COCPA NewsAccount - 2013 - July/August Issue

NewsAccount Colorado Society of CPAs

July/August 2013

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Contents Features

} 6 CDOR: A View from the Inside

CDOR Executive Director Barbara Brohl talks about her first two years in the role and what’s on the horizon.

9

Financial

Framework for SMEs

The framework gives small- and medium-sized businesses a new option for preparing financial statements when GAAP isn't required.

10 The Art of the Tough Decision

Combining households isn't easy, especially when it's with your mom. But it can be done well.

12 Leadership Council 2013

Attendees gave the Board of Directors and the 2020 Committee plenty to work on in the coming year.

14 CPAs Taxed by Identity Theft

The Wightmans knew something was afoot even before they tried to file their 2012 tax return.

Departments

}

2 Chair Column 25 Movers & Shakers 25 Classifieds

July/August 2013 • www.cocpa.org •

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Chair Column

NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 59, No. 2 July | August 2013 Board of Directors Marc C. Hendrikson, Chair Sheila M. Balzer, Vice Chair Lora L. Finley, Treasurer Scott E. Bush, Immediate Past Chair Mary E. Medley, Secretary Directors Carrie J. Bartow, Christine Benero, Peter J. Derschang, Sharon S. Lassar, Mark J. Smith, Debbi C. Warden Editorial Board Jack Allgood, James M. Boak, Kay R. Dragon, Jennifer Emerson, Georgia Z. Phillips, Patrick A. Lytle, Mark Paller, Barbara J. Tedesko, R. Stephen Van Meter, Michael D. West Mary E. Medley, President/CEO Elizabeth M. Julin, Deputy Director Krista Flynt, Editor/Publisher Natalie G. Rooney, Contributing Writer NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 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 online at www.cocpa.org.

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• NewsAccount • July/August 2013

Full Speed Ahead

A

fter a frenzied start to my year as Chair, I'm happy to report that by the time you read this, I will be in the midst of the COCPA’s annual Chair Tour, traveling the state and meeting many of you in person. It's the continuation of a rapid-fire start to the new membership year.

From late April into early June, I attended over 20 COCPA meetings and events which included reaching out to committees, interacting with staff, supporting member events, planning for Leadership Council, and attending the May State Board of Accountancy meeting, among other activities. I also met individually with the Society’s senior staff to get to know them better, ran my first board meeting, attended my first AICPA Council meeting as COCPA Chair, and participated in an AICPA-sponsored town hall webinar on this year’s tax season.

I’m not telling you all of this to impress you, nor do I wish to scare you if you might want to be a part of the COCPA leadership someday. Rather, I want you to know how important it is to me to reach out, meet with COCPA members, and hear what you have to say. Remember, it’s all about you and your COCPA membership.

In this vein, my interactions so far have been very rewarding. I was privileged to hand out the 2013 Women to Watch

awards on May 23rd, when the COCPA honored women leaders in the profession.

While enjoying an outing at the annual Rockies game and networking event for members, I had the opportunity to talk with two accounting students from Adams State College in Alamosa. They were almost beside themselves to interact with members of their future profession.

At the Fort Collins beer tasting event, I met a younger member who asked if I could assist her in setting up a “speed mentoring” program where more experienced CPAs could be paired up with younger professionals for brief periods of interaction. This is exactly the type of idea generation I am hoping to garner over the next year as I meet and greet you all across Colorado. I want to know how the COCPA can support you as lifelong members.

Please keep the ideas coming!

At my first Chair Tour stop in Fort Collins, I asked the group: What makes your COCPA membership valuable? I want to know what the Society is doing well, but more importantly, I also want to know how we may better serve you. If you can't attend an upcoming Chair Tour event, please reach out to me directly by emailing me your feedback at hendriks@ citywidebanks.com. I want to hear from you.

AICPA Spring Council In mid-May, I had the wonderful opportunity to join the group of Colorado CPAs who attended the AICPA’s Spring Council meeting in Washington, D.C. In a word, the meeting was amazing. Connecting with the profession at a national level is a real privilege and enables me to keep you up to date on national issues facing the profession.

As always, the Institute scheduled an excellent group of speakers for us, including members of Congress, noteworthy CPAs from around the world, and even Face the Nation’s own Bob Schieffer. We also heard from the head of the GAO, who provided a unique perspective on GASB and other governmental reporting issues. Council meetings provide time to make professional connections at the highest level, hear updates on the most important issues that face the profession, and take part in discussions with peers from around the country. I greatly enjoyed a roundtable for Business and Industry members, where we shared what’s on our minds.

Spring Council sessions include Capitol Hill visits when we meet in D.C. This year was no exception. More than 400 CPAs from every state and territory converged on the halls of Congress, charged with taking legislative and other professional issues to our respective Senators and House members.

Another treat this year included hearing from two of the 10 CPAs in Congress. Their message was that CPAs are uniquely qualified to understand the issues facing the federal government and to help their lawmakers understand the fiscal issues with which they are currently grappling. Our elected officials in Congress are addressing issues important to the CPA profession regardless of their individual political affiliation. It’s comforting to hear that the hallmark characteristics of our profession have a place in policymaking.

Here is an overview of the topics we covered at Council and during our Hill visits: Tax Reform: It's finally gathering real momentum in D.C. What shape it will take or when it will occur is anyone’s guess, but politicians on both sides indicate that they are committed to the conversation. Simplification of the tax code, even though it potential-

ly means significant change for practitioners, is desperately needed. The time is right, and it’s the right thing to do. COCPA Past Chair Scott Bush commented to several lawmakers and staff that there will be plenty of business for CPAs, even with a simpler tax code.

Also on the tax front, we discussed legislation that would realign and simplify tax due dates, which would allow for a smoother reporting cycle for individuals and business entities, particularly flow-throughs.

FRF for SMEs: The AICPA’s Financial Reporting Framework for Small- and Medium-Sized Entities, something near and dear to me as a banker, was formally launched on June 10th. FRF-SME was specifically designed for America's small business community to deliver financial statements that provide useful, relevant information in a simplified, consistent, cost-effective way to end users like me, the community banker. The Institute’s next goal on this front is to reach out to the banking and regulatory communities to build consensus on its use as a GAAP alternative under the OCBOA umbrella.

The Financial Accounting Foundation’s Private Company Council is also studying

the matter and proposing potential solutions via GAAP departure options, specifically in the areas of FIN46, accounting for goodwill, and fair value accounting. It is important to note that knowing of the PCC’s efforts, the AICPA moved ahead with FRF-SME to provide a real-world solution to small business reporting needs. It's also worth noting that the need has been talked about since 1973, so the launch of FRF-SME is no small feat.

For information, including a free copy of the framework, a webcast, toolkits, and more, go to www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/ PCFR/Pages/Financial-Reporting-Framework.aspx.

Mobile Workforce: Legislation has been introduced that would allow companies (including CPA firms) which send employees across state lines for 30 days or less annually to incur no payroll tax liability in those other jurisdictions. We support this effort and received favorable reaction to it, particularly since the overall tax revenue impact is virtually neutral nationwide.

Chair Continued on 4

From left: Ron Seigneur, Marc Hendrikson, Marvin Strait, Scott Bush, Sheila Balzer, and Sidny Zink prepare to meet with Sen. Michael Bennet's staff in Washington D.C. July/August 2013 • www.cocpa.org •

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Chair Continued from 3 Dodd-Frank and the SEC: Dodd-Frank currently carries a provision that potentially requires CPAs and other professionals to register with the SEC if they are providing services to municipalities, even if those services are customary, usual, and in the ordinary course of business. We explained to Colorado delegation members and their staffs that this creates an additional and unnecessary layer of regulatory compliance for CPAs — an unintended consequence of Dodd-Frank. The consensus was that a fix is in the works.

Other Updates: Council discussed how to grow the new CGMA credential beyond the current U.S. 38,000 holders. And the AICPA is exploring the use of U.S. specialty designations internationally.

Council adopted a resolution to clarify and expand the definition of the attest function to better protect the profession and the public, so look for more information on that front. Lastly, AICPA rolled out an initiative to greatly expand diversity and inclusion in the profession, allowing for better and increased minority representation.

What’s at Stake: CPAs delivered to every member of Congress a copy of the updated video featuring Colorado’s own Greg Anton, a COCPA Past Chair and AICPA’s Immediate Past Chair. It clearly and concisely addresses the country’s delicate fiscal situation from a balance sheet perspective. Using the GAO’s own financial statements in lieu of the budget as a platform to deliver the message of fiscal responsibility to the Hill, I'm pleased to report that it was well received by Congressional members and staff from both sides of the aisle.

Busy Season for a Banker In between COCPA and AICPA activities and as I gear up for my busy season analyzing all those financial statements and tax returns CPAs prepare, my older sons and I took our first camping trip of the year over Memorial Day weekend. We literally headed to the hills — the Black Hills of

South Dakota, a place I fondly remember visiting with my late father who grew up there. In June, the whole family took in some culture in Santa Fe. We plan to hit a few of our favorite locations here in Colorado over the rest of the summer, in between visits with you.

See You on the Road As I travel across Colorado in the coming months, I greatly look forward to getting to know more of you. Remember to bring me your questions and thoughts. The COCPA is a member-driven organization, so make your voice heard. s Email Marc at hendriks@ciywidebanks.com.

2013 Chair Tour All Chair Tour events include one hour of recommended CPE credit.

7/11

Boulder/Longmont • Spice of Life Event Center

8/6

Steamboat Springs • Rex’s American Grill

8/7

Aspen • The Gant

8/7

Grand Junction • DoubleTree Hotel

8/8

Montrose • The Camp Robber

8/8

Durango • Kennebec Café

8/9

Alamosa • Inn of The Rio Grande

TBD

Additional dates and locations are in the works.

Call the COCPA at 303-773-2877 or 800-523-9082 for details.

Resource Available For Disaster Recovery Do you know someone affected by the fires already plaguing Colorado this summer? Check out the resource developed by the AICPA in collaboration with the National Endowment for Financial Education and the American Red Cross, Disaster Recovery: A Guide to Financial Issues. The free, three-part guide addresses the following topics.

Download the Guide at www.redcross.org./find-help/disaster-recovery/ recovering-financially.

Part I defines the steps to take immediately following a disaster, such as restoring household stability, managing an injury or disability, and financial decisions after death.

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Part II identifies steps to take in the weeks and months after the disaster to help those affected to settle into a more normal routine by establishing a steady flow of income, handling expenses and debt, and working through potential lawsuits or other settlements.

Part III outlines what steps to take in planning for the future in such areas as assessing financial needs, retraining for employment, and estate planning.

2013 WOMEN TO WATCH

On May 23, 2013, Sandy L. Shoemaker, Rhonda E. Willert, Jami L. Coulter, Peggy E. Jennings, Kelly A. Rodriguez, and Lynne A. LehrBuck were honored at the Women to Watch awards presentation. They were joined by Barbara S. Seacrest and Melissa K. Hooley, center, co-chairs of the COCPA Women to Watch Awards Committee. Also honored was Georgie Z. Phillips who was unable to attend.

2013 Heroes & Heroines Sought Nominations Deadline Aug. 31, 2013

Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We want to celebrate these contributions and to do that, we need your help. If you know a CPA who should be considered for the 2013 Everyday Heroes and Heroines Awards, to be given at the CPAs Make A Difference celebration on Nov. 7, 2013, please submit a nomination.

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

Nominees should demonstrate significant service in one or more areas:

INVOLVEMENT: Describe the nominee’s level(s) of involvement; length of involvement; and time devoted to nonprofit organization(s) and community activities.

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

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

For more information or to submit your nomination electronically, contact Terry Cervi at tcervi@cocpa.org, or call her at 303-741-8610 or 800-523-9082, ext. 110.

July/August 2013 • www.cocpa.org •

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Regulatory News

CDOR: A View from the Inside

BY NATALIE ROONEY

A visit with Barbara Brohl, Executive Director of the Colorado Department of Revenue

I

n July 2011, Gov. John Hickenlooper appointed Barbara Brohl as the executive director of the Colorado Department of Revenue (CDOR). On the eve of her second anniversary with the CDOR, Brohl reflected on her first two years and spoke with us about what’s on the horizon.

What has changed at CDOR during your tenure?

What we do touches everyone in the state, so we’ve been working to create a more customer-centric environment. Coming from the private sector, it’s clear that even when the customer isn’t right, the customer is still number one. Without our customers, we wouldn’t be here. Whether it’s the Division of Motor Vehicles where our customers obtain a driver’s license or an identification card, the Lottery Division which is responsible for overseeing sales of lottery tickets, or businesses which are paying sales tax — our customers are the reason we exist. In everything we do we need to be mindful of how our customers are affected.

We’re concentrating on implementing new, robust, and repeatable processes. As we develop and document those processes, we are able to make sure that we set the right expectations and that everyone is on the same page. For example, we have developed a project management process which has helped us with our relationship with the Office of Information Technology and has been instrumental in our ability to begin to deliver needed functionality. With project plans in place, we are able to focus on resolving issues and problems.

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Another area of focus is implementing a culture of continuous improvement. Our employees have undergone Lean training, which is based on a set of principles designed to maximize the value obtained by the customer. It’s like Total Quality Management, which you would normally see in a factory environment, but can be used in organizations that provide services to customers. The Department has fully embraced using Lean to look at how we can provide better customer services.

We’ve been able to use the Lean concept and continuous improvement processes to directly impact our efforts with the Colorado Society of CPAs and taxpayers. Feedback told us that our notices were incomprehensible. We took a hard look at them and put major process and notice language improvements in place. We’ve received positive feedback from the COCPA and practitioners.

They’ve said this has made a huge difference.

How is the CDOR working to better serve its constituents, specifically tax preparers, CPAs, and Colorado’s business community?

I met (COCPA CEO) Mary Medley before I began working at the CDOR. After talking with her, it was clear to me that the relationship between the COCPA and the CDOR was broken. I told Mary I wanted us

to work together on these issues and to find a way to establish trust. I’m a problem solver by nature, and I knew we needed to identify the problems, find the root causes to those problems, and then develop mechanisms to fix them. Harry S. Truman said, “It is amazing what you can accomplish if you do not care who gets the credit.” And it is so true.

To that end, the CDOR and the COCPA formed a task force that began meeting quarterly. At first, it was really difficult. But then, as we worked through the issues and developed our relationship, the trust started to come back. The COCPA is our customer in some areas and our partner in other areas.

We both have the same goal — we want to make sure taxpayers are fairly treated. That boils down to setting the right expectations so people understand what they need to do, advising them what the CDOR will do, and then doing it. We’re getting better at that.

Are we one hundred percent? No, but we’ve come a long way. One of Deputy Director of Taxation Paul Northrup’s main goals is to address customer issues and resolve them.

He works with the CPA or the taxpayer and, if something is an issue, he resolves it.

What are your top projects for the coming year? What challenges are on the horizon?

We’ve spent the last five years implementing our new tax system and have continued to improve our processes and technology needs as the opportunities have arisen. This year, we’ll be focusing on the Division of Motor Vehicles, taking what we’ve learned through our efforts with the COCPA and applying that knowledge to other areas. Literally, we took a page from our COCPA/ CDOR book and put together a working group to address issues our constituents are having with the issuance of drivers licenses and state IDs. It’s working quite well already.

Because the problems at the DMV are more systemic, we are meeting monthly.

The issues and impediments we’re facing? We know we provide good service; I receive both complaints and kudos. But some of our customers have had less than positive experiences with us in the past, and I want to turn that around.

We’re also working on the implementation of Amendment 64, which legalized marijuana for recreational use in the state last November and was signed into law by Governor Hickenlooper on May 28, 2013. It is another example of how when people come together to get something done, it can work well. We created a task force and submitted reports to the Governor, the General Assembly, and the Attorney General. Since then we have gone through the legislative process. Now we’re going through the rulemaking process, which will include licensing requirements, public safety requirements, taxation requirements, and how businesses can claim certain exemptions. This is because since marijuana is still illegal at the federal level, those businesses cannot avail themselves of the exemptions that other businesses regularly use. And, assuming Colorado voters approve them in the November election, we’ll also be implementing an excise tax and an additional sales tax.

We’re definitely in a fishbowl with Amendment 64 and how we implement it. The whole country is watching to see what Colorado will do. In addition, we’ve been working closely with the state of Washington, which also legalized the sale of recreational marijuana last fall.

What are you looking forward to in the coming year?

Other than the Lottery, our Department doesn’t generally make people say, “Hooray! I get to work with the CDOR!” We understand we’re not the department everyone is happy to hear from. So, we have to work at making those contacts as pleasant as we can. As a result, there are three key things I plan to work on: continuing to improve our relationship with the COCPA with regard to taxation and taxpayers; moving forward with our plans for the DMV by implementing resolutions from our Lean process; and getting Amendment 64 implemented in a manner that creates a robust and thoughtful regulatory and enforcement program.

To help us with these plans, we’ve hired a new director of communications to enable us to do more outreach with taxpayers, practitioners, businesses we regulate, and individuals who receive services from us. We want to be more proactive in distributing information to people and helping them understand it. We’re starting to get the message out, with the goal of keeping everyone as informed as possible.

Finally, we really value our relationship with the COCPA. Working together to address issues and solve problems has helped improve our relationship with each other and the services we both provide to our end users, the taxpayer. s

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July/August 2013 • www.cocpa.org •

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Financial Reporting

Financial Accounting Standards Board Update Certain Disclosures for Nonpublic Employee Benefit Plans Deferred On June 12, 2013, the Financial Accounting Standards Board (FASB) voted to defer indefinitely certain disclosures about investments held by a nonpublic employee benefit plan in its plan sponsor’s own nonpublic equity securities. The FASB will issue an Accounting Standards Update, Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04, in summer 2013.

The indefinite deferral applies to disclosures of certain quantitative information about the significant unobservable inputs used in Level 3 fair value measurement for investments held by certain employee benefit plans. The deferral applies specifically to employee benefit plans — other than those plans that are subject to Securities and Exchange Commission filing requirements — that hold investments in their plan sponsors’ own nonpublic entity equity securities, including equity securities of their nonpublic affiliated entities. “(The) decision is responsive to private company stakeholders, addressing their concern that certain disclosure requirements would potentially provide proprietary information when their employee benefit plans’ financial statements are posted on the plan regulator’s website,” said FASB Chairman Leslie F. Seidman.

The deferral will become effective upon issuance of the final Update for all financial statements that have not yet been issued. For details, go to the FASB website at www.fasb.org.

Three Private Company Council Proposals Endorsed On June 10, 2013, the FASB voted

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to endorse three alternatives within U.S. Generally Accepted Accounting Principles (GAAP) proposed by the Private Company Council (PCC) to address concerns raised about the relevance and complexity of certain aspects of GAAP for private company stakeholders. The three proposals will be issued as Exposure Drafts for public comment in summer 2013. They focus on accounting for intangible assets acquired in business combinations, goodwill, and certain types of interest rate swaps.

FASB Chairman Seidman commented that the “decision by the FASB to endorse these three PCC proposals represents significant progress in our joint efforts to address concerns about the complexity and relevance of certain standards for private companies that prepare GAAP-based financial statements. We anticipate issuing the proposals for public comment later this month and encourage our stakeholders to review them and let us know whether they believe they will improve financial reporting for private companies.”

The first proposal — derived from PCC Issue No. 13-01A, Accounting for Identifiable Intangible Assets in a Business Combination — would not require private companies to separately recognize certain intangible assets acquired in a business combination. The proposal enables private companies that elect the alternative within U.S. GAAP to recognize only those intangible assets arising from non-cancelable contractual terms or those arising from other legal rights. Otherwise, an intangible asset would not be recognized separately from goodwill even if it is separable.

The second proposal — derived from PCC Issue No. 13-01B, Accounting for Goodwill Subsequent to a Business Combination — would allow for amortization of goodwill and a simplified goodwill impairment model. This would enable private companies that elect the alternative within

U.S. GAAP to amortize goodwill over the useful life of the primary asset acquired in a business combination, not to exceed 10 years. Goodwill would be tested for impairment only when a triggering event occurs that would more likely than not reduce the fair value of a company below its carrying amount. Moreover, goodwill would be tested for impairment at the company-wide level as compared to the current requirement to test at the reporting unit level.

The third proposal — derived from PCC Issue No. 13-03, Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps — would allow private companies the option to use two simpler approaches to accounting for certain types of interest rate swaps that are entered into by a private company for the purposes of economically converting its variable-rate borrowing to a fixed-rate borrowing. Under both approaches, the periodic income statement charge for interest would be similar to the amount that would result if the private company were to have entered into fixed-rate borrowing instead of variable-rate borrowing. The two approaches would apply to all private companies, except for financial institutions.

For the first two proposals, the FASB directed the staff to conduct additional research during the comment period to assess the applicability of these proposals to public companies and not-for-profit organizations.

For PCC Issue No. 13-03, the Board directed the staff to conduct outreach through its normal channels, including advisory groups and other meetings in which the FASB participates.

The PCC’s July 16, 2013, meeting agenda includes plans to discuss PCC Issue No. 13-02, Applying Variable Interest Entity Guidance to Common Control Leasing Arrangements.

For more information, go to the PCC website at www.fasb.org. s

Financial Reporting Framework Introduced to Help Small Businesses On June 10, 2013, the American Institute of CPAs (AICPA) launched the Financial Reporting Framework for Small- and Medium-Sized Entities to help the small business community with its financial reporting needs. The framework is a new accounting option for preparing streamlined, relevant financial statements for privately held, owner-managed businesses that are not required to use U.S. Generally Accepted Accounting Principles (GAAP).

"The creation of the Private Company Council by the Financial Accounting Foundation and… issuance of the FRF for SMEs ™ gives private business owners two more viable options,” said Barry C. Melancon, CPA, CGMA, AICPA President and CEO. “(It) has been developed to provide consistent and simpler financial statements for small- and medium-sized entities where GAAP is not required. Where GAAP is required, the Private Company Council is working to expand GAAP financial reporting options for private business. Some private businesses, typically smaller or those with less complex business models, will see the AICPA’s framework as an effective alternative to other existing financial reporting options. Larger, more sophisticated private businesses may, in the future, choose to use GAAP for private companies, and still others with unique user needs, regulation, or intentions to go public might use GAAP for public companies.”

Simplified Reporting Small businesses will use the FRF for SMEs™ to prepare financial statements that clearly and concisely report what a business owns, what it owes, and its cash flow. Lenders, insurers, and other financial statement users will find this new accounting framework helps them clearly understand key

measures of a business and its creditworthiness, including: • Business profitability • Cash available • Assets to cover expenses • Concise disclosures

Standardized Approach The framework’s streamlined requirements are based on traditional and proven accounting methods to ensure consistent application. Specifically, the FRF for SMEs™: • Uses historical cost — steering away from complicated fair value measurements

• Offers a degree of optionality — businesses can tailor the presentation of statements to their users • Includes targeted requirements

disclosure

• Reduces book-to-tax differences • Produces reliable financial statements that can be compiled, reviewed, or audited Melancon said, “The FRF for SMEs™ is not GAAP, and it is not intended to become GAAP. It is another comprehensive basis of accounting with a framework around it for enhanced financial reporting.”

For details, go to www.aicpa.org/INTERESTAREAS/FRC/ACCOUNTINGFINANCIALREPORTING/PCFR/Pages/ Financial-Reporting-Framework.aspx. s

July/August 2013 • www.cocpa.org •

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The Art of the Tough Decision COCPA member Kay Dragon and her family recently went through the process of determining the best living situation for her aging mother. Here are some of the lessons they learned through it all.

BY KAY R. DRAGON, CPA

H

ow should a family react and accommodate as a parent grows older? This parent is not necessarily sick or disabled — not ready to stop living a full life — but the body is slowing down and options are dwindling. How can siblings reach a consensus when they don't agree on what is needed, what said parent most desires, or what resources are available? What can a family do to deal with all of this — when even the parent cannot think of a way to change circumstances for the better and in preparation for the future?

Serendipity brought me and my three brothers together in Chicago in May 2012, where we renewed our now-redundant discussion on what could be done to help out our mother. We all agreed the present tenuous situation shouldn't continue much longer. Someone thought to give her a questionnaire, a tool to communicate to all of us, stop the debate, and provide needed information. (See the Key Questions on page 11.)

All our areas of debate would be listed as questions that she would rank with a range of values. Resources and debt would be listed. Deliberately few open-ended questions were included as our intent was to gather succinct and quantitative answers so we could proceed. Our debating was over.

My job was to organize our thoughts into the questionnaire and send it to our mom. Then, at our next family gathering at a wedding in June 2012, we would review the available options with her. I was somewhat nervous to present this idea, but she was thrilled. I was so relieved with her

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From left: Kay Dragon, her mom Audrey Greve, and husband Guy Dragon on their new front porch.

response; I didn’t ask why. I emailed the completed list of questions, even braving the scary topic, "Would she be OK with releasing her finances?"

Stepping out of character, she followed our request to avoid narratives and completed the questionnaire. I was delighted to finally have answers to some long awaited and long speculated-upon questions.

Her lifestyle values were prioritized; resources and possible living locations were listed. Paris was at the top. My amusement lasted a couple of days until I realized she had listed Colorado as an option. We’d mentioned the idea, but she’d never responded positively or given any indication she’d like to live here.

My mother is a somewhat belated product of the 60s. She taught at a university, was a New York City cabbie, a social worker, a waitress, and most recently an artist.

She has lived in Paris, Guatemala, and a variety of other places in her time. She’s not about to change.

My husband and I struggled to find the right living situation for my mother to enjoy Colorado. She needed an art studio, but transportation to and from would be a challenge. If we found an apartment or condo, she’d miss out on spontaneous baby-sitting

and joyful time spent with grandkids. As well, she’d be alone if sick — missing such simple acts of kindness as having someone bring her a bowl of soup or a glass of water. In the end, we determined that our best solution was to buy a house together in a "New Urbanism" (i.e. walkable) neighborhood with room for a studio and, gasp, an elevator. Mom would live with me and my husband.

With only one week before our planned June visit, we visited our targeted neighborhood and found nothing that suited our needs within the existing housing stock. On a lark, we visited the builder who was completing the last remaining lots. We begged the salesman to hold the perfect lot until our family meeting, telling him more than he ever wanted to know about our family dynamics, I'm sure.

At the June meeting of siblings, we reviewed the questionnaire results with aim of creating different "plans" from which our mother could choose. During the meeting, we each seemed to trade in our "family roles" for those reflecting our various professions and the skills we had gained from them. In my job, I’m often required to evaluate resources, review differing opinions,

and arrive at solutions that address a joint mission focus. I figured doing the same thing within our family couldn't be any more challenging than with a governing board. Using my professional lens to review our family decision helped to remove my emotions and bias. It was even somewhat amusing at times.

With our combined expertise, we created four broad plans based in three different cities for her to consider.

It was a short morning meeting with our mom, and she selected Colorado. We shifted quickly into action mode and assigned a couple of teams to work on first necessary tasks. Two were in charge of finances, and two were in charge of settling her current affairs. Once home, I summarized our decision and some basic parameters, mostly financial, and emailed them to all the family. I’ve worked with boards long enough to know views of the joint decision can easily shift after euphoria of the decision fades. Once all agreed, we signed for a new house and put our home of 19 years on the market.

One short, and long, year later we’re all in our new home, and the old house belongs to someone else. The elevator is a delight, and the studio is real. Though there are curtains in only one room and the garage is filled with full boxes, we are now engaged in the new phase of this adventure.

A sampling from our experience: • We found the questionnaire of immense value. I cannot imagine creating this solution without it.

• Look for and create a plan that is exciting for all involved.

• Our Mom had to open up her private finances to us, and we shared more about our own finances with each other than ever before.

• Don’t try to be a martyr. My husband and I have some limitations on what we could do personally, and we needed to be up front with my brothers and our kids regarding the help we needed.

• When things become difficult, remember you love each other. And things will become difficult.

• Each family member has different boundaries and limits, and those need to be respected. Although the impact was primarily to my Mom, my husband, and

me, it also involved my three brothers, our three kids, their spouses, and our grandkids. Each person looks at these changes from a different point of view, and each perspective is valid to that person.

• Plan as much as possible, and be flexible when plans don’t work. Always keep focus on the goal.

• We needed to respect each other. Once teams were set to do certain tasks, we needed to support each other and not meddle.

• If at all possible, do this before there is a crisis. Part of our goal was to create an environment that would help reduce the likelihood of an emergency.

• I appreciate my one brother who was brave and caring enough to ask me probing questions regarding the impact of this decision on our marriage.

• It was wise to write the summary memo because there were differing memories.

• All emotions and responses should be appreciated and considered normal. We were all surprised at what was upsetting or not.

• Start downsizing sooner rather than later. Combining two households and lifestyles is not easy.

• Remember, it’s an adventure.

• Celebrate. s Kay R. Dragon, CPA, is Director of Finance for the National Institute for Trial Advocacy, Westminster.

Key Questions Determining the Facts 1) What is the current (unimproved) value of your property and other assets (over $5,000)? Please list by asset.

2) List your total debt — mortgages, loans, credit cards, etc.

3) List current monthly non-rent income — net social security, anything else.

4) List your monthly non-housing or food expenses — medical insurance, rent, auto insurance, etc.

Establishing Priorities 5) Brainstorm a list of one- or twoword things that are most important in your life right now, not talking about money or finances.

6) Provide value rankings for the following, and add as needed: (1 is most important and 5 is least important) a) Ability to travel at will b) Ability to participate in hobbies c) Room for guests d) A yard or sidewalk e) Freedom from outdoor home chores f) Owning a vehicle g) Prefer to use mass transit 7) Are you willing to do a property fire sale and risk paying taxes to achieve other goals? Yes or no?

8) Are you open to allowing someone to handle your major finances?

If yes, who?

9) Ideal size of personal housing (range — in square feet)?

10) What kind of dwelling would you prefer to live in? House? Condo?

11) List cities you can see yourself living in, in order of preference.

12) Are you open to the idea of renting and not owning your home?

Above: Construction of the new elevator

July/August 2013 • www.cocpa.org •

11

Leadership Council I

f you’d been there, you’d have heard about the 10,000 Hours Rule; L>C2, the Bounce, the Five C’s, Escape Velocity, Flash Foresight, and the Wave. You’d know the #1 reason organizations fail, and you’d know that the COCPA is dedicated to understanding, planning for, and successfully leading in this Age of Transformation. It all surfaced at the 2013 Leadership Council conference, June 12.

Facilitated by Maryland Association of CPAs CEO Tom Hood, the group explored the many issues and opportunities before the CPA profession. He and COCPA CEO Mary E. Medley also led the group in a strategic conversation using SOAR, a facilitation technique based on the concept of appreciative inquiry, and designed to

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• NewsAccount • July/August 2013

capture an organization’s Strengths, Opportunities, Aspirations, and Results. In addition, the entire day’s discussions were captured graphically by Alece Birnbach of Alchemy: The Art of Transforming Business — one of which is shown here.

If you weren’t there, you don’t have to look at the bottom of the page or turn NewsAccount upside down to read the fine print to know what the attendees now know: • It takes 10,000 hours to achieve mastery of something.

• As Tom Hood puts it, “In a period of rapid change and increasing complexity, the winners are going to be the people who can LEARN faster than the rate of CHANGE and faster than the COMPETITION” — L>C2.

• The Bounce is what you experience when you’ve achieved technical proficiency (mastery), and you combine it with leadership and strategy.

• The #1 reason organizations fail, according to futurist Andrew Zolli: “They miss the weak signals of disruptive change.”

• The Five C’s are change, complexity, compliance, competition, and convergence — all of which are happening simultaneously and rapidly shifting.

• The Wave? It’s a reminder: You can’t stop the Wave (of change, disruption, uncertainty, complexity, etc.), but you can learn to surf.

• Escape velocity is the speed needed to “break free” from the gravitational attraction of a massive body without further propulsion. Think of the rocket power needed to launch a spaceship or the energy needed to break free of the past.

Watch for surfing lessons coming soon to the COCPA, as the COCPA 2020 Committee and Board of Directors digest all the input and feedback from the 2013 Leadership Council gathering and develop plans for helping you to succeed into the future. s

• Flash Foresight: How to See the Invisible and Do the Impossible, by Daniel Burrus, is a summer reading opportunity.

To receive an electronic copy of the three illustrations from the day, contact Krista Flynt at kflynt@cocpa.org.

July/August 2013 • www.cocpa.org •

13

CPAs Taxed by Identity Theft

BY NATALIE ROONEY

S

tories about tax-related identity theft have been in the news for years, but the IRS is seeing an alarming upward trend in the filing of fraudulent tax returns. If you think you and your clients are immune, think again. Several COCPA members share their stories — yes, even CPAs are victims — as a cautionary tale.

How It Works A thief steals an individual's name, Social Security number, or other information, files a fraudulent tax return, and collects a refund from the IRS. When the actual taxpayer files to claim a refund, the return is rejected.

Discouragingly, little can be done to bring identity thieves to justice because current federal law prevents the IRS from turning over the fraudulent returns that state and local prosecutors need to build a case.

In addition, the sheer volume of fraud occurring makes it nearly impossible for any agency — local, state, or federal — to have enough staff to handle these cases. On average, it takes more than six months for an identity theft case to be resolved. The delay poses particularly difficult challenges for lower-income taxpayers who rely on these refunds to help pay for basic necessities. A recent report by NBC News examined this issue and found that some taxpayers are being victimized year after year — even after their accounts have been flagged by the IRS.

By the Numbers Last year alone, there were 1.8 million incidents of identity theft and fraudulent refunds creating a $5 billion problem, according to TITGA, the U.S. Treasury Inspector General for Tax Administration. TIGTA estimates that if tax identity theft isn’t addressed, it could cost the IRS $21 billion in fraudulent refunds over the next five years.

Since the start of 2013, the IRS says it has worked with victims to resolve and close more than 200,000 cases of identity theft. That's in addition to an expanded Identity Protection personal identification number (PIN) pilot program to protect victims in previous tax-

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• NewsAccount • July/August 2013

related identity theft cases. The IRS reports it issued more than 770,000 identity protection PINs to victims at the start of the 2013 tax filing season.

While fraudulent refunds are being sent, the IRS is catching some before they’re disbursed. In fiscal 2012, the agency says it prevented issuance of more than $20 billion in fraudulent returns — up from $14 billion the year before.

CPAs Share their Stories Fran Coet, CPA “Not a good situation,” is how Coet describes the ever-growing problem of tax-related ID theft after helping a handful of clients with the issue. “Yes, it’s happening here in Colorado,” she says. “For the past four years, we’ve been talking about it at practitioner liaison meetings which include CPAs, attorneys, and IRS employees. Even one of the IRS employees had their identity stolen. It’s pervasive, and we’ve seen the cases grow. It’s beyond scary.”

In one example, when Coet attempted to transmit a client’s return electronically, it was rejected as a duplicate file. Having dealt with this type of situation before, Coet knew im-

mediately that the problem likely was identity theft. “I called the client and told her I suspected she was a victim,” Coet says.

In this particular case, the client’s bank account had been hacked and her information used to obtain a fraudulent refund, but Coet says every ID theft situation she’s dealt with for clients has been different.

Three and a half years ago, when another client’s identity was stolen, he was instructed by the IRS to go to the local police department and file a report. Coet says the IRS assigned her client a PIN in order to process his return for 2011 and 2012.

“We’re trying to educate our clients,” Coet says. She is amazed that people still send their Social Security numbers to her without password protection. Her firm uses portals so clients can securely e-mail documents. “We’re responsible for educating clients and making them aware, ensuring we have the appropriate firewalls in place, and also educating our staff to be sensitive about what they send via e-mail. It just takes one mistake, and you can’t undo it.”

Coet says there is a pilot program in seven states that sends ID theft victims to the local police department to have fingerprints taken, talk to someone in person, and deliver documents to prove their identity. The bottom line

is that the IRS doesn’t have enough personnel to handle the issue, she adds. But the agency is trying to work with the Department of Justice and law enforcement.

“I don’t know what the answer is to the problem,” Coet says. “The situation has inspired my clients to file early, but not everyone can do that. For those who have been victims, we’re sure to file first and file as completely and accurately as we can with the disclaimer that we will amend if necessary.”

Diane Wightman, CPA and Lowell Wightman Diane and Lowell already knew something was afoot even before they tried to file their joint 2012 tax return.

“I was notified by the finance company for Home Depot that someone had attempted to open an account in my name,” Lowell says. “The company stopped the application process, but we knew the person attempting to open the account already had my Social Security number, address, and name.” His credit information was put on a seven-year watch by all of the reporting agencies, a service provided by CitiCorp.

Fast forward several months. Diane was filing their joint 2012 tax return and received a notice that a return had already been filed under Lowell’s taxpayer ID number. “TurboTax walked me through some options to refile,” Diane recalls. “But the same thing happened again.” Having just seen a 60 Minutes report on taxpayer ID theft, a red flag immediately went up for Diane. “I figured I’d better call the IRS. As a CPA, I wasn’t the average citizen.”

Diane says she got a helpful agent on the phone, but although the agent could see the filings under Lowell’s name in the IRS system, he couldn’t give her any information, verify any numbers, or talk about the attempted false refund. Why? Diane and Lowell could have been the thieves themselves.

“They’re really looking at you as the possible assailant,” Lowell says. “They won’t give you any information over the phone. You have to prove who you are.” Lowell was required to file a local police report, provide copies of his passport, Social Security card, and driver’s license, and prove that he was living where his tax return said he was living.

While the Wightmans have followed all the procedures, including filing a paper re-

turn, they question some of the IRS processes. “I mailed our paper return on April 11,” Diane says. “The return receipt from the IRS was stamped April 9. It makes you wonder.”

Mixed up date stamps aside, she says the IRS was “fabulous” to work with on the phone.

“Now they have a script for when this happens. They have a list of agencies you need to contact and their phone numbers. They were very thorough.”

Is there anything Diane wishes she’d done differently? “I wish I’d filed in January,” she says. “If I’d put my request in first, the identity thief would have been stopped. The good news is that we weren’t relying on our refund to pay our bills. Other people aren’t so lucky.”

To date, the Wightmans haven’t received their refund.

Lynn Otto Otto, a former CPA, was notified by her CPA that someone had already filed a tax return under her Social Security number for tax year 2011. “He’d been in practice for 20 years but had never encountered this problem,” she says. That same day, Otto’s CPA emailed her the IRS’s toll-free fraud phone number.

When she called, she was told she needed to file an affidavit, provide a picture ID, and submit color copies of her driver’s license and passport.

After contacting both the Colorado Attorney General and the Denver Police Department, Otto found that law enforcement would not take a report. The good news: her homeowner’s insurance contains a provision covering ID theft, and she began working with her carrier’s resolution center. Ultimately, her insurance company didn’t have to pay a claim, but Otto said her carrier put her in touch with a contact who followed her case, gave her advice along the way, and put a 90-day security alert on her credit file. “I reviewed my credit reports at that time, and there was nothing wrong,” she says.

Despite her goal of filing earlier for the 2012 tax year, Otto had to wait for several investment documents. “The IRS suggests filing earlier, but I couldn’t do it,” she says. “I do have a security code that my CPA uses when he files on my behalf.”

The security code, which the IRS now gives to all victims of taxpayer ID theft, is distributed after a paper return is filed and an affidavit and copies of picture IDs are received.

Otto asked her CPA, and everyone else she could think of, what she could have done differently to prevent the ID theft. The only answer: File early. “This is brand new to most CPAs,” she says.

During her many conversations with the IRS, Otto found that getting information was a frustrating, lengthy process, but it wasn’t without its humorous moments. “An agent asked me, ‘Did you ever have another profession because it says here you’re surgeon. But you must not be a very good one because you only made fifty thousand dollars.’”

Otto doesn’t know if the IRS made a payment on the false return, but she did finally receive her full refund after 10 months. “The IRS had always assured me that the theft wouldn’t impact my refund,” she says. She

Theft

Continued on 16

By the Numbers • Approximately 450,000 cases in 2013, so far

• 78% increase over FY12 and rising — reflects growth in cases and difficulty in resolution • 1 million suspicious returns suspended this filing season • 3,000 full-time and 35,000 part-time employees involved • IRS spent $328 million on identity theft efforts in FY12 Source: AICPA Tax Section

July/August 2013 • www.cocpa.org •

15

Theft

Continued from 15

added that she never got anywhere trying to call the IRS. After 10 months, she was contacted by an agent from the Taxpayer Advocate Service who moved the process forward. Her file was closed in March 2013.

If It Happens to You If you receive a notice from the IRS, respond immediately. If you believe someone may have used your Social Security number fraudulently, notify the IRS immediately by responding to the name and number printed on the notice or letter. You will need to fill out the IRS Identity Theft Affidavit, Form 14039, available online at www.irs.gov/pub/irs-pdf/f14039.pdf.

If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost/stolen purse or wallet, questionable credit card activity, or credit report, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.

What the IRS is Doing How can you minimize the chance that you or your clients will become a victim?

• Don’t carry your Social Security card or any document(s) with your Social Security number on it.

• Don’t give a business your Social Security number just because you're asked. Give it only when required.

• Protect your financial information.

• Check your credit report every 12 months.

• Secure personal information in your home.

• Protect your personal computers by using firewalls and anti-spam/virus software. Update security patches regularly. Change passwords for Internet accounts often.

• Don’t give personal information over the phone, through the mail, or on the Internet unless you have initiated the contact, or you are sure you know who you are dealing with. s

For fiscal year 2012, the IRS tripled the number of criminal investigations vs.

2011 of tax-related ID theft cases, which resulted in nearly 500 indictments. Still, hundreds of thousands of people have been victimized. To help, the agency is: Expanding its unique "PIN" program. In documented cases of ID theft, the IRS now assigns victims a unique personal identification number which must be included on the return.

Speeding up victim case resolution.

Resolving ID theft cases takes an average of six months. The IRS has assigned more employees to sort through the details and streamline the process.

Lending an ear. The IRS now has a dedicated section on its website devoted to the problem at www.irs.gov/uac/ Taxpayer-Guide-to-Identity-Theft.

In addition, the agency has implemented a special phone number for victims. The IRS Identity Protection Specialized Unit is available, toll free, at 1-800-908-4490.

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• NewsAccount • July/August 2013

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www.eksh.com July/August 2013 • www.cocpa.org •

17

COCPA Young Professionals Gear Up for Another Great Year

T

he Young Professionals Committee offers the perfect opportunity if you're a younger COCPA member looking to take part in professional networking and social activities.

While the group is known for its annual kickball tournament, new efforts are planned for the coming year, says Young Professionals Committee Chair Jesse A. Bean, CPA. The committee’s hallmark events have included the annual kickball tournament, a golf tournament, and a casino night. Recently, the group introduced Executive Happy Hour events, which Jesse says evolved from functions the COCPA Member Connections Committee had been hosting. “We wanted to change and improve the happy hours by having the Young Professionals and Member Connections committees come together, changing the way they were branded and organized,” he says.

The first Executive Happy Hour took place in October 2012, and four have been held since then. Jesse says each has provided a successful networking opportunity for members as attendance has grown to 50-60 attendees. More happy hour events are on the schedule for this year, with a goal of five each year.

The formerly prominent casino night has been phased out. Instead, the Young Professionals will be coordinating outings in conjunction with the popular Film on the Rocks series at Red Rocks Amphitheater in Morrison. Jesse says the group plans to meet and travel to the venue, have a tailgate and networking barbeque, and enjoy the movie.

“The first few years after graduation can be pivotal in the career of a young CPA. As a part of the COCPA, we have the platform and membership base to offer valuable networking to the next generation of CPAs as they begin their careers,” Jesse notes. He says he personally enjoys the peer networking and the opportunity to meet more experienced professionals.

While the focus going forward is providing fun social and networking opportunities for COCPA’s young professional contingent, the group is also continuing its plans for philanthropic efforts.

“There has been some legacy thought around the idea that the young professionals have a goal of giving back to our community,” Jesse says. “We want to take that more seriously and have a larger impact going forward. Philanthropy is important for CPAs as a professional community, and we as young professionals want to be leaders in the area.” He says he’d also like to add more volunteer days and ultimately see volunteering on a level equal to networking.

One of Jesse’s goals is to find out what “meaningful networking” means to young professionals and develop events around those answers. “We don’t want to have events just to have events,” he says.

“We want to know why people want to network, what their professional developmental goals are, and how we can meet those needs.

It’s all about providing value. We’re looking to better define that this year.”

If you are interested in getting involved contact Jesse Bean at jesse.bean@morganstanley.com. s

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• NewsAccount • July/August 2013

2013 Young Professionals Charity Golf Tournament — in support of Food for Thought Above Right: Tourney winners Steve Corder, Mark Felser, Jeff Brantz, and Luke Tomczak Lower Right: COCPA Chair Marc Hendrikson, Past Chair Ron Seigneur, Gus Gustafson, and Immediate Past Chair Scott Bush.

www.cgma.org

July/August 2013 • www.cocpa.org •

19

CGMA

Managing Innovation in the Workplace

I

n the late 1950s, the average tenure of a company in the S&P 500® was 61 years. Today, it is down to only 18 years.

In just the last decade, approximately half of the companies in the Index have been replaced by newcomers such as Google and Facebook. Organizations able to foster the creativity needed for innovation, and finance and efficiently implement it across the organization, reap numerous rewards in growth, profitability, and marketplace distinction.

In the midst of this uncertain marketplace, a new role for management accountants — manager of innovation — has not only emerged but has also grown in demand. What uniquely positions management accountants as catalysts for the innovation needed for long-term success? Their ability to evaluate the risks associated with specific opportunities and their multi-faceted role across the organization when helping to transform creative ideas into commercially successful innovations.

New Resource for Management Accountants To obtain further insights into how management accountants drive innovation, the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) developed a program to explore how successful organizations encourage innovation without compromising risk management. They were also interested in learning more about how management accountants can promote a culture of creativity while providing for sustainable success, reliable data analysis, and strategic decision making.

The AICPA and CIMA held roundtable meetings and conferences in the Americas, Asia, and Europe where financial leaders from The Coca-Cola Company, Royal Dutch Shell, BT Group, and a wide range of other organizations shared their experiences and opinions. The result is a Char-

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• NewsAccount • July/August 2013

tered Global Management Accountant (CGMA) report titled, Managing Innovation: Harnessing the Power of Finance.

The report combines top insights from roundtable and conference participants with AICPA and CIMA research findings and explains how management accountants are playing a vital role in ensuring that the most innovative ideas are funded and properly executed. It also features real-life examples and anecdotes from a diverse range of senior financial executives and acclaimed thought leaders about how the finance function, working with innovation strategies, can have a positive, measurable, bottom-line impact on the organization. The report concludes with a detailed checklist that management accountants can apply to their own organizations' innovation plans.

Four Steps to Unleashing Innovation Building a culture that comfortably balances creative thought and flexibility as well as it does discipline and control can be a challenge for even the best-managed organizations. The following are four areas where management accountants can help strike this balance and put an organization on the path to an innovation-powered future.

• Create a New Mindset. Support from the top is necessary for the success of the most important initiatives, and shaping an innovation-centric mindset is no exception.

More than half the respondents to a recent McKinsey & Company survey cited C-suite support as a driver of innovation success.

With demonstrated backing from the leadership team, innovation can more successfully flow within the organization — and spread among supporters and advocates at all levels.

• Focus on Flexibility. When evaluating and measuring innovation, financial metrics need to be more flexible than the traditional metrics applied to business operations. Fi-

nancial processes and metrics should align with different innovation lifecycle stages — more relaxed criteria that gradually tighten as ideas approach implementation — with ideas challenged and refined as necessary at each stage. There also needs to be an understanding that there will likely be detours, and in some cases failures, in the pursuit of innovation.

• Pave a Path to Profits. The long-term rewards of innovation require that projects conceivably generate some degree of profit—innovation is not an end in itself.

With expert advice on costs, financing, and resource allocation, among other areas, a more successful progression from idea to implementation can occur. What follows is finance being valued as a contributor to, and not a constraint on, innovation.

• Take a Balanced View of Risk. Although minimizing risk plays an indispensable role in an organization’s daily activities, it can present a challenge when applied to innovation, which includes risk as an inherent part of its process. However, innovative organizations recognize that the risk function helps ensure that they have balanced strategies and actions needed for growth, which repositions risk as a value driver.

Organizations are then better able to make business decisions that allow innovation to flourish.

Innovation is not easy to unleash and support. It can be disruptive to operations, and uncertain in its outcomes, and requires new thinking and a strong appetite for risk.

Nonetheless, it has become a lifeforce for today’s organizations. Management accountants can guide organizations through the many stages of the innovation process and help them avoid the risks that can undermine long-term success, including what is perhaps the greatest risk of all — the failure to innovate.

CGMA designation holders can download a copy of Managing Innovation: Harnessing the Power of Finance at www.

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Thunder Pass in State Forest State Park

Rifle Falls State Park

THE BIG BUSINESS OF C Have you hugged a hunter lately? How about an angler? You should, according to the Colorado Parks and Wildlife Division, because people who hunt and fish bring a lot of money to the Centennial State.

Outdoor recreation in Colorado spurs $13.2 billion in spending, according to a survey by the Outdoor Industry Association (OIA) quantifying the economic impact of outdoor play in all 50 states.

Nationally, Americans spend $646 billion a year on outdoor recreation, creating the need for 6.1 million jobs and generating almost $80 billion in local, regional, state, and federal tax revenue.

In Colorado, outdoor recreation spending supports 124,600 workers who earn $4.2 billion every year and generates $994 million in state and local taxes. The state ranks 17th in the most recent OIA survey and fourth among 11 Western states, behind California, Washington, and Nevada.

Abundant Choices If you want to enjoy the outdoors, Colorado is the place to do it, says Randy Hampton, statewide public information officer for Colorado Parks and Wildlife.

Colorado is home to 42 state parks (with two more in development), which

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• NewsAccount • July/August 2013

are wholly managed by Colorado Parks and Wildlife, four national parks, and four national monuments.

Hampton says Pueblo State Park, Cherry Creek State Park, and Chatfield State

Outdoor recreation in Colorado spurs $13.2 billion in spending Park lead the state in park visitors — each receiving more than 1.5 million visits annually. “These parks are close to metro areas and have large bodies of water for boating, swimming, fishing, and other activities,” Hampton says. “The Arkansas Headwaters Recreation Area sees about 750,000 visitors annually and is one of the top river rafting destinations in the country, plus it’s a spectacular fishing destination.”

Hampton reports that state park visitation puts $1.7 billion into the Colorado economy each year, especially in the nearby communities. Fishing contributes about $1.3 billion. Wildlife watching adds another $1.2 billion. Hunting generates a

whopping $510 billion for the Colorado economy.

“The ski industry touts that it has the biggest recreational financial impact, but parks and wildlife related recreation is spread across the state and is just as meaningful to rural Colorado as the ski industry is to wealthy towns like Vail and Aspen,” Hampton says.

Most Coloradans have no idea that fees from hunters and anglers pay for the protection of wildlife and the open spaces they call home, says Hampton. The Wildlife Council of Colorado hired an advertising agency to help educate the general public about the benefits hunting and fishing bring to Colorado. The Council’s “Hug a Hunter/Angler” ads target non-hunters and anglers with one simple message: Once you understand everything hunters and anglers do for our state, you may want to give them a hug. This message is used for TV, radio, and online banner ads. The campaign is part of a five-year effort to help the Wildlife Council expand its message from traditional to digital, social, and emerging media. The ad series is funded through a fee added to each hunting and fishing license sold in the state.

“When it comes to funding for wildlife management, there are no general fund tax revenues,” Hampton says. “We man-

Eldorado Canyon State Park

COLORADO RECREATION

BY NATALIE ROONEY

age more than 900 species with funds that come from sportsmen. Today's world has a lot of people who don't hunt and fish, and that's okay, but we need to make sure that people aren't opposed to hunting and fishing because that leads to future problems with managing wildlife resources.”

Trendlines After several years of decline in hunting and fishing, attributed largely to aging baby boomers becoming less active outdoors, a national survey by the U.S. Fish and Wildlife Service saw the number of anglers jump 11% between 2006 and 2011, to 33.1 million, while hunter numbers rose 9%, to 13.7 million. It was the first time in 20 years the number of hunters and anglers, nationally, has not slipped.

Participation in other outdoor activities, such as camping and hiking, is trending upward, especially in Colorado where people often choose to live here because of the outdoor opportunities, Hampton says.

Big Business for Small Communities In 2008, a consulting firm examined the impact of hunting and fishing recreation

on Colorado’s local economies. Hampton notes that counties like Moffat, Rio Blanco, Grand, and Montrose are extremely dependent on the wildlife recreation economy. But surprisingly, even more metro counties benefit from the hunting and fishing opportunities in their counties. In 2007, Larimer County, which is home to fishing destinations like the Cache La Poudre River and Horsetooth Reservoir, saw approximately $121 million in fishingrelated spending, according to Parks and Wildlife statistics.

Who Does What Home to both state and national parks, Hampton says Colorado’s two park systems are operated separately. However, with so much focus on Colorado’s high profile winter sports, avalanche control is a big issue, and the responsibility is spread among national, state, and local agencies. Hampton says Colorado Parks and Wildlife does some avalanche control work in State Forest State Park, which is a popular destination for snowmobilers.

Overall though, avalanche control in Colorado is generally handled by the Colorado Department of Transportation when roads are threatened. Ski areas and

the National Forest Service handle slope safety work. The state Avalanche Information Center is a sister agency to Colorado Parks and Wildlife and reports through the Department of Natural Resources. That agency's function is to monitor avalanche conditions and potential in the state, track data, and provide alerts to the public when avalanche potential is high.

Inevitably, where there is outdoor recreation, there are also rescue operations for outdoor enthusiasts who encounter problems in Colorado’s backcountry, on waterways, and even on well-populated hiking trails. Hampton says rescue operations in the state are generally provided by counties through sheriff's and volunteer groups.

Counties are able to apply for reimbursement of funds for a statewide search and rescue when someone has a hunting or fishing license.

About 90% of the money in the search and rescue fund comes from a 25¢ surcharge on every hunting and fishing license sold. Having a hunting or fishing license doesn't guarantee your rescue, and it doesn't preclude a person from being billed by an ambulance service or helicopter company for your rescue, Hampton cautions, but rather, it allows a county to seek reimbursement for expenses. s July/August 2013 • www.cocpa.org •

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The Affordable Care Act: A Timeline Effective Aug. 1, 2013

Effective Oct. 1, 2013

• Religious organizations that were given an extra year to implement the contraceptive mandate are no longer exempt.

• Open enrollment begins. Individuals and small businesses (generally those with fewer than 100 employees) looking to buy health insurance can enroll in subsidized plans offered through state-based marketplaces, with coverage beginning in Jan. 2014.

Customers can sign up until March 31, 2014. After that, open enrollment periods will be Oct. 15 to Dec. 7 each year. Those who miss this window will be unable to enroll until the next enrollment period. Colorado's health insurance marketplace — Connect for Health Colorado — is available online at www.connectforhealthco.com/.

• Coloradans who are enrolled in GettingUSCovered, the state's pre-existing condition program, will transition to the federally administered, pre-existing condition program and their coverage will continue through the end of 2013. They can enroll in health plans through Connect for Health Colorado for coverage effective in 2014.

Effective Jan. 1, 2014 • Insurers are prohibited from discriminating against or charging higher rates for any individual based on gender or pre-existing medical conditions.

• Insurers are prohibited from establishing annual spending caps.

• Individuals who are not covered by an acceptable insurance policy will be charged an annual penalty of $95, or up to 1% of income over the filing minimum, whichever is greater. This will rise to a minimum of $695 ($2,085 for families), or 2.5% of income over the filing minimum, by 2016.

Exemptions are permitted for those for whom the least expensive policy would exceed 8% of their income.

• In participating states (including Colorado), Medicaid eligibility is expanded to include all individuals with income up to 133% of the poverty line (approximately $15,856

for an individual and $32,499 for a family of four).

• Insurers will be prohibited from dropping or limiting coverage because an individual chooses to participate in a clinical trial. Applies to all clinical trials that treat cancer or other lifethreatening diseases.

• Tax credits to make it easier for the middle class to afford insurance will become available for people with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage. (In 2010, 400% of the poverty line comes out to about $43,000 for an individual or $88,000 for a family of four.) The tax credit is advanceable.

• The small business tax credit is increased to up to 50% of the employer's contribution to provide health insurance for employees for qualified small businesses, and up to 35% for small non-profits. Qualifying

small businesses have fewer than 25 full-time employees and pay average annual wages below $50,000.

• State-based health insurance marketplaces are established and open for individuals and small businesses to shop for plans that meet benefit and cost standards.

• A $2,000 per employee penalty will be imposed on employers with more than 50 employees who do not offer health insurance to their fulltime workers. Full-time is defined as employees who average 30 hours per week.

• For employer-sponsored plans, a $2,000 maximum annual deductible is established for any plan covering a single individual or a $4,000 maximum annual deductible for any other plan.

• The qualifying medical expenses deduction for Schedule A tax filings increases from 7.5% to 10% of adjusted gross income.

Effective Jan. 1, 2016

Effective Jan. 1, 2017

Effective Jan. 1, 2018

• States are permitted to form health care choice compacts.

Insurers are allowed to sell policies in any state participating in the compact.

• A state may apply to the Secretary of Health & Human Services for a "waiver for state innovation" provided that the state passes legislation implementing an alternative health care plan meeting certain criteria. In 2011, Vermont and Montana announced intentions to apply for the waiver in order to set up single-payer healthcare systems.

• All existing health insurance plans must cover approved preventive care and checkups without copayment.

• The threshold for itemizing medical expenses increases from 7.5% of income to 10% for seniors.

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• States may allow large employers and multi-employer health plans to purchase coverage in the marketplace.

• Two federally regulated 'multi-state plan' (MSP) insurers — one non-profit and the other forbidden from providing coverage for abortion services — will now be available to all states.

• NewsAccount • July/August 2013

• A 40% excise tax on high cost "Cadillac" insurance plans is introduced. The tax applies to insurance premiums in excess of $27,500 (family) and $10,200 (individual).

Classifieds Miscellaneous Seeking a CPA in the Fort Collins area to share office space, expenses, and collaboration. If interested, call Mike at 972-658-2091.

Opportunities Available

Seeking candidates for Senior Tax Staff position

Partner Level CPA. Roger M. Schaefer, CPA, is dedicated to the success of our clients. We are looking for a highly motivated and qualified partner level CPA to join the firm. Candidate will be a licensed CPA with 5+ years of experience in accounting, tax, and management services.

Candidate must have good people skills. If interested, please send your resume and salary requirements to PO Box 1125, Fort Morgan, CO 80701, or email to roger@rogermschaefercpa.com.

Continue your career with a market-leader firm in Western Colorado. Dalby, Wendland & Co., P.C. (DWC) is currently seeking a Senior Tax Accountant to join our Glenwood Springs office. This person must be a licensed CPA or a current CPA candidate with 2-5 years experience in public accounting, have solid technical skills in income taxation, and a strong general accounting background.

Practices for Sale, Purchase, or Merger

DWC’s strong team culture and quality-focused work environment provides challenging opportunities and growth throughout your career. We are consistently ranked by Accounting Today as one of the top firms in the Mountain States Region. We believe in trust, respect, and responsibility to foster collaboration and excellence. Our firm provides a good work/life balance, competitive compensation, a comprehensive benefits package, and opportunities for advancement.

CPA firms or partners. We represent a number of quality CPA firms who are looking to merge, acquire, or sell their practices to other CPA firms or partners with business. Locations are in the Denver area.This is an opportunity to ensure your future as well as help your clients by expanding your services to them. Why settle when you can select? Established in 1939. For further information, please contact: Phil Rubeck at D&R Associates of Colo., 720-446-7020 or email: dandrassociatesofco@aol.com.

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

Movers & Shakers Eide Bailly LLP named Brian Callahan, CPA, partner-incharge of its Colorado practice, which includes offices in Boulder, Denver, Frisco, Golden, Grand Junction, and Vail. Callahan succeeds James Lyons, CPA, who has been named the firm's new Strategic Growth Officer. Also, the firm welcomed Danny Bresnahan, CPA, to the partnership.

Matthew Beerbower, CPA, joined RubinBrown, Denver, as a partner; and Martin Gold, CPA, joined the firm as a tax manager.

Mark J. Smith, CPA, of M.J. Smith and Associates, Greenwood Village, was named to the inaugural list of the top 400 financial advisors in the U.S. by the Financial Times.

To apply, email your resume to HR@dalbycpa.com.

For more information, visit our careers section at www.DalbyCPA.com.

In Memoriam

We regret the loss of the following COCPA members.

We extend our sympathy to their families and friends.

Mary E. Barbour Member since 2008 Denver, Colo.

Michael A. Bent Member since 1979 Lakewood, Colo.

A. Ronald Kucic Member since 1982 Denver, Colo.

Brittany M. Dreher, of Dalby Wendland & Co., PC, Glenwood Springs, is shown with the Glenwood Springs Elementary 4th graders she taught through Junior Achievement. The students participated in “JA Our Region,” which introduced them to entrepreneurship and how entrepreneurs use resources to produce goods and services in a community. They solved problems by weighing risks and rewards.

July/August 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

LOADED: July CPE Covers All the Bases Compilations and Reviews: Engagement Performance and Annual Update July 9 (COCPA) Explore the in's and out's of SSARS No. 19, Compilation and Review Engagements, the most significant change to the compilation and review standards since their inception over 30 years ago. • $355 /$507 Yellow Book Credit Not-for-Profit Industry Update and Major Accounting and Disclosure Issues July 15 (COCPA or webcast) This 2013 update of the issues at the forefront of industry will assist you in assessing risk. You’ll be able to prepare complete and accurate financial disclosures, enhance transparency in financial reporting, and much more. • $355/$507 NEW Yellow Book Step-by-Step Guide to Compliance Auditing — A Gateway to Efficiency July 16 (COCPA) Following a step-by-step format, this course addresses the changes resulting from issuance of the Yellow Book and A-133 Audit Guide related to sampling and evaluating deviations noted in testing as well as covers new practice aids and other pertinent changes. • $355/$507 2-Hour Course The A.R.T. of Work: Accountability, Respect, and Trust July 17 (COCPA) Improve your understanding of human nature as it relates to how individuals typically handle making mistakes, and explore and identify elements of respect- and trust-building in the workplace.

• $75/$107

2-Hour Course Creating an Ethical Work Environment July 17 (COCPA) Receive a practical how-to for understanding the components of an ethical work environment and concrete actions for creating and sustaining an ethical work environment. • $75/$107 Excel Financial Projection Model for Business Plans, Acquisitions, New Product Launches, Annual Budgets, and Cash Flow Forecasts July 18 (COCPA) Gain the tools and training to effectively create up to five years of financial projections. Attendees receive both a completed fictional example and a clean copy of the Excel financial projection model.

• $355/$507 Yellow Book Credit Not-for-Profits: Start to Finish — How to Run and Finish the Race July 22 (COCPA) Delve into the critical elements that make up not-for-profit accounting and reporting, so you’ll be better prepared to resolve nonprofit accounting issues when they arise.

• $345/$493

TO REGISTER Visit: www.cocpa.org • Call: 303-773-2877 • Toll Free: 800-523-9082 • Denotes Member and Nonmember Course Fees