Happy New Year and a Look Back at the Top 10 Posts of 2015
All of us at AICPA Insights wish you a joyous holiday season and a Happy New Year. This will be our final post for 2015, but we’ll be back with more exciting content the first week of January. In the meantime, in case you missed them, here’s a look back at the top 10 posts of 2015:
All of us at AICPA Insights wish you a joyous holiday season and a Happy New Year. This will be our final post for 2015, but we’ll be back with more exciting content the first week of January. In the meantime, in case you missed them, here’s a look back at the top 10 posts of 2015:
3 Initiatives to Improve Employee Engagement in Your Firm
What if the concept of employee turnover was foreign to your firm? What if the Monday morning faces of each of your staff shone like those of children lined up for entrance to Disneyland? What if your firm had so many clients eager for your help that your biggest problem was managing new business?
The best firms have already figured out that motivated and passionate employees equals success. The real challenge lies in retaining those employees and keeping them engaged and inspired so they aren’t tempted to look for work elsewhere. Here are three initiatives to help your firm enhance employee engagement and inspire long-lasting dedication.
1. Get Employees Involved
An engaged employee is one who has a strong connection with their firm. That connection can be developed when the firm’s vision, mission, and core values are created and lived out through the involvement of all employees – not just trickled down from higher-ups. To help increase employee involvement, establish an engagement system that will benefit everyone in the firm, such as:
Set clear expectations that instill a sense of accountability in each employee.
Invest in your staff by making career development and learning a priority.
Develop a performance management process. Start with a focus on establishing SMART goals—goals that are specific, measurable, attainable, realistic, and timely and continue with a commitment to keep open lines of communication between supervisors and employees.
Involve employees directly in firm projects and committees to encourage collaboration and provide confidence among all levels of staff to be innovative. This will provide them with an opportunity to prove themselves as a valuable team member.
How does your firm currently stack up on engagement? Your employees probably have an idea. AICPA Private Companies Practice Section member firms can use this Engagement Scorecard to see how their firm ranks among their staff in each of the areas of engagement.
2. Foster a Culture of Gratitude
The concept of being grateful is highly undervalued in today’s business world, and yet it is such a familiar part of our individual daily lives. Simply adopting a grateful outlook in your firm can increase employee motivation; bolster team work and collaboration among the firm; improve individual confidence; provide employees a sense of empowerment; and encourage healthy lifestyle habits among employees by reducing stress, building immunity, and just making people feel appreciated.
Begin to incorporate gratitude into your firm’s culture by saying “please” and “thank you.” You can take it a step farther, and implement a reward system to motivate your staff to do their best. For example, the AICPA has created a program that enables every staff member within the organization to acknowledge a job well done for any colleague, at any level, through a point award system called “You Earned It!” The points can be awarded in varying increments, and these points can be accumulated and traded in for tangible awards. A lot of little “Thank Yous” can add up, and it doesn’t take much time to show your appreciation. You’ll be surprised how much these small signs of gratitude will positively affect your firm’s culture over time. Be specific in your praise, and don’t be shy about sharing your gratitude with others in your firm.
3. Embrace and Nurture Through Learning
Creating an environment of engaged learning can be the key to attracting and retaining quality staff members. Now more than ever, learning opportunities are a prime concern for individuals in the workforce. Employees who feel their firms are supportive of their continued career development are more likely to stay with that firm.
On-demand education has transformed the way people learn, making it easier to access quality materials and hear from sought-after subject matter experts. Now, training courses don’t have to take up an entire day of staff time. Through initiatives such as The Future of Learning, professional development is being delivered in bite-size pieces, allowing individuals to learn something new in periods as small as just a few minutes. Continued professional education is now being delivered in new and innovative ways that make learning a passionate and personal experience. That excitement for learning can translate into an employee who is passionate about your firm and its mission.
Bottom line: make learning an ongoing initiative in your firm –it’s essential to creating deeper engagement with your firm.
Sandra Wiley, COO and Shareholder, Boomer Consulting. Sandra Wiley is ranked by Accounting Today as one of the 100 most influential people in accounting as a result of her prominent role as an industry expert in human resources and training as well as her influence as a management and planning consultant. She is the director of The P3 Leadership AcademyTM as well as the CEO AdvantageTM. Sandra consults and speaks around the globe on management- and technology-related topics, including strategic and technology planning, compensation, change management, and developing a training and learning culture.
Tangible Property Wins Demonstrate AICPA’s Advocacy for Taxpayers
The AICPA continually advocates on tax matters to improve tax policy and administration for tax practitioners and taxpayers alike. Though the issues and challenges we grapple with could be difficult, our goals are simple: transparency, simplicity and certainty. Taxpayers and practitioners have scored a major victory for certainty and simplicity as AICPA-supported provisions in legislation will soon become law. Taxpayers will have to deal with fewer late and amended Forms 1099 that have $100 of income or less impact, fewer identity theft situations due to Forms W-2 will soon have truncated Social Security numbers, and clients will be able to rely on several permanent rather than temporary tax credits.
We also achieved more simplicity when the small business tax community received two big to make the “repair regs” more taxpayer friendly.
In February 2015, the IRS released Revenue Procedure 2015-20, providing the AICPA-requested relief that allowed taxpayers to prospectively apply the final tangible property regulations, eliminating a substantial administrative burden for small businesses. It also meant that many small business taxpayers did not have to file a Form 3115 to comply with the regulations.
The IRS also requested additional comments on the $500 de minimis safe harbor limitation for taxpayers without an Applicable Financial Statement (AFS). Taxpayers and the tax professional community had a lot to say, recommending increased deminimis thresholds ranging from hundreds to tens of thousands of dollars. The AICPA suggested $2,500 as a new deminimis amount and also recommended indexing the amount to inflation.
Their chief complaint was that the $500 threshold did not represent the cost of ordinary repairs or basic property purchases for small businesses that are less likely to have an applicable financial statement. Repairs or purchases of laptops or printers for small businesses can often range from $600 to over $1,000. Repairs of an oven in a small bakery shop or a commercial refrigerator in an ice cream shop could cost a lot over $500 with labor and replacement parts. Any of these basic expenses in excess of $500 were not protected from IRS audit under the safe harbor.
In the spirit of giving during this holiday season, at the end of November, the IRS released Notice 2015-82, which provides the long-awaited AICPA requested relief for small businesses. Starting in 2016, Notice 2015-82 increased the de minimis safe harbor threshold from $500 to $2,500 per invoice or item for taxpayers without an AFS.
The release of this notice prior to the end of 2015 allows taxpayers without an AFS to take advantage of the $2,500 de minimis safe harbor by implementing a required consistent accounting procedure or policy by the beginning of the 2016 taxable year.
For additional guidance, see the AICPA Quick Summary Chart and the IRS FAQs, which note the tangible property regulations safe harbor. And don’t forget to make the annual elections for the de minimis safe harbor in your timely filed tax return!
Ogochukwu Anokwute, CPA, J.D., Lead Technical Manager-Taxation, American Institute of CPAs.
Rebecca McNeil, CPA, CGMA is the chief financial officer of The Arts Finance Cohort, a collaboration between five Pittsburgh-based arts organizations including a theater company, a performing arts venue, a community arts space and ceramic studio, a glass studio and a crafts center. As a shared CFO, she provides strategic and operational financial expertise the groups could not afford individually. Her task is to move the organizations beyond year-to-year, break-even operations to long-term sustainability, as she helps each create a capitalization plan. McNeil is also a classically trained clarinet player. In this AICPA Insights Member Spotlight, we find out how Rebecca is using her management accounting skills to help an industry that she is passionate about: the arts.
1. Tell me about your day-to-day responsibilities.
There’s a wide variety of work. I might review one group’s [IRS] 990 and make corrections to the form, perform current-year projections for another group and work on policies and procedures for another. For some organizations, I’m providing higher-level oversight and strategic planning advice and for others I’m offering more upper-level staff support by updating their record-keeping. I have to evaluate with each organization based on the staff they have in place.
2. What are your direct areas of responsibility?
My job is to not just show the numbers, but to tell the story of the organization through the numbers. I’ve redrafted nearly every organization’s financial statements at this point. I’m trying to get more clarity on the numbers and present them in a way that makes sense.
There’s also been some education for the organizations on their financial statements so they can understand where their focus should be. I’m trying to help them manage their cash flow while understanding how much fundraising they need to do. We’re trying to get realistic, achievable budgets, and in some cases that requires resetting the budget process.
3. What is/was your biggest challenge?
Time management—without a doubt. When you work for a single organization, you can figure out which priorities should take precedence and how to focus your time. When you work for five organizations, they all have priorities, and the priorities are all at the same high level. One organization or initiative can’t take priority over the other. That’s a challenge.
4. What skills do you think are critical for your role?
It’s my job to present financial information in a way that makes sense. People are scared of numbers if they don’t understand them, and most people don’t understand numbers. If a user of one of my financial statements is not understanding what it is showing, then I haven’t done a good job on that report, and I need to make a change. I feel really strongly about that.
5. When you’re not at work, where can you be found? What are you most passionate about?
I consider music to be my great passion outside of work. It’s my release. You can escape in music. When you’re playing, you have to let everything else drop out of your head so you can focus on the music. I play in a local community symphonic band, a small woodwind ensemble, and a folk group at my church. I’m also a single parent – I have a nine-year-old daughter – so I spend as much time as I can with her. She just started the clarinet, so we’ve been practicing together, which is fun. She’s so excited about the clarinet and loves to practice with me.
6. Do you see any correlation between the skills you use for your music and the skills you use for your job?
When you’re playing as part of a band or ensemble, you have to be aware of what everyone around you is doing and how your part complements the greater group. If someone else is leading, you need to make sure they can be heard and understand how your part supports them. I see myself as a support person for the whole organization, not just the financial staff. If we’re not reporting internally in a way that makes sense to the staff, then they can’t use the information correctly. We need to make sure that we’re providing what they need so that they can do what they need to do.
7. Any advice for young CGMA designation holders starting their careers? What skills are most important for them to develop?
Communication skills. When you’re managing lots of different personalities and communication styles, you have to be able to adjust your style to fit your audience.
Also, it is vital to have strong working relationships because, believe it or not, everyone has the ability to impact the final numbers. Often the lowest paid part-time staff person has the most direct interaction with an organization’s customers. That person can have a major impact on your bottom line.
Information sharing is also really important. Even people who may not need to see a report might want to see the report, because it might help them understand the organization better. I like to make information available to everybody.
8. What do you see as the biggest benefit of being a CGMA designation holder?
The CGMA designation shows the finance community that you have the skills and the ability to think in a strategic way. As a management accountant, you must be able to look at the big picture. Often in accounting, you’re analyzing the past. But if you’re constantly looking backwards and you’re never looking forward, you’re going to get caught off guard. So you have to be able to step back and look at the present and the future. I spend most of my time when I’m presenting reports not even really talking about what’s on the page, but talking about what those numbers mean for the future.
As a CGMA designation holder, Rebecca applies her left-brain management accounting knowledge in right-brain ways in order to be a leader in an industry she’s passionate
about. See how taking the first step to becoming a CGMA designation holder starts you on a path to elevating your technical, business, leadership and people skills in order to advance your career goals.
It’s flu season — conveniently coinciding with busy season. It’s time to stock up on cough syrup and analgesics to ward off the aches and discomfort of the flu. A visit to your family doctor might also be in order, if you can get an appointment. But what do you do if that ringing in your stuffy ear is a sign of hearing loss and not some flu-induced infection? What if those sniffles just won’t clear up on account of that broken nose you suffered last spring? Well, that’s when you visit the ENT– the Ear, Nose and Throat specialist. She sees patients who need more focused care. She’s managing a niche practice.
For many CPAs, setting themselves apart in a competitive market is a critical goal. The popularity of practice areas such as personal financial planning, IT specialization, fraud and forensic accounting, business valuation, tax and assurance services demonstrates the value that finding the right niche can offer. Here are a few of the many benefits that help explain why more CPAs are choosing to specialize.
1) Keep clients in the fold. Clients are impressed when a firm is ready to provide services they might never have anticipated needing. “When clients need business valuation for estate planning or a buy-sell agreement, we have that expertise on staff and they don’t have to look elsewhere,” notes Richard L. Craig, CPA/ABV/CFF, CITP, of 415 Group in Canton, Ohio. His 50-professional firm’s valuation and litigation niche grew from a small subspecialty to the market leader in northeast Ohio. When he got started, the competition “was mostly economists doing business valuation and litigation, not CPAs. We were in demand because we were better able to communicate in plain language with judges and juries. We found ourselves getting assignments even from attorneys we had previously gone against in court.”
2)Hold on to top professionals. At Martin & Associates in Cincinnati, the roughly 20-person firm has taught business skills to all its technologists. According to Kevin Martin, CPA.CITP, 100% of the practice is built around the customer relationship management (CRM) solutions leveraging the team’s accounting knowledge. “Clients might come to us when they need to implement a new inventory or sales order accounting system, or other business process,” for example, he says. “We understand the business and accounting side as well as the technology behind the solutions.”
The practice’s structure offers a strong staffing advantage. “Having the professionalism and ethics of a CPA firm with the fun of being a tech firm has made it easier to retain great people,” says Martin. Craig agrees that his specialty is also an asset in retention. “Having this niche gives staff members another area for growth,” he says.
3) Seize growth opportunities. The market for service organization control (SOC) reports is exploding. It can include providing services to industries ranging from investment fund administrators to health care billers to data centers or trust fund administrators. “It’s a service that is touching a lot of industries and organizations,” says Torpey White, CPA.CITP, of Wipfli LLP, in Philadelphia, Pennsylvania.
In fact, all the CPAs interviewed reported rapid growth for their niches. At 415 Group, for example, business valuation and litigation is a growing practice area, with higher realization of billable rates than traditional accounting services. “We’re also always paid up front,” Craig says. “We receive retainers on all work, and there’s no problem getting paid.”
4) Balance the workload. Many niches, including business valuation and technology, make it possible to spread work throughout the year and enhance retention opportunities. The same is true for White’s SOC practice, although the last four months of the year can be a busy time if clients request reports to be issued near year end.
What’s involved in launching a niche practice? A commitment to initial and ongoing education, and training for all professionals involved is one requisite. In Martin’s niche, “you need to spend about 300 hours a year getting smarter and keeping up with new software, upgrades or technologies,” he says. “The training requirement never goes away. If you stop, another firm and staff are going to pass you by.” Narrowing your focus can make it easier to stay current. “You have to define what you’re going to do,” Craig advises.
It’s also important to pick a niche that you love so that prospective clients are inspired by your enthusiasm. “Make certain that you follow your passion,” Martin says. “When you’re introducing something new that might represent a big change for clients, you need passion in order to demonstrate your excitement.”
If you’re considering niche practice options, the AIPCA can help get you started. The Private Companies Practice Section YOU Are the Value Workshop prepares you to articulate what you have to offer and can be used in conjunction with your strategic planning efforts to spotlight the strengths you can build into a successful niche.
In addition, you might want to showcase your expertise by earning a CPA specialization. The AICPA’s Personal Financial Specialist (PFS), Certified in Financial Forensics, Accredited in Business Valuation (ABV) and Certified Information Technology Professional (CITP) credentials and the Chartered Global Management Accountant (CGMA) designation can each help you stand out in the marketplace.
Mark Koziel, CPA, CGMA, Vice President, Firm Services & Global Alliances, American Institute of CPAs.
Taxes and Terrorism: Why Data Could Become Vulnerable
The world watched and listened in horror recently as reports of terrorism in Paris and San Bernardino, Calif., dominated the airwaves. In what is becoming a regrettably familiar scene, countries around the world joined the victims in mourning. But as the days wore on, attention increasingly turned to the covert, encrypted digital communications of the perpetrators. The government has begun questioning the wisdom of unbreakable encryption as a result. It might all seem a million miles from the concerns of tax practitioners. But is it?
In the wake of potential terrorist attacks, government officials are again addressing the complexities of obtaining intelligence data in an encrypted world. John Brennan, Director of the CIA, recently outlined these complexities in a talk at the Center for Strategic and International Studies in Washington:
“In the past few years because of a number of unauthorized disclosures and a lot of hand-wringing over the government’s role in the effort to try to uncover these terrorists, there have been some policy and legal and other actions that are taken that make our ability, collectively, internationally to find these terrorists much more challenging. And I do hope that this is going to be a wake-up call.”
The hand-wringing and unauthorized disclosures to which he is referring came after the revelations of the Edward Snowden leaks. Companies such as Google and Apple, among others, took steps not only to strengthen the encryption employed on their devices, but also to make sure even they cannot force their way in. Rights to privacy, they reasoned, trumped the government’s right to collect information, especially if that information was being obtained as a result of a legal gray-area.
The Two Sides of the Argument
From the perspective of the agencies charged with protecting Americans, there should be no haven for illegal communication. They argue that when strong encryption prevents them from accessing emails, texts or other communications among suspected terrorists, they are unable to anticipate and prevent attacks. For these agencies, the answer is simple: a “backdoor,” or concealed way available only to the government to unencrypt data.
But that backdoor might not remain available only to the government, argue the tech companies. They liken this idea to putting a key under the mat; safe as long as you are the only one who knows it’s there, but not for long once someone else finds out. The tech companies say leaving an entrance for government means creating an eventual gaping hole for thieves and worse, as well.
Keen to avoid complicity both in illegal search and seizures, and in the commission of thefts, the tech companies are adamant that there should never be a backdoor for any government agency to circumvent encryption. Independent tech experts agree.
Many point out that even if American companies were to comply, no such mandate for government access to encrypted systems exists globally. In short, terrorists could simply get their cell phones, tablets and laptops from another supplier in another country, and be right back at covert communication. Furthermore, they argue, the government’s record in selectively capturing private data is hardly pristine.
Meanwhile, government agencies struggle to address real-world threats, many times with their hands tied. While metadata–which contains information such as the identity of senders and receivers–is not usually encrypted at all, communications such as texts and emails that might go strictly from one device to another without a server intercept are inscrutable without some kind of access.
Why Does This Affect Tax Practitioners?
Right this very moment, the computers and mobile devices at your practice are brimming with sensitive customer data: Social Security numbers, bank account numbers, phone numbers, addresses, and much more. If you employ best practices, these devices are secured from internet access, behind one or more firewalls, and their data stored on encrypted drives.
If the recent tragedies lead to changes in the law, before long your encrypted drives and other devices could have a legally mandated backdoor installed for government access. If a hacker should discover how to exploit that back door (and let’s face facts, they usually do), the information you store could be up for bids.
With new hacks on giant corporate servers happening daily, we are seeing more theft of private information than ever before. As a steward of the data that makes your clients’ financial lives possible, it is important to keep up not only with best practices for securing that data, but also with laws that could affect your ability to do so effectively.
For now, it’s a very good idea to review your security practices with your IT provider. Keep informed of developments in the law, and follow best practices to stay safe. Assure you are using updated versions of all your software, and review best practices for securing client data with your staff. It’s the best way to gird yourself against experiencing any more tragedy.
Adam Junkroski, Lead Manager-Tax Communications, American Institute of CPAs.
The Q1/Q2 2016 score release timetable is now available. Score release timelines are updated biannually on AICPA Insights and on the CPA Exam website. For more information about score release and the scoring process, please visit the Psychometrics and Scoring page.
**The examination data files the AICPA receives after March 1 will be included in the final target score release date.
**The examination data files the AICPA receives after June 1 will be included in the final target score release date.
Keep in mind:
All dates and times are based on Eastern Standard Time zone.
For the vast majority of candidates, the AICPA receives the examination data files from Prometric within 24 hours after a candidate completes the Exam.
The scores for the examination data files received after the AICPA cutoff dates will be in the subsequent scheduled target score release.
Some candidates who take the BEC section might receive their scores approximately one week following the target release date due to additional analysis that might be required for the written communication tasks.
I recently had the pleasure of speaking with two of the profession’s leaders to discuss their thoughts on the profession and the evolution of the joint venture between the AICPA and CIMA. Paul Stahlin, CPA, CGMA, is the former chairman of the AICPA’s Board of Directors and Myriam Madden, FCMA, CGMA, is the president of CIMA.
Ash Noah: What are the biggest issues impacting the accounting profession today?
Myriam Madden: We are living in a volatile, uncertain, complex and ambiguous world. We are navigating a complex environment that is becoming increasingly connected and congested. It’s critical that in this environment we look to continuously refresh our competencies and skills and excel in our customer focus and quality.
AN: In your opinion, how does the joint venture between the AICPA and CIMA address some of the issues you just described?
Paul Stahlin: The AICPA and CIMA have developed the resources and tools members need to perform in an ever-changing and fast-paced world. For example the CGMA Competency Framework and the Global Management Accounting Principles equip finance professionals with the tools to be leaders in business; to be better informed and part of decision-making from beginning to end.
AN: How would you describe your experiences working with your partner organization?
MM: I learned that when partnerships are formed between organizations with a similar strategic direction, the possibilities for enhancing the profession and service to our members are significant. Both CIMA and the AICPA are organizations that have a fierce loyalty to their members and a commitment to excellence and quality in the services they deliver.
PS: It’s been so natural to create an affiliation through the joint venture. The quest to make it better serves as the common language and goal without regard to geography. Passion is not limited to just one organization, and leadership abilities flourish in both.
AN: The AICPA recently introduced a proposal to evolve its joint venture with CIMA to create a new association while continuing to operate the membership bodies our communities have long trusted. Why do you support this proposal?
PS: The profession has evolved, our clients have evolved, and the world around us has evolved. What the AICPA and CIMA are proposing is the next logical step in this evolution. The creation of a new association—in addition to the AICPA and CIMA—of more than 600,000 accounting professionals will provide a broader platform to strengthen and promote the CPA in the U.S. and globally, as well as grow and promote the entire accounting profession for the next generation.
MM: For me, the overall aim of deepening the joint venture is to allow us to do what we do…better. And, simply put, that is to deliver better services for our members.
Our goal is to create and support world-leading finance professionals who are respected and in demand, and who create true value for the organizations in which they work. The deepening of the joint venture accelerates our strategy for greater influence of the management accounting profession. Together, we can promote the profession and build greater market recognition to bring our members the reputation, reach, and resources to help them go further.
To learn more and share your feedback on the AICPA/CIMA proposal to evolve the joint venture, please visit:
Continuing the Journey of Inclusion: The Year in Review
As 2015 draws to a close, I’ve been reflecting on the 12-month journey that our society and the accounting profession have made in the area of diversity and inclusion. This has been a banner year for diversity and inclusion in the profession, especially in relation to gender issues. Additionally, there are a number of new opportunities for accountants to capitalize upon as a result of a key diversity and inclusion-related ruling raised by the U.S. Supreme Court.
In July of 2015, KPMG announced Lynne Doughtie as their U.S. Chairman and CEO. In addition, growth in leadership among women within the accounting profession continued. Tommie Barry recently concluded her year as AICPA Chairperson of the Board of Directors. At the same time, the AICPA’s governing Council voted Kimberly Ellison Taylor into the Vice-Chair position of the AICPA Board of Directors at its fall meeting. Of even greater note, Kimberly is the first African American voted into such a position within the AICPA.
But there remains much work to be done. The data continues to show that the profession lags in representation of both African Americans and Latinos as CPAs and firm partners. While the AICPA and its National Commission on Diversity and Inclusion continue efforts to close the gap, we find that our profession is not alone. This year also highlighted that not only is the accounting profession struggling with equal representation of diverse talent, but so is the technical industry, as indicated by Intel’s and Microsoft’s multimillion dollar commitments to improve both gender and ethnic diversity within their workforces.
The legalization of same-sex marriage was also a significant focus in 2015, and requires the accounting profession to take notice. Over the summer, the U.S. Supreme Court ruled in favor of striking down same-sex marriage bans in 13 states in Obergefell v. Hodges; granting same-sex couples the freedom to marry nationwide. This new ruling will impact how tax laws will be applied more equitably to same-sex couples and presents CPAs with additional service opportunities to advise couples on issues such as healthcare and estate planning.
The more poignant and uncomfortable cases of discrimination on university campuses, protests against law enforcement, and the Paris—and now—U.S. terrorist attacks, makes our understanding and tolerance of others more than a business case for diversity and inclusion. These dynamics in our society increase the importance of doing more than just tolerating difference. They make it imperative that we exist equally in a world of difference.
The final 2015 edition of Inclusion Solutions highlights the most popular articles we’ve published in 2015. I invite you to peruse the list of articles on best practices and news about diversity in corporate America. I think you’ll see how these articles can have an impact on your organization’s inclusion journey.
Kim Drumgo, MBA, PMP, Director, Diversity & Inclusion, American Institute of CPAs
