COCPA NewsAccount - 2013 - May/June Issue

NewsAccount Colorado Society of CPAs

May/June 2013

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Contents Features

} 2 State Board Update

The Colorado State Board of Accountancy adopted new rules on March 20, 2013, the majority of which become effective, July 1, 2013.

6

2013

Women to Watch Named

On May 23, 2013, seven outstanding accounting professionals will be honored at the Women to Watch awards presentation.

12 Banking on Membership

Meet the 2013-2014 Chair of the Board, Marc C. Hendrikson, CPA, whose goal is to connect with COCPA members and create alliances.

17 Prepare Your Business for Disaster

With wildfire season coming, now is the time to plan ahead so your business is ready for anything.

20 Quenching Colorado's Thirst

Natalie Rooney takes an in-depth look at Colorado's water supply, its sources, its risks, and its future.

Departments

Mark Solomon, Sidny Zink, and Marc Hendrikson at the U.S. Capitol in 2012.

}

18 CPAs As...

23 Movers & Shakers 25 Classifieds May/June 2013 • www.cocpa.org •

1

State Board Update

NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 59, No. 1 May | June 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. Lasser, Mark J. Smith, 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, Tawyna Ramirez, Ronald O. Reed, Scott K. Sprinkle, Barbara J. Tedesko, Mark A. Torrey, Gregory A. Truitt, R. Stephen Van Meter, Michael D. West Mary E. Medley, President/CEO Elizabeth M. Julin, Deputy Director Krista Flynt, Editor/Publisher Natalie G. Rooney, Contributing Writer NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 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.

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

2

• NewsAccount • May/June 2013

New Rules to Take Effect on July 1, 2013 After almost a year of discussion, drafts, revisions, public input, and meetings, the Colorado State Board of Accountancy adopted new rules on March 20, 2013. All of them become effective, July 1, 2013, except for the Continuing Professional Education rules (CPE), Chapter 7, which become effective, Jan. 1, 2014, in conjunction with the start of the next CPE reporting period, and the Peer Review requirements, Chapter 8, which are effective with CPA Firm renewal in 2014 and Certificate Holder renewal in 2015. To view and download a copy of the new rules, go to: www.dora.colorado.gov/dpo and select Certified Public Accountants.

Amendments had been proposed for all twelve chapters — some substantive and some minor. Substantive changes were made to Chapter 2, Education Requirements for Examination and Certification, and the rules governing the 150-hour requirement to address issues raised by educators and others. In addition, Chapter 7 now includes a comprehensive description of what must be covered for a Colorado Rules and Regulations (CR&R) course to be accepted for CPE credit. New definitions and references to certain standards were added, and Chapter 9, Rules of Professional Conduct, was amended to include what constitutes a conflict of interest and when it doesn’t apply, along with a new section on safeguarding client records and property.

The rule-making process, which began in spring 2012, included comprehensive review of the current rules by State Board members and staff, written comments from the public, two rule-making hearings where COCPA staff and others provided public testimony, and extensive revision of the draft rules as originally proposed.

You’re encouraged to review the new rules carefully as many changes were made which affect Colorado CPA Certificate

Holders, registered CPA Firms, students, CPA Candidates, educators, and providers of CPE content.

Among the rules the State Board adopted are the following. This is not an allinclusive list. The purpose of this update is to highlight substantive changes. See the rules for complete details. Note that any word that is capitalized (other than because it is the first word in a sentence) indicates that it is a defined word or term in the new rules and can be found in Chapter 1.

Chapter 1 – Board Organization and Administration: Lists the acronyms used throughout the rules separately from the abbreviations and definitions. Updates the dates to the most current version of standards and publications. Adds new definitions including " Responsible Party" and “Network,” an association of two or more entities that includes at least one CPA Firm and specifies what it does. Incorporates by reference the AICPA Code of Professional Conduct, the AICPA Professional Standards, the NASBA CPE Fields of Study, and the Joint AICPA/NASBA Statement on Standards for Continuing Professional Education (CPE) Programs, along with numerous other publications and standards.

Chapter 2 – Education Requirements for Examination and Certification: Establishes four quarter hours as equivalent to three semester hours of college credit for conversion purposes. Emphasizes that on and after July 1, 2015, the State Board cannot issue a CPA Certificate to a Candidate who has not satisfied the 150-hour requirement, even if the application were pending prior to July 1, 2015. Continues the ability of a Candidate to sit for the Uniform CPA Examination after completing a Baccalaureate Degree and a minimum 120 hours under certain conditions and expands the ability for students attending a college or university which does not grant a separate

Baccalaureate Degree but confers instead a Masters or higher degree upon graduation from a minimum 150-hour program to sit for the exam before graduation.

For those completing the requirements for examination and certification on and after July 1, 2015, when the 150-hour requirement becomes effective, establishes the hours and subject matter of non-duplicative accounting and business administration coursework (undergraduate and/ or graduate level) required for each. Sets a grade of C or higher to be counted. Excludes introductory accounting courses such as principles of accounting, accounting and tax software, payroll accounting, and other basic coursework from the required hours. Requires a three-semester hour or more auditing course concentrating on U.S. GAAS. Requires at least three semester hours in business, technical, or accounting communications as part of the total 150-hour requirement.

The rules for those taking the exam and seeking certification on or before June 30, 2015 also have been updated. Rule 2.7, Education in Lieu of Experience, expires on June 30, 2015.

Regarding where a student may take coursework, Rule 2.4 C. (for examination eligibility, on or after July 1, 2015), Rule 2.5 D. (for certification, on or after July 1, 2015), and Rule 2.6 C. (for examination and certification before June 30, 2015) all state: The courses required…must be taken at an Accredited Baccalaureate Granting College or: (1) such a college must accept the courses by including them in its official transcript or verify to the Board that it would accept the courses for credit towards graduation;

(2) the courses must be acceptable for transfer to such a college 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; or (3) the Board may accept the findings of an academic credential evaluation provided pursuant to Rule 2.2.

Chapter 3 – Examination General Requirements and Prohibited Conduct: Expands rules on what constitutes “candidate conduct during examination” including what constitutes a violation of test administration for those taking the Uniform CPA Examination.

Chapter 4 – Experience Requirements for Certification: Requires work hours to be obtained over a period of not less than one year and not more than three years and within five years immediately preceding the date the application is received. The Verifier of work hours must be a CPA who is, “for the entire period verified,” actively licensed in any jurisdiction. Also, “The Verifier must attest to having direct and continuous knowledge of the work done by the Applicant and to having performed contemporaneous periodic review and evaluation of the Applicant’s work.”

Chapter 5 – Requirements for Certification: Requires the Applicant for licensure to pass the AICPA Ethics Examination with a score of 90% or better within two years immediately preceding the application receipt date. Requires an Applicant for reciprocity to hold an Active Certificate or license issued by another jurisdiction; an Applicant who holds a Certificate or license based on passage of the Uniform CPA Examination but who is not licensed to practice is not eligible

Summary of Rules 2.4 and 2.5 Minimum Education Requirements for Examination and Certification Courses Above the Introductory Level Degree For Examination Baccalaureate Degree or 120 semester hours (see Rule 2.4) For Licensure* Baccalaureate *On and After Degree + 30 July 1, 2015 Semester Hours

Total Hours

Accounting 21 Semester Hours

Business 12 Semester Hours

Accounting 27 Semester Hours

Business 21 Semester Hours

27 Semester Hours

18 Semester Hours

33 Semester Hours

27 Semester Hours

for reciprocity. Outlines how foreign applicants may become licensed, depending on whether a Mutual Recognition Agreement exists.

Chapter 6 – Certificate Requirements, Discipline, Maintenance, and Status Changes: Requires Inactive Status Certificate Holders wishing to return to Active Status to complete not only 80 hours of CPE prior to applying for the status change but also any CPE the Applicant should have taken during the time the certificate was active.

Cautions that the Inactive Certificate Holder may be disciplined for failure to timely complete such previously required CPE. Adds requirements for CPAs seeking Retired Status, as well.

Requires Certificate Holders to notify the Board of any name, assumed or trade name, address, telephone, or email change within 30 days of the change. Enables a CPA who operates as a sole proprietor to provide an assumed or trade name to the Board and that name would be added to the CPA credential record.

Includes language that the Division of Professions and Occupations provides for a 60-day grace period from the expiration date of a Certificate within which to renew that Certificate. Stipulates that a Certificate Holder will not be disciplined for holding out as a CPA or practicing public accounting with an expired Certificate during the grace period. Requires an Inactive CPA to use the term “Inactive” if the individual uses the CPA designation. Requires a Retired CPA to use the term “Retired” if the individual uses the CPA designation.

Establishes requirements for reactivation of a Retired or Inactive Status Certificate and reinstatement of an Expired Certificate.

Rules Continued on 4 May/June 2013 • www.cocpa.org •

3

State Board Update

Rules

Continued from 3

Chapter 7 – Continuing Professional Education (CPE) – Effective Jan. 1, 2014: Adds course content requirements which must be met for the Board to accept a Colorado Rules and Regulations (CR&R) course for CPE credit. Requires that CR&R course materials and/or the certificate of completion include the date on which the course was taught and the materials were last updated. Also outlines what is required to claim credit for a specialized industry program which does not meet the CPE standards as outlined in the AICPA/NASBA Joint CPE Standards.

Requires Certificate Holders, CPE program sponsors, and CPE program developers to comply with the Joint AICPA/NASBA Standards, except as noted. For internet-based CPE programs, requires a minimum of 75 percent of polling questions, if used for monitoring participation, be answered by the Certificate Holder to receive credit.

Outlines the information required on a Certificate of Completion, Certificate of Attendance, or Firm Transcript, to document the CPE credit claimed, including the field of study.

Establishes the requirements for claiming CPE credit for teaching, panel presentations, published articles or books, college or university coursework, and specialized industry programs that do not meet the applicable CPE requirements.

Clarifies that all CPAs who hold an Active Status certificate must participate in learning activities that maintain and/or improve their professional competence as a CPA and assure reasonable currency of knowledge.

Chapter 8 – Peer Review Requirement: Exempts those who do not issue attest or compilation reports from the requirement. Clarifies the effective date as upon renewal of Firm registrations in 2014 and CPA Certificates in 2015.

Chapter 9 – Rules of Professional Conduct: Establishes when a Licensee may perform a Professional Service that may otherwise be considered a conflict of interest. Outlines what constitutes “acceptable disclosure” of confidential Client and employer information.

Includes a new section on safeguarding Client records and property, specifically requiring that “the Certificate Holder shall provide for continuing services to a Client or ensure that, in the event that he is incapacitated, disappears, or dies: (1) Clients are promptly notified; (2) Client records, property, and funds belonging to a Client are securely maintained; and (3) those Client records, property, and funds are promptly made available or returned to the respective Clients.”

Incorporates the AICPA Code of Professional Conduct, effective June 1, 2012, and stipulates that “all Licensees must comply with the Board’s Rules of Professional Conduct and the AICPA Code of Professional Conduct in the performance of Professional Services.”

Where a State Board rule and the AICPA Code differ, the State Board rule governs.

Chapter 10 – Declaratory Orders: No substantive changes made.

Chapter 11 – Practice Privilege/Mobility: Defines “principal place of business” as “the location designated by the Individual, but the presumption may be overcome if (1) the Individual resides in

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• NewsAccount • May/June 2013

this state; and (2) the Individual provides or offers Professional Services to his employer or to a Client or potential Client located in this state.”

Chapter 12 – Firm Requirements: Consolidates in a newly created chapter all the firm-related rules and requires that a Certificate Holder, including a single owner PC, LLC, etc., register any form of partnership, professional corporation, or limited liability company before holding out or engaging, through that entity, in activity for which an active CPA certificate is required. NOTE: There is no grace period for registering a Firm.

Firms must notify the Board within 30 days of any change in location or addition/deletion of offices; dissolution or other termination of the Firm; legal entity type; name of the Firm registered with the Colorado Secretary of State or equivalent authority if registered in another state; assumed or trade name of the Firm; Responsible Party for the Firm; change in ownership including addition or withdrawal of any partner, principal, shareholder, member, or equivalent; and identities and numbers of partners, shareholders, members, managers, or officers.s For more information, contact COCPA CEO Mary E. Medley, at mmedley@cocpa.org, 303-741-8601, or 800-523-9082, ext. 101.

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5

2013 WOMEN TO WATCH RECIPIENTS NAMED LEADERS OF NOTE

Women CPAs who have demonstrated leadership and have made significant contributions to the profession and their communities, while still on the path to the highest levels of advancement

Peggy E. Jennings, CPA Eide Bailly LLP Greenwood Village “Peggy approaches life with a sense of optimism, and her positive energy is impossible to ignore,” writes Amanda Rugloski who nominated her. Partner and Director of Oil and Gas for the firm, Peggy’s background in service to public, private, non-profit, and exempt organizations spans more than three decades. Peggy is a member of the firm’s Women’s Initiative Committee, and she is an annual participant in Montana State University’s Circle of Excellence event for Women’s Leadership Studies. Her involvement in civic, trade, and charitable organizations includes board service and chair of the Investment/Finance Committee with the Community First Foundation, the driving force behind Colorado Gives Day. Peggy is vice chair of the COCPA Peer Review Board and a frequent speaker on diverse topics including professional ethics, nonprofit governance, CPA independence, and leadership roles for women. She is a sought-after mentor within the firm and is known for her leadership, professionalism, and dedication both to the profession and to her community.

WOMEN TO WATCH

May 23, 2013 4:30 to 6:30 p.m.

Kevin Taylor's at the Opera House 14th and Curtis St., Denver

Keynote Speaker

Dean Christine M. Riordan

Daniels College of Business, University of Denver

$50/person

To attend, contact Terri Cervi at tcervi@cocpa.org, 303-741-8610, or 800-523-9082, ext. 110.

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• NewsAccount • May/June 2013

Lynne A. Lehr-Buck, CPA Intrascope Accounting Solutions Highlands Ranch Her colleagues describe Lynne: “As a sole practitioner, her time is filled with work, yet she always finds time to promote our profession. It may be in offering sage advice, filling in on a committee, or connecting other CPAs. She has shown tremendous dedication to helping other professionals throughout her entire career.” A past COCPA president, treasurer, and longtime chair of the Society’s strategic planning effort, Lynne has demonstrated her commitment in Colorado and nationally through her work with the AICPA’s CPA Vision Team and service on the Change Management Team, among others. Currently serving on the Raymond Wentz Foundation board, she also has led the Littleton Soccer Club, using her CPA expertise to improve the organization’s processes. Lynne is a frequent speaker on planning and budgeting topics. Certified to administer the Myers-Briggs Type Indicator, Lynne brings added dimension to her consulting services. Need a visionary who “gets” the CPA profession? Ask Lynne; she’ll mentor, lead, and deliver every time.

Sandy L. Shoemaker, CPA EKS&H LLLP Denver Partner Robert B. Hottman writes, “(Sandy) is an ambitious, high-energy, and tenacious leader. Whether it is in mentorship and coaching of future leaders, expert publications and presentations in a variety of outlets, service to community and promotion of female leaders, or efforts to improve the workplace at EKS&H, she rises to the top as a true Woman of Note.” Sandy joined EKS&H as an audit manager in 1997 and became a partner in just six years. In 2012, she became the first woman to join the firm’s management board while in a traditional audit/tax partner role. A Leadership Denver graduate, Sandy’s resume is replete with community service including Mile High United Way, Delta Sigma Pi, and Focus Points Family Resource Center.

Sandy frequently mentors others, writes, presents, and is interviewed on industry-specific topics including ESOP’s, employee benefit plans, and franchise accounting. Her dedication to client service and technical accounting make her a noteworthy local and national expert. Spend time with Sandy, and you’ll know you’ve been with a leader.

On May 23, 2013, seven outstanding accounting professionals will be

honored

at

the

Women

to

Watch

awards

presentation,

co-sponsored with the AICPA Women’s Initiatives Executive Committee.

EMERGING LEADERS

Women CPAs who have attained leadership positions within their organizations, have made notable contributions to the accounting profession, help to improve their workplaces, and mentor others

Jami L. Coulter, CPA PwC LLP Denver Colleague Elizabeth Bradley describes PwC Senior Manager Jami Coulter as “a working mother who serves as a role model for all the working parents in the firm. By demonstrating a shrewd work-life balance and supporting her teams to find a balance that works for them, she (is) living proof of being successful at perfectly balancing one’s personal life and career.” Jami helps to lead the Denver PwC office’s women strategy, particularly in helping to connect women to the community. Jami is a Colorado Women’s Chamber of Commerce board member, treasurer with Clothes to Kids of Colorado, and former board member with Open Roof, a nonprofit start-up youth center where she helped create and organize fundraising, budgeting, and accounting processes — along with obtaining the organization’s nonprofit status. Jami’s community service also includes Mile High United Way, VITA, Habitat for Humanity, and Food Bank of the Rockies. If you’re looking for an example of someone who’s doing it all, look to Jami.

Kelly A. Rodriguez, CPA Grant Thornton LLP Denver GT Managing Partner James C. Burton puts it simply: "Kelly has always been a strong leader, and her colleagues, particularly women, often turn to her for advice and guidance because of her solid judgment and valuable insights.” Colleague Jill English adds, “Kelly’s encouragement that sometimes work can wait has made it possible for me and others to create space for these important relationships without sacrificing our career aspirations.” Kelly is a partner and leader of both the Hospitality Industry Practice and National Restaurant Industry Practice groups, as well as the former local champion for the firm’s Women at Grant Thornton initiative. Her community involvement includes chairing the Mile High United Way Women’s Leadership Council Volunteer Committee and participating in the Denver Metro Chamber Leadership Foundation. Named a Denver Business Journal “Forty Under 40,” Kelly also is active in the Colorado Restaurant Association — when she’s not helping clients, mentoring others, volunteering, and making a difference wherever she is.

Georgia Z. Phillips, CPA Baurle and Company PC Denver “I have yet to find (anywhere else) the balanced nature Georgia exudes…she is able to be strong, implement change, and stand up for her opinions… and to be compassionate, flexible, and a sounding board…” writes Meredith Goss in support of Tax Manager Georgia Phillips’s nomination. Another co-worker adds, "Her willingness to sit down and train staff, even during our busiest times, has made Georgia a sought-after mentor. I appreciate her honest, open, and helpful feedback.” Georgia is a board member of the Cherry Creek Academy, her children’s charter school, and the CCA Foundation, active on the COCPA Editorial Board and the Joint COCPA/Colorado Department of Revenue Task Force, and writer for NewsAccount. Her strong leadership and enthusiasm make her an inspirational leader.

In her words, “As CPAs, we are our clients’ most trusted business advisors. My philosophy is to provide our clients with the advice and guidance they need at every state of their personal and business life, contributing to their ultimate achievement and success.”

Rhonda E. Willert, CPA Deloitte LLP Denver A senior manager with Deloitte’s Denver office, Rhonda has honed her expertise in business risk, technology risk, and regulatory risks in business, specifically in the oil and gas and utilities sectors. Active with the Information Systems and Controls Association (ISACA), she’s been the ISACA Board’s Academic Relations chair since 2006. There, Rhonda has expanded development of the scholarship program, established student groups, and spoken at Colorado universities on the importance of integrating information technology and accounting. She’s served on the DU School of Accountancy Alumni Affinity Council and has mentored Beta Alpha Psi students. Alexandra Tune says, “Rhonda mentors multiple women in the Deloitte office regarding work/life fit. She finds it especially important to mentor them on how to handle working and having a family or other personal time for themselves — so important to our staff and to succeed in our fast-paced work environment.” There’s no doubt Rhonda is leaving her mark with her mentees, in the IT world, and for clients.

May/June 2013 • www.cocpa.org •

7

State and Local Government

Police and Fire Pensions – A Cost-effective Solution In “Can State and Local Governments Go Bankrupt?” published in the March/April 2013 NewsAccount, contributing writer Natalie Rooney discussed the pension funding challenges many state government entities face. In this followup article, COCPA member Pamela Feely, CPA, discusses how Colorado has addressed pension funding for firefighters and police.

F

irefighters and police officers, by the strenuous, physical nature of their work, have shorter careers than many other workers. Colorado has recognized this fact for decades — and retirement benefits for them were in place here before Social Security was created as a federal program.

Also, these benefits are segregated from benefits provided to other municipal employees.

Historically, Colorado municipalities and special districts established local pension plans. Today, most Colorado firefighters and police officers are covered by the statewide defined benefit retirement plan offered by the Fire & Police Pension Association of Colorado (FPPA). Notably, Colorado’s plan is among the most healthy, funding-wise, in the U.S.

ing multiple times in the ensuing years. During this time, local departments continued to be responsible for funding payments towards the unfunded liability of the Old Hire plans.

The Solutions

As we go to print, the Colorado General Assembly is working on the 20132014 state budget, commonly referred to as the Long Bill. Already amended in the House, it includes paying off the $143 million obligation to FPPA for the Old Hire plans.

The New Hire plan, administered by the FPPA, is a defined benefit plan. As of Jan. 1, 2013, it is about 97% funded.

The local government and the employee each contribute 8% of the employee’s qualified pay — a rate unchanged since inception more than three decades ago.

How It Happened Cost of living increases are awarded purBY PAMELA FEELY, CPA More than thirty years ago, the suant to a 30-year rolling projection of Colorado General Assembly and local authorities recognized a affordability — a prudent, conservative calculation. And, the financial crisis was looming with existing, local, public safety plan contains safeguards to protect against increases in emretirement plans. Therefore, in 1978, the Colorado legislature ployer contributions. passed legislation which created the FPPA; froze all existIn the early years, several local departments withdrew from ing plans, which became known as “Old Hire” plans; estab- the FPPA plan. However, more recent downturns in the econlished that anyone hired after April 4, 1978, would be placed omy have caused them to request re-enrollment in the plan. in a “New Hire” plan; and outlined how the entire structure In permitting this, the plan trustees required a 20% combined would function. The legislation charged the FPPA with ad- employer/employee contribution to avoid disadvantaging curministration and funding of retirement and disability benefits rent plan participants. Any contributions in excess of what is for police and fire departments. The asset management and needed to equalize the actuarial cost are returned to the embenefit payment functions of Old Hire plans were transferred ployee, with earnings, at the end of his or her career. to the FPPA. Local department pension boards retained auThe foresight and leadership of Colorado’s legislators, emthority over the level of benefits. ployers, and the police and fire unions made this cost-effective solution possible. For more information, go to the Fire & Police Pension Association of Colorado website at www.fppa.

The Problem org. s Generally, Old Hire plans were severely underfunded. The state agreed to assist local departments with fully funding the unPamela Feely, CPA, Feely & Associates, P.C., Lakewood, is funded liability, and the original plan called for the state to fund president of the West Metro Fire Protection District and a directhe obligation completely over 40 years. Fiscal pressures resulting tor and trustee of the Fire & Police Pension Association of Colofrom economic downturns caused the state to extend its fund- rado. Contact her at Pamfeely@feelycopc.com.

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• NewsAccount • May/June 2013

Monday June 10

1:30 p.m. Shotgun Start Lakewood Country Club Lakewood, Colorado Tournament to benefit First Descents, sponsor of outdoor adventure programs for young adult cancer survivors

YOUNG PROFESSIONALS GOLF TOURNAMENT

$150 per player $520 per foursome

Fee includes: Green fees, cart fees, range balls, personalized Arrowhead bag tag, lunch, all oncourse snacks and non-alcoholic beverages, post-tournament refreshments, and prizes.

Sponsored by: Colorado Society of CPAs Young Professionals Committee

Register By phone: Terry Cervi at 303-741-8610 or 800-523-9082, ext. 110 Online: www.cocpa.org

Golfers of all ages are welcome and encouraged to play.

May/June 2013 • www.cocpa.org •

9

Healthcare: What to Expect in 2014

BY JAMES V. MARSH

H

ealth Care Reform is a volatile topic in our country. The reality of change is looming, and the deadlines are approaching quickly.

The Patient Protection & Affordable Care Act (PPACA) was signed by President Barack Obama on March 23, 2010. The philosophy behind PPACA is delivery of a better value for each health care dollar, creating a culture of health with a focus on healthy living and wellness and expanding access to affordable care.

Effective Jan. 1, 2014, all U.S. citizens and legal residents will be required to obtain qualifying coverage. Those who do not obtain coverage will pay a penalty.

The total annual penalty will be the greater of a flat dollar amount or a percentage of taxable income: • $95 per person or 1% of taxable income in 2014 • $326 per person or 2% of taxable income in 2015 • $695 per person or 2.5% of taxable income in 2016 A person will only pay one-twelfth of the total annual penalty for each month without coverage and will not have to pay more than the national average cost for Bronze Plan-level coverage through the state exchanges. After 2016, the tax penalty increases annually based on a cost-of-living adjustment.

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• NewsAccount • May/June 2013

The law provides exceptions for: • Individuals and families below a certain income level • People who cannot afford coverage that is available • Individuals who have been uninsured for less than three months • Members of Native American tribes • People who do not obtain coverage because of religious objections.

PPACA requires each state to establish an American Health Benefit Exchange (including a Small Business Health Options Program (SHOP) exchange), by Jan. 1, 2014.

A Health Benefit Exchange is a competitive marketplace for Americans shopping for health insurance.

Colorado will be introducing an enhanced employer/employee choice model to its SHOP marketplace beginning Oct. 1, 2013. In addition, Colorado is implementing the technology and operational support necessary to offer small employers more health plan choices than exist in the market today. Starting in October, employers with 2-50 full-time employees will come to the marketplace, set their budget, and decide what types of plans they wish to offer to their employees.

In 2014-2016, only individuals and small group employers are eligible to participate in the Exchange; beginning in 2017, states may permit employers in the large group market

to participate. States may also form regional exchanges.

The health plans offered in an exchange must meet standard requirements for affordability, Essential Health Benefits, and consumer protections. The Act defines four coverage levels: • Bronze Plan which covers 60% of the actuarial value of the covered benefits • Silver Plan which covers 70% of the actuarial value of the covered benefits • Gold Plan which covers 80% of the actuarial value of the covered benefits • Platinum Plan which covers 90% of the actuarial value of the covered benefits For more information, go to www.hofgard.com/HEALTH_CARE_REFORM. s James V. Marsh is the president of HofgardBenefits, Boulder, Colo. He will speak at the COCPA's Not-for-Profit Conference on May 16, 2013. Reach him at jmarsh@hofgard.com.

Not-for-Profit Conference May 16, 2013 Hyatt-regency-DTC or Webcast Member/Nonmember Fees: $290/$414 8 hours of CPE Register online now at www.cocpa.org.

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13102-326

May/June 2013 • www.cocpa.org •

11

Chair Column

Banking on Membership Connections Colorado native Marc C. Hendrikson, CPA, CCIFP, CGMA, is the 2013-2014 Chair of the Board. He's ready to jump in and tackle the issues important to Colorado CPAs.

BY NATALIE ROONEY

Colorado Grown A graduate of Northglenn High School and Regis University, Denver, Marc Hendrikson describes his route to the accounting profession as nontraditional. “I didn’t take any accounting courses in high school. I really didn't know what I wanted to do with my life at that point,” he recalls. In fact, he says he barely graduated from high school with his class. After spending time in Germany as an exchange student during his junior year, he was behind in the credits he needed to graduate. “After a long and difficult senior year, I didn’t go to college right away.”

Fluent in German and somewhat proficient in Spanish and French as well, thanks to multicultural family experiences and the exchange program, Marc considered entering the foreign language translation field. However, the thought of relocating to another, larger city to work as a translator didn’t appeal to him at all. Instead, he volunteered with his faith community, worked odd jobs, and waited to see what life would bring his way.

where he has remained for nearly two decades. Marc says it's been the perfect environment in which to utilize his analytical skills and further develop his natural ability to connect with people. For 14 years, he has been a commercial lending officer, and he is currently a senior vice president with Citywide Banks, a 50-year old local community bank founded by a former CPA. Marc is one of only a few bankers nationwide to hold the Certified Construction Industry Financial Professional (CCIFP) credential, and he recently added the Chartered Global Management Accountant (CGMA) to his list of designations.

Getting Involved Marc traces his involvement with the COCPA to 1994 and his days at Regis University. He joined as a student member simply be-

At Home in the Bank It was when he began working as a bank teller that something clicked. Marc quickly realized he had a knack for numbers. “After high school I paid the bills and balanced my dad’s checkbook while he traveled,” he says. “Now I was doing it for other people, and I could do it well.”

The time was right for him to head to college. He earned his degree in accounting and graduated magna cum laude while working full-time and raising a young family. Later, he added an MBA in finance and accounting, also with a high GPA. During this time, while holding several accounting and finance positions in a publicly held community bank in Denver, he made several efforts to transition into public accounting but found it difficult since his work experience was so narrow.

It was during this period, which included a brief stint as controller of a struggling construction company, that Marc embraced his “chosen” field of banking, realizing it was where he belonged. As a financial analyst, Marc prepared complex historical and projected financials for several of the bank’s large departments. During a typical presentation of the monthly forecast, one of the bank’s executives asked him to consider moving over to the sales side of the bank, something he had never contemplated.

True to form, Marc realized this was a great opportunity and made the decision quickly to transition to commercial lending,

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• NewsAccount • May/June 2013

Marc with his wife and children.

cause someone suggested he should. He laughs when thinking about it. “I certainly never thought I’d be chair of the organization.” As a student member, he kept his resume on file with the Society and attended career days from time to time. He even won a $500 scholarship, which he's never forgotten. “The accounting department of the bank I was working for at the time made a really big deal about me receiving that scholarship,” he says. During his recent stint as president of the Educational Foundation of the COCPA, Marc enjoyed awarding scholarships to worthy accounting students, remembering fondly his own experience.

Still following his nontraditional ways, Marc took the education path to earn his Colorado CPA license in 2000, several years after transitioning out of the accounting and finance area. The moment he earned his designation, he joined the Colorado Society as a full member, as well as the AICPA. “It made sense to network with other CPAs, but I also wanted to be a part of the profession because I hadn’t been in public accounting,” he recalls. “It was a way for me to connect more directly with so many talented individuals.”

Marc says his work on the Small Business and Member Connections committees showed him the profession’s fun side and provided opportunities for him to give back to the profession in a meaningful way. “From the start, I began addressing member issues and hosting member events, and it has been my forte,” he says. “I greatly enjoy reaching out to the membership base.”

He admits that when he attended his first COCPA Board meeting several years ago, he could not foresee himself as chair someday.

“I’m certainly no wallflower, but I saw these amazing individuals on the Board, particularly in the chair position, and wondered how they did it.” When he was asked to become vice chair last year, after over a dozen years of being involved with the Society, he took time to carefully consider the commitment. “I really had to think about it, but I also knew I really wanted to do this.”

“I am very appreciative for this wonderful opportunity to fulfill this role. It's an honor I will remember for the rest of my career,” Marc says. “I'm both humbled and eagerly looking forward to my year as spokesperson for this great profession in Colorado.”

Connecting with Members Marc says his mission for the next year is to connect with members and create alliances. After actively engaging with members for over a decade, along with teaching lending and accounting courses to bankers in rural communities across the state, he appreciates the importance of the connections he has made over the years. “It really embodies who I am and what I want to do this year,” he says. “I want to promote why CPAs should be members of our state society. More importantly, I want to hear from members about how we can help them succeed.

That sounds so salesy,” he chuckles. “But I want to toot the COCPA’s horn and learn how we may better serve members.”

Marc says he’s ready to address challenges that face the profession as well. “I’ll have to deal with the various challenges that arise during any chairperson’s year,” he says, citing the COCPA’s ongoing work

Marc with AICPA CEO Barry Melancon, CPA, CGMA, left, and AICPA Vice Chair Bill Balhoff, CPA, CFE, CFF, CGMA, right.

with the Colorado Department of Revenue and the Colorado State Board of Accountancy, not to mention attending AICPA conferences and keeping up with the profession’s current issues nationally.

On that note, challenges will continue to appear beyond Colorado’s borders, Marc says. “GAAP has been going through many changes in the last several years, and there are many pronouncements that will challenge us to keep up. Colorado is a small business state, which is what I live, eat, and breathe in my role at the bank,” he says.

In this regard, he has been keeping close tabs on the AICPA’s proposed Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs). “Financial reporting for smaller, privately held companies has become too burdensome,” he says. “This is an important issue, not just locally, but nationally, and one I intend to remain close to.”

And don’t forget the fiscal cliff, recent tax legislation, proposed changes in the attest area, and IFRS to name just a few other “minor issues” currently on the horizon. “Let’s just say the future for the accounting profession will not be boring,” he says. As a user of financial statements versus the typical preparer, Marc will bring a unique perspective to the profession as COCPA Chair.

Busy Family Life Marc and his wife Michelle have been married for nearly 22 years and are parents to two biological children, an adopted child from Guatemala, and several foster children. One little girl they had from birth through six months was returned to her birth family for two years, and she has recently transitioned back into their home. At the same time, two other siblings transitioned to another home. For about a month, says Marc, “We managed a family of seven children with ages ranging from six months to twenty years, and that included two, two-year olds! Now that we are down to five kids, it's much more manageable — our older boys do so much to assist us with the little ones. It's chaotic at times, yes, but very rewarding."

What made the Hendriksons enter the foster program? “One international adoption experience in a third world country was enough for us,” says Marc. “Our Chair Continued on 15 main motivation was for May/June 2013 • www.cocpa.org •

13

Financial Reporting

SEC Matters and Musings

BY W. ANDERSON BISHOP, CPA

W. Anderson (Andy) Bishop, CPA, and CFO, Hallador Energy, Denver, prepared the following information and editorial comments, as of April 16, 2013. Contact him at wabcpa@msn.com. Read why he chose to publish the names and ages of the company’s auditors on his proxy statement this year at http://blogs.wsj.com/cfo/tag/hallador-energy/.

SEC’s New Boss: The U.S. Senate recently confirmed Mary Jo White as the new head of the Securities and Exchange Commission (SEC), the first time a former prosecutor will fill the position. White spent almost nine years prosecuting complex white collar and international terrorism cases during her days as U.S. Attorney for the Southern District of New York. In 2002, she rejoined Debevoise & Plimpton LLP, New York, as a partner.

Her practice concentrated on internal investigations and defense of companies and individuals accused of white collar corporate crime or SEC and civil securities law violations, among others.

White, like me, believes prosecutors should rarely if ever indict corporations for criminal wrongdoing — instead they should focus more on the individuals who committed the crime. Although White will not possess the tools criminal prosecutors do, such as wiretaps, search warrants, and grand-jury investigations, she will have the SEC’s power to carry out an investigation and issue a tellall story about an individual, even if no violation is found.

Each time I sign Forms 10-K and Q, I am reminded of the SEC’s power to bar individuals from serving as officers or directors of a public company — thus taking away a person’s livelihood. Remember: The burden of proof in a criminal case is “beyond a reasonable doubt” compared to a civil case which is “the preponderance of the evidence,” the former being in the 90% range and the latter being greater than 50%.

Insider Trading Rules and 10b5-1 Plans: Compliance with insider trading rules should be on all boards of directors’ meeting agendas. Today, 10b5-1 plans are on the

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• NewsAccount • May/June 2013

SEC’s radar, but boards may not have focused on them. Some of the practices that have evolved don’t really pass the smell test, and if they were brought to the attention of directors, they would probably say no. I, for one, think the rules for such plans should be overhauled. I expect this area to be on White’s priority list, too.

XBRL: FEI (Financial Executive International) has been asking the SEC to reconsider the costs and benefits of XBRL. At least the SEC should exempt Smaller Reporting Companies — which have a public float (not market cap) of less than $75 million.

Conflict Minerals: This rule is estimated to cost investors in excess of $3 billion upfront to comply. I’m sure the SEC staff wishes this one would go away — and so do I. The JOBS Act: If you are contemplating an IPO, take advantage of the regulatory relief that this new law allows. A company is exempt from internal control audits for a few several years — but XBRL is still required. A confidential filing is a huge advantage; competitors don’t have months to pore over filings before you go public.

A Missed Opportunity: In April 2012, the SEC rejected attempts by the Carlyle Group and proposals by Pfizer and Gannett stockholders to mandate arbitration rather than litigation in disputes between investors and management. The SEC gave no explanation for its actions on Carlyle (related to an IPO), and it said opaquely the Pfizer and Gannett proposals might violate the securities laws. Having personally been involved in a suit like this, the only ones who win are attorneys and insurance companies that sell the D&O policies. This matter deserves a fair hearing.

Foreign Investments: Many foreign public companies are dropping their NYSE or NASDAQ listings to avoid internal control audits and XBRL reporting requirements.

Wouldn’t it be grand if domestic companies had the same ability to opt out? Let the shareholders/owners decide if they want this added protection that does little to safeguard their investments. The money spent far outweighs the benefits.

Risk Modeling at the SEC: The Division of Risk, Strategy, and Financial Innovation (RiskFin) is trailblazing. It hopes to identify earnings management among other things. I hope it works.

Disclosure Controls: As all public companies have been doing for the last ten years, the CEO and CFO must render a conclusion and certify as to the effectiveness of their disclosure controls. I consider disclosure controls to encompass proper and timely reporting of the S-K requirements (MD&A for example) and internal controls to encompass proper reporting of the S-X requirements (the financial statements).

Also the Proxy Statement, the CD&A, and Form 8-K fall under the umbrella of disclosure controls. Ask yourself how you would respond to an SEC comment letter that requested evidence of the last evaluation performed to ensure the effectiveness of your disclosure controls. Most companies have set up a disclosure committee to ensure that the SEC reporting requirements are met.

SAS 100 Quarterly Reviews: As we know, all public companies must have their 10-Qs reviewed before filing. Although the SEC does not require the report to be filed, consider obtaining from the auditors the SAS 100 review report anyway. Many audit committees are requesting the written review report for their files, and many companies are including such report in their filings. A few of the companies that include the review report in their 10-Qs: Alcoa, Pepsi, Gap, Microsoft, Boeing, Yum, Allstate, FedEx, 3M, Sprint, and Denver’s own Western Union.

In-house EDGAR: Doing the EDGAR filings for periodic reports is a snap now that the software has improved substantially.

Thomson/Reuters pretty much has a monopoly on this in that it owns both www.edgarease.com and www.edgarfiling.com. For complex registration statements, it’s probably best to stick with the Big Two: Donnelley and Merrill.

Codification of Existing Standards: One way to stay current on the plethora of changes in GAAP and SEC rules is to subscribe to

one of the services like ARM, Comperio, and Checkpoint.

PCAOB: I sure hope it adopts the proposed rule requiring audit partners to personally sign their names to audit reports. As CFO of a public company who personally signs the 302 and 906 certificates, along with meeting the attendant disclosure requirements, I don’t think it’s too much to ask of audit partners. I would go as far as disclosing the age and business experience of the partner and concurring partner.

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Chair

Continued from 13

our daughter to have someone to grow up with. A family friend who had success working with one of the local counties encouraged us to look into it. The need right here in metro Denver was so much more pronounced than we ever knew. That ‘someone’ turned into ‘several’ little ones. “It’s been a crazy ride, but it’s all good,” he says. It's an expression he uses often.

With all these little ones at home, quiet time is priceless. “We aren’t the traditional three-sport-a-kid family,” he says. “The kids are in some activities, but we’re generally homebodies.” On Sundays, doughnuts rule at the Hendrikson house, and they usually come with a side of pancakes and bacon. Marc is just as adept at changing diapers and making meals as he is underwriting multi-million dollar loan transactions or visiting with CPAs about GAAP. “Life is never boring for me. I have certainly taken the path less travelled, but I would not trade it for a minute.”

The mountains beckon the family for extended camping and day trips. They enjoy cross-country skiing, sledding, hiking, or just some four-wheeling. “I love the mountains,” Marc says. “I can never get enough of them, having grown up in this beautiful state.”

Is he the typical golfing banker? “I really enjoy it, but I’m better at diapers, dishes, home repairs, and financial statement analysis than I will ever be at golf!”

Given his penchant for connecting with people of all ages, Marc will be a valuable and committed voice for the COCPA and a passionate advocate for members. It's all good. s Contact Marc Hendrikson at hendriks@citywidebanks.com.

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www.eksh.com May/June 2013 • www.cocpa.org •

15

How to Create a No-Equity Partner Position in Your Firm

BY GARY ADAMSON, CPA

M

ost firms face the dilemma of keeping long-term managers who are major contributors to the firm but for whatever reason are not ready to be equity partners — or who may never have what it takes to be equity partners. In the past, most would not outplace long term managers since, from many perspectives including client service, engagement, staff management, profitability, etc., they did a great job. But, there were missing pieces to making them an equity partner — we just weren’t willing to make an up or out decision or to bring them into the partnership. So, we procrastinated until in many cases they left the firm.

Also, the opportunity to make partner in many firms has been limited in the last few years due to the economy and slowing growth. We risk losing some of our stars because we can’t bring them in as quickly as we would like.

Both of these issues have the same result: the loss of high level, talented people. A relatively new approach to dealing with the problem is gaining popularity in mediumto smaller-sized firms: the no-equity partner position. Some firms call it a principal. Other firms offer a small piece of equity, and call it a low equity partner. Regardless, the mission is to create an intermediate level between senior manager and partner. This type of partner position has been a common level on the ladder

16

• NewsAccount • May/June 2013

for the top 100 firms for several years.

Here is an outline of what the position looks like, how it differs from the normal equity partner spot, and some implementation considerations.

First, the difference between no-equity and equity should be internal only. From the perspective of the public and clients, this is a partner position. Making a new no-equity partner is a big deal, and you should celebrate it inside and especially outside the firm, just as you would a new equity partner. These individuals wear the partner title.

In most firms, no-equity partners function just as equity partners do when serving clients.The differences typically are in how you pay them and whether they receive other partner benefits like buyout and retirement.

Most firms utilize a different compensation plan for no-equity partners. They may participate in firm profits to some extent, but they are typically not in the equity partner compensation plan or year-end pool. It is common to see a base salary that is between a senior manager and an equity partner with a bonus potential based on some percentage of that salary or a profit pool separate from the equity partners.

The no-equitiy partners make either a small equity contribution or none at all, and they do not participate in the firm’s equity partner goodwill buy-out or deferred com-

pensation plan. They do participate in the firm’s qualified pension plan, and in most cases their other fringe benefits are the same as the benefits provided to equity partners.

From the perspective of firm governance, no-equity partners should participate in partner meetings, including firm retreats. Normally, they will not be eligible for service on the firm’s executive board or management committee. They will be able to vote their shares if they hold any.

Many firms use the no-equity partner position as a preliminary step to admitting someone as an equity partner. The individual will spend some time at the no-equity level while developing a book of business or fulfilling whatever additional requirements are necessary. Most of the time, firms will permit someone to remain indefinitely at the noequity level. I encourage you to establish and communicate the criteria for moving to the equity level as a part of your firm’s career development program. The expectations should be clear.

You may also be witnessing the phenomenon in your firm where at least one or two generations of your people don’t want the same things that older folks wanted. Their motivations may be different, and they just might be happy (happier) with something less than the full equity role. Maybe title and some recognition/differentiation along with minor financial changes are the perfect combination for them.

Consider the no-equity partner position in your firm. It may be the answer to keeping talented people while helping the firm maintain the right leverage and number of equity owners. s Gary Adamson, CPA, is the President of Adamson Advisory, Richmond, Ind. (www. adamsonadvisory.com). He can be reached at 765-488-0691 or gadamson@adamsonadvisory.com.

Continuity Planning

Preparing Your Business for Disaster

BY KRISTA FLYNT

It’s looking to be another unfortunate year for wildfires — with the March fires in northern Colorado a bad omen. Annual snowfall totals are below average across the state and nowhere near enough to return reservoirs to healthy levels. Residents of both Colorado Springs and Fort Collins, among others, understand the fear that can set in when a fire is bearing down, wondering if home, work, or both will survive unscathed. According to the Insurance Information Institute, up to 40% of businesses affected by a natural or humancaused disaster never reopen. With that in mind, here are a few steps you can take to prepare your place of business for the worst.

Develop a Plan First and foremost, complete a risk assessment and business impact analysis available at www.ready.gov/risk-assessment. Identify your hazards, assess your assets, and risk and vulnerabilities, and finally, analyze the impact and repercussions of the disaster.

Develop an evacuation plan. This includes testing the warning system (fire alarm, public address system, or air horns) and ensuring that it can be heard throughout the building by all employees. Appoint an evacuation team leader and a back up leader. Choose an area away from the building for employees to convene in order to account for all employees and ensure everyone has left the building.

In case of tornado, designate an area of the building for everyone to shelter in. Potential shelters include basements or interior rooms with reinforced masonry construction. Most importantly, make sure everyone understands these plans beforehand.

Protect Your Property and Data Make sure you have adequate insurance coverage to rebuild the business. Review your policy to see what is and isn’t covered. Consider purchasing business interruption insurance — which helps cover operating costs during a post-disaster shutdown period.

Back up data off site. Storing data in the cloud can be very helpful in this regard, as well as purchasing space on an offsite server.

Important data can also be stored on portable external hard drives. Copies of important documents should be stored in a fireproof

safe deposit box at an offsite location, as well as in a portable water and fireproof container to take with you.

If you own your own building, you can take steps for it to be prepared as well. Plant fire resistant trees like the Rocky Mountain maple, thinleaf alder, serviceberry, and riverbirch. Colorado State University outlines how to make your landscape more fire-resistant at www.colostate.edu/Depts/ CoopExt/4DMG/Whats/fire.htm. Regularly clean the gutters and ensure that there is an easily accessible external water source outside your building.

Communicate Establish a communication plan for both employees and clients. Employees and their families will be concerned and want information, and customers will want to know how they will be impacted. A phone tree and point-person are both good places to start.

Make sure contact information for all parties is easily accessibly in an emergency.

A virtual private network (VPN) is extremely helpful for incidents when weather or other circumstances prevent employees from traveling to the office, but there is no danger. With the VPN, employees can connect to their computers from offsite, and business can continue.

Resources Know where to turn once the worst has struck — there are organizations to help.

The Small Business Administration (SBA) offers low-interest loans to homeowners, renters, and non-farm businesses of all sizes. Non-farm businesses and non-profit organizations can apply for up to $2 million to repair or replace disaster-damaged property or assets. A working capital loan of up to $2 million to make up for economic losses due to a disaster is limited to small businesses.

The SBA also has a number of resources for emergency preparedness on its website, www.sba.gov/content/disaster-preparedness. The federal government offers a wealth of step-by-step guides to prepare for disaster at www.ready.gov/business. As well, check out the Institute for Business and Home Safety, www.disastersafety.org.

Beyond Your Business For information on how to protect your home and personal finances in case of disaster, read the AICPA’s Disaster Recovery: A Guide to Financial Issues. The guide is available through the American Red Cross website, www.redcross.org/find-help/disasterrecovery/recovering-financially.

In the guide: • 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.

• Part II identifies steps to take in the weeks and months after disaster has occurred 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 illustrates the steps to take in planning for the future and moving on with life in areas such as assessing financial needs, getting retrained for a job, and estate planning. s May/June 2013 • www.cocpa.org •

17

CPAs As Educators

In this issue, we introduce a new column, "CPAs As." We’ll feature a CPA who is employing his or her skills in a different way.

BY NATALIE ROONEY

Jacqueline J. Eschenlohr, CPA, says she has the perfect job. Ironically, it’s one she would have never chosen for herself. A lecturer in the Daniels College of Business at the University of Denver’s School of Accountancy, Eschenlohr never envisioned herself in front of a classroom.

Like most of her accounting major classmates, when Eschenlohr graduated from DU with a Bachelor of Science in Accounting and a Master’s in Accountancy, she already had a job that was the result of an internship with Ernst & Young, LLP in Denver. She worked at E&Y for seven years.

After a career in financial planning and five years in the oil field as a geographic technician, Eschenlohr left the professional world to raise her son.

When it was time for him to head off to kindergarten, Eschenlohr was ready for a new adventure as well. That was when Ron Kucic, then director of DU’s School of Accountancy, approached her with an idea. “He asked if I’d like to try teaching,” Eschenlohr reflects. “And I thought, me? A teacher?” She considered her options, but it wasn’t until her friends from her professional life pointed out she was already a teacher that she seriously considered the position. “My friends reminded me that when you’re in public accounting, you’re always teaching,” she says.

“You learn in your first year and from then on, you’re teaching others.”

In 2005, Eschenlohr joined DU as an adjunct professor, bringing her full circle.

She is currently teaching Intro to Financial Accounting, Intro to Managerial Accounting, and Accounting Communications, a capstone course she co-developed to meet the specific needs of the business community and the Colorado State Board of Accountancy education requirement.

From Professional to Professor Why didn’t Eschenlohr return to a successful career in public accounting rather

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• NewsAccount • May/June 2013

than toil away in the halls of academia? First and foremost, she likes the flexibility. “Being a professor allows you the flexibility to raise your family,” she says. Her other reason? “I love it. I had no idea how much I would love it,” she says of her current career.

“I love sharing with my students the needs of the business world. They’re excited, and I’m a part of it. That’s the beauty of making this transition from professional to professor.”

Eschenlohr says her 13 years of professional experience helped create a unique classroom environment for her students.

Drawing from her own time as a DU student and her business contacts, she strives to bring the real world into the classroom. On the first day of spring quarter 2013, a speaker from E&Y was on hand to discuss business technical writing and presentations using PowerPoint with Eschenlohr’s students.

“My joy comes in bringing the needs of the business community into the classroom,” she says, adding that she is comfortable partnering with a CPA firm “because I was in one for seven years. The friends I made there are now local businesses leaders, and they are able to share their business needs with me.

The result is the students hear exactly what employers are looking for.”

While speakers and case studies are a large part of Eschenlohr’s course outline, she doesn’t stop there. “We’re learning that what employers are looking for are things like business writing and etiquette skills,” she says. “We even talk about how to eat, how to shake hands, and how to sit and listen to a presentation. The word is out they need to know these skills.”

Making Textbooks Relevant The combination of Eschenlohr’s professional background and partnerships with business leaders means a real-world experience for her students.

Eschenlohr says this generation of students is very entrepreneurial. “Each quarter, I prom-

ise them that I will make the class relevant,” she says. Whether it’s an introductory-level course or a capstone class, she shares her real-world stories so students can envision where they will soon be in the professional world.

Students have the opportunity to analyze a Form 10-K for a company that interests them. “Whether a business major or a minor, that will be relevant to all students,” Eschenlohr says. In addition, students in her classes start their own companies. Some students have taken their classroom knowledge and put it to work — sometimes while they’re still in school — at their own startup companies.

In It for the Long Haul Eschenlohr says her role at DU is a little different than other professors because she’s not on the doctorate path, but that the administration sees the need for good teachers, not just good publishers and researchers.

While it can be challenging, Eschenlohr says she’s not leaving anytime soon. “I’ll stay here at DU until I can’t talk anymore, I guess!

And then maybe I can teach digitally,” she says of the trend toward online education.

For now, her focus is fully on her students, and she is committed to their needs.

“When I see them engaged and learning the material, when I see the switch turn on about how relevant accounting is to the business community, and when they thank me at the end of the quarter, that's why I'm here.” s

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May/June 2013 • www.cocpa.org •

19

QUENCHING COLORADO’S THIRST

W

ater. You turn on your faucet, and out it flows. You water your lawn, put ice in your beverage, go fishing or rafting — all thanks to water. It’s one of our scarcest resources, and yet demand for it continues to grow. Here in Colorado, it’s a constant conversation topic.

On April 1st — no joke — watering restrictions began in Denver. And, whether Colorado experiences recordsetting snowfall or (like recently) dry winters and resulting drought conditions, it's always on our minds.

We have only so much to go around, here and across the planet, and we need more and more of it to supply more and more people every day.

Consider that 3/4 of the earth’s surface is covered by water, yet 98% is salt water not fit for drinking. U.S. water consumption, according to the U.S. Environmental Protection Agency, is more than double that of central Europe. The average American uses 176 gallons of the zero-calorie liquid per day compared to an average African family’s five gallons.

The water supply is fixed. No matter what we do, we can’t make more. How do we quench this thirst?

20

• NewsAccount • May/June 2013

BY NATALIE ROONEY

Where Our Water Comes From Colorado is a headwater state which means all the major rivers in Colorado start here and flow out to other states. Colorado and Hawaii are the only states where rivers do not flow into them. About 80% of the Colorado water supply comes from snowfall and about 20% comes from rainfall — about 80% of which, overall, falls on the Western Slope. It’s an “essentially developed resource,” according to Dick Wolfe, State Engineer and Director of the Colorado Division of Water Resources (DWR), a division of the Colorado Department of Natural Resources. Wolfe and his staff have the herculean task of overseeing Colorado’s water supply.

Where Colorado’s Water Goes One third of Colorado water stays in the state; the rest flows downstream where other states and the Republic of Mexico benefit from it. Interstate compacts between Colorado, other states, and Mexico govern how much water is delivered from each major river to others. Approved by Congress, these agreements outline Colorado’s unique obligation to provide water for use outside the

state. There’s no doubt about it, Wolfe says, “Water is a big deal.”

What Governs Colorado Water Rights Since 1876, the Colorado Constitution and subsequent water court rulings have governed the use, diversion, and storage of Colorado water. According to the Colorado Constitution, the people of Colorado own the state’s water; water rights owners possess the right to use it, based on the Prior Appropriation Doctrine of first-in-time, firstin-right. This system of water allocation controls who uses how much water, the types of allowed uses, and when the water can be used.

An appropriation is made when an individual physically takes water from a stream or underground aquifer and puts it to beneficial use. The first person to appropriate water and use it has the first right to use that water within a particular stream system. This person, after receiving a court decree verifying the priority status, becomes the senior water right holder on the stream. That water right must be satisfied before any other water rights can be fulfilled. In short, those with the most senior water rights receive their

share first. When there’s a shortage, those holding more junior water rights may not receive any water at all. “In an above-average water year, there’s more water, and more water rights get satisfied,” Wolfe explains.

The Water Rights Determination and Administration Act of 1969 created seven water divisions, with 78 districts, based on the drainage patterns of various Colorado rivers. Each water division is staffed with a division engineer appointed by the state engineer; a water judge appointed by the Colorado Supreme Court; a water referee appointed by the water judge; and a water clerk assigned by the district court. Water judges are district judges, and they have jurisdiction in determining water rights, issuing decrees for water rights, the use and administration of water, and all other water matters within their respective water divisions.

This system is unique to Colorado. Water rights in other states typically are granted and administered by the state engineer.

Another unique aspect to Colorado’s water rights system is that water is considered a property right and can be sold separately. “If you have an adjudicated water right, you can sell it, just like a mineral right,” says Wolfe.

Individuals can buy, sell, and trade water rights away from their property.

Who Sets Water Policy The Colorado Water Conservation Board (CWCB), also housed within the Colorado Department of Natural Resources, provides policy direction on water issues — especially on conservation which plays a vital role in long-term water supply plans. As Dick Wolfe puts it, “The challenge is in how we balance competing interests of traditional, consumptive uses such as agricultural, municipal, and industrial with non-consumptive uses such as environmental and recreational.”

The CWCB’s mission is to conserve, develop, protect, and manage Colorado’s water for present and future generations.

Charged by statute to establish policy to address Colorado’s water issues, the CWCB is a Governor-appointed citizen board of rep-

resentatives from each of the eight major river basins, the City and County of Denver, and several state agencies. Its responsibilities range from protecting Colorado’s streams and lakes to the aforementioned water conservation, flood mitigation, watershed protection, stream restoration, drought planning, water supply planning, and water project financing. The CWCB also works to protect Colorado’s water apportionments in collaboration with other western states and federal agencies.

Who Regulates Colorado Water Established in 1881, the Colorado Division of Water Resources manages Colorado water according to the doctrine of prior appropriation, state law, water court decrees, and interstate compacts. It administers water rights, issues water well permits, represents Colorado in compact proceedings, monitors stream flow and water use, approves construction and repair of dams, performs dam safety inspections, issues licenses for well drillers, assures the safe and proper construction of water wells, and maintains numerous databases of Colorado water information. It is responsible for three primary areas: • Water Administration: The division administers all surface and groundwater in Colorado as it naturally occurs in the stream systems or underground, ensuring the appropriate amounts

are delivered to users such as Denver Water, where the water is treated and passed on to customers.

• Wells: Colorado is peppered with more than 270,000 water wells. The DWR is the sole issuer of permits for drilling new wells and replacing existing wells. It also inspects wells during construction. Over 40,000 applications are submitted annually, and Wolfe’s staff evaluates each one under strict statutory guidelines. In addition, in cooperation with various local groundwater management districts, the DWR operates a statewide network for monitoring groundwater levels.

• Dams: Approximately 3,000 existing dams come under the DWR’s purview, and new dam construction involves DWR review and approval according to engineering standards. The DWR also inspects all dams to ensure they are operated and maintained to protect public safety and minimize property damage.

All this monitoring couldn’t happen without technology, Wolfe says. Currently, 114 water commissioners across the state, working out of their homes, are responsible for Colorado’s water management, day to day. “We have the same number of commissioners today as we did in the 1960s,” Wolfe notes. The agency relies on technology to

Thirst Continued on 22

In 2011, low water levels in Dillon Reservoir exposed the old highway and the normally submerged mouth of the Blue River as seen at right.

May/June 2013 • www.cocpa.org •

21

Thirst

Continued from 21

handle the monitoring process remotely and collect real-time flow data from more than 550 gauging stations statewide. “Without technology, we’d need many more people on staff. How do you keep track of 170,000 water rights? Technology makes what we do possible.”

Challenges Ahead About 80% of Colorado’s current and future municipal and industrial human demands are located on the eastern plains, so getting water from where it is — mostly on the Western Slope — to where it needs to be is a complex process which needs to be managed carefully. Plus, about 80% of Colorado’s water is produced in May, June, and July when snow melt occurs. “It’s a short window of time, and it’s critical to capture,” Wolfe says. “With variability in precipitation and the shortages we’ve seen the past two

winters, it’s easy to understand why it’s important to collect and store water that can be carried over from one year to the next.”

Several years ago, the DWR and the CWCB began assessing Colorado’s needs over the next 50 years. Together, they’ve identified four major challenges:

• Transferring Water Use from Agricultural Use to Municipal Use: Currently, 86% of Colorado’s water is used for agricultural purposes. Wolfe notes that much study and debate are occurring on the impact of changing this dynamic.

• Meeting Gaps: Existing projects to expand or build new reservoirs won’t meet demands in 50 years’ time.

Answers won’t come easily. But, the process is bringing much-needed attention to the challenges of meeting Colorado’s future water needs. To quote Director Dick Wolfe, “Traditional consumption such as agriculture, municipal, and power plants are how the state survived and grew. Today, we also place great value on non-consumptive use, such as water for fish and wildlife and recreation. These are all part of the debate on our future.”

Now, go fix that leaky faucet…s

• Conservation: Can Colorado become more efficient at conservation and meet future gaps? Can those gaps be addressed by efforts such as reduced watering of lawns and golf courses?

• New Water Supplies: Does Colorado have new supplies it can access?

The primary option is beneath the Colorado River system. Should the state build a new pipeline to transport water from the Western Slope to the eastern plains?

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• NewsAccount • May/June 2013

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Hiratsuka & Associates, LLP CPAs promoted Tracy Peterson to senior manager; Ryan Brown to manager; and Brannon Aldridge to senior.

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May/June 2013 • www.cocpa.org •

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AN EVENING OF NETWORKING & BASEBALL Thursday, May 16 Networking Reception: 5:00pm Game Time: 6:40pm

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Food, Ticket, Networking, Fun — Only $23 Celebrate the Rockies' 20th Anniversary with your coworkers, family, and friends when the team takes on the 2012 World Champion San Francisco Giants.

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To apply, contact Terry Cervi at tcervi@cocpa.org, 303-741-8610, or 800-523-9082, ext. 110.

Application Deadline: June 21, 2013

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24

• NewsAccount • May/June 2013

Classifieds

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Near the new Wadsworth Light Rail Station opening soon in Lakewood

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

This newly renovated 3,500 SF building, offering two well-lit floors from a Centralized Skylight, and containing 11 Renovated Offices with a full Walkin Security Vault and Storage area in the basement, and ample parking is the perfect match for a firm looking for comfort and efficiency.

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Opportunities Available Audit Senior: Holben Hay Lake Balzer CPAs, LLC (HHLB) is a second generation firm providing over 60 years of CPA services in the Denver metro area. We are currently seeking a professional to join our growing audit practice as an Audit Senior. Applicants should have a Bachelor’s degree in Accounting and 3+ years of experience in public accounting. Experience with financial institutions and/or pension plans considered a plus. CPA required or actively pursuing. Please visit www.hhlbcpa.com to learn more about this opportunity. To be considered for this position, please email your cover letter, resume, list of references, and salary requirements to ahavey@hhlbcpa.com.

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 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 is 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 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.

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May/June 2013 • www.cocpa.org •

25

Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076

Periodicals Postage

Take the Plunge

CPE Season at the COCPA Heats Up Colorado Board of Accountancy Statutes, Rules, and Regulations May 8 (webcast only) Learn how to apply these bodies of law to practical, everyday experiences.

Instructor Rosemary Weiss will update you on recent rule changes. The State Board requires CPAs to complete this course within six months of initial licensure. • $75/$107 Chief Financial Officer: Executive Level Skills for Financial Managers May 14 (COCPA) Sharpen your skills and become a more effective and respected CFO. Increase your understanding of the CFO's role in banking and financing, corporate conduct, operational control, written documentation, and more. • $355/$507

TO REGISTER

Visit: www.cocpa.org Call: 303-773-2877 Toll Free: 800-523-9082

2013 Not-for-Profit Conference May 16 (Hyatt Regency-DTC or webcast) 8.5 hours of CPE Includes coverage of the new Not-forProfit Entities Audit and Accounting Guide. • $290/$414 Audits of 401(k) Plans: Special Considerations* May 21 (COCPA or webcast) Zero in on the special issues related to accounting, auditing, and reporting on these employee benefit plans, and learn the most efficient and effective ways to plan and conduct your next audit of 401(k) plans. • $345/$493 Auditing Defined Contribution Plans: Exploring the Complex World of Defined Contribution Plans* May 22 (COCPA) Go beyond the basics of preparing workpapers and financial statements to improve communication and coordination among the plan sponsor, the auditor, and various service organizations.

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Debt Related Tax Issues: Foreclosures, Short Sales, and Cancellation of Debt May 29 (COCPA or webcast) Be prepared to assist clients who are considering debt settlement options and those for whom the transaction is completed before you became involved.

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*AICPA members receive a

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• Denotes member and nonmember course fees