Blog Timeline – Page 49

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100 Years of CPA Exam as Licensure Requirement

Post author By FFC
Post date June 23, 2017

100 Years of CPA Exam as Licensure Requirement

A lot has changed over the last 100 years with the evolution of the CPA profession. Old fashioned calculators gave rise to Microsoft Excel. Stacks of financial statements have morphed into data in the Cloud. And many CPAs have expanded beyond auditing or tax services through the growth of specializations such as IT assurance, financial planning and business valuation.

Despite all the change, one notable constant has remained – the Uniform CPA Examination’s alignment with professional practice and the work of newly licensed CPAs. This alignment has continuously ensured that those earning licensure have demonstrated the requisite knowledge and skills vital to protecting the public interest.

The exam as we know it has a long and storied history. With its origin based on a test first given to individuals seeking membership in the AICPA, the exam has become the well-known, rigorous gateway to our profession. Following New York’s lead in 1896, states began to pass CPA laws and develop their own assessments to ensure only qualified individuals could attain licensure. While these exams were the first step to verifying the knowledge and skills of a future CPA, there was no testing uniformity across jurisdictions.

A Standardized Path to Licensure

This month we recognize a milestone that changed the administration of the exam for the better and brought about a new era of cooperation and uniformity that standardized this qualification assessment. A century ago, in 1917, three state boards of accountancy, New Hampshire, Kansas and my home state of Oregon, became the first to accept the AICPA’s offer to prepare and grade a uniform exam on their behalf. This initial move set the stage for jurisdictions, one-by-one, to move to uniform testing, including some states that had not previously prepared their own exams. The use of a uniform exam saved the states valuable time and expense previously spent preparing and grading their own exams.

State boards’ long-standing support of a uniform assessment has ensured that, regardless of when and where candidates test, our profession can have confidence that the knowledge and skills of these individuals have been verified through a fair, reliable and valid exam. Further supporting state boards’ confidence in the exam’s effectiveness was another milestone this past April, when the AICPA launched an updated version of the exam following a comprehensive, multi-year review of professional practice. The successful launch was the latest in a long line of enhancements and updates over the years to ensure the exam remains aligned with the profession.

A Path for the Future

This evolution includes firms, large and small, and CPAs from the public, private and non-profit sectors, strengthening our foundation for the future. Through various initiatives and endeavors, we remain in tune with and anticipate the needs of clients and consumers. From supporting efforts to enhance audit quality — the audit being the cornerstone of our profession — to specialization and capitalizing on marketplace trends to expand service offerings, we are laying the groundwork for success today and generations to come. And for the next generation, it all begins with the exam.

As we look back to back to 1917, we have confidence that our profession has been well-served over the last century by the exam partnership between the AICPA, state boards of accountancy, and the National Association of State Boards of Accountancy (NASBA). The century-long use of a uniform method to assess candidate qualifications has strengthened the value of the CPA credential. And those of us who have passed through the rigor of exam and on to licensure maintain a deep commitment to protecting the public interest. Because of this purpose, we remain one of the most respected professions worldwide. Together, through a shared vision and continued evolution of our profession, we are paving the way for the next generation of CPAs to join us.

Roberta Newhouse, CPA, partner, Newhouse & Neistadt LLC in Pendleton, OR. She serves as the Chair of the AICPA’s State Board Committee as well as a member of the Board of Examiners.

Adding machine courtesy of Shutterstock.

Summer Jobs: More Than Money in Your Pocket

Post author By FFC
Post date June 22, 2017

Summer Jobs: More Than Money in Your Pocket

Summer jobs aren’t just about earning a paycheck and learning how to manage the money you’ve earned. These jobs provide valuable work experience and help youth develop professional skills and discover their talents. It’s an opportunity to take responsibility, learn time management skills and how to get along with co-workers. Summer jobs also provide future employment references, mentorship and can even help a teen succeed in school per Stanford researcher, Jacob Leos Urbel.

Thinking back on my summer jobs, one of the most unique positions I held was at the House of Seven Gables in Salem, MA. I was hired as a tour guide at age 15 and underwent rigorous training before the tourist season began. There was a script to learn and facts that had to be memorized before I could be trusted to lead a tour. I also had to have dresses made, all the tour guides wore period costumes of a calico dress and hoop skirt. I would have fit right in on the set of a Jane Austen production. In fact, each tour was a performance of sorts. I loved opening the door to the secret staircase with a flourish. This experience helped me hone my public speaking skills and taught me how to build rapport with people.

I asked a few people around the office to share memories of their summer jobs and here’s a few examples from AICPA staff members who specialize in learning and development:

Melony Johnson—manager, development and engagement

A summer job that helped me to develop my professional skills was courtesy clerk at a neighborhood grocery store. I learned how to pursue opportunities for growth and know when to move on when my skills and talents are not being recognized. Ultimately, I learned:

How to really listen

The art of customer service

The importance of setting goals and putting in the effort to advance professionally

Michael Grant—director, learning design and development

After my freshman year of college, I took a job out of my “comfort zone”, and worked on the sales promotions team for ADT Security Systems. It was a commissioned based job where our small team rode around the city in a company van offering special promotional incentives (free equipment) to secure new customers. This opportunity made me increase my self-confidence and also exposed me to the following:

Strategic marketing principles and creatively “pitching” to potential clients

Value proposition

Presentation and communication skills

Negotiation techniques

Networking and relationship building

Clar Rosso—vice president, member learning and competency

After my sophomore year of college, I was a summer intern for the Los Angeles Dodgers in their community services and special events department. I learned that eating lunch in an empty baseball stadium is a pretty incredible experience. I learned about the importance of:

Stakeholder communications

Giving back to your community

Supporting nonprofits

Managing messages with the media

Determining when to in-source and when to outsource key business functions

What skills did you develop in your summer job? We’d love to hear from you. Share your comments below.

Jennifer Gardner, Manager–Communications and Social Strategy, Member Learning & Competency, Association of International Certified Professional Accountants

Scooping ice cream courtesy of Getty Images.

6 Money-Saving Tips You Can’t Afford to Miss

Post author By FFC
Post date June 21, 2017

6 Money-Saving Tips You Can’t Afford to Miss

Those fun, light-hearted GEICO commercials that ask if you are tired of paying too much for car insurance hone in on the idea of wasting your money –– paying too much for something or not getting enough.

As a CPA who is passionate about making my hard-earned money work for me, it’s important to take time to critically analyze what my cash is doing. Busy lives often lend themselves to costly complacency in one’s personal finances. Basically, we want bill paying done and our retirement planning intact with as minimal effort as possible.

At least once per year, I do a serious deep-cleaning scrub on my family’s finances. I look at what we’re paying and why, and I see where we need to do better. This “scrub” saves us thousands of dollars and I suggest each of you take a few hours each year to review your finances critically. Don’t let your money run itself; it needs you to keep it on track.

Here are six tips to make your money work for you (consider sharing these with your clients):

Carefully review your credit/debit card auto-drafts.

Did you join Consumer Reports to get insight on what car to buy and forget to cancel it after your purchase? Or sign up for other subscription services that you haven’t used in months? Review your statements for these $10-20 no-value bills. Though small, they add up quickly.

On the flip side, auto-draft anything you can to your credit card. You’ll consolidate bill paying, and get paid to pay your bills. Often, electricity, water, cable, etc., can be auto-drafted. One can easily earn hundreds of dollars each year (in points and rewards) by effectively using a credit card. But, don’t forget to pay off the balance each month! Interest on credit cards is extremely costly. I suggest setting up another auto-draft to pay your credit card bill directly from your bank account.

Bundle your insurance (home, automobiles, etc.), and scrutinize rate increases.

These bills can significantly fluctuate each year as your insurance carrier offers new incentives or changes its rates (sometimes arbitrarily). This year, I noticed our home and auto insurance went up by about $1,500. After calling my agent, I learned that there was an explanation for some of it (insurance regulation hiked up the price), but there was no excuse for the bulk of it. After asking my agent to price shop, I decreased my bill and increased my coverage. My agent wasn’t going to do this price shopping without my nagging, but a five-minute phone call saved me over a thousand dollars.

Review your investments.

Make sure you are deferring appropriately to your 401(k), taking advantage of company matches and profit sharing plans. Also, ensure you’re planning for retirement with other investment vehicles (IRAs, etc.). Review your portfolio, making sure it’s well-balanced. Consider contacting your 401(k) or brokerage adviser to confirm your investments (as a whole) keep your plans on track. Consider making serious adjustments the older you get; the closer you are to retirement, the less risk you may want to take.

Know the market rates for cell phone plans, cable, internet, etc., and don’t be afraid to negotiate.

Cell phone rates have actually gone down recently as more competition enters the market. If you bundle plans with family members, you may be able to save even more. Plus, many employers offer their employees discounts for certain carriers.

Cable/internet, for example, is a bill that I need to renegotiate each year. Otherwise, they go up significantly. Call your cable/internet company and ask about promotions, and let them know you’re not happy that your bill went up. Talk to someone in their customer retention group. They usually have more flexibility to keep your rates lower (or offer you freebies like premium channels) to keep you from switching to a competitor. If it doesn’t go well the first call (and you have time and patience), call back. A different representative may give you a better deal.

Review your debt financing and interest rates.

Prioritize what to pay off quickest based on which item has the highest interest rate. Explore where you may be able to decrease interest rates by re-financing or consolidating debt. Make an extra payment that goes directly to principal. You can save significant money by paying off your debt sooner.

Know what you’re worth (net equity).

Annually, prepare a financial statement. Add up your assets (cash, investments, property, etc.) and subtract your liabilities (loans, etc.) to yield your net worth. Are you too heavily in debt, or saving enough for retirement? These are important questions to know your true financial health.

I use Mint.com (a free application) to track our family’s progress, but a simple spreadsheet or other system works. The point is: don’t let your finances be a surprise to you.

The AICPA is committed to helping us achieve financial security. Visit feedthepig.org for additional tips and resources to help you budget, invest and reduce debt.

Susan C. Allen, CPA, CITP, CGMA, Senior Manager, Tax Practice and Ethics-Public Accounting, Association of Certified Professional Accountants

Savings courtesy of Shutterstock.

New Liquidity Disclosures for Not-for Profits: Are You Ready?

Post author By FFC
Post date June 19, 2017

New Liquidity Disclosures for Not-for Profits: Are You Ready?

Under current financial reporting standards, not-for-profits are not required to illuminate clearly restrictions that affect the availability of liquid resources in their financial statements. But this is all about to change with the Financial Accounting Standards Board’s (FASB) new financial reporting standard (Accounting Standards Update (ASU) 2016-14), effective for fiscal years beginning after December 15, 2017.

In this update, FASB clarifies that the nature of an asset isn’t the only quality that affects its availability. Specifically, liquid resources are quickly converted to cash and available to fund general expenditures within one year following the balance sheet date. Internal (board-designated) and external (donor-imposed) restrictions could mean certain sums of cash and cash equivalents may not be used for general expenditures. If a board designates an amount of cash to be set aside for a building renovation, for example, it cannot be used to buy office supplies.

What’s changing?

The new guidance requires enhanced financial statement disclosures regarding an organization’s liquidity and availability of resources. Both qualitative and quantitative information are required. The qualitative component describes the organization’s liquidity management plan, or how liquid assets are managed to meet cash needs for general expenditures within one year following the balance sheet date. Quantitative information regarding those assets and their availability to meet current-year needs may be presented either on the face of the statement of financial position or in the notes to the financial statements.

And why?

Potential donors, grantors, creditors and other not-for-profit constituents want to know that the organizations they are evaluating have sufficient resources to meet financial obligations as they come due. By making sure that restricted cash and cash equivalents are clearly presented, FASB’s new guidance increases transparency in the financial statements and promotes a more thorough and accurate understanding of the organization’s ability to fund operations.

How do we implement these changes?

While the new requirements make sense in theory, their practical implications can be confusing. This blog post addresses several questions we have encountered thus far in our conversations with AICPA Not-for-Profit Section members regarding the implementation of ASU No. 2016-14.

Question 1: My not-for-profit organization doesn’t currently have a “liquidity management plan.” Do we have to create one to comply with the new standards?

Answer:

Having a liquidity management plan is a best practice, but not a requirement per the standards. FASB says that qualitative disclosures should describe how a not-for-profit entity “manages its liquid resources available to meet cash needs for general expenditures within one year of the date of the statement of financial position” (“Pending Content” in ASC 958-210-50-1A (a)). This leaves room for interpretation, although sample liquidity note disclosures are provided in ASC 958-210-55-5 through 55-8 and 958-205-55-21.

An organization’s liquidity management plan or process will depend on its sophistication and size, the type and complexity of its activities, and its specific liquidity risks, among other factors.

Question 2: Does my not-for-profit need to set up a liquidity reserve?

Answer:

Liquidity reserves are not required under GAAP. The decision to set up a liquidity reserve is made at the discretion of management and the board. However, it is important to note that if a liquidity reserve is approved by the board, specific disclosure is required under the new standards.

Question 3: An example provided in the new standard states, “The $1,300 liquidity reserve, created in a prior year when the governing board designated net assets without donor restrictions, was included as a reconciling item in Not-for-Profit Entity A’s note on liquidity risk and the availability of resources because the intention of the designation was to support unanticipated liquidity needs and not general expenditures.” Wouldn’t liquidity reserves be considered assets available for use within one year, given the nature of the reserve?

Answer:

We understand the confusion here, but the answer to the question is that the classification of a liquidity reserve in the context of the newly required liquidity disclosures would depend on the nature of the assets comprising the reserve and the ability of management to access them.

Question 4: Can a not-for-profit entity early-adopt just the liquidity disclosures?

Answer:

Yes, this is an option. Liquidity disclosures are an addition to current requirements, rather than a change in existing disclosure requirements. Therefore, the new liquidity disclosures can be added at any point.

Question 5: In the year of adoption, must a not-for-profit present liquidity disclosures for the prior year as well?

Answer:

The entity may choose not to present the prior-year liquidity disclosures in the year of adoption. In all subsequent years, prior-year disclosures should be presented.

We anticipate many more questions in the months to come, as not-for-profit organizations begin preparing to implement the new financial reporting standard. The ensuing changes are significant, so it is critical to begin preparing now for implementation. If you are in that process or have questions we haven’t covered in this article, you may be interested in the upcoming webcast being hosted by the AICPA’s Not-for-Profit Section on June 28^th: Implementing the Financial Statement Presentation Standard – Mastering the Most Difficult Challenges.

Cathy J. Clarke, CPA, Chief Assurance Officer – National Audit and Assurance Quality Group, CliftonLarsonAllen LLP. Cathy’s primary responsibilities include overseeing the audit quality with the firm, being a technical resource for her firm’s audit and assurance practice and quality review of assurance and accounting engagements. She is the immediate past chair of the AICPA’s Not-for-Profit Industry Expert Panel. Throughout her career, Cathy has served a variety of clients in numerous industries, with an emphasis on not-for-profits and healthcare entities.

Tim McCutcheon, CPA, Partner – National Not-for-Profit Practice, Eide Bailly LLP. As a CPA for over thirty-five years, Tim has served not-for-profits as CFO, independent auditor, tax advisor, business consultant, volunteer and board member. His experiences from both inside and outside a wide variety of organizations gives him a practical and balanced view of industry issues and the concerns of the industry’s varied stakeholders, constituents and other interested parties.

Not-for-profits courtesy of Shutterstock.

New Liquidity Disclosures for Nonprofits: Are You Ready?

Post author By FFC
Post date June 19, 2017

New Liquidity Disclosures for Nonprofits: Are You Ready?

What’s changing?

And why?

How do we implement these changes?

Question 1: My not-for-profit organization doesn’t currently have a “liquidity management plan.” Do we have to create one to comply with the new standards?

Answer:

An organization’s liquidity management plan or process will depend on its sophistication and size, the type and complexity of its activities, and its specific liquidity risks, among other factors.

Question 2: Does my not-for-profit need to set up a liquidity reserve?

Answer:

Question 4: Can a not-for-profit entity early-adopt just the liquidity disclosures?

Answer:

Question 5: In the year of adoption, must a not-for-profit present liquidity disclosures for the prior year as well?

Answer:

The entity may choose not to present the prior-year liquidity disclosures in the year of adoption. In all subsequent years, prior-year disclosures should be presented.

Not-for-profits courtesy of Shutterstock.

How Robots Can Help You Thrive

Post author By FFC
Post date June 16, 2017

How Robots Can Help You Thrive

Technology is creating opportunities for the accounting profession, but the human factor is still key– that was the message at IdeaAcct, a session at the AICPA Engage Conference highlighting thought leadership and innovation in the profession.

Practical & Immediate Opportunities for CPAs in Artificial Intelligence – Dan Giffiths, CPA, CGMA

Because accounting is highly structured, it lends itself nicely to machine learning. Therefore, many people think that accounting and tax services are likely to be automated. Software already exists that can populate tax-ready financial documents just from an individual’s bank login information, and such services are available for as little as $100 a month. However, clients are willing to pay far more for advisory services drawn from that information. The value, Griffiths says, lies in the relationships and the advice that CPAs can provide. To take advantage of the opportunities, CPAs need to become friends with their tech colleagues. Good friends.

Robots Can’t Own Their Personal Brand – Byron K Patrick, CPA, CITP, CGMA, CCA MCSE

Many iconic, fictional robots have dynamic personalities. The Jetsons’ Rosie. Knight Rider’s K.I.T.T. Short Circuit’s Johnny 5. Star Wars’ R2-D2 and C-3PO. Fortunately (or unfortunately depending on your perspective), robots today aren’t so dynamic. Humans have a warmth and personality that robots lack. As long as that remains true, the accounting profession is going to be just fine. How can CPAs best leverage this advantage?

Be interesting. Have a story. Have a personal brand.

Be interested. Ask questions.

Be sincere. Mean what you say.

Fixing Employee Engagement Is Easy – Rebecca Brown, CPA

There are three types of employees: engaged, disengaged, and actively disengaged. Gallup estimates that only about one-third of employees are engaged. For millennials, that estimate is even lower. On the other end of the spectrum are the 16 to 17 percent of U.S. employees who are actively disengaged. Not only are these workers miserable, they seek to make everyone around them miserable, too. The remaining employees are disengaged–just sleepwalking through the day. Thus, at any organization, approximately 67 percent of employees are either about to walk out the door or – worse – stay and create such toxic environments that good employees leave.

With these facts in mind, how do business leaders keep people engaged and recharged? Brown recommends mapping out individuals’ strengths to figure out where people do their best work, and then let them excel in those areas. Two great programs for this are StrengthsFinder and the VIA Character survey.

Why We All Benefit from Whistle-Blowers – Kelly Pope, PhD, CPA, CGMA

Forty-two percent of fraud is discovered by whistle-blowers. Unfortunately, such individuals are often attacked for coming forward. They are singled out and their motives are questioned. Nevertheless, the public and the profession frequently benefit from whistle-blowers. For example, Kathe Swanson, a city clerk in Dixon, Illinois, helped uncover $53 million in theft from the city – or about $3,300 for every citizen in the small town. Thus, CPAs should remember their duty to protect the public interest and report suspicious information that could indicate fraud or theft.

Agility, Adaptability, Action: Accounting at the Speed of Change – Kimberly Ellison Taylor, CPA, CGMA

The accounting profession is facing unprecedented change, and CPAs need to be ready. Is the path they are on the path that will make them better tomorrow than they are today? CPAs have a responsibility to leave the profession better for the next generation than they found it.

Technology presents opportunities for CPAs to do just that. Whether it’s a firm looking to boost efficiency and accuracy with new software and hardware or a business trying to choose technologies that will increase margins and boost productivity, CPAs are on the forefront of hard analysis and decision-making. The result? Clients and customers who are better served and more engaged.

To hear more from these speakers, check out the full IdeaAcct session on Facebook live – Part 1 and Part 2.

Lindsay N. Patterson, CAE, Senior Manager-Communications and Public Relations, Association of International Certified Professional Accountants

3 Trust Ideas for Reducing Estate Taxes

Post author By FFC
Post date June 15, 2017

3 Trust Ideas for Reducing Estate Taxes

Bob Keebler spoke at the AICPA ENGAGE conference on “The Best Estate Planning Ideas Today.” Included in his detailed presentation were numerous points of interest beyond trusts. The following is a small selection from his 50-minute talk.

Because of the high limit on unified credit, many clients believe that estate planning isn’t for them. The truth, however, is much more complicated. Depending on the client’s state of residence, their positions in real estate or partnerships that might survive them and many other considerations, estate loss can be considerable. Your clients shouldn’t have to pay more than necessary in taxes on their estate, and as their trusted adviser, it’s your job to guarantee that the family’s wishes for their wealth are honored to the fullest extent possible.

Trusts are an effective way to protect assets from tax, creditors and other forces seeking to take a piece of what your clients have built over their lifetimes. Here are three worth considering carefully:

Charitable Remainder Trust: This kind of trust provides two big benefits to the client. First, it creates a place for them to donate assets (that might be burdened with high capital gains), giving them an immediate charitable deduction. Second, the trust generates regular income for the client, while remaining tax-free. Upon death, the remainder of the trust goes to the charitable organization, also tax-free. For charity-minded clients, this is the best of both worlds, allowing them to benefit from their assets, while also giving back.

Domestic Asset Protection Trust (DAPT): A DAPT is an irrevocable trust that is set up under the laws of the states, allowing a person to be a discretionary beneficiary of his/her own trust without creditors being able to access it. This means the trust is safe from a wide spectrum of threats, including divorce, bankruptcy and taxes. However, not all jurisdictions are equal in this regard. It’s important to choose a state with a short statute of limitations, and one where no statutory exception creditors have access.

Dynasty Trust: In all the tax reform talk about a potential repeal of the estate tax, it is sometimes lost that the GST, or Generation Skipping Tax, and Gift Tax will likely still exist. Clients wishing to leave a legacy to future generations of their family could suffer significant burdens from both taxes as they work to pass on their wealth. A dynasty trust is set up so that the trust can make discretionary distributions that avoid the GST. Numerous benefits include protection from estate tax, creditors, divorce, direct decedents and spendthrifts. Additionally, it allows for a consolidation of client capital.

A good CPA financial planner looks at all the available avenues of planning for their clients, and makes their best recommendation based on the client’s individual needs. Once you have thoroughly discussed the pros and cons of each with your client, and they’ve made a final decision, you should involve your attorney partner to have appropriate documents drawn up.

For more information on trust and estate planning, the AICPA Personal Financial Planning Division has created a comprehensive, 1,000+ page resource, The CPA’s Guide to Financial and Estate Planning.

Robert S. Keebler, CPA/PFS, MST, AEP, is a partner with Keebler & Associates, LLP and the current chairman of the AICPA Advanced Estate Planning Conference. In 2007, he was inducted into the Estate Planning Hall of Fame of National Association of Estate Planners & Councils. He has also been named by CPA Magazine as one of the Top 100 Most Influential Practitioners in the United States and one of the Top 40 Tax Advisors to Know During a Recession.

5 Technologies Transforming CPA Practices

Post author By FFC
Post date June 14, 2017

5 Technologies Transforming CPA Practices

One message keeps coming up at the AICPA ENGAGE Conference: technology is changing the profession, and CPAs have countless opportunities to incorporate it into their practice. Across conference sessions, conversations keep coming back to the ways practitioners can benefit from the deploying to the cloud, embracing social media, providing cybersecurity-related services, using mobile devices and understanding big data. Here’s how:

1) The Cloud

In a recent Facebook Live session, conference presenter Jim Bourke discussed the many ways the cloud can improve a CPA’s practice. It allows staff from around the country to work together to serve clients. It houses data without the burden of purchasing dedicated servers and the infrastructure and personnel to maintain them. It gives CPAs access to client information anytime and anywhere. And it keeps that information secure. “Data is more secure on the cloud than it is sitting in your own office,” Bourke said.

2) Social Media

By embracing social media, CPAs can build client relationships, market their services, and position themselves as thought leaders. CPAs can also use social media to stay current on news and events, and to research people—from clients to new hires—and companies, both clients and vendors. The AICPA has developed several tools to help practitioners develop and evolve their social media strategy.

3) Cybersecurity

With new technologies come new threats, including those related to cybersecurity. However, even this provides CPAs with an opportunity to serve their clients and the public. In April, the AICPA introduced of its new cybersecurity risk management reporting framework, which allows organization to communicate about – and CPAs to report on – cybersecurity risk management efforts.

4) Mobile

While mobile devices certainly make CPAs more accessible to their clients, the opportunities extend far beyond just emails and text messages. New apps allow firms to do business anywhere. For example, the Microsoft Flow app automates processes and tasks, while the Power BI app allows CPAs to access business data on their mobile device. Other apps scan and store documents, auto-populate data, and offer access points for encrypted information.

5) Big Data

Data analytics enables CPAs to test 100 percent of transactions, and to more easily detect and analyze trends, anomalies and risks. This can improve the effectiveness of an audit and bring additional insights to stakeholders. Robust data analytics also means that CPA firms can apply similar analysis routines to different data sets without having to redevelop the analysis every time.

For more information on technology trends transforming the profession, check out the AICPA’s Facebook Live sessions from ENGAGE.

Lindsay N. Patterson, CAE, Senior Manager-Communications and Public Relations, Association of International Certified Professional Accountants

Technology courtesy of Shutterstock.

3 Tax Technologies You Shouldn’t Ignore

Post author By FFC
Post date June 13, 2017

3 Tax Technologies You Shouldn’t Ignore

OMG CLOUD. Cloud, cloud, cloud. You’ve heard it. Repeatedly. By now you probably even know what it means. But running a successful tax practice is about more than acknowledging the technology du jour. It’s about knowing which technologies make the most sense for you, and using them to their fullest potential. But no matter your firm’s size, market or specialty, here are three tax technologies you shouldn’t ignore.

Cloud-Based Servers/Software as a Service

An IT department is a luxury many small- and medium-sized firms can’t afford. Even in larger firms, the demands of day-to-day management of client systems can overtax an IT department to the point where managing servers is a time-draining hassle, not to mention expense.

Cloud-based servers save time and money by removing the burden of purchasing and maintaining dedicated servers, the infrastructure to properly house and cool them and the personnel to keep them running right. Cloud servers can be configured to meet any level of need, and you only pay for what you use in terms of dedicated space. Even better, your cloud provider will guarantee regular backups and, in many cases, 100 percent uptime. Having your information in a secure, off-site location also means staff can access files from anywhere, and security is maintained and kept current by your provider. Make sure to investigate your service provider thoroughly and have them sign a security agreement.

Software as a Service, or SaaS, is another aspect of cloud computing. It replaces dedicated apps on your systems with cloud-based solutions, presenting them by subscription, often through a web browser. The advantages of using a SaaS solution include spreading out software expenses over the course of a year and regular, automatic and secure updates that address bugs and improve functionality without needing to download updates manually.

Client Portals

Providing information digitally, while convenient, has some limitations. For example, complying with privacy laws means many documents can’t be emailed. That’s one place where a client portal comes into play.

Using an up-to-date web browser, a client can access a dedicated, secure area of your servers to exchange files with your firm. Since the files are encrypted, privacy concerns are greatly diminished. On top of this, limits on file sizes for email don’t apply to client portals, which can accept much larger files. So, you can share documents of any kind or size with your clients, and vice-versa. Security protocols range from simple password to password-challenge to two-factor authentication (typically a message sent to the user’s mobile phone with a code to input after logging in). Client portals can be cloud-hosted or hosted locally on firm-owned servers.

Scan-and-Input Software

Even if your practice is taking advantage of the newest technology, it’s far from a sure bet that your clients are, as well. You probably still have that client who shows up with a shoe box filled with receipts or stacks of paper forms.

In the past, this meant hours of dedicated administrative time hand-keying data into the system. Not only is it slow, it’s also prone to error—and firms that understand this spend even more time proofing their data entry.

Scan-and-input software comes to the rescue. When you can’t have an all-digital environment, scan-and-input software is the next best thing. Using a desktop scanner, the software can read documents and identify the information you need, transferring it into your accounting or tax software (or into a more useable file to then export into your accounting software). It’s fast, highly accurate and frees up your administrative staff for more productive pursuits. While scan-and-input software is a must for practices transitioning their technology, it’s also good to have in firms that have transitioned fully; the time savings and improved accuracy will help ensure nothing is missed.

We’ve reached a point in time where technology is no longer a curiosity, nor is it an option. By embracing these and other emerging technologies, you’ll position your practice for future success. To keep up with the latest trends in technology, get the most recent tax-related news and find opportunities to meet and learn from your peers, consider joining the AICPA Tax Section. Even if you aren’t a Tax Section member, many of our tax practice management tools, videos and checklists are available to you.

Adam Junkroski, Lead Manager, Communications: Tax, PFP, S&C–Public Accounting, Association of International Certified Professional Accountants

Cloud technology courtesy of Shutterstock

The One Vulnerability Cyber Thieves Are Desperate to Exploit

Post author By FFC
Post date June 12, 2017

The One Vulnerability Cyber Thieves Are Desperate to Exploit

Cybersecurity attacks are becoming more pervasive and seemingly effortless to pull off. Cybercriminals who can execute a successful attack are seizing credit card numbers, bank account information and even Social Security numbers. A 2016 study conducted by the Ponemon Institute found that the average cost of a data breach is $4 million. You can strengthen your organization’s cybersecurity risk management plan by addressing this one vulnerability: weak passwords.

The capture or reuse of passwords, or “static credentials” as they are often referred to in the IT industry, is standard practice for organized crime groups and state-affiliated attackers alike, according to the Verizon 2016 Data Breach Investigations Report, whose list of contributors represents a “who’s who” of cybersecurity expertise worldwide, from both the private and public sectors. Likewise, passwords are used against all kinds of targets, from the largest organizations to individuals.

A common misperception is that cyber attackers have become so sophisticated that something as simple as a password is no longer effective. The tendency is to think that if federal agencies and multi-national corporations can be breached, there’s nothing individuals can do to protect themselves. This could not be further from the truth. Individuals have the most power in preventing attacks that exploit passwords, which is why a policy on passwords should be a key component of your firm or organization’s cybersecurity risk management program.

One of the ways cyber attackers breach systems is by using software that repeatedly tries combinations of letters and characters until it finds your password. Weak passwords are low hanging fruit for a password cracker. What’s a weak password? Generally, if your password can be readily found in a dictionary—or on the Internet—it’s weak. If your password is an easy-to-remember name such as that of a child, spouse, pet, car, person, or place—it’s weak.

Adding numbers to your pet’s name might help get your password approved by system validation requirements (e.g., “Your password must contain at least one uppercase letter, one lowercase letter, and one number.”). Unfortunately, with the strength of today’s password crackers, numbers alone, particularly those in sequence like “123,” provide little added protection.

Essentially, you want to fight password cracking technology with password protection technology. Random password generators use statistical methods to create passwords that are very hard to crack. “Wait,” you say, “I already have trouble remembering how many numbers I’ve added to my dog’s name.” Some password generators offer pronounceable passwords that, while not real words, are easier to memorize. Another option is to use an encrypted password manager on your smart phone, tablet, or computer. Because the password manager is encrypted, it cannot be accessed even if you lose your phone.

With cybersecurity threats on the rise, there is demonstrable need for both large and small organizations to have comprehensive cybersecurity risk management programs in place, and to assess and report on them using standardized tools such as the recently-released AICPA Cybersecurity Risk Management Reporting Framework.

The AICPA’s Private Companies Practice Section (PCPS) recently released the Building a Cybersecurity Practice Toolkit. It discusses services CPAs can provide to help clients apply the Cybersecurity Risk Management Reporting Framework, as well as other available IT frameworks, to their systems and implement within their firm’s systems.

Want to learn more about opportunities for CPAs in the cybersecurity space? Join us live from AICPA ENGAGE on Facebook Live Tuesday, June 13, at 2pm ET. Chris Halterman, Executive Director, Advisory Services at Ernst & Young will share his insights.

For more information on cybersecurity, visit the AICPA Cybersecurity Resource Center.

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

Password protection courtesy of Shutterstock.