ASCPA Magazine Dec 2014 Jan 2015

ALABAMA CPA MAGAZINE DECEMBER 2014 / JANUARY 2015

ANNUAL Education Issue

The Alabama CPA MAGAZINE Alabama Society of Certified Public Accountants P.O. Box 242987 Montgomery, Alabama 36124-2987 1-800-227-1711 334-834-7650 www.ascpa.org Officers Don McCleod, Chair Dr. Lowell Broom, Chair-Elect Renee Hubbard, Past Chair Board of Directors James R. L. Carroll Caitlin F. Glass Kate J. Ham Paul Marcus Hamilton M. Buddy Johnsey Jason L. Miller Michael C. Reibling Gregory E. Sellers Dennis E. Sherrin Rachel M. Taylor AICPA Council Members Don McCleod E. Lamar Reeves John P. Shank

Message from the Chair...

I admire you. You woke up at six thirty in the morning for that eight o’clock advanced accounting class, even though the previous night you had to finish a class assignment for your auditing and assurance services class. You are amazing, because even as you guaranteed your success on that take-home quiz in your governmental and non-profit class by diligently working through each and every question, you still remembered to submit your essay to the ASCPA Educational Foundation on ‘Why the Scholarship is Important to Me’. You are simply wonderful, because your excitement is hard to contain, knowing that the day’s lecture would be on the ‘Development of Complex Business Structures’ and you remembered to preview the topic; before you attended the lecture; thanks to the really nice speaker who attended your Beta Alpha Psi meeting the previous week.

You remembered his advice was to “preview, attend the lecture, review, and then study”.

You are awesome because you took the initiative to develop that relationship with your accounting professor who mentioned that the way to distinguish yourself from your peers was by performing with high marks in the classroom and by connecting with the Alabama Society of CPAs at www.ascpa.org. Free student membership! You are the best because you discovered that the ASCPA student membership gives you access to scholarships, discounts on CPA review programs, The General Ledger student newsletter and the Student Guide to Alabama Public Accounting Firms. The ASCPA’s student membership also made you award of one of the Society’s signature service programs, the Classroom Blitz.

You learned that it has reached over 20,000 high school students across the great state of Alabama to provide financial education and awareness of accounting as a career. You are a cut above the rest, because you now know that your student membership will allow you to build professional relationships, and by granting you access to our eleven ASCPA chapters, it gives you the opportunity to get to know both young and established professionals. Some of whom may one day want you to come and work for them.

It is because of students like you that we have seen some of the greatest interest in our organization in years. Moreover, we offer a lot for a reason. It is because we believe it is important, as the premier accounting membership organization in this great state, to provide to our best and brightest students the same opportunities that were provided to us. Finally, as chair of the Alabama Society of CPAs, I know that we will continue to meet our mission of developing and improving accounting education and of sustaining the future of our profession because of students like you; and for this reason I want to say, thank you for all that you do.

Don

Jimmy L. Williamson, Past Chair, AICPA The Alabama CPA Magazine is published by Alabama Society of Certified Public Accountants as a membership service to Society members.

Views and opinions appearing in this publication are not necessarily endorsed by the ASCPA. The deadline for submitting materials for publication is the first of the month preceding issue date.

Jeannine P. Birmingham, CPA, CAE, CGMA President and CEO Diane L. Christy, Editor Carlton Melton, CPA and scholarship recipient Huey Miller III at St. Joseph’s Chapel, Spring Hill College, Mobile

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While you’re wrapping gifts, offer one to the profession.

As the holiday season approaches, add the Alabama Society of CPAs’ Educational Foundation to your list.

It’s a great time to make an end-of-year gift that will last into the next generation.

Consider that the ASCPA awarded 32 scholarships (including intern stipends) during 2014, totaling $78,000. These students are committed to becoming CPAs, and will continue to adhere to the high standards you’ve set as leaders.

Open your pockets, open your hearts; help us help you and the profession by supporting the Educational Foundation of the ASCPA. Go to the website, choose About ASCPA, click on Educational Foundation and log in to make a donation.

The Alabama CPA MAGAZINE

STUDENT SUCCESS

Congratulations to YOU! 1

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You are talented and able students. This accomplishment is one among many as you begin your accounting career.

The ASCPA looks forward to having you as a member and professional colleague for many years to come.

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1 Ellen Barker

Troy University Chairman’s Award

2 Brooke Beasley

Alabama State University

3 Marisa Bell

Tuskegee University

Chairman’s Award

4 Evan Cox

Auburn University Kassouf & Co. Scholarship

5 Renata DeOliveira

University of Alabama at Birmingham Pearce Bevill Minority Scholarship

6 Crimson Dooley

Jacksonville State University

7 Rebecca English

Troy University – Dothan

8 Kristin Francisco

Samford University

9 Stephanie Howe

University of Montevallo

10 Catherine Humphrey University of Alabama

Kassouf & Co. Scholarship 11 Alexis Johnson

University of Alabama at Birmingham

12 Melinda Kilgore

University of Alabama in Huntsville

13 MonTerrius Lowe

University of Alabama at Birmingham Chairman’s Award

14 Mario McKinnon

Miles College

15 Huey Miller III

Spring Hill College

16 Mitchel Mims

Troy University

Chairman’s Award

17 Abigail Missildine

Auburn University

18 Bryant Northington University of Alabama 6

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19 Angelina Offei-Dua

Athens State University Chairman’s Award

20 John Posey

University of North Alabama

21 Cody Scott

University of Mobile Chairman’s Award

22 Lynn Smith

University of West Alabama

23 Ernest Stevens

Tuskegee University

24 Jeffrey Temple

Troy University – Phenix City

25 Chrystal Todd

Troy- Montgomery

26 Shirin Torabinejad Huntingdon College

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27 Emily Vickrey

University of Mobile

28 Iryna White

Athens State University

29 Melissa Williams

Troy University 3

STUDENT SUCCESS fall Intern brittany Jones

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rittany Jones, accounting senior from Auburn University, came to the ASCPA in early August. She’s weathered staff transitions, the fierce heat of continuing education season, the intense legwork involved in organizing the 28th Accounting Interview Day and mentoring Robert E. Lee accounting students during a job shadow day.

While all of these activities were consuming her time at the ASCPA, she also attended Auburn’s Meet the Firms event which resulted in eight interviews with CPA firms from Birmingham, Auburn, Columbus and Montgomery. She will be working for Auburn/Opelika firm Lovoy, Summerville & Shelton for 10 weeks as an audit intern beginning in mid-January.

Ms. Jones hails from Carrollton, Georgia. Her high school graduating class had 17 members so she elected to attend a large university, initially as a journalism major. She discovered accounting when she realized that a degree in journalism was not going to be as rewarding financially as an accounting degree (unless she won a Pulitzer Prize).

“I took my first principles of accounting class as a sophomore, got my first real college “A”, and that was it. The biggest shift in my thinking as an accounting major was realizing that concepts were being taught, not facts to be regurgitated on a test. Accounting is all about problem-solving and thinking through situations.”

Brittany’s been impressed with the Auburn faculty and their caring attitude towards the students.

“It’s obvious that they want you to do well. They are always available with support and guidance as you work through the program.”

Brittany will graduate in May 2015, after taking the GMAT during winter break, completing her internship at Lovoy and finishing up 6 hours in the March-May mini-term. She plans to go to graduate school and enter public accounting after sitting for the CPA exam.

“I’m really excited about my internship with Lovoy in Auburn. Audit was my very favorite accounting class and it’s going to be amazing to put the methodology into practice. The chance to observe how an office operates was one of the best take-aways from my time at the ASCPA. I have had several jobs, but none of them in an office. The experience has changed my mind about the kind of firm I want to join, too. A smaller firm, with a warm office culture, is now a lot more attractive than a large firm. While at the ASCPA I got such a sense of accomplishment as I finished each task and I ended up learning a little about each department.”

Away from class, Brittany enjoys tailgating at Auburn football games and hanging out with her two roommates and boyfriend.

The ASCPA wishes her good luck as she continues to grow into her career.

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Stephanie Howe, University of Montevallo

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hen I was nine, my mother gave my younger sister and me each $30.00. In an attempt to showcase the temporal value of money, she explained that whoever had the most money left at the end of the month would receive an additional $30.00. I immediately resolved that I would not spend a single cent. I put my cash in my purple velcro wallet and pretended like it did not exist. That extra $30.00 was going to be mine.

My sister, on the other hand, blew her allowance on candy and Silly Putty™ almost instantly. Naturally, it was not long before she came to me and begged to borrow a portion of my money. I thought about her request and eventually agreed to lend her some of my precious savings. However, I quickly added that there would be one binding condition: she and a witness would have to sign a contract stating that she would pay back the principal amount along with compounded interest. My sister agreed. I gladly handed her a $10.00 bill and began awaiting repayment. This anecdote always reassures me that I have made the right choice by choosing to study accounting. What kid would do something like that if they were not meant to be an accountant?

I began attending the University of Montevallo in the fall of 2012.

My best friend’s father is a certified public accountant with his own practice. He had graduated from Montevallo and was able to provide invaluable advice on the degree. My interactions with him, coupled with my apparent natural inclination toward accounting, guided my decision.

My plan is to move to Birmingham after graduation and work in public accounting. I intend to sit for the CPA Exam as soon as possible so that I may start building my career. As a CPA, I would like to take what I have learned and accomplished and use it to motivate other young women to study accounting. To do this, I would like to work with organizations such as the Birmingham chapter of the Accounting & Financial Women’s Alliance and others like it.

Bryant Northington, University of Alabama

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y journey on the path to becoming an accountant started in the 9th grade. My English teacher assigned the class to write a paper about a career that we might want to pursue when we got to college. Up to that point in time, I hadn’t really given my future very much thought. To find a topic for my paper, I did what any reasonable kid would do…I went to the internet and begged Google for an answer. I remember googling Top 10 Best Careers and decided to pick one out of that group. My best friend’s mother was an accountant and she always seemed happy, so it only made sense for me to choose that profession out of the results Google provided. I am thankful I did. From the day I started that paper, I have had my mind set that accounting is the profession for me. I have not wavered with that goal and I am thankful that I got lucky with my internet search!

I believe my goals as a future CPA fall in line with what most accountants in this profession strive for. I want to be well-trusted and respected within the profession. I want my employers to know each and every day that there will be no one that will work harder and be more dedicated than I will. Having an opportunity to be significant and to blaze my own trail is something I do not take lightly. There is a lot of hard work that needs to be done. I feel with this outlook and dedication in time I can work my way up the accounting ladder to become a partner in one of the many prestigious firms in Alabama.

The Alabama CPA MAGAZINE

Shirin Torabinejad, Huntingdon College

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rowing up, I always wanted to be a doctor, to help people have a better life. I thought that was the only way I could. However, by discovering my talents and passions, my dream evolved into a love for accounting.

My junior year of high school, I took AP chemistry and remember coming home to tell my mom I could not be a doctor anymore. I was good at math, it was my favorite subject, but science was excruciating.

Then I became involved with Key Club International because I loved politics. I thought I would be a political science major and go to law school; I could still help people, right? After moving to Montgomery, the center of politics, I discovered it was not for me.

One semester I interned at First United Methodist Church and thought God was calling me to work in ministry. I became a business major because I thought it was a safe choice. I met some incredible accountants at the church and they helped me choose accounting as a future profession, giving me an opportunity to intern with an accounting firm.

I love accounting because it is like a giant math problem. There is always an answer that is right or wrong. I have the ability to help those who may be struggling financially to become profitable. I can help advise clients on ways to save money on their taxes. The opportunities are limitless.

As I finish my senior year, I am graduating from college knowing I have job options. Accounting was never what I dreamed to pursue as a kid, but now I cannot imagine any other career for me. One of my co-workers at Warren Averett, sent me this quote about my future, “Fortunately, life doesn’t turn out how we want or plan it. Fortunately, because God knows what is best. We have limited vision, limited resources and finite minds. God is all-knowing, all-powerful, owns the world and is not limited to space, money, or circumstances.” This quote is exactly right. I never could have picked a plan as awesome as God’s for my future.

Iryna White, Athens State University

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ccounting has always been interesting to me. I grew up in a family where parents trusted kids with money at a very early age. When I was about 8 or 9 years old, I remember going to the store with my older sister to buy groceries; after shopping we could keep the change to put in our savings.

It was all cash transactions at that time and I was handling the money because my sister didn’t have as much interest in “accounting” as I did. Of course, we reported to our parents what we bought and how much change we brought back to make sure that the debit and credit sides were balanced. I started then to learn how to manage the money my parents trusted me with, and I believe that was beginning of my journey as accountant.

In Ukraine I obtained my MBA in management and achieved my degree as an economist. In my earlier career I worked as an accounting assistant for a small wholesale company and, later, as an economist at Raiffeisen Bank Aval [fifth largest bank in Ukraine] in the loan department, issuing loans for corporations.

Since arriving in the U.S., I decided to obtain a degree in accounting to further my knowledge. Accounting degree was a natural choice due to my passion for numbers. My career goal is to work for a well-known company, advance in my career, and be an asset to the company.

Accounting is a profession which will help to secure the future of our family. The accounting degree I am earning now at Athens State University gives me a sense of security that I will find employment and continue my accounting career.

To further my career, I am going to test for CPA certification. After spring 2015 semester I will complete all credit hour requirements for CPA exam. I know that my journey as an accountant and future CPA will be very interesting and productive, and will bring me to my destination. The journey itself is a positive and very valuable experience.

BRING A FRIEND!

You’re a student member of the ASCPA; invite a friend to join you.

• 10 issues of the Alabama CPA magazine • 3 issues of The General Ledger student digital newsletter • Discounts on CPA exam review products • P ersonalized ASCPA business cards for networking functions • B est of all, it’s FREE! Click on the *Join* button at the top of the ASCPA website, www.ascpa.org.

The Alabama CPA MAGAZINE

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Meet the Staff

Ashley Smallwood – The new face of peer review

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ith four new (young) staff members in the last year, it’s easy to see that the ASCPA is no exception to the “gray tsunami” of retirements that are rolling out. While the latest transition was not initiated by a retirement, it is a change which will have ramifications beyond the walls of the Society, directly affecting firms who participate in the peer review program.

After 14 years as the peer review administrator, Shirley Carroll has moved into a different post and turned the reins of peer review over to Ashley Smallwood. The transferral of knowledge is being aided by training from the AICPA and Tennessee Society of CPAs. Smallwood went to Valley High School and attended Troy University for both her undergraduate degree in marketing and her MBA. While attending classes, she worked for six years at the city of Troy as the mayor’s assistant and special projects coordinator. She created fund-raising programs, coordinated special events, and developed a week-long children’s recycling program called Go Green, among many other duties.

After completing her MBA, she left Troy and moved to Montgomery. She worked as a manager in a staffing firm for 18 months before joining insurance broker J. Smith Lanier & Co. as a benefit eligibility specialist. She worked in life and health insurance with the 100 employees at their West Point and Columbus locations for more than a year.

Even though Smallwood thought the move back home was a permanent one, she discovered returning to Montgomery offered her more options. She found out about the position at the ASCPA and her Troy University connections served her well. Both CEO Jeannine Birmingham and CFO Amanda Freeman are Troy graduates. While the Trojan football team may be struggling, Troy grads are now 30% of the entire staff at the ASCPA! Smallwood has had a steep learning curve, with the move to peer review coming barely three weeks into her time at the ASCPA. She already had two major projects on her plate, including the annual Classroom Blitz, but has shown patience and flexibility by moving ahead on all fronts.

If you are a member of a firm who will rotate through the peer review process, please make a note of Smallwood’s contact information, asmallwood@ascpa.org or 334.386.5751, and stop by the ASCPA office to meet her.

M o r e S tud e nt E v e nts

Miles College Interview Skills Workshop

Tuskegee NABA meeting social 6

Accounting Interview Day

Robert E. Lee High School Job Shadow Day The Alabama CPA MAGAZINE

Members Speak

Determinant Factors in the Dearth of Minority CPAs EXECUTIVE SUMMARY

Helen G. Gabre, Alabama A&M University, Dale L. Flesher, University of Mississippi and Frank Ross, Department of Accounting at Howard University he dearth of minority certified public accountants (CPA) has been a major source of concern for many decades within the accounting profession. Even though the CPA certificate bestows upon its holders professional prestige and expansive economic opportunities, the number of minority accountants who have achieved CPA status has remained abysmally low. Among CPAs in 1969, there were only .4% African American, .9% Latino, and 1.9% Asian American CPAs in the United States. According to a 2004 study by the American Institute of CPAs (AICPA), those percentages have increased substantially with 12% of CPAs who are Asian/Pacific Islanders, 8% Hispanics or Latinos and 3% African Americans (CPA Examination Summit, 2007). Despite the increases, there is still a deplorable discrepancy between the percentage of minority CPAs and the percentages of these groups among the general population. For example, according to US Census Bureau’s report of 2013, African Americans make up 13.2% of the U. S. population. Why do they compose only 3% of the CPA population? Similarly, Hispanics make up 17.1% of the overall population, but only 8% of CPAs. This discrepancy exists despite numerous initiatives by prominent organizations such as the AICPA, National Association of Black Accountants (NABA), and Association of Latino Professionals in Finance and Accounting (ALPFA) to increase minority representation in the accounting profession. On the other hand, Asian/Pacific Islanders make up only 5.3% of the American population, but 12% of CPAs. Thus, that group has made major strides since 1969.

At the beginning of 2011, the National Association of State Board of Accountancy (NASBA) launched a new accounting education research grants program. One of the research areas of interest specified by NASBA was the different barriers to the CPA license that may deter minorities or other potential candidates from achieving the credential.

Thus a study was conducted to investigate the determinant factors that impede the realization of the CPA credential among minority accountants. Hence, an online survey of African American as well as Hispanic accoun-

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The Alabama CPA MAGAZINE

tants was distributed through the auspices of the Center for Accounting Education (CAE) at Howard University, NABA, and ALPFA. The results suggest that both ethnic groups possess a very positive perception of the certificate in terms of providing job security, prestige, career mobility and added compensation. However, more CPA minority accountants than non-CPA minority accountants were more likely to envision that the certificate afforded more prestige and job mobility. On the other hand, non-CPA minority accountants perceived that the exam was expensive, difficult and the preparation for the exam required too much time. In a further statistical analysis, such negative perceptions about the exam were associated with a low likelihood of being a CPA. In addition, an examination of response differences based on gender revealed that female minority accountants were less likely to be CPAs. Further analysis showed that female minority accountants were more likely to perceive the CPA exam to be difficult, expensive and requiring time consuming preparation.

Moreover, occupational motivations such as employer support and job requirement were highly associated with being a CPA for minority accountants. Interestingly, even though the

150-hour requirement has been a debatable issue, minority accountants did not perceive it as detrimental in their quest for the CPA certificate.

These results give us a glimpse of the causative factors contributing to the dearth to minority CPAs. First, the reason for the dearth of minority CPAs seems to be an economic issue. Minority accountants in general, and especially female accountants, perceive that the exam is expensive. Therefore, different accounting programs, especially those at minorityrelated institutions, must strive to include CPA review programs into their curricula.

Second, minority accountants overwhelmingly perceive that company support and the CPA certificate’s being a job requirement to be motivational factors for acquiring the credential. Therefore, the problem can be alleviated through concerted efforts by accounting firms in providing financial aid for CPA review courses and making the credential part of the job requirement. State boards of accountancy and state CPA societies can also help through information dissemination about the benefits of the certificate and exam scholarships.

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PAY IT FORWARD CLASSROOM BLITZ

Thank you schools!

Athens High School Auburn High School Autauga County Technology Brewbaker Technology Magnet High School Brookwood High School Bullock County Career Technical Center Calera High School Carroll High School Carver High School Central High School Chambers County Career Technical Center

Chickasaw High School Cottonwood High School Curry High School Dadeville High School Demopolis High School Escambia County High School Florence High School Foley High School G.W. Carver High School Geraldine High School Goshen High School Grissom High School Hartselle High School Hewitt-Trussville High School

Hillcrest High School #2 Holt High School Hoover High School Jacksonville High School Kinston High School Lawrence County High School Leeds High School Minor High School Moody High School Mortimer High School Murphy High School Northridge high School Oak Mountain High School Opp High School

Thank you volunteers!

Ellen Barker Kyle Beason Jeannine Birmingham Allison Blair Jerry Carden Cary Cherry Diane Christy Rachel Chou Emma Cole Russ Cole Amanda Collins Jill Datema Lyndsey Dixon Michelle Dooley

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Robin Entrekin Elizabeth Finley Amanda Freeman Helen Gabre/Alabama A&M students Jacob Gatlin BJ Gilbert Holly Goodmon Allison Guice Rodney Hawkins Ryan Hendrix Stacie Hughes Williams Hughes Barry Jacobs

Betsy Jarnigan Derrick Keith Heather Kilpatrick Katies Krack Teri LIttrell Greg Maples Mario McKinnon Don McCLeod Michaela Moore Garey Morrison Julie Parker Amanda Paul Rob Pearson Krystal Pino

Pike County High School Pinson High School Prattville Christian Academy Robert E. Lee High School Robertsdale High School Sardis High School Tarrant High School Tuscaloosa Career & Technology Academy Tuscaloosa County High School Weaver High School Woodlawn High School

Kasey Powell Bryan Robinson Landon Shelby Trenton Shepherd Tashantia Stewart Jeff Sims Bob Slaby Amanda Snead Mary Anne Spradley Laine Spruiell PJ Talley Kate Thigpen Shirin Torabinejad Rebecca Vosghanian The Alabama CPA MAGAZINE

...rocks on !

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labama Society of CPAs’ Young CPAs continue to make high school outreach a priority. This year’s

stats reflect the amazing success of this program in the last 6 years: 54 schools, 65 volunteers, 3141 students. This program would not be possible without the support of the Young CPA Board of Directors, all 11 chapters of the ASCPA, and Adena Whitman, Marketing and Outreach Director at the Guadelupe Credit Union in Santa Fe, New Mexico, who trained the volunteers on the National Endowment for Financial Education materials.

The Alabama CPA MAGAZINE

“Some of the juniors and seniors had questions about accounting jobs here in Montgomery. [After you left] the afternoon classes had fun visiting the websites from the handouts and playing Bank on It© games against one another.”

– Linda Mitchell, G.W. Carver High School

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Joint Leadership Development Conference

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n the Society’s continuing support of the Alabama State Department of Education’s high school accounting programs, ASCPA staff attended their 2nd Joint Leadership Development Conference (JLDC) at the BirminghamJefferson Civic Center on Nov-ember 18.

It was both exciting and terrifying to learn that 7000+ students would be attending all or part of the multi-day program. The ASCPA had an exhibit booth in the finance cluster, alongside the Federal Reserve, America’s First Credit Union, Warren Averett, UAB School of

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Business, Protective Life and the enormous BB&T Banking Bus. To engage the students, the booths were given cards which resembled “deeds” from a Monopoly game and play money. Once a student correctly answered questions posed at the booth, they received cash to spend at the prize table. The ASCPA provided 50 stadium cups stuffed with information about accounting careers, a pen or highlighter, and candy.

UAB scholarship recipient MonTerrius Lowe brought Benjamin Bankes of the AICPA’s Feed

the Pig campaign to life by donning the giant pig head and pink tie. Can you say “selfies”?

The students came in waves, producing a constant energy in the convention hall. Teachers also dropped by and picked up Society high school resource packets. It was quite a week for high school outreach at the ASCPA, with 3000+ students seen during the Classroom Blitz in addition to those at the JLDC. A huge THANK YOU to the Young CPA board for providing the financial support to purchase materials and give-aways!

The Alabama CPA MAGAZINE

bABC SALT Corner Want to Avoid Being Blamed by Your Client?

Clarify the Scope of Your Engagement!

Bruce P. Ely and William T. Thistle, II, Bradley Arant Boult Cummings LLP

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t’s happened to you before; one of your clients received an audit notice related to its sales, use, rental, and/or business license tax compliance. Naturally, your client is not excited about the upcoming audit, and the first reaction is to call you to develop a game plan. One problem, though: you only prepare your client’s income tax returns and an annual set of financial statements. Your client prepares all other tax returns. And you’ve never even discussed your client’s sales or business license tax obligations before – at least not that you can remember.

During the meeting, you quickly realize that your client may indeed have some potential sales tax exposure. And worse yet, if you’re right, they’ll owe sales tax to the State, county and city (or multiple counties and cities). As it turns out, your client wasn’t charging sales tax on otherwise taxable sales to churches which, generally, are not exempt from Alabama and local sales tax, and churches are your client’s major customers.

Or your client has been delivering a substantial amount of its goods into cities for which it never bought a business license. The potential liability could be significant. It could be enough to put your client out of business. It’s a classic “OH, NO!” moment.

While you immediately begin to think of ways to minimize your client’s potential liability, your client’s first question is “why didn’t you warn me about this before?!”

Suddenly, your focus switches from how can we can help our client to how can we retain our client and prevent at least a threatened malpractice claim. It’s an awkward moment, and it’s one that we as a law firm that works with many CPAs see all too often. The client blames their unsuspecting CPA. In our experience, most clients view their CPA as their advisor for all things financial and tax-related, and oftentimes much more than that. Unfortunately, that may include, as in the above example, matters on which the CPA has never been consulted or offered unsolicited advice. As a result, when things start to go badly, the CPA may become the scapegoat.

At the outset, it should be noted that most of the time these issues resolve themselves.

In fact, the CPA and the client are usually able to work through the audit and the CPA The Alabama CPA MAGAZINE

retains the client. But, that’s not always the case.

The obvious question is, how can you avoid this dilemma? At a minimum, we suggest two things: (1) clearly define the scope of your services in your engagement letter; and (2) routinely meet with your client to discuss the idea of expanding the scope of your services. Frankly, the two work well together.

Your engagement letter should be regularly updated (at least annually) to accurately set forth the nature of the services that your client has asked you to perform. For instance, if you simply prepare your client’s income tax returns and compile its financial statements, your engagement letter should clearly state that the scope of your services to your client “shall include only income tax preparation and financial statement compilation, unless the client requests that the scope of our services be expanded and our firm agrees in writing to the additional responsibilities.” Additionally, when drafting or updating your engagement letter, you may also add that the scope of your engagement does not extend to compliance with other taxes, such as sales, use, rental, business license, property, excise, etc. That way, when your client later asks why you didn’t warn her that she needed to buy a business license in City X, you can politely point out that it’s not something you were engaged to handle.

By itself, modifying your engagement letter may just seem like a nice way to cover your rear end, but it doesn’t necessarily help you preserve your relationship with your client. That’s why, in conjunction with having a clear statement of services in your

Bruce Ely

William Thistle

engagement letter, you also should meet with your client regularly to consider expanding the scope of your engagement to include a review of certain other tax obligations. As a result, you may be engaged to perform a “reverse audit,” so you can advise the client – ahead of an audit by the State Department of Revenue or other taxing authorities – what it likely owes or perhaps of a refund that it’s entitled to claim. [Please read our October 2014 column regarding the benefits of voluntary compliance programs if your client discovers that it owes back taxes to state or local governments.] For example, you can do this by including it as a question in your new client packet or in your annual income tax questionnaire, or in a separate letter after Tax Season subsides. If you did, then instead of officially responding to the worried client that business license taxes are “outside the scope of our engagement,” you can say, “Well, I offered to review that for you, but remember, you didn’t want to spend the time (or the money).” Obviously, those conversations should be documented in your files.

These two steps should allow you to create a closer relationship with your client that results in more business for you and value added from their perspective. And it may also result in minimizing your client’s potential tax liabilities or discovering an unknown refund claim, thus enhancing your reputation as your client’s most trusted advisor. It’s a win-win outcome! _____

© Bruce P. Ely/William T. Thistle, II/Bradley Arant Boult Cummings LLP/November 2014. www.babc.com

Contribute to the ASCPA archive as we celebrate 100 years. Send photos, early CPA certificates and other memorabilia. Contact Jeannine Birmingham jbirmingham@ascpa.org 11

MEMBERS IN MOTION Promotions and New Positions Bank of Wedowee, an independent community bank located in Randolph County, Alabama announced that Brian L. Smith has been promoted to vice president and chief financial officer. Smith is a chartered global management accountant (CGMA), certified bank auditor (CBA) and holds the Anti-Money Laundering Professional (AMLP) credential.

He has undergraduate degrees in accounting and marketing as well as MBA from Troy University. His accounting career began in 1996 with Aldridge, Borden & Company, eventually becoming a manager within the firm’s audit department before joining Bank of Wedowee in 2005 as its internal auditor.

with total annual revenues of $108 million and more than 800 professionals and specialists in 17 offices across seven states – Alabama, Georgia, North Carolina, Ohio, South Carolina, Tennessee, Virginia – and the Cayman Islands.

BBVA Compass has named Gary Evans to its Fort Payne advisory board. Evans is a shareholder at MDA Professional Group. He began his career as an audit manager at Hancock, Askew & Co. in Savannah. In 1997 he

moved to Fort Payne, opened his own firm in 2004 and merged with MDA in 2012.

Warren Averett was recognized at the Birmingham Business Journal’s 2014 Top HR Innovators event. The event was held October 30 at the Harbert Center to honor 19 talented and innovative human resource directors and executives who are helping Birmingham companies create great workplace environments for their employees.

For the 6th year in a row, Barfield, Murphy, Shank & Smith was named to Accounting Today’s “Best Accounting Firms to Work For” list. David King, Firm Administrator, attended the Accounting Today conference and accepted the award on November 4th for the firm. The list honors the top 100 best places of employment in the accounting industry in the United States.

Awards and New Designations Ralph Summerford, Forensic/Strategic Solutions, has been named a finalist in the small business category of the Birmingham Business Journal’s 2014 CEO awards.

Barfield, Murphy, Shank & Smith was the only firm in Alabama to make this list. Company’s workplace policies, practices, philosophy, systems and demographics were evaluated along with an employee survey to measure the employee experience. The combined scores determined the top companies and the final ranking.

Cherokee County Health Care Authority recently honored Wallace Lyons, Lyons & Morgan CPAs, for his 35 years of service to the authority for his 17 years on their board.

Delvin D. Seawright successfully defended his dissertation proposal November 6, 2014.

Seawright is an accounting Ph.D. candidate and AICPA Minority Doctoral Fellow at Morgan State University in Baltimore, Delvin Seawright Maryland. He graduated from Spring Hill College with an undergraduate degree in accounting and Alabama State University with his MAcc. He holds the CGMA and CGFM designations. Seawright will complete his Ph.D. in May 2015.

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Community News Good friend of the Alabama Society of CPAs, Bruce Ely of Bradley Arant Boult & Cummings, is now an adjunct professor at the University of Alabama’s Culverhouse School of Accountancy. He will teach a state and local tax (SALT) class in the spring term to masters of tax candidates.

Congratulations to Leigh Dollar, mayor of Alabaster, and Thomas Zoghby, CFO at Volkert Industries in Mobile, for being part of Leadership Alabama Class XXV. Elliott Davis and Decosimo have announced plans to merge as of January 1, 2015. The combined firm, Elliott Davis Decosimo, creates the region’s fifth largest accounting firm 12

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When I hear children crying out to me and to the community and to the world, they are saying, ‘ Somebody help me. Somebody just give me a chance to make it.’

They’re saying, ‘I didn’t create my living conditions, I didn’t create my dysfunctional family. I didn’t create any of this, just give me a chance to make it.’ We lose that focus sometimes. It gets tied up with politics, and it has to be separate from that. And that little child is sitting there, with his arms crossed, saying, ‘Well what about me.’ While you all are fighting and arguing over financial problems and the crisis you’re basically having that little child is still sitting there.”

”

Hansell Gunn, Chancellor Gunn Christian Academy

Alabama Opportunity Scholarship Fund is available to help taxpayers through the process of making a donation.

Executive Director, Lesley Searcy lsearcy@alosf.org 205-206-7801 The Alabama CPA MAGAZINE

12,000 children applied 2,800 scholarships have been awarded by Alabama Opportunity Scholarship Fund for the 2014/2015 School Year.

3,500 children waitlisted 90% minorities (83% African-American).

of scholarship awards are to

P.O. Box 59188 Birmingham, AL 35209 www.alabamascholarshipfund.org

Controller, Tonya Jones donors@alosf.org 205-206-7805 13

Continuing Education

2015 Women to Watch Award T

he 2015 Women to Watch Awards for the Alabama Society of CPAs will be given at the 2015 Women’s Summit, on May 7, 2015. Awards will be given in two categories, Established Leaders and Emerging Leaders, as defined below. It should be noted that evidence of every item listed is not required for consideration, but nominees should have made significant contributions in at least two of the criteria listed below. Submissions are due to the Alabama Society of CPAs no later than December 19, 2014.

Please provide supporting documentation as evidence of accomplishments. This may include letters of recommendation from supervisors, peers, students, community organizations, etc. Résumés are not required, but are strongly recommended.

Winners will be selected by the Women’s Task Force selection committee and recognized at The 2015 Women’s Summit at the Hyatt Regency Birmingham – The Wynfrey Hotel.

Questions?

For more information about the nomination process, membership status, requirements, or nomination categories, please contact Corena Unpingco with the Alabama Society of CPAs at (334) 834-7650 or cunpingco@ascpa.org.

14

Experienced Leaders

Defined as one who has advanced to a higher level or leadership position within the organization. Titles include, but are not limited to, partner, owner, elected official or appointee, executive, etc.

1. Authorship of articles 2. Major or unique contribution to the profession 3. Public and/or community service 4. Mentoring other professionals* 5. Improvement to the workplace *More heavily weighted than other criteria

Emerging Leaders Defined as a professional who has made significant contributions to the profession and her community, but who has not yet reached the highest levels of advancement.

1. Pulic and/or community service 2. Demonstration of leadership 3. Contribution to the profession 4. Creation and implementation of unique initiative(s) 5. Involvement with alma mater or other local colleges and universities The Alabama CPA MAGAZINE

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Presorted Std US Postage PAID Permit No. 131 Montgomery, AL DECEMBER 2014

JANUARY 2015

The Alabama Society of Certified Public Accountants 1041 Longfield Court P.O. Box 242987 Montgomery, AL 36124

C l assi f i e d

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Enjoy all the Colors of the Holiday Season.

Best wishes from the staff at the Alabama Society of CPAs The ASCPA office will be closed on December 24 and 25.