Category: News

Halloween used to scare me. I was sure that monsters — specifically zombies — were out to get me. But I’m not afraid anymore because I faced down a nameless ghoul who did more actual harm to me than any imaginary monster could ever do.

It all started one fateful day when an identity thief used my name, Social Security number and birth date to file a fraudulent tax return, netting the fraudster a $4,000 refund. While it was an excellent payday for the thief, it was the start of some major headaches for me.

By the time I found out what happened, I was on the hook for more than $14,900 (including supposed unpaid taxes, penalties and interest). Fresh out of grad school with high student loan debt, rent and health insurance payments, I was completely unprepared to weather this storm.

Here’s the scoop on how everything went down and the things I did — and didn’t do — to contribute to the problem. Share this cautionary tale with your clients. You don’t want them to make the same mistakes I did.

The Internal Revenue Service comes knocking.

Once the IRS figured out the scam, it took steps to get the money back. It sent out a Notice CP-2000, but the letter never got to me because the identity thief used a different address to claim the fraudulent tax refund.

I found out about this via a Notice CP49, which came after I filed a genuine tax return sometime later. (Now that the IRS had my real address, it knew where to go to get the bill paid.) The Notice explained how much I owed, and that the IRS was applying that year’s overpayment to the bill, leaving me with $13,700 due: Immediately.

The next few days were filled with phone calls to the IRS, my parents, my brother and anyone I could think of to help me (with one exception, but more on that in a minute). Then, I filled out Form 10439 Identity Theft Affidavit, reported the crime to the Federal Trade Commission and local police, reviewed my credit reports and did everything I could think of. (What I wouldn’t have given for this identity theft recovery checklist!)

Then I waited. And while I waited, I tried to figure out how this happened to me and if I could’ve stopped it earlier. Spoiler alert: I made some big mistakes. And yes, I could’ve avoided them.

The plot thickens.

While this issue festered and grew, I started seeing signs someone had gotten ahold of my personal information — such as a collection call for a debt that wasn’t mine. But I didn’t see these as major red flags because I wasn’t paying attention to the subtle symptoms of identity theft.

It shouldn’t come as a surprise, then, that my lack of attention to detail was part of what got me into this mess in the first place. Mistake number one was not prioritizing my taxes while in grad school. To be honest, I didn’t really think about them. For the first time, neither did my parents. Mistake number two was failing to check in with them. As it turns out, since they were no longer supporting me, they didn’t claim me on their tax return that year. Had I realized this and filed a genuine return, the identity thief wouldn’t have had an opening.

Although there were steps I could’ve taken to avoid this situation, it’s important to remember that this one fraudulent tax return isn’t the whole story. My identity and private data were stolen and used to file the return. I still don’t know what else this information was used for, and I probably never will. 

The monster is eventually defeated, but…

Eight months after I filed the affidavit, the IRS unceremoniously sent me a check for my refund. Soon after, an IP PIN followed. The case was closed, and I was in the clear. With that relief came a great appreciation for the work done by the IRS to ensure we all get a fair shot.

But getting to the end of my tax identity theft horror story took months of tears, uncertainty and feelings of powerlessness while I tried to prove my identity, not knowing if I would be on the hook for a tax bill that wasn’t mine. I realize now that I could have saved at least some of the heartache if I’d contacted a CPA for help the moment I received the Notice CP49. Not only could a CPA have helped me remedy this issue, she would’ve been able to address the underlying identity theft that caused the problem in the first place.

Identity theft is an ongoing national crisis. According to a recent AICPA survey, 48 percent of U.S. adults think it’s at least somewhat likely identity theft will cause them financial loss in the next year, and 6 percent report that they or family members have had someone obtain a tax refund in their name. It’s possible that one or more of your clients will come up against these bad guys — if they haven’t already. Don’t let them battle this alone. Be by their side, or better yet, help them avoid it altogether.

One of the benefits of an AICPA membership is all the resources, and we have excellent tools, articles, checklists and more that address cybersecurity, tax identity theft and other issues. Don’t let your clients turn out like me. Talk to them about protecting themselves from the REAL things that go bump in the night – before it’s too late.

Allison Carter Fanney, Communications Manager — Tax, Association of International Certified Professional Accountants

     

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As a CPA or CGMA, you excel at getting into the weeds. Whether it’s a reporting discrepancy or buried tax provision, you will find it. More importantly, you know how to arrange those weeds to form a bouquet that helps your client.

Now, with software spouting numbers on everything from revenue and sales to “likes” and clicks, a new business opportunity is opening up, one that lets you use that great analytical mind to serve clients who desperately need help with getting a grip on all that data.

“CPAs are ideally positioned to be able to step in and do that type of work.” said Dan Griffiths, CPA, Strategy and Leadership partner at Tanner LLC. Griffiths ought to know. In addition to Tanner’s tax and audit practices, the firm has stretched its accounting arms to carry a range of specialty consulting services such as strategic planning, cybersecurity and, now, data analytics.

The diversification paid off – not only in creating new revenue sources but also in company culture and reputation.

To Griffiths, standing still means getting left behind – and he has a point. The World Economic Forum’s Jobs Report lists traditional accountant and auditor roles as being made increasingly redundant by automation, while dozens of new roles will emerge. Branching out now will pay dividends later. In our interview, Griffiths shares the ups and downs about venturing into new services and offers insights for firms of all sizes who want to dip their toes into the world known as Big Data.

Jennifer Gardner: It’s mind boggling to think that by 2022, half of the companies surveyed by the World Economic Forum expect machines to replace some of their full-time workforce. How has technology impacted your work? You’re on the forefront for some of this change.

Dan Griffiths: We’ve gotten pretty involved, we’ve even gotten “bleeding edge” on some of it. We figure we kind of have to if the change is going to happen as fast as it’s likely to happen.

A key part of that preparation is experimenting and being willing to risk duplication. “I had someone in my office this morning…talking about how to leverage technology in our audit processes. He said, ‘I hate to do all this work if someone is just going to create a tool in six months that makes all this work irrelevant.’”

While that could happen, he noted, “we need to think through all these processes and implications that technologies are likely to have on our processes or we aren’t going to recognize the tool when it comes. Also, we are going to be ill-prepared to fit it to our needs because we haven’t defined business requirements on our side.”

For example, Tanner is working with a company that has a data extraction tool that allows information to be taken out of any general ledger accounting system “almost without any effort on the part of the client” and put in a standard format. The challenge is that “when you work with a software company, they have no understanding of our business – they don’t know how an audit works, don’t know what a confirmation is. They [simply] know a lot about data analytics.”

JG: Is there a critical need for the profession to bring knowledge to software developers?

DG: We either need CPAs to become developers – which is probably not a very realistic pathway – or CPAs need to learn enough about the underlying technologies and their application to translate the requirements the developers can code for.

One of the biggest benefits of bringing a cybersecurity practice was not the incremental revenue. . .but bringing the people with different skillsets into the firm to help us get better. They can apply that [technical] knowledge to our process and audit workflows and say why are you guys doing this? [For example, they identified ways] to cut four hours out of every audit. If we’re doing 500 audits, that’s a lot of hours…We would never have gotten there on our own if we didn’t have people here at the firm with those skillsets.

JG: Companies have huge amounts of data, but most companies don’t really know how to leverage that data yet. It seems an accountant, a CFO, a strategic business partner or analyst would have a huge value-add to help these companies use the data they’ve collected.

DG: We’ve been very successful in helping clients ask and answer questions that may sound pretty basic. Tools like Shopify, QuickBooks, Facebook Ads and even the WordPress backend of a website can all provide valuable information, but putting it together to see the big picture is where businesses often need help. If I’m an ecommerce company, how do I answer the question, what’s my CPA? That’s marketing speak for cost per acquisition.

Marketing companies dabble in this, but CPAs are ideally positioned to be able to step in and do that type of work – as long as we’re supported by people who know how technology works.

JG: Not everybody is on the bleeding edge [of technology]. Let’s say I’m a small or mid-sized firm . It probably feels a little overwhelming. How do I start a data analytics practice?

DG: For each firm, you have to evaluate where you’re going to find your early wins. One for us was cybersecurity. There’s not a business client of any firm that isn’t thinking about information security or hasn’t been hacked or been afraid of being hacked. That to me is a really easy way to bring tech savvy into the firm.

Another win for Tanner was that adding data analytics services covers a pretty wide range; part of it is rearview mirror information. “Do we know how much money we made last month? Do we know what our gross margin percentages were by product line, historically speaking? Then how do we take that information to predict what will happen in the future or tell us what to do differently next time.”

JG: I think that would be a huge value to the client. Everyone needs to know how much money they’re making.

DG: They not only want to know [that]– but they also want to know, “How can I make more money? If I start doing more Facebook ads, will I make more money, or will I start losing money?”

What we found interesting as we have been able to take our understanding of data analytics and apply it internally, this is a case of the cobbler’s children not having shoes. We’re horrible, horrible at tracking and managing our own data. No one knows what their profit margins are. We can’t agree on how they will define what profit is. We could do a better job of using data to guide our decisions as a firm as opposed to gut feels. We’re in the middle of an ERP implementation to make sure we’re drinking our own data analytics Kool-Aid.

JG: It sounds like it’s been a value add. It’s just a matter of getting people more comfortable with data analytics as part of the future of profession. I think the barrier to entry feels big to them.

DG: It shouldn’t be. We found you can hire someone at $80,000 or $100,000 and just start there. Their skillset is going to just multiply with what you’re able to do at the firm. Just find one opportunity. For instance, we’ve got clients asking for dashboards. Why don’t we hire someone with that specific expertise and turn ‘em loose to help solve those client problems? We don’t need to make a ton of money upfront, we just need to learn. And then we can refine it from there. We need to learn from Silicon Valley and be willing to do things that don’t scale. That’s the only way that we’ll succeed in innovating things that will scale. You can generally cover your costs, but your initial investments are not about making a bunch of money, they’re about learning what has the potential to do that.

Unless we’re willing to experiment, we’re just going to sit around waiting for someone to come out with QuickBooks and a ProAdvisor certification program and everything else. We’re waiting too long. We’ll miss the opportunity.

JG: So, if I want to get started in data analytics, I need to have some baseline knowledge. How much do you need to understand to get your feet wet?

DG: I think it’s important for leaders of the firm to understand relational databases and some basics of how big data actually works. Just a baseline understanding of those concepts would be really helpful. Then you at least understand what’s possible with the tools even if you’re not the person who can go in and push all the buttons to make it happen.

3 key takeaways from Dan Griffiths to help you get started with data analytics in your firm:

Starting with Low-Hanging Fruit

A good way to think about dipping a toe in the water is finding something that self-funds. If we added this service offering, how many existing clients can we sell it to pay for itself? That opens up the possibility of having people in the firm with different skill sets. It’s not about trying to boil the ocean by hiring $500,000-a-year data scientists.

Embracing Trial and Error

It’s important we spend some time going down some of these dead-end pathways. That’s how we’re going to learn.

Keeping it Real

We’re not whizbang data analytics people… We’re just helping companies have a little bit better business intelligence.

Intrigued by Dan’s comments? Check out these free AICPA webcasts to hear more about opportunities that accounting firms can explore to stay relevant. Also, learn more about the types of skills to either develop in your practice or acquire through new staff from this excerpt of the Journal of Accountancy annual technology roundtable.

Jennifer Gardner, Lead Manager, Communications & Social Strategy ML&C, Association of International Certified Professional Accountants

     

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As CPAs, we’re always interested in numbers, so let me share an interesting statistic: The United States Census Bureau has projected that  groups now considered ethnic minorities will make up the majority of the population by 2042 with Hispanics being the second largest racial or ethnic group and second fastest growing.

According to market research by Neilson, there are about 57 million Hispanics in the U.S., or 18 percent of the population, making them an important demographic to any business – including CPA firms. Is your firm ready to engage with these potential clients and staff? There are a few insights that can help CPA firms connect with this burgeoning business and talent market.  

1. They’re small business owners.

Many of the clients that CPAs work with every day are entrepreneurs, and you’ll be seeing more and more Hispanics in this group. “Latino entrepreneurs are starting small businesses faster than the rest of the startup population and becoming a bigger part of the total U.S. market every day,” according to JPMorgan Chase & Co. The way to appeal to diverse business owners is by understanding their culture, because that’s what sets any ethnic group apart. 

2. Their purchasing power is growing.

Once again, let’s look at some numbers. The percentage of Hispanics is expected to grow to 24 percent by 2040 and 29 percent by 2060. Their purchasing power will rise from $1.3 trillion in 2015 to $1.7 trillion in 2020. Add to those numbers the many Hispanics in the global marketplace. My firm belongs to an international network, and many investors from abroad work with our accounting affiliates in Miami. It’s clearly a significant demographic, and one that can’t be ignored if a firm wants to remain competitive.

3. They’re great team builders.

In my experience, and as an Hispanic woman, Hispanic people relish being part of a group. The profession is a team effort, which is why it’s been a great career for me. I’ve always focused on the growth and development of my engagement teams. I tell my team that they don’t work for me, we all work together. They know I encourage them to grow and take responsibility, but that I’ll always be behind them if they need support. Firms that make an effort to recruit Hispanic professionals will benefit from their team spirit and new perspectives and connections based on unique backgrounds and experiences.

4. Role models are still needed if Hispanics are to make a real contribution to the profession.

Working in an organization whose leaders don’t look like you can be discouraging or intimidating, which is why a firm’s diversity and inclusion efforts can make a real difference in the recruitment and retention of minorities, and their advancement. No matter how strong a role I play in my firm, I’m the only woman and only minority among nine partners, so I’m very much aware of the need to foster greater diversity and inclusion.

There are valuable opportunities for the profession in serving this demographic, but our firms will have to understand the diverse markets we want to serve. As we celebrate Hispanic Heritage Month, I encourage firms to consider the many benefits of including Hispanic CPAs in your organizations. In a changing world, we all have an important contribution to make.

Jenny E. Herrera, CPA, CGMA, Shareholder at Rubino & Company

     

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While I’m not a good baker, when I talk to CPAs who are new to the governmental auditing area and need to understand what the “Yellow Book” is, I often explain using the analogy of a multi-layered cake. The bottom layer of the cake is the AICPA auditing standards, which are the basis for most Yellow Book audits. The second layer of the cake (let’s make it a yellow layer!) adds standards issued by the Government Accountability Office (GAO), known as the “Yellow Book” or Generally Accepted Government Auditing Standards (GAGAS) that build upon the AICPA rules. Finally, if your client gets federal funds, there may be a third layer of the cake that consists of compliance auditing requirements.

The big news for auditors right now is that the GAO has issued a 2018 revision to the Yellow Book which will change the ingredients for the middle layer of the cake. If you audit federal, state or local governments, or not-for-profits, whose audits are subject to the Yellow Book, you should begin updating your recipe card so your cake turns out right. 

To help you learn more about the new recipe, I talked with Brian Schebler, CPA, CGFM, National Director, Public Sector for RSM US LLP. Brian is also a member of the GAO’s Advisory Council on Government Auditing Standards and the immediate past Chair of the AICPA Governmental Audit Quality Center (GAQC) Executive Committee. He has already begun discussing some of the key Yellow Book changes with colleagues at his firm and has some good tips as you begin delving into the new standards.

1. Effective date. You need to understand when the new standards are effective, so you can be ready. If you’re doing financial audits, attestation engagements or reviews of financial statements, the changes are effective for periods ending on or after June 30, 2020. If you’re doing performance audits, they’re effective for audits beginning on or after July 1, 2019.

2. CPE and competency. While some clarifications were made, luckily one concern from the exposure draft wasn’t adopted— a four-hour training requirement specifically on GAGAS prior to performing engagements under the new standards. Instead, GAO is emphasizing that being competent includes possessing specific knowledge about GAGAS. GAO also incorporated relevant CPE and competency guidance from a 2005 GAO Q&A, which is something we’re focusing more attention on, and I’d advise you to do the same. Look at your CPE practices well before the effective date to make sure they’re consistent with the new standards since updating firm policies and procedures may be time and effort-intensive.

3. Format. You’ll notice this significant change right away as the standards look very different. GAO has gone from embedding requirements and application guidance together within the chapters to blocking out the requirements, followed by related application guidance. In the past, people may have been confused by what has appeared to be conflicting language in the standards. Under the new standards, you’ll easily be able to identify what the requirements are, which should result in more consistency in how auditors are employing the Yellow Book. While there’s some flexibility in how we apply a requirement, we need application guidance to do it properly. This change will also improve communications with clients on why a certain stance is being taken.

4. Independence. The Yellow Book now makes clear that an auditor preparing financial statements in their entirety creates a significant threat to independence. I’m aware there have been varying interpretations on this topic among practitioners in the past. While it won’t affect my firm because that’s been our policy for a long time, some auditors may see it as a new or an additional burden since the standards will require the identification of safeguards to mitigate the significant threat, as well as additional documentation and communication. Auditors that view this position as a change should keep in mind that they need to be independent for the entire period covered by the professional engagement, so this should be considered well before the actual effective date of the standards.

5. Peer review. Generally, AICPA members aren’t going to see the changes to peer review as being significant. That’s because audit organizations affiliated with a recognized peer review organization such as the AICPA or the State Auditor Association will generally satisfy the GAO peer review requirement except for a few additional GAO-specific requirements.

6. Waste and abuse. The new Yellow Book transitions the requirements for abuse from the current standards, along with a new concept of waste, to application guidance related to findings. While we are not required to perform specific procedures to detect waste or abuse, we need to consider it if we see it and determine whether it would be an indicator of noncompliance or deficient internal controls.

7. New review service. The concept of a financial statement review appears for the first time in this Yellow Book. I don’t expect to see many of these in our practice, but now that it appears in the standards, some organizations might be interested in having review services performed under the Yellow Book. This is something to keep in mind.

8. Performance audits. The last two chapters of the standards focus on performance audits, which you should review carefully if you perform these types of audits.

The AICPA GAQC has been and will continue to be proactive about providing members with tools, resources and communications about these changes. For more information, you can read GAQC Alert #364, visit the GAQC website for updates, or register for the upcoming webcast “The 2018 Yellow Book: What You Need to Know” taking place on November 13. 

Happy baking!

Mary Foelster, CPA, Senior Director- Government Auditing and Accounting, Association of International Certified Professional Accountants

     

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Is there even a day that passes anymore in which you don’t read, hear or watch a story about the wonders of technology? New apps, new computer systems and entirely new technologies are emerging and being put into practice at dizzying speeds. Cutting through the noise and knowing which technologies are best for your planning practice can be complicated, but ignoring the value technology can add to your practice carries a heavy price in lost efficiency and opportunity.

Are you still driving a manual?

Spreadsheets used to be the go-to tech for organizing and assessing a client’s finances and your resulting financial plan. Handy but labor-intensive, spreadsheets were and are prone to errors and omissions. Other old-school trappings like physical copies of client’s financial data, wills or healthcare directives presented other problems related to security, inaccessibility or loss of the paperwork due to disaster or misplacement.

The modern planner no longer has these concerns. At their fingertips is an arsenal of technology ready to step in, reduce risk and increase customer satisfaction. By creating efficiency and automating tasks once done by hand, planners can spend the time freed up going through the planning process with their clients. It’s simply a matter of assessing, learning and implementing the best technologies for your practice.

It’s not eenie, meenie, miney, moe, but it’s not calculus, either.

Choosing technology solutions can seem daunting. It’s easy to feel like you have to be an expert on the available technologies to ask pertinent questions, but that isn’t the case.

Technology vendors can often be found at planning conferences, and they’re more than happy to chat with you about the best applications for their solutions. In lieu of that, the websites for these technologies often have forums, FAQs or “live chat” help you can use to get more information and address your questions. The only questions you’ll really need to come armed with are ones specific to your practice and how you can use the technology to serve your clients.

A good place to start developing the questions you need to ask is to determine what kind of firm you want to be. If you’re planning to remain a sole practitioner, some technology solutions might not scale well for you or be cost-effective, for example. Similarly, some solutions don’t scale well for larger practices. As you review your technology needs, ask if the solutions you’re investigating work well for your firm’s intended size.

Next, think about your clients’ needs. While the full range of possible combinations of technology are beyond the scope of a blog, there are some big-ticket technologies you might want to consider.

Financial planning software

Financial planning software is a must in today’s market. In the past, clients could ask questions that would require running manual simulations to understand the impact of a proposed change. With planning software, changes can be tested in real time, while the client participates and sees what the impact of that new car purchase or extra annual vacation might be.

Planning software allows clients to feel more like a participant in the planning process, and it gives you the flexibility of answering their questions about changes to their plan on the fly. You can also easily share with them the stress testing process, assessing outcomes based on a variety of economic environments and personal finance changes. This allows you to add value for your clients, and advice that guides them in an assortment of real-world scenarios.

Customer relationship management (CRM) software

Clients respond well when they are made to feel special. And nothing feels more special than having someone remember the little things about you that make you who you are.

Do you have a client whose kids recently won a sporting event or academic honor? Maybe you noticed their company was recognized with an award, or you know they have an important birthday or anniversary coming up. CRM software can help you keep track of these details, helping you build a closer relationship with your clients. Imagine getting a notification a week in advance of a client’s milestone birthday, for example. Not only can you send a card or gift or make a call, you can keep track of planning milestones that could accompany those birthdays. This allows you to be proactive with your clients, talking to those who hit the minimum ages for social security payments, or the age for taking a required distribution. This type of connection is more than just good customer service; it demonstrates you’re paying attention to your clients and taking their lives into account before even they do. In my practice, we even use this software to keep track of what our clients prefer to drink when they visit our offices, so our front desk manager can provide excellent experiences for our clients even in the waiting area.

Client portals

A secure client portal allows clients to upload their documents from the convenience of their homes. This would be benefit enough, but the portal can help clients in other ways. I once had a client need access to a copy of a healthcare directive they couldn’t find. Since they’d uploaded it to the portal, they were able to download and print it right at the hospital. It’s hard to put a dollar value on that kind of peace of mind and service.

Making it work for you

Implementing new technologies doesn’t have to be a chore. Here are some simple things you can do:

• Test new technologies with a small group in your firm (or with a few trusted clients if you’re solo). Work out the bugs and get your questions answered before going broad.
• Talk to other firms of a similar size about technologies they use and how they benefit from them. Ask about lessons learned to help speed your adoption.
• Be flexible. Technology is rapidly evolving and updating. You want to make sure your solution is always providing the best bang for your buck.

The AICPA PFP Section’s technology for planning & tax advisory services business toolkit offers a wealth or resources designed to help you get your practice up and running with cutting-edge technology.

Jennifer Birchett, CPA/PFS, Wealth Advisor, TrueWealth Management. Jennifer has broad experience with high net worth individuals, corporate executives and multi-generational families to plan, preserve and enhance their wealth. You can email her at jbirchett@truewealth.com

     

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When I first saw the word smishing, I assumed it was some new lingo the kids came up with to further stump us adults. But then again, this is coming from someone who didn’t know what ‘on fleek’ was until it was no longer cool to use. (It’s okay if you still don’t know what that means.)

Jokes aside, smishing is a very serious matter – and since October is Cybersecurity Awareness Month, it’s the perfect time to discuss it.

What is smishing?

According to Experian, a credit reporting bureau in the U.S., smishing is yet another tool used by cybercriminals to obtain personal information and steal identities. You’ve probably heard of ‘phishing,’ which is an attempt to get people to provide sensitive information via email, like credit card numbers or passwords. Smishing is a mashup of SMS (short message service) and phishing.

Basically, it’s phishing via text. The fraudsters use malware to send an SMS, and once someone downloads the link, the malware is activated, tricking people into sharing sensitive information.

What are some examples of popular smishing scams?

We’ve all heard of the phishing scams like “I’m a prince and I want to wire $10 million to you, all I need is your bank account information,” or “If you click this link you will get rich quick!” But these SMS scam messages can be more difficult to spot. Here’s one example from Experian:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Another example might be a text saying that if you fail to click on the link and provide personal information, whatever company they’re pretending to be will start charging daily for the service. Delete these immediately.

How can you disrupt fraudsters trying to smish you?

I spoke to Rod Griffin, director of public education at Experian, and he suggests treating your phone like a PC. On a PC, you have antivirus software to prevent fraudsters gaining access to your computer. Since your phone does pretty much everything your PC does, if not more, why not purchase antivirus software for that as well? Don’t let the fraudsters out-tech you. And, of course, never click on suspicious links that come in via text.

To make sure you haven’t been recently smished, check your credit report regularly to see if any suspect accounts have been opened in your name.

While fraudsters are always coming up with new scams, there are plenty of steps you can take to keep yourself, your organization and your clients safe. For more information, be sure to check out the AICPA’s Cybersecurity Resource Center.

Samantha Delgado, Communications, PR & Corporate Responsibility, Association of International Certified Professional Accountants

     

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If you have a small firm, you know how much of your valuable time can be eaten up with things that don’t generate revenue, such as administrative duties and staffing headaches. So, the thought of doing one more thing might seem overwhelming. But what if it’s the one thing that catapults your practice to the next level?

“We talked about doing a client poll a million times, but never seemed to find the time,” explains Jim Davidson, CPA, of Davidson and Nick CPAs in Naples, Florida. “This past year we had a lot of new staff. We wanted to know what clients thought we did well, and what we didn’t.”

What Jim learned didn’t exactly surprise him, but it did give him some good ideas. After 30 years of practicing in a town known as a retirement mecca, it wasn’t a revelation to learn clients were looking for estate and trust planning. But Naples is nearly bursting with those services already. Surely his clients are getting them elsewhere?

“We learned by sending out our poll just how much clients really do value our advice,” Davidson said. “And now we see the importance of having more communication with our clients to better understand how they feel.” As it turns out, many of Davidson’s clients do want to talk to him about estate and trust planning, and as a result, it’s a service his firm is now exploring offering formally. It’s a road to increased growth for a small firm that’s weathered three decades in a local economy subject to the boom-and-bust of reliance on real estate and tourism.

A lot has changed in those 30 years.

“I’m 55, and my age seems to be the dividing line,” Davidson said. “Clients over that age tend to want to show up in person. Younger than that, and they are fine sending their documents through a secure portal and talking on the phone.”

That’s to say nothing of tax reform, around which Davidson says he’s already had plenty of questions on things like qualified business income (QBI). He’s also anticipating lots of work on new entity structures.

Because of all the changes over the past 30 years, Davidson understands the need to get his clients’ perspectives on his firm. If you’re looking to improve client retention and acquisition, you should consider doing the same. And a poll is a great way to get started.

Structuring a poll

Keep in mind your poll will always be more important to you than to your clients. So, don’t expect them to take hours with it. You’ll want it to be brief, yet still hitting the high points. Avoid confusing language and technical speak. Don’t pack the page (whether printed, emailed or online) with text. Choose what you think is a manageable number of questions before you begin writing them. This will help you focus on what’s most important, and keep your poll from getting out of hand.

When writing your questions, make as many as possible answerable with a simple “yes” or “no.” You could also provide a scale, such as “Rate your service with a number 1-5, with 1 being dissatisfied and 5 being completely satisfied.” Limit the number of open-ended questions to no more than a few.

What to ask

Don’t try to dig too deeply on your first poll, and be careful not to ask for information that doesn’t net you any action items.

Focus some attention on areas you’re already aware need improvement to gauge how acutely your clients have been affected by them. Learning that a large number of clients feel your efficiency or customer service needs improvement can be a powerful motivator for you and others in the firm. Alternatively, you might learn you’re doing better than you thought and find ways to expand on your success.

An important thing to ask is whether your clients feel they’re getting all the services from you that they need. Their answers are likely to surprise you. CPAs are trusted advisers across a wide range of topics. Ask if your clients would like for you to talk with them about retirement, estate and trust, risk management or charitable planning.

How to distribute the poll

You have choices here. While you could email a link to an online poll or even send a fillable PDF, you can also include a hard copy and a stamped envelope with their tax return (some clients might be more comfortable with pen and paper). It’s best to be prepared to deliver the poll in the way the client is most likely to respond. Make a point of telling the client their opinion is important to help you improve your services. You can show your appreciation with a modest discount for clients who return their polls by a set deadline, or small gift cards from a coffee shop or online retailer.

Once you have results, then what?

This is the easy part. Tally your responses and draw conclusions. Did they feel like they had to wait too long for their return? Think about ways to increase your efficiency: make better use of technology, hire more hands, give yourself longer lead time by asking clients to deliver their documents as soon as possible. Are many looking for planning services? Demonstrate your mastery by seeking the Personal Financial Specialist (PFS) credential, available only to CPAs.

However you choose to proceed, don’t just listen to your clients; hear them. Conduct your poll annually, post-season, and eliminate or swap out questions as your services and abilities evolve. The changes you make will deepen client relationships and steel your firm for years to come.

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

     

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The thing I enjoy most in my role as Chair of the AICPA is the time I get to spend talking to members from across the profession about the issues most important to them. What’s clear to me is we’re all facing the same challenge of staying ahead in a fast-changing world. But we’re unique in how we confront this challenge.

This is especially true with small firms and sole practitioners, which play a powerful role as trusted advisers for their clients and communities. Firm owners wear many hats — human resources, business development, marketing and service providers. As the pace of change speeds up, it’s hard to manage the day-to-day and prepare for the future.

I had the pleasure of attending the recent AICPA Private Companies Practice Section (PCPS) Executive Committee meeting, where members shared insights on the top issues facing firms and the tools and resources we’re providing to help address each of these issues as they plan for today and tomorrow.

Here are three areas that really stood out.

Tax reform

It’s probably no surprise that tax reform remains a big topic of conversation. Even with tax season on the horizon and the overview of the legislative changes now well-known, practitioners understand guidance will keep coming for the foreseeable future. The top areas of concern are related to educating clients about the changes in deductibility for entertainment, uncertainty and need for additional IRS guidance around qualified business income, and accounting method changes.

As more practitioners seek guidance to address these issues for their clients, you need a resource you can trust to provide the answers they need. The Tax Reform Resource Center provides you with comprehensive coverage on tax reform. And, since tax reform is such a shift for clients, it presents a great opportunity to strengthen client relationships and discuss planning for the future. The AICPA’s Planning & Tax Advisory Services website has details on how to leverage those tax reform discussions with clients.

Succession planning

Succession planning continues to be a focus area. As more baby boomers set their sights on retirement, selling their practice is often a viable way to ensure their legacy and set up their staff for the future. To remain attractive and valuable to potential buyers, they need to maintain a solid infrastructure. That includes updated and secure IT systems, a well-defined business model and strategy, knowledgeable and skilled staff and a strong client base. PCPS has several resources to help, including the PCPS Firm inMotion e-Toolkit, which guides you through the latest trends while offering solutions for embracing new talent and meeting evolving client needs.

Another helpful resource is the PCPS Succession Planning Resource Center. There you’ll find podcasts, turnkey tools and programs to help you prepare your firm for the future.

Culture

Since staff is a key component to a solid infrastructure, it’s important to create a culture that encourages being holistic and accountable. Firms need to be inclusive, inviting and committed to evolving as staff needs change. In short, firms should be places where people want to work.

An evaluation tool for employee engagement is a great first step to take a pulse on where your organization sits currently. The AICPA Online Mentoring Program allows participants to seek a mentor and/or mentee outside of their organization, which is a powerful force for developing the next generations of leaders.

The work environment can be a significant influencer for CPA candidates in their pursuit. A firm culture of motivation, support and recognition can be just what staff needs to prepare for and conquer the CPA Exam. This toolkit contains best practices from peers, guides for developing liaison programs, a progress tracker tool and other resources to help you encourage your staff as they pursue the Exam.

In a new podcast dedicated to culture in small firms, you can hear what small firm leaders across the country are doing to remain successful in today’s rapidly changing environment. 

As CPAs, it’s our role to help our clients, whether individuals or businesses, navigate these extraordinary times to create a more successful future. To deliver on that responsibility requires we stay a step ahead. The AICPA is working harder than ever to make sure firms of all sizes have the support and guidance needed to meet client demands today and tomorrow. Together, we’ll create an even stronger profession and more vibrant future.

Eric Hansen, CPA, CGMA, Chair, American Institute of CPAs

     

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How many emails does your firm receive in one day?

Whatever the number, there’s a good chance a chunk of it is malware. According to a 2018 report compiled by Symantec, Corporation, one in 412 emails contained malware in 2017. For businesses with less than 250 employees, this rate jumped to one in 376 emails. When you consider just how many emails the average office worker receives in a week, things can look a little scary.

Cyberattackers represent a growing and evolving threat to CPA firms. Perpetrators are seeking sensitive client information, financial records and firm data like PTINs using any method available to infiltrate your defenses. And a lot of times, it works.

Understanding how to ward off these attacks is half the battle. Learn how to dispel common misconceptions about cybersecurity so you can be better prepared to face down any threat to your data.

Myth 1. Cybersecurity protocols are guidelines.

A robust cybersecurity plan isn’t optional for your tax practice. You’re legally required to protect your clients’ private information. It doesn’t matter where you live in the country or how many clients you have, your job is to keep would-be cyberthieves at bay.

The Federal Trade Commission (FTC) requires all tax preparers to create and enact security plans to protect client data. On top of that, all financial institutions — including CPA firms — must safeguard sensitive data under the Gramm-Leach-Bliley (GLB) Act. Although CPAs are exempt from some aspects of GLB, they must develop a written information security plan that describes how they’re prepared to safeguard client information and how they’ll continue protecting clients’ nonpublic personal information.

Not adhering to these guidelines will get you in hot water. You could lose your business or find your reputation with clients and your peers is damaged. On top of that, you’d be on the financial hook for breaches resulting from improperly secured client data. At an average of $148 per record, that’s quite a bit of cash.

Myth 2. Encrypted email is a safe way to send information to clients.

There’s a reason the IRS doesn’t send transcripts via email.

Your firm can have the very latest cybersecurity software and still spring a leak through email. That’s because to transfer a message from one computer to another, the email must go through multiple servers and sites along the way. And at any point, that message could be intercepted.

No matter whether you employ security certificates or message encryption, your clients are probably not going to such extremes to protect their email communications. Consider using client portals — secure online storage centers — to transmit all sensitive information to clients.

Myth 3. Third-party service providers have protocols in place that protect client data.

In May 2017, Target Corporation was ordered to pay $18.5 million to 47 states and the District of Columbia after a 2013 security breach compromised customer data. Because of the breach, cyberthieves stole the debit and credit card information of more than 40 million customers.

How did hackers gain access to Target’s sensitive customer data? By attacking a third-party vendor and snaking their way into the company’s servers. It’s the same way hackers can infiltrate your firm’s client data if you don’t fully vet your vendors. Here’s how:

• Look into the security practices of all vendors who handle any sensitive client data or who access or may access servers where client data could be held.
• Review your vendors’ security policies and require copies for your records.
• Be sure they perform internal security audits and ask to see their SOC 2 report.
• Vet their background and references and find out if there’s a history of data breaches.

You should avoid any third-party vendor that can’t guarantee the protection of your clients’ sensitive information.

Myth 4. The changes to tax transcripts will keep tax data safe.

Recently, the IRS announced it would change the format for individual transcripts in an effort to protect taxpayer data. As of September 23, personally identifiable information and data, such as birth dates and full Social Security numbers, have been redacted from the Form 1040 series. Should an identity thief gain access to an individual’s transcript, they’ll be unable to access key personal information that would enable them to create a fake return.

While eliminating sensitive information creates a stumbling block for identity thieves, it won’t stop all tax-related identity theft. Hackers can adapt, and transcripts aren’t the only place they can get this information. They can get this and more by going to just one place: your firm.

If cyberthieves target your practice and breach your cybersecurity, they’ll gain access to a treasure trove of private information including passwords, maiden names, birth dates and credit card information. If you aren’t the first line of defense against hackers, no changes to tax transcripts will keep your clients’ data secure.

Bonus myth: The latest technologies will protect client data.

Your firm is doing everything right. You’ve installed and activated software and hardware firewalls. You’ve secured your wireless networks and set up web and email filters. Your clients are routinely using portals. You’ve vetted all vendors, and your passwords are indecipherable. In short, your defenses are impregnable. 

Not even close. Because there’s one variable you haven’t considered: your employees.

It’s possible that your employees are the biggest threat to client data. Focusing on network security while ignoring employee training can lead to a disaster. According to a report by IBM Security, most data breaches can be attributed to human error.

Proper training and limiting employee access to data and information is key to reducing these errors. This includes helping employees identify suspicious emails and phishing attempts that can create gateways for hackers to enter your servers. And if disaster strikes, develop a plan to respond to security incidents quickly.

Cyberattacks are a reality of doing business in the modern world. But they don’t have to derail your firm. Take charge of your firm’s security. Review the resources available in the AICPA Cybersecurity Resource Center and use the downtime before busy season to get up to speed on how you can best protect client and customer data. For a deeper dive into tax identity theft, visit the Tax Identity Theft Information & Tools Resource Center made available by the AICPA Tax Section.

Cyberthieves aren’t going to wait. Why would you?

Allison Carter Fanney  Communications Manager – Tax, Association of International Certified Professional Accountants

     

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Fall has finally arrived. The change in season is the perfect time to evaluate your firm’s inner workings and maybe even switch up your routine. Are your staff and clients happy? Are you fostering a work environment where staff feel energized, supported and have growth opportunities available to them?

People need the right blend of opportunities, challenges and accomplishments to achieve optimal success. And when the environment is right, growth can flourish. We asked three successful firm leaders how they’ve nurtured their firm’s cultural climate. This is what they said:

1. Define your desired culture and core beliefs.

Andy Armanino, CPA, managing partner of California-based Armanino LLP, leads his firm on the concept of providing a unique level of client service that makes a difference in clients’ lives. By promoting internal behaviors to staff that support his firm values including: positive energy, empowerment and being “wickedly smart,” Armanino has developed a strong firm culture for more than 1,000 employees.

Gabrielle Luoma, CPA, of GMLCPA in Tucson, Ariz., says she started her firm with the vision of continuously creating more value for both clients and staff. Luoma says it’s important for clients to know the firm is focused on giving them the value and attention they deserve rather than just billing a certain number of hours. This builds a whole new level of trust with clients – something very important to Luoma.

2. Foster a climate that allows innovation to take root and grow.

Armanino challenges his staff to really listen to clients to gain a new perspective of their needs. “When you combine a desire for a deep understanding with smart people, innovative solutions just come naturally,” he says.

Luoma’s staff of 15 all work remotely. She gives staff the freedom of flexible hours and unlimited paid time off. Luoma says her staff have proven they’re dedicated to providing value to both the firm and their clients. And in turn, staff see the value in their work and want to produce innovative and quality results.

3. Grow people rather than products.

Supporting your staff through continuing professional education (CPE) is one part of fostering an environment where growth can flourish. Erin Roche, CPA, of Elliot CPA Group in Santa Rosa, Calif., says they require technical staff to complete double the CPE required by their state board. But they make sure staff aren’t “punished” for taking time to complete CPE by coming back to large piles of work in the office.

4. Develop leaders and successors.

Team leaders at Elliot CPA Group are expected to participate in community leadership. “We ‘brag’ to staff about these community leadership roles and look for ways to get them involved,” says Roche. As staff become more visible in the community, not only does the firm benefit from increased exposure, individuals experience new leadership opportunities and have a chance to grow professionally, too.

Armanino says he doesn’t worry about handing over the reins of the firm to the next generation because of the leaders they’ve developed. “I know that I need to follow my own advice and the firm will be in great hands.”

Culture is important in firms of all sizes. No matter your current climate, a change – even just a small spark – could be exactly what your firm needs to recharge its batteries and spark engagement with staff.

The AICPA recently launched a new podcast on small firm culture. In the series, you can listen to small firm leaders across the country talk about how they run a successful practice in today’s rapidly changing environment.  

It’s also beneficial to your firm to support staff on their journey towards achieving CPA Exam success. The CPA Culture of Support Toolkit has more information and unique ideas on ways you can best support your CPA candidates.

Lisa Simpson, CPA, CGMA, Associate Director – Firm Services, Association of International Certified Professional Accountants

     

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