MACPA Professional Issues Update - Fall 2013 Edition


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Positioning You for Success in A VUCA World - members only Professional Issues Update in an interactive townhall format.

Welcome to the new normal or the "VUCA" world as it has been called. VUCA stands for Volatility, Uncertainty, Complexity, Ambiguity. How can you position yourself for success in this VUCA world. Come hear MACPA CEO Tom Hood talk about how to deal with this VUCA world and how to keep your L>C. Tom will cover the latest trends and issues facing the CPA Profession including private company financial reporting, cloud computing, getting past the generational issues, CPA firm of the future and CFO of the future. Tom will cover the latest developments from Washington to Annapolis. Attendees will come away with a personalized action plan to ride the waves of change.

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MACPA Professional Issues Update - Fall 2013 Edition

  1. Tom Hood, CPA, CITP, CGMA CEO MACPA & the Business Learning Institute MACPA Town Hall & Professional Issues Update for MEMBERS Fall, 2013
  2. Ask and answer questions throughout the day here… was used to engage our members and encourage open Q&A and feedback with this exciting new technology we will begin incorporating into strategic planning and CPE courses for engagement and collaboration.
  3. HOW TO PROFIT FROM INNOVATION: Building the Agile Learning Organization
  4. The New Normal - VUCA
  5. Historical Context – The Perfect Storm •  Web 2.0 •  Globalization •  Generations Source: DonTapscott - Wikinomics
  6. T
  7.   #PIU13  #MACPA   @tomhood   @MACPA   Download  today’s  slides  at  …  
  8. Insights  to  Ac,on     “One  without  the  other  is  either  useless  or  destruc,ve”  
  9. The  new  “Big  Four”   • Standards  &   Leg/Reg   • Technology   • The  Changing   Workplace   • Innova,on  
  10. What’s  in  a  list?  
  11. Standards   •  Interna,onal  –   IASB  &  IFRS   •  FASB  &  PCC   •  AICPA  &  FRF  –   SME   •  ASB  –  Clarity   (12/15)   •  GASB  Pension   •  PEEC  hQp://  
  12. #Accoun,ngStandards   Public  &   Private   Companies   Private   Companies-­‐   Small   Business   Public  &   Private   Companies     Private   Companies     Private   Companies-­‐   Small   Business   Financial   ReporFng   IFRS   (IASB)     IFRS-­‐SME   (IASB)     GAAP   (FASB)     GAAP-­‐PCC   (FASB)     FRF-­‐SME   (AICPA)     AudiFng   IAASB   IAASB   PCAOB   ASB  (AICPA)   ASB  (AICPA)     ASB  (AICPA)     Ethics   IFAC   IFAC   PEEC   (AICPA)   PEEC   (AICPA)     PEEC   (AICPA)    
  13. Happy  40th  Birthday  FASB!   10/9/13   T  
  14. FASB  PCC  
  15. #MainStFinancials   10/9/13   T  
  16. Comfort  LeQers?  
  17. COSO  and  you   1. Ar,cula,ng  the  role   of  a  company  when   outsourcing   2. Pu^ng  fraud  right   out  in  the  forefront   3. Highligh,ng  the   cri,cal  nature    of  IT  
  18. Federal  Agenda   •  Mobile  Workforce   •  Tax  Due  Dates   •  What’s  at  Stake   •  Tax  Simplifica,on   •  Amended  1099s  (de  minimis)   •  DATA  Act   •  Keep  accrual  basis  for  personal  service   companies  (S  Corps  &  Partnerships)    
  19. Here  we  go  again…  
  20. #CPAsSavetheWorld  
  21. MACPA State Budget Task Force 15
  22. Record of what has actually happened Prepared on an accrual basis Provide informatio n about longer- term implicatio ns Financial statement
  23. !5,000% 0% 5,000% 10,000% 15,000% 20,000% 25,000% 30,000% 35,000% Revenues% Expenses% Net% 11
  24. Revenue: how much money the company is bringing in Expenses: how much money the company is spending Earnings Expenses < Revenue = Financially Healthy Company How a CPA looks at a publicly traded company’s financials
  25. 2012 Financial Statements Revenue = $33.8 billion Expenses exceeded revenue by $1.0 billion Note:The Financial Statement Deficit is down from the 2009 highpoint of $2.9 billion 6
  26. 0" 5000" 10000" 15000" 20000" 25000" 30000" 35000" 40000" 2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" Millions! State"of"Maryland" Financial Statements! Revenue"&"Expenses" Revenue" Expenses" The"State"of"Maryland"is"showing"a"negaEve"trend" in"covering"expenses."Only"2"years"out"of"11"show" net"revenues"over"expenses"on"a"financial"basis." 7
  27. Assets: Property, contracts, and investments owned by a company, regarded as having value and available to meet debts, commitments, or legacies. Liabilities: Debts and obligations arising from past transactions and events Net Assets:The residual net worth of assets minus liabilities. If net assets are negative you are considered insolvent as your obligations are more than you own. Assets > Liabilities = Financially Healthy Company How a CPA looks at a publicly traded company’s financials
  28. 0" 5" 10" 15" 20" 25" 30" 35" 40" 45" 2007" 2008" 2009" 2010" 2011" 2012" State of Maryland! Balance Sheet! Billions $! Assets" Liabili4es" Net"Assets" Net Assets decreased by $8.6 Billion in past 6 years 9
  29. Revenue  =  $2.4   trillion   Expenses  =  exceeded   revenue  by  $1.3   trillion   2012 financial statements
  30. Assets=   $2.7  trillion   LiabiliFes=   $18.8  trillion   Accumulated   deficit=   $16.1  trillion   2012 financial statements
  31. Reality of future obligations These future obligations equal: Additional social insurance deficit $52 trillion Cumulative deficit 16 trillion Total deficit $68 trillion
  32. In  trillions   2009 2010 2011 2012 $11.5 $13.5 $14.8 $16.1 Accumulated deficit
  33. Where  were  you  on  January  16th?   2014  CPA  day  –  January  15,  2014  
  34. #TaxSimplify  
  35. “It  is  more  important  to  stop  bad  bills  than  pass  good  ones.”   -­‐  Calvin  Coolidge  –  President   •  Sales  tax  on  accoun,ng  and  tax  services  (defeated   several  ,mes)  1997  -­‐  HB  580  ,2001  HB  1337,   2004  HB  1364,    2007  -­‐  HB  448  ,  2012  HB  1051   •  Maryland  corporate  accountability  (SOX  and  404   for  private  companies  and  non-­‐profits)   2003  –  SB  560   •  Debt  counseling  registra,on  by  CPAs     2011  -­‐  SB  741   •  Maryland  Tax  Preparers  2007  -­‐  HB  998   •  Compara,ve  fault  (several  ,mes)  1998  SB  618  ,   2000  -­‐  SB  779,  2001  SB  483  ,    2007  -­‐  HB  110   •  Elimina,on  of  audit  requirements  for  Maryland   cemeteries    2011  –  SB  352   •   AG  opinion  allowing  CPAs  to  include  Social   Security  numbers  on  documents  for  tax  services  –   8/30/2011   •  Got  Exemp,on  from  MSP  Private  Inves,gator   Registra,on   If  not  us,  Who?  
  36. Building  and  Maintaining  the  CPA   Infrastructure   •  Separate  funding  for  the  State  Board   2006  -­‐  HB  103   •  Experience  requirement  to  make  Maryland  CPAs   compa,ble  with  UAA  (Uniform  Accountancy  Act)   2001  -­‐MD  COMAR       •  Ethics  requirement  for  CPE  2006  -­‐MD  COMAR   •  Mandatory  peer  review  and  prac,ce  quality   2005  –  HB  1223   •  Exemp,on  for  CPAs  from  Maryland  (and  federal)   tax  preparer  regula,on  2008  -­‐  SB  817   •  Prac,ce  mobility  2008  -­‐  HB  1296   •  Expanding  acceptable  CPE  methods    2009  -­‐  HB  69   •  120/150  CPA  exam  legisla,on    2011  -­‐  SB  287   •  Restricted  audits,  reviews,  and  compila,ons  to   CPAs  and  added  safe  harbor  for  compila,ons     2011  -­‐  HB  328   •  State  Board  of  Public  Accountancy  reauthoriza,on   2013  -­‐  SB  238  
  37. State  Board  of  Public  Accountancy   •  License  –  Inac,ve  Status  Explained   •  PI  License  Required  in  MD?   •  Firm  Names  –  Do’s  and  Don’ts   •  Mobility  –  Do  You  Have  Staff  Licensed  In  Another   State?   •  MD  Firm  Permit  Number  –  Website  Requirement   •  State  Board  –  Renewed  Un,l  2025   •  Peer  Review  –  Update  and  Sta,s,cs   •  State  Board  CPE  Audit  Periods  
  38. It’s  really  a  numbers  game   2,500   188   90   3  
  39. New  CPA  Swearing-­‐in  Ceremony   November  4,  2013  BWI  Hilton  
  40. #CPATechnology  
  41. AICPA  Top  Technology  Issues   1.  Managing  and  retaining  data   2.  Securing  the  IT  environment   3.  Managing  IT  risk  and  compliance   4.  Ensuring  privacy   5.  Managing  system  implementa,ons   6.  Preven,ng  and  responding  to  computer  fraud   7.  Enabling  decision  support  and  analy,cs   8.  Governing  and  managing  IT  investment/spending   9.  Leveraging  emerging  technologies   10. Managing  vendors  and  service  providers  
  42. RIP  Lotus  1-­‐2-­‐3  &  PC  
  43. #SocialAccoun,ng  
  44. "The  speed  of  change   makes  you  uncomfortable   on  a  regular  basis,"  he  says.   "That's  so  difficult  for   people  who  are  paying   mortgages,  buying  cars,   trying  to  give  their  kids  the   things  they  had,  to  get   them  through  school.  You   want  to  feel  confident  in   the  last  15  years  of  your   career  that  ater  25  or  30   years  of  effort,  it's  just   going  to  work,"  he  says.   "But  it  isn't  so.  And  I  don't   think  you  ever  get  over  the   fear  of  not  knowing.”                        –  Doug  Gould  Ad  Exec  
  45. Genera,ons  
  46. Innova,on  for  CPAs   •  Big  Four  Trends   –  Social   –  Mobile   –  Cloud   –  Big  Data  (XBRL)   •  Innova,ve  Services   –  Value-­‐added  CFO   –  CFO  Advisory  Services   –  FRF-­‐SME   –  Assurance  on  XBRL  Tagging   –  XBRL  for  research    
  47. About  Digital  CPA   Helping  Prac--oners  Reach   Their  Digital  Des-na-on   November  20-­‐22,  2013   Gaylord  Na,onal  Resort     &  Conven,on  Center   Washington,  D.C.     Learn more or register at:
  48. #IIRC   hQp://   T   <IR> Framework Consultation Draft – released April 16
  49. IIRC  Value  Crea,on  Process   T  
  50. The Research   A  2012  survey  by  the  Corporate  Execu,ve  Board  showed  that  60%  of  organiza,ons  were  experiencing  a  leadership   shortage,  an  increase  of  40  percentage  points  from  the  previous  year.   67%   #1  issue  is  developing   leaders  &  succession   planning  
  51. Shift Happens
  52. The  high  performers  in  our  survey  invest   more  in  talent,  focus  on  closing  skills   gaps,  have  more  customized  training   and  development  programs,  iden,fy   future  leaders  earlier  in  their  careers,   and  have  robust  succession  plans  in   place.  They  also  focus  more  on  “sot”   leadership  skills  such  as  the  ability  to   embody  the  organiza,on’s  culture  and   values  and  to  lead  effec,vely  in  a   complex  global  business  environment.     Paradigm Shift Source: E&Y Paradigm Shift: Building a new talent management model to boost growth
  53. •   Innova,on  –  making  changes  in   an,cipa,on  of  future  trends  and   customer  needs   •   Individual  -­‐  The  ability  to  analyze,   and  understand  new  situa,ons   and  new  business  plaxorms  in  a   ,mely  (proac,ve)  manner.     •   Organiza,onal  –  Programs  and   processes  designed  to  enhance  its   collec,ve  ability  to  acquire  new   knowledge  and  skills,  and  to  stay   ahead  of  the  market.     Source: Bersin & Associates Innovation = Agile Learning The right talent at the right time with the right skills
  54. •  Career  Path  (Ladder)   •  Competency-­‐based  Learning   •  Curriculum   •  Compliance  Tracking  for  CPAs   •  Content  –  world-­‐class  Technical  &   Leadership  Courses  in  mul,ple  formats   •  Context  –  Line  of  sight  to  organiza,on   vision,  mission,  strategy  &  culture   Our approach -The Six C’s
  55. 10/9/13   T  
  56. CPAs  are  trusted  advisors  who,  combining   insight  with  integrity  deliver  value  by:   T   CommunicaFng  the  total  picture  with  clarity  and  objec,vity   TranslaFng  complex  informa,on  into  cri,cal  knowledge   AnFcipaFng  and  crea,ng  opportuni,es     Turning  insights  into  acFon  to  transform  vision  into  reality    
  58. The  Bounce   hQp://    
  59. T   Curriculum design by BLI and AICPA usingTop 5 Competencies for future from CPA Horizons research and job levels from the BLI “Bounce” Model. Leadership and Communications were combined and the 5th category expanded to include practice specialties for firms and functional areas for corporate. Examples would include: Corporate Accounting, FP&A, divisional reporting, shared services, etc. CPA Firms would have audit, tax, industry specialties. These technical areas would have specific curriculums designed to meet their specific technical competency needs.
  60. Innova,on  &  Accoun,ng   1. Create  an  innova,on   mindset   2. Nurture  crea,vity   3. Prepare  the  path  to   profit   4. Match  metrics  to  the   stage  of  development   5. Take  a  balanced  view  of   risk  across  the  porxolio   hQp://    
  61. The  collaboration curve  is  replacing   the  experience  curve   “The organizations that will become the household names of this century will be renowned for sustained, large-scale, efficient innovation. The key to that capability is neither company loyalty nor free- agent autonomy but, rather, a strong collaborative community.” HBR, July-August 2011 #CC>EC  
  63. Three  Rules  for  Success   1.  BeQer  before  cheaper   (it's  best  to  compete  on   differen,ators  other   than  price);   2.  Revenue  before  cost   (priori,ze  increasing   revenue  over  reducing   costs);   3.  There  are  no  other  rules.  
  64. “In  a  period  of  rapid  change  and  increasing   complexity,  the  winners  are  going  to  be  the   people  who  can  LEARN  faster  than  the  rate  of   CHANGE  and  faster  than  their  COMPETITION.”   -­‐  Tom  Hood,  CPA.CITP.CGMA  
  65. Average  is  over!   1. Think  like  an  immigrant   (Paranoid  Op,mist)   2. Think  like  an  ar,san   3. Think  like  an  innovator   (always  be  in  beta)   4. Think  like  an  entrepreneur        -­‐  Tom  Friedman   hQp://   hQp://    
  66. Tom  Hood,  CPA.CITP   CEO   Maryland  AssociaFon  of  CPAs   Business  Learning  InsFtute   (443)  632-­‐2301   E-­‐mail   Web  h`p://   Blog  h`p://   Blog  h`p://       Follow  me  on:   ü   TwiQer:  hQp://   ü   LinkedIn:  hQp://   ü   Facebook:  hQp://   ü Plaxo:  hQp://   ü Slideshare:  hQp://   ü Youtube:  hQp://   ü Second  Life  avatar  name:  Rocky  Maddaloni  
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