Professional Issues Update
Spring 2008 Edition
Tom Hood, CPA.CITP
CEO & Executive Director
Maryland Association of CPAs
Enduring
• to have or gain continued or lasting
acknowledgment or recognition, as of
worth, merit or greatness
Great Hall,...
Did you know?
The Big Three Trends
• Globalization
• Technology – Web 2.0
• Workforce Issues
Top 6 Issues facing
business
1. Financing and credit crunch
2. Keeping up with Technology
3. Workforce and People Shortage...
Change is the only constant…
“As it relates to science and technology, the
rate of change in the next decade, is likely
to...
So you can see farther…
Understanding these trends
and issues will allow you to
better position yourself and
your organiza...
Professional
Standards,
Legislation &
Regulation
Professional
Standards,
Legislation &
Regulation
2008
ISSUE
IRS
OIG
Regulatory Structure of CPA Profession
Treasury Advisory Committee on the
Auditing Profession
TreasuryTreasury
AdvisoryAdvisory
CommitteeCommittee
focuses onfocu...
GAO Report on Audit Market
Concentration
• Audit market for large public companies
remains highly concentrated, while
smal...
GAO Analysis of Audit Analytics Data
2002 2006 2002 2006 2002 2006 2002 2006
--------------------------- -----------------...
HUD IPA Roster
Proposal
• Would create an Independent Public
Accountant (IPA) roster of auditors
allowed to perform HUD au...
Federal & State
Legislative
Issues
Federal & State
Legislative
Issues
2008
ISSUE
Tax Strategy Patents
• Comprehensive patent reform bill,
including
ban on tax strategy patents, passed
House
– Led by Bouc...
Say what? MLTN legislation
passed in Iraq funding bill!
More Likely Than Not
• Congressmen Crowley (D-NY) and Ramstad
(R-MN) have legislation (H.R. 4318) to
equalize the taxpayer...
Multi State Income Tax
Legislation
• Congressmen Hank Johnson (D-GA) and
Chris Cannon (R-NV) introduced
legislation to cre...
•The current licensing of P.A.s results in a second tier
professional that is not functionally different than a CPA
• The ...
Tax Preparer Licensing – Risk to
CPAs?
Unlicensed Accountants
Unlicensed accountants are using tax preparer
legislation as...
WA
OR
CA
NV
ID
MT ND
SD
WY
UT
CO
AZ
NM
AK
HI
TX
OK
KS
NE
MN
IA
MO
AR
LA
MS
AL GA
FL
WI
IL
MI
IN
KY
TN
SC
NC
VA
WV
OH
PA
NY...
WA
2008
OR
CA
NV
ID
2008
MT
ND
SD
WY
UT
2008 CO
AZ
NM
2008
AK
HI
TX
OK
KS
NE
MN
IA
MO
AR
LA
2007
MS
2008
AL GA
FL
WI
IL
MI...
MOBILITY
Score Card for 2008
• 24 States with mobility in place
• 12 States have 2008 Bills introduced
• 36 States have le...
FASB and FAF Changes
• Changes to the oversight, structure, and
operations of the FAF, FASB, and GASB:
– FASB board reduce...
U.S. GAAP Codification
• Jan. 15—FASB released Codification for
one-year verification period
• Codification
– Organizes th...
Audit Quality Centers
975 Firm Members
1,528 Firm Members
AICPA Center for Audit
Quality Audit Committee
Survey
5% Fair
17%
Good
53%
Very
Good
25%
Excellent
Q9: Based on your exper...
Peer Review Facilitated
State Board Access Pilot
• Ohio, Oklahoma, North Carolina, Texas,
Tennessee, and South Dakota pilo...
Preliminary Findings –
Enrollment
• Accounting enrollments up
Preliminary Findings –
Graduates
• Graduates increased 20% from 2004 to
2007
53,760
64,221
40,420
47,662
13,340
16,559
Ove...
International
Financial
Reporting
Standards
International
Financial
Reporting
Standards
ISSUE
2008
IFRS – International
Financial Reporting Standards
Not if but when…
Goodbye GAAP?
Think about this – If SEC timeline is 20...
Slide 35
IFRS: The Globalization of Financial Reporting
A simpler set of accounting
principles
About IFRS
IFRS:
• Standard...
SEC Chairman Cox
IFRS - Top 10
considerations for
transition preparation?
1. Investigate differences between IFRS and
U.S. GAAP
– Revenue r...
Top 10 Considerations
continued….
3. Expect more disclosures during transition
– This may close the gap or more subjectivi...
Top 10 Considerations
continued….
7. Outline governance and risk
management processes that will be used
during the transit...
CPAs in
Business,
Industry, Gov’t &
NFP
CPAs in
Business,
Industry, Gov’t &
NFP
2008
ISSUE
What’s keeping you up at night?
Maryland CFOs Top Issues
What stuck out for you?
After the gathering and categorizing of major issues, we asked the group for
their reactions. One ...
Emerging Issues from AICPA
Tom Foard discussed some of the leading issues he has seen from AICPA Business
& industry Execu...
Source: 2007 Private Company Index Report by Entrex
Private Company Trends per CEOs
Lean
Operations
Workforce
Source: 2007 Private Company Index Report by Entrex
Private Company Trends per CEOs
Workforce
Emerging Trends / Issues
• Enterprise Risk Management
• LEAN Accounting
• Supply Chain Management
• GREEN / Sustainability...
Value creation & CFO
CFO Competencies
Needed
• Change
Management (C)
• Strategic Ability (S)
• Critical Thinking (S)
• Business
Perspective (C)...
CPAs in
Practice
CPAs in
Practice
2008
ISSUE
52
PCPS MAP Survey
53
• Human Capital, Technical Training
(standards) and Succession related
issues top the lists
• Retention moves up by fir...
54
Top 10 Reasons to Join a Firm
0 20 40 60 80 100
Career Growth
PTO
Salary
Respect for Company Mission
Challenging Work
H...
55
Finding Qualified Staff
• Your unique value proposition
• Incorporating newer team members in
Business Development
• A ...
Top 10 Reasons to Stay
0 20 40 60 80 100
Respect for Mission Statement
Career Growth
Salary
Management Style
Challenging W...
Advancement – Partner Track
Top Talent Partners
Firm Has a Ptr
Track
31% 41%
Firm Does Not 37% 55%
Do Not Know 32% 4%
Who ...
Advancement – Partner Level
Top Talent Responses
55%
23%
22% Firm Encourages
Them to Pursue Ptr
Status
Firm Does Not
Encou...
Alternate Career Paths
• Many young professionals may not want the
partner track
• Most of the survey respondents agreed t...
Identify & Develop New
Partners
• Competency assessment
• Technical knowledge
• Client service development
• People develo...
Identify & Develop New
Partners
• Give power and responsibility for all to do their
jobs autonomously
• Chart your firm’s ...
Identify & Develop New
Partners
• Set the firm requirements for new
owners
• Provide formal leadership training for
approp...
Why do I need a succession
plan?
• Consider these facts:
– In 1993, 47% of AICPA membership was over 40
years of age, in 2...
Why do I need a succession
plan?
• Based on current statistics, there will be more
sellers than buyers in the next 5-10 ye...
Types of Succession
Strategies
• Position the firm for sale so the
owner(s) can retire.
• Position the firm for merger wit...
General Succession Steps
1) Have the difficult conversations
2) Multiple partner firms, bring in a
consultant to facilitat...
4 Generations in
the Workplace
4 Generations in
the Workplace
2008
ISSUE
The Differences are Real!
Tom’s Top 5 Workplace Tips
1. Be the right person – versus the right
organization
2. Be specific and don’t assume anything...
Talkin’ bout my generation
The Maryland
Perspective
The Maryland
Perspective
2008
ISSUE
SUPPORTS
CHALLENGES
VALUES
B O L D S T E P S
2. Legislative / PAC
1. Talent Mgmt/Human Capital Development
3. New / Young
...
Promoting the CPA License!
Filling the pipeline…
1. Student members
2. CPA Candidates
3. New/Young Professionals
4. Leader...
Legislative Success!
 Pass Mobility
 Opposed by DLLR
 Opposed by Maryland Society of Accountants
 Stop / Amend Marylan...
Mobility passes Senate
April 7th
@ 10:44 pm
Maryland Individual Tax
Preparers Act
• Requires registration and examination of all tax
preparers
• Registered Tax Prepar...
Legislative Success!
Corporate Income Tax
Reporting
(amendments to SB 2)
Repeal Tech Tax
Prevent Sales Tax on
Services
...
MD Rate 11.5%
What would happen if we
weren’t there?
"There's no strong voice of landscaping, computer services and arcade...
Audits of Employee Benefit
Plans
Ian Dingwall, CPA
Chief Accountant
US DOL
• Maryland Plan Assets $127.2 Billion
• Error R...
So what are we doing
about this?
• DOL Workshop
• SBA Strategic Alliance
• Intuit Partnership Workshops & Resources
• iTun...
SBA Strategic Alliance
• Sessions at the EXPO
• Workshops & Resources for CPAs
• Maryland Statistics
– 536,200 small busin...
Intuit –
Future of Small Business Report
• Two sessions at the EXPO
– Future of Small Business
– What CPAs need to know ab...
Phase One –
The Changing Faces of
Entrepreneurs
Phase Two –
The Connected World of Entrepreneurs
Phase Three –
The New Entrepreneurial Economy
“Web 2.0 generally refers to a second generation of
services available on the WWW that lets people
collaborate and share i...
Web 2.0 continues to grow
Try this professional networking site
www.CPALEARNING2.com
www.linkedin.com
MACPA has a Second Life…
CPA Island
Promoting the CPA License!
Filling the pipeline…
1. Student members
2. CPA Candidates
3. New/Young Professionals
4. Leader...
2. Promote the CPA license
• 150 Hours of Education
• Group I – 27 semester hours in
accounting subjects
– Auditing (3 hou...
2. Promote the CPA license
• Group II - 21 semester hours in business subjects (at least
five of the following subjects:
–...
What are the four parts of the “new” CPA
Exam?
1. Auditing & Attestation
2. Business Environment Concepts
3. Financial Acc...
CPA Exam changes
• Paper-based
• 2 x year May &
November
• 5 sections
• Computerized
• Anytime
• 2 months per quarter
• Pa...
2. Promote the CPA license
Next date : June 17, 2008
At the Maryland Business & Accounting Expo
Maryland DLLR Swearing-in ...
What you can do to promote the
CPA?
• Understand the “new” CPA Exam
• Encourage MACPA candidate
membership
• Use CPA Exam ...
3. New / Young Professionals
NYPN All member holiday party
Maryland Zoo (in Baltimore)
TBA
“CPE - Certified Penguin Extrav...
Protect your license &
Differentiating the CPA
• BBJ Supplement
• Smart CEO
• Articles & PR
• Managing our Brand
Achieve! Top CPE in Nation
• Public Seminars, Chapters
& Committees
• In-house Training
• Business Learning Institute
• MA...
Achieve! Member resources
MACPA’s Trusted Partners
• Provident Banking
• RJP Insurance
• AON
• Purchasing Power of the pro...
Maryland Business and
Accounting Expo
• 90+ sessions
• $250 for two days of CPE
• 100+ sponsors and providers
• National T...
What is a Profession?
Professions enjoy a high social status, regard
and esteem conferred upon them by society.
This high ...
What is a Profession?
All professions involve technical, specialized
and highly skilled work. Training for this work
invol...
“CPAs ARE the DISCIPLINE
in business!”
Jim Collins
Conclusion
“Greatness is not an unblemished
record. It's the ability to right yourself,
to go through the 'valley of the s...
What STuck out
for you?
Questions & Discussion
Learning Questions
Feedback Form
Tom Hood, CPA.CITP
CEO
Maryland Association of CPAs
Business Learning Institute
(443) 632-2301
E-mail tom@macpa.org
2008 Professional Issues Update
2008 Professional Issues Update
2008 Professional Issues Update
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2008 Professional Issues Update

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Professional Issues Update of trends and issues facing the CPA Profession

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  • And a look again at how we look today, with a future glance into ’08 and beyond
  • *NOTE* Please check with the AiCPA Staff to ensure this is the current information
    This is the current status –
    10 States have now achieved “no notification” – consistent with the newly revised UAA Section 23 language… As you will see from the map, the ’07 legislative sessions began with 4 states – OH (’61), VA(99), MO (02) and WI (06). Six states have been added to the “gold states” thus far in ’07 and included are 4 additional states that had or still have ongoing legislative activity. Additionally, there are 3 states that have taken first steps in achieving full-no-notification mobility.
  • Able to give and exchange information within meaningful context and with appropriate delivery and interpersonal skills. Able to influence, inspire, and motivate others to achieve results.
    Able to link data, knowledge, and insight together to provide quality advice for strategic decision-making. Able to anticipate and meet the changing needs of clients, employers, customers, and markets better than competitors. Able to interpret and provide a broader context using financial and non-financial information.
    Able to utilize and leverage technology in ways that add value to clients, customers and employers.
  • What concerns are keeping your competitors up at night? Are firms like yours experiencing the same trends that you are? And are there any challenges facing other practices that you have avoided so far but that might be looming down the road?
    The 2007 PCPS Top MAP Issues Survey is designed to answer those questions. It takes the pulse of current practice, questioning firms around the country about the problems that are of greatest concern to them. This year, technical complexity and finding and retaining qualified staff were among the top practice management issues facing CPAs in smaller firms. However, by examining the top issues broken down by firm size, it’s possible to glimpse an interesting picture of public practice today.
    The PCPS Top MAP Issues Survey gathers information from a broad spectrum of practitioners in firms of various sizes to profile the most critical challenges facing PCPS members. For the first time this year, PCPS is not issuing one overall Top MAP Issues list. That’s because it was determined that averaging the answers from many different types of firms does not necessarily accurately mirror the concerns of each segment. Instead, PCPS is releasing five separate Top MAP Issues lists that reflect the views of CPAs who are sole practitioners and those in firms with two to five professionals, six to ten professionals, 11 to 20 professionals and more than 21 professionals.
  • To summarize, the MAP Top Issues for 2007 deal with Human Capital issues, Technical training issues in staying up on new regs and standards and succession issues, whether developing a plan or developing new partners to replace the older partners.
    One critical concern is that succession didn’t make it on the sole practitioner list and barely made it at number 10 on the 2-5 CPAs. Both categories have the greatest risk since it’s less likely to grow someone from the inside, the number of succession options become limited.
  • The PCPS Top Talent Study: Gaining a Strategic Advantage in Recruiting and Retention
    PCPS conducted a new “Top Talent Study,” in 2006, much like a similar landmark study performed in 2000. In this initiative, CPA firm partners asked their most highly valued nonpartner employees to take a survey that examined, among other things, their hopes for growth opportunities, job benefits and firm culture, and how these elements affected their decisions to join or stay with a firm. For comparison purposes, PCPS also asked partners to offer their opinions on the importance of all the same issues in hiring and retention.
    good news for the profession and all that it has to offer young professionals is the fact that 63% of the top talent in this survey said they had no plans to change careers in the next five years, while 29% didn’t know. That means that roughly two-thirds of promising young CPAs expect to stick with accounting, and nearly another one-third can still be influenced to remain in the profession. That’s a good indication that these professionals clearly believe a great future is possible in accounting.
    At the same time, partners are much more in tune with their staff than in 2000, when the last Top Talent survey was conducted. Based on the results of that survey, there were great differences between what employees sought and what their firms were offering. In many cases, firms in 2000 also appeared to be investing in programs that were not high on the staff members’ list of priorities. But the gap in understanding, which was so evident in 2000, has narrowed significantly today, the most recent data show.
    However, while firm leaders may generally be aware of promising younger staff members’ expectations, other AICPA research raises questions about whether they have taken concrete steps to meet those expectations. For example, in the Top Talent study, 76% of the young CPAs said they were interested in being groomed for a senior position. Another recent PCPS study of firm staffing policies found, however, that 93% of the practices surveyed did not have a leadership development program, 90% did not have a career professional program and 89% did not have a partner-in-training program. Such programs can reassure ambitious staff members about the career opportunities within a firm and clarify firms’ expectations.
    Here are the top talents’ top 10 reasons to join a firm:
    Career growth opportunities: 80%
    Paid personal/vacation time: 79%
    Salary: 78%
    Respect for company mission statement: 73%
    Interesting, challenging projects: 71%
    Medical benefits: 70%
    Comfortable office atmosphere: 69%
    Open door/accessible management style: 68%
    Retirement savings plan: 67%
    Flexible work schedule: 65%
    In comparison, the partners’ top reason was Salary at 93% followed by Heathcare at 83% and Paid Time Off at 79%. The good news for firms is Salary isn’t the top reason for joining a firm. While important and firms need to be within a market range, its not the primary reason. Firms should note that item 7, Management style at 68% for Top Talent, it wasn’t even in the top 20 in the opinion of partners. Firms should develop a Unique Selling Proposition for recruits that address the top 10 according to Top Talent.
  • The top talent’s top 10 reasons to stay with a firm:
    Respect for company mission statement: 93%
    Career growth opportunities: 92%
    Salary: 89%
    Open-door/accessible management style: 89%
    Interesting/challenging projects: 88%
    Flexible work schedule: 88%
    Paid personal/vacation time: 86%
    Comfortable office atmosphere: 83%
    Equity incentives: 79%
    Retirement savings plan: 78% (tied)
    Training/professional development opportunities: 78% (tied)
    In comparison, the partners top reasons were Salary: 91%,Career growth opportunities: 90%,Respect for company mission statement: 88%. Again partner opinions put salary at the top, while its third on the list for top talent. Again, paying market rate is important, but other factors are equally important in retention. The two areas with the greatest difference between top talent and partners are Management Style and Equity Incentives with each having a 20 point difference between the two groups. Firms may find that differences between top talent and the style of managers may have a greater impact on losing talent. Its important for firms to work with personalities within the practice and try to manage teams to reduce conflict.
  • As previously noted, career growth was number one on the Top Talent’s list of reasons to join a firm and number two on their list of reasons to stay with a firm.
    Top Talent Insight: When it comes to promotion and advancement, there were several apparent disconnects of which partners should be aware:
    First, among the top talent, 31% said their firms had a partner track, 37% said their firms did not and 32% weren’t sure. Among the partners, 41% said their firms had one, 55% said they did not and 4% did not know. Partners may have to communicate better about the existence of a career track and how it works in their firm.
    Top Talent Questionnaire question – Does your firm have a “partner track” in place?
  • Third, 55% of the top talent said their firms encouraged them to pursue possible partner status, 23% said they didn’t and 22% didn’t know. Compare that with the partner responses: 81% believe their firms encourage promising people to become partners. Perhaps this message is not being expressed forcefully enough.
    Top Talent Questionnaire question – Does management encourage you to pursue possible partner status?
  • Top Talent Insight: 59% of the young professionals surveyed agreed or strongly agreed that their job stress was high. However, there’s good news for those who don’t want to move up the career ladder and, perhaps, experience more stress. Many of the top talent believe that it’s possible to remain with a firm even if they don’t want to become owners. In one healthy sign, 65% of respondents did not believe it hindered their career if they did not want to become partner. Only 9% thought it did, and 27% weren’t sure. Once again, a communications effort might be in order, since 83% of partners said this decision will not hinder someone’s career. In the same vein, 50% of top talent said there were alternative career paths for those who did not want to be partner, while 33% weren’t sure. Among partners, 76% believed their firms offered alternative career paths.
    Firms can and should offer paths other than firm ownership. And clearly, firms should communicate all available options to their employees early before their talent seek the ideal opportunity elsewhere.
    Top Talent Questionnaire questions:
    – I would consider my job high-stress. (scale of 1-5)
    -- If you are not interested in becoming a partner, does that hinder your professional success there?
    -- Are there alternatives career paths available at your firm for those who did not aspire to be partner?
  • Here is some advice for all of us that have anguished over the events of the past year as our Profession has gotten bruised and battered. This is the closing slide we use at our town hall meetings and captures the fellings of this task force.
  • 2008 Professional Issues Update

    1. 1. Professional Issues Update Spring 2008 Edition Tom Hood, CPA.CITP CEO & Executive Director Maryland Association of CPAs
    2. 2. Enduring • to have or gain continued or lasting acknowledgment or recognition, as of worth, merit or greatness Great Hall, Oxford University Built 1386 So… How do we endure and prosper in the face of continuous market, economic, and environmental change?
    3. 3. Did you know?
    4. 4. The Big Three Trends • Globalization • Technology – Web 2.0 • Workforce Issues
    5. 5. Top 6 Issues facing business 1. Financing and credit crunch 2. Keeping up with Technology 3. Workforce and People Shortage 4. Rising Health Care Costs 5. Rising Energy Costs 6. Rising Taxes
    6. 6. Change is the only constant… “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 2006 in 1890, if it is 7x faster it would be like planning for 2006 in 1670.” -Expert on Education Panel, The Aspen Institute, 2007
    7. 7. So you can see farther… Understanding these trends and issues will allow you to better position yourself and your organization to succeed in the rapidly changing marketplace.
    8. 8. Professional Standards, Legislation & Regulation Professional Standards, Legislation & Regulation 2008 ISSUE
    9. 9. IRS OIG Regulatory Structure of CPA Profession
    10. 10. Treasury Advisory Committee on the Auditing Profession TreasuryTreasury AdvisoryAdvisory CommitteeCommittee focuses onfocuses on encouraging aencouraging a sustainablesustainable auditingauditing professionprofession
    11. 11. GAO Report on Audit Market Concentration • Audit market for large public companies remains highly concentrated, while smaller public company market has become significantly less concentrated • Market concentration doesn’t appear to have significant negative impact • Large public company audit concentration is unlikely to be reduced in the near term • No consensus for addressing market concentration
    12. 12. GAO Analysis of Audit Analytics Data 2002 2006 2002 2006 2002 2006 2002 2006 --------------------------- ----------------- ------------------ ----------------- ----------------- Total companies 3,617 3,643 1,329 1,272 522 561 1,241 1,544 --------------------------- ----------------- ------------------ ----------------- ----------------- Company revenue <$100 million $100 - $500 $.5 - $1 billion >$1 billion -------------------------- ----------------- ___million__ ------------------ -----------------
    13. 13. HUD IPA Roster Proposal • Would create an Independent Public Accountant (IPA) roster of auditors allowed to perform HUD audits – Firms register with HUD and agree to adhere to eligibility requirements – HUD could remove auditors for various reasons including failing to maintain compliance with eligibility requirements – Once removed, a firm would no longer be allowed to perform HUD audits • Comments due in early April
    14. 14. Federal & State Legislative Issues Federal & State Legislative Issues 2008 ISSUE
    15. 15. Tax Strategy Patents • Comprehensive patent reform bill, including ban on tax strategy patents, passed House – Led by Boucher (D-VA), Goodlatte (R-VA) • Baucus (D-MT) and Grassley (R-IA) introduced companion legislation in Senate • The IRS opposes tax strategy patents
    16. 16. Say what? MLTN legislation passed in Iraq funding bill!
    17. 17. More Likely Than Not • Congressmen Crowley (D-NY) and Ramstad (R-MN) have legislation (H.R. 4318) to equalize the taxpayer and tax preparer standards at “substantial authority,” the current taxpayer standard • A bill is expected to be introduced in the Senate shortly • In Notice 2008-13, the IRS provided interim guidance
    18. 18. Multi State Income Tax Legislation • Congressmen Hank Johnson (D-GA) and Chris Cannon (R-NV) introduced legislation to create uniform national standards for state income tax withholding for employees who work in a state other than their residence for more than 60 days per year • AICPA submitted testimony at a hearing in the House Judiciary Committee • AICPA engaged in legislative campaigns and may be reaching out to state societies
    19. 19. •The current licensing of P.A.s results in a second tier professional that is not functionally different than a CPA • The public would benefit from the licensing of a second tier of accounting professional who has proven ability through education, examination, ethics and experience, but is more limited in their scope of practice than a CPA. • The second tier of licensing would be more meaningful to the public and give them a true choice in the matter of choosing a professional. Tax Preparer Licensing – version 2.0 Oklahoma – HB 1752
    20. 20. Tax Preparer Licensing – Risk to CPAs? Unlicensed Accountants Unlicensed accountants are using tax preparer legislation as step to second-tier accounting license. Accredited Business Accountant Alert to State CPA Society Executives: CPA VS
    21. 21. WA OR CA NV ID MT ND SD WY UT CO AZ NM AK HI TX OK KS NE MN IA MO AR LA MS AL GA FL WI IL MI IN KY TN SC NC VA WV OH PA NY VT ME NH MA RI NJ DE MD CT Do you file taxes in multi-states? Mobility at the end of 2007 DC Legislative ActionMobility Board Support NH Mobility First StepsTargets for 2008 Safe States: MO, OH, WI, VA, TX, LA, TN, IL, RI, MN, IN
    22. 22. WA 2008 OR CA NV ID 2008 MT ND SD WY UT 2008 CO AZ NM 2008 AK HI TX OK KS NE MN IA MO AR LA 2007 MS 2008 AL GA FL WI IL MI IN KY 2008 TN SC NC VA WV 2008 OH PA NY VT ME NH MA RI NJ DE MD CT States with Mobility Enacted or Legislation Introduced 43 States are moving toward uniform mobility for CPAs! DC State Board SupportLegislation PendingMobility Enacted Mobility Enacted 24 Legislation Pending 12 AICPA –NASBA March 27, 2008 2007 2007 2007 2007 2007 2007 1961 2002 1999 2006 Eleven (11) States have passed this in 2008! PR PA Passed Senate on Mar 12th , 2008
    23. 23. MOBILITY Score Card for 2008 • 24 States with mobility in place • 12 States have 2008 Bills introduced • 36 States have legislation passed or introduced • 7 State BOAs have voted to support mobility • 43 States in place, introducing Bills, or voting to support
    24. 24. FASB and FAF Changes • Changes to the oversight, structure, and operations of the FAF, FASB, and GASB: – FASB board reduced from 7 to 5 – Provides FASB chair more authority – Secures stable mandatory funding source for GASB – Provides the GASB chair more authority to set the agenda • FAF appointments • AICPA comment letter
    25. 25. U.S. GAAP Codification • Jan. 15—FASB released Codification for one-year verification period • Codification – Organizes thousands of pronouncements into roughly 90 topics – Doesn’t change GAAP – More user-friendly set of standards • Use the Codification in your daily work and provide feedback to FASB • Register at http://asc.fasb.org
    26. 26. Audit Quality Centers 975 Firm Members 1,528 Firm Members
    27. 27. AICPA Center for Audit Quality Audit Committee Survey 5% Fair 17% Good 53% Very Good 25% Excellent Q9: Based on your experience as an audit committee member, how would you rate the overall quality of audits publicly traded companies being conducted today?
    28. 28. Peer Review Facilitated State Board Access Pilot • Ohio, Oklahoma, North Carolina, Texas, Tennessee, and South Dakota piloted the program • Assessment of feedback is underway • Implementation will be phased in over the next 12 to 18 months
    29. 29. Preliminary Findings – Enrollment • Accounting enrollments up
    30. 30. Preliminary Findings – Graduates • Graduates increased 20% from 2004 to 2007 53,760 64,221 40,420 47,662 13,340 16,559 Overall Undergrad Masters 2004 2007
    31. 31. International Financial Reporting Standards International Financial Reporting Standards ISSUE 2008
    32. 32. IFRS – International Financial Reporting Standards Not if but when… Goodbye GAAP? Think about this – If SEC timeline is 2013 – what year do you have to convert to show three years of comparable f/s?
    33. 33. Slide 35 IFRS: The Globalization of Financial Reporting A simpler set of accounting principles About IFRS IFRS: • Standards - IFRS: 8 - IAS: 29 • Interpretations - IFRIC: 8 - SIC: 11 • Framework US GAAP: • Standards: - SFAS: 106 - APB: 16 - ARB: 4 • Interpretations - FSP: 49 - EITF: 108 - FIN: 27 • Concepts Statements: 6 • Other - FTB: 32 - AICPA Interpretations: 6 - SOP: 51, - AICPA Industry Audit and Accounting Guides, SABs, DIGs… 2,000 pages vs 25,000 pages
    34. 34. SEC Chairman Cox
    35. 35. IFRS - Top 10 considerations for transition preparation? 1. Investigate differences between IFRS and U.S. GAAP – Revenue recognition, taxes, hedge accounting – Establish project teams to address top issues – Review IASB agenda for critical projects relevant to you 2. Be prepared with large expense – Larger EU co. spent .05 % of revenues Year 1 – Upgrade IT systems and applications
    36. 36. Top 10 Considerations continued…. 3. Expect more disclosures during transition – This may close the gap or more subjectivity 4. Identify contracts, grants, agreements, etc. with requirements to provide U.S. GAAP F/S • Garner support from those charged with governance and stakeholders early in the process 6. Don’t train and educate too early (but do so)
    37. 37. Top 10 Considerations continued…. 7. Outline governance and risk management processes that will be used during the transition 8. Make IFRS the basis for internal reporting, budgets, etc. 9. Be open and transparent about pros & cons of switch and 10.Ensure communications are clear and consistent
    38. 38. CPAs in Business, Industry, Gov’t & NFP CPAs in Business, Industry, Gov’t & NFP 2008 ISSUE
    39. 39. What’s keeping you up at night?
    40. 40. Maryland CFOs Top Issues
    41. 41. What stuck out for you? After the gathering and categorizing of major issues, we asked the group for their reactions. One insight was that “systems” as an issue has dropped off the list. The other “ahha” was the issues are very much the same for all levels and types of organizations.
    42. 42. Emerging Issues from AICPA Tom Foard discussed some of the leading issues he has seen from AICPA Business & industry Executive Committee and CFO magazine. The group noted that these are the same globally as well…
    43. 43. Source: 2007 Private Company Index Report by Entrex Private Company Trends per CEOs Lean Operations Workforce
    44. 44. Source: 2007 Private Company Index Report by Entrex Private Company Trends per CEOs Workforce
    45. 45. Emerging Trends / Issues • Enterprise Risk Management • LEAN Accounting • Supply Chain Management • GREEN / Sustainability • XBRL • Enhanced Business Reporting / SEC Simplification
    46. 46. Value creation & CFO
    47. 47. CFO Competencies Needed • Change Management (C) • Strategic Ability (S) • Critical Thinking (S) • Business Perspective (C) • Organizational Agility (C) • Dealing with Ambiguity (S) • Communication & Leadership • Strategic & Critical Thinking • Focus on the Customer, Client, and Market • Interpretation of Converging Information • Technologically adept C – Catalyst S - Strategist
    48. 48. CPAs in Practice CPAs in Practice 2008 ISSUE
    49. 49. 52 PCPS MAP Survey
    50. 50. 53 • Human Capital, Technical Training (standards) and Succession related issues top the lists • Retention moves up by firm size • Firms with 5 CPAs and under are less focused on Succession, yet the most vulnerable • Firms 21+ are all Human Capital Issues PCPS Top MAP Issues Bottom Line
    51. 51. 54 Top 10 Reasons to Join a Firm 0 20 40 60 80 100 Career Growth PTO Salary Respect for Company Mission Challenging Work Healthcare Atmosphere Management Style 401k Flexible Work Top Talent Partner
    52. 52. 55 Finding Qualified Staff • Your unique value proposition • Incorporating newer team members in Business Development • A function of marketing • Social functions • Websites • Team Recruitment Action Plan
    53. 53. Top 10 Reasons to Stay 0 20 40 60 80 100 Respect for Mission Statement Career Growth Salary Management Style Challenging Work Flexible Work PTO Atmosphere Equity Incentives Training(tie) 401k(tie) Top Talent Partner
    54. 54. Advancement – Partner Track Top Talent Partners Firm Has a Ptr Track 31% 41% Firm Does Not 37% 55% Do Not Know 32% 4% Who Thought Their Firm Had a Partner Track?
    55. 55. Advancement – Partner Level Top Talent Responses 55% 23% 22% Firm Encourages Them to Pursue Ptr Status Firm Does Not Encourage Pursuing Ptr Status Don't Know if Firm Encourages
    56. 56. Alternate Career Paths • Many young professionals may not want the partner track • Most of the survey respondents agreed that not pursuing a partner track does not have to hurt your career Top Talent Partners Will not Hinder Young CPA’s Career 65% 83% Alternate Career Paths are Available 50% 76%
    57. 57. Identify & Develop New Partners • Competency assessment • Technical knowledge • Client service development • People development • Leadership development • Business Development • Succession plan and communication Don’t Miss the Emerging Partner Program at the MDBIZEXPO!
    58. 58. Identify & Develop New Partners • Give power and responsibility for all to do their jobs autonomously • Chart your firm’s skill sets (see PCPS Human Capital Center for Firm Needs and Competency assessment tools) • Identify future potential • Understand the difference between a top-notch manager and a leader • Mentor promising staff • Get partners actively involved in mentoring and client contact • Include junior staff in decision making
    59. 59. Identify & Develop New Partners • Set the firm requirements for new owners • Provide formal leadership training for appropriate members • Set a timetable for new leadership • Don’t underestimate the amount of time it can take to groom a new partner • Choose a managing partner that you see as “the face of the firm” • Create a compensation plan Source: PREPARING FOR TRANSITION: The State of Succession Planning and How to Handle the Process in Your Firm A White Paper from the AICPA Private Companies Practice Section (PCPS)
    60. 60. Why do I need a succession plan? • Consider these facts: – In 1993, 47% of AICPA membership was over 40 years of age, in 2006, 74% of AICPA members was over 40 years of age. – The 2004 PCPS Succession Survey found that of the nearly 500 firms surveyed, only 25% had a documented succession plan in place, yet over 60% of the firms had owners in the 55-62 age bracket. – In 2008, PCPS updated the Succession Survey and found that of the nearly 500 firms surveyed, 35% had a documented succession plan. A marked improvement over 2004.
    61. 61. Why do I need a succession plan? • Based on current statistics, there will be more sellers than buyers in the next 5-10 years. • Succession is about MAP and client transition, not multiples. • Many practitioners feel the next generation is not ready to lead the firm. • The next generation is not sure they want to. • Successful succession planning for a partner takes about five years of preparation. • Niche practices will have even greater struggles.
    62. 62. Types of Succession Strategies • Position the firm for sale so the owner(s) can retire. • Position the firm for merger with an eventual buyout of the original owner(s). • Position the firm for internal transition to future leaders. • Practice continuation with other firms. • Turn out the lights at the end of the day.
    63. 63. General Succession Steps 1) Have the difficult conversations 2) Multiple partner firms, bring in a consultant to facilitate 3) Determine the best succession strategy, internal or external 4) Build the plan
    64. 64. 4 Generations in the Workplace 4 Generations in the Workplace 2008 ISSUE
    65. 65. The Differences are Real!
    66. 66. Tom’s Top 5 Workplace Tips 1. Be the right person – versus the right organization 2. Be specific and don’t assume anything 3. Define roles and career path (in easy increments and steps) 4. Invest in training – it has high ROI, and is a retention tool 5. Offer challenging work and reward even small steps
    67. 67. Talkin’ bout my generation
    68. 68. The Maryland Perspective The Maryland Perspective 2008 ISSUE
    69. 69. SUPPORTS CHALLENGES VALUES B O L D S T E P S 2. Legislative / PAC 1. Talent Mgmt/Human Capital Development 3. New / Young Professionals 4. Financial Literacy 5. Regulation • Competence • Objectivity & Integrity • Openness & member Involvement • Professional Foresight The MACPA is a progressive, professional association dedicated to serving CPAs in the Maryland region, enabling them to grow, prosper and remain viable in a dynamic, rapidly changing environment. TechnologyStrategic Alliances Government Relations IMAGE Organizational Structure Professional Development • Protect the Public Interest • Responsiveness 2008 Priorities
    70. 70. Promoting the CPA License! Filling the pipeline… 1. Student members 2. CPA Candidates 3. New/Young Professionals 4. Leadership Academy 1. Recruit Students 2. Promote CPA License 4. Fast Track Career 3. Build CPA Skills Issues addressed: •Retention •Recruitment •Succession Planning •Leadership •Staffing •Generational Issues
    71. 71. Legislative Success!  Pass Mobility  Opposed by DLLR  Opposed by Maryland Society of Accountants  Stop / Amend Maryland Individual Tax Preparer Act  Amend Corporate reporting requirements  Repeal “Tech Tax” Sales Tax on Computer Services  Prevent Sales Tax on Accounting & Tax Services  Stop trial lawyers efforts at repealing contributory fault doctrine
    72. 72. Mobility passes Senate April 7th @ 10:44 pm
    73. 73. Maryland Individual Tax Preparers Act • Requires registration and examination of all tax preparers • Registered Tax Preparers (cannot use terms licensed or certified) • CPAs and staff are exempt (along with other Circ 230 Practitioners • Out-of-state CPAs exempt • Independent Regulatory Exam required • Safe Harbor disclosure required – “I am not a CPA” • MACPA seat on State Board
    74. 74. Legislative Success! Corporate Income Tax Reporting (amendments to SB 2) Repeal Tech Tax Prevent Sales Tax on Services Stop Comparative Fault Over 500 Visits, e-mails, calls by our CPA members!
    75. 75. MD Rate 11.5% What would happen if we weren’t there? "There's no strong voice of landscaping, computer services and arcade owners. …that's one of the reasons they got picked.” - former Senator Barbara Hoffman (commenting on the special session where they passed the sales tax on computer services) "An old adage among politicians is that if you don't holler at tax- raising time, you'll get hurt." – Lou Panos
    76. 76. Audits of Employee Benefit Plans Ian Dingwall, CPA Chief Accountant US DOL • Maryland Plan Assets $127.2 Billion • Error Rate of 30% over 37 Firms • Error is failing 1 or more of 10 GAAS • MACPA Board oversight • Sessions at EXPO • DOL workshop
    77. 77. So what are we doing about this? • DOL Workshop • SBA Strategic Alliance • Intuit Partnership Workshops & Resources • iTunes – Podcasts on breaking issues • Blogs – CPA Success, New CPAs, Legislative Insider, CPA Island • Webcasts on breaking topics • Learn, Connect, Grow at the MDBIZEXPO!
    78. 78. SBA Strategic Alliance • Sessions at the EXPO • Workshops & Resources for CPAs • Maryland Statistics – 536,200 small businesses – 141,700 employer firms – Employ 53.3% of labor force – Employing 1.1 million people
    79. 79. Intuit – Future of Small Business Report • Two sessions at the EXPO – Future of Small Business – What CPAs need to know about the future of small business • Workshop for CPAs to faciitate strategy sessions with clients and prospects
    80. 80. Phase One – The Changing Faces of Entrepreneurs
    81. 81. Phase Two – The Connected World of Entrepreneurs
    82. 82. Phase Three – The New Entrepreneurial Economy
    83. 83. “Web 2.0 generally refers to a second generation of services available on the WWW that lets people collaborate and share information online.” - Wikipedia.com Shared Pictures = Shared Knowledge = Shared Bookmarks = Shared News = Shared Videos = Shared Everything = Web 2.0 & You
    84. 84. Web 2.0 continues to grow Try this professional networking site www.CPALEARNING2.com www.linkedin.com
    85. 85. MACPA has a Second Life… CPA Island
    86. 86. Promoting the CPA License! Filling the pipeline… 1. Student members 2. CPA Candidates 3. New/Young Professionals 4. Leadership Academy 1. Recruit Students 2. Promote CPA License 4. Fast Track Career 3. Build CPA Skills Issues addressed: •Retention •Recruitment •Succession Planning •Leadership •Staffing •Generational Issues
    87. 87. 2. Promote the CPA license • 150 Hours of Education • Group I – 27 semester hours in accounting subjects – Auditing (3 hours) – Managerial Accounting (3 hours) – US Federal Income Tax (3 hours) – Financial Accounting (9 hours) – Accounting Electives (9 hours) Maryland Educational requirement Uniform & Flexible
    88. 88. 2. Promote the CPA license • Group II - 21 semester hours in business subjects (at least five of the following subjects: – Economics – Statistics – Corporation or business finance – Management – US Business Law – Marketing – Business Communication • Ethics – Business, accounting, philosophy of ethics or a course that examines a framework for ethical decision making Uniform & Flexible Maryland Educational requirement
    89. 89. What are the four parts of the “new” CPA Exam? 1. Auditing & Attestation 2. Business Environment Concepts 3. Financial Accounting & Reporting 4. Regulation The “New” CPA exam update
    90. 90. CPA Exam changes • Paper-based • 2 x year May & November • 5 sections • Computerized • Anytime • 2 months per quarter • Pass all sections in 18 months (to keep passed sections) • 4 sections • 70% new content! Then: Now: update
    91. 91. 2. Promote the CPA license Next date : June 17, 2008 At the Maryland Business & Accounting Expo Maryland DLLR Swearing-in of new CPAs
    92. 92. What you can do to promote the CPA? • Understand the “new” CPA Exam • Encourage MACPA candidate membership • Use CPA Exam tracking tool to track employees progress • Support the swearing-in ceremony • Create / reinforce firm/company culture that celebrates CPAs
    93. 93. 3. New / Young Professionals NYPN All member holiday party Maryland Zoo (in Baltimore) TBA “CPE - Certified Penguin Extravaganza”
    94. 94. Protect your license & Differentiating the CPA • BBJ Supplement • Smart CEO • Articles & PR • Managing our Brand
    95. 95. Achieve! Top CPE in Nation • Public Seminars, Chapters & Committees • In-house Training • Business Learning Institute • MACPA1040 Fast Track “it’s better than Gear-Up!” • Self-study – AICPA CPE Express
    96. 96. Achieve! Member resources MACPA’s Trusted Partners • Provident Banking • RJP Insurance • AON • Purchasing Power of the profession – Savings of up to 70% off!
    97. 97. Maryland Business and Accounting Expo • 90+ sessions • $250 for two days of CPE • 100+ sponsors and providers • National Thought Leaders on every topic
    98. 98. What is a Profession? Professions enjoy a high social status, regard and esteem conferred upon them by society. This high esteem arises primarily from the higher social function of their work, which is regarded as vital to society as a whole and thus of having a special and valuable nature. Source: Wikipedia
    99. 99. What is a Profession? All professions involve technical, specialized and highly skilled work. Training for this work involves obtaining degrees and professional qualifications without which entry to the profession is barred. Training also requires regular updating of skills. Maryland CPAs are required to achieve the 4 E’s to qualify for licensure 1. Education – bachelor’s degree + 30 hours 2. Examination – Pass the Uniform CPA Exam 3. Ethics – Maryland requires a separate ethics exam 4. Experience – 1 year of experience working with a CPA Thereafter, they are required to complete 80 hours of continuing education every two years, including four hours of ethics training. Source: Wikipedia
    100. 100. “CPAs ARE the DISCIPLINE in business!” Jim Collins
    101. 101. Conclusion “Greatness is not an unblemished record. It's the ability to right yourself, to go through the 'valley of the shadow of death' and come out even stronger. To be built to last, you have to be built to change. You can't possibly be static — it is a dynamic world. You have to change what you do to preserve what you are.” Jim Collins – author of Good to Great Enduring -
    102. 102. What STuck out for you? Questions & Discussion Learning Questions Feedback Form
    103. 103. Tom Hood, CPA.CITP CEO Maryland Association of CPAs Business Learning Institute (443) 632-2301 E-mail tom@macpa.org
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