AZ CPA July August 2017

AZ CPA July/August 2017

Allocating Equity in a Residence in a Divorce Cyber Security A Look From the Top Get the Most Out of Your Planning Retreat

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AZ CPA JULY/AUGUST 2017

Special Offer 3 MONTHS FREE Offer ends August 31

ASCPA Conferences Expert Witness Tips – Be On Your Game From Engagement to Testifying Jonathan Ibsen, Canterbury Law Group Starting and Growing a Forensic Practice Donald R. Bays, Henry+Horne, and Joe Epps, Epps Forensic Consulting PLLC

Forensic & Litigation Services Conference September 7 ASCPA Learning Center or Via Webcast War Stories: Tales From Experts Who Have Survived the Front Lines Tim D. Tribe, REDW, Mark R. Hughes, Gorman Consulting Group, Josephine Giordano, Kotzin Valuation Partners, and Donald R. Bays, Henry+Horne The Behavioral Analysis Interview: Eliminating the Innocent & Identifying the Guilty Dennis Nebrich, Arizona Attorney General’s Office

Business Valuation Conference September 8 8 a.m. to noon

ASCPA Learning Center or Via Webcast DLOM Guide & Toolkit: A New Way to Look at DLOM Calculations Jim Alerding, Alerding Consulting LLC

Forensic Accountants: An Essential Part of the Bankruptcy Team Bryan Albue, Sherman & Howard LLC, and Jeff Sumpter, CBIZ Valuation Group, LLC

What’s Behind the Curtain of the Market Approach That Can Hurt You Frank Pankow, Pankow Company, P.C., and Lance Meilech, IBG Fox & Fin Financial Group, LC

The Marital Residence — Community, Separate or Both David Cantor, Cantor Forensic Accounting PLLC

Valuation vs. Calculation: How They Fit in Your Practice Ed Dupke, Dupke Consulting, LLC

Memory Dynamics — Transform Your Memory from a Liability Into Your Most Powerful Asset Sean O’Neil, Memory Dynamics FBI Perspective: Current Cyber Threats and Trends Martin Hellmer, FBI

Never-Ending Story: The Life and Times of the Financial Expert Kevin Yeanoplos, Brueggeman and Johnson Yeanoplos PC

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AZ CPA

Burch & Cracchiolo welcomes

The Arizona Society of Certified Public Accountants President & CEO

Cindie Hubiak

Editor

Patricia Gannon

Advertising

Heidi Frei

Board of Directors Chair Chair-Elect Secretary/Treasurer Directors

Robert L. “Bob” Lane

Molly Montgomery Mike Allen Jared Van Arsdale Michael Chesin Virginia DeSanto Tom Duensing Marcus Feder Kristen French Alan Gold Aaron Grant Julia Miessner Alice Pope Jeffrey Quick Nikki Vogt Char Woodall

Immediate Past Chair Greg Nelson AICPA Council Members

Martha C. Patrick

Joel K. Heriford

Douglas L. Wood

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Cathy Poore Bethany de Alva Southwest Chapter Helen Greenwell North-Central Chapter Ellen Carpenter

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Reach 5,500 ASCPA Members Through Our Advertising & Sponsorship Programs Advertising: Sponsorships: • AZ CPA • Conferences • Email Newsletters • Webinars • ASCPA Website • Phoenix Tax Workshop • Don Farmer Tax Update • CPE Resource Catalog

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AZ CPA JULY/AUGUST 2017

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 articles or advertisements within this publication.

Opinions expressed by contributors are not necessarily those of the ASCPA. Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 www.ascpa.com

Volume 33 Number 6

AZ CPA

July/August 2017

Features

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Allocating Equity in the Marital Residence in a Divorce

Find out what the best factors are for determining what the potential community equity is in a residence.

by David Cantor, CPA

14

Looking at Cyber Security From the Top

Corporate board members can no longer afford to ignore the dangers of cyberattacks.

Columns & Departments

by Sarah Ovaska-Few

Chair’s Message by Molly E. Montgomery, CPA 6 Member News

7

A Dash of SALT by James G. Busby, Jr., CPA

9

Quick Quiz

21

10 Tips to Get the Most Out of 19

Your Planning Retreat

If you are investing the money into a planning retreat, you should make sure it is worthwhile for everyone who attends.

Classifieds 22

by Gary Adamson, CPA

Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 180 Phoenix, Arizona 85034-2040 www.ascpa.com

JULY/AUGUST 2017 AZ CPA

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ASCPA Chair’s Message

Connection Through Technology

by Molly E. Montgomery, CPA I continually find myself in conversations with other professionals whose workflow or service offerings are already being altered to include some of these advanced technologies that are disrupting our traditional business models.

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AZ CPA JULY/AUGUST 2017

The AICPA, state CPA associations and especially the Arizona Society of CPAs, are all led by an underlying mission that is focused on continually enhancing the image and relevance of the profession within the marketplace, while also providing the resources needed to help our profession stay ahead of the curve. Anticipating and embracing change, supporting the progression in our competence and effectiveness in the work that we do, and representing our interests before regulatory bodies, is what fuels the role that our professional associations have in our lives. At the AICPA Regional Council meeting in Los Angeles this spring, we spent part of the day in an in-depth discussion about the significant changes that the profession will see over the next five years, and we were asked how the AICPA can best support us.

While the future of the profession and the resources that are needed to support change always have been and always will be an important conversation, the underlying theme that drives these discussions has increasingly been bringing us to the topic of technology. The impact that technology has in our lives is profound.

I may be a little biased, but I love talking technology. Being deeply involved in the tech industry, and seeing the innovation that is happening behind the scenes, it feels as though the future we are talking about is far more of a present moment conversation than some may realize.

Not a day goes by that I do not interact with someone who has already implemented artificial intelligence, virtual reality, augmented reality or robotics in their business. Just this week alone, I have helped a client evaluate options for outsourcing part of their operations to a fulfillment center that is using robots in their warehouse to process orders. While having coffee with the founder of a digital media company, the founder held her phone in front of her new augmented reality business card. Through the phone’s camera, we watched a video that appeared on the back of her card, showing a sample of the work that her company does. As I am writing this, I am listening to a music app that is coded by artificial intelligence, which creates a never-ending loop of uninterrupted music that uses neuroscience concepts that enhance focus. Outside of the work that I do, I continually find myself in conversations with other professionals whose workflow or service offerings are already being altered to include some of these advanced technologies that are disrupting our traditional business models.

Thinking about the future of the profession and how quickly the business environment is changing, where we will be in five years is difficult to anticipate. In some ways, it can be quite unnerving to think about. However, when viewed from a different angle, I think you will start to see how these changes are supporting a shift in how we interact with each other that is far more connected than we realize.

While we have become inundated with information and data over the past 20 or so years since the world-wide-web found its way into our lives, it is getting to a point that can be described as overwhelming and unmanageable. The technological

Member News advances impacting us over the next five years, in many ways, are giving us the ability to pull ourselves out of the noise and allowing us to view the world from a very different perspective. It is a change that has the potential to create more connection and more opportunity than ever.

While there truly is no way of knowing where we will be in five years, what we can do in the immediate future is find ways to stay connected. We need to stay connected with the younger generations who are joining the profession at a very different entry point than any of us experienced; and we need to stay connected with clients and colleagues who are also impacted by these changes.

Finding ways to leverage the changes in our profession and support each other through this shift is where that connection can be found. I am excited to see where the next five years takes us. n

The Tucson office of Heinfeld, Meech & Co., P.C., volunteered along with members of the University of Arizona Accounting Students Association to help Sky Island Alliance battle invasive fountain grass in Bear Canyon.

James Sean McGettigan, CPA, of Grant Thornton, was selected to receive an AICPA Standing Ovation for his exemplary professional achievement in personal financial planning as a CPA/PFS credential holder. He was recognized at the AICPA Advanced PFP Conference in June.

Take advantage of your ASCPA membership benefits and sign up for our next free webinar.

Jeffrey Pruitt, CEO of Tallwave and Tallwave Capital, was featured as a “Tech Titan” in the Phoenix Business Journal.

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(Top left) Molly Montgomery, Cindie Hubiak and Jared Van Arsdale met with Congressman Biggs in Washington, D.C. and (Bottom left) Cindie Hubiak met with Congresswoman Sinema to discuss matters impacting the profession.

(Top right) Hubiak and Montgomery with AICPA Chair Kimberly Ellison-Taylor at the AICPA Spring Council meeting.

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A Dash of SALT

Successor Liability for Taxes in Arizona In this month’s state and local tax (SALT) column, Busby explains Arizona’s successor liability rules and what successors or assignees should do to protect themselves when they purchase or inherit a business or stock of goods.

Like many states, Arizona has laws that address responsibility for outstanding taxes, penalties and interest when one party sells or assigns a business or stock of goods to another.

These provisions, generally referred to as successor liability rules, make it possible for successors and assigns to be responsible for applicable unpaid taxes, interest and penalties. They also provide that applicable taxes are a lien on the property of any party that sells its business or stock of goods, or quits business, if that party fails to make a final return and payment of the tax within 15 days of selling or quitting the business.

Applicable Taxes Arizona’s successor liability rules apply to withholding tax, state and municipal transaction privilege taxes, telecommunication services excise tax, county excise taxes and any other privilege excise tax administered by the Department of Revenue (Department), severance tax, use tax, luxury tax, tax on water use and jet fuel excise and use tax.

The rules do not apply to income tax and, although property taxes are assessed against the property and follow the property, Arizona’s successor liability rules do not apply to property taxes. It is customary, however, for parties to real estate transactions in Arizona to prorate liability for property taxes at close of escrow.

Successor Liability When a party sells or assigns a business or stock of goods to another in Arizona, the successor or assignee may be held liable for any applicable outstanding taxes, penalties, or interest unless the successor or assignee can produce a certificate from the Department stating that no tax is due.

If a subsequent audit shows a deficiency arising before the sale of the business, the deficiency is an obligation of the seller and does not constitute a liability against the buyer or assignee if the buyer or assignee obtained a certificate from the Department. However, if the buyer or assignee failed to obtain a certificate from the Department stating that no tax is due, the buyer or assignee may be held liable for taxes, penalties and interest accrued by the former owner or assignor.

by James G. Busby, Jr., CPA

James G. Busby, Jr., CPA, is a state and local tax attorney at The Cavanagh Law Firm. Busby previously worked in the SALT departments at Arthur Andersen and Deloitte & Touche. Before entering private practice, Busby was in charge of all transaction privilege (sales) tax audits at the Arizona Department of Revenue.

If you have any questions, please contact the author. He can be reached at (602) 322-4146 or JBusby@CavanaghLaw.com.

How to Obtain a Certificate To obtain a certificate from the Department stating that no tax is due, the taxpayer or an authorized representative must submit a Form 10523, “Tax Clearance Application,” to the Department. Oddly enough, one must check the box on this form for a “Letter of Good Standing” to get the “certificate” required by Arizona law.

JULY/AUGUST 2017 AZ CPA

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ASCPA Conferences

Corporate Finance Conference August 23

The Department is required to respond to requests for letters of good standing within 15 days. Sometimes the Department’s only response within that timeframe is that they need additional information and, if the Department must confirm payment of municipal sales taxes to a city or town that collected its own sales taxes before January 1, 2017, the process may take longer than it is supposed to.

Practice Tip — Before closing on the acquisition of a business or stock of goods in Arizona, buyers and assignees should obtain a letter of good standing from the Department stating that no tax is due. If the transaction must close before the buyer obtains the letter of good standing, the buyer should withhold enough from the purchase price to cover any taxes, penalties and interest that could be due until the buyer obtains the letter. n

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Allocating Equity in the Marital Residence in a Divorce

by David Cantor, CPA/ABV, CDFA® In many divorces, the primary financial asset is the marital residence. Although some professionals believe in using the HFTB (House For The Business) determination of equity, this really isn’t the best way to go.

There are several factors that need to be considered when properly determining what the potential community/separate equity is in the residence: • Date of purchase of the residence • Amount of down payment and mortgage • Total cost of the residence (purchase price plus improvements) • Date of marriage • Mortgage paydown, including amounts paid before, during and after marriage • Appraised values at date of marriage and date of service/date of trial • Refinances • Change(s) in title

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Arizona is a community property state with equitable distribution. This can result in significant differences compared to community property states that have equal distribution. ARS §25-318 states: “… it shall also divide the community, joint tenancy and other property held in common equitably, though not necessarily in kind ….”

Another factor to remember is ARS §25211 that states: “All property acquired by either husband or wife during the marriage is the community property of the husband and wife except for property that is acquired by gift, devise or descent.”

There is no “one size fits all” method when you are allocating the ownership interest in the residence. The facts and circumstances of each case will determine that. However, you need to have the above information available so that you can present your client and the court with your findings that are based on the utilization of proper case law (remember, it is our job as expert

witnesses to determine the amounts utilizing the formulas indicated in the applicable case(s). It is not our job to opine as to which case should be used (we can leave that to the attorneys)).

There are a few Arizona cases that deal with this issue head on. The underpinnings of these cases are two California cases; In Re Marriage of Marsden, 130 Ca; App 3d 426;181 Cal. Rptr. 910; 1982 and In Re Marriage of Moore, 28 Cal. 3d 366; 618 P.2d 208;168 Cal Rptr 662; 1980. Both cases ascribed a “pro-tanto” interest when the community contributed to a separate property residence. The primary difference between the two cases was that the Moore case did not address pre-marital appreciation since the house was purchased only eight months prior to the marriage. Marsden, on the other hand, allowed for pre-marital appreciation since the residence was bought years prior to the marriage.

That now brings us to Arizona. The primary cases that are referred to today

are In Re Marriage of Drahos, 149 Ariz.

248; 717 P.2d 927; 1985 and In Re Marriage of Barnett/Jedynak 219 Ariz. 550; 200 P.3d 1047; 2009. There are some other cases out there, but their foundation is based on these two cases, so I will focus on them.

Arizona courts use the term; “valueat-dissolution” when allocating equity between separate property and community property. What it comes down to is that if the community is contributing to the equity of the separate property, the community should receive not only reimbursement for the principal, but an interest in the residence’s appreciation. In the Drahos case, the house was purchased by the husband as his separate property one day prior to date of marriage. The court determined that the community had a lien (“community lien”) on the residence. In the ruling, the Court of Appeals clarified that the character of a separate property residence does not change merely because it was used as the community residence,

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but instead the community would have a lien on the property … necessitating a value at dissolution formula to determine the amount of the lien. Not only were community funds used to improve the separate property residence used, but also an allocation of the appreciation during marriage was considered.

The Drahos case allocated marital appreciation based on a prorata formula that gave the separate property spouse appreciation times the percentage of separate property funds used divided by total funds used. The community was given its share of appreciation based on community funds used divided by total funds used. The court explicitly stated that no pre-marital appreciation was considered due to the timing of the purchase vs. the date of the marriage (one day). But, it went on to say that the separate property interest should be given credit if there is any pre-date of marriage appreciation. The Drahos formula is: C + [C/B x A] C = community contribution to principal B = purchase price A = appreciation since purchase

That brings us to Barnett/Jadynak. In this case, there was pre-date of marital appreciation and the court awarded that appreciation to the husband who had purchased the property prior to marriage. The court utilized the Drahos case, with slight variations, to illustrate the formula for community lien as follows: C + [C/B x A] C = community contribution to principal B = value at date of marriage A = appreciation during marriage Barnett/Jadynak has now addressed the issue of pre-date of marriage appreciation.

These formulas can only do so much.

With what happened to the Arizona housing market over the last 10 – 12

years, one needs to be careful when dealing with pre and post date of marriage appreciation. That’s because it may be depreciation instead of appreciation. In Re Marriage of Valento, 225 Ariz. 477;240 P.3d 1239; 2010 addressed this issue. The court said that the community was still entitled to a lien, even if the market was declining. However, The court stated; “We likewise see no reason to deprive the community of the entire value of the contributions when separate property depreciates to the point that the owner-spouse has negative equity – to the extent that the owner-spouse has received existing value from the community, the community’s contributions must be recognized.

It would be illogical, however, to hold that the community should receive the full benefit of its contributions to principal when a portion of the equity it created can no longer be realized.”

So now we have a slight twist to the Barnett/Jedynak formula: C - [C/B x D] C = community contribution to principal B = value at date of marriage D = depreciation during marriage

A final consideration in this process is title. What happens if a spouse who owned the property prior to marriage deeds the property to the community during marriage? The odds are that when this happens, there was some type of separate property component to the equity. Is the separate property spouse gifting the separate property equity to the community or does there still remain a separate property interest in the residence? That’s a discussion for another day. n David Cantor, CPA/ABV, is the founder of Cantor Forensic Accounting, PLLC and has been practicing in the area of Family Law accounting since 1990. Cantor has worked on close to 1,000 Family Law cases, ranging from small businesses to entertainers, professional athletes and executives from international companies. His experience covers all aspects of Family Law issues including: income determination, business valuations, separate property tracings, reimbursement claims and community waste issues.

David Cantor will be speaking on this topic at the Forensic & Litigation Services Conference.

Forensic & Litigation Services Conference — Sept. 7 ASCPA Learning Center or Via Webcast

Learn more at www.ascpa.com/ conferences JULY/AUGUST 2017 AZ CPA

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Looking at Cyber Security From the Top Directors must take the initiative to make sure a company’s “crown jewels” are protected.

by Sarah Ovaska-Few Corporate board members can’t afford to ignore the dangers of cyber-attacks, with an infected file capable of quickly stripping a company of valuable information.

It’s not a matter of just slowing down operations; data theft could jeopardize pending mergers and acquisitions or create a public relations nightmare.

With money and reputation at stake, businesses need to make cyber-security a company-wide priority if it isn’t already, says Kim Chatani, CPA, CGMA, a California-based Khronicle Partners Inc. advisory partner with two decades of experience in audit consulting and information technology.

“The board must own it, and they must set the tone,” says Chatani, who also serves on the board of two companies, including a bank.

It’s important to know about the risks to help properly steer the company in the right direction, he said.

“Don’t be afraid and shy away from learning about cyber-risks,” Chatani said.

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“The board is ultimately responsible at the end of the day.”

What’s at Stake Awareness of lurking hackers and other online dangers has increased tremendously in recent years, said Robyn Bew, director of strategic content development for the National Association of Corporate Directors (NACD), a U.S. not-for-profit focused on boardroom issues.

In 2014, less than 40 percent of corporate directors reported that cyber-security risks were routinely covered in board meetings, according to the NACD’s Director’s Handbook on Cyber-Risk Oversight. That number jumped to 90 percent last year, Bew says.

“Cyber-security has really become part of the board’s regular agenda,” she said.

The jump in awareness is in no small part because of news coverage of major events, from customers’ data at companies such as U.S. retailer Target being compromised to major geopolitical events such as the fallout from the WikiLeaks data trove. A teenage hacker exposed security weaknesses in 2015 at the UK’s TalkTalk internet service company, a cyber-attack that cost the company more than 100,000 customers and $73 million, according to The Guardian.

A breach can begin by an employee inadvertently downloading an infected file, or through a more targeted infiltration by capable hackers who can bypass basic security measures.

Cyber-security experts have seen an uptick in extortion-related events, Bew says, with hackers demanding money after stealing data from a company.

No Businesses or Industries are Safe from Attack “Cyber-security is a massive issue for all corporate entities, regardless of size,” says Nigel Davies, FCMA, CGMA, a Wales-based accountant who also serves on the board of a financial services company. “Attackers have little

feelings from where they find their ill-gotten gains; they simply target the most vulnerable.”

Nearly half of all cyber-breaches stem from criminal or malicious attacks, with an average cost to victims of $4 million, according to an IBM study on data breaches.

No alarm bells sound when online thefts occur; an average of 146 days can pass before officials realize information was compromised, according to the NACD. There are also considerable risks when third parties, such as law firms or consultants, hold sensitive information, as was the case when more than 11 million documents, known as the “Panama Papers,” were leaked to journalists after hackers stole the data from a Panamanian law firm specializing in offshore business dealings.

Unknown Dangers Known events are only the tip of the iceberg when it comes to cyber-security, Bew said. Even more concerning are situations in which companies have been breached but don’t know it until they suddenly lose bids, or overseas competitors release products with striking similarities.

It can be impossible to determine what the losses are in those cases.

“There’s all this stuff that’s under the water that we don’t see,” Bew says.

“How do you calculate the value of lost intellectual property?”

With the widespread prevalence of cyber-theft in all types of industries, it’s extremely unlikely that a sizable company would have no ongoing issues.

“A red flag for directors would be if management is reporting that the company is not experiencing any cyber incidents,” Bew says. “No company is perfect at this.”

In 2014, less than 40 percent of corporate directors reported that cyber-security risks were routinely covered in board meetings - that number jumped to 90 percent last year.

“Attackers have little feelings from where they find their ill-gotten gains; they simply target the most vulnerable.”

Confidence Not Widespread While awareness of cyber-security issues is up, not all board members are confident in their abilities to address them. The NACD survey found

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How to Boost Cyber-Security Evaluate board composition. If the board lacks tech expertise, consider bringing someone with that background on board.

Kim Chatani, CPA, CGMA, a Khronicle Partners Inc. advisory partner who serves on the boards of two companies, said the future board member needs to have the ability to look at how cyber issues affect business. “It doesn’t mean the board should look to add members with a purely technical background,” Chatani says. “These board members should also have a business mind and see how the technology interacts with the business side.”

If the board doesn’t have the technical expertise to effectively govern cyber-security, it can bring in a third-party subject-matter expert to consult on the issue.

Find your crown jewels. The first thing board members need to discover is what and where the most valuable information in the company is, and what would happen if it were compromised.

The most valuable data set, or “crown jewels,” will be different from company to company, and it’s important to look at all levels of a business to figure out what vulnerabilities exist, said Robyn Bew, the director of strategic content development for the National Association of Corporate Directors in the U.S. Also, come up with a plan of what to do if the data are compromised, and how clients, authorities and other stakeholders will be notified. Because no one is immune to cyber-attacks, everyone should have board-approved plans and policies for how to react and minimize the damage if they do get breached.

Get regular updates. The board needs to get regular updates from management on contextual indicators related to cyber-security. For example, board members can be updated on how many threats to the network were detected in a given month; whether any breaches occurred; the cost of those breaches; and how management has responded to threats and managed and maintained its networks.

“They don’t necessarily need to be totally in the weeds,” says Steven Ursillo Jr., CPA/CITP, CGMA, a partner, and director of technology and assurance services for the U.S.-based accounting and technology consulting firm Sparrow, Johnson & Ursillo. “But they need to know enough to be able to steer the ship in the right direction, so they don’t head for disaster.”

Discourage risky cyber practices. Breaches can occur when employees are allowed to use their own technology and plug into company networks without scanning for viruses, said Anurag Chaturvedi. Push for policies that also prevent staff from using unsecure Wi-Fi networks at places like coffee shops.

Employees who travel frequently, especially in nations known to be hot-beds of cyber-crime activity, need to maintain protections on their devices and avoid using unsecured Wi-Fi networks, Bew said.

Finally, require strong passwords. Do not tolerate the use of “password” or “12345” as the gateway to privileged information.

Make cyber-security a top priority. Companies should align their cyber-security policies with governance, overall risk management, and the company’s business planning, Chatani says. Also consider looking at cyber-risk insurance as a part of the overall strategy.

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that nearly 60 percent reported that they were challenged when it comes to overseeing cyber-security issues.

Board members of smaller companies have a steep learning curve as well, according to a PwC survey. While 63 percent of directors at large companies report being very comfortable in their company’s resistance to cyber-attacks, less than one-third of directors at smaller companies had that same level of assurance.

Not making cyber-security a priority puts a company at unnecessary risk, said Anurag Chaturvedi, a senior director at the consulting firm Crowe Horwath International.

It’s important that boards lead the discussions on cyber-security to look at the overall health of the company and determine how much an attack could disrupt operations, he said.

“Boards need to understand risk exposure and their risk appetite while developing their cyber-security priorities and strategies,” says Chaturvedi, who specializes in information technology risk assessment.

He estimates that large companies in the UAE will spend 40 to 55 percent more this year compared with the previous year on cyber-security, a necessary uptick to meet rising threat levels.

What Should You Do? Finance professionals, including those who head audit committees, can play key roles by pushing management to adopt policies that minimize the dangers of cyber-intrusion where possible, says Davies.

“These skills enable them to research, translate the sometimes complex IT issues, and balance the risks with the costs,” Davies says.

He also recommends seeking cybersecurity insurance. The process involves going through a detailed risk assessment and will help board members as well as company executives assess areas of weaknesses and adopt best practices.

Companies should not wait until an attack occurs to formulate a response plan, said Chaturvedi.

He suggested companies go through

While 63 percent of directors at large companies report being very comfortable in their company’s resistance to cyber-attacks, less than one-third of directors at smaller companies had that same level of assurance.

an inventory where they assess the cyber-security risks of IT systems, data stores, vendors, and suppliers. Then, at the board’s urging, policies can be deployed to detect ongoing and future attacks.

“Attackers are constantly innovating, testing, and refining their tactics,” he said. “This is a battle where inattention and complacency can have devastating consequences for an organization.”

While many board members may not have the technical knowledge to completely immerse themselves in cyber issues, Chatani says, those with keen business skills don’t need to.

Rather, board members can concentrate on protecting the most valuable data, or “crown jewels” of the com-

pany, and authorize company officials to take steps to protect those data.

He also suggested developing sources on cyber-security outside the business that can offer insight into trends that in-house technology experts may not know about. It’s important, however, to not depend on a consultant to do all of the work, he said.

“You can outsource the work,” he said. “But you can’t outsource the responsibility.” n Sarah Ovaska-Few is a U.S.-based freelance writer. This article first appeared in CGMA Magazine. For more articles, sign up for the weekly email update from CGMA Magazine at http:// bit.ly/UZ07NC.

Cyber-security Risk Management Reporting Framework The AICPA has developed a reporting framework intended to help organizations take a proactive approach to cyber-security risk management and to communicate the effectiveness of the cyber controls they have in place. Additional cyber-security resources are available at ww.w.aicpa.org/cybersecurityriskmanagement.

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Headfarmer Headfarmer is a local boutique recruiting firm that specializes in finance and technology within the greater Phoenix area. Headfarming helps people connect and grow by using a consultative approach, selfless acts of service, and a due diligence process that exceeds industry standards. We take a genuine interest in examining our clients’ hiring needs. We make a true investment in determining our candidates’ strengths and careers goals. Hunters provide for today, and farmers cultivate for a generation.

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10 10 Tips to Get the Most Out of Your Planning Retreat

by Gary Adamson, CPA Another tax season is over and many CPA firms are turning their attention to scheduling their annual planning retreat. If you’re not one of them, then I encourage you to become one; planning retreats are a critical part of firm management and strategy. It is the process where your leadership group establishes the road map for the firm for the next year and beyond. You know the old saying, “If you don’t know where you’re going, any old road will do.”

As a former managing partner (MP) with a firm who religiously held an annual retreat, I can offer a few tips to you from experience that will help you get the most out of the process. You’re investing a lot of time (= money) taking your top talent out of production, so make it worthwhile.

Here are my 10 tips. Give them to your MP or firm administrator. It’s a quick checklist to help you.

Venue. Hold the retreat outside your offices. Select a comfortable meeting facility far enough away from the office that it is not easy for people to “stop by” the office. Better yet, hold it out of town. This takes a little bit more planning

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but is worth it. We used to alternate between staying local and going to a resort location every other year.

to “sleep on it” can be good and the second morning conversation is often the most valuable of the retreat.

Mix in Some Fun. You don’t get the group together very often. Take advantage of the opportunity to do something as a group that’s not business.

It will help you get to know each other better and perhaps take the edge off of the retreat itself, particularly if you have some tough issues to discuss.

Outside Facilitator (or Not). I have a strong opinion here and not just because I do a lot of retreat facilitation.

In the no-facilitator approach, your MP usually winds up leading the retreat because “someone has to do it.” When you put your MP in that role, it creates a very different atmosphere and changes the dynamics of his or her participation. Most firms find that it is worth the investment to bring in the outside person.

Spouses? This is a business meeting and a time to be with your business partners. That said, I’m a realist.

Depending on your destination, if spouses are going to show up, try to make it before or after, not during.

Duration. One day or two? My experience is that it is tough for most firms to get it all done in one day, but on the other hand two full days can be exhausting for the group. Consider a day and a half or so, concluding early afternoon on day two. The opportunity

Survey. Make sure that you survey your group and develop the agenda beforehand. It takes too much time to try to do it on site at the retreat.

The survey is best done by the outside facilitator in a confidential manner, meaning that individual comments are not shared. Typically the facilitator and the MP will use the survey results and work together to develop the agenda.

Give Back to the Future “A professional goal that I have set for myself is to have the opportunity to one day mentor and encourage other women to continue their education.” ­—ASCPA Scholarship Recipient, 2017-18 Assist future CPAs through a contribution to the Arizona CPA Foundation for Education & Innovation.

These funds will provide scholarships to accounting students in Arizona.

Donate at www.ascpa.com/foundation

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Strategic. Remember that your annual planning retreat is a strategic meeting of the firm’s leadership. It is about the future of the firm and where we’re going – big picture things. It’s not about billing rates or staff salary increases or things that are part of the day-to-day management of the firm.

How Deep Do We Go? This is the question about whether we are flying at the 30,000 foot view or do we get into the weeds? The answer should be somewhere in between. The purpose of the retreat is not to hash out detailed solutions to problems or questions. It is to develop the question or issue far enough to articulate agreement on a direction and an action plan to later deal with the details.

Short List / Short Time Frame. I strongly suggest that you keep your action plan coming out of the retreat to a relatively short list and that you focus on what you can get done in the next several months excluding busy season.

Figure out what is really important and don’t over-commit. Coming out with a laundry list and unreasonable expectations is setting you up to fail.

And, we all know that implementation is where most of us drop the ball.

Implementation. Make sure that you spend some time at the retreat talking about how you will implement beyond putting a name and date beside each action item. How are you going to make sure that the ball isn’t dropped? You need an implementation action plan and it’s really up to your MP after the retreat to keep it alive. n Gary Adamson is a CPA in Illinois and the president of Adamson Advisory, specializing in succession planning and strategic planning for CPA firms. He can be reached at (765) 488-0691 or gadamson@adamsonadvisory.com. For more about Adamson Advisory, visit www.adamsonadvisory.com or follow the company at www.adamsonadvisory.com/blogArticle — and www.twitter. com/adamsonadvisory

AZ CPA Quick Quiz You’ve Read It, Now Get Credit Take this quiz online or submit this hard copy on AZ CPA content.

Receive a score of 70 percent or more and earn one hour of CPE credit in specialized knowledge. It’s that easy!

Fees Members: $25 Nonmembers: $40 Online Access Go to www.ascpa.com/QuickQuiz to access links to all active quizzes. Purchase quiz and the quiz link and password will be emailed to you. Your results will be sent immediately after completing, and certificates are emailed within two business days.

Hard Copy Please select one answer for each question. Fill out registration/payment information below and mail or fax to the Society office. Quiz results and certificates will be emailed to the address provided on the registration form. *This quiz will be available until August, 2018. Please note that users have three attempts to pass the quiz with at least a 70 percent score.

July/August 2017 Issue of AZ CPA* 1. I n t h e C h a i r ’ s m e s s a g e , Montgomery suggests doing this in the immediate future as technology continues to transform: m Take as many IT specific courses as possible m Find ways to stay connected m Ignore that change is happening 2. Arizona’s successor liability rules do not apply to which of the following: m County excise tax m Severance tax m Income tax 3. The taxpayer must submit this form to obtain a certificate stating that no tax is due: m Form 10523 m Form 1120 m Form 13775 4. When a CPA is called as an expert witness in divorce proceedings, it is their responsibility to determine which case’s formula to use. m True m False

7. The first thing board members need to discover to effectively govern cybersecurity is: m What and where the most valuable information in the company is m Who is plugging in personal electronic devices at work m How much a third-party subject matter expert will cost 8. The effectiveness of cybersecurity would be enhanced greatly by doing what? m Allowing “password” to be used as a password m Consider looking at cyberrisk insurance as part of your overall strategy m Placing cybersecurity updates as a topic on a board member meeting agenda

board meetings in 2014. Last year the number increased to: m 70 percent m 80 percent m 90 percent

9. When scheduling a planning retreat for your firm or business, how deep should you go in strategizing and problem solving? m 30,000 ft. high-level view m Get into the “weeds” m Somewhere in between

6. On average, how many days can pass before officials even realize information was compromised? m 142 days m 146 days m 148 days

10. Which of the following is not one of the tips mentioned in the article regarding planning retreats? m Mix in some fun m Practice public speaking m Implementation

Quick Quiz Registration Name: ____________________________________________________ Email:_____________________________________________________ Telephone: _________________________________________________

Payment

m Member: $25 m Nonmember: $40 Checks: Please make payable to: The Arizona Society of CPAs Credit Card:

m Visa m MasterCard m American Express

Credit Card #: _______________________________________________ Expiration Date: _____________________________________________ Name on Card. _____________________________________________

5. Less than 40 percent of corporate directors reported cybersecurity risks were routinely covered in

Mail to: ASCPA, 4801 E. Washington St. Suite 180, Phoenix, AZ 85034-2040; fax to ((602) 324-6045 scan and send to ASCPACPE@ascpa.com.

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Classifieds Business Opportunities/ Practices for Sale N. ARIZONA PRACTICE FOR SALE — Sole practitioner in Page, Arizona looking to retire. Good growth opportunity for right firm. Solid client base.

Situated on the shores of Lake Powell, center of the Grand Circle. Great recreation opportunities. Call (928) 645-9478 for more information.

OVCPAFIRM — Tucson CPA firm has an opportunity for a licensed CPA with a minimum of 3 years public accounting experience. Candidate should be a career-minded self-starter with strong interpersonal and communication skills.

Experience: • Plan and prepare federal and state individual and business tax returns. • Reconcile accounts, compilations and preparation of financial statements. • Solid knowledge of reporting state and local sales tax and payroll taxes.

• Advanced working experience using Quick Books, Creative Solutions, Ultra Tax and Excel preferred. This a full time position with competitive salary and benefits DOE. Please send your resume with salary requirements to ovcpafirm@ gmail.com O R O VA LL E Y / M A R A N A C PA PRACTICE — Oro Valley sole practitioner CPA is seeking to buy a comparable practice in Oro Valley, Marana or NW Tucson. Our practice is personal tax preparation/planning as well as fee-only financial planning and investment management. We would also consider a merger partner or an office sharing arrangement. Our firm is a Registered Investment Adviser and we are focusing our growth in that area.

Contact John Daniels at (520) 572-8774 or john@johndanielscpa.com. Website: http://johndanielscpa.com.

TUCSON CPA TAX PRACTICE seeks succession plan with new partner — A two partner firm of over $1 million seeks a tax partner or manager to buy out partners over time. Beneficial if interested person has an existing practice to merge in. Over 30 years, the practice is highly

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profitable with a strong concentration in business and individual tax preparation and consulting. Firm would also consider merger with equal or larger firm. Firm has a 90-day lease cancellation notice. Please contact CPAfirm3@ gmail.com.

Employment CPA FIRM, TECHNOLOGICALLY ADVANCED AND NONTRADITIONAL ADDS NEW TAX POSITION — R.C. Thornton & Associates, LLC is located in North Phoenix, Arizona. Our culture of top-notch team-collaboration produces excellence. We are rewarded by working less hours than most CPAs. Our efficient firm has streamlined technology utilizing a cloud environment and CCH systems. A dynamic mentor training program will ensure your success. Qualified CPAs have 5+ years of recent tax experience. Preferably an MS degree in Taxation or candidate. Are we a good fit? Before applying go to http:// www.rcthornton.com/careers.html read about our culture, benefits, education, and watch the career videos, then email your resume to info@rcthornton.com.

TAX MANAGER - CPA — Tull, Forsberg & Olson. We are looking for a stellar Tax Manager to become a trusted business advisor to our clients. We provide top quality accounting, auditing, tax, and a variety of consulting services to private companies in a variety of industries. We’re dedicated to professional excellence, integrity, and community service. If you are a Tax Manager and a licensed CPA with seven years of public accounting experience we would love to hear from you. See our career section on our website for more information. Email resumes: tfyan@tfocpa.com.

TAX MANAGER AND TAX STAFF —Eight-person Tucson CPA firm, has Tax Manager and Tax Staff positions open for CPAs with a minimum of five years of recent CPA firm experience with partnership potential. Proven sales and

marketing skills are highly desirable.

We offer highly competitive salaries and comprehensive benefits, including group health insurance, 401(k) with company 4% contribution, eight paid holidays, paid sick time and vacation, and complete reimbursement of all CPA related expenses. Please apply for the Tax Manager or Tax Staff opportunity today, by sending your resume and salary requirements to cpafirm3@gmail.com.

Office Space Beautiful North Peoria Location — This is it! Premier Office development located by Happy ValleyLake Pleasant intersection, in the heart of thriving North Peoria. This 2,797 sq.ft. suite has the highest quality wood trim and finishes giving it Biltmore area quality. It is the last suite in a 98 percent occupied highly professional center.

Contact: Tevis (623) 707-5280 or email: tevis@essex-companies.com.

OFFICE SPACE AVAILABLE WITH GROUP OF TUCSON CPAS — Share in costs with Tucson CPA group for a receptionist, conference rooms, a comprehensive library, copier/fax/scanner and other office services and facilities.

Become part of CPAs who each own their own practices, but unite together in discussions and interpretations of tax and accounting issues through personal interaction or meetings. Options available to either lease your own office space from the group or pay a standard monthly fee to have use of the conference rooms, receptionist, mail services, copier/fax/ scanner and other services. Located in the prestigious Plaza Palomino. Please contact David Lotz or Randy Livingston for more details. (520) 321-1334. Website: http://CPATUCSON.COM. Office space available in old town Scottsdale — Ideal location. Large Executive office space in a professional suite. Share space with other CPAs & attorney, with access to the typical amenities (conference & copy room and kitchen). A staff office is also avail-

able. Contact Rita at (602) 553-0202 or wandatang@wandatangpc.com.

SCOTTSDALE OFFICE SPACE AVAILABLE — Raintree & Hwy 101.

Large window office with adjacent cubicle in class A building is available immediately. $800/month includes one covered parking spot, file and copy room. One-year lease. Call Jim for more information (480) 951-9229 or email jww3996@aol.com.

TUCSON CPA HAS OFFICE TO SHARE — Large private office available with great views, spacious conference room and reception area. Convenient central Tucson location near Speedway and Wilmot. Reply to: options4cpa@ gmail.com.

For information about classified ads visit www.ascpa.com.

You’re Invited!

Come to the ASCPA Open House - July 18 3:30-6:30 p.m.

We’ve moved - same building, different floor. Come by and check out your new ASCPA learning center and office. To better serve you, we have updated our office space and technology to make our webcasts even better. Stop by, tour the new space and enjoy some appetizers and beverages. We will also raffle off a couple of gift cards. Please go to the link to RSVP. Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040 RSVP at www.ascpa.com/openhouse

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Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040

PRSRT STD U.S. Postage PAID Phoenix, Arizona Permit No. 952 ADDRESS SERVICE REQUESTED

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