Page 1

NewsAccount March/April 2017 Colorado Society of CPAs

Introducing the Newest Members of the COCPA Leadership Team PAGE 3

Networking by Non-Networking: It's the Millennial's Way PAGE 6

Keeping the Beat with Charlie Wright, CPA PAGE 12


Contents Features SEEKING N O M I N AT I O N S

3

Deadline April 19, 2017 Emerging Leaders

Women CPAs who — while still on the path to the highest levels of advancement — have made significant contributions to the profession and their communities, demonstrated leadership, been involved with their alma maters or other local colleges and universities, and/ or created and implemented unique initiatives.

6

June 1, 2017

Networking by Non-Networking: It's the Millennial's Way Networking is changing as Millennials gravitate away from formal events and toward casual social interactions.

8

As LeadFit prepares to kick off its sixth class this summer, Mark Solomon, CPA, CGMA, and Mira Finé, CPA, explain why they sent young professionals from their teams to the very first class and have done so ever since.

10

The Risks of Sticking with Legacy Technology

12

Dan Burrus explains why saying "no" to updating legacy technology can be more costly than saying "yes."

Keeping the Beat with Charlie Wright, CPA Charlie took his first percussion lesson at age seven and knew by the time he hit middle school that music was going to be a permanent part of his life.

IRS Issues New Disguised Sales Regulations

14

For a nomination form, contact Terry Cervi at terry@cocpa.org.

S AV E T H E D AT E

Meet the newest additions to the Board of Directors and Educational Foundation of the COCPA, effective May 1st.

Grow Your Future Leaders Through LeadFit

Leaders of Note

Women CPAs who have attained leadership positions within their organizations, made major or unique contributions to the profession, participated in public and community service, been published, and not only help to improve their workplaces but also mentor others.

Introducing the Newest Members of the COCPA Leadership Team

In October 2016, the Internal Revenue Service issued final and new temporary regulations addressing disguised sales of property to partnerships under Internal Revenue Code (IRC) §707.

Departments

2 24

Chair Column Movers & Shakers


Chair Column

NewsAccount A bi-monthly publication of the Colorado Society of Certified Public Accountants Vol. 62, No. 6 March | April 2017 Board of Directors Mark T. Solomon, Chair Tawnya Y. Ramirez, Vice Chair Benjamin T. Hrouda, Treasurer Steve R. Corder, Immediate Past Chair Mary E. Medley, Secretary Directors Christine Benero, Ann E. Hinkins, Gregory P. Osborn, Christopher J. Telli, Dan W. Soukup, Karen F. Turner Editorial Board Jack Allgood, Alan D. Bennett, Kay R. Dragon, Peggy Jennings, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Emily Russell, Blue Ocean Ideas, Design 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 Englewood, 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 = 7,267 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 7,193; free distribution by mail = 0; free distribution outside the mail = 24; total free distribution = 50; total distribution = 7,217; office use, leftovers, spoiled = 50; returns from news agents = 0; total sum = 7,267; percent paid and/or requested circulation = 99%.

303-773-2877 • 800-523-9082 Fax: 303-773-6344 NewsAccount is available online at www.cocpa.org.

2

• NewsAccount • March/April 2017

With Thanks BY MARK SOLOMON, CPA, CGMA

Grateful. If I had to choose one word to sum up this past year as your COCPA chair, that word would do the job. As I think back on the year, there wasn’t one overriding issue or theme that monopolized our time and attention as CPAs. Rather, as I traveled the state, meeting members, and talking about many different subjects, I was reminded, again and again, that this great, wide profession we’re all fortunate to be a part of deals with almost countless issues. CPAs want to – and will – talk about everything! Fortunately, the COCPA is the place where we can do just that, no matter what the issues are. It speaks to the diversity of our profession. We’re not just about tax or SOX or audit or financial planning. We’re in so many different areas, and it’s what makes the COCPA such a tremendous organization. Together, we are stronger. Thank you to all of you around the state who hosted me on the Chair Tour, encouraged members to come out to meet me, and made the events happen in your roles as chapter presidents. Thank you also to the COCPA staff. The COCPA’s strategic initiatives have been one of the year’s bigger undertakings. The process started before I became chair and will continue beyond my time in this role. It’s been a big year for the COCPA staff with personnel changes, new technologies, and constant effort to really dig in and build the momentum. My hat is off to the staff for what they’ve done and for what they continue to do for all of us.

Thank you to Past Chair Steve Corder who set a great example for me and helped educate me for my role. It was a seamless handoff and so helpful as I began my year as chair. And most of all, thank you to COCPA CEO Mary Medley. If you’re reading this, it means I prevailed, and she didn’t edit out (as she typically does) the part where the chair gives her some much-deserved recognition. Mary pulls everything together for us. She drives everything forward. And she’s the glue that holds us all together. She is an amazing leader, and we are fortunate to have her guidance and wisdom as we navigate whatever the world throws at us. We all are part of a great profession. We all can be incredibly proud of what we do and what we stand for. It’s humbling when I see you volunteer at the COCPA, serve in your communities, and work at your companies. The leadership and value you bring to your organizations – whether you’re in public accounting, private industry, nonprofits, academia, or government – is incredible. You inspire me. To say I’ve been proud to lead the COCPA for the last year would be an understatement. And I know I leave you, the CPA profession, and the COCPA in good hands with your Chair-Elect Tawnya Ramirez. Yes, I’m grateful – for you, for the profession, and for an amazing year as your chair. Thank you. s Email Mark Solomon at msolomon@sm-energy.com.


Leadership News

Taking the Reins: Introducing The Newest Members of the COCPA Leadership Team The following individuals will join the COCPA Board of Directors and Educational Foundation of the COCPA, May 1st. Chair-elect Ramirez and Vice Chair/Chair-elect Amaya will serve one-year terms. Directors-elect Miller and Watkins will serve two-year terms. Educational Foundation Trustees Gramling, Hinkins, and Ranby will serve three-year terms. Tawnya Y. Ramirez, CPA, CGMA COCPA Board Chair

Victor A. Amaya, CPA COCPA Board Vice Chair/Chair-elect

Vice President of Finance and Administration, Charter School Growth Fund, Broomfield

Co-Founder, ClearPath Accountants, LLC, Denver

Currently COCPA Vice Chair/Chairelect, Tawnya has served in a variety of volunteer positions for the COCPA. She also is Treasurer for Roots Elementary, a new charter school in northeast Denver. Tawnya is the Vice President of Finance and Administration for the Charter School Growth Fund (CSGF), a nonprofit foundation focused on growing the nation’s best charter schools, where she oversees finance, human resources, and business operations. Prior to joining CSGF, Tawnya was the Controller and Compliance Manager for BRC Investment Management LLC, an institutional money management firm. Tawnya started her career at Comcast as the west division Business Assurance Manager. She obtained her BS in financial accounting from National American University in Denver. Tawnya loves listening to podcasts and audiobooks and enjoys sharing what she’s learned with others. She is frequently quoted as saying, “I’ve got a podcast (or book) recommendation for that.” In her free time, she enjoys taking long walks with her husband Oliver and two dogs and spending time with their families. She is most concerned about the decreasing ratio of students graduating with an accounting degree who pursue CPA licensure and the increasing need for CPAs to understand and synthesize complex information into a clear, concise, and actionable message. Her intention for her leadership role is straightforward: “The accounting profession provided my family the opportunity to escape poverty. When I was fifteen, my mother graduated with a degree in accounting and went on to become a CPA, inspiring me to do the same. As a first generation professional, the Colorado Society of CPAs provides me access to the resources – knowledge and connections to people – that I need to grow. I hope to return at least as much as I have received so that others may have the same opportunity.”

Victor brings a wealth of experience to this new leadership position. A graduate of the AICPA Leadership Academy and of the Disney Institute Leadership Development program, he served as a COCPA director in 2014-2015; has served on the COCPA Financial Literacy Committee since 2010; and is treasurer for the Vega Collegiate Academy. This former ALPFA Denver Chapter Board member and YouthBiz Board member and treasurer also is a U.S. Army veteran. He received four Army Achievement medals, one of which led to a “Top Gun” award and the National Defense Medal. Prior positions include a teaching assistantship at Colorado State University (CSU) and audit work with PricewaterhouseCoopers LLP. Victor completed his BSBA and Masters of Accountancy degrees at Colorado State University. Victor sees relevancy as a major issue facing the CPA profession. “With the advent of artificial intelligence and more sophisticated software every year, more people are turning to a DIY mentality when thinking about compliance-related matters. As a profession, we need to rethink what our value proposition really is and how to retool our initial and continuing education to better serve the public. We need to embrace the tools that help us do the routine work and create efficiencies. Our value is the ability to translate the numbers into lay terms and to provide guidance to our customers.” He adds, “My goals are to encourage younger CPAs to help re-energize the profession and to create awareness within our profession of rethinking our business model so the CPA continues to be recognized as the trusted advisor.” In summer, when Victor isn’t thinking about how to ensure the profession’s relevancy into the future, he loves to get away with his fly fishing gear to “appreciate mother nature’s gifts and to collect my thoughts.” CONTINUED ON PAGE 4 March/April 2017 • www.cocpa.org •

3


Leadership News

Dana Miller, CPA, COCPA Director Budget Director, Adams 12 Five Star Schools, Thornton Dana is well-known for her nonprofit expertise, speaking, and leadership skills. Before joining the school district, she served as an outsourced CFO for fifteen years, with clients such as the Butterfly Pavilion, Center for Resource Conservation, Phoenix Multisport, and Big City Mountaineers. In her current position, Dana manages an approximately $1B budget which involves more than 50 schools and 50 departments, four direct staff reports, and two indirect staff reports. She graduated with a BS in Accounting, magna cum laude, from Metropolitan State University of Denver and passed the CPA exam on her first try. Of the issues and challenges facing the COCPA and the profession, Dana highlights the need for agility in providing value when expectations and norms are changing continually; accommodating small business reporting in the global space; and tapping into the braintrust of not only retiring CPAs but also incoming CPAs to address the challenges of the marketplace. She looks forward to addressing the larger issues of the profession and helping the Society move the needle on solving some of those issues – “or world peace.” Dana’s non-work interests include ice-climbing, bicycling, Burning Man, and gardening. If you’re a Burner, you know. If you’re not, yes, you can Google it.

Randy Watkins, CPA, COCPA Director Partner, Anton Collins Mitchell LLP, Denver and Greeley Randy is a member of the AICPA Government Performance and Accountability Executive Committee (GPAC); past member of the AICPA Government Audit Quality Center executive committee; past president of the COCPA Northern Chapter, University of Northern Colorado (UNC) Alumni Association, and Northern Colorado Active 20/30 Inc.; and a Board member for the UNC Foundation, just to name a few of his leadership roles. He’s also serving currently on the Greeley Chamber of Commerce and United Way serving Greeley and Weld County boards. During his nearly 17 years working with BDO LLP and ACM LLP, he’s focused on governmental and nonprofit auditing; construction, computer software development and technology, and manufacturing and distribution. Randy earned his BSBA, Accounting Emphasis, at the University of Northern Colorado.

4

• NewsAccount • March/April 2017

He places at the top of his “issues facing the profession” list: Technology – friend or foe; Recruitment – Do we have a full enough pipeline to continue to provide the level of service necessary?; and Relevance in an environment where historical information becomes dated quickly. He adds, “I’m hoping my involvement will help me stay current on issues facing the profession, offer my thoughts/ideas on ways to address these issues, and leave the profession in a place better than I found it – not to imply it’s in a bad spot, just hoping to help improve it." This Colorado native enjoys the outdoors – golfing, camping, snowboarding, and water skiing. He and his wife, Nicole, named their daughters Lennon and McCartney after the two Beatles. Randy’s height might have been a factor when Charles Barkley once introduced himself to the tall CPA.

Audrey Gramling, Ph.D., CIA, CPA, Educational Foundation Trustee Accounting Department Chair and Professor, Colorado State University, Fort Collins Before joining CSU in July 2014, Audrey held the Treece Endowed Chair and was the Accounting Department Professor and Chair at Bellarmine University, Louisville, Ky. She also served on the accounting faculty at Kennesaw State University, Georgia State University, Wake Forest University, and the University of Illinois at Urbana-Champaign. She served a one-year appointment as an Academic Accounting Fellow in the SEC’s Office of the Chief Accountant. Prior to earning her Ph.D. at the University of Arizona, Audrey worked in auditing at a predecessor firm of Deloitte LLP and as an internal auditor for the Georgia Institute of Technology. Her volunteer activities include work with local nonprofits, the American Accounting Association – for which she chaired its Council and was president of the Auditing Section; and as a member of the Advisory Council of the Committee of Sponsoring Organizations (COSO). Audrey teaches at the undergraduate and graduate levels, with one of her courses an Education Abroad offering with travel to Turkey. She has published over 30 peer-reviewed articles in professional journals and has over 25 publications in various accounting trade publications. Audrey is concerned with the need to increase the talent pipeline, with a focus on including greater diversity; the decrease in recent graduates sitting for the CPA exam; and the increasing interconnectedness of global markets. “I am excited to play a role in helping students who want an accounting career to be successful in their educational activities. And, I welcome the opportunity to give back to the profession that has been so good to me.” While teaching, leading, writing, publishing, and encouraging students, Audrey and her spouse, John, have been foster parents. They adopted a son through the foster care system.


Ann Hinkins, CPA, Educational Foundation Trustee Audit Partner, EKS&H LLLP, Denver Ann leads the firm’s nonprofit practice and brings more than 30 years of public accounting experience to her work with organizations in Denver and across the Rocky Mountain region. A frequent speaker, she is a regular presenter at the Rocky Mountain Nonprofit Conference. A member of the AICPA Expert Panel for Not-for-Profit Entities, Ann also has served on the Young Americans Bank Board of Directors and as its Audit Committee Chair. She serves on the COCPA Audit Committee and will complete a two-year term on the COCPA Board of Directors in April. Ann earned her BS in Accounting, magna cum laude, from the University of Denver, where she took business writing from COCPA CEO Mary E. Medley, “back in the day.” Ann sees many issues on the horizon which the profession needs to address, and among them how the process of auditing will change in the next five or fewer years. Also, she’s concerned with how to ensure females – who make up more than 50% of accounting graduates – find the work/life balance to remain in the profession; and continuing to ensure high school students hear about the profession, the opportunity to major in accounting, and choosing it as a career path. “It IS the language of business and will always provide a sustainable, rewarding career,” she says. Ann wants to ensure that the COCPA is in the best position to serve members at the highest level and thinks the changes she’s seen over the last two years have positioned the COCPA to do that. “Joining the Educational Foundation will be new for me. I’m looking forward to ensuring that students who desire to major in accounting have the financial and other support , such as mentoring, that will ensure their success.”

What you won’t see on Ann’s resume is this: She’s most proud of co-parenting six children (ages 16-39) with her husband, Dave Steiner, CPA, and continuing her career in public accounting. She’s also proud two of their children are CPAs – and that she keeps up with five grandchildren under the age of 5.

Scott Ranby, CFP®, CPA, MBA, Educational Foundation Trustee Principal and Financial Advisor, Kuhn Advisors, Inc., Denver Scott began his career with PricewaterhouseCoopers LLP, planning and executing SEC and private company audit and review engagements in conjunction with the filing of forms 10-K and 10-Q, along with assessing client internal control procedures and providing recommendations for improvement. He moved on to an accounting manager position with KB HOME; then served as a contracts analyst/accountant-global sales operations at Quintiles. He joined Kuhn Advisors, Inc., in 2011. Scott is a board member for The Learning Source; a financial consultant for the Colorado Chapter of the American Academy of Pediatrics, on the finance committee and governing session for Montview Boulevard Presbyterian Church, and on the COCPA Investment Committee. He earned his BSBA in Accounting and Finance at the University of Arizona and his MBA at the University of North Carolina, Chapel Hill. Top of mind for Scott are attracting and retaining excellent staff and making a career in the CPA profession appealing to the next generation. Through his service on the Educational Foundation, he looks forward to providing input to help ensure the Foundation can expand its ability to offer scholarships to deserving accounting students. What he wants COCPA members to know about him: “It’s never too late to learn something new. I’m taking violin lessons with my daughter.” s

SAVE THE DATES 2017 Conferences

May 23 Not-For-Profit

October 24 CPAs In Industry

August 17 Marijuana Business Symposium

October 31 Governmental

For details, contact COCPA at 303-773-2877, 800-523-9082, or go to www.cocpa.org.

August 19 Women's Summit August 22 Personal Financial Planning August 25 Young Professionals

November 14 Accounting and Auditing November 17 Real Estate December 13 SEC and PCAOB December 18 Mix and Match

March/April 2017 • www.cocpa.org •

5


Personal Development

Networking by Non-Networking: It’s the Millennial's Way BY NATALIE ROONEY

N

etworking events, where you make small talk, exchange business cards, and give your elevator pitch in hopes of advancing your career, are changing as Millennials gravitate away from formal events and toward casual social interactions. TRADITIONAL NETWORKING VS. MILLENNIAL NETWORKING A key component of networking of any kind is building relationships. But the types of relationships networking produces – and how people go about them – is looking a lot different these days. Traditionally, professional networking focused on deliberate interactions and relationships solely for business purposes. The goal might be to get a job offer, make a sale, recruit a new employee, and to promote yourself. Research released in December 2015 by public relations firm Weber Shandwick and the Institute for Public Relations (IPR) found distinct differences in what Millennials think makes or breaks their reputations at work compared to older generations, especially when it comes to networking and socializing

6

• NewsAccount • March/April 2017

on the job. The survey reveals Millennials’ hyper-focus on their reputations at work – 47 percent of Millennials report that they think about it all or most of the time compared to 37 percent of Gen Xers and 26 percent of Baby Boomers. Surprisingly, although Millennials have grown up in this digital revolution, they place even greater value on their in-person interactions at work and after hours than their older, less digitally bred colleagues. “Overall, the research demonstrates how level-headed Millennials are about building their reputations at work based on good job performance, being on time, and being polite and courteous,” says Sarab Kochhar, Ph.D., Director of Research at Institute for Public Relations. The trend is toward building relationships and trust, not just swapping business cards. For successful networking to take place, a real relationship needs to be built. And that’s just what Millennials are focused on. When Millennials “network,” the topic of business may not come up for months. And they’re just fine with that.

FRIENDLY, NOT FORCED The driver behind all of this is Millennials’ focus on a healthy work-life balance. Rather than launching straight into, “Tell me about your business,” Millennials are more likely to start a conversation off with, “What do you like to do?” or “Tell me about yourself.” Why this shift? Research shows Millennials prefer to work alongside people whose values and interests align with their own. When Natalie Guard, tax senior at Holben Hay Lake Balzer CPAs, relocated to Denver, she wanted to get involved in the community and meet people. Her volunteer work with Florence Crittenton Services, a high school for teen mothers, fit the bill perfectly. “I wanted to meet people for meeting people’s sake and through a common interest,” she explains. “If a referral blossoms from that, great, but it’s not my priority. For me, networking is about building relationships without feeling forced. It’s about building the relationship first.”


Guard adds that she focuses on being genuine. “When you’re talking with people, you talk about the organizations you’re passionate about,” she says. “Sometimes the conversation drifts to what you do for a living. It’s a good segue, but it’s about being genuine. The organization is my true passion. If we start to talk about work, that’s fine, too.” Guard clearly isn’t alone in her feelings about networking. Ian Shows, CPA, accounting specialist in the Controller’s Office of the City and County of Denver, also says networking means building relationships. “Relationships are the first thing I think of,” he says. “I have a little bit of baggage associated with the term networking. It feels very self-centered. It has the connotation of, ‘Let’s all get together and hang out!’ But there’s obviously an ulterior motive.” Shows prefers networking online through LinkedIn. But he also says networking happens naturally as he goes through his day. “It’s about having natural relationships that are not necessarily for the sake of building my career,” he says. “That might look like getting lunch with a co-worker, having a conversation with someone at the grocery store, even chatting on a ski lift. Just talking about the things that ordinarily come up about work and life.” While attending college in Texas, Shows said formal networking was emphasized, especially if you wanted to go into public accounting. But he felt it was about being seen versus participating, which put him off. He was coming from a musical background that was “about genuine relationships, more so than technical ability,” he says. “My experience had taught me the importance of being sincere in a professional context, and my university’s networking events were the opposite of that. But it’s hard because how do you teach someone to build professional relationships without being overtly self-seeking?”

Shows says even now, networking in the traditional sense doesn’t appeal to him. “I don’t have the time, and it doesn’t seem valuable enough for me to prioritize it above other things,” he says. “It doesn’t seem beneficial compared to what I would normally do through different daily activities.” Marisa Barslund, CPA, tax senior associate for Eide Bailly LLP in Golden, says she began networking through various campus clubs while in college. She was co-president of the accounting club and assistant director of the cultural diversity board. “When I think about traditional networking, I think of it as talking about what you do, your product, and your time,” she says. “But to me, it’s about relationship building and getting to know someone one-on-one. I like to let the rest happen organically.” One of the things Barslund thinks makes people uncomfortable with the traditional networking concept is the pressure to make something happen, to come away with a sale or something else that advances your career. “You hear horror stories of people having to go in and sell themselves,” she says. “It’s like being accosted by the kiosk people at the mall. Find functions, organizations, and events where you can get to know people instead. Some people are great at having that elevator pitch ready to go, but that’s not my personality. I want to get to know someone. Everyone is more comfortable and relieved when you’re not trying to pitch them.” Guard agrees and says when she attends events that involve her passion – nonprofit organizations – “networking” doesn’t feel as forced. “People don’t know how to get involved, so we can talk about that,” she says. “Talking about work isn’t the goal. I try not to force anything. Relationships take time to grow. You have to be patient.” OCCASIONALLY TRADITIONAL Guard said she does attend more traditional

networking events occasionally. At an allwomen’s networking event sponsored by The Women’s Network at Black Creek, she said a “speed networking” format gave her the opportunity to talk to a lot of different people. When she lived in Texas and worked out of her home office, she felt she had to make a concerted effort to get out and meet people to grow personally and professionally. Now she relies on the contacts she makes to help her and her clients. “Networking helped me learn how to foster and nourish relationships. If I have a client who has a need, I want to send him or her to someone I know will care about that client, not someone I’d just look up on the Internet.” Barslund says so far, she hasn’t taken part in a lot of traditional networking events, but she recently joined a professional women’s group that has the informal, organic feel that appeals to her. “During the event, it was casual conversation and sitting and really listening,” she says. “I wasn’t there to say, ‘Here’s my elevator speech. I’m not going to waste my time with you if you can’t do something for me business-wise.’ It’s treating people like people. We did discuss business at the end, but it happened naturally.” For the past year, Shows has been on the board of the Association of Government Accountants. “That was a pivot to potential networking, but it wasn’t the main reason I joined,” he says. “I wanted to go to colleges and recruiting fairs to talk with students about the opportunities in state and local government accounting.” Guard adds, “I think everyone gets a little anxious at the thought of going to a new networking event. That forced feeling is what everyone hates about networking. I tell myself to focus on meeting new friends and that takes the pressure off.” Guard tries to step outside her comfort zone every day. “It’s the only way you’ll grow,” she says. “It’s important for our generation because we’re working more from home, so we need to get out there in different ways.”s

March/April 2017 • www.cocpa.org •

7


Leadership Development

Grow Your Future Leaders Through COCPA's LeadFit Program BY NATALIE ROONEY

As LeadFit prepares to kick off its sixth class this summer, COCPA Chair Mark Solomon, CPA, CGMA, and Mira Finé, CPA, explain why they sent young professionals from their teams to the very first class and have done so ever since.

M

ira Finé, CPA, partner, national director of tax operations at Hein & Associates LLP, Denver, was chair when the COCPA Board of Directors began discussing development of a Colorado-specific leadership training program. COCPA Chair Mark Solomon, CPA, CGMA, Vice President and Controller with SM Energy, Denver, was on the Board just before the program launched under the leadership of past chair Barbara Seacrest, incoming chair Tawnya Ramirez, and former Board member Alicia Gelinas. Finé and Solomon report that the program they watched develop from the ground up has become a critical tool in their organizations’ succession planning, ensuring they’re growing the leadership they need for a strong future. WHAT IT’S ABOUT LeadFit is an innovative leadership development program, created in collaboration with Interface Consulting, LLC. The program is designed to enable young professionals to gain knowledge, skills, and practice to achieve their desired professional and personal results including interacting effectively with, leading, and managing people. The program is limited to 16 participants who commit to attending all sessions. Delivered over five months, the program is recommended for 24 hours of continuing professional education credit. It includes two 8-hour and two 4-hour group workshops, a special debriefing session, individual coaching, a welcome BBQ hosted by COCPA CEO Mary Medley and COCPA leadership, and a celebration event at its conclusion.

8

• NewsAccount • March/April 2017

Attendees explore the following areas: • Relationship Building – listening and presence; professional and personal • Managing a Team v. Leading a Team – goal setting; time management; conflict resolution • Performance Evaluation and Feedback – acknowledgement; confrontation; resolution; rewards • Negotiation requesting

• Rainmaking – generational styles

message thinking

tailoring; styles;

• Role Definition – qualitative and quantitative • Defining Your “Best Work” – linking to purpose, commitment, and boundaries BUILDING LEADERS FROM WITHIN Solomon says leadership development is heavily ingrained in SM Energy’s company culture, and LeadFit plays a big role in that. Even though the company has its own internal leadership development program, Solomon says there aren’t enough spaces available. “I have more people I want to develop,” he says. “We want our people to have training whenever and wherever they can – and the COCPA delivers a quality program.” Every summer, SM Energy goes through a talent review process to identify emerging leadership. “We talk about who is ready for that next step and what we’re doing to prepare people for that next step.” High potential people are identified and tapped for leadership training. Solomon sent three individuals to the first LeadFit class. “After the first session, they

were already giving us feedback that the program was good,” he says. “When we send people to LeadFit, they’re being exposed to things and getting their ‘wow’ and ‘aha’ moments. They start to think about things from a leadership perspective versus an employee/staff perspective.” Solomon says LeadFit attendees also make connections with other emerging leaders outside of their own company. “They follow up with each other and bounce ideas off each other,” he says. “It’s a great alternative way to build their networks, and that’s important, too.” Solomon says LeadFit graduates have a more mature approach to and perspective on managing teams and leading people. One of the most critical changes he sees is in their listening skills. “It’s powerful when they learn how to listen,” he says. “They don’t come to quick conclusions or fly off the handle. They just have a different approach to listening, and it shifts the filter and lens they’re looking through.” Two or more SM Energy employees have attended each LeadFit class since its inception, and Solomon says the program absolutely plays a role in the company’s succession plan. “Many of our SM LeadFit graduates have moved into more senior positions after they complete the program.” WATCHING THEIR PROGRESS “What I initially saw in it was having a connection in the community with other LeadFit attendees and their organizations,” Finé explains. Then, when employees began attending, she saw changes firsthand. “An attendee came back after the listening


session and really practiced that piece of it, both with his family and internally at Hein. I could see him putting into action what he’d learned. He was becoming more effective at work and at home because he was listening more effectively.” Finé sees attendees progress into maturity in leadership because they have the ability to do so in a safe environment, “and that’s huge,” she says. “It’s huge for the firm as well because you see them incorporating what they’ve learned as they work and deal with people. Our firm is all about the people working within it. It’s not about dollars in our pockets but about having

LeadFit 2017

people – who have the ability – to actually grow into leadership.”

So is it a worthwhile investment overall, given it’s several days away from work plus the $1395 fee? “Firms focused on developing their people definitely will find LeadFit worth the time and money,” Finé emphasizes. “Participants gain so many strengths from the experience.”

GROWING YOUR TEAM In LeadFit’s planning stages, Finé says there were concerns about whether it was the right kind of program, who would attend, and what participants would get out of it. “We asked ourselves, ‘Is it the right thing?’” she recalls. “Now in its sixth year, we have a solid base of people who have graduated with a consistent skill set and a coach (in facilitator Lorrie Blanchard Tietze) who connects well with the people involved and continues to provide support long after graduation.”

It’s a sentiment Solomon echoes. “You just need to send people,” he encourages. “Yes, they’ll be out of the office some over the course of the program, but it’s worth it. Developing leaders is what we all need to be doing. Find your emerging leaders, and send them to LeadFit.” s

Interested in attending LeadFit or sponsoring someone from your organization? Request an application from Terry Cervi at terry@cocpa.org, 303-741-8610, or 800-523-9082, ext. 110. Complete and return it. You’ll be notified of your acceptance. Your sponsor will be invoiced for the $1395 program fee, which is payable on receipt and no later than July 1, 2017. The program is recommended for 24 hours of CPE credit in the Communications field of study.

APPLICATION DEADLINE: JUNE 26, 2017

INDIVIDUAL COACHING

You will receive, over the five-month period, up to two hours of optional, individual phone coaching to address your specific needs. Additional coaching time will be available at a discounted rate. All coaching and group sessions are confidential.

LEADFIT FACILITATOR

Lorrie Blanchard Tietze is the founder and manager of Interface Consulting, LLC, Castle, Rock, Colo., a consulting firm focused on helping companies enable change and build productivity through process, tools, and skills. She is committed to helping people help themselves and their businesses.

Lorrie consults with Fortune 500 companies, governmental agencies, and not-for-profit organizations. The COCPA chose her to help create and facilitate LeadFit because she understands the professional services world and the importance of the human dimension in creating meaningful, sustainable relationships. her high energy approach and commitment to personal growth guarantee that you will not only gain the skills you need for success but that you will truly enjoy the learning experience. Before establishing her consulting practice, Lorrie worked in the manufacturing and engineering fields. She is adept at maintaining strong customer relationships, developing international, multi-functional teams, and working in fast-paced, challenging environments.

SESSION DATES JUNE 28-JULY 5 |

Pre-call with each participant to determine individual goals, wants, and needs. Optional call with the participant’s sponsor.

JULY 6

| 6:30 p.m. to 8:30 p.m., Home of COCPA CEO Mary Medley Welcome BBQ for all participants, with LeadFit Facilitator Lorrie Blanchard Tietze and COCPA leadership.

JULY 7

| 8:30 a.m. to 4:30 p.m., COCPA Education Center, Englewood. Breakfast and lunch included.

AUGUST 11

| 8:30 a.m. to 12:30 p.m., COCPA Education Center, Englewood. Breakfast included and optional lunch.

SEPTEMBER 8 |

8:30 a.m. to 12:30 p.m., COCPA Education Center, Englewood. Breakfast included and optional lunch.

OCTOBER 18 |

4:30 p.m. to 6:30 p.m., Home of CEO Mary Medley. Optional Debrief. Refreshments included.

NOVEMBER 14

| 8:30 a.m. to 5:00 p.m., COCPA Education Center, Englewood. Breakfast, lunch, and graduation reception included. March/April 2017 • www.cocpa.org •

9


Technology

The Risks of Sticking with Legacy Technology BY DANIEL BURRUS, CEO BURRUS RESEARCH

I

t’s akin to that pair of blue jeans you continued to wear as a teenager, despite your mother’s protests. “How in the world can you go out in public like that?” she’d exclaim. “There are holes in the knees that are bigger than your head!” “Mom,” you’d reply with a noncommittal shrug. “They’re comfortable.” Move that anecdote onto a larger stage, and you have a fairly accurate picture of how many organizations look at legacy technology – systems, software, and other tools for which the best, most productive days are well in the past. Why do organizations stick with such outdated technology? “They’re what we’re used to,” comes the reply, with the corporate equivalent of an indifferent shrug. In a world characterized by exponential change, that can prove a serious miscalculation. Continuing to use outdated technology of all sorts – particularly when suitable upgrades can readily be found – can be exceedingly costly. Moreover, the cost to your organization may not be limited to mere finances. LEGACY TECHNOLOGY DEFINED One online definition of legacy technology describes the term as referring to “an old method, technology, computer system, or

10

• NewsAccount • March/April 2017

application program, of, relating to, or being a previous or outdated computer system.” As it happens, this particular definition goes on to point out that legacy technology is often framed in a negative light, meaning that the system is rather outdated and, in fact, would greatly benefit from an upgrade or replacement. That may sound like a bit of editorializing, but there’s no getting around the fact that legacy technology is pervasive. An article by Saca Technology titled “Top Five Most Impactful Legacy Techs” details some of the most troubling suspects: Mainframes. As the article notes, even newly manufactured mainframes are often saddled with running applications written with out-of-date programming languages. COBOL. The common business-oriented language created in 1959 is still used widely by both the federal government and business. OS/2. Although the last official version of OS/2 was released in 2001, the system is reportedly still being used by various ATM companies around the world as well as several major metropolitan mass transit systems.

That may come off as a bit abstract, but as several recent news items can attest, organizations of all sorts know all too well the risks that out-of-date technology can pose: In July 2016, Southwest Airlines canceled 2,300 flights when a router failed, delaying hundreds of thousands of passengers. A few weeks later, Delta Air Lines grounded 451 flights in a single morning. It’s not just the airline carriers themselves that are vulnerable to the risks of legacy technology. In November 2015, Orly Airport in Paris was forced to ground planes for several hours, stranding thousands of passengers. The cause: the airport’s weather data management system, which was running on Windows 3.1, crashed in bad weather. At the time, the system was 23 years old. In a more recent episode, British bank Tesco shut down online banking in early November after 40,000 accounts were compromised. Additionally, roughly half of those accounts were compromised by hackers committing fraudulent transactions. Andrew Tschonev, technical specialist at security firm Darktrace, was blunt in his assessment that outdated security measures were a primary reason for the breach. “With attackers targeting everyone and anyone,


today’s businesses cannot safely assume that it won’t happen to them,” he said. BAD PR? YES, BUT MUCH MORE THAN THAT Obviously, high-profile incidents like these don’t make for the most glowing headlines. And reputation is naturally imperative for most any organization. But there are even more reasons not to turn a blind eye to outdated, potentially destructive legacy technology: • The potential for data breaches. As Tesco learned to its chagrin, legacy technology is extremely open to cybercrime. For one thing, vendor support is often spotty or completely nonexistent, which can limit valuable upgrades. Further, old technology can’t take as much advantage of improvements in security measures as newer systems can. That only furthers overall security risks. • It’s more expensive than you might assume. No one will argue that revamping outdated technology can be an expensive proposition. But so, too, can sticking with systems whose best days have come and gone. No matter the particular use, running outdated technology increases operating costs - not only do old hardware versions lack modern power-saving technology, but also the systems are inefficient and cost more to maintain. Here’s evidence: A study several years ago by Unisys and MeriTalk reported that the federal government spends more than $35 billion trying to maintain legacy systems – and even with that amount of money, efforts at modernization were still running behind. • You may run up against compliance issues. This can depend on the particular industry you’re in but, in many cases, continuing to use legacy technology may make you vulnerable to compliance guidelines. Once a legacy technology becomes unsupported, the vast majority will fail to meet industry compliance standards such as the Health Insurance Portability and Accountability Act (HIPPA). That can result in severe financial penalties.

• You run the risk of losing customers. No matter what industry your organization may be in, offering outdated solutions and ideas that derive from equally outdated technology may only prompt customers to look to someone else with better answers. • You run the risk of unreliability. Many organizations that hold onto legacy systems attribute the decision to the “fact” that the systems still work. That may or may not be the case, but consider what may happen if or when something goes wrong. For one thing, as the airline example underscores, having outdated technology in place only boosts the risk that something eventually is going to misfire. In the case of Delta’s shutdown, it was discovered that some 300 of its 7,000 data center components had not been configured correctly. And should something go amiss, older technology may simply not be bolstered by adequate vendor support as manufacturers turn their attention to newer products. • It can also be an internal perception issue. Of course, no organization wants the public image of being saddled with problematic, outdated technology. But in working with organizations of all sizes and types, I emphasize that leaders also need to be aware of the message they’re sending to every one of their employees. Consider how an employee – particularly a younger one who’s comfortable with technology – might react to having to cope with the limitations and headaches that outdated systems and networks can foster. That’s not only an issue of lost productivity, but also a possible reason to begin looking for a new employer who’s more willing to invest in adequate, up-to-date infrastructure. “NO” CAN BE MORE COSTLY THAN “YES” Updating or replacing legacy technology is not entirely devoid of downsides. A potentially steep price tag is perhaps the most obvious concern, but there are others as well. For one thing, legacy replacement projects can fail or take longer than expected. That can damage credibility on any number

of levels, from organizational leadership to IT. Add to that the time and cost involved in system testing, not to mention the time and expense of widespread end-user retraining. But it begs the question: Are you and your organization rolling the dice with aging technology, or are you identifying the Hard Trends that are shaping the future, including mobility, cloud services, data analytics, and virtualization? Further, are you anticipating the need to invest and upgrade before widespread problems occur? Look back at any of the real-life examples I cited earlier – there’s not one organization that wouldn’t want to go back and address the issue of legacy technology instead of waiting for something to break down. That said, before making any decisions, taking into account both Hard and Soft Trends that affect your organization and your industry, assess the overall impact that replacing legacy systems may carry, both positive and negative. Consider the impact on your customers as well as people within your organization. Be certain that every element for the resulting new system serves a well-defined business goal – both current as well as those in the future. As I emphasize in my Anticipatory Organization™ Model, saying yes can be expensive. But saying no to updating outdated technology can be even more costly – in any number of damaging ways. s Daniel Burrus is considered one of the World's Leading Technology Futurists on Global Trends and Innovation and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends to help clients understand how technological, social, and business forces are converging to create enormous untapped opportunities. He is the author of six books including New York Times and Wall Street Journal best seller Flash Foresight. Burrus also is the creator of The Anticipatory Organization™ Learning System–named a Top 10 Product of 2016.

March/April 2017 • www.cocpa.org •

11


Member Profile

Keeping the Beat with Charlie Wright, CPA BY NATALIE ROONEY

T

his

CPA took his first percussion lesson at age seven. Now just a few years older, the CFO of the Denver Zoo by day also is the principal percussionist with the Denver Pops Orchestra, the culmination of a lifetime of musical achievements. Here’s how the Colorado transplant drummed, clashed, rang, and tapped his way into the orchestra, playing more instruments than anyone else. Growing up outside of Baltimore, MD, Charlie Wright knew by the time he hit middle school that music was going to be a permanent part of his life. His mother was an excellent musician and wanted Wright and all his siblings to take music lessons. He had to be seven years old to start, which he did on his birthday that year. For the first two or three years, he took drum lessons but soon expanded to the keyboard percussion instruments – xylophone, marimba, vibraphone, and bells. In 10th grade, he took his first timpani (kettledrum)

lesson. By then he was well on his way to becoming a full-fledged percussionist. “To be a top-notch percussionist – and able to be named principal percussionist – you have to be fluent in all the percussion instruments: timpani, snare and bass drum, cymbals, tambourine, triangle, etc.,” Wright explains. And don’t forget about the mallet instruments such as the marimba, xylophone, chimes, vibraphone, and bells. “Many people don’t play all of them.” By the time he reached his high school years, Wright was highly rated on each. What, exactly, does a principal percussionist do? More than stand at the back of the orchestra holding the triangle, it turns out. The principal percussionist is often the most accomplished percussionist in the section and is expected to play the most difficult and/or solo parts. The principal also organizes the remaining players and assigns individual responsibilities for each piece of music. While still in high school, Wright became the principal percussionist with the Maryland All State Orchestra and made money playing in the orchestra for Broadway shows. While attending Duke University, which awarded him a partial music scholarship, Wright was a substitute with the North Carolina Symphony. He also spent a semester in Vienna, Austria, at the Vienna Music Institute, playing in multiple European cities. While attending graduate school at Vanderbilt, he was a substitute with the Nashville Symphony. Wright says an orchestra typically employs four percussionists, but extra players often are needed when composers such as Mussorgsky and Rimsky-Korsakov are played. A professional orchestra usually has one rehearsal; then the musicians play the performance(s).

12

• NewsAccount • March/April 2017

A REST NOTE Wright’s music took a backseat to career and family for about 25 years. “I was busy with the kids and traveled a lot for work,” he says. “It wasn’t conducive to playing with orchestras.” While on his musical break, Wright’s accounting career included time as the CFO of The Kroenke Group, the holding company that includes 100% ownership of the Colorado Avalanche, Denver Nuggets, Colorado Rapids, Colorado Mammoth, and the Pepsi Center Arena. During the Kroenke years, he also served as Vice President, New Business Development, for KSE, and as General Manager and CFO of the Colorado Rapids Soccer Club. He previously had spent more than 20 years as an outside professional financial consultant, including 14 years as a partner with Ernst & Young, where he focused on transaction advisory services, including mergers and acquisitions due diligence, restructuring and reorganization, and litigation services. Nonetheless, even during his busy career and family years, Wright kept his instruments with him wherever he lived, adding a baby grand piano into the mix. He still played music at home and regularly attended concerts, but the stage was on hold. In 2001, Wright relocated to Denver. In 2003, he decided to check out the Mile High City’s music scene and discovered the Denver Pops Orchestra was holding auditions. “I decided to show up and check these guys out.” The Denver Pops immediately snapped him up. Wright went to one rehearsal and began playing with the Pops regularly. He became the principal percussionist after a year or so in the ranks and has held the role for most of the past decade. Balancing work and music is challenging and worthwhile, Wright says. As part of the orchestra, he is committed to playing


approximately seven concerts a year in Denver and the Front Range (10 this current season). He took some time off when he broke his elbow a few years ago, but other than that, he practices once a week with the full orchestra and plays a full season. The orchestra takes summers off. PLAYING FAVORITES When it comes to naming a favorite composer or type of music, Wright says the variety of what he gets to play makes it fun. “I really love all kinds of music. Some of the great Russian composers have better percussion parts. We play a lot of Broadway and movie selections, and I love that music as well. It’s a good mix.”

Now, he says, “I’m much more focused on the happiness of the audience, especially my friends and family who come to the concerts. What we do makes people happy.” Wright revels in the joy the music brings to the audience. “When you look up from the music itself and see a happy audience, that’s rewarding.” And when the audience hears Charlie and his musical colleagues play, every listener is rewarded, too. s

To hear Charlie and the Denver Pops Orchestra, be there, April 8, for Rockin’ with the Pops, the final concert of the 2016-2017 season, www.denverpopsorchestra.org/2016-2017season/2017/4/8/rockin-with-the-pops. It’s guaranteed you’ll leave happy.

“As a percussionist, you really need a whole group to have the experience, so I need to make practices and rehearsals,” he says. “I willingly make the commitment.” What about playing on his own? Wright sits down at that baby grand from time to time. “Some people would say I was somewhat competitive for many years,” Wright reflects. “Having the credential, being the numberone guy in the state, getting the scholarship, playing with professional orchestras. It has all been gratifying.” He adds that all of those things come with intense preparation and yes, sometimes pressure. “It wasn’t all fun and games.” March/April 2017 • www.cocpa.org •

13


Tax Law

IRS Issues New Partnership Disguised Sales Regulations BY JUSTIN L. MILLS, ESQ.

I

n October 2016, the Internal Revenue Service (IRS) issued final regulations addressing disguised sales of property to partnerships under Internal Revenue Code (IRC) §707. These new regulations substantially adopt prior proposed regulations issued in 2014 with several important revisions.1 In addition, the IRS issued new temporary regulations addressing the allocation of partnership liabilities for purposes of these disguised sale rules.2 The new final and temporary regulations became effective Oct. 5, 2016, and Jan. 3, 2017, respectively. Following is an overview of the disguised sale rules of IRC §707(a)(2) (B) and a summary of the more significant changes resulting from the new regulations. DISGUISED SALES UNDER IRC §707(C) IRC §707(c) prevents individuals from using tax partnerships to effectuate sales of property without recognizing gain. IRC §721 and IRC §731 allow partners to contribute appreciated property to and receive distributions of appreciated property from partnerships without recognizing gain.3 IRC §707(a)(2)(B), however, provides that if: (1) there is a direct or indirect transfer of money or other property to a partnership, and (2) there is a related direct or indirect transfer of money or other property by the partnership to such partner (or another partner), and (3) the transfers when viewed together are properly characterized as a sale or exchange of property, the partner is treated as if he or she sold the contributed property to the partnership for all tax purposes.4 The regulations issued under IRC §707 contain detailed guidance for interpreting See T.D. 9787, 2016-52 I.R.B. 889, 79 FR 4826 (Jan. 30, 2014). 2 See T.D. 9788, 2016-52 I.R.B. 878 (amending Treas. Reg. §1.707-5). 3 These rules are unique to Subchapter K because IRC §311(b) forces corporations to recognize gain on the distribution of appreciated property to shareholders. 4 IRC §707(a)(2)(B)(i)-(iii). Because the property is treated as sold, the property in the partnership’s hand initially has a tax basis equal to the value of the 1

14

• NewsAccount • March/April 2017

and applying the disguised sale rules. First and foremost these regulations articulate the basic rules that: (1) transfers to and from partnerships will only be treated as sales if, based on all of the facts and circumstances, the original transfer of money or other property would not have been made but for the subsequent transfer of property, and (2) if the transfers do not occur simultaneously, the subsequent transfer must not be dependent on the entrepreneurial risks of partnership operations.5 Taxpayers must evaluate and apply a non-exclusive list of ten factors to determine whether the transfers would not have been made but for one another. These factors focus on whether the transferor partner has the right or ability to compel the partnership to make the distribution and whether the partnership is likely to have access to the property or cash necessary to make the distribution.6 The regulations also establish a number of important presumptions that allocate the burden of proof between taxpayer and IRS. If the two transfers occur within two years of one another, the regulations presume that the property has been sold to the partnership, and the taxpayer has the burden of proving that the facts and circumstances do not support sale treatment.7 Conversely, if the transfers occur more than two years apart, the regulations presume that the property has not been sold to the partnership.8 In such cases, the IRS has the burden of establishing that the facts and circumstances support sale treatment.

property and the cash paid for the property. The partner must recognize gain on the contribution and distribution under the general rules of IRC §1001. 5 Treas. Reg. §1.707-3(b)(1). 6 Treas. Reg. §1.707-3(b)(2)(i)-(x). 7 Treas. Reg. §1.707-3(c)(1). If the transfers occur within two years of one another and the taxpayer concludes that the facts and circumstances do not support sale treatment, it must disclose as much to the IRS. See Treas. Reg. §1.707-3(c)(2), §1.707-8.

Partnership Payments not Treated as Disguised Sale Proceeds Many taxpayers avoid inadvertently violating the disguised sale rules on account of the nature of the partnership’s payment. The regulations expressly provide that certain partnership payments will not be treated as disguised-sale proceeds. These payments include: (1) guaranteed payments for capital,9 (2) reasonable preferred return payments,10 (3) operating cash-flow distributions, and (4) reimbursements of preformation and certain capital expenditures made by the transferor partner.11 Liability Relief as Disguised Sale Proceeds Liabilities present a number of unique problems under the disguised sale rules. The regulations generally provide that if a partnership assumes liabilities or takes property subject to liabilities in conjunction with a partner’s transfer of property to a partnership, the transferor partner is treated as receiving disguised-sale proceeds to the extent the liability assumed exceeds the partner’s share of the liability under IRC §752 (net liability relief).12 This occurs any time that less than all of the liability is allocated to the transferor partner.13 Under IRC §752 the manner in which partnerships allocate liabilities turns on whether the liabilities are recourse or nonrecourse liabilities. In the most general terms, partnerships allocate recourse liabilities to the partners who bear the economic risk of loss with respect to those liabilities.14 Partnerships allocate nonrecourse liabilities pursuant to a three-tier system set forth in Treas. Reg. §1.752-3. Treas. Reg. §1.707-3(a)(4)(d). Treas. Reg. §1.707-4(a)(1)(ii). 10 See Treas. Reg. §1.707-4(a)(3) 11 See Treas. Reg. §1.707-4(b)(2). 12 Treas. Reg. §1.707-5. 13 See IRC §752(a),(b), Treas. Reg. §1.752-2(regarding allocations of recourse liabilities), Treas. Reg. § 1.752-3 (regarding allocations of nonrecourse liabilities). 14 See Treas. Reg. §1.752-2. 8 9


The disguised sale regulations further subdivide liabilities into qualified and nonqualified categories. Net liability relief from qualified liabilities will not be treated as disguised-sale proceeds provided that the partnership does not transfer any other consideration to the transferor partner.15 Net liability relief from nonqualified liabilities, on the other hand, will always be treated as disguised-sale proceeds. This qualified liability rule is necessitated by the regulations’ two-year presumption. Liability relief typically occurs simultaneously with the transfer of the property to the partnership. As a result, any transfer of encumbered property to a partnership that generates liability relief would be presumed to be a disguised sale under the two-year presumption rule. The regulations define “qualified liability” as: (1) a liability incurred more than two years prior to the transfer (or if earlier, the date he or she agrees in writing to transfer the property) that has encumbered the property throughout such two-year period, (2) a liability that was not incurred in anticipation of the transfer of the property, but that was incurred within two years of the transfer and has encumbered the property during the entire two-year period,16 (3) a liability properly allocable to a capital expenses, (4) a liability incurred in the ordinary course or in connection with a trade or business if the transferred property was used or held in such trade or business, but only if the partner or partners transfer all of the assets material to the continuation of such trade or business to the partnership.17 Practitioners should be aware that the qualified vs. nonqualified distinction has no bearing on whether a liability is recourse or nonrecourse for purposes of IRC §752 nor does it impact the allocation of the liability. This is to say that a qualified liability may be either recourse or nonrecourse just as a nonqualified liability may be recourse or nonrecourse.

2017 CPAS MAKE A DIFFERENCE

SAVE THE DATE November 10, 2017 Grand Hyatt Downtown Denver

THE 2016 FINAL AND TEMPORARY REGULATIONS The new final and temporary regulations issued in October 2016 focus primarily on the reimbursement of preformation expenses and on the manner in which liabilities are allocated for purposes of the disguised sale rules. Reimbursement of Preformation Expenses The current regulations provide that certain payments made from a partnership to a partner to reimburse such partner for certain preformation and capital expenditures incurred by the partner will not be treated as disguised-sale proceeds. These expenditures must have been incurred during the two-year period preceding the transfer of property to the partnership and for: (1) partnership organizational or CONTINUED ON PAGE 16 See Treas. Reg. §1.707-5(a)(5). Liabilities incurred within two years of the date of transfer to the partnership are generally presumed to be incurred in anticipation of the transfer unless the facts and circumstances clearly establish that the liability was not incurred in anticipation of the transfer. See Treas. Reg. §1.707-5(a)(7)(i). If treated as a qualified liability under Treas. Reg. §1.707-5(a)(6)(i)(B), such treatment must be disclosed to the IRS under the disclosure rules of Treas. Reg. §1.707-8. 17 See Treas. Reg. §1.707-5(a)(6)(i). 15 16

March/April 2017 • www.cocpa.org •

15


Tax Law CONTINUED FROM PAGE 15

syndication expenses under IRC §709 or (2) property contributed to the partnership. Capital expenditures incurred with respect to property contributed may only, however, be reimbursed to the extent the capital expenditures do not exceed 20% of the fair market value of the property contributed at the time of contribution.18 This 20% limit, however, does not apply if the fair market value of the property does not exceed 120% of the partner’s basis in the contributed property. Under finalized Treas. Reg. §1.707-4(d), partners are now allowed to aggregate multiple properties together for purposes of applying this 20%/120% limit. To aggregate, the total fair market value of all properties cannot be greater than: (1) 10% of the FMV of all properties (excluding cash and marketable securities) transferred to the partnership by the transferor partner or (2) $1,000,000.19 Furthermore, no one single property may have a fair market value greater than 1% of the total fair market value of the aggregated property. Taxpayers are required to use a reasonable, consistently applied aggregation method. The 2014 proposed regulations required that the 20%/120% rule be applied on a property-by-property basis. Commentators complained that the property-by-property approach created an undue administrative burden for partners who contribute a large number of properties to a partnership. The instinct of most practitioners will be to aggregate loss or highbasis property with their highly appreciated, capital-expenditure property in hopes of avoiding the 20% limit. The 20% fair market value limit only applies if the capital expenditure property has appreciated more than 120%. Unfortunately, in practice the new aggregations rule will not be conducive to this logical strategy. No one piece of property in the aggregate group may have a fair market value exceeding 1% of the fair Treas. Reg. §1.707-4 See Treas. Reg. §1.707-4(d)(1)(ii)(B)(1), (2). 20 See Treas. Reg. §1.707-4(d)(2). 21 See Treas. Reg. §1.707-4(d)(3). 22 Id. 23 Id. The total amount of reimbursement payments may not exceed the amount that the transferor partner 18 19

16

• NewsAccount • March/April 2017

market value of all property in the aggregate group. While this new rule may not offer many planning opportunities, practitioners should welcome it as a favorable change intended to promote efficient compliance and reporting. The 2016 final regulations no longer require that the transferor partner personally make the capital expenditure.20 If a transferor partner acquires the capital expenditure property in a nonrecognition transaction, the transferor partner steps into the shoes of the party who made the expenditure. This rule should cover corporate partners who acquire property in IRC §351 transactions and reorganizations under IRC §368. It will also apply to individuals who acquire property in IRC §1031 exchanges and partnership partners who acquire property in transactions covered by IRC §721. The new regulations also allow for the reimbursement of capital expenditures through tiered partnerships.21 If a transferor partner subsequently transfers his or her partnership interest to another partnership (i.e. an upper-tier partnership or a parent holding company), the uppertier partnership steps into the shoes of the transferor partner and may receive reimbursement payments from the lowertier partnership without the payments being treated as disguised-sale proceeds. Similarly, an upper-tier partnership may reimburse the transferor partner for the capital or organizational expenses without the reimbursement payment being treated as disguised-sale proceeds.22 Practitioners should note that this rule only applies if the transferor partner transfers his or her partnership interest to a partnership. It does not appear to apply if the transferee partnership transfers the contributed property to a lower-tier partnership. Furthermore, the partner must contribute would otherwise be entitled to receive had he or she received reimbursement payments directly from the lower-tier partnership. 24 See Treas. Reg. §1.707-5(a)(5). Under this rule, the amount treated as disguised sale consideration will be the lesser of the amount of liability relief or the product obtained by multiplying the qualified liability by the

the interest in the lower-tier partnership to the upper-tier partnership within two years of incurring the capital expenditure.23 Lastly, the 2016 final regulations clarify that if any qualified liability is used by a partner to fund capital expenditures and the economic responsibility for the liability shifts on account of the partnership’s assumption of that liability (i.e. net liability relief ), the partnership may not reimburse the partner for such expenses under the organizational/ capital expense exception of Treas. Reg. §1.707-4(d). Practitioners should be aware that if partners are reimbursed for preformation or capital expenditures funded with qualified liabilities, not only will the reimbursement payment be treated as sales proceeds but also a portion of the net liability relief will be treated as disguised-sale proceeds. This results because net liability relief is not the only consideration being received by the partner on account of the reimbursement payment.24 Allocation of Partnership Liabilities for Disguised Sale Purposes New Temp. Reg. §1.707-5T(a)(2) and new final Treas. Reg. §1.752-3(a)(3) create new liability allocation rules that apply solely for purposes of the disguised sale rules of IRC §707. IRC §752 and its regulations require that partnerships allocate liabilities among their partners. Partnerships must allocate recourse liabilities to the partners who bear the economic risk of loss (EROL) with respect to those particular liabilities.25 The EROL analysis seeks to determine which partners would ultimately be required to pay the partnership’s creditors (or contribute property to the partnership so that it could pay its creditors) in the event that all of the partnership’s assets became worthless and all of its liabilities immediately became due and payable.26 This analysis requires that practitioners evaluate all contractual and partner’s net equity percentage with respect to the property. Net equity percentage is calculated by dividing the total amount of transfers treated as sales proceeds transferred from the partnership by the fair market value of the property less the qualified liabilities encumbering the property. Id. 25 See Treas. Reg. §1.752-2.


legal obligations to make payments to the creditor or other partners and to contribute property to the partnership.27 The IRC §752 regulations require that nonrecourse partnership liabilities be allocated among partners pursuant to a three-tier system set forth in the regulations. A liability is treated as nonrecourse if no partner bears the EROL with respect to the liability.28 The regulations first allocate nonrecourse deductions among the partners based upon each partner’s share of partnership minimum gain. Partnerships must next allocate nonrecourse deductions among the partners based upon the amount of IRC §704(c) gain or reverse IRC §704(c) gain that would be allocated to the partner if the partnership sold all partnership property subject to nonrecourse liabilities in full satisfaction of the liabilities (with no other consideration). The third and final tier of nonrecourse liabilities (the “excess nonrecourse liabilities”) may be allocated among partners in several different ways. The vast majority of partnerships allocate excess nonrecourse liabilities in accordance with each partner’s share of partnership profits.29 Second, partners may specify, in their partnership agreement, each partner’s share of partnership profits for purposes of applying this rule. Such allocation method must, however, be consistent with some other significant allocation of partnership income or gain (the “significant item” method).30 Lastly, excess nonrecourse deductions may be allocated in the same manner that the deductions attributable to the nonrecourse liabilities will be allocated (the “alternative method”).31

Treas. Reg. §1.752-2(b) sets forth a detailed hypothetical transaction that partnerships are deemed to go through for purposes of this determination. 27 Treas. Reg. §1.752-2(b)(3). Such obligations may be found in partnership agreements, guarantees, state partnership and LLC statutes, indemnification agreements, reimbursement agreements, and contribution agreements. 28 Practitioners should be aware that while a liability may be nonrecourse according to commercial lending standards, it may be treated as a recourse liability 26

New Temp Reg. §1.707-5T(a)(2) requires that for disguised sale purposes, all liabilities whether recourse or nonrecourse, be allocated among the partners as if they were excess nonrecourse liabilities. New final Treas. Reg. §1.752-3(a)(3) takes this rule one step further and forces partnerships to allocate such liabilities in accordance with each partner’s share of partnership profits under Treas. Reg. §1.752-3(a)(3).32 A partner may not, however, be allocated liabilities for disguised sale purposes if the liabilities are recourse liabilities with respect to another partner under Treas. Reg. §1.752-2.33 Thus, for disguised sale purposes, all of a partner’s recourse liabilities and all of the partnership’s nonrecourse liabilities must be allocated to the partner in accordance with his or her share of partnership profits. If a partner enjoys net liability relief after applying this new rule, practitioners still must consider whether the liability is a qualified or nonqualified liability under Treas. Reg. §1.707-5(a)(6). As indicated above, a recourse liability may be a qualified liability or a nonqualified liability under the disguised sale liability relief rules. Similarly, a nonrecourse liability may be a qualified liability or a nonqualified liability. The new temporary regulations will not cause a qualified liability to become a nonqualified liability. They will only cause a recourse liability to be treated as a nonrecourse liability. In issuing these new temporary regulations, the IRS expressed concern that taxpayers had abused the significant item and alternative methods to circumvent the disguised sale liability relief rules with respect to nonqualified liabilities. If practitioners successfully allocate 100% of a nonqualified liability to the contributing partner, the under the IRC §752 rules. 29 See Treas. Reg. §1.752-3(a)(3). A partner’s share of partnership profits is determined by taking into account all facts and circumstances relating to the economic arrangement of the partners. 30 Id. 31 Id. Partnerships may also first allocate excess nonrecourse liabilities to a partner who contributed built-in gain property to the extent of any excess IRC §704(c) gain and allocate the remainder according to the significant item method or the alternative method.

assumption of the liability (or the taking subject to the liability) will not trigger any disguised-sale consideration under IRC §707. This could be accomplished with a guarantee of the liability not specifically required or requested from a third-party lender.34 The following illustrates the impact of these new rules on recourse liabilities in the disguised sale context: Example: Paul contributes property with a fair market value of $10mm to Partnership. Paul has a 50% interest in partnership profits. The property is encumbered by an $8mm liability that Paul guaranteed to finance other operations prior to the contribution of the property to Partnership. For purposes of IRC §752, the entire $8mm liability is recourse with respect to Paul and thus allocated to him under IRC §752 and included in the basis of his partnership interest.35 For purposes of IRC §707 and determining whether the assumption of the liability results in a disguised-sale payment from the partnership to Paul, only $4mm (50% interest in partnership profits multiplied by the $8mm liability) will be allocated to Paul.36 If the liability is a nonqualified liability, Paul is deemed to receive $4mm of disguisedsale consideration ($8mm of liability assumed by Partnership, less Paul’s $4mm share equals $4mm of net liability relief). If the liability is a qualified liability and Paul receives another payment from Partnership, he will have disguised-sale proceeds in an amount equal to the lesser of: (1) $4mm (his net liability relief) or (2) the qualified liability multiplied by Paul’s net-equity percentage with respect to the property.37 CONTINUED ON PAGE 18 See Temp. Reg. §1.707-5T(a)(2), Treas. Reg. §1.752-3(a)(3)(final sentence). 33 Id. 34 The bottom dollar payment obligation regulations also issued under TD 9788 are similarly designed to address liability guarantees that are not required under prevailing commercial lending standards. 35 See IRC §752(a),(b). 36 See Treas. Reg. §1.752-3(a)(3). 37 See Treas. Reg. §1.707-5(a)(5)(B), Temp Reg. §1.707-5T(f ), Ex. 2. 32

March/April 2017 • www.cocpa.org •

17


Tax Law CONTINUED FROM PAGE 17

Practitioners should not be surprised that under this new rule a partner may not be allocated 100% of any liability, even recourse liabilities.38 Thus, a certain amount of net liability relief will invariably result under these new rules. This will trigger disguisedsale proceeds if the liability is a nonqualified liability or the partnership distributes other consideration to the transferor partner along with assuming a qualified liability. It will also trigger disguised-sale proceeds when the partnership assumes both qualified and nonqualified liabilities. Taxpayers and practitioners will appreciate a new de minimis rule included in the 2016 final regulations. Under this rule, if a partnership assumes (or takes property subject to) both qualified and nonqualified liabilities and the partner enjoys liability relief on account of the partnership’s assumption of the liability,

the assumption (or taking subject to) of the qualified liability will not be treated as disguised-sale proceeds if the nonqualified liabilities assumed (or taken subject to) are the lesser of 10% of the total amount of qualified liabilities assumed (or taken subject to), or $1mm.39

This results because a partnership by definition requires more than one partner and the sharing of profit and loss among the partners.

39

38

18

• NewsAccount • March/April 2017

A MIXED BAG FOR PRACTITIONERS? Subchapter K provides practitioners with more than enough opportunities to unknowingly trigger adverse tax results. The disguised sales rules of IRC §707 are no exception. The new 2016 final and temporary regulations appear to be a mixed bag for practitioners. The expansion of the preformation and capital expenditure reimbursement rules will undoubtedly help practitioners and taxpayers both in terms of compliance and economic results. The new See Treas. Reg. §1.707-5(a)(5)(iii).

liability allocation rules, on the other hand, do no favors for practitioners or taxpayers. The IRS issued these regulations to increase the amount of disguised-sale proceeds transferor partners receive. Practitioners lost an important planning opportunity with nonqualified liabilities. These regulations will likely delay the transfer of much encumbered property to partnerships as partners attempt to convert nonqualified liabilities into qualified liabilities. Like much of Subchapter K, practitioners should navigate these new rules in a deliberate and thoughtful manner until they become comfortable with their operation. s Justin Mills, JD, LLM, is a partner with Robinson, Diss & Clowdus, P.C., Denver. Contact him at jlmills@lektax.com. ©2017.


Your Financial Well-Being. OUR PRIORITY. Creating a comprehensive financial plan can seem difficult and daunting, especially to people who aren’t trained, or who don’t have time to manage a plan on their own. That’s where M.J. Smith & Associates comes in. For more than 30 years, we’ve worked with clients at every life stage – from young high-earners and high-net-worth individuals to women in transition, and even couples in retirement. We believe in creating holistic plans that place your interests first. As an independent Registered Investment Adviser, we act as fiduciaries for our clients, and provide all of our services – including investment and wealth management, insurance and risk management, tax planning, estate planning and retirement planning – with a “best interest” duty of care. We also make it a point to educate you along the way, so you feel confident in your plan and your future. In addition, our experienced team members work hard to achieve and maintain some of the highest qualifications in financial services, including the CPA/PFS designation, the CERTIFIED FINANCIAL PLANNERTM certification or CFP® certification, the Chartered Financial Analyst or CFA® credential, and the Certified Investment Management Analyst® or CIMA® designation. It’s our way of showing you our professional commitment.

Barron’s

Top Advisors*

2007-2016

CALL US FOR A COMPLIMENTARY, NO OBLIGATION CONSULTATION We love it when a plan comes together, and we’d welcome the opportunity to help you create a plan for your financial future. Call us today at 303.768.0007 for a complimentary, no obligation consultation, or to receive a second opinion on your investment portfolio.

Forbes

America’s Top 100 Wealth Advisors*

2016

M.J. Smith & Associates is an Independent Registered Investment Advisor. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. *Barron’s rankings are based on assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. *Forbes rankings, developed by SHOOK Research, are based on an algorithm of qualitative and quantitative data, rating thousands of wealth advisors with a minimum of seven years of experience and weighing factors such as revenue trends, assets under management, compliance records, industry experience and best practices. Raymond James Financial Services, Inc. and its advisors do not provide advice on tax or legal issues.

5613 DTC Parkway, Suite 650, Greenwood Village, CO 80111 | 303.768.0007 | www.mj-smith.com


YOU HAVE THE DRIVE. NOW GET THE DISTINCTION. Introducing the CGMA® Program: Learning Pathway bundle. It’s the one-click solution that includes all the learning resources you need to progress through the program, plus the cost of one exam sitting. It’s an end-to-end experience that not only fulfills your yearly CPE requirements, but also moves you along the pathway toward earning the CGMA designation.

THE CGMA DESIGNATION IS MY STATEMENT TO THE BROADER BUSINESS MARKETPLACE THAT I AM INVESTED IN HELPING BOTH MY ORGANIZATION AND MY CUSTOMERS’ ORGANIZATIONS IN ACHIEVING THEIR BUSINESS GOALS. Marie M. Hibbert, CPA/CITP, CGMA

20278A-326

To learn more, visit AICPAStore.com/CGMAProgram

EVERYTHING YOU NEED TO ATTAIN THE CGMA DESIGNATION + YOUR YEARLY CPE AND MORE THAN $450 IN SAVINGS AICPAStore.com/CGMAProgram


Private Company Financial Reporting

RIVIO: Protecting CPAs’ Critical Role in Private Company Business Transactions CPA.com and Confirmation.com are bringing private company financial information exchange into the 21st century with their financial clearinghouse solution, RIVIO. The platform validates CPA firms and ensures that unaltered financial documents are delivered to key financial stakeholders including CPA firms, lenders/investors, and private businesses. The platform supports greater controls, increases collaboration, and minimizes risk.

C

hanges in financial technology are transforming banking and investing, with high demand for easily accessible, comprehensive, financial data from trusted sources. Nowhere is the need for readily available, credible data more evident than in private company transactions. When it comes to public companies, U.S. shareholders and lenders can turn to the Securities & Exchange Commission’s EDGAR system for financial information in an online, digital format. But there is no comparable clearinghouse for private companies, which make up the vast majority of the nation’s businesses. CPAs are, according to business decisionmakers, the most trusted financial professionals. In that role, they’ve long played a prominent part in producing financial statements and other critical documentation for private businesses. But traditional delivery methods for CPA-produced documents in this area can be problematic since, in the absence of a central repository, they typically rely on email, courier, or other methods susceptible to fraud or error. Banks and lenders, meanwhile, have put an increasing premium on verifiable data that can be accessed digitally and have gravitated toward third-party sources such as IRS tax filing databases even if their chief preference remains the CPA-reviewed financial statement. These issues led CPA.com, the technology subsidiary of the American Institute of CPAs, and Confirmation.com to jointly develop RIVIO Clearinghouse, a secure, online hub for private company financial information.

RIVIO stands for Repository of Intelligent, Validated Inputs and Outputs, and it creates a rational workflow of documents that protects the interests of all parties that use it: CPAs, lenders, shareholders, and the companies themselves. Here’s how: • It protects the public interest by ensuring that CPA-reviewed information is presented to authorized users without alteration by company management, reducing the risk of fraud or inaccurately presented data. • It protects CPA firms in three ways: 1) ensuring that fraudsters can’t easily misuse a firm’s name or letterhead to present manipulated data; 2) eliminating liability issues that can arise when financial information is shared with someone who isn’t a direct client, and 3) ensuring CPAs remain a key resource in the increasingly automated, digitized decision-making process for banks and investors.

• It gives banks and lenders timely data from a validated, trusted source - a critical component in the loan approval process. • It gives private companies a secure channel that allows them maximum control and flexibility over which authorized users can view their sensitive financial information. RIVIO ensures that CPA firms aren’t in direct connection with end users of their financial statements that a client authorizes, a critical component of privity of contract defenses. But the automated system also includes protections for the firm if it ever withdraws its report. Unlike current practice, where management is responsible for notifying users of that information, RIVIO tracks and notifies any authorized recipient about the statement’s withdrawal. s Learn more about RIVIO at rivio.com.

March/April 2017 • www.cocpa.org •

21


Management Accounting

How to Keep Compliance and Ethics on Target BY LOU CARLOZO

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.

C

ompliance and ethics management can be a bit like exercise: Intentions may be good and you can put a plan into place, but your results won’t be superb unless you continue to work at it with diligence. Just as many a well-intentioned fitness effort falls short, so too do those companies that approach compliance and ethics issues in unfocused, inefficient ways. There isn’t much room for error, given the twin challenges of an increasingly complicated regulatory landscape and the heightened level of scrutiny from regulators.

Sometimes, it’s also a question of how ethics fits into foundational strategy. “After many years, maybe 20-plus of compliance and ethics programs, we’re still seeing that compliance officers aren’t truly integrated into the strategy activities of companies,” says Seth Cohen, director, risk management and compliance solutions at PwC and co-author of the report. Just 36% of compliance officers are so integrated, the study reveals, “and you’d think that number should be higher. There’s room to grow.”

communication gets lost in the shuffle,” Cohen said. “It should be more integrated at all levels – and not just come from the senior leadership, but the ones who run the business operations every day and communicate every day with employees.”

Identify the risk owners and take their responsibilities company-wide. Do you know who in your company is responsible for overseeing certain risks? The answer isn’t as straightforward as you might think. The study shows that while As for how to approach compliance and two in three companies have a process in ethics successfully, Cohen suggests these six place to determine the owners, many may A recent report sheds light on just how action steps companies can take: rely too heavily on legal and/or compliance much work companies still have to do to and ethics functions for day-to-day risk get in shape. PwC’s sixth annual State of Keep communication clear, consistent, management. “It’s surprising that there’s Compliance Study, which surveyed more and constant. The report indicates not more ownership in the business in than 800 global executives, shows that a that while 82% of senior leadership general,” Cohen said. “It’s thinking that number of factors hinder compliance and communicates with employees on ethics for a potential risk, compliance and legal ethics efforts, ranging from inefficient points, the dialogue often takes place would initially own it and then transfer Find out what’s happened with the COCPA Strategy Initiatives since June 2015. Learn what’s happening on the top-down communication to uncertainty through channels such as email. “If you it to the business, which we believe is the national and international scenes which affects and challenges you and the CPA profession. Understand what about who owns the responsibility for go under the hood, only 46% go through ideal structure.” branding is and how to use it successfully. Identify hard trends which can help guide strategy. Prioritize what’s particular initiatives. business [unit] the meetings, so much of the

22

critical, essential, and significant to be successful as an anticipatory CPA and anticipatory organization.

• NewsAccount • March/April 2017


Make compliance and ethics part of company strategy. Cohen said strategic involvement is essential for companies to focus their compliance and ethics and monitoring activities. One in five respondents reported that their organizations now have a stand-alone board-level compliance and/or ethics committee. “We think there’s some specialization taking place on the board level, and that might be a good thing,” Cohen says. “The compliance report may be the last 15 minutes in a four-hour meeting, but at least they’re getting more than five minutes, and we hope that trend continues.” Form a “risk incubator.” Risks to companies are changing at a speed as fast as the digital landscape. “But if a new risk emerges, with a risk incubator we can develop the necessary activities to mitigate the risk,” Cohen points out. “And after an amount of time, those

strategies come out of the incubator, and you give them to the company.”

to do their short- and long-term planning, because they do not have enough granularity.”

A risk incubator is analogous to a business innovator: Think of an environment within the company where businesses can develop a comprehensive risk strategy before putting it into place. In doing so, they tap the brain power of capable employees who follow regulation and compliance issues and are familiar with the landscape.

Put someone in charge. If your company doesn’t have a chief ethics officer, now is a great time to consider naming one. “Fifty-six per cent of companies do not have a chief ethics officer,” Cohen says. Even if appointing one is not in the cards, find another way to take compliance and ethics front and center. “We believe the organization should have a focus on ethics in some way: either with an officer, as a core value, or making sure that employees are taught about how to make decisions ethically.” s

Go beyond standard enterprise risk management. The study shows that 77% of companies have some kind of ERM process – and quite a number of those that have one, about 88%, say it covers compliance and ethics risk. “But 54% overall are doing compliance and ethics risk assessments beyond ERM,” Cohen says. Those that don’t “are not getting the data and information they need

Lou Carlozo is a freelance writer based in Chicago. Copyright © 2011-2016 American Institute of CPAs. Copyright © 2011-2016 Chartered Institute of Management Accountants. All rights reserved.

If you have a specialized interest, you can build on the value you offer clients by adding an AICPA advisory service credential: Personal Financial Specialist (PFS ), Accredited in Business Valuation (ABV ), Certified in Financial Forensics (CFF ) or Certified Information Technology Professional (CITP ). These credentials were developed for the profession by the profession. They set you apart, make a statement and get you noticed. And, they can seriously boost your career. ®

®

®

© 2015 American Institute of CPAs. All rights reserved. 18432A-326

WHERE CAN AN AICPA C REDENTIAL TAKE YOUR CAREER NEXT?

Explore your opportunities at aicpa.org/aicpacredentials. 18432-326_YCPA Credential Campaign SS Half Page_8.5X5.5.indd 1

9/16/15 5:51 PM

March/April 2017 • www.cocpa.org •

23


Movers & Shakers

Tax Study Groups

Judy R. Kelloff, CPA, was named finance director for the City of Alamosa.

Corey J. Zink, CPA, joined Causey Demgen & Moore P.C., Denver, as a director in the tax group.

Anton Collins Mitchell LLP named Ryan M. Sanger, CPA, a partner in its Greeley office and Mark E. Lumsden, CPA, a partner in its Boulder office. Delta Dental of Colorado promoted Greg Vochis, CPA, to chief financial officer and Sherwin Louie, CPA, to controller. Mueller & Associates CPA, Loveland and Estes Park, brought in a new partner and expanded to Houston. The firm changed its name to Mueller Pye & Associates CPA LLC. Holben Hay Lake Balzer CPAs LLC, Denver, named Laura Theiss, CPA, and Andrea Van Gundy, CPA, partners in the firm. The North Carolina Association of CPAs nominated William F. "Bill" Ezzell as its 2017-2018 Chair-elect.

Crowe GHP Horwath, Denver, joined Crowe Horwath LLP. Nadine Pietrowski was named managing partner of Crowe Horwath's newly established Denver office. Email announcements to Mary Medley, mary@cocpa.org, and note in the subject line, “For COCPA Movers & Shakers.” Announcements for individuals are published for COCPA members only. The COCPA may edit content for space and reserves the right to decline publication of an announcement.

Classifieds OFFICE SPACE AVAILABLE GREENWOOD EXECUTIVE PARK at S.Quebec St. and Peakview Ave. (Near I-25 and Arapahoe Road). Windowed office, conference room, kitchen, receptionist, copier, fax, telephone system. DSL line, tax library, free parking, great environment. Arlyn or Neil 303-771-7377. To submit a classified advertisement for publication, email the information to advertising@cocpa.org and note in the subject line, “For COCPA Classifieds.” There is a 400-word limit on classified ads. Pricing: 0-50 words, $50; 51-100 words, $100; 101-200 words, $200; 201-300 words, $300; and 301-400 words, $400.

24

• NewsAccount • March/April 2017

Denver Tax Study Group at the COCPA Office

Tuesday, March 28 and Tuesday, April 25 This informal roundtable discussion group meets over lunch, the last Tuesday of most months, at the COCPA office, 7887 E. Belleview Avenue, Ste 200, Englewood. 2017 Meeting Dates scheduled through June: March 28, April 25, May 30, June 27. Register at www.cocpa.org.

North Metro Tax Study Group at The Ranch Country Club

Thursday, March 16 and Thursday, April 20 This informal roundtable discussion group meets over lunch ($20/ person), the third Thursday of most months, at The Ranch Country Club, 11887 Tejon St., Westminster. 2017 Meeting Dates: March 16, April 20, May 18, June 15, July 20, Aug. 17, Sept. 21, Oct. 19, Nov. 16, and Dec. 21. Register at www.cocpa.org.

In Memoriam We regret the loss of the following COCPA members and extend our sympathy to their families and friends.

H.W. "Bill" Nelson

Member since 1968, Denver, Colo.

Morey Idelberg

Member since 1956, Denver, Colo.

Charles A. Haskell

Member since 1961, Englewood, Colo.

John "Jack" Corbridge

Member since 1957, Denver, Colo.

James H. Noenning

Member since 1966, Denver, Colo.

Thomas C. Brown

Member since 1997, Rocky Ford, Colo.


Accountants and Consultants www.acmllp.com

Live Here. Work Here. Play Here.

imagine the possibilities tm ACM is a locally owned, locally committed

accounting firm. We understand why you live here, why you do business here and what you expect from your advisors. ACM is committed to providing integrated, value-added, assurance, tax and

SAVE THE DATE June 9, 2017 Leadership Council attendees explore national and state initiatives and issues, provide feedback on profession-oriented matters, and assist in determining the future direction for the Colorado Society of CPAs and those it serves. All COCPA members are invited to participate.

consulting services. How can ACM help you? Contact us to find out: info@acmllp.com

303.830.1120 Boulder ∙ Denver ∙ Northern Colorado ∙ Laramie

For details, contact Terry Cervi at terry@cocpa.org.

NOT-FOR-PROFIT CONFERENCE

Not-for-Profit Conference Featuring the latest trends in the sector. MAY 23, 2017 Denver or Webcast •New Nonprofit Accounting Standards •Nonprofits Marketing and Social Media •Reviewing Financial Statements: Grantor Observations •Leases and Revenue Recognition

Register at cocpa.org March/April 2017 • www.cocpa.org •

25


Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076

Periodicals Postage

Are your clients ready for rising rates?

+ Mark Kuhn

Stocks and bonds can perform differently in changing interest rate environments. Are your clients' portfolios prepared? Let's talk.

President & Founder

Scott Ranby, CFP® Financial Advisor

STRATEGIES AND SERVICES OFFERED:

Investment Management

Schedule a complimentary consultation today.

Social Security Claiming Pre-retirement Planning Charitable Giving Retirement Income

KuhnAdvisors.com Minimum Relationship: $1 million Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Kuhn Advisors, Inc. is a registered investment adviser. More information about Kuhn Advisors, Inc., including its advisory services and fee schedule, can be found in its Form ADV Part 2, which is available upon request.

2373 Central Park Blvd. Suite 100 Denver, CO 80238 (303) 803-1016

COCPA NewsAccount – March/April 2017