NewsAccount September/October 2017 Colorado Society of CPAs
The Driverless Car Revolution: Are You on Board?
Data Analytics: Changing the Face of Accounting
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Contents Features
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The Changing Landscape of State Taxes Keeping up with new rules and regulations and how they impact business can be difficult and confusing.
Change vs. Transformation —Know the Difference
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In an era that’s dominated by technology-driven, exponential, game-changing shifts of all sorts, knowing the distinction between change and transformation can be essential to your organization’s success and possibly its survival.
The Driverless Car Revolution: Are You on Board? Imagine a future without congestion, car crashes, smog, or road rage. It’s coming sooner than you think.
Is That Gift Conditional?
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Achieving accurate financial information can be challenging, especially when a not-for-profit organization receives gifts that can be difficult to distinguish from one another but have very different financial reporting consequences.
Data Analytics: Changing the Face of Accounting Analytics is a rapidly growing area as business and IT professionals look to use the huge mounds of internally generated and externally available data.
$112,500 in Accounting Scholarships Awarded Forty-five scholarships make a difference for Colorado accounting students who represent the future of the CPA profession.
Departments
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Chair Column Movers & Shakers Classified Ads
Chair Column
NewsAccount
Facing Risk Together BY TAWNYA RAMIREZ, CPA, CGMA
A bi monthly publication of the Colorado Society of Certified Public Accountants Vol. 63, No. 3 September/October 2017 Board of Directors Tawnya Y. Ramirez, Chair Victor A. Amaya, Vice Chair Benjamin T. Hrouda, Treasurer Mark T. Solomon, Immediate Past Chair Mary E. Medley, Secretary Directors Renny Fagan, Dana J. Miller, Gregory P. Osborn, Christopher J. Telli, Karen F. Turner, Randy L. Watkins Editorial Board Jack Allgood, Alan D. Bennett, Peggy Jennings, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Ariana Cassard, 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%.
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NewsAccount is available online at www.cocpa.org.
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As I’ve traveled Colorado for the annual COCPA Chair Tour, I’ve been talking to members about the risks in our profession. If you attended a Chair Tour event in your area, thank you! If you didn’t have the chance to join us, here’s a look at what we’ve been discussing.
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PAs tend to be risk averse, which isn’t news. Nonetheless we are members of a profession that regularly and routinely faces risk. So how can we learn to embrace it and build resiliency? During the Chair Tour conversations, we’re talking about the risks we face in our professional lives, communities, and businesses. The Big Question: How do we operate and maintain our relevance in a world that’s constantly evolving? Remember the “old” (public accounting) model? Staff accountants came on board. We gave them work that was organized, narrow in scope, and repetitive. As they gained experience, they began to process transactions. Eventually, they moved into client relations, cross-team projects, and business development. Today, technology and artificial intelligence (AI) make it unnecessary for humans to do tasks that used to be standard training ground for those new to the profession. In this changed environment, how can we ensure staffers gain the foundational technical skills and hands-on experience they need? How do we make sure they understand the concepts well enough to review financial statements, analyze data, and participate in effective business decision-making so they move along the learning curve? Add emerging concepts like blockchain technology and augmented reality (AR), and even the more seasoned professionals among us find ourselves facing intriguing, big, and potentially scary concepts. While the myriad unknowns ahead can be daunting, think of all of the times you’ve
• NewsAccount • September/October 2017
said to yourself, “If I weren’t so bogged down in the day-to-day minutiae, I could focus on…” What’s your…? Planning for the future? Thinking about a succession plan? Meeting with clients or senior management about their futures? Imagine freeing up your time so you could gain deeper technical knowledge on a subject and explain it in a way that helps people understand it and then make better decisions. What if you could provide the organizations you serve with the capacity and foundational knowledge to take the very complex and make it very simple so they could take advantage of new opportunities? What does that sound like? Our profession! The more we can collectively put some definition around risk and our profession and then embrace it, the more quickly we’ll be able to move forward. As a starting point, we need to stop talking about “soft skills.” The good news is this: Leadership, interpersonal, and communication skills are teachable and learnable. These are critical skills that everyone needs; they’re not just nice to have. We need to take the same approach with these vital skills as we did when we built our technical skills. We need to encourage our teams to do the same. Our colleagues aren’t going to learn these important skills by osmosis, so we need to help them gain them. Right now, we may think we don’t know how to teach these skills or have the time to devote to learning them. Yet, we’re in transition as technology phases in and menial
Four Corners
Roaring Fork
Boulder/Longmont
LICENSING 101 Recently, I attended a Colorado State Board of Accountancy meeting and was privileged to give three new CPAs a CPA lapel pin and a personal welcome into the profession. I also witnessed some of the challenges Colorado applicants face in becoming licensed, especially due to the Colorado requirements for coursework in accounting ethics and business, technical, or accounting communications. Know that your COCPA team is working diligently behind the scenes to address these challenges. For details, contact Mary E. Medley at mary@cocpa.org.
tasks phase out, freeing up time for such skills development and higher-level thinking. Our first steps can include opening up a dialogue and having intentional conversations. We can read, share experiences, and talk about the future. We can explore how to build resiliency. We can
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attend trainings, seek more information, and learn new skills. These concepts already are making their way to our young leaders via LeadFit, the COCPA leadership development program. Something often new for LeadFit attendees is learning how to listen to someone when he or she comes to a situation with emotion. It’s a completely different type of problemsolving. This is just one example of how COCPA trainings, and LeadFit specifically, are evolving to help members of our profession segue into leadership roles. We continue to explore other options, as well, to help us all prepare for the future. How quickly will all these new technologies catch on? What will all this change mean for the profession? I’ve seen everything from
genuine excitement to concern to fear as I talk to members. I, for one, am excited. A whole new generation of CPAs is entering the profession, and they’re excited, too. One thing is certain: Change has come, is coming, and will continue to come — and it’s coming quickly. We have detailed knowledge, and we need to be able to communicate it in a way people can hear and understand. That, to me, will be one of the key skills our profession needs to move forward and remain relevant. Change is just a series of small, manageable problems. Everything that is complicated is made up of small parts. So, let’s all navigate these changes and tackle the future together. s Email Tawnya at tramirez@chartergrowthfund.org.
September/October 2017 • www.cocpa.org •
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Taxation
The Changing Landscape of State Taxes
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he state and local sales and income tax landscape is constantly changing. Therefore, keeping up with new rules and regulations and how they impact business can be difficult and confusing. Here are highlights of a few recent developments you will want to consider. PHYSICAL NEXUS REQUIREMENT Many states are attempting to overturn the physical nexus requirement for sales tax and replace the current presence test with a new test based on sales or transaction volumes. It is important to remain aware of the issues and decisions being made, as they may impact your nexus and filing responsibilities. SALES TAX REPORTING REQUIREMENTS Sales tax reporting requirements for Colorado began on July 1, 2017, for those sellers who do not currently collect Colorado sales tax and have annual sales of $100,000 or more. Penalties are being imposed if the seller does not have specific language on its invoice alerting the buyer of the need to pay use tax. There also will be penalties for failing to provide purchasers with a year-end transaction summary (customer making more than $500 in purchases), as well as for failing to provide customer information to the state.
Since this law was enacted, a number of states including Kentucky, Washington, Vermont, and Louisiana have enacted similar requirements; others will likely follow suit. This is a fluid issue with new emergency regulations being adopted quickly, with varying filing thresholds. Some states are choosing to enact penalties, while others simply have a use tax notification requirement. ECONOMIC STANDARD States are imposing an economic standard for any business conducted in a state that leads to an income tax return requirement. The "doing business" standard is generally: • $500,000 of sales into a state • $50,000 in either property or payroll in a state • Or an amount of activity in these categories that exceeds 25 percent of the company's total The minimum amount of sales, payroll, or property in a state can vary depending on the state. Currently, the following states have adopted similar definitions for "doing business": Alabama, California, Colorado, Connecticut, Michigan, New York, Ohio, Tennessee, Virginia, and Washington. MARKET-BASED METHOD For a number of years, businesses which
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do not sell tangible personal property have used an alternative revenue sourcing method called "cost of performance." This approach was the standard in most states until recently. States are now beginning to source this type of revenue using a market-based method. This simply means the sale is attributed to the location of the customer and not where the work was performed. A large number of states have made this change, and many other states are jumping on board as well. When this change occurs along with the new definition of "doing business," filing requirements and taxes may be due in states where taxpayers may not have filed previously. MOVING FORWARD It is critical to understand these key issues so you can prevent costly surprises as states begin to actively enforce these rules. Simply filing in a state in which a company has an actual physical location (office, employee, etc.) is no longer a valid course of action and is considered an invalid excuse for the failure to handle sales and income taxes. s First published in Eide Bailly’s Tax News & Views on August 14, 2017. Reprinted with permission, Eide Bailly LLP, NationalTaxOffice@eidebailly.com.
At the COCPA
Farewell to One and Welcome to Another
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n Sept. 29, 2017, Carol Cameron, CPA, CGMA, COCPA CFO and Executive Director of the Educational Foundation of the COCPA, will retire after 25 years of service. She is looking forward to what she describes as a “full stop” for at least a year. After that, she’ll decide what will come next. In lieu of a retirement celebration (which Carol asked not to have), you are invited to contribute to the Educational Foundation of the COCPA in Carol’s honor. You may do so online at give.cocpa.org or by mailing a check to the COCPA office, c/o Mary E. Medley.
On Sept. 11, Alicia Gelinas, CPA, joins the COCPA team to step into the CFO role
upon Carol’s retirement. She comes to the Society with a long history of involvement in the profession, including service on the COCPA Board of Directors, Educational Foundation, Young Professionals Committee (which she chaired), and Audit Committee. An AICPA Leadership Academy graduate, Alicia served on the AICPA Future of Learning Task Force, on its Young CPA Committee — for which she was vice chair — and as a Leadership Academy Mentor. Alicia received the COCPA Everyday Heroine Award in 2011. If you attended the CPAs Make A Difference celebration that year, you’ll remember it was Alicia’s video vignette that grabbed everyone’s attention and tugged at those heartstrings when she talked about what it means to be a CPA who makes a difference in the world. Rich would be the word to describe Alicia’s background. She first became active in the COCPA while an audit senior manager with Ernst & Young LLP, Denver. Subsequent roles have included work with a residential construction company in accounting process improvement and management; outsourced accounting and management consulting; ownership of her own leadership coaching and contract accounting business; and most recently as assistant treasurer for
WorldVenture, a global missions organization, where she honed her nonprofit skills. In addition to her CPA credential, Alicia is a Hudson Certified Coach. She graduated from the University of Denver with a BS in Accounting, Magna Cum Laude, and a Masters of Accountancy. Alicia’s personal mission statement is straightforward: “I strive to use my skills and experiences in accounting, leadership, organization, communication, and compassion to help others improve the quality of life and experience a sense of well being.” In her application for the CFO position, Alicia wrote, “The COCPA, its staff, and its members have played a vital role in my career and personal development. Because of this, I have always had a passion for giving back to the Society and doing work to support the accounting profession of today and of the future.” She continued, “It would be an honor to continue my service in the capacity of CFO, working alongside the current staff to continue the good work that Carol Cameron has begun.” We’re honored to welcome Alicia to the position and to celebrate the legacy Carol leaves in such capable hands. s
October 24 CPAS IN INDUSTRY
SAVE THE DATES 2017 Conferences For details, contact COCPA at 303-773-2877, 800-523-9082, or go to www.cocpa.org.
October 31 GOVERNMENTAL November 14 ACCOUNTING AND AUDITING November 17 REAL ESTATE December 13 SEC AND PCAOB December 18 MIX AND MATCH
September/October 2017 • www.cocpa.org •
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Change Management
Change vs. Transformation — Know the Difference BY DANIEL BURRUS, CEO, BURRUS RESEARCH
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hink back to your earliest memories of watching television. If you’re of a certain age, you may have had only a handful of channels from which to choose — not to mention wrestling with rabbit ears or risking your neck to climb on the roof to attach an antenna — and let’s not forget getting out of your chair every time you wanted to change the channel. We did have a sense of choice, but we all seemed to watch the same shows anyway. Then came cable and satellite television. Not only were your viewing choices vastly expanded with hundreds of shows to watch, but also reception headaches were a thing of the past. Fast forward to present day. Cable and satellite subscriptions are plummeting. Instead, more and more consumers are opting for streaming services and other options with a greater range of choice and cost flexibility. Moreover, they’re accessing them on devices other than the living room TV. Laptops, tablets, and mobile devices of all types are part of the mix, particularly among millennials, many of whom have yanked the plug on cable or satellite or, for that matter, never signed up for them in the first place. Viewing habits and patterns have also been turned upside down. Consider: Even as recently as ten years ago, had anyone ever heard the term “binge watching”? The situation boils down to a game-changing shift. Gone are the days when broadcast companies, cable providers, and others dictated what we watched and when. The audience is largely in the driver’s seat now. This scenario illustrates the stark difference between change and transformation. Adding new channels or making antennas unnecessary are forms of change, a series of relatively modest, incremental steps. On the other hand, being able to stream a movie,
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watch a live event, or watch a how-to video on your smartphone while riding on the light rail or flying in a plane is transformational. That’s a vital difference to understand. As I travel the world working with organizations in just about every industry, I find it amazing how many say they are transforming some process, service, or product when, in reality, they are only changing it. That’s because they don’t really know the difference. In an era that’s dominated by technologydriven, exponential, game-changing shifts of all sorts, knowing the distinction between change and transformation can be essential to your organization’s success and possibly its survival. Today, if you are only changing something, you are falling behind. Just as important, it’s critical to recognize change and, from there, what additional steps may be necessary to shove change forward into outright transformation. CHANGE DEFINED Change is a common term. But, in the context of an anticipatory mindset — one whose focus is on the future and identifying the opportunities inherent in tomorrow — it can mean much more than the commonly accepted definition.
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From an anticipatory point of view, change means continuing to do something in essentially the same fashion, with only some minor variation. Build a product a little bigger, smaller, or faster. In the case of services, make them more responsive or cost effective. Tinker here and there to make incremental improvements. Change can also go beyond a product or service itself. Increasing the marketing budget, hiring more staff, or getting a new ad agency will all create change. In effect, change is different, but somehow the same. It’s not identical, but it’s still something of a variation on an existing theme. Transformation lives on an entirely different level. Transformation means doing something utterly and radically different. When you transform something, you make whatever came before it outdated, if not completely irrelevant. There’s no tinkering or adjusting involved — just about everything is drastically different. The distinction between change and transformation is everywhere you look. In the early 1990s, Barnes and Noble superstores changed how we shop for books. A few
years later, Amazon was transforming how we shop for books, which then transformed how we shop for everything. Blockbuster changed how we watched movies; by contrast, Netflix and other streaming services utterly transformed how we watch movies. Those and other examples like them also illustrate the possible ramifications that exist when comparing change and transformation. In contrast to other major booksellers, Barnes and Noble has survived, primarily through diversification of its product line and adding other services. But survival doesn’t preclude struggling — in its most recent quarter, in-store sales fell more than 8 percent. Compare that with companies that transformed what they did and how they interacted with customers. As of the fourth quarter of 2016, Amazon reported revenue of more than $43 billion, an increase of some 22 percent over fourth quarter 2015 results. And its stock price passed the $1,000 mark. Likewise, Netflix in April 2017 reported higher than expected earnings. Those sorts of eye-opening comparisons show how costly mere change can be in an era that mandates transformation. By the same token, it also underscores what is possible when an existing product or service is transformed into something utterly new and different. TURNING CHANGE INTO TRANSFORMATION It’s clear that mere change can be a decidedly risky business. So, that begs an initial question: How can you take change and essentially make it into the sort of transformation that’s absolutely necessary? Start by taking a close look at your organization’s products, services, and other activities. If they’re not the same as they used to be, consider the degree to which they’re different. Look back at some of the words I used to associate with change — bigger, smaller, and so on. Those and other similar terms suggest nuance, a slight adaptation to something that already exists. A logical, incremental evolution. That’s change. If what you’re looking at is mere change, consider the next logical question: What can
you do to propel a product or service into the realm of transformation? Here, it’s helpful to reexamine other examples of what I mean by transformation. For those who can remember getting up to change the channel on your TV, you can remember when most everyone who listened to music bought vinyl records. That was followed by eight-track tapes, cassettes, and CDs. Consider that continuum. Admittedly, they represented forms of improvement. I switched from vinyl records to CDs not just because they were smaller, but because they didn’t have the hiss and pops that my record albums had due to a lot of listening and parties. And CDs had the “cool” factor over cassettes. But those were all forms of change, nonetheless. Today, I don’t know where your record albums, cassettes, or CDs are — most likely with my film camera somewhere. Today, I have all of my music, all of my photographs, all of my movies, and access to the world all from my smartphone. That didn’t change how I listen to music; it transformed it. Access, cost, quality, flexibility of purchase, and other elements were all dramatically impacted — and for the better. That’s transformation. Transformation differs from change because it completely disrupts the status quo. Moreover, transformation is a one-way street. Once you transform something, there’s no going back. Granted, there are people out there who still purchase and listen to vinyl records, but it’s safe to say most consumers aren’t giving serious thought to retreating back to using records, cassettes, or CDs. Using these and other examples can kickstart your thinking about taking change and ramping it up to transformation by focusing on redefining or reinventing just about everything. Moving from change to transformation can also boil down to a simple question: “How can I offer my customers the ability to do what they would want to do if only they knew it was possible?” In other words, rather than merely changing or even improving something, what utterly new product or service would people genuinely embrace if they were aware of it and what it could do for them?
No customers asked for an iPhone or an iPod, yet they were transformational. Transformation can also occur by applying an existing product or service in a completely different way. Consider GPS — by conventional definition, it’s associated with planning trips and getting vehicles from A to B as efficiently as possible. Consider how John Deere transformed agriculture using GPS, something that we now refer to as “precision farming” — farmers pinpointing specific areas by the square inch for planting, harvesting, and much more. EVEN BETTER: JUMP RIGHT TO TRANSFORMATION Trying to move something from the realm of change to transformation is vital in today’s quickly evolving environment and economy. So, why make the journey needlessly slow? Rather than looking to change something, why not aim for transformation from the get-go? Here, my Anticipatory Organization Model can be of vital help. Using concepts such as Hard Trends (those trends we know for certain will take place) and Soft Trends (those trends that may or may not happen but are open to influence), ask yourself how your field or business can be transformed in the next few years in ways that enable those trends. How you answer those questions can help you begin developing strategies and ideas to help you transform the products or services you offer. Further, they can boost your thinking about utterly new ideas that will impact not only what you manufacture or sell but also how you communicate and collaborate with those around you. 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.
September/October 2017 • www.cocpa.org •
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Future Look
The Driverless Car Revolution: Are You on Board? “Imagine a future without congestion, car crashes, smog, or road rage. It’s coming sooner than you think. Summoned with an Uber-like smartphone app, driverless cars will revolutionize transportation. For less than bus fare, you’ll enjoy the quiet, comfortable, door-to-door service you’d get from a personal chauffeur. A chauffeur that is never distracted, never tired or testy, and always knows the fastest and safest route to get you where you’re going. No cash, no tipping, no crowds, no congestion – just hop in, enjoy the ride, hop out, and be on your way. These cars will be electric: quiet, clean, and so safe that deaths and disabilities will be rare. Instead of dealing with road rage and the frustration of bumper-to-bumper traffic, you’ll be free to text, Facebook with friends, or get a head start on your workday. Since you can cut your cost in half by riding with another passenger, seamlessly arranged by your mobility provider, traffic congestion will slowly fade away.” ~From the Driverless Car Revolution: Buy Mobility, Not Metal, by Rutt Bridges BY NATALIE ROONEY
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riverless cars. They might sound a little bit Jetsons and a little bit Stephen King’s Christine, and the concept may freak you out a bit. But while all of these vehicles we read about in books and see in movies may seem like futuristic entertainment, driverless cars are very much a present-day reality. Colorado is working to be at the forefront of this innovation, being hailed by some as the most disruptive technology in all history. (We can argue that point with the inventors of man-made fire and the wheel later.) COLORADO’S NEW LAW Amy Ford, director of communications for the Colorado Department of Transportation (CDOT), says the Centennial State is on the leading edge of driverless car technology, thanks in part to Senate Bill 17-213 which Gov. John Hickenlooper signed into law earlier this year (https://leg.colorado.gov/ bills/sb17-213). The bill was sponsored by Sens. Owen Hill, R-Colorado Springs, and Dominick Moreno, D-Commerce City, with Reps. Jeff Bridges, D-Greenwood Village, and Faith Winter, D-Westminster. The new law says automated vehicles are a matter of state, not local, law, and that if a vehicle complies with every other state and federal law, they’re authorized to drive in Colorado. Senate Bill 213 also requires anyone testing such a vehicle to get approval
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from the Colorado State Patrol and the Colorado Department of Transportation.
The bill passed overwhelmingly in both the Colorado House and Senate.
Rutt Bridges, author of Driverless Car Revolution: Buy Mobility, Not Metal (and father of Rep. Jeff Bridges who co-sponsored SB 213), says the goal of the new law was to encourage testing driverless cars in Colorado but not be overly restrictive. “The law made Colorado a friendly state to do this.”
“This means good things for Colorado,” Bridges says. “One of the biggest of which is getting people to come here and test and then encouraging them to start delivering services here.”
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Why is Colorado pushing to be at the forefront? Many reasons.
“We cannot build our way out of congestion,” CDOT’s Ford says. “More than six hundred people died on Colorado roads last year. Our job is to save lives and make people’s lives better. What’s happening with technology will be transformative so we must be aggressive in how we bring it to Colorado.” Nearly two years ago, CDOT launched RoadX to combine a way of thinking and then acting to drive progress. RoadX plans to use 21st century technology and ingenuity to solve Colorado’s current infrastructure challenges. According to the RoadX website, that means “smarter roadways with more informed drivers and, eventually, self-driving cars that can communicate with the roads on which they travel.”
2017 CPAS MAKE A DIFFERENCE
2017 HEROES & HEROINES SOUGHT Nominations Deadline: September 15, 2017
Ford emphasizes CDOT is focusing on safety, mobility, and commuting through the use of data and technology. THE FUTURE IS NOW If this move to driverless cars seems all so sudden and mind bending, it’s not. We’ve actually been moving toward the technology for quite a while. First there were self-parking cars. Then came lane control and automatic braking. In fact, experiments have been conducted on automating cars since at least the 1920s. More testing took place in the 1950s. And now you no longer have to worry about that sweaty, nervous feeling trying to parallel park on a busy street while everyone watches. The first self-sufficient and truly autonomous cars appeared in the 1980s, with Carnegie Mellon University's Navlab and ALV projects in 1984 and Mercedes-Benz and Bundeswehr University Munich's Eureka Prometheus Project in 1987. Since then, numerous major companies and research organizations have developed working prototype autonomous vehicles including MercedesBenz, General Motors, Nissan, Toyota, Audi, Volvo, and Google. In July 2013, Vislab demonstrated BRAiVE, a vehicle that moved autonomously on a mixed traffic route open to public traffic.
Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We will honor those contributions with the 2017 Everyday Heroes and Heroines Awards, to be presented at the CPAs Make A Difference Celebration, Nov. 10, at the Grand Hyatt, 1750 Welton St., Denver. If you know a CPA who should be considered, please submit a nomination. Send a narrative, not to exceed three pages, explaining why you believe the candidate should be recognized and detailing his or her accomplishments. Nominees must hold a CPA certificate and be a COCPA member. They should be “everyday” heroes and heroines who haven’t been recognized widely for their contributions. Nominees should demonstrate significant service in one or more areas: INVOLVEMENT: Describe the nominee’s level(s) of involvement, length of involvement, and time devoted to nonprofit organizations and community activities.
Colorado made the news in October 2016 when a selfdriving truck drove down I-25 loaded with Budweiser beer. That 132-mile road trip was, according to the Guinness Book of World Records, the “longest continuous journey by a driverless and autonomous lorry.”
LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in one or more community organizations, including taking the lead in identifying and solving a problem, founding or rescuing an organization, or developing an innovative program.
While the concept behind the world’s first driverless beer run was fun and interesting, Ford says the event was also a demonstration that driverless technology isn’t 10 – 20 years down the road. “It’s coming faster than people realize,” she says. “The reality is things are moving incredibly quickly, and we want to be prepared for all of that.”
IMPACT: Describe how the nominee’s actions benefited the community, improved the overall quality of life, helped others overcome adversity, or served as a role model for CPAs exemplifying the profession’s core values of integrity, competency, and objectivity.
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For more information and to submit your nomination electronically, contact Terry Cervi, terry@cocpa.org, 303-741-8610. September/October 2017 • www.cocpa.org •
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Driverless Cars CONTINUED FROM PAGE 9
In addition to Colorado, 19 states — Alabama, Arkansas, California, Connecticut, Florida, Georgia, Louisiana, Michigan, New York, Nevada, North Carolina, North Dakota, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Vermont, plus Washington D.C. — have passed legislation related to autonomous vehicles.
and scale of technology-driven disruption and its implications across society, produced a report that projected driverless cars could save the average family up to $5,600 a year.
In Europe, cities in Belgium, France, Italy, and the UK are planning to operate transport systems for driverless cars. Germany, the Netherlands, and Spain have allowed testing robotic cars in traffic.
A reduction in traffic deaths. According to the National Safety Council, 40,200 people died on U.S. roads last year, more than 600 of them in Colorado. Imagine reducing those totals by 90 percent. No more distracted, drowsy, or drunken driving. Bridges says driverless cars don’t have blind spots and avoid common human errors. “They tend to be very defensive drivers,” he says.
Volvo says it will have a driverless car on the market in 2020. Don’t be alarmed by the Volvo testing in Australia which showed the cars are confused by kangaroos. Volvo’s 2017 S90 and XC90 models use its Large Animal Detection system to monitor the road for deer, elk, and caribou, which we certainly will appreciate in Colorado, too. You can head to your local Volvo dealership and test drive a 2017 Volvo S90 today if you’d like. The car can steer to stay within a lane, slow itself down in rush-hour traffic and accelerate (up to 80 mph) on the highway. It’s the first Volvo to include the second-generation Pilot Assist as a standard feature. But, even equipped with radar and a 360-degree camera that can distinguish humans from deer, bicyclists, and other cars, the S90 sedan is not an autonomous vehicle. A driver must still be in the seat and frequently touch the steering wheel. Otherwise, the car slows down. LOOKING INTO THE CRYSTAL BALL Bridges says eventually transportation will operate somewhat like Uber or Lyft. You’ll pick up your phone, press a few buttons, and a car will show up at your door. The cost will eventually be a tenth of what is currently paid for Uber or Lyft. A recent study suggests automated vehicles could drive 95 percent of the miles traveled each year in the U.S. as soon as 2030. RethinkX, an independent think tank that analyzes and forecasts the scope, speed,
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Some of the predictions for driverless cars are mind-boggling.
Reliable transportation for the aging, disabled, and low-income populations. Older people can stay in their own homes longer with independent transportation options. Low income and disabled individuals can summon affordable transportation in real time. “Our nation has a shortage of workers,” Bridges says. “For these folks, inexpensive on-demand transportation can be life-changing.” Help for parents. Parents who are running themselves ragged driving kids from home to school to sports to dance class and every other activity under the sun will be able to send them off in a driverless vehicle — though it will take time to gain their confidence. A survey of millennials, who have passed baby boomers to become the largest population, are already used to using Uber and Lyft and indicate they are eager to give driverless technology a try. SUPPORT FROM THE FEDS The federal government is pushing driverless technology along. On July 27, the House Energy and Commerce Committee unanimously approved a legislative package that would bar states from setting certain driverless car rules and allow manufacturers to deploy up to 100,000 self-driving vehicles per year without meeting existing auto safety standards.
• NewsAccount • September/October 2017
While the bill would prohibit states from imposing laws related to the design, construction, or performance of self-driving cars, local governments would still maintain traditional auto responsibilities, such as licensing, registration, insurance, and law enforcement. Last fall, the National Highway Traffic Safety Administration (NHTSA) released the first federal guidelines for driverless cars which included a voluntary, flexible framework that created a 15-point safety checklist for automakers. Manufacturers are also required to consider cybersecurity and consumer privacy issues during development. The automotive industry itself is moving rapidly toward delivering these cars, changing the nature of the automotive business. “They’re pivoting from just selling cars to delivering mobility,” Bridges says. Driverless cars are the intersection of several disruptive technologies. “We’re just getting to the point where all of this is possible,” Bridges explains. “It’s maturing at a remarkable pace. It’s an exciting time.” BUT WHAT ABOUT… Once you’re past the horror and/or cool factor of driverless vehicles, you might have some questions. Some of them don’t have answers just yet. What happens to federal, state, and local revenues when gas tax, sales tax, airport parking fees, and speeding and parking tickets all go away? What if you still want to drive a car? What about motorcycles? Eventually, you might find yourself on a track, driving a car or motorcycle for fun, just as when we transitioned from using horses for transportation. But for decades, driverless cars will have to co-exist with conventional vehicles. Can an autonomous car be hacked and wrecked? “It’s a valid concern and a huge priority,” Ford says. But both she and
Bridges point out there will be far fewer auto deaths than there are today. Cars likely won’t be as big, mostly seating five or fewer people. How do you go somewhere with a larger group? Ford says autonomous shuttle systems will emerge. Think of it as Uber but with shuttles instead of cars. Inevitably when you’re introducing a technology, there will be bumps in the road, Bridges said. “But eventually, it will seem normal to send your kids to school in a driverless car.” He emphasizes that these vehicles will be very secure with multiple cameras and the ability to summon the police. “You’ll pick up your phone and summon a ride. There are no issues with parking, congestion, or having a second beer. Saving thousands of dollars a year will convince many people to buy miles instead of metal.” The cumulative annual savings from all these different areas is estimated to be over a trillion dollars. That’s not to say there won’t be some negatives. Even with its changes, the car industry will be hit hard, along with oil producers. It’s estimated that one vehicle will serve anywhere from 7 to 10 people. Cars will go continuously from one fare to the next, sometimes picking up rideshare passengers along the way. “There are huge implications for the auto industry, yet they’re all fighting to be first,” Bridges says. “They’re moving at an amazing pace.” OTHER IMPLICATIONS Congestion and Land Use In 2015, automakers sold 17.5 million new vehicles. With one driverless car replacing so many traditional cars, new car sales will significantly decline as mobility services expand. Thirty percent of congestion is caused by accidents, so fewer accidents means less congestion. And with efficient ridesharing strategies like those now being implemented by Lyft and Uber, road capacity would substantially increase without the need to expand highways. Dedicated driverless HOV lanes could carry as many commuters as several regular lanes.
Land could be used in different ways if cars are being driven more — dropping one person at the gym and heading out from there to take someone else to another destination. Do we need as much parking? Less parking, more parks. When there is an accident, who’s at fault? Driverless cars create and record a 3D world view movie up to 200 yards on all sides. If there is an accident, there’s not much question who is at fault. Bad news for personal injury attorneys?
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Transportation and Logistics Semi-trucks can operate 24/7, no longer reliant on when people can stay awake. Goods can be delivered in half the time, but truckers may lose jobs. “Unfortunately, there will be winners and losers,” Bridges says. There is no part of life or the economy that autonomous vehicles will not impact. DATA IS THE NEW ASPHALT Ford says the federal government is mandating that vehicles have the ability to talk back and forth to each other about where they’re going, road conditions, and what they’re doing. A car senses the road is slippery and knows there’s a tight turn ahead. It tells other cars, ‘I’m braking now, so you brake now.’ “A Tesla throws off a gigabyte of data every second,” Ford says. “How do you share that data back and forth so you maximize these autonomous systems?” CDOT is already using similar technology to share and manage information in its system, such as for deploying snowplows.
Bridges points out that half of all 16- to 19-year olds don’t have their driver’s licenses. “It’s a different attitude today,” he says. “They’re often more interested in having the latest smartphone technology than owning a car.” While people tend to be afraid of driverless technology at first, once they experience it firsthand, they realize it’s just not such a big deal. “You’d be surprised how quickly people get comfortable,” Bridges says. “The first time they’re in a driverless car, they watch everything. Then after a while, they just kick back.” Ford says the public looks at driverless technology from the safety and privacy angle, and they think, “I’m not going to let a computer drive for me.” But we’re already on the path to autonomy. “The reality is our cars are already starting to drive for us,” she says. “This is just the next step.” s
September/October 2017 • www.cocpa.org •
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Not-for-profit Accounting
Is That Gift Conditional? BY TIM MCCUTCHEON, CPA, CGMA
legally enforceable. Legal enforceability refers to the availability of legal remedies, not the donee’s intent to use them (para 9).
F
inancial statement information should be complete, true, and accurate. Achieving that objective can be challenging, especially when a not-for-profit organization (NFP) receives gifts, conditional gifts, and intentions to give that can be difficult to distinguish from one another but have very different financial reporting consequences. Getting it right means breaking down each giving arrangement to its essential elements, carefully considering whether any legal rights and obligations have been created, and applying the appropriate revenue recognition principles in deciding whether or not a contribution should be recorded. FASB Accounting Standards Codification (ASC) 958-605-25 provides guidance on revenue recognition, first by predicating recognition on whether a gift or promise to give is unconditional or conditional (para 7). Unconditional gifts and promises to give must be recognized as revenue when received. In the case of a promise to give, there must be sufficient evidence in the form of verifiable documentation that a promise was made and received (para 8). A communication from a donor that fails to indicate clearly whether it is a promise is nonetheless considered to be an unconditional promise to give if it indicates an unconditional intention to give that is
12
On the other hand, solicitation materials that include wording such as, “Information to be used for budget purposes only,” or that clearly and explicitly permit donors to rescind their indications that they will give are intentions to give, rather than promises to give, and cannot be reported as contributions (para 10). Absent solicitation materials containing such provisions, a communication from a donor may contain similar qualifiers, such as, “It is my intention to give, subject to my financial ability to do so,” in which case there is no legal enforceability, and the intention cannot be reported as a contribution. Assuming that a gift or a promise to give has, in fact, been received, donees must determine whether any conditions exist that preclude the contribution from being recognized as revenue. The ASC defines Conditional Promise to Give as a promise to give that depends on the occurrence of a specified future and uncertain [italics added] event to bind the promisor. A conditional promise to give is considered unconditional if the possibility that the condition will not be met is remote [italics added] (958-605-25-12). ASC 958-605-25-11 explains that imposing a condition creates a barrier [italics added] that must be overcome before the recipient has an unconditional right to retain the promised assets. Here are some common examples of conditions, i.e., barriers:
• NewsAccount • September/October 2017
A. Donor’s challenge grant, under which the donor promises to match all new contributions obtained by the NFP, dollar-for-dollar, up to a maximum of $500,000, during a prescribed time period B. Donor’s promise to contribute $150,000 to a school if its students achieve a specified minimum average test score on a standardized examination C. Donor’s requirement that the NFP provide an annual report of grant expenditures and programmatic results D. Donor’s promise to establish a $750,000 scholarship fund if at least 80% of participants in a job-training program will find suitable employment within six months after completion of the program
Receive cash, other assets, or promise to give
Irrevocable?
Unconditional?
Unambiguous?
Recognize contribution
Do not recognize contribution; Disclose in notes
In which of these examples does the possibility of not meeting the condition seem to be remote—in other words, in which examples is it certain that the NFP will meet the condition?
2017
In examples A, B, and D, certainty cannot be assured or assumed. Even though an NFP may have a successful track record of fundraising, academic achievement, or job placement, past performance is not a guarantee of future results. In each of these examples, the gifts would be considered conditional promises to give.
CPAS MAKE A DIFFERENCE
Example C depicts a condition which, under normal circumstances, would be considered to have a remote possibility of not being met. A stipulation that an annual report must be provided by the donee to receive subsequent annual payments on a multiyear promise is not a condition if the possibility of not meeting that administrative requirement is remote (958-605-55-16). In this case, the NFP would record the contribution.
SAVE THE DATE
Because of the uncertainty about whether or not they will be met, certain conditions may cast doubt on the determination of the donor’s intent to make a contribution, to make a conditional contribution, or to make no contribution. Accordingly, donor-imposed conditions should be substantially met by the entity before the receipt of assets, including contributions receivable, is recognized as a contribution (958-605-55-15). When donor communications do not clearly state whether the right to receive payment depends on meeting the specified conditions, or if the conditions are ambiguous, donees should review the facts and circumstances surrounding the gift and communicate with the donor. If the rights and ambiguities cannot be resolved, presume that the promise is a conditional promise to give. Transfers of cash or other assets with a condition attached to them are accounted for as refundable advances until the conditions have been substantially met or explicitly waived by the donor. Transfers after a conditional promise to give is made and before the conditions are met are the same as transfers with a conditional promise to contribute (958-605-25-13). A change in the original conditions of the agreement between promisor and promisee cannot be implied without an explicit waiver (958-605-35-2). When conditional promises to give have been received, recipient organizations must disclose both of the following: A. The total of the amounts promised B. A description and amount for each group of promises having similar characteristics, such as amounts of promises conditioned on establishing new programs, completing a new building, and raising matching gifts by a specified date (958-605-50-4)
November 10, 2017
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Seeking Nominations for Everyday Heroes and Heroines Contact Terry Cervi for details, terry@cocpa.org, or visit heroes.cocpa.org.
John Garrett After several years in public accounting, being told to "think outside the box," John decided it's better to "live" outside the box. He became a comedian – and recovering CPA - who's become a regular in Las Vegas and across the U.S. He's proof that CPAs can be funny.
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The flowchart shown here may be helpful in stepping through the process of properly determining when various giving arrangements are or are not recognizable as contribution revenue under generally accepted accounting principles. s September/October 2017 • www.cocpa.org •
13
Technology and the Profession
Data Analytics: Changing the Face of Accounting BY NATALIE ROONEY
B
ig data and data analytics. You’ve likely heard the terms. But what do they mean, really? Who’s using them? And why? The funny thing is, you may be personally using data analytics and not even know it. Do you own a FitBit or some other wearable device to monitor your daily steps, calorie burn, or heart rate? What happens when you walk more steps this week versus last week? Do you change something when the scale goes up by a pound? That, in its simplest form, is data analytics.
MODELING The Gartner model is the cornerstone of data analytics. Modeling and analytic techniques are divided into four phases: • • • •
Descriptive: What does the data look like now? Diagnostic: Why did something happen? Predictive: What will the future look like if nothing changes? Prescriptive: How can we make something happen?
warehousing; GPS data from ships, trucks and ports of call; satellite; roads; and weather to name a few. MAKING DATA ANALYTICS WORK According to a 2015 Harvard Business Review article, studies show that cultural resistance is an obstacle for data analytics (D&A). While 51% of C-suite executives fully support their organization’s D&A strategy, Gartner estimates D&A falter 60% of the time, often because they aren’t supported by the right organizational structure and talents
Data analytics can mean different things to different people and organizations. For some, it’s the process of analyzing information from a particular domain, such as website analytics. For others, it’s applying the breadth of business intelligence (BI) capabilities to a specific content area (for example, sales, service, supply chain, etc.). Increasingly, the term “analytics” is used to describe statistical and mathematical data analysis that clusters, segments, scores, and predicts what scenarios are most likely to happen. Analytics is a rapidly growing area as business, and IT professionals look to use the huge mounds of internally generated and externally available data. (Source: Gartner) DATA ANALYTICS = REVVED UP DATA ANALYSIS? Is data analytics really just data analysis with a new nametag? Not really, says Deborah Kellogg, Ph.D., Associate Professor and Discipline Director, Business Analytics, at the University of Colorado Denver’s Business School. “There are nuances to data analytics,” she explains. “Data analysis grew out of plain, old statistics. But as our computing capabilities grew and more and more data was being collected and needed analysis, regular statistics no longer worked. As a result, statisticians, operations researchers, and computer scientists developed new technologies to address the vast amounts and different kinds of data. So, while traditional data analysis was the underpinning of where we are now, it doesn’t even look the same.”
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Causal models are the “fun stuff,” Kellogg says. “How do we prove causality? For example, are sales of ice cream going up because of higher temperatures? We’re developing more models that show causality so when we do X we get Y because we know X causes Y to change in predictive ways.” A newer type of analysis, evaluative, is making inroads but is still evolving. Kellogg says that supply chain is currently the biggest area under development because of the massive amount of data it generates:
• NewsAccount • September/October 2017
and aren’t aligned with the business strategy. The Harvard Business Review article goes on to explain that: “…some organizations have D&A capabilities spread across functions or rely on a few data scientists to provide insights. Some are too reliant on technology tool kits and rigid architectures and not enough on creating the right environment to effectively leverage people with the right expertise to drive D&A projects forward. These sorts of models usually are not capable of achieving truly transformative D&A.” (Source: Harvard Business Review)
Gary Colbert, Ph.D., Director of Accounting Programs for the Business School, University of Colorado Denver, says while topics often emerge as the next “hot thing” and then fizzle out, D&A is here to stay. “The upside is significant,” he says. “It has quickly bubbled up on our advisory council’s priority list. Today’s students can be the talent that best addresses this opportunity.” ADDRESSING D&A EDUCATIONALLY CU Denver currently offers a Master’s degree in business analytics, emphasizing the use of data for business applications and business decisions. Colbert says there’s a relatively new accounting accreditation standard from the Association to Advance Collegiate Schools of Business (AACSB) to address technology and data in accounting education. AACSB accreditation — which CU Denver has achieved — is considered the gold standard of business education accreditation. The new standard, International Accounting Accreditation Standard A7: Information Technology Skills and Knowledge for Accounting Graduates: An Interpretation, is broadly written to include data management and D&A. “The new standard is driving changes in accounting curriculum and education,” he says. “It goes beyond just analysis of data to data creation, collection, management, storage, and protection.” “Data analytics is a hot issue in business and accounting in particular,” Colbert says. “We’re seeing movement to stay abreast of this evolving area. Interestingly, the standard setters decided to apply this accreditation standard to accounting in particular, but there are reasons to expect these ideas will have to be applied throughout business education.” Colbert adds that some of the most provocative and important data and data analytic questions are at the edge of accounting such as marketing analytics or operational analytics. “That analytics is more complex, the velocity of that data is enormous, and its implications are large,” he says.
As a result, accounting curricula are changing. “It’s groundbreaking,” Colbert says. “There is a surge of demand and implications in ways we don’t yet fully comprehend. We just know the direction it’s going. You can see that in the new standard. There is a transitional period, and we all need to make progress. I think that’s what business schools and accounting programs are trying to do. The implications for accounting are only beginning to be realized and fully understood.” CU Denver has an accounting advisory council made up of individuals from both the corporate world and public accounting. Last spring, Colbert surveyed the members, asking them to rate their priorities and give a narrative of what they want from graduates. “Their feedback helps shape our curriculum,” he says. While CU Denver’s advisory committee ranked data analytics and IT skills highly, they also ranked research and communication skills highly. The demand and supply for talent will be a critical factor. “Business schools are having to compete aggressively with industry for data analytics talent,” Colbert says. “Demand is exceeding supply. It’s one of the challenges we face as a business school, and it ripples into accounting. We’re bringing our current accounting faculty up to speed with the opportunities and challenges around data analytics. It’s a work in progress.” STUDENT PERSPECTIVE Paul Nebel is a full-time graduate student in CU Denver’s business analytics program and a data science development intern at Arrow Electronics. After graduating from Colorado State University with a degree in finance, he worked for an advertising company but wanted delve more deeply into analytics. “Most companies are in the first stage of analytics — the understanding what happened in the past,” Nebel says. “People know they need data analytics, but they don’t really know why. They don’t know what to do with it. We’re learning to help companies understand the need and put them on the right path for applying it.” As for class work, Nebel says there is a heavy focus on communication skills
through presentations and report writing, producing material as if it is being presented to stakeholders who don’t have technical skills. “We focus on explaining something really difficult in a manner that everyone can understand,” he says. WHO IS GATHERING WHAT? Companies such as Facebook, Google, and Amazon employ some of the best data scientists in the world. While most of the companies using data strategically are retail or Internet companies, there are opportunities for any company that holds data to benefit from data analytics. If you’ve ever done an Internet search and then suddenly have ads for that item pop up in your Facebook newsfeed, or had Netflix suggest a new movie you might be interested in watching, you’re seeing data analytics at work. “Facebook revenue comes from advertising,” Nebel says. “Every single thing you do on the Internet is for sale. Facebook can get specific data from who does what on their site and then target a specific audience based on what an advertiser wants. If you’re trying to advertise baby products, Facebook can determine the perfect group of people for you to advertise to. Companies are figuring out what you want to watch or listen to based on your browsing history. Credit card companies can look at transactions around the world and target fraud with amazing accuracy.” CHANGING THE FACE OF ACCOUNTING The ability to obtain, analyze, and react to data is changing the world of auditing, says Dave Rooney, Partner in Charge of Deloitte LLP’s Denver audit practice (not related to the author). “Data analytics is allowing us to analyze much more complete sets of data versus just samples. It reduces labor intensive, manual tasks and allows us to spend more time analyzing and assessing the information obtained, generating new insights about trends and outliers throughout the process.” Rooney describes “the old days” when an audit would sample hundreds of items. “We had to pull supporting invoices, cancelled checks, and evidence of receipt,” he says. “It CONTINUED ON PAGE 16
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Data Analytics CONTINUED FROM PAGE 15
took a lot of time. Now, we can use laser-like focus to pinpoint something and avoid the need for sampling.” Data analytics usage varies by industry. Rooney says retail, an industry that historically has issues with fraud, is benefitting tremendously by identifying stores that are performing at a proficiently high level or showing which ones are struggling and may have impairment of store assets. Data can be sliced and diced by region, product type, management of an area, etc., to identify issues. “Data analytics takes the expectation of what you might see and runs the data through the traps to see if there are outliers and unexplained things,” he says. “While it’s critical to get your hands on the data and to be able to do something with it, the real key is to visualize it. The visualization tools that go with data analytics are critical.” Data analytics is literally changing the face of audits. Deloitte has developed a proprietary artificial intelligence (AI) tool that allows for the analysis of large amounts of data from traditional documents. “We have the ability to get hundreds or thousands of contracts or lease documents converted to an electronic format and then use AI to look for common themes and key words that might drive a different accounting answer based upon the contract’s specific terms,” Rooney says. “This allows us to have a much more focused audit. Rather than just picking a certain number of contracts or leases out of thousands, we can access the entire population and go back to a client with the ones that appear to be outliers. We’re more efficient, and we’re producing a higher quality audit. We’re not chasing things that aren’t risky. Clients appreciate that.” Rooney says that internal audit functions of larger companies have already been using similar procedures, looking at things like expense reports, business travel, and vendor transactions to analyze and identify their own outliers. DATA FOR EVERYONE If it sounds like data analytics is just for the big guys, Kellogg disagrees. “Smaller companies
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might have to rely on consultants to help them, but computers continue to get more powerful. As an educational institution, we make sure MBA students and undergraduates are exposed to these tools and how they work. They can learn to use the tools and know what to ask a consultant.” Colbert adds that smaller firms also sense the direction data analytics is heading. “It’s going to be an area of increasing demand for professionals in organizations of all sizes.” D&A isn’t a trend that’s going away, Rooney confirms. “It will take others longer to get there, but there are so many advantages from a quality and client service perspective,” he says. “The best audits will be performed by firms with the deepest knowledge of their clients. It’s going to become more broadly employed by all size firms. We use this technology broadly, and we don’t use it solely on large clients. We use it on every audit. Data analytics are size agnostic.” DATA PROLIFERATION “If you think about the flow of data that happens every day, it’s stunning,” says Colbert. “Data can be captured in real time whether it’s about our customers or our potential customers. Data can forecast sales, forecast where we should be selling, and model financial outcomes. And then
• NewsAccount • September/October 2017
there’s operational data. We can put sensors everywhere and every place — on the street, in the factory, in the air. How is that data useful? Some way or another, accounting is going to figure this out. Can you tell this is one of my favorite topics these days?” In the end, Rooney reiterates that the biggest challenge as data analytics continues to evolve is the talent issue — arming students coming out of school with skills relevant to D&A. “It will take collaboration between firms and companies, as well as educational institutions, to drive the curricula. To be a good auditor, you can’t put the accounting and auditing standards and internal controls skills aside, but now you need data analytics as well. It’s above and beyond.” He emphasized the timeframe for all of this is soon — not in five to ten years but rather more like three to five years. “When we go to our clients and raise certain topics and issues, we’re not talking about a run of the mill invoice. This is something we’ve done our homework on, and it’s well received. Our young people love it. It resonates with our people to a very high degree,” Rooney says. “This is exciting stuff. I’ve been at Deloitte thirty-seven years, and this is the most exciting thing I’ve seen in a long time.” s
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Colorado Business CONTINUED FROM PAGE 15
Forbes America’s Top 100 Wealth Advisors 1 2016
The Journey to a Brighter Financial Future
BEGINS WITH THE RIGHT PATH. Introducing by M.J. Smith & Associates, a new online wealth management tool that combines the convenience and cost efficiency of online investing and index funds/ETFs with professional guidance from an experienced, client-centric financial advisor. Wealthpath™ is a new service for managing wealth created for everyone, from entry-level investors with at least $100,000 to cost-conscious market veterans. With wealthpath™, you gain access to our easy-to-use digital platform, as well as a nationally recognized team of financial professionals who are ready to assist you in creating your portfolio. wealthpath™ offers: • An “all in” cost structure that is typically 50% less* than that offered by traditional bank, brokerage firm or insurance company platforms • Portfolio structured around your goals with ongoing monitoring and guidance from an M.J. Smith & Associates advisor to help you stay on track • Tax-loss harvesting and disciplined rebalancing • Broad diversification using low-cost index funds/ETFs • Fund choices from many of the industry’s largest names • Account security features from Raymond James, a nationally recognized firm that is part of the S&P 500 index • A digital dashboard and mobile app to monitor your investments anytime from anywhere
TAKE THE FIRST STEP. Simply visit our website and answer a few questions to see if you qualify. Then, talk to an M.J. Smith & Associates advisor to create your very own wealthpath™ portfolio or to have us compare the cost savings of wealthpath™ to the fees you pay now. From there, you’re off and running toward your ideal financial future. Visit StartMyWealthPath.com today. Investment advisory services offered through M.J. Smith & Associates. M.J. Smith & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. 1 The Forbes ranking of America’s Top Wealth Advisors, developed by SHOOK Research, is based on an algorithm of qualitative and quantitative data, rating thousands of wealth advisors with a minimum of seven years of experience. Ranking algorithm is based on quality of practice, including: telephone and in-person interviews, client retention, industry experience, review of compliance records, firm nominations; and quantitative criteria, including: assets under management and revenue generated for their firms. Investment performance is not a criteria because client objectives and risk tolerances vary, and advisors rarely have audited performance reports. Rankings are based on the opinions of SHOOK Research, LLC which does not receive compensation from the advisors or their firms in exchange for placement on the ranking. Research Summary (as of July 2016): 11,235 Advisor nominations were received, based on thresholds. 4,000 Advisors were invited to complete the online survey. 2,500 Advisors were interviewed by telephone. 425 Advisors were interviewed in-person at the Advisors’ location. Final list of the top 200 Advisors was then compiled based upon the quantitative criteria. Raymond James is not affiliated with Forbes or Shook Research, LLC. This ranking is not indicative of advisor’s future performance, is not an endorsement, and may not be representative of individual clients’ experience. Neither Raymond James nor any of its Financial Advisors or RIA firms pay a fee in exchange for this award/rating. * www.kitces.com/blog/independent-financial-advisor-fees-comparison-typical-aum-wealth-management-fee
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Educational Foundation of COCPA
$112,500 in Accounting Scholarships Awarded
T
here’s a gratifying payoff for the hundreds of donors who generously give to the COCPA’s Educational Foundation each year — the satisfaction of knowing their dollars make a difference for Colorado accounting students who represent the future of the CPA profession. This year, 45 scholarships worth a total of $112,500 are benefiting 45 grateful recipients.
Past President of the Colorado Society of CPAs with the Thomas J. Kundinger Scholarship. Matching donors Anton Collins Mitchell LLP, Hein & Associates LLP, and Mark J. Smith also received naming privileges.
For the first time, a Deloitte LLP scholarship was awarded this fall, thanks to a $50,000 gift from the Big 4 firm that has been designated by the Foundation’s Board of Trustees to fund a perpetual named scholarship.
These major gifts, along with many more donations that come from COCPA members with their membership dues, from the Silent Auction fundraiser, online on Colorado Gives Day, and throughout the year, have allowed the Foundation to increase the number of scholarships awarded from 40 last year to 45 in 2017.
Five donors who each made a $5,000 matching gift on Colorado Gives Day in 2016 received the privilege of naming a scholarship in 2017. Donor EKS&H LLLP chose to honor its partner and former Educational Foundation Board President, Lori Nelson, with the Lori Nelson / EKSH Scholarship. Another matching donor, Kundinger Corder & Engle, honored its former Managing Director and
In addition, the RubinBrown Charitable Foundation gave $5,000 earmarked for minority scholarships.
Juniors, seniors, and graduate students from 13 Colorado colleges and universities applied for Foundation scholarships this year. Of these applicants, 66 students met the highly selective eligibility standards. Of the eligible group, 45 or 68% were chosen by the trustees of the
Foundation to receive a $2,500 scholarship. Congratulations to these deserving recipients: Anton Collins Mitchell LLP Scholarships – Kelly McIlvride, University of Colorado Denver; Yulianna Zhuk, University of Denver Crowe Scholarship – Kathryn Schell, Colorado State University Deloitte LLP Scholarship – Caitlin Hughes, University of Denver Eide Bailly LLP Scholarship – Trey Hoefer, University of Denver EKS&H LLLP Scholarships – Kathryn Byczkowski, University of Denver; Raymond Feigal, Regis University; Zachary Fryer, University of Denver; Cassandra Leonis, Colorado State University EY LLP Scholarship – Peter Cal, University of Denver Gordon Scheer Scholarship – Erin Cook, University of Denver Hein & Associates LLP Scholarships – Hailey Bork, University of Denver; Andrew Romano, University of Northern Colorado
2017-2018 BOARD OF TRUSTEES Sharon S. Lassar, PhD, President University of Denver, Denver
Ann E. Hinkins, CPA EKS&H LLLP, Denver
Diego J. Baca, CPA, Vice-President EY LLP, Denver
G. Suzanne Lay, CPA Colorado Mesa University, Grand Junction
Toby D. Clary, CPA, Treasurer Soukup Bush & Associates, Fort Collins Kristine Brands, CMA, Past President Regis University, Colorado Springs Audra Dixon, CPA EY LLP, Denver Audrey A. Gramling, CPA Colorado State University, Fort Collins
Hugh C. Braly Scholarship – Rachel Gustafson, University of Denver KPMG LLP Scholarship – Kristi Genetti, University of Denver
Mary E. Medley Colorado Society of CPAs, Englewood
Lori Nelson / EKSH Scholarship – John Owsley, Adams State University Mark J. Smith Scholarships – Jessica Gilmore, Adams State University; Amanda Pajonk, University of Colorado Denver; Henock Tesfay, University of Colorado Denver
Scott W. Ranby, CPA, CFP Kuhn Advisors, Inc., Denver Matthew O. Rolland, CPA Hein & Associates, LLP, Denver Carol J. Cameron, CPA, Executive Director Colorado Society of CPAs, Englewood
Otto and Betty Butterly Scholarship – Taylor Blagg, University of Denver CONTINUED ON PAGE 20
September/October 2017 • www.cocpa.org •
19
Scholarships CONTINUED FROM PAGE 19 T WO T HOU SA N D SE VE N T E E N
Past Presidents Scholarship – Kayla Mees, Colorado State University
F O U N D E D I N PROMOTE ACCOUNTING EDUCATION T WO TH THO USA N D S E SEVENTEEN VENTEEN TWO OUSAND IN COLORADO AND SUPPORT INDIVIDUALS PricewaterhouseCoopers LLP
1958 in order to
Scholarship – Michael Samii, University of Denver
and Finstitutions engaged in its study and teaching. ACCOUNTING EDUCATION O U N D E D I N PROMOTE
ACCOUNTING EDUCATION F O U N D E D I N PROMOTE IN COLORADO AND SUPPORT INDIVIDUALS
1958IN COLORADO AND SUPPORT INDIVIDUALS 1958 in order to and institutions engaged in its study and teaching $1,746,000.00 IVEN IN 2017 $112,500 G$1,746,000.00
RubinBrown Charitable Foundation Scholarships – Edgar Enriquez, Colorado Mesa University; Sean Sutanto, Colorado State University
in order to and institutions engaged in its study and teaching.
$1,746,000.00 N IN 2017 $112,500 G I V Escholarships
Thomas J. Kundinger Scholarship – Lilyana Frayre, Metropolitan State UniversityTHAT of Denver MEANS
45
General Scholarships – Spencer of THAT MEANS Adleman, Colorado Mesa University; Amanda Avery, of Fort Lewis College; Casie Cook, Metropolitan State University THAT MEANS of Denver; Brittany Droogsma, $32,405 University of Denver; Caroline of $ 95 ,0 0 0 Scholarship dollars Average cost of 4-year $29,300 $9,410 Endersbe, Fort Lewis College; awarded by$32,405 the public collegeTyler tuition $8,351 $ 95, 0 0 0 Scholarship dollars Average cost of 4-year $9,410 Ed$29,300 Foundation Gastineau, Regis University; Average cost Jordan of 4-year awarded by the public college tuition $8,351 private college tuition Ed Foundation $19,307 Hicks, Adams State University; Average cost of 4-year $ 5 5 ,0 0 0 $3,768 private college tuition $19,307 Eric Learn, University of Denver; $ 55,0 0 0 $3,768 Steven Lorenzen, University $10,348 $ 35 ,0 0 0 $32,405 $10,348 of Denver; Aishwarya Narang, $ 3 5 ,0 0 0 $2,035 $9 5,000 dollars $2,035 $ 1 8,0Scholarship 00 $29,300 $9,410 University of Denver; Sadie $3,811 Average cost of 4-year $ 1 8 ,0 0 0 awarded by the $1,809 $840 public college tuition$3,811 $ 1 0 ,0 0 0 $8,351 Parris, University $785of Denver; $1,809 $840 $ 1 0 ,0 0 0 Ed Foundation $785 $427 $ 4,0 0 0 cost of$427 4-year $169Colorado Mesa Average$169 $ 4,0 0 0 Hailley Pedersen, $ 80 0 $ 8 0 0 private college tuition $19,307 University; Mary Peterson, $55,000 $3,768 1 960 1960 1970 1980 1990 2000 2010 2015 1 9 70 2015 1 9 80 1 91609 90 1 9 7 20 1960 1970 1980 1990 2000 2010 0 0 01 9 8 020 1 01 9 9 020 1 52 0 0 0 20 10 20 15 Colorado State University; Lindsay $10,348 Rogers, University of Denver; $35,000 $2,035 Jessica Schneider, University $ 1 8PRIVATE ,000 $3,811 5 YEARS PUBLIC / 1 YEAR PRIVATE TUITION YEARS PUBLIC / 3TUITION YEARS TUITION of Denver; Courtney Smith, 5 YEARS PUBLIC / 1 YEAR PRIVATE TUITION 10 YEARS PUBLIC / 10 3 YEARS PRIVATE $1,809 $ 1 0 ,0 0 0 $840 $785 University of Denver; Samuel $427 $ 4,0 0 0 Spare, University of Denver; Kane$169 $800 Spillar, University of Denver; 1980 1990 2000 2010 2015 1960 1 9 70 1980 1990 2000 2010 2015 Morgan Tomenchok, University 1960 1970 of Denver; Morgan Wuthrich, University of Colorado Denver s
scholarships
$112,500 45 G I V E N I N
2017
scholarships
45
In 1960, = In 2015, $95,000 = In 1960, $800 = $800 In 2015, $95,000 =
5,568% 5,568%
In 1960, $800 = 5 YEARS PUBLIC / 1 YEAR PRIVATE TUITION
In 2015, $95,000 =
10 YEARS PUBLIC / 3 YEARS PRIVATE TUITION
YOU CAN HELP THESE NUMBERS GROW.
YOU CAN HELP THESE NUMBERS GROW.
5,568%
For more information, visit give.cocpa.org
For more information, visit give.cocpa.org 20
• NewsAccount • September/October 2017
YOU CAN HELP THESE NUMBERS GROW.
COCPA Office Update
Demo, Reno, Reveal: We’re Almost Ready for Prime Time
I
f you’ve stopped by the COCPA office lately, you’ve seen first-hand the physical changes we’re making as we’ve intentionally disrupted the space, demolishing walls, tearing up flooring, and reworking the public
and staff areas. By the time you read this, we’ll be close to or done with a major renovation that is creating a fresh new look in a smaller footprint. We’ll still have the classroom, CPA Cafe, Conference Room, and Board Room.
We won’t have private offices or an officesized server room full of hardware. Here are a few examples of what had to go or change to make room for what’s ahead. We look forward to welcoming you to the new COCPA.
September/October 2017 • www.cocpa.org •
21
Alerts
CPA License Renewal Coming Soon
I
f you’re a licensed Colorado CPA, you’re up for renewal in November 2017. The CPE reporting period is Jan. 1, 2016 to Dec. 31, 2017. You’ll be asked to attest that you have or will have completed your required 80 hours of qualifying CPE hours — including four hours of ethics and no more than 16 hours of coursework in Personal Development — by Dec. 31. Renewal must be done online, and the Colorado State Board of Accountancy will notify you by email when the online renewal
system is “open” for processing. Watch your email inbox for details.
forms, and making your application for the change.
Note that you are not able to change your license status — active, inactive, or retired — during the renewal period. If you wish to do so, you must apply for a status change before October 2017 or after January 2018 by going to the Colorado State Board of Accountancy website, colorado.gov/pacific/dora/Accountancy, downloading and completing the required
Also, be aware that if you intend to apply for retired status and you have held a license in active status, you must have completed the required CPE hours for the period — ten hours for each calendar quarter in the reporting period.
CPAs I N Industry CONFERENCE The next step on your path to success.
Questions? Contact CPE Director Rebecca Campbell, rebecca@cocpa.org. s
Firms with AICPA Peer Reviews Due in 2017
DoubleTree By Hilton Denver Tech or Webcast
In May, the AICPA launched PRIMA, a new, webbased 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:
The annual CPAs in Industry Conference is designed to address key economic trends, innovative technological, and regulatory issues that affect you and your organization.
• Updating your firm’s enrollment, including your Managing Partner and Peer Review Contact as well as levels of service your firm performs
October 24, 2017
• Scheduling your peer review
TOPICS AND SPEAKERS: Thriving in Chaos Corinne Hancock, My Powerful Life The Only Three SALT Issues That Matter Bruce Nelson, EKS&H LLLP 2018 Economic Outlook for Colorado with a look at the Marijuana Industry Rich Wobbekind, Leeds School of Business, University of Colorado at Boulder
Is Your Retirement Plan Susceptible to Litigation? Cynthia Hansen, CRPC, Hansen Wealth Management Group Hot Topics in Immigration Law Sherry Lin, Esq., Mountain States Employers Council Health Care - What Are Companies Doing? Senator Jim Smallwood, Employee Benefits Division, Moody Insurance Agency
Measuring Technology ROI Donny C. Shimamoto, CPA, CITP, CGMA
Register at industryCPAs.cocpa.org.
22
• NewsAccount • September/October 2017
• 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, 303-7418605, or 800-523-9082. s
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
To learn more, visit AICPAStore.com/CGMAProgram
EVERYTHING YOU NEED TO ATTAIN THE CGMA DESIGNATION + YOUR YEARLY CPE AND MORE THAN $450 IN SAVINGS AICPAStore.com/CGMAProgram
State Taxation
News From the Colorado Department of Revenue Do you ever wonder how much income and sales tax return processing the Colorado Department of Revenue (CDOR) does? Here’s a snapshot of the past two years. Of particular note, the numbers of returns keep increasing; the state budget dollars and full-time employees the CDOR employs don’t.
Income Tax Returns FY 2016
Sales Tax Returns
FY 2017
% Change
FY 2016
FY 2017
% Change
Paper
440,970
434,368
-1.5%
544,367
466,579
-14.3%
Electronic
2,328,288
2,375,350
2.0%
1,897,117
2,138,125
12.7%
Total
2,769,258
2,809,718
1.5%
2,441,484
2,604,704
6.7%
T
his information and the following data points were shared with the COCPA/ CDOR joint working group at its August 2017 meeting. If you’d like to receive updates directly from the Department, sign up for Colorado Tax News at colorado.gov/ tax/education. EXECUTIVE DIRECTOR NAMED July 31, 2017, Michael Hartman was named executive director of the Department. Hartman joins CDOR from the Mutual of Omaha Bank in Denver, where he served as a senior vice president. Prior to that, he served in leadership roles with GE Capital, GE Antares Capital, Bank of the West, and Pi Kappa Phi Properties, Inc. “I'm very excited to work with CDOR's incredibly talented team to continue improving the customer experience for all Colorado residents during their interaction with the Department's various functions,” Hartman said. “I share the Governor's appreciation for Barb Brohl's impeccable service and hope to build on the foundation of success that she has established during her tenure.” Hartman takes the reins from Brohl, who departed after six years as head of CDOR. CALL CENTER STATS • CDOR blocked 24.4% of calls to date last fiscal year, compared with 34.7% in FY 2015. • Wait times averaged 9:07 minutes last
24
fiscal year, compared to 10:15 minutes in FY 2015. • CDOR received approximately 273,000 fewer phone calls this year. • For the practitioners hotline, the statistics are 0.6% blockage and 3:36 minute wait time this year. • CDOR will replace its current phone infrastructure with a VOIP capable system, and it will update its software during this fiscal year. Details on the new system’s capabilities are forthcoming. Features under consideration include virtual hold, customer surveying, enhanced reporting, and the ability to pre-populate taxpayer information to decrease total talk time. NEW LEGISLATION New Subtractions from the 2016 Colorado legislative session which affect the 2017 tax year: • 1st time home buyer — equal to any interest and other income earned from investment money in a first-time home buyer savings account • Increased deduction for wildfire mitigation — 100% of $2,500 • 1st time farmer — precertification required from the Colorado Agricultural Development Authority
• NewsAccount • September/October 2017
Changes to Credits from the 2016 Colorado legislative session: • Rural preceptor credit — limited to 200 preceptors, not to exceed $1,000 per taxpayer and certification from Area Health Education Center (AHEC) or institution • Innovative Motor Vehicle — allows for purchaser/lessee to assign credit to financing entity and eliminates the credit calculation in favor of a $5,000 credit for a purchased vehicle or $2,500 for a lease. 2017 Colorado legislative session changes: • Exception to Refund Deadlines related to fraud • Voluntary Checkoffs — Nongame Wildlife renewed and expanded, and two new created for Urban Peak and Family Caregiver Support • Marijuana — Exempts sale of retail marijuana from 2.9% sales tax and increases the marijuana-specific sales tax from 10% to 15%; also changes made to local government taxation (not administered by CDOR) • Sales and Use Tax Simplification Task Force established • Apportionment of income for Enterprise Data Centers • Certain economic development tax credits to receive different treatment s
September/October 2017 • www.cocpa.org •
25
The Colorado Department of Revenue offers monthly FREE tax classes for Colorado businesses with a sales tax and/or use tax account in Colorado, as well as for business tax professionals. Due to limited seating, reservations are required. Review the course calendar and register for an upcoming class at: Colorado.gov/Tax/Education. The Colorado Department of Revenue offers monthly FREE tax classes for Colorado businesses with a Clickuse ontax ‘Want to take a FREE Colorado Sales Tax class?’ sales tax and/or account in Colorado, as well as for business tax professionals.
Due toby limited seating, required. Remaining 2017 class dates location (allreservations classes areare 10am to Noon): Review the course calendar and register for an upcoming class at: Colorado.gov/Tax/Education.
Denver Click on ‘Want to take a FREE Colorado Sales Tax class?’ 1313 Sherman Street, Room 220 Denver, CO 80203 August 9 September 13 Remaining 2017 class dates by Colorado Springs November 8 location (all classes are 10am to 2447 North Union Boulevard noon):
1881 Pierce Street, Denver Room 110
1313 Sherman Street, Room 220 Lakewood, CO 80214 Denver, CO 80203 October 5 • November 8 December 13 1881 Pierce Street, Room 110 Lakewood, CO 80214
Fort Collins • October 5 3030 South College Avenue • December 13 Fort Collins, CO 80537 Fort Collins August 8 September 12 3030 South College Avenue Fort October 10 Collins, CO 80537 November 7 • October 10 December 5 • November 7 •
December 5
Colorado Springs 2447 North Union Boulevard Colorado Springs, CO 80909 August 3 September 7 October 4 November 2 December 7
Colorado Springs, CO 80909 • • •
October 4 November 2 December 7
Pueblo 827 W. 4th Street, Suite A Pueblo, CO 81003
Pueblo
th • 827 October W. 411 Street, Suite A • November 8 CO6 81003 • Pueblo, December
August 9
Grand Junction September 6 222 6th Room 11 101 Grand Street, October Junction, CO 81501 November 8 • • •
October 11 December 6 November 8 December 13
Grand Junction 222 6th Street, Room 101 Grand Junction, CO 81501 August 9 September 13 October 11 November 8 December 13
Skills Development
How to Deliver a Powerful Financial Presentation This article first appeared in CGMA Magazine. For more articles, sign up for the daily email update from CGMA Magazine at http://bit.ly/2svn2AY. BY SAMANTHA WHITE
P
resenting essential data without confusing or overwhelming your audience can be tricky. A common mistake is to share everything you know. Instead, concentrate on the essential information or suggestions you want the audience to take in. In a new CGMA brief, Six Rules to Delivering a Powerful Financial Presentation (http://bit.ly/2sqo6uW), Peter Margaritis, CPA, CGMA, and Jennifer Elder, CPA/ CFF, CGMA, provide the following advice on creating a session which connects with your audience and empowers them to act. FOCUS ON YOUR AUDIENCE’S NEEDS Give your audience the information they want first. You have very little time at the beginning of any presentation to capture their attention. Once you have their attention, you can cover what they need to know. It’s common for presenters to come out and tell the audience about themselves, regardless of whether they have already been introduced by the host. But what the audience really wants to know is why they should be listening to you. “Whether somebody gives me an intro or not, I start all of my presentations with an executive summary,” Margaritis says. The ideal outcome is for the presentation to seem like a conversation with the audience, rather than something you have memorized. Learning it by rote puts unnecessary pressure on the presenter and creates a sense of panic if you are less than word perfect. If you’re the one giving the accept that you will make mistakes. But also know probably be the only person
presentation, a couple of this: You’ll who notices.
Don’t be fazed if the screen doesn’t work or some other issue crops up. Remember, the audience is on your side. MAKE YOUR MESSAGE RELATABLE Think about how you can deliver your message in a way everybody can understand and relate to. Stories help provide relatable context, and humans are hardwired to want to listen to the whole thing, Margaritis says. He uses the example of the CFO of an airline delivering an update on company performance to staff. In this case, the presenter might reel off a set of figures for revenue, expenses, and profit in the billions of dollars. But few of us have ever seen, nor can we visualize, a quantity like $1.2 billion, for example. A much more accessible context is, in this instance, the dollar bill. Margaritis suggests using that image on a PowerPoint slide to break down performance for every dollar a customer pays the company for the privilege of flying on the airline. For example, if 22% of the dollar goes to payroll costs, a graphical representation could show 22% of the dollar bill disappearing. “Seventeen cents goes on fuel, and so on,” he explains. “I take those costs in turn and start whittling away at that dollar until there’s just a little sliver that represents the 11 cents we get to keep as profit.” This helps everybody understand what’s going on from an income standpoint and provides a better understanding of the organization than simply stating, “We’ve got a gross profit margin of X% or a net profit of Y% which was up by 0.5% from the prior year.”
Breaking it down in this way helps the audience become better invested in the financials and gives the CFO an opportunity to promote a culture of cost consciousness. TELL THE STORY BEHIND THE NUMBERS In a financial presentation, the presenter’s role is to translate the data into knowledge that is useful to the audience, covering these three points: What? For example: Over the past two years, revenue increased by 25%. So what? Explain why this fact matters. The only way to discover this is to get out from behind your desk and ask what the business did differently in the period that drove the change. A conversation with the head of sales, for instance, may reveal that a particular salesperson focused on building relationships with major companies over the period and secured a number of contracts. One of those contracts alone constituted half of that 25% growth. There’s the “so what.” Now what? This is your chance to highlight what we can learn from this and suggest changes, such as encouraging the sales team to adopt a similar strategy to the star performer. “When I look at income statements or balance sheets, there’s a story there. We just have to figure out what it is, which means we have to go out and ask and find the answer,” Margaritis says. s Samantha White, Samantha.White@ aicpa-cima.com, is a CGMA Magazine senior editor. © 2017 Association of International Certified Professional Accountants. All rights reserved.
September/October 2017 • www.cocpa.org •
27
Movers & Shakers Timothy M. O’Brien, CPA, Denver City Auditor, received the AICPA’s 2017 Outstanding CPA in Government Impact Award which recognizes the impact of significant contributions to the efficiency, effectiveness, and innovative service delivery by CPAs in government. Jamey L. Camp, CPA was named a principal at Causey Demgen & Moore P.C., Denver.
Timothy B. Bachicha, CPA, PC, Monte Vista, has associated with Wall, Smith, Bateman, Inc., Alamosa.
Tax Study Groups
Boulder/Longmont Tax Study Group at the Meadows Branch Public Library Tuesday, September 19 and Tuesday, October 17 This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd, Boulder, BYO Bag Lunch. 2017 Meeting Dates: Sept. 19, Oct. 17, Nov. 28, and Dec. 19. For additional information, contact Lynn M. Mitton, CPA, MT, MPA, (303) 499-7445 or email lynn@flewellingcpa.com. Register at www.cocpa.org.
Denver Tax Study Group Groskopf & Groskopf LLP, Montrose, sold the practice to Parker Consultants and Accountants, PLLC, Montrose. Sidny K. Zink, CPA, FredrickZink & Associates, PC, Durango, was reappointed to the Colorado Transportation Commission for a second four-year term and elected chair. Hein & Associates, LLP, Denver, announced plans to combine with Moss Adams LLP, Seattle, effective, Nov. 1, 2017.
at the COCPA Office Tuesday, September 26 and Tuesday, October 24 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: Sept. 26, Oct. 24, and Dec. 5. Register at www.cocpa.org.
North Metro Tax Study Group at The Ranch Country Club Thursday, September 21 and Thursday, October 19
Dalby, Wendland & Co., P.C., Grand Junction, announced the following promotions: Michael B. West, CPA, to principal; Sarah L. Menge, CPA, to associate principal; Brooke A. McKenzie, CPA, to tax manager; Brian J. Hollingsworth, CPA, to audit supervisor; Gregory M. Ward, CPA, and Lucas D. Warth, CPA, to tax supervisor; and Justine Arnold to senior tax accountant. Also, Gregory Ward became treasurer for the Western Slope Chapter. Matthew R. Martinez, Dalby, Wendland & Co., P.C., Grand Junction, recently attained his Colorado CPA certificate. Bridge West LLC, Denver, joined Boeckermann Grafstrom & Mayer, LLC. Jim Marty, CPA, will continue to serve as Bridge West’s CEO. 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.
28
• NewsAccount • September/October 2017
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: Sept. 21, Oct. 19, Nov. 16, and Dec. 21. Register at www.cocpa.org.
In Memoriam
We regret the loss of the following COCPA members and extend our sympathy to their families and friends.
Robert Ortlip Member since 1982, Aurora, Colo. Frank Kraly Member since 1967, Denver, Colo.
Classifieds OFFICE SPACE AVAILABLE Office sharing opportunity in 3 sole practitioner CPA Colorado Springs office suite (1 or 2 available). 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. Suite-share arrangement with CPAs in our newly remodeled office space at 7000 East Belleview. 120 square feet at $500/month, furnished or unfurnished. Use of wi-fi, conference room, kitchen, copier and fax. Walking distance to new restaurants. Please contact Carol at 720-7213405 for more information.
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Looking to retire/transition? DTC full service accounting and tom@thomaslangcpabroker.com tom@thomaslangcpabroker.com tom@thomaslangcpabroker.com advisory firm is looking to acquire a practice with revenues up to Colorado Estate License andand CPACPA License Colorado Real Real Estate Real License Estate License and CPA License License $500,000. We specialize in working with small business in the Colorado Colorado market; attest, tax, consulting, write up, payroll, and general Member ofColorado the Colorado Society of CPAs Member Member of the of the Colorado Society Society of CPAs of CPAs business matters across multiple industries. No brokers. Please email Member of Colorado Association of Business Brokers Member Member of Colorado of Colorado Association Association of Business of Business Brokers Brokers your inquiries to: carley@cocpa.org (Box #100932). CPA Firms or Partners. We represent a number of quality CPA firms and individuals who are looking to merge, acquire, or sell their practices to other CPA firms or partners with business. Locations are in the Metro Denver, Boulder, and Evergreen areas. 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 Colorado: 720-446-7020, or email dandrassociatesofco@aol.com.
Colorado Gives Day 2017 Call for Matching Donors
We're seeking your stories! If you or someone you know has a story to tell and photos too — trekking the Colorado Trail, writing a new book, motorcycling on Route 66, or competing in national snowboard events, etc. — let us know! Send your story ideas to Mary E. Medley, COCPA CEO, at mary@cocpa.org.
What Would You Tell Your 22-Year-Old Self? NewsAccount is seeking your advice — from your vantage point today — about what you would have appreciated knowing as you entered the CPA profession. Send your wisdom to Mary E. Medley, mary@cocpa.org.
Thanks to the generosity of the following donors, your gift to the Educational Foundation of the COCPA can be matched: • RubinBrown Charitable Foundation • Mark J. Smith Family Foundation • Kundinger, Corder & Engle, P.C. If you’d like to become a matching donor, contact Mary E. Medley, mary@cocpa.org. To learn more, go to give.cocpa.org.
September/October 2017 • www.cocpa.org •
29
Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076
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