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Piu keeping up with accounting - spring 2010

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Piu keeping up with accounting - spring 2010

  1. Welcome to the Spring 2010 Professional Issues Update An Exclusive Benefit For MACPA Members “A pioneer in using social media and Web 2.0 technologies in accounting, Hood (and his team at MACPA) has tapped his expertise to roll out one of the most extensive sets of resources in the country for helping CPAs handle the recession.” - Bill Carlino, Editor Accounting Today Magazine 1
  2. Why we are here? C P A
  3. CPA Professional 2.0 1. Learning & staying on the cutting edge 2. Managing my career 3. Doing my work 4. Interacting with peers 5. Becoming a leader in my field Allen Blue – CEO of Linked In
  4. Are you an untouchable? A Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed. He said it was interesting: lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn’t there. But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the new untouchables.
  5. What is the # 1 reason leaders (and their organizations) fail? 5
  6. What is different? 
  7. Being in business today feels like being in permanent whitewater 7
  8. You feel overwhelmed by the rapid and turbulent pace of change and uncertainties in business today
  9. You need new skills and new approaches to ride these waves of change Photo: Pratt’s surfing page
  10. You will learn to become a navigator of change using BLI's I2A - Insight to Action strategic thinking system Sight  Insight  Create  Communicate  Inspire! 
  11. Five Qualities of Extraordinary Leaders 1. Sight - Ability to see emerging patterns and shift perspective when necessary 2. Insight - Ability to learn faster than the rate of change in your industry 3. Create - Ability to think strategically and critically to gain insights that create new opportunities 4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work 5. Inspire – Ability to mobilize support and engage others to join you in ACTION
  12. It’s not what you look at that matters, it is what you see – Henry David Thoreau “The faster you go, the further ahead you have to see.”
  13. Insights & Opportunities “But a time of turbulence is  also one of great  opportunity for those who  can understand, accept and  exploit the new realities. It is  above all a time of  opportunity for leadership.”      ‐ Peter Drucker,       Managing in Turbulent Times  Insight 
  14. Create! “The best way to  predict the future  is to create it.”              ‐ Peter Drucker,               Managing in Turbulent Times  Create 
  15. Communicate Extraordinary  leaders must be  O E W R adept at network  K leadership – which  T S is the building &  N sustaining of large  social networks of  people engaged in  the work.  Communicate 
  16. Inspire to Action You must be  able to reach  the hearts  and minds of  the people  doing the  work.  Inspire! 
  17. Today’s agenda  • What we see ‐ trends & issues we  are  watching  • What do you see and what are your insights?  – External environment  – Internal environment – SCOT  • Finding the strategic opportunities for you  • Beginning of strategic planning process    Sight  Insight  Create  Communicate  Inspire! 
  18. Trends & Issues  • The economy  • Connect – Protect – Achieve  • The mega‐trends  – Globalization  – Workforce & Demographics  – Technology  • The Profession    Sight  Insight  Create  Communicate  Inspire! 
  19. The economy is still uncertain? Economists offer a wide range of predictions... Source: Banham, R. (2010 Mar 1). The shape of things to come. CFO Magazine. 
  20. The fact of the matter is, this is not a normal downturn, this is a …fundamental re-SET! - Steve Ballmer – CEO Microsoft
  21. The Pace of Change is Accelerating Faster “As it relates to science and technology, the rate of change in the next decade, is likely to be 4 to7 times faster than in the last decade. If it is 4x faster it would be like planning for 2010 in 1890, if it is 7x faster it would be like planning for 2010 in 1670.” -Expert on Education Panel, The Aspen Institute, 2007
  22. Connect To your Profession To our community To each other
  23. Connect • Chapters • Committees • Conferences • CPE events • NYPN • Educators • Students • Social Networks
  24. Despite a turbulent economy, learn how to make your business thrive MACPA’s Business & Industry Conference May 14 Turf Valley, Ellicott City Topics: • Annual Update • National & Local Professional Issues Update • Enterprise Risk Management • The Virtual Workplace • Strategic Planning • Professional/Career Development • Political & Social Changes in the Business Environment • Economic Update
  25. 2010 Event Schedule  April 30 GNFP Conference  May 14 Business and Industry  June 7 Employee Benefit Plan Audit  June 28-29 New! Maryland CPA Summit  June 30- July 3 Annual Beach Retreat  Sept 21 Government Contractors  Sept 13 & 14 Technology/AccountingWeb  Sept 27-28 Chesapeake Tax  Oct 4 International Conference  Oct 26 Practitioners’  Nov 1-5 Advanced Tax Institute  Jan 2011 Educator’s Conference
  26. Protect
  27. Protect “No man’s life, liberty, or happiness are safe when the legislature is in session” – Mark Twain IRS 7216, FTC Red Flags, Sales Tax on Services, Tax Preparer regulations, Wall Street Reform Act, Sarbanes-Oxley Act…
  28. State CPA Statutes police power of the states to protect their citizens vs commerce clause
  29. Where do major changes come from? Us – MACPA & AICPA Them OR
  30. An example of “us” - The 120/150 Hour CPA Exam Bill (HB 1137) Changes the requirements to sit for the CPA exam to allow you to sit for the Exam upon completion of 120 hours (and the requirements of section 1 & 3) and get licensed upon completion of the final 30 credit hours (and the requirements in group 2)
  31. The A‐team! 
  32. A tale of two bills… 
  33. The clock runs out at midnight 
  34. 37
  35. CPAs swear oath to “protect the public interest” Maryland DLLR Swearing-in of new CPAs June 28, 2010 At the MACPA Member Summit
  36. Do the math! • 90 Days • 188 legislators • 2,500+ bills • House = 141 • Senate = 47 MACPA • Legislative Executive Committee • PAC • State Tax Committee • Board of Directors
  37. State CPA Statutes police power of the states to protect their citizens vs commerce clause
  38. Landscape of Financial Regulatory Reform                         White House  Senate Banking Committee  Financial  Regulatory    Reform                          House Financial  Industry Groups  Services Committee 
  39. Latest proposals -Wall Street Reform & Consumer Protection Act - HR 4173 1. Promote robust supervision and regulation of financial firms 2. Establish comprehensive regulation of financial markets 3. Protect consumers and investors form financial abuse 4. Provide the government with the tools it needs to manage financial crisis 5. Raise international regulatory standards & improve international cooperation
  40. Wall Street Reform & Consumer Protection Act • HR 4173  o Passed House floor vote (223‐202)  o Combines CFPA Act & Investor Protection Act  • Provisions  o PCAOB authority to scope the regulation of audits for all  broker‐dealers through rulemaking  o Exempts non‐accelerated filers from SOX Section 404(b)  • Progress  o Recognizes CPAs’ valuable advice and counsel   o Excludes sales of securities or extension of credit 
  41. Senate Version Introduced • Dodd introduced Senate bill March 15  • Passed Senate committee March  22  • Establishes Financial Stability Oversight Council  • Grants greater powers to Federal Reserve  o Break up large entities that pose a “grave threat”  o Examine bank‐holding companies >$50 billion in assets  o Create Consumer Financial Protection Agency within Fed  • Includes version of Volcker Rule  • Proposes transaction fee to establish fund for future financial  collapse   
  42. “Red Flags” Rule Fair and Accurate  • Requires written plan for identity verification for  Credit  anyone who is a “creditor”  • Defines “creditor” too broadly  Transaction Act  • AICPA , state societies wrote letters urging delay of rules  (enforcement delayed twice)  Implementation  • Nov. 1 implementation date delayed to June 1, 2010  • AICPA released guidance for CPAs on Oct. 16  • AICPA continues to seek exemption for CPAs  Advocacy  • ABA and subsequent AICPA lawsuits filed 
  43. Tax Issues Disclosure of  Tax strategy  Regulation of  uncertain tax  Sec 7216  patents  preparers  positions  Health care  Estate tax  AMT   Tax reform  Valuation  Workload  Workforce  LIFO  discounts   compression  mobility 
  44. Tax Preparer Registration Congress’ Concerns  • High error rate associated with Earned Income Tax Credit  • Consumer protection  IRS Proposal  • Registration of all paid tax return preparers; fee  • Preparer Tax Identification Number; subject to Circular 230  • Non‐affiliated tax preparers must:  • Pass “competency” exam  • Complete 15 hours education annually 
  45. Tax Preparer Penalty - 7216 • Temporary Regulations (12/29/09)  o Can filter newsletters to specific clients  o Can generally disclose scope of practice to potential clients   o Can disclose specific taxpayer information if required for qualify, peer  or conflict reviews   • Rev Rul 2010‐4  (12/30/09)  o No advance approval necessary to:     • Contact client regarding change in tax law or regulations  • To use unrelated third party to create, publish and distribute  newsletters  • Rev Rul 2010‐5   o Generally permits disclosure of specific taxpayer information as  necessary to the preparer’s professional liability insurance carrier 
  46. Estate Tax • House action  o Proposed permanent extension of $3.5 million exemption, 45% rate  o Republicans wanted $5 million exclusion and 35% rate, or, as  an alternative, either total repeal or reducing the rate to that of long  term capital gains  • Meantime, total repeal  o Total repeal as of 1/1/10 but carryover basis   • Note – 1/1/10 not total carryover basis – get to step up 1.3 million of assets  (as selected by  executor) and another 3 million if there is a surviving spouse  • AICPA position   o Consistency important   o Index exemption to inflation   o Conform exemptions for estate, gift, generation skipping and special  use valuation   o Portability of exemption between spouse so, if first to die, does not  use full exemption; residual amount automatically carries over to the  surviving spouse  
  47. Health Care and Taxes • Patient Protection and Affordable Care Act signed into law March 23  • Health Care and Education Reconciliation Act of 2010 signed into law  March 30  • Numerous tax provisions within for individuals and employers, including:  o Premium Assistance Credit  o Small Business Tax Credit  o Excise Tax on Uninsured Individuals  o Medical Care Itemized Deduction Threshold  o Additional Hospital Insurance Tax on High‐Income Taxpayers  o Excise Tax on High Cost Employer‐Sponsored Coverage  o Tax on HSA Distributions  o Expansion of Adoption Credit, Adoption Assistance Programs  o Information Reporting  o Adult Dependent  o Medicare Tax on Investment Income 
  48. Looking to the Future • 2011  top rates go up  ‐ 36% and 39.6%   • Proposals not getting traction  o Increase capital gains rate to 20%  o Limit itemized deduction to 28% rate   • Proposals getting traction  o Taxing carried interest as ordinary income  o Codification of economic substance doctrine   o Impose limits on family limited partnership valuations  o LIFO repeal   o AMT “patch “ will happen  
  49. Standards Changes • AS 5 - PCAOB • IFRS – SEC International gets legs (again) • Fair Value Accounting • XBRL – SEC mandatory • Codification Project – FASB • Clarity Project – ASB – Convergence with international • Reliability Project (comps & reviews) • DOL 403 (b) Plans • Internal Control – COSO • Fin 48 effective 2009 • Form 990 Changes • Fraud & Forensic SAS 99 • FASB – IASB Convergence Project
  50. Compilation and Review Standards • SSARS No. 19 issued on December 30, 2009  • Represents the most significant changes to the compilation  and review literature since 1978  • How SSARS 19 differs from the April 2009 exposure draft  o SSARS 19 retains the concept of limited assurance rather  than moderate assurance  o Non‐independent review not part of SSARS 19  53
  51. Clarity Project • Convergence of auditing standards  • ASB redrafting all of the auditing sections in Codification of  Statements on Auditing Standards  o Apply the clarity drafting conventions and converge the  material with the ISAs  • Effective date is expected to apply to audits of financial  statements for periods beginning no earlier than December  15, 2010 
  52. Ethics and Independence Codification • Professional Ethics Executive Committee creating a single  source of easy‐to‐use guidance on AICPA ethics and  independence matters  • Restructure AICPA Code of Professional Conduct  and  combine with related guidance  • Benefits  o Topically organized; simpler, easier and more intuitive to use  o Improved research capability  o Reduced time and effort in identifying differences with IFAC  Code  • Scheduled for 3 years ( through 2011)   
  53. SEC Roadmap released Early adopters Large can file using Accelerated IFRS Filers Small-caps 2010 2014 2016 2011 2015 Official SEC Accelerated decision filers – point second wave
  54. IASB/FASB Convergence • Hope to complete convergence by 2011 • Outstanding Issues: – Revenue recognition – Financial statement presentation – Leases – Financial instruments – Liabilities and equity distinctions – Consolidations – Derecognition – Post-employment benefits 57
  55. Blue Ribbon Panel: Members • Rick Anderson, Moss Adams, LLP  • Terri Polley, FAF   (Chairman of BRP)  • Steve Feilmeier, Koch Industries   • William Knese, Angus Industries   • Krista McMasters, Gunderson   • Michael Menzies, Easton Bank and  • Dev Strischek, SunTrust Banks, Inc.   Trust Company   • Hubert Glover, REDE, Inc.   • Billy Atkinson, NASBA   • Barry Melancon, AICPA   • Kewsong Lee, Warburg Pincus   • Mark Vonnahme, Surety, Arch  • David Morgan, Lattimore, Black,  Insurance Group   Morgan and Cain PC   • David Hirschmann, U.S. Chamber of  • Daryl Buck, Reasor’s Holding  Commerce   Company, Inc.   • Jason Mendelson, Foundry Group   • Paul Limbert, WesBanco, Inc.   • Teri Yohn, Indiana Univ. 
  56. Potential Versions of   Private Company IFRS  IFRS with  differential  reporting  U.S. Adapted  (accent)  Separate U.S.  version of  Private Co.  Private Entities  GAAP – Revised  (Dialect)  (PCFRC)  Separate U.S.  IFRS SME  Private  GAAP‐  Company   Maintained  and Updated 
  57. Achieve
  58. Globalization
  59. 5 Forces of Globalization 1. Growth of consumers in emerging economies  2. Technologies that empower consumers &  communities  3. Increase in labor productivity in developed markets  4. Shift of economic activity between and within  regions  5. Increasingly global markets for labor & talent   
  60. It is not either global or local, it is AND… Glocal
  61. Workforce / Pipeline
  62. Bright spot?
  63. AICPA - Accounting Doctoral Scholars • $16.8 million contributed  • 70 firms & 41 state societies  • 39 universities  • 99 complete applications  • 60 selected for conference  • 30 selected as ADS Scholars   
  64. Live First, Work Second Digital Natives
  65. Generation Gap? Or Generation Lap? Generations “In 1997, young people for the first time were recognized by adults as being authorities on something truly revolutionary – digital technology, interactive media, and collaboration.” – Don Tapscott “Growing Up Digital” NGenophobia—the irrational and morbid fear of youth, especially with regards to their use of the Internet
  66. What are baby boomers most “clueless about”? • Mom does not know how to work the TV • Computers- do not let Dad touch it • Technology in general • Certain forms of technology • Digital camera operation • Boomers think work is everything
  67. Gen X – Stuck beneath the boomer ceiling 10 ways to breakthrough 1. Play to your strengths 2. Build your brand 3. Collaborate – create the context for your success 4. Raid the candy store – learning & development 5. Change the rules 6. Influence the organization 7. Influence the Boomers 8. Take initiative 9. Honor your commitments 10. Build & leverage your network
  68. How to start the conversation The eight Net Gen Norms  1. Freedom – The freedom to work when and  where you want  2. Customization – My job my life  3. Scrutiny – I know what you did last night  4. Integrity – Be a good company to work for  5. Collaboration – Teamwork  6. Entertainment – Work should be fun  7. Speed – Let’s make things happen now!  8. Innovation – Let me invent 
  69. Bottom Line: How to keep your star talent • Engage your top performers • Coach tomorrow’s leaders • Manage your Millennials Think AMP • Autonomy • Mastery • Purpose
  70. Technology
  71. • Information Security • Training & Competency Management • Identity & Access • Privacy Management Management • Secure Data File Storage, • Improved Application & Transmission and Integration Exchange • Document, Forms, Content • Business Process & Knowledge Management Improvement / Work Flow • Electronic Data Retention • Mobile & Remote Strategy Computing
  72. The SEC Mandate
  73. Technology & Web 2.0 By 2010, Millenials/Gen Y-ers will outnumber Baby Boomers.
  74. Here are five major benefits that The Economist  report says that social media has created:  1. Trusted online venues where real people can meet up using their real identities. 2. New ways for firms and organizations to reach their customers and those who influence them. 3. Reduced friction in labor markets by allowing employers and prospective employees to find each other and connect. 4. Faster information flow and communication inside companies and organizations. 5. A "free and immensely powerful set of communication and collaboration tools to everyone on Earth who has access to a broadband internet connection."
  75. Social media = social capital real world examples 
  76. Research says…  • To ban or not to ban? A recent University of  Melbourne study showed that people who use the  internet for personal reasons at work are about 9%  more productive than those who do not.  "One day at work they took away our tools, like  Facebook, Pandora, Bebo, NPR. Work is slow  now, cold and boring." —STEVE RESSLER, 27,  TAMPA, FLORIDA  In a social environment based on networked individualism, the internet’s capacity to maintain and cultivate social networks has real payoffs (in the workplace).”– “The Strength of Internet Ties” Report
  77. Risk Management  • Educate & train your staff  • Set security & usage policies  • Restrict Access during certain     times (if you have to)  • Monitor – using search &     google alerts 
  78. MACPA social media efforts featured  in J of A and win 3rd place in Mobbies,  Top 75 Biz blogs & Top 50 Acctg blogs  MACPA won 2  out of top 10 Biz  blogs in MD 
  79. CPA Profession
  80. Top 10 Issues Facing CPAs  1. Economic Outlook   2. Tax   3. Business Operations   4. Implementation and Execution  of Plans   5. New Business Development   6. Personal/Professional  Development   7. Management and Leadership   8. Financial Regulatory Reform   9. Access to Financing and Credit   10 New Accounting Standards,  IFRS  Source: CPA Trendlines for AICPA Feb, 2010
  81. Top Ten Issues for MFG  1. Regulatory/Legislative (56)  2. Private Company Leadership (47)  3. Capital Markets Awareness / Recognition (34)  4. Rethinking Business Model (25)  5. Protect Audit/CPA Franchise (20)  6. Risk Management (Audit efficiencies) (20)  7. Leadership Development / Succession  Planning (19)  8. Global / International (Clients / IFRS /  Branding) (17)  9. Leveraging Technology & Social Media (17)  10. MFG Issues specific forums / focus groups (8)  89
  82. PCPS/TSCPA MAP Survey 2009  Top Five Issues Facing Firms 21+  1. Client Retention  2. Marketing / Practice Growth  3. Tax Law Changes & Complexity  4. Keeping up with Regulations &  Standards  5. Retaining Qualified Staff /  Work/Life Balance  For larger firms add Partner Accountability & Succession Planning Mark Koziel, CPA AICPA PCPS 90
  83. Top Ten Issues for FEI  1. Economic Recovery and the U.S. Fiscal Outlook  2. Health‐Care Reform  3. Employee Benefits  4. Financial Regulatory Reform  5. Global Convergence of U.S. GAAP and IFRS  6. Financial Instruments  7. Financial Statement Regulation  8. Revenue Recognition  9. Business Taxation  10. *XBRL    91
  84. Business & Industry Responsibilities AICPA Core – 1/3 of B&I AICPA non-Core – 2/3 of B&I Responsibilities Responsibilities Financial accounting Strategic planning Financial reporting Sustainability Audit Budgeting Tax Financial operations management Risk management & internal 1/3 Core controls 2/3 Internal audit Additional Governance HR & benefits IT, legal, purchasing
  85. Are you a value integrator? Efficiency, insight, integration 1.Scorekeeper 2.Disciplined operators 3.Constrained advisors 4.Value Integrators
  86. # 1 Gap is developing people in Finance Source: 2010 IBM Global CFO study
  87. Image of the CPA The future success of the CPA profession relies a great deal upon public perception of CPAs' abilities & roles - CPA Vision Project
  88. So what does the future look like for CPAs?
  89. CPA re:Vision –the wisdom of the crowd Our core purpose, our reason for being is CPAs... Making sense of a changing and complex Here is what they said… world.
  90. Top 5 Competencies needed to ride the waves of change • Communication & Leadership • Strategic & Critical Thinking • Focus on the Customer, Client, and Market • Interpretation of Converging Information • Technologically adept
  91. Top 5 Attributes of CPAs • Has integrity • Competent • Objective • Able to synthesize information • Focused on client needs 99
  92. Bottom Five Attributes of CPAs • Creative & innovative • Demonstrates leadership • Able to see the big picture • Communicates effectively • Technologically adept
  93. CLO Magazine Stephen Miles, vice chairman of Heidrick & Struggles, an executive recruitment firm, said this: "The best CEOs in the world are a combination of CEO, COO and CFO. They are inspirational, financially literate and know the ins and outs of their business at a sophisticated level."
  94. Accounting is the quickest path to the corner office 1. Broader and longer line of sight (future focus) 2. Network leadership 3. Strong analysis skills (financial and operational) 4. Communication skills 5. Global perspective Top 5 skills of the post-recession leader – CLO Magazine
  95. Top 10 Opportunities for CPAs 1. Valuation 6. Green / sustainability 2. Forensics and fraud 7. XBRL 3. Governmental – 8. Tax planning State/local/NFP 9. Enterprise Risk 4. International Management (IFRS and tax) 10. Renewable energy 5. Health care
  96. How to increase your odds of roaring out of the recession from HBR 1. Focus on operational efficiency (smart spending and targeted headcount reduction for efficiency versus across- the-board headcount reductions). 2. Investment in developing new markets (leveraging your product / service mix into expanded markets -- geographic, new segments or niches). 3. Investments in enlarging the asset base. (In professional services, that is training and development and strategic staffing for new opportunities.) I call this placing careful bets on the future.
  97. Are you indispensable? Imagine an organization with an employee who can accurately see the truth, understand the situation, and understand the potential outcomes of various decisions. And now imagine that this person is also able to make something happen. This is our leader, our marketer, our linchpin!
  98. Tools for CPA Leaders
  99. The meta map of the I2A™Strategic Thinking System provides an architecture or framework to structure thinking and conversation as you engage. When talking about complex issues that aren’t completely understood, or debating solutions where there are multiple points of view, it is easy 107get lost in the conversation and prematurely locked into a solution. to
  100. Insight & Communicate  CPA templates to help you with...
  101. Insight & Communicate – Social Media Tools 
  102. Tom Hood, CPA.CITP  CEO  Maryland Association of CPAs  Business Learning Institute  (443) 632‐2301  E‐mail  Web  Blog  Blog     
  103. MACPA resources  • CPA Success, our daily blog  •  CPA Spotlight, our weekly podcast  •  Other MACPA blogs:  •  •  •  • CPA Learning 2, a Web 2.0 playground by CPAs for CPAs  112  
  104. Tools  • I2A – Insights to Action – a strategic thinking system  –    • CPA Vision project  –    • Social media – How are CPAs using social media  –‐are‐cpas‐using‐social‐media.html  – Social Media Quick Start Program  –    • XBRL   –  – Blog posts from CPA Success  –‐and‐government‐a‐marriage‐made‐in‐nevada.html  –    • Mindmanager CPA edition  –   
  105. Professional Issues Update Spring, 2010    Tom Hood, CPA.CITP  CEO & Executive Director  Maryland Association of CPAs    • Follow me on:   Twitter:   LinkedIn:   Facebook:   Plaxo:   Slideshare:   Youtube:   Second Life avatar name: Rocky Maddaloni