Blog Timeline – Page 67

News

What it Means to Be There for Your Clients as They Age

Post author By FFC
Post date May 25, 2016

What it Means to Be There for Your Clients as They Age

Most people don’t think they need to plan for getting older. That is, until they are forced to make unexpected, and potentially no-win, decisions, or, perhaps they fall victim to a scam that targets elderly people. In the best cases, the reality of aging means the person merely finds they can’t do something they used to do with ease. Unfortunately, in many cases, the reality doesn’t hit them until after they’ve experienced a problem.

Getting older can be a challenge to your clients’ personal and financial security if their physical and mental capacity start to wane. As their trusted adviser, you can help your clients safely ease into the later decades of their lives by organizing, simplifying and monitoring their finances, and building important relationships to help them address senior issues. As you gain more experience in this area of practice, you may find yourself identifying a range of later life planning services that can offer significant practice development opportunities.

Get your clients organized. This is the single most important step to safeguard your clients from running out of money and help them keep control of their finances for as long as possible. Most of the time, investment returns are based on asset allocations. Without organized finances, no client can have a comprehensive, monitored investment plan.

You can help your clients create a master list of their assets and where they are located. I’ve found that many seniors don’t know what assets they have, let alone where they are. For example, they often have stock certificates and other important documents in their safe deposit box, which is a dangerous and inefficient means of holding assets because they can easily be overlooked, forgotten or, worse yet, stolen.

As accountants, we need to guide, encourage and push clients proactively to consolidate and simplify where they have their assets. I have one very simple rule: is there a legal or tax reason the client needs a particular account? If not, that account should be consolidated into another account. While this planning might sound simplistic, it is incredibly powerful and, too often, overlooked.

Build monitor relationships. A monitor relationship is similar to an advocate who can “monitor” a situation and recommend solutions. For aging clients, creating this relationship, and in many cases, serving as one of the monitors is a way for you and others to identify your clients’ problems independently. This creates a check and balance on your client, their planning team, and the people giving them care. For example, if the client has duplicate copies of each monthly statement sent to you, and retains you to keep books and records, you will be able to identify a range of issues and alert fiduciaries or family when appropriate. Although there are online tools that can help do this, they all lack a trained professional’s touch.

As clients age, they may begin to have trouble handling some of their finances. Having as much of their finances on autopilot as possible enables them to spend time reviewing, rather than paying their bills., For example, recommending seniors use a personal finance management tool and sign up for auto pay can be very effective. Moreover, don’t forget about life inventory and legal documents. Clients should make a list of the location of all of their important personal items and documents, and identify any preferences they have as to final disposition.

Competency. Observant practitioners can see the signs of cognitive impairment by noting changes in client conduct at meetings, nuances in how they use words or if they make mistakes in communication. Reports from physicians and care managers can be similarly useful. Have the client’s attorney provide confirmation, in writing, that the client has sufficient capacity to sign your engagement letter, investment policy statement and other important papers. If the attorney does not think the client has the capacity, then have the attorney confirm to you that the agent under the client’s power of attorney has the authority to retain you or perform other actions.

Helping your clients plan for their later years, earlier in life, is critical to their financial and emotional well-being. Be proactive and help them plan, now.

Want to learn more about this topic? Martin Shenkman presented a webcast in late 2015, “Aging and Incapacity: CPAs Role in Advising Aging Clients” Click here to access the webcast, and visit the PFP Division’s Retirement Planning Center for more information on a variety of retirement topics. The resources are free to PFP/PFS members, and excerpts for many resources are provided to nonmembers, along with instructions on how to access more information. Throughout 2016, look for additional webcasts, podcasts, and resources related to elder planning and life transitions after retirement.

Martin Shenkman, CPA, MBA, PFS, AEP, JD, Shenkman Law. Martin is the founder of Shenkman Law, where he focuses on estate and tax planning. He is the author of more than 42 books and 1,000 articles, and is a quoted expert on tax matters., His work appears in well-known publications, including The Wall Street Journal and The New York Times. Martin is also known for his active charitable work, which has been profiled in Forbes. See his blog post at www.shenkmanlaw.com.

Elderly couple review finances courtesy of Shutterstock.

Showcase Your Expertise: How Digital Badges Will Shape Your Profile

Post author By FFC
Post date May 24, 2016

Showcase Your Expertise: How Digital Badges Will Shape Your Profile

I make meatballs so delicious they’ll bring tears to your eyes, but only people who come to my house for dinner know that about me. What if I want others to know? I can post photos to social media, but that really doesn’t demonstrate the depth of my expertise.

As a CPA, you face a similar dilemma when it comes to assessing and showcasing your expertise. Of course, your need to do so is far more important and the stakes significantly higher than my need to publicize my culinary skills.

As you progress in your career, employers and clients alike expect you to continuously build your competence and stay ahead of the learning curve on regulations, standards and other changes. But how do you prove it?

AICPA digital badges can help. These graphical representations of significant achievements are linked to online descriptions that are fast becoming the standard for recognizing and publicizing your professional development.

Our first digital badges will be awarded this spring to those who earn one of the AICPA’s single audit, employee benefit plans audit or not-for-profit certificates or complete the CGMA Financial Performance Management Program.

Here are four things you should know about digital badges:

Digital badges are much more visible than paper certificates you’ve traditionally received.

Paper certificates confine your achievements to a wall or desk drawer. Digital badges are free to roam, providing unlimited opportunity for you to publicize your expertise to employers, colleagues, hiring managers and clients.

You can post and share digital badges through email signatures, social media, your firm’s website, proposals and more. Facebook, Twitter and LinkedIn have fully embraced digital badges, teaming with badge providers to make it easy to add digital badges to your social networks and profile.

Digital badges are verifiable.

Embedded in each digital badge is a URL that takes users to a website which validates and explains your certificate, enabling anyone to quickly and easily verify your competence, as well as the credibility of the credentialing organization.

Digital badges are portable and move with you.

Digital badges allow you to take control of showcasing your skills and expertise in ways that suit your needs.

Badges you earn through AICPA can live with those from other organizations in one place and go anywhere you go.

You can curate your badges and display them any way you like. Choose which badges to keep private and which to show, customizing your display as you would a resume for different audiences and purposes.

Your digital “backpack” of badges may likely become the centerpiece of your professional profile over the course of your career.

Employers value industry-validated credentials.

Employers increasingly seek workers with specific industry-recognized skills, experience and credentials.

Digital badges enable you to build a visible portfolio of respected, validated certificates and credentials that show employers and clients – current and future – that you possess the latest industry knowledge, specialties and skills and share a commitment to quality work.

You’ve worked hard to develop your knowledge, expertise and competencies. AICPA digital badges will help you make the most of what you’ve learned and earned, showcasing your knowledge and skills more easily and broadly with your network and beyond.

As for me, if you come to dinner, I’ll make you some homemade pasta and meatballs.

Learn more about the AICPA’s new single audit and employee benefit plans audit certificate programs, offering the AICPA’s first digital badges.

Clar Rosso, Vice President, Member Learning and Competency, American Institute of CPAs.

Source: AICPA

News

States Moving to Conform Tax Due Dates with Federal Law

Post author By FFC
Post date May 23, 2016

States Moving to Conform Tax Due Dates with Federal Law

As you recover from yet another grueling tax season, the optimist (and realist sometimes) in me says next year will be better with fewer practitioner frustrations. After many years of AICPA tax policy and advocacy efforts, Congress enacted several AICPA-supported federal due date changes and a de minimis safe harbor of $100 of income/$25 of withholdings for corrected Form 1099s that take effect for 2016 tax returns (2017 filing season).

New Federal Due Dates

As described in detail in the AICPA summary chart, these federal due date changes should provide a more logical workflow next year. Starting with 2016 returns, business entity investors’ Schedules K-1 are due before the investors’ returns are due, and foreign account information (FBAR) is due (and can be extended) when the individual returns are due. Here’s a brief recap of the new federal tax return deadlines:

Partnership and S corporation information returns are due March 15, providing investor Schedule K-1 information to their partners and shareholders (including corporations) before the investors’ returns are due.

Tax returns for calendar-year corporations, individuals, trusts and estates, and FBAR are due on April 15.

The extended due date for partnerships continues to be September 15, along with corporations (until 2026). The extended due date for trusts and estates is September 30.

The extended due date for individuals and FBARs (and starting 2026, for extended corporations) is October 15.

State Tax Return Due Dates

As we get ready to implement the new federal due dates in the upcoming 2017 filing season (for 2016 tax returns), many states are considering legislation, regulations or administrative/guidance changes to conform state tax return due dates to the new federal due dates.

States should consider making sure the state corporate tax return is not due before the new federal corporate due date of April 15. Otherwise, CPAs may need to prepare state tax returns based on incomplete federal information. Also, states may want to consider aligning the partnership due dates to the new federal due date of March 15.

State Legislative Update

So far, due dates conformity legislation has been enacted in the following states:

As of May 19, Arizona and California were considering proposals to alter their due dates.

Several states that might want to consider changes to the state corporate tax return due date include the District of Columbia, Illinois, Massachusetts, New Hampshire, Ohio and Wisconsin. Some states, such as Alabama, may require only a regulatory rule or guidance change from the state departments of revenue to change their due dates.

Lastly, as taxpayers and practitioners plan for the 2017 filing season, they may want to update their work processes and workflow align with the new due dates. The AICPA has numerous resources to help you and your clients prepare, including:

Chart on federal due dates

Chart tracking states’ conformity with federal corporate due dates

Sample client letter

Archived webcast answering commonly asked questions

Presentation and Journal of Accountancy article (advocacy background)

Wishing you much success and a smooth tax season next year.

Eileen R. Sherr, CPA, CGMA, M.T., Senior Technical Manager, Tax Policy & Advocacy, American Institute of CPAs.

Use a Flowchart to Illustrate Client Wealth Transfer Goals

Post author By FFC
Post date May 20, 2016

Use a Flowchart to Illustrate Client Wealth Transfer Goals

You consider yourself to be proactive. By age X, you have a well-thought-out estate plan. Your will states that 80% of your wealth will be distributed to your two children, while 20% will be donated to a charity close to your heart. All of this is set in stone, right?

Once estate documents are drafted, some may feel confident that their wishes and intent will always be carried out; yet, this is typically not always the case. While estate documents are static, a client’s life is dynamic and ever changing. CPA financial planners are uniquely positioned to ensure a client’s wealth transfer goals are continually being met.

Sometimes, these changes may be dramatic enough to cause the current estate plan to produce outcomes that are completely different from their original intent. This can occur in many situations, for example, if a couple divorces, changes their residency or sells a family business. The CPA who can proactively spot when this shift occurs, and present it to their client, will prove themselves to be an integral part of the estate planning process.

One way to monitor a client’s estate plan is to prepare a flowchart in conjunction with a family balance sheet (see Figure 1). The purpose of this chart is to provide an illustration of who is to receive what, when they are to receive it and how. It can also quantify the movement of wealth when a spouse dies, as well as how much wealth is directed into trusts, passed outright to beneficiaries and given to charity.

Figure 1

A flowchart can have a powerful visual impact as clients generally draft their documents verbally. When they actually see numerical values, they are sometimes quite surprised, which leads to a dialogue about whether their wealth transfer wishes are currently being met. One word of caution, clients may be alarmed to see how much is earmarked to satisfy federal and state tax obligations.

With a flowchart, it will immediately become obvious whether their original intentions are still being honored or if a change in circumstances distorted their plan. Review and discuss any significant changes that may have occurred including births, deaths and estrangements with family members. Family dynamics can certainly be complicated, especially in blended family situations with children from different marriages. As a result, family circumstances changing over time can render estate documents ineffective when carrying out a client’s wishes and goals.

Clients may also see dramatic changes in personal wealth levels since they initially created their estate plan. For example, a corporate executive may have a concentrated single stock position that results in a volatile net worth tied into the company stock price. The family estate planning goals may be accomplished when that stock is at a specific price, but what happens if there is a significant increase or decrease? If the company stock representing the majority of a family’s net worth loses a lot of value, which bequests bear the depreciation in asset values? On the opposite side, which bequests bear the appreciation if there is a meaningful increase in value?

To further complicate things, the amount excluded from estate tax is not set in stone, but rather, subject to change in any given year. This fact, alone, could have a huge impact on how your client’s current estate plan will play out in the real world. Clients generally do not specify the exact dollar amounts to transfer to trusts; otherwise, every time the applicable exclusion amount changes, the documents would also need to be changed.

You can add value to your relationships by reminding clients that planning is dynamic, and as situations change, their current documents may need to be amended to meet their goals. It may not always be obvious that certain life changes can alter the outcome of their current plan. Continual monitoring is crucial to ensure that over time, as inevitable changes occur, goals and wishes are still being met.

More information on estate planning can be found on the PFP Section website. Members of the PFP Section can also listen to a webcast which offers new ideas to address with your clients when it comes to estate and financial planning (conducted by Lisa Featherngill and Stephen Bigge). Section members also have access to other estate planning webcasts in the PFP Learning Library and the four volume set, The CPA’s Guide to Financial and Estate Planning.

Robert A. Westley, CPA/PFS, Northern Trust. Robert is a CPA financial planner with Northern Trust in New York City. He specializes in developing, implementing, and monitoring holistic financial plans and wealth management solutions for ultra-high net worth families. Robert serves on the AICPA PFS Credential Committee.

Asian and Pacific Islanders Have a High Degree of Cultural Diversity but Need Greater Visibility

Post author By FFC
Post date May 19, 2016

Asian and Pacific Islanders Have a High Degree of Cultural Diversity but Need Greater Visibility

May is Asian American and Pacific Islander Heritage Month, a celebration established in 1992 to recognize the culture, traditions and history of Americans of Asian or Pacific Islander ancestry as well as their achievements and contributions.

Did you know?

The term “Asian Pacific Islands” includes more than 50 countries and ethnic groups

According to the U.S. Census, Asian and Pacific Islanders are the fastest growing race in the nation

About 5.4 percent of the U.S. population is of Asian or Pacific Islander descent

As of 2007, there were 1.5 million Asian American-owned businesses in the United States—up 40 percent from 2002 (U.S. Census Bureau’s Survey of Business Owners – Asian-Owned Firms: 2007, released May 2011)

Creating Environments Where Asian and Pacific Islanders Can Thrive

Within the CPA profession, there are more Asian and Pacific Islanders represented than any other minority group, including Hispanics and African Americans. Also, the numbers overall are increasing. However, the increase is small, and more can to be done to recruit and retain Asian and Pacific Islanders as well as other minority groups. In our firms, we can help promote Asian and Pacific Islanders by:

Being aware of the great diversity that exists within this group

Acknowledging Asian and Pacific Islander employees, offering feedback, asking their opinions and encouraging them to speak up.

Presenting them with opportunities to develop leadership skills

Darryl Nitta is a CPA of Asian Pacific Islander descent working for Accuity LLP in Honolulu, Hawaii, as principal in charge of C&Y CPAs. Observing his father succeed as a CPA had a direct influence on his decision to go into accounting.

“My dad inspired me to become a CPA,” says Nitta. “He is a CPA and has been able to live very comfortably while supporting three children attending private school and college. He always had time to enjoy fishing, golfing, coaching baseball and spending quality time with our family. I think I subconsciously made the connection after college that his work-life balance happiness was attributable to his job as a CPA.”

Nitta says accounting has indeed turned out to be a great career—and in fact, the profession has opened many unexpected doors to him already.

“Being a CPA allows me to become involved with the CPA profession at both the state and national level—something I didn’t even consider when I first became a CPA,” he says.

So far, these leadership opportunities have included:

Participating in the 2010 AICPA Leadership Academy in North Carolina

Serving as a board member and officer of the Hawaii Society of Certified Public Accountants (2011–present)

Serving as a member of the Hawaii Tax Review Commission, appointed by the governor (2012–2014)

Serving as an AICPA Council member (2013–2015)

Regarding his involvement in Council, he says, “I truly enjoyed being a part of a team that is helping to shape the future of our CPA profession.”

Asian and Pacific Islanders Have Leadership Potential, but Need Support

For other Asian and Pacific Islanders, though, finding leadership opportunities has proven challenging. Ascend recently found in a study that among five of the largest tech companies, Asian and Asian Americans represent 27 percent of professionals, but only half that among executives. This disparity could be a result of a growing concept referred to as the bamboo ceiling, which is a combination of individual, cultural, and organizational factors that impede the career progress of Asians or Asian Americans.

It isn’t because employers perceive Asians or Asian Americans as lacking—in fact, it is because Asian and Pacific Islanders are often stereotyped as high achievers, so others assume they are doing well and don’t need mentoring or help. It’s true that many in this group are high academic achievers. For example, 21 percent of Asians in the United States, age 25 and older, have an advanced degree (e.g., Master’s, Ph.D., M.D. or J.D.). In comparison, just 10 percent of all Americans in that age group have an advanced degree.

However, individual statistics often don’t tell the whole story. For instance, people from certain Southeast Asian nations have dealt with recent historical or political challenges and are struggling. Consider the fact that 40 percent of Hmong, 38 percent of Laotian and 35 percent of Cambodian students do not complete high school.

Once in the workplace, Asian and Pacific Islanders also report that they feel set apart. Thirty to 31 percent of Asian and Pacific Islanders surveyed reported incidents of employment discrimination, the largest of any group, according to a Gallup poll.

They often don’t voice these complaints publicly. Asian and Pacific Islanders only filed about 2–3 percent of the total employment discrimination complaints received by the Equal Employment Opportunity Commission against private employers.

Many Asian cultures are very respectful of leadership, this trait may influence individual decisions to publicly voice complaints about their employer. Gaining knowledge about various cultures and understanding culturally-based tendencies is critical to building and sustaining a diverse and inclusive workforce.

This is where the AICPA can help. With free and supportive resources including the AICPA Recruitment and Retention Toolkit used it in conjunction with AICPA Accounting Inclusion Maturity Model, organizations can use this model to assess where they are on their inclusion journey, evaluate their existing diversity and inclusion efforts and develop roadmaps to success.

Kimberly Drumgo, Director, Diversity & Inclusion, American Institute of CPAs.

How to Talk to Not-for-Profit Boards About Their Responsibilities

Post author By FFC
Post date May 18, 2016

How to Talk to Not-for-Profit Boards About Their Responsibilities

As a CPA and community volunteer, I’m often asked to talk to not-for-profit boards about financial and governance topics. My presentations often generate lively discussions. Some people are surprised to learn that although it is not necessary to be a financial or business expert to serve on a board, there are some broad fiduciary responsibilities that apply to all board members. Most nonprofits are formed as corporations under their particular state’s law (I’ll leave the nuances to the lawyers), but a cornerstone of these laws is that board members owe a fiduciary duty to the corporation they serve on. A fiduciary responsibility is defined as the obligation to act in the best interest of another party, and this pertains to all matters regarding the not-for-profit, including its financial oversight. There are three basic responsibilities that apply to board members: the duty of obedience, duty of care and duty of loyalty.

Duty of Obedience

When I explain that all board members can be equally responsible and liable to safeguard the not-for-profit’s assets and interests, the response I often receive is, “The entire board? Even commissioners?” or “But I’m just a commissioner. I shouldn’t be held responsible!” The duty of obedience means board members are accountable for internal laws (that is, bylaws and policies) and all applicable external laws and regulations. For instance, the IRS can hold each board member personally liable for failure to pay certain taxes incurred by the organization. It does not matter if they are the Chair or President or “just” a member at-large; generally, all board members have responsibility.

Duty of Care

The duty of care requires the board to conduct the affairs of the not-for-profit in a way that a prudent person would, which is more than just showing up for meetings and exercising good judgment. Consider this: are transactions in the best interest of the organization from an objective perspective? I advise board members to keep asking questions until they feel they can comfortably make an informed and independent decision before casting their vote at a board meeting.

Duty of Loyalty

Board members are expected to put the organization’s needs above their own. To introduce the duty of loyalty, I ask my audience how many of them joined the board because of their belief in the organization’s mission. The majority proudly raise their hands. The next question I ask is, “As a board member, how does your organization guard against misuse of assets?” This question sparks a discussion on how to protect the not-for-profit’s interests. Then I ask, “Is a board member with a personal or professional interest that is at odds with the organization’s best interest demonstrating loyalty to the organization?” Someone will usually answer “no”. Then, I let them know they just identified the definition of a conflict of interest, which is addressed in the duty of loyalty. This provides a great segue into discussing various conflict of interest scenarios, and how to address them.

To drive this home, I like to point out the IRS’s excess benefit rules that apply to charitable organizations. An excess benefit transaction occurs when a person in a position to exercise substantial influence over the organization’s affairs (including board members), impermissibly benefits from a transaction with the organization. Examples include if they receive unreasonable or unsubstantiated payments, such as fees, compensation, benefits, or expense reimbursements that serve a private interest and not the public interest. If such a transaction is not corrected within the taxable period, then:

The organization must report the transaction(s) to the IRS;

The person(s) benefitting is subject to an excise tax of up to 225% (there is a first-tier excise tax of 25% and then a second tier excise tax of 200% in the absence of timely correction)

Plus, the organization’s tax exempt status could be jeopardized;

In addition, generally, any officer, director, manager, etc. who knowingly approved such a transaction is subject to an excise tax of 10% (up to a maximum of $20,000 for each excess benefit transaction, and additional second tier penalties may apply).

What transaction is worth all of that? To date, no one has thought of a single transaction worth all of the above.

One noteworthy exception to the 10% excise tax is if a board member votes against the excess benefit transaction. Then, he or she is not considered to have participated in the transaction.

Insofar as board leadership comes with great responsibility, it has even greater rewards. From my own experience, I can say the most satisfying years of my career have been in service to not-for-profits in my community. It is deeply rewarding to lend your skills to a cause that is meaningful for you. Just make sure you are going into it with your eyes wide open.

Want more information on this topic? The AICPA’s Not-for-Profit Section is a community that supports not-for-profit professionals and business advisors. You can find a number of board governance resources, including an extensive overview of board responsibilities, a guide to board member orientation and a sample conflict of interest policy here. To learn more about the ins and outs of excess benefit transactions, the AICPA Not-for-Profit Section and Tax Section have teamed up to co-host a webcast on June 1 on Emerging Tax Topics for Not-for-Profits.

Annice Reed, CPA, Controller for North Texas State Soccer. She has more than 20 years of professional experience. Annice is also a CPA who specializes in not-for-profit accounting, taxes and consulting. North Texas State Soccer is a not-for-profit organization that offers soccer programs for over 165,000 youth and adults in that region.

One Man’s Journey From Poverty and Neglect to CPA and Inspirational Speaker

Post author By FFC
Post date May 16, 2016

One Man’s Journey From Poverty and Neglect to CPA and Inspirational Speaker

A conversation with Frank Thomas, keynote speaker at the 2016 AICPA Accounting Scholars Leadership Workshop

On May 18–20, about 100 minority accounting students will assemble in Durham, N.C., for the AICPA Accounting Scholars Leadership Workshop. The annual event draws accounting, finance and tax majors from across the country for an immersion into leadership development, CPA Exam preparation and the infinite benefits of earning the CPA credential.

Frank Thomas, a renowned inspirational speaker, author of RISE: Even Death Can’t Stop Me and previously a practicing CPA, is this year’s keynote speaker. Insights recently spoke with Thomas about his journey to becoming a CPA, overcoming profound childhood obstacles and observations on the future leaders of the profession.

Insights: What memories stand out to you on your path to becoming a CPA?

Thomas: Becoming a CPA is not the easiest thing in the world. Take the CPA Exam for instance, it’s one of the most rigorous exams in the world. It’s a difficult exam to prepare for, and it’s a difficult career path. I just remember how incredibly challenging it was.

I say that as someone who grew up in a home environment that was not ideal. My brother and I were raised by a single mother who gave her best but faced demons of her own. Drugs, alcohol, you name it. We were forced to raise ourselves. So I always knew it was up to me to face challenges and that I had to work twice as hard to make something of myself.

Becoming a CPA was the road I took.

The memories I’m most fond of have to do with the relationships I made in the process. Once I decided to be an accounting major and pursue the CPA designation, I met such wonderful people from all over the world. Graduating with an accounting degree, going to work for Deloitte, and preparing and passing the CPA Exam — every step of the way, I built such strong and amazing relationships, which is such an integral part of success in life and business.

Insights: Why accounting? What other professions did you consider in school?

Thomas: Before deciding on accounting as a major, I wanted to be a high school guidance counselor. I wanted to work with young people, to inspire them to fulfill their potential and achieve their dreams.

But my best friend, a fellow accounting student at USC [University of Southern California], really challenged me to think about the CPA as a possible career path. The more I learned about the profession, the more I realized the career path opens up so many possibilities.

Accounting is the language of business. There’s business in everything. Just about anything you can think of, there’s a business behind it. If you can understand the framework of that business, the possibilities are limitless.

Personally, I also saw the prestige of being a CPA. CPAs are held in such high regard. They’re professionals who are many times behind the scenes, but their integrity and intelligence are front and center. All those things appealed to me.

Today, I get to have the best of both worlds. Even though I’m now an inspirational speaker and no longer a practicing CPA, the credential continues to open up doors for me. In my career’s second act as a consultant, speaker and author, I’m living my dream of working with young people and helping them achieve their dreams.

Maybe it’s serendipitous, but somehow we always find our way back home.

Insights: Now that your focus is on inspiring others, what standout characteristics do you see among up-and-coming CPAs?

Thomas: Integrity, ambition, work ethic, not shying away from challenges. Those [qualities] separate great professionals across the board, but it’s so true for CPAs. They bring passion, and it shows through in everything they do.

For minority students, in particular, I recognize their heart, soul and spirit. Being a minority myself, I identify with the challenges they face that are beyond the coursework and the profession. There’s so much talent, but questions and doubt may loom large. “Am I where I’m supposed to be? Am I fulfilling my potential?” Many of them are trailblazers in their own right who may be first-generation college graduates and professionals. I say to them: Have faith. Stay focused on what’s within you. Your path may go up and down, side to side, but you’ll find your way.

I encourage CPAs in practice, minority or not, to see how they can be of service to these rising CPAs. Make yourself available for questions, shadowing, mentoring, because the rewards for everyone involved are tremendous.

Insights: What’s your favorite part of working with these eager students who represent the profession’s future?

Thomas: It’s such an honor to reach them when they’re just starting out and plant seeds in their hearts and minds that may someday help unlock their potential. Their dreams are so achievable. They just need encouragement, inspiration and support from people who have put themselves in service to ensure that happens. I share my successes, but I make a bigger impact by sharing how I’ve failed and had to pick myself up and finish my race.

I also share with them how being a CPA has changed my life. It’s created opportunities for me that I wouldn’t have believed existed before. The challenge is: how do you stick with something that will challenge you beyond your comfort zone? How much pain are you willing to endure to fulfill your destiny? No one has ever achieved anything of great value without enduring some level of struggle.

It’s a dream come true to participate in a workshop just for future CPAs. What an opportunity for the profession and for these young people. They’ll never forget it. I promise you that.

The AICPA Accounting Scholars Leadership Workshop is an all-expenses-paid event sponsored by the AICPA Foundation. The application window for the 2017 workshop will open in January. For more information, contact diversity@aicpa.org.

Hitting it Out of the Ballpark with the IRS’s Future State

Post author By FFC
Post date May 13, 2016

Hitting it Out of the Ballpark with the IRS’s Future State

Baseball is ninety percent mental and the other half is physical.

-Yogi Berra

Spring time. The first busy season is done – that’s when CPAs can catch their breath, relax a little, maybe even catch a baseball game. Speaking of baseball, CPAs are in a league of their own, no question about it, and our Tax Section helps get you there. Baseball also brings me back to my childhood when I was a huge Washington Senators baseball fan. But the future for the Senators was never bright; thoughts of the playoffs, let alone the World Series, were out of the question. But now with the Nationals in town, the future is much brighter.

I’m hoping that’s the case with the IRS as well. Unlike Yogi Berra’s concept of accounting, the numbers have just got to add up for the IRS and, well, the IRS has dropped the ball in service. We all know that, including the IRS. With two strikes against them in the realm of public opinion, the IRS has unveiled its Future State Initiative. You may know from reading my recent blog on IRS service levels that I thought the signs were starting to look good in terms of possibly starting to move the IRS service needle back in the right direction.

We recently conducted a survey of all AICPA members to gauge their experience with IRS service levels. It was a way to give everyone an opportunity to be heard – the CPA perspective from the bleachers in deep center field, if you will. The survey, conducted right after busy season, was a reprise of the survey we undertook in April 2015 so we’ll be able to track the changes in experience. Did the relief pitcher in the form of additional money Congress allocated in December have a measurable impact? We’ll report on the survey results shortly. I’m hoping for a home run but even a bunt single in results would look good at this point (and be more realistic).

This is where the Future State Initiative comes in but it is only in the outline stage at this point. In essence, the IRS is attempting to take a strategic view of its evolutionary needs to support taxpayers, the tax community and the country’s needs in a more comprehensive way. Future State relies heavily on technology to alter the way IRS interacts with taxpayers. This endeavor is not just about service but it is a significant focus.

National Taxpayer Advocate Nina Olson believes there are many positive aspects to the plan but has also raised concerns in her 2015 Annual Report to Congress regarding its significant reliance on technology that could adversely affect some taxpayers. The report points out that:

(1) 16% of adult Americans do not use the Internet;

(2) Millions more who do use the Internet are concerned with data security; and

(3) Those who use the Internet and are comfortable with security issues will find that the tax law’s complexity will make online resolution impractical.

Olson commented in the report that the proposed approach could have serious ramifications and urges the IRS to seek input from the public and interested stakeholders.

That’s where the AICPA has stepped up to the plate. We’ve formed a task force to develop our thoughts on the Future State, and believe me, we have some heavy hitters in that group. The task force is also responsible for advancing the concept AICPA Council espoused last year. Also, Tax Executive Committee chair Troy Lewis will be testifying on May 17 at the National Taxpayer Advocate’s Public Forum on the IRS Future State. We have a high batting average in tax advocacy and we will make our voice heard. We know how important this is for CPAs – for everyone – and so we will be swinging for the fences.

Boston Red Sox legend Ted Williams said, “Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer.” That just won’t cut it for the IRS.

Edward Karl, Vice President-Taxation, American Institute of CPAs.

The One Career Move That Changed My Life

Post author By FFC
Post date May 12, 2016

The One Career Move That Changed My Life

Q&A With David Oransky, CPA/PFS

Pilot … sailor … entrepreneur … CPA financial planner. David Oransky, CPA/PFS, is open for an adventure in both his personal and professional life. Embodying the ‘can-do’ spirit and desire for ownership that defines the millennial generation, David left public accounting to begin a career in financial planning and now serves as principal and founder of Laminar Wealth. In order to help other young CPAs understand the career possibilities in financial planning I sat down with David to learn how one career-defining move changed his life.

Sarah Bradley: What is the one career move that changed your life?

David Oransky: It would have to be when I made the decision to leave my job and join a wealth management firm. I felt I was doing well in my role there, but realized my natural curiosity was in personal, not corporate, finance. When I gave my notice, partners and colleagues expressed concern about my decision. Looking back, I’m glad I listened to my heart. Today, I get out of bed every morning excited that I get to not only do work I find interesting, but also get to make a direct and positive impact on the lives of my clients.

SB: What is your primary core value?

DO: Growing up, I was taught how important it is to do your best work and the right thing, even when no one is watching. This has extended into my career as a financial planner. I spend a lot of time researching potential solutions when faced with an important decision. By the time I reach a conclusion, I have looked at all the data and am convinced of the right way forward. As a result, I’m usually steadfast in my opinions, a quality my family would probably instead call stubborn.

I’ll give you an example of how I approached looking for a financial planning firm when I was leaving corporate finance. I looked at every single financial firm in the Bay Area and narrowed it down, after researching various aspects from the consumer’s point of view. I had three criteria: It had to be a fee-only firm, provide comprehensive financial planning and the firm’s investment philosophy had to match my own. Subsequently, the firm I joined before eventually starting Laminar Wealth wasn’t by coincidence.

The result? It helped me see the bigger picture more clearly. Many non-CPA financial planners come from a sales industry, so there is a very different culture than what I was looking for. I really think that CPAs are well positioned to be the best financial planners out there. We approach it as a consultative engagement rather than a sales pitch

SB: How did you come up with the name “Laminar Wealth?”

DO: Laminar is a physics term that means streamlined. I grew up sailing and I’m also a pilot, so the concept of reducing turbulent flow was familiar. I think the same concept should be applied to personal finance, such as reducing fees and taxes, and focusing on what the client actually keeps in their pocket. Many of the investment strategies out there focus on improving the top line. Doing so usually involves increased risk. Our aim is to instead minimize the drag, and focus on reducing all the frictional costs for the client. All the fees and taxes are akin to swimming against the current. To overcome them, you have to be a really strong and fast swimmer. In most cases, it’s simply better to avoid the current.

SB: What do you enjoy most about working with your clients?

DO: Coming up with creative solutions and seeing the impact those solutions have on my clients’ lives. Whenever I’m faced with a new client situation, I try to find every potential way to solve the problem at hand and make sure we arrive at the best solution for the client. That can mean a lot of extra work, but I’ve never liked shortcuts or being just “good enough.”

SB: What career opportunities are there for a CPA financial planner?

DO: It’s a multi-disciplinary profession. There are taxes, but also estate, retirement, investments, insurance and planning. I think it’s important to have knowledge of all these aspects because they are all so integrated. However, many advisers don’t sell insurance or write estate plans, even though they’re very familiar with the technical knowledge. Everyone needs to know the general information, but then you can specialize in the areas you enjoy most.

SB: Who was your childhood hero?

DO: I’m going to give you two, my childhood hero and my hero today, because my hero today is very important to me. Growing up, it was Chuck Yeager. He was a pilot and the first to break the sound barrier in 1947. When I was a kid, I was obsessed with aviation and space. For me, it was about pushing boundaries and always living on the cutting edge.

Today, it would be John Bogle, founder of Vanguard. Vanguard is owned by the same people whose money they’re investing. It was structured from day one to be in the clients’ best interests. As a result, he made less money for himself, but created the largest and most respectable financial company in the world. His core values are so embedded in the firm that it has continued to succeed even years after he no longer has direct involvement. I remember he once said that all the mistakes he ever made were the result of putting marketing above the best interests of the investor. That’s ultimately what made Vanguard so successful – staying focused on the core values by putting clients’ best interests at the forefront.

David Oransky, principal and founder of Laminar Wealth, is an AICPA Standing Ovation recipient and founding member of the Young Advisers Network. He presented, “Planning for the Next Generation of Affluence” at the 2016 PFP Conference. View the full recording of this session as part of the free sample bundle of conference recordings.

Sarah Bradley, CPA, Senior Technical Manager, Personal Financial Planning, American Institute of CPAs.

Not-for-Profit Section Celebrates One Year Anniversary

Post author By FFC
Post date May 11, 2016

Not-for-Profit Section Celebrates One Year Anniversary

On May 2, the AICPA’s Not-for-Profit Section marked its one-year anniversary. Today, as I write this article, our community is more than 3,600 members strong and counting. As I reflect on my team’s work and that of all the tireless staff and teams of volunteers throughout the Institute who helped us nurture and grow this initiative, I am deeply grateful. I am also inspired by their commitment to providing high-quality specialized resources and learning opportunities for not-for-profit professionals.

About 52 percent of our current members are business advisers to not-for-profits, such as consultants, auditors and tax professionals. The remaining 48 percent are leaders working within the not-for-profit sector, including charities, human service agencies, faith-based organizations, associations, educational institutions and a whole host of other causes that are united by one common focus: achieving a mission to make a difference.

In the last decade, the growth rate of the not-for-profit sector surpassed both the private and government sectors. However, they face unprecedented challenges– economic, regulatory and financial. Among fundraising organizations, competition for contributions is fierce. At the same time, the donating public wants accountability from not-for-profits. From a regulatory standpoint, state attorney generals are acting aggressively, prosecuting – and making an example out of organizations associated with or involved in wrongdoing. The resulting negative publicity does not just affect the entities involved, but can affect entire communities. It can trigger a ripple effect that becomes an impediment to attracting financial support for not only that specific entity but also related causes. Strong governance oversight and risk management are important for all businesses, especially not-for-profits because they live in the public eye.

From a tax standpoint, we expect the IRS to cast a wider net with its audits, as the IRS Exempt Organizations Division recently announced that it is migrating from a project-oriented examination selection process to a more data-driven process. Additionally, not-for-profits face challenging new reporting requirements. In particular, we are closely monitoring the FASB’s proposed standard that, if adopted, would represent the biggest change in accounting standards for not-for-profits in over two decades and significantly alter the financial reporting model for not-for-profit entities.

Successful management of a not-for-profit organization goes beyond tax compliance and adherence to standards. Our members want to set themselves and their organizations apart to stay ahead of these challenges, demonstrate their success and measure their double bottom line, that is, their financial and mission accomplishments. To that end, the Section’s mission is to deliver information, tools and resources that facilitate timely compliance with standards and regulations, promote the excellence of our members as leaders in the not-for-profit sector and serve as a connector for peer-to-peer learning and information sharing.

Successful work in this industry requires specialized expertise. Because we recognize the unique challenges faced by not-for-profits and their business advisers, we are working to increase member communications and are expanding our resource library. Some of the items on our 2016-17 work plan include:

Disseminating timely information through our eNews Alerts to keep our members updated on IRS and FASB activities as well as emerging trends affecting not-for-profits

Publishing a new series of frequently asked questions on industry-specific accounting, financial reporting, tax compliance and governance topics for not-for-profits

Releasing the first edition of the Not-for-Profit Controller’s Toolkit this summer, a new e-publication that will be complimentary and made exclusively available to Section members

Continuing our popular webcast series, offering up to 8 hours of complimentary CPE for our community members

Updating our illustrative financial statements and Form 990 preparation checklists

Publishing background papers on data analytics, benchmarking, considerations for expanding to international locations, reporting of executive compensation and more

Thank you for this opportunity to let us serve you. To learn more about the Not-for-Profit Section, please visit our website. If you have a specific question, please contact my team by emailing NFPSection@aicpa.org.

Chris Cole, CPA, CFE, CFF, CGMA, Senior Technical Manager- Not-for-Profit Section, American Institute of CPAs.