NewsAccount May/June 2017 Colorado Society of CPAs
Meet Your New COCPA Chair PAGE 2
Contents Features S AV E T H E D AT E June 1, 2017 4:30 – 6:30 pm
Kevin Taylor's at the Opera House 14th and Curtis Street Denver
R E G I S T E R AT
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www.cocpa.org
Dean Beth Walker, Ph.D. Colorado State University College of Business
HONORING THE 2 0 1 7 AWA R D RECIPIENTS Emerging Leaders and Women of Note
SPONSORED BY
To thrive in today’s environment, dexterity and innovation are musts. That’s what the new Association, formed jointly by the AICPA and CIMA is designed to support.
Bylaws Amendment Proposed The COCPA Board of Directors requests member comment on a proposal to broaden the Associate member category.
The Colorado Economy – The Real Story Colorado’s economist Henry Sobanet says the forgotten story is about Colorado’s resiliency and its economic diversification.
Sunset Review: The Colorado Conservation Easement Program
10 F E AT U R I N G KEYNOTE SPEAKER
Accounting for Tomorrow
The process will provide the Colorado General Assembly with information to determine whether to continue or repeal the program. The program itself provides landowners with tax breaks and protection from development into the future.
Long-term Care Insurance: Why Now?
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How would your retirement plan be affected if you or your spouse developed a chronic health condition requiring long-term care? A new COCPA-sponsored plan is available to help.
The Advantage of Edge Computing
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Big Data. Cloud. Internet of Things. Accelerating Pace of Change. Edge computing offers game-changing opportunities in this rapidly evolving, technology-driven environment.
Departments
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Chair Column Movers & Shakers Classified Ads/Bits & Pieces
ON THE COVER: For details, visit womentowatch.cocpa.org.
COCPA Chair Tawnya Ramirez with her husband Oliver and their constant companions Baxter and Buddy.
Chair Column
NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 63, No. 1 May | June 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, Kay R. Dragon, 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.
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Meet Your New Chair: Tawnya Ramirez, CPA, CGMA BY NATALIE ROONEY
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awnya Ramirez, CPA, CGMA, has a story. It begins with today because Tawnya’s mom, Susan Bessey, CPA, knew all along – mostly – how it would play out. Though she didn’t know Tawnya would be COCPA Chair some day, she predicted just about everything else. “I wasn’t surprised when Tawnya pursued her CPA,” Susan explains. Thinking about Tawnya’s upcoming year as COCPA Chair, Susan adds, “It makes me very, very proud. I always knew she’d be successful. She’s an outstanding person all the way around. Sometimes I wonder where in the world she came from? Life wasn’t perfect for our family. It was a struggle for all of us. But it was worth it. In the long run, it was so worth it. And I’d do it again.” THE BEGINNING: GROWING UP TOGETHER Tawnya’s story could have been so different. Except that she’s, well, Tawnya. Her mom was divorced and rearing four kids by the time she was 25. She didn’t even have her high school diploma, but she knew she had to do something to make life better for Tawnya, who was born in Wyoming and raised mostly in Nebraska, and her siblings. “I was working three jobs just to make ends meet,” Susan reflects. “It was no way to live.” So, she took the first steps
and got her GED. She was working 60 – 70 hours a week at a restaurant when she told a frequent customer that while she hoped to go to college, she didn’t know what to study. That customer happened to be a CPA, so he, of course, suggested accounting because “we need more women, and it’s a great job.” He had no way to know he'd just launched two careers. When Tawnya was 10 years old, Susan went back to school at the local community college to pursue an accounting degree. The whole family pitched in to make it work. Both Susan and Tawnya say some of their fondest memories of those challenging years were the evenings when the family would sit down at the table to do homework together. Even the youngest, only four years old at the time, brought cars or coloring books as his “homework.” After the kids went to bed, Susan studied late into the night. “It wasn’t perfect, but my kids really know first-hand the value of an education,” she says. LIVING HER LIFE OUT LOUD Susan knew Tawnya would follow the path to success. “She was driven from the time she was three,” Susan laughs. “She was always a straight A student. When I was studying for the CPA exam, we listened to tapes and lectures in the car or while cooking dinner. Tawnya told me if I didn’t hurry up and pass the exam, she was going to pass it before me! So being a CPA comes naturally to her. It’s all embedded.” Tawnya took her first accounting class in high school. She ended up graduating from high school early and worked her first tax season for a firm in western Nebraska, the same firm where Susan worked as a staff accountant. Tawnya was hired as an administrative assistant and had the opportunity to work on some simple returns. She headed off to college knowing
she’d major in accounting. “Between working at the firm and my mom, I was around CPAs all the time,” she remembers. Tawnya moved to Colorado, but without any college savings, she needed to work full time, attending night school at National American University. Her plan after graduation was to return to Nebraska and start a firm with her mom. “But as happens in life, it didn’t go exactly according to plan,” Tawnya says. “It worked out well anyway – maybe even better.” While she was working in the accounts payable department at Comcast (formerly AT&T Broadband), a job opened up in the general ledger accounting department. Tawnya hadn’t received her degree yet, but she convinced the hiring manager that she’d completed all the relevant accounting courses required to do the new job and was committed to finishing her degree. The hiring manager warned Tawnya that hiring her was a risk, and she would have to earn her position. Tawnya worked her way up from there. “I went from being an accounts payable clerk to being Business Assurance Manager for the Western Division, doing finance and operational audits at regional and local offices across the western half of the U.S.” After seven years, Tawnya made the difficult decision to leave Comcast and join a money management firm. “I was not looking for a new role at the time, but I thought that I owed it to myself to be open to new experiences,” she says of her decision. “I started to think of my career as a business of which I am the CEO and therefore the only person looking out for my best interests. It also means that I owe my employer a duty of loyalty and the best services I have to offer which is in both of our best interests. That’s a mindset I frequently share with others. Think of yourself as the CEO of You, Inc.” At the new firm, she did a lot of everything – bookkeeping, payroll, portfolio accounting, compliance work, risk management, HR. After four years, opportunity knocked again when she opened an email asking if she knew of anyone who would be
interested in a Controller position with the Charter School Growth Fund (CSGF), whose mission is to grow high quality charter schools for students who are underserved. “I related to the students in the schools that CSGF serves, 80% of whom come from low-income families,” Tawnya says. “I saw it as an opportunity to use my skills, doing work that I enjoy, for a mission that I care about deeply.” She made the move to CSGF in 2011 and is now the organization’s Vice President of Finance and Administration. “I tell my story because it’s important to me that people talk about their experiences, especially when they come from families and communities that struggle to achieve the American Dream,” Tawnya says. “People think they’re the only ones experiencing something and with that come shame and the thought that you can’t be yourself. It creates fear that inhibits you from taking the next step. I share my story openly and candidly because I want people to see you don’t have to do that. It can be uncomfortable to talk about, but I choose to live out loud, so that others don’t have to feel ashamed and hide their true selves.” RULE FOLLOWER There are a lot of things Tawnya likes about accounting. “Whatever the rules are, and there are a ton, you have to know and
understand them and then analyze them relative to facts and circumstances in order to reach a conclusion, whether that's an audit opinion, process design, transaction record, or whatever it is you’re tasked to do. It’s like putting a puzzle together,” she says. “You’re building a case and defending your point of view based on your analysis. It’s super nerdy, but it’s what I love about accounting.” It isn’t just the analytical side that drew her to the profession. “You also have to understand human behavior – what motivates and drives people,” Tawnya explains. “For example, when conducting an audit or designing a process, it’s not just about sitting in front of someone and asking questions. You have a conversation with people to understand what motivates them and their point of view in order to build trust. If you do that well you will come to a better and more accurate answer, and everyone will walk away feeling good.” Tawnya adds that she will always maintain her CPA license. “It makes me part of a profession,” she explains. “To me, it says to people that I’m dedicated to maintaining my skills, and I hold myself accountable to a higher standard than just myself. And it’s a sense of belonging to what you love. I’m committed to maintaining this license, education, and high standards.” CONTINUED ON PAGE 4 May/June 2017 • www.cocpa.org •
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HER COCPA JOURNEY Tawnya first crossed paths with the COCPA in college. An accounting professor was a COCPA member and recommended Tawnya apply for a COCPA Educational Foundation scholarship, which she received. That professor encouraged all of the students to become members, but it wasn’t until Tawnya was a new CPA that she took advantage of the first year of free membership and joined the Young Professionals group. “From that point on, it feels like a blur,” she says. “I made new friends, ended up on the CPE Board, and started going to more events. It was a meandering path. And, it was a function of showing up, making a commitment, and doing what you say you’re committed to doing. Being a CPA is a core part of my identity. I want to give back to the profession at least what it has given me.”
market more critically than ever. We have a tremendous amount of detailed knowledge. Therefore, we have a big opportunity to leverage that knowledge and turn it into actionable insights by breaking down the complex and communicating it in a clear and concise manner to make it accessible to the target audience. CPAs are trained to build their case and then reach a conclusion or point of view and that's how we communicate. But, that communication style doesn’t work in a world overloaded with information and moving at an increasingly fast pace. We have to commit to building new skills to communicate more effectively – start with the conclusion and then show your homework.” She’d like to see professional development in this area. “Artificial intelligence isn’t going to put us all out of jobs, but it is going to change how we do our jobs.”
Two big things are on Tawnya’s radar for the coming year. First, she’d like to help CPAs think differently about the way they communicate information. “It’s predicted that much of what we do is going to be systemized and automated,” she explains. “We need to think about the value we bring to the
Another area of interest is diversity. “There are many studies that show how much better companies do when they take diversity seriously,” she says. “It’s why I share my story and why I come at things differently. Conversations are richer, and we get better answers that work for everyone.”
FREE TIME? WHAT’S THAT? Other than hanging out at the COCPA, Tawnya enjoys spending time with her family and her dogs. She and her husband, Oliver, enjoy traveling with family and friends. On Denver Broncos game days, you can find them tailgating. She also enjoys cooking, walking, reading, and listening to podcasts. Look forward to her soapbox thoughts on a variety of topics. s Email Tawnya at tramirez@chartergrowthfund.org.
COCPA Leadership News
Fagan Joins COCPA Board
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ince 2003, when the new governance structure was implemented, the Colorado Society of CPAs (COCPA) Board of Directors has included five officers and six directors-atlarge. One of those at-large members is a nonCPA, non-COCPA member who represents the public. The two-year term has been held by leaders in the community including Mile High United Way CEO Christine Benero who completed her term on April 30, 2017. May 1st, the Board welcomes Renny Fagan, President and CEO of the Colorado Nonprofit Association (CNA), to the position. A former Colorado state director for U.S. Senator Ken Salazar, Fagan also has held positions as head of the Colorado
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Department of Revenue, deputy attorney general, and state legislator. He joined CNA, the statewide trade, research, and advocacy group for Colorado nonprofits, in 2009. Fagan holds a bachelor’s degree in political science from the University of Chicago and a law degree from Northwestern University. “We couldn’t be more excited that Renny is joining the Board,” says immediate past COCPA chair Steve Corder. “His depth of knowledge and wealth of experience make him the perfect person to follow in Christine Benero’s footsteps on behalf of the many clients, employers, and organizations CPAs serve.” s
AICPA-CIMA Joint Venture Update
Accounting for Tomorrow Powering an
indispensable profession
BY KIMBERLY ELLISON-TAYLOR, CPA, CGMA AND TIM CHRISTEN, CPA, CGMA
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t the top of Fast Company magazine’s list of the 50 most innovative companies in the world this year was not a startup but a company that many of us first met two decades ago: Amazon.
an international association with The Chartered Institute of Management Accountants (CIMA) in June 2016, they enabled a platform for enhanced resources and benefits for members, employers, and most importantly the public interest. This bold path will allow us to promote, protect, and grow the profession and extend its relevancy far into the future while advancing the strength of the CPA.
get the latest information and insight on proposed and passed tax law changes.
In coming weeks, members will see new tools to assess and advise on a rapidly growing risk — cybersecurity. Members Amazon today looks very different than it in business and industry will gain access to did in 1995 when it primarily sold books. Its a new daily newsletter to help them keep business model has expanded significantly to up with developments relevant to their include music streaming, digital assistants, work. We have new initiatives to provide grocery delivery, TV shows, logistics, drones, awareness and understanding of emerging Web services, and much, much more. Since the approval of our members, we technologies that create both opportunities thechallenges numbers Amazon “has continued to be nimble even as have been very busy working to make thatByand for our business models and it has achieved enviable scale,” Fast Company vision a reality through the new Association the services we offer. One key area is audit. The Association of International Certified Professional wrote. It demonstrates a “willingness to of International Certified Professional We are beginning research into the auditing Accountants provides the world’s most highly-skilled embrace uncertainty, experimentation, and Accountants (the Association). It combinesMembers function and of thestudents future – how it's performed, accountants – CPAs and CGMAsthe – with the knowledge, messy inconsistencies.” strengths of the AICPAinsight, and CIMA to what tools are needed, and what skillsets will and foresight to meet the demands of apublic disruptive world. accounting be required. advance and management To thrive in today’s environment – shaped and power enhanced resources for members by geopolitical shifts, rapid technological of both professional bodies. At the heart of this work is a question that Countries in our member change, and the unrelenting challenge of guides us: How do we drive a dynamic and student network complexity — such dexterity is a must. In To date, we have integrated the profession forward? members formofthe largest most influential a KPMGOur survey, two-thirds CEOs said and management, strategy,network and operations of of management and public accountants on the front lines that the next three years will be more critical both organizations, and we are pleased There is plenty of evidence that shows almostthan every for their of industries the industry, last 50. Andfirm fourandtofinancial note thatissue. we currently have one team the strength of our profession today. The employ in ten said that they plan to transform their working across 35 offices in support of CPAsFirms CPAand is businesses unmatched for trust – business our members organizations into significantly different and CGMAs around the world. We already decision makers and investors rank the entities as a result. are making progress. CPA first among financial and business professionals. The Center for Audit Quality, The Association formed theinstance, American “The question organizationswas need to askby members In January,offor the Association in its annual Main Street Investor Survey, Institute of CPAs (AICPA) and The Chartered Institute of themselves is this,” a recent Conference took a stand against mandatory audit firmPremier found designations confidence in public companies supported: CPA high. and CGMA Board report concluded,Accountants “Are we driving rotation in South And our unwavering Management (CIMA) to advance theAfrica entireon behalf of the at an all-time change profession. and disruption, theyremain 650,000 members and students it represents. commitment to the pipeline of future talent AICPAorandare CIMA as member bodies driving us?” March, we launched a new website continues to pay dividends. supporting CPA, CGMA and otherInspecializations. (www.aicpaglobal.com) for the Association That’s a question our profession has long and an iconic new look for our family ofSpecialized Additionally, the CGMAand continues to grow credentials asked – and one we have answered time and brands to underscore the dynamic role of ourcertificates in demandoffered as employers seek talented leaders again by choosing the path of innovation. profession in powering trust, opportunity, and team members who can transform data There areWe numerous examples in our history: and prosperity worldwide. into actionable insight that drives better are driving a dynamic profession that powers trust, The embrace of specialization nearly 30 years decisions. More than 150,000 professionals opportunity and prosperity for people, businesses, and ago, computerization of the Uniform CPA In Washington, we are working to represent around the world now hold the CGMA, Office locations economies worldwide. Exam more than a decade ago, adoption the public interest and keep you informed and our Global Management Accounting of cloudwww.aicpaglobal.com computing, and our focus on the on policy changes and the impact as our Principles and CGMA Competency future of learning, to name just a few. new president and Congress act on tax, Framework are setting the benchmark trade, and other key agenda items. We for management accounting practice and AICPA members again picked the path of have also launched an online resource competency development. transformation last summer. By approving (aicpa.org/taxreform) where members can CONTINUED ON PAGE 6
We champion quality
650,000 179
We influence the world
150,000
We embrace our heritage
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We create the future
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AICPA-CIMA Joint Venture Update CONTINUED FROM PAGE 5
Maintaining that strength for the profession of tomorrow will require new ways of thinking and increasingly faster responses to changing client and business needs. We have to work across many fronts to advance the profession in a world that will be more and more influenced by technology as well as international business forces. As a profession of public and management accountants, we must be agile and willing to embrace uncertainty and experimentation.
Powering an indispensable profession
In that way, the Association – with its expanded reach and resources – is an accelerant we will ensure that we are well prepared for and Public Accounting Board. Tim Christen, for innovation. And, similar to Amazon’s different services, different technologies, and CPA, CGMA, is the Immediate Past metamorphosis, 20 years from now the different skills. s Chairman of the American Institute of CPAs profession likely will look quite different – and current Vice Chairman of the Association numbers Certified Professional however, just as strong and relevant. Through Kimberly Ellison-Taylor, CPA, CGMA, isByofthe International our initiatives and collectiveof efforts today, Chairman the American Institute of CPAs Accountants. The Association International Certified of Professional
We champion quality
650,000
Accountants provides the world’s most highly-skilled Members and students POWERING AN INDISPENSABLE PROFESSION accountants – CPAs and CGMAs – with the knowledge, insight, The Association is committed to protecting the public interest, speaking with the power of 650,000 professional and foresight to meet the demands of a disruptive world. accountants and students around the world.
We influence the world
Powering an indispensable profession
Our members form the largest and most influential network of management and public accountants on the front lines of almost every industry, firm and financial issue.
We embrace our heritage
The Association was formed by members of the American Institute of CPAs (AICPA) and The Chartered Institute of Management Accountants (CIMA) to advance the entire profession. AICPA and CIMA remain as member bodies supporting CPA, CGMA and other specializations.
We create the future We are driving a dynamic profession that powers trust, opportunity and prosperity for people, businesses, and economies worldwide.
We champion quality
www.aicpaglobal.com The Association of International Certified Professional Accountants provides the world’s most highly-skilled accountants – CPAs and CGMAs – with the knowledge, insight, and foresight to meet the demands of a disruptive world. 6 • NewsAccount • May/June 2017
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Countries in our member and student network
150,000
Firms and businesses employ our members
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Premier designations supported: CPA and CGMA
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Specialized credentials and certificates offered
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OfficeBy locations the numbers
650,000
Members and students
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COCPA Governance
Bylaws Amendment Proposed for Member Comment At its April 19, 2017, meeting, the COCPA Board of Directors approved the following bylaws amendment for publication to the membership. The proposed change would broaden who may join the COCPA as an Associate member. Deleted wording is shown as strikethrough, and additions are shown in capital letters, boldface. Comments should be emailed to Mary E. Medley, CEO, at mary@cocpa.org by June 30. COCPA BYLAWS ARTICLE 1 - MEMBERSHIP Section 1. FELLOW MEMBERS. This class shall consist of holders of valid and unrevoked certificates of Certified Public Accountant issued by the State Board of Accountancy of Colorado, or issued by authority of other states or territories of the United States, or the District of Columbia. The right to vote in the election of officers and directors or upon questions affecting the privileges, rights, duties, and aims of Certified Public Accountants shall rest solely in this class of membership.
ASSOCIATE MEMBERS. This class shall consist of persons, other than holders of Certified Public Accountant Certificates, who are (1) members of the professional or administrative staff of a Colorado Certified Public Accountant, or firm thereof, or (2) pursuing further requirements to become a CPA, having completed the academic requirements to become a CPA, or (3) accounting professionals employed in industry, government, or not-for-profit organizations in Colorado, or (4) faculty members in accounting at accredited colleges or universities, or (5) non-CPA owners of CPA firms. Associate members
are entitled to all privileges of membership except to vote and hold elective office AS AN OFFICER. Associate members who are pursuing further requirements to become a CPA or administrative staff of a CPA or CPA firm are exempted from the membership CPE requirements. Any Associate Member in good standing, upon qualifying under Section 1 (a) of this article, shall be transferred to the class of Fellow Member. s
Educational Foundation of COCPA
Gold Key Honorees Announced Each year, the Educational Foundation of the Colorado Society of CPAs recognizes the top graduating accounting student chosen by faculty at each Colorado college or university with the Gold Key Award. Recipients of the 2017 awards are: Adams State University, Eric Learn and Erin Guymon Colorado Christian University, Joseph Maroney Colorado Mesa University, Megan Lynch and Anthony Hammond Colorado Mountain College, Leah Valdez Frink Colorado State University – Fort Collins, Ryan Joseph Margheim Colorado State University – Pueblo, James D. Betty Fort Lewis College, Meg Vanasse Metropolitan State University of Denver, Sarah Churchill
Regis University, Ann Marie White and Raymond Feigal University of Colorado – Boulder, Anna Finch University of Colorado – Colorado Springs, Dustin "Ty" Doering University of Colorado – Denver, Ryan Sparks University of Denver, Derek Christensen University of Northern Colorado, Janna Allen and Michelle Ellison Western State Colorado University, Shawn Wollin
The Educational Foundation of the COCPA also supports Colorado accounting students through scholarships funded by CPAs, CPA firms, organizations, and friends of the profession. The application deadline is June 30, 2017. For information and the application, go to students.cocpa.org. To contribute to the Educational Foundation, go to www.coloradogives.org/EFColoradoSocietyCPAs/overview. s
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State Fiscal Affairs
The Colorado Economy – The Real Story BY NATALIE ROONEY
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y almost any measure, Colorado’s economy is looking pretty good. In fact, the Centennial State’s economic status has been ranked as one of the best in the United States by U.S. News and World Report, landing in the top five of state economies for several years running in many different areas – GDP, net migration, job growth, and unemployment. While that’s all well and good – great, actually – the real story lies in Colorado’s economic diversification over the last three decades that has allowed the state to grow and prosper in many areas despite contractions in others, most notably oil and gas. “The resiliency of Colorado’s economy is really the forgotten story,” says Henry Sobanet, Director of Colorado’s Office of State Planning and Budgeting. “The last time there was a big contraction in oil and gas, the whole economy suffered. But in the most recent contraction, there was still net in-migration to Colorado, growth in personal income – and state general fund tax revenue increased. That isn’t talked about enough.” Now, with prices pushing higher for oil and gas commodities, rigs are beginning to rebound, and the oil and gas industry is no longer a drag on the economy, Sobanet says. A March 2017 forecast from Colorado’s Office of State Planning and Budgeting shows that in the fourth quarter of 2016 regional oil producers recorded their first profitable quarter in more than two years. While some who were laid off aren’t being rehired because of efficiencies gained through technology, natural growth is returning. Statewide economic growth for 2017 is forecast to be higher than last year. However, growth is expected to be only modestly higher due to the state’s persistently tight labor and housing markets that are acting as a constraint on economic activity.
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EMPLOYMENT According to the forecast, in March, statewide unemployment was sitting at 3 percent, well below the national average of 4.7 percent. In fact, every Colorado metropolitan area experienced a decline in unemployment over the last year, and every area also saw an unemployment rate less than the national average. Boulder had the lowest unemployment rate at 2.4 percent, while Grand Junction had the highest at 4.6 percent. Sobanet calls Colorado’s labor market a bit of a mismatch. “There are more job openings than applicants in some sectors, but there are also those who are still looking,” he explains. THE IMPACT OF THE UNKNOWN Other factors such as immigration, labor force participation, and the availability of affordable housing also impact the labor market. “Prices are high and acting as a constraint in some areas,” Sobanet says. “Around the country, there are places with high real estate prices that have kept their economic vibrancy. Colorado is in that situation for the moment, but high home prices can be an impediment.” On a national level, there are a lot of unknown issues, with the potential for both positive and negative impact. Expectations for pro-business federal policies often result
in increased hiring and investment in the short term, according to the March 2017 report. “Immigration and trade policies have the potential to drag down growth, but not much has come through Congress yet,” Sobanet says. “Things like infrastructure and tax reform could be stimulative, but until those changes are made, it’s hard to know what will happen. Colorado is home to a lot of federal employees, and the proposed budget, if adopted, will have an impact on the state. We’ve got a long way to go through Congress before we see any of those changes.” STRENGTHS AND WEAKNESSES Year over year, almost every industry in the state is growing. “We’re seeing growth in so many sectors right now,” Sobanet says. The education and health sectors are leading the pack, but financial services, leisure and hospitality, construction, and technology all grew over the course of the past year. The exception is mining and logging which has fallen off by 14.5 percent. Agricultural markets are facing a rough patch as the result of price deflation. “That’s good for food prices but bad for producers,” Sobanet says. A strong dollar also is affecting the export of agricultural products. Nonurban agricultural economies continue to struggle with weak commodity prices and
reduced incomes. “Farm income is a weak spot that certainly affects Colorado,” he adds. ECONOMIC GROWTH V. LEGISLATIVE CHALLENGES “What’s exciting about Colorado is its vibrancy,” Sobanet says. “It remains attractive to people. The lifestyle is a big selling point.” What remains challenging, however, is managing Colorado’s growth, paying for infrastructure, and not losing quality of life, he adds. “It’s everyone’s job in government to keep things in balance, otherwise you lose the things that make Colorado a nice place to live.” The good news: Conversations about how to handle things like transportation infrastructure investment are happening. “We’re behind on infrastructure as a country,” Sobanet explains. “And in Colorado, transportation has lagged. The gas tax hasn’t changed since 1992. Rising fuel efficiency and increased materials costs mean purchasing power for the Transportation Department has dropped. But in seven or eight months, we’ll know more about where things stand with infrastructure.” Sobanet emphasizes that public finance in Colorado is complicated. It’s driven by the Colorado Constitution. Spending is mandated, but revenue is limited. These conflicting concepts don’t get enough media attention which means the general public doesn’t understand how it all works. Citizens want more money for things like roads and schools, but it’s not that simple.
“The rules as they exist now are at cross purposes and don’t make any sense,” Sobanet says. “That’s my message when I talk to any group. Colorado doesn’t have the control of its money that 49 other states do. Issues such as roads and schools can’t be solved by the legislature.” Why? The Gallagher Amendment, the Taxpayer Bill of Rights (TABOR), and Amendment 23. The three of them create competing and contradictory goals. The Gallagher Amendment to the Colorado Constitution, enacted in 1982, made significant changes to how property taxes are calculated. In 1992, Colorado voters approved TABOR which amended Article X of the Colorado Constitution. It restricts revenues for all levels of government (state, local, and schools). Under TABOR, state and local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without voter approval if revenues grow faster than the rate of inflation and population growth. Revenue in excess of the TABOR limit, commonly referred to as the "TABOR surplus," must be refunded to taxpayers, unless voters approve a revenue change as an offset. Amendment 23 was a constitutional change passed in 2000 to reverse a decade of budget
SAVE THE DATES 2017 Conferences For details, contact COCPA at 303-773-2877, 800-523-9082, or go to www.cocpa.org.
cuts experienced by Colorado school districts throughout the 1990s. The March 2017 forecast shows that TABOR revenue is projected to be $220.9 million under the cap in FY 2016-17 but is expected to be above the cap by $135.1 million in FY 2017-18. An additional $22.7 million will be refunded to taxpayers in FY 2017-18 due to accounting adjustments to prior years and fewer refunds claimed than expected. TABOR revenue will exceed the cap by $145.1 million in FY 2018-19. “It’s very hard for the legislature to do its work each year with these constraints,” Sobanet says. “Colorado’s economy is doing well, and the tax revenue is reflective of that, but for a variety of reasons, the state can’t keep all the money it has right now.” Sobanet says a statewide referendum on infrastructure is needed, but that is a complicated process. “Voters have to be persuaded. Transportation has to come through as a priority. And people need to understand that constitutional rules keep us from making progress on certain issues.” s For more on Colorado’s economic outlook, access the full Colorado Office of State Planning and Budgeting’s March 2017 Colorado Outlook: Economic and Fiscal Review online at: https://drive.google.com/ file/ d/0B0TNL0CtD9wXYWJBTHM 3T3NqdmM/view.
May 23 Not-For-Profit
October 24 CPAs In Industry
August 15 Personal Financial Planning
October 31 Governmental
August 16 Marijuana Business Symposium August 18 Young Professionals August 25 Women's Summit August 28–29 Technology Conference
November 14 Accounting and Auditing November 17 Real Estate December 13 SEC and PCAOB December 18 Mix and Match
May/June 2017 • www.cocpa.org •
9
Regulatory Update
Sunset Review: The Colorado Conservation Easement Program BY NATALIE ROONEY
T
his year, Colorado’s Conservation Easement Program is undergoing sunset review to determine if the program will continue. COCPA member Lyle Hood, CPA, offers a unique perspective on conservation easements. He not only sits on the Conservation Easement Oversight Commission, but also he has helped numerous clients through the conservation easement process and has even set up his own conservation easement to protect his family’s land. When Hood, a partner with Wall, Smith, Bateman, Inc. in Alamosa, thought about the future of his property along the Rio Grande River, he wanted to be sure it would be there for future generations to enjoy. Hood’s land includes over half a mile of river frontage that carries the “Gold Medal” fishing designation. This means the Colorado Wildlife Commission has designated the area as being able to produce 60 pounds of trout per acre and at least twelve 14" or larger trout per acre. Only 322 miles of Colorado's 9,000 miles of trout streams and three lakes are worthy of the Gold Medal seal.
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• NewsAccount • May/June 2017
“Like much of Colorado, waterfront property in Rio Grande County was being acquired and developed at an alarming pace,” Hood says. “We didn’t want to see the property developed.” Hood’s land also is a significant corridor for mule deer and elk. Development would have jeopardized them and other wildlife, too. “Each break in that chain has a much greater impact on the overall health of the habitat than just the loss of those specific acres,” he explains. “The riparian area also provides significant nesting locations for migratory waterfowl, as well as habitat for a wealth of species.” To permanently protect the land, Hood put a conservation easement (CE) in place. “The placement of the CE will inevitably impact the long-term value of our land,” Hood says. “But we’re happy that it will never be developed.” WHAT IS A CONSERVATION EASEMENT? A CE is a voluntary, legal agreement between a landowner and a land trust or government entity which contains permanent restrictions on the use or development of land in
order to protect certain values of that particular property. The CE is recorded in the county records and binds all current and future owners of the land. In return, the landowner receives some tax benefits recognizing the donation. The land trust or government entity “holds” the CE but does not own the property or get involved in day-to-day management. The majority of CEs protect working farms and ranches, wildlife habitats, and scenic views from public roads or nearby public land. A CE does not prevent a landowner from mortgaging, leasing, selling, or passing on the land, subject to the restrictions of the CE. A property qualified for conservation purposes must include one or more of the following Conservation Values that will provide a benefit to the public: • Agricultural or scenic open space • Natural habitat of fish, wildlife, or plants • Land for outdoor recreation and/or education • Historically important land and/or structures
There are potential tax benefits for landowners who put a CE on their Colorado land and who donate all or a portion of its value to a land trust. The landowner is entitled to federal income tax deductions and Colorado tax credits. The landowner can use the tax credits or sell them for cash through a tax credit broker to a Colorado taxpayer. Colorado’s Conservation Easement Program was created in 1976; the tax credit portion of the program began in 2000. Hood has been member of the Colorado Conservation Easement Oversight Commission since he was appointed in July 2014 by Governor John Hickenlooper. Hood’s term ends July 1, 2017, and he may apply for another term. HELPING CLIENTS NAVIGATE THE CE PROCESS The first CE Hood worked on for a client was in 2001, soon after Colorado approved the tax credit program. The easement was valued at approximately $3 million with “a bargain sale component amount of $1.5 million cash which the client §1031-exchanged into another property.” Hood’s client received a Colorado CE tax credit of $100,000. “I was intrigued as I familiarized myself with CEs and the federal and Colorado incentives,” he says. “I believe CEs are a wonderful and effective tool for land protection and preservation, if and only if the circumstances are right for the taxpayer and the family. The economic incentives and tax benefits help make it more viable for a donor landowner.” Hood offers several points to discuss with clients who are considering a CE: Costs and burdens. Hood explains that the placement of a CE is an expensive and time-consuming process. There are many steps, and the donor must meticulously address each one. “From start to finish, it can easily cost in excess of $50,000,” he says. Many land trusts and donee organizations can provide assistance with these costs. Great Outdoors CONTINUED ON PAGE 12
Colorado’s Sunset Review Process The Colorado General Assembly sets specific dates for specific programs to undergo sunset review. An analysis is performed to determine if the program is necessary and should be continued, modified, or cease operations. Colorado citizens are invited to weigh in on any program undergoing sunset review through http://www.dora.state.co.us/pls/real/OPR_Review_Comments.Main. SUNSET STATUTORY EVALUATION CRITERIA (I) Whether regulation by the agency is necessary to protect the public health, safety, and welfare; whether the conditions that led to the initial regulation have changed; and whether other conditions have arisen that would warrant more, less, or the same degree of regulation; (II) If regulation is necessary, whether the existing statutes and regulations establish the least restrictive form of regulation consistent with the public interest, considering other available regulatory mechanisms, and whether agency rules enhance the public interest and are within the scope of legislative intent; (III) Whether the agency operates in the public interest and whether its operation is impeded or enhanced by existing statutes, rules, procedures, and practices and any other circumstances, including budgetary, resource, and personnel matters; (IV) Whether an analysis of agency operations indicates that the agency performs its statutory duties efficiently and effectively; (V) Whether the composition of the agency's board or commission adequately represents the public interest and whether the agency encourages public participation in its decisions rather than participation only by the people it regulates; (VI) The economic impact of regulation and, if national economic information is not available, whether the agency stimulates or restricts competition; (VII) Whether complaint, investigation, and disciplinary procedures adequately protect the public and whether final dispositions of complaints are in the public interest or self-serving to the profession; (VIII) Whether the scope of practice of the regulated occupation contributes to the optimum use of personnel and whether entry requirements encourage affirmative action; (IX) Whether the agency through its licensing or certification process imposes any disqualifications on applicants based on past criminal history and, if so, whether the disqualifications serve public safety or commercial or consumer protection interests. To assist in considering this factor, the analysis prepared pursuant to paragraph (a) of subsection (5) of this section must include data on the number of licenses or certifications that the agency denied, revoked, or suspended based on a disqualification and the basis for the disqualification. (X) Whether administrative and statutory changes are necessary to improve agency operations to enhance the public interest. Source: Colorado Department of Regulatory Agencies May/June 2017 • www.cocpa.org •
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Regulatory Update CONTINUED FROM PAGE 11
Colorado (GOCO) has a grant program specifically dedicated to assist with CE transaction costs. Most CEs start with a template prepared by the donee organization (which can be over 30 pages long). The donor must carefully review this document and be sure it is customized to accommodate the donor’s priorities. Perpetuity is a long time. “I tell every client contemplating a CE that somewhere down the line, one of your children or descendants will ask, ‘What was he (or she) thinking?’ Involve the family, as well as any other stakeholders, in the process.” Benefits. CEs provide significant economic benefits in the form of federal and limited Colorado income tax charitable deductions; estate tax benefits (§2031(c)); the Colorado income tax credit; and bargain sales. Many land trusts and donee organizations will pay the donor cash for a significant portion of the value of the CE donated – frequently 50% or more. Quality of players. CEs are complicated projects requiring explicit compliance with Colorado and IRS statutes and rules. They are subject to challenge by state and federal authorities. Be sure to use reputable and certified (by the Division of Real Estate) land trusts, certified general appraisers, and experienced attorneys. This is not an area to cut corners, Hood cautions. Resources. A must read is FYI Income #39 (Gross Conservation Easement Credit) from the Colorado Department of Revenue. Most land trusts and the Colorado Coalition of Land Trusts have websites with a wealth of information about CEs. The Division of Real Estate website also is a valuable resource. FYI Income #39 can be found online at http:// avlt.org/wp-content/uploads/ColoradoDOR-FYI-39-rev-5-12-conservationtax-credit.pdf. When clients want to pursue a CE, Hood becomes involved early in the process, making them aware of the requirements. Even though land trusts have comprehensive
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templates, Hood goes through each step, emphasizing the perpetuity aspect of the CE. “Donors need buy-in and participation from their family and all stakeholders,” he says. “They need to be comfortable limiting the future development of the land. I emphasize that if they’re trying to maximize the income from the land, a CE isn’t the way to go because it will reduce the value of the land. A CE is applicable if they want to continue to use the land as it was before and keep it from being developed.” Hood also walks clients through the incentives available to them. “Everyone begins with the motivation to protect the land from development, but it’s also helpful that there are economic incentives to soften the blow.” THE SUNSET REVIEW PROCESS Brian Tobias, senior policy analyst for the Colorado Department of Regulatory Agencies, is heading up the Colorado Conservation Easement Program sunset review. He says the tax credit portion of CE, which is part of the Colorado Department of Revenue’s statutory scheme, is not under review. What is up for repeal and under review are two statutory provisions administered by the Division of Real Estate that cover the process by which easement holders are certified (the organizations that receive the donation) as well as the Conservation Easement Oversight Commission itself. “We’re taking a holistic approach and looking at everything the Division of Real Estate does with respect to conservation easement,” Tobias says. The CE sunset review is in the research phase, and Tobias is reaching out to stakeholders for diverse input. “More diversity at the beginning means better output at the end,” he says. Ten criteria guide every sunset review (see box on page 11), and the first two drive every review, Tobias explains:
• Is the program necessary to protect the public health, safety, and welfare? • Does it represent the least restrictive form of government consistent with the public interest? “These force us to look into consumer protection versus over-regulation.” Tobias also emphasizes that this sunset review is a review of the Division of Real Estate and the Conservation Easement Program, conducted by the Colorado Department of Regulatory Agencies’ Office of Policy, Research, and Regulatory Reform. The review is not conducted by the Division of Real Estate itself. As part of his information-gathering process, Tobias looks at whether the Division of Real Estate receives complaints about the program, the number of disciplinary matters, the number of tax credit certificates that have been applied for, how many were approved or denied, the value of the tax credits, and much more. COCPA member input on the CE sunset review, and any other current or upcoming programs, is welcomed and encouraged by emailing Dora_opr_website@state.co.us or by visiting http://www.dora.state.co.us/pls/ real/OPR_Review_Comments.Main. Drop down boxes will guide you through the feedback process, which can be submitted anonymously. “Our process really depends on stakeholders reaching out to us to share their thoughts and ideas,” Tobias emphasizes. “There’s a whole world of people who have ideas. COCPA members are consumers as well as professionals. They may see something that sparks their interest as a consumer, and we welcome that feedback as well.” Editor’s Note: The Colorado State Board of Accountancy will undergo sunset review in 2018. s
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Governmental Standards
GASB 68 Year Two: More Challenges for Governments & Auditors BY NATALIE ROONEY
G
ASB 68, Accounting for Pensions by State and Local Governmental Employers, radically changed accounting standards for governmental pension plans. Implementation was required for employer fiscal years beginning after June 15, 2014. The standard dictates accounting for pension plans as presented in employer financial statements, making significant changes to balance sheet disclosure, pension expense determination, discount rate selection, mandated actuarial methods, required reporting of the net pension liability, and supplemental disclosures. Even with a year of work under their belts, auditors say there still were challenges for governments with a June 30 year end for the second year of GASB 68 implementation. Governments with a December 31 year end are in the process of working through the second year of implementation for the year ending December 31, 2016. THE OSA PERSPECTIVE Kerri Hunter, CPA, oversees the Colorado Office of the State Auditor’s (OSA) financial audits, including the state’s annual federal Single Audit and statewide financial audit. Hunter also oversees the OSA’s Local Government Audit Division. She says the OSA recently completed its year ended June 30, 2016, financial and compliance audit of the State. “I think everyone involved, including us as auditors, initially underestimated the complexity of the second year of GASB 68,” she says. “We definitely made some adjustments this year as a result. We went through the State’s initial implementation last year and thought we had a good handle on it, but there were some
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• NewsAccount • May/June 2017
additional changes to the calculation in the second year that we all had to consider.” Hunter acknowledges OSA wrote an internal control finding to the Office of the State Controller, as the preparer of the State’s financial statements, specifically on GASB 68 issues. The finding is contained in the Statewide Single Audit Report for the Fiscal Year Ending June 30, 2016. It addresses issues such as errors in the Office of the State Controller’s formulas and missing GASB 68 required elements. Hunter notes, “The finding gives you an idea of some of the issues they had just in preparing their calculations, and therefore, some of the problems we ran into in trying to audit the calculation.” Crystal Dorsey, CPA, OSA’s Local Government Audit Manager, advises CPAs auditing local governments to seek out and use the many resources available from Colorado PERA. “If they’re an employer that participates in PERA, and even if they’re not, there is a lot of information on the PERA website.” The resources at www.copera.org include videos, sample note disclosures, webcasts, white papers, and journal entries demonstrating tying numbers to PERA’s example. “Even the general information on PERA’s site explaining GASB 68 is helpful,” she says. Employers who participate in the Fire & Police Pension Association of Colorado can find information and resources on that website at www.fppaco.org/employers.html. While the State didn’t hire additional people to implement GASB 68, it did have
to reallocate resources. Hunter says Dorsey and one of Dorsey’s team leaders spent many hours working through the Office of the State Controller’s calculation. Dorsey says auditors always are challenged with how much to help their auditees. “We couldn’t do the calculation for them,” she explains. “The Controller’s Office had some errors we brought to their attention. We try to coach them and point them to the resources.” When Dorsey has presented at various COCPA events, including the COCPA Governmental Conference, she has cautioned attendees about watching the decimals when calculating net pension liability. “If you think the number is too big, it’s probably correct,” she says. For example, the net pension liability of one of the largest school districts in the state is $1.5 billion. “The numbers are big,” she says. Board members and legislators alike are struggling to understand the impact. “It’s still new so we haven’t heard much yet about how this has changed local government from a financial reporting standpoint, but it definitely has an impact,” Dorsey says, adding that school districts’ financial statements have changed drastically. “One thing we have noted, not only in our audit of the State, but also in our review of local government financial statements, is ensuring the applicable GASB 68 disclosures are included and the financial statement presentation is correct. Overall, make sure there is agreement between the note disclosure and the financial statement presentation.”
Dorsey stressed that GASB 68 isn’t just for defined benefit pension plans. It’s also for defined contribution plans, and there are new requirements for disclosing pension expense and vesting and forfeitures policies. CITY & COUNTY OF DENVER VIEW GASB 68 implementation complexity was magnified for the City and County of Denver with its six different plans, says Shanna Tohill, CPA, Manager of Financial Reporting. “We’ve got four cost sharing plans and two single agent employer plans which added fifteen pages of footnotes. Implementation was substantial.” Year two has brought additional challenges. “Calculations are a bit different, and we have so many plans and so many inputs that we get from our actuary reports,” she says. “We're responsible for reviewing what comes from the actuary for reasonableness.”
The auditors helped Tohill through the process. “We had a discussion before year end 2016 about the differences between year one and year two,” she says. “We did our own independent calculations, and the auditors provided a template for year two as a way to verify that we all understood the implications of the year two changes.” The process worked well. Tohill says the City and County of Denver’s GASB 68 footnote was ready to go before the 2016 audit even began. Tohill says year two’s challenges included separately recognizing in pension expense changes in the deferred inflows and outflows, which wasn’t a component in year one. Despite the challenges ahead, Tohill says year two is going more efficiently. As the only person working on the 15 pages of footnotes, Tohill said last year was a challenge. “But we also knew it was
coming. We started preparing a year out from implementation, making sure we had all the information for each of the six plans – the type of plans they were and the benefits they provided. That was all new information that had to be disclosed in the financial statements. We had to gain a comprehensive understanding of all of the calculations. No matter how many times you read the work papers, it’s still a challenge.” Tohill advises CPAs to stay on top of the additional guidance as it is released. “Attend CPE, watch webinars, and use resources to make sure you’ve got the most up-to-date information so you can start your research early,” she says. “Our success resulted from starting early and staying on top of any changes. Year two continues to be challenging because things are changing, but we’re prepared for it.” s
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15
Member Benefits
COCPA Sponsors New Long-Term Care Insurance Plan BY PAUL M. HALLMARK, CSA, CLTC, NEB
Y
ou work hard to plan for a secure future. You understand the value of planning ahead. Part of retirement and estate planning is recognizing potential hazards and planning for unforeseen adverse circumstances that might lie ahead. How would it impact your retirement plans if you or your spouse were to develop a chronic health condition and need long-term care (LTC) for an extended period of time? Would you be able to afford the cost of longterm care at home, in assisted living, or at a nursing home now or in 20, 30, or 40 years down the road? Would you have to rely on your family for care? The Colorado Society of CPAs (COCPA) is pleased to introduce a new association long-term care insurance plan to assist you in meeting these needs. This discounted policy is available to you, your spouse/ partner, your parents, parents-in-law, stepparents, stepparents-in-law, children, and stepchildren between the ages of 30-79. Consider the following realities. The issues surrounding long-term care have become more prominent in the last few years. The increasing demand for formal caregiving is due to several factors: our aging population (the graying of America), working women not available to be full time caregivers, children living extended distances from their parents, and medical advances that prolong our lives but many times with added need of long-term care. Of course we all hope that a longer life equates to added years to pursue our goals and spend time with our loved ones. In reality, a long lifespan also increases the risk of experiencing age-related frailties and needing assistance to be able to handle the activities of daily living
(ADLs). “Someone turning age 65 today has a 69% chance of needing some type of long-term care services or support in their remaining years.”1 Currently, an estimated 15 million Americans need long-term care services, and the number is expected to reach 27 million by 2050.2 This explosion in the growth of our senior population is one of the most significant demographic changes that will impact the demand for long-term care. Currently, 43 million U.S residents are over age 65, which is 14% of the population. By 2050, the number will grow to 84 million or 21% of the population. Those age 85 and older will grow from six million to 18 million.3 This trend of age 65+ U.S. citizens is due to aging baby boomers reaching their senior years. The need for long-term care will continue to put a growing strain on families.
Administration on Aging and the U.S. Department of Health and Human Services, https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html 2 Metlife Foundation and Schmieding Foundation, Caregiving in America 2006 1
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• NewsAccount • May/June 2017
An illness or accident that requires longterm care can deplete a lifetime of savings quickly. The 2016 average annual cost of a semi-private room in a nursing home in the Denver area is $90,703 and is estimated to be $220,160 by the year 2046. The 2016 average annual cost for long-term care at home in the Denver area is $53,655 and is estimated to be $130,488 in 2046.4 If you need long-term care, what are your options? There are basically three: self-fund the cost of care, depend on government programs, or own long-term care insurance. Medical insurance plans, Medicare coverage, Medigap plans, and HMOs only cover “acute care” or “skilled care” costs, not expenses related to “chronic” or “custodial” long-term care. Skilled care is focused on getting a person better, and it is received mostly at doctor offices, hospitals, and rehab facilities. Unfortunately, some people are
U.S. Bureau of Labor Statistics: Unpaid Eldercare in the United States 2013-14 Summary 4 CareScout 2016 Cost of Care Survey, www.carescout.com/provider-data-services/ cost-of-care.html 3
treated for an acute condition and still end up with residual chronic care needs – the cost of which is not covered by any form of medical insurance or Medicare. Self-funding the cost of care is an option some wealthier people choose. Most of them are in a position to pay for it from interest and dividends. Some financial advisors recommend against self-funding unless the client’s net worth exceeds $5 million. For the moderately wealthy, the growing expense of long-term care can deplete a lifetime of accumulated assets, and that doesn’t factor in potential taxes that have to be paid on money pulled from investments. Medicaid, the federal and state program, is an option for those who are impoverished, subject to stringent guidelines to qualify for benefits. Colorado residents must spend down to $2,000 dollars in assets to qualify. The setting in which Medicaid pays for long-term care may not be what you would prefer. Medicaid generally does not pay for care in settings such as in-home care, adult day care centers, or assisted living facilities. Loss of one’s independence as one moves to dependence on government welfare programs also is a consideration. Long-term care insurance is gaining in popularity with CPAs for a variety of reasons. The tax and liquidity benefits it can provide on several levels can be appealing. People like that it pays for care in all levels of the continuum of long-term care, i.e., home health care, adult day care, assisted living facilities, and nursing homes. The NAIC Rate Stabilization Act of 2014 has greatly increased the probability that the premium on new policies will remain unchanged for the life of the policy. The policies, however, are health-underwritten and age-rated. The earlier one purchases a policy the lower the premiums are and the lower the risk of developing a health problem that can create insurability problems. For those in the middle (assets too great to qualify for Medicaid or not wealthy enough to be comfortable with self-funding), long-term care insurance is the solution to protect one’s
financial security, family, and independence from the risk of long-term care cost. The COCPA LTC insurance plan provides you with comprehensive coverage and a broad array of choices. The coverage will ensure that you have access to the best care available in a setting that you prefer. There are four main benefit choices you will need to make that are foundational to the design of your policy. These choices will play a key part in determining your premiums. MONTHLY BENEFIT How much do you want the policy to pay per month? You can choose a monthly benefit between $1,500 and $10,000 (in $100 increments). To determine the amount that is right for you, we will check the long-term care costs in your specific area. Do you want the policy to pay 1/2 of the bill, 2/3 of the bill, or the full cost? If you need a nursing home as a last resort, are you a private room person, or will you be comfortable with a semi-private room? It is important to note that the COCPA policy will pay the same benefit amount for home care and facility care. INFLATION COVERAGE Industry experts agree that most purchasers today should elect the 3% automatic compounded inflation protection for their benefits because cost for care most likely will continue to increase. The cost of long-term care is projected to increase about 2.5 times the current cost by the year 2046.4 Inflation protection is critical, because you want your policy benefits to be as meaningful in the future as they are today. Having inflation protection on your policy can also add additional benefits through the Colorado LTC Partnership Program. BENEFIT POOL SIZE How long do you want the policy to pay benefits after you begin receiving care – for example, a starting benefit pool of $324,000 ($4,500 a month x 6 years) or an unlimited lifetime benefit? Choosing the $324,000 starting benefit pool does not mean that your policy will last only six years. To illustrate
this, if your reimbursed expenses were 2/3 of your monthly benefit, your benefits would last approximately 1/3 longer. If your policy has inflation protection, the monthly benefit and benefit pool will both grow accordingly. Many CPAs who have a spouse or partner prefer to have a shared benefit pool that either person can use. ELIMINATION OR WAITING PERIOD The last major choice you will need to make is choosing a waiting period. This is the equivalent to choosing a deductible, as it is the length of time you will pay for care before receiving policy benefits. Your selections will be 0, 30, 60, 90, 180, or 365 days. The waiting period must be satisfied only once during the life of the policy. The policy counts the days by using a calendar day format versus days of service received. If you need care, what triggers access to benefits under this policy? Qualifying events are: a licensed medical practitioner certifies that you need substantial assistance with two of the activities of daily living (ADLs), or you need supervision due to cognitive impairment, and the condition is expected to last at least 90 days. The ADLs are: bathing, continence, dressing, transferring, toileting, and eating. These policies offer a 5% discount to each COCPA member and qualified family members. In addition, there is a 30% spouse/partner discount when both apply and are approved and a 15% spouse/partner discount when only one partner applies and is approved. The Colorado Society of CPAs longterm care plan is a cost-effective way to help protect your retirement and estate planning dreams and maintain a level of independence. This plan is available through COCPA’s sponsored broker Capstone Planning Solutions LLC. To ask questions or schedule a consultation, contact Paul M. Hallmark, CSA, CLTC, NEB, at 303-774-0688 / 800-737-0914 or email paul@capstoneps.com. s
May/June 2017 • www.cocpa.org •
17
Practice Management
Considering the Purchase or Sale of a CPA Practice? BY THOMAS J. LANG, CPA
I
transferred ownership of my CPA practice seven and a half years ago after a 30-year career in public accounting. Since that time, I’ve consulted with 100 plus prospective buyers and owners interested in selling their practices. As a Colorado licensed real estate broker, I’ve listed and sold numerous CPA practices in Colorado. These are my thoughts and ideas for you to consider when evaluating your options as a seller or a buyer. PARTIAL PRACTICE SALE In January 2017, we closed a partial sale of a CPA’s tax practice. The owner had grown his valuation and litigation support practice substantially and made the decision to sell a portion of his tax practice in an effort to improve his quality of life. The terms of the sale were a multiple of gross revenue with one-half down and the balance to be paid at the end of year one and two, subject to an earn-out arrangement. In this arrangement, if revenue decreases, the buyer is protected, and the installment payments (without interest) are adjusted. If revenue increases, the seller shares in the growth. The seller provides a non-compete and nonsolicitation agreement with respect to the list of transferred clients for three to five years to protect buyer. This particular transaction helped an existing practitioner grow his existing practice – a win-win situation. FINANCING The financing option most often used to transfer a practice is the SBA guaranteed loan program. Generally, it requires the seller to carry 10% of the sale price (up to 20% depending on the financial strength and existing financial commitments of the buyer), and the buyer must put down 10% with the lender providing 70% to 80%. The lender often will provide a working capital line of credit. Typically, the program will require the seller to have a two-year period after sale where there are no payments on the seller’s
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• NewsAccount • May/June 2017
note. Interest accrues, and then in year three interest is paid, followed by a fully amortized loan for five more years including the interest for years one and two. Loan limitations are about $3 million. There are substantial loan fees of up to 3% of the loan amount. Up until recently the SBA loan program was the best financing option available. Recently a commercial bank commenced a conventional lending program with no real estate needed as collateral. This program is only available to CPAs and health professionals. The commercial lender will finance 100% of the sale price with a 10-year, fully amortized, fixed rate loan currently averaging 5.5% to 5.8% depending on the banking relationship. It also will extend a working capital line of credit. There is a loan fee of $500. Additionally, the borrower must have a 700 plus FICO score. The funding time is reduced to three to four weeks. The loan limit is generally $1 million plus the line of credit. This allows the CPA to transfer ownership of the practice and walk away with 100% of the sale price. DETERMINING VALUE As the owner of a CPA practice, you have
an idea of what your practice is worth but depending on location, mix of revenue, and profitability, the value will vary. The ultimate sale price will depend on many variables, but a key determinant is profitability or cash flow to owner. The average cash flow to owner for a CPA firm is about one-third of revenue. Sole practitioners may generate up to 50% of revenue. A tax practice value will range between 80% and 125% of gross revenue depending on cash flow to owner. Higher than average fees will entice a buyer. Be prepared to provide your averages, over the last three years, for Forms 1040, 1120S, 1065, 1120, etc. The number of chargeable hours you work as a sole practitioner also will factor into the negotiated sale price. If you have staff, the number of years they have been with your firm and their willingness to continue with a new owner will impact the sale price. It is very important that you do your due diligence on the buyer to ensure a good fit in the transition. TIMING When listing your practice for sale you will want to consider that the average business listed for sale in the U.S. takes nine months
to sell from the time listed until closing. The sooner you list your tax practice after April 15 the more likely you will close by the end of the calendar year. I listed and sold a Golden, Colo., CPA practice in one week after the practitioner had passed. Unfortunately, the value was diminished since there was only one staff person who could provide continuity in the transition. Most importantly, you need consistent revenue and profitability. A concentration of revenue (clients over 10% of total revenue each) may require a discount due to risk of loss of clients to buyer. The discount may be reduced if the seller makes assurances by providing continuing support after the closing. In some cases, lenders are open to an asset purchase agreement that provides for a one to two year “look back revenue assurance,” after closing. If revenue decreases over a stated amount, there is a downward adjustment to the ultimate sale price and seller note. As a CPA considering the purchase of an existing CPA practice, consider taking the following action: Reduce your personal debt and financial commitments as existing obligations will impact your ability to obtain financing. As a prospective buyer, the seller will evaluate your background and work experience, communication skills, and overall presentation in the interview process. It is important that you demonstrate the ability to manage projects and people and have the knowledge to handle the types of engagements the firm has. Consider some coaching on how to present yourself to a seller. Keep in mind a seller’s practice is a result of his or her life’s work. The seller will be discerning when deciding on a buyer out of loyalty to clients and a desire to obtain the highest value.
2017 CPAS MAKE A DIFFERENCE Save the Date November 10, 2017 Grand Hyatt Downtown Denver
Keynote Speaker John Garrett
From Big 4 to Big Laughs
TECHNOLOGY CAPABILITY Younger buyers are looking for a paperless firm with a strong website and a portal to facilitate the transfer of information. Engagement letters are still important, but they may be signed electronically. I recommend the initial signature apply to future years as well by the wording in the first year engagement letter. Seasoned practitioners will find that the salability of the firm is enhanced by embracing technology. This will make the firm more appealing and possibly a quicker sale. Some younger buyers will charge more for a meeting with the client and due to heavy work loads they will encourage clients to submit their tax information electronically. Depending on the size of your practice, existing lease constraints may be an issue. Larger firms are looking to tuck your practice into their own, acquire your staff, and often will not want to take over your lease. Or, it may be for just one tax season. If you’re considering the sale of your practice within the next few years, this should be a consideration when renewing your existing lease. Plan accordingly. s Contact Thomas J. Lang, CPA, MBA, www.thomaslangcpabroker.com.
at
303-726-7646,
CPA-turned humorist, John Garrett is an entertainer on a mission: To help break down barriers, foster unity, and strengthen bonds - through laughter. John returns to the COCPA with new stories and a new message you'll want to hear and share with your colleagues. Contact Terry Cervi, terry@cocpa.org, for details. May/June 2017 • www.cocpa.org •
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Technology
The Advantage of Edge Computing BY DANIEL BURRUS, CEO, BURRUS RESEARCH
O
ne of the strategic topics being discussed in business circles today is how to harness the true potential that resides in all the data we have and are generating. This huge amount of data is often referred to as big data. However, when you look ahead at the hard trends that are shaping the future including the rapid growth of the Internet of Things (IoT), the accelerating use of artificial intelligence, and the digitization of just about everything, you can clearly see that today’s big data is quite small in comparison. The amount of data we will be generating in just the next few years, not to mention by 2025 and beyond, creates both enormous challenges as well as opportunities for every organization. Reacting faster will help a little, but by becoming anticipatory, we can turn a rapidly growing problem into an opportunity now. With wide-scale use of the cloud now becoming the norm rather than the exception, many pundits and industry observers agreed – we had arrived at an optimal computing function and storage destination that would likely last for many years. But, as rock icon Neil Young said in one of his albums, rust never sleeps. In this case, technology-driven innovations are advancing at an exponential rate, rendering many current strategies and technologies either ineffective or obsolete.
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The straw that will break the camel’s back will be the exponential impact of the IoT, the enormous and rapidly growing network of connected sensors, machines, and devices, all creating billions of terabytes of data at an accelerating rate. Given the massive and increasing amount of data that will be created on a daily basis, accessing, interpreting, and acting on all that data quickly and efficiently isn’t a cloudfriendly function. Without a new solution in place, it can lead to squandered opportunity, as valuable time-sensitive data withers while it waits for analysis and subsequent action. Edge computing can help clear up that backlog in any number of settings and applications by effectively putting processing power a good deal closer to where the action is happening. And, in so doing, it can offer game-changing opportunities for all sorts of organizations looking to leverage the advantages of IoT without many of the more problematic and predictable drawbacks. WHAT IS EDGE COMPUTING? Edge computing is a type of information technology architecture in which data is processed as close to the original source as possible. It incorporates a horizontal network that distributes the resources and services of computing and control, storage, networking, and communications closer to the data
sources. In effect, rather than merely sending data elsewhere, any device with computing, storage, and network connectivity can be connected to programmable automation controllers that handle processing, communication, and more. Thanks to advances in dematerialization and miniaturization, this can be accomplished in powerful new ways. Edge computing is inherently flexible from a physical standpoint. Any device with computing, storage, and network connectivity can be connected to programmable automation controllers that handle processing, communication, and other tasks. These can be located on a factory production floor, in a car, along a train or subway track, on an oil rig, and in countless other settings. THE DIFFERENCE BETWEEN “FOG” AND “EDGE” COMPUTING In examining this overall topic, you may come across the term “fog” computing, which, as it happens, is often used interchangeably with edge computing. But there are some significant distinctions. In a sense, fog computing is more centralized. This system focuses processing efforts at the local area network end of the overall chain. Data from various points in the network is processed and stored within the network via
an IoT gateway. The processed data, along with any additional directions, are then sent back out to the necessary devices. By contrast, edge computing essentially moves actual processing closer to the data sources. Instead of doing most of the processing at a centralized location, each device within the network carries some of the information-processing load. In one respect, by distributing more processing responsibility along a greater part of the overall network than does fog computing, edge computing provides a buffer against widespread system failures. And, as I’ll discuss later, edge computing is particularly useful in combatting cybercrime and other sorts of security breaches. This article offers a comprehensive discussion of the differences between as well as the varied advantages and drawbacks of both edge and fog computing. EDGE COMPUTING ADVANTAGES AND APPLICATIONS The potential of edge computing is both powerful and broad across any number of possible applications: In industrial and manufacturing settings, edge devices including machines and sensors can capture streaming data that can be used to predict and prevent a part from failing. If a problem or slowdown occurs, edge computing can reroute traffic or modify production for maximum productivity and head off product defects quickly and efficiently. As a result, you can increase speed and reduce costs while boosting revenue at a new and amazing rate.
there, take appropriate steps. For instance, drones examining a remote forest fire, a collapsed building, or a major traffic accident can pinpoint a problem and act instantly as well as identify nearby emergency personnel. By providing those people with valuable information and other analysis, response time can become that much faster and more effective.
forms of technology are lacking. For instance, self-driving cars produce enormous amounts of data. Directing that information elsewhere would prove too slow in situations that mandate fast response, such as whether to increase speed or slow down. Automakers such as Tesla use advanced edge computing technology to provide instant analysis and direction.
Edge computing can also be effectively applied in non-emergency applications. As this article discusses, cities such as Mesa, Ariz. and Palo Alto, Calif. are employing edge computing to monitor civic management issues such as traffic patterns and flow as well as home energy consumption.
Edge computing can also prove a boon to cybersecurity. Since computing and control occur near the original source of the data – rather than in massive storage systems – unusual or suspicious activity can be faster and easier to spot. Additionally, since edge computing allows for communication, networking, and other tasks without extensive routing, a higher level of containment is possible, providing less opportunity for cyberattacks.
Edge computing can also benefit organizations that use a network of widely located branch or network offices. By installing intermediary micro data centers or high-performance servers at such remote locations – effectively replicating cloud services on a local level – employees and others working away from a centralized location or headquarters can have the ability to act on valuable information in a fraction of the time needed to first send the data to cloud storage.
Edge computing also boosts the opportunity for collaboration, one of the central elements of my Anticipatory Organization™ Drones and computer-controlled drones Learning System. Currently, the sensors are used increasingly in any number and connected machines are far from the of commercial and public safety various teams and groups within a large applications. One major problem is that organization. Edge computing allows for drones traditionally need to, in effect, instant response as well as closer and greater “phone home” to take any action on data contact with teams and groups, promoting Find out what’s happened with the COCPA Strategy Initiatives since June 2015. Learn what’s happening on the that’s collected. Edge computing allows Edge computing also complements new faster response and greater accessibility to national and international scenes which affects and challenges you and the CPA profession. Understand what drones to analyze information and, from products and services in ways that other information afforded by IoT.
branding is and how to use it successfully. Identify the hard trends which can help guide strategy. Prioritize what’s CONTINUED ON PAGE 22 critical, essential, and significant to be successful as an anticipatory CPA and anticipatory organization. May/June 2017 • www.cocpa.org •
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Technology CONTINUED FROM PAGE 21
BOTH/AND NOT EITHER/OR Given the enormous game-changing potential of edge computing, it can be tempting to say that today’s more established technology systems will likely fade into obscurity. That would be an error. Edge computing is not unduly limiting. In fact, it’s an ideal example of my “Both/And” principle. While edge computing offers remarkable opportunities, we’re certainly not going to stop using the cloud and related technologies. Rather, it’s a complementary relationship in which both boost the other’s value. That makes edge computing a component that adds overall flexibility to any intelligent network. Although one of edge computing’s advantages is the capacity to analyze and act upon data that requires a quick response, information that is less pressing in nature
can always be moved to an intermediary. Particularly large or less time-sensitive data and information can also be transferred to the cloud for analysis, comprehensive analytics, or simply long-term storage. Nor are advantages limited to a more effective system that appropriately prioritizes and analyzes certain data while filing away less time-sensitive information for subsequent use. Edge computing can also address bandwidth capacity and other communications challenges, particularly with the increased demands of artificial intelligence and other uses. That, in turn, can make the production of revenue-generating products and services more efficient and therefore more cost-effective. Ultimately, edge computing also affords the opportunity to make the most of your overall investment in your technology. Looked at one way, edge computing efficiently distributes the allocation of function as opposed to
resources. That not only makes configuration and management less of a chore, it also boosts overall efficiency and response time and allows you to make the most of the enormous resources and data afforded by IoT. That can afford game-changing opportunities of all sorts for a broad array of organizations. 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.
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standard. It says you are an impartial adviser who puts your clients’
CPA Examination
Calling All Candidates: Are You Ready for the New Exam?
A
pril 1 marked the first wave of testing for the recently updated Uniform CPA Examination, which was developed by the AICPA after a multi-year analysis of the CPA profession and the work of newly licensed CPAs. The most significant change is the greater focus on assessing a candidate’s ability to demonstrate his or her knowledge using critical thinking, analytical ability, and problem-solving skills. Why is this relevant, and what does this change mean to the candidate? Core content knowledge will always remain fundamental to the CPA profession. But with changing market forces and technological advances, newly licensed CPAs are performing more value-added services than ever before. These expanded roles and responsibilities require certain essential skills to be used in tandem with core knowledge to be an effective CPA and to protect the public interest. To enhance the testing of essential cognitive skills, the exam now uses more simulations – included in the Business Environment and Concepts (BEC) section for the first time. The BEC section, along with the Regulation (REG) section, also provides an additional hour of testing to accommodate the expanded use of simulations. And, all four, four-hour sections now include a 15-minute break where the clock pauses. Candidates can take a breather or grab a snack without the worry of losing valuable test time.
Pages/default.aspx. For the singular best study tool, candidates should look to the Examination Blueprints, http://www.aicpa.org/ BECOMEACPA/CPAEXAM/EXAMINATIONCONTENT/Pages/ default.aspx. Compared to the former Content and Skill Specification Outlines, the Examination Blueprints offer much more comprehensive coverage of the material tested. The blueprints break down each exam section with an overview, content and skill weighting, and a designation of the skill level at which a particular topic will be assessed. Candidates will find more than 600 tasks representative of those that they may be asked to complete when testing. When it comes to receiving exam scores after testing, the AICPA will release them only once per test window for the remainder of 2017. With all the updates, the AICPA must conduct a standard-setting process to ensure the exam remains a valid, legally defensible assessment. This is common in the world of high-stakes testing, and it takes time. Details about standard setting, score holds, and exam scoring in general, can be found on the Examination Scoring, aicpa.org/BecomeACPA/ CPAExam/PsychometricsandScoring/ScoringInformation/Pages/ FAQ2011ScoreRelease.aspx, section of the AICPA website. s Accountants and Consultants www.acmllp.com
As candidates register for it, they may be focused on whether or not recent updates make the new exam more challenging than in the past. The exam always has been, and will continue to be, a rigorous assessment. Today’s exam is different, and its approach to assessing knowledge and skills continues to evolve and keep pace with the profession. Preparation and thorough studying remain a candidate’s best path to success. “It’s all about developing an exam strategy,” says Michael Decker, AICPA Vice President for Examinations. “When a candidate makes the decision to take the exam, it’s best to map out a complete plan, from understanding the testing process to deciding how and when to study to developing a support system of mentors, colleagues, and friends. Most importantly, a candidate must seek out the right resources to prepare.”
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integrated, value-added, assurance, tax and consulting services. How can ACM help you? Contact us to find out: info@acmllp.com
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May/June 2017 • www.cocpa.org •
23
Management Accounting
How Financial Statement Audits Deliver Key Business Insights BY KEN TYSIAC
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.
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piece of the audit, and our client would value that.”
In many cases, though, companies are not taking full advantage of the insights that audits provide, a survey of 300 executives and 100 audit committee members by Deloitte’s U.S. audit practice revealed.
Through audits, companies may learn new information about their industry and market, discover shortcomings in processes and policies, and identify inefficiencies and risks. Increased use of data analytics is helping auditors look at large pools of data in a variety of areas to find information that could be helpful to clients.
inancial statement audits are not only a compliance exercise but also an opportunity to gain knowledge that can generate positive business results, according to a recent survey.
According to the survey report, which was published, March 29, 2017: • More than three-fourths (79%) of executives and 91% of audit committee members say financial statement audits identify opportunities to improve business performance. • Almost half (46%) of executives and even more audit committee members (62%) say it’s at least somewhat likely that they would have missed important insights if the audit had not occurred. • Companies that regularly capitalize on information received from the audit are more likely to have achieved growth over the past three to five years that survey respondents consider “good” or “great.” “Obviously quality is the foundation here. We’ve always got to do a good, quality audit to start with,” says Adam Weissenberg, CPA, the national managing audit partner – Clients & Industries for Deloitte LLP. “If we’re also providing insights and using that as a way to help the company know about some things it didn’t know about, that should be a valuable
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Whether it’s journal entry testing, analyzing contents of many leases across a company, or gleaning information from multiple contracts, data analytics is giving auditors the ability to find anomalies and discover inefficiencies that might have remained hidden in the past. These insights can provide important information for audit clients to act on. Nonetheless, financial statement audits often represent a missed opportunity for companies. More than one out of every three companies (35%) rarely or never use the information received from their financial statement audits to improve their business, according to the Deloitte survey. About half of executives (45%) and audit committee members (48%) whose companies don’t always use information from their audits do not have processes in place to make use of the insights that can be taken from an audit. Weissenberg suggested that auditors, management, and audit committees use the following tactics to make sure the client derives maximum value from the audit:
Communicate. Management, audit committees, and auditors need to communicate frequently to make sure the company is aware of and taking advantage of the insights that auditors discover. By following up and checking in with management and the audit committee, auditors can ensure that their insights have been understood. Train auditors on judgment and communication. “We have to continue to work on [developing] the skills in our teams so that they can deliver on this, they have the ability to communicate effectively, they have the ability to take all these analytics and innovation that we’ve done, and discern from that what kind of information is important to share with the audit committee,” Weissenberg said. The survey offers good news for those who continuously strive to make the quality of audits as high as possible, as 83% of executives and 83% of audit committee members rated the reliability of information provided during an audit as good, very good, or excellent. “There’s an inherent trust that the auditors are doing their job,” Weissenberg said, “that the auditors are doing a good, quality audit, and that audit committees would look at us as an independent source in doing what we’re supposed to do.” s Ken Tysiac is a CGMA Magazine editorial director. Contact him at Kenneth.Tysiac@ aicpa-cima.com. © 2017 Association of International Certified Professional Accountants. All rights reserved.
ARE YOUR FINANCE PROFESSIONALS SKILLED ENOUGH TO FULFILL YOUR STRATEGIC BUSINESS GOALS? Whether you integrate a qualified CGMA designation holder into your team, or empower your people through the program, you’re adding the experience to excel, to be ready, to be the difference.
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Why? Identifying & Leveraging Your Purpose June 9, 2017 Inverness Hotel & Conference Center, Englewood, Colorado Whether you're a past attendee or a first-timer, this is the year to come! All COCPA members are invited. Register at www.cocpa.org.
FEATURING
Tawnya Ramirez
Henry Sobanet
Tom Hood
Tom Konkel
Bob Bach
OBJECTIVES Find out what’s happened with the COCPA Strategy Initiatives since June 2016. Learn what’s happening on the economic scene which affects and challenges you and the CPA profession. Identify your WHY to help guide strategy.
AGENDA 7:45 a.m. – 8:20 a.m. Registration and Continental Breakfast 8:20 a.m. – 8:30 a.m. Welcome, Plans for the Day, Introductions Tawnya Ramirez, CPA, CGMA, 2017-2018 COCPA Chair, Charter School Growth Fund, Broomfield, CO 8:30 a.m. – 9:00 a.m. COCPA Strategy Update 9:00 a.m. – 10:30 a.m. State of the Colorado Economy Henry Sobanet, Director, Colorado Office of State Planning & Budgeting, Denver, CO
1:00 p.m. – 3:00 p.m. Insights Into Action Tom Hood and Mary Medley, CEO, COCPA 3:15 p.m. – 4:45 p.m. What’s Relationship Got to Do With It? Thomas J. “Tom” Konkel, Executive Vice President, Stewart Title Guaranty Company, Denver, CO Robert H. “Bob” Bach, Esq., Partner, Bryan Cave LLP, Denver 4:45 p.m. – 5:00 p.m. Reflections and Closing Remarks Tawnya Ramirez and Mary Medley 5:00 p.m. Networking Reception
10:45 a.m. – Noon What’s Your Why? - Using Your Purpose to Accelerate Success Tom Hood, President & CEO, Maryland Association of CPAs and BLI, Towson, MD
Fee: $125 RECOMMENDED CPE CREDIT AND FIELDS OF STUDY: 8 hours in Specialized Knowledge
LEADERSHIP COUNCIL PURPOSE In January, 2001, the COCPA Board of Directors approved creation of the Leadership Council which discusses national and state initiatives and issues, provides feedback on profession-oriented matters, and assists in determining the future direction for the Colorado Society of CPAs and those it serves.
LeadFit 2017
Perhaps you’ve been wondering where to go to obtain the leadership tools and skills you need. Or, you know someone who’s got great potential and needs additional training in those ever-important interpersonal and supervisory skills to be well-positioned for promotion. Consider LeadFit 2017, sponsored by the Colorado Society of CPAs, a program specifically for CPAs and CPA-track accounting professionals who are looking to grow professionally and personally.
APPLICATION DEADLINE: JUNE 26, 2017
MAJOR SUBJECTS
• Relationship Building – listening and presence; professional and personal • Managing a Team v. Leading a Team – goal setting; conflict resolution • Performance Evaluation and Feedback – acknowledgement; confrontation; resolution; rewards • Negotiation – message tailoring; requesting • Rainmaking – thinking styles; generational styles • Role Definition – qualitative and quantitative • Defining Your “Best Work” – linking to purpose, commitment, and boundaries
LEADFIT FACILITATOR
Lorrie Blanchard Tietze is the founder and manager of Interface Consulting, LLC, Castle Rock, Colo., a consulting firm focused on helping companies enable change and build productivity through process, tools, and skills. She is committed to helping people help themselves and their businesses.
Lorrie consults with Fortune 500 companies, governmental agencies, and not-for-profit organizations. The COCPA chose her to help create and facilitate LeadFit because she understands the professional services world and the importance of the human dimension in creating meaningful, sustainable relationships. Her high energy approach and commitment to personal growth guarantee that you will not only gain the skills you need for success but that youwill truly enjoy the learning experience. Before establishing her consulting practice, Lorrie worked in the manufacturing and engineering fields. She is adept at maintaining strong customer relationships, developing international, multi-functional teams, and working in fast-paced, challenging environments.
SESSION DATES JUNE 28-JULY 5
Pre-call with each participant to determine individual goals, wants, and needs/Optional call with the participant’s sponsor.
JULY 6 |
6:30 to 8:30 pm, Home of COCPA CEO Mary Medley Welcome BBQ for all participants, with LeadFit Facilitator Lorrie Blanchard Tietze and COCPA leadership
JULY 7
| 8:30 am to 4:30 pm, COCPA Education Center, Englewood. Breakfast and lunch included. Session I: Relationship building, listening, and presence skill building – customer, client, family, supervisor, subordinates, and team applications.
AUGUST 11
| 8:30 am to 12:30 pm, COCPA Education Center, Englewood. Breakfast included and optional lunch. Session II: Conflict resolution, team commitment.
SEPTEMBER 8 |
8:30 am to 12:30 pm, COCPA Education Center, Englewood. Breakfast included and optional lunch. Session III: Message communication inside and outside, generational differences, thinking style differences.
OCTOBER 18
| 4:30 to 6:30 pm, Home of CEO Mary Medley. Refreshments included. Debrief: An opportunity for you to discuss your experiences in applying what you’ve learned so far.
NOVEMBER 14 |
8:30 am to 5:00 pm, COCPA Education Center, Englewood. Breakfast, lunch, & reception included. Session IV: Goal and expectation setting, role definition, performance feedback (confrontation, correction, acknowledgment), rewards, and graduation celebration.
SPECIALTY INSTRUCTION
INDIVIDUAL COACHING
You are encouraged to identify an individual from your firm or company who will serve as your sponsor. Delivered over five months, the program is recommended for 24 hours of continuing professional education credit. It includes two 8-hour and two 4-hour group workshops, a special debriefing session, individual coaching, a welcome BBQ hosted by COCPA CEO Mary Medley and COCPA leadership, and a celebration event at its conclusion.
TO APPLY/FEES
This innovative leadership development program, created in collaboration with Interface Consulting, LLC, is designed to enable you to gain the knowledge, skills, and practice to achieve your desired professional and personal results including interacting effectively with, leading, and managing people. The program is limited to 16 participants who commit to attending all sessions.
You will receive, over the five-month period, up to two hours of optional, individual phone coaching to address your specific needs. Additional coaching time will be available for purchase at a discounted rate. All coaching and group sessions are confidential.
Request an application form from Terry Cervi, terry@cocpa.org, 303-741-8610, or 800-523-9082. Complete and return it by June 26, 2017. You will be notified of your acceptance. Your sponsor will be invoiced for the $1395 program fee, payable on receipt and no later than July 1, 2017.
May/June 2017 • www.cocpa.org •
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Movers & Shakers
Tax Study Groups
The AICPA nominated Sheila M. Balzer, CPA, CGMA, for a three-year term on its Board of Directors. Jennifer Cottrell was named to the Women's Foundation of Colorado Board of Trustees and also was elected Treasurer. She recently joined Pinnacle Healthcare Consulting, Denver, as COO/CFO. The Financial Times named Mark J. Smith, CFP®, CPA/PFS, CIMA®, president and branch manager of M.J. Smith & Associates, Greenwood Village, to its 2017 list of 400 Top Financial Advisers. Also, Barron’s named Smith to its list of top 1,000 financial advisers organized by state for the tenth consecutive year. Smith moved up to fourth in 2017 from fifth in 2016 among Colorado advisers. Karla Willschau, CPA, Wall Smith Bateman Inc., Alamosa, and James “Jamie” Harvey, CPA, established the Gerald Corning Endowment in honor of their Adams State University mentor and emeritus professor of accounting, Gerald Corning. The endowment will support a student who is eligible to sit for the CPA examination. EKS&H LLLP admitted to partnership Michael S. Fitzgerald, CPA, Rebecca B. Kelley, CPA, Clayton J. Sparks, CPA, and Kari Ritz Thiessen, CPA.
Denver Tax Study Group at the COCPA Office
Tuesday, May 30 and Tuesday, June 27 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: May 30, June 27, 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, May 18 and Thursday, June 15 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: May 18, June 15, July 20, Aug. 17, Sept. 21, Oct. 19, Nov. 16, and Dec. 21. Register at www.cocpa.org.
In Memoriam
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 regret the loss of the following COCPA members and extend our sympathy to their families and friends.
Peter Mazula
Member since 1978, Boulder, Colo.
COCPA SEEKS NEW CFO After 25 years with the COCPA, CFO Carol Cameron has announced her retirement, effective Sept. 29, 2017. If you or someone you know may be interested in applying for the position, request the position description by email to COCPA CEO Mary E. Medley, mary@cocpa.org. To apply for the position, email Medley a letter detailing applicable background and experience, along with a current resume. Active Colorado CPA certificate preferred. Applications must be received by June 1, 2017.
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Wayne Roth
Member since 1971, Longmont, Colo.
William Trupkiewicz
Member since 1987, Longmont, Colo.
Bruce Youmans
Member since 1964, Aurora, Colo.
Classifieds OFFICE SPACE AVAILABLE Single and double occupancy space available at newly remodeled office within Plaza 7000 at I-25 and Belleview, Greenwood Village, in a suite-share arrangement with CPAs. Includes use of conference room, network, and tax software. Receptionist and secretarial services. Available June 1, 2017. Please contact Carol McGaughey at 303-792-3020 for more information. PRACTICE FOR SALE, PURCHASE, OR MERGER Selling your firm is complex! ACCOUNTING BIZ BROKERS has been selling CPA firms for over 12 years, and we know how to simplify the process for you. We have a large database of active buyers ready to purchase, and we work with industry specific lenders ready to assist buyers with financing. We are experienced, professional, and confidential, and our focus is on bringing you the "win-win" deal you are looking for. Contact us today to receive a free market analysis or to start the sales process. Kathy Brents, CPA, CBI, at 866-2602793 or Kathy@AccountingBizBrokers.com, or visit our website at www.AccountingBizBrokers.com.
30 years experience in public accounting 25 years of service with Lang & Company, CPAs 6 years experience as a business broker Please call for your free consultation 303-726-7646 www.thomaslangcpabroker.com tom@thomaslangcpabroker.com Colorado Real Estate License and CPA License Member of the Colorado Society of CPAs
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.
Bits & Pieces PTIN Holders Heads Up: The IRS is changing what it releases about tax preparers to third parties. As a result, CPAs are likely receive more junk e-mail regarding CPE and other information. Currently, any person can purchase from the IRS a list of preparer tax identification number (PTIN) holders on a CD for $35. Beginning June 30th, the list of PTIN holders will be available in electronic format for free. Third parties wanting to market to CPAs will be able to download contact information at any time from the internet.This process change is a result of the FOIA Improvement Act of 2016 signed by President Obama last year. It requires agencies to “make available for public inspection in electronic format…copies of all records…that have been requested three or more times.” The AICPA recommends that practitioners use their business information, instead of their personal information, when registering or renewing a PTIN. The IRS has told PTIN holders that they may now use a P.O. Box for their business mailing address. Also, if practitioners receive unwanted solicitation, they should report the problem to the Federal Trade Commission. For more information, visit FOIA Awareness for PTIN Holders (https://www.irs.gov/ tax-professionals/foia-awareness-for-ptin-holders/). Help When It Matters Most: The AICPA Benevolent Fund has been helping AICPA members and their families since 1933. Established by AICPA members, for AICPA members, the fund helps recipients by providing temporary financial relief in difficult times. To contribute, learn more, or identify a CPA/AICPA member who needs help, go to Benevolent_Fund@aicpa.org or call 888-777-7077.
Member of Colorado Association of Business Brokers
Alerts FIRMS WITH AICPA PEER REVIEWS DUE IN 2017 In early May, the AICPA is launching PRIMA, a new, web-based platform for administering peer reviews. If you are scheduled for peer review after May 1, you will complete all peer review information directly into the new system, including: • Updating your firm’s enrollment, including your Managing Partner and Peer Review Contact as well as levels of service your firm performs • Scheduling your peer review • Responding to Matters for Further Consideration (MFCs) • Responding to Findings for Further Consideration (FFCs) • Acknowledging your peer review acceptance letter • Submitting evidence for corrective actions For complete details, go to www.aicpa.org/interestareas/peerreview. For assistance, contact Jill Turner, COCPA Peer Review Coordinator, at jill@cocpa.org, 303-741-8605, or 800-523-9082.
OFFICE CLOSINGS The COCPA office will be closed May 29 for Memorial Day, June 9 for Leadership Council, and July 3-4 for the Independence Day holiday. For information 24/7/365, go to www.cocpa.org.
May/June 2017 • www.cocpa.org •
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Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076
IS YOUR NEST EGG EVERYTHING IT’S CRACKED UP TO BE?
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“Actually, honey, I was expecting something a little bigger.”
The challenges facing today’s retirees are unique. Low interest rates, sky-rocketing healthcare costs, longer life expectancies, and complex Social Security rules make much of the conventional wisdom of the past obsolete. For nearly 25 years, we’ve been working with people like you to address the challenges of the transition from accumulating their nest egg to using it to support their retirement lifestyle. Get in touch today to schedule a complimentary consultation.
KuhnAdvisors.com
LEARN MORE AT 303-803-1016
Minimum Relationship: $1 million Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Kuhn Advisors, Inc. is a registered investment adviser. More information about Kuhn Advisors, Inc., including its advisory services and fee schedule, can be found in its Form ADV Part 2, which is available by calling 919-493-3233 or visiting kuhnadvisors.com.