November-December 2016 NewsAccount

NewsAccount November/December 2016 Colorado Society of CPAs

What You Need to Know This Tax Season PAGE 4

Flying High Into the Wild Blue Yonder PAGE 14

Support the Profession's Future on Colorado Gives Day PAGE 16

Holiday Hours The COCPA office will be closed for the holidays:

Contents

Nov. 24-25 Dec. 26 Jan. 2 For information 24/7/365, visit www.cocpa.org.

Features

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What You Need to Know This Tax Season You’re a tax practitioner; change is a given. You can count on something new to learn, incorporate, address, or perhaps avoid every year. The 2017 filing season is no exception.

Changes Loom in NFP Financial Statement Reporting In the world of not-for-profit reporting, the last time there was a major change was 23 years ago. Learn about the newest changes, passed in August.

FASB Issues New Updates in 2016

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The Financial Accounting Standards Board released 15 Accounting Standards Updates during the first eight months of 2016. Read the high-level overview of those that will have the most impact on financial reporting.

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Flying High Into the Wild Blue Yonder

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Meet Jeffrey Barker, CPA, a licensed pilot who earned the right to fly when he was just 17 years old.

Support the Profession's Future on Colorado Gives Day Colorado Gives Day, Dec. 6, is the single biggest fundraising opportunity of the year for the COCPA’s very own Educational Foundation. Mark your calendar.

Why Business Leaders Need to Look Beyond Their Own Departments Your major competitor may not be another company.

It may be your own organization.

Departments

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Chair Column Movers & Shakers and In Memoriam

Chair Column

NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 62, No. 4 November | December 2016 Board of Directors Mark T. Solomon, Chair Tawnya Y. Ramirez, Vice Chair Benjamin T. Hrouda, Treasurer Steve R. Corder, Immediate Past Chair Mary E. Medley, Secretary Directors Christine Benero, Ann E. Hinkins, Gregory P. Osborn, Christopher J. Telli, Dan W. Soukup, Karen F. Turner 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 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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One Profession, Many Differences

BY MARK SOLOMON, CPA, CGMA

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s I traveled the state on the Chair Tour throughout the summer and early fall, I heard some common concerns about the issues we face as CPAs. We’re all challenged by recruiting and retaining the best and the brightest. We’re all focused on employing our ethics and integrity, as well as our technical expertise, to achieve the best outcomes for our clients, our firms, and our companies.

We all work hard to keep up with increasing regulations. Those issues are consistent regardless of whether we work in public practice, industry, education, or government.

Yet, depending on where I was in the state, I also heard about new and different issues through my conversations with members. Those experiences reminded me that while we share many commonalities as CPAs, we are a diverse profession with varying issues and concerns.

What’s at the top of the list for a Denver CPA can differ greatly from a CPA’s concerns in one of Colorado’s more rural areas.

These differences make the Chair Tour and the interaction and feedback it provides so important to your COCPA leadership overall.

It helps us understand how best to help you, regardless of where and how you practice.

For example, as I visited chapters closer to Denver, members discussed ongoing hiring challenges. On the Western Slope, discussions revolved around the new fiduciary rules. Everywhere I went, we talked about Amendment 69 – ColoradoCare, and the COCPA Board of Directors’ position urging members to vote against it. Does it have a chance of passing? Who knows? After Denton, Texas, passed a fracking ban, it seems anything is possible! Members also wanted to discuss the oil and gas industry and what I’m seeing from the inside of that industry.

In Durango, younger CPAs discussed the Uniform CPA Examination and with good reason. A new version of the computerized

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exam will launch on April 1, 2017. Still structured in four parts – Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR) and Regulation (REG) – the new exam is designed for increased assessment of a candidate’s higher-order skills such as critical thinking and analytical ability.

The exam will utilize a skills-based framework consistent with the revised Bloom’s Taxonomy and additional task-based simulations (TBS).

An increase in the background material and data in a TBS will require candidates to determine what information is or is not relevant. These changes will shift the exam emphasis to competency and problem-solving skills and away from rote memorization. This is a big deal – especially if you haven’t passed the exam yet or are just getting started. Read more about the new exam at uniformCPA.cocpa.org.

So, while we all have overarching and common concerns, we all face issues that are as diverse and varied as we are as individuals.

From the CPA exam to the impact of the oil and gas field on the Colorado economy to recruiting and retention to regulation, COCPA members are dealing with complex and challenging topics in myriad areas.

This diversity in our profession is why I’m looking forward to the annual CPAs Make a Difference celebration on November 2nd in Denver. It’s a night to gather together to celebrate our profession and to honor colleagues who are making big impacts in their communities. We’ll also welcome the newest members of our COCPA community – the Colorado CPAs licensed since last year who are the future of our profession. It’s a night for celebrating what we have in common as professionals who make a difference for those we serve. I hope to see you there. s Email Mark Solomon at msolomon@sm-energy.com.

Legislative Update

House Passes National Standard for State Taxes on Nonresident Employees

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n Sept. 21, the U.S. House of Representatives passed the Mobile Workforce State Income Tax Simplification Act of 2015, H.R. 2315, by voice vote. The bill would establish a uniform, national standard governing withholding of state income taxes for nonresident employees.

Cong. Mike Bishop (R-MI) and Cong.

Hank Johnson (D-GA) sponsored the bill and spearheaded the measure’s passage.

Colorado Cong. Ed Perlmutter and Cong.

Ken Buck signed on as co-sponsors.

H.R. 2315 includes several key components designed to alleviate the burden the current state income tax withholding system places on traveling employees and their employers.

For the vast majority of states, including Colorado, the legislation would result in minimal or no revenue impact.

H.R. 2315 would: • Provide for a uniform and easily administered law for traveling employees and their employers, establishing a national threshold of thirty days.

• Ensure the correct amount of tax is withheld and paid to the states without the undue burden the current system places on employees and employers.

• Simplify the patchwork of existing, inconsistent, and confusing state rules as well as reduce administrative costs to states and lessen compliance burdens on consumers.

• Establish provisions for the use of time and attendance systems that would provide protection for honest mistakes by the employer and a reduction in audit risk.

• Align the many different tax requirements of forty-one states regarding the withholding for income tax of nonresidents by setting a national threshold of thirty days or more before liability to withhold and pay taxes.

• Provide an opportunity for greater compliance because of the certainty and consistency of minimum withholding rules across all states, thus encouraging the free movement of personnel within the marketplace.

At press time, consideration had been handed off to the Senate, where the companion bill, S. 386, sponsored

by Senators John Thune (R-SD) and Sherrod Brown (D-OH), already had garnered 51 cosponsors. s

November 14–15, 2016 TECHNOLOGY CONFERENCE

SAVE THE DATES 2016 Conferences

November 17, 2016 ACCOUNTING AND AUDITING CONFERENCE

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

December 13, 2016 SEC AND PCAOB CONFERENCE December 15, 2016 MIX AND MATCH CONFERENCE

November/December 2016 • www.cocpa.org •

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Taxation

What You Need to Know This Tax Season

BY JOHN W. (JACK) ALLGOOD, CPA

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f you’re a tax practitioner, change is a given. Whether it’s driven by Congress changing the law, the IRS changing its regulations, clients changing their situations, or some other impetus, you can count on something new to learn, incorporate, address, or perhaps avoid every year. The 2017 filing season is no exception.

15, was not changed. We’re all hoping this 2017 filing season will provide some deadline relief for practitioner workload compression and better facilitate the flow of information between the different types of taxpayers by promoting earlier filings for taxpayers needing information from final flow-through returns.

• May 15 due date (with extensions to Nov. 15): Form 990 return for exempt organizations

TAX RETURN DUE DATE CHANGES As the result of concerted efforts of the AICPA and other organizations, more sensible due dates for tax and information returns have been established, beginning in the 2017 filing season. The new due dates affect a variety of entities and are generally effective beginning with 2016 returns to be filed in 2017. Technically, the new rules apply to tax years beginning after Dec. 31, 2015. Therefore, the new due dates will apply to short-year returns with periods beginning in 2016 and ending in 2016.

Many states are enacting legislation to change their due dates to conform with the respective new federal dates.

Here is a list of Dec. 31 year-end federal due dates applicable to 2016 returns:

Other forms that are likely to be changed to go along with their corresponding returns’ new federal due dates are:

Note the individual tax return original due date of April 15, with extensions until Oct.

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• March 15 due date (with extensions to Sept. 15): Partnership and S corporation returns (no change) and for providing Schedule K-1 to the entity’s partners or shareholders • April 15 due date (with extensions to Sept. 30): Income tax returns for estates and trusts • April 15 due date (with extensions to Sept. 15): C corporation income tax returns filed before Jan. 1, 2026 • April 15 due date (with extensions to Oct. 15): Individual returns (no change) and FinCEN Form 114 Report of Foreign Bank and Financial Accounts (FBAR), which were previously due

by June 30

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• July 31 due date (with extensions until Oct. 15): Form 5500 for employee benefit plans (no longer a need for an additional extension)

• Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation • Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations, is to be filed by the due date (including extensions) of the return requiring Form 5471.

• Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business (Under IRC Sections 6038A and 6038C) is to be filed by the due date (including extensions) of the corporation’s return.

• Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)

• Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax • Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities • Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships • Form 8886, Reportable Transaction Disclosure Statement Important exception to the general application of the tax return filing due dates: For C corporations with a fiscal year ending on June 30, the first filing deadline will remain Sept. 15, the 15th day of the third month following the end of the fiscal year.

If the C corporation gets the seven-month extension, the extended filing deadline will be April 15. These deadlines will remain the same through June 30, 2026.

AUTOMATIC FILING EXTENSIONS ELIMINATED FOR MOST FORMS IN THE W-2 SERIES Regulations issued by the IRS effective for the 2017 filing season remove the automatic extension to file information returns on most forms in the W-2 series, except for Form W-G2, and allow only one 30-day nonautomatic extension to file these returns.

The IRS will grant one 30-day extension if it believes extension is warranted based on the transmitter’s explanation, generally considered to represent extraordinary circumstances or catastrophe. It is believed submission of information returns earlier in the filing season should help the IRS improve its ability to identify fraudulent refund claims and stop such refunds before they are paid. Be a student of Circular 230 requirements.

DELAYED TAX REFUNDS Tell taxpayers up front that refunds of their 2016 overpayments might be delayed.

Specifically, refunds attributable to early filers who claim the Earned Income Tax Credit and the Additional Child Tax Credit will be delayed at least until Feb. 15. Also, the rise in identity theft is causing the IRS and states to spend additional review and

processing time to protect against fraudulent refund claims. Accordingly, most taxpayers claiming refunds will experience a processing delay over that of prior years. This may cause some taxpayers to decide to apply 2016 overpayments to 2017 estimated tax rather than claim a refund. An option is to reduce remaining 2016 estimated tax payments or withholdings taxes. Taxpayers may choose to owe tax with their 2016 returns rather than have overpayments.

REQUIRED HEALTH INSURANCE RELATED TAX PENALTIES Taxpayers must have minimal, essential health insurance coverage during 2016 or be prepared to pay an ever-increasing penalty when they file their 2016 returns.

The requirement to maintain basic health coverage is referred to as the “individual mandate.” The penalty, which is based each month on the number of uninsured family members and the level of household income, keeps increasing. An uninsured household of three individuals age 18 and over during all 12 months of the 2015 tax year faced a maximum penalty of $975.

The 2016 maximum penalty for this same uninsured household jumps to $2,085 (the 2016 “applicable dollar amount” of $695 x three individuals).

PREPARATION MISTAKES WHICH MAY DELAY PROCESSING • Misspelled (or change in) names, address changes, and incorrect Social Security numbers: This generally happens when a tax preparer is preparing a return for the first time, or the taxpayer (or spouse) has changed his or her name but has not notified the Social Security Administration of the name change.

This also can happen when taxpayers marry and file an initial joint return for the tax year, or when taxpayers divorce, and a change in one of the names occurs.

Taxpayers often move and forget to inform the preparer. All or any of these can delay processing and the receipt of Treasury check refunds.

• Incorrect direct deposit or bank account payment information: This most often happens when account information is entered on a return for

the first time. If incorrect bank account information is entered for direct deposit, a taxpayer’s refund could end up in the wrong taxpayer’s account.

• Additional, new income information for a particular year will cause processing delays if this information is omitted from the return, and the IRS was alerted to the income from information reporting by the payer.

Omitted information often arises when a taxpayer had miscellaneous, dividend, or interest income reported to the IRS on Form 1099, and this information was not included in the return. Also, be sure to inquire if the taxpayer had a non-recurring employment relationship (reported on Form W-2) during the year.

• Filing status errors: This is likely to happen in years of marriage, divorce, legal separation, or with the household addition of a new dependent for an unmarried taxpayer.

• Improper reporting of noncash donations: This not only can lead to delays in processing but also can lead to additional governmental correspondence. Be sure to follow the rules for reporting and disclosing noncash donations. If a Form 8283 (Noncash Charitable Contributions) is required, be sure to attach it to the return.

• Incorrectly reporting estimated tax payments: This generally happens when the taxpayer changes an amount the tax preparer provided to pay and send. The tax preparer should always confirm if the taxpayer made estimated tax payments by requesting the dates paid, check numbers, and amounts remitted.

• Finally, taxpayers and or tax preparers should avoid missing the correct deadline for filing a return or timely extension. This can be extremely punitive if the taxpayer owes a significant sum that must be paid by the original due date, has International information form reporting, or misses the opportunity to make an advantageous “election” required as part of a timely filed return. Any tax that CONTINUED ON PAGE 6

November/December 2016 • www.cocpa.org •

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Taxation CONTINUED FROM PAGE 5

is expected to be due should be sent with the return (or an extension) filed by the original due date. Many initial, late-filed information returns for which taxpayers receive proposed penalties from the IRS can be waived for a “firsttime filer.” This can apply to Form 5471, Form 5472, Form 8858, Form 8865, FinCEN Form 114, etc.

RETURN PREPARER PENALTIES AND MANAGING RISK The tax return preparer penalty regulations contained in IRC Section 6694 stress documentation, client communication, and due diligence. An individual and the firm can both be subject to the Section 6694 return preparer penalty for the position(s) reported in the return giving rise to an understatement of tax. Preparers are expected to exercise appropriate due care. Although the answer or treatment of an item can be wrong, a tax preparer who acts in good faith should not be assessed a preparer penalty.

To demonstrate good faith, the preparer should be able to demonstrate he or she applied proper preparation and review procedures, asked the appropriate questions, performed necessary research, and developed a reasonable conclusion. A systematic, step-by-step approach to the preparation and review of tax returns is a “normal office practice” which helps ensure quality control and demonstrates due care.

One of the factors the IRS considers in determining if the preparer acted in good faith is if the practitioner can show a normal office practice for promoting accuracy and consistency in the preparation and review of returns. This generally means the practitioner applies the use of preparation and review checklists as returns proceed through a preparation and review process, attempts to ask appropriate questions and obtain necessary information from the taxpayer, and reviews the prior year’s returns.

Applying these factors that normally promote the exercise of due care and good faith should lead to efficient, consistent,

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and accurate preparation of tax returns. Be able to demonstrate you and your firm had preventative measures in effect before an alleged misconduct occurred.

WELL-DRAFTED ENGAGEMENT LETTERS Properly drafted engagement letters (EL) serve to define the relationship with the client by outlining the services to be performed (and not to be performed), the fees to be charged, and how to settle disputes. The EL is the first line of defense against a client’s claim the practitioner or firm did not perform as promised or as represented. And, it is often required to be in place for professional liability insurance coverage purposes.

PROCEDURES FOR INFORMATION DOCUMENT REQUESTS ISSUED

BY THE LARGE BUSINESS AND INTERNATIONAL DIVISION If your client receives a notice of examination issued by the Internal Revenue Service’s Large Business and International Division (LB&I), keep in mind the IRS has issued a special directive (LB&I-04-0214-004) to examiners and specialists assigned to these types of IRS audits. The directive involves the requirements for issuing and enforcing Information Document Requests (IDR).

Among other things, the directive states that examiners and specialists have discretion, as warranted by the circumstances, to grant an extension of time to taxpayers who either fail to respond to an IDR or provide an incomplete response before the enforcement process begins.

Generally, an IDR must state or identify an “issue” under examination. Part of the LB&I directive clarifies that there is an exception to this rule. An IDR issued at the beginning of an examination that requests basic books and records, and general information about a taxpayer’s business, is not subject to this requirement.

The new IDR enforcement process (directive) contains three, graduated steps: (1) a delinquency notice; (2) a pre-summons letter;

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and (3) a summons. Procedurally, this process is mandatory and has no exceptions. However, the new directive clarifies that if, during the discussion of an IDR, a taxpayer indicates that the requested information will not be provided without a summons, the IDR enforcement procedures do not apply, and the IRS should move directly to issue the summons.

These directives have been effective since March 2014, however practitioners may not be aware of the LB&I audit process, flexibility surrounding IDRs, and the related benefits to their larger clients. Although there are other benefits to be aware of, one requirement regarding the issuance of an IDR is for the examiner or the specialist to specifically discuss with the taxpayer (or the taxpayer’s representative) the issue related to the IDR, how the information requested relates to the issue, and why the information is deemed necessary.

One IDR has to be prepared and delivered for each issue, and the examiner or specialist must determine with the taxpayer or representative a reasonable time frame for responding to the IDR. s John W. (Jack) Allgood is a tax partner with Anton Collins Mitchell, LLP, Denver, and a member of the COCPA Editorial Board.

Contact him at jallgood@acmllp.com or 303-830-1120.

Editorial Credits recognizing the work of writers and contributors: A portion of this content came from Thomson Reuters “CHECKPOINT” Federal Library, a tax research database to which Anton Collins Mitchell, LLP is a subscriber.

Some information related to the tax return due date section came from an Aug.1, 2016 article written by Eileen Reichenberg Sherr, AICPA senior technical manager, Tax Policy & Advocacy, Washington, DC, as published in “The Tax Advisor” available through AICPA Resources. The aforementioned writers and publishers make no warranties or representations of any kind. As the writer of this NewsAccount article, I accept full responsibility for all information provided.

– Jack Allgood

We always knew Mark Smith was top notch.

Now, Forbes’ 2016 List of Top Advisors confirms it.

For more than 30 years, Mark J. Smith, CFP®, CPA/PFS, CIMA®, has been the “voice of reason” for clients – helping them navigate some of life’s greatest financial challenges, including selling a business, managing an inheritance, or divorce. He built a firm dedicated to education, trust-building, faith in the future, and to placing clients’ interests first.

We’re pleased to announce that Forbes recently named Mark to its 2016 list of America’s Top 100 Wealth Advisors. Developed by SHOOK Research, rankings are based on an algorithm of qualitative and quantitative data, rating thousands of wealth advisors with a minimum of seven years of experience and weighing factors like revenue trends, assets under management compliance records, industry experience, and best practices.

Forbes is not the first to recognize Mark’s achievements. Earlier this year, Barron’s named Mark a top financial advisor for the ninth consecutive year.* Nothing tops the satisfaction Mark receives when clients feel heard, supported, and comfortable that they have help to reach their financial goals. It’s a pleasure and privilege for all of us at M.J. Smith & Associates to be of service.

Congratulations, Mark!

M.J. Smith & Associates specializes in: Providing low-cost and tax-efficient investment platforms Minimizing the risk of poor investment decisions by providing our clients in-depth education Integrating tax reduction strategies into the client’s overall financial plan Serving women in transition (divorce, retirement, death of a spouse, etc.)

Preparing the next generation to be good stewards of wealth

M.J. Smith & Associates is an Independent Registered Investment Advisor. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. *Barron’s rankings are based on asset under management, revenue produced for the firm, quality of practice, regulatory record and philanthropic work.

These awards are bestowed by an independent third party organization not affiliated with Raymond James.

5613 DTC Parkway, Suite 650, Greenwood Village, CO 80111 | 303.768.0007 | www.mj-smith.com

Not-for-Profit Accounting

Changes Loom in NFP Financial Statement Reporting

BY LORI ANNE REINWALD, CPA, AND STEVE CORDER, CPA, CGMA

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ome events in nature happen only occasionally, such as Halley’s Comet which comes around every 75 years. Certain types of cicadas come above ground every 17 years. In the world of not-for-profit (NFP) reporting, the last time there was a major change was 23 years ago with the issuance of Statement of Financial Accounting Standard No. 116 and 117, now in the Financial Accounting Standards Board (FASB) codification Topic 958 Not-for-Profit Entities.

It was probably time for change. On Aug. 18, 2016, the FASB issued its new guidance on NFP financial reporting, Accounting Standards Update or ASU 2016-14, focusing primarily on net asset classes, investment return, expenses, liquidity, and presentation of operating cash flows. This ASU’s purpose is to simplify and improve NFP financial statement presentation and disclosures. It is effective for annual financials issued for fiscal years beginning after Dec.15, 2017. Let’s

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take a closer look at the significant changes so that your organization can be prepared.

NET ASSET CLASSES NFPs have been recording gifts and tracking the related net assets as unrestricted, temporarily restricted, or permanently restricted depending on the nature of the gift. The FASB decided that there was too much confusion between permanently restricted and temporarily restricted and that these funds had been restricted by the donor, not by management or the board. There also was confusion about how unrestricted net assets could be legally restricted, such as through debt covenants.

To simplify this, instead of three categories of net assets, there will be only two: with donor restrictions and without donor restrictions. There is still a requirement, however, to disclose the amounts and nature of restrictions, which means that the tracking of net assets with donor restrictions is still a

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critical endeavor. Furthermore, additional disclosure is required for net assets with board designations, including amounts, purpose, and appropriations.

A change also was made related to donorrestricted endowment funds which are “underwater.” Previously, this underwater amount was segregated and included in net assets without donor restriction (i.e. unrestricted). It will now be included in net assets with donor restrictions. The underwater amount also requires additional disclosures in the footnotes.

INVESTMENT RETURN The ASU now requires the investment return to be presented net of external AND direct internal investment expenses. In the past, NFPs had the option to show investment return net of external expenses or not. This new requirement to net external and direct internal costs against investment return will allow for more comparability among NFPs.

EXPENSES The current requirement for NFPs is to disclose expenses by functional classification (i.e. as program, management and general, or fund raising), whether on the face of the statement of activities or in the notes. Most NFPs were not required to disclose expenses by natural classification, such as salaries, depreciation, or rent expense. Only NFPs that were voluntary health and welfare organizations were required to include a statement of functional expenses, which included expenses by both natural and functional classification. This ASU requires expenses to be presented by both natural and functional classification in one or more of the following manners:

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• on the face of the statement of activities, • in a separate statement, or • in the notes to the financials.

This new requirement is to help disclose additional information to readers of the financials. Previously, NFP stakeholders had to obtain this information from the NFP’s Form 990 tax return.

Congratulations to the following COCPA members who will be honored for their contributions to their communities, Nov. 2, at the CPAs Make A Difference celebration. To attend the event at the Grand Hyatt Downtown, Denver, register online at www.cocpa.org, or contact Susan Vachereau, susan@cocpa.org, to reserve a patron or supporter table of eight.

NFPs also are now required to describe their methods for allocating expenses by functional classification.

LIQUIDITY Readers of NFP financials will now be able to assess the NFP’s available financial resources and the methods used to manage its liquidity and liquidity risk through this additional footnote disclosure. Quantitative and qualitative information about how an NFP manages its available liquid resources to meet cash needs for general expenditure within one year of the reporting date is now required. This disclosure requirement may be the most challenging aspect for financial statement preparers as it focuses on financial management issues. Presenting a classified statement of financial position may be an effective way for NFPs to comply with this new requirement.

Brett Hanselman, CPA KPMG LLP, Denver

Marc Hendrikson, CPA, CGMA Centennial Bank, Denver

Chad Mulliniks, CPA SM Energy Company, Denver

Greg Pfahl, CPA Hein & Associates LLP, Denver

OPERATING CASH FLOWS The new ASU continues to allow NFPs to present cash flows from operations using either the direct or indirect method. However, NFPs no longer will be required to present the indirect method reconciliation if the direct method is used. The intent here is to provide more flexibility in financial reporting.

The FASB is not finished with its financial statement display project.

This is merely the first phase. Some of the more contentious changes initially proposed still need to be considered and finalized. We hope these additional display issues are resolved prior to the next scheduled arrival of Halley’s Comet in 2061. s Lori Anne Reinwald, CPA, and Steve Corder, CPA, CGMA, are shareholders in Kundinger, Corder & Engle, P.C., Denver. Contact them at lreinwald@kcedenver.com and scorder@kcedenver.com respectively.

Reinwald will teach Accounting and Reporting for Not-for-Profit Organizations, Nov. 17, at the COCPA office. To register, visit www.cocpa.org.

LEAD SPONSOR

NEW CPAS SPONSOR

November/December 2016 • www.cocpa.org •

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Accounting Standards

FASB Issues New Updates in 2016

BY STEVE VAN METER, CPA

T

he Financial Accounting Standards Board (FASB) was active during the first eight months of 2016 with the release of 15 Accounting Standards Updates (ASUs).

In comparison, 17 ASUs in total were issued in 2015. This article provides a high-level overview of the ASUs issued in 2016 that will have the most impact on financial reporting.

Several ASUs issued in 2016 are not addressed in this article as they either cover narrow topics or involve clarifications to the new revenue recognition standard. Copies of the ASUs can be found free of charge on the Financial Accounting Standards Board (FASB) website, www.fasb.org.

assessments for goodwill and indefinite-lived intangible assets.

Effective Dates: Public Entities – years beginning after 12/15/2017; Nonpublic Entities – years beginning after 12/15/2018.

Early adoption is permitted.

ASU 2016-02, LEASES A basic premise of the new guidance is that a lease, by definition, conveys the right to control the use of an asset for a period of time in exchange for consideration, and therefore it creates an asset and liability for lessees that will be reflected on the balance sheet. For lessors, their accounting model will be similar to what it is today, with certain changes to conform to the new revenue recognition model.

enforceable contract terms. The question becomes, “Are you going to sue yourself?”

The expectation is that many will take the position that related party leases are not considered legally enforceable.

Effective Dates: Public Entities – years beginning after 12/15/2018; Nonpublic Entities – years beginning after 12/15/2019.

Early adoption is permitted.

ASU 2016-07, INVESTMENTS — EQUITY METHOD AND JOINT VENTURES: SIMPLIFYING THE TRANSITION TO THE EQUITY METHOD OF ACCOUNTING This new standard eliminates the requirement to retrospectively apply the equity method of accounting due to an increase in the ownership or degree of influence that requires the use of the equity method. If the investment were previously classified as an available-for-sale security, any unrealized holding gain or loss sitting in other comprehensive income will be recognized in earnings. Effective for years beginning after 12/15/2016 for all entities.

Early adoption is permitted.

ASU 2016-01, FINANCIAL INSTRUMENTS — OVERALL: RECOGNITION AND MEASUREMENT OF FINANCIAL ASSETS AND LIABILITIES This standard represents a partial completion Under the new lessee accounting model, of a joint project of the FASB and the finance leases will be similar to existing International Accounting Standards Board capital leases, where amortization of (IASB) that began in 2008, with the objective the right-of-use asset will be recognized of reducing the complexity in accounting for separately from interest expense on the lease financial instruments. All entities that hold liability. Most existing operating leases financial assets and owe financial liabilities will remain operating leases under the new will be impacted. The most significant guidance and will require a right-of-use change is that equity investments (except asset to be recorded on the balance sheet those accounted for under the equity along with a lease liability, with recognition ASU 2016-08, REVENUE FROM method of accounting or those that result in of a lease expense generally on a straight- CONTRACTS WITH CUSTOMERS: consolidation of the investee) will most likely line basis over the lease term. A lessee may PRINCIPAL VERSUS AGENT be measured at fair value with the changes make an accounting policy election not to CONSIDERATIONS (REPORTING in fair value recognized in net income. The recognize lease assets and liabilities when REVENUE GROSS VERSUS NET) previous presentation of changes in fair the lease term is 12 months or less; renewal This guidance was issued to assist values of equity investments through other options must be considered if it is reasonably stakeholders with consistent application comprehensive income has been eliminated. certain to be exercised. (Reasonably certain of principal versus agent considerations In addition, equity investments without means high probability.) under the new revenue recognition standard Find out what’s happened with the COCPA Strategy Initiatives since June 2015.

Learn what’s happening on the readily determinable fair values will need to in ASU 2014-09. Principals are those national and international scenes which affects and challenges you and the CPA profession. Understand what undergo a qualitative assessment to identify Related party leases should be classified entities that are most at risk and actually is and how it successfully.

Identify the leases hard trends which can help guide strategy. what’s anybranding impairment, similar to to theuse qualitative similarly to other based on legally provide the goods and Prioritize services. An agent

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critical, essential, and significant to be successful as an anticipatory CPA and anticipatory organization.

• NewsAccount • November/December 2016

is an entity that arranges for another party to provide the goods and services. This update lays out various indicators and examples to assist in the determination of who is primarily responsible for providing the goods and services. This guidance has the same effective dates as the new revenue recognition standard: Public Entities – years beginning after 12/15/2017; Nonpublic Entities – years beginning after 12/15/2018.

ASU 2016-09, COMPENSATION – STOCK COMPENSATION: IMPROVEMENTS TO EMPLOYEE SHARE-BASED PAYMENT ACCOUNTING The amendments in this update are intended to simplify the accounting for the issuance of share-based payment awards to employees.

Areas impacted include income tax consequences, valuation of liability awards which are settled in cash, and classification of cash flows. Some of the areas of simplification apply only to nonpublic entities. One of the significant changes is companies can elect to recognize forfeitures when they occur instead of estimating the number of awards that are expected to vest (current GAAP). Another important feature is that a nonpublic entity can make a onetime accounting policy election to switch from measuring all liability awards at fair value to intrinsic value.

Under current GAAP, an entity must determine whether the difference between the deduction for tax purposes and the financial reporting compensation cost results in either an excess tax benefit or a tax deficiency. Excess tax benefits are recognized as additional paid-in capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. Excess tax benefits are not recognized until the deduction reduces income tax payable.

Under the update, all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit in the income statement. An entity also should recognize excess tax benefits regardless of whether the benefit reduces income taxes payable in the current period.

Effective Dates: Public Entities – years beginning after 12/15/2016; Nonpublic Entities – years beginning after 12/15/2017.

Early adoption is permitted.

ASU 2016-13, FINANCIAL INSTRUMENTS — CREDIT LOSSES: MEASUREMENT OF CREDIT LOSSES ON FINANCIAL INSTRUMENTS Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable that a loss has been incurred. The incurred loss approach is based on historical experience and current conditions. During the 2008 global financial crisis, financial statement users often made their own estimates of credit losses and devalued financial institutions before the accounting losses were recognized.

The result of applying the incurred loss methodology was that financial institutions could not record credit losses that they were expecting but which had not met the probable threshold.

The new guidance replaces the incurred loss approach with a methodology that reflects “expected credit losses.” This guidance, which will impact most companies, affects loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded that have the right to receive cash. In addition to using historical experience and current conditions, the new guidance requires the use of forecasted information. The FASB does not specify a method for measuring expected credit losses; entities will need to apply methods that reasonably reflect expectations of credit loss estimates.

Effective Dates: Public Entities – years beginning after 12/15/2019; Nonpublic Entities – years beginning after 12/15/2020.

Early adoption is permitted in years beginning after 12/15/2018.

ASU 2016-14, NOT-FOR-PROFIT ENTITIES: PRESENTATION OF FINANCIAL STATEMENTS OF NOT-FOR-PROFIT ENTITIES

The purpose of this guidance is to provide more useful information to donors, grantors, creditors, and other users of financial statements of not-for-profit entities. The new net asset classification requirement replaces the current net asset presentation (unrestricted, temporarily restricted, and permanently restricted) with two classes (without donor restrictions and with donor restrictions). Without donor restrictions includes board-designated purposes. Notfor-profit entities will be required to present information regarding liquidity and the financial assets available to meet nearterm demands on cash. Disclosure of net investment returns will be required. An analysis of expenses by function and nature will be required to be presented in one location (statement of activities, footnotes, or separate statement). A description of the method used to allocate costs among program and support functions also will be required.

This guidance eliminates the requirement to present the indirect reconciliation of operating cash flows when the direct method is used. This standard is effective for years beginning after 12/15/2017. Early adoption is permitted.

ASU 2016-15, STATEMENT OF CASH FLOWS: CLASSIFICATION OF CERTAIN CASH RECEIPTS AND CASH PAYMENTS Stakeholders had indicated that there was diversity in practice as to how certain cash receipts and cash payments were presented in the statement of cash flows. This guidance clarifies how eight types of cash receipts and cash payments are to be presented in the statement of cash flows. It applies to all business and not-for-profit entities.

Effective Dates: Public Entities – years beginning after 12/15/2017; Nonpublic Entities – years beginning after 12/15/2018.

Early adoption is permitted. s Steve Van Meter, CPA, is an assurance principal with CliftonLarsonAllen LLP, Greenwood Village, and a member of the COCPA Editorial Board. Contact him at Steve.vanmeter@CLAconnect.com.

November/December 2016 • www.cocpa.org •

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Governmental Auditing

Goodbye A-133 – Hello Uniform Guidance What You Need to Know

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ffective for fiscal years beginning on or after Dec. 26, 2014 (generally Dec. 31, 2015, calendar year ends and beyond), single audits formerly performed under U.S. Office of Management and Budget (OMB) Circular A-133 now must be performed under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, tinyurl.com/nxawgds (Uniform Guidance).

In brief, the Uniform Guidance consolidates federal grants administration requirements into one regulatory location and makes significant revisions to the requirements that had been previously contained in numerous OMB circulars. The new regulation addresses grant management policy for federal agencies administering federal programs, recipients of federal funds, and auditors.

Finally, the Uniform Guidance emphasizes the importance of audit quality by requiring a government-wide audit quality study once every six years. The first study likely will occur in 2019 or 2020 as determined by OMB and will include single audits submitted to the Federal Audit Clearinghouse as early as 2018 (meaning certain 2017 year-end single audits could be included in the scope of the study). Given the need for firms to retool their single audit procedures to implement the Uniform Guidance, there is a unique opportunity to reexamine existing processes and tap into best practices.

Here are some steps you can take now:

Among the changes for auditors are revisions to the major program determination process, threshold changes, and modifications to the compliance requirements subject to audit. To achieve high-quality engagements, auditors carefully should review the new requirements to make sure they clearly understand how to implement the guidance.

Changes to client requirements under the new regulations also may present an audit quality challenge. Clients may make changes to their internal controls in response to the

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provides up-to-date information, resources, tools, and events to support governmental engagements and single audits. If your firm is not already a member, consider joining.

Uniform Guidance that auditors need to understand and test. Further, the criteria that auditors test compliance against may have changed.

• Attend Applying the Uniform Guidance for Federal Awards in Your Single Audits, Nov. 7, at the COCPA. • Partners and firm managers should emphasize the importance of single audit quality to their professional staff.

A recently issued Uniform Guidance flyer, tinyurl.com/gvor6yz, containing tips for auditors implementing the Uniform Guidance may help firm leaders with this effort.

• The AICPA’s Governmental Audit Quality Center, tinyurl.com/k4jjso8, (GAQC)

• NewsAccount • November/December 2016

• Listen to a free, archived GAQC web event, Avoiding Common Deficiencies in Yellow Book and Single Audits, tinyurl.com/grs5pyl, to learn more about common pitfalls and tips to prevent them.

• Check out a new free practice aid, Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice, tinyurl.com/jj8os8h, which contains customizable illustrative policies and procedures and includes tips, warnings, and reminders to help practitioners better implement the quality control policies and procedures.

• Review the AICPA’s free AICPA Competency Framework: Governmental Auditing, tinyurl.com/hyuyzg8, which includes single audit competencies to gauge your knowledge, and learn more about the AICPA’s exam-based single audit certificate program.

•

Direct your clients to the free tools and resources available through the GAQC Auditee Resource Center, tinyurl.com/z9me79k, to help them understand their role under the Uniform Guidance. s

2 0 1 6 WO M E N TO WATC H

Event co-chairs Melissa Hooley, CPA (left), and Barbara Seacrest, CPA (right), celebrate with the 2016 Women to Watch: Christine Noel, CPA; Erin Breit, CPA; Judy Cain, CPA; Meghan Mahala Dack, CPA; Debbi Warden, CPA, CGMA; and Kerri Hunter, CPA.

If you have a specialized interest, you can build on the value you offer clients by adding an AICPA advisory service credential: Personal Financial Specialist (PFS ), Accredited in Business Valuation (ABV ), Certified in Financial Forensics (CFF ) or Certified Information Technology Professional (CITP ). These credentials were developed for the profession by the profession. They set you apart, make a statement and get you noticed.

And, they can seriously boost your career. ®

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© 2015 American Institute of CPAs. All rights reserved. 18432A-326

WHERE CAN AN AICPA C REDENTIAL TAKE YOUR CAREER NEXT?

Explore your opportunities at aicpa.org/aicpacredentials.

18432-326_YCPA Credential Campaign SS Half Page_8.5X5.5.indd 1

November/December 2016 • www.cocpa.org • 13 9/16/15 5:51 PM

Member Profile

Flying High Into the Wild Blue Yonder

BY NATALIE ROONEY

When you’re paid to be a pilot, you fly to make a living.

When you’re a CPA pilot, you fly because you absolutely love it. Meet Jeffrey Barker, CPA, tax partner at Anton Collins Mitchell LLP, Denver. He absolutely loves to fly.

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eff Barker’s interest in flying was piqued at a young age. He was a Boy Scout, living in Boulder, and pursuing the Aviation Merit Badge. “I found it fascinating that something so big and heavy could leave the ground and carry people from place to place,” he recalls.

A family friend had a plane and would take Barker flying. A high school teacher also had one. “I would wash the plane and help change the oil, and he’d give me a ride.”

Later, a friend introduced him to a flight

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instructor, and when Barker was 16, he began taking flying lessons.

LICENSED TO FLY To obtain his pilot’s license, Barker needed 40 hours of flying time. Twenty of those hours needed to be with an instructor.

A written test and a flight test also were required. “It cost significantly less back then – about a tenth – than it does now,” Barker laughs.

By age 17, Barker was a licensed pilot dreaming of an Air Force career. But at his first airman’s medical exam, he was told his eyesight didn’t meet Air Force standards. No matter. Barker decided he wanted a different career anyway. He liked math and business so pursuing an accounting degree at CU Boulder was the perfect alternative.

Throughout college, Barker continued to fly and also engaged in a few fraternity hijinks reminiscent of an airborne Animal House.

Once, he and some friends flew quite low

• NewsAccount • November/December 2016

over a nearby sorority house and attempted to drop trash bags full of water on the girls sunbathing on the roof. A breeze blew the water onto the wrong sorority house, but the effort became notorious on campus.

“I didn’t get into trouble,” Barker marvels.

“Technically, you’re not supposed to be lower than a thousand feet above a populated area.

We were a little lower than that.”

There also was the time he and a fraternity brother, who happened to be a parachute instructor, decided to parachute into North Boulder Park. They checked with the police and discovered there weren’t any laws against it. Armed with this knowledge, they let the local newspaper know “someone” would be landing in the park.

They snuck the parachutist onto the plane, concerned the flying club wouldn’t be overly supportive of their mission.

“We took off. He opened the door and jumped,” Barker recalls. “I circled and

watched his descent. We had someone in the field to help pack him up just in case.” The next day, Barker’s friend was on the front page of the paper. “It was our few minutes of fame.”

THE VIEW FROM ABOVE Barker took time off from flying when his children were young. But he kept up his certification with check rides every two years.

When the time was right, he began flying regularly again. “I’ve always loved it because it gives you such a different perspective,” Barker says. “You can see so much more of the country in a little bit of time.”

Flying over the mountains has always been especially fascinating, but Barker notes it comes with more risk and requires more training. He vividly remembers his first flight over the mountains, from Boulder to Vernal, Utah. “It was smooth and dry,” he recalls. “And, it was exhilarating to do it myself for the first time.”

Now Barker will fly whenever he gets the opportunity, whether it’s for business, visiting his kids when they were away at school, or logging a few hours on weekends. He has even been known to create opportunities to fly by donating flights to silent auctions for charity. “It’s so expensive to fly that it doesn’t hurt to make it tax deductible,” he laughs. “The charity gets the donation, I get an hour of flying time, and it’s a silent auction item people are excited about.”

Barker belongs to a flying club and pays a fee to take club-owned planes out for flights. He typically flies a four-seat Cessna Skylane which has enough horsepower for mountain flying.

Even with all of the fun and beauty, Barker says flying hasn’t been without its scary moments. He tells of flying to Missouri to visit his son at school and stopping in Salina, Kan., for lunch and fuel. “It was getting toward afternoon, and clouds were building,” he recalls. “I had heard on the radio that there was a thunderstorm system

northeast of Salina moving slowly south toward our eastward route.

I checked the latest weather with the Flight Service Station before refiling our flight plan.

The storm was still far enough north, and clouds and visibility were good along our route.” Barker filed the flight plan and took off to the east. As he passed over Junction City, the thunderstorm was closing on the left, and the sky was darkening ahead. Flight Service reported overcast skies and rain in western Missouri. The thunderstorm had picked up speed. “I decided to go no farther,” Barker says. “We began to get rain as I made a 180 degree turn. We landed smoothly in Junction City and stayed the night. The next morning we took off into a clear blue sky for a smooth flight into Missouri.”

FREEDOM IN FLIGHT These days, Barker flies mostly for fun on weekends – except during tax season. After it ends, he usually spends time with an instructor to refresh his skills. “It’s important to stay in practice.”

A typical hour-long flight route usually takes Barker from Centennial to Boulder, along the foothills, down to Chatfield, and back to Centennial. “During that time, I can practice all of the different phases of flight, and that is really satisfying,” he says.

One of his favorite places to fly is Lake Tahoe. “That’s been my most enchanting flying,” Barker says. “The mountains, the lake, and all of the scenery. The water is so clear and deep, and when you’re straight above it, you can see way down into it.”

Barker’s favorite time to fly is fall. “The air is more stable, and the aspens are beautiful from above.” He likes to fly along the Peak to Peak Highway from Central City to Estes Park for the incredible views of the changing leaves.

Most of all, Barker flies to relax and enjoy.

“It’s really freeing,” he says. “There are no curbs or medians. No traffic, at least not like being on a highway. You can trim the plane up and fly along with very little effort. There is so much to see. You can go anywhere you want. Fast. Much faster than in a car.”

Barker has accumulated 640 hours of flight time over approximately 25 years. Still, one of his all-time favorite moments happened right after he passed his private pilot flying test. He was flying home and looked out the window to see a bald eagle just off his wing.

“The eagle was circling, and just as I passed him, he lined up even with me, facing the same direction and close enough that I could see him well. It was my reward.” s

November/December 2016 • www.cocpa.org •

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Educational Foundation of the COCPA

Support the Profession’s Future on Colorado Gives Day

BY NATALIE ROONEY

Colorado Gives Day, Dec. 6 this year, is an important fundraiser for many Colorado nonprofit organizations, and it’s the single biggest fundraising opportunity of the year for the COCPA’s very own Educational Foundation. It’s a great way to support the future of the profession.

Colorado Gives Day encourages charitable giving by providing comprehensive, objective, up-to-date information about Colorado nonprofit organizations and an easy way to support them online. Community First Foundation started the program in 2010, and COCPA member Peggy Jennings, CPA, Eide Bailly, LLP, is the Foundation’s board chair. We talked with her and the Educational Foundation’s executive director, Carol Cameron, CPA, MBA, CGMA – who also is the COCPA’s CFO – about the difference the program has made.

I

t all began in 1975 with the founding of Lutheran Medical Center Foundation, the fundraising arm of the nonprofit hospital supporting Denver’s west side. Over the years, the name changed, and the geographic focus expanded. The foundation’s mission is simple: “We increase generosity and power community for positive change.”

Colorado Gives Day is doing just that.

“Community First Foundation developed the powerful online giving platform that makes Colorado Gives Day possible,” Peggy Jennings says. “We invest considerable efforts and dollars, making sure the platform is the best it can be and provides the necessary security.”

Though Jennings herself didn’t connect the COCPA and Colorado Gives Day, she loves that the Educational Foundation is a beneficiary. “The Society saw the opportunity and came to Community First Foundation, which was very insightful,” she says. “It’s been exciting to see it all come together.

What a great opportunity it’s been for the Educational Foundation!”

IN THE BEGINNING The process to join the Colorado Gives Day group of nonprofit organizations isn’t easy, which is a good thing, says Carol Cameron. “Community First Foundation wanted donors to be able to trust that any organization participating in Colorado Gives Day is legitimate.” Charities must submit information on tax returns, audited financials,

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registration with the Secretary of State, metrics about outcomes, and statements from the chair and the board.

same. That second year, the Educational Foundation raised $40,000, and Cameron knew Colorado Gives Day was a perfect fit.

Before joining Colorado Gives Day in 2013, the Educational Foundation relied on smaller giving methods, such as donations through COCPA annual dues collections and a silent auction at the CPAs Make a Difference celebration. “We needed something to focus our fundraising around,” Cameron says. “Colorado Gives Day was the perfect format. At the end of the year, when people are thinking about charitable donations and tax deductions, Colorado Gives Day brings everything together in one place. It really simplifies year-end charitable giving.”

“There are so many reasons why it works,” Cameron says. “Our members have an intrinsic desire to perpetuate the profession.

They get the whole mission of the Educational Foundation.”

THE IMPACT The first year the Educational Foundation was listed with Colorado Gives Day, the effort brought in $3,000 – not as much as the annual silent auction but enough for Cameron to believe the concept had traction. The CPA community clearly wanted to support the Foundation, so the question became how to best leverage the opportunity.

Enter Mark Smith, CPA, CFP, PFS, CIMA, one of the Educational Foundation’s most avid supporters. He offered to match the first $5,000 raised on Colorado Gives Day if two other donors would do the same. His challenge attracted four donors who offered to do the

• NewsAccount • November/December 2016

The numbers show that small and large donations alike help the Educational Foundation: 87% of gifts are $100 or less.

“Many people wonder how much of a difference they can make individually. When you pool large and small donations, the impact can be significant,” Cameron adds.

“That’s what Colorado Gives Day allows us to do. It’s an ingenious concept that Coloradans have embraced.”

In addition to direct donations, organizations receive a proportion of an incentive fund.

That amount can range anywhere from a few hundred to a few thousand additional dollars.

Five matching donors already have committed to the Educational Foundation for the 2016 effort. A $25 donation becomes a $150 donation. A $100 donation becomes a $600 donation and so on – you can do the math.

What happens to all that money? This year, the Educational Foundation awarded 40 $2500 scholarships to Colorado accounting

students – $100,000 to help students with their educational expenses. “Many of our scholarship recipients are graduate students,” Cameron says. “They’ve made the decision to pursue a career that requires a fifth year of education. They see the Colorado CPA community saying, ‘We support you. We believe in your ability.’ It helps them feel

connected to the profession because they see how we support those who want to become CPAs. They are so grateful and can’t wait to give back someday themselves. That support really matters!”

SCHEDULE YOUR DONATION You can donate on Dec. 6, or you can schedule

your donation now, to be processed on Dec. 6. Either way, you’ll be making a difference that truly matters. Go to the Educational Foundation of the COCPA’s Colorado Gives Day page to view past scholarship recipients telling their stories, and learn more at give.cocpa.org. s

HIS

future is

YOUR future.

Every dollar you give will be matched 5x thanks to: • Anton Collins Mitchell LLP • Hein & Associates LLP • EKS&H LLLP

• Kundinger, Corder & Engle, P.C. • Mark J. Smith Family Foundation

Your $50 becomes $300.

Your $150 becomes $900.

Leverage the match and support the CPA profession by donating to the Educational Foundation. Your gift provides much needed scholarship support to deserving accounting students at Colorado colleges and universities.

Learn more and donate: give.cocpa.org

2 0 1 6 L E A D F I T C L AS S Now in its fifth year, LeadFit is designed for CPAs and CPA-track accountants looking to grow professionally and personally. For information on how you or a colleague can apply for the 2017 class, contact Terry Cervi at terry@cocpa.org.

Participating this year are: Brad Baker, Katie Byrne, Khadyja Johnson, Katelyn Juven, Kent King, Cassandra Lenfert, Gustavo Orrantia, Matt Page, Jason Sands, Joe Utterback, Nicole Walters.

FACT CHECK YOUR LOOK AT HOW AMENDMENT 69 FALLS SHORT

Amendment 69 Fast Fact Amendment 69 will create a first-of-its-kind, untested, government run health care system that will not work as intended. Colorado cannot afford the risks.

No other state in the country has a health care system in place like the one proposed in Amendment 69 so there is no model to look to for how this will play out in Colorado.

Vermont explored a similar plan but its governor, a single payer champion, ultimately pulled the plug on his own proposal stating, “In my judgment, the potential economic disruption and risks would be too great to small businesses, working families, and the state’s economy.”

The COCPA Board of Directors urges you to vote NO on Amendment 69.

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• NewsAccount • November/December 2016

YOU HAVE THE DRIVE. NOW GET THE DISTINCTION. Introducing the CGMA® Program: Learning Pathway bundle. It’s the one-click solution that includes all the learning resources you need to progress through the program, plus the cost of one exam sitting.

It’s an end-to-end experience that not only fulfills your yearly CPE requirements, but also moves you along the pathway toward earning the CGMA designation.

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

20278A-326

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EVERYTHING YOU NEED TO ATTAIN THE CGMA DESIGNATION + YOUR YEARLY CPE AND MORE THAN $450 IN SAVINGS AICPAStore.com/CGMAProgram

Management Accounting

Why Business Leaders Need to Look Beyond Their Own Departments

BY ASH NOAH, CPA, FCMA, CGMA, AICPA VP OF CGMA EXTERNAL RELATIONS

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onsider this: Your major competitor may not be another company. It may be your own organization.

In today’s business environment, C-level executives have to wear many hats and focus on the huge volume of external factors impacting their organizations. Due to these business complexities, many executives have lost sight of their own internal operations.

As a result, companies are finding that their internal bureaucracies – originally designed to streamline corporate operations – have actually become a major barrier to decision-making.

Earlier this year, the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) conducted a survey of c-level executives and found that nearly a third of respondents think corporate bureaucracy and silos within their organizations are leading to significant issues with coordinating corporate initiatives.

A whopping 72 percent stated that they’ve had at least one initiative fail completely due to barriers within the organization. When a company’s infrastructure becomes an obstacle to its own success and starts leading to bad decision-making, it’s time to make a change.

Business silos, while intended to promote efficiency and effective decision-making, can unintentionally have the opposite effect.

Leaders within these corporate structures often are focused solely on the goals of their own division, team, or department. Survey respondents noted that their companies have begun operating as individual departments competing for dominance, rather than working together for the benefit of the organization as a whole.

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The result is a dysfunctional organization that is out of sync with the overall company strategy. This lack of connection and communication of goals often leads to missed market opportunities, inflated costs, and a less productive, demotivated staff.

REMOVING BARRIERS Recognizing this, some companies are seeking to remove bureaucratic roadblocks by turning to enterprise technology, such as internal communications platforms, to help clarify overall strategy and initiatives for employees.

While technology is most certainly a means to create connections within and across an organization, the organizations seeing the most success are going beyond technology and addressing the issues by shifting the mindset of their corporate leadership and employee behavior.

The most successful companies are developing leaders with mindsets that go beyond individual departments. They are seeking and cultivating well-rounded leaders who can adjust their perspective to encompass the entire company or even the entire industry.

To foster this sense of perspective, companies are encouraging their leaders to develop a more comprehensive skill set that crosses departments. With these skills, business leaders can create stronger internal lines of communication and break down barriers for the good of the company. They also can work to instill collaborative principles across the organization, including: • Transparency: Make sure all employees, from the bottom of the organization to the top, understand the company’s mission and the reasoning behind its business model and major decisions and initiatives.

This creates a common goal for employees across departments.

• NewsAccount • November/December 2016

• Collaboration: Ensure that all major decisions are fully informed by establishing a system in which knowledgeable employees from different departments are involved in the decision-making process – not to create more red tape but to encourage interdepartmental communication.

• Trust: Share information to ensure that leaders and employees are not operating with drastically different levels of knowledge and understanding.

• External engagement: Encourage engagement with external stakeholders so leaders can maintain a finger on the pulse of the company’s stakeholder value and long-term sustainability.

Survey respondents who reported they were well equipped to make good decisions for company performance and bottom line results all follow integrated thinking principles, similar to those outlined in the Global Management Accounting Principles (GMAPs), GMAPs.cocpa.org. The GMAPs were designed to create a principles-based framework to help organizations “join the dots” so to speak, so they can make better decisions and respond more effectively to the risks and opportunities with which they’re presented.

Today’s corporate environment is continuing to become more fast-paced. For an organization to be successful, its decision-making needs to be just as agile. By fostering interdepartmental collaboration and communication, a company can break down barriers to decision-making by bringing employees from across the company onto the same page, reducing internal competition, and ensuring everyone is working toward a common goal. s This article was originally published

by American City Business Journals: www.bizjournals.com/bizjournals/how-to/ growth-strategies/2016/10/business-leadersneed-look-beyond-own-departments.html.

"The new standards 2016 LeadFit Class fundamentally change the rules that govern accounting for substantially all leases, including equipment and real estate leases. We expect the standard will have far-reaching implications in areas such as accounting, finance and reporting, real estate, tax, and technology among others."

–deloitte llp

BREAKOUT SESSIONS

for members in Industry and in Public Practice

ACCOUNTING &AUDITING CONFERENCE

November 17, 2016

Inverness Hotel & Conference Center or Webcast 8:30 a.m. – 4:30 p.m.

TOPICS: • Accounting and Auditing Update • Leases • Incorporating Non-Financial Metrics in Budgeting and Planning

• Self-Assessing Your IT Risk • The Dashboard Effect: Transforming Your Company Virtually Overnight • Change Management • Revenue Recognition

Register at AccountingAuditingConf.cocpa.org.

DON FARMER

TAX WORKSHOPS

Stay up-to-date on current tax law with Don Farmer Tax Workshops.

INDIVIDUAL INCOME TAX WORKSHOP with Walter Nunnallee Monday, November 21 • 8:30 a.m. – 4:30 p.m.

Inverness Hotel & Conference Center or Webcast Learn more and register: FarmerIndividual.cocpa.org

CORPORATE/BUSINESS INCOME TAX WORKSHOP with Walter Nunnallee Tuesday, November 22 • 8:30 a.m. – 4:30 p.m.

Inverness Hotel & Conference Center or Webcast Learn more and register: FarmerCorp.cocpa.org

FEDERAL TAX UPDATE with Don Farmer Thursday, January 12 • 8:30 a.m. – 4:30 p.m.

Inverness Hotel & Conference Center or Webcast Learn more and register: FarmerFed.cocpa.org

Professional Liability Insurance The following carriers write professional liability insurance for Colorado CPAs. CAMICO is the Colorado Society of CPAs sponsored program, available only to COCPA members. Information on other carriers is provided as well. You must perform your own due diligence with respect to the coverages offered. You may call the listed insurers directly, call the local agent, or contact the insurance professional who handles your business insurance coverages to inquire about these carriers.

CAMICO PROFESSIONAL LIABILITY INSURANCE PROGRAM – Sponsored by COCPA

Insurance Carriers: CAMICO Mutual Insurance Co., Great Divide Insurance Co. (a W. R. Berkley Co.) 1800 Gateway Drive, Suite 300 | San Mateo, CA 94404 TAMMY GEER Account Executive for Colorado 800-652-1772 ext. 6886 Email: tgeer@camico.com, inquiry@camico.com Visit www.camico.com to learn more.

AICPA Program – CNA Insurance Through AON Insurance Services 2711 North Haskell Ave., 8th Floor | Dallas, TX 75204 CATHY WHITLEY 267-282-6292 Email: cathy.whitley@aon.com or www.cpai.com

Great American Insurance Group

Lloyd’s of London Through Betty Harder & Associates, Inc. 84 Chalet Circle | Dawsonville, GA 30534 800-998-1414 | 706-216-6698 Email: bettyharder@windstream.net or www.bettyharder.com

Lloyd’s of London Through RPS Executive Lines 550 W. Van Buren | Chicago, IL 60607 LINDA DEISS 312-294-5475 | 800-776-7475 | Fax: 312-803-2170 Email: Linda_Deiss@rpsins.com or www.rpsins.com

Philadelphia Insurance Company Accountant’s Professional Liability Program Through BILL ROONEY 640 Plaza Drive Suite 200 | Highlands Ranch, CO 80129 303-200-5340 | Direct: 610-538-2199 Email: Bill.Rooney@phly.com or www.ThinkPHLY.com

Through Herbert H. Landy Insurance Agency, Inc. 75 2nd Ave., Suite 410 | Needham, MA 02494

Argo Pro

JOHN TORVI 800-336-5422 Fax: 800-344-5422 Email: johnt@landy.com or www.landy.com

WILLIAM KELLY

CPA Mutual Insurance Company of America Risk Retention Group 4923 NW 43rd St., Suite C | Gainesville, FL 32606 BILL THOMPSON, CPA, RPLU 800-272-0290 or 352-240-7884 Fax: 352-240-7896 Email: bthompson@cpamutual.com or www.cpamutual.com

General Star Accountant’s Professional Liability Through Pearl Insurance | 1200 E. Glen Ave., Peoria, IL 61616 www.pearlinsurance.com BOB KIRK, SENIOR ACCOUNT EXECUTIVE 309-679-0297 | 800-438-6174 Fax: 866-817-9009 | Email: bob.kirk@pearlinsurance.com

101 Hudson, Suite 1201 | Jersey City, NJ 07302 732-623-8987 x8987 | Cell 845-537-6151 Email: bkelly@argoprous.com

Philadelphia Insurance Companies, The Hartford, Great American Insurance Company, Travelers, and United States Fire Through The Liability Place, Inc. PO Box 1726 | Carlsbad, CA 92018

BRENT T. EPPLEY 888-786-8318 | 760-720-0110 | Fax: 760-720-0330 Email: brent@liabilityplace.com or www.LiabilityPlace.com

CPA Protector Plan Through Brown & Brown of Colorado, Inc. ALEX FRAZIER 2170 S. Parker Rd., Suite 251 | Denver, CO 80231 303-980-6265 Email: afrazier@bbdenver.com or www.bbprotectorplans.com November/December 2016 • www.cocpa.org •

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Movers & Shakers Colorado Governor John Hickenlooper appointed Michael Kraehnke, CPA, KPMG LLP, Denver, to the Colorado State Board of Accountancy for a four-year term. He succeeds Kevin Collins, CPA, CliftonLarsonAllen LLP, Greenwood Village. The Board elected Kristal Bernert, CPA, chair, and Christine Noel, CPA, vice chair. Also serving are Kurt Kofford, CPA; Judy Thomas, CPA; Cynthia Chung Aki and Garth Ferrell, Esq., public members.

Michael S. Bearup, CPA, CGMA, office managing partner and audit partner, KPMG LLP, Denver, was elected to KPMG LLP’s Board of Directors, effective, Oct. 1, 2016.

The Denver Business Journal named Christine Benero, CEO, Mile High United Way, Denver, and public member on the COCPA Board of Directors, its 2016 Outstanding Woman in Business for education, government, and nonprofits.

INSIDE Public Accounting (IPA) named Dalby, Wendland & Co., P.C., Grand Junction, Glenwood Springs, and Montrose, a Top 300 Firm in the U.S., ranked by U.S. Net revenues. Also, for the second year in a row, IPA named Erickson, Brown & Kloster PC, Colorado Springs, a "Best of the Best" accounting firm, for firms with annual revenues of less than $5 million.

Bauerle and Co., P.C., Denver, opened a new office in Loveland at 1625 Foxtrail Drive.

Mark J. Smith, CPA/PFS, CFP®, Greenwood Village, was named to the Forbes 2016 list of America’s Top Financial Advisors and was ranked 87 of the Top 100 nationwide.

Zedell Loomis, CPA, earned the Seniors Real Estate Specialist® designation from the National Association of Realtors® Seniors Real Estate Specialist Council.

Cuchiaro & Associates PC was selected for the 2016 Best Businesses of Colorado Springs Award in the Accountants category. Each year, the program identifies companies that have achieved exceptional marketing success in their local community.

Karen Heerschap, CPA, joined Hewitt & Couch LLC, Pueblo.

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• NewsAccount • November/December 2016

FredrickZink & Associates, Durango, expanded the firm's ownership team. Joining owners Chuck Fredrick and Sidny Zink are John Lopez, CPA, and Michelle Sainio, CPA. Lopez joined the firm in 2013 and will work on the tax side of the business while Sainio, who has been with the firm for 10 years, specializes in audits and other financial statement reporting services.

Diane Wightman, CPA, Controlled Resources Inc., Westminster, was appointed to the AICPA National CPA Financial Literacy Commission.

In Memoriam We regret the loss of the following COCPA members and former members and extend our sympathy to their families and friends.

Robert D. Hammond

COCPA President 1984–1985 I remember past COCPA president Robert D. “Bob” Hammond, who passed away, Oct. 7, 2016, as the guy with the biggest smile who, with his wife Greta, lit up the room with warmth and laughter. When elected to the position in 1984, he was partner in charge of Clifton Gunderson & Co.’s Denver office. Highly respected for his expertise in governmental accounting, Bob was a popular CPE instructor on the subject and active with the AICPA, serving on its governing Council and State and Local Government Accounting Committee. During his year, the Society began efforts to develop a national program for accrediting specialties – an initiative that the AICPA eventually acquired. In a NewsAccount interview at the beginning of his term, Bob stressed the importance of helping COCPA members prepare for a rapidly changing future – a hot topic then just as it is today.

Competition, marketing, technology (“microcomputer” being the term back then), and public relations were on his list along with specialization, and he pursued initiatives on all those fronts. The consummate CPA, Bob Hammond loved the profession, and we all loved him. – Mary E. Medley

Allen S. Rosenbaum

Gene A. Strasheim

Englewood, Colo.

Colorado Springs, Colo.

John Karl Koll

Daniel E. Carleo

Colorado Springs, Colo.

Pueblo, Colo.

Classifieds OFFICE SPACE AVAILABLE Office sharing opportunity in 4 sole practitioner CPA Colorado Springs office suite. Share conference, kitchen, internet, and telephone.

Convenient North Academy and I-25 location with ample free parking.

Tax season only or longer lease available. Call for details, Mark or Karen, 719-884-2000 or email karen@findleycpa.com.

OPPORTUNITIES AVAILABLE Are you ready for a change? Public accounting firm based in Southeast Denver has an opening for a part time (possibly full time during tax season) professional with a minimum of five years experience in public accounting with an emphasis in taxation.

CPA & MS Tax is preferred but not absolutely required.

Candidates should possess necessary technical skills to identify tax issues, research tax questions, and recognize tax planning and savings opportunities. Excellent communication and interpersonal skills are required as the candidate will have direct contact with clients.

Experience managing multiple tasks is essential.

Responsibilities include tax preparation and review, tax consultation, research and development of solutions to tax issues, direct contact with clients to discuss and resolve tax-related matters. Knowledge of general ledger accounting, including the ability to reconcile bank accounts, analyze activity, and prepare working trial balances with adjusting entries is essential. In addition, the candidate should have strong proficiency with spreadsheet, word processing and tax preparation software. Our firm uses Word, Excel, and CCH ProFx. Our client base generally consists of high net worth individuals and closely held businesses. We provide tax, business management, consulting, and compilation/review services.

season. Looking to establish long-term relationship. Send resume to denvertaxassist@gmail.com.

PRACTICES FOR SALE, PURCHASE, OR MERGER LOOKING TO RETIRE/TRANSITION? DTC full service firm is looking to acquire a practice with revenues up to $400,000. We specialize in working with small business in the CO market; attest, tax, consulting, write up, payroll, and general business matters within multiple industries. No brokers. Please email your inquiries to: stacy@cocpa.org Box #23239.

CPA FIRMS OR PARTNERS. We represent a number of quality CPA firms who are looking to merge, acquire, or sell their practices to other CPA firms or partners with business. Locations are in the Metro Denver area. This is an opportunity to ensure your future as well as help your clients by expanding your services to them.

Why settle when you can select? Established in 1939. For further information, please contact: Phil Rubeck at D&R Associates of CO, 720-446-7020, or email: dandrassociatesofco@aol.com.

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.

Accountants and Consultants www.acmllp.com

The firm is dedicated to providing a high quality of service to our clients and, just as importantly, to maintaining a positive and friendly work environment.

Salary will be commensurate with experience. We look forward to hearing from you and appreciate your time and consideration for a wonderful position with a great firm!

Please email your inquiries to: stacy@cocpa.org Box #10417.

Established SE CPA FIRM IS SEEKING A PROFESSIONAL, for a permanent, part-time position who can work 20 to 25 hours per week. The candidate should have knowledge of Tax Software, accounting and review procedures. Apply via email at denise@nayarco.com.

Live Here. Work Here. Play Here.

imagine the possibilities tm ACM is a locally owned, locally committed

accounting firm. We understand why you live here, why you do business here and what you expect from

TAX PREPARER NEEDED for Lakewood CPA firm.

2 plus years experience in individual and business tax returns.

Ultra Tax Software knowledge a plus but not necessary.

To apply, please email resume to Contactus@acctaxsolutions.net.

your advisors. ACM is committed to providing integrated, value-added, assurance, tax and consulting services. How can ACM help you?

Contact us to find out: info@acmllp.com

CONTRACT TAX ACCOUNTANT – Cherry Creek firm seeks tax accountant with 7+ years experience preparing personal returns for professional accounting firm. Position is 40 hours per week in our office from Feb 1 to April 30. Potential additional work after tax

303.830.1120 Boulder ∙ Denver ∙ Northern Colorado ∙ Laramie

November/December 2016 • www.cocpa.org •

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

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2373 Central Park Blvd. Suite 100 Denver, CO 80238 (303) 803-1016