COCPA NewsAccount - 2012 - July/August Issue

NewsAccount Colorado Society of CPAs

July/August 2012

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NewsAccount

Contents Features

} 2 125 and Counting

The anniversary of the AICPA highlights the CPA profession's rich history and continuing impact.

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FAF Establishes New Council

The Financial Accounting Foundation Board has established a new body to improve accounting standards setting for private companies.

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Setting Performance Targets Specific, achievable targets help to focus action, encourage success, and drive superior performance.

On the Road Can you travel full time and audit while on the road? If you are CPA Stephen P. Taylor, the answer is yes.

16 2012 Legislative Session Review

The Colorado General Assembly adjourned, May 9, 2012, after passing 312 bills of the 538 it considered.

Departments

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20 State of the Industry 24 Movers & Shakers 24 Classifieds Congratulations to three-peat

winners of the Young Professionals Golf Tourney, June 16, at Arrowhead Golf Club: Jacob Brantz, Randy Larson, Steve Corder, and Tom Kundinger.

On the Cover } Belleview Tower will be the COCPA’s new home, July 30.

Visit us at 7887 E. Belleview Ave., Ste. 200, Englewood, CO 80111. Our phone numbers remain the same: 303-773-2877, 800-523-9082, and fax 303-773-6344.

July/August 2012

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Chair Column

NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 58, No. 2 July | August 2012 Board of Directors Scott E. Bush, Chair Marc C. Hendrikson, Vice Chair Lora L. Finley, Treasurer Michael S. Bearup, Immediate Past Chair Mary E. Medley, Secretary Directors Carrie J. Bartow, Steven R. Corder, Peter J. Derschang, Ben T. Hrouda, Christine Riordan, Debbi C. Warden Editorial Board Jack Allgood, James M. Boak, Frances J. Coet, Kay R. Dragon, Deanna C. Duell, Jennifer Emerson, Mira J. Finé, Georgia Z. Phillips, Patrick A. Lytle, Mark Paller, Jennifer C. Pitkin, Tawyna Ramirez, Ronald O. Reed, Scott K. Sprinkle, Barbara J. Tedesko, Mark A. Torrey, Gregory A. Truitt, R. Stephen Van Meter, Michael D. West Mary E. Medley, President/CEO Elizabeth M. Julin, Deputy Director Krista Flynt, Editor/Publisher Natalie G. Rooney, Contributing Writer NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7979 E. Tufts Ave., Suite 1000, Denver, Colorado 802372847. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication.

Membership dues include a $9.90 one-year subscription to NewsAccount. Periodical postage paid at Denver, CO. POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants, 7979 E. Tufts Ave., Suite 1000, Denver, CO 80237-2847.

Net press run = 8,550 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 8,450; free distribution by mail = 50; free distribution outside the mail = 0; total free distribution = 50; total distribution = 8,500; office use, leftovers, spoiled = 350; returns from news agents = 0; total sum = 8,850; percent paid and/or requested circulation = 99%.

303-773-2877 • 800-523-9082 Fax: 303-773-6344 • cpa-staff@cocpa.org www.cocpa.org NewsAccount is available in PDF format online at www.cocpa.org.

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NewsAccount July/August 2012

News From the Front: 125 Years and Counting

BY SCOTT E. BUSH, CPA By the time you read this, I’ll have been home from the AICPA Spring Council Meeting in Washington, D.C., for two months. I’ve begun to tour Colorado to visit with COCPA members. The COCPA office will be relocated by the end of July to its new location at 7887 East Belleview Avenue, Suite 200, Englewood, Colorado. And, the 10th CPAs Make A Difference event, scheduled for Nov. 8, at the Westin Denver Downtown, will be here sooner than it seems possible.

Time is flying, and change is happening — a lot of it and fast!

Time to learn about and digest all that’s happening can be tough to devote. With that reality in mind, thanks for giving me a few minutes of your time to read about recent events and developments.

CPAs Take To Capitol Hill First, a few reflections on the AICPA Spring Council meeting. I’ve attended two Council meetings so far, and this was the first one I attended which included the opportunity to meet with Colorado members of Congress and their staffs “on The Hill.”

Council meetings always are informative and worthwhile; this one was especially meaningful because we also celebrated the 125th anniversary of the AICPA, with our own COCPA member Gregory J. Anton, CPA, CGMA, presiding as AICPA Chair of the Board.

Usually visits to Congressional offices focus on asking for support of or opposition to specific legislative issues. This time was different. We showcased the CPA profession’s unique skill set through two new resources we delivered personally to each office. “What’s at Stake? A CPA’s Insights into the Federal Government’s Finances” is a new video, featuring Greg Anton, which provides non-partisan analysis of the fi-

nancial sustainability of our country. In it, Anton calls on policymakers and the public to improve America’s fiscal health. It’s available, along with additional resources, at www.aicpa.org/Advocacy/Pages/CPAsInsight.aspx. I encourage you to visit the website and share the information with others.

The Total Tax Insights™ Calculator is a free, online service the AICPA developed to give taxpayers a clearer picture of the types and number of taxes they pay throughout the year and the estimated amounts of each. By linking federal tax rules with the country’s abundant and varied state and local tax conventions — including more than 20 of the most widely applied taxes — this first-of-a-kind tool fosters greater public understanding of taxes and provides key insights to enhance one’s financial well-being. It’s the first tax calculator that estimates a person’s tax obligation based on place of residence across the country. And, it’s customized for each state, the District of Columbia, and Puerto Rico.

Taxpayers access the calculator at www. totaltaxinsights.org and enter, at a minimum, the county and/or city where they live, marital status, number of dependents, and the exact or estimated amount of their federal adjusted gross income. The calculator then delivers a comprehensive view of the number and variety of taxes they pay, as well as their estimated annual tax obligation.

Both the video and the calculator were well received by everyone with whom we spoke. The overwhelmingly appreciative response reinforced to all of us making Hill visits that CPAs are the trusted advisors Americans turn to for information and answers, a recurring theme throughout the Spring Council Meeting. Be sure to check out these latest resources for yourself.

Young Professionals Share Their Views Council also provided the opportunity to hear what young CPAs have to say about the profession and their future in it. We listened to a panel of them talk about their vision, much of which relates to technology — not only how to leverage and use it to contribute to the profession but also to enhance their own lives by changing business processes and reducing the amount of time CPAs have to spend during the busy season, a pervasive theme in our profession, as we all know.

This demographic group isn’t going to be content to sit behind a desk. They are trying to find their passion and purpose, and they want to be involved in determining an organization’s strategy. They want to be engaged. They want to feel they are valued by the organization. They want to be empowered through mentorships so they can impact change in the profession. It’s not about the money with this group. It’s about their career and what they can contribute to it.

Forget any preconceived notions about the newest CPAs coming through the ranks.

They are committed, passionate, hard-working, and our future visionaries.

• The PCC will determine which elements of existing GAAP to consider for possible exceptions or modifications by a vote of two-thirds of all sitting members, in consultation with the FASB and with input from stakeholders.

While the AICPA supports the new PCC, there is a continued push for a twoGAAP system addressing the specific needs of private companies. The AICPA has plans to develop an other comprehensive basis of accounting (OCBOA for SMEs) framework to provide a less comprehensive and less costly alternative to U.S. GAAP for entities that don’t need to comply with U.S. GAAP. See the article on page 4 for more details on the new PCC.

On the Home Front At a joint meeting of the COCPA Board and the 2020 Committee, the COCPA’s strategic planning group, May 23, we discussed how we're meeting member needs and how we'll do so in the future. As a group, we’re reading Race for Relevance: 5 Radical Changes for Associations, which

challenges the old ways of doing business as an association and charts a new course through change. As an organization, we’re looking forward, looking at changes in our demographics, and talking about what the relevance of associations, especially ours, will be in five to ten years. We want to ensure that we remain relevant and meet member needs.

We’re off to a good start, making improvements to the COCPA member database, rolling out a new website, and focusing on services members want and need, like CPA Connect, our new e-communities platform, which will enable you to connect electronically with your colleagues. Big changes in the accounting profession affect us, but so do big changes in the association world. We want to make sure we’re ahead of the curve.

There’s so much going on behind the scenes at the national level and in Colorado. It all impacts what we do every day, and I look forward to sharing all the change with you as I travel the state. See page 5 for this summer's chair tour dates. s Share your comments with Scott Bush at scott@soukupbush.com.

What's Up with Setting Private Company Standards On May 23, the Financial Accounting Foundation (FAF) voted to create the Private Company Council (PCC) to identify and vote on differences in U.S. GAAP for private companies. The major difference from what was proposed in October 2011 is that the FASB will be responsible for “endorsement” rather than “ratification” of the newly created council’s decisions. The FAF received more than 7,000 letters about this hotly debated subject.

The new structure means: • The PCC chair will not be a FASB member, as originally proposed.

• The FASB will generally have 60 days to act on PCC decisions. If it fails to endorse a PCC decision, it must provide public, written notice of the reasons.

Among Colorado CPAs attending Council were, from left to right, Mike West, Sidny Zink, Scott Bush, Ron Seigneur, Mira Finé, Marc Hendrikson, Marvin Stone, Mike Bearup, Marvin Strait, and AICPA Chair Greg Anton.

July/August 2012

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Financial Reporting

New Council Established to Improve Standard Setting for Private Companies The Financial Accounting Foundation (FAF) Board of Trustees has established a new body to improve the process of setting accounting standards for private companies.

The new group, the Private Company Council (PCC), will have two principal responsibilities. Based on criteria mutually developed and agreed to with the Financial Accounting Standards Board (FASB), the PCC will determine whether exceptions or modifications to existing nongovernmental U.S. Generally Accepted Accounting Principles (U.S. GAAP) are necessary to address the needs of users of private company financial statements. The PCC will identify, deliberate, and vote on any proposed changes, which will be subject to endorsement by the FASB and submitted for public comment before being incorporated into GAAP. The PCC also will serve as the primary advisory body to the FASB on the appropriate treatment for private companies for items under active consideration on the FASB’s technical agenda.

FAF President and CEO Teresa S. Polley said, “The plan approved by the trustees strikes an important balance…(it) recognizes that the needs of public and private company financial statement users, preparers, and auditors are not always aligned. The plan ensures comparability of financial reporting among disparate companies (by creating) a system for recognizing differences that will avoid creation of a ‘two-GAAP’ system.”

In response to stakeholder concerns, the trustees changed the process through which the FASB considers Council recommendations for private company exceptions or modifications to GAAP from one of ratification to one of endorsement. The final plan stipulates that the Council chair will not be a FASB member; that the Council will hold meetings more frequently than originally proposed; and that its size will be smaller than initially suggested.

“The establishment of the PCC will help the FASB improve upon the efforts already under way to better serve the needs of private company financial statement users, pre-

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parers, and practitioners,” said FASB Chairman Leslie F. Seidman.

Key elements of the Private Company Council responsibilities and operating procedures include: Agenda Setting: Working jointly, the PCC and the FASB will mutually agree on criteria for determining whether and when exceptions or modifications to GAAP are warranted for private companies. Using the criteria, the PCC will determine which elements of existing GAAP to consider for possible exceptions or modifications by a vote of two-thirds of all sitting members, in consultation with the FASB and with input from stakeholders.

FASB Endorsement Process: If endorsed by a simple majority of FASB members, the proposed exceptions or modifications to GAAP will be exposed for public comment.

At the conclusion of the comment process, the PCC will redeliberate the proposed exceptions or modifications and forward them to the FASB, which will make a final decision on endorsement, generally within 60 days. If the FASB endorses the proposals, they will be incorporated into GAAP. If the FASB does not endorse, the FASB chair will provide the PCC chair with a written explanation, including possible changes for the PCC to consider that could result in FASB endorsement.

Membership and Terms: The PCC will comprise 9 to 12 members, including a chair, all of whom will be selected and appointed by the FAF Board of Trustees. Membership of the PCC will include a variety of users, preparers, and practitioners with substantial experience working with private companies.

Members will be appointed for a three-year term and may be reappointed for an additional term of two years. Membership tenure may be staggered to establish an orderly rotation. The PCC chair and members will serve without remuneration but will be reimbursed for expenses.

FASB Liaison and Staff Support: A FASB member will be assigned as a liaison to

the PCC. FASB technical and administrative staff will be assigned to support and work closely with the PCC. Dedicated full-time employees will be supplemented with FASB staff with specific expertise, depending on the issues under consideration.

Meetings: During its first three years of operation, the PCC will hold at least five meetings each year, with additional meetings if determined necessary by the PCC chair. Deliberative meetings of the PCC will be open to the public, although the Council may hold closed educational and administrative sessions. Most of the meetings will be held at the FAF’s offices in Norwalk, Conn., but up to two meetings each year may be held elsewhere. All FASB members will be expected to attend and participate in deliberative meetings of the PCC, but closed educational and administrative meetings may be held with or without the FASB. Oversight: The FAF Board of Trustees will create a special-purpose committee of trustees, the Private Company Review Committee (Review Committee), which will have primary oversight responsibilities for the PCC. The Review Committee will hold both the PCC and the FASB accountable for achieving the objective of ensuring adequate consideration of private company issues in the standard-setting process. The Review Committee will be chaired by a trustee with substantial experience in private company accounting issues. Oversight activities will be ongoing and will include monitoring of PCC meetings, among other activities.

FAF Trustees’ Three-Year Assessment: The PCC will provide quarterly written reports to the FAF Board of Trustees. The FAF trustees will conduct an overall assessment of the PCC following its first three years of operation to determine whether its mission is being met and whether further changes to the standard-setting process for private companies are warranted.

The complete report on the PCC is available at www.accountingfoundation.org. s

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2012 Women to Watch Recipients Recognized W W

Over 100 attended, May 23, when the inaugural 2012 Women to Watch Awards were presented to (upper left photo, from left to right) Dianne Ray, Mira Finé, Karen Turner, Sheila Balzer, Nina Currigan, and Megan Donohue.

Dean Christine Riordan (bottom left) of the University of Denver Daniels College of Business spoke. Also participating were awards task force co-chair Barbara Seacrest and AICPA Chair Greg Anton (pictured bottom right).

Coming to a Venue Near You – 2012 Summer Chair Tour Scheduled COCPA Chair Scott Bush, CEO Mary Medley, and Leslie O’Donnell, Membership Development Coordinator, will visit the following cities to provide an update on national and local professional issues and discuss member concerns. Each event is recommended for one hour of CPE credit. Additional dates and locations will be scheduled soon. To register, contact Leslie O’Donnell, lodonnell@cocpa.org, 303-741-8611, or 800-523-9082, ext. 111.

Boulder Chapter August 2, Lunch Meeting

Western Slope Chapter August 8, Evening Meeting

Northeast Chapter August 7, Lunch Meeting

West Central August 9, Lunch Meeting

Roaring Fork Chapter August 8, Lunch Meeting

Four Corners August 9, Evening Meeting

July/August 2012

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Strategy and Leadership

Taking a Seat at the Strategic Planning Table

BY NATALIE ROONEY

F

eeling like you’re stuck in a rut in the finance or accounting department?

Wanting to break out of the tax return mold? CPAs have been stereotyped as “just the numbers” people forever. But are you stereotyping yourself as well? If you're feeling hemmed in by the walls of the finance department, or stifled by only doing tax returns or audits year after year, it’s time to think a little bigger and leverage your skills into the strategic planning arena.

deficient in that area, but I also realized how important it was.”

The result of his realization — and through development of his strategic planning skills — is a company which focuses on helping clients integrate their financial statements and their strategy. And then, of course, implementing that strategy. “A strategic plan that never gets implemented is a waste of time,” Chenoweth says. “Sooner or later, the rubber has to meet the road.”

Thinking Outside the Box

Working in the Corporate World

Strategic planning strikes fear in the hearts of even the most experienced business professionals, and it’s an area where CPAs are uniquely qualified. “This is a growth area for CPAs,” says Lynne Lehr-Buck, CPA, founder of IntraScope Accounting Solutions, LLC, Highlands Ranch, Colo. “Other than CPAs, there aren’t a lot of people who can help clients through strategic issues. Part of what I do for clients is find out what they’re not doing. It’s a lot more than just accounting. Our strong business background as CPAs helps us.”

Lehr-Buck’s firm works primarily with small businesses “who are good business people in their field but aren’t sophisticated financially.” She got her foot in the door with many clients by doing traditional tax planning and preparation. She had previously considered leaving the accounting profession in the mid-90s after having made partner at a firm, where she realized it wasn’t a good fit.

After being involved with the national CPA Vision Project, she saw she could create a firm by doing what her clients needed, not only what she was hired to do. Working with her clients on their strategic planning needs enables her use her skills to grow her clients’ businesses.

It’s a similar story for Dan Chenoweth, CPA, MBA, president and founder of Chenoweth and Associates Business Consulting, Loveland, Colo. After leaving public accounting for positions at different corporations, Chenoweth became involved in strategic planning initiatives. “I realized I was

According to Chenoweth, strategic planning is something CPAs in industry need to be doing. Period. Research over the past decade shows that as Fortune 500 Chief Operating Officer (COO) positions have been eliminated, Chief Financial Officers (CFOs) pick up the slack. As a result, CPAs are rising to the top. “The CFO becomes the CEO's right hand person,” Chenoweth says. “CPAs in the CFO role see the big picture, the cause and effect. We form trusting relationships.

We’re conscientious. We’re nonthreatening.

We can play nicely in everybody’s backyard.”

So if you’re looking for a way to make an impact at your company, it’s time to blow your own horn, says Chenoweth, adding that CPAs don’t do that often enough, if at all. “As CPAs, we can see the big picture, understand cause and effect, and connect the dots. We speak the language of business.”

His advice? Be proactive and show them what you can do.

Additional tips: • Don’t get involved in strategic planning if the financial records you’re responsible for aren’t correct. Get your house in order first.

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• Get to know the company’s operations and sales. Find out what’s going on.

• Be proactive versus reactive. Tell yourself, “I’ve got these skills. Maybe I can not only participate in these discussions but also facilitate them.”

• Tell a story. Take the financial information you produce, and compare it to a non-financial metric. When you

do this, you tell a story everyone can understand. For example, ratios like revenue/employee and profit/product are much more meaningful than just reporting the sales or profit dollars.

• Make data available in real time and in a format users want. Help users of your financial information understand what they can do with it going forward so they can be proactive in decisionmaking.

“Strategic planning is the wave of the future,” Chenoweth says, “and CPAs are the best people to be involved. Make sure you’re one of them.”

Strategic Planning by Stealth Lehr-Buck says many of her clients are so overwhelmed by the concept of strategic planning that she doesn’t even use those words when talking to them about their future plans. But there are so many opportunities for CPAs to help their clients beyond the traditional tax and audit, Lehr-Buck says it’s a great way to provide value-added service and really help your clients grow.

“We understand the financials, and that’s big,” she says, “but in this environment with small companies, I learn a lot about sales, marketing, and other areas.” Her years of experience have given her the insight to help clients put all the pieces together. “For example, marketers have a tendency to talk brand and not understand that if money is tight and we don’t fix cash flow first, nothing will happen.”

Getting to this point with clients has taken time says Lehr-Buck. She feels fortunate to have been involved with the CPA Vision Project which enabled her to take part in strategic planning training, such as how to facilitate a strategy-oriented meeting.

Training can be expensive, so Lehr-Buck suggests reading books about strategic planning, talking to clients, and simply trying it out. “Have informal meetings. Ask how it’s going and what issues the client is facing,” she suggests, noting that all roads typically lead to one or two problems that you can’t

identify until you start asking questions. “Then you put a plan together to address the problems,” she says.

Lehr-Buck describes her role as part of the problem-solving process, but she is there for the follow up as well. She says the accountability portion can be tricky and sometimes has to be handled with kid gloves. “You want to be a cheerleader, not tick them off,” she says. If a client has identified five things to accomplish, she’s there to encourage them to reach those goals. Her aim is to make sure plans get implemented.

“Clients feel I really get them, and I’m there to help solve problems,” she says. “My clients, the ones I can work with the way I want to, love me and consider me part of the family. It’s very rewarding.”

Lehr-Buck’s advice: Stop talking; start listening. Then ask questions, and get to the heart of the matter. The bottom line: “We’re CPAs so people trust us and talk with us,” she says. Leverage that asset.

GR WTH

Being Part of the Bigger Picture

Chenoweth says building on your existing skills as a CPA, and then adding skills like listening, communicating, and presenting, will help lift CPAs from the basics in the accounting department to a more strategic role. “Be willing to do more,” he advises.

“There are people who are willing to work, and people who are Officially, of course, it’s Chartered Global Management Accountant. willing to let them. Look at strategic planning as an opportunity A new representing accomplished professionals that drive to learn and grow.” He reminds CPAs that ifdesignation they’re only looking at the backend financial statements, they’re missing out on the big and deliver business success, worldwide. picture. “We have a whole lot more to offer.” s

It’s what CGMA stands for.

GR WTH

Find out more at cgma.org

It’s what CGMA stands for.

Officially, of course, it’s Chartered Global Management Accountant.

A new designation representing accomplished professionals that drive and deliver business success, worldwide.

Copyright © 2012 American Institute of CPAs. All rights reserved.

Find out more at cgma.org

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Progress and Growth

Colorado Economic Development Incentives Competition among the states for new that provided potential new and expanding and expanding jobs became widespread in the employers with financial assistance for train1930s with the electrification of rural areas as ing Colorado workers in new and more compower companies sought demand for their petitive skills. These programs continue today newly created capacity. States in the south- and are among the most in-demand of all eastern U.S. became among the first to create programs. “industrial development” policies to lure manufacturers from

BY ALICE KOTRLIK northern states.

Economic development has come a long way since those days. The “smokestack chasing” has given way to sophisticated programs and policies to nurture high tech, high paying jobs in sectors such as bioscience, clean energy, information technology, nanotech, aerospace, and similar industries.

In the 21st century, economic development is more than offering incentives. The overall business climate and assets that foster innovation and attract capital are also critical factors. What Massachusetts gave up in textile mills it gained Another effort initiated early on was the back many times over by becoming the epi- creation of Enterprise Zones. This program center of bioscience in the U.S. and possibly provides incentives in the form of state inthe world, the result of its attraction of ven- come tax credits to companies that invest and ture capital, and its world class universities’ creat jobs in areas of the state that are ecobrainpower. nomically distressed. It also continues today Colorado also did quite well as compa- — although specific zones and credits availnies such as Martin-Marietta (now Lockheed able have changed over the years.

Martin) began building Titan rockets in JefFinally, the creation of the Economic ferson County in the 1950s. IBM built a Development Commission, a nine-memmajor facility in Boulder in the 1960s, and ber board appointed by the Governor and home-grown companies such as StorageTek the Colorado General Assembly, provided made their mark. a mechanism to grant incentives to compaBy the 1970s, local and regional economic nies that relocate to, or expand in, Colorado. development organizations began springing Now, state income tax credits and cash incenup and getting actively involved in economic tives for creating high paying jobs are offered development on a national scale. In 1986, the through the Job Growth Incentive Tax CredColorado Office of Business Development, it and the Strategic Fund respectively. High predecessor to today’s Office of Economic paying jobs are strategically important beDevelopment and International Trade (OE- cause they often are in sectors or occupations DIT), was created and made part of the Gov- that could locate anywhere. They typically ernor’s Office — intentionally declaring that have a multiplier that is higher than average Colorado is “open for business.” wage jobs and thus, have a great economic Early economic development programs impact and spur additional activity within the included customized job training programs local and state economy.

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Incentives may also be directed at a specific industry sector, such as the Bioscience Discovery Evaluation Grant program, which provides grants to early stage companies commercializing technologies developed in one of Colorado’s research universities.

The state also directs some federal dollars to Colorado’s economic development programs.

For example, the Department of Housing and Urban Development’s Community Development Block Grant funds for rural areas are utilized partially to capitalize 15 regional Business Loan Funds, provide public infrastructure funding, and assistance for feasibility/planning studies. These funds are used to support businesses and microenterprises across Colorado.

Gov. John Hickenlooper’s Colorado Blueprint, the state economic development plan created in 2011, outlines a framework for involvement of 15 key industry groups, with one area of interest being how incentives can be modified or tailored to be even more effective in meeting the needs of these sectors, attracting more companies to Colorado, and helping those already here to expand.

The bottom line: Colorado’s incentives are strategic and intentional in seeking and rewarding companies and supporting jobs that will enhance Colorado’s economic competitive position now and in the future. It is more important than ever to develop incentive programs that truly will have the intended outcome of attracting and keeping strong companies offering high paying jobs and building key industries that will provide Colorado taxpayers the most “bang for the buck” when allocating state resources to economic development. For more information, visit www. advancecolorado.com. s Alice Kotrlik is the deputy director of Budget and Business Funding and Incentives for the Colorado Office of Economic Development & International Trade. Contact her at alice. kotrlik@state.co.us.

Specialty Development

Business Valuation Continues to Increase in Importance

BY RONALD L. SEIGNEUR, CPA/ABV/CFF, ASA, CGMA Business valuation engagement opportunities continue to grow in number and scope. Recent surveys have confirmed this as one of the fastest growing segments of business for qualified practitioners. At the same time, the skill set necessary to competently practice in the area has continued to evolve to require a much higher degree of specialized knowledge as well as access to more sophisticated resources.

Recent emphasis on the need for competent valuation services by certain regulatory and governmental bodies, such as the IRS, FASB, and the Courts, has increased the need for practitioners to undertake a sincere, life-long, learning commitment to excel in this discipline. Anyone interested in the practice of business valuation can simply survey the competitive landscape to validate the need for enhanced, cutting edge education.

In response to this opportunity, the AICPA Forensic and Valuation Services Section (FVS) (www.aicpa.org/fvs) offers a wide range of support for practitioners who focus on valuation services. The Accredited in Business Valuation designation (ABV) is held by just over 3,000 AICPA members, all of whom are also required to hold an active CPA license from their respective licensing jurisdictions. Other requirements for the ABV include continuing education relevant to the business appraisal discipline, sufficient experience in valuation-related work, and passage of the ABV examination. The designation is widely recognized by those who use and rely on valuation professionals as a sign of qualified, experienced, and objective work product.

For those interested in learning the fundamental principles of business valuation, the AICPA offers the week-long National Business Valuation School in various locations around the country two to four times a year. A group of carefully selected, nationally recognized authors were brought together to compile the materials utilized for this program, based on the concepts in Financial Valuation: Applications and Models (FVAM),

which is now in its third edition and is published by John Wiley & Sons. The curriculum consists of a week-long workshop with each participant receiving a copy of FVAM and the accompanying workbook, which contains exercises and questions similar to what individuals can expect to encounter if they sit for the ABV exam.

Adding significantly to the quality of the curriculum, the BV School is team-taught by discussion leaders who have been screened not only for their knowledge and experience in business valuation principles but also for each individual’s ability as a dynamic and engaging discussion leader.

The National BV School’s educational objectives are to provide participants with the fundamental knowledge required to practice in the BV arena. The program isn't intended to provide everything, from an educational perspective, one needs to know to be successful and fully competent in all aspects of the discipline. Rather, it focuses on the core competencies of the body of knowledge in business valuation.

The AICPA BV School curriculum emphasizes: • Introduction to the valuation process and historical underpinnings • Valuation research techniques • Quantitative and qualitative analysis • The asset-based approach to valuation • The market approach to valuation • The income approach to valuation • Cost of capital • Valuation adjustments — discounts and premiums • Report writing and reconciliation of value indications • Expert witness issues • Valuation of ESOPs, divorce valuation, dissenting shareholder • Suits and special classes of stock • Professional standards

A unique aspect of the curriculum is the use of a detailed case study, where all pertinent aspects of a fictional business enterprise are researched and analyzed, leading to a final conclusion of value. This case study component allows BV School participants to comprehend the concepts and valuation principles covered within the program as they are applied to a real life, factual, valuation engagement. The case study includes evaluation of economic trends, consideration of proper normalization adjustments, discount and capitalization rate determination, and the proper quantification and application of discounts and premiums. The case study also includes interactive class discussion on the rationale for each aspect of a valuation assignment.

Participants who meet the ABV qualifying criteria and plan to sit for the ABV exam will benefit from the AICPA National BV School curriculum, although completion of this program does not guarantee success on the exam. The AICPA offers a separate ABV review course, which is specifically tailored for more experienced practitioners planning to sit. The 2012 exam will be offered prior to the 2012 AICPA Forensic and Valuation Conference in Orlando, Fla., Nov. 11-13, 2012. If you are considering practice opportunities within the business valuation arena, or otherwise want to enhance services already provided by your practice, give the ABV credential and National BV School a look.

A complete schedule of business appraisal education, including webcasts, expert witness skills workshops, conferences, and selfstudy can be found at www.aicpa.org/fvs.

Visit www.aicpa.org/fvs/abvinfo for more information on the ABV credential, the ABV examination, and related BV educational opportunities. s Ronald L. Seigneur, CPA/ABV/CFF, ASA, CGMA, is the managing partner of Seigneur Gustafson LLP, Lakewood, Colo.

Contact him at ron.seigneur@cpavalue.com or 303-980-1111.

July/August 2012

www.cocpa.org

9

CGMA Resources

Setting Performance Targets: A 10-Step Tool Targets are frequently used as a motivational technique. Founded on well established theories of achievement motivation, targets that are specific and perceived as achievable can help to focus managerial action, encourage people to succeed, and drive superior performance.

But setting the right targets is tricky and has become a real issue for many organizations.

The target-setting tool presented here is based on research by Prof. Mike Bourne and Dr. Monica Franco-Santos at the Centre of Business Performance, Cranfield School of Management. It was adapted from The Impact of Performance Targets on Behaviors: a Close Look at Sales Force Contexts, CIMA/Cranfield School of Management, 2009.

Based on a two-year study and interviews with nearly 100 sales people, the Cranfield School of Management identified the common barriers to setting effective targets and developed this ten-step tool to help improve the target-setting process.

There are three common issues that undermine the effectiveness of targets: • The forecast was mainly based on past performance so people do not overachieve as overachievement will make the next year’s target much harder.

• Some targets are based on the wrong performance measures which is often referred to as “hitting the target and missing the point.”

• Targets were ‘given’ to sales people, and no ownership was created.

This target-setting tool will help you better understand and implement sales targets. It is divided into ten steps and presented in the form of a wheel to illustrate its cyclical nature.

1. Review stakeholder expectations: You need to ask, “Who are our stakeholders and what do they expect from us?” This will determine the critical areas your organization

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needs to address in order to be perceived as successful.

2. Strategic objectives clarification/selection: Once the stakeholders’ expectations are identified, you need to express these as strategic objectives, clear statements of what the organization needs to achieve. They must be few in number and should address the different stakeholders’ requirements.

3. Success map: A success map is a visual tool that shows how lower level objectives link to higher level strategic objectives. It is a powerful communication tool that explains “what” is to be achieved and “why.” It also shows where each part of the organization contributes to achieving these goals.

4. Objectives prioritization: Most companies try to achieve too much. It is much better to prioritize and deliver fewer objectives than fail to deliver on too wide a range of goals. The focus will help employees too as they will be clear about what is important in the coming period.

5. Operationalization: This means designing appropriate performance measures.

How you define the measure will drive behavior. So KPIs must reflect the organization’s goals and encourage the right behavior from those responsible for delivering the goals.

6. Data collection: This step is often overlooked.

You need to collect timely and relatively accurate information as a basis for setting your targets. Data is never perfect, but it does have to be consistent and reliable enough to be fit for purpose.

7. Data analysis: This is fundamental. You have to draw on your knowledge of the past and of the future to project what is going to happen. You also have to analyze the capability of your processes. Are the processes capable of delivering the forecast? Most companies forecast, but fewer reassess their capabilities.

8. Set targets: Based on the previous steps, this is the point at which you set the target. Judgment is required, and you need to assess the risk of getting the target wrong.

This is also where most organizations stop, but this is not the end of the process.

9. Action plan design: An action plan is required covering all the projects and changes to the organization that are needed to ensure the target is reached. This may include training, new processes, new IT systems, or ways of working with your customers.

10. Action plan discussion and agreement: The plan must be communicated to staff. The communication has to be two-way and done regularly. Regular staff meetings where the objectives are restated, goals outlined, and progress discussed is a good format. Sending out the annual targets by email is not! s Got to www.cgma.org for more resources and information on becoming a Chartered Global Management Accountant.

Reprinted with permission from the Cranfield School of Management

Legislation

The JOBS Act: What You Need to Know

BY GREG PFAHL, CPA

On April 5, 2012, President Barack Obama signed into law the Jumpstart Our Business Startups Act, also known as the JOBS Act. The preamble to the Act reads that it is meant “to increase American job creation and economic growth by improving access to the public capital markets for emerging growth companies.”

The Act garnered bipartisan support in Congress, which has been unusual in recent times. Conceptually, it will bring back smaller initial public offerings (IPOs) for emerging growth companies and provide access to capital using private and small public offerings without registering with the U.S. Securities and Exchange Commission (SEC).

Emerging Growth Companies The Act created a new status of SEC registrant: Emerging Growth Company. It is defined as an issuer that had total gross revenues of less than $1 billion (indexed for inflation over time) during its most recently completed fiscal year. Issuers will remain an emerging growth company for five years following their initial public offering or until (1) they generate $1 billion in annual revenue, (2) issue more than $1 billion in non-convertible debt over a three-year period, or (3) are deemed to be a large, accelerated filer (generally companies with $700 million of non-affiliated market capitalization).

An issuer does not meet the definition of an emerging growth company if the date of its first sale of common stock pursuant to an effective registration statement occurred on or before Dec. 8, 2011.

Internal Controls Audit: Emerging growth companies are exempted from Section 404(b) of the Sarbanes-Oxley Act of 2002, which is the requirement for external auditor attestation of the issuer’s internal control over financial reporting. Under prior rules, companies going public were provided with a one-year exemption from 404(b), so the new law may provide up to four additional years of exemption.

Audited Financial Statements and New Accounting Standards: In its registration

statement filed with the SEC in connection with an IPO, an emerging growth company is only required to provide two years of audited financial statements. Previously, companies were required to provide audited balance sheets as of the end of the two previous fiscal years, and audited statements of income, equity, and cash flows for each of the three previous fiscal years. The new requirement is comparable to the scaled reporting available for Smaller Reporting Companies.

The Act also provides that an emerging growth company does not need to apply new accounting pronouncements until such time as a private company would be required to apply the new accounting standard.

In a preemptive move, the Act exempts emerging growth companies from mandatory audit firm rotation and requirements for auditor discussion and analysis, should those be approved by the Public Company Accounting Oversight Board (PCAOB). Furthermore, any additional rules passed by the PCAOB shall not apply to an audit of an emerging growth company unless the SEC “determines that the application of such additional requirements is necessary or appropriate in the public interest, after considering the protection of investors and whether the action will promote efficiency, competition, and capital formation.”

Crowdfunding: Originally utilized within the music industry, crowdfunding provides a means for early-stage companies to raise capital, generally by utilizing the internet to pool individually small investments into a larger capital contribution. The JOBS Act allows companies to raise up to $1 million through crowdfunding in a one-year period. Each individual investor is limited to the greater of $2,000 or 5% of annual income or net worth if the investor’s net worth is less than $100,000; or $100,000 or 10% of annual income or net worth if the investor’s net worth is equal to or greater than $100,000. Such investments are required to take place through a qualified intermediary, and the SEC has been given 270 days to issue the applicable rules.

Private Offering Solicitation: The SEC has been given 90 days to modify its rules to

allow general solicitation and advertisement related to Rule 506 private offerings.

Small Company Capital Formation: The JOBS Act changes the maximum size of a Regulation A offering from $5 million to $50 million annually. Historically, the advantages of a Regulation A offering have been that the financial statements included in the offering did not need to be audited, there are no ongoing Exchange Act reporting requirements up to certain thresholds, a simpler offering circular compared to traditional registrations, and the allowance to solicit interest in the offering before filing with the SEC. In addition to increasing the dollar threshold for eligibility, the JOBS Act adds a requirement that annual audited financial statements be filed with the SEC and provides the SEC with the discretion to require ongoing reporting following a Regulation A offering.

Private Company Flexibility and Growth: Not every company wants to be a public reporting company. The JOBS Act changes the thresholds mandating registration under the Securities Act of 1934. Though $10 million in assets remains unchanged, the shareholders of record increases from 500 to 2,000 provided that not more than 500 of the shareholders are unaccredited investors. The Act further exempts employees from the definition of “held of record,” thereby providing greater flexibility under stock compensation plans.

Despite the bipartisan support of the JOBS Act, there was significant opposition to and criticism of the legislation. Some see it as an invitation for additional fraud on Wall Street, and others predict a weakening of necessary oversight of public companies. Only time will tell if the JOBS Act provides the access to capital for private companies that was intended. s Greg Pfahl, CPA, is an audit partner in the Denver office of Hein & Associates LLP. He can be reached at gpfahl@heincpa.com.

July/August 2012

www.cocpa.org

11

Stephen P. Taylor, CPA, Builds a Business

ON THE ROAD

BY NATALIE ROONEY

W

hen you talk to COCPA member Stephen P. Taylor, CPA, you feel like you should start humming a tune like the Allman Brothers’ Ramblin’ Man or Willie Nelson’s On the Road Again.

His story is about an unconventional guy finding his way in a profession known for its convention. He discovered how to make the conventional unconventional and build a career perfectly suited to him along the way.

Home is in the Mountains Growing up in Southern California, Steve Taylor said he felt trapped in the city. The youngest of four boys, “I was my mother’s final failed attempt to have a daughter,” Taylor laughs. He knew he didn’t belong in the big city and dreamed of escaping to the mountains and forests.

“I was a terrible student. All I wanted out of high school was out.” As soon as he could, he was going to find a way to move to the mountains and be a forest ranger or smoke

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jumper. When he turned 18, he came up with his plan: He would join the Army and become a paratrooper. After that he could be a smoke jumper because he would already have jump training. By the time he left the Army though, his plans had changed. It was only years later that he remembered his original plan, and by that time he was already an accountant.

When he came home from overseas duty, he married his high school sweetheart, Judy, and completed his commitment with the Army. They’ve been together for 50 years and just celebrated their 46th wedding anniversary. “One of the first things we did as a couple was to escape Southern California,” Taylor says. He was thinking of becoming a veterinarian at the time so he and Judy got out a map of the U.S and circled schools with that profession in mind. They headed across the country in a VW bus with four hundred dollars to their name. They looked at towns along the way, and when they pulled into the scenic overlook above Boulder they knew they were home. They settled in Colorado.

Professional Progress While Taylor was studying at the University of Colorado Boulder, he first encountered accounting. “I had an accounting professor that I just loved, and he made the subject interesting” Taylor says. “That got me excited… and it made my career choice.”

Still, it took a few tries for Taylor to find his professional fit. After graduation, the Taylors left Colorado for Seattle so Taylor could work at Peat Marwick, a national firm and predecessor to KPMG LLP. “I started out on the audit side, and that worked out okay.

They tried sending me to the tax side, but the tax side sent me back. I guess I was destined to be an auditor,” he laughs.

While they were in Seattle, the Taylors missed the Colorado sunshine. After two years, they packed their bags and moved back to the place that was home to them. It was time for a new career. Having had enough of public accounting, Taylor found a position with Colorado’s State Court Administrator’s

Office as an internal auditor. After a two-year stint there, he decided to pursue his passion: making candles. “It’s the typical accountant career path,” he chuckles. Laugh if you will, but Taylor’s basement candle business evolved into the Colorado Candle Company, selling more than 10,000 candles a year in the continental U.S. The company lasted for six years until the market tapered off, pun intended.

“Then I had to give up, return to the real world, and find a real job,” he says. His CPA license was still active, and Taylor fell back on it. “I regretfully took a job in accounting, going back in desperation.”

Turns out, that was a pretty good desperation decision.

Finding His Niche Taylor landed a job with Ashby Armstrong in Denver. He liked it for its lack of giant corporate clients and its focus on nonprofit organizations. “I loved working with these little organizations,” he says. “It was all about who I was working with and how I felt about what they were doing.” And that’s how Stephen P. Taylor, CPA, discovered his niche in the nonprofit world. “You can say my niche actually found me.”

Five years later, Taylor made the decision to open his own shop, but when he announced his intent, it was the first time Judy ever expressed hesitation about a big change.

“Now that we had kids and a house in Louisville, she wanted to see how it was all going to work,” he says. “I asked her what it would take to convince her, and she said one client.” The next day he made a quick call to a friend at a nonprofit organization who said, “Yeah, I’ll be your first client.” With Judy’s requirement met and one $3,000-a-year client, Taylor launched the firm specializing in nonprofit audits.

“Everyone advised me not to do it,” Taylor says. “They said nonprofits don’t have any money. They wouldn’t pay. But it turns out they make great clients.” Taylor discovered that nonprofit organizations were delighted to find someone who cared about them and specialized in their area. “They were thrilled to find someone who already knew their issues. We could be more efficient and provide better service for the same or less money. And I was making enough to do what I wanted to do for a living.”

With Judy as his first employee — she handled the bookkeeping — they grew large enough to need office space in Denver.

When they had grown to several employees, Judy decided they didn’t need her anymore and retired to do other things. “She didn’t actually retire; she just quit showing up,” Taylor laughs.

The practice was a conventional one for a time, but leave it to Taylor to shake up the status quo. Every so often the firm received a request from a nonprofit in another city.

Small, rural nonprofits couldn’t find anyone locally to handle their audits. “Judy and I were already taking vacations in our RV, so we decided we’d audit together in the RV,” Taylor says. “We’d just spend a whole week together out doing something different.”

That’s when Taylor says the light bulb went on. Could they do this on purpose?

Could they travel full time, and audit nonprofit organizations on the road? While they were on a trip, they began laying the groundwork, and by the time they got home, Taylor already had a business plan in mind. He contacted the director of a nonprofit resource center to float the idea and see if it had legs.

It did. “I told him what I wanted to do, and he told me this concept was the piece that had been missing for nonprofits in rural areas.”

After that phone conversation, things fell quickly into place. A simple flyer generated enough initial jobs for the two to set off on their traveling audit adventures. “Within two years, our calendar was totally full,” Taylor says. “It grew pretty easily.”

They coordinated jobs by area as much as they could. With a dozen jobs between Glenwood Springs and Aspen, they could go up and down the Roaring Fork Valley auditing clients from one central campground. “We did jobs in Steamboat Springs, Craig, Grand Junction, Cortez, and Durango,” Taylor says.

“We looped all around Colorado.”

Being away from the Denver practice did present some logistical issues though. A bricks and mortar location was still necessary. “I thought I could run it by phone, but it got awkward,” Taylor says. Ultimately his longtime employee, Ken Roth, agreed to be a partner, and they formed Taylor, Roth and Company. “Ken became the Denver partner, and I’m the roving partner.”

How it Works Some people think Taylor is crazy. Some people are impressed. “The business model is an evolving process,” Taylor says. "When we got to the point where we were fully booked, we had to figure out how to make it scalable. It could rely entirely on me, but only up to a point. To move beyond that, we needed something different." With his connections in the RV community, he wondered if there could be a population of CPA RV’ers who wanted to travel and have adventures. He found one CPA that way, but he admits it’s not a lifestyle that everyone can sustain.

Taylor July/August 2012

Continued on 14

www.cocpa.org

13

2012 Heroes & Heroines Sought Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We want to celebrate these contributions and to do that, we need your help. If you know a CPA who should be considered for the 2012 Everyday Heroes and Heroines Awards, to be given at the CPAs Make A Difference celebration on Nov. 8, 2012, please submit a nomination.

Send a narrative, not to exceed three pages, explaining why you believe the candidate should receive this award and detailing the person’s accomplishments. Nominees must hold a CPA certificate and be a member in good standing of the COCPA. They also should be “everyday” heroes and heroines who may not have been recognized widely for their contributions.

Nominees should demonstrate significant service in one or more areas: INVOLVEMENT: Describe the nominee’s level(s) of involvement; length of involvement;

Taylor

Continued from 13

After many years of traveling across Colorado, New Mexico, and Texas, other CPAs at the firm — roving and otherwise — now handle the travel and client work. Taylor focuses on supervision and review, with some marketing and promotion thrown in. “Mostly we grow by referral, but from wherever I am, I can trigger flyers to go out if we decide we need new clients. We always get a good response.” He laughs at the irony. “Typically a firm’s number one concern is getting new clients. Our problem has always been how to manage the growth.”

Living in their RV isn’t exactly roughing it. And they have sought out some of the most scenic locations available to enjoy the nation’s flora and fauna. Taylor’s RV office has provided any number of breathtaking vistas over the years. When it’s time to move on, the Taylors are quite a sight to behold — all 60 feet of them between the RV and the Jeep they tow. It's mobile accounting at its finest.

Having an Exit Strategy Taylor reflects on the rituals and routines life on the road has allowed whether that’s fly

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and time devoted to non-profit organization(s) and community activities.

LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in a community organization, including taking the lead in identifying and solving a problem, founding or rescuing an organization, or developing an innovative program.

IMPACT: Describe how the nominee’s actions benefited the community, improved the overall quality of life, helped others overcome adversity, or served as a role model for CPAs exemplifying the profession’s core values of integrity, competency, and objectivity.

For more information or to submit your nomination electronically, contact Terry Cervi at tcervi@cocpa.org, or call her at 303-7418610 or 800-523-9082, ext. 110.

Nominations Deadline August 31, 2012

fishing before dinner or taking an annual float trip down the Madison River outside of West Yellowstone, Mont. He says it comes back to reinventing every year. And having an exit strategy. “As soon as we bump up against our capacity in some way, we have to find a way to go beyond. Any time the process relies on me, we have to have an exit strategy to make sure the process can continue after I’m gone,” he says.

To the inevitable question about when he will retire, Taylor responds, “Retire from what? Working for me is like playing, like all of the other things I enjoy doing.” By other things he means bird watching, hiking, taking photos, and writing about their adventures on his blog. “The people in the Denver office might not think I work at all, based on my trip reports.”

The Taylors now make their home on the road full time, having sold their house in 2004. “We have two kids. They didn’t grow up and leave home, so we did,” Taylor laughs. Winters are spent on Mustang Island on the south coast of Texas. They used to return to Colorado in the spring for audits and work here all summer and fall, but that was before going digital. As the years passed and the process became more

CPAs Make a Difference

Nov. 8, 2012 Westin Denver Downtown 1672 Lawrence St. Denver, CO Reception and Silent Auction to benefit The Educational Foundation of the COCPA

Cost: $100/person

$25 for new CPAs $1,500/Supporter Table $750/Patron Table

Contact: Terry Cervi at tcervi@cocpa.org, 303-741-8610, or 800523-9082, ext. 110, to attend.

digital, they became “location independent,” free to roam North America. They’ve been from the Florida Keys to British Columbia and Alberta. They’ve been all over the south and southwest. The only region they haven’t made it to yet is the Northeast. That’s on the schedule for next summer. No matter where they are though, the Taylors start their day with morning coffee on their patio or in their front yard. They stay in a variety of RV resorts and state parks, so their view is often beautiful and always changing. “There are so many interesting things around us.”

"When people first meet us they ask if I’m retired," Taylor says. Most people save up and retire so they can hit the road. He says he tells them, “I wasn’t smart enough to figure out how to retire, but I was just smart enough to figure out how to work from the road. Now, after all this time, it’s not so much about me and what I do though. I’ve set the process in motion. It’s all the other people at Taylor, Roth and Company doing the hard work they do to keep it all going." s You can follow along on the Taylors' adventures via their blog, http://steveandjudystravelblog.blogspot.com. Check out the firm's website at www.TaylorRoth.com.

YOU GET TWO DOLLARS IN HEARTBURN FROM THIS CLIENT FOR EVERY DOLLAR IN FEES?

“LET’S TALK THIS THROUGH” Ron Klein, JD, CFE, VP - Risk Management Counsel for CAMICO, discusses the risks faced by CPAs every day.

OK, Ron, is this client relationship really a risk to me?

Well, let’s look at the red flags. The client has careless record-keeping practices, is late in providing information and is often non-responsive, causing you delays. What happens if the business fails or you later discover the client had been deliberately withholding information due to unethical activity.

How might you be blamed?

Isn’t it better to fix the problem and keep the client?

Sure, if you can. But at what cost to you, your staff and your firm?

But disengagement is such an unpleasant business...

Not nearly as unpleasant as getting sued. Proactively managing your risk through client selection and retention is really about upgrading your client base and thus upgrading your firm.

OK, so I’m ready to disengage from this problem client.

What’s the next step?

Calling CAMICO is always your first step. Our risk management specialists will help you tactfully and securely end the relationship. We have many sample disengagement letters and will even help you tailor your own letter to make sure all your bases are covered.

Not insured by us? Give CAMICO a call, and we can start the conversation about lowering your risk – and easing your heartburn – today.

Scan this QR code with your smart phone to learn about CAMICO’s products and services.

CE LE B RATI N G M OR E THAN A QUARTE R CE NTU RY OF PR OFE S S I ONAL LIAB I LITY I N S U RAN CE F OR CPAS

CAMICO can be your one-stop resource for other CPA Business Insurance Solutions such as:

CAM IC O P ROF E S S IONAL LIAB I LIT Y I N S U RANCE I S S P ON SOR E D BY

Employment Practices Liability Business Owners Package Workers’ Compensation Personal Umbrella (Currently available in CA only) W W W. CA M I C O . C O M

1. 800. 652. 1772

July/August 2012

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15

2012 Colorado Legislative Session Review Editor’s Note: The following information comes from the 2012 legislative summary prepared by Danny L. Tomlinson, Ed Bowditch, and George Dibble, as of June 13, 2012. To read the entire article, log on to www.cocpa. org and click on 2012 Colorado General Assembly Legislative Session Review. For more information, contact Tomlinson at 303-6606036 or go to www.lobbycolorado.com.

T

he Second Regular Session of the 68th General Assembly of Colorado convened, Jan. 11, 2012, and adjourned, May 9, 2012 — the constitutionally limited 120 days.

Gov. John Hickenlooper has 30 days after adjournment sine die of the legislature to either sign or veto any bills passed during the session. He signed the last few bills, June 8, 2012, the last day for him to act on those bills.

The final two days were tumultuous and controversial — possibly more so than in any year in memory — and a number of bills with strong bi-partisan support “died on the calendar.” This prompted Gov. Hickenlooper to call the legislature back, May 14, 2012, for a three-day special session to consider several issues.

In this year’s final three days of the regular session, about 30 bills were on the second reading calendar of the second house for debate and action. One of these bills was Senate Bill 12-002, the civil unions legislation. It had passed the Senate 23-12 and had passed three committees in the House. It appeared it would have passed the House floor had it been calendared.

However, the House Republican leadership did not support the bill. A series of parliamentary maneuvers put the House at impasse, and the House adjourned about 11 p.m., May 8, without taking second reading action on approximately 30 bills.

This meant that those 30 bills could not be passed on third reading the following calendar day (the last day of the session).

They were effectively dead.

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On May 9, several of the failed bills were successfully added as amendments to legislation that did pass. One of the bills that could not be amended on to other legislation involved the Unemployment Insurance Trust Fund. The bill was universally supported by both parties and the Governor’s office and would have saved the business community about $20 million annually in unemployment insurance costs. Another bill was the annual water projects bill that details projects and appropriations of the Colorado Water Conservation Board. It also enjoyed strong bipartisan support.

Gov. Hickenlooper called the General Assembly into special session to consider seven unfinished legislative issues. Ultimately, two of the seven successfully passed in the special session — the UI Trust Fund bill and the water projects bill.

Major Economic Issues The Center for Colorado’s Economic Future concludes that the state’s General Fund faces a serious structural imbalance because Medicaid growth and K-12 education spending will far exceed the growth rates of sales and income tax revenues.

The total state budget is about $20.4 billion, with $7.5 billion being General Fund (primarily income — about two-thirds of the total — and sales/use tax — about onethird of the total) revenues. The balance of state budget revenues comes from cash funds (licenses, user fees, tuition, etc.) of about $6.2 billion; federal funds of about $5.2 billion; and about $1.5 billion in reappropriated funds.

On the other side of the budget, we see where the money goes. Appropriations of the General Fund revenues show almost 40% goes to K-12 education, about 33% to health care/human services, almost 13% to corrections/judicial, about 8% to higher education, and about 5% to all other areas of state government.

FY 2012-13 Budget Gov. Hickenlooper delivered his budget request for FY 2012-13 on Nov. 1, 2011.

On Jan. 3, 2012, he submitted amendments to the FY 2012-13 budget request, and more revisions were made after the March 2012 forecasts. The Legislature used the March revenue forecasts of the Colorado Legislative Council and the Governor’s Office of State Planning and Budgeting in drafting the FY 2012-2013 budget. The positive December and March forecasts allowed the Governor to withdraw the planned reductions to K-12 and withdraw almost all of the planned reductions in higher education for FY 2012-13.

After the Joint Budget Committee deliberated for six months, the legislature adopted a budget with the following major components: Education: In contrast to the prior few years of reductions in education funding, the FY 2012-13 budget contains flat per student funding for K-12 education. And, although the per student amount will be held flat, 111 of the state’s 178 districts will receive less funding because of declining enrollments.

Higher Education: The Governor’s initial budget request contained a reduction of approximately $60 million for higher education, continuing the recent trend of declining state support for it. After the two positive revenue forecasts, however, the overall funding for the governing boards was reduced by only $6 million from FY 2011-12.

Senior Property Tax Exemption: The exemption is reinstated as of July 1, 2012.

The Governor’s Office had initially proposed that in place of this broad program, a more targeted, means-tested program be adopted.

However, no changes were made by the legislature, and the full exemption returns intact.

Medicaid: The Colorado Medicaid program required a General Fund increase of 9.5 percent for FY 2012-13. In FY 2010-11, the number of individuals served increased by 57,000, or approximately 5,000 new

Medicaid recipients per month, and this pace appears to be continuing. The state’s Medicaid program faces an uncertain future as long as there are policy disagreements in Washington, D.C. regarding federal health insurance. Nonetheless, Medicaid continues to take an ever-larger share of the state budget. More than 33% of the state’s General Fund appropriations in 2012-13 will go to health care and human services.

Overall Budget Adequacy Over the last ten years, the state has eliminated, reduced, or refinanced a number of state-funded programs (e.g. state merit-based aid in higher education, state funding for the Division of Parks). In addition, the legislature has substantially reduced funding for K-12 education and higher education — in spite of increased enrollment. One could say that these decisions reflect priorities and the tough choices that have to be made in tough economic times. But the continuing reductions to higher education, combined with the continuing budget strain of Medicaid, leads to a question of budget adequacy: Is Colorado’s current tax structure — 2.9 percent sales tax and 4.63 percent income tax — sufficient to provide necessary state services? Both of these revenue streams are dependent on employment, and they will fluctuate with the economy. Should Colorado work towards a new taxing system that would be less cyclical?

Economic Development The highest priority for Gov. Hickenlooper, the 100 legislators, and nearly every other public policy maker in Colorado is the creation and retention of good jobs for Coloradans. With unemployment hovering near 8% and the state’s economy slowly recovering, this properly is the highest priority.

The Economic Development Council of Colorado (EDCC) worked closely with legislators, particularly Minority Leader Mark Ferrandino (D-Denver), on three bills dealing with enterprise zones, one of the few economic development tools that Colorado has available to attract and retain primary employers and capital investment. House Bill 12-1241 passed with unanimous support in both houses. It establishes a task force to conduct an objective review of enterprise

zones and to report to the General Assembly

by November 2013. The task force will work under the guidance of the Governor’s Office of Economic Development and International Trade (OEDIT).

K-12 Education: Outside of the budget, the most pressing issue for K-12 was House Bill 12-1238, the “Literacy Bill,” which requires assessment of students in grades K-3 and conversations with parents for those students reading below minimum grade level.

There is some additional funding associated with the bill, and districts will need to focus efforts on those students reading below minimum proficiency. This bill was strongly supported by the business community.

Also, the state awaits the next ruling in Lobato v. State of Colorado. The ruling by District Court Judge Sheila Rappaport that the state is out of compliance with the “thorough and uniform” requirement of the state constitution is being appealed. This case could have significant ramifications for K-12 funding and the remainder of the state budget.

Higher Education: Though the cut for FY 2012-13 is small, it continues the recent trend. More importantly, the state does not have any plan to change funding for higher education.

The higher education policy issue drawing the most attention this year was the effort to provide unsubsidized tuition for undocumented students. This bill (Senate Bill 1215) passed the Senate but was killed in the House. Since the legislative session ended, however, the Metro State University of Denver Board adopted an unsubsidized tuition rate. Will other schools follow Metro’s action?

The move by the Metro State Board appears to have generated a lot of controversy in the Joint Budget Committee, and it has added the subject to its next meeting agenda.

Finally, 2012 saw three name changes: Adams State College to Adams State University; Metro State College to Metro State University of Denver; and Western State College to Western State Colorado University.

Local Government: We traditionally see a number of bills dealing with the powers and authority of local governments, particularly with regards to beer and liquor and more recently, medical marijuana. The sanctity of local control generally held strong this year.

The major issues for local governments revolved around House Bill 12-1029, dealing

with business personal property tax (BPPT), and distribution of severance tax revenues to locally affected areas through the Energy Impact Assistance Fund. House Bill 12-1029 will allow local governments — cities and counties alike — the discretion to forgive or abate BPPT payments as an economic development incentive. The legislation is optional, not mandatory, and was supported strongly by the Economic Development Council of Colorado, the Colorado Municipal League, Colorado Counties, Inc., and the state’s several business organizations and chambers of commerce.

As the state’s economy has struggled during the past several years, the General Assembly has found it necessary to help balance the state budget with funds from the Energy Impact Assistance Fund. These dollars come from severance tax or federal mineral lease revenues and are intended to help fund critical infrastructure and local jobs in the impacted communities. This year, Gov. Hickenlooper worked closely with the Joint Budget Committee, particularly Rep. Jon Becker, to ensure that those funds would not be transferred to the state General Fund and would instead be used for their stated purpose.

2012 Take-aways The economy is fragile, but recovering. Split control of the legislature leads to moderation. Also, significantly fewer bills are introduced — 538 in 2012 and 586 in 2011 with the Republican majority in the House and Democratic majority in the Senate. In 2009 and 2010, Democrats controlled both houses of the legislature, and we saw 664 and 642 bills introduced in those years, respectively. A total of 312 bills passed and were sent to the Governor in 2012. He signed 309 of those, allowed one (House Bill 12-1348) to become law without his signature, and vetoed one (Senate Bill 12-124).

Lt. Gov. Joe Garcia signed one in the Governor’s absence (House Bill 12-1005).

Legislative reapportionment and term limits have a huge impact on the General Assembly — more than one-third of the legislature that convenes in January 2013 will have virtually no legislative experience. Stay tuned. It’s going to be quite the adventure in politics. s July/August 2012

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Ready to Retire?

Your Firm Might Not Be Worth What You Think

BY NATALIE ROONEY More than 100,000 baby boomer CPAs will retire over the next decade, many of whom are sole or small firm practitioners. As these CPAs transition their firms, they may be unpleasantly surprised to find the market for their practices isn’t what they thought it would to be. What can sole and small practitioners expect as they prepare for the future?

ing and selling businesses. Lang specializes in working with CPA firms. “It has become harder to transfer ownership of a practice,” he says. “If you have a practice with attestation services along with tax, it’s harder to find the right person who has the experience in both areas to step into that role.”

Great Expectations In the good old days, retirement planning for a sole/small firm practitioner typically included three components: personal investments, real estate (a personal residence), and the value of the practice at the point of retirement, says COCPA member Albert S. Williams, who built a second career helping CPAs transfer their practices. The three components combined typically provided a comfortable retirement for CPAs who had spent a lifetime building a business and were ready to move on to something else. Today, many CPAs start the transition process expecting the old rules to still apply: When they decide to retire, they will sell the firm for 1 or 1.2 times billing and maybe continue to be involved with the firm, or maybe not, depending on what they want to do.

But it’s a whole new world, and CPAs are finding their plan might not go as intended.

Nearly every aspect of the CPA's threepronged retirement savings plan has changed.

Personal investments have dropped, the real estate market has declined, and selling a small practice has become more challenging. The result, says Williams, is that smaller practitioners are working longer than they ever envisioned — many to the age of 70 or beyond — in a profession that is growing more complex as the result of tax laws and regulatory and political issues. All this while competition is increasing and clients are turning away from personal service to user-friendly software.

Thomas J. Lang, CPA, MBA, of Touchstone Business Advisors is seeing the same trends. Touchstone is a boutique business brokerage providing assistance to people buy-

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Other factors, such as availability of bank financing for the buyer, are also complicating firm sales. In addition, Lang says he is finding fewer people are willing to take on the responsibility and workload of a firm — which means there are fewer interested buyers than five years ago.

How to address these challenges? By planning an exit strategy early on. Williams and Lang say shockingly few CPAs have a plan.

“When I talk to them, they shrug and don’t even know how to begin,” Lang says. “CPAs need to be planning and visioning and putting ‘what’s my plan?’ down on paper. It takes time to pull it all together.”

There’s another unfortunate factor that Williams has seen all too often over the years: Sometimes CPAs die or become unable to work due to health issues or an accident before reaching retirement. They never set up a practice continuation agreement, didn’t keep their practice up to date, and didn’t create an exit plan. The result: The firm was essentially worthless, leaving loved ones without any income at all.

My Practice is Worth WHAT? As a result of recent economic changes, CPAs contemplating retirement and considering the sale of their practice are getting a real wakeup call, says Lang. When he begins

working with a CPA to sell a practice, he has his clients think about retirement and figure out what resources and asset base they need to fund their lifestyle. Plan for a conservative three to four percent return on assets for replacement of practice income, and prepare a budget of annual expenses. Lang suggests estimating the practice value conservatively in the process. Typically there’s a gap between value needed from the practice and what the practice will sell for. “That’s when they see they need to work another few years,” Lang says.

For CPAs expecting to receive 1.2 times billing, or even 1.0 times billing, .75 may be a more realistic starting point. The ultimate sale price will depend on cash flow to owner, terms such as seller willingness to carry a note, staffing strengths or weaknesses, location of practice, type of revenue the firm generates, client turnover, and revenue trends. Different factors will affect the final number. “Sellers need to dial down their expectations,” Lang says.

CPA owners may also be surprised when they’re asked to carry part of the new owner’s loan as a condition of the sale, a typical caveat of Small Business Administration loan guarantees.

One of the first things Williams would say to CPAs wanting to sell their practice at the prevailing market price is to think about the sale in terms of buying the practice themselves. If the practice contains out-of-state clients; clients in an economic downturn or close to bankruptcy; clients you want to cut loose but haven’t yet; one-time clients; family and friends you work for at a discounted rate; non-transferrable trust work; or very specialized areas of work, would they themselves be willing to pay full price?

Working to create value, long before you’re ready to sell, is important. Don’t ever forget that cash is king. “CPAs ask over and over, ‘What is the net income of the business?’” Lang says. “Create value by keeping costs down and net income up to show a strong bottom line. Simply put, watch your

expenses, and manage your bottom line. The larger your bottom line, the better your value component.”

Other ideas for creating value include creating an appealing business, even if you’re five to ten years out from a potential sale. Keep up-to-date financial records, keep your office current in terms of technology and appearance, and make sure the business can run without you for weeks at a time.

If you think it’s tough to sell a CPA firm now, wait three to five years and then watch what happens. “As boomers move close to the end of their working years, there will be a race to the door,” Lang predicts. “There will be more practices on the market. As the economy picks up and boomers retire, the multiple may be lower due to supply and demand for these practices.”

In an ideal world, Williams suggests setting up your exit plan 10 years prior to when you want to make a change. If you want to retire at 65, be planning by the time you’re 55.

Special Circumstances CPAs in small towns face their own special set of circumstances that may require extra planning time, says Williams. “The professional community in the more remote locations is very small,” he says. As a result, people have been clients of competitors. There may have been infighting among competitors that you might not see in a metropolitan area.

Williams says the opportunity to convey a practice to someone in the community is limited because firm owners don’t want to share information that would allow someone else to learn too much about the firm’s client list.

The population base of smaller towns is an issue as well. Many times there just aren’t enough people with the skills necessary to take over a CPA firm. Bringing a buyer from the outside doesn’t always present the most realistic option, Williams says. “This is where elements that may not even be related to the practice come into play, but these issues need to be overcome. Now we’re talking about someone completely relocating their family, and with the number of two-income families, it can be difficult for the non-CPA spouse to find employment in the new, smaller community.”

Small, rural firms may need to be even more aware of keeping the practice up to

date in terms of client mix, technology, and staff expertise, to make the firm more saleable when the time comes.

Examining Options “It’s a mental shift for CPAs to realize their firm isn’t worth what they thought it was,” Williams says. “They’ve been told for years their practice is worth a certain amount.

Then they find out it’s worth less than that amount, and they’re in denial. Couple the reduced value with other factors such as location, a shrinking client list, and outdated business practices, and the practice may be virtually worthless.”

What then? Can a CPA still get something out of the firm? Facing reality is the first step, according to Williams. A practitioner should first try everything to sell a practice including: • Start well in advance of the end point of retirement.

• Explore all known potentially interested parties.

• Consider or actually list the practice with one of the practice brokers in the area • Consider some kind of bifurcation of the practice in order to convey elements of the practice to others (employees, nonCPA firms, etc.).

• Consider downsizing the practice, keeping manageable portions into retirement.

At that point, if nothing has worked, you might just have to “take down your shingle,” Williams says. The CPA must maintain the sanctity of client records, pursuant to Board of Accountancy, Internal Revenue Service, and statutory privilege requirements. The clients should be notified with ample time for them to seek other service providers. Purchasing a tail on the malpractice insurance policy should also be considered.

Lay the Groundwork, Plan Ahead When Lang owned his own firm, he created a practice continuation agreement — which he obtained through the Colorado Society of CPAs — with COCPA Past Chair Ron Seigneur, CPA. “If something had happened to me, Ron would have stepped in to manage the practice in the short-term and

then assimilated the firm or sold it,” Lang says. “Having a practice continuation agreement is the smartest thing, but most CPAs don’t have one. It’s the first thing I would recommend implementing.”

Don’t make assumptions about your future, including your health, as circumstances change. You may need to exit your firm in a six- to twelve-month timeframe. Or even immediately. “Most people don’t plan that way,” Lang says. “Instead, they think, ‘I’ll go ten more years, and when I’m ready, I’ll sell.’ You need to plan years in advance. This is a call to action: Think ahead.” s

One CPA’s Story COCPA member Paul Eakins, CPA, recently sold his practice. After the process was completed, Eakins and Company PC became Eakins Fort and Company PC. Individual tax clients made up more than half of Eakins’ business, but the firm also did payroll and consulting work. After making a verbal commitment to the new owner, Eakins continued to work full time during the transition over the past year.

Eakins spoke with several brokers, including an Internet broker, before deciding to work with Tom Lang. The process of choosing a broker occurred over three to six months, but Eakins said the whole transition process took place over a period of years.

“This isn’t something you decide to go do in ten minutes,” Eakins cautions. He describes a series of questions CPAs need to ask themselves: Where are you? What do you want to do and when? “Maybe there’s a straw that breaks the camel’s back. That usually happens right after tax season.”

The process began with collecting and reviewing the firm’s statistics. “In order to even start the process, we had to figure out what we had to work with,” Eakins says.

“What you are retiring to” is important to think about as well. “I didn’t want to sit around,” Eakins says. He hasn’t totally resolved that issue yet, but he encourages CPAs to ask themselves why they’re getting out. “What do you want to do with the rest of your life?” Eakins describes himself as tired of the day-to-day running of the practice. “I was ready to move on to other things,” he says, including home projects and travel.

He and his wife are avid square dancers and go to conventions around the U.S. Now, they're ready to hit the road.s

July/August 2012

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The State of the Industry

MINING

In this column, NewsAccount talks with CPAs from various industries that are important in the U.S. and Colorado economies. We ask: What’s happening today? What factors will affect your industry over the the next 12 months?

In this issue, we focus on the mining industry.

BY NATALIE ROONEY

Stuart Sanderson

President & COO Colorado Mining Association Denver, CO

About Your Organization The Colorado Mining Association (CMA) has been around as long as Colorado has been a state. Established in 1876, the CMA is a trade association with 180 company members and 800 individual members. Membership comprises both small and large enterprises engaged in the exploration for, and production and refining of metals, coal, oil shale, and industrial minerals; firms that manufacture and distribute mining and mineral processing equipment and supplies; and other institutions providing services and supplies to the mineral industry.

The CMA is a spokesman for the mining industry in Colorado and the west, working

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in cooperation with other state and national mining associations, keeping the industry informed on pending state and federal legislation, and promulgating constructive programs and actions that will adequately recognize and serve mining's special problems and needs. It serves the industry on a wide range of subjects through the expertise of its members on standing, ad hoc, and select committees.

Much of Colorado’s history and heritage is intertwined with mining. What surprises people is that mining is not some vestige of Colorado’s past. Mining is very much a part of our state’s present and future.

What role does mining play in Colorado’s economy?

Recent data from PricewaterhouseCoopers LLP reports that Colorado’s min-

ing industry employs approximately 12,000 people directly and accounts for 48,000 jobs in the state’s general economy. Mining accounts for $6 billion in economic benefits for Colorado.

People don’t realize the role mining plays in their daily lives. When you get up in the morning and brush your teeth, you’re probably not thinking about Colorado’s mining industry, but you’re using a product that may come from a Colorado mine: sodium bicarbonate, also known as nahcolite. Colorado is home to the only pure reserves of sodium bicarbonate in the continental U.S. The wall board in your house is made of gypsum which is also mined here. Colorado is the number one producer of molybdenum which is used in the manufacture of automobiles and other alloy steel products, not to mention light bulbs and computers. Molyb-

denum is even used as a solid lubricant and a high-pressure, high-temperature, anti-wear agent. Limestone mined in Colorado is used for cement. Gold isn’t just used for coins and jewelry; it’s also used for industrial applications in the medical industry, computers, and cell phones. Colorado is the nation’s fourth leading-gold producing state.

There are significant uranium projects underway in our state, although there was no commercial production in 2011. The U.S. is the largest consumer of nuclear energy in the world, and it currently accounts for nearly 20 percent of U. S. electricity generation.

Colorado has extensive uranium reserves that could support clean nuclear energy.

Colorado ranks ninth in the country for coal production. If you turn on a light switch, you’re using electricity powered by coal mined in our state. Coal is by far the lowest cost source of electricity in Colorado with an extremely high energy content. Our coal is also low in sulfur, mercury, and other emissions. Coal accounts for over 68% of electricity generated in Colorado and about 41% nationwide, highest among all energy sources. Coal mined here is called “super compliance” coal because it’s essential in helping utility companies meet clean air emissions standards. Colorado’s coal industry alone employs more than 2,500 workers who average $115,000 a year in salary and benefits — the highest among the state’s industrial workers. Federal royalties from coal fund Colorado public schools.

Minerals are absolutely essential to everything we do in our lives. While other states may rank higher in terms of mineral production, no state matches Colorado’s diversity of mineral deposits.

What challenges face the mining industry?

The greatest issue we face is public perception of the mining industry. Traditionally, the industry hasn’t done enough to raise public awareness and consciousness of mining and its importance, and the stakes could not be higher. We are working to change that through public outreach which includes raising public awareness of our increasing dependence on minerals produced outside the United States.

We know that the U.S. is dependent on foreign oil. But did you know that our

nation is also import-dependent on many minerals, like uranium, silver, and rare earth minerals? Rare earth minerals are used in the manufacture of magnets for wind towers and other strategic and military applications. We are 100% reliant on imports from China.

The U. S. is more than 90% dependent on imported uranium.

Permitting delays are a big part of the problem. Congress is starting to recognize this and is considering legislation, the National Strategic and Critical Minerals Act (H.R. 4402), aimed at streamlining the permitting process for U.S. mining. It’s important that we do all we can to stimulate the domestic production of minerals.

We are also concerned about rulemaking initiatives by the Environmental Protection Agency (EPA) that will discourage the use of affordable energy from coal and raise electricity rates considerably. EPA’s proposal for controlling greenhouse gas emissions from about half the nation’s electric power supply is a poorly disguised cap-and-tax scheme that will result in higher utility bills and fewer jobs. It is also an attempted end run on Congress, which has consistently declined to enact punitive caps on carbon dioxide emissions. EPA’s “war on coal” is unwise; we believe better strategies exist for developing technology-based solutions. As the United States has 27% of the world’s coal reserves representing more energy than all the oil in the Middle East, we believe in promoting an “all of the above” policy that will promote the continued use of our most abundant energy resource. And utilities have a proven track record of success; although coal use has tripled in the last thirty years, emissions are down by up to 80%.

Colorado-specific issues include legislation enacted in 2010 that will result in the premature closure of Front Range power plants currently using coal and their replacement with facilities using higher cost resources at a projected cost of more than $1 billion to Colorado consumers. This will also displace tens of millions of tons of coal beginning in the near future. This means higher electric rates and lower royalty and tax revenues to support public schools and governments. CMA is challenging regulatory decisions to shut down these plants.

The national Roadless Rule, passed in 2001, prohibits road building on federal

lands for industries such as mining, logging, and oil and gas development, including more than 4 million acres in Colorado.

If allowed to stand, the rule will impact areas where mining has taken place for more than a century. We are supportive of a state alternative rule — recently approved by the U.S. Forest Service — that would allow mining to continue in areas designated for multiple use. These areas are small — about 20,000 acres — but they are very important to mining’s future.

What is your role within the Colorado Mining Association?

In addition to serving as president and chief operating officer, I also work with public officials on various issues relating to mining’s future. CMA focuses on education through numerous speeches to civic organizations, and television and print advertising campaigns.

We are also working to develop a social media presence. We cooperate with the National Mining Association (NMA) in raising public awareness about mining through the NMA’s “Minerals Make Life” program. The CMA Education Foundation hosts a comprehensive four-week summer course for teachers.

Since 1968, more than 1,400 educators from Colorado and the U.S. have graduated from the program. If you are interested in enrolling a teacher, please contact the CMA at colomine@coloradomining.org.

As an association, we focus on legislative and regulatory issues, and we also hold member meetings throughout the year. In February 2013, we’re teaming with the Society for Mining Metallurgy and Exploration to hold a national conference which will draw 6,000 people to Denver. It will be the largest mining event in the western U.S. in 2013, and we’re hoping to raise public awareness of mining. We want to alert our membership and the public to critical infrastructure needs. Half the people working in the mining industry today will be retired by 2029. We are examining the implications of an aging workforce and how we replace the expertise necessary to meet demand.

Above all, my role, and the role of the CMA, is to help our elected leaders and the public understand the importance of the mining industry.

Mining Continued on 22 July/August 2012

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Movers & Shakers Larry D. Fetzer, CPA, has been named "Business Person of the Year" by the Logan County Chamber of Commerce.

RubinBrown LLP promoted Dan McCabe, CPA, CFE, to manager in the firm’s Assurance Services Group.

TJ Bert, CPA, has been promoted to audit partner, and Judy Vorndran, CPA, JD, has been promoted to state and local tax partner in Eide Bailly LLP's Denver West office.

Causey Demgen & Moore has relocated its office to 1125 Seventeenth Street, 14th Floor, Denver, CO 80202. The telephone (303-296-2229) and fax (303296-3731) numbers remain the same.

Rick Wagner, Eide Bailly LLP healthcare audit partner, was honored at the 2012 Colorado Ambulatory Surgery Center Association's Annual Spring Education Conference. He received the ‘Clutch Player’ Award in recognition of his work on Medicaid that benefitted the association and led to the Ambulatory Surgery Association Medicaid Reimbursement program with the State of Colorado.

Mining

Continued from 21

Is this a good time to be in the mining industry?

Yes. We’re in a period of growth. Many people say we’re actually in a mining “super cycle” that will last for some time.

There is definitely interest and a resurgence in mining throughout the world as demand, particularly in the U. S., China, and India, grows.

Mining was one of the only industries to add jobs to the nation’s economy during the recession of 2008-09. And we are adding jobs in Colorado. The historic Climax molybdenum mine has resumed production for the first time in more than 15 years and employs hundreds of workers. The Cripple Creek & Victor gold mine announced it will continue operations through 2025. The coal industry is experiencing a rough patch right now due to the warm winter (which softened demand) and anti-coal policies at the state and federal levels. We are encouraged somewhat

by recent political and regulatory developments in Colorado, especially the state’s adoption of the Colorado Roadless Rule which will allow mining to continue in Gunnison and Delta Counties, where coal mining has taken place for more than a century.

It’s also a great time for other professions and industries to engage with associations that represent mining for networking, business development and working to accomplish goals. The city of Denver is the world’s leading international center for mining expertise, with literally hundreds of companies and thousands of workers engaged in mineral development throughout the world. The Denver area is home to the Colorado School of Mines and several leading professional societies. Regardless of whether a company is interested in mining in Colorado or elsewhere, the opportunities begin here in Colorado, the world’s mile high mining hub. s

Eide Bailly LLP was recently ranked as the nation’s 10th best accounting firm in North America for quality of life issues and prestige in Vault.com's Accounting Firms Rankings.

In Memoriam We regret the loss of the following COCPA members.

We extend our sympathy to their families and friends.

Diane M. Graepler Member since 1991 Centennial, CO

Ronald R. Mahan Member since 1981 Fort Collins, CO

Angie Nowak

Member since 2003 Fort Collins, CO

Michael E. Sapp Member since 1988 Lakewood, CO

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NewsAccount July/August 2012

Come Kick It with the Young Professionals Aug. 25, 2012 9am to 4pm Kickball Location: Clement Park

intersection of W. Bowles Ave. and S. Pierce St., Columbine, CO

Cost: $350/team or $25/Individual Register: http://wasasports.leagueapps.com/events/1938-6th-annualcolorado-society-of-cpas-kickball-tournament

A Look at Books

BY MARK PALLER, CPA

Daniel Kahneman, Ph.D., is a Senior Scholar at Princeton’s Woodrow Wilson School of Public and International Affairs and a winner of the Nobel Prize in Economic Sciences. He penned the 2011 book Thinking, Fast and Slow. Throughout his career, he dove into the human psyche to determine what makes us tick.

He explored the depths of our minds, perspectives, rationality, feelings, and actions which he put together in 418 enlightening pages.

The Economist writes: “As Copernicus removed the earth from the centre of the universe and Darwin knocked humans off their biological perch, Mr. Kahneman has shown that we are not the paragons of reason we assume ourselves to be.”

As a CPA/PFS and a CFP, I wanted to know why many of us seem inclined to make poor financial decisions. Over coffee with a colleague, we debated the issue. He mentioned that maybe decision-making isn’t a linear equation with an end result. Rather, it's dependent on how a question is posed or the circumstances in which a decision is made. My colleague went on to describe Kahneman’s book and talked about how many people make decisions without doing the hard analysis to draw an objective conclusion. Kahneman labels automatic decision making as System 1. On the other hand, System 2 is when we allocate attention to an effortful mental activity. More often than not, we default to System 1 — which many times translates into an inappropriate conclusion about a complex matter.

An illustration described in the book is worth considering: the determination of the length of two lines.

Two horizontal lines are parallel to each other. On either end of the top line, arrows point inward; on the lower, they point outward. We all see and naturally believe the lower one is longer than the one above it.

You may recognize this illustration as the famous Muller-Lyer illusion. As you can confirm by measuring them (System 2, the act of measurement), the lines are actually identical in length. This is just one of many observations Kahneman discusses as he covers the concepts of biases, overconfidence, and coming to a conclusion about an observation.

Thinking, Fast and Slow is definitely worth a read. Think about it, and discuss the concepts with your family and coworkers. Through Kahneman's findings, you will know more about yourself, your family, and your clients — and will be able to offer better advice and guidance.

Intriguing indeed!

Mark Paller, CPA, Paller Financial Services, Inc., Centennial, Colo., is a member of the COCPA Editorial Board. Contact him at mpaller@ qwestoffice.net.

What are you reading? We’re looking for members to contribute book reviews to NewsAccount. If you're interested, contact Krista Flynt at kflynt@cocpa.org.

July/August 2012

www.cocpa.org

23

Classifieds Opportunities Available Join a team of genuine people who bring creative ideas and valuable results to our clients. If you are a CPA and want to experience a different way of serving clients, contact Kennedy and Coe, LLC, CPAs and consultants. Be a key business partner for our clients and help them strategically grow their businesses. You will work in a team environment with other accounting professionals to develop creative ideas and deliver significant value to our clients. We have openings in our General Practice Group and Agriculture Group. Qualified candidates will possess: CPA license and 5 – 10 years’ experience in accounting, with 3 – 5 of those years in public accounting. Supervisory and staff development experience. Expertise in tax and financial statement preparation and analysis. Excellent interpersonal skills to establish, build and maintain client relationships. Ability to converse with clients to identify service opportunities and problem solve. Strong general business knowledge.

Business development experience and prior business consulting experience a plus. If applying for the openings in our Agriculture Group, an agricultural background is preferred. Positions located in Loveland, CO, and will require relocation to Loveland or nearby Northern Colorado area. We offer a competitive salary and excellent benefits, including, health, dental vision, life and long term disability insurance, 401k and profit sharing plans, holiday and paid leave and flexible work arrangements. Join our team of 200 and apply on line at www.kcoe.com/careers. EOE. Tax CPA, Aspen, CO. Otte & Cote CPAs PC is looking for a new team member. 3 to 5 years experience. Local practice: tax, litigation support, and estate. Permanent, with advancement and partnership potential. Compensation commensurate, typical benefits, etc. Office on Roaring Fork, upstream from Aspen. Resumemikeotte@aspencpa.com.

CPA. Financial Planning and Retirement Specialists Firm looking for an experienced CPA to join our team of Professionals and work with our clients. You should have a minimum of 8 years of tax preparation experience specifically for individuals and small businesses. CPA license must be current and you must have IRS issued PTIN. Additional requirements include: Experienced with tax return preparation software. Familiar with current IRS Code and Regulations and the desire to stay on the leading edge of changes in the tax code. Experience working with high net worth individuals and their unique tax issues. Client Interview skills necessary to obtain client information and promote confidence in the Firm’s ability to provide the necessary professional services in the tax area. Job may require some bookkeeping assistance and personal accounting for our clients. Skills to promote new tax services to prospects and clients. Since this position is a new position within our Firm

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NewsAccount July/August 2012

you will need the skills to implement not only tax return processing procedures but also a time and billing system for this portion of our Firm. Estate and trust taxation knowledge would be plus for the Professional we are seeking.Pay range: Negotiable and dependent upon experience level. Pay structure: Equity Ownership + salary. Includes Full Benefits. For consideration, please send your cover letter, resume, and salary requirements to trsjob24@yahoo.com.

Take your career to the next level at a top 25 Denver business advisory and CPA firm. At StarkSchenkein we offer the resources you need to go as far as your talent will take you. StarkSchenkein is a stable and growing firm that offers competitive compensation and benefits. About Us: We are a local business advisory and PCAOB licensed certified public accounting firm located in Southeast Denver providing services to companies and individuals on a local, national, and global scale. We are seeking an experienced tax supervisor. What you will be doing: Review individual, corporate, and partnership tax returns prepared by tax staff accountants and prepare more complicated returns. Tax research and planning. Work with clients regarding gathering of tax data and related tax/accounting issues. Recognize and anticipate client issues and propose solutions. Advise clients regarding business operations.

Assist with litigation support and expert witness engagements. Add value for our clients. What you need for this position: Experience preparing and reviewing individual, corporate, and partnership tax returns. Strong tax research abilities. Excellent computer skills. Solid communication skills, both written and verbal. Ability to take disparate client information and translate to sound advice. Ability to work independently and participate in a supportive, communicative environment. CPA certification.

Minimum of 4-6 years recent experience in public accounting. Minimum of two years reviewing tax returns prepared by others. What's in it for you.

Chance to work with a wide variety of client industries. Compensation commensurate with experience. Growth opportunities with a growing firm.

Opportunities to do “big firm work” in a “small firm environment.” Please send your resume to: vbramble@starkcpas.com. No phone calls please.

Practices for Sale, Purchase, or Merger CPA firms or partners. We represent a number of quality CPA firms who are looking to merge or sell their practices to other CPA firms or partners with business. Locations are in the Denver area.

This is an opportunity to ensure your future as well as help your clients by expanding your services to them. Why settle when you can select? Established in 1939. For further information, please contact: Phil Rubeck at D&R Associates of Co. 720-4467020 or email: dandrassociatesofco@aol.com.

Touchstone Business Advisors is experienced in the sale of CPA practices. We are retired CPAs and advisors/brokers ourselves. Considering the purchase, sale, or merger of a practice? Please visit http://bit.ly/GKB3z2 to view a short video on selling your practice and our website for a free copy of our Accounting and Tax Practice Sale Organizer, which will guide you with what information is vital to a practice transfer. We provide personal service and confidentiality. Contact Tom Lang, CPA, 303726-7646, or Rich Bevelhimer, CPA, 303-9174146, www.touchstonebiz.com.

Fred Mehring, Select Business Group, Inc., specializes in the sale, merger, and acquisition of accounting and tax practices. Over 25 years of experience. Confidentiality stressed! Call Fred Mehring at 303-771-3100, fax 303-477-6010, or fmehring@selectbg.com.

Situation Wanted CPA, sole practitioner, up in years, would like to associate with CPA firm using Lacerte Tax and Quickbooks software. Willing to pay rent and payroll cost and sign buy-sell agreement. Send responses to kflynt@cocpa.org with Box# 345 in the subject line.

Denver CPA firm with 3 shareholders in a 10 person office would like to attract a partner level person who is interested in a near-term ownership opportunity (6-18 months). Our firm provides a wide variety of services including tax planning and compliance (60-70%), audits, compilations, reviews, business consulting, and estate planning.

Industry specializations include new car dealerships and non-profit organizations. The ideal candidate would have 10-20 years of recent CPA experience, a solid background in taxation and accounting, strong leadership skills, a good understanding of practice building, and good client retention skills.

The ability to research and interpret tax laws is a must, and human resource experience would be helpful. If this opportunity seems to fit your background and career goals, please e-mail your resume or letter of interest (in confidence) to jtanner@htdcpas.com.

Miscellaneous CPA Focused IT Support. Live Consulting is the complete IT solution for CPA firms in Denver, Boulder, and Castle Rock. Plans and packages available to meet your unique needs. Solutions for Cloud Computing, Scanning and Document Management, Service Agreements, Virus and Spyware Removal, Complete Network Design, and Troubleshooting. To find out how you can save on recurring IT costs, go to www.LiveConsulting. com or call 303-217-3000 today! Client references available upon request.

You Deserve the Best Mark J. Smith,CFP®, CPA/PFS,CIMA®–Principal

“The top independent financial advisor in Colorado and one of the top advisors in the U.S. in 2009, 2010 and 2011” Barron’s* Based on assets under management, revenues, quality of the adviser’s practices and other factors. Based on Barron’s Top 1000 advisors issued February 2011.

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“The top Colorado independent financial advisor in 2011” Registered Rep** Based on $150 million or more assets under management.

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Contact us today at 303.768.0007 for a complimentary portfolio review

Securities Offered Through

Raymond James® Financial Services, Inc. Member FINRA/SIPC

An independent registered investment advisor.

Our expertise and integrity. Your financial independence.

5613 DTC Parkway, Suite 650 • Greenwood Village, CO 80111 T303.768.0007 • www.mj-smith.com July/August 2012

www.cocpa.org

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Colorado Society of Certified Public Accountants 7979 E. Tufts Ave. Ste. 1000 Denver, CO 80237-2847

Financial Literacy: one of 139 badges today’s Girl Scouts can earn.

Statistics show that 90% of women will be responsible for their own financial self-sufficiency at one point or another in their lives. Girls need to learn the basics of money management today.

The Colorado Society of CPAs and its Financial Literacy Committee are partnering with the Girl Scouts of Colorado this fall to bring money smarts to girls all over the state. Will you volunteer to help girls prepare for their future and develop financial literacy? All we ask is that you commit to a one-day program and a small amount of time to prepare.

How else can a CPA make such a difference in just one day? Dates TBD; training will be held on one Saturday in September or October.

To volunteer or for information contact: Liz Julin at ljulin@cocpa.org, 303-741-8607 or 800-523-9082, ext. 107.

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