Professional Issues Update - Leadership in the New Normal


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The theme of the Northeast CPE Conference is "Today You Can See Tomorrow". Tom Hood is the opening presentation where he will focus on the forces affecting the CPA profession and set the context for the changing world of CPE (Continuing Professional Education). The theme is Leadership in the New Normal and how to lead in turbulent times.

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Professional Issues Update - Leadership in the New Normal

  1. Today You Can See TomorrowNortheast CPE Conference - 2011 Professional Issues Update Leadership in the New Normal Tom Hood, CPA.CITP Maryland Association of CPAs Business Learning Institute 1
  2. Thought Leader in Leadership - Learning - Technology “With a social media outreach in the tens of thousands, Hood is wellTom Hood known for his pioneering use of Second Life, multimedia and socialCPA.CITP networking tools to communicate and educate.” That is what Accounting Today magazine said in their 2010 profile of Tom as one of the Top 100BIO Most Influential People in the CPA profession (his sixth time). Tom is best known for his role in helping CPAs “shape their future” through his work at the Maryland Association of CPAs and the Business Learning Institute, a center for development of leadership and strategic thinking skills for CPAs. He stands out in three areas, leadership, learning, and technology.(443) 632-2301 He was recently named as one of the Top 25 Thought Leaders in Public AccountingWeb Technology by CPA technology Advisor, one of the Top 25 Online Influencers in Talent Management by HR Examiner and as one of the Top 100 Most Influential People in the CPA Profession by Accounting Today Magazine (sixth time in 2010) Tom and his team have facilitated and taught the Major Firms Group (Top 100 CPA firms) for the AICPA, the AICPA Leadership Academy and facilitated strategic plans with numerous national AICPA committees and leading CPA firms from all over the US, alongBlogs with corporations and non-profits. Tom also co-authored BLI’s i2a - Insights to Action a strategic thinking system that is used to cultivate leaders and a strategic planning to help organizations navigate today’s permanent whitewater He is a nationally recognized author, speaker, and consultant. Tom and the MACPA been featured in the Journal of Accountancy, Accounting Today magazine, AccountingWeb. He also won the AICPA Special Recognition Award for contributions to the profession leading the CPA Vision Project in 2003. He is also considered as a thought leader in the Association Community speaking at the DigitalNow Conference and the ASAE (American Society of Association Executives)Social Media Tom likes to say much of his success as a CPA is due to membership in associations. He has been an active volunteer since starting his career. He has been past-president of Maryland Association of CPAs (1993-1994) and currently on the AICPA CPE Committee. He has served on several key national committees - the AICPA Business Reporting Committee and AICPA Special Committee on Mobility. He is also a member of the ASAE, World Future Society in addition to the AICPA & MACPA. In addition to his history as an association executive and CEO, Hood has experience as athoodcpa high level executive in industry, specifically as treasurer and CFO of Bryn Awel Corporation, a privately owned $75 million highway construction company.Second Life He is a graduate of Loyola College (B.A. in Accounting) and has a Master’s in FinanceSL Rocky Maddaloni (Real Estate) from Johns Hopkins University and a Master’s equivalent in Information Systems from the University of Baltimore. He also obtained the Certified Information%20Island/146/189/21/ Technology Professional (CITP) certification from the AICPA.
  3. The recession is over? Many of our CPAs are continuing to see rough seas ahead 2
  4. CPAs and businesses are feelingoverwhelmed by the rapid andturbulent pace of change
  5. You would like to be ahead of the waves instead of being crushed by them
  6. Today we will show you how you can survive  and even thrive these waves of change Photo: Pratt’s surfing page
  7. Our agenda• What do we see? – Economy  – Regulations & Standards – Globalization – Technology – Workforce & demographics• What does it mean to lead in  turbulent times?
  8. A useful framework for dealing with change – strategic thinking using our i2a – Insights to Action System Making sense of What a changing & possibilities complex world do we see? What does it What direction mean to us? should we go? Who do we need to How is the inspire to help us get world there? changing?
  9. Report from the future…
  10. Re‐Set, Re‐Think, Re‐ImagineAnticipation of a very large business model change amidst  rapid change – Steve King There are two recessions – the obvious one and the not so obvious, the end of the industrial age where perfecting the model was the key. The new model will be completely different. – Seth Godin #4 Rethinking the Business Model (25)  from AICPA MFG
  11. The Economy
  12. Where have the jobs gone – 8,000,000  downSource: Small Business Labs blog –
  13. Are we in the “Loch Ness Monster”  Economy? “Characterized by a  series of dips  superimposed on a  slow underlying  economy thru 2020”  ‐ Business Redefined by Ernst & Young
  14. Regulations & Standards
  15. The Federal Issues• FTC Red Flags rule – privacy  & identity theft• Tax Preparer Registration &  PTIN issue• Patient Protection Act &  1099’s• Sub S. Employment Tax Issue• H.R.5297 ‐ Small Business  Jobs and Credit Act of 2010 – 1099s• Tax Patents
  16. Massive legislation in a very short timePatient Protection Act Dodd-Frank Wall Street Small Business Tax Relief Reform & Consumer Act Financial Protection Act
  17. A useful framework to  understand the CPA profession The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under urban streets, it is often invisible until it breaks.
  18. The (infra) Structure of the CPA Profession Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB State CPA Statutes (Law) State Boards of Accountancy issue licenses and regulate CPAs
  19. Recent example – The Dodd – Frank Wall Street  Reform and Consumer Financial Protection Act of 2010Crisis hits news Bureau of Consumer Financial Protection 848 pages! 533 regulations 60 studies 94 reports
  20. What did we do when you were forced to have a license in every state you file A taxes in? WA MT ME VT ND K OR MN NH ID SD WI WY NY *MA MI • Collaborative effort with AICPA – NE IA *PA CT RI NV OH CPA/SEA – NASBA & State CPA CA UT CO IL IN WV DE NJ VA KS HI Societies MO KY NC MD TN DC • 47 states passed legislation in three AZ NM OK AR SC (3) years MS AL *GA TX LA • Maryland enacted it in 2008 FL Awaiting Governor Signature - 1 PR CPA Mobility Legislation Pending - 2 GU U.S. VIRGIN ISLANDS CPA Mobility Enacted 46 * CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA19 In Process
  21. It’s 7:00 am at a town hall meeting in Aberdeen when the  AICPA alert comes in…
  22. More than 100 MACPA members call our senators and we  defeat the amendment!
  23. Protecting by advocating for members  (CPAs) = real results!Working together with the AICPA and many State CPA Societies achieved these:Retained independent structure of financial  accounting standards (FASB)Modified provision to audit broker‐dealers  (PCAOB)Exempted CPAs from CFPA registration due to  existing licensing and oversightStopped excessive liability exposure for  auditors (aiding & abetting)Commented on SOX 404(b) exemptions
  24. Professional Standards are also rapidly  changing
  25. Another way to look at standards & oversight Public Company Private Company Int’l CompanyFinancial SEC FASB IASBReporting FASB PCFRC IFRS & SMEAudit /Attest AICPAPerformanceStandards PCAOB ASB, ARSC, PRB IAASBCode of AICPA AICPAConduct PEEC PEEC IFACCPA State Oversight & Enforcement of CPA LicenseLicensure
  26. Six Ways Convergence is happening1. FASB – IASB Convergence Project2. SEC IFRS – The Long and winding roadmap3. Private Company Standards4. AICPA Auditing Standards Board ASB Clarity  project5. AICPA Professional Ethics Executive  Committee – convergence6. Green / Sustainability reporting
  27. GlobalizationAs the globe  shrinks, opportunities  grow for  CPAs
  28. 5 Forces of Globalization1. Growth of consumers in emerging economies2. Technologies that empower consumers &  communities3. Increase in labor productivity in developed markets4. Shift of economic activity between and within  regions5. Increasingly global markets for labor & talent
  29. Growth is projected to come fromoverseas for the next five years while the US remains flat
  30. Priority #1 Exports by Small to Medium Enterprises (SME’s) • 33 % shipments overseas by UPS • 25% of small practices had international clients • US targets 100% increase in exports by SMEs
  31. Technology• Cloud• Mobile• Location‐based /  Augmented Reality• Security / Privacy• Social Media• XBRL
  32. It’s the power of the network
  33. Are you on Facebook?
  34. It’s the power of the network
  35. Social media = social capital real world examples
  36. The IRS is on Twitter are you?
  37. The AICPA is on Twitter are you?
  38. CCH is on social media
  39. Workforce & Demographics
  40. 5 Generations in the workforce Live First, Work Second Digital Natives
  41. Workforce & Demographics – Are you  ready for the shift change? These guys are retiring These are the new workers These are making the purchasing decisions Facebook Email Generation Generation
  42. Bright spot?
  43. What today’s workers want• Engage your top performers• Coach tomorrow’s leaders• Manage your Millennials Think AMP • Autonomy • Mastery • Purpose
  44. The CPA Profession Flat is the new growth 3% average growth Some declines Competition is increasing
  45. Accounting Firms Most Trusted  Advisors • Generally speaking, how believable do you normally find  statements made by someone who works for one of  these organizations or groups • “Echo Boomers” (18‐34) rated accounting firms highest– 74%67% 62% Acctg Firms 55% 51% Banks 49% 47% Investment Firms Health Ins. Co. 36% Mortgage Companies Govt regulators Credit Card Co. Source: Harris Poll, May 18
  46. CPAs most profitable small businesses
  47. 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
  48. Top Ten Issues for MFG1. 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) 49
  49. Grant Thornton report outlines  8 key areas  for CFOs to focus on 1. Developing soft skills 2. Understanding and applying international accounting standards 3. Understanding complex accounting & auditing standards 4. Adapting to an evolving regulatory framework 5. Addressing new external reporting needs 6. Understanding ERP or IT systems & XBRL 7. Employing quantitative risk management techniques 8. Possessing specialized industry knowledge & companys non-financial business drivers
  50. What is leadership and why  is it important?
  51. “You can’t stop the waves, but you can learn to surf” - Jon Kabat-Zinn Photo: Pratt’s surfing page
  52. Leadership is still about…• Engagement• Alignment• Accountability• Commitment“First I get all of my men facing the same direction.” - Napoleon
  53. How is leadership changing?“What got you here won’t get you there.” – Emmanuel Gobillot - Leadershift
  54. How Leadership gets it done is changing! From: Command & Control To: Connect & Collaborate
  55. Turbulent times require new skills and new thinking Source: Chief Learning Officer magazine
  56. 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 creatively 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
  57. Leadership = Multiplication•15 X – ROI strategy as  process & alignment• 8 X – Strengths• 6 X – Trust & Engagement•3 X ‐ Positivity
  58. Five Keys to Success in the New Normal The Flywheel Effect1. Strategic Planning continuously2. Collaborative environment3. Culture that focuses on people4. Seek Opportunities & Builds on  Strengths5. Harness the new skills & tools
  59. Does it really work? Four ExamplesService Profit Chain AICPA Major Firms
  60. The Tortoise was rightSometimes you have to go slow to go fast
  61. Elvis was wrong! What we need is a little more conversation!
  62. Leadership defined The four most  important words  for organizations  are, “what do you  think?” ‐ Tom Peters
  63. The only question for leadersHave I madeyou feelstronger andmore capable?Source: Emmanuel Gobillot -LeaderShift
  64. Tom Hood, CPA.CITP CEO Maryland Association of CPAs Business Learning Institute (443) 632‐2301 E‐mail Web http://www.macpa.orgBlog