Disclosures March/April 2012

BROUGHT TO YOU BY THE VIRGINIA SOCIETY OF CPAs

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New lease accounting rules

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Ethics beyond public accounting

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Outsourcing is in

MARCH/APRIL 2012 I VOL. 25 NO. 2 I WWW.VSCPA.COM

INSIDE

INDUSTRY Features and articles focusing on CPAs working in business and industry.

INSIDE this issue COVER STORY >>

The opportunities are nearly endless for CPAs — and many of them are outside public accounting. This issue focuses on hot issues affecting CPAs working in business and industry, like lease accounting, ethics and business valuation. Plus, learn how one CPA firm is using an innovative approach to offer accounting services to its clients.

FEATURES JUST WHEN YOU ‘LEASE’ EXPECT IT

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The proposed new standard for the accounting for leases could have a major effect on financial statements, financial ratios and the way companies choose to lease assets.

ETHICS BEYOND PUBLIC ACCOUNTING

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CPAs working in industry need to be just as vigilant about ethics as those working in public practice.

OUTSOURCING IS IN

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One Virginia firm offers full accounting services for its clients — and it’s a winwin situation for everyone.

A VALUATION ROUND-UP New business valuation rules and regulations, plus emerging issues.

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ARTICLES

SECTIONS

LICENSE RECIPROCITY: WHAT YOU NEED TO KNOW 8

BACKTALK

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LINE ITEMS

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DATA DRAFT

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WILL IT BE A TOUGH YEAR? 12

ADVOCACY

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Results are in from the 2011 Virginia Economic Outlook Survey.

SELF-ASSESSMENT 36

Practicing across state lines? Make sure you know the rules!

ADVERTISERS INDEX Accounting Practice Sales inside back cover • Audimation Services Inc. p. 20 • Beth A. Berk, CPA p. 21 • Digital Benefit Advisors p. 19 • GEICO p. 11 • Keiter back cover • PNC inside front cover

VSCPA NEWS

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MEMBER NEWS

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VSCPA EDUCATIONAL FOUNDATION 42 CLASSIFIEDS 43 I AM

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disclosures is published bimonthly for members of the Virginia Society of CPAs.

Our mission is to enhance the success of CPAs.

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VIRGINIA SOCIETY OF CPAs

4309 Cox Road Glen Allen, VA 23060 Ph. (800) 733-8272 Fx. (804) 273-1741 www.vscpa.com

disclosures EDITORIAL STAFF Jill Edmonds Managing Editor disclosures@vscpa.com Jenny Hansen Communications Director jhansen@vscpa.com Tina Lambert, CAE Vice President, Member & Public Relations tlambert@vscpa.com

BACKTALK you said it

From an opinion article inVirginia Business The citizens of the commonwealth and the business community at large would be better served if the risks and potential impact associated with federal budgetary policy decisions were described in more detail in its revenue forecast.

JOHN MONTORO, CPA, Cherry, Bekaert & Holland, LLP, Richmond

EDITORIAL TASK FORCE Joan D. Aaron, CPA Bill Barrett, CPA/ABV, CFF Beth A. Berk, CPA James D. Cole, CPA Cheri G. David, CPA, CVA James P. Davis Jr., CPA William C. Foote, CPA/ABV, CVA Elizabeth M. Helle, CPA Heather L. Judson, CPA Clare K. Levison, CPA Gabriele Lingenfelter, CPA Haven S. Pope, CPA, MBA, CFE George D. Strudgeon, CPA Philip H. Umansky, CPA, Ph.D. Thomas L. Visotsky, CPA

VIA FACEBOOK >> Thank you for allowing me to speak to your members about social media.

DEADLINES

ANONYMOUS SUMMIT EVALUATION

Articles and advertising for future issues are due by 5 p.m. on the following dates: July/Aug. 2012 Sept./Oct. 2012 Nov./Dec. 2012 Jan./Feb. 2013 Mar./Apr. 2013 May/June 2013

Apr. 15, 2012 June 15, 2012 Aug. 15, 2012 Oct. 15, 2012 Dec. 15, 2012 Feb. 15, 2013

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers, members or editorial staff.

The Warren Group Design / Production / Advertising www.thewarrengroup.com custompubs@thewarrengroup.com

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From the

TWITTERSPHERE >>

ANDREW ROSE,

Naden/Lean, LLC, Timonium, Md.

FROM CONFERENCE EVALUATION >> This was my first [Virginia Financial Literacy] Summit and it was great.

I got so many ideas and resources to support my students’ academic success.

VIA LINKEDIN >> Every time we hear this [candidates promising a simpler tax code], the tax code gets more complicated. I think they will try but I don’t expect to see any results.

MONIQUE VALENTINE, CPA,

Associated General Contractors of America, Arlington

Get in touch

RT @vscpaemwalker: Va. Senate Finance Committee just passed tax conformity legislation... #VSCPA Does great work.

— @BOYD_SEARCH

RT @VSCPANews: Excited to talk to legislators for #VSCPA #CPA Assembly Day! — @VPAIGE

Just had a great meeting with Sen. Steve Martin on #VSCPA issues.

— @VSCPAEMWALKER

BLOG: www.cpacafe.com TWITTER: @VSCPANews, @FinancialFit LINKEDIN: http://tinyurl.com/VSCPALinkedInGroup FACEBOOK: www.facebook.com/VSCPA

At the Virginia Society of CPAs, we love to hear from you.

Whether it’s a quick email to a staff member, chat on the phone, Disclosures letter to the editor, tweet, blog comment or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

2012–2013 VSCPA Membership Benefits Your continued dedication and support enables us to enhance our products and services to meet your needs and protect CPAs’ interests. Here is just a handful of the benefits we offer: • 18+ hours of high quality, FREE CPE • Discounts on CPE, including Ethics 2012 — Your License Depends on It! • Access to our new social networking site, VSCPA Connect • Access to our online Career Center • Discounts on CCH tax guides and access to the new tax law e-book and mobile app • Continued advocacy on your behalf • Access to our award winning publications, including Disclosures magazine and other e-newsletters • And much more Enjoy these benefits in addition to many others. For more information on your VSCPA member benefits, please visit www.vscpa.com/Benefits or contact us at (800) 733-8272.

LINE items FRIENDLY ACADEMIC COMPETITION >>

Meeting the financial literacy challenge Question: How can Virginia high school students learn more about personal finance and have fun at the same time?

Answer: Take part in a new online competition that complements the new financial literacy graduation requirement!

Gov. Bob McDonnell has announced the first Governor’s Challenge in Economics and Personal Finance to promote the newly implemented economics and personal finance graduation requirement and new classes that fill it.

Spurred by the VSCPA’s efforts, in 2009 the Virginia Board of Education (VBOE) unanimously approved a one-credit course in economics and personal finance as a requirement for high school graduation. The requirement went into effect for students who entered ninth grade in fall 2011.

The online Governor’s Challenge is designed to support teachers and school divisions in their implementation of the new course.

It will be conducted in partnership with the Virginia Council on Economic Education (VCEE), a nonprofit focused on enhancing economics and financial education in Virginia schools. VCEE and several other institutions, including the VSCPA, have helped provide instruction for teachers.

Teams of four high school students can participate in the online challenge anytime between March 7 and April 4, answering questions in personal finance or in one of two economics divisions. Eight regional winners in each of the three divisions will be recognized and, along with selected other teams, will be invited to participate in a live championship challenge at Virginia Commonwealth University on April 20. n

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CPAS & SUSTAINABILITY

The international movement in accounting for sustainability marches on, and CPAs from the United States remain committed to their involvement. The American Institute of CPAs (AICPA) represented the CPA profession at the Accounting for Sustainability Forum held in London in December. The Accounting for Sustainability Project was begun by His Royal Highness The Prince of Wales, who addressed the forum on how the value of natural resources can be taken into account in economic, accounting and decision-making systems. Check out www.accountingforsustainability.org for more information.

LINE items NEW ‘FEED THE PIG’ PHASE LAUNCHES >>

Benjamin Bankes returns The face of the “Feed the Pig” campaign returned in January with a new tidbit of financial wisdom: “Put away a few bucks. Feel like a million bucks.”

New TV, radio, print, web and outdoor public service announcements are appearing nationwide in the next phase of the “Feed the Pig” financial literacy campaign. The American Institute of CPAs (AICPA) and state CPA societies (including the VSCPA), in partnership with The Ad Council, have promoted the campaign since 2006 in an effort to improve the financial behaviors of young adults ages 25–34. In addition to advertisements, the campaign’s new features include:

2012 JOB CLIMATE >>

Will your pay go your way?

For some accounting professionals, the answer is a resounding “yes.” Compensation for accountants will rise 3.5 percent in 2012, according to the latest report from staffing company Robert Half International.

>> A MOBILE WEBSITE for easy viewing on smartphones >> QR CODES on print ads and bus shelter announcements that link to the mobile site >> AN ENHANCED FACEBOOK PRESENCE with more interactive tools >> EXTENDED OUTREACH to the blogger community for more online presence The CPA profession supports national financial literacy efforts to encourage saving and smart money management while promoting a positive image of the profession.

Scan the QR code with your smartphone to view one of the new 30-second “Feed the Pig” public service announcements. And turn to page 43 to check out a new infographic highlighting the spending habits of 25–34-year-olds and offering tips on how to change spending into saving. Feel free to share with your clients! n

In particular, more senior positions will be most likely to receive raises. These include tax managers, senior tax accountants and senior auditors. Entry-level staff will see the lowest increase, the survey reveals.

In addition, the hiring environment looks good.

“Employers are refilling positions cut during the recession, adding new ones, and making replacement hires to reduce attrition and turnover,” the report says.

There is increasingly high demand for certain positions, and some firms are having difficulty finding the candidates they need, which increases hiring time. On the flip side, some candidates are seeing multiple offers and counter-offers.

Check out the salary guide at www.roberthalffinance.com. n

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DATA draft TOPS ON CAMPUS >>

VIRGINIA NEEDS FISCAL EDUCATION >>

JMU, UVA get CPA Exam accolades

Virginians’ financial literacy?

Merely average

Two Virginia universities claimed high spots on lists of 2010 Exam candidate performance, recently announced in a 2011 report from the National Institute of State Boards of Accountancy (NASBA).

Schools with top overall pass rates for first-time candidates without an advanced degree are: 1. WAKE FOREST UNIVERSITY 2. UNIVERSITY OF VIRGINIA 3. UNIVERSITY OF WISCONSIN- MADISON 4. CORNELL UNIVERSITY 5. TRINITY UNIVERSITY

Schools with top overall pass rates for first-time candidates with an advanced degree are: 1. JAMES MADISON UNIVERSITY 2. BRIGHAM YOUNG UNIVERSITY 3. UNIVERSITY OF GEORGIA 4. UNIVERSITY OF KENTUCKY 5. NEW YORK UNIVERSITY

BY THE NUMBERS >>

64

The number of CPAs serving in state legislatures across the country.

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If there was ever any doubt about the need for education on personal finance in the Commonwealth, a new study confirms it: Virginia is No. 29 in a state ranking of financial literacy behaviors from the Employee Benefits Research Institute.

TOP FIVE >>

BOTTOM FIVE >>

1. ALASKA

47. OKLAHOMA

2. UTAH

48. ARKANSAS

3. DELAWARE

49. MISSISSIPPI

4. COLORADO

50. KENTUCKY

5. NEW JERSEY

51. WEST VIRGINIA

The report also ranks the states based on financial capability (Virginia shows up at No. 25). Side-by-side, the state rankings demonstrate the differences between consumers’ actual financial literacy versus their behavior.

In addition, researchers state that, “most bottom-ranked states have a statistically significant effect on their residents’ financial literacy and almost all states have a statistically significant effect on their residents’ financial behavior. This suggests that there might be something going on at the state level whereby individual financial literacy and financial behavior are being shaped not only by individual demographic characteristics but also by the state in which people live.”

That’s why the VSCPA continues to support a variety of financial literacy initiatives to enhance citizens’ money management skills (see pages 5 and 40), and hopefully budge the ranking forward over time. Visit www.ebri.org for more. n

M&A activity on the rise Business valuation experts, you may have some more work on your hands this year! Thirty-six percent of companies plan to make an acquisition deal this year, according to an Ernst & Young survey. This continues the 2011 trend of 7.6 percent mergers & acquisitions (M&A) growth.

Make sure your firm is positioned to take advantage of this opportunity! See www.vscpa.com/M&ABonusArticle for a bonus Disclosures article on valuation tips in the current environment, or scan the QR code with your smartphone. n

ADVOCACY SESSION WATCH >>

Legislative issues on the line tax based on net income, the starting point in computing state taxable income is federal adjusted gross income for individuals and federal taxable income for corporations.

The VSCPA encouraged legislators to quickly pass tax conformity legislation, which advances the date as of which Virginia income tax laws conform with the IRC from Dec. 31, 2010, to Dec. 31, 2011. Early passage is critical to prevent taxpayers and preparers from having to file amended returns for changes made to the Virginia tax code as a result of the bill’s passage.

CONFIDENTIALITY At the VSCPA’s request, Del. Chris Peace (R-Hanover) introduced HB 275, which would close a loophole that would allow private citizens to request records from the VBOA that contain personal and private financial information.

VSCPA members Elsie Rose, CPA, partner at Yount, Hyde & Barbour, PC, and Marshall Northington, CPA, partner at Wells, Coleman & Company, LLP, flank Del. John Cox (R-Ashland) on CPA Assembly Day.

The 2012 Virginia General Assembly session started Jan. 11, and VSCPA leaders, members and staff were on top of important state issues that could affect the profession.

In addition to its chief legislative charge to protect and promote the CPA profession and designation in Virginia, the VSCPA is tackling a legislative/regulatory agenda that includes: advocating for automatic tax conformity; advocating for CPAs on state, federal and regulatory issues; supporting financial literacy education; supporting continued independence and expertise of the Virginia Board of Accountancy (VBOA); and supporting and promoting practice mobility.

Below is the latest information on the VSCPA’s advocacy efforts as of press time.

TAX CONFORMITY Tax conformity is the degree to which a state’s tax code conforms to the Internal Revenue Code (IRC). In most states that levy a

Although sensitive financial information, including tax returns and financial statements, is protected from disclosure during the course of an active VBOA investigation, as well as in general under the Freedom of Information Act (FOIA), all records of the VBOA are currently subject to disclosure under FOIA once the case is closed. This legislation would create an exemption for those confidential records submitted as a result of an investigation.

Check out www.vscpa.com/SessionWatch for the latest information on these issues and others that arise. n

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CPAs SPEAK UP

On Tuesday, Jan. 17, dozens of CPAs gathered at the Virginia Capitol for CPA Assembly Day to meet with legislators to discuss top issues affecting the CPA profession and observe the General Assembly in session. Tax conformity and confidentiality were at the top of the agenda, but participants also fielded questions from legislators on other financial and tax legislation.

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LICENSING

LIVIN’ ON THE BORDER? >>

License Reciprocity: What You Need to Know

BY CHIP KNIGHTON

Virginia sits at the crossroads of the midAtlantic, with major population centers bordering Maryland, North Carolina and Washington, D.C. The Commonwealth’s location is great for business for CPAs in those areas, but can create a logistical nightmare when those same CPAs must make sure they have the appropriate licenses.

Reciprocity makes that task much less cumbersome, although not foolproof, as you’ll read in the sidebar to this article on page 10. Reciprocity is the granting of a CPA license by one state based on a CPA license issued in another state. Most states use the Uniform CPA Examination and therefore recognize the validity of licenses from other states, with varying requirements for experience and education.

Reciprocity comes into effect when CPAs move to a new state, but it also plays a big role every year for a great many Virginia CPAs who stay put.

Depending on where you live, you might need to monitor the rules for Maryland, Washington, D.C., West Virginia, North Carolina, Tennessee or Kentucky, or some combination of those jurisdictions.

Here’s an overview of the reciprocity rules for several of the states that border Virginia.

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WASHINGTON, D.C. The District of Columbia passed mobility legislation in September 2011 that should be effective at the beginning of 2013. However, CPAs practicing in the D.C. metro area rely heavily on the District’s reciprocity rules. To qualify for reciprocity in D.C., you must: • Be at least 18 years of age • Not have been convicted of a crime or moral turpitude which bears directly on your fitness to be licensed • Have your licensing state complete D.C.’s “Verification of State Licensure in Accountancy Form” • Possess a valid license as a CPA from a jurisdiction whose licensing standards are verified by the National Association of State Boards of Accountancy’s (NASBA) National Qualifications Appraisal Service (NQAS) to ensure the standards are substantially equivalent to the Uniform Accountancy Act (UAA) Substantial equivalency is a key part of the requirements for D.C. and other jurisdictions. If you have a license in good standing from a state that utilizes certification criteria that are essentially those outlined in the UAA — usually 150 hours of education, successful

LICENSING

completion of the CPA Exam and at least one year of experience — you will generally be qualified to practice in another state that’s not your principal place of business. Your Virginia license will work.

MARYLAND Maryland requires a reciprocal license for individuals who are licensed in other states, but whose principal place of business is located in Maryland.

Sole practitioners who are licensed in another state and whose principal place of business is located in another state can only practice in Maryland through a firm with a permit from the Maryland Board of Public Accountancy (MBPA).

For a reciprocal license, Maryland requires four years of experience in the most recent 10 years since passing the CPA Exam, as well as an active license in good standing from another state or country. That experience can come from providing any type of services or advice using accounting, attest, management advisory, financial advisory, tax or consulting skills.

Application Course Checklist to document the completion of education you had obtained at the time you were licensed in your previous state or country. If you need to complete this checklist, submitting course descriptions and syllabi will expedite the review process.

MD WEST VIRGINIA

NORTH CAROLINA

• Official copies of your transcripts from all colleges and universities you have attended, forwarded from those schools’ registrars directly to the MBPA

Ensuring that you’re properly licensed, through reciprocity if necessary, will save you a lot of hassle down the road.

• Report of Practical Work Experience (documentation of at least 2,000 hours or one year of accounting-related experience earned within the most recent three-year period)

NORTH CAROLINA

• Passage of the CPA Exam

Virginia CPAs who move to North Carolina or take a job there must apply for a temporary permit and a reciprocal certificate. The North Carolina State Board of CPA Examiners (NCSBCE) may issue a reciprocal CPA certificate to a properly licensed CPA from another jurisdiction who resides in North Carolina or whose principal place of business is located there, as long as the applicant meets the North Carolina requirements for licensure. Once that certificate is granted, the applicant is not required to maintain his or her outof-state license to maintain his or her North Carolina license (but may elect to do so).

• Completion of the Reciprocal

To get a North Carolina reciprocal

If you don’t have the required four years of accounting experience, you’re not out of luck. You can still qualify for a Maryland license if you have the education and experience required by the Maryland Public Accountancy Act. Those requirements are: • Active licensure as a CPA in good standing in another state or country

VIRGINIA

certificate, you must furnish the NCSBCE with an affidavit signed by an official of the CPA licensing board that issued your current license. The affidavit must show the certificate number and that your license is in good standing.

You also must provide evidence of your CPA Exam scores through an affidavit signed by an official of a CPA licensing board that can verify the scores.

WEST VIRGINIA To obtain a West Virginia reciprocal certificate, you must be a resident of West Virginia, have established a business there or be an employee of a firm or business in West Virginia. You also must meet one of the following conditions: 

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LICENSING • Meet the education, examination and experience qualifications for a certificate • Hold an out-of-state certificate and meet the substantial equivalency certificate requirements for a

>>

reciprocal certificate • Hold an out-of-state license and do not meet the substantial equivalency requirements, but do meet the reciprocal certification requirements for not substantially equivalent

jurisdictions • Hold a substantially equivalent foreign designation and meet the reciprocal certificate requirements for a foreign designation

YOU WORKED HARD FOR YOUR CPA: STAY LICENSED!

BY BETH A. BERK, CPA Are you a CPA who earned your license a while back and either moved, left public accounting or entered a career that doesn’t require an active license? Listen up!

Long story short: I was originally awarded my license in New York and transferred it to Georgia. I then moved to Virginia and received my Virginia license after completing the ethics requirement, which wasn’t part of the process when I first became a CPA (not to date myself).

When I moved to Maryland, it was my understanding that I could maintain my license in Virginia as long as I met Virginia’s laws, CPE requirements and regulations. Possibly like some of you, I thought I was in compliance.

Last year, someone pointed out to me that it was possible that I was in violation of not being licensed in Maryland since I lived and worked there and held myself out as a CPA by using the title. I called upon my trusted resources and found out that in order to be in compliance with Maryland’s law, I needed a Maryland license.

documents submitted on my behalf that ultimately were not necessary or applicable in my situation (it seems that the Maryland Board of Public Accountancy will assess one’s situation on an individual basis if one’s situation doesn’t neatly fit their criteria). I did make great strides as quickly as possible to get a Maryland license since I was trained as an ethics instructor and did not want to appear unethical.

After starting the online application process and paying the fee, I thought I was nearly in the clear. On the next page, though, I saw the requirement to provide proof of passing ethics.

I started to panic, thinking about where and how I would obtain this since I took it so long ago. I started wondering if the American Institute of CPAs (AICPA) could easily provide a copy. I had 90 days to comply; otherwise, the clock would start ticking again for the application process. Needless to say, I felt a bit

Needless to say, the process of obtaining my license did result in some unnecessary hoop-jumping. I also ended up driving around to get

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stressed here since I had advertising in process and other externally viewed documents clearly depicting me as “Beth A. Berk, CPA,” and I was making presentations using that title.

Fortunately, I had kept the document confirming that I passed ethics from more than 10 years ago in some folders at the top of my linen closet.

Also, the curriculum my university offered and the choices of classes I took for my bachelor’s degree satisfied Maryland’s requirements. I am not so sure the Maryland Board of Public Accountancy had seen such a quick turnaround for a CPA to get reciprocity! And if you know me, you know I move fast and talk fast too!

In today’s world where having a CPA license allows us so many career options, make sure you are in compliance with the jurisdictions where you reside or work. Keep in mind that reciprocity is not the same as mobility!

BETH A. BERK, CPA, is an independent recruiter based in the metropolitan D.C. area who tends to focus on placing CPAs and CPA candidates, although she also places other professionals, including IT-related/network engineers, administrative and more. Contact her at BethABerk@msn.com or (301) 767-0670.

LICENSING BUT WHAT ABOUT VIRGINIA? We haven’t forgotten about those of you who live and practice in other states but need a Virginia license. You must be licensed in Virginia if you provide services to the public using the CPA title and your principal place of business in which those services is provided is in Virginia.

If you’re licensed in another jurisdiction and want to apply for a Virginia license, you must confirm that the CPA licensure requirements of your licensing jurisdiction have been reviewed by the NQAS and determined to be substantially equivalent. You also must:

score of 90 percent or better, of the American Institute of CPAs’ (AICPA) Professional Ethics: AICPA’s Comprehensive Course • Apply online for a Virginia license • Arrange for the board of accountancy in each jurisdiction where you currently hold a CPA license to send a copy of your license status and CPA Exam scores to the Virginia Board of Accountancy (VBOA) Virginia requires licensees from jurisdictions with asterisks on NASBA’s substantial equivalency listing to apply as initial applicants.

• Verify your completion, with a

THE PROPER PAPERWORK Working in multiple jurisdictions isn’t just a good way to grow your business — it’s a reality of working as a CPA in the 21st century. Ensuring that you’re properly licensed, through reciprocity if necessary, will save you a lot of hassle down the road. Good luck! n CHIP KNIGHTON is communications specialist at the Virginia Society of CPAs (VSCPA), where he manages, writes and edits VSCPA print and online communications.

Contact him at cknighton@vscpa.com or (804) 612-9408.

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VIRGINIA economy

Will it be a tough year?

2011 VSCPA Economic Survey shows CPAs have increased pessimism about the economy

BY DANIEL D. SELBY, CPA, PH.D., AND W. DARRELL WALDEN, PH.D.

While the current state of the U.S. economy drives this pessimism, Virginia was the first of 27 states to legally oppose the federal health care mandate. We speculate that VSCPA members’ outlook differences between national and state economies can be attributed to Virginia’s opposition to the federal health care law.

The Economic Outlook Survey was conducted at the end of 2011; the VSCPA received responses from 492 members (compared to 342 in the 2010 survey).

While there may be some glimmers of hope about a turnaround to the U.S. economy, such as decreasing unemployment, Virginia CPAs aren’t betting on a huge recovery in the next year.

The third annual VSCPA Economic Outlook Survey reveals Virginia CPAs are more pessimistic about the United States and Virginia economies than they were last year, but they are actually more optimistic about Virginia’s economy compared to the United States as a whole.

Likewise, VSCPA members continue to feel good about the economic outlook in Virginia relative to neighboring states.

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Figure 1 (opposite) shows respondents’ outlook for the U.S. economy for the subsequent year (2010 respondents provided their outlook for 2011; last year’s respondents provided their outlook for 2012), demonstrating the increase in pessimism.

Six percent of 2010 respondents were “very pessimistic” and 41 percent were “somewhat pessimistic” of the U.S. economic outlook for 2011. In contrast, only 23 percent of the respondents were “somewhat optimistic” of the U.S. outlook for 2011.

The 2011 survey shows increasing pessimism in members’ outlook for 2012.

VIRGINIA economy

The percentage of “very pessimistic” respondents of the U.S. economic outlook doubled from 6 to 12 percent. Also, fewer respondents gave neutral or optimistic responses.

MORE POSITIVE CLOSER TO HOME? The news isn’t necessarily better for the Commonwealth — VSCPA members still have a pessimistic view of Virginia’s economy in 2012 (see Figure 2, page 14).

But their outlook is still better than their predictions for the country as a whole.

For example, only 2 percent of respondents were “very pessimistic” of the outlook for Virginia in the 2010 survey, and that percentage doubled to 4 percent in the 2011 survey. While the pessimism is increasing, those percentages are still much lower than the “very pessimistic” percentages for the U.S. outlook.

And while the percent of respondents who were “somewhat optimistic” about Virginia’s outlook for 2011 is very similar to the percentages provided in 2012, the “very optimistic” response for 2012 is

triple that from the 2011 outlook — from 1 percent to 3 percent.

There is also some indication that Virginia CPAs are now surer about their economic predictions than last year. A much larger percentage of respondents chose to respond to the question on Virginia’s

outlook for 2012 than for 2011 — 92 percent and 76 percent, respectively. This may signal some shift among VSCPA members from uncertainty to certainty about the perceived outlook for Virginia between 2011 and 2012. 

FIGURE 1: VSCPA MEMBER OUTLOOK FOR THE U.S. FOR THE SUBSEQUENT YEAR 50%

40%

30%

20%

10%

0%

VERY SOMEWHAT PESSIMISTIC PESSIMISTIC

NEUTRAL

SOMEWHAT OPTIMISTIC

VERY OPTIMISTIC 2010

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NO RESPONSE 2011

MARCH/APRIL 2012

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VIRGINIA economy THE PRESSING ISSUES In both the 2010 and 2011 surveys, Virginia CPAs identified health care costs as the top overall and business issues facing the Commonwealth.

Figure 3 demonstrates survey respondents’ rankings of top overall issues in Virginia. Health care received 27 percent of the vote in 2010 and 29 percent in 2012. Government regulation, however, saw a major increase, with 16 percent citing it as the top overall issue facing Virginians in 2012 — an increase of 8 percent over the previous year.

The 3 percent who chose the “other” category specified items like housing, retirement, jobs and political climate.

Far and away, survey respondents identified health care costs as the major business issue, with 37 percent (see Figure 4, opposite). The lending environment clocked in a close second with 33 percent.

In a demonstration of certainty, 94 percent of survey takers responded to this question in 2011, compared with only 71 percent in 2010.

VIRGINIA AGAINST THE REST Overall, Virginia CPAs feel that the Commonwealth’s business climate is excellent or good relative to neighboring states (Maryland, West Virginia, North Carolina, etc.). In another demonstration of increased certainty, a higher percentage of respondents chose to respond to this question for 2012 than for 2011 — 96 percent versus 77 percent, respectively.

Figure 5 shows that more respondents feel Virginia’s business climate is excellent

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FIGURE 2: VSCPA MEMBER OUTLOOK FOR VIRGINIA FOR THE SUBSEQUENT YEAR 35% 30% 25% 20% 15% 10% 5% 0%

VERY SOMEWHAT PESSIMISTIC PESSIMISTIC

NEUTRAL

SOMEWHAT OPTIMISTIC

VERY OPTIMISTIC

NO RESPONSE

2010

2011

FIGURE 3: TOP OVERALL ISSUES IN VIRGINIA FOR VSCPA MEMBERS 30% 25% 20% 15% 10% 5% 0% EDUCATION

GOVERNMENT REGULATION

HEALTHCARE INFRASTRUCTURE FINANCIAL COST LITERACY

OTHER

2010

NO RESPONSE

2011

VIRGINIA economy compared to the previous year (a jump from 9 percent to 20 percent). The “good” rating also saw an increase, from 52 to 61 percent. The results are very similar for 2011 and 2012 for the respondents’ “fair” and “poor” ratings.

FIGURE 4: TOP BUSINESS ISSUES IN VIRGINIA FOR VSCPA MEMBERS 40% 35%

Why did Virginia CPAs feel positively about Virginia’s outlook against neighboring states? None of those states are on the list of the 27 states that legally oppose health care. This fact, coupled with the respondents’ consistent identification of health care costs as the top overall and business issue in Virginia, leads us to speculate that respondents may find solace in Virginia’s opposition to the mandatory health care law.

30% 25% 20% 15% 10% 5% 0% LABOR UNIONS

MINIMUM WAGE INCREASE

HEALTHCARE LENDING SLOW COST ENVIRONMENT OR NO COLLECTIONS

TAX CLIMATE

COST OF NO RESPONSE WORKMEN'S COMPENSATION

2010

2011

Respondents may feel more optimistic about the economic outlook for Virginia because they predict they will be exempt from the existing mandatory health care law. n

FIGURE 5: VSCPA MEMBER OUTLOOK ON VIRGINIA BUSINESS CLIMATE RELATIVE TO NEIGHBORING STATES DANIEL D. SELBY, CPA, PH.D., is the corresponding author and an assistant professor in the Robins School of Business at the University of Richmond. Contact him at dselby@richmond.edu.

80% 70% 60% 50% 40% 30% 20%

W. DARRELL WALDEN, PH.D., is an associate professor in the Robins School of Business at the University of Richmond.

10% 0%

EXCELLENT

GOOD

FAIR

POOR

NO RESPONSE 2010

2011

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ACCOUNTING

Just When You ‘Lease’ Expect It Proposed new accounting rules will affect nearly all companies

BY TOM VISOTSKY, CPA, AND JIM CARTER, CPA

The Financial Accounting Standards Board (FASB), in conjunction with the International Accounting Standards Board (IASB), continues to work on its proposal for a new standard for the accounting for leases, which could have a major effect on financial statements, financial ratios and the way companies choose to lease assets.

The proposed treatment affects leases of property, plant and equipment, but excludes leases of intangible assets, biological assets and those to explore for or use natural resources (i.e., minerals, oil and gas, etc.). FASB and IASB (collectively the Boards) released their current thinking in the fourth quarter of 2011 and agreed unanimously to re-expose their proposals for a revised

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ACCOUNTING

lease standard, which is expected to be issued in the first half of 2012.

Demonstrating the wide-ranging impact of the proposed new rules, the Boards received more than 750 comment letters in response to their initial exposure draft from respondents of all types.

LESSEE ACCOUNTING MODEL Historically, companies have accounted for leases as either operating leases or capital leases. While both lease types involved a company entering into an obligation for future payments related to the use of an asset, the operating lease model did not reflect that obligation on the balance sheet while the capital lease model did. As a result of this distinction, and the various bright-line tests in the literature differentiating between the two, agreements could be structured to produce very different accounting treatment for similar transactions.

The proposed new rules try to remove these differences while increasing transparency and comparability between transactions. As a result, once the new rules are enacted, all leases would be capitalized and the distinction between “capital” and “operating” leases would cease to exist. The only exception that allows for the adoption of treatment

Once new lease accounting rules are adopted, companies following GAAP will need to record trillions of dollars of existing leases on their balance sheets. similar to existing operating leases (record payments as rent expense), will be for short-term leases of “12 months or less.” Otherwise, all companies that are lessees will be required to book the present value of all future lease payments as a liability on their balance sheets, with a corresponding Rightof-Use (ROU) asset to comply with U.S. Generally Accepted Accounting Principles (GAAP). The liability will include all payments covered by the non-cancellable period of a lease agreement, plus any renewal options where there is a “significant economic incentive” to extend or not terminate. Both the ROU asset and the corresponding liability to make lease payments will be measured at the Present Value (PV) of the lease payments, using the rate charged by the lessor, if available, or the lessee’s incremental borrowing rate.

Currently, most companies reporting under GAAP detail future lease liabilities in the footnotes to the financial statements, rather than on their balance sheets. Once this new

standard is adopted, it is estimated that companies following GAAP will need to record trillions of dollars of existing leases on their balance sheets.

This will have significant implications for the companies and investors. The magnitude of the increase will be directly correlated to the volume of lease payments that a company is required to make. Therefore, companies such as retailers, restaurant chains and banks that have many leased locations will be significantly affected. For many of those companies, interest-bearing debt (including lease obligations) will increase by 100 percent or more, with total assets reflecting smaller percentage increases.

BIG CHANGES TO KEY OPERATING METRICS & DEBT COVENANT RATIOS THE GOOD NEWS Earnings Before Interest Taxes Depreciation & Amortization (EBITDA) has become short form for lenders 

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ACCOUNTING

Retailers, restaurant chains and banks — watch out. These companies, which have many leased locations, will be significantly affected by new lease accounting rules. Interest-bearing debt (including lease obligations) could increase by 100 percent or more. to evaluate the cash flow and borrowing capacity for most companies. EBITDA definitions generally do not add back operating lease rent expense. However, with the capitalization of all leases, rent expense will be replaced by depreciation, amortization and interest, which are normally added back in deriving EBITDA. This change is expected to increase EBITDA for most companies, with consumer companies expected to show increases of more than 20 percent.

in EBITDA and debt. However, debt will generally increase at a faster rate than EBITDA, resulting in larger increases in companies’ Debt to EBITDA ratios.

Larger ratios will imply that companies have proportionally less cash flow to cover their debt obligations, and in many cases, these ratios could double. Unless lenders are open to excluding the new lease obligations from debt balances, companies could see a decrease in their borrowing capacities.

Operating income is a key metric for shareholders of many public companies.

Since some of the former rent expense will now be considered as interest expense, which is excluded from the calculation of operating income, many companies will likely see an increase in operating income. Retailers and restaurants are expected to show increases of greater than 10 percent.

Since the start of the latest financial crisis in 2007, underwriters have taken a materially more conservative view on the borrowing capacity for most companies.

In addition to compressing overall senior debt multiples, lenders may take advantage of the situation by using the more conservative and restrictive GAAP definitions for debt covenants going forward. Most existing loans today use the old definitions of total debt and EBITDA (excluding rent expense), and those will likely remain in place until the loan matures. However, if the company is under any kind of stress, lenders may try to use this change to put more pressure on borrowers to renegotiate terms and conditions. Going forward, this change may result in tighter covenants and lower credit availability.

THE NOT-SO-GOOD NEWS The Debt to EBITDA ratio (also known as Debt to Cash Flow ratio) is a common metric that lenders use in assessing the creditworthiness of borrowers.

This metric tells lenders how many years of cash flow will be needed to repay the debt principal. The new lease accounting will result in both increases

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LESSOR ACCOUNTING MODEL While much of the focus on the new rules is on lessees, lessor accounting will also change to an approach based on the “receivable and residual” model. Under this methodology, companies will recognize the lease receivable for the right to receive (RTR) lease payments, “at the present value of the lease payments, discounted using the rate the lessor charges the lessee.”

An allocation will be made between the carrying value of the underlying asset being leased related to the ROU asset and the residual value. The residual asset will be composed of “two amounts: (a) the gross residual asset, measured at the present value. ... And (b) the deferred profit, measured as the difference between the gross residual asset and the allocation of the carrying amount of the underlying asset.” The gross residual asset will be accredited to the estimated residual value, but the lessor would not recognize any of the deferred profit into profit or loss until the residual asset was sold or re-leased.

LEASE TERM Companies will be recording ROU assets and related liabilities that reflect the entire lease term, which makes the terms and renewal options critical. The term is defined as the “non-cancellable period” of the lease, “plus any options to extend or terminate the lease when there is a significant economic incentive for an entity to exercise an option to extend the lease, or for an entity not to exercise an option to terminate the lease.” The longer the initial term, and the more likely the terms and circumstances would lead to a renewal, the larger the ROU asset and related liability

ACCOUNTING

that will need to be recorded on the balance sheet.

SUMMARY OF TENTATIVE DECISIONS The Boards continue to meet periodically and released a summary of tentative decisions reached to date in the fourth quarter of 2011. The highlights summarized below reflect the most recent decisions of the Boards, but could change before the new exposure draft is issued.

• Amounts expected to be payable under Residual Value Guarantees (RVGs).

Lessee disclosures:

• The cost to exercise a purchase option for which a significant economic incentive to exercise exists.

• Term option penalties that apply if the lessee does not renew, if the renewal period had not been included in the lease term.

• The end-of-lease purchase option, if the lessee has significant economic incentive to exercise the purchase option.

LEASE AMOUNTS The lessee’s liability and the lessor’s receivable should include: • Lease payments that are, in substance, fixed lease payments but are structured as variable lease payments (i.e., a lease with a fixed rental increase of 2 percent per annum would be included in full).

FINANCIAL STATEMENT PRESENTATION & DISCLOSURE No new significant accounting rule would be without a number of disclosure requirements, and this proposal has its fair share, including:

CPAs Take Note.

• A reconciliation of the opening and closing balance of the ROU assets, disaggregated by class of underlying asset.

• A reconciliation of the opening and closing balance of the liability to make lease payments.

• A maturity analysis of the undiscounted cash flows that are included in the liability to make lease payments (in each of the first five years and a total of the remainder thereafter).

• All expenses relating to leases recognized in the reporting period, in a tabular format, disaggregated into a) amortization expense, b) interest expense, c) expenses related to variable lease payments, and d) expenses recorded as shortterm leases. 

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ACCOUNTING • Principal and interest paid on the liability to make lease payments (note that interest expense and interest paid relating to leases must be presented or disclosed separately).

The lessor should disclose: • A table of all lease-related income items, recognized in the reporting period, disaggregated into a) profit, b) interest income on the lease receivable, c) interest income on the residual asset, d) variable lease income, and e) short-term lease income.

• Information about the basis and terms on which variable lease payments are determined.

• Information about the existence and terms of options, including for renewal and termination.

• A qualitative description of purchase options in leasing arrangements.

• A reconciliation of the opening and

closing balance of the RTR lease payments and residual assets.

• A maturity analysis of the undiscounted cash flows that are included in the RTR lease payments, in each of the first five years and a total of the remainder thereafter.

pronouncements from the definition of debt in such debt agreements. Also, upon entering into and negotiating new leases, companies will also need to consider how lease renewal options and contingent rents will impact the magnitude of the liability they will need to record under the new rules. n

CONCLUSION Virtually all leases are going to be required to be capitalized on the balance sheet. Companies may want to review debt covenants to determine how terms such as debt, EBITDA and cash flow are defined. Based on those definitions, it is advisable to consider the effect of new lease accounting on the debt covenants.

Pro forma calculations of the effect of capitalization of leases on assets, debt and EBITDA may be useful in this process.

To the extent debt terms are negotiated in the future, companies may want to be proactive to carve out the effect of capitalized leases or new accounting

TOM VISOTSKY, CPA, is a VSCPA past president and is currently an independent consultant in Richmond. He can be reached at tvisotsky@gmail.com.

JIM CARTER, CPA, is a partner with BDO USA, LLP, in Richmond, and heads up the assurance practice for the firm in Virginia. He can be reached at jcarter@bdo.com.

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ETHICS

Ethics Beyond Public Accounting CPAs working in industry also have ethical obligations

BY CLARE LEVISON, CPA

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MARCH/APRIL 2012

ETHICS

You know what makes a CPA a CPA: Someone who has passed the Uniform CPA Examination and received state certification to practice accounting. This includes passing an ethics exam, because CPAs also have an obligation, both as human beings and as professionals, to act in an ethical manner. In fact, the Virginia Board of Accountancy requires all state-licensed CPAs to take an annual ethics CPE course.

Employers, as well as internal and external customers, expect CPAs to be technically competent, caretakers of confidential information and providers of accurate data. These expectations provide a good foundation for CPAs working in industry to refer to when ethical situations in their particular work environments arise.

CPAs working in industry need to be just as vigilant about ethics as those working in public practice.

Webster’s dictionary defines ethics as a system of principles governing morality and acceptable conduct. “Honest,” “fair” and “law-abiding” may be a few words that come to mind when you think of someone who acts ethically. “Deceitful,” “unscrupulous” and “greedy” could define unethical actions.

The trouble with ethics is that blackand-white rules are sometimes hard to establish for difficult ethical situations.

Everyone knows that you shouldn’t steal your employer’s inventory, visit pornographic websites on your employer’s computer system or create fraudulent expense reports. When Bernie Madoff, the Ponzi scheme king,

scammed thousands of investors out of billions of dollars, it was clear that his actions were unethical and he ended up with a 150-year prison sentence. But many situations are not that black and white.

In addition, unethical behavior can often be easier to identify than ethical behavior. Sherron Watkins, the former vice president of corporate development at Enron, became a famous whistleblower when she exposed the irregular accounting activities of the company. She was one of three whistleblowers selected as People of the Year in 2002 by Time magazine. But Dan Ackman, writer for Forbes magazine and The Wall Street Journal, argued that she was not a true whistleblower because she only wrote an internal email to Enron’s CEO and didn’t alert anyone outside of the company. Because of this, some feel Watkins didn’t do enough. Others think her courage in reporting her concerns to the CEO is admirable.

This is just another example of the gray area that exists when it comes to ethics.

There is no doubt that it’s very difficult for us to put ourselves in someone 

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ETHICS

CPAs working in industry may be focused on the ethics of protecting company assets, accurately representing the company and complying with industry-specific regulations. else’s shoes and to know for sure what we would do if placed in the same situation.

Hindsight is always 20/20, but we must be as prepared as we can to know how to do the right thing when the time comes. We must also be aware that when it comes to ethics, perception often becomes reality.

Are there ethical considerations that those accountants working in industry need to focus on more than those working in public practice? Often CPAs working in industry are performing managerial and cost accounting functions. Cost accounting and financial analysis can play a crucial role in the success of a company. Managerial accountants provide much-needed information and often take a very active role in developing plans, budgets and strategies. Managerial accounting focuses on providing information to internal managers and executives. These people, therefore, expect that they are also the accountant’s clients. Do industry accountants have different needs than those working in public practice whose ultimate client is always the public?

The Enron case is a perfect example of what can happen when CPAs in both sectors act unethically, and clearly the ramifications can be disastrous.

Ultimately, it’s difficult to create a one-

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size-fits-all set of ethics for CPAs or for any other group. Ethical standards need to be broad enough to be usable by all members of a profession, yet specific enough to be meaningful. While CPAs in public practice may be focused on ethical issues involving things such as engagement fee structures, supervision of audits and tax services, CPAs in industry may be more focused on things like protecting company assets, accurately representing the company and complying with industry-specific regulations. These CPAs have to act ethically in order to protect their own reputations, as well as the reputations of their employers — who may often be a publicly traded company.

Also, CPAs working in industry may face different ethical dilemmas than those working in public accounting.

Publicly traded corporations face great pressure to meet financial expectations.

If actual results are less than desired, CPAs may find themselves being asked to record transactions differently to create more favorable financials. Fraudulently recording a transaction is clearly unethical, but what if the methodology used could be open for debate — what some may call “creative accounting?”

There may be many shades of gray.

CPAs in industry have an obligation

MARCH/APRIL 2012

to approach these situations with the appropriate degree of professional skepticism and act with objectivity and integrity. It can be very helpful to try to look the situation through an outsider’s eyes. Ask yourself if a third party would think you were taking the most appropriate actions. In addition, you should maintain thorough documentation of your transactions, particularly those that could be later questioned.

RULES ARE HERE TO HELP The American Institute of CPAs (AICPA) Ethics Rules and Interpretations in Section 102 of the AICPA Professional Standards, Code of Professional Conduct, provide specific guidance regarding questionable situations. The following are particularly relevant for CPAs in industry: .01–RULE 102 — INTEGRITY AND OBJECTIVITY: In the performance of any professional service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest and shall not knowingly misrepresent facts or subordinate his or her judgment to others. .05–102-4 — SUBORDINATION OF JUDGMENT BY A MEMBER: Rule 102 [ET section 102.01] prohibits a member from knowingly misrepresenting facts or subordinating his or her judgment

ETHICS

when performing professional services.

Interpretation .05 also details the steps a CPA should take if they have a disagreement or dispute with their supervisor related to the preparation of financial statements or the recording of transactions to ensure that the situation does not constitute a subordination of judgment. In addition, the AICPA Professional Ethics Team maintains a hotline for members to make inquiries about the Code of Conduct or ask for advice when facing situations that challenge their professional ethics.

ON THE JOB Now that you know what the AICPA expects of you, here are a few things your industry employer is going to expect of you as well:

PROPERLY USE COMPUTER SYSTEMS

PROVIDE ACCURATE INFORMATION

Companies are going to expect that you are using their computer systems for business purposes; however, they may allow limited personal use as long as it doesn’t interfere with job performance.

You should never download or transmit data that is offensive, sexual or discriminatory, and you can bet that your company will be monitoring your activity.

All financial statements and financial transactions, including time reporting, expense reporting and invoicing should be accurate and complete. Know and follow all appropriate accounting policies.

In addition, you should avoid postings and pictures on your own computer applications such as websites, blogs or social media sites that might call your professionalism or the professionalism of your company into question. Also, refrain from posting anything that could be considered a part of your company’s confidential information.

KEEP CONFIDENTIAL PROTECT COMPANY ASSETS This includes tangible assets such as buildings, equipment and inventory, as well as intangible assets like proprietary information, intellectual property and business processes. You should be mindful that these assets are being protected from theft, fraud and misuse.

They should not be used for personal gain and should be used for legitimate business purposes only.

Keep information about other employees, such as their financial, medical and salary information, confidential. In addition, keep information about suppliers and customers confidential.

It’s also important that you not disclose your company’s proposal and pricing information or financial data such as business forecasts, plans and strategies.

You shouldn’t discuss this information with people outside the company, and only authorized individuals should speak on behalf of the company.

You should also be sure to represent your company’s products and services truthfully, including representations regarding quality and quantity. Avoid making any false claims. Maligning competitors, or former customers or suppliers, is not appropriate. 

CONSULT THE CHART >>

If you’ve got an ethical issue on your hands and you’ve reviewed the rules and tips suggested in this article, it may be time to pull out a handy resource from the American Institute of CPAs, “Ethics Decision Tree for CPAs in Business and Industry.”

As this resource so eloquently puts it, “ethical conduct is never out of vogue in the CPA profession, and this professional code is what sets us apart from our noncertified colleagues.

There is no compromise.”

Access the PDF of the decision tree at http://tinyurl.com/EthicsDecisionTree.

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ETHICS

COMPLY WITH ALL APPLICABLE REGULATIONS Know, understand and follow all laws and regulations that apply to your particular industry. If there is something you’re unsure of, ask for help. Be sure to avoid actual violations and, just as importantly, the perception that a violation has taken place.

AVOID CONFLICTS OF INTEREST Be sure that it would not appear to an outsider that your judgment could be biased because of personal relationships with customers, suppliers or competitors.

You shouldn’t hold a substantial investment in a customer, supplier or competitor. The key word here is “substantial.” For example, owning a hundred shares of Walmart stock, even if Walmart was your customer, likely wouldn’t qualify as substantial.

In addition, you shouldn’t initiate business dealings because they will benefit a family member or friend. Also, if you’re working in industry, you should avoid being involved in the hiring or supervision of family members.

COMPANY ETHICS POLICIES

ethics awareness and prevent ethical mishaps and typically require training that includes a discussion of corporate policy along with case studies.

But sometimes an employer’s ethics policy can seem just as much like a document designed for the purposes of limiting legal liability as it does a code of conduct that can be easily applied during any ethical dilemma. Even though you might agree with all of the principles and strive to uphold them, in reality, being ethical in the strictest sense in every situation may be a goal that is not easy to completely attain. And while CPAs may find it a no-brainer to follow policies such as “refrain from forging expense reports,” “don’t take home office equipment” and “don’t engage in insider trading,” one of the greatest difficulties may lie in reporting the unethical behavior of others.

Many people find it more difficult to get involved when someone else is acting unethically than they do to act ethically themselves. This can be referred to as being guilty by omission — knowing there is wrongdoing taking place and not doing something about it. Many companies have an ethics hotline you can use to report unethical behavior. If you see something unethical taking place, you have a responsibility to act. If you’re

Many companies have a formal ethics policy that governs employee conduct.

Most have a broad corporate ethics statement, as well as specific ethics codes that provide guidance on ethical issues that commonly occur in the workplace.

Companies use these codes to create

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MARCH/APRIL 2012

a supervisor, you have an even greater responsibility. You should also make sure you’re modeling ethical behavior for your employees and responding immediately to any concerns they might have.

And how does intent come into play? To quote an old saying, “The road to hell is paved with good intentions.” While this may be the case — and although good intentions can’t be used as a substitute for actual knowledge of appropriate rules, regulations and policies — when it comes to ethics, acting with good intentions may be one way to measure whether or not you’re acting ethically. While it may be difficult to always follow the exact letter of a policy, it shouldn’t be difficult to apply good intent and a good dose of common sense in order to maneuver your way through ethical dilemmas.

When dealing with one of these dilemmas you can often ask yourself this simple question in order to help you decide what to do: Would I feel uncomfortable if other people knew that I was involved in this situation? Feeling the need to hide something is often an indicator that unethical behavior is taking place. But remember, even if you had no fear of being caught or exposed, being a truly ethical CPA means doing the right thing even when no one is watching. n

CLARE LEVISON, CPA, is an analyst at Alliant Techsystems in Radford. She is a member of the VSCPA Board of Directors and VSCPA Editorial Task Force. Contact her at clare.levison@atk.com.

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PRACTICE development

The Piascik Outsourced team includes Elizabeth A. Barry, tax specialist (back); VSCPA member Steven M. Piascik, CPA, MT, founder and president (middle); and Nadine Chambers, staff accountant (front).

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JANUARY/FEBRUARY 2012

PRACTICE development

Outsourcing Is In How one Virginia firm offers clients outsourced accounting services

BY WINDY CAMPBELL

The current U.S. economic and market conditions are placing new challenges on corporate America. Now more than ever, companies are seeking ways to improve their financial foothold, at a time when layoffs and hiring freezes have seemed commonplace in recent years.

Piascik & Associates, PC, a Glen Allenbased CPA firm providing financial services to a broad range of clients throughout the United States and abroad, is offering new solutions to its client companies that have downsized their in-house accounting staff. By offering clients outsourced accounting services through its Piascik Outsourced program, the firm is helping to reduce clients’ costs by around 30 percent, while contributing to clients’ business growth.

CLIENT SERVICE FROM DAY ONE “Since this firm was founded 10 years ago, Piascik & Associates has consistently

put the needs of its clients first,” says Steven M. Piascik, CPA, MT, the firm’s founder and president. “Seeing the challenges that many companies are facing in today’s market conditions, Piascik Outsourced is a way we can help our clients to reduce their own risk. Our experience in complex tax solutions has enabled us to take on the responsibility of hiring accounting staff who can service our clients’ tax and accounting needs — more efficiently and more affordably.”

Piascik — who left the security of a Big Four accounting firm in 2001 with no clients and no employees — set out to build a firm whose foundation was based on relationships. Today, Piascik & Associates is a relationship-driven CPA firm providing strategic tax solutions 

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PRACTICE development

to more than 500 clients, employing two partners and 13 personnel. The firm has built its successful 10-year-old practice through its commitment to providing high-value customer service. Building long-term client relationships has been the firm’s primary focus since Day One. Piascik Outsourced is a direct result of this commitment to client service, which is extended to high-level tax planning across every service line: corporations and partnerships; professional athletes and other high-wealth individuals; and international companies.

WHAT CLIENTS WANTED In 2007, Piascik saw a need arising among some of his clients for outsourced accounting services. Some of his international clients were facing myriad issues in relocating to the United States and were already benefiting from the firm’s Piascik Passport program, which offers both business and cultural assistance to companies establishing U.S. entities in Virginia. Followed by a global economic crisis and corporate downsizing, Piascik found solutions to these companies’ economic and financial roadblocks by establishing Piascik Outsourced.

Within the accounting industry, an in-house, full-time senior-level finance executive can cost a company anywhere from $100,000 to $150,000 — and that’s

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often before benefits and training costs.

Smaller companies may not be willing or able to take on these risks, thus reducing opportunities to expand their own business. Through Piascik Outsourced, the firm assumes this risk of hiring, training and maintaining the talent — and does the same work on an outsourced basis for around $70,000 to $90,000 — or about a third less than what it would cost a company to hire in-house.

By providing clients with year-round, experienced accountants who understand the business and tax challenges their companies are facing, clients have access to critical decision-making and solutions to help them grow their business. It is a long-term, trusted partnership between the client and Piascik & Associates.

“Piascik Outsourced is a value-added service at a time when companies are looking for outside expertise rather than hiring for full-time, in-house positions,” says Piascik. “Our clients are benefiting from full-service expertise at a lower rate than hiring in-house. What’s more, they are receiving year-round involvement from a trusted and valued CPA firm — and not just at tax time — enabling them to make sound executive decisions thanks to a high level of expertise.”

FLAT-FEE POLICY Back in 2001 when he established his firm, Piascik implemented a flat-fee

MARCH/APRIL 2012

policy for his clients. From the outset, the firm has made a policy to not charge by the hour, but rather a flat fee that is determined prior to entering into the engagement with a client. This flatfee policy also extends to the Piascik Outsourced program.

“Our flat-fee policy is a tremendous value to our clients in that they know they can contact us with whatever financial issues they face and not receive a bill for it,” says Piascik. “We have found this to be vital

A MENU OF CHOICES >>

Piascik & Associates’ outsourcing program offers clients a full array of services, including: • Accounting • Bank financial statements • Depreciation • Sales invoicing • Debt collection • Bill pay • Loan reconciliation • Executive compensation and benefits • Executive concierge services — travel arrangements, company car lease arrangements, etc.

PRACTICE development

as we can assist our clients in growing their businesses in the most sound way.

Throughout the year, and not just at tax time, clients don’t even hesitate to pick up the phone and ask questions that they might not ask otherwise.”

This allows the firm to budget the time it will take to perform the agreed-on set of services. If the work takes more time than expected, Piascik doesn’t charge more; if the work comes in under budget, Piascik credits the client for next year’s budget.

“This open communication policy fosters an environment of sharing,” adds Piascik.

“When we are fully in the know as to what is going on in the lives of our clients, we are better able to serve them.”

A LONG-TERM RELATIONSHIP Global trends indicate that outsourcing is a direct result of the present financial climate and market. The U.S. Department of Labor estimates that outsourced jobs in the United States will peak to over three million by the year 2015. Cost reduction is a major reason for outsourcing, which can reduce costs by around 30 percent.

Another benefit from outsourcing is better service quality due to the fact that providers — in this case, Piascik & Associates — have proven track records in specialized services.

In addition, statistics show that more jobs are being created from service firms, such

as Piascik & Associates, that are providing outsourcing.

Since Piascik Outsourced was established, Piascik & Associates has hired four fulltime accountants to provide dedicated, outsourced accounting services to a number of international companies with U.S. locations and affiliates.

Elizabeth Barry, a tax specialist who has served three Piascik Outsourced clients since she was hired a year ago, says she sees value in managing the details of her clients’ businesses so they can focus on the “big picture”: growing their business. Barry was first hired to focus on individual domestic tax issues, but later she was given the opportunity to work with the Piascik Outsourced program, where she has been able to grow her own client base.

“I’m a recent college graduate and a candidate for the CPA Exam, and Piascik Outsourced has given me experience in various accounting practices from both a domestic and international standpoint, as well as on individual and corporate levels,” says Barry.

Nadine Chambers is a staff accountant at Piascik & Associates who has worked with roughly five of Piascik’s international clients over the past three years.

“I am fluent in German, and my language skills have proven invaluable to international firms that are establishing subsidiaries in Virginia,” says Chambers.

“It’s been great for me to help these clients as they are trying to enter the Virginia business market.”

Chambers began her career at Piascik & Associates six years ago in an administrative role. After three years, Piascik saw the value she could bring to their clients and promoted Chambers to service Piascik Outsourced and Piascik Passport clients.

“We value employee retention as a means of maintaining a high level of efficiency and expertise for our clients, as well as job security for our employees,” adds Piascik. “Whenever possible, we offer professional development and mentoring opportunities by our senior partners. In the end, experienced staff translates to trusted partners for our clients, which is critical to client retention.” n

WINDY CAMPBELL is founder of Campbell Communications in Richmond, an independent public relations practice serving private companies and nonprofits. Her areas of expertise include communications strategy, media relations, writing and product publicity. Visit her at http://windycampbellpr.wordpress.com or contact her at (804) 314-0205 or windycampbell@mindspring.com.

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MARCH/APRIL 2012

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BUSINESS valuation

A Valuation Round-up

BY BILL BARRETT, CPA/ABV, CFF

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MARCH/APRIL 2012

BUSINESS valuation

attempting to legislate requirements for state divorce courts to consider “the extent [to] which income for support was already capitalized and paid to the other spouse in the division of community property, in order to avoid double counting the income when the result would be inequitable.”

Business valuation experts and appraisers, get ready. Here’s a quick list of new rules and regulations from the past year, and a look at emerging issues in 2012.

VIRGINIA RULES OF EVIDENCE State Rules of Evidence will go into effect July 1, 2012. SB 94, sponsored by Sen. John S. Edwards, provides that the Rules of Evidence (available at http:// tinyurl.com/VARulesofEvidence) that have been prepared and adopted by the Supreme Court of Virginia and approved by the Virginia Code Commission will become law. The bill also repeals current evidentiary provisions in the Code of Virginia that are included in the Rules of Evidence. This bill is a recommendation of the Virginia Code Commission.

Virginia and Massachusetts are the only two states that have not adopted State Rules of Evidence.

Edwards stated that passage of the bill will enable courts to reach more uniform and consistent evidentiary rulings, since

attorneys and expert witnesses will be able to “look at the rule, now in one spot,” as opposed to researching case law.

Charles (Chuck) M. Allen, a complex litigation attorney with Goodman, Allen & Filetti PLLC, says that adoption would make the Rules standard-setting. “All experts should read Rule 2:702 (et sec), ‘Testimony by Experts, before preparing reports and testifying.”

OTHER STATES DIVORCE VALUATION AND THE DOUBLE DIP What happens when a professional practice is valued under an income or earnings approach for purposes of distribution — and the court also considers the professional’s income to determine support? California is

For Virginia courts, the standard of value is intrinsic value, where the business at the valuation date should be based upon past earnings, i.e., such value is only the value derived during the marriage and which is distributable to the respective spouses. It follows that future earnings capacity of the business belongs to the operating spouse (the spouse who will continue the business). Therefore, there would be no double dip.

The classic Virginia example of double dipping comes from Gamble v. Gamble, in which the trial court ordered the husband to convey to the wife his interest in the marital home, and then ordered the husband to pay spousal support to cover the wife᾿s mortgage payments on the home. The appeals court said the trial court erred in fashioning a spousal support award that effectively required the husband to satisfy the mortgage 

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BUSINESS valuation

obligations on the marital home he was required to convey to the wife.

FEDERAL ALTERNATIVE VALUATION DATE The Internal Revenue Service has just issued new proposed regulations on electing an alternate valuation date for an estate, withdrawing earlier regulations issued in 2008. According to a published notice in the Federal Register from Nov. 18, 2011, (available at http://tinyurl. com/6tt5p8e) “the proposed regulations will affect estates that file Form 706, United States Estate (and GenerationSkipping Transfer) Tax Return, and elect to use the alternate valuation method.”

The notice also announces a public hearing on the proposed regulations, with comments due by Feb. 16, 2012.

AMERICAN INSTITUTE OF CPAS (AICPA) SSARS 19 Valuation analysts and his/her firm using a subject company’s general ledger to prepare historical financial statements that will be presented as part of the business valuation report must comply with Statements on Standards for Accounting and Review Services (SSARSs). Analysts must include the performance and reporting requirements for a compilation engagement with respect to those financial statements, and are therefore subject to peer review requirements.

However, if the valuation analyst receives

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company financial statements either from an outside accounting firm or internally prepared by the subject company, and retypes them for side-by-side comparison in the valuation report, the valuation analyst is not required to compile those internally prepared company financial statements in accordance with SSARSs (See SSVS1, Appendix A, Assumption 2) — and is not therefore subject to peer review requirements.

ADVOCACY The AICPA’s Financial Reporting Executive Committee issued working drafts of the AICPA Accounting and Valuation Guides: Testing Goodwill for Impairment and Assets Acquired to Be Used in Research and Development Activities. These guides address many new accounting and valuation issues that have emerged over the years. Interested parties are encouraged to review the working draft at and submit their informal feedback by March 15, 2012; both guides are available at www.aicpa. org.

Also, the FVS Executive Committee responded to the Appraisal Standards Board᾽s proposed change to the communication and reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP). The proposed change would directly conflict with Rule 26 of the Federal Rules of Evidence and have a significant impact on appraisers who work in a litigation environment. Under Rule 26, valuation analysts do not need to keep copies of draft reports or disclose copies of draft reports to opposing

MARCH/APRIL 2012

litigants or opposing counsel. While AICPA members do not have to comply with USPAP, a significant percentage of AICPA members do comply with USPAP either voluntarily or as a requirement of their membership in some other professional organization.

THE FUTURE OF BUSINESS VALUATION Panelists at the most recent AICPA National Business Valuation Conference in Las Vegas reached consensus that one of the major trends heading into 2012 and the years to come is the “trifurcation” of the business valuation profession among three tracks: litigation, fair value for financial reporting and “traditional” practices (ESOP, estate and gift and other tax work, business transfers, civil and matrimonial divorce, etc.).

Appraisers will also increasingly specialize in particular industries, such as health care, oil and gas, telecommunications and other “niche” sectors. Keeping up with the advancing sophistication of valuation techniques and even general technology will also be a challenge. n

BILL BARRETT, CPA/ABV, CFF, owns his own practice, Barrett, PC, in Richmond.

He specializes in business valuation and litigation, and is a member of the VSCPA Editorial Task Force. Contact him at billbarrett@barrettpc.com.

REALIZE YO UR GROWT H P O TENTIAL ON THE VSCPA CAREER CE NT E R

VSCPA HOUSE AD SPACE An employment resource to keep you growing.

The VSCPA Career Center makes researching job opportunities faster, leaving you more time to plan your next career move. Simply set up a Job Agent to automatically receive updates when new jobs matching your criteria are posted. You can even specify a company name to be alerted when a preferred employer lists a new job. Plus, the VSCPA Career Center allows complete control of how your personal information is stored and shared. Climb into the driver’s seat with the VSCPA Career Center and take control of your career.

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5/11/2009 2:37:42 PM

VSCPA self-assessment Complete this 12-question test and submit to the VSCPA for 1 CPE credit. Exams will not be graded until after the submission deadline. A 75 percent or better pass rate is necessary to receive credit. After your exam is graded, you will receive either a certificate of completion via email for your records or an email notification that the 75 percent grade was not met.

SUBMISSION DEADLINE: April 30, 2012. Exams received after this date will not be graded and your money returned.

COST: $15 for VSCPA members / $30 for nonmembers.

Please note that this exam will not be live online until March 1, 2012.

SUBMISSION INSTRUCTIONS You may submit this selfassessment and make the exam payment online at www.vscpa.com/ March2012DisclosuresExam.

You may also circle your answer to each question and mail this paper exam to: CPE Team Virginia Society of CPAs 4309 Cox Road Glen Allen, VA 23060 Fax submissions are acceptable to (804) 273-1741.

Name _________________________ Address _______________________ _______________________________ Email Address ___________________ Date __________________________ Method of Payment

• Check (payable to the VSCPA) • Credit card Credit Card Number _______________________________

1. PROPOSED NEW RULES WOULD REQUIRE ALL LEASES TO BE CAPITALIZED, WITH THE ONLY EXCEPTION ALLOWED FOR SHORT TERM LEASES OF: a. 6 months or less b. 12 months or less c. 18 months or less d. 24 months or less 2. CURRENTLY, MOST COMPANIES REPORTING UNDER U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) DETAIL FUTURE LEASE LIABILITIES IN THEIR: a. Income statement b. Balance sheet c. Statement of cash flows d. Footnotes to the financial statements 3. UNDER PROPOSED NEW RULES, THE DEBT-TO-EBITDA RATIO FOR MANY COMPANIES COULD: a. Decrease by 25 percent b. Stay the same c. Increase by 50 percent d. Double 4. AS PROPOSED, THE LESSEE’S LIABILITY AND LESSOR’S RECEIVABLE SHOULD INCLUDE: a. Lease payments that are, in substance, fixed lease payments but are structured as variable lease payments b. The cost to exercise a purchase option for which a significant economic incentive exists c. Term option penalties that apply if the lessee does not renew, if the renewal period had not been included in the lease term d. All of the above 5. YOUR INDUSTRY EMPLOYER IS GOING TO EXPECT YOU TO: a. Protect company assets b. Properly use computer systems c. Provide accurate information d. All of the above 6. WHICH OF THE FOLLOWING IS NOT TRUE ABOUT INDUSTRY ETHICS? a. Only authorized individuals should speak on behalf of the company. b. If you’re unsure of an industry law or regulation, ask for help. c. It’s okay to hold a substantial investment in a customer, supplier or competitor. d. You should protect company assets from theft, fraud and misuse.

Expiration Date ________________ Signature _____________________ Date

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MARCH/APRIL 2012

7. MANY COMPANIES HAVE: a. A formal ethics policy that governs employee conduct. b. A broad corporate ethics statement. c. Specific ethics codes that provide guidance on common ethical issues. d. All of the above.

8. THE AMERICAN INSTITUTE OF CPAS’ ETHICS RULES AND INTERPRETATIONS IN SECTION 102 REQUIRE: a. Subordination of judgment b. Integrity and objectivity c. Conflicts of interest d. Misrepresentation of facts 9. OUTSOURCED ACCOUNTING SERVICES CAN COST: a. One-third less than hiring in-house b. One-fourth less than hiring in-house c. About the same as hiring in-house d. Outsourcing doesn’t save them at all.

10. ACCOUNTING FIRMS THAT OFFER OUTSOURCED SERVICES TO THEIR CLIENTS: a. Assume 100 percent of the risk of hiring, training and maintaining staff b. Provide a high-level of expertise which can contribute to their clients’ business growth c. Maintain better employee retention with opportunities for professional growth within the firm d. All of the above 11. COMPANIES THAT USE OUTSOURCED ACCOUNTING SERVICES: a. Benefit from paying for an accountant only at tax time, and not year-round b. Pay their accounting firm 15 percent additional of salary, to cover health insurance and other employee benefits c. Receive year-round, full-service expertise at a lower rate than hiring in-house d. Don’t need to look at corporate spreadsheets, knowing that their financial health is in the hands of an experienced, trusted CPA. 12. BY 2015, OUTSOURCED JOBS IN THE UNITED STATES WILL PEAK TO: a. 900,000 b. 1.5 million c. 3 million d. 6 million

We Remember On April 16, 2007, the lives of three Virginia accounting families and countless others changed forever.

To honor and remember the lives of those we lost, the VSCPA Educational Foundation established the Austin M. Cloyd, Matthew G. Gwaltney and Maxine S. Turner Doctoral Scholarship Fund to provide needed financial support to Virginia Tech’s accounting doctoral candidates.

Your tax-deductible gift honors Austin, Matthew and Maxine while supporting our profession for generations to come. Please give today.

V S C PA

Educational Foundation

Remember those we lost at www.vscpa.com/RememberVT DISCLOSURES

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JANUARY/FEBRUARY 2012

37

VSCPA news

VSCPA Annual Meeting and 2012–2013 Board of Directors

April is Financial Literacy Month The VSCPA and Virginians across the Commonwealth will focus on financial fitness throughout the month of April during Governorproclaimed Virginia Financial Literacy Month.

CHAIR

The VSCPA offers plenty of ways to help Virginians increase their financial literacy, including its award-winning Financial Fitness initiative.

CHAIR-ELECT

John Montoro, CPA

James M. Shepherd, CPA

Here are some ways the VSCPA will encourage wise money management during Financial Literacy Month:

VICE CHAIRS

FINANCIAL FITNESS CALENDAR: The VSCPA has released the 2012

Roy D. Peters, CPA

Financial Fitness Calendar, which offers financial tips and profiles of VSCPA members, with supplemental material online at FinancialFitness.org/ Calendar.

“ASK A CPA” EMAIL PROGRAM: Virginia CPAs will answer questions

from the public via emails submitted at FinancialFitness.org. Free advice is available from experts on financial planning, tax planning, military taxes and disaster recovery. Questions will be answered by volunteer VSCPA members within three business days. Members from across the state are encouraged to participate.

FINANCIAL FITNESS WORKSHOP: The VSCPA will hold a free financial

fitness workshop for the public. The date and topic of the workshop were not confirmed when this issue went to press. Check www.FinancialFitness.org for updates.

To volunteer for the “Ask a CPA” Email Program, contact VSCPA Community Relations Coordinator Tracey Zink at tzink@vscpa.com or (804) 612-9427. n

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The VSCPA Annual Meeting will be held Friday, May 11, 2012, at 11:30 a.m. at the Richmond Hilton Hotel & Spa in Short Pump. During the meeting, the Nominations Committee will present the following nominated members for election as 2012–2013 officers and directors:

DISCLOSURES

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MARCH/APRIL 2012

Carl W. Hoecker, CPA James L. Phillips, CPA Colette Y. Wilson, CPA AT-LARGE DIRECTORS

Rebecca Bartholomae, CPA Susan Q. Ferguson, CPA Marc E. Filer, CPA Staci A. Henshaw, CPA Clare K. Levison, CPA Andrew T. Martin, CPA A. Marshall Northington, CPA Gary E. Romer, CPA Lawrence W. Schwartz, CPA Jamie C. Wohlert, CPA

Congratulations to the following members!

NEW HIRES >>

APPOINTMENTS & AWARDS >>

Dixon Hughes Goodman LLP has hired LINDSEY ANDERSON, CPA, as a senior associate in the Norfolk office and LEAH MAZAR, CPA, as an audit supervisor in the Newport News office.

DAN DELP, CPA, of Wytheville firm

CORT KIRKLEY, CPA, has joined

Rockbridge Area Community Services as chief financial officer and director of administration.

JOSHUA SHELL has

joined Johnson, Equi & Co., PLC, Certified Public Accountants, as a staff accountant.

PROMOTIONS >> DAVID CHASE, CPA, has been

promoted to shareholder at Wall, Einhorn & Chernitzer, PC, in Norfolk.

Charlottesville firm Hantzmon Wiebel has promoted CARRIE DAVIS, CPA, to supervisor and MATT DEAN, CPA, to supervising senior.

Fairfax firms BISH & HAFFEY, PC, and THE BURDETTE SMITH GROUP, PC, have merged under the name BURDETTE SMITH & BISH LLC. Richmond firm KEITER, STEPHENS, HURST, GARY & SHREAVES has changed its name to KEITER.

Jones, Adams & Delp, CPAs, was elected to the Board of Directors of the Wytheville-Wythe-Bland Chamber of Commerce.

Roanoke firm R. WM. JOHNSON, JR., & CO., PLC, has changed its name to JOHNSON,

MARTIN EINHORN,

WILL HARLAND JR., CPA, has joined

Richmond firm William B. May, Jr., CPA, PC.

FIRM NEWS >>

CPA, of Norfolk firm

Wall, Einhorn & Chernitzer, PC, has been chosen as the 2011 Hampton Roads Corporate Volunteer Leadership Honoree.

CERTIFIED PUBLIC ACCOUNTANTS. CHARLES EQUI, JR., CPA, is now managing partner.

WALL, EINHORN & CHERNITZER, PC, in Norfolk, has joined CPAmerica

HAROLD MARTIN JR., CPA, of

Richmond firm Keiter, has been appointed chair of the steering committee for the American Institute of CPAs (AICPA) 2011 National Business Valuation Conference.

>>

EQUI & CO., PLC,

International, a national association of independent CPA firms that provides shared best practices, networking opportunities and expert resources to member firms. n

STEVE DICKINSON RETIRES On Dec. 31, 2011, STEPHEN Y. DICKINSON, CPA, retired as vice president and chief accounting officer of Media General, after 28 years with the company. He has been a VSCPA member for 40 years and has served in various volunteer capacities at the Society, including a stint on the Board of Directors in the 1980s.

JOSHUA C. KERR-HOBERT, CPA,

was named principal at Yount, Hyde & Barbour, PC, in Middleburg.

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MARCH/APRIL 2012

39

VSCPA news

ANNE BEATTIE

TALLEY KING

CATHERINE MEEHAN

JEN SYER

VALERIE VAUGHN

EMILY WALKER

VSCPA STAFF NEWS >> Two VSCPA employees have been promoted: JEN SYER, formerly graphic designer, is now technology director. And VALERIE VAUGHN, formerly conference planner, is now conference manager.

Government Affairs Director EMILY WALKER celebrates her ninth anniversary with the VSCPA on April 1.

Education Specialist ANNE BEATTIE marks her sixth anniversary with the Society on April 3.

Two employees mark their first anniversary with the VSCPA: Marketing Specialist TALLEY KING on March 9 and Accounting Assistant CATHERINE MEEHAN on March 14.

Event Planner LAUREN MOORE and Project Planner TARA PENNINGTON have left the VSCPA. We wish them luck. n

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MARCH/APRIL 2012

VOLUNTEER FOR VSCPA TAX ADVICE PROGRAMS >>

Richmond-area tax experts: The VSCPA needs you! The Society is seeking last-minute volunteers for its NBC 12 Tax Call-In Program on Wednesday, March 7, and Wednesday, March 14.

CPA volunteers answer phone calls and online questions from viewers and give free tax advice during NBC 12’s evening news broadcast.

The VSCPA is also seeking tax experts in Roanoke to staff its radio call-in tax advice program on WVTF-AM on March 27.

Contact VSCPA Public Relations Specialist Hillary Crowder at hcrowder@vscpa.com to participate in either event.

VSCPA news

VSCPA 100% Member Firms VSCPA 100% Member Firms show their commitment to their employees, the profession and the association. A 100% Member Firm is simply a Virginia CPA firm or company that has all of its CPAs enrolled as members in the VSCPA. Interested in being listed as a 100% Member Firm? Contact VSCPA Member Relations Director Brenda Fogg at bfogg@vscpa.com or (804) 612-9409.

THANK YOU FOR YOUR COMMITMENT, 100% MEMBER FIRMS! Anderson & Reed, LLP Anderson, White & Company, PC, CPAs Barnes, Brock, Cornwell & Heilman PLC Beale & Curran, PC Beck & Company, CPAs, PC Bennett, Atkinson & Associates, PC Biegler & Associates, PC BlackHeath Company, PLC Bowling, Franklin, & Co., LLP Boyce, Spady & Moore PLC Britt & Peak, PC, CPAs Burdette Smith & Bish LLC Burgess & Co., PC, CPAs Cameron, Moberly & Hamrick, PC Charles S. Pearson, Jr., CPA Charles W. Snader, P. C. Cherie A. James, CPA, PLC Chesapeake Accounting Group PC Cole & Associates CPAs, LLC Coley, Eubank & Company, PC Corbin & Company, PC Craver, Green and Company, P.L.C. Creedle, Jones and Alga, PC CST Group, CPAs, PC Dalal & Company David L Zimmer CPA PC Diane Y Smith CPA PC Didawick & Company, PC Dominion Benefits Donald W. Coleman, CPA, Inc., PC Douglas L. Thompson, CPA PLLC Duvall Wheeler, LLP Eggleston & Eggleston, PC Elmore, Hupp & Company, PLC Everett O. Winn, CPA, PLC Frank Edward Sheffer & Company Fritz & Company, PC Garland & Garland, CPAs, PC Garris and Company, PC GL Roberson CPA, PLLC Gregg & Bailey, PC Gregory & Associates, PLLC Gurman & Company, PLLC

Hantzmon Wiebel Harris, Harvey, Neal & Co., LLP Henley & Henley, PC Henry R. Hortenstine III, CPA, PC Hogan & Reed, PC, CPAs Holland & Brown LLP Homes, Lowry, Horn & Johnson, Ltd. Honeycutt & McGuire CPAs Hunt & Calderone, PC, CPAs Jay E. Reiner CPA PLLC John M. Watkins, CPA Jones, Adams & Delp, PC Jones, Madden & Council, PLC Jones & McIntyre, PLLC Keiter Kositzka, Wicks and Company Kuehl Shepherd Kozlowski & Associates, Inc. L. P. Martin & Company, PC Lane & Associates, PC Larry D Greene CPA PC Lauren V. Wolcott, CPA, PC Lent & Hawthorne, PC M. Lee Winder & Associates, PC Martin, Beachy & Arehart, PLLC McPhillips Roberts & Deans PLC Michael B. Cooke, CPA, PC Michael R. Anliker, CPA, PC Miller Foley Group Mitchell, Wiggins & Company, LLP Moss & Riggs, PLLC Murray, Jonson, White & Associates, Ltd., PC PBGH R.T. McCalpin & Associates Renner & Company, CPAs, PC Roger L. Handy, PC Rubin, Koehmstedt & Nadler, PLC Russell, Evans & Thompson, PLLC Rutherford & Johnson, PC Salter & Associates, PC Scheulen, Patchett & Edwards, PC Sells, Hogg & Jones, CPAs, PC Spencer, Hager & Mosdell, PC Stephen Merritt CPA, PC Steve Guy & Associates, PC Steve Walls & Associates, PLLC

Strickland & Jones, PC Sullivan, Andrews & Taylor PC Terry L. Jones, CPA, LLC Thomas E. Fraley, CPA Thompson, Greenspon & Co., PC Tongelidis Consulting, LLC Updegrove, Combs, McDaniel & Wilson, PLC Valderas & Fishel, PC Walker Consulting Group Wall, Einhorn & Chernitzer Wells, Coleman & Company, LLP Yancey, Miller, Helsley & Bowman, CPAs, PLLC Yount, Hyde & Barbour, PC

The above list was compiled Jan. 9, 2012.

Check www.vscpa.com/100percent for a complete, up-to-date list. n

WE WANT TO HEAR ABOUT IT! >>

Email disclosures@vscpa.com if you have exciting news to share. The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. Firm news, as well as mergers and acquisitions, is also welcome.

GET IT ALL ONLINE >>

VSCPA CPE & NETWORKING Visit the CPE Catalog at www.vscpa.com for the latest VSCPA seminars, conferences, webcasts, networking event and more!

DISCLOSURES

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MARCH/APRIL 2012

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VSCPA educational foundation

Virginia Tech scholar builds a personal connection Like many people her age, Kerry Inger, CPA, was saddened by the 2007 Virginia Tech shooting, despite not having a personal connection to the attacks. Now she’s studying where the tragedy occurred, working side-by-side with one person who lives with the effects of the shooting every day.

Inger is the 2011–2012 recipient of the Austin M. Cloyd, Matthew G. Gwaltney and Maxine S. Turner Doctoral Scholarship. The award is given in memory of three Virginia Tech students from Virginia accounting families who were killed in the April 16, 2007, shooting.

Inger, who was working in the Atlanta tax practice at PricewaterhouseCoopers when the tragedy occurred, is in her last semester of her accounting Ph.D. program. She meets regularly with her dissertation advisor, Dr. Bryan Cloyd, whose daughter, Austin, was one of 33 students and teachers killed in the tragedy.

“He has been a great mentor and I feel honored to have the opportunity to work with him,” she said.

Cloyd was actually a major reason that Inger chose Virginia Tech for her doctoral work. The director of the University of Florida’s (UF) Fisher School of Accounting recommended Cloyd as an advisor. After a campus visit and interview, Inger knew that Blacksburg was the place for her.

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Before going back to school, Inger spent one year as an independent consultant after a four-year stint at PricewaterhouseCoopers. She got her bachelor’s and master’s degrees at UF. Inger was drawn to accounting for a reason you don’t often hear — glamor.

She came in contact with an accountant in her hometown of Tallahassee, Fla., who worked with the band Creed.

“Although I have not worked with any rock-and-roll bands, and the career was not quite as glamorous as I thought, it has been a great field,” she said. “I can say that I love accounting.”

While Inger enjoyed her tax work, the idea of teaching accounting never left her mind. She had taken note of several happy professors during her master’s education at UF and decided to enter academia herself.

“My professors really seemed to enjoy their jobs,” she said. “I was happiest at my job when I was training and recruiting, so teaching at the college level seemed like a natural fit.”

For all the happiness she gets from teaching, Inger is inspired by her Virginia Tech mentor, who experienced some of the most profound sadness imaginable. Austin Cloyd was 19 years old when she was killed and was active in the community, going on church missions to rural Appalachia to help rehabilitate homes.

The Cloyd family has kept her generous spirit alive, asking for donations in her honor to the Appalachia Service Project, a program that repairs dilapidated houses in poor mountain communities. They have participated in house-repair trips themselves and brought hundreds of

MARCH/APRIL 2012

Virginia Tech students with them.

Inger has seen firsthand the effects of Austin’s death on the Cloyd family and the positivity of their remembrances of her life. She is honored to be a recipient of the scholarship that bears Austin Cloyd’s name after she lost her life so tragically.

“Although I had no ties to Virginia Tech at the time, I felt such sorrow for the families of the victims and the community as a whole,” Inger said.

Inger now has a family of her own, including a one-year-old son, Marlowe.

She enjoys spending time outdoors with Marlowe, her husband, Matthew, and their two dogs. She’ll graduate in May and already has a job lined up as an assistant accounting professor at Auburn University, but Southwest Virginia will always have a special place in her heart.

“My favorite place used to be the beach,” she said, “but having lived in Blacksburg, the mountains are now at the top of my list.” n

IN REMEMBRANCE, FIVE YEARS LATER >>

Five years have passed since the 2007 Virginia Tech shootings, and the VSCPA continues to honor the victims’ memories with the Austin M. Cloyd, Matthew G. Gwaltney and Maxine S. Turner Doctoral Scholarship. Visit www.VSCPAFoundation.com to donate to the Cloyd-GwaltneyTurner scholarship fund or any of the VSCPA Educational Foundation’s other funds.

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Southwest VA — $140,000 Blue Ridge Mountains CPA firm that serves clients in all kinds of industries. Clients are accustomed to exceptional service. Firm focuses on tax, payroll and bookkeeping. There are no reviews or audits. Firm caters to individuals with small businesses. Employees are very skilled and well liked by clients. They will help make a smooth transition.

SALE/MERGER OPPORTUNITY — Well established and diversified small Northern VA CPA firm seeks sale/merger opportunities.

Practice clientele includes reviews, compilations, write-up services and three nonprofit audits.

The firm has a significant individual income tax practice as well as a variety of business tax returns.

The firm enjoys a long-standing on-site and unqualified or pass peer review history. The firm is that of a sole practitioner seeking retirement or semi-retirement over the next two years. Growth and referral opportunities are excellent. Reply in confidence to VSCPA CC # 74, 4309 Cox Road, Glen Allen, VA 23060 or vscpa@vscpa.com.

ADVERTISE IN CLASSIFIED! >>

Email disclosures@vscpa.com Your connection to success

IF YOU’RE 25-34, NOW’S A GREAT TIME TO SAVE. SO WHY AREN’T YOU DOING IT? Saved nothing at all

40%

Saved 20+%

4%

Set aside a measly 1-5%

Volunteer for charity

23%

32%

Spend more time with friends

35%

Socked away 6-9% of their income

Lose weight

44%

Most likely New Year’s Resolutions among 25- to 34-year-olds

There are lots of reasons to be putting money away: For retirement, for personal goals, for the unexpected, for the chance to stop worrying about finances so much. For many of us, though, the task seems overwhelming. Here’s a look at some easy ways to get started—and to put ourselves in better financial shape in the future.

24%

Save more money

62%

WE’RE ALL ABOUT SAVING. IN THEORY.

Saving activity among 25- to 34-year-olds in 2010

Desirability

Keeping in touch For 7 out of 10 people aged 25-34, a smartphone with a data plan is a must-have. But maybe that necessity doesn’t need to cost so much.

Watching the tube

AND IT’S POSSIBLE. IN REALITY. Maybe you actually can have everything. Just not at the same time. By balancing splurges and keeping the big picture in mind, it’s possible to get on track toward a future that’s financially secure (and relatively freak-out-free).

1 Average of 4 largest carriers 2 Average of 4 largest carriers, with ~475 minutes, ~250 messages and ~175MB of data 3 Average of 4 largest carriers, with ~475 minutes, no message or data plan 4 Comprehensive plan from a leading service provider, including 200+ channels, multi-room DVR and 25Mbps internet and voice 5 Representative plan from a leading service provider 6 Unlimited streaming plan from a leading provider (Assuming you already have internet service and a streaming device) 7 Savings return based on 2% interest rate

79% of us subscribe to cable/ satellite TV. And there’s probably no chance of prying the remote from our hands. But do we have the optimal arrangements for our lives and budgets?

Setting the table More than half of us dine out or get take-out at least 3 times a week. How much would it help our bank accounts if we could scale that back?

The latest and greatest

Affordability

$119.57/mo1

Free phone with 2-year contract

$66.24/mo2

Basic phone with limited features

$39.99/mo3

The smorgasbord, with DVR and all Basic cable Streaming web service only

Dining out

Grabbing take-out Cooking at home

Tackling debt Slightly more than half of Americans carried a balance and were charged interest on a credit card in the past year, which is decidedly non-affordable and non-fun. Paying more than the minimum each month—and remembering that using credit doesn’t make a splurge any more affordable—is a clear path to getting yourself back in shape.

BESIDES, LOOK WHAT HAPPENS IF YOU START NOW. Save

$25 /wk

$50 /wk

$100 /wk

$25,208

$199.99/mo4

$29.00/mo5

$7.99/mo6

In 5 years

$6,302

$12,064

In 10 years

$13,238

$26,477

$52,955

In 30 years

$48,708

$97,416

$194,833

Making smart trade-offs in the right categories helps you set aside more cash for the future. And by starting now, you get the added benefit of knowing you’re getting your finances in order. Peace of mind? You can’t put a price on that.

Get more free tips and advice at feedthepig.org.

©2012 American Institute of Certified Public Accountants

DISCLOSURES

•

MARCH/APRIL 2012

43

I AM the vscpa

LOS BANK AUDITORS >>

The only thing better than crunching the numbers is rapping about it.

JUSTIN DUBRUELER, CPA >>

He might not get behind the wheel, but DuBrueler helps drive the success of Richmond International Raceway.

THE SPEED OF SUCCESS >>

Two minutes with Justin DuBrueler, CPA As senior director of accounting for Richmond International Raceway (RIR), DuBrueler helps ensure the track remains financially sound. With an objective voice and an unbiased view, he is used to answering his colleagues’ financial questions.

IF I WEREN’T A CPA, I WOULD BE… An

WHEN I TOOK THE CPA EXAM… At

engineer. I’ve always been interested in the way things work and the way things are built. Plus, it’s very satisfying to solve problems and in my mind, that’s exactly what engineers do.

the Arthur Ashe Center in Richmond, the wooden tables we tested on were so old that splinters would come up through the test papers creating an additional degree of difficulty for the examination.

I WISH CPAS KNEW… That just because

I NEVER LEAVE HOME WITHOUT…

I AM PASSIONATE ABOUT… Making a

we are CPAs doesn’t mean that we have to conform to the quiet and conservative stereotype. Many CPAs are fun and expressive with much to offer this world aside from tax returns!

My cell phone. Being connected to my co-workers, family and friends is very important to me.

difference in everything that I do. When I’m working on a project or initiative at work, I want to do my best to achieve success. I feel the same way about what I do in my personal life as well.

PEOPLE DON’T KNOW THIS, BUT…

I’m a reality TV junkie! “Pawn Stars,” “American Pickers,” and “Lizard Lick Towing” are among my favorites.

Also, my affinity for Mexican food is unparalleled!

44

DISCLOSURES

•

MY ADVICE TO ASPIRING CPAS IS…

To get as much experience in as many different disciplines of accounting as possible early in your career so that you can later pinpoint exactly what area(s) of expertise you are most interested in devoting the rest of your career to.

MARCH/APRIL 2012

I AM A CPA BECAUSE… I enjoy all

aspects of running a business and in my view there is no better foundation for success than being fluent in the accounting/finance discipline. n

an affiliate of accounting practice sales north america’s leader in practice sales

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Virginia Society of CPAs Virginia Society of 4309 Cox Road Glen Allen, VA 23060 Certified Public

Accountants Address service requested