Blog Timeline – Page 69

News

Say “Yes” to Advancing Our Profession

Post author By FFC
Post date April 25, 2016

Say “Yes” to Advancing Our Profession

For nearly 129 years, the accounting profession has preserved an esteemed reputation through a commitment to protecting the public interest and upholding the profession’s core values of competence, integrity and objectivity. Each and every day, CPAs live those values through the work they do for their organizations, employers and clients. You now have a new opportunity to further strengthen our profession and play an integral part in its vitality for the future.

On March 24, the AICPA governing Council voted to proceed with a member ballot on a proposal that would enhance our profession and position us for continued success far into the future. The proposal already has strong support: 52 state CPA societies; leaders from many CPA firms of all sizes; finance leaders from businesses and organizations worldwide; and the AICPA’s Business & Industry Executive Committee, Private Companies Practice Section Executive Committee, Government Performance and Accountability Committee, Women’s Initiatives Executive Committee, Pre-certification Education Executive Committee, and National Accreditation Commission. We urge you to vote “yes” as well.

Keep profession relevant and strong

Specifically, the Institute is asking members to support a proposal to create a new association with The Chartered Institute of Management Accountants (CIMA) representing the entire accounting profession, while preserving our respective membership organizations. This is an incredible opportunity to build on the strength of our profession today to ensure its continued relevance amid rapid technological change, demographic shifts and regulatory complexity, domestically and around the world.

Overall, the proposal fits within a broad portfolio of activities to promote and grow the CPA profession for both public and management accounting. Through the new association, AICPA members would gain access to enhanced resources, insights and educational opportunities to better serve their clients and organizations. By representing 600,000 accounting professionals in 91% of the world’s countries, the new association also would provide a broader platform for our advocacy efforts, including an enhanced voice to defend against onerous, unnecessary regulations increasingly originating overseas that could potentially be considered for the US market. Membership in the new association would be automatic for AICPA members and be included as part of their AICPA dues. Members also would retain existing membership benefits.

Vote on member ballot by June 16

Now through June 16, members have an opportunity to vote on the ballot. Last week, AICPA members eligible to vote should have received their personal and confidential electronic ballot information from an independent third-party voting administrator under the name of “AICPA Independent Tabulator.” For more information about the proposal and to hear perspectives from your peers, visit www.aicpa.org/horizons.

Thank you in advance for demonstrating your commitment to the profession and voting on this important proposal. We hope you will join us and vote “yes” to advance the profession for the future.

Timothy L. Christen, CPA, CGMA, Chairman, Board of Directors, American Institute of CPAs.

Barry C. Melancon, CPA, CGMA, President and CEO, American Institute of CPAs.

Tax Season Wrap Up

Post author By FFC
Post date April 22, 2016

Tax Season Wrap Up

Congratulations – you have made it through another tax season!

Take the requisite time to mourn the loss of your time, sleep and missed social events. Enjoy some much needed rest and relaxation with an activity of your choosing. Then, if you have not already done so, take the advice of Kool & the Gang and celebrate!

No matter how many years pass, this song always manages to lift me up. So, whether this is your first or 50th tax season, it is an accomplishment and should be celebrated. Embrace the hard work that you have put in and give yourself a pat on the back.

Even as a perpetual optimist, I too fall victim to feeling down when I am exhausted, have hit a roadblock or have experienced a failure. In my many years in tax practice, I often came out of tax season telling myself this was my last. But guess what? By the beginning of the next tax season, I was hyped up and couldn’t wait for those first returns to come in the door.

When watching the live video of Kool & the Gang performing, I imagine that they came running onto the stage with boundless energy at the start of the show, then felt like collapsing after a successful event. So too are you, CPA tax practitioners, the stars of your own performance and likely have a large audience of client supporters out there who are grateful for what you have done.

Once you are well rested, this is the ideal time to reflect on the details of the past few months. Use the freshness of those memories to record what went well and what didn’t. Include anything you feel strongly about, and don’t cut things off your list because you don’t see a solution in the moment. Here are a few probing questions to get you started:

Did you find that certain days were more productive than others?

What time of day did you feel the highest energy level?

Imagine signing the completed returns, what feelings arise?

Which returns were most interesting to review? (This checklist and sample worksheet can give you ideas for other services to offer those clients.)

Which clients were you most excited to visit with again? (Send them a brochure to encourage a repeat visit for tax or business planning needs.)

Which clients did you dread seeing? (You may want to download this Client Disengagement Letter from PCPS.)

Which staff member had the highest number of repeat review points?

How user friendly was your software? (Check out the results of last year’s Journal of Accountancy software survey to explore options.)

Once you have all of your thoughts down, step back and assess the words looking back at you. Are there any trends? Does any particular note cause a stronger reaction than the others?

If your answers to the top two questions indicate you were most productive on Saturday afternoons, ask what that might mean. Perhaps you wear jeans and sneakers on Saturdays, the staff takes a lunch break and eats together, or there are no scheduled appointments. Use this knowledge to brainstorm possible changes in the way you work. Some options might include adopting a business casual dress policy or including Friday as an allowable jeans day. Another might be forcing yourself to stop and take a break for lunch every day, even if you eat your sandwich in the lobby or take a few spins around the building. And something I did when in practice was to set “client meeting days.” I only met with clients on those days, with few exceptions, and spent the other days being productive by preparing and reviewing returns.

Thinking about your technology or client work may reveal that it is time for change. If you feel you are ready to go paperless, explore new tax software or prune your client base, you should trust your instinct.

Finally, take this time to assess your staff. Working with people during periods of high emotion can sometimes skew your outlook. The truth is that right now is probably the best time to honestly say which staff members really came through during busy season, and which were less engaged than you expected. Perhaps someone is in the wrong role, or needs extra training before next year. January isn’t the time to fix it, but now is.

If you are still not quite convinced, remind yourself why you got into this profession in the first place. Allow yourself to wind down, celebrate all of your victories (regardless of size), and remember that you are one of the premier providers of tax services and we here at the AICPA are rooting for you every day of the year!

Cari Weston, CPA, CGMA, Director – Tax Practice & Ethics, American Institute of CPAs.

End of the road courtesy of Shutterstock.

Make Every Day Earth Day and Save Two Kinds of Green

Post author By FFC
Post date April 21, 2016

Make Every Day Earth Day and Save Two Kinds of Green

Where I live in Queens, New York, recycling is mandatory. My husband and I keep a plastic sorting bin with two compartments—one for glass and plastic, the other for paper and cardboard—right next to our garbage can to make things easy…and messy, since our almost 20-month-old son thinks that the cardboard recycling is there for his entertainment. But a little mess in our living room is a small price to pay to help the planet. While recycling has become common practice in many parts of the United States, there are so many other things you can do that will help both the earth and your bottom line, and, in some cases, offer a tax break.

Water Conservation

Shut off the tap when brushing your teeth. Doing this twice a day saves up to 8 gallons of water.

Install low-flow shower heads in bathrooms.

If remodeling, consider low-flow toilets. These give the user the option of how much water will be used to flush based on the amount of waste.

Don’t buy disposable water bottles. Instead fill reusable water bottles.

Be sure sprinkler systems won’t go off when it has rained or during the sunniest times of the day and be mindful of drought conditions.

When running water to wash dishes, collect the initial cool water to water houseplants.

Potential cost savings: A family of four that upgrades and optimizes their water usage can save nearly $300 a year in utility bills and 32,000 gallons of water. For more tips on water conservation and to calculate how much you might save, visit the Environmental Protection Agency website.

Energy Efficiency

There are a number of ways to be more energy efficient at every price point.

Inexpensive solutions:

Install energy efficient light bulbs.

Unplug appliances that aren’t in use.

Turn off the lights when you leave a room.

Use rechargeable batteries.

Potential cost savings: Several hundred dollars per year.

Moderately priced solutions:

When the time comes to replace old appliances, purchase those that are the most energy efficient, including washers, dryers, dishwashers, refrigerators and air conditioners. Look for the Energy Star label which indicates the highest level of energy efficiency, and may offer tax savings.

Check home insulation. If your home is poorly insulated, you will spend more money to both heat and cool it, which is bad for the earth and your wallet.

Potential cost savings: Several hundred to several thousand dollars per year.

Expensive, but offers long-term savings:

Investigate solar energy. In addition to solar panels, there are options for solar water heaters. There is often a substantial expense to initially installing solar energy options, but there are tax breaks and long-term savings as a result.

Potential cost savings: hundreds to thousands of dollars per year.

Day-to-Day Ways to Conserve and Save

This saves on emissions and gas.

Learn to compost.

Think before you hit print. Do you really need something printed out or will an electronic document suffice? Considering some ink costs more than perfume these days, you will save money, not to mention trees.

Use the library or share books with friends.

Borrow things you might only need to use periodically (specialized power tools) or for a short period of time (baby gear).

Recycling cans, bottles and catalogs are just some of the most well-known ways you can help preserve our planet and save money. With a little effort, you can make green activities a regular part of your life and see more green in your wallet.

Lauren J. Sternberg, Communications Manager-American Institute of CPAs.

Recycling symbol courtesy of Shutterstock.

The Growing Importance of Financial Literacy Month

Post author By FFC
Post date April 18, 2016

The Growing Importance of Financial Literacy Month

Every second, America’s trillion dollar student loan debt grows by nearly $3,000. This debt that people begin to carry at an early age often leads to more uninformed financial decisions, such as taking on credit card debt and other loans they can’t afford. Typically, this occurs because of limited access to financial education tools and resources. This alone points to the urgent need for financial literacy in this country.

The AICPA and state CPA societies across the country are leading the effort to address this growing problem through new programs and initiatives. April is Financial Literacy Month, and we continue to be diligent in spreading the important message of financial literacy to millions of Americans. Through the AICPA’s flagship 360 Degrees of Financial Literacy program, the national volunteer effort of CPAs to help all Americans understand their personal finances through every life stage, we have combined grassroots advocacy with free public resources and tools for CPAs to educate Americans of all ages. Additionally, Feed the Pig, the AICPA’s award-winning public service campaign with the Ad Council, has provided tools and resources aimed specifically at Americans aged 25-34, an age group that is making major life decisions, often with little financial experience or guidance.

This year, our Feed the Pig program celebrates its 10th Anniversary. A recent survey conducted by the AICPA and the Ad Council illustrates the success of our endeavors, saying that one in three millennials ranked saving as their top priority. Making these young adults aware of our free resources, such as the student loan calculator, Benjamin Bankes’ weekly savings tips, and our humorous PSAs, is helping to set them up for financial success—and ultimately bettering their futures for not only themselves but also for their families.

The AICPA is dedicated to bringing financial literacy to Americans through new technology and platforms, such as our online financial literacy version of Bank On It®, and social media platforms like Snapchat, Instagram, and IFTTT. It continues to be apparent that people, regardless of their age, crave information in new and innovative ways—and that is what our programs aim to do in 2016 and beyond. Additionally, this month we plan to broaden the scope of our resources to include 360 “En Español” to address the needs and questions of Spanish speakers.

The profession has consistently led efforts to bring innovative solutions to address the growing importance of financial literacy to all consumers for more than ten years, and we hope you’ll join us in celebrating Financial Literacy Month over the next couple of weeks.

The AICPA’s Consumer Education Team: Cheryl Reynolds, Vice President – Communications, Advertising and Brand Management; Daniel Bond, MSM, CAE, Senior Manager – Communications & Consumer Education; Samantha Delgado, Manager – Communications & Consumer Education

Elder Planning: Life’s Transitions After Retirement

Post author By FFC
Post date April 14, 2016

Elder Planning: Life’s Transitions After Retirement

Clients often fantasize about retirement; it becomes a sort of finish line for them. Get to retirement and you’ve made it. What they might not consider are the ways life may change once they’ve retired, and the financial, health care and other planning needs that go into preparing for the future.

Enter the knowledgeable CPA/PFS, who can go beyond retirement planning and assist with elder planning. There is a fine line between retirement planning and elder planning: While all financial planners help ensure their clients have enough savings to last until the end of their lives, elder planning also involves helping clients plan for life’s transitions after retirement.

You’re probably thinking, “Isn’t that the same as retirement planning?” Not really. Elder planning goes beyond financial independence and retirement to touch all areas of financial planning, including investment strategy, health care, estate planning, risk management (insurance) and end-of-life care.

Elder planning focuses attention on those life transitions that result from aging. How could changes in housing or health needs affect the client’s financial and legacy goals? Are proper documents in place to achieve these goals regardless of physical or cognitive impairment? While CPA financial planners would not get involved in a evaluating a client’s need for health care and housing, they are crucial in decisions about evaluating potential options, funding those options and defining the impact on their current financial goals. These decisions often require connecting clients with professionals in areas that complement our services, such as elder law attorneys, geriatric care managers and others who have deep knowledge in this area.

I think the key to successful elder planning is to address the future with your clients as they age rather than when they are in a crisis, as well as helping them make more informed decisions. Too many times I have seen families scrambling to figure out what to do with their parents in the event of a sudden decline in health. One such example is the sudden need to find a good continuing care retirement community (CCRC). It isn’t as simple as finding the one closest to home; there are other factors to consider such as base and add-on pricing, the facility’s financial stability, and quality of care. In this instance, proactively planning for a CCRC could have helped—and that’s part of elder planning. Brad Breeding, one of the speakers at the annual AICPA Advanced PFP Conference, wrote an AICPA Insights blog post about this topic last year.

It is so important for CPAs to know about elder planning that the AICPA’s PFP Executive Committee decided to make it a focus for 2016 by bringing PFP Section members the following resources:

A CPA guide to life transitions after retirement, including elder planning: Authored by Jim Sullivan, this comprehensive online reference, similar to last year’s CPA’s Guide to Practical Retirement Planning, will be published later this year. It will touch on all the topics associated with transitions later in life and include practical checklists and resources.

Series of articles for the CPA Insider and The Tax Adviser: Topics will include how to serve older clients, how to build rapport with older clients, the steps to take when a client is diagnosed with a terminal illness, estate planning and more.

Video panel presentation: This unique video will include practitioners discussing elder planning topics to ensure that practitioners cover all that they should with their clients.

Conference topics: Presentations will be given at various conferences, including the AICPA’s Estate Planning Conference in July.

Webcasts and podcasts: Topics will include life transitions and how they affect your practice, end-of-life planning, and estate planning implications of aging.

The bottom line is this: The more you can do for your clients immediately, before they face these issues, the more valued and respected resource you will be. The PFP Division will help you get there. Stay tuned!

For more information: The AICPA’s PFP Division has a consumer booklet, A Guide to Financial Decisions: Implementing an End-of-Life Plan, with helpful checklists for CPAs to use with their clients. In addition to the resources mentioned above, PFP Section members, inclusive of PFS credential holders, have access elder planning information in the CPA Guides on financial and estate planning and Social Security and retirement healthcare, as well as a wide variety of client education available in Forefield Advisor.

Lyle K. Benson Jr., CPA/PFS, L.K. Benson & Co., PC. Lyle is president and founder of L.K. Benson & Company, a CPA/Financial Planning firm based in Baltimore, Maryland. The firm specializes in personal financial planning, tax and investment advisory services for high-income individuals and families, as well as corporate executives and entrepreneurial, closely held business owners across the country. Lyle is immediate past chair of the AICPA’s PFP Executive Committee. Contact him at lyle@lkbenson.com.

Elderly couple courtesy of Shutterstock.

IRS Form 990 is an Opportunity for Not-for-Profits to Shine

Post author By FFC
Post date April 13, 2016

IRS Form 990 is an Opportunity for Not-for-Profits to Shine

IRS Form 990 is the information return that is filed annually by most tax-exempt organizations, including charities and fundraising organizations. Just like any other return, it is vitally important to comply with the IRS requirements. What makes Form 990 unique is that it reports extensive information on operations, programs and governance and contains not just financial data, but written narratives and opportunities to provide supplemental information as well. Because Form 990 is available to the public, fundraising organizations that view it as merely another compliance requirement are missing a golden opportunity to shine a light on their organization’s accomplishments and attract support for their causes.

Here are some tips to help you or your clients make the most of Form 990 as a promotional tool:

Be mindful of your audience. With few exceptions, organizations are required by law to make their Form 990 returns available to the public. There are several widely accessible online databases, the largest being GuideStar, from which the public can easily access that information at no cost. Also, many online fundraising platforms, such as CrowdRise, Network for Good and Kimbia to name a few, interface with GuideStar’s database to provide would-be donors access to Form 990 information. When preparing your Form 990, consider who is reading your return: your constituents, including clients, customers and citizens in the communities you serve, and others who put faith in your organization. Also, consider your current and prospective donors. These individuals have the expectation that their participation and contributions of time and money are put to good use. Other groups and individuals who may read your Form 990 include community leaders who influence local policy decisions, other not-for-profits and the media.

First impressions matter. The first thing a reader will see about your organization is a written statement on the front page in Part I, Line 1 that describes the organization’s mission. Be concise and try to avoid using an overflow schedule so that a reader will immediately understand what the organization does.

Ask your communications director to help. The language used throughout the return should mesh with the organization’s communications materials, including information reported on the website, annual report and fundraising appeals. Give special attention to the Statement of Program Service Accomplishments in Part III, which is a written narrative that tells readers how the entity achieves its mission. Provide specific quantitative information about accomplishments during the current tax year. For example, for an education program, you might describe the nature and number of classes offered, the number of pupils participating and completing the program and the successes of program participants (for example, employment statistics) compared with a similar population not receiving the same services.

Think beyond the minimum requirements. An organization not required to file can still voluntarily file Form 990. Also, it is not uncommon for small organizations to file the full Form 990 even if they are only required to file Form 990-N (e-Postcard) or the shorter Form 990-EZ. For example, some churches who are exempt from the annual Form 990 filing requirement will voluntarily file to demonstrate greater transparency or attract potential donations. Grantseekers may file because some foundations require grantees to furnish a copy of their Form 990. Also, some organizations will use the Form 990 overflow schedule to further explain information that could be confusing to readers, even if there is not a specific IRS instruction requiring more detail. Note that if you do choose to file a return that is not required, you should still comply with all of that form’s requirements; that is, you can’t selectively choose which parts to complete and ignore the rest.

Don’t be afraid to request an extension. Two 90-day extensions of time to file are available. The first extension is an automatic request; in other words, the IRS will approve it automatically with no questions asked! I never hesitate to file the first extension if additional time is needed, which is not all that unusual. The second extension requires the organization to detail the reasons for needing another 90 days of time to file. To request an extension, use Form 8868.

Preparing Form 990 is not just about getting all the correct numbers in the right boxes to satisfy the IRS. If you view it that way, you may be missing out on an opportunity to help your organization or client stand out from the rest.

To learn more about tax compliance and access financial management resources for not-for-profit professionals and their business advisors, check out the AICPA’s Not-for-Profit Section. Here you can find Form 990 checklists, preparation tips, red flags and more. Visit: www.aicpa.org/nfp.

Mission image courtesy of Shutterstock.

Jay-Z Learned the Value of a Good "Blueprint"

Post author By FFC
Post date April 12, 2016

Jay-Z Learned the Value of a Good “Blueprint”

When New York-based rapper/producer/entrepreneur Jay-Z released his critically-acclaimed The Blueprint in 2001, he cemented his place at the top of the music industry with an album that serves as a model for his music genre and those who came after him.

Much has been written about The Blueprint and its impact on Jay-Z’s career, with critics noting that it was a defining moment. The album became the foundation of a young man’s rise from just another rapper to that of a world-renowned musician, entrepreneur and investor.

Now, I admit that pivoting from Jay-Z to the next version of the CPA Exam might seem like a stretch. But think about the figurative title of The Blueprint and what the album did for future rappers. Now compare that to what the new CPA Exam blueprints (unveiled on April 4) mean to a candidate in their quest to become a CPA. Both serve as a valuable guide and resource.

Blueprints are the foundation of the next version of the Exam. These new, informative guides were developed by experienced CPAs and psychometricians to provide candidates with a detailed look into the content, skills and related representative tasks that may be tested when they sit for the Exam. Expanding on the information presented in the Content Specification Outline (CSO) and Skill Specification Outline (SSO), the blueprints go beyond generalized descriptions or short explanations to provide a great deal of useful information.

A quick example of the positive change the blueprints offer candidates is Area III within the Auditing and Attestation section. Under the current Exam, the only clue given to a candidate with regard to what will be tested in a particular group is the term “Analytical Procedures.” Using the new blueprints, the candidate will not only know the topic and content group, but also have six representative tasks associated with it and understand that these will be assessed at the Analysis and Evaluation levels. How’s that for a blueprint?

Approximately 600 representative tasks that are critical to the role of a newly licensed CPA are included in the blueprints, combining both the applicable content knowledge and skills required in that context. They were developed with input from newly licensed CPAs and their supervisors, whose feedback played a significant role in validating the Exam’s content and skills. Based on the nature of a task, one of four skill levels derived from the revised Bloom’s Taxonomy[1] is assigned to each task. Bloom’s Taxonomy classifies a continuum of skills that students can be expected to learn and demonstrate. In short, by simply reviewing the blueprint for an Exam section, a candidate will be able see a task they may face, the skill level at which it would be tested and the content weight for the related area.

While candidates will see a tremendous benefit from the new blueprints, so too will the academic community that prepares students to enter the profession and earn the CPA license. Throughout the college and university system, educators craft realistic scenarios and case studies for the classroom that challenge students to function as they would on the job. The representative tasks included in the blueprints will serve as a valuable guide for the creation of these assignments, as they accurately reflect what may be tested on the Exam, as well as the work being performed by newly licensed CPAs.

The new CPA Exam blueprints are a significant part of the Exam’s evolution to maintain its rigor and relevance. It may be difficult to imagine the Exam and Jay-Z in the same thought, but just as The Blueprint provided a model and guide for future artists, the Exam blueprints will serve as a model and guide by which candidates will have a very clear picture of the Exam and what they can expect come testing time.

Joe Maslott, CPA, CGMA – Sr. Technical Manager, Content Management, American Institute of CPAs.

[1] Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives (Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classification of educational goals. Handbook 1: Cognitive domain. New York: David McKay.

Source: AICPA

News

Americans Need Financial Literacy More Than Ever

Post author By FFC
Post date April 8, 2016

Americans Need Financial Literacy More Than Ever

Americans are delaying major life decisions, including buying a home, marriage or retirement in increasing numbers—for financial reasons. According to a recent survey, as many as 51 percent of college students say finances, such as the high cost of student loans, play a major role when making important life choices.

This staggering statistic points to the need to educate and help all Americans make smart financial decisions. As Chair of the AICPA’s National CPA Financial Literacy Commission, I help spread the message about the critical need for financial educational programs. The AICPA, state CPA societies and thousands of CPAs across the country share a common responsibility for leadership and promotion of financial education through the profession’s flagship 360 Degrees of Financial Literacy program and the public service announcement campaign Feed the Pig.

This month is Financial Literacy Month, and while it is a great time to shed light on the need for financial literacy, it’s a topic that must be consistently discussed year round—especially since the total national student loan debt is now over a trillion dollars. Too many people of all ages continue to find themselves in precarious financial situations they’re unable to handle due to a lack of knowledge about topics that seem commonplace to us as CPAs, such as credit cards and loans.

Helping people understand their finances and providing educational opportunities to solve financial problems, such as the increasing student loan debt, is the CPA profession’s social responsibility. As trusted advisers, we have the ability to create better financial futures across the country. Millions of Americans have been assisted by free resources available on the 360 Degrees of Financial Literacy and Feed the Pig websites. These sites include free tips and calculators to help them make sense of student loans, accelerated debt payoff and much more. This is just one part of the profession’s commitment to improving the financial education of Americans.

Financial literacy education is a grassroots effort and CPAs are leading the charge. I encourage you to go out in your communities and speak to neighbors, friends, family and local schools about the importance of financial literacy. As a member, there are a variety of resources available to you, such as prefabricated presentations, hand outs and more. Reach out to Samantha Delgado, the AICPA’s communications manager of consumer education, for more information.

What are some ways that you help people understand their personal finances?

Greg Anton, CPA, CGMA is Chair of the AICPA National CPA Financial Literacy Commission.

Saving for a house courtesy of Shutterstock.

Source: AICPA

News

Starting Here: On the Path to Assuring Sustainability Data

Post author By FFC
Post date April 7, 2016

Starting Here: On the Path to Assuring Sustainability Data

In terms of intangible accounting, there are no assets or liabilities more ethereal than those related to environmental, social and governance issues. Mother Nature does not send monthly balance sheets. An organization’s diversity and inclusion committee cannot easily sell its access to deeper talent pools on the open market. And yet, gaps in management structures can wreck value beyond any analysis.

As a result, an organization must account for these concepts with hard data to help manage and improve these often overlooked risks and assets. Furthermore, just as it can with an organization’s financial data, regular auditing (or “assurance” as it’s known by the CPA profession when covering subject matter other than financial statements) can strengthen environmental, social and governance data’s accuracy, collection process and reporting.

The environmental, social and governance assurance landscape

In 2014, more than 2,600 reports were produced applying the Global Reporting Initiative framework for sustainability reporting. And while the proportion of assured reports has been slowly growing, less than half of the reports published that year were assured.

Looking forward, trends favor greater external assurance. According to a survey of CFA Institute members, 69% think it is important that environmental, social and governance disclosures be subject to some level of independent verification. In addition, a recent AICPA study projects that corporate expenditures on various forms of sustainability verification and assurance will grow by an average of 11 percent between 2013 and 2017.

The benefits of starting now

While it is still unclear when environmental, social and governance data assurance will become standard practice, organizations should begin preparing for that very possible eventuality. Forward-looking companies can start by building their capacity to use internal auditors to review environmental, social and governance data and processes. Beyond helping to prepare an organization for an external audit, an internal review system can also:

create a more robust reporting process that brings together team members not typically engaged with environmental, social and governance reporting

provide more timely sustainability metrics to help strategic planning

improve overall credibility inside and outside the organization

This is especially true for a system built on multiple reviews per year, instead of the annual cycle that is most common for sustainability reporting. The bottom line: a more credible process leads to more credible data.

The first steps

Elevating the management and verification of environmental, social and governance data in a manner similar to financial data is likely to be resource intensive, requiring a level of scrutiny most environmental, social and governance data does not currently receive. External assurance is the ultimate target in bridging any trust gap between reporter and stakeholder. However, there are several intermediate steps that corporations can take before engaging with an external auditor that will help provide greater credibility. These minor changes leverage the expertise that already exists within an organization given its experience preparing financial and legal disclosures.

The Institute of Internal Auditors (IIA) has created a model with three internal layers of assurance that build on one another to increase credibility. The layers are:

Senior management, which implements procedures, collects data, and monitors the process.

Senior risk management, financial management, and compliance, which define and develop the process to collect and report data.

Internal auditors, which provide independent assurance of a credible and consistent process of data collection.

These internal layers can improve the data collection process and documentation of the process while maintaining a consistent process across the board.

Looking ahead

For sustainability data to gain full credibility and utility for business leaders and investors, it’s essential that it ultimately receives the same rigorous scrutiny as other major business disclosures. In fact, treating financial and environmental, social and governance data in a similar fashion may someday be the norm.

While your organization may not be ready to seek third-party assurance on your environmental, social and governance data, taking small steps now can position you to eventually implement a more comprehensive approach and reap the advantages of early adoption when the time is right for a more extensive investment.

KT Michaelson, Director of Analytics, Framework LLC. KT’s work and writing focus on transparency, risk and opportunity assessment and climate. Framework LLC is a specialty management consultancy that helps leading global companies maximize performance by developing strategies and practices for managing financial, social and natural capital sustainably.

For information on CPA provided assurance, check out this AICPA brochure illustrating the many benefits.

Leaf graph image courtesy of Shutterstock.

Source: AICPA

News

From the Frontlines: Kimberly Ellison-Taylor

Post author By FFC
Post date April 5, 2016

From the Frontlines: Kimberly Ellison-Taylor

Welcome to the AICPA’s series focused on bringing the perspectives of diverse CPAs to life.

Attitude. Aptitude. Appearance.

If I had to boil down the topics I focus on when I give advice to women in the workplace, the triple-A approach would be it.

Attitude, because people want to be around engaging, charismatic and nice people. Think about talent shows like “American Idol” or “The Voice.” Raw talent will get you far, but star power draws people in. The corporate world is the same. It is not enough to only be smart. Plenty of people who are smart have trouble growing their carreers and getting promoted. The difference maker? Confidence. Self-esteem. The ability to speak up and also work as part of a team.

Aptitude, because we are all works in progress and must continually improve and build our respective skill sets. You can’t rest on what you did yesterday. Opportunities for leadership and increased responsibilities will arise, and it’s important to be prepared. That’s how I’ve earned credibility throughout my career to succeed in challenging roles. Yes, we all have met colleagues who can do minimal preparation for a presentation, and it’s an approach that works for them. However, I know that is not me. I would much rather minimize potential issues that could occur—review the material, get feedback if possible, practice, anticipate questions and show up early. Why take any risk? We have the ability to shape our personal brand and earn the confidence of others. When mastery of our craft is clear and demonstrated, we earn respect.

Appearance, because yes, there will always be some people who will make judgments. She’s young. She’s blonde. She’s black. She’s…fill in the blank. If you subject yourself to such comparisons, your self-esteem will be shattered, and you will subscribe to the changing opinions of others. By all means, do your strengths, weaknesses, opportunities and threats assessment and be honest. Identify others who will tell you not just what you want to hear, but what you need to hear. However, ultimately, own your truth—your own story and give yourself permission to have a different path based on your own reality.

The triple-A approach has been very helpful in my career, though it has not fully insulated me from uncomfortable situations in my carrer. I simply prefer to be positive and—as I tease with my female colleagues—I don’t carry a broom in my purse.

In my former role as a CIO, there were quite a few times when people made assumptions about me. Here I am in the conference room: younger, female and black. Several vendor representatives would seek our business, and would routinely make no eye contact with me. They assumed I worked for my male team members. When it was time for the decision or next steps, my team would say, “Kimberly, what do you think?” I would then say “Hi, I’m Kimberly. I’m the CIO.”

In these situations, I could have been offended, defensive or angry, but I just chose not to be. Negative emotions would change me – and not in a positive way. Their thinking says more about them than it does about me.

If I walk in a conference or ballroom, and I’m the only woman or the only woman of color, I look for commonalities and connections of similarities. This approach has helped me develop great relationships wherever I have traveled.

That’s not to say that we as women should completely ignore the issues that have occurred and continue to occur. We have to be vigilant about addressing the ongoing challenges faced by working women. More often than not, that means balancing work and family. I’ve found it invaluable to get ahead of potential conflicts by having a proactive, straightforward conversation with management, i.e., “I can work late on Monday and Wednesday, but I have to be at my son’s champion soccer game on Tuesday.”

Today, companies and leaders are more understanding than they were 20 years ago, 10 years ago and, yes, even five years ago. Moreover, they are right there on the frontlines with how to help with the integration of work and life, alternative work schedules and even part-time staffing. Many companies and firms have initiatives to attract and keep talented people, both women and men, so that we as a profession are better for it. Some of these initiatives include the various resources and efforts offered by the AICPA’s Women’s Initiatives Executive Committee.

We are moving in the right direction. The progress is promising, and I am excited by the opportunities that will only get better and better. We should identify the employers who recognize the value of our attitude, aptitude and appearance, as well as the men who are supportive and understand our perspectives. To be pro women’s issues is not anti-men. The profession is the strongest when it draws from the best and brightest and there is more than enough room for all of the talents we collectively offer. In the meantime, we can continue to demonstrate our skills and capabilities like trailblazing CPA leaders Christine Ross, Mary T. Washington and Olivia Kirtley. We’ve come a long way, and we’re not done.

Kimberly Ellison-Taylor, CPA, CGMA, Vice Chairman of the Board of Directors, American Institute of CPAs