Author: FFC

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The one thing stopping you from making better decisions

Post author By FFC
Post date February 16, 2018

The one thing stopping you from making better decisions

It’s been several years since your last dodgeball game in the high school gym, but you may remember it like it was yesterday. Nervous energy hangs in the air during those moments when the captains choose their teams. No one wants to be picked last.

Human nature is at play, compelling Captain Kim to choose Mark instead of you. Maybe it’s Mark’s athletic ability, or maybe it’s because he lives on Kim’s street and she is more familiar with him. Kim’s unconscious bias drives her toward one classmate over another. For the person whom Kim picks last, it might sting a little.

Without realizing it, every day in our professional lives, we make choices similar to Kim’s. It’s not always pleasant for everyone involved. All humans have a hardwired need to belong. If we don’t check our unconscious bias and unknowingly show favoritism, we risk alienating our colleagues and staff. That can affect engagement, productivity and team cohesion.

The good news is that you can train yourself to become mindful of your unconscious bias and strengthen your relationships in and out of the office. Try this practice I call the Three Rs.

Recognition: In this phase, you identify the feelings you’re having when faced with a decision. Is it frustration, fear or confusion? Empathy, pity or camaraderie? Or maybe it’s as simple as preference? Your goal with recognition is to understand your emotions so that you can observe them.

Reflection: Feelings are temporary, so before taking any action, in the reflection phase, you want to pause. This gives you a chance to really assess what’s affecting you. Process the emotions and ask yourself what those emotions mean and why you’re feeling them. What is driving you to feel the way you feel?

Response: Now, in the response phase, you’re ready to make a mindful choice about how to act. When you’re responding, make the conscious decision to take the best action. That is, do the right thing. Choose a person using inclusiveness, make a healthy choice for your wellness or behave in the most ethical way the situation allows.

You can use this practice in a number of ways, from teaching and supporting children to coaching staff to help them feel they belong. You can even use it before making the decision between eating a sugary treat and a healthy one. In any of these circumstances, you can challenge your unconscious bias and broaden your own thinking.

Join me for an in-depth discussion of unconscious bias and the mindfulness techniques you can use to enrich your personal and professional lives and elevate your team and colleagues.Register for Your Brain is Good at Inclusion… Except When It’s Not (Understanding Unconscious Bias), broadcasting Wednesday, February 21, 2018, from 9 a.m. to 10 a.m. ET.

Dr. Steve L. Robbins, founder and owner of S.L. Robbins and Associates, a consulting firm on issues of human behavior based in Grand Rapids, Michigan.

Woman thinking image courtesy of Shutterstock.

Engagement letter stories — when they hurt and when they worked

Post author By FFC
Post date February 13, 2018

Engagement letter stories — when they hurt and when they worked

As a risk management professional at CNA, professional liability insurance carrier for nearly 25,000 CPA firms, I am often asked if engagement letters are worth all the effort. The answer, based on my personal and CNA’s claim experience, is a resounding YES!

I’ve experienced firsthand the value these letters bring to the table. When an engagement letter is used, and a claim arises related to that engagement, the losses are typically less severe (meaning less expensive) than if an engagement letter had not been used. But what means more (especially to a CPA) than more money in your pocket? Many professional liability insurance carriers provide premium credits or other benefits for firms that use engagement letters.

If it’s not enough to just trust the numbers, consider the following experiences of CPA firms that have or have not used engagement letters.

One that hurt — no engagement letter meant higher risk

A CPA was engaged to prepare income tax returns for a small business and its owner for many years. The owner regularly spoke with the CPA about his plans to sell the business and ultimately retire. One day, the client did just that and moved away.

In his new hometown, he employed a local CPA. As part of the new CPA’s due diligence, she reviewed the business and personal tax returns for the prior three years. In doing so, she noticed that if the client had elected S corporation status prior to the sale, he would have saved a boatload on taxes.

As a result, the client sued his original CPA for failure to advise him about the benefits of electing S status. Without an engagement letter that limited the scope of the CPA’s services to income tax return preparation, the client successfully convinced a jury that the CPA was engaged to be his business advisor in addition to preparing tax returns. The CPA was held responsible for the additional tax.

An engagement letter is not a “get out of jail free” card. But a clearly defined scope of service, including a provision that tax advice would be subject to a separate engagement letter, may help mitigate a claim.

The engagement letter that worked

A CPA provided compilation services for a small plating company. The client’s cousin was the bookkeeper, but not the most honest person. She stole money from her cousin’s business.

After realizing his cousin was a thief, the business owner sued his CPA, arguing that he relied upon the firm to identify and communicate all accounting irregularities.

Defense counsel for the CPA argued that the engagement letter specifically noted that the CPA would not perform procedures to identify theft or fraud. Through a series of emails, the CPA had made the business owner aware that his cousin had unfettered access to his accounts, and suggested he segregate her duties. The CPA had also pointed out some questionable transactions. In response, the owner directed the CPA to discuss any irregularities with his cousin.

Despite the CPA’s engagement letter and emails, the client sued. The jury understood that the owner and his cousin were equally, if not more responsible, for preventing the theft than the CPA. As a result, the court ruled in favor of the CPA.

My story

I spent almost 20 years as a tax practitioner. I specialized in state and local tax.

When I started practicing, I only obtained engagement letters for tax compliance work. As my practice grew, my engagement letter use did too. Thank goodness, because an engagement letter helped me get out of a jam.

I was engaged to do a nexus study for a client. After completing the nexus matrix, I presented it with my conclusions to the client, who promptly asked for the promised memo. I told the client I would check on it, but couldn’t remember anything about a memo.

I reviewed my engagement letter and associated deliverables. Sure enough, the letter assigned me two deliverables: a nexus matrix (check!) and a memo detailing the sales tax consequences for states in which the client had nexus. As a result, I completed the additional work, prepared the memo, and avoided a dispute.

The best story of them all

These stories may be interesting to read, but the best story is the one we will never hear. That’s the story of the claim that was never filed because the engagement letter saved the day.

While anyone can sue a CPA at any time for any reason, a well-drafted engagement letter provides a CPA’s defense attorney something to defend. My advice is to use engagement letters for everything you do. Don’t view them as an administrative burden, but your best friend in the event of a client dispute.

The AICPA Personal Financial Planning group offers a sample engagement letter for personal financial planning services to get you started. And AICPA Tax Section members have access to the Annual Compliance Kit, which includes samples for fourteen tax services, including tax audit representation and consulting. Review these as you draft your own engagement letters.

Deborah K. Rood, CPA, MST, is a Risk Control Consulting Director for the Accountants Professional Liability Insurance Program of Continental Casualty Company, a CNA company and the underwriter of the AICPA Professional Liability Insurance Program. She previously practiced public accounting for 19 years with regional public accounting firms, leading her firm’s state and local tax practice.

Engagement letter courtesy of Shutterstock,

Blockchain was made to solve 1 problem. Here’s what that is.

Post author By FFC
Post date February 12, 2018

Blockchain was made to solve 1 problem. Here’s what that is.

“Blockchain is a solution looking for a problem. Unless you want to buy drugs on the internet,” said the instructor in a technology training I recently attended.

While not the first time I had heard such a comment, it was disturbing that a hundred of my fellow practitioners were being misled. Ignoring or dismissing blockchain does the accounting profession no favors. Instead, let’s consider the problem that the technology solves. This will provide a basis for later understanding possible applications to our work.

What is the problem blockchain is trying to solve?

Blockchain, or distributed ledger technology, set out to solve how we transfer a digital asset between two peers without an intermediary. While there are many applications of this transfer, let’s look at it in the context of money.

Imagine you are selling a bike online. You don’t actually know the person who is buying your bike, so you have no way of knowing if the buyer actually has the money to pay for it. You have to trust an intermediary like PayPal for this information. PayPal is crucial to the transaction because it verifies what you cannot – whether the buyer has enough money in their bank account to make the purchase.

The asymmetry of trust in this transaction is known as the Byzantine General’s Problem. Imagine we have four generals planning to attack a city. At least three of the generals must attack at the same time to overpower the army holding the city. However, the only way they can communicate with each other is via messenger, and they do not know if one of the generals is a traitor. If a general were traitorous, he could modify the attack message and cause the other generals to fail. The only way to overcome a traitorous general is to provide the history of all messages sent and evidence they have not been altered. If the generals see that one of their peers has sent a message different from the others, they would know the general is traitorous and disregard his message. If more generals are good actors than bad in this attack, the correct message will be obvious.

In our bicycle-selling scenario, we cannot see the buyer’s equivalent of “history of all messages sent” – that is, their entire transaction history. Therefore, similar to the Byzantine General example, we cannot see if the buyer is traitorous in telling us they have the funds to send. PayPal acts as a clearinghouse, but also adds cost and time to the transactions.

Blockchain removes the need for PayPal. With a distributed ledger, we can verify for ourselves that the buyer has the necessary currency – cutting out the middleman and saving time and fees.

How does blockchain solve that problem?

Blockchain technology solves the Byzantine General’s Problem using a proof-of-work consensus algorithm. What is that, you ask? Simply put, instead of having a central bank determine the order of transactions, a majority of the users on the platform agree to the authenticity of the transactions. (And by “users” I really mean nodes. In the early years of cryptocurrencies, a node could be a simple laptop. Now it is more likely to be a server farm in a region with cheap electricity.)

First, transactions are grouped together in blocks. Then users (“nodes”) compete to solve a complicated, cryptographic puzzle to add a block of transactions to a chain of previous blocks. After a block has been added to the chain, a majority of users must agree to the authenticity of it by adding other blocks onto this existing chain. Because all future blocks are connected to, and dependent on, previous blocks, it is virtually impossible to alter or delete previous entries. This is why blockchain is considered to be immutable.

Further, every transaction in the blockchain is visible, so every user on the blockchain can see whether the sender has the digital assets they claim – without the use of a third-party.

Through the immutability and the visibility of all transactions, blockchain technology removes the intermediary required and allows participants to interact in a trustless exchange of digital assets.

But asset exchanges are just one application. The technology could be applied to audit and assurance services, supply chains and the assessment and collection of taxes. As such, the accounting profession must educate itself about the technology so we can be prepared for its more widespread adoption.

Joshua Holley, CPA, is the Founder & Managing Director of The Tripoli Group, which provides services to early-stage, high-growth startups in multiple industries and an Adjunct Instructor at UNC’s Kenan-Flagler Business School. He was an enlisted Marine before earning a bachelors degree from the University of Tennessee and a Master of Accountancy degree from Vanderbilt University.

Blochchain courtesy of Shutterstock.

10 tips to tackle the CPA Exam during busy season

Post author By FFC
Post date February 8, 2018

10 tips to tackle the CPA Exam during busy season

If your time already seems extra valuable during busy season, try studying for the CPA Exam at the same time. Many do it, however, as they power forward to earn a credential that will significantly enhance their professional lives. If you’re about to jump into juggling the demands of busy season and test preparation, here are a few tips from CPAs I talked to who’ve been there, done that and earned their CPA.

Plan your time.

CPA Leighton Smith, who is a finance director at Microsoft, calculated the time he thought he’d need to study each quarter. He then tracked his actual weekly progress and made adjustments as needed. “I didn’t want to leave anything to chance,” he says.

Stretch the workday.

To keep on track, you’ll have to wake up early, get to bed late and study on the go. “When I took the metro to work in the morning, instead of reading or listening to music, I worked with flash cards that I had made the night before based on my reading,” says CPA Jeff Wilson, advanced QuickBook ProAdvisor at The W2 Group, LLC. During his 30-minute commute each way every day, CPA Caleb Bullock, business development manager at Somerset CPAs and Advisors, listened to lectures. “I did it every spare minute,” he says.

Dedicate some of your downtime to the cause.

A day off is a great time to sleep late, but getting up a little early and putting in an hour or two of study time is a better idea over the long run. When I did this while studying for the exam, I found I could use the rest of the day to relax and recharge. I was also less stressed about the need to catch up with studying another time. The work doesn’t have to be too intense, just enough to keep you up on the study materials.

Know how you learn best.

Tailor your study methods to your learning style. I know I can have a short attention span, especially when I’m stressed or tired, so at the end of a long day I used flash cards as a quick way to reinforce key information.

Dial back on social life.

The prospective CPAs I spoke to also scaled back on their social time. “Often when friends asked me to go to lunch, I had to say no,” says Bullock. That was particularly difficult since he was in a new job and eager to get to know his colleagues. “Finding the discipline to stay at your desk and study can be as tough as the exam itself,” he says.

Take on tutoring.

CPA Patrick Kmieciak, who is now an assurance associate at PriceWaterhouse Coopers, worked as a tutor and teaching assistant while preparing for the exam. He found that helping others enabled him to retain crucial knowledge. “One question on the exam was on intense technical regulations, and I had just gone over the regulations in tutoring someone the previous week,” he says.

Strategically schedule your test days.

As Wilson notes, scheduling a test date at the end of the exam window gives you more time to study, even if it means having to drive to a distant testing location. He also recommends scheduling two exams in the same test window, if time allows and you’re able to fiscally. “Even if you don’t pass the second exam, it gives you a sneak peek at what you’re facing and helps you understand what you need to study in the next exam window.” It can also help keep you on course. “People who’ve passed will tell you that momentum is important,” says Wilson. “Once you pass one section, keep going.”

Refresh your knowledge as you go.

After reading or listening to lectures on one topic, Kmieciak noticed that he wasn’t retaining as much as he hoped from previous sections. To address this, whenever he completed one topic, he did a brief review of all he had learned so that more of the material would remain fresh in his mind.

Have an accountability partner.

Link up with someone else studying for the exam who’ll cheer you on and sympathize with your complaints, Bullock advises. It also helps to explain what you’re up against to friends and family outside the profession, so they understand why study time is so critical and can offer support.

Start sooner rather than later.

Bullock decided to take the exam as soon in his career as possible. Some colleagues preferred to put it off until they were more settled in their jobs, “but in public accounting you always have things to do,” he says. “If you wait for the perfect opportunity when you have all the time in the world, you’re not going to do it.”

How will you seize your opportunity to pass the exam despite busy season responsibilities? By following these tips, you’re sure to improve your chances for success!

The CPA Culture of Support Toolkit offers a wealth of resources to help prospective CPAs succeed and firms support their staff in the CPA Exam journey.

Kari Hipsak, CPA, CGMA, Manager, Firm Services –Association of International Certified Professional Accountants

Juggling priorities courtesy of Shutterstock.

10 busy-season exercises CPAs can do at their desks

Post author By FFC
Post date February 7, 2018

10 busy-season exercises CPAs can do at their desks

Busy season means tough choices—dividing daily life into essentials and non-essentials. Food: essential. Sleep: essential. You know exercise is important, but is it essential? Research shows that completely dropping your exercise routine for just a few weeks can put you at increased risk for a heart attack or stroke. But findings also show that even short periods of exercise can reduce those risks while boosting productivity and reducing stress. But how? If you don’t have time for a full routine at the gym or outside, deskercise!

The following exercises, though not intended as a substitute for the recommended 75 minutes a week of vigorous aerobic activity, count toward the recommendation for 150 minutes per week of moderate-intensity physical activity or a combination of vigorous and moderate activity. Best of all, they can be done at your desk. To add some competition to the mix, challenge your colleagues to try these deskercises, too.

Stationery jog. This exercise can be done seated or standing. Pick up your feet and push them forward in a jogging motion. Continue the movement for one minute. If standing, increase intensity by picking up your knees and pushing off the floor.

Arm flutter. Sit tall on the edge of your chair (or stand) with arms fully extended to each side. Make small circles and work your way up to larger circles. Continue for one minute.

Wall chair. Find a wall, squat with your thighs parallel to the floor, make a 90-degree angle with your legs, and hold for a minute. If this is too hard for you, begin by splitting the challenge into two, 30-second sits.

Desk press. Standing in front of your desk or a sturdy table, place your palms on the edge and take two steps backward. Bend your elbows down to a 90-degree angle, hold, and straighten to lift your body weight. Complete 8–10 reps.

Hand pull. Clasp hands in front of chest as if you were giving yourself a handshake. One thumb should be up and the other down. Pull as hard as you can and hold the movement for 20 seconds. Repeat twice.

Hand push. Seated upright with feet flat on floor, bring palms together in front of your chest. Push both hands together powerfully until you feel your arm and chest muscles contract. Hold for 20 seconds and repeat twice.

Finger stretch. Hold one arm fully extended out in front of you with your fingers facing up, palm facing away. Use your other hand to gently tug your fingers back towards your body and hold the stretch for 10 seconds. You should feel the stretch in your wrist and forearm. Repeat with your other arm. Now perform the same movement but with your fingers facing down on each arm.

Shoulder extender. Cross one arm over your body and loop the other arm at the elbow of the extended arm and hold for 10 seconds. Repeat the same movement with your other arm.

Ceiling breaker. Hold a small dumbbell (or other weighted object you have available) in each hand. Starting with your hands in a neutral position in front of you, raise your hands as high as you can toward the ceiling and pull them back into the starting position. Complete 8–10 repetitions.

Desk cycle. If the exercises above leave you wanting more, consider getting a desk cycle. Manufacturers say you can pedal off 100 to 150 calories per hour. Models vary in price from as low as $25 to over $1,000.

Desk exercises

Demonstrations of wall chair, desk press, hand pull, hand push, and two finger stretches.

For additional activities to do in your office, download the Private Companies Practice Section (PCPS) Busy Season Fun Calendar. Also, check out our Small Firm Resources for ready-made marketing tools to help you leverage busy season opportunities and get information on firm-practice-management best practices.

Exercises adapted from Deskercise! 20 Ways to Get Moving While You Work by Allison Hoit, National Center on Health, Physical Activity and Disability.

Shelly Guzetta, Manager–Firm Services, Association of International Certified Professional Accountants

Social security benefits hacked: A cautionary tale

Post author By FFC
Post date February 5, 2018

Social security benefits hacked: A cautionary tale

If you or your clients are at or nearing retirement age, you need to know that hackers are targeting social security accounts. I found out the hard way. My career as a CPA Personal Financial Specialist was devoted to advising individuals and families on their most important financial goals, including tax, retirement, estate, risk management, investment and retirement planning. After decades of helping my clients navigate and manage these important decisions, imagine my surprise when I received a letter in the mail shortly after my 67^th birthday congratulating me on initiating my Social Security benefits. The trouble was, although I had entered the glory years of retirement, I had not yet applied for Social Security benefits, opting to wait until age 70 to receive my benefits. Further digging uncovered the unfortunate fact that a thief had received $19,236 of my benefits. I was dumbfounded.

How did this breach occur? And if I was victimized, who else might be at risk? What can you do to prevent this or respond should this happen to you or your clients?

Who is at risk?

All individuals age 62 to 70 who have not yet applied for benefits are at risk, particularly if their personal information was exposed in the Equifax breach. For beneficiaries over age 66.5, the risk is even greater. In my case, a fraudulent application was made one month after I turned 67. The timing is not coincidental – in fact it reveals that the thief was sophisticated enough to understand the Social Security system. Individuals who have reached full retirement age and have not applied for benefits can receive a retroactive payment from Social Security of up to six months of benefits. So, beginning at age 66.5 (for people born between 1943 and 1954), thieves can access the maximum amount of back benefits.

How did this happen?

While I’m not entirely sure how the thief obtained my personal information, it’s likely that the Equifax data breach, which exposed the vital personal identification data of as many as 143 million consumers, contributed to the identity theft. According to the Equifax website, my personal information was potentially exposed as a result of the breach.

Prior to the Equifax breach, I had frozen my credit with all three credit bureaus, effectively denying any attempts to obtain credit in my or my wife’s names. Despite the freeze, the thief was able to have my benefits direct deposited into an account opened with a bank that proudly advertises at major retailers that they do not perform credit checks prior to issuing prepaid Visa debit cards. If these stores had done a credit check, in my case, they would have found that I had freezes on all three bureaus and would have then rejected the false application they had blindly accepted with my stolen information.

But Equifax, the bank, and the retailers who market and sell these cards are not the only players involved. There is a flaw in the controls on the Social Security website that, unfortunately, does little to protect the beneficiary.

Beneficiaries who set up a my Social Security account can view their Social Security Statement, update their address and phone number, start or change direct deposit of their benefit payment, and view benefits online. This secure website sends an email or text message with a secure access code to the contact information on file on the website before login can be completed.

However, there is a separate, unsecure website that is not located within the secure my Social Security account, which was the door the thief used to perpetrate the fraud. This website, the Social Security Retirement/Medicare Benefit application, can be used to apply for benefits online.

On the unsecure website, the thief changed one digit of my phone number, entered a fake email address, set up direct deposit information for the bank prepaid card that had been fraudulently opened, and applied for benefits. Although the personal information entered by the thief did not match the information I had previously entered on the secure website, I received no notification of these changes or the fact that a benefit application had been made.

If there is a silver lining, it is that addresses cannot be changed on the unsecure benefit application website, so I received a letter in the mail congratulating me for initiating my benefits. Unfortunately, six months of back benefits and a current month of benefits, totaling over $19,000, had been dispersed to the fraudulent bank card account prior to when the Social Security Administration (SSA) mailed the letter and 11 days before I received it.

What Next?

Whether or not you are a victim of this crime, taking precautionary security measures to protect yourself from a diversion of benefits is critical. The SSA provides recommendations on how to secure your information online. Unfortunately, because of the notification breakdown and unsecure nature of the benefit application website, taking these steps does not ensure that you will not be victimized. At a minimum, I would recommend that you a create a my Social Security account and log in at least annually (more frequently if over age 62) to verify your personal information and benefit status.

If you discover that you or one of your clients has been the victim of a Social Security breach or theft, make an appointment (if you can) or wait in line at your local SSA office immediately. You will be interviewed and required to provide a written statement certifying the circumstances of the fraud. The agent will freeze further payments on your account. Maintain digital and hard copies of everything that you receive. Furthermore, I was advised to file a police report with a case number, which I have maintained in my files. Finally, I had electronic access to my account blocked.

I just received Form SSA-1099 for the $19,236 that was dispersed out of my account. I will now have to battle with both the IRS and the Social Security Administration, and eventually Medicare as this additional income would tip me over the threshold for means testing on my Parts B and D premiums.

I urge you to alert your clients of this and other cybersecurity risks. The AICPA Tax Section has a toolkit relating to tax identity theft, including a client identity theft checklist with action steps for recovery that is open to all AICPA members. Consumers can also benefit from materials on the AICPA’s 360 Degrees of Financial Literacy website relating to identity theft. In addition to the SSA recommendations, Broadridge Advisor (which offers free access to AICPA PFP/PFS members) has a customizable client article on “How to Protect Yourself Against Identity Theft” as well as materials related to the Equifax breach.

James A. Shambo, CPA (retired) is president of Lifetime Planning Concepts, Inc., which is located in Colorado Springs, CO. James served in many capacities in the profession, including as a member and chairman of the AICPA Personal Financial Planning Executive Committee, member of the Colorado Specialization Oversight Board, and on several PFS related committees. He has been a regular speaker at national and state PFP conferences, and is the author of The CPA’s Guide to Practical Retirement Planning. He recently developed a tool, the Retiree’s Cost of Care Barometer which is available on aicpa.org. He is the recipient of the AICPA PFP Distinguished Service Award as well and Stanley H. Breitbard Lifetime Achievement Award.

Hacker courtesy of Shutterstock.

Personal financial satisfaction extends record run…but for how long?

Post author By FFC
Post date February 2, 2018

Personal financial satisfaction extends record run…but for how long?

Americans are experiencing unprecedented levels of personal financial satisfaction, the highest in the 24-year history of the AICPA’s Personal Financial Satisfaction Index (PFSi). After seven consecutive quarters on the rise and a second quarter in a row setting at an all-time record, the average Americans’ personal financial satisfaction has been steadily picking up steam. With financial satisfaction climbing to new highs, some can’t help but wonder when this rise will end.

First, some background. The PFSi is a quarterly economic indicator that measures the financial standing of the average American. It’s calculated as the difference between two sub-indexes: The Personal Financial Pleasure Index, which measures the growth of assets and opportunities, and the Personal Financial Pain Index, which calculates the loss of assets and opportunities. The Pleasure Index is made up of four factors, the largest contributor being the PFS 750 Market index. The Pain Index is also comprised of four factors, with the largest contributor being personal taxes. Most recently, the Pleasure Index (69.2) greatly outweighed the Pain Index (42.3) bringing the PFSi to a positive reading of 26.9, the highest reading since 1994.

I recently sat down with Michael Landsberg, CPA/PFS, member of the AICPA’s Personal Financial Planning Executive Committee, to understand the potential for a market decline in the face of the index’s record performance.

Jonathan Lynch: With personal financial satisfaction continuing its steady rise, what should Americans look out for?

Michael Landsberg: While we’re not at the “euphoria” stage by any means, there are certainly concerns out there that the market is due for a significant pullback. That very well may happen, but few investors remember that corrections (10 percent decreases in the market) are actually healthy occurrences during a bull market. I’m a big advocate of diversification and “staying the course” so each individual’s approach should be dictated by the circumstances of his or her situation.

JL: What opportunities may be presented and what investment decisions might Americans consider as their current financial satisfaction is at an all- time high?

ML: As equity prices have continued to run up over the past few years, for many it’s an opportune time to analyze his or her current asset mix. The common “60/40 portfolio” (60 percent stocks, 40 percent bonds) could have easily drifted to an 80 percent stock, 20 percent bond allocation at this point. While that may be suitable for some investors, it probably won’t be appropriate for those nearing retirement or already drawing down their portfolio for living expenses.

JL: Do you see anything from your clients that syncs up with the results?

ML: For my clients, I’m finding that many are cautiously optimistic. I’d like to think that they’ve been conditioned over the years to realize how much returns can fluctuate. What’s popular today could just as easily fall out of favor tomorrow.

JL: How can a CPA financial planner help?

ML: It’s always prudent to enlist the help of a CPA financial planner to navigate the labyrinth of new tax laws along with the elevated risk present in the market. The CPA financial planner is able to take a disciplined approach in order to ensure each clients’ financial satisfaction remains high.

Throughout most of 2017, the surging market was the big story. Looking ahead, Americans are waiting to see the impact that tax reform will have on their financial situation. Personal taxes have been the leading overall contributor to financial pain for seven quarters in a row and while many people are likely to see their federal income taxes lowered by the Tax Cuts and Jobs Act, the full impact on each individual remains to be seen. Refining your plan accordingly is crucial.

“Planning is not a singular event. It’s dynamic; meaning it’s constantly evolving as a result of tax law, financial markets, and changes to your personal situation. Therefore, it’s important to work with a CPA financial planner on an ongoing basis to ensure you’re taking advantage of all opportunities to optimize your finances,” said Mark Astrinos, CPA/PFS, member of the PFS Credential Committee.

With new tax law now in effect, Americans will soon see the impact it has on their paychecks. However, for many, the true impact of the bill will come into clear relief only once they file their 2018 taxes next year.

“As we move forward into 2018, and taxpayers meet with their CPAs in advance of the April tax deadline, they should engage their CPAs and ask them to explain how the new tax laws impact them. While rates have been lowered, the limits to itemized deductions are just as, if not more significant, and could cause for some big, unexpected surprises later in the year,” said David Cherill, CPA, member of the PFP Executive Committee. “Taxpayers should ask for projections from their CPAs, so they can properly plan for the remainder of 2018, and avoid any large tax bills this time next year.”

Whatever your personal financial situation may be, CPA financial planners are able help you make informed decisions about the tax planning opportunities emerging from the new bill. In good times and bad, CPA financial planners help their clients reach their goals by integrating a strong foundation of technical tax knowledge into a holistic financial plan.

New AICPA chair shares his vision for the future

Post author By FFC
Post date February 1, 2018

New AICPA chair shares his vision for the future

Today, Eric Hansen, CPA, CGMA, assumes his new role as Chair of the American Institute of CPAs. We sat down with Eric to ask the four questions that will help you know him and his vision for the profession a little better.

You can also watch the video of his inaugural address, delivered to members of AICPA Council, here.

Congratulations on becoming the 105th Chair of the AICPA! How would you define your role as a leader in the accounting profession?

I’m so humbled and honored to join the ranks of so many amazing and visionary leaders who’ve come before me. They are the reason for our success today. And I see it as my duty – and really that of all accountants – to continue to build on that success, keeping the profession strong and maintaining our critical role in protecting the public interest.

Strong positioning seems especially important now, as we navigate a world defined by rapid change and disruption. So, how do we keep the profession relevant and trusted?

One thing many people may not know about me is that I’m an Eagle Scout. And it was during my time in the Scouts that I learned one of my favorite sayings: “If you’re early, you’re on time. If you’re on time, you’re late. And if you’re late, forget about it.” This is how I’ve approached my life and career, and it’s never failed me.

This is how we need to think about our profession, as well. No one knows for sure what tomorrow will bring. But, if we have the courage to be bold and a bias for action, we’ll be prepared.

It’s interesting how those early life moments can really shape who we are. Can you tell us a little more about your background and the path that got you here?

I was born in Independence, MO – the former homeplace of Harry Truman. My father was a World War II veteran who served on both Omaha Beach on D-Day and at the Battle of Okinawa. After he returned, he and my mother built a small family farm, where they raised my three brothers and me. They instilled in us the importance of hard work and accountability – we had chores from sun up to sun down. Our only real escape for fun was the Boy Scouts. But even that we approached with the same level of discipline. I’m very proud to say all four of us earned the rank of Eagle Scout.

Later, I attended Evangel University. It was a chance meeting there that really set the trajectory that got me to where I am today. My auditing class had a guest speaker, Chuck Wells, a partner in the Kansas City office of BKD. After class, I introduced myself, and so began my more than 33-year career with a fantastic firm. Not only that, I met one of the greatest friends and mentors anyone could hope for.

Today, I’m the Chief Operating Officer of BKD, where I oversee firm-wide operations and act as a liaison between the National Office and BKD’s four regions.

Looking at the year ahead, what do you see as the top areas where the profession should focus?

The way I see it, there are three areas where we need to take action today to be ready for tomorrow:

Harness technology to create more value for clients and businesses.

We must use data and insights to enhance quality in audit, tax and finance, and continue to evolve these services for the future. And we must take the lead in emerging areas such as cybersecurity risk management.

Embrace our role in a hyper-connected, global society.

We will continue to serve as a strong voice of the profession in DC, and tax reform will remain a significant area of focus this year. But we must also recognize that we are part of a global tapestry. As technology binds us closer, one legislation or regulation can have fast and far-reaching ramifications. That’s why it’s so important that we extend our influence to protect the public interest amid increasing complexity.

Invest in personal development.

We must focus on evolving skills and competencies, advancing learning opportunities and cultivating future leaders. Last year, we took an important step for future professionals by updating the Uniform CPA Exam. But we must look at ourselves, as well. The skills we’ve relied on to get us here aren’t necessarily the skills that will sustain us – we need to continue upping our game.

Essentially, we must Go beyond. To remain successful, we have to think differently about what we do and how we do it. We have to learn from the past and create the future.

This is an exciting and defining moment for the profession. I look forward to working with members, state societies and other stakeholders to embrace the opportunities ahead.

Eric and his wife, Jana, currently reside in Springfield, MO. They have three children – Todd, Luke and Elise. He has been an active volunteer with the AICPA and member of the Missouri Society of CPAs. In his spare time, he enjoys spending time with his family outdoors camping, hiking and mountain biking.

Busy season cheat sheet: 8 considerations to make it easier

Post author By FFC
Post date January 30, 2018

Busy season cheat sheet: 8 considerations to make it easier

Time is always a precious commodity during tax season, but especially so this year. On top of starting to prepare 2017 tax year returns, CPAs are working to figure out exactly how the tax reform law affects clients.

Before you start pulling your hair out, take a deep breath and remember the wise words of Eleanor Roosevelt: “This too shall pass.” Then, check out the AICPA resources that not only make preparation a bit more convenient, but will also help you impress your clients by answering their questions before they even ask them.

Getting lots of questions from clients about tax reform? Download presentations on the impact on individuals or businesses from the Tax Reform Resource Center, and register for webcasts (starting Jan. 30) that will explore effects of tax reform on pass-throughs and other types of businesses. Additionally, 360 Degrees of Financial Literacy provides a brief overview of updates to the tax law, including tax brackets and individual deductions.

While tax reform is the top-of-mind concern, use the Tax Law Snapshot to remind clients of items like the ACA individual mandate that are in effect for the 2017 tax year return. This snapshot (one of the updated resources added to the Tax Practitioner’s Marketing Toolkit) also touches on upcoming changes and suggests ways to plan for them.

If you dread telling a client they need to file an extension, help the medicine go down with these FAQs from the Tax Practitioner’s Marketing Toolkit. The FAQs explain clearly what an extension really means and why it can be a good thing. (Note: AICPA log-in required for most resources.)

Keeping up with identity theft threats and the best ways to combat them is challenging but critical. While the number of individuals reporting tax ID theft has dropped considerably, the number of business returns affected by thieves has risen, and tax professionals remain at risk. Use the Tax ID Theft Information and Tools page to find articles and webcasts on trends and best practices. If you have a client who suffered ID theft, offer them the ID Theft Checklist: Action Steps to Recovery to help them recover.

You want to be 100% sure that your checklists and organizers are as thorough as they can possibly be. If you join the Tax Section, these trusted resources from the Annual Tax Compliance Kit are yours for free, in addition to practice guides and engagement letters.

Here is one more cheat sheet to save you and your staff time looking things up. This quick guide from the Journal of Accountancy lists retirement plan limits, tax brackets, mileage rates and a slew of other numbers you’ll need handy.

Last but not least, find all these great resources and others at the AICPA’s Tax Season Resources for CPAs.

Need a cheat sheet of return due dates and updates on which states have conformed with the federal changes? The AICPA due dates page has tools such as the State Tax Return Due Dates for Partnerships Summary Chart and the C Corporation Due Dates Quick Reference Chart.

Tax season is here, so be sure to keep these resources close at hand. Best of luck!

Minh Graham, Manager – Tax Practice & Ethics, Association of International Certified Professional Accountants

Busy season finish line courtesy of Shutterstock

Take a timeout: 9 do’s and don’ts for a good work break

Post author By FFC
Post date January 26, 2018

Take a timeout: 9 do’s and don’ts for a good work break

Your neck and back ache from hunching over your desk. Your eyes burn from staring at a monitor. You don’t want to stop because the clock is not your friend today. Yet stopping can, in fact, make the clock your friend.

Taking a break on the busiest of days (and, of course, this is the busiest of seasons for tax CPAs) can be hard to do. I get it – while working on a deadline, I hyper focus and hate to put myself on pause. But I make myself do it because I know from experience that it will ultimately lead to greater productivity.

You don’t have to take my word for it, science says the same thing. Consultants monitored people’s productivity using an application called DeskTime and found that the best performers worked for 52 consecutive minutes followed by a 17-minute break. Not too surprising, considering that scientists have learned that our brains are better at solving complex problems when given a chance to relax. Think of that “aha” moment that comes to you when you’re in the shower or picking up dry cleaning.

Some folks I know swear by the Pomodoro method, named after the tomato-shaped timer used by the method’s originator. Try setting a timer for various intervals to see what works for you. More important than the exact span of the break is reminding yourself to take one in the first place.

Here are some additional tips:

DO get out of the workspace and walk around. If it’s not 5 degrees outside, get out of the building for a few minutes. Here, too, science confirms the benefits. Walking stimulates blood flow to your brain, which leads to more oxygen and energy, as well as improved memory and thinking. If only science would also affirm the critical role of nachos and cheese in productivity.

DO seek out opportunities to talk with staff or colleagues who are available and keep the conversation light –you are working on so much technical content, you’ll need some relief. While chatting about the Super Bowl may feel like goofing off, you’re reinforcing relationships, which is extremely important. Double whammy: hit these first two “do’s” by offering to pick up coffee or tea for a few people.

DON’T look at your email, computer or any other screen, more than you absolutely need to. This may be the only time you can text a friend or spouse or check personal emails, but be mindful that your eyes desperately need a rest to ease digital eye strain.

DO bring in snacks for your break that provide sustained energy rather than a sugar-fueled burst that will be followed by a productivity-killing glucose crash. I am a big fan of peanut butter-filled pretzels. They may not top nutritionists’ list of healthy snacks, but I’ve found a few will fill me up, and they are low in sugar.

DON’T cram in multiple errands that risk your coming back to the office even more stressed because you’ve exceeded the time you wanted to spend away.

DO let yourself escape reality. Peruse travel magazines to plan your next vacation. Try meditation or check out silly cat videos (keeping in mind #3 about your eyes). I enjoy looking at food magazines, especially the gourmet recipes. Am I really going to make cherry-infused almond biscotti? Of course not. But I like knowing it exists, just in case.

DON’T feel guilty or self-conscious about walking away from your desk. Trust me. It will be there when you get back, whether you want it to be or not. Think of Audrey II, that terrifying plant in Little Shop of Horrors yelling “Feed me!” Your stimulus-craving brain is saying the same thing and just as with Audrey II, there will be a price to pay if it doesn’t get satisfied. To ease the guilt, following the tip in #8 below may help.

DO use some of your breaks to focus on the people important to you. Brainstorm a list of creative thank-you gifts for staff, or surprise a kid in college with a handwritten note. You can also pick out a “Thinking of You” card for a significant other who hasn’t seen much of you lately (go ahead and get a Valentine’s Day card while you’re at it) or call a friend you haven’t spoken with in a while.

DO consider taking advantage of the time to learn something non-technical. If you’re in a small office, getting out may be harder so listen or watch these videos from the Association’s Human Intelligence topics such as future proofing your career or thinking like a CEO.

Taking a break is one way to be more productive. Another is to use our free tools. Check out the updated Tax Practitioner’s Marketing Toolkit as well as the resources on the small firm website to boost your productivity.

Jeannette Koger, Vice President – Advisory Services and Credentialing, Association of International Certified Professional Accountants

Take a break courtesy of Shutterstock.