CPAs are trusted advisors who, MACPA Professional Issues Update - Fall 2013 Edition

Tom Hood, CPA, CITP, CGMA CEO MACPA & the Business Learning Institute MACPA Town Hall & Professional Issues Update for MEMBERS Fall, 2013

http://macpa.cnf.io Ask and answer questions throughout the day here… Conferences.io 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.

www.blionline.org HOW TO PROFIT FROM INNOVATION: Building the Agile Learning Organization

The New Normal - VUCA

Historical Context – The Perfect Storm •  Web 2.0 •  Globalization •  Generations Source: DonTapscott - Wikinomics

www.SlideShare.net/thoodcpa #PIU13 #MACPA @tomhood @MACPA Download today’s slides at …

Insights to Ac,on “One without the other is either useless or destruc,ve”

The new “Big Four” • Standards & Leg/Reg • Technology • The Changing Workplace • Innova,on

What’s in a list?

Standards •  Interna,onal – IASB & IFRS •  FASB & PCC •  AICPA & FRF – SME •  ASB – Clarity (12/15) •  GASB Pension •  PEEC hQp://cpa.tc/1us

#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)

Happy 40th Birthday FASB! 10/9/13 T

FASB PCC

#MainStFinancials 10/9/13 T

Comfort LeQers?

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

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)

Here we go again…

#CPAsSavetheWorld

www.macpa.org MACPA State Budget Task Force 15

www.macpa.org Record of what has actually happened Prepared on an accrual basis Provide informatio n about longer- term implicatio ns Financial statement

www.macpa.org !5,000% 0% 5,000% 10,000% 15,000% 20,000% 25,000% 30,000% 35,000% Revenues% Expenses% Net% 11

www.macpa.org 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

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

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

www.macpa.org 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

www.macpa.org 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

Revenue = $2.4 trillion Expenses = exceeded revenue by $1.3 trillion 2012 financial statements

Assets= $2.7 trillion LiabiliFes= $18.8 trillion Accumulated deﬁcit= $16.1 trillion 2012 financial statements

Reality of future obligations These future obligations equal: Additional social insurance deficit $52 trillion Cumulative deficit 16 trillion Total deficit $68 trillion

In trillions 2009 2010 2011 2012 $11.5 $13.5 $14.8 $16.1 Accumulated deficit

Where were you on January 16th? 2014 CPA day – January 15, 2014

#TaxSimplify

“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?

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 09.24.03.1 •  Ethics requirement for CPE 2006 -‐MD COMAR 09.24.02.02 •  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

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

It’s really a numbers game 2,500 188 90 3

New CPA Swearing-‐in Ceremony November 4, 2013 BWI Hilton

#CPATechnology

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

RIP Lotus 1-‐2-‐3 & PC

#SocialAccoun,ng

"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

Genera,ons

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

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: DigitalCPA.com

#IIRC hQp://www.theiirc.org T <IR> Framework Consultation Draft – released April 16

IIRC Value Crea,on Process T

www.blionline.org 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

www.blionline.org Shift Happens

www.blionline.org 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

www.blionline.org •  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

www.blionline.org •  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

10/9/13 T

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

www.blionline.org

www.blionline.org The Bounce hQp://cpa.tc/2qh

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.

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://cpa.tc/3ey

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

#MACPAGROUPS

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.

“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

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://cpa.tc/3cr hQp://cpa.tc/3cr

Tom Hood, CPA.CITP CEO Maryland AssociaFon of CPAs Business Learning InsFtute (443) 632-‐2301 E-‐mail tom@macpa.org Web h`p://www.macpa.org Blog h`p://www.cpasuccess.com Blog h`p://www.bizlearningblog.com Follow me on: ü  TwiQer: hQp://www.TwiQer.com/tomhood ü  LinkedIn: hQp://www.linkedin.com/in/tomhood ü  Facebook: hQp://www.facebook.com/thoodcpa ü Plaxo: hQp://tomhood.myplaxo.com ü Slideshare: hQp://www.slideshare.net/thoodcpa ü Youtube: hQp://www.youtube.com/thoodcpa ü Second Life avatar name: Rocky Maddaloni

CPAs are trusted advisors who, MACPA Professional Issues Update - Fall 2013 Edition

Tom Hood, CPA,CITP,CGMA

CPAs are trusted advisors who,