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The Arizona Society of Certified Public Accountants

The Recharacterization of Policy Loans

Spotting the Signs of Elder Abuse Success Beyond Public Accounting

Transitioning a New Generation of CPAs into Private Industry


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Volume 26 Number 10

Success Beyond Public Accounting


Within the first five years of their hire, many new generation CPAs will transition into careers in government, non-profit organizations or private industry. by William F. O’Brien, CPA


The Firm Summit

Recognizing the Signs of Elder Abuse


As the elderly population continues to grow, the incidence of financial abuse perpetrated against them is growing as well. by Randy R. Werner, J.D., LL.M., CPA

The Recharacterization of Policy Loans


When someone borrows money from a bank or commercial lender and the note is canceled or forgiven, that loan is converted into income and generates an income taxable event.

by Steve Schneider

Columns & Departments 6

Chair’s Message by Julie Klewer, CPA


Focus on Members

22 Classifieds Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, Arizona 85034-2021



Successful companies take the time to plan for future growth with a Firm Summit. by L. Gary Boomer, CPA



The Arizona Society of Certified Public Accountants

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Copy & Advertising Deadline The first of the month one month prior to publication date. Board of Directors Chair Chair-Elect and Secretary/Treasurer Directors

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AZ CPA is published by the Arizona Society of Certified Public

Accountants (ASCPA) to provide information, news and trends in the profession of accounting. It is distributed 10 times a year as a regular service to members of the Society. The ASCPA, its members, board of directors and administrative staff assume no responsibility for advertisements herein. The ASCPA and the above people also assume no liability for business decisions made by readers in reference to statements and/or claims in advertisements within this publication. Opinions expressed by correspondents and contributors are not necessarily those of the ASCPA.

Arizona Society of CPAs 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034-2021 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 Fax (602) 252-1511

Accounting and Reporting Standards Conference Jan. 20, 2011

Start the year out with guidance and updates that will help you and your organization stay on top of the changes in the profession. Topics focus on the economy, accounting and current developments, IFRS, fraud, internal controls and the status of the profession. Also receive a timely update on what your State Board of Accountancy is doing. DECEMBER 2010 y AZ CPA


Chair’s Message

by Julie Klewer, CPA

Your Voice is Heard … Really Change is a way of life, especially in our profession. Whether you practice in the public or private accounting arena, you know that tax and financial statement reporting rules and regulations are consistently changing. I’m guilty of complaining when those changes come and make my job and my clients’ jobs more difficult. I think most of us have no problem voicing our opinion after the fact. But how many of you reading this article take the time to let your voice be heard when it can make a difference … in helping shape the new rule or regulation, or in putting a stop to a proposed change? In all honesty, I rarely bothered to comment on an exposure draft, or write my congressional representative regarding a proposed tax law change, until I became involved in ASCPA leadership. As a result of attending AICPA Council meetings and working with the ASCPA staff, I’ve discovered that my voice really can make a difference. Last week, I attended the fall meeting of the AICPA Council in New Orleans. Many of the issues currently facing our profession were discussed. Among those with the most significant impact for my practice and clients are the new IRS tax preparer registration program and the Blue Ribbon Panel on Private Company Financial Reporting. All tax preparers, whether signing the return or simply inputting data as part of the return preparation, must now apply for a PTIN and pay a registration fee. However, CPAs are not required to comply with the examination and continuing education requirements that are part of the new regulations. As currently written, the exam and CPE requirements apply to non-CPAs. However, the IRS is giving “serious consideration” to the possibility of exempting these requirements for non-CPAs working under the supervision of a CPA. During the fall meeting of Council, Barry Melancon, AICPA President & CEO, talked about the success of the


AICPA’s advocacy efforts in helping shape the regulation and minimizing the burden on our profession. Those efforts were based in large part on a grass-roots campaign to ensure that officials at the IRS heard directly from members who believe that examination and continuing education requirements for CPAs is redundant and imposes an unnecessary burden. You may recall receiving an email call to action from the AICPA in August urging you to send a letter to the IRS expressing concern over some elements of the proposed preparer registration program. Across the country, AICPA members responded, and according to Barry Melancon, at a recent meeting between the IRS and AICPA representatives, the IRS said, “Enough!” Our voices were heard loud and clear, and as a result, we successfully halted the implementation of the examination and continuing education requirements for CPAs. In December 2009, the Blue Ribbon Panel on Private Company Financial

Reporting was formed to examine continued deviation of the standards based on the needs of the users of private company financial statements. Most of the Panel members are supporting “GAAP with exceptions for private companies.” The recommendation includes forming a separate board to set private company accounting standards by modifying current standards. The panel sought input from the profession regarding this issue earlier this fall. I was shocked when, during her report at Fall council, Judith O’Dell, Chair of the FASB Private Company Financial Reporting Committee, commented that only about 200 responses were received. There are 29 million privately held companies in the U.S., and this issue has a broad affect across our profession. Why, then, did so few of us take the time to respond? Judith O’Dell specifically commented that the Panel wants our input and will use it to shape recommendations about a separate set of private company reporting standards. It’s important that we also encourage our

clients and their financial statement users to express their opinions. The Panel expects to make its recommendations to the Financial Accounting Foundation (FAF) in January, and FAF will expose any proposed changes for public comment following its consideration. Now is the time for all of us to consider the importance of this potential change for our practice, our clients and their financial statement users and speak up. As one Panel member noted, “Well-crafted comment letters catch the attention of standard setters. If you care about it, you owe it to yourself and your clients to speak up.” The AICPA, ASCPA and the many volunteers who support these organizations are working hard to advocate for you. But those advocacy efforts need your continued reinforcement. Will your voice be heard? Until next AZ CPA month …

Economic Outlook 2011

Jan. 13 2011 11:30 a.m. to 1:00 p.m. Speaker: Dr. Lee McPheters Sponsor: Alliance Bank of Arizona Doubletree Hotel – Phoenix Airport

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Focus on Members

25th Annual Governmental Accounting Conference Feb. 4, 2011

AICPA President & CEO Barry Melancon, ASCPA President & CEO Cindie Hubiak, ASCPA Chair-Elect Mark Anderson and AICPA Vice Chair Greg Anton at the 2010 AICPA/CPA-SEA Leadership Conference. Lohman Company, PLLC promoted Dennis M. Hare, CPA to tax manager.

AICPA President & CEO Barry Melancon will open the conference as the keynote speaker giving an update on how IFRS will impact the government sector. David Cotton will discuss fraud and David Bean will return with his GASB update and FASB and AICPA pronouncements. City of Mesa Mayor Scott Smith will give an Arizona update during lunch. Six additional topics will be offered in concurrent sessions during the afternoon. Register at

Jennifer Mellor, CPA, was promoted to vice president of program development at the Greater Phoenix Chamber of Commerce. Glenn Conover, CPA, was hired as director of tax services for Morrison & Associates. Steven Tait, CPA, was elected as treasurer of the Arizona Bridge to Independent Living. Ashley Cole, the accounting and CPE assistant at the ASCPA, was accepted into the Eller MBA Program at the University of Arizona, Scottsdale campus.

Newsworthy CPAs ... Brian Swartz, CPA, of Apollo Group, was featured in an article on education in the Phoenix Chamber of Commerce’s publication, Impact. Rick Goldenson, CPA, was featured in Accounting Today in an article on women in accounting firms. Sandra Abalos, CPA, was featured in an article on the 2010 Elections in the Phoenix Chamber of Commerce’s publication, Impact.

In Memorium Malcolm S. Johnson Victor Frizzell, Jr. Phillip Dennis Lambson


Seasons Greetings from the Arizona Society of CPAs

Building Your Connections

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Recognizing the Signs of Elder Abuse By Randy R. Werner, J.D., LL.M., CPA

As the elderly population (those 65 and older) continues to grow, the incidence of financial abuse perpetrated against them has grown along with their numbers. When one considers that the elderly population is projected to grow to 80 million by 2050, the potential for widespread abuse becomes alarming. As trusted financial advisors, many CPAs have an intimate knowledge of client finances, business matters, and family dynamics, and they may be in a position to detect and prevent problems and to render assistance. It is therefore important to be aware of the main warning signs of elder financial abuse.

Signs of Exploitation One of the more common and prominent warning signs is isolation. The abuser controls the elder’s social life, telling callers or visitors that the elder does not want to talk with them, or providing an excuse that prevents the elder from speaking with callers or visitors. The abuser then tells the elder that no one has called or visited and that the abuser is the only one who cares about the elder. Another common tactic is to tell the elder that if anyone asks questions, it is only for the purpose of placing the elder in a nursing facility. This intimidates the elder into refraining from speaking with anyone, including those who are trying to

help. Signs of intimidation or threats would include unusual submissiveness or fear toward the caregiver, withdrawn behavior, or anxiety about personal finances and other issues. While some elder abuse is perpetrated by family members, much is carried on by strangers who insinuate themselves into the senior’s life, whether as a new caregiver, friend, romantic interest or even as a financial “advisor.” All too often, seniors who feel isolated in retirement are vulnerable to this kind of approach. Elders who have few contacts with the outside world may also be vulnerable to telemarketers and sales people. Such sales “professionals” are often able to persuade elders to purchase inappropriate and risky investments by promising unrealistic investment returns. Or they may convince an elder to purchase a variable annuity with high commissions to the seller and high surrender charges, causing the elder’s funds to be illiquid and unavailable. Other signs and symptoms of exploitation include but are not limited to:

Lifestyle/Care • the sudden appearance of previously uninvolved relatives claiming their rights to an elder’s affairs and possessions • missed appointments, substandard care being provided, or bills unpaid despite the availability of adequate financial resources



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• the provision of unnecessary services or goods (e.g., large appliances, expensive jewelry) •pharmacy or grocery receipts for purchases inconsistent with the client’s prescriptions or lifestyle (e.g., alcohol for a nondrinker) • significant changes in spending patterns


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• unexplained disappearance of funds or valuable possessions • sudden changes in a bank account or banking practices, including an unexplained withdrawal of large sums of money by a person accompanying the elder • the inclusion of additional authorized signers on bank and other financial accounts • unauthorized withdrawal of the elder’s funds using the elder’s ATM card, especially when the elder is physically unable to leave home • credit card statements reflecting increased and unusual activity • an increase in the number and amount of credit card accounts • check numbers out of sequence • addresses for bank or credit card statements changed to an address other than the elder’s home

Legal/property •changes in a power of attorney from a long-time friend or family member to a person new to the situation • abrupt and/or unexpected changes in beneficiaries or provisions in a will, trust or other legal or financial documents • unexplained sudden transfer of assets to a family member or someone outside the family • deeds reflecting changes in title to property • a refinanced mortgage and an unexpected cash-out • discovery of an elder’s signature being forged for financial transactions or for the titles of his/her possessions

How Can CPAs Help? CPAs should encourage their clients to explain their dispositive and gift-

planning desires, particularly if there is a second marriage. Emphasize that planning now will help avoid ambiguity about their future desires. Clients should consider arranging for a living will or other type of medical directive, such as an Advanced Health Care Directive, to make their own health care desires known in the event someone has to intercede on their behalf. CPAs can also advise their older clients to consider consulting with family members and legal counsel regarding the options for assigning financial guardians or power of attorney. If the client has assigned power of attorney to someone, ask the client for the person’s name and contact information in the event an illness or disability necessitates contacting that person. CPAs may also suggest that the client provide the contact information and written consent to contact a responsible adult son or daughter in the event the CPA suspects any type of elder abuse. There are many resources for reporting and dealing with elder abuse. For example, the National Center on Elder Abuse, a division of the U.S. Administration on Aging, provides a database of contact information for county Adult Protective Services agencies and hotlines ( As laws on reporting potential elder abuse vary from state to state, CPAs who suspect their senior clients are being abused should contact the firm’s lawyer or insurance provider for advice and guidance on the best way to AZ CPA proceed. Randy Werner is a loss prevention specialist with CAMICO (www.camico. com). She responds to CAMICO loss prevention hotline inquiries and speaks to CPA groups on various topics. Werner has Big Four public accounting experience in federal and state tax as well as regional accounting firm experience. She has practiced as a sole practitioner in estate planning since 1984.

The Recharacterization of Policy Loans by Steve Schneider When someone borrows money from a bank, financial institution or commercial lender and the note is canceled or forgiven, that loan is converted into income and consequently generates an ordinary income taxable event. The lender is then required to file with the IRS using Form 1099-C, Cancellation of Debt. However, there are general exceptions. Home Indebtedness: The Mortgage Debt Relief Act of 2007 applies to most homeowner’s indebtedness with their principle residence; this temporary Act ends in 2012. Individual Bankruptcy: Debts discharged in bankruptcy are not considered taxable income. Business Insolvency: If a business becomes insolvent, the debt more than likely will not be taxable. The general definition of business insolvency is applied when the total debts are more than the fair market value of the total assets. Non-recourse Loans: A non-recourse defaulted loan normally has some asset as collateral that can be repossessed.

Farm Debt: The debt directly incurred in the operation of a farm where half the income over the last three years from farming is generally not considered taxable income. An unknown area of indebtedness, that can’t be freely discharged, is policy loans from a life insurance contract. There are three main areas of concern with cash value life insurance policies: Modified Endowment Contracts (MEC), lapsed or surrendered life insurance contracts and contracts at maturity.

Modified Endowment Contracts MEC life insurance policies are subject to TAMRA in the design of any contract after June 21, 1988. TAMRA regulations test the frequency of premiums paid in relationship to death benefit purchased at the date of the contract. All life insurance contracts that are funded with a single deposit are subject to the MEC test. Proceeds from MEC contracts are also subject to the TEFRA “LIFO” schedule which recognizes gain first and basis second, whether it’s classified as a loan or withdrawal. It’s important to note that the vast majority of contracts have provisions that permit flexible changes in death benefit amounts, death benefit options and premium schedules. Because of these flexible provisions, many policy owners unknowingly alter their original contracts which subject them to possible consequences if the contract becomes a MEC. If the policy becomes a MEC, policy loans will be recharacterized as ordinary income and a 1099 will be generated from the carrier.



Life insurance carriers are anticipating increases in life expectancy as current proposals illustrate to ages ranging from 121 to 131 years. Lapsed or Surrendered Policies Each year millions of dollars are contributed to cash value life insurance contracts for tax advantaged retirement plans. All permanent life insurance contracts generally accumulate cash values tax deferred and feature access to those monies tax free via policy loans as long as the contract is kept in force. If the contract is not kept in force, all gain distributed by policy loans will trigger an ordinary income tax event. Additionally, there are a variety of contractual conditions that could cause the policy to lapse and if any of these conditions occur, all policy loans identified as gain will be recharacterized as phantom income and are subject to ordinary income tax in the year the contract lapses. The vast majority of policy owners never pay back the loans, many times by design, and never pay the interest charge on the policy loans. The interest charges are subsequently added to the outstanding loan balance which continues to accumulate, cannibalizing existing cash values. If policies are not

reviewed on a consistent basis, low cash values in conjunction with minimally funding the premium on a policy can result in a lapse of the contract. Contractual loan provisions dictate the cost of taking monies out of the contract/policy; however, the “current company practice” of carriers advertise an inexpensive rate of interest despite their contractual ability to charge the maximum expense load in the policy. There are basically five different loan provisions contained in life insurance contracts, of which one will apply. Zero Net Cost Loans charge and credit a policy loan, generally 30 days apart and posted at the beginning of the loan. This is the most effective way to access policy loans. Over the years, the IRS has shown an interest in the veracity of such loans, calling into question their legitimacy. Wash Loans charge and credit at the same rate, generally 365 days apart. Be advised that there is an unaddressed issue of accrual between the time the loan is charged and then credited. That time differential may incur as much as a

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35 basis point charge over the life of annual policy loans in an income scenario. Spread Loans charge and credit at different rates, and as stated above, will also generate an accrual charge for the time differential. The wider the spread, the greater the accrual charge over the life of annual policy loans. Direct Recognition Loans charge and credit a different rate, can lower dividends credited to the cash values, and can add an accrual charge. In many cases, the minimum charge under this loan provision is between 300-350 basis points. Arbitraged Loans can charge a variable rate with a maximum ceiling rate and credit earnings against those charges to actually make money on the loan spread. As an example: An Indexed Universal Life contract may be earning eight percent with a policy loan charging five percent and earn an additional three percent.

Contracts at Maturity Policies that mature with gain or have incurred policy loans will also be subject to ordinary income tax. This is a real concern with average life expectancy ever increasing. Life insurance carriers are anticipating increases in life expectancy as current proposals illustrate to ages ranging from 121 to 131. It may sound farfetched, but every day on “The Today Show,” Willard Scott celebrates more and more Americans turning 100. That’s today and tomorrow, but yesterday’s policies are the item of growing concerns. Policies that mature at age 95 and 100 are already subject to ordinary income tax on gain in the year the contract endows as well as any policy loans the policy owner received and interest on those loans the policy owner never paid. It’s double trouble for living longer. Overall, policies must be reviewed on an annual basis to determine if these issues may be caught pro-actively to AZ CPA minimize tax exposure. Steven J. Schneider is senior vice president for Ward T. Bell and Associates, a Phoenix-based independent life insurance and annuity brokerage.

Success Beyond Public Accounting Making the Transition of New Generation CPAs into Private Industry a Win-win Proposition by William F. O’Brien, CPA According to the Bureau of Labor Statistics, the number of new jobs among accountants and auditors will increase by more than 275,000 in the next eight years. A majority of these accountants will be newly minted CPAs entering public practice. Within the first five years of their hire, most of these professionals will transition into careers in government, non-profit organizations or private industry. This article suggests 10 Keys to Success for those joining the ranks of private industry. It also provides several hints for the hiring managers working with these transitioning CPAs. These suggestions result from interviews conducted with both seasoned financial professionals and CPAs who have successfully made the transition. While the primary goal of this article is to improve the experience of accountants as they transition into private industry, it also provides some insight into how the hiring managers can



generate higher levels of effectiveness from this critical component of the financial workforce. In the end, all parties can benefit from a win-win proposition.

How This Article Evolved Since 1991, I have taught undergraduate and graduate accounting courses at Santa Clara University in California. Previously, I was a senior financial executive at several technology companies in California’s Silicon Valley. Over the years, numerous former students have approached me for advice on how to move into private industry successfully. At the same time, I often found myself participating in discussions among experienced financial executives that begin with the phrase, “Why don’t you academic people teach these young CPAs what they really need to know in the real world?” I will reveal answers to both these questions in the next few paragraphs.

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I began compiling the material for this article motivated by these inquiries and fortified by a desire to learn more about my current generation of students. Initially I contacted several experienced and very successful financial executives from the “Baby Boomer” generation. Two were CPAs; one was not. Each executive had more than 20 years of private industry experience.

The Former Student Group Following the executive interviews, I re-connected with a handful of former students. These individuals each began their career in public accounting but ultimately transitioned into private industry. Similar to the participants in the executive group, these individuals also engineered private industry success.

A Consistent Approach I asked each interviewee what attributes contributed most significantly to their success. In addition, I explored with the executive group what skillsets were most lacking in their recent new hires from public accounting. In a similar line of inquiry, I probed the


former students to discover where they felt under-prepared as they executed their transition game plan. The 10 Keys to Success are the result from these inquiries.

10 Keys to Success Some people, including myself, find it is easier to retain new information when the presentation is in list form. So I’ve come up with the 10 Keys to Success. listed here.

cial to the mentor as well as the mentee. Mentors can gain valuable insights into what really motivates the new employees. This can lead to a customized and meaningful work experience for the transitioning CPA in the form of assignments crafted to take advantage of their point of passion. Remember, issues for which they are passionate motivate this generation.

The established management teams of today’s organizations must accept this line of thought as well. Become comfortable stretching the competencies of your new staff. If your company has another perspective on this issue, maybe it is time to consider looking at the situation in a different way. Consider how you build muscle strength. As muscle tears down through

1.Demonstrate Curiosity with a Purpose Curiosity is a virtue. This is particularly true when your insatiable desire to discover new things focuses on what is truly important to your business. Newly hired CPAs must take the time to determine what issues are most important. They should then gather as much relevant information as possible about those issues. I call this, “Knowing the Territory.” Let curiosity help you to find your passion in your new position. Never stop asking questions—questions about your company, your responsibilities and your career. My advice for the hiring managers is simple— welcome and encourage these questions. Researchers have found that nothing motivates the current generation more than finding a passion and a purpose for what they are doing.

2. Create and Steward a Mentorship Knowing the territory also includes the process of finding a mentor. Mentors are valuable resources, particularly mentors that understand the company’s systems and processes. They can guide you around the rocks of a rapidly moving corporate environment. Soak up their advice like a sponge and do not forget to continue asking those relevant questions. Listen to the advice based on their years of experience. Heed their warnings. Follow their directives. A good mentor is an invaluable resource. Steward the relationship as if it is your most valuable asset. It just might be! It is important to note that the benefits of a mentorship are equally benefi-

Take pride in stepping outside of your comfort zone. Do not be afraid to volunteer for challenging assignments.

Mentors of the so-called “Generation Y” can also benefit from that group’s incredible familiarity and comfort level with social media and other emerging aspects of technology. This mutual mentoring leads to improved productivity and improved trust from all of the mentoring participants.

3. Failure is Good The fictional “Return to Wall Street” character, Gordon Gecko, suggests, “Greed is good.” I suggest a different phrase, “Failure is better.” The transitioning CPA needs to be secure in the belief that it is acceptable to fail—once. Experiment and learn from the resulting successes and failures. Take pride in stepping outside of your comfort zone. Do not be afraid to volunteer for challenging assignments. I reflect on my own career experiences where I missed opportunities to move radically outside my financial comfort zone—one time into corporate law and another time into marketing. I regret passing on both of these unique challenges.

weight lifting, it rehabilitates with a stronger capacity. Organizations can strengthen themselves in the same way.

4. Master Communication This suggestion is a no-brainer. Remember, however, communication includes the art of listening. Stephen Covey admonishes us to use our senses in proportion—two ears and one mouth. His advice is excellent. Another aspect of communication excellence is the ability to articulate your ideas in a clear and concise manner. Think Cliff’s Notes rather than War and Peace. We are the USA Today generation. Shorter attention spans require focused communication. It is common knowledge that many transitioning accountants have poor writing skills. Many of these young professionals are not aware of their composition deficiencies. Test your own writing skill by turning on all of the spelling, grammar and style features of MS Word and analyze something that you wrote. For good business writing, you should seek to have few passive



sentences (under 10%) a reading ease score of at least 40, and a grade level of no more than 12. Practice improving your writing by eliminating all of the highlights MS Word puts underneath your material. No matter how effective your work, if you cannot clearly articulate your ideas, you are not being fully effective. Consider the words of former Chrysler CEO, Lee Iacocca: “You can have brilliant ideas, but if you can’t get them across, your ideas won’t get you anywhere.” Language skills also fall under the heading of communication. In today’s global economy, the mastery of multiple languages is useful. The newly hired CPA should consider adding a second language to their portfolio of skills. Economists believe that the economies of the “B-R-I-C”—Brazil, Russia, India and China—will drive global growth. Look to these regions for your new language skills. From an experienced manager perspective, it is important to hold your team’s new members to communication excellence. They represent you and your organization. Good enough is not good enough when it comes to the presentation and articulation of clear, crisp concepts and positions.

5. Increase Your Visibility Recall the old saying, “out of sight,

out of mind.” If you telecommute, take this adage to heart. Although you might operate out of a home office, take advantage of all opportunities that maintain visibility with your co-workers and your bosses. Frequently, join them for lunch and brainstorming sessions. Participate in group training exercises. All of these activities keep you in sight of senior management and other operating executives. In addition, do not forget the importance of extra-curricular activities such as sports teams, community service and other company-sponsored social events. A consistent exhortation from my interviews with senior managers was: “Be all in.” In other words, sometimes just doing your job is not enough to ensure success with your career. Visibility is also critical for the senior manager. Today’s generation likes to build relationships with their co-workers. This is very hard to achieve when their bosses barricade themselves in their offices. Take the time to “manage by wandering around.”

6. Five O’clock is Not the End of the Day Similar to standard operating procedures in the public accounting profession, the workday in private industry does not necessarily end at 5 p.m.

The absence of a supervising senior accountant or engagement manager, however, places the burden of work commitment squarely on the shoulders of the transitioning CPA. Be prepared to see projects through to completion on a recurring basis. As you might expect, this sometimes might require extra time in the office. Other times, you will invest the extra hours at home. This investment of time is well spent. As a transitioning CPA, you have months, if not years, of information to absorb. A “standard” workday usually does not provide sufficient time to accomplish this task. It is all about commitment. Since we discussed the concept of commitment from the perspective of the new employee, it might be helpful to look at the issue through the eyes of the hiring manager. Experienced managers need to understand that today’s generation of workers does not believe in working overtime for the sake of working overtime. They are committed to the success of tasks in which they see purpose and value. Make sure that you reinforce those attributes with the newly hired CPAs. Believe me, today’s young CPAs want to add value to all that they do. Make it easy for them to have a passion for commitment to excellence and for the completion of their tasks.

7. Ownership

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Andrew Grove, the retired chairman and CEO of Intel Corporation, urges employees to take control of their own careers. One successful CPA I interviewed, Heather S., conveyed the same message. If you do not receive feedback, find it. If you do not have opportunities for job rotation, look for them. Consider using the two-circle analysis as a performance review vehicle. In the two-circle analysis, the employee lists in prioritized order the major activities for which they consider themselves responsible. The employee then asks their boss to prepare a prioritized list of the same activities from the boss’ perspective. The parties ultimately meet to discuss

the consistencies or inconsistencies of the two lists. Often this discussion can prompt a more complete dialog over performance and career progression. Take ownership and be proactive with respect to the development of your career. This tool is one way to do just that. Above all, commit yourself to a comprehensive continuing education program. Do not look for the easy way out to maintain your continuing professional education requirements. Just 40 hours of CPE each year may be barely enough to maintain your skill level. You signed up to become a professional. That includes a commitment to keeping yourself current and up-to-date. Similarly, the more relevant business books you seek out and read, the broader will be your knowledge base. This could lead to an acceleration of your career advancement. Remember, your career is Job #1. Hiring managers need to promote this perception of career ownership. Encourage newly hired CPAs to stay technically current and expand their business perspectives. Help them to take ownership of their career progression.

8. Share Your Skills Recall my earlier discussion about mentoring. Sociologists indicate that Generation Y is one of the most, if not, the most sharing generation in terms of giving back to society. Do not be afraid to carry this attribute into the office. Share your incredible knowledge of technology with your co-workers, particularly the Boomers. Turn mentoring into a two-way street. Take the flow of experience from the senior managers and return to them the gift of current networking technology. In terms of community involvement, be prepared to participate and even lead the charge in terms of neighborhood service projects. This type of effort quite possibly will bring more meaning to your day job as you see the impact of your employer in the real world. For the senior managers reading this article, I have only one word to share with you—encouragement. Encourage

Everyone is aware of the terrible stereotypes that accompany CPAs. Take the opportunity to dismiss these stereotypes and show you are human!

these young CPAs to continue their personal commitment to sharing their time, talent and treasure. The benefits to you, your company and to the transitioning employees will be huge.

9. It’s Only a Job Do not forget to take time to laugh. It will extend your life and reduce the stress that comes with ordinary life. In the 1960s, a famous Los Angeles Dodger outfielder misjudged a fly ball in the World Series. It cost the Dodgers the game. Later, when asked about the error, the ballplayer said, “It ain’t my life and it ain’t my wife. It’s only a ballgame.” Don’t let the job define you. You define how the job affects you and those around you. You will make mistakes. Recall my previous discussion about failure. Learn from your missteps and recover from them. Hiring managers can leverage this perspective.Find ways to celebrate! Celebrate both accomplishments and personal milestones. One of the most memorable events I can recall during my years at Intel was the company’s CEO attending my child’s baby shower. Everyone is aware of the terrible stereotypes that accompany CPAs. Take the opportunity to dismiss these stereotypes and show you are human!

10. Interact with Dignity and Respect The final component of the winning formula should probably be the first.

Treat everyone with dignity and respect. Contrary to popular belief, nice guys do not finish last. This tenet applies equally to the transitioning CPAs and their hiring managers as well. Take the time to make friends and allies within the company. They will accelerate the success of your transition to private industry and promote your future career both inside and outside the organization. People enjoy working with co-workers they respect.

Some Final Thoughts Change is never easy. Learning to adapt to new environments and embracing new perspectives is equally challenging. Ten simple steps of anything can rarely solve the complex issues we face in business and life. It is my desire, however, that these steps will encourage you, the transitioning CPA, and you, the experienced manager to embrace the changes and challenges you face with a mutual commitment to excellence. The success you achieve will surely be your own. AZ CPA William F. O’Brien, CPA, MBA, is a faculty member at Santa Clara University and an internationally recognized author and lecturer in the areas of corporate financial management and international accounting. He is a discussion leader for Executive Education, Inc. and a frequent speaker.



its competition. The purpose of a Firm Summit is to bring leaders and firm members together along with outside expertise and facilitation in order to initiate strategies for significant growth. Most firms spend too little time working on the firm and too much time working in the firm, especially where governance is less defined. In those firms everyone believes he or she is in charge but is too busy to lead—so little growth happens. Too often firms put the same people in a room year after year, hold a retreat and call it good. But you can’t expect exciting and revolutionary results using this formula. It takes a process, not a slogan in order to insure accountability and success.

Break out of the CPA Mold

The Firm Summit Making Good Things Happen by L. Gary Boomer, CPA

Firms who are serious about growth have a few things in common, one being a more strategic approach to planning and placing a higher value on management. They take time to think about where they are going and how they will get there. They assess their dangers, opportunities and strengths and focus on the top three by reducing or eliminating the dangers, focusing on priority opportunities and leveraging their strengths. Times have changed! It is impossible to focus on every danger and every opportunity. Also, it is not enough to identify issues (which is often all that happens at traditional partner retreats); you must also address those issues if you expect to grow. Some of the top issues in firms today are succession, workflow, lack of integrated technology, lack of accountability and lack of growth. Why a “Firm Summit” and Not a “Retreat”? “Retreat” implies that you are looking to the past and moving backwards. “Firm Summit,” on the other hand, implies a more ambitious approach—one that incorporates a broader participation base that will distinguish your firm from


Now is the time to change your format, make these meetings fun and create some excitement. The following suggestions will improve your Firm Summit’s results, as well as make it a much more enjoyable experience.

Select a relaxing venue away from the office. Get people out of their daily routine. Meetings at the office just don’t work. There are too many interruptions, and participants have trouble focusing on strategic thoughts. Choose an out-oftown location or somewhere where leisure activities available. One firm recently conducted its Firm Summit on an overnight sailing trip.

Encourage everyone to participate during parts of the Firm Summit. Be inclusive rather than exclusive— fresh ideas and “new blood” should be welcomed. Management’s participation is also a must. While transportation and lodging expenses are always a consideration, off-season rates at many venues make them easily affordable.

Utilize a professional facilitator as your leader. Use an experienced facilitator to keep participants focused and on the agenda. It is difficult, if not impossible, to facilitate your own Firm Summit. Most firms

have partners who can easily become tactical rather than strategic. A good facilitator will keep them from going off on tangents and diluting the focus of the meeting.

Start your Firm Summit with a positive focus exercise. Take time to celebrate and be grateful for your successes. This exercise requires mere minutes but is often overlooked. Take a little time to reflect on the most positive events during the past year, why they were important and if any follow-up is needed. Better decisions result when participants feel confident and positive.

Work from an agenda and stay on time. Don’t surprise participants. Solicit agenda items in advance and distribute an agenda with meeting materials. Do your homework prior to the meeting. Keep on time.

Avoid the numbers, stick to the concepts. Force participants to think in terms of the big picture. The tendency is to focus on tactical rather than strategic issues. Tell participants up front to avoid restraints such as budget and time. It pays to dream. You will find the time and budget for great ideas and strategies. The chances of identifying great ideas and strategies are diminished greatly if you start with the premise, “We can’t afford that.” Think in terms of who can “pull this off” or “whom do we know that can help us?”

Keep minutes of the Firm Summit and share with the entire firm. Document the “who” and “what.” Accountability is essential, and minutes help you avoid conflicts later on while keeping participants focused.

Think strategic rather than tactically. Utilize your agenda to avoid tactical discussions. Also highlight the benefits of strategic thinking when you announce the Firm Summit date as

Most firms spend too little time working on the firm and too much time working in the firm ...

well as the beginning of your session. An experienced external facilitator is especially helpful in maintaining focus on the “big picture” and providing references to best practices by leading firms and companies.

Mix the sessions in with activities such as golf, tennis or boating.

an opportunity to voice their perspectives. What did they find to be the most valuable aspects of the meeting, and what changes would they like to see in the future?

Create a One-Page Laminated Game Plan.

Plan for social activities and make a special effort to include those who are more introverted. Team activities such as a scramble in golf are fun and allow those with less skill to participate and still enjoy the event.

A one-page laminated game plan is critical to success. It allows you to easily communicate vision to members inside the firm as well as to stakeholders outside the firm. No one throws away a laminated document. Review it frequently and hold people accountable.

Invite outsiders such as experts or even clients.

90-Day Game Plans and Accountability Reviews.

Outsiders bring a fresh perspective and generally command respect. Don’t expect them to provide answers to all of your problems. You should expect them to have opinions and ask penetrating questions.

Each partner and manager should develop a personal 90-Day Game Plan in support of the firm’s strategic plan. At the end of 90 days, an Accountability Review should be held for each partner and manager. Firm Summits can be productive and fun! Thoughtful planning, facilitation and location contribute to their value. Delegate the planning if it’s not your unique ability. Every firm has or should have a social chairperson. Give that person a reasonable budget. Don’t wait—schedule your Firm Summit AZ CPA today!

Name task forces for follow-up with a responsible person and due date. Each person must be held accountable for his or her part. Allow those responsible an opportunity to agree upon due dates, which will ensure the chance of each project being completed on time.

Conclude the Firm Summit with a brief statement from all participants. Take a few minutes at the end of the Firm Summit to allow all participants

L. Gary Boomer, CPA, is CEO of Boomer Consulting, Inc., an organization that provides planning and consulting services to leading accounting firms. He can be reached at



Classifieds Business Opportunities

Employment Opportunities

OWN YOUR OWN TAX PRACTICE—New to Arizona. Looking for professionals interested in owning their own Tax Preparation and Financial Services practice? Easy and affordable to get started, with training and great support. You choose your location, we provide the system to attract premier clientele. Confidential. Reply to Box 100, Arizona Society of CPAs, 4801 E. Washington St., Suite 225-B, Phoenix, AZ 85034.

SCOTTSDALE WEALTH MANAGEMENT FIRM is looking for an experienced CPA with the following areas of tax (partnerships, corporations, individuals, trust, estates). CFP designation or experience with financial planning a plus. Please fax a resume to (480) 3232450 or email to

CPA WHO HAS A VERY SUCCESSFUL RECORD AT CLIENT RETENTION seeks to purchase Phoenix CPA practice or majority ownership. Buyer doesn’t need to get financing because has funds. Favorable terms for the seller. Contact Jeff at (602) 292-2009 or jeff@ OUR CPA FIRM IS SEEKING TO BUY CLIENTS in increments of one to a small practice in the Scottsdale and Phoenix Metropolitan area. Our staff has been practicing in public accounting for more than 30 years and specializes in the small- to medium-size business needs. We have an emphasis on business accounting and tax. We have a great staff and lots of satisfied clients. We are located in North Scottsdale with a satellite office in northwest Phoenix. If you are downsizing or retiring and want an easy transition, please call us today. Ask for Kara at (480) 990-2727. BUYING OR SELLING A PRACTICE? Let me make it happen for you. • Integrity • Confidentiality • 44 years selling Arizona businesses. Call Allan Jeffryes, the Jeffryes Company at (602) 279-4988. WANT TO SELL OR BUY AN ACCOUNTING PRACTICE? Make it easy on yourself. Call Gary Hankins, CPA (800) 584-4595, ext. 05. hankins@ .


TAX & AUDIT MANAGER/SENIOR —We are seeking a talented CPAs desiring to be an immediate long-term integral part of our firm. We are looking for individuals who work well in a team environment and possess excellent communication skills. Five plus years of tax experience or three plus years audit experience, and an initiative to seek out innovative and practical solutions to issues are required. Attractive compensation and a flexible atmosphere that balances family and quality of life with a rewarding interaction among clients and coworkers is the norm not the exception. Please email or fax resumes to tfyan@tfocpa. com; (602) 285-9872.

able. Great opportunity for those looking for flexible schedules in the off season. Come join our well respected, established firm. We are located in a beautiful newer office on Ray Road close to the 101. Experience with corporate, partnership, trust, and individual taxes, and compiled and reviewed financial statement engagements. Please email cover sheet, resume and salary requirements to or fax to (480) 968-1359. CPA/TAX SUPERVISOR OR PREPARER—Tucson CPA firm has immediate openings for full-time or part-time CPAs to fulfill tax preparer or tax supervisor positions. Benefits include 401K, life and disability insurance, cafeteria plan and flexible hours. Send resume by fax to (520) 325-0639 or e-mail to

GOVERNMENTAL/NPO SPECIALISTS—Heinfeld, Meech & Co., P.C., recognized leaders in governmental and non-profit accounting and auditing, seeks ambitious and motivated individuals with at least eight years expeAUDITORS—TIRED OF 60-70 rience specializing in governmental or HOUR WEEKS? LUMBARD & AS- nonprofit accounting and/or auditing SOCIATES, P.L.L.C. ESTABLISHED, for our offices in Phoenix, Tucson and GROWING NORTH CENTRAL Flagstaff. Nationally recognized on the PHOENIX CPA FIRM specializing in “25 Best Small Companies to Work for serving Not-for-profit, Governmental in America” list for the past three years, and small businesses has opportunities our firm is committed to providing a for audit managers and seniors. Must superior work environment and career be licensed or about to be licensed opportunities for our staff. ComCPA.  Minimum 5 years public auditing petitive salaries and benefits offered. experience. MBA and CGFM a plus.   Excellent professional development Must have strong communication skills program includes professional dues and proficiency in US GAAP, GAAS, and continuing professional education GAGAS and Single Audit.  Bilingual paid by firm. BS in accounting and at in Spanish and English a plus.  Future least 8 years accounting or auditing partnership opportunity for qualified experience specializing in governpersons. Insurance and 401 (K) Plan.  ments/nonprofits required. CPA or CPA Minimal overtime and maximum 25% candidate preferred. Travel required. travel.  Compensation D.O.E.  E.O.E.  E-mail resume and salary requirements E-mail resume to Jessica@llumbard. to com. CPA, AUDIT MANAGER—part-time, CHANDLER CPA FIRM HIRING assist with compilations and reviews TWO CPA/ACCOUNTANTS. Full in Phoenix. Email: auditmanager2@ time and/or part time positions avail-

TEMPE FIRM SEEKING CPA WITH 2+ YEARS EXPERIENCE in audit, review & compilation work. Flexible working environment and great benefits including paid Fridays off during the summer months. Please send resume to: PERMANENT PART-TIME TAX MANAGER—We have a GREAT JOB in a GREAT PLACE to work! The six employee firm OFFERS telecommuting, flex-time, four-day work weeks during the summer and CLOSES between Christmas and New Years. We are seeking a CPA technician and producer of tax returns. Please email resume & cover letter with salary requirements and a brief description of your “ideal” job to: AUDIT SUPERVISORS Fester & Chapman PC seeks 2 audit supervisors with 5+ years of public experience for audit staff in Phoenix, Arizona. Minimum bachelor’s degree in accounting, finance, business or related field and CPA required. Must have experience managing large nonprofit and government audit engagements and display firm knowledge of accounting & auditing principles, planning & conducting audits, preparation of financial statements and supervision of staff. Travel

required. Send resumes via fax to (602) 265-6241 or lchapman@f FULL-CHARGE BOOKKEEPER, 20 HRS./WK. - Accounting, grants administration & reporting with light Human Resource-related functions. Minimum Qualifications: Two years non-profit bookkeeping experience required; Associates Degree in Accounting preferred. QuickBooks experience and MS Office proficiency required. Salary: $20/hr.; no benefits. To Apply: Email cover letter and resume to: direct@ Open until filled.

Office Space SHEA BLVD & 101—108 SQ. FT. OFFICE AVAILABLE IN ESTABLISHED CPA FIRM. Includes phone system with receptionist, printer/ copier/scanner, paperless filing system, current & previous year tax software, internet, utilities & kitchen privileges. Furnished or not. Seeking ambitious CPA with tax and/or investment experience with an eye toward future partnership or buy out. Contact Jan at (480) 951-1699. OFFICE SHARING ARRANGEMENT 192 SQFT office available. Prime 1st floor Scottsdale CPA office—

2010 Technology Conference—Dec. 15 Learn faster and easier ways to work with the latest technology. General sessions include a Technology Update and 10 Things You May Have Missed in Excel. Customize the conference to meet your needs by choosing from a variety of break-out sessions including: Reviewing and Editing PDF documents; Technologies for Tax, Practice Management, Audits and Write-Ups; All Things Google; How to Create a Lean, Clean Computing Machine; Social Networking—Essentials for Business; and Becoming More Productive with Office 2010.

Hayden and ViaDeVentura. Ample parking, conference room, receptionist, fax machine, copier, Internet, etc. Staff desks available. Come join the Group !!! We use Drake, Creative Solutions & QuickBooks. Contact Jim (480) 991-7576 or email jimtoel@ CUT $$$$$$—Move into the “ACCOUNTING ANNEX”—Tenant sought. Office space to rent. Suitable for a dynamic CPA or CPA firm. Share phenomenal resources. On light rail and next to a station. Two conference rooms, included. 150 feet to 9,000 feet. Unique property next to the heart of downtown, walk to baseball and basketball stadium. Call Lance at (602) 741-7876 cell. PRIME OFFICE SPACE (40th Street & Camelback). Large private office available with room for one other person. Possibility of shared resources/ services. Call Bob at (602) 234-2466 or email


Display and Classified Advertising For information contact Michelle McBay at (480) 216-9559 or



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AZ CPA December 2010  

The official publication of the Arizona Society of CPAs

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