COCPA NewsAccount - 2015 - May/June Issue

NewsAccount Colorado Society of CPAs

May/June 2015

Managing Risk

• The risks of highly technical audits • Taking the guesswork out of selling a company • Performance reviews: From dreaded task to strategic tool

Contents Features

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Highly Technical Audits = High Risk Audits, especially high risk ones, are a significant commitment. As a CPA, you have a professional responsibility to do them right.

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Transforming the Performance Review

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Goodwill Changes Lives

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Laying the Groundwork to Sell

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Contributing Through Board Service

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Refresh, Reenergize, Renew

It's time to think of the review process as an ongoing cycle of continuous feedback.

Your favorite place to drop off old clothes or find that perfect costume is so much more.

Timing may be everything. but when you think you're ready to go to market, make sure you're 100% prepared.

CPAs bring unique skills to the corporate board in addition to technical expertise and business acumen.

Taking a sabbatical requires planning and communication. Do both well — and you, your team, and your clients benefit from the break.

Departments

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Chair Profile In Memoriam: Marvin L. Stone, CPA Women to Watch Awards Movers & Shakers Classifieds May/June 2015 • www.cocpa.org •

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Chair Profile

NewsAccount

Welcoming the New Chair: Steve Corder

A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 61, No. 1 May | June 2015 Board of Directors Steven R. Corder Chair Mark T. Solomon, Vice Chair Tawnya R. Ramirez, Treasurer Sheila M. Balzer , Immediate Past Chair Mary E. Medley, Secretary Directors Victor A. Amaya, Craig A. Arfsten, Christine Benero, Kelly G. Boggs, Ann E. Hinkins, Dan W. Soukup Editorial Board Jack Allgood, Kay R. Dragon, Patrick A. Lytle, Georgia Z. Phillips, Laura J. Theiss, Barbara J. Tedesko, R. Stephen Van Meter, Michael D. West Mary E. Medley, President/CEO Elizabeth M. Julin, Deputy Director Krista Flynt, Editor/Publisher Natalie G. Rooney, Contributing Writer NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave., Suite 200, Englewood, CO 80111. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication.

Membership dues include a $9.90 one-year subscription to NewsAccount. Periodical postage paid in Denver, CO, and additional mailing offices.

POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111 Net press run = 8,550 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 8,450; free distribution by mail = 50; free distribution outside the mail = 0; total free distribution = 50; total distribution = 8,500; office use, leftovers, spoiled = 350; returns from news agents = 0; total sum = 8,850; percent paid and/or requested circulation = 99%.

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NewsAccount is available online at www.cocpa.org.

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• NewsAccount • May/June 2015

BY NATALIE ROONEY

Welcome to May, the month when flowers bloom, some CPAs recover from tax season, and the COCPA welcomes a new chair of the Board of Directors. From the flatlands of Omaha, Neb., to Denver, to the shores of New Jersey, and finally back to Denver, Steven R. “Steve” Corder, CPA, CGMA, has covered a lot of ground. Now he’s ready to take on his year as the new COCPA chair.

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f you look at Steve Corder’s background, you would have predicted he’d spend his entire career at a Big Four firm, specializing in the technology sector. In fact, Corder himself thought that was where he was headed. But life had other plans.

During an accounting class at Arapahoe High School in Centennial, Colo., he listened to a guest speaker, wearing a three-piece suit, who happened to be a CPA, explain what he did for a living.

“The accounting angel came down, and I received my calling in life,” he laughs. “I knew from day one I’d be an accounting major even though I wasn’t sure what was in store for me.”

After graduating from the University of Nebraska, marrying, and going to work for Peat Marwick Mitchell (now KPMG LLP) in Denver, Corder found himself on a rotational assignment in the firm’s Mondale, N.J., office, focusing first on technology and later on quality assurance and technical research.

“I truly thought technology was going to be my specialty,” he says. But fate, in the form of a colleague in the firm’s Denver office, had other plans. “I returned to Denver, and (1995-1996 COCPA President) Tom Kundinger asked me to start a new firm with him,” Corder remembers. He decided to take the chance,

and on May 1, 1991, they opened their doors with “three employees, two clients, and a lot of hope.”

Fast forward 24 years, and Kundinger, Corder & Engle, PC is still going strong with Corder now the managing director. The firm specializes in auditing charities in the Denver Metro area. “We’re still around because of Tom’s vision,” Corder says. “It’s a unique practice that was founded on the idea that we’ll do one thing well — audit charities, we won’t travel, and we won’t work overtime. Our employees leave at five o’clock. What a concept,” he laughs. “We learned pretty quickly that all of this leads to happy employees, which in turn leads to happy clients.”

Corder says the best thing about the work he does is working with the charities themselves. “These organizations do the hard work in the community that no one else wants to do,” he explains. “We get to work with one hundred and twenty ministries of all kinds and sizes. I love helping these nonprofits, their employees, and board members. They’re so mission focused and generally don’t have a lot of financial expertise. We are a part of the discussions with their boards and CFOs about whether their business model is working or not, helping them to determine how they’ll pay for and deliver their programs.”

Getting Involved Corder’s first involvement with the COCPA came in 1992 through teaching CPE. “I’d taught CPE at what was then Peat Marwick for many years, and I missed it,” he says. “Plus, it brought in a few extra bucks. I had four kids to support!” He also got involved in committee work with the CPE Curriculum Committee, the Careers in Accounting Committee, and the Not-for-profit Conference Planning Committee.

Five years ago, he was tapped for the COCPA Board of Directors.

This year, his agenda as chair will include guiding the COCPA through its new strategic initiatives. “We’re continuing to ask, ‘What should be the direction of the Society going forward?’” he says. “We know we can no longer rely on CPE revenue to be our largest source of funding, and our evolving business model will reflect that. We’ll be identifying what we need to do and putting the steps in place to do it.”

Corder says he also will continue to focus on servant leadership.

“The COCPA does a great job of it, but how can we do it better? As a state society, we have such a strong reputation. It’s not until you travel to other states and attend conferences that you realize what a good thing we have here.”

Ask Corder about his hobbies, and you’ll discover he’s got the credentials to be considered a professional volunteer coach. His kids’ baseball, basketball, soccer, volleyball, and softball teams have all benefitted from his guidance. “One of my passions is youth sports, not only helping my own kids, but also helping others,” he says. He has served as the basketball commissioner for the Catholic Schools Athletic League for the past seven years. When the kids hit high school sports, he steps away. “The real coaching experts take over to undo all of the terrible fundamentals I taught,” he laughs.

Corder is involved at his church, St. Thomas More Catholic Church, and golfs occasionally. “I call it ‘purpose golf’ though. It mostly involves entertaining clients or catching up with friends,” he says. This onceupon-a-time caddie is a more avid player than he lets on, so be forewarned if he invites you to come along for a “casual” round.

Speaking about the impending dearth of kids living at home, Corder says he and Pat recently have been educated by his firm’s younger staff members on the merits of Netflix. “We’re about to become binge watchers!” he says of his plans to dive into the series House of Cards. “We’re way behind. Meredith graduates in May, and then we’ll be all in.”

Be forewarned about Steve’s easy-going demeanor, too. Behind that casual style and quick sense of humor is a competitive spirit that is borne out by his dedication to reaching his daily Fitbit goals.

Count on Steve Corder to invest that same drive to achieve in the COCPA during this new year. s Email Steve Corder at scorder@kcedenver.com.

Family Fun Corder and his wife, Pat, have four children: Matt, who is about to become a CPA in San Francisco and is married to Brittney; Stephanie, who is the operations manager for the nonprofit organization Families of Character in Denver; Chandler, who works in marketing for PlaceWise Media; and Meredith, a senior at Arapahoe High School, who will attend the Corder family alma mater, the University of Nebraska, this fall.

May/June 2015 • www.cocpa.org •

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Practitioner Alert

Highly Technical Audits = High Risk Practitioners who don’t perform many audits each year, but who especially are auditing in highly technical areas, such as employee benefit plans, need to be aware of the high risk to their practice and their clients if these engagements are not done correctly.

BY NATALIE ROONEY

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ust how big and how real is this problem?

It’s big, and it’s real. And numbers show it’s a statistically valid issue, says Bill Lajoie, CPA, shareholder at William G. Lajoie PC, Centennial, and technical reviewer for the COCPA peer review program. He sees the proof of audit deficiencies. With 750 Colorado firms subject to peer review, approximately 250 peer reviews cross his desk every year. Lajoie says while there are firms who do one audit and do a great job, that’s the exception rather than the rule.

“Those firms know their client and industry, and they keep current on professional standards,” he says. “But some practitioners just take CPE in tax and consulting and completely ignore A&A education.” That, he says, is where it all begins. Practitioners start working in areas where they don’t have the appropriate knowledge or education, creating a risk to themselves and their clients.

“If you have a tax practice, but still do one audit, you need to educate yourself about it,” he cautions. He says it’s understandable that firms want to serve their clients and that there may be turf issues. “CPAs worry that if they let another firm in to perform an audit, say of a 401k plan, they’ll lose the client,” he says. “So people respond by thinking about lost revenues and their checkbook.” Instead, Lajoie encourages practitioners to focus on the opportunities. “Get the right education.

Consult with other firms. Consider what ethical and quality control standards require you to do.”

The standards CPAs commit to in the Code of Professional Conduct are exactly what Sheila M. Balzer, CPA, CGMA, past COCPA chair and audit partner at Holben Hay Lake Balzer LLC, Denver, points to

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• NewsAccount • May/June 2015

when she discusses the topic. “When you’re a CPA, you have a professional responsibility to abide by professional standards,” she says.

“The second auditing standard says when you evaluate whether you should accept an engagement, you decide if you have the expertise to do it. If you don’t, you shouldn’t be doing it.”

Balzer adds that while practitioners could technically get up to speed, “we’re not talking about an hour of education. We’re talking about significant hours of CPE and training — and consideration of necessary quality controls, such as hiring a CPA with industry expertise to review your work now instead of waiting three years for your peer review.”

Lajoie emphasizes that point, saying practitioners need to comply with standards — and not just in the bureaucratic sense.

“What’s in the public interest?” he asks. The answer is clear: High quality audit work.

Professional Responsibility The profession is taking steps to correct and prevent future deficiencies (see The Future of Peer Review, NewsAccount, January/ February 2015). Balzer says deficient audits by some likely will bring increased regulation for all. “Most firms are doing what they should,” she says. “It’s this other set that’s causing problems for everyone, and that’s frustrating.”

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Balzer, whose audit expertise is in credit unions, nonprofit organizations, employee benefit plans, and HUD projects, gives an example of where auditors might get into trouble. “If someone asks me to do an audit in the automobile industry, which has a lot of specialized accounting and inventory issues, I’d like to say yes and get the client.

But I can’t unless I'm willing to make a significant investment in training time and ensuring that controls are in place for the quality of the audit,” she says. “I would be doing a disservice to my client and myself.”

She says it goes back to basic auditing standards. “Do I have the competency?”

Balzer emphasizes that employee benefit plan audits are especially high risk.

Unfortunately, many CPAs don’t consider that they may actually be at risk. “CPAs are trying to protect their client relationship because they’re afraid of another firm coming in,” Balzer says. “We have to show more professional responsibility than that. I do pension audits for clients, and many times there’s another firm on site as well. You can find someone to work with who will respect your relationships with the clients.”

Errors of Omission During peer review, firms must list all engagements considered to be A&A engagements. The problem is, some firms don’t, Lajoie says. “People have omitted putting down a limited scope audit on an employee benefit plan because they didn’t think it was a real audit,” he says. “I’ve found firms who spend ten to twelve hours to do an audit on an employee benefit plan, which may not be enough even for a compilation. The firm has no audit guide, no industry-specific practice aids, and no industry training. The firm says it did the audit as an accommodation to the client, and likely it charged a minimal fee.

That’s not going to produce a good result.”

It’s also what is bringing the U.S. Department of Labor's (DOL) focus squarely upon these high risk audits. “The DOL is taking a close look at firms doing these audits,” Lajoie cautions. He adds that

firms can do one or two audits adequately but, he emphasizes, only as long as CPAs are getting the appropriate CPE and adopting other measures, such as having another party assist in planning and conducting the audit or perform an engagement quality control review. “You can do a great job regardless of the number of audits performed,” he says. “I’ve seen it. But there are others who have no training, don’t use relevant practice aids, don’t use consultation, and produce a lousy product that doesn’t meet ERISA standards. Then the DOL comes down hard.”

While CPAs are supposed to list every attest report they’ve issued, peer reviewers generally review the procedures used to prepare the schedule but don’t audit the list. “They rely on you to have the integrity to tell them,” Balzer says. “List all of your engagements.”

The Consequences Once the DOL identifies deficient work, the CPA firm is referred to the AICPA Professional Ethics Division which can ultimately refer the issue to the state board of accountancy. “It comes home to roost,” Lajoie cautions. “A CPA could lose his or her license to practice and deservedly so.”

Lajoie says practitioners need to ask themselves: Do I want to do something as an accommodation without proper training and risk losing my license? “That emphasis hasn’t been made in the past,” he notes.

“This isn’t just a slap on the wrist. It’s a lot more serious.”

The seriousness extends beyond loss of licensure for the CPA; clients can also feel the DOL’s wrath. If the DOL asks a practitioner to send in work papers to support an audit report and the 5500 filing is rejected, the client is subject to a $50,000, or more, penalty if not remedied quickly. “And governing boards bear a fiduciary responsibility beyond the fine,” Lajoie says. “This can really damage clients and individual fiduciaries.”

Resources Available For the past year, the AICPA’s Enhancing Audit Quality initiative has been underway to take a holistic approach to improving quality. The AICPA’s Employee Benefit Plan Audit Quality Center provides numerous practice aids and resources, including information not only for CPAs performing ERISA audits but also for those in charge of plan governance as well, so clients gain more understanding of their fiduciary responsibilities and the need for comprehensive audits.

The AICPA’s website also includes similar materials through the Government Audit Quality Center at www.aicpa.org.

Balzer says deficient audits have created significant frustration within the profession and at the AICPA. “As a result, we can expect huge changes in the way we run our practices. Whether clients know it or not, we will have to go through a completely different paradigm, and that will get passed on to clients.” While Balzer says CPAs tend to be a collegial group, patience is running thin. “The general feeling is that it’s time to censure.”

Balzer reminds practitioners that audits, especially high risk ones, are a significant commitment. “If you’re going to do these audits, you won’t accomplish them in a few hours,” she says. “If you don’t want to or can’t put in the time and quality controls, don’t do the audit.”

Auditing standards, says Balzer, exist to help CPAs make good decisions. “Don’t blow by them,” she advises. “There are a lot of pressures in a CPA firm. Revenue is rewarded. But it’s back-to-the-basics time.

As a CPA, you’re supposed to abide by standards to the best of your ability. That’s your professional responsibility.”s To access the AICPA Enhancing Audit Quality discussion paper, go to http://tinyurl. com/AuditQualityDiscussionPaper. To view the free e-version of the AICPA practice aid, Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing Practice, go to http://www. aicpa.org/interestareas/frc/pages/enhancingauditqualitypracticeaid.aspx.

May/June 2015 • www.cocpa.org •

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In Memoriam

To Life, as Marvin L. Stone, CPA, Lived It

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n April 23, 2015, the CPA profession lost one of its icons. Marvin Stone had told his family just a few short weeks before that his life was complete at 93 and a half.

As Rabbi Steven E. Foster put it at the April 26 funeral service in Denver, “Marvin was articulate, humble, self-effacing, sharp, and clear to the end of his life. We are all better because he was in our lives.” He was still joking with those who shared his final days, too.

Marvin anticipated the day his many friends, family members, and colleagues would gather without him, and he made sure he could add a few thoughts to the occasion. Shortly before his 78th birthday, he wrote and audiotaped his eulogy, to which he added a postscript shortly before his 87th birthday. As anyone who knew Marvin would expect, hearing his words, spoken with his familiar, slow, and measured voice, was heart-warming, poignant, and funny.

He told the story of seeing a sign at his favorite barbecue joint: “To truly enjoy life, take big bites — moderation is for monks.” It became Marvin’s motto. He added, “No one should mourn my passing… except my creditors.” He observed that if his body weren’t present, it should be no surprise as he’d left it to science, several parts having been relatively unused. No doubt, others could make use of those parts. And, if his body were present, it would be because his bequest had been rejected. The laughter filled Feldman Mortuary to overflowing.

A CPA who took and passed the Uniform CPA Examination as a junior with the highest grades in the country; a legend in the accounting profession who championed establishment of continuing professional education nationally; a first-generation American Jew whose parents immigrated from eastern Europe to escape anti-Semitism; a raconteur who could tell the same story repeatedly and still make you laugh; an avid world traveler, music lover, theatregoer, a green-thumbed gardener, and bridge player who hummed his favorite tunes when he walked; Marvin Stone was not only tall but also larger than life.

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• NewsAccount • May/June 2015

His daughter Robyn says in all her years she never saw him angry — “on rare occasions, he might express mild displeasure over a decision I’d made” but then he’d see the positive side. Greg Anton, CPA, CGMA, former AICPA and COCPA Chair, remembers: “Marvin was a true legend in the accounting profession nationally and as a business leader in Colorado. When I was nominated to become chair of the AICPA, he told me he would only support me if I changed my name to Marvin — like him and (former COCPA and AICPA Chair) Marvin Strait, CPA. He had some great quotes — Marvinisms — one of which I heard many years ago and again at his funeral. ‘Speak only if it is an improvement over silence.’ Marvin lived by that saying, and when he spoke it truly was an improvement over silence.”

Former COCPA Executive Director Gordon Scheer acknowledges, “Marvin played a huge role in my career, and I was most fortunate to have had a more than 30-year working relationship with him. He was my mentor since he was President-elect of the Colorado Society of CPAs when I was hired in 1955. Marvin was a man of unusual and rare talents. I especially admired his creativity, his leadership skills, his brilliance, and his willingness to pioneer and experi-

ment. He transferred those traits to the Colorado Society and, as a result, over the next few years, the Colorado Society became one of the leading CPA organizations in the country. His warm and outgoing personality along with his care and concern for the profession combined to make him one of the most effective leaders the profession has ever seen.”

And, lest another of his Marvinisms be overlooked, Marvin Strait tells the story often of Marvin Stone serving as an expert witness in a case being tried in San Francisco: “When on the witness stand, opposing counsel asked Marv how much he was being paid for his time. Marv told him ‘$375 an hour and that’s why I talk so slow.’”

That story never fails to provoke laughter.

Marvin was profiled in the March/April 2011 NewsAccount, and the article is worth re-reading to appreciate the depth and breadth of his influence on the accounting profession and those with whom he took big bites of life. His long-time companion Susy Grazi expressed it simply and eloquently at the service when she said, “L’chaim! To life, Marv, as you lived it.”

Contributions in Marvin Stone’s memory may be made to The Denver Hospice, www.thedenverhospice.org, or to the charity of your choice. s

Rule Change Alert

Need to Know for Colorado CPA Candidates The 150-Hour Requirement becomes effective in Colorado, July 1, 2015.

Any individual who plans to apply for a Colorado CPA license and qualifies under the July 2013 Colorado State Board of Accountancy Rules, must submit a completed CPA License application to NASBA Licensing Services by June 15, 2015.

On or after July 1, 2015, all applicants for licensure must provide proof of having a minimum of 150 hours of education plus one year of work experience. The Colorado rules, http://tinyurl.com/julyrules, outline what must be included in the 150 hours of content, minimum grade requirements, and additional licensure-related details.

NASBA Licensing Services provides educational pre-evaluation services for those interested in licensure. To apply online, go to

http://nasba.org/licensure/nasbalicensing/ colorado. For additional information, contact the NASBA staff at 866-350-0017 or colicense@nasba.org.

Also as of July 1, 2015, the Colorado State Board of Accountancy rules will require a minimum grade of C or the equivalent in accounting coursework. By policy, the State Board has clarified this as a minimum of 2.0 on a 0.0 to 4.0 grading scale. For pass/fail or letter-based (A through F) grading systems, the applicant must demonstrate to the State Board’s satisfaction that a grade of “pass” or a letter grade is equivalent to a 2.0 or greater.

Here’s how this grade requirement could affect Colorado candidates who are able to sit for the Uniform CPA Examination under the current rules and who will apply for licensure on and after July 1, 2015. For

example, a candidate who receives a D in Intermediate Accounting, as shown on the college transcript, could be approved to sit for the exam before July 1st this year.

If the same person applies for licensure in Colorado — having completed the exam, the current education requirements, and the experience requirements — after June 30, 2015, that Intermediate Accounting course would not count towards the accounting coursework requirement. The candidate would have to retake the course or take another course and receive a C or greater to proceed toward licensure.

Please share this important information with students and recent graduates who intend to become licensed Colorado CPAs so that they can plan accordingly. For more information, contact Mary E. Medley at mmedley@cocpa.org. s

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May/June 2015 • www.cocpa.org •

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Personnel Management

Transforming the Performance Review: From Dreaded Task to Strategic Tool The annual performance review: Managers dread it, and employees stress over it — an entire year comes down to this one moment. But there’s good news. With a few changes, you can turn this annual chore into a strategic tool that benefits everyone.

BY NATALIE ROONEY

T

ara Powers, M.S., earned her master’s degree in organizational way, when you do sit down with the official form, it’s just a formalmanagement and is the chief engagement builder at Power ity,” Powers says. “You and the employee have been talking all year, Resource Center. She says annual performance reviews don’t have to be and now you’re just putting it all on paper.” a tortuous experience for anyone. She’s consulted with and provided Powers says at the official annual review, there should be no surtraining for companies since 2001, helping leaders and teams engage prises, nothing employees aren’t fully aware of or working toward. in building a place where people are motivated and can do their best “They know where they excel and where they need to work,” she work for themselves and the company. Powers says there are ways to says. make performance reviews pain free for everyone. The This change in format is especially important key is using reviews differently. with Millennials, who studies have shown prefer Powers, whose undergraduate degree is in accountcontinuous feedback. “These employees want to feel ing, has worked with accounting firms and banks, connected to their work,” Powers says. “They want among other industries. She says she knows from expeto know that their values align with the company’s rience that most accountants tend to shy away from values. How would they ever feel that way if you’re giving negative feedback. “They’re a conscientious, dataonly meeting with them once a year?” she asks. driven group, and the people side of things can be chal“With a performance management process, you’re lenging,” she says. “The biggest lesson is to address little establishing connections all year long. It helps keep issues and expectations as they arise and not wait to give them engaged and motivated, helps managers undernegative feedback until the end of the year. The longstand where employees are in their growth and skills term benefits of these habits will far outweigh the time development, and both managers and employees are commitment. You just have to keep practicing.”

TARA POWERS involved in creating developmental plans.”

“The performance review happens once a year, and in some cases, it’s one of the few, if only, times a leader and an Making the Time employee sit down to have a heart-to-heart about what the employee is doing,” Powers explains. “That is nowhere near often enough, and So how do managers find time in an already busy schedule to it’s why the process is so feared.” accommodate performance management? “It is a commitment,” It’s time to stop thinking of the review process as an annual event, Powers acknowledges. “A leadership commitment. And just as leaders Powers suggests. Instead, treat it as an ongoing cycle of continuous have tasks to do every day, such as growing the business and paying feedback. She says managers and employees should be sitting down attention to the financials, growing and developing your people is one monthly, or at least quarterly, to check in and talk about how the of those tasks, too. This is a responsibility you take on as a leader.” employee is progressing, what’s getting in the way, what’s changed, Changing to a performance management system isn’t about adding and what support and resources are needed. “If we don’t have these all kinds of extra work, Powers says. Rather, it’s asking leaders to look conversations to help employees adjust and think about these goals at how they’re currently prioritizing their time and asking where team differently, the end-of-the-year review is just telling them what development is on the list. If it’s not on the priority list, it needs to be. they’re doing wrong after we didn’t tell them all year,” she explains.

Powers encourages busy leaders to find a day and time and set it “The system isn’t set up correctly.” aside for team development. “Maybe it’s Monday morning between eight and ten,” she says. “At that time, you should be connecting with and talking to people. It’s a regularly scheduled meeting that Changing Terminology and Behavior becomes part of how you do business.”

Changing your mindset is critical — from thinking of one time Powers points to Stephen Covey’s four quadrants of time manof year as performance review time to embracing a performance agement as an example of how managers need to realign their time. management process, which happens throughout the year. “That Quadrant one activities are where the most time is typically spent

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• NewsAccount • May/June 2015

— putting out fires. Everything is important and urgent. But that, Powers says, isn’t where amazing leadership happens. Instead, managers need to move some of their time to quadrant two — important, but not urgent. “When you make time every week to connect with employees, that’s when you create an environment where people want to come to work,” she says. “They become committed and loyal to you because you invest in them.”

The process doesn’t have to be overwhelming either. When you reframe your mindset, great things happen. “You’ll achieve more of your goals if you include this as part of the job,” Powers encourages.

“Being in quadrant one all the time doesn’t keep people motivated and committed. It burns people out.”

The Performance Management Process The diagram at right illustrates a structured methodology for managing employee performance.

Powers says when you look at the diagram, it seems like there’s a start and an end, but the process actually is continuous. “When something changes, you might have to jump in and give feedback,” she notes. “You can start anywhere in the process.” The focus is on creating conversations which foster commitment and build trust, which is what motivates people and keeps them engaged.

Feeling overwhelmed at the thought of overhauling your entire performance appraisal system? Powers suggests breaking down changes into small, manageable events. For example, one of her client companies asked its managers to categorize their ongoing conversations with employees in one of three ways: performance, checkin, or coaching. Managers decide if the conversation, called a Shout Out, will be 30 minutes, 20 minutes, or 10 minutes.

Managers assess a situation to determine what is needed. If things have changed and an employee’s performance is off track, the manager schedules a 30 minute Shout Out to revisit expectations, discuss the employee’s goals, and understand how they connect to the company’s vision.

Weekly check-ins might consist of a 5–10 minute Shout Out where the manager might ask the employee, “What progress or accomplishments have you experienced this week? What do you need from me to be successful? What obstacles are getting in the way?”

A 20-minute Shout Out might be used when the company has a new client and the manager is going to sit in on a call with the employee and the new client. The manager listens in and provides the employee with feedback and coaching. “This is a way to make it easier for leaders to wrap their arms around the time commitment involved in assessing and determining what employees need and have the appropriate conversation,” Powers says. It comes down to having the right conversations at the right time to create the right environment.

“I always tell managers that if you get to the performance evaluation at the end of the year and an employee is shocked, you need to assess your own leadership performance,” Power says. “That’s a red flag that you didn’t have enough of those conversations over the course of the year.”

At the start of each week, Powers suggests asking yourself, “What does my 30/20/10 look like this week? Who do I need to talk to?

Who needs a check-in? Who needs more support? These are the questions leaders should be asking themselves to plan conversations accordingly,” she says. s

Create a vision Define goals

Encourage success through follow-up and regular check-in's

Set performance expectations

Conduct evaluation meeting

Provide ongoing feedback and coaching

Source Tara Powers

LeadFit

Now in its fourth year, Leadfit is designed for CPAs and CPAtrack accounting professionals looking 2015 to grow professionally and personally. Facilitated by Lorrie Tietze, Interface Consulting, LLC, the program includes two full days and two half days of content delivered over five months, individual coaching, and networking events. It is recommended for 24 hours of CPE credit. The program is limited to 16 participants who commit to attending all sessions.

2015 Schedule

July 9: Welcome BBQ July 10: Full Day Aug. 14: Half Day

Sept. 25: Half Day Oct. 22: Debrief Nov. 13: Full Day

To apply, contact Terry Cervi at tcervi@cocpa.org, 303-741-8610, or 800-523-9082, ext. 110.

Application Deadline: June 19, 2015 May/June 2015 • www.cocpa.org •

9

2015 WOMEN TO WATCH NAMED LEADERS OF NOTE

Women CPAs who have attained leadership positions within their organizations, have made notable contributions to the accounting profession, help to improve their workplaces, and mentor others

LORI D. GIBSON, CPA

KATRINA L. SALEM, CPA

LAURA D. SRSICH, CPA

“The impact Lori has made on EKS&H in terms of both business success and employee growth is unmistakable,” writes Robert B. Hottman, CPA. “She’s been a leader in our firm for nearly 25 years and in our profession and community for much longer. It’s an honor to work with her.” Lori joined EKS&H in 1992 after an elevenyear career managing her own firm. She became a partner in 2004, and by 2007, she had formed and was leading the firm’s transaction services and merger and acquisition (M&A) practice. Since 2011, Lori has led the consulting group.

From helping FORTUNE 1000 companies with tax advice to developing the next generation of leaders, Katrina’s continued success is based on her ability to deliver the highest levels of service, internally and externally. An active community steward, Katrina brings her business experience to benefit local organizations and help positively shape greater Colorado. She serves on the boards of Junior Achievement– Rocky Mountain Inc. and Mile High United Way, as well as on the Denver Metro Chamber of Commerce’s Economic Development Corporation. Simply put, community involvement is a top priority.

Colorado Partner-in-Charge Brian P. Callahan, CPA, writes, “Laura embodies the attributes of a leader in all facets of her professional and personal life. Her impressive professional prowess and business development skills personify her as a strong female role model partners, staff, and community members look up to.”

Consulting Partner EKS&H LLLP, Denver

Lori frequently speaks for the Association for Corporate Growth (ACG), the Association of Legal Administrators (ALA), and Financial Executives International (FEI). Since 2010, Lori has chaired ACG Denver’s Private Equity Group and Intermediary Committee. She also is active in Women in M&A and serves as Treasurer for the Fairmount Mortuary Company. Lori describes one of her primary passions as “mentoring women in the professional world — specifically helping them integrate work and life.” Currently, she coaches and mentors 22 individuals, primarily but not exclusively women, at various levels within EKS&H. Whether it’s her extraordinary impact on EKS&H’s consulting group, her mentorship of successful female leaders, or her support and service to the community, Lori truly exemplifies a Colorado Woman of Note.

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• NewsAccount • May/June 2015

Office Managing Partner PricewaterhouseCoopers LLP, Denver

Katrina also is a champion of women in business and supports numerous women-based initiatives at the firm and in the broader community. In 2012 she accepted the Women’s Vision Foundation Corporate Advocate Award which is given to the company that embodies the spirit of coaching, mentorship, and advancement for women in Colorado. In 2013, the Denver Business Journal named her its Outstanding Woman in Business for the Accounting, Finance, and Banking sector, for exemplifying exceptional professional achievement, devotion to community service, and generosity in actively assisting other women in attaining professional excellence. Katrina’s story highlights the benefits of hard work, reaching out to others, and “leaning in” to take advantage of opportunities to make a difference.

Tax Partner Eide Bailly LLP, Golden

Alexie Tune, CPA, adds, "I've worked with Laura on the Alliance of Professional Women’s Foundation Board where I've seen first hand the impact of her tireless efforts and leadership style. Through her leadership not only of the Foundation Board but also of the Helping Women + Changing Lives Luncheon, the Foundation was able to fund Village Banks to promote micro credit lending, provide scholarships to women at local universities, and to fund the APW’s outreach efforts. The impact of these programs on women globally and locally is profound and demonstrates Laura’s ability to lead by example and give back."

Laura also serves on the Make-A-Wish Foundation Board and Finance Committee, the United Way Women’s Leadership Council, the DU Tax Institute Planning Committee, the Finance Council for Christ the King Parish, and on the Mullen High School Foundation Board of Directors.

Laura takes to heart the importance of leading by example and giving back.

MAY 21, 2015 — 4:30 TO 6:30 P.M.

Kevin Taylor's at the Opera House 14th and Curtis St., Denver

Keynote Speaker Sueann Ambron

Dean, CU Denver Business School

$50/person

To attend, contact Terry Cervi at tcervi@cocpa.org.

EMERGING LEADERS

Women CPAs who have demonstrated leadership and have made significant contributions to the profession and their communities, while still on the path to the highest levels of advancement

TYRA L. LITZAU, CPA

MONICA MARTINEZ, CPA

SHAUNA M. SHAFER, CPA

Tyra believes giving back is of paramount importance, whether to her clients, colleagues, family, or community. She has taught new associate training for BDO USA, LLP and courses for the Colorado Government Finance Officers Association (CGFOA). Her ACM colleague Randy L. Watkins, CPA, says Tyra has a knack for developing strong relationships. Currently, she is coaching two ACM employees through the firm’s coaching program. Tyra serves on the Young Philanthropist Project Board of CASA (Court Appointed Special Advocates) of Adams and Broomfield counties and has been trained and sworn in as a special advocate herself. Her more than sixteen years of experience include financial audits and A-133 audits of governmental entities. Prior to working in public accounting, Tyra worked with a mortgage company as a senior internal auditor and on the Colorado Office of the State Auditor staff. A devoted mother and wife, Tyra balances her responsibilities to her family and her career with “style and grace,” according to Watkins. She epitomizes the Emerging Leader.

Monica brings energy and enthusiasm to everything she undertakes, and many benefit from her passion for making a difference. As Jill Whelan, Alumni Relations and Development Coordinator for the University of Denver (DU) School of Accountancy, puts it, “Monica is one of our “goto” alumni. She answers the call for help whenever we need her.” A DU graduate in 2005, Monica chairs the DU School of Accountancy Alumni Engagement Council.

Its purpose is to initiate, promote, and organize events and educational/networking opportunities to build connections among students, faculty, alumni, friends, and the business community. Monica also is mentoring a DU accounting student — all while working with EKS&H as an audit manager with expertise in nonprofits and the franchise industry. Word has it she can light up a room with her smile and make everyone around her feel comfortable. Clearly, Monica Martinez is an Emerging Leader.

Shauna recently relocated from Eide Bailly’s Grand Junction office to the Denver Tech Center office in Greenwood Village and brought her passion for her work and clients with her. A mentor for staff members and associates, Shauna is active in the firm’s First Focus program, an initiative that focuses on improving the advancement and retention of women. She is a program facilitator for the firm’s Colorado offices and serves as an excellent example and role model for female staff.

A member of the Girl Scouts of Colorado Board of Directors, Shauna already has established herself as a leader within the firm and the community. Her more than ten years in public accounting enable her to provide consulting and compliance services to a variety of corporate, partnership, individual, and multi-state entities. Need assistance with conservation easement planning or have a question about how to succeed as a woman in the accounting profession? Emerging Leader Shauna Shafer is the person to contact.

Audit Director Anton Collins Mitchell LLP, Denver

SUEANN AMBRON Dean, CU Denver Business School

Audit Manager EKS&H LLLP, Denver

Dean Sueann Ambron has provided unparalleled leadership for the CU Denver Business School since 2000. Named the “Mother of Multimedia” by Wired magazine, the Colorado business community knows her for her passion for the Business

Tax Senior Manager Eide Bailly LLP, Greenwood Village

School, its students, its faculty, and those who hire its talented graduates. Dean Ambron serves on the Downtown Denver Partnership board of advisors among many other roles. She will speak on women and leadership.

May/June 2015 • www.cocpa.org •

11

Industry Profile

Goodwill Industries: Changing Lives and Protecting Our Planet Most of us know Goodwill as the place where we drop off old clothes and unwanted household goods after spring cleaning — and where we shop when we need a theme party costume. Did you know Goodwill also has its hand in e-commerce, computer refurbishment, and a whole lot more — enabling it to deliver on its 90+ year commitment to the communities and people it serves across metropolitan Denver and northern Colorado? Check out “the Goodwill effect.”

BY NATALIE ROONEY

A

sk Goodwill Industries of Denver’s CEO Stuart Davie to describe the organization he has led for the last two years, and you’ll hear him use the term “social enterprise.” What does that mean? “In other words, we generate funding for social need,” Davie explains. “Our mission is to help people obtain gainful employment. We believe in a hand up rather than a hand out.

That’s the social enterprise side of things.”

To that end, Goodwill Industries of Denver offers programs for many different groups: Youth Career Development: Goodwill employs teachers in 37 Denver metro and northern Colorado public schools who provide career development assistance and college exploration to youth. With the support of community volunteers, this program helps students formulate a career path and prepare for life after graduation.

Adult job training and placement in Denver and Northern Colorado: Goodwill serves more than 4,100 adults annually through various programs that provide support for them and their families. These include job training, job placement, and financial assistance to help those in need get off of welfare and get back on their feet.

Work options for individuals with disabilities at Goodwill’s locations throughout Denver: Goodwill hires individuals with disabilities for contract projects with various organizations. The work includes light assembly, sorting, and packing projects.

Retail work and recycling programs: Throughout its network of stores and dona-

12

• NewsAccount • May/June 2015

tion centers, Goodwill’s retail stores provide funding for its assistance programs while providing affordable used goods to the community. These programs also provide

Good To Know If you’re looking to donate old technology safely and responsibly, take those computers, components, cellphones, remote controls, and other outdate devices to your local donation center. If you’re looking for a great deal on a refurbished, warrantied computer complete with all the necessary gear and instructions to send off to school with a student, go to a retail location. And, if you’re wondering about what not to schlep to a donation center, Goodwill doesn’t accept large appliances, mattresses or box springs, large rolls of carpet, windows or doors, water heaters, construction material, car batteries, paint and chemicals, pressurized containers, tires, swing or slide sets, skis, propane tanks, TVs, or wire coat hangers. employment opportunities for those with barriers to work, as 54% of employees are disadvantaged and/or disabled.

Programs for farmers and ranchers with disabilities: Goodwill partners with Colorado State University Extension Services and the USDA’s Agrability grant to provide

assistance to disabled farmers and ranchers throughout 25 counties in Colorado.

Vocational training and placement for individuals with disabilities: Goodwill partners with the Division of Vocational Rehabilitation to provide individualized assessments, work skills training, job development, and job placement for individuals with disabilities.

All programs are available free of charge and are funded by sales at Goodwill’s 27 retail stores, the Deja Blue Boutique, its Home Store, and through its e-commerce efforts.

Goodwill’s #1 CPA COCPA member Mike Pritchard, CPA, is Goodwill Industries of Denver’s CFO. Twenty-five employees from the accounting, IT, loss prevention, safety, risk management, and purchasing/procurement departments report to him.

Pritchard says one of the organization’s biggest priorities is using technology to generate revenue and cut expenses. While that’s mission critical for any nonprofit, Pritchard says for a big retailer like Goodwill, it’s imperative. In 2014, the organization implemented a new point-of-sale (POS) system in all of its retail stores. “It’s important to have a stable, strong, secure POS for the volume of transactions we do, from IT infrastructure to general ledger packages to budgeting,” he says.

Goodwill also implemented “the coolest budgeting system,” according to Pritchard.

The system, Adaptive Insights, and a strong accounting team have improved the organization’s monthly close to eight days from 15.

“We’re a complex organization, and the new system has been great for us,” he says.

Making Money, Greening the Planet Approximately 80 percent of Goodwill’s revenue comes from donated goods. The organization seeks to realize the economic value by selling those goods through its thrift stores and e-commerce channel for wider distribution. Anything not sold is diverted to outlets and sold by the pound. If it’s not sold, there is a salvage value for everything. CEO Davie says that last year, 82 million pounds of donations were received. Seventy percent was reprocessed and kept out of landfills.

The organization has a very active electronics recycling program as well. Bring in your old computer — free of charge — and it will be assessed, wiped of its data to Department of Defense standards, refurbished, given a new operating system, and then resold in the thrift stores. Goodwill is R2-certified, which means it is accredited to safely recycle and manage electronics.

Component parts are disassembled and sold.

Goodwill is understandably proud of its efforts to provide work for people with disabilities, which includes working in the stores, the electronics refurbishing process, and also repairing donated bikes which are then sold. “There is a big, green, sustainable effort to what we do,” Davie says.

“We are a workforce development nonprofit,” Pritchard adds. “Yes, we’re a thrift retailer, but with fifteen hundred employees in metro Denver, and one hundred and twenty-two thousand nationally, it’s incredible what we’re able to do.” Pritchard says two-thirds of the organization’s employees are disabled or have a barrier to employment. “Some are coming out of homelessness, addiction, or the corrections system.

We provide jobs for individuals who may not get a job anywhere else and help them stabilize their lives.”

The organization also sells jewelry through online channels such as Amazon

and eBay. Davie says Goodwill receives everything from costume jewelry, which is sold by the bag, to gold watches and diamonds. “Our goal is to maximize the economic value from these items, too — you’d be amazed at what people will donate,” he says. The e-commerce channels are run by Goodwill of Orange County.

Davie notes that sometimes items aren’t resold but instead are returned to their owners. He tells the story of a 200-year old family Bible that made the trip from England by ship and ended up at a Goodwill donation center generations later. Instead of selling the Bible, Goodwill staffers traced it to the original owners’ descendants, living in New Jersey, and returned it to them. The grateful family made a donation to Goodwill.

Goodwill Industries of Denver is one of 165 Goodwills in North America and employs close to 1,500 people. Its revenue is just over $70 million, which includes donations, recycling, grants, and financial donations. Pritchard says 87 cents of every dollar go to programs, and the organization has a four-star rating — the highest available — on Charity Navigator.

partners with other organizations such as Mile High United Way, where COCPA Board member Christine Benero is president and CEO. Goodwill leases space in the United Way building, and last year, Benero was a runway model for Goodwill’s annual fashion show, which was emceed by Project Runway’s own Tim Gunn. Davie escorted Benero down the runway wearing his kilt. “It was a very public manifestation of our nonprofit partnership,” Davie recalls.

After spending more than 25 years working for international corporations, Davie acknowledges “I have never worked as hard as I have now, and I love it. It’s such a great cause. I’m grateful every day that I work for Goodwill Industries of Denver.”s

Partnerships Davie says while Goodwill Industries of Denver is a great organization doing great things, “We can’t do it on our own.” Goodwill

May/June 2015 • www.cocpa.org •

13

Planning Strategies

Selling a Company? Laying the Proper Groundwork Will Help You Get Top Dollar

BY NATALIE ROONEY

team wanted to get to a certain run rate to prove to potential buyers that the company could scale. “The last thing you want to do is go out and not maximize the value as you test the market,” he advises.

Get Professional Help

Merger and acquisition activity in the first quarter of 2015 was up 8% compared to last year. As the U.S. economy continues to strengthen, you might be considering a sale.

Here are some tips to lay the groundwork now to be ready for the deal down the road.

M

ark A. Pougnet, CPA, now COO and CFO for T3Media, knows a thing or two about getting a company ready to sell. He joined Front Porch Digital prior to its sale, “to enter new markets and build things up with a view to selling,” he says. It was a planned sale by the original investors.

Last fall, he sold Front Porch to Oracle. He’s getting ready to do it again in three or four years at T3 Media and is taking the necessary steps to ensure the company brings top dollar when the time is right.

Laying the Groundwork The team at Front Porch was thinking two-and-a-half years ahead when it brought Pougnet on board. While Pougnet says smaller companies, under $10 million, can go to market in under a year, the preparation and sale of larger companies will be more complex and take longer. More people, more investors, more products, international

14

• NewsAccount • May/June 2015

operations, and a variety of other factors will impact the timing. “Every investor has a different time horizon, and you need to get the shareholders on the same page,” he says.

“People overlook this task.”

When you’re ready to go to market, make sure you’re really ready. “If you go out to the market and then stop the process, the market is going to form its own opinions, and they’re never good,” Pougnet says. “When you go out, you must be one hundred percent ready.”

Product decisions should be carefully considered when creating a timeline.

Companies should also ask themselves what product decisions they’re going to make.

Will you release a new product to prove your value? Are you on the verge of signing a major customer? There are lots of criteria important to have in place, including knowing when it might be prudent to wait. For example, Pougnet says Front Porch had a new product and new customers, and the

You can try to sell your business yourself, but Pougnet says that shortsighted view won’t bring the desired result. “It’s like selling your house yourself,” he says. He recommends working with an investment banker.

“If you don’t hire a banker, you’re sending a message to these big companies that you can get pushed around. You’re a little bush league and not very serious.” A banker will negotiate on your behalf and make you look professional.

You may also want to consult business brokers, exit planners, other CPAs, and valuation experts, to ensure your company is ready before you go to market.

Tips for Success Have a target list. Selling a multi-million dollar company isn’t as simple as placing a classified ad in the newspaper. Having a target list of who you’d like to sell to is imperative. Who is most likely to acquire you? If there are only one or two viable options, you may want to wait. “There are many dynamics to consider,” Pougnet says.

“There’s never perfect alignment, but you must take all of the factors into account.

Front Porch’s target list had six companies on it. The company met with three and sold to one. “We targeted the companies and tailored our message,” Pougnet says.

When you make contact with a company, be careful who you talk to or you might get hung up in the corporate development departments which manage M&A processes. Front Porch made contact with Oracle through its product team. “We got them interested and then they went to their

Practice Management development department and opened the gate for us,” he says.

Continue to run your business. From laying the groundwork to signing on the dotted line, remember you’re still running a business. “You cannot put the business on hold during this process,” Pougnet says.

Once you share your financials with an acquirer, it will have ammunition to ask questions and potentially reduce the offer.

Pougnet describes how even during negotiations with Oracle, the Front Porch team continued to operate, reorganizing business units, hiring, and firing. “We sent the message that we were prepared to continue running the company even if Oracle didn’t buy,” he says.

Communicate. Tell your employees and customers what’s happening. “The word will get out,” Pougnet says. “Competitors will use it against you, telling clients they should switch.” There isn’t a need to name names early on, but keep employees and customers informed. “During our negotiations with Oracle, employees and customers heard the information from us. We were able to tell the story the way we wanted it to be told,” he says.

Have a vision. How will 1+1=3 for the acquiring company? “We demonstrated how our product would offer Oracle exponential value, and we kept reminding them of that,” Pougnet says. “They had one product, and we were beating them. We told them they should buy us and shut their product down.” Show potential buyers how your company will make theirs better.

Create a competitive situation. This is one area where Pougnet says maybe he’d do something differently. While the Front Porch team had several interested buyers, Oracle wanted to move quickly and insisted upon exclusive due diligence. “Maybe we should have created a more competitive situation. But the investors were ready to move and wanted to get the deal done,” he says. “We were well prepared, we had a solid message, and we were focused,” Pougnet says. “We did an awful lot of things right, and it wasn’t the end of the world, but if we could have a do-over, more competition would be it. It’s a ‘what if.’” s

CPA Firms Show Modest Growth

M

irroring the broader economy, results of the biennial National Management of an Accounting Practice (MAP) Survey show that in 2013 CPA firms experienced modest growth over the prior year. The survey, which is conducted by the AICPA Private Companies Practice Section (PCPS) and the Texas Society of Certified Public Accountants (TSCPA), found that all participating firms experienced a small increase in net fees since the last survey was administered in 2012, or were holding steady.

The survey data is broken down into size segments, from the smallest practices with less than $200,000 in revenue to the largest with more than $10 million in revenue.

Every segment reported growth in net client fees from 2012 to 2013, ranging from four to eight percent.

“The 2014 MAP Survey shows that we have a healthy profession poised for continued growth,” says Sheila M. Balzer, CPA, immediate past COCPA Chair of the Board.

“The detailed benchmarking data this survey provides is an important tool firms of all sizes can use to evaluate their performance and develop growth plans.”

When comparing partner compensation to net remaining per owner (NRPO), a key performance indicator that measures revenue minus expenses before owner-related compensation, it appears that rather than take that cash for themselves, partners chose to put money back into the business. The 2014 survey results show that NRPO was larger than partner compensation in all but one revenue category. Holding onto more cash could indicate a cautious optimism toward future growth. “This is a trend we

like to see,” Balzer observes. “As the economy continues to grow, I think we’ll see this cash reinvested in firms.”

Future partner retirements (and buyouts) also may be driving some firms to keep more cash in the firm. This may signal opportunities for emerging partners after these transitions within firms are complete.

“Liquidity and cash flow are likely a consideration, especially for smaller firms focusing on merger and acquisition opportunities,” notes AICPA Firm Services Vice President Mark Koziel CPA, CGMA. “Uncertain cash outlays in mergers and showing a strong cash position to attract acquiring firms are likely factors for holding back cash.”

Large firms continued to invest in technology, and smaller firms also invested in technology through external partners.

When it came to information technology expenses, the total percentage ranged from 5.5% of net client fees for the smallest firms to around 2.5% at the largest. The percentage may be lower at larger firms because they employ in-house IT staff and train internally, so many of their costs would be reflected in salaries.

The 2014 survey offers a new online platform to make it easier for participating firms to use the results. Users can generate and download detailed reports in Excel, PowerPoint, and PDF files using a variety of filters specific to the firm’s needs. An online tutorial is available to help users make the most of these new features. For more information or to access the survey results, visit aicpa.org/mapsurvey, email pcps@aicpa.org, or call the AICPA at 888777-7077. s May/June 2015 • www.cocpa.org •

15

Professional Perspective

Contributing Your Expertise as a Board Member

BY CHERYL A. WENZINGER, CPA

I

am fortunate to have had a rewarding career in public accounting.

After graduating with my accounting degree from the University of Northern Colorado, I joined Touche Ross. I took early retirement from the firm almost thirty years later, ending my career as an audit partner on Dec. 31, 2000. This opened doors for me to serve on corporate boards as the Sarbanes-Oxley Act of 2002 (Sarbanes) was signed into law shortly after I retired. It wasn’t a post-retirement career I’d planned, but I found myself in the right place at the right time.

I already had served on numerous nonprofit boards during my public accounting career. Those opportunities provided invaluable experience with governance, strategy, and business issues that you don’t normally get with an accounting, tax, or consulting professional background. And nonprofit board service can be a great launching pad for corporate board service.

Soon after I retired, and pre-Sarbanes, a former client/CEO came out of retirement to become CEO of a private company. She wanted to add business and financial expertise to her board and asked me if I would submit my resume for board consideration. I was intrigued. I thought it could be a great way to bridge almost three decades of public accounting with retirement — and a way to use my experience and expertise without a full-time, stress-filled career. I respected her, and I knew the industry. I knew I could add value. I was appointed to her board, and the wheels started in motion.

Demand for CPAs Sarbanes requires public company boards to include a financial expert. Suddenly, I was in great demand as companies, particularly small and medium-sized ones, scrambled to find a qualified financial expert who was a good fit. They wanted an audit committee member or chair to help them through the roll out of Section 404 on internal controls and to work with their accounting staff and external and internal auditors to ensure an unmodified opinion on internal controls over financial reporting. A recently retired audit partner from a Big Four accounting firm (who also happened to be female –— a rarity in the typical board room at the time) was the perfect asset to add to the board mix.

Finding the Right Opportunity The first opportunity was not with a public company, but the second and third were. These came about as friends knowing of com-

16

• NewsAccount • May/June 2015

panies looking for financial experts connected me to those management teams and board chairs. I wasn’t looking for corporate boards at the time, but they found me due to the Sarbanes environment.

The two public companies were in the biotechnology field, and both now have been sold. I currently sit on one private company board and one volunteer board.

Board service is a major responsibility, and it requires significant time commitments. You must keep informed on the industry, the competition, and relevant articles and readings, in addition to reviewing board/committee materials, and preparing for and attending meetings.

Unexpected meetings get scheduled for various reasons, and you have to be flexible to fulfill your responsibilities.

Using Your Skills As CPAs, we bring unique skills to the board table in addition to our technical expertise and business acumen. Analytical skills and problem solving abilities are two additional and important attributes we can offer. I’ve found that the CEO types on boards have much better skills at vision and strategy, and the CPA helps connect the dots on financing the strategy and delving into the risks and opportunities. We are good at asking questions and pointing out vulnerabilities. In the end, the strategies are more transparent and fully evaluated if board members from various backgrounds are more involved in asking the tough questions and evaluating the risks.

You learn a lot of life lessons as a CPA which carry over to the board room. Don’t be concerned about being as smart — or not — as the CEOs around the table. Respect the governance process, and always keep the mission/vision in mind. If you do that, and if you follow a sound process, you almost always get to the right answer. In one interview, a board member asked me which is more important — process or getting to the right answer. I thought it was an insightful question, and I think I got the answer right.

Understanding the Risks There is always the chance for liability exposure when you serve on a board. The best thing you can do when evaluating a board position is to get to know the management team and some of the board members. Never agree to a board position if you aren’t sure you feel right about the others around the table or if you aren’t interested in the company or cause. One of the best ways to get comfortable with the management team, board members, and overall risk exposure is

to have a one-on-one with the audit partner, the internal auditor, and perhaps the general counsel. I always asked if they would serve on this board if asked and why or why not. Ask, too, for a review of the Directors and Officers (D&O) coverage on a regular basis, as well as a review of the indemnification conditions.

Enjoy the Rewards Looking for a board position? Network, network, network.

Let your personal network know you are considering board service. Be prepared to articulate your skillsets and the value you can add. Be conscientious and informed. Don’t rely solely on your technical background. Don’t be afraid to step up and wave your flag if a board position is something you want. Board service is a prestigious opportunity and a way to meet smart, successful people. Find the right fit, the right opportunities, and you’ll find board service one of the most rewarding ways to leverage your expertise, beyond the traditional CPA career, just as I did. s Cheryl A. Wenzinger, CPA, served as COCPA president in 1999-2000 and led the organization’s governance restructuring initiative as well as chaired the Centennial Committee which planned the 100th anniversary celebrations for the Colorado CPA profession in 2004-2005.

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May/June 2015 • www.cocpa.org •

17

Taking a Sabbatical: Refresh, Reenergize, Renew

18

• NewsAccount • May/June 2015

Work/Life Balance

What if someone told you that every five years, you were required to leave the office and not work for four to six weeks? If it sounds like you might be dreaming, you’re not. Businesses, especially accounting firms, are finding that requiring partners to take time off is just the ticket to maintaining a vital organization.

BY NATALIE ROONEY Kim Higgins, CPA Audit Partner, Eide Bailly LLP, Denver Kim Higgins, CPA, completed her most recent sabbatical in January 2015. Did she travel to the four corners of the earth or write a novel? No. Even better: She spent six weeks with her family over the holidays.

Higgins explains that partners at Eide Bailly are required to take a sabbatical every five years. “It’s a phenomenal experience,” she says. “It’s rejuvenating. As CPAs, we work our buns off. This is time to reflect and come back ready to go to work.”

A team at the firm prepares partners for their temporary departure by setting them up on personal e-mail — no checking your office e-mail at all — making sure clients know who to contact and ensuring staff members are ready to handle clients’ issues as they arise.

Four to six months in advance, Higgins met with her team to discuss timing for her sabbatical. While the firm tries to meet the partners’ requests for a specific time, sometimes client issues do get in the way. Higgins said her first attempt at a sabbatical had to be postponed because of her client base at the time.

The whole process can be a little bit scary, especially the first time around.

“You’re cut off from your e-mail and your calendar for the duration,” Higgins explains.

“It’s an interesting awakening to be without the firm, your clients, and your staff. It was a little bit of an eye opener as to what life would be like when I retire.”

Higgins learned from her first attempt and had the process down the second time.

She changed the scheduling of her request to be more conducive to her client base, and she knew her staff was well-prepared

to take the reins in her absence. “I didn’t even sit down at a computer for days at a time,” she remembers. With her two sons coming home for Christmas, she was able to spend time with them that she normally would have spent working. “I put up and took down my own Christmas decorations, shopped, wrapped gifts, and even cleaned out a few closets, all while not trying to work forty to fifty hours a week. All I wanted to do was stay home, clean my house, be with and talk to my kids, and relax. And that’s exactly what I did.”

Everything at the office ran smoothly in her absence. No one — staff or clients — called during her time away. “I have a fantastic group,” she says of her team. “And the clients knew the staff would be there to support them.”

Higgins said in addition to spending time with her family, she also met with a life coach and took time to do some things for herself. “That’s what a sabbatical is for: To truly reflect and rejuvenate and work on me for six weeks instead of having to share me with everyone else. I really appreciate the firm for allowing me to do this.”

In the end, Higgins says the sabbatical process is a win-win for everyone. She returned to work “ready to hit the ground running.” Her staff got the chance to demonstrate what it could do. “I knew the team could do it without me,” she says.

Upon their return, partners meet with their partner-in-charge to discuss how the sabbatical went, what they reflected upon, and whether or not they need to be doing things differently, either at home or at work.

“We work so hard in this country,” Higgins says. “This is really a reward for all that hard work. And it’s a planning technique to learn

to let go, even for a brief period, so you know you can do it again.”

Travis Webb, CPA Managing Partner, BKD LLP, CPAs & Advisors, Denver With two sabbaticals under his belt, Travis Webb, CPA, already is anticipating his next one in 2016. Out of the 11 BKD partners in Colorado, he says usually one to three partners will be on sabbatical each year. The firm structures the sabbaticals to coincide with calendar months or from midmonth to mid-month. Partners are eligible to take sabbaticals every five years after they make partner.

For his first sabbatical in 2006, Webb traveled around the world. “I went east until I got home,” he says. He spent time in Europe, North Africa, Asia, and Hawaii, mapping out his stops with a travel agent before his departure. Although he was in some pretty remote locations, he admits “stopping into a few Internet cafes along the way to violate policies. We weren’t as connected digitally back then,” he laughs.

“But other than those few times, I stayed away.” He needn’t have worried. The team took care of everything while he was on the road.

His second sabbatical was more familyoriented. He spent his time taking his parents on some trips and enjoyed a week in Hawaii.

The firm’s sabbaticals, he says, are designed to help partners “recharge, step away, spend time with family, and reconnect.” They’re also a chance for junior staff to step up and deal with issues. “You never

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Work/Life Balance

Sabbatical | Continued from 19 know when the need for a proposal will arise, there will be a client crisis, or whatever,” Webb explains. “When you’re on sabbatical, you’re on it. This gives managers the opportunity for direct client contact on their own. And, it’s a chance for them to prove they can do it, demonstrating to the partners they can be trusted.”

Webb says for his firm, a month away works well. “You’re ready to get back to work. After a few days, you’re back in the swing of things,” he says. “But sabbaticals are fun enough that you look forward to them coming around again.”

Both times, the office, clients, and staff were in great shape when he returned. “It shows that none of us is irreplaceable,” Webb says.

“Small firms which may think they can’t offer sabbaticals should realize it’s not only feasible but also important. You can have a health emergency that can take you out unexpectedly, and the firm still survives.” Sabbaticals, he says, allow you to plan for absences and extend careers by providing those breaks.

Webb says BKD partners take their sabbaticals at times that fit with the firm’s business cycle, as well. “It takes good communication, particularly with clients, about who their points of contact will be,” he notes. “They have a lot of questions, but typically not out of concern about their work. It’s more along the lines of how excited they are for us. They’re very supportive.”

Stacey Hekkert, CPA Managing Partner, Anton Collins Mitchell LLP, Denver What does Stacey Hekkert, CPA, think of her firm’s policy on partners’ four-to-six week sabbaticals every five years? “It’s fun!” she says. Hekkert spent her sabbatical mostly at home with her kids and their busy summer schedules. “It’s really about taking time out — real down time to refresh,” she says. “We work hard, so it’s nice to have that opportunity to step away and reenergize.”

Hekkert pointed out that while the firm doesn’t offer formal sabbaticals outside the partner level, people do save up vacation and take extended time, or even unpaid time, away. “We’ll make extended time away work for anyone in the organization, within reason,” she says. What’s outside of reason? Busy season. But Hekkert emphasizes, “This profession is a marathon, and we have to be flexible and promote disengaging. It’s imperative to the happiness of our teams and the sustainability of our profession.”

Hekkert says planning ahead and communication are key to a successful sabbatical, but she also says that philosophy applies to the profession in general. “If you plan ahead and communicate, you can make anything happen,” she says. “This is such a great profession.

You really can make extended leaves work around both your personal and professional needs.”

Her team at ACM did such a good job that Hekkert did only the merest bit of work for one client while she was away. Her personal and work e-mail are combined, so she saw work messages during her sabbatical, but she never had to reply. “People responded before I

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did,” she said. “It’s amazing to see how people step up. Younger staff members have the opportunity to shine.”

And what works at larger firms, should work elsewhere, Hekkert encourages. While it might be more difficult at smaller firms, “if you communicate internally and externally, there’s no reason it shouldn’t work to take a sabbatical.” She prepared her clients a full year in advance that she would be away.

“Once you communicate, it’s easy,” she says. “Everyone makes it work — and my clients were excited for me.”

For Hekkert, her biggest takeaway was seeing her team excel. “I knew they would, but until you see it happen, there’s still a fear,” she explains. “They never missed a beat. It was interesting to see who stepped up — some unexpected people really came through.”

When she returned, both her staff and her clients wanted to hear all about her time away. “We do these sabbaticals for our own mental health, not for recruiting or retention, but it becomes a tool for that as well.”

Hekkert’s plans for her next sabbatical include renting a villa in Italy “and just living in the culture. I’ll have two kids in college then.

It will be a chance for all of us to get away.” s

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