NewsAccount Colorado Society of CPAs
January/February 2013 •
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NewsAccount
Contents Features
} 4 CDOR's New Notice Process
The Department of Revenue is implementing new methods for processing 2012 individual returns.
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2013-2014
Nominees Announced
Marc C. Hendrikson will become chair, May 1, 2013. Sheila M. Balzer is tapped for vice chair.
12 The Accidental Author
COCPA member Richard R. Gibson didn't plan to write a book about state capitols — but that's what he did.
14 Colorado's Higher Education System Why is higher education in Colorado continuing to receive a smaller slice of the General Fund pie?
20 Standing Up to Fraud
Personal ethics can come under fire no matter where you work. What would you do if confronted with fraud?
Departments
Richard R. Gibson, CPA, shot the cover photo of the inside of the Colorado Capitol dome. See page 12 for the story of his book.
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2 Chair Column 18 Point/CounterPoint 22 State of the Industry 25 Movers & Shakers 25 Classifieds Jan/Feb 2013 • www.cocpa.org •
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Chair Column
NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 58, No. 5 January | February 2013 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 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, 7887 E. Belleview Ave, Suite 200, Englewood, CO 80111. 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 in Englewood, CO, and additional mailing offices. POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave, Suite 200, Englewood, CO 80111. 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 NewsAccount is available in PDF format online at www.cocpa.org.
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• NewsAccount • Jan/Feb 2013
Our Course Through Change BY SCOTT E. BUSH, CPA As we launch into the New Year, it’s clear 2013 will be full of challenges. And, with them come opportunities. Speakers and sessions at the AICPA fall Council meeting, Oct. 21-23, 2012, made it abundantly clear that the CPA profession will navigate uncertain waters over the next twelve months. As always, those of us who attended the Council meeting, including myself, Vice Chair Marc Hendrikson, past chairs Ron Seigneur and Sidny Zink, and CEO Mary Medley, were fortunate to hear about the myriad issues affecting the profession from a variety of experts in the business world.
Atkinson Discusses PCC Recently appointed Private Company Council (PCC) Chair Billy Atkinson shared his perspective on how the Council will begin its work and responded to pointed questions from the audience. AICPA President and CEO Barry Melancon challenged Atkinson’s comments that he envisions addressing the Financial Accounting Standards Board’s (FASB) standards for all users before moving to create exceptions or modifications for private companies. The situation can best be described as “fluid,” and we’ll have to wait to see how the PCC tackles its charge. In a Dec. 6, 2012, press release, the Financial Accounting Foundation reported: At its inaugural meeting today, the Private Company Council (PCC), a new body created to improve the standard-setting process for private companies, identified four areas to research for agenda consideration. The areas involve consolidation of variable interest entities; accounting for “plain vanilla” interest rate swaps; accounting for uncertain tax positions; and recognizing and measuring, at fair value, various intangible assets (other than goodwill) acquired in business combinations. “These four areas are often top of mind for users, preparers, and auditors of private company financial statements,” said PCC Chair
Atkinson. “We are eager to review the research, and we look forward to discussing the issues in more detail at our next meeting in February. After we discuss these issues further, we’ll make a decision about which projects to add to the PCC agenda.”
Framework FRF for SME’s Released for Comment The AICPA introduced its proposed Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs). Designed for privately owned, for-profit, smaller enterprises not required to follow Generally Accepted Accounting Principles (GAAP), the exposure draft was released for public comment, Nov. 1, 2012. It may be downloaded at www.aicpa.org/ InterestAreas/FRC/AccountingFinancialReporting/PCFR/DownloadableDocuments/FRF-SME/FRF-SME-ExposureDraft.pdf. This special purpose framework — an “other comprehensive basis of accounting” (OCBOA) — is focused on the ownergoverned small businesses with which many of us work. We’ve had OCBOA tax-basis
reporting for many years, but this gives us a way to do accrual basis reporting within a different framework for private company financial reporting that banks and other users will be willing to accept. Comments on the exposure draft are due, Jan. 30, 2013, and the AICPA expects to issue the final framework in spring 2013. For more details, see the related story on page 7.
The Fiscal Cliff There was much discussion at Council about the fiscal cliff and what effect the November 2012 election would have on federal efforts to address it. At press time, we still don’t have clarity on the many expiring tax provisions and budget cuts that constitute the fiscal cliff. Amid the uncertainty, one thing is crystal clear: The 2013 filing season will be challenging what with late forms likely from the IRS and states and a likely lag in systems and reports needed to prepare tax returns. This creates a burden for CPAs and breeds anxiety among employers and clients. Our role: To continue to gather information and help prepare those we serve once we finally have answers.
At the COCPA We’ve been busy at the organizational level, too, offering more live-streaming CPE courses and conferences, assisting members with Colorado Department of Revenue matters, working through proposed rules changes with the Colorado State Board of Accountancy, and planning strategically for the future. If you’ve never attended the CPAs Make A Difference celebration, mark your calendar for Nov. 7, 2013, and look forward to an evening to remember. I continue to be inspired anew by the everyday heroes and heroines we honor each year. The amazing work they do in their communities, the kindness and dedication they show to others, and the positive differences they make are impressive and heartwarming. A highlight of this year’s event for me was participating in recognition of the newest CPAs to join our profession. Their energy is infectious — and I’m confident the profession’s future will be in good hands. That same evening, we presented Immediate Past Chair Mike Bearup with an actual chair — a Campeachy chair, for those of you who are Thomas Jefferson aficianados — in recognition of and thanks for his leadership this past year. Word has it he’s been able to enjoy it personally only twice. His family has declared it the best chair for everything from reading to watching the world go by.
Do you desire a work life balance? Strive to help others succeed? Want a great career opportunity? Enjoy working with challenging clients? Do you like to have fun?! Then consider the opportunities available at EKS&H. With approximately 440 professionals, EKS&H, consecutively named one of the best places to work in Denver and America, is Colorado’s largest locally owned public accounting and business consulting firm. Our commitment to serving others and building trust has resulted in exceptional and continued growth. As a result, we are looking for talented and enthusiastic individuals to join our team. For more information, visit our website or e-mail your resume to lnelson@eksh.com.
What Lies Ahead As the saying goes, “We live in interesting times,” and 2013 promises to be interesting indeed. The COCPA will continue to chart its course, helping you in every way we can by providing resources and support. We’ll keep you informed and look forward to working with you through the challenges and uncertainty. Here’s to a healthy, productive, and successful New Year for you and yours. s Contact Scott Bush at scott@soukupbush.com.
303.740.9400
www.eksh.com Jan/Feb 2013 • www.cocpa.org •
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From the Department of Revenue
CDOR Announces New Processing Method By Paul Northrup
Deputy Director of Taxation Colorado Department of Revenue
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s you may know, the Colorado Department of Revenue (CDOR) and COCPA formed the COCPA/ CDOR Joint Task Force to address issues and concerns tax practitioners have raised on behalf of their clients. We've worked closely together since May of 2011 towards the Department's goal of effective, efficient, and elegant service delivery for the citizens of Colorado. From the task force, we heard the following critiques: • Our written correspondence is unclear, and taxpayers do not necessarily know what is being asked of them or what to do next. • In many situations, taxpayers do not know the resolution of their protests. • We sometimes ignore attachments that were provided with the return or were sent in separately from the return. • The Tax Professional Hotline has not been as effective as it was in previous years. Individual Income Taxmembers Return Based on feedback from CPA of the task force and recommendations from the CDOR’s internal working group, we've made the following system and process changes to our Individual Income Tax return processing methodology to improve our ser-
vice delivery, effective for the 2012 return processing season: 1. Improved our correspondence to make it more clear, concise, and directive. 2. Added an “inquiry stage” and inquiry letter where we ask the taxpayer for missing documentation (usually documentation to support subtraction and credit claims) before we adjust the return and issue a bill, if necessary. 3. Added two “resolution” letters to inform the taxpayer of the resolution of the review of their documentation submittal resulting from the inquiry letter and the review of their protest submittal. 4. Upgraded our internal processes and system work items for reviewing return attachments from the taxpayer. 5. Increased the methods by which we can receive attachments, information, and responses from the taxpayer to include electronically, by mail, and by fax. 6. Simplified the manner in which we can receive protests to our return adjustments through Revenue Online without having to login. Review Process 7. Upgraded our return adjustment letter to include the reason why we adjusted a line on the return. 8. A renewed focus on and increased management of our Tax Professional Help Desk Hotline (303-232-2419).
Inquiry Letter Ask For Documentation
Preferred Response Methods 1. Revenue Online-Non Login (< 5MB) 2. Fax (< 10 Pages) 3. Mail GenTax
Return Filing
If Documentation Provided
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• NewsAccount • Jan/Feb 2013
Protest Resolution Letter
Protest
Inform Taxpayer of what will happen next per claim • Return Process as Filed, or • Return Will Be Adjusted
If Adjustments
Required Evaluate Documentation
Return Adjustment Letter
•
Process Return As Filed
• Separate Inquiry from Bill/Notice of Deficiency • More Clear and Instructive Communication • Upgraded Internal Processes for Attachment Handling • Variety of Taxpayer Response Options
Inform Taxpayer of what will happen next per claim • Protest Successful • Protest Unsuccessful – Remaining Statutory Administrative Rights
Preferred Protest Methods 1. Revenue Online-Login 2. Revenue Online-Non Login 3. Fax GenTax 4. Mail
• Return Method Preferred Attachment Method • MeF MeF; MeF Revenue Online; Mef DR1778 • Revenue Online Revenue Online • Paper Paper
Key Points
Inquiry Resolution Letter
Work Items
If Documentation Missing
The process flow diagram shown here describes the major stages of the return evaluation process and the respective correspondence at each stage. This new approach, improved correspondence, and upgraded internal processes will allow you and CDOR staff to have a laserlike focus on the specific issues that inevitably arise as we evaluate taxpayer returns. After this pilot program, we anticipate these changes will be implemented for Corporate, Fiduciary, Partnership, and Sales Tax return filing for the 2013 return processing season. The Department of Revenue truly values our working relationship with the Colorado Society of CPAs. We believe we share the same goals – to administer the Colorado Tax Statutes in an effective, consistent, fair, and efficient manner for the citizens of Colorado. We look forward to working with you in this new year.
If No Adjustments Required
Adjustment Explanations Link to Online FYIs
Notice of Deficiency Letter • • •
Work Items
Pay
Payment Instructions Protest Instructions Bill w/ Statement of Account (SOA)
Key Points •
Separate Inquiry from Bill/Notice of Deficiency
Colorado State Board of Accountancy Update
Rule-making Work Continues in 2013
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t its Dec. 5, 2012, meeting, the Colorado State Board of Accountancy voted unanimously to terminate the rule-making process it began with a rule-making hearing, Oct. 17, 2012, and to schedule a new rule-making hearing on Jan. 23, 2013, when the public is invited to comment. All interested parties may provide written comments on the proposed rules, and they must be received by 8 a.m., Jan. 7, 2013. Comments should be submitted electronically to the Colorado State Board of Accountancy, c/o Ofelia Duran, Program Director, at dora_ accountancyboard@state.co.us. To review the proposed rules, go to www.dora.state.co.us/accountants and click on the Board Information tab. Note that the rules have been revised since they were posted previously on the State Board website. You’re encouraged to download the newest version as several proposed rules have changed since the State Board’s Dec. 5, 2012, meeting. For the Jan. 23, 2013, meeting agenda, which typically is posted online 10 days prior to the meeting date, go to www.dora.state.co.us/accountants/board/ notices.htm.
Where We’ve Been After the public testimony portion of the Oct. 17, 2012, rule-making hearing was closed, the Colorado State Board of Accountancy reviewed all the proposed rules and modified them, taking into consideration written comments and public testimony by various parties. As reported in the Nov/Dec 2012 NewsAccount, page 3, the State Board proposed changes in all 12 chapters. At the end of the hearing, the State Board delayed adoption of the proposed rules to enable further discussion specifically on Chapter 1 — Board Organization and Administration, Chapter 2 — Education Requirements for Examination and Certification, and Chapter 9 — Rules of Professional Conduct. On Nov. 16, 2012, the State Board held another “for discussion purposes” meeting
primarily to consider changes to Chapter 1, Chapter 2, and Chapter 9. All three chapters were laid over from the Board’s Oct. 17, 2012, rule-making hearing so that the State Board members could review the comments received and determine what changes, if any, to make in the originally proposed rules. In addition, the State Board considered again all the other chapters and discussed changes to those as well. Most significant in Chapter 1, the State Board included a new definition AY. UpperDivision to replace the originally proposed Definition AX. Upper-Division. The new proposed definition reads: AY. Upper-Division: Coursework delivered or acceptable for transfer at the junior or above level by a baccalaureate, masters, or doctorate-granting institution. And, in Chapter 2, the State Board eliminated proposed Rule 2.8: 2.8 Community College Certificate Programs: The Board may approve a program allowing a person who has a Baccalaureate Degree or higher degree outside of accounting and deemed conferred by an Accredited College to complete the requisite accounting and business courses as outlined in Rule 2.5 at a community college which has been reviewed and accepted by the Board. The State Board also decided to retain the coursework requirements as originally proposed: For Examination: A Baccalaureate degree with 27 semester hours in accounting of which 21 must be Upper-Division and 21 semester hours in business of which 15 must be Upper-Division. For Licensure: A Baccalaureate degree plus 30 semester hours with 33 semester hours in accounting of which 27 must be Upper-Division and 27 semester hours in business of which 21 must be Upper-Division. The University of Colorado/Colorado Springs accounting faculty has proposed an
alternative definition for Upper-Division and what will not qualify for it, as follows: Chapter 1, Board Organizaton and Administration, 1.2 Abbreviations and Definitions, AY. Upper-Division: Coursework delivered at the junior or above level by an accredited baccalaureate, masters, or doctorate-granting institution; or coursework taken at a community college which is transferred to an accredited baccalaureate, masters, or doctorate-granting institution and accepted for credit at the junior or above level; or coursework acceptable for transfer at the junior or above level by an accredited baccalaureate, masters, or doctorate-granting institution pursuant to a transfer articulation agreement approved or accepted by the Colorado Department of Higher Education or what the Board determines to be an equivalent regulatory agency of another jurisdiction. Chapter 2, Education Requirements for Examination and Certification, 2.5 Education Requirements for Certification On and After July, 1, 2015 2.5.C.1.b.: Introductory accounting courses, principles of accounting, accounting and tax software courses, payroll accounting, and other basic accounting courses will not be counted as Upper-Division coursework. The COCPA Board of Directors supports this alternative.
What's Next It is critical that the Colorado State Board of Accountancy hear from you as its members decide how best to protect the public and establish appropriate rules for those it licenses and regulates. You’re encouraged to write the State Board about how the rules would affect Colorado citizens as consumers of CPA services; educators and educational institutions dedicated to preparing students for entry into the CPA profession; students themselves; and employers of CPAs. For more information, contact Mary Medley, CEO, at mmedley@cocpa.org. s Jan/Feb 2013 • www.cocpa.org •
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Leadership News
Community Bank CPA To Become Chair Local Firm CPA Tapped For Vice Chair
The Nominating Committee, chaired by COCPA immediate past chair Michael S. Bearup, presents the following slate for COCPA leadership positions beginning May 1, 2013. The chair and vice chair serve for one year, and the treasurer and directors serve for two years. Watch for the March/April issue of NewsAccount, in which you’ll find the biographical information on these nominees. Congratulations to the following officer nominees: Chair Marc C. Hendrikson, Citywide Banks, Aurora and Vice Chair/Chair-elect Sheila M. Balzer, Holben Hay Lake Balzer CPAs LLC, Denver. Treasurer Lora L. Finley, Johnson Capital Group, Denver, continues for the second year of her two-year term. Scott E. Bush, Soukup Bush & Associates CPAs PC, Fort Collins, continues on the Board as immediate past chair. COCPA CEO Mary E. Medley is the Board secretary. Directors to begin a two-year term are: Sharon S. Lassar, University of Denver School of Accountancy, Denver; and Mark J. Smith, M.J. Smith & Associates, Greenwood Village. Continuing on the Board are directors Carrie J. Bartow, CliftonLarsonAllen LLP, Colorado Springs; Peter J. Derschang, Brakes Plus, Centennial; and Debbi C. Warden, The Business Manager, LLC, Greenwood Village. The Board of Directors thanks for their service the following directors who will complete their terms on April 30, 2013: Steven R. Corder, Kundinger Corder and Engle PC, Denver; Benjamin T. Hrouda, UDR, Highlands Ranch; and public member Christine Riordan, University of Denver Daniels College of Business, Denver. The Nominating Committee presents the following nominees for the Educational Foundation Board of Trustees for a three-year term: Brenda M. Clarke, Seigneur Gustafson LLP, Lakewood; and Stephanie E. Hernandez, KPMG LLP, Denver. Currently serving on the Foundation Board are President David M. Dirks, Metropolitan State University of Denver, Vice President Cynthia G. McGinley, Jefferson Wells International Inc., Denver; Secretary/ Treasurer Christine J. Haslam, CPA, Denver; Griselda E. Casillas, JDS Professional Group, Greenwood Village; Jill E. Korenek, JDS Professional Group, Greenwood Village; William C. Sanden, SSA PC, Colorado Springs; Mark T. Solomon, SM Energy Company, Denver; Alicia J. Sweeney, CPA, Aurora; Geri B. Wink, Colorado State University – Pueblo, Pueblo; and Mary E. Medley. Susan M. Vachereau serves as executive director of the Foundation.s
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• NewsAccount • Jan/Feb 2013
Financial Reporting Update
AICPA Releases New Framework for SME's BY JAMES M. BOAK, CPA
Common Sense Accounting for Small Businesses at Last? The AICPA has come to the rescue of small business owners and CPAs who have been frustrated for years with the ever-increasing complexity of FASB rules and the seeming abandonment of basic accounting principles common in the prior century. How: On Nov. 1, 2012, the AICPA issued an exposure draft titled Financial Reporting for Small- and Medium-sized Entities (FRF for SME’s) that largely restores historical cost basis of accounting for use by non-public businesses for reporting to owners, lenders, and other users. Why: Private company owners have often asked for a more relevant, less-complicated, and cost-beneficial reporting alternative that is easier to understand and is based on a reliable and consistent framework. In other words: (1) basic financials that plainly show what is owned and owed and what is earned and expensed and (2) relevant principles(and not rules) based concepts not burdened by excessive footnote disclosures. Timing: Comments on the exposure draft are due to the AICPA by Jan. 30, 2013, with expected final approval and release later in the first half of 2013. A few examples: The framework does not include earnings per share or other comprehensive income reporting. Only certain marketable securities must use fair value measurement. Inventories can again be valued using LIFO. Capital and operating lease accounting are simplified. Derivatives need only to be disclosed. Basic accrual principles are used to measure revenue and expense. Consolidation is simplified and does not require variable interest accounting. Goodwill is amortized similar to tax accounting. At 252 pages, the release is comprehensive and may not be appropriate for all private companies. The draft may be accessed at www.aicpa.org/interestareas/frc/ accountingfinancialreporting/pcfr/downloadabledocuments/frf-sme/frf-sme-exposure-draft.pdf. The AICPA will develop CPE, webinars, conference sessions, and user tool kits to assist with implementation.
FRF for SME’s • Not intended for non-profits or companies expecting to go public • Requires substantial use of professional judgment since principles-based • Should not be confused with the Private Company Council established to generate private company GAAP • Is, in effect, an alternative accounting model or other comprehensive basis of accounting (OCBOA) such as cash, modified–cash, or tax basis • May be audited, reviewed, or compiled, though appropriate reports have yet to be created
Private Company Council News The PCC was established in May 2012 by the Financial Accounting Foundation (FAF) to work with the Financial Accounting Standards Board (FASB) to determine whether and when to modify U.S. Generally Accepted Accounting Principles (GAAP) for private companies. During the PCC’s first meeting, Dec. 6, 2012, FASB staff members presented issues of concern identified by constituents. The PCC directed the FASB staff to develop agenda research memoranda on: • Accounting Standards Codification (ASC) Topic 810, Consolidation (formerly FIN 46(R) and FAS 167), which addresses financial reporting by companies involved with variable interest entities (organizations in which the investor holds a controlling interest that is not based on the majority of voting rights). • Accounting for “plain vanilla” interest rate swaps, which are used to convert variable interest rates on loans to fixed interest rates, and vice versa, as referenced in ASC Topic 815, Derivatives and Hedging (formerly FAS 133). • ASC Topic 740, Income Taxes (formerly FIN 48), which is intended to increase
relevance and comparability in reporting information about uncertain tax positions. • Recognizing and measuring various intangible assets (other than goodwill) acquired in business combinations, including providing Level 3 fair value measurements and disclosures associated with them, as referenced in ASC Topic 805, Business Combinations and ASC Topic 350, IntangiblesGoodwill and Other (formerly FAS 141(R) and FAS 142). The following items were also addressed during the inaugural meeting: • The official transition from the Private Company Financial Reporting Committee (PCFRC), including a report which summarizes recent PCFRC activities, lessons learned, and suggestions on FASB projects that the PCC may want to monitor • An update on the FASB’s private company decision-making framework Invitation to Comment, including a summary of outreach and feedback • An update on the FASB’s project on the definition of a nonpublic entity, including a summary of outreach and feedback • A discussion on the current FASB project on going concern. “We are very pleased to see the PCC off and running — tackling the critical financial reporting issues facing private companies,” said FAF President and CEO Teresa S. Polley. “This Council represents a critical milestone along our journey to improve financial reporting for private companies, and today is the first step in our journey." For more information on the PCC, and to read the Establishment of the Private Company Council Final Report, go to http:// tinyurl.com/PCC2013. s James M. Boak, CPA, is a member of the COCPA Public Company Forum and Editorial Board. He can be reached at boakjm@aol.com.
Jan/Feb 2013 •• www.cocpa.org •
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Technology
The iPad for Business You already know the iPad and other mobile devices can be extremely helpful for personal use and just plain fun, but can an iPad really be productive in business? That depends on what business and job functions we are discussing. Business users have needed the ability to do more than just read documents. As it stands now, we can. For business use of an iPad, I strongly recommend adding a Bluetooth keyboard and stylus. These two additional devices will expand your business use capabilities dramatically. Also, there are apps such as Air Display that will allow you to use your iPad as a second monitor for your laptop. You should also buy the iPad its own data plan with LTE (Long Term Evolution) if available in your area, as LTE is significantly faster than 4G.
Who Should Use It The key to successful use of an iPad in business revolves around the job function of the user. If you can do your job by viewing and editing information, the iPad has a chance at success. People who consume or use information are great candidates. For example, a controller can run the corporate accounting via an RDP (Remote Data Processing) app, such as Citrix or PocketCloud, and access information beyond email and instant messages — including running the legacy accounting application from the iPad. You can even run older Windows accounting systems with the iPad touch control. This requires some setup on the server side, but it's possible. When I speak at events, I often show Open Systems TRAVERSE running on my iPad via PocketCloud Pro (courtesy of Open Systems, Inc.). It runs very well. On the other hand, people who produce information are not good candidates because of the smaller keyboard, screen, hard drive, and limited applications. For example, a tax preparer can easily review tax returns on an iPad, but preparing them on an iPad even with an RDP tool can be very tedious.
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• NewsAccount • Jan/Feb 2013
Some industries are a great fit for the iPad's capabilities. For example, a large national delivery company is now fully committed to the iPad Mini because it is a powerful iPad in a smaller form and can be held in one hand for signature on package delivery. Plus, the Mini is not expensive or hard to find if a replacement is needed.
What About Security? Your iPad can also be as secure as you like. With 256 bit AES encryption built into the hardware, all you really need to do is stop using the simple lock code in General Settings and go for a more secure passcode. You can also use the Apple Configurator, a utility to manage corporate policy settings, on either a Windows or Mac system. Then, upload the HTML file to the iPad. This will lock the iPad, and users can only reset to factory settings if they try to go around corporate policy. You certainly want to set up each iPad so that it can be located from iCloud, including invoking the Erase Data setting — which is located in Settings, General, Passcode Lock — after 10 failed passcode attempts.
Working with Data No USB port on the iPad? No problem. You can access data files from email or data sync applications. I prefer to use the data sync approach, and I recommend Dropbox or ShareFile. You can read, edit, and sign PDF files easily. All you need is the free Adobe Reader for normal use and GoodReader for large documents. SignMyPad and iAnnotate PDF add the ability to sign and edit documents respectively. MS Office documents can be a challenge. Apple’s office tools Keynote, Numbers, and Pages are not really MS Office-compliant. While Microsoft has announced a version of Office for the iPad, it will not be here until late spring of 2013. In the meantime, here are some apps that do work — they just require a bit of learn-
BY VAL D. STEED, CPA, MACC
ing and setup. If you need to view, edit, or manage MS Office documents, check out the following. The most impressive one, OnLive Desktop, requires that you upload and download files via your desktop or laptop to the OnLive Desktop website. You can then edit them with your iPad. You can even pay $5 per month for the Pro version and get full flash browsing via IE 9.0. Other users combine Dropbox with CloudOn, and they are good to go. One caveat: CloudOn has a built-in auto-save mode so you don’t want to make changes to documents unless you want to keep the changes.
Solutions for CPAs For the CPA in public practice, we are starting to see iPad apps that will draw information from your practice management, tax prep, and even clients' QuickBooks data installed on their systems. CPA firm apps: • Mobile CS – Thomson Reuters • CCH Mobile • CCH Tax News • Avatax Rates • Five Plus Accounting solutions with mobile apps: • Xero • Concur • Freshbooks Bottom line, can an iPad replace a laptop? Yes, if all you need to do is manage information such as email, PDF files, and MS Office files (review, edit, make small changes to documents). An iPad is not good if you produce a lot of information. So is it right for you? You decide.s Val D. Steed, CPA, MAcc, is the CEO and founder of K2 Enterprises, a national technology training organization. He is a nationally recognized CPE instructor who teaches for the COCPA and other organizations. Contact him at val@k2e.com.
9 Apps To Improve Your Life
TuneIn Radio Plus 99 cents
Looking to listen to a little music but don't want to bother with organizing a music library for your iPad? Check out the 70,000 global AM and FM radio stations available through this app. Bonus: You can rewind and record live radio.
Air Hockey Gold Free
This app is for the kids or the kid in you. Face off against a live player on the other side of the screen (which means no more fighting over the iPad). Single players can also take on the computer set to the difficulty level of their choice. Another great free game is Zen Pinball. Both work well at eliminating the "Are we there yets?"
Crackle Free
It's a long-haul flight, and sleep is evading you. Wifi and iPad to the rescue. Owned by Sony Pictures, Crackle provides free streaming TV and featurelength movies like Stepbrothers, Snatch, and Legends of the Fall. Ads break up your entertainment every once in a while but aren't overly intrusive.
Epicurious Free
Don't get stuck in a food rut ever again. Search over 30,000 recipes by main ingredient, meal/course, cuisine, dietary consideration (including vegan/ vegetarian recipes), dish type, or occasion. Then add ingrediants to your shopping list and get cookin'.
LiveStrong Calorie Tracker $2.99
This app might help you maintain some willpower in the face of that epic German chocolate souffle Epicurious just recommended. Knowing what's going into your body is half the battle when trying to keep off or lose the pounds. Also comes with a database of excersises to help with the other half of the equation.
mint.com Personal Finance for iPad Free
News360 Free
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Jan/Feb 2013 â&#x20AC;˘ www.cocpa.org â&#x20AC;˘
9
Economic Outlook Remains in Flux
D
omestic economic concerns have risen to prominence among CPA senior executives as the global optimism picture continues to dim, according to the CGMA Global Economic Forecast performed by the American Institute of CPAs and the Chartered Institute of Management Accountants. The third quarter 2012 survey shares the opinions and experiences of nearly 1,200 CFOs, CEOs, controllers, and other senior Chartered Global Management Accountants on the full range of business and leadership issues. The survey, which was performed between August 22 and Sept. 19, 2012, represents 62 countries from the U.S., the UK, Europe, Asia, Rest of World Emerging (RoWE), and Rest of World Developed (RoWD).
The second quarter’s cross-regional decline in global economic optimism made an unwelcome return in the third quarter. A mere 7% of respondents expressed optimism about the global economy. The highest optimism levels reign in RoWE and the UK. Levels in the U.S. shrank from 12% to 6%, with the lowest in RoWD, Europe, and Asia.
Volatility Influences KPIs and Top Challenges
Global Economic Index Stabilizes The third quarter CGMA Global Economic Index reveals that significant strides have yet to be made in a number of vital economic measures, with some retreating further since the previous quarter. The Index is a comprehensive gauge of CGMAs’ opinions on 10 equally weighted Forecast measures that range from global, domestic, and organizational optimism to revenue, spending, and hiring plans. After falling seven points in the second quarter, the composite Index score held firm at 58. On a scale of 0 to 100, a score of 50 is considered neutral, above 50 indicates a positive sentiment and below 50 signifies a negative sentiment.
Business Uncertainty Continues to Plague Optimism Levels Continuing change and unrest in markets around the world are boldly reflected in the mixed outlook CPA senior executives have not only for global and domestic economies but also for their own organizations.
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AICPA senior vice president for management accounting. “Many are guardedly optimistic about their own businesses but unsure about the political, regulatory, and economic landscape around them.” The survey also revealed CGMAs’ optimism about their prospects from an industry perspective, with technology commanding the most optimism (60%), followed by manufacturing (50%). Both sectors rose from 41% and 45% respectively from the previous quarter, with construction rising slightly to 34%. Finance and insurance (48%), retail and wholesale trade (46%), and banking (33%) suffered reversals, with banking dropping most dramatically by 15%.
The outlook is more upbeat domestically, yet it still fails to live up to the high expectations set at the start of the year. Only 21% of CGMAs worldwide have favorable expectations for their domestic economy, which is a sharp drop from the previous quarter (29%). Optimism in the U.S. about the domestic economy fell sharply from 36% to 22%. The most optimistic regions, and only areas with quarter-to-quarter increases, are RoWD and Asia. Domestic optimism levels are bleakest in the UK and Europe. Organizational optimism maintained its hold on its 45% second-quarter response rate and stands as the only measure in the optimism category that did not lose ground since the prior quarter. RoWE was the most optimistic, followed by RoWD, and the UK and U.S. Consistent with the global and domestic categories, optimism runs lowest in Europe, despite a slight third-quarter improvement. “Executives are mired in uncertainty,” says Arleen Thomas, CPA, CGMA, and
There was a modest upswing across all Key Performance Indicators (KPIs) since the second quarter. The survey revealed that CPA senior executives are expecting slim increases in revenue (2.7% to 3%), profits (2% to 2.4%), and headcount (0.6% to 0.7%). CGMAs in RoWE and RoWD project the highest growth in revenue and profits, with Asia and RoWD foreseeing the greatest rise in headcount. In comparison, the U.S. is the only region where expectations for all KPIs — revenue, profit, and headcount — are less than the prior quarter, and Europe experienced the lowest across-the-board percentage increases. The third quarter’s leading challenge is domestic economic conditions, followed by domestic regulatory requirements/changes, and domestic competition. The new order marks domestic economic conditions’ return to the number-one position and the departure of global economic conditions from the top-three listing. Visit www.cgma.org/Resources/Reports /Pages/GlobalEconomicForecast.aspx to view the full survey results. s
2012 Everyday Heroes and Heroines receiving their awards were (from left) Griselda E. Casillas, Joseph C. Colgan, Valerie A. Hampton, William E. Keefe, Doug Laufer, Timothy J. McCormack, Kimberly H. Smith, Kelly D. Watson, Ann King White, and Cheryl Barba who accepted the posthumous award for her husband, J. David Barba.
Left: Mark Soukup and Mira Finé share a lighter moment during the Silent Auction to Benefit the Educational Foundation of the COCPA. Right: Mike Bearup congratulates CPAs who've received their Colorado certificates since October 2011.
Left: Mike Bearup tries out the Campeachy chair the Board of Directors presented to him in honor of his leadership as 2011-12 COCPA Chair. Right: Scott Bush, 2012-13 COCPA Chair, welcomes award recipients and guests during the VIP reception. Jan/Feb 2013 • www.cocpa.org •
11
The Accidental Author
BY NATALIE ROONEY
T
here are quite a few states separating Colorado and Illinois, and Richard R. Gibson, CPA, will testify that most of them are flat and covered with wheat — and maybe some cows and corn. On one road trip between the two states, Gibson took a detour. What evolved after that was a several-decades-long labor of love that culminated in his book showcasing America’s 50 state capitols.
In the Beginning “I didn’t start out to write a book or anything close to a book,” says Gibson on the process that ultimately resulted in A Celebration of State Capitols. He didn’t know it would be about capitols either. Gibson graduated with his accounting degree from Southern Illinois University and began his career in industry. It was during the Viet Nam War, and he knew his low draft number probably meant he’d be called up. One night, he and his wife, Ella, went out to dinner. When they came home, Ella handed him the draft notice that had arrived that day in the mail. Because he’d expected it, Gibson already had checked out all branches of the service. He chose to enlist in the Air Force because he was guaranteed a position in accounting and finance, and he would be stationed in Colorado Springs. “I got to defend this side of Pikes Peak,” he chuckles now. So began the family’s journey from Illinois to Colorado. Once he’d completed his service, he worked for several different accounting firms in audit and tax. And, every
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year — sometimes more often — he and Ella would return to Illinois to visit. Although he had been an accounting major, he had also taken a few elective photography courses in college. On one crosscountry trip, the Gibsons stopped to visit and photograph a state capitol. Today, he can’t remember which one it was, but visits to other capitols along their driving route soon followed. While all of the buildings Gibson visited were state capitols, that’s where the similarities ended and his curiosity began. Every capitol’s interior and exterior were unique, and the stories about how they were built and why they are located where they are were also different. There were stories about our forefathers’ involvement in their development and government, too, such as Thomas Jefferson in Richmond, Va., and George Washington in Annapolis, Md. Soon Gibson was expanding beyond the states along his Colorado to Illinois route. He began taking vacations specifically to visit state capitols. A self-professed collector of various items including capitol memorabilia, Gibson pondered how he could best showcase his capitol collection. He settled on creating a giant map made of cork cutouts of each state on which he mounted the 5X7 photos he took.
A Book is Born As the cork map on Gibson’s family room wall grew, it started to attract attention from visitors to the Gibson home. “People would see the map and say, ‘I’m from Minneapolis. Let me tell you a story about our capitol,’” he recalls, adding this was one of the ways he learned even more about the buildings. Then, Gibson would share a story he had learned. “People were fascinated with the stories and wanted to hear more,” Gibson says. The idea for developing his collection of photographs and stories into an actual book began to germinate. In 1988, when his employer United Banks, Inc.’s 20% staff downsizing resulted in his layoff, Gibson found himself with more time to concentrate on his book. At last he was able to start shaping his collection
and his ideas into something more substantive. He put his background as an auditor to good use as he meticulously developed sections for the book, including Facts and Figures, Claim to Fame, the Past Remembered, For What It’s Worth, and the Inside Story. Where others who had written about state capitols lacked key information or used undocumented facts, Gibson strived for seals of approval from historians, curators, and archivists from whom he’d gleaned information. He also made sure each capitol’s section contained information on how that building was unique, which sometimes involved returning multiple times to various capitols to search their archives. He photographed the buildings at different times of the day and night to take advantage of changing lighting conditions. Through it all, Gibson’s goal was to make his book stand out with stories, quotes, facts, and figures that were more authoritative and comprehensive than any book on state capitol buildings ever produced. “I wanted to show and tell people the inside story,” he says. In addition to his photographs of the buildings’ exteriors and interiors, Gibson unearthed unusual quotes, stories, and statistics. He included vintage postcards, early photographs, memorabilia, and comical or unique accounts of history. Each state capitol is featured on four pages with eye-catching titles for each story which capture his humor with a play on words. His comprehensive book also includes former capitols, governor's mansions, comparative charts, dome close-ups, night views, trivia, and a check-off list.
Getting Published Although the Gibson family was along for the ride in the early days, eventually Gibson realized it was not fair to ask the family to spend the bulk of the day at a capitol. Thus, he began touring capitols on his own. “I was spending entire days with tour guides and historians, asking questions and taking pictures, often skipping lunch to maximize the time the capitol was open.” Early on, Gibson wondered if his project might be of interest to publishers. He contacted a number of them but didn’t get any
Colorado bites. He contracted with graphic designers, spending $25,000 of his own money while also working with editors to perfect the content. Through it all, Gibson continued to learn and persevere as people made suggestions or informed him of minor, yet important, inaccuracies they found in the book. One historian told Gibson that historians and textbook writers sometimes get their facts wrong, and even the popular television show, Bonanza, perpetuated a myth about Nevada statehood. That didn’t sit well with Gibson, whose audit background drove him to produce the most accurate information possible. In the end, Gibson self-published his book, realizing he was already paying for the graphic design and editing anyway. “The more I talked to people, the more they told me that a publisher would likely change much of my content and layout,” he said. “I wanted it to be my work.” Taking over two decades to complete and collaborating with experts from every capitol, it was truly time to celebrate as his book became a reality.
The Finished Product Ella, who was diagnosed with early onset Alzheimer’s disease in 2001, passed away in early 2011. She spent her last three years in an assisted living facility where her husband visited her almost every day. “Over the years, she was patient about the book project going on and on,” Gibson reflects. “I’m not sure she truly believed I would ever finish it. When I received the first published copy and put it in her hands, I turned to the dedication page and read to her what I had written about her. Although she wasn’t able to express herself in words, she had a smile on her face.”
Gibson received many compliments from historians with whom he collaborated. The ultimate compliment came from David Schütz, Vermont’s state curator, who showed Gibson several other recent books about state capitols. “You see these?” the curator said. “I won’t carry them in my capitol gift shop — but I will carry yours.”
Playing Favorites If you ask Gibson which capitol is his favorite, he’s like a proud father, reluctant to single out one in particular. He says it depends on if you’re asking about the exterior, the interior, the landscaping, the architecture, or its history. “There are so many factors,” he says. But if you could only visit one, Gibson recommends the state capitol of Pennsylvania in Harrisburg, where the green-tiled dome, majestic rotunda, and mosaic tile floor will make you say, ‘Wow!’ “It’s more than pictures can capture,” he says. In marketing his book at signings and presentations for libraries, schools, retirement communities, churches, and clubs, Gibson has talked with lots of capitol enthusiasts. He says he enjoys hearing citizens talk about their capitols. “Every state has its pride, and it’s a common thread as to why each state ultimately did what it did and how. Everyone wanted to make their capitol a showcase and the finest.” So whether you’re from North Dakota and your capitol is a concrete high rise with the most amount of usable space, or Pennsylvania, where your capitol dome is modeled after St. Peter’s Basilica in Rome, Gibson says, “There’s something to be proud of everywhere.” Learn more about Gibson’s book at www.capitolcelebrations. com. s
Iowa
New Hampshire
Massachusetts
Jan/Feb Jan/Feb2013 2013•• www.cocpa.org www.cocpa.org••
13
Colorado’s Higher Education System This is the second in a two-part series about Colorado’s education system. In the Nov/Dec 2012 issue, we provided an overview of K-12 education. In this issue, we focus on how higher education funding has decreased over the years and why the Colorado business community should be concerned. BY NATALIE ROONEY
Rising Enrollment, Decreasing Funds First, the good news: Higher education enrollment in Colorado has been rising steadily. Over the past 11 years, Colorado’s colleges and universities experienced a 35.2 percent jump in enrollment. Now for the bad news: At the same time higher education enrollment has increased, funding for higher education has plummeted from $700 million to less than $550 million. The increase in enrollment over the last decade isn’t surprising, says Chad Marturano, director of legislative affairs for the Colorado Department of Higher Education. “Enrollment in higher education is countercyclical to the economy,” he says. “You lose your job; you go back to school to retool so you’re more marketable.” So that explains the continued growth of students. But why is higher education in Colorado continuing to receive a smaller slice of the General Fund pie?
How Colorado Funds Higher Education Colorado’s total state budget is approximately $20.4 billion, with $7.5 billion being General Fund (primarily income – about two-thirds of the total — and sales/use tax — about one-third of the total) revenues. The balance of the revenues in the state budget 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. How is money in the general fund allocated? Appropriations show almost 40 percent goes to K-12 education, about 33 percent 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.
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While Colorado’s general fund has grown each year since fiscal year 2010, and continued growth is expected, the increases haven’t kept up with growing demands or the rate of inflation. Ultimately, you can manipulate data to get the results you’d like to see, but Danny Tomlinson, founder of Tomlinson & Associates, an independent governmental affairs firm primarily focused on dealings with the Colorado Legislature, says no matter how you slice and dice the information, Colorado comes up short. “Our state is dead last in funding for higher education,” he says. “We’re even below Mississippi.” Higher education’s share of the general fund pie continues to get smaller. Why? Because other general fund recipients, like Medicaid, K-12 education, and the prison system, are getting more. From FY 2000–01 to FY 2010–11, the number of state Medicaid recipients doubled. The prison population also grew. Where could the legislature get the money required to fund required caseload and population increases in other
areas of government, while keeping a balanced budget? Higher education, says Tomlinson.
What Happens on Campus Colleges and universities basically have three sources of funding: the state’s general fund, tuition, and federal funds. Unlike K-12 education, higher education does not generally receive anything from local property taxes, with the exception of two local district community colleges (Aims Community College and Colorado Mountain College). As the general fund portion of their revenue gets smaller, colleges and universities start looking at their cash funds to make up the difference. That means tuition goes up. Rising tuition rates are a national issue. Tuition and fees at U.S. public universities rose 4.8 percent in 2012 to an average $8,655. While that was the smallest increase in 12 years, it still outpaced inflation, according to a College Board report. At the University of Colorado Boulder, tuition
DI-1 Operational Funding Increase for Public Colleges and Universities ATTACHMENT A
soared 205.2% between 2000 and 2011. Public universities blame decreases in state funding for their tuition hikes. The amount of grant aid available to students has leveled off, after years of increases, so students will bear more of the cost, according to the College Board. Data from the Colorado Department of Higher Education shows the total number of students receiving financial aid in FY 2011 (224,518) increased by seven percent over FY 2010 (209,516). The average overall student loan debt for baccalaureate graduates in Colorado was $23,662 in 2010-11, which was similar to the national average for such students ($22,000). John Straayer, Ph.D., professor at Colorado State University and director of the school’s Legislative Internship Program, says that while enrollment is up, the discourse in his classroom has changed along with the economy and the burden of rising tuition prices. “Five or six years ago, if we talked about budgeting in the classroom, we’d talk about the growth of entitlement programs eating up the national budget. On the state level, we’d discuss the implications of the increasing Medicaid burden and the growing prison population,” he says, adding that students were aware of the budgetary implications but weren’t especially agitated by them. Straayer says in recent years, as students’ own financial situations have changed, so have their viewpoints. “They’re increasingly cognizant of their own growing debt, and in some cases, you can sense financial pressure in their own families. There’s a growing awareness and concern over budgetary issues and pressures. They know what’s happening to state support.” Straayer says schools are changing their faculty hiring in response to funding decreases. “We’re using more adjunct professors,” he says. In addition, CSU faculty went three years without a raise, but “schools can’t go on that way forever. Eventually, people will flee, and morale will be hurt.” Straayer says reliance on temporary adjunct faculty versus tenure-track faculty will eventually affect curriculum maintenance and stability. “That’s a real problem down the line,” he says. One way schools are trying to generate funds beyond raising tuition is adding fees.
“There are fees related to student government, recreation, technology, health, counseling, conflict resolution, arts, facilities construction, special course fees, and legal counsel that are all in addition to tuition,” Straayer says. In the long run, it’s the financial pressure on students that concerns him. “Increasing costs will make for a more exclusive student body,” he says. “Our demographic is changing, and we need to respond. Many of these students leave school with more debt than my first house was worth.”
“
What Colorado is doing with higher education funding is like making the minimum payment on a credit card. The legislature is forced into making critical decisions in hopes of “catching up” in future years. — Danny Tomlinson, CPA
Impact on Colorado Business A 2011 analysis by the University of Denver’s Center for Colorado’s Economic Future reported that “Twelve years from now, Colorado will generate only enough sales, income, and other general-purpose tax revenue to pay for the three largest programs in the General Fund: public schools, health care, and prisons. There will be no tax revenue for public colleges and universities, no money for the state court system, nothing for child protection services, nothing for youth corrections, nothing for state crime labs, and nothing for other core services of state government.” What do these predictions mean to Colorado business in the long run? Straayer says the state’s higher education funding crisis should serve as a wake-up call. “It boils down to do you want to be able to hire capable employees or not?” he says. “Businesses will do better if our state grows. If it stagnates, people won’t want to come here. If we’re the first state to defund higher education, it would start a downward trajectory of
quality of life for people and businesses.” Tomlinson agrees outward appearances are important. “Business looks at a state to see how well it funds higher education. A poor funding system says higher education isn’t important to the people in that state. Businesses need a trained workforce, so they might rethink their decision to locate here.” Statistics show Colorado students are crossing state lines for a more cost effective education. “There are a lot of kids who are going to school in Wyoming, Nebraska, and New Mexico because it’s cheaper and no farther away,” Tomlinson says. “Paying nonresident tuition there is cheaper than paying resident tuition in Colorado. The bottom line is your students leave, and then you become noncompetitive for professors and teaching talent.” Tomlinson points out that CEOs looking for places to expand will want to have access to college graduates who can join their companies. CEOs will also seek opportunities for employees to earn advanced degrees. The eighth edition of Toward a More Competitive Colorado, the Denver Metro Chamber of Commerce’s annual benchmark report of Colorado's strengths, challenges, and opportunities for future job growth and economic expansion, draws attention to the state's challenges. Since its inception, the report has warned of the threats faced by declining funding for higher education.
What the Future Holds Tax revenue will rise, and the economy will improve, but Colorado’s structural problems will continue because of Medicaid growth and constraints from provisions such as the Gallagher Amendment. “Something has to happen to Colorado’s fiscal policy,” Straayer asserts. “People don’t remember what we’ve done in the past, which was to cut taxes with no broad understanding of the convoluted mix of constitutional provisions. The legislature can’t raise taxes. We stripped our legislature of that authority.” Straayer points to the state income tax rate which was 5 percent 12 years ago. Now it’s 4.63 percent. “And this is where that’s brought us,” he says. Tomlinson says higher education is treated much like a credit card bill. “We
Education Continued on 17 Jan/Feb 2013 • www.cocpa.org •
15
Financial Literacy Volunteer Opportunities
Saving for a Clydesdale and Making a Difference
T
he COCPA Financial Literacy Committee develops, promotes, and implements financial literacy programs for Coloradans by partnering with organizations — such as Girls Scouts of Colorado — which serve individuals and families from all walks of life. You’re invited to become involved through one or more of the following programs, as well as to join the committee. Perhaps you’d like to spend a morning with young girls learning about needs and wants or with single mothers gaining critical personal financial life skills. Take a look at the opportunities outlined here, and contact Liz Julin at the COCPA office, ljulin@cocpa.org, 303-741-8607, or 800-523-9082, ext. 107, with your questions and to volunteer.
Girl Scouts of Colorado This program enables Cadets in the 6th, 7th, and 8th grades to earn the Financial Literacy merit badge. In 2013, the Committee is expanding the program to include Colorado Springs, Durango, Fort Collins, and Grand Junction, as well as to reprise the Denver program described here. If you are interested in working with the Girl Scouts in a small-group setting on a Saturday morning for just a three-hour commitment, this is the opportunity for you. A special thanks to the volunteers who have already gotten involved in the program: Phylis Anderson, Barb Kaup, Aaron Leatherwood, Gordon Phair, and Pam Smith. Special thanks as well to Karen Kehler and Julie Willy who traveled from Fort Collins for the program on Sept. 29, 2012. On that Saturday, the COCPA members awaited 24 exuberant Girl Scouts — Juniors and Cadets, ages nine to 12 — for the Girl Scouts “Feed the Piggy Bank” program and the opportunity to earn badges in financial literacy. The session included curriculum written by the Girl Scouts organization and materials from the AICPA’s Feed the Pig for Tweens program. Volunteers led the Scouts in exercises to help them identify what types of things they want to save up for, spend money on, and to
16 • NewsAccount • Jan/Feb 2013
A Scout adds to the list of causes the girls would like to support with their time or money.
Julie Willy, CPA, and the Scouts select images from magazines depicting their savings goals.
what programs or charities they would donate money or time. "If you had $50, how much would you give to something, and where would you give it?" asked the CPA volunteer. "About one-fourth," answered one Girl Scout. "I’d give to an animal shelter because sometimes the animals can be really sick, and they need to be safe." Also included in the session was a discussion of needs versus wants. In all, the volunteers led five different activities: budgeting for your values; learning to track your spending; different ways to save money; different ways to give; and creating a budget focused on your values. Juniors earned their "Savvy Shopper" badge, and Cadets earned their "Budgeting" badge. To receive them, the Scouts had to say what their savings goals were and how long they thought they would take to achieve. While most wanted iPads or laptops, one big thinker said she was saving for a Clydesdale.
rial campaign. It will kick off at the Governor’s Mansion in August 2013. The COCPA Financial Literacy Committee will lead the session on economic wellness including ethical campaign fund raising, campaign finance rules, budgeting, and basic financial terminology. Participants will check in each month with a Money Mentor to monitor their fund-raising progress.
Girls Govern
Women’s Bean Project
Girls Govern is a non-partisan, civic learning program for high school sophomore and junior girls from across Colorado who participate in a year-long mock gubernato-
COCPA volunteers work with approximately 30 women over several sessions on needsvs. wants, tracking spending,
Warren Village, Denver Participants in these single-evening sessions held in January, February, and March are low-income, single parents with children who are working toward sustainable personal and economic self-sufficiency. The program, “Take Control of Your Finances: Plan for Your Future,” includes discussion of goalsetting, developing a spending plan, establishing credit, and commitment, accountability, and tracking.
Continued >>
Education Continued from 15
The Gallagher Amendment
Amendment 23
have to fund K through twelve education because of Amendment 23. We have to fund Medicaid. We have to fund prisons. But we don’t have to fully fund higher education. What Colorado is doing with higher education funding is like making the minimum payment on a credit card. The legislature is forced into making critical decisions in hopes of “catching up” in future years."
In 1982, voters approved a property tax reform measure that included a provision (generally called the "Gallagher Amendment") which initially reduced the residential assessment rate from 30% to 21% and capped the residential share of property taxes.
Tying Legislators’ Hands
In 1992, voters approved the Taxpayer's Bill of Rights (TABOR). Prior to TABOR, local governments could generally collect and spend the same amount of property tax revenue each year by periodically increasing or decreasing mill levies. With respect to school district property taxes, TABOR: (1) imposes a property tax revenue limit based on inflation and changes in student enrollment; (2) prohibits districts from increasing a mill levy without voter approval; and (3) requires voter approval for any increase in the assessment rate for a class of property.
Amendment 23 was a constitutional change passed in 2000 to reverse a decade of budget cuts experienced by Colorado school districts throughout the 1990s. It requires K-12 funding to increase by inflation plus 1% from 2001-2011 and by inflation after that. Unfortunately, because of the economic downturn and Colorado’s resulting budget crisis, Amendment 23 was not fully implemented through 2011. Seeking ways to cope with falling revenues, the legislature reinterpreted Amendment 23 in a way that enabled them to cut education funding for three years. These three constitutional provisions — that simultaneously limit revenue but require spending — stripped the legislature of authority to manage fiscal policy. An analogy often used is that we have one amendment that causes us to “step on the gas” while another requires that we "keep our foot on the brake.” We're burning rubber just standing still.s
Colorado legislators don’t make education funding cuts because they’re antieducation, says Tomlinson. Two constitutional provisions, combined with a statutory provision in the School Finance Act of 1994, have limited property tax revenues available for public school operations and have also impacted overall revenue generation for the state’s general fund, which in turn has impacted higher education funding.
The Taxpayer’s Bill of Rights (TABOR)
Financial Literacy Continued establishing credit, taxes, banking, and comparison shopping. Participants typically are single mothers in their late 30s who have a prison record and generally have not been able to keep a job. About half have their GED. They work in the bean production area, or they make jewelry and take classes such as this to learn life skills and maintain employment.
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What You Need to Know Committee members have developed and tested these programs, so you need only to be willing to share your financial knowledge using the existing curriculum. Go to www.cocpa.org and click on Member Communities/Financial Literacy to view the resources, toolkits, and Train-the-Trainer videos. If you’re willing to spearhead implementation of financial literacy programs in your COCPA chapter area or community, let us know. If you’re interested in a particular program, or if you just want to be involved for a limited time, you can volunteer for one of the programs already developed. And, if you’d like to conduct a program but are not interested in content development, we can provide the tools you need. s
2011 & 2012 “Best Companies to Work for in Colorado” 2010 & 2011 “Best Accounting Firms to Work For” Best – /best/ - of the highest quality, excellence, or standing. People. Culture. Client Service. Technical Expertise. Quality. 303.830.1120 www.acmllp.com Boulder ∙ Denver ∙ Northern Colorado
Jan/Feb 2013 • www.cocpa.org •
17
Point/CounterPoint
Online vs. In Person CPE Options
Online CPE — Up There With Sliced Bread
I Prefer Human Interaction
BY BARBARA TEDESKO, CPA, CGMA
BY GREG STABOLEPSZY, CPA
O
C
nce, 80 hours of live CPE every two years was a struggle to complete. I would find myself weighing attributes such as location, topic, and cost to fill my yearly quota. As CPAs, our time and money needs to be used efficiently. Currently, I exceed the 80hour requirement by 50 or 60 hours every reporting period because I can easily schedule virtual CPE at my convenience. Although I am regularly bombarded with webinar requests, I only attend the ones that interest me. I am always looking for new topics, and I appreciate the endless variety available via the virtual world. Thanks to outside auditors, former auditors, national and state societies, and independent educators, I receive at least 30 weekly invitations. Most are no cost or very low cost. I am ready for the virtual CPE webcast today. Each one is in my Outlook calendar with a 15 minute reminder, and login instructions are a click away. The lunch hour timing is perfect, and my headphones with the six foot extension are plugged in! I can stand up and stretch at my leisure. There is no need to print the handouts when I can just download and save the presentation. When a roundtable discussion is broadcast in addition to the PowerPoint, I feel like I am in the same room as my fellow attendees. There is no travel involved, and I can easily schedule a meeting right before or after. I usually take mass transit to work, so there is no need for me to bring my car just to attend some CPE during the day. It is easy to ask questions, and if mine go unanswered during the session, most instructors will send a personal reply. I have had few technical problems, and in one case, I was able to retake the course and was offered a refund. If an emergency comes up and I need to leave the webinar, I can view the presentation at a later date without CPE credit. I can always break away for a quick second for a phone call, email, or a visit from a coworker. If I log in and find that the topic is not worthy of my time, I just log out. The CPE certificate is usually available immediately or sent within a few days and can be stored electronically for easy retrieval. My coworkers are also addicted to the ease of webinars. We often exchange notes and ideas afterward. Most webinars are one hour long which easily fits into a busy day. I do a yearly governmental update that is four hours, and breaks are built in! The 90-minute session I attended last week also had a short, five-minute break in the middle. Another plus for webinars is being able to attend while on vacation. There is no reason for a true workaholic to miss a great topic if out of town. In addition, online CPE classes require students to demonstrate their understanding of the material by answering Continued >>
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PE is as much a part of a CPA’s work as a calculator or a computer. And quite a varied perspective can pervade the world of the CPA concerning the nature and usefulness of CPE. Many see CPE as a significant resource for information in the responsible execution of our profession. Others might view CPE as something a CPA must do to maintain certification. And some might view CPE as a necessary infringement on one’s time. Whatever view or mix of views we might harbor, it's all a matter of perspective. As far as CPE perspectives go, the information provided is an important resource that does, in fact, consume our finances and time. And as such is the case, it seems to be in our best interest to get the most in return for our dollars and time spent. CPE is a vital source of practical information that can mitigate a great deal of risk in the performance of our varied CPA responsibilities. So it would seem there's a practical aspect of CPE. It's intellectually stimulating, risk reducing, confidence building, disclosure of rules and facts we need to know, integrative in our daily practice, and on occasion something we should have known a bit sooner. Today, a number of CPE vehicles are available, ranging from classroom attendance, to self-study, to the internet. We have the opportunity to assess which mode of instruction provides us with the best use of our dollars and time — not just the easiest way to fulfill our CPE requirements. For me, that vehicle is the nonbroadcast classroom experience with a live, qualified instructor and a mix of CPAs in private practice or a CPA firm environment. Were I to select the principal reason for this preference, it would be “spontaneous debate and discussion.” Discussion and debate go beyond that of an attendee with the instructor and also includes the pertinent points of view and experiences from other members of the class. During these discussions, other fringe areas of interest often emerge, further lending clarity and options to the matter at hand. The capacity to effectively communicate tax law or accounting regulations and standards to our clients or employers helps to establish a sense of trust. Discussion and debate in a classroom setting can enhance the CPA’s ability to efficiently communicate and clarify complex issues. Spontaneous debate and discussion with our peers in a classroom setting not only helps us discover clarity in professional guidelines, tax laws, and accounting standards, but also helps us develop communication skills. Additionally, the learning experience goes beyond the CPE classroom. Discussions of rules, regulations, Continued >>
MAP Survey Results a Benchmark for Firms Looking to Grow
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PA firms continue to successfully navigate the recession, according to the 2012 PCPS/TSCPA National Management of an Accounting Practice (MAP) Survey, developed by the AICPA Private Companies Practice Section and the Texas Society of CPAs. Two-thirds of survey participants reported at least some growth in client fees over the past year, an increase of 11 percentage points over 2010, when the survey was last taken. Practices have yet to rebound fully from pre-recession levels, but there are signs that they are steadily gaining momentum. A total of 42% of firms experienced modest fee increases of 1% to 9%, while a little more than a third saw a decrease or no change. The smallest firms — those with less than $200,000 in annual revenues — were more than twice as likely as others to see an increase in client fees of 30% or more. • Staffing may emerge once again as a concern for firms. For many years, attracting and retaining qualified staff was the top priority for CPA firms. That shifted in recent years, when even the best people were more likely to stick with good jobs rather than jumping ship in the midst of the recession. The 2012 survey includes some indications that staffing issues may soon become a challenge for firms once again. Average turnover was about the same, 30%, as it was in 2010. However, while voluntary turnover has moved slightly higher, involuntary turnover — when staff are let go — was significantly less than half what it was in 2010. Now, the number leaving voluntarily is beginning to rise. • Larger firms in particular appear to be taking succession concerns more seriously, but there’s still work to be done. Sole practitioners in particular have some catching up to do when it comes to succession planning. The survey indicated that more firms need to initiate formal succession planning, especially the smallest ones. A paltry 7% of firms with under $500,000 in revenues had practice continuation agreements, not much changed from 2010. These agreements can ensure a firm’s survival or smooth transition to new ownership if a sole owner dies or is disabled, so failure to have one could create serious challenges. No more than 4% of these firms had formal succession plans of any kind. For more perspective on this area, practitioners have free access to the commentaries on the 2012 PCPS Succession Survey, which reviewed the findings and offers practical advice. There is one commentary for sole practitioners and one for multi-owner firms. • Firms are expanding their technology horizons. In virtually every category — from multiple monitors to social media, from websites to blogs — more firms were involved in 2012 than in 2010. The number of firms with client portals was up 14 percentage points from 2010 to 42%. The percentage involved in social media rose 11 percentage points to 25%, and the number that were paperless spiked 9 percentage points to 61%. For more information, go to www.aicpa.org/InterestAreas/PrivateCompaniesPracticeSection/Resources/NationalMAPSurvey/ DownloadableDocuments/mapcommentary.pdf. s
Online CPE
Continued
questions periodically throughout the presentation. This keeps students engaged and can provide instant feedback to instructors to determine if students are grasping important concepts. I still attend a few hours each year in live settings as I do like networking and supporting local organizations. However, having the ability to schedule CPE when it is convenient is great. Virtual CPE can save time, money, paper, energy, and you feel as if you are time traveling to another city. One day I was in New York in the morning, Los Angeles, in the afternoon and I still made it home for dinner on time! s Barbara Tedesko, CPA, CGMA, works for the City and County of Denver and is a member of the COCPA Editorial Board. Contact her at barbara.tedesko@denvergov.org.
In Person CPE
Continued
practice management, communication with clients and employers, and other CPAs' experiences take on important educational meaning during breaks and lunch sessions. And, we can engage in a one on one dialogue with the instructor. Yet another reason for my preference exists for a non-broadcast classroom setting. That is, I get to personally know other CPAs and experience a feeling of belonging to a profession of which I am proud to be a member. s Greg Stabolepszy, CPA, is a sole practitioner in Buena Vista, CO. He can be reached at gregstab@buenavistaco.com.
Jan/Feb 2013 • www.cocpa.org •
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Standing Up to Fraud: Could You Do It? BY NATALIE ROONEY
Schools Addressing Ethics Ethics-specific accounting courses are a newer trend in higher education, says Rick Crosser, Ph.D., CPA, CCEP, professor and accounting department chair at Metropolitan State University of Denver (MSU). MSU launched its first accounting ethics course in 2007 after Crosser completed a sabbatical and shifted his entire teaching focus to ethics. He immersed himself in ethics literature, took a 10-week business ethics course through the University of New Mexico, and visited the University of Wyoming to observe how ethics courses were integrated into the accounting curriculum. The result was Accounting Ethics, Professionalism, and Leadership — a course he developed to help students understand the linkages among the areas of accounting, ethics, leadership, and professionalism. By 2015, Crosser notes that an ethics course will become part of the education requirements for CPA licensure in Colorado. “We were very vocal in our support of the ethics requirement in the 150hour rule,” he says. “We really believe in it.”
A
ccounting fraud cases — and the whistleblowers who expose them — continue to make headlines. The Securities and Exchange Commission received approximately 3,000 tips on alleged wrongdoing in the first full fiscal year of its new whistleblower program. Allegations about corporate disclosures and financials, which represented 18.2% of submissions to the SEC, were the most common category of complaints from whistleblowers, followed closely by offering to commit fraud (15.5%) and manipulation (15.2%). Remember UBS whistleblower Bradley Birkenfeld? He was awarded $104 million by the IRS for providing information about overseas tax cheats and exposing widespread tax evasion at the Swiss bank. He was jailed for fraud conspiracy after cooperating with authorities. But not every case is so high profile. Fraud occurs every day in small ways that go undetected for an average time period of 18 months. In fact, the Association of Certified Fraud Examiners’ (ACFE) 2012 Report to the Nations on Occupational Fraud and Abuse says occupational fraud is a significant threat to small businesses. The smallest organizations in the study suffered the largest median losses. These organizations typically employ fewer antifraud controls than their larger counterparts, which increases their vulnerability. Personal ethics can come under fire in both large and small ways, from discovering occupational fraud to a client asking you to fudge a number to a supervisor asking you to doctor your timesheet on an engagement to a co-worker you know is padding expenses for reimbursement. What do you think you would do when confronted with one of these situations?
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There’s Nothing Like Experience Crosser says his efforts at MSU are focused on preparing students to become professionals who may face unethical or fraudulent situations during their careers. He points out that nothing can replace on-the-job experience, but his ethics course is designed to help raise students’ awareness of the types of situations they might face in the real world. Case studies present a situation and then ask, “What would you do?” They studies aren’t about heavy duty financial reporting schemes. “Students can’t really relate to that,” he says. Instead the focus is on situations the students might have already encountered like academic cheating, incidents from their personal lives, or even first-year accounting professional situations. Crosser tells his students that sometimes making the ethical decision involves sacrifice. “We talk about how following your values is hard,” he says. That concept led to a graduate class assignment on moral courage heroes. Instead of focusing on the fraudsters and crooks, students write a biographical paper about someone who exemplified moral courage. “Famous” whistleblowers such as Jeffery Wigand (tobacco company Brown & Williamson), Erin Brokovich (Pacific Gas & Electric for contaminating groundwater), and Cynthia Cooper (WorldCom) have been among the men and women profiled by students. Studying cases like these help students make connections, Crosser says.
Who’s Blowing the Whistle? Doug Laufer, Ph.D., CPA, CFE, and professor at MSU says while there is much research on fraud, there is limited data about
the “typical” whistleblower. But without a doubt, “You have to be a really strong person,” he says. “Going down that path can be brutal.” In fact, retaliation against whistleblowers is surging. New laws, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, contain provisions to push back against such responses. On Nov. 27, President Obama signed legislation that affords greater protection to federal employees who expose fraud, waste, and abuse in government operations. According to the 2011 National Business Ethics Survey, Inside the Mind of a Whistleblower, 45% of U.S. employees said they had observed misconduct in the previous 12 months. Roughly twothirds of those who observed wrongdoing reported it. While this is the highest reporting rate to date, that still leaves over 20 million members of the U.S. workforce who said nothing. “People are reluctant to step forward,” Laufer agrees. Part of the difficulty for young professionals is having the experience to know if they are, in fact, becoming involved in an unethical situation. Victoria Marschner, CPA, has had her share of questionable requests from clients over the years, including one who, when asked for information, told Marschner, “Just put in some numbers.” “It’s a hard place for CPAs to be in because we’re all under pressure to make money," she says. “But where do you draw the line?” And while it would be nice to think the good guys always win, they don’t. Marschner recounts an incident when working for a large firm. A client wanted a certain treatment, and the firm refused. The client went to another firm. “How did we get rewarded?” she asks. “We didn’t, but you have to look at the big picture.”
they don’t go so far down the line that they end up in a position where they’ll have to blow the whistle,” Laufer says. “We want them to be able to identify red flags early on before they get in too deep.” Laufer encourages young professionals to document what they see if they do encounter red flags. He also reminds them to be comfortable standing their ground. “Be aware of your environment, and don’t be afraid to speak up if you think something’s wrong.” Crosser advises young professionals to look to their colleagues for support. “Having someone to share with can be helpful,” he says. Some organizations appoint a mentor to new hires. “There needs to be more of that,” Crosser says. He also suggests finding a mentor outside of your organization who can be a neutral sounding board and advisor. Marschner recommends constantly asking yourself, “Is this the right thing to do? Will I worry about someone finding out about this?” While people used to spend their entire career with one organization, those days are over. “Making choices that are going to sacrifice your career or work solely for the benefit of the firm may not be a decision you want to make anymore,” she says. “Be in charge of your own career.” Marschner says she has sought counsel from colleagues and mentors over the years. “I’ve collected people whose opinion I value. I check in with them, and I do it for other people. It’s important to have other people you trust and whose opinion you value to give you input in a situation where you need ethical guidance.” s
Advice for Young Professionals So what do you do if you get that “something doesn’t seem quite right” feeling? Certainly, working with your supervisor is a starting point, but Marschner points out that asking your supervisor isn’t always going to guarantee good advice because he or she might be the one encouraging the unethical behavior. How employees choose to proceed after encountering an ethical decision is very much dictated by the “tone at the top,” Laufer says. The concept refers to how an organization's leadership creates an ethical (or unethical) atmosphere in the workplace. That tone has a trickle-down effect on employees. If top managers uphold ethics and integrity, so will employees. But if upper management appears unconcerned with ethics and focuses solely on the bottom line, employees will be more prone to commit fraud and feel that ethical conduct isn't a priority. In short, employees will follow the examples their bosses set. Talking openly about ethical issues is an important first step, according to Marschner. “The more you talk about it, the more people will think about it, and that encourages and inspires more ethical behavior,” she explains. “We try in all our classes, but especially in ethics and fraud, to give students an awareness and framework for decision-making so Jan/Feb2013 2013•• www.cocpa.org www.cocpa.org•• Jan/Feb
21
The State of the Industry
Automobiles BY NATALIE ROONEY
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 automobile industry.
Tim Jackson, CMP, CAE
President - CEO Colo. Automobile Dealers Association Denver, Colo.
About the Organization The Colorado Automobile Dealers Association (CADA) was founded in 1933 to serve the car sales retail industry in Colorado and was already passing effective legislation benefitting the industry by 1937, even before CADA was incorporated in 1938. The Metro Denver Auto Dealers Association (MDADA) pre-dated CADA, starting in 1914. The organizations merged at the end of 2009, becoming one larger and more influential trade association. As a result of the merger, CADA became the owner and producer of the annual Denver Auto Show, Colorado’s largest consumer show which actually pre-dates both associations, beginning in 1902. Today, CADA staff oversees two organizations: CADA Services, the
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501(c)6 trade association, which is a wholly owned for-profit, and Clear the Air Foundation (CTAF), a high priority charitable and educational 501(c)3 which was launched in 2010 and charged with taking old highemitting cars out of service and ensuring they are recycled, as well as developing an industry-targeted youth scholarship program.
What roles do the auto industry and auto sales play in Colorado’s economy? Colorado’s auto industry is important to Colorado’s economy because it is a reliable creator of high-paying, technology-centric jobs. It positively impacts all parts of the state by providing mobility and development for individuals, families, and communities across the state. The number of new car dealerships across Colorado and the United States has held steady while the population continues to grow almost exponentially. That is a factor dictated primarily by auto manu-
facturer investment and design requirements of local dealerships. Yet, for those who can meet the criteria, the Colorado new car dealership of today’s economy is higher volume, providing greater throughput and more jobs and economic development than ever before. Oftentimes, dealerships are among the biggest private employers in most communities across the state, and the dealership owners are generally community-involved, politically focused, and fiscally solid.
What challenges face Colorado’s automobile industry? Colorado’s new car dealers and the industry face most of the same challenges all small business owners face, such as high healthcare costs, workers’ compensation coverage, locating and retaining quality workers, and regulatory compliance. Additionally, as far as industry-specific challenges, the facility, capital requirements, and other franchise demands by manufacturers continue
to increase across most brands, making the viability of new-car dealerships in small- or even medium-size towns unviable and untenable. Additionally, new fuel economy rules will drive up new car prices. While the industry could support reasonable Corporate Average Fuel Economy (CAFE) standard increases, going too far, too fast will price many consumers out of the market, accelerating the growth of an aging fleet of cars which is already the nation’s oldest on record.
What is your role within the Colorado Automobile Dealers Association? As President and CEO of CADA, I direct a staff of 10 and oversee all association, for profit, and non-profit priorities for the related and connected corporations in the CADA family. So, when the Colorado General Assembly is in session, I’m a lobbyist at the Capitol. When the auto show is in town, I’m a consumer show producer. And when we are expanding efforts with the Clear the Air Foundation car-donor program, I’m a philanthropist. Overall, 90 percent of my job with staff, leadership, and volunteers for the association as well as the entities and groups we influence is keeping everyone in the right frame of mind.
Is this a good time to be in the auto industry? Overall, notwithstanding the many, seemingly monumental, challenges we face, this is a very exciting time for the industry. Never throughout history have the new cars our member dealers sell been better in quality, durability, and longevity, nor have they lasted longer and with fewer repairs and maintenance. Never throughout history have consumers been so well served. Never before has the industry received such a high level of focus from a presidential campaign as it did 2012. One could say that these are the worst of times, even while being the best of times. Compelling, even convincing, arguments could be made to support each view. Today’s auto industry is one that I am proud to serve and proud to represent.s Contact Tim Jackson at tim.jackson@ coloradodealers.org.
21st Century practice BY VICTOR AMAYA, CPA
NewsAccount always gets my special attention when it arrives. As a younger CPA, and with our practice at ClearPath Accountants, LLC in growth mode, I look for opportunities within the profession. I found the July/August 2012 issue spot on for the vision we have at our firm and our growth strategy. Stephen Taylor’s article outlined how he and his wife found an effective way to live with work, rather than work to live. Their travels now take them all over the country. When asked about retirement, his response was simple, “Retire from what?” This is the perfect example of carving out the part of the business that you enjoy, while leaving other tasks to others. He provides a great example and inspiration of how our profession should be to attract new talent and offer the ever-elusive worklife balance. My firm believes in the Stephen Taylor approach. Rather than selling your practice, consider fashioning the business to be handled in segments and delegating them to budding talent. Your talent pool may be aging, but it’s far from obsolete. Putting an experienced CPA to pasture is not only illogical but also a detriment to the CPA profession. At our firm, we believe that the true value of the practice lies in the brainpower and experience compiled over the years, not in the amount of billable work amassed. Wouldn’t it be great to review work, correspond with clients, prepare special projects, and not be faced with fundamental tax preparation, scheduling, billing, and collections? At ClearPath Accountants, LLC, we make all this possible through our commitment to the “cloud.” We can create the back office support we need while allowing our professionals to work on the most profitable facet of the business — client interface. Rather than sell the practice, the practioner continues to work a reduced schedule. All of the practitioners' documents are stored on a Citrix-based server in a document management system. They sim-
ply login to the system through a secure connection on the internet. They can do as much, or as little, as they wish by using a minimum of three monitors while addressing email, coordinating projects, and managing due dates. The access and the introduction of clients to a younger CPA, such as me, allows clients to feel good knowing that someone has the junior CPA’s back. If traveling, the laptop or tablet allows the same access. The CPA works less, maintains the base, and arranges for a transition that is smooth and seamless when it's really time to retire. CPAs in rural locations can benefit even more as they can transition their work while sipping java in the local coffee shop. Alternatively, we can develop a remote staff center, training individuals in rural communities to provide the support services to the existing CPA and others within our network. This capitalizes on the work ethic and low turnover you would expect in smaller communities. We added a satellite office in Frederick, Colo., and a second office near City Park in central Denver in one day, just by plugging in an IP phone and a desktop computer. It actually took longer to figure out the paint colors. There is virtually no downtime or learning curve because what you see on one computer, you see on every computer you use. Our firm is looking to the future by offering a working relationship with professionals who don’t want to work full-time but still want to make valuable contributions to the firm. Our model lets them accomplish this whether at work, at home, or on the beach. We add the portal, send a phone, and away we go. Now if you would excuse me, I have to respond to the messages I have on LinkedIn and Twitter before I finish my blog post for the website. You do read blogs, don’t you? s Victor Amaya, CPA, is a partner with ClearPath Accountants, LLC in Aurora. He can be reached at 303-766-2076 or victor. amaya@clearpathaccountants.com. Jan/Feb 2013 • www.cocpa.org •
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Five Steps to a Winning Organization BY BRAD HAMS
If you want to beat the competition in today’s business environment, being good is not good enough. You must be great. And you cannot be great if your organization has not engaged every employee in driving the operational and financial performance of the business. In short, you must create an organization of employees who think and act like owners. Here are five steps that will help you to create an organization of ownership thinkers and win in the marketplace:
1.
Teach your employees the fundamentals of your company's business and finance. When employees don’t understand the company's finances, they make mistakes and assumptions. They make mistakes because they don’t understand the ramifications of their actions relative to financial performance. They’ll assume that the company is making a 50% profit and that all of that money is going into management's pockets. Or they’ll assume that the company is going bankrupt. Employees can’t make intelligent decisions if they don’t understand how those decisions impact the company’s profitability (and their stock value). How to Do It: Companies that employ training methods that are fun, interactive, and tie financial concepts to personal finances are generally most successful. Examples include refinancing your mortgage (restructuring debt), changing your cell provider (continuously reviewing vendor relationships and purchasing policy), and taking care of your automobile (preventative maintenance on equipment to increase its life and reduce repair costs). In addition, include exercises on real life issues from the company that affect profitability and equity value, such as waste, inventory control, and safety.
2.
Identify the Key Performance Indicators (KPIs) that drive the financial, operational, and shareholder value of your business. The reason most employees feel disconnected from financial performance is that the only mechanisms to keep score are financial statements (income statements, cash flows, and balance sheets). There are three problems with this. First, financial statements
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are only about dollars and cents. They don’t focus on the operational KPIs (the people stuff) that make the dollars and cents happen, so they don’t effectively connect tasks to financial performance. Second, most people can’t read financials, so they’re of no use to them relative to their role in the company. Finally, they’re historical documents, not leading indicators of financial performance. How to Do It: Survey your employees and management team to find out where they believe opportunities for improvement lie. Do a financial trend analysis. Compare your performance to other companies in your industry. Utilizing this data, have a facilitator lead a team of key personnel through the process of KPI identification. By focusing first on those, then pointing to the financial result of driving them, you’ll effectively link tasks to financial results over time.
3.
Create an organization of high visibility and high accountability by utilizing your KPIs to monitor performance and keep score. How to Do It: Once you have identified your KPIs, create scoreboards, and assign the responsibility of monitoring those measures to the individuals who have the greatest impact on them. Ask those individuals (and/ or teams) to forecast results against budget, rather than simply looking at historical data. If there’s some unease about sharing a high level of financial information throughout the company, then lower level scoreboards (departmental) may be focused primarily or entirely on operational measures.
4.
Regularly involve employees in creating and participating in Rapid Improvement Plans (or games if you prefer). RIP’s are mechanisms to focus employees on areas of opportunity that will 1) improve financial performance, 2) create a learning environment, 3) drive equity value and fund incentive plans, and 4) make work fun. How to Do It: Select a KPI that has significant opportunity for improvement and build your Rapid Improvement Plan. For example, a San Diego company had a problem with obsolete inventory. It created a
game called “Ice Age” to eliminate it. The game board was a small sand box in the office which had several toy dinosaurs in it, each representing $10,000 of obsolete inventory. The objective of the game was to make them go extinct. They insured that results were quantifiable and that a specific time frame was determined, then identified the people who needed to participate and the activities that needed to take place. Finally, they selected a prize for winning. Nothing expensive, because they understood that every time they win a game, they’re funding their incentive plan and driving stock value.
5.
Make sure your incentive plan is clearly tied to your organization’s KPIs. Most incentive plans don’t work because they are overly complex. They are tied to financial performance yet we don’t teach participants about finance. Consequently there’s no connection between activity and bonus, and the plan becomes nothing more than an entitlement. Creating a good plan isn’t difficult. The trick is teaching people that it must pay for itself, how they can drive it, and that it’s their plan, not yours. How to Do It: First, identify your KPIs. Second, select one or two to drive the plans that 1) everyone (or nearly everyone) can impact, such as profit before tax, and 2) people can understand (probably not EVA or EBITDA). If you have more than one, you may want to select something from your income statement (to drive profit) and something from your balance sheet (to drive cash flow). Third, identify a threshold that will insure the company’s financial needs are met before the plan is funded. Finally, identify the other design elements such as how often the plan is paid out, who participates and when, if there is a cap or not, etc. Finally, provide the financial acumen, training, and tools (Rapid Improvement Plans) your employees need to fund their plan. s Brad Hams is founder and president of Ownership Thinking, LLC, and author of Ownership Thinking: How to End Entitlement and Create a Culture of Accountability, Purpose, and Profit. Contact him at brad@ownershipthinking.com.
Classifieds Opportunities Available Partner Level Auditor. StarkSchenkein, LLP is committed to the success of our clients. We dedicate ourselves to providing sound and innovative financial advice and solutions based on a comprehensive knowledge of our clients’ financial goals and business operations. We are looking for a highly motivated and qualified partner-level Auditor to join our firm. Stark Schenkein is a business advisory and CPA firm with a significant audit and SEC practice. We offer an attractive compensation package with benefits that are competitive and commensurate with experience. Responsibilities include: direction and oversight of engagements, technical advisor to firm and clients, supervising and training of audit managers and staff, first partner and concurring reviews, engaging new clients, providing exceptional client communication and service. Professional requirements: CPA with 10+ years of experience, experience managing and leading audits, strong audit and SEC technical knowledge/experience, ability to manage and motivate direct reports and other team members, leadership style that sustains a cohesive team, passion for bringing in new clients, skilled at client and staff communications, ability to think big picture and attend to the details. Our mission is to add value and provide peace of mind for our clients. Please send resumes to: vbramble@starkcpas.com. CPA w/3-5 yrs experience in tax and accounting. Flexible hours. Full-time during busy season and part-time rest of the year. Please send letter of interest and resume to phaigh@klacpa.com.
Office Space Great office space in a Class A Executive Suite. Location near I-25/Orchard Rd., Greenwood Village. Office suites from 115 to 285sf. Rates starting at $500 per month. Front desk receptionist, conference room use, free parking, mail delivery included. Ask about 1 month free rent. Contact 303-7796700, dishan@corporateofficeconcepts.com. Practices for Sale, Purchase, or Merger 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 303-7713100, fax 303-477-6010, or fmehring@ selectbg.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.
NewsAccount and Web Classified Advertising Rates $55 for the first 40 words. $2 per word thereafter. $10 discount for placing both a NewsAccount and web classified ad. E-mail Krista Flynt at kflynt@ cocpa.org for a price quote and to place a classified ad.
In Memoriam We regret the loss of the following COCPA members. We extend our sympathy to their families and friends. Kevin B. Farrell Member since 1970 Greenwood Village, Colo. Robert McCoy Member since 1955 Wheat Ridge, Colo. Carol L. Stella Member since 1988 Colorado Springs, Colo.
Movers & Shakers Wagner Barnes, P.C., Certified Public Accountants and Business Consultants, Lakewood, announced that Gayle L. Griggs, CPA, became a shareholder effective Dec. 1, 2012. Also, the company changed its name to Wagner Barnes & Griggs, P.C. RubinBrown LLP added Darin James, CPA, as a partner in the firm’s Tax Consulting Group. StarkSchenkein, LLP added David W. Haller, CPA, as an auditor.
Clark & Srsich LLC, Littleton, joined the Golden office of Eide Bailly LLP effective Dec. 1, 2012. Gaylen R. Hansen, CPA, became the 2012-2013 chair of the National Association of State Boards of Accountancy (NASBA) Board of Directors. Mark J. Smith, president of M.J. Smith and Associates, was recently named a Five Star Wealth Manager for 2012.
Jan/Feb 2013 • www.cocpa.org •
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Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076
Periodicals Postage
Are You Tax Prepared 1/8
Tax Year in Review and 2012 Planning
Mark Soukup brings you the latest tax updates and what you need to know this season. Member: $365 Nonmember: $521 (COCPA)
Effective and Efficient Senior-Level Review of Individual Tax Returns
1/9
Both new and seasoned reviewers will discover additional and advanced procedures to more thoroughly review various tax returns. Member: $355 Nonmember: $507 (COCPA)
Preparing Individual Tax Returns for New Staff and Para-Professionals
1/10
Train new staff accountants, data processing employees, paraprofessionals, and bookkeepers to prepare a complicated federal individual income tax return. Member: $365 Nonmember: $507 (COCPA)
The Complete Guide to Preparing Limited Liability Company, Partnership, and S Corp Federal Income Tax Returns
1/11
Focus on an identical trial-balanceto-completed-tax-return case study, prepared on both Form 1120S and Form 1065, allowing you to explore the similarities and differences of these popular entity structures. Member: $365 Nonmember: $507 (COCPA)
1/16
Federal Tax Update
Don Farmer returns to Denver with plenty of advanced-level tax information you wonâ&#x20AC;&#x2122;t want to miss. Member: $410 Nonmember: $586 (Inverness Hotel)
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