COCPA NewsAccount – July/August 2017 by Colorado Society of Certified Public Accountants

NewsAccount July/August 2017 Colorado Society of CPAs

Accounting Leadership in Extraordinary Times PAGE 2

Funding Colorado Schools and Other Public Services PAGE 12

To Tweet or Not to Tweet PAGE 22

Contents Features

Leadership Council: Notable, Quotable, and Provocative When everything is in flux, it’s most important to know what doesn’t change: purpose and values. That’s just one of the many nuggets from this year’s event.

Catching Up with Denver’s Auditor

2017 Women to Watch Honored

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Halfway through his term, Tim O’Brien, CPA, and his team have made significant strides in professionalizing the office.

Five COCPA members were recognized for their leadership and mentorship. Read about them and be inspired.

Funding Colorado Public Schools, Cities, and Special Districts It’s all about property taxes and the impact of the Gallagher Amendment and TABOR.

What’s Next for Colorado’s Marijuana Industry? Social consumption, banking, and Sec. 280E are among the issues the industry faces as it continues to grow.

Will A.I. Replace Human Intelligence? Artificial Intelligence will keep you from having a car accident. Its impact overall will be disruptive and transformational on both a product and service level.

To Tweet or Not to Tweet? By first quarter 2017, Twitter averaged 328 million monthly active users and can generate conversations that otherwise might never happen. Social media makes people brave.

Departments

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Chair Column Movers & Shakers Classified Ads/Alerts

Chair Column

NewsAccount A bi monthly publication of the Colorado Society of Certified Public Accountants Vol. 63, No. 2 July | August 2017 Board of Directors Tawnya Y. Ramirez, Chair Victor A. Amaya, Vice Chair Benjamin T. Hrouda, Treasurer Mark T. Solomon, Immediate Past Chair Mary E. Medley, Secretary Directors Renny Fagan, Dana J. Miller, Gregory P. Osborn, Christopher J. Telli, Karen F. Turner, Randy L. Watkins Editorial Board Jack Allgood, Alan D. Bennett, Peggy Jennings, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Emily Russell, Blue Ocean Ideas, Design 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 = 7,267 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 7,193; free distribution by mail = 0; free distribution outside the mail = 24; total free distribution = 50; total distribution = 7,217; office use, leftovers, spoiled = 50; returns from news agents = 0; total sum = 7,267; percent paid and/or requested circulation = 99%.

303-773-2877 • 800-523-9082 Fax: 303-773-6344

NewsAccount is available online at www.cocpa.org.

• NewsAccount • July/August 2017

Accounting Leadership in Extraordinary Times

his spring’s AICPA Council meeting focused on Accounting in Extraordinary Times. I can’t think of a better way to describe the transformation our profession is going through. Technological innovation makes a lot of people nervous, but I see it as a new opportunity for CPAs to adapt, evolve, and remain relevant. Every moment of Council was devoted to hammering home this concept, from the message AICPA Chairman Kimberly Ellison-Taylor, CPA, CGMA, delivered, to the presenters, to our Capitol Hill visits with members and staff of the Colorado Congressional delegation. Ellison-Taylor discussed six key issues that need to be on CPAs’ radar and how the AICPA is addressing them: Cybersecurity In April 2017, the AICPA released a risk management reporting framework which helps organizations describe their efforts and facilitates a CPA’s examination and report on those activities. Business Model Transformation CGMA’s Rethinking the Business Model white paper proposes a busi-

ness model framework designed to enhance decision-making leading to long-term value creation. Finance leaders are invited to share feedback. Transparency The AICPA’s Certified in Entity and Intangible Valuations (CEIV™) credential helps address regulator concerns about quality, consistency, and transparency of how fair value measurements are substantiated. Advocacy AICPA Council members visited Capitol Hill to discuss key issues, such as IRS modernization, tax reform, mobile workforce legislation, and a federal financial statement report to Congress. More on that follows. Auditing in the Future Business needs are changing. The AICPA is preparing members to better serve their clients and the public by providing new assurance and advisory services that capitalize on the latest technologies. Talent Gen Z is different from the millennials who precede them. Understanding their unique traits and career expectations will help leaders attract, retain, and develop this next generation of talent. THE GAME HAS CHANGED Washington hill visits are exhilarating, interesting, and exhausting. My big takeaway was that there are new rules to the game with the Trump administration. All of the traditional ways things used to get done are up in the air. As representatives of the profession, we carried four specific messages to our Colorado delegation members on Capitol Hill:

Tax Reform. As President Trump’s win was fairly unexpected, there is no detailed tax reform plan. The Republicans, champions of tax reform, were caught a bit flat-footed. This, we told legislators, is where CPAs can help. We are the thought leaders on tax reform. The AICPA has laid out some principles, which I encourage you to read. They aren’t about tax law changes but rather are focused on more comprehensive tax reform with an emphasis on simplicity. For example, millions of taxpayers only earn W-2 income and don’t really need to file a tax return. By simplifying the process, we could restore some faith in the system. The AICPA produced a one-page document that highlights equity, fairness, simplicity, and transparency. We wanted our legislators to know we’re here, we’re your constituents, and we offer you our expertise. Mobile Workforce Legislation. On March 7, 2017, U.S. lawmakers in the House and Senate reintroduced legislation that simplifies withholding and reporting requirements by providing that no part of an employee's wages or other remuneration are subject to income tax other than: (1) the state of the employee’s residence and (2) the state within which the employee is present and performing employment duties for more than 30 days during the calendar year. This legislation has been hanging around for more than six years even though it has bipartisan support. It’s a common sense piece of legislation, and we continue to pursue passage. See page five for late-breaking news. A Fiscal State of the Nation Resolution. The AICPA supports this bipartisan initiative to inform lawmakers. A “Fiscal State of the Nation” Resolution (H. Con. Res. 8) was introduced on Jan. 6. It would require the Comptroller General to address a joint session of Congress on our country’s fiscal health and financial position to promote greater awareness of its long-term financial constraints. How can Congress understand the long-term impact of what it is voting to spend if members don’t understand the bigger picture of the country’s financial

COCPA leaders with Senator Cory Gardner at the AICPA Spring Council meeting.

position? We asked our Colorado delegation members to support this effort. IRS Service Levels. Helping taxpayers and tax practitioners is one of the IRS’s most important responsibilities. Yet over the past three years, Congress has voted repeatedly to defund the IRS. Long wait times on the phone and slow responses are still a reality of interactions with the IRS, making it extremely difficult for CPAs to provide timely service to their clients and efficiently run their practices. We asked our senators and representatives to write a letter emphasizing the importance of restructuring the IRS to make it more customer service friendly, making investments in modern technology, and hiring talented individuals from other sectors to adequately meet staffing needs. So, what was the response on the Hill? We actually met with a number of our Colorado Congressional members in person, which is unusual. You usually meet their staffers, who are always gracious, interested, and engaged. This time, we had the rare opportunity to cross paths with and discuss the issues with several members personally. Our COCPA delegation was the welcoming committee, complete with a Colorado flag, for Sen. Cory Gardner before he spoke on tax reform before the full AICPA Council.

A trip highlight was spending a significant amount of time with Cong. Ed Perlmutter who was very engaged and well-informed. We didn’t just get head nods. He discussed, debated, and focused on what we were saying. Cong. Jared Polis stopped by during our meeting with his staffers, as did Cong. Doug Lamborn. As always, the general AICPA Council sessions were lively and full of debate. One such session centered around completely rethinking a CPA’s core competencies. We brainstormed ideas and when our COCPA group was told to be RADICAL and BOLD, we took that to heart. We were recognized for our out-of-the-box concepts! One final note: Thank you, COCPA Northern Chapter members who hosted me on my first Chair Tour visit. In addition to the traditional Chair update, we asked what was going on in your communities and how can we build resilience as we move forward. You answered. Thank you for engaging and talking. I look forward to the rest of the Chair Tour and seeing you in your communities across Colorado. s For more information on these topics, go to aicpa.org and cocpa.org. Send an email to Tawnya at tramirez@chartergrowthfund.org. July/August 2017 • www.cocpa.org •

Leadership News

Leadership Council: Notable, Quotable, and Provocative

f you were in the room, June 9, you heard, from distinctly different perspectives, why knowing your purpose and the purpose which drives others can transform your business, your professional and personal relationships, and our world. If you weren’t in the room, without context, some of those perspectives seem at least edgy and definitely thought-provoking. Here are few of the nuggets. From Henry Sobanet, Colorado’s Director of State Planning and Budgeting: • CPAs contribute to civilized society. • Medicaid is why we can’t have nice things – a summary of the last two years of discourse on this mandated expenditure. • When you’re 65, you’re still too young to be the drummer for the Rolling Stones. • The Millennial generation is bigger than the Boomer generation by two million people.

• For this (the Colorado economic challenges) to get fixed, the political climate has to change. From Tom Hood, CPA, CGMA, Maryland Association of CPAs and BLI President and CEO:

A Business and Its Beliefs: The Ideas That Helped Build IBM, Thomas J. Watson, Jr.

• CPAs could save the world - because we’re considered to be nonpartisan in a highly politicized environment.

Option B: Facing Adversity, Building Resilience, and Finding Joy, Sheryl Sandberg

• The Collaboration Curve will beat the Experience Curve in the future. • Sometimes you can’t connect dots looking forward. You can only connect them looking back. • Top Skills Poll: Strategic and Critical Thinking, Communication, Anticipating and Serving Evolving Needs; Collaboration and Mobilizing Consensus; Innovation – not one technical skill is on the list. • The #1 Leadership Skill is the ability to inspire and motivate others.

• Preferences are changing in our society, creating massive disruption. Who’s going to want all that stuff grandparents (and parents) have collected?

• When everything is in flux and changing, it is most important to know what will not change: purpose and values.

• The Colorado transportation budget is made up of gas taxes. Purchasing power is being destroyed by the continuing decrease in the gas tax receipts.

• Check out Letitripple.org.

• NewsAccount • July/August 2017

READING LIST Start With Why: How Great Leaders Inspire Everyone to Take Action, Simon Sinek

• Change what you do - not who you are.

From the Relationship Guys, Bob Bach and Tom Konkel:

Made to Stick: Why Some Ideas Survive and Others Die, Chip Heath and Dan Heath The Colorado Outlook: Economic and Fiscal Review, June 2017 https://drive.google.com/file/d/0B0 TNL0CtD9wXZWZlVXRfSnhEa2s/ view

• Don’t close yourself off to encounters that may change your life. • Build relationships because you can choose who you work with. • Avoid trying to do business by random acts of lunch (or gift giving). • Be a net-giver, rather than trying to be a networker, especially if you don’t like the traditional approach to networking. s

Washington DC Update

House Passes Mobile Workforce Bill

n June 20, the U.S. House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2017, H.R. 1393, which is intended to simplify state income tax reporting and withholding rules for employees who sometimes work outside their home states.

eliminate the need for much of the complex recordkeeping employers face when their employees cross state lines to work. It also would relieve many workers of the burden of filing state income tax returns for states in which they worked only a few days during the year.”

“The House’s passage of the mobile workforce legislation is a victory for taxpayers and their employers,” says Barry C. Melancon, CPA, CGMA, president and CEO of the American Institute of CPAs (AICPA). “Enactment of H.R. 1393 would

The legislation calls for creation of a uniform national standard that would eliminate the compliance maze many employers and employees currently confront. Employee earnings would not be subject to state income tax and withholding outside one’s

home state unless the employee worked in a state for more than 30 days during the calendar year. Identical legislation, S. 540, is awaiting Senate consideration. The Colorado Society of CPAs joins the AICPA in urging the Senate to pass the companion bill soon so that thousands of employers and employees can be relieved of the burden imposed by inconsistent state tax laws. For more information, contact COCPA CEO Mary E. Medley at mary@cocpa.org. s

At the COCPA

Pardon Our Dust: We’re Embracing Innovation and Intentional Disruption

f you’re an HGTV fan or working in a “new” office environment, the open concept is familiar to you. If you’re working in a traditional office environment, the big picture is this: At the COCPA office, we’re moving away from private offices and into an open working environment. The art you see behind me in this photo still may find a home in our renovated space, however those walls will be gone, along with most of the other walls where our offices currently exist. In January 2015, we began a journey to create an organization ready to change, adapt, and grow to meet your needs now and into the future. The first step in that journey was to develop our five strategic initiatives. Of course, an acronym was born: CLIMS (pronounced like “climbs,” to keep the metaphor going). It stands for: • Content Management and Delivery • Leadership Development • Innovation Culture and Competency • Member and Customer Service • Sustainability

We developed CLIMS with staff, and most importantly, the COCPA Board of Directors and key volunteers. These strategic initiatives set us on a multiyear path we continue to travel today. We’ve been up and over some of the innovation mountains already: • Outsourcing our marketing, communications, and IT to improve quality and service – and reduce cost • Replacing our hardware with MacBook Pro laptops so our staff can work from anywhere • Changing the way we work with Google products and Slack, and moving our infrastructure to a cloud environment Today we work in an entirely different way than we did only two years ago. The journey continues as we embark on a newly designed office concept. We’re intentionally disrupting our work environment to support our member service culture and foster innovation, collaboration, and adaptability.

The Board Room, Conference Room, classroom, and CPA Cafe will see aesthetic improvements but will remain the same shape spaces they are today. All of our other space will be completely renovated. We will remain open during the eight-week transformation. In early September, we’ll be ready for the next chapter of our innovation story – a new website and infrastructure, coming in 2018, that will make it easier for you to find what you need online and connect with your colleagues. To quote Maryland Association of CPAs and BLI President and CEO Tom Hood, “It’s about shifting from ‘where I go to work’ to ‘where I go to do my work.’” We’re experimenting, and we’re modeling how innovation and collaboration can be accomplished differently. Stay tuned. There’s more to come at the budding innovation laboratory we call the COCPA office. In the meantime, pardon our dust! s Email Mary E. Medley, COCPA CEO, at mary@cocpa.org. July/August 2017 • www.cocpa.org •

Report Card

Catching Up with Denver Auditor Tim O’Brien BY NATALIE ROONEY

Halfway through his four-year term as Denver Auditor, COCPA member Timothy M. O’Brien, CPA, says he’s happy he threw his hat in the ring and is enjoying serving the City and County of Denver. He reflects on why he ran, how things are going, and what he’s thinking about a run for another term.

ne of Tim O’Brien’s primary points when he ran for the office was that the City and County of Denver Auditor should be a CPA. Ever since that goal was accomplished – defeating the favored candidate – O’Brien has been hard at work for Denver’s taxpayers. “Long term, I think the auditor position should reflect the values and principles upon which the auditing profession is built,” O’Brien says. “Having an auditor who is a CPA will take a giant step in that direction.” When elected, O’Brien was the only CPA in the Auditor’s Office. Now, there are 13. “We’re building the right kinds of skills needed to get the job done,” he says. “You can have all sorts of great ideas, but if you don’t have the right people, you can’t get much accomplished. We must have high quality people.” In the past, O’Brien says the auditor spent too much time quarreling with the mayor about public policy decisions and not enough time being the auditor. He says his focus has been, and will continue to be, producing high quality reports. “This isn’t a political platform to argue with the mayor or city council – or a position where career politicians go on to run for mayor,” he explains. “If I can continue to provide what I would call ‘proof statements,’ good audit reports, I can show that the Denver auditor should be a qualified professional. If I have the honor of being elected to a second term, I think Denver citizens will be even more convinced." Yes, O’Brien plans to run again in 2019. Although term limits apply, he even could

• NewsAccount • July/August 2017

run for a third term. “But I’ll take them one at a time,” O’Brien laughs. “I’ve got to win the second term before I think about running for the third.” With 45 auditors on staff, O’Brien says there’s no target number of CPAs he’s trying to achieve, but he emphasizes that the CPA is an important credential and background for people to have. “I’m not trying to create a CPA firm within the government, but we want to be a professional organization with CPAs so people feel confident in our audit findings and recommendations. CPA training is a good base for that.” Like counterparts in the corporate world, the Auditor’s Office is focusing on data analytics and using electronic tools. One team member recently earned his Ph.D. Others are working to earn data analytics credentials. “I want to invest in the staff because that’s how we’ll be able to get the job done,” O’Brien says. EXPANDING THE OFFICE'S ROLE O’Brien says that while the prior auditor focused exclusively on performance audits, he knows citizens want more, and the city charter demands more. The Auditor’s Office will continue to conduct performance audits, and the team also is delving into the financial aspects of the City and County of Denver, performing technology audits, cybersecurity audits, and contract compliance. “My office is doing a lot of general oversight to make sure Denver and the taxpayers are getting what they pay for,” he says. In addition, the Auditor’s Office is using data analysis tools to do continuous auditing.

“Instead of using statistical sampling, data analysis allows us to electronically examine large quantities of data, sort it, and identify higher risk transactions. We’re just getting our toe in the water.” O’Brien says the team is working on getting better at these new techniques, and the right people on staff are critical to that effort. “We’re going to continue to see more emphasis on information technology and cybersecurity,” he says. “I expect to see more emphasis on the financial aspects as well. Are transactions properly classified, authorized, and recorded? We want to be able to answer the question: ‘Did we get what we bargained for?’ from a particular contract with a vendor.” REFLECTING AND LOOKING AHEAD “I’m proud of the job we’ve done in recruiting in a tight labor market,” O’Brien says. “One thing we have to offer a young CPA is the variety in the work we have here. As we interview, candidates usually say, ‘I want to be able to make a difference in my community.’ This is a way we can all do that.”

O’Brien outlines the variety of projects available to staff members. Options include the police department, the zoo, the airport, the fire department, jails, parks, and libraries. “If you get bored in the assignments here, that means you’ve been working here 35 years,” he laughs. “There’s a lot going on. Our scope is huge.” That scope is why analytics will play an increasingly important role. Not every agency is audited annually. At the beginning of the year, the team meets with each agency and its department heads to determine risks and determine what audits might be needed. These interviews are considered in the creation of the annual audit plan. Citizen input and other sources also play a role in creating the annual plan. O’Brien places emphasis on “plan,” because it’s developed in October and as the year progresses, more pressing matters may supersede the original plan. “The world changes fast, as you know,” he says. Another change O’Brien has introduced is tapping resources in the local audit community. “We want to do business with local CPA firms, and we’ve issued a number of RFPs for that purpose,” O’Brien explains. “By contracting out some of our audit work, we can utilize expertise that our staff doesn’t yet have. It also preserves our independence on audits where our staff might have a conflict of interest. I think I’m delivering exactly what I told the voters I would do two years ago,” O’Brien says. “I like ‘giving back’ and making a difference. If you’re a CPA looking for a challenge, we’d be interested in talking with you.” s Contact Tim O'Brien at TimothyM.OBrien@denvergov.org.

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July/August 2017 • www.cocpa.org •

CPAs Making a Difference

2017 Women to Watch Honored On June 1, the COCPA, in collaboration with the AICPA, honored the following individuals with the 2017 Women to Watch Award. Leaders of Note have attained leadership positions within their organizations, have made notable contributions to the accounting profession, help improve their workplaces, and mentor others. Emerging Leaders 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. LEADER OF NOTE LAURIE B. ANDERSON, CPA “Great leaders are hard to come by and are few and far between. That’s why, when we see one, it’s important to recognize her – or him. In the Denver private foundation community, one of those great leaders is Laurie Anderson. Our community is richly blessed to have her.” So writes Steve Corder, CPA, CGMA, in nominating Laurie as a Leader of Note. Colleague Lori Anne Reinwald, CPA, adds, “Outside of work, Laurie also dedicates much of her time to improving not-for-profits through sitting on boards, teaching classes, and writing articles to help them and their leaders understand financial statements and fiscal responsibility.” A past board chair of the Colorado Nonprofit Development Center, Laurie also has dedicated countless volunteer hours to the Women’s Bean Project including service as board treasurer and current finance committee member; shared her expertise through teaching for Metro Volunteers; and contributed articles to the Colorado Nonprofit Association newsletter. She’s served often on, and also chaired, the planning committee for the COCPA Not-for-Profit Conference and presented on various topics for the Institute Tax Group, too. Laurie’s mentorship is legion within her firm, Kundinger Corder and Engle P.C., Denver. Staff member Ken Fichter says, “Laurie has been instrumental in my growth and learning how to become an accurate, efficient, and prepared staff auditor. Her guidance and

• NewsAccount • July/August 2017

Left to right: COCPA Chair Tawnya Ramirez, Jane Everhart, Laurie Anderson, Rebecca Kelley, Andrea Geerdes, Peggy Jennings, who accepted the award for Ksenia Popke, and Alexie Tune, Women to Watch Awards Committee Member.

mentorship began the first day I walked through the door. Laurie has always made herself available for questions and guidance independent of her own workload.” Lori Anne Reinwald adds, “When I joined the firm – after graduating from Oklahoma State University and relocating from Oklahoma to Denver – Laurie kept a close eye on me. She was patient, always open to my questions, and instrumental in helping me learn about auditing, client relations, and being a professional. She also kept a close eye on my time. She might be staying late to get a jump on the next day, but she would say, ‘I think your eight hours are up.’ That was especially helpful as it gave me time after work to study for the CPA exam.” Lest you think Laurie is all work and no play, think again. She noticed younger staff wanted more opportunities to get to know each other and have fun together since they often work at clients’ offices and don’t see each other for weeks at a time. The quarterly social gathering on Friday afternoon at Govnr’s Park in Denver is Laurie’s solution –

in case you’d like to witness the camaraderie she helps to create. Laurie Anderson is one great leader – and a 2017 Leader of Note award is well-deserved recognition! LEADER OF NOTE JANE EVERHART, CPA For over 20 years, Jane Everhart has served as an accomplished global finance and accounting executive for entrepreneurial, fast-growing companies such as OtterBox. Now COO and CFO with Brinkman/ Brinkman Construction in Fort Collins, Jane is committed to the impact a strong corporate culture has on a company’s bottom line. She is unique in a numbers-driven field, as she utilizes culture as a fundamental competitive advantage. Colleague Kate Baker writes, “Her innovation surrounding keeping culture in the forefront of an organization’s financial outlook has positioned her as a pioneering CFO.”

In nominating Jane for the Leader of Note recognition, Kate gathered input from many who have benefitted from Jane’s leadership and mentorship. Jay Hardy, president of Brinkman, says, “Jane is the glue that has brought the company from a small, growing one to a real contender in every part of the business she touches. Years from now, Jane will be seen as the ‘agent for change’ who helped the organization mature.” Diane Zile with JERA Partnerships writes, “What I value and admire most about Jane is her ability to maintain a strong sense of self and authentic leadership during the most stressful and challenging situations. She has always shared the spotlight and the credit by building high performing, high impact teams around her. She is gifted at identifying the strengths and talents of her team members to achieve the very best results.”

2017 CPAS MAKE A DIFFERENCE

2017 HEROES & HEROINES SOUGHT Nominations Deadline: September 15, 2017

Moxie Exchange Movement founder Maureen Boyt says, “Simply put, Brinkman would not be where it is today without Jane’s influence. She is a believer in balancing culture and process.” Paul Brinkman, co-founder of Brinkman and Brinkman Construction, describes Jane as a “visionary for developing young talent within the company.” He adds,” Jane is a leader within our companies, our teams, our communities, and her industry. I hold her and her contributions with the highest regard.” Imagine hearing that from your boss! Jane is recognized for hiring people into stretch positions and helping them to develop the technical skills, leadership philosophies, and cultural awareness to aid in their advancement and success. She kicked off the Women of Brinkman Mentoring Leadership program; led the vision for creation of Brinkman/Brinkman Construction’s peer to peer core value recognition program, Shine; and introduced a paid Volunteer Time Off Day for all employees – just a few examples among many which bear Jane’s handprint. Kate Baker sums it up: “The thing I respect the most about Jane is her genuine commitment to backing her team. She makes it clear that her number one priority is helping each of us succeed.” Jane has made her mark as mentor, strategist, innovator, cultural compass, teacher, visionary, colleague in arms, and friend. Truly, Jane Everhart is a Leader of Note. EMERGING LEADER ANDREA GEERDES, CPA Anton Collins Mitchell tax director Andrea Geerdes is known for her relationships with clients and her coaching and mentoring of others. A quiet leader who generally dodges the spotlight, Andrea is deeply involved in the firm’s initiatives and events including recruiting. She is always one of the first to volunteer in support of firm activities. CONTINUED ON PAGE 10

Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We will honor those contributions with the 2017 Everyday Heroes and Heroines Awards, to be presented at the CPAs Make A Difference Celebration, Nov. 10, at the Grand Hyatt, 1750 Welton St., Denver. If you know a CPA who should be considered, please submit a nomination. Send a narrative, not to exceed three pages, explaining why you believe the candidate should be recognized and detailing his or her accomplishments. Nominees must hold a CPA certificate and be a COCPA member. They 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 organizations and community activities. LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in one or more community organizations, 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 and to submit your nomination electronically, contact Terry Cervi, terry@cocpa.org, 303-741-8610.

July/August 2017 • www.cocpa.org •

CPAs Making a Difference CONTINUED FROM PAGE 9

Andrea also is deeply involved in her children’s school activities, facilitating communication between teachers and parents, organizing events for her son Anderson’s class, and securing volunteers. About five years ago, Andrea sought a volunteer opportunity which would engage her passion for children’s and women’s issues. That’s when she became involved with Florence Crittenton Services, the Denver nonprofit whose mission is education, preparation, and empowerment of teen mothers seeking to become productive members of their communities. As a member of the organization’s Junior Board, Andrea helps to raise awareness for the cause and raise funds to support its services. Andrea says, “Most of these girls come from dysfunctional or even abusive environments. Some are homeless, and most live at or below poverty level. Yet, they are determined and motivated to improve their lives and to make sure their children have different opportunities and outcomes. Andrea is determined and motivated to help make that happen. At ACM, Andrea is all about helping others, too. As one of her colleagues puts it, “Andrea is always accessible to answer questions and help me work through issues. She is an invaluable resource and always reaches out to make sure I’m doing well and progressing.” A mother of two young boys, Andrea cares about the people she works with and her clients. She is an outstanding role model and advisor for young women finding their way through the challenges of juggling multiple priorities. She demonstrates technical excellence and thoughtful leadership every day. She is a 2017 Emerging Leader. EMERGING LEADER REBECCA KELLEY, CPA For Rebecca Kelley, giving back has been a part of her life since

• NewsAccount • July/August 2017

childhood. This Grand Junction, Colorado, native grew up making annual trips to a small fishing village in Mexico – for vacation. She and her family became close with some of the families there and recognized the need for support in the community. The result: Rebecca’s dad started a charity to provide gift bags for the children which Rebecca and her family would deliver at Christmas time. That early start was a life-changing one. Today, Rebecca volunteers her time in support of her alma mater, the University of Denver, through service on its Alumni Engagement Council and in her role as chair of the student/alumni mentorship program. She has served as a mentor, encouraged others to do so, and led kick-off events at which program expectations and mentee/ mentor roles are addressed. Rebecca joined EKS&H LLLP, Denver, in 2005, and recently was named a partner. A member of the Accounting Solutions Consulting Group, she is a QuickBooks Certified ProAdvisor. She led the effort to launch the Front Range QuickBooks User Group. Rebecca currently is coordinating the firm’s involvement with CareerWise, a high school apprenticeship program being introduced in Colorado this summer. When she’s not working hard at work and on behalf of DU, Rebecca is planning to travel, traveling, or thinking about where she’ll travel next internationally. The UK, France, Spain, Italy, Switzerland, Belgium, the Netherlands, Iceland, Costa Rica, and Peru already are stamped into her passport. She says she looks forward to a trip somewhere every year, after busy season, of course. Dr. Sharon Lassar, who nominated her, says, “Rebecca is a CPA who shows integrity and respect in her dealings. She is a steady force who keeps things moving while making everyone around her feel comfortable and accomplished.” High – and well-deserved – praise indeed.

That’s just one person’s thought on what all who know Rebecca believe to be true: She is an Emerging Leader worth celebrating. EMERGING LEADER KSENIA V. POPKE, CPA Ksenia Popke spends her days working with nonprofit organizations, helping them prepare for and complete their audits, but her devotion to nonprofits doesn’t end with her workday. In fact, her professional and personal lives regularly intersect. Organizations that focus on education are Ksenia’s passion. She serves on the University of Denver’s School of Accountancy Advisory Board and has facilitated its International Student Forum for the past three years. She is vice chair of the Art Students League of Denver board of directors and has served on its finance committee. A frequent speaker at local events including the Colorado Business Council for the Arts, Ksenia, too, has served on the planning committee for the COCPA Not-for-Profit Conference. Brian Callahan, partner in charge of the Colorado offices of Eide Bailly LLP, writes, “Ksenia joined Eide Bailly in 2011 and quickly established herself as a leader. She currently mentors five young women and is a program facilitator for the firm’s First Focus program, an initiative for improving the advancement and retention of professional women. She is a mover and shaker within our nonprofit practice locally and nationally and a bright star here at the firm.” Ksenia shines wherever she goes, making her not only an Emerging Leader but also a true Woman to Watch! s To nominate an individual for the 2018 Women to Watch Award, contact Terry Cervi, terry@cocpa.org, 303-741-8610.

AICPA Volunteer Service

he American Institute of CPAs (AICPA) appointed the following Colorado members to its volunteer groups. We thank them for their service to the profession.

James D. Ewing, Financial Accounting and Reporting (FAR) Subcommittee

Gregory J. Anton, Chair, Financial Literacy Commission

Melissa K. Hooley, Chair, Women’s Initiatives Executive Committee, and Nominations Committee

Angela M. Appleby, SOC Reporting Task Force Diego Baca, Board of Examiners Sheila M. Balzer, Accounting and Review Services Committee and AICPA Council James P. Burton, Assurance Services Executive Committee

Gaylen R. Hansen, Auditing Standards Board Stacey E. Committee

Hekkert,

PCPS

Executive

William G. Lajoie, Practice Monitoring Task Force for Employee Benefit Plans Sharon S. Lassar, Chair, Pre-certification Education Executive Committee Kathryn R. Lockhart, Women’s Initiatives Executive Committee

Steven R. Corder, AICPA Council

Patrick A. Lytle, Student Recruitment Committee

Wendy Davis, IT and Cloud Services Task Force

Claire B. McAuliffe, Practice Advisory Group

Nedra L. Downing, Relations with the Judiciary Subcommittee

Timothy J. McCutcheon, Chair, Not-forProfit Advisory Council Tawnya Y. Ramirez, AICPA Council

Robert Rudloff, IMTA Cybersecurity Task Force Richard L. Russell, Regulation (REG) Subcommittee Ronald L. Seigneur, FLP Issues Task Force Jason A. Sibley, Investment Companies Expert Panel Mark T. Solomon, AICPA Council Scott K. Sprinkle, Chair, Investments Committee, and AICPA Council David E. Taylor, Individual & Self-employed Tax Technical Resource Panel Randy L. Watkins, Government Performance & Accountability Committee (GPAC) Randy S. Watson, Peer Review Board Oversight Task Force and Practice Monitoring Task Force for Employee Benefit Plans Diane H. Wightman, Financial Literacy Commission Sidny K. Zink, Joint Trial Board

July/August 2017 • www.cocpa.org •

All Things Taxation

Funding Colorado Public Schools, Cities, Counties, Fire Protection Districts, and Other Special Districts BY PAM FEELY, CPA, MBA

ublic schools, county governments, fire protection districts, and other special districts rely on property taxes to fund the services they provide to their communities. While cities generally rely on sales taxes, property taxes may supplement those revenues. In fall 2016, elected officials and managers of these entities gasped when Colorado’s property tax administrator released the 2017 preliminary residential assessment rate (RAR). It was dropping to 6.56% of a residence’s value from the current 7.96% – an over 20% rate decrease. How was that possible? GALLAGHER AND TABOR We got here through the intersection of two amendments to the Colorado Constitution approved by voters. The Gallagher Amendment, enacted in 1982, limits growth in residential property tax rates. The Taxpayer Bill of Rights (TABOR), enacted in 1992, limits growth in overall government spending and requires that taxpayers vote on any tax increases. Prior to the passage of the Gallagher Amendment, no formal system existed for county assessors to value property. Some counties re-evaluated properties every few years while others were more casual about the process. County assessors used up to seven methods to value property, and statewide property valuation was inconsistent. The Amendment did the following: • Reduced the number of methods county assessors use in computing actual value of the property to three: cost, market, and income approaches. • Limited residential property valuation to the cost or market approach. • Established commercial assessment at 29% of value.

property

• NewsAccount • July/August 2017

• Established Agricultural land valuation using the income method only. • Established a statewide percentage of commercial property bearing approximately 55% of the total property tax liability. • Established a two-year re-evaluation process. • Allowed the residential assessment rate to go up or down to maintain the 45% – 55% split. Taxpayers loved the Gallagher Amendment and passed it by a 65%-35% margin. Post 1982, anti-growth and taxation limitation forces continued to push for smaller government. In 1992, Colorado voters passed TABOR which specifically requires the RAR to increase only through a statewide vote. As Colorado’s residential property valuation increased during the past three decades, the RAR decreased. By 2003 the RAR was reduced to 7.96% where it has remained until 2018. The 2003 decrease reflects the impact of the dot-com bubble and following

recession. Property values barely had time to recover before the great recession hit. The result: The RAR remained constant for 14 years. Because residential property values increased along the Front Range coupled with a decrease in oil and gas production over the last two years, the RAR will go down. The question for local agencies was, “By how much?” The initial estimate was 6.56% to maintain the 55%-45% commercial/ residential ratio. WHAT’S NEXT? The Gallagher Amendment is successfully keeping property tax bills lower than the rapid increase in home values. As an example, a couple with five children, two dogs, and a mother moved into a residential property in Lakewood, Colo. in 1981. In 1983, the property was valued for property tax purposes at $71,000. Over the next 34 years, the property increased in actual value to $475,000.1 The following table shows the property’s actual value and assessed value at various

Year

Residential Actual Value

Residential Assessed Value at 21%

1981

$71,000

$14, 910

2002

$310,000

$65,100

$24,676

2016

$325,000

$68,250

$25,870

2017

$475,000

$99,750

Value Increase %

669%

times between 1981 and 2017. The property’s value has increased 669% while the amount subject to property tax has increased 254%, at the 7.96% assessment rate. The Denver/Boulder CPI between 1982 and 2015 increased 240%.2 Note that the RAR is computed statewide, and not all residential property has increased in value to the same extent as residential property between Castle Rock and Fort Collins. Residential values in the rest of the state have stayed stagnant or decreased.

Residential Assessed Value at 7.96%

Residential Assessed Value at 7.2%

Residential Assessed Value at 6.56%

$34,200

$31,160

229%

209%

254%

residential increase as in the Denver metropolitan area, a RAR of 6.56% means a huge reduction in revenue that would impact services. School district reductions are backfilled by the State of Colorado while other types of governments are left to make up the shortfall from either reserves or asking voters for a mill levy increase. If the RAR comes in at 6.56%, the impact on the state budget with the requirement to backfill the loss to local school districts means legislators would need to make some hard choices.

Each year government entities create their budgets by computing their local property tax rate (mill levy) on the total assessed valuation of the taxing authority. The governmental entity has the ability to lower its approved mill levy but cannot increase it without a vote of its taxpayers.

In June of even years, county assessors begin the process of revaluing all commercial and residential property. They send the information to the Property Tax Administrator, and the process of compiling the data begins. In November 2016, the Administrator released the preliminary RAR based upon the information collected and processed to date.

For those local governments in areas where values have not experienced the dramatic

The next step in the process is to present the information to the Colorado General

Jefferson County Assessor’s Office

Assembly in January and again in April with the final number. The legislature votes on the final ratio. The Property Tax Administrator and the Board of Equalization’s final recommendation was made to the legislature in April, 2017. The RAR for the next two years was ultimately set at 7.2%, as set forth in House Bill 17-1349. See the table above for the impact of the 7.2% rate. Now local governments are reviewing their 2018 – 2019 budgets to see if they are able to weather the potential decrease in revenues by using reserves or asking their voters for a mill levy increase. s COCPA member Pam Feely, CPA, MBA, consults on campaign finance issues, chairs the Fire and Police Pension Association of Colorado Board of Trustees, and serves as president of the West Metro Fire Rescue Board of Directors. Contact her at pamfeely@aol.com.

Colorado Legislative Council Staff

SAVE THE DATES 2017 Conferences For details, contact COCPA at 303-773-2877, 800-523-9082, or go to www.cocpa.org.

August 16 Marijuana Business Symposium August 18 Young Professionals August 22 Personal Financial Planning August 25 Women's Summit August 28–29 Technology

October 24 CPAs In Industry October 31 Governmental November 14 Accounting and Auditing November 17 Real Estate December 13 SEC and PCAOB December 18 Mix and Match

July/August 2017 • www.cocpa.org •

Colorado Business

What’s Next for Colorado’s Marijuana Industry? BY NATALIE ROONEY

usiness is booming. Both recreational and medical marijuana sales are growing and have set new sales records for ten consecutive months. In March 2017, sales tax revenue hit $22.9 million, according to the Colorado Department of Revenue (CDOR). If the current growth rates continue, the industry could hit $1.6 billion in sales, according to the Marijuana Policy Group (MPG), a Denver-based financial, policy, research, and consulting firm focused on the industry. Almost all of the sales growth is in the retail marijuana space. Here are more March 2017 data points: • $131.7 million in sales by all Colorado licensed marijuana shops • $93.3 million in recreational marijuana sales • 48 percent growth in sales from March 2016 to March 2017 Source: The Cannabist

Colorado’s cannabis industry has created approximately 18,000 jobs since adult use was legalized in 2014, according to MPG.

• NewsAccount • July/August 2017

Number of Licensed Medical Marijuana Businesses as of May 1, 2017

Number of Licensed Retail Marijuana Businesses as of May 1, 2017

Centers

520

Stores

479

Cultivations

776

Cultivations

667

Infused Product Manufacturers

250

Product Manufacturers

257

Testing Facilities

Source: Colorado Department of Revenue

Of those, nearly 13,000 were direct, fulltime employment (FTE) positions within the industry, with the rest indirectly added through sectors peripheral to the industry, or induced jobs created through the economic activity spurred by legalization. The created jobs span a range of sectors. MPG estimates that more than one-third of the jobs (35 percent) were created in the retail sector, with 22 percent in administrative roles, 16 percent in manufacturing, and 12 percent in agriculture. (Source: The Cannabis Industry Annual Report 2017) Economists project that Colorado’s marijuana market will eventually hit a ceiling as the draw from the black market becomes more complete, regular economic cycles take hold, and other states implement adult-use sales. When that will occur is still a question,

but looking at the license and application fees from March may be an indicator. The license and application fees for medical marijuana businesses and retail marijuana businesses were down 25.4 percent and 8.5 percent, respectively, according to the CDOR report. WHERE DOES THE MARIJUANA TAX MONEY GO? Marijuana is a heavily taxed product. Based on New Frontier Data national sales forecasts, medical and adult use cannabis sales will generate $745 million in tax revenue in 2017, $609 million of which will come from cannabis-specific taxes (such as the 37 percent excise tax in Washington). The remaining $136 million will be earned from state sales taxes applied to all retail sales. By 2020, tax revenues from cannabis

will grow to $2.3 billion, of which $1.8 billion is projected to come from cannabisspecific taxes. These forecasts underscore the important role that cannabis taxes will play in driving new revenue for state government, generating funds to cover the costs of administering the cannabis programs, and supplementing states’ general tax funds. In Colorado, the wholesale tax on pot is entirely dedicated to schools. The first $40 million goes to a state program called BEST, which awards grants to local school districts to build and improve school facilities. While $40 million isn’t exactly revolutionizing Colorado’s education budget, it is producing upgrades, particularly in rural districts, according to a 9News report. In the fiscal year ended June 30, 2016, the state collected $2.6 million above the $40 million cap. That money is transferred to a public school fund where it contributes a small amount to the $5.4 billion cost of running Colorado’s public schools each year. Local governments get a 15 percent cut of the state’s special sales tax on pot, which was worth about $10 million in the last fiscal year. The rest of the 10 percent special sales tax and all of the regular 2.9 percent sales tax (about $76.5 million in the last fiscal year) are available for the state legislature to determine. Generally, it has worked out agreements to apply significant portions to enforcing marijuana laws and treatment and education programs to address the impact of marijuana use on society. ISSUES ON THE HORIZON Lewis Koski, co-founder and partner at Freedman & Koski in Denver, says the legalization of marijuana in Colorado was just the tip of the iceberg. Many open-ended issues are still unknowns on Colorado’s marijuana landscape. Koski’s name may ring a bell. He was the Colorado Department of Revenue’s deputy

senior director of enforcement before making the leap to the private sector in January along with Andrew Freedman, the state’s former director of marijuana coordination. Together they formed Freedman & Koski LLC to advise local and state governments that are hashing out cannabis regulations. Freedman and Koski are two of only a few individuals in the country who have been insiders as a state has gone through both medical and recreational legalization, start to finish. “Our core value-add is to help implement legalization successfully in the U.S., Canada, Europe, wherever,” Koski says. The firm works with governmental clients to help them with successful implementation in jurisdictions where the law already has been mandated for recreational and medical marijuana. “We take a lot of the lumps and bumps and newness away and help states establish best practices and approaches to public deliberation, rulemaking, stakeholder involvement, task force creation, holding public meetings, and helping a government be more proactive in how it anticipates the biggest challenges,” he says. Koski outlines some of the open-ended issues Colorado’s marijuana industry still faces. SOCIAL CONSUMPTION Since marijuana users are limited in where they can consume, interest has existed from the outset in having a place to socially consume marijuana, whether it’s by a patient, resident, or tourist, Koski says. In November 2016, Denver voters approved Initiative 300, granting businesses the ability to apply for a permit to allow adult marijuana consumption in designated areas. While applications are available to apply for a permit through the Denver Excise & Licenses office, the office’s web page states applications will not be accepted and permits will not be issued until final rules and regulations are adopted. Once that happens, the department will develop the application process. A business may not begin operating a designated social consumption area until after it obtains a valid permit to do so from

Excise & Licenses. “We don’t know what social consumption licensing will look like yet, but there’s a big push for it,” Koski says. “Will there be rooms on a premise where you purchase? Can you use it in a bar? Can you bring your own? The situation is evolving, not just in Colorado, but also nationwide. It comes from a lack of understanding of what public consumption really means. A lot of policy alternatives are being thrown around.” Koski adds that while the state didn’t underestimate the level of use of marijuana, it did underestimate the way it would be used – for example, edibles consumption. “Licensees say edible sales are really strong,” he says. “People are traveling here, purchasing, and consuming.” Transportation of marijuana products is another issue – not from retail outlet to home but the transportation of products between growing and testing facilities. The only persons authorized to transport marijuana or marijuana products are those licensed by the State Licensing Authority and Denver Excise & Licenses. BANKING Because marijuana is still illegal under federal law, it is also illegal for banks to work with any marijuana-related businesses. Colorado Congressman Ed Perlmutter is hoping to remedy that. In 2014, the Obama administration issued stringent guidelines that allow banks to serve marijuana-related businesses that are following state laws. But most banks haven’t been willing to risk the lingering threat of criminal prosecution or to spend the resources needed to comply with the rules. That leaves marijuana licensees in a bind. Where do they put their money? How do they pay bills? How do they pay their employees, for that matter? What about record keeping and paying taxes? And all of that cash raises safety issues. CONTINUED ON PAGE 16

July/August 2017 • www.cocpa.org •

Colorado Business CONTINUED FROM PAGE 15

Koski says Colorado is beginning to normalize, and there are banking solutions for a vast majority of licensees, but that doesn’t mean the situation isn’t tenuous. “There are banks which have decided to take on marijuana clients, but they’ve done their due diligence to meet guidelines.”

medical marijuana to unregulated markets, or “gray market” activity. In addition to placing a new 12-plant cap on the number of plants that can be possessed or grown on a residential property, these bills also create a grant program totaling $5.9 million from the Marijuana Tax Cash Fund.

A recent survey by the California Growers Association found 75 percent of its members don’t have a bank account, and the ones who do have had three or more accounts closed in the course of doing business. A 2015 survey by Marijuana Business Daily of more than 400 cannabis professionals nationwide also found 70 percent of businesses that deal directly in marijuana operate without traditional banking services. As for firms that support the business but don’t handle the plant, 49 percent don’t have bank accounts.

Why is this a big deal? “Because if you’re growing over 12 plants, you’ll need to get a grower’s license,” explains Koski. “And if your local jurisdiction doesn’t allow that, you’ll have to ask to it to allow a commercialized business. One-third of local jurisdictions allow for commercial growth; the rest don’t.”

In April 2017, Cong. Perlmutter introduced the Secure and Fair Enforcement Banking Act (SAFE Banking Act), legislation that would allow banks to serve marijuana-related businesses without fear of penalties from the federal government.

“No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.”

The bill is a reintroduction of the Marijuana Businesses Access to Banking Act, which was first introduced in 2013 – and again in 2015 – but never gained traction. In May, Cong. Diana DeGette and Cong. Mike Coffman introduced the Respect States’ and Citizens’ Rights Act of 2017, which would add a provision to the Controlled Substances Act that would prevent federal preemption of state law. They also threw their support behind banking legislation for the marijuana industry. THE GRAY MARKET On May 26, Gov. John Hickenlooper signed Senate Bill 17-254, the “2017-18 Long Appropriations Bill,” into law, which included House Bill 17-1220 and House Bill 17-1221, Unregulated “Gray Market” Medical Marijuana Activity. The legislation creates the authority and resources needed to combat and prevent the illegal diversion of

• NewsAccount • July/August 2017

WHAT ABOUT 280E? Section 280E of the Internal Revenue Code states:

Congress passed Section 280E in 1982 in response to a case in which the Tax Court ruled that a taxpayer could deduct expenses related to the sale of cocaine, amphetamines, and marijuana. Deductible expenses included the costs of packaging, travel, and even scales used to weigh the illegal substances. This is no longer possible in the world of 280E. Since cannabis is a Schedule I controlled substance, the IRS has used Sec. 280E to disallow marijuana businesses from deducting their ordinary and necessary business expenses. The result is that marijuana companies face much higher federal tax rates than similar companies in other industries. Opinions differ on the level

of tax rates imposed on marijuana companies – from 40% to 70% to as high as 90% – all of which are higher than the 35% corporate tax rate paid by most other U.S. businesses. The Canna Law Blog writes that for those in the marijuana business, normal business expenses such as rent, advertising, and employee salaries won’t reduce taxable income unless they can be allocated to Costs of Goods Sold (COGS). For marijuana growers, COGS include expenses directly related to production of the plants, such as the seeds, electricity, and labor that went into growing and preparing the flowers for sale. For marijuana dispensaries, COGS are much more restrictive and generally include only the amount paid for the cannabis products they sell plus a few additional allocations. In January 2015, the IRS released Chief Counsel Memorandum 201504011 that clarified what types of costs could be allocated to COGS, further limiting the ability of marijuana businesses to reduce their federal tax rates. The Chief Counsel Memorandum states that when auditing a cash-basis marijuana facility, the IRS has the authority to permit the taxpayer to deduct from gross income its costs that would have been inventoriable had the taxpayer been on the accrual method. As long as marijuana remains on the list of controlled substances, Sec. 280E will serve to create monumental problems for those in the industry. s

MARIJUANA BUSINESS SYMPOSIUM SPONSORED BY COCPA Check out the COCPA Marijuana Business Symposium: Guiding the Businesses That Will Pilot an Industry, August 16, at mbs.cocpa.org. Industry leaders will provide clarity on how to provide services in this growing field. Recommended CPE: 8 hours.

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THE CGMA DESIGNATION IS MY STATEMENT TO THE BROADER BUSINESS MARKETPLACE THAT I AM INVESTED IN HELPING BOTH MY ORGANIZATION AND MY CUSTOMERS’ ORGANIZATIONS IN ACHIEVING THEIR BUSINESS GOALS. Marie M. Hibbert, CPA/CITP, CGMA

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Business Planning

Doing Business in Another State? Nine Things to Know BY GEORGIA Z. PHILLIPS, CPA

2. Registration Requirements. To do business in a state, a company is generally required to register with the Secretary of State. The state also may require registration with the state department of revenue/taxation, state payroll withholding and unemployment tax set-up, and sales/use tax account set-up.

trides in mobility and technology allow companies to do business across state lines with ease, and by doing so, businesses can expand rapidly since they are not constrained by geographic boundaries. However, this opportunity for growth and expansion comes with a caveat: Beware of state laws, rules, and regulations that may result in adverse consequences if compliance is absent. Proper planning prior to commencing business in a state is essential for avoiding possible compliance issues. Companies should be aware of these nine things before venturing across the state line: 1. Form of Business. A company needs to confirm if there are special filing requirements for its form of business to be valid in the state in which it intends to do business. For example, not all states automatically recognize federal S Corporation status – these states require a state S Corporation election as well. Does the company have a Qualified Subchapter S Subsidiary (QSub)? Several states require special tax reporting for this type of entity.

• NewsAccount • July/August 2017

3. Industry Specific Requirements. Many states have special rules for certain industries. For example, construction contractors have licensing, bonding, and insurance requirements that must be met before they can do business in a state. Trucking companies may have state regulatory hurdles and labor laws with which to contend, in addition to federal ones that are in effect. Know the state requirements for the business activity that will be conducted. 4. Employees and Payroll. Additional payroll reporting requirements may apply if a company’s employees are working in a state other than their home state. Some states have generous thresholds for days worked and/or income earned before withholding is required, while other states require income tax withholding and reporting for as little as one day of work performed by an out-of-state employee. 5. Sales and Use Tax. It is essential for companies to understand and comply with state sales and use tax remittance requirements. A product or service may be exempt from sales/use tax in one state, city, or special district but not in another. Companies should understand what constitutes nexus and what is taxable for sales and use tax purposes in each location in which they do business. 6. Gross Receipts Tax. A gross receipts or commercial activity tax is imposed upon gross receipts earned in a state. Ohio and Nevada are two states

with such a tax. Certain cities and municipalities also have gross receipts or business taxes that are levied on business activity conducted within the governmental entity. 7. Franchise Tax. A franchise tax is not based on income. It is typically based upon net worth or capital held by a business entity. Not all states have a franchise tax. States that impose a franchise tax do so if the company has met nexus thresholds. A company may not have income tax nexus but could have minimum franchise tax reporting requirements. 8. Income tax. States may have only a franchise tax, only an income tax, or both. Nexus for income tax can become quite complex, especially if a company is selling tangible goods that it is producing in one state and shipping to another. It is important to note that income tax nexus can be different from sales/use tax nexus. A state nexus study can be invaluable in determining the taxability of sales in a given state. At a minimum, a company doing business in multiple state jurisdictions should develop a thorough understanding of Public Law 86-272, throwback rules, the Joyce and Finnegan court cases, unitary/combined reporting, and their applicability. 9. Incentives. A number of states and cities provide tax incentive programs and available tax credits for bringing in new business. Investigation into these programs can uncover the potential for significant tax savings, sometimes over a multi-year time span. s Georgia Z. Phillips, CPA, is a tax partner at Bauerle and Company, P.C., Denver. She can be reached at 303-759-0089 or at gphillips@bauerlesolutions.com.

State Taxation Update

Sales and Use Tax Task Force Formed through HB17-1216

Tax Appeal Reform Upheld

n June 5, thanks to legislation spearheaded by the Simplify Colorado Sales Tax Coalition and sponsored by Representatives Tracy Kraft-Tharp and Lang Sias and Senators Cheri Jahn and Tim Neville, Gov. John Hickenlooper signed into law House Bill 17-1216 to create a legislative-directed task force focused on simplifying Colorado’s sales and use tax system.

• Having a third-party entity responsible for state and local sales and use tax administration, return processing, and audits

The fifteen-member task force will conduct meetings, take testimony, gather information, and report its findings and recommendations to the Colorado General Assembly by Nov. 1, 2017. It specifically is directed to consider the feasibility of:

In 2016, the Coalition was successful in promoting passage of Senate Bill 16-36 to reform Colorado’s system which required a taxpayer to pay the full tax audit assessment or post a bond before seeking a ruling from an independent court. Now, taxpayers can appeal to district court before any tax

• Making audits of retailers more uniform for all state and local taxing jurisdictions • Using certified software for sales and use tax administration and collection • Using a single sales and use tax return for state and local taxing jurisdictions

payment is due (yet retain the option to do so, to stop further interest and penalties from accruing). Earlier this year, the City and County of Denver argued that a taxpayer challenging an assessment had to pay up first. The court dismissed the challenge in April. The taxpayer, a cloud-computing company, is headed to district court. The Coalition, to which the Colorado Society of CPAs belongs, seeks to simplify Colorado’s overly complex sales and use tax system. You and your organization are encouraged to join the effort as well. For more information and to become a member of the Coalition, go to simplifycosalestax.org. s

Professional Standards

PCAOB Expands Auditor’s Reporting Duties BY KEN TYSIAC

eports prepared by public company auditors will contain more information for investors and other financial statement users as a result of new rules approved, June 1, 2017, by the PCAOB. Under the new standard, the auditor’s report will retain the pass/fail opinion of the existing auditor’s report and also will include a new description of “critical audit matters,” providing financial statement users with information about the most challenging, subjective, or complex aspects of the audit. This is the first significant change to the standard form auditor’s report in 70 years, according to PCAOB Chairman James Doty. Critical audit matters are defined as any matter arising from the current period’s audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

• Relates to accounts or disclosures that are material to the financial statements, and • Involved especially challenging, subjective, or complex auditor judgment If no critical audit matters arose from the audit, the report must state that there were none. Additional changes also approved include items that are intended to clarify the auditor’s role and responsibilities, provide additional information about the auditor, and make the auditor’s report easier to read. The new standard will apply to audits conducted under PCAOB standards, but communication of critical audit matters will not be required for audits of brokers and dealers; investment companies other than business development companies; employee stock purchase, savings, and similar plans; and

emerging growth companies. The standard is subject to SEC approval. If approved, all provisions other than those related to critical audit matters will take effect for audits for fiscal years ending on or after Dec. 15, 2017. Provisions related to critical audit matters will take effect for audits for fiscal years ending on or after June 30, 2019, for large accelerated filers, and for fiscal years ending on or after Dec. 15, 2020, for all other companies to which the requirements apply. Pending SEC approval of the final standard, auditors may elect to comply before the effective date. See the standard and related amendments at https://tinyurl.com/y8oyq6ak. s Ken Tysiac is a Journal of Accountancy editorial director. Contact him at Kenneth.Tysiac@aicpacima.com. Article reprinted with permission. July/August 2017 • www.cocpa.org •

Technology

Will Artificial Intelligence Replace Human Intelligence, Not Just Our Processes? BY DANIEL BURRUS

he single most disruptive influence on business, as well as society, will be artificial intelligence (A.I.), which includes technology such as machine learning and cognitive computing to name just two. In other words, there is more than one type of A.I., and each represents a new way of doing both big things as well as everyday things in amazing ways. When I say big things, I mean solving highly complex problems such as enabling the development of highly personalized drugs and genetic therapies designed for your genetic makeup. A.I. will keep you from having an accident, whether you are driving your car or not, by knowing the surroundings in real time, predicting a problem, and helping you avoid the accident. Eighty-five percent of traffic accidents are caused by blind spots, and soon your car won’t let you have that accident. The good news is that we don’t need full autonomy to do this, and it will happen faster than you think.

• NewsAccount • July/August 2017

A.I. will impact everyday things such as asking your car or your phone or your (fill in the blank) a question and getting an intelligent answer that is customized for you. Thanks to cloud-based A.I. and devices like Amazon’s Echo and Google Home, A.I. is quickly being integrated into both business and consumers’ lives – by using voice as the primary interface. The impact will be disruptive and transformational on both a product and service level. A.I. and other exponential technologies that are enabling a social, mobile, virtual, and visual evolutionary revolution will shift us from a period of rapid change to a period of true transformation. I say evolutionary because the underlying technologies have been in play for a long time. For example, in 1983 I first published my list of 20 technologies that would drive exponential change for decades to come. On that list were the Internet, digital technologies, A.I., genetic engineering, photovoltaics, fiber

optics, and more – the very technologies that are driving the revolution today. So here is a prediction for you: During the next five years, we will have the technologies to transform every business process including how we sell, market, communicate, collaborate, train, educate, design, pay for things, and much more. That is what I call a Hard Trend that will happen because it is based on future facts – the tools are real, and they will be used to both disrupt and transform. Soft Trends, on the other hand, might happen because they are based on assumptions. The Soft Trend related to business process transformation can best be expressed in a question: Will your organization transform your business processes or only change them? In other words, disruption becomes a choice when you know it’s going to happen ahead of time.

Being agile allows you to react faster than your slower competitors and helps you with unpredictable change. But the new competency that is now an imperative is to be anticipatory – to learn how to use Hard and Soft Trend analysis to anticipate disruptions before they disrupt and problems before you have them so that you can pre-solve them, and game-changing opportunities that you can use to accelerate growth and transform results. Here is a Hard Trend/Soft Trend question for you to consider: As A.I. and robotics advance at an exponential rate, will they cause mass unemployment globally? To answer this question, you need to break down the future fact from the future assumption. The Hard Trend future fact is that A.I. and robotics will indeed advance at an exponential rate in the years to come. That will happen. The Soft Trend that might happen is the mass

unemployment they will create globally. Even though mass unemployment for both blue- and white-collar jobs is very likely, it is not a future fact. Business and government leaders from around the world could do something about this now before it happens, thus changing the outcome. For example, all trucks, cabs, and busses could become self-driving, thus eliminating tens of millions of jobs on a global level. This is not a future fact, but it could happen – technology exists to enable this outcome. The question is: Do we want this to happen? Before answering, you need to look at a bigger picture. You need to consider that in the past and present primarily blue-collar jobs were replaced by automation. But with the new capabilities of A.I. and robotics to replace white-collar jobs such as accounting, banking, and even sales, to name a few, the unemployment numbers could grow

significantly. Do we want that future or a different future? We can’t change the past, but we can change the future. What kind of future do you want? What would we need to change in order to have a better tomorrow than today? s Daniel Burrus is considered one of the World's Leading Technology Futurists on Global Trends and Innovation and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends to help clients understand how technological, social, and business forces are converging to create enormous untapped opportunities. He is the author of six books including New York Times and Wall Street Journal best seller Flash Foresight. Burrus also is the creator of The Anticipatory Organization™ Learning System–named a Top 10 Product of 2016.

The Anticipatory OrganizationTM: Accounting & Finance Edition The Anticipatory Organization™model, created and developed by Daniel Burrus and Burrus Research, Inc., teaches accounting and finance professionals to actively anticipate what will happen, identify related opportunities, and take action to shape the future by learning how to identify and take action on fully predictable Hard Trends (trends that will happen) and more easily manipulated Soft Trends (trends that might happen). Burrus has been helping stakeholders to see and shape the future for more than 30 years. The Anticipatory Organization™: Accounting and Finance Edition synthesizes his approach into an accelerated learning system that includes a series of short, singleconcept videos featuring Burrus that presents the model’s core principles. Each video is followed by a job aid and rapid-application activities that teach the learner to apply the concept to everyday activities.

The 28 lessons in the learning series include the following competencies: • Strategic thinking • External awareness • Vision • Continuous learning • Innovation • Creativity • Problem-solving • Prioritization • Business acumen • Decisiveness • Influencing / persuading • Emotional intelligence • Consensus building • Collaboration • Inspiration • Risk management

The model has been customized for the accounting profession by the Maryland Association of CPAs and its Business Learning Institute with a customer co-creation group of CPAs in small to large firms, CFOs, controllers, young professionals, and other segments in the profession. They have worked with the Burrus team to gather accounting- and finance-specific examples that have been built into the learning platform. The result is a powerful tool that will help everyone on your team know what’s next, develop opportunities, shape the future of the organization, and accelerate success. The COCPA has partnered with MACPA and BLI to bring this transformative new learning approach to you. Find complete details about The Anticipatory Organization: Accounting and Finance Edition by visiting BLIonline. org/The-Anticipatory-Organization. July/August 2017 • www.cocpa.org •

Social Engineering

To Tweet or Not to Tweet? The Role of Social Media in Today’s Business World BY NATALIE ROONEY

he first Twitter message – known as a “tweet” – went out on March 21, 2006. As of the first quarter of 2017, Twitter averaged 328 million monthly active users – zero to 328 million in under 11 years. That’s pretty impressive. And pervasive. Different people view and use Twitter in different ways. Celebrities and politicians who want people to follow them post content by posting what their followers want to see. Other users are more passive, acquiring their news via Twitter but not posting themselves. Twitter provides an ideal platform for creating sound bites both social and political. A major player in the 2016 presidential election and since, we’ve seen the ability of a single tweet to create a media frenzy. “Twitter is an interesting platform,” says Sally Baalbaki, Ph.D., associate professor of marketing at Metropolitan State University of Denver. “You have to sort through a lot to find out what’s true and what’s not true,

• NewsAccount • July/August 2017

what’s out there to create an annoying dialogue, and what’s out there to create interesting and insightful dialogue.”

Whoever is managing it is empowered to make decisions so customers are happy and have positive experiences.”

Baalbaki says people are more likely to engage on Twitter (and on any other social media platform for that matter) because it’s not face-to-face and can generate conversations that might otherwise never take place. “Someone can argue, put a point of view out there, and say things you normally wouldn’t to someone’s face.”

Companies’ quick response on Twitter – and other social media – has created a sense of immediacy. “You definitely find that people are impatient, and they expect a response ASAP,” Baalbaki says. “Otherwise, it creates negative associations and perceptions.”

Anonymity, it seems, makes people brave. Businesses increasingly are using Twitter as a form of customer service – much more so than Facebook or Instagram – and tend to respond quickly when someone tweets a negative comment. Baalbaki did a test tweet with DirecTV and had a response in under two minutes, asking her to direct message the company for help with her issue. “It’s definitely a way to communicate with unhappy consumers if someone is watching and taking care of an issue on the spot.

Baalbaki created MSU’s Social Media Marketing class in 2013. “No one was teaching how to use social media as a marketer, and we really needed it.” she says. “Our students love it, and they beg to get into the class. It’s offered every semester, and every section fills on the first day of registration.” Baalbaki uses an academic text dedicated to social media marketing, Social Media Marketing, by Dr. Tracy Tuten and Dr. Mike Solomon. The course covers the four different “zones” of social media.

ZONE 1: SOCIAL COMMUNITY Social communities are channels of social media focused on relationships and the common activities people participate in with others who share the same interest or identification. Thus, social communities feature two-way and multiway communication, conversation, collaboration, and the sharing of experiences and resources. All social media channels are built around networked relationships, but for social communities the interaction and collaboration for relationship building and maintenance are the primary reason people engage in these activities. Many of the channels in which you already participate likely reside in this first zone. The channels in the social community zone include social networking sites, message boards and forums, and wikis. All emphasize individual contributions in the context of a community, communication and conversation, and collaboration. ZONE 2: SOCIAL PUBLISHING Social publishing sites aid in the dissemination of content to an audience. The channels of social publishing include blogs, microsharing sites, media sharing sites, and social bookmarking and news sites. ZONE 3: SOCIAL ENTERTAINMENT The zone of social entertainment encompasses channels and vehicles that offer opportunities for play and enjoyment. These include social games and gaming sites, socially enabled console games, alternate reality games (ARGs), virtual worlds, and entertainment communities. At this stage in the development of social media, social games are by a substantial margin the most advanced channel in the social entertainment zone. Entertainment communities fall into this zone as well. ZONE 4: SOCIAL COMMERCE Social commerce refers to the use of social media to assist in the online buying and selling of products and services. Social commerce leverages social shopping behaviors when online shoppers interact

and collaborate during the shopping experience. Social commerce channels include reviews and ratings (on review sites or branded e-commerce sites), deal sites and deal aggregators (aggregate deals into personalized deal feeds), social shopping markets (online malls featuring userrecommended products, reviews, and the ability to communicate with friends while shopping), and social storefronts (online retail stores that sometimes operate within a social site like Facebook with social capabilities). Source: Social Media Marketing by Dr. Tracy Tuten and Dr. Mike Solomon Baalbaki’s students conduct research and create a social media marketing plan for a company that includes how the plan will be implemented, what platforms will be used, and how frequently they’ll post. Baalbaki says discussions arise on how the use of different platforms will affect each other. Each student also produces a research project on a particular social media platform that is then shared with the class. “It’s educational for all of us,” Baalbaki says. By the end of the semester, students are HootSuite certified, which they can add to their LinkedIn resumes. The certification demonstrates expertise with the essential elements of social marketing to clients and employers. SETTING BOUNDARIES Baalbaki’s course also requires students to create a LinkedIn profile, on which she offers feedback and then grades. “We talk about the use of pictures – are they appropriate or not? We discuss what information you should share and what you shouldn’t share when you’re looking for a job. Basically, don’t share anything you wouldn’t be comfortable discussing with an employer at a job interview,” she says. “We’ve had some interesting discussions about what social media companies have the rights to once you post on their platform.” Baalbaki says it’s surprising that students still think if they delete something off of social

TWEETING GUIDELINES Do text or tweet when your intent is to: • Communicate logistics and simple directives • Share small praises and appreciation • Connect on special occasions • Share a personal epiphany or accomplishment • Talk through simple scenarios Don’t text or tweet if your intent is to: • Respond to criticism – especially a knee-jerk, emotional response • Convey anger • Attack, berate, mock, blame • Confront • Gossip Source: Fierce, Inc.

media, Snap Chat, for example, it actually disappears. “They think it disappears after twenty-four hours,” she says. “I explain that it goes somewhere. It doesn’t disappear into thin air, but they have trouble grasping that. It could be a screen shot someone has taken.” To get her point across, she has students conduct an internet search on themselves. “They’re shocked when they come across old pictures, often unflattering, of themselves. The bottom line is, when you’re drunk, don’t get on social media!” Baalbaki’s advice to everyone, not just her students, is to think about what you’re doing. “Your social media posts – what you say and what you like – say a lot about your personal brand,” she emphasizes. “You really have to watch what you’re telling the world on social media. What you do and say reflects on you and your company or employer as well.” Within good conscience, be honest and be yourself on social media, Baalbaki says. “Anything you put out there that’s dishonest will come back to you.” s

July/August 2017 • www.cocpa.org •

Management Accounting

Set Goals That Won’t Lead Employees Astray BY SABINE VOLLMER

This article first appeared in CGMA Magazine. For more articles, sign up for the weekly email update from CGMA Magazine at http://bit.ly/UZ07NC.

etting performance goals to promote growth is tricky.

Although aggressive goals can spark great accomplishments, they also can lead to bad behavior by employees who may be willing to bend or break rules in pursuit of those goals. At financial services company Wells Fargo and automaker Volkswagen, aggressive goalsetting led to fraud and cost each company customer trust and record fines, said Bonnie Hancock, executive director of N.C. State University’s ERM Initiative.

in its Sydney and Melbourne offices, since the Australian government released plans last year to support economic growth through entrepreneurship and innovation.

“When the stakes are high – i.e., employees worry, ‘If I don’t meet this goal, I’ll lose my job or I’m going to get a poor performance evaluation’ – then they may game the system,” Hancock said.

“While income and profit are very important, without first delivering quality of service, we would not be serving our clients’ needs,” said Wrays CFO Robert Pierce, ACMA, CGMA.

Finding middle ground between setting the bar too low and too high is challenging, she said. Thought needs to be put into analyzing potential actions that employees may take to achieve goals, and ways to prevent or detect potentially harmful actions should be developed. Also, companies should identify behavior that’s off limits and install controls to detect it.

To further its growth goals and accommodate clients frustrated with high hourly charges, Wrays has set fairly modest hourly rates for its services. Bonuses for Wrays’s professional staff start at 5% above targets, Pierce said. To make sure the quality of service doesn’t suffer, Wrays surveys its clients every month. Survey questions include inquiries about whether clients’ emails and calls are answered promptly. Clients are also asked whether they would refer Wrays to peers, and their responses are tallied and tracked monthly at the board level.

“If a company really has to set stretch goals,” Hancock added, “it has to be careful not to be punitive if those stretch goals aren’t met.” FAST GROWTH, BIG RISKS Wrays, an Australian firm of patent and trademark lawyers established almost 100 years ago, is well aware that rapid expansion goals carry risk. The firm focused on aggressively growing its client base, especially

• NewsAccount • July/August 2017

“You have to have some measurable goals, but you also have to take into account some qualitative factors and some judgment,” Hancock said. “If you’re just blindly following numerical goals, you might hit the goal but miss the mark in terms of what you’re trying to achieve.”

SETTING ACHIEVABLE GOALS To ensure performance goals are appropriate and to detect bad behavior as the goals are implemented, Hancock suggested using the following tools: Balanced scorecard. To tie business activities to the organization’s vision and strategy, a balanced scorecard offers a framework that provides executives and managers a balanced view of organizational performance. Multiple measurements are used to monitor performance against multiple strategic goals. Wells Fargo, for example, got into trouble relying too much on one performance measurement – eight products per customer – to determine the success of its crossselling strategy. A more balanced approach would have included consideration of other indicators towards its strategic goal, which, Hancock said, was probably cementing deep customer relationships. Periodic surveys. Polling customers or employees is a tool to measure interactions and, depending on the questions asked, can also be used to collect qualitative opinions. In Wrays’s case, the customer surveys help determine whether clients are satisfied with the firm’s service.

Employee surveys can be used to gauge how lower-level employees interpret management’s risk appetite, Hancock said. Employees are asked, for example, which trade-offs they are willing to make in pursuing specific goals. The responses help determine whether there’s a gap between what employees do and what management would want them to do.

with the assumption that the worst possible outcome that could occur has happened. The potential trigger is found by backtracking and analyzing what could have caused the outcome.

perform periodic audits of a sample of transactions that count towards a certain goal. These risk assessments would have to be done before annual audits to determine incentive compensation. s

Once potential bad behaviors are identified, ways to prevent or detect them can be built in, Hancock said.

Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.

Pre-mortem analysis. To test whether a goal may trigger unintended and unwanted consequences, a pre-mortem analysis starts

Periodic audit. Companies that have done pre-mortem analyses and installed controls to detect bad behavior can then

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2017 Legislative Summary

Bipartisan Compromise a Precious Commodity BY DAN PILCHER, CACI EXECUTIVE VICE PRESIDENT, AND LOREN FURMAN, CACI SENIOR VICE PRESIDENT, STATE AND FEDERAL RELATIONS

f there are only two words – one an adjective, one a noun – to describe the first regular session of the 71st Colorado General Assembly, they’re two words that rarely have been used in recent years on contentious legislative issues: "bipartisan compromise." Perhaps the two most important reasons for the fragile sprouting of bipartisan compromise this session were: • 2017 is not an election year, following a very polarizing 2016 political year • Senate President Kevin Grantham (R-Canon City) and House Speaker Crisanta Duran (D-Denver) exhibited a willingness to work together to address Colorado's most pressing problems

For the Colorado Association of Commerce and Industry (CACI) and the statewide business community that it represents, the three top issues for the 2017 session were: • Transportation funding • Regulatory reform • Construction-litigation reform During this session, and in the last several legislative sessions, CACI and the business community have been thankful for the balance of power in the General Assembly and have played defense against many antibusiness "messaging" bills. The majority of those bills were successfully defeated due to the Republican-controlled Senate

which holds a one-vote majority. This year, CACI and the business community saw significant progress on major challenges facing the State such as increased funding for transportation infrastructure, regulatory relief, and construction-litigation reform. Such progress on these issues had not always been reached in previous legislative sessions. To view the full report with bill positions and descriptions, go to tinyurl.com/ CACI2017LegislationSummary. s For more information, contact Loren Furman, Senior Vice President, CACI State and Federal Relations, at lfurman@cochamber.com.

July/August 2017 • www.cocpa.org •

Movers & Shakers The El Pomar Foundation recognized Jeff Mueller, CPA, and his wife Connie of Canon City with its Community Champion of Youth award in honor of their work with the community’s Boys & Girls Club. Travis Webb, CPA, managing partner of BKD LLC's Denver and Colorado Springs offices, was named to head the firm's national auditing practice. Jeff Ronsse, CPA, became the new Denver and Colorado Springs managing partner, June 1. He comes to Denver from BKD’s Tulsa, Okla. office.

Tax Study Groups

Boulder/Longmont Tax Study Group at the Meadows Branch Public Library Tuesday, July 18 and Tuesday, August 15 This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd, Boulder, BYO Bag Lunch. 2017 Meeting Dates: July 18, August 15, September 19, with more dates to come. Register at www.cocpa.org.

Denver Tax Study Group at the COCPA Office

Scott Sprinkle, CPA/PFS, received the AICPA’s Personal Financial Planning (PFP) Distinguished Service Award for his significant contributions to the PFP profession. Sprinkle also chaired the Institute’s 2017 inaugural ENGAGE conference. Check out the newest AICPA-produced video, "What's at Stake: The CPA Profession's Call for Federal Financial Responsibility," featuring COCPA's own Greg Anton, former AICPA Chair. Go to www. youtube.com/watch?v=d0dmMn8745g&sns=em. Email announcements to Mary Medley, mary@cocpa.org, and note in the subject line, “For COCPA Movers & Shakers.” Announcements for individuals are published for COCPA members only. The COCPA may edit content for space and reserves the right to decline publication of an announcement.

We're seeking your stories! If you or someone you know has a story to tell and photos too – trekking the Colorado Trail, writing a new book, motorcycling on Route 66, or competing in national snowboard events, etc. – let us know! Send your story ideas to Mary E. Medley, COCPA CEO, at mary@cocpa.org.

In Memoriam

Shirley Strait June 15, 1935 - June 8, 2017 A Pueblo, Colo., native, Shirley put the sparkle in Colorado CPA Marvin Strait’s eye as a high school sophomore. They were married for 62 years, and their love for each other is legendary. So were Shirley’s sense of humor, her malapropisms, her penchant for cleaning, and her community service. Though not a CPA, Shirley was a lifelong supporter of the accounting profession along with many other organizations. She is deeply missed by all who knew her. Contributions in Shirley’s memory may be made to the Assistance League of Colorado Springs or the Anti-Defamation League.

• NewsAccount • July/August 2017

Tuesday, July 25 and Tuesday, August 22 This informal roundtable discussion group meets over lunch, the last Tuesday of most months, at the COCPA office, 7887 E. Belleview Avenue, Ste. 200, Englewood. 2017 Meeting Dates: July 25, Aug. 22, Sept. 26, Oct. 24, and Dec. 5. Register at www.cocpa.org.

North Metro Tax Study Group at The Ranch Country Club Thursday, July 20 and Thursday, August 17 This informal roundtable discussion group meets over lunch ($20/ person), the third Thursday of most months, at The Ranch Country Club, 11887 Tejon St., Westminster. 2017 Meeting Dates: July 20, Aug. 17, Sept. 21, Oct. 19, Nov. 16, and Dec. 21. Register at www.cocpa.org.

In Memoriam We regret the loss of the following COCPA members and extend our sympathy to their families and friends. Garth C. Ramsay Member since 1972, Colorado Springs, Colo. James “Jim” Sweeney Member since 1991, Glenwood Springs, Colo. Colin M. Lewis Member since 1994, Denver, Colo. Richard P. Chulick Member since 2002, Woodland Park, Colo. Denice Hill Member since 2011, Fort Collins, Colo.

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ALERT IRS Resumes Issuing PTINS After Fees Struck Down On June 21, the IRS resumed issuing preparer tax identification numbers (PTINs) - now at no cost to users. Recently, a federal district court found that, while the IRS has the authority to mandate tax return preparers obtain PTINs, the IRS cannot charge a PTIN fee. The IRS, working with the Department of Justice, is still considering how to proceed but will make PTINs available while deciding how to address the court order. The IRS has posted FAQs to help practitioners.

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COCPA Chair Tawnya Ramirez with her soapbox and Colorado Springs Chapter members' tips for building resilience in times of rapid, unpredictable change. To submit a classified advertisement for publication, email the information to advertising@cocpa.org, and note in the subject line, “For COCPA Classifieds.” There is a 400-word limit on classified ads. Pricing: 0-50 words, $50; 51-100 words, $100; 101-200 words, $200; 201-300 words, $300; and 301-400 words, $400. July/August 2017 • www.cocpa.org •

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