COCPA NewsAccount – March/April 2019 by Colorado Society of Certified Public Accountants

NEWSACCOUNT COLORADO SOCIETY OF CPAs • MARCH/APRIL 2019

Vision and Optimism PAGE 2

New Board Members PAGE 7

Wayfair – A Cover for Other Mischief? PAGE 12

C2 - Ad

NewsAccount | March/April 2019

Contents

Features 5

State Board Adopts New Rules, v. 2.0 Two recent amendments to the Colorado State Board of Accountancy Rules are significant, depending on whether you are a CPA candidate pursuing licensure or a Colorado CPA applying for RETIRED status.

New Members Join the COCPA Board and Educational Foundation, May 1 These leaders are focused on ensuring the profession’s value - and value add to and for those it serves today and well into the future.

Wayfair - A Cover for Other Mischief? More than twenty states have adopted South Dakota’s nexus threshold resulting from the Wayfair decision. How is Colorado responding?

Succeeding at Transition: A Case Study When Tim McCutcheon, CPA, retires on April 30, 2019, he’ll have been a CPA for 40 years. He and Ksenia Popke, CPA, his successor, offer advice on planning for smooth transition of clients.

Parking Expense Guidance Released The Tax Cuts and Jobs Act eliminated the tax deduction for qualified transportation fringe benefits businesses provide to their employees. Tax exempt organizations did not escape this law change.

Why Going Back to Work Might Be the Best Decision You Ever Make Mel Thompson seized the opportunity to return to work part-time, at a lower level, and says it’s the most rewarding and fulfilling job of his career.

Financially Fit Aging: Plan Now to Have Options Later Amy King, CPA, covers the importance of planning before having to make tough decisions and creating a team which can handle the various aspects.

24 Departments 2

Chair Column

Movers & Shakers / Classified Ads

In Memoriam

CONNECT WITH COCPA

March/April 2019 | www.cocpa.org

CHAIR COLUMN

NEWSACCOUNT

Vision and Optimism

A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 64, No. 6 March/April 2019

Your Code Words for this Year

Officers

Victor A. Amaya, Chair Benjamin T. Hrouda, Vice Chair Christopher J. Telli, Treasurer Tawnya Y. Ramirez, Immediate Past Chair Mary E. Medley, Secretary

Directors

Kristine M. Brands, Renny Fagan, Dana J. Miller, Georgia Z. Phillips, Matthew O. Rolland, Randy L. Watkins

Editorial Board

Jack Allgood, Alan D. Bennett, Steve Corder, 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 Ariana Cassard, 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 $9.00 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 = 6,743 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,688; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 35; total distribution = 6,708; office use, leftovers, spoiled = 35; returns from news agents = 0; total sum = 6,743; 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.

BY VICTOR A. AMAYA, CPA, CHAIR OF THE BOARD

very COCPA Chair chooses a theme for his or her year. Mine, as I’ve noted previously, has been the “value add.” My year as COCPA Chair is coming to an end, but I hope the value add is something we all continue to focus on because it is, without a doubt, where our profession is heading. What we do as CPAs is no longer about price or doing a certain kind of work. It’s about our clients or employer asking us if we can continue to help them as an individual, a business, or entity. It’s what our market and our customers are looking for

Ask yourself: “Who values what I know and is looking for guidance?”

– someone to help and guide them on their path to success rather than simply checking off a to do list of tasks. Those who view what CPAs do as merely putting numbers in boxes are missing the boat. We have an incredible amount of information in our heads that we pick up over the course of our day-to-day activities simply by working with and listening to people. We are so fortunate that we get to see firsthand the outcome of what we do. We can see that people are doing well and witness their triumphs, as well as know of those who aren’t doing as well and the mistakes they’ve made.

We can do so much more than compliance work. As accountants, we like to account for everything, but we easily can overlook that value add – the most important thing. We don’t always capture that vital piece of what we do. How can we do more? Always ask yourself that. For example, I’m on the tax side of things, and it’s a brave, new world out there. New rules and ambiguity have clients asking, “Can you help?” We’ve been given a huge opportunity to create something far beyond compliance work. So ask yourself: “Who values what I know and is looking for guidance?” Right now, the new rules and ambiguity might not seem like a gift, but this is our chance to do something different. Jump at the chance! The audit world is experiencing similar opportunities thanks to revenue recognition. Auditors, here is your chance to create something more by forging deeper relationships with your clients. These opportunities are going to show up more frequently as our regulatory environment continues to change and become more complex. We need to have the vision and optimism to view what’s happening as a path to a new world rather than a burden. I also encourage you to continue to step outside your comfort zone. Seeks new ways of doing things, rather than continuing to do things the way they’ve always been done. Make change a part of your organization’s environment. Drive that change rather than being driven by it. Yes, I agree all of this can be uncomfortable, but discomfort is where change and excellence occur. Don’t forget to look up and notice what’s around you. I’m as guilty as anyone of putting my head down and getting lost in work. Develop a habit of setting aside time look up and see what’s coming rather than waiting for it – whatever “it” may be – to pop out and scare you. And keep looking out for each other. There are only so many of us CPAs out there. Reach out to your colleagues with help, support, and advice. Ask for help when you need it. As CPAs, we already have built-in camaraderie. To strengthen that bond, we need to look out for each other. It makes the profession an even more attractive place to be.

Working together to make a

r e ib gg difference

NOT-FOR-PROFIT CONFERENCE

May 21, 2019 | Denver or Webcast | CPE: 8.0 Every year, CPAs and business professionals gather at the Not-for-Profit Conference to understand the latest issues and trends in the NFP sector. Attendees learn about leading non-profit organizations through unique challenges and how to provide effective guidance to accomplish their organization’s mission.

Thank you for your support this past year. It has been an incredible experience. Email Victor Amaya at vamaya@mycpadvisors.com.

Visit cocpa.org/NotForProfit to register. March/April 2019 | www.cocpa.org

SUNSET REVIEW

Colorado Legislature Takes Up State Board Continuation BY MARY E. MEDLEY

As we go to print, the Sunset Review of the Colorado State Board of Accountancy process moves from the Department of Regulatory Agencies (DORA) – which issued its report and recommendations for statutory changes, Oct. 15, 2018 – to the Capitol. DORA presented the report before the Senate Business, Labor, and Technology Committee, Feb. 13. Subsequently, the committee voted to proceed with drafting the bill. Follow progress by going to leg.colorado.gov/bills and searching by the bill number, SB 19-155, sponsor, or keyword Accountancy.

eriodically, the Colorado State Board of Accountancy undergoes a “Sunset Review” to determine whether it should continue to license, regulate, and discipline Colorado CPAs, for the protection of Colorado consumers. Last conducted in 2009, with continuation legislation passed by the Colorado General Assembly in 2010, the statute specified that “the State Board of Accountancy shall be reviewed as provided in section 24-34-104, Colorado Revised Statutes” - the Sunset Review Provisions - and that the statute establishing the State Board “is repealed, effective July 1, 2019.” In lay terms, the Colorado legislature must act during the 2019 legislative session to continue the State Board of Accountancy after June 30, 2019. The Department of Regulatory Agencies (DORA) is charged with performing the Sunset Review and issuing its recommendations to the Colorado General Assembly, by Oct. 15, the year before the General Assembly must act. The Department’s 2018 report outlined eight recommendations, including that the State Board be continued for 11 years, to 2030. The DORA recommendations are incorporated into a draft which is discussed at an initial committee hearing, after which proposed legislation is prepared. The bill, sponsored by Sen. Angela Williams (D-Denver) and Sen. Kevin Priola (R-Henderson), will undergo committee consideration and public testimony in the Senate, followed by full Senate action. It then will move to the House for committee consideration and full House action. Ultimately, the legislation must be passed by both houses and signed by Governor Jared Polis. COCPA legislative counsel Daniel Furman of Hall & Evans LLC, CPE Director Rebecca Campbell, and I attend the committee hearings. I testify on behalf of the COCPA when appropriate. At each step in the legislative process, your COCPA provides support, resources, and input to ensure the best possible results both for the public and for the profession. For further details, contact me at mary@cocpa.org.

NewsAccount | March/April 2019

2018 SUNSET REVIEW RECOMMENDATION 1: Continue the State Board of Accountancy for 11 years, until 2030. RECOMMENDATION 2: Make the use of fraudulent, coercive, or dishonest practices, or the demonstration of incompetence or untrustworthiness, grounds for discipline. RECOMMENDATION 3: Clarify that foreign corporations operating a Colorado office must register with the Board and add “limited liability partnership” to the list of business types. RECOMMENDATION 4: Allow graduates of unaccredited programs to petition the Board to determine whether their education is substantially equivalent. RECOMMENDATION 5: Permit Chartered Global Management Accountants who are not CPAs to use the title “chartered global management accountant” and the abbreviation CGMA, provided they do not purport to provide services that require a CPA license. RECOMMENDATION 6: Clarify section 12-2-123(1)(j), C.R.S., to accurately reflect the Board’s jurisdiction. RECOMMENDATION 7: Allow CPAs to request inactive status via other Board-approved methods. RECOMMENDATION 8: Make technical changes to the law.

REGULATORY NEWS

State Board Adopts New Rules, v. 2.0

n Nov. 19, 2018, following a rule-making hearing held on Sept. 19, 2018, amendments to the Colorado State Board of Accountancy Rules became effective. Most of the amendments were of a “housekeeping” nature. Two were significant, depending on whether you are a CPA candidate pursuing licensure or a Colorado CPA applying for RETIRED status. A LITTLE HISTORY The 150-hour education requirement became law in Colorado in 2010, ten years or more after most states adopted it. It became effective for CPA candidates on July 1, 2015. As a result of this timing, several educational content requirements were included in the Rules which were not adopted in other jurisdictions. One of these - the requirement for a three-semester hour course in accounting, business, or technical communications - created significant challenges for candidates, especially for those who attended colleges and universities outside of Colorado or who completed their education before the new Rules were implemented in 2015.

On Jan. 23, 2019, the State Board of Accountancy held another rule-making hearing to clarify this change and to specify what CPE requirements the individual would have to meet if seeking to return to ACTIVE status. IMPORTANT REMINDERS All Colorado licensed CPAs, whether Active, Inactive, or Retired, must renew online in November 2019 and attest to meeting the CPE requirements by Dec. 31, 2019. If you wish to change your status, do so before Nov. 1, 2019, to avoid potential delay in the approval process. You can access the new Rules at cocpa.org/accountancyrules. For questions about either of these changes or other State Board matters, contact Mary E. Medley at mary@cocpa.org.

COLORADO RULES & REGULATIONS

As of Nov. 19, 2018, the accounting, business, or technical communications requirement is repealed. Students are encouraged to take business communications as part of their business administration coursework, however the content no longer is a requirement for licensure.

Webcast, April 29, 2019

The second amendment - important for Colorado CPAs wishing to apply for RETIRED status - eliminates the need to complete all CPE accrued as of the date the individual applies for the status change.

Join Rosemary Weiss to learn about the changes and receive 2 Hours of Recommended CPE in Ethics.

AICPA NEWS

AICPA and Leading CPA Firms Commit to DAS Initiative

he American Institute of CPAs (AICPA) and a significant number of the nation’s largest accounting firms are moving forward with a multiyear initiative to create a new, innovative process for auditing using technology. The goal of the collaborative effort – with contributions of time, talent, and funding by leading CPA firms, the AICPA, its technology arm CPA.com, and the AICPA’s technology partner CaseWare International – is to develop a transformational auditing methodology supported by a state-of-the-art technology platform.

“Technology is poised to disrupt auditing as we know it,” said Barry C. Melancon, CPA, CGMA, president and CEO of the AICPA, who discussed the Dynamic Audit Solution collaboration at the fall meeting of the AICPA’s governing Council. “We can take a more cautious approach to change, automate here or there using existing methodology, or we can boldly reimagine what auditing in the future will look like. To me, and to the firms that have committed to this initiative, the choice is clear.”

So far, $50 million has been committed to develop the new Dynamic Audit Solution (DAS) methodology. In addition, CaseWare has invested in building out its new cloud platform and has plans to continue this level of investment to support further advancements. The output of the initiative would be available to the more than 14,000 CPA firms that have auditing practices in the United States.

The plan is to develop a dynamic, flexible, and scalable platform that uses the power of automation, data analytics, and updated methodologies to transform auditing. Some 40 percent of the AICPA’s Major Firms Group have committed funds to the initiative.

March/April 2019 | www.cocpa.org

MEMBER SUPPORT

For You. For the Profession. For the Public. Advocacy. It’s what we do, daily, on your behalf, as a COCPA member, and on behalf of the clients, employers, and organizations you serve.

hether it’s responding to requests for information from a state agency or providing resources to a Colorado member of Congress, or attending Colorado State Board of Accountancy meetings, or testifying before a legislative committee or regulatory agency, or working on problem resolution with the Colorado Department of Revenue, the COCPA has your back, especially when you’re busy doing what you do, every day. Wonder how the Colorado State Board of Accountancy handles a particular issue? Call the COCPA office at 303-773-2877 or 800523-9082, or email Mary E. Medley, COCPA CEO, at mary@cocpa. org. Because she and COCPA CPE Director Rebecca Campbell attend almost every State Board public meeting, they can give you perspective, answer questions, and help you navigate through the statute, rules, and policies. Need assistance with the Colorado Department of Revenue? Thanks to the Department’s efforts and the working group of COCPA members who raise issues for resolution, you have access, and COCPA has people who can help. Your first move: Call the CDOR Practitioners Hotline at 303-2322419. You’ll be connected with a highly trained Department representative who can assist you. If you’re unsuccessful at resolving a thorny issue, email Medley at mary@cocpa.org.

NewsAccount | March/April 2019

Include in your email the taxpayer name, Colorado Account Number or last four digits of the SSN, a brief description of the issue, whether you have a power of attorney on file, and that you already have tried the Practitioners Hotline for resolution. Attach a pdf of a recent notice if available. Medley will forward your request personally. Please note that you must seek assistance through the Hotline first. Curious about how the legislative process works? Be in touch. We’re always ready to explain it. Perhaps you have a close relationship with a member of the Colorado General Assembly or Colorado member of Congress. Let Medley know so you too can participate in advocating on behalf of doing what’s right for the citizens of Colorado. One more thing: If you hear of proposed legislation or run across an issue you think the COCPA should be involved in, be in touch. We’re here to advocate - and you can help us do that well.

LEADERSHIP NEWS

New Members Join the COCPA Board and Educational Foundation, May 1 BENJAMIN T. HROUDA, CPA, CGMA

rom relevancy of the profession to the impact of rapid change and emerging technologies such as Artificial Intelligence to the need to encourage students to pursue the CPA designation and more, these leaders are focused on ensuring the profession’s value - and value add - to and for those it serves today and well into the future. Here’s a brief look at who they are, (some of) what they’ve accomplished already, and what’s on their minds. Chair-elect Ben Hrouda and Vice Chair/Chair-elect Sharon Lassar will serve one-year terms. Directors-elect Toby Clary and Audra Dixon will serve two-year terms. Chris Telli continues as Treasurer for the second year of a twoyear term.

COCPA BOARD CHAIR NOMINEE Managing Partner, Flywheel Capital, Denver A University of Denver (DU) graduate with his M.A. and B.S. in Accountancy, Ben brings broad professional experience to the leadership team. He possesses Big Four public accounting experience (Ernst & Young LLP), teaching experience (DU adjunct faculty), real estate development experience (formerly with several organizations including Sage Hospitality and now with his own company), and COCPA leadership experience (former Young Professionals Committee chair, Board of Directors member and Treasurer, Budget Committee member and Chair, and Investment Committee member). He will complete his one-year term as COCPA Vice Chair/Chair-elect in April. Flywheel Capital, which Ben founded with partner Adam Hazlett, focuses on commercial real estate investments where it can add value to the deal and find creative solutions. The company prides itself on finding “diamonds in the rough” - properties or land that are underutilized and underinvested with the potential to become exceptional, authentic additions to the community. Ben is an AICPA Leadership Academy graduate. He talks about the importance of clearly communicating how CPAs are relevant in today’s environment and the value CPAs provide. “I hope we can be proud in our accomplishments, our service, our relevance, and why the profession remains important. We should not be shy in these areas.”

“I can’t imagine being successful without belonging to the COCPA” Ben has been a dedicated COCPA member since his college days when COCPA CEO Mary E. Medley first met him - in her business writing for accounting majors class. “The COCPA is my professional family. I count on it to help support my business, develop and nurture relationships with other professionals, and keep me up to date on the issues. I can’t imagine being successful without belonging to the COCPA. I look forward to championing all it has to offer during my year as COCPA Chair.” Ben’s family connections to Denver and DU run deep. He is a descendant of minister Henry A. Buchtel, who came to Denver in 1885 and was stationed at Evans Chapel on what now is the University of Denver campus. Ben’s great great great grandfather eventually served simultaneously as Chancellor of DU and Governor of Colorado. BTW, it’s pronounced BOOK-tul rather than buck-TELL. CONTINUED ON PAGE 8

March/April 2019 | www.cocpa.org

LEADERSHIP NEWS CONTINUED FROM PAGE 7

SHARON S. LASSAR, PH.D., CPA, CGMA

TOBIAS D. “TOBY” CLARY, CPA, CVA

COCPA BOARD VICE CHAIR/ CHAIR-ELECT NOMINEE

COCPA BOARD OF DIRECTORS NOMINEE

John J. Gilbert Endowed Professor and Director, School of Accountancy, Daniels College of Business at the University of Denver, Denver

Shareholder, Soukup, Bush & Associates, P.C., Fort Collins

“The cost of high-quality education is always on my mind. The COCPA and many schools, like the University of Denver, provide good scholarship support for students. Yet, I worry that the listed tuition price may discourage students from applying for admission and financial aid. I’ve observed that some students pay more for a lower quality education than they would have paid, after scholarships, for a higher quality education.” On the profession front, “AI, robotics and data analytics are increasing the CPA’s value. CPAs will help businesses realize the value of their technology investment by helping them streamline processes. Just as CPAs helped businesses adopt quality improvement processes in the last half of the 20th century, we are helping businesses adopt machine learning and data-driven decision making in the first half of this century.” Sharon is past chair of the AICPA Pre-Certification Education Executive Committee where she steered policy regarding the education requirements to become a licensed CPA. She also served on the Accounting Accreditation Task Force of AACSB International whose work resulted in new standards for accreditation of accounting programs. In 2017-18, Sharon led the Accounting Programs Leadership Group, a 300-member organization of those who manage academic accounting programs in higher education. For the COCPA, Sharon has served on the Careers Committee, the Board of Directors, and as an Educational Foundation Trustee, including a term as President. Before moving to Colorado in 2010, Sharon was actively engaged with the Florida Institute of Certified Public Accountants, including a term as Vice President. She directed several key FICPA initiatives, including transforming financial literacy and women’s leadership development efforts into standing programs. She also has served as Minority Issues Chair of the Taxpayer Advocacy Panel, to which she was appointed by Treasury Secretary O’Neil. Sharon earned a Ph.D. at the University of Southern California, a Master of Taxation at Bentley University in Waltham, Massachusetts, and a Bachelor in Accounting from West Virginia University. Her research has been published in journals such as Journal of Accountancy, Journal of Taxation, Taxes – The Tax Magazine, The CPA Journal, The Journal of Legal Tax Research, and Tax Adviser. Sharon observes, “At work, I use my brain. In my free time, I use my hands as much as possible. I like to garden, sew, refinish furniture, and repurpose old items. I buy used clothing at thrift stores for the buttons - vintage buttons are so much nicer than modern ones.”

NewsAccount | March/April 2019

Toby has been practicing in Northern Colorado since 2001. He is a proud CSU Ram alumnus and 25-year Colorado native. An AICPA, COCPA, and National Association of Certified Valuation Analysts member, Toby is President of the COCPA’s Northern Chapter and current Vice President of the Educational Foundation Board of Trustees. Toby’s volunteer service doesn’t stop there. He is a member of Colorado State University’s Accounting Advisory Board. And, he recently finished a three-year term on the Intuit Professional Tax Council. Active in tax policy, Toby has met many times with members of the U.S. House Ways and Means Committee and the Senate Finance Committee to discuss taxation and tax reform. In 2018, Toby succeeded his colleague Mark Soukup, CPA, in teaching the COCPA signature CPE program, Tax Year in Review and Planning, across Colorado. Toby cites implementation of Artificial Intelligence and Blockchain among the top issues facing the CPA profession. “Currently, we’re operating in the Wild West of technological improvements. The rapid pace at which AI, Blockchain, and data analytics are being implemented is causing wide discrepancy among practitioners. The firm of the future will rely heavily on these technologies. Those that don’t will fade into obscurity.

“The firm of the future will rely heavily on these technologies. Those that don’t will fade into obscurity.” “I also am concerned with the role Congress has forced on practitioners through the Tax Cuts and Jobs Act. With the complexity of the new law, we must not only interpret it but also – almost – decide for clients as they’re not always able to understand the nuances and impacts.” Toby says he didn’t intend to be a CPA. He was pursuing a career as a chef until he realized he didn’t want to work nights, weekends, and holidays. Now, he’s a tax practitioner who, on occasion, works nights, weekends, and… When not at work, you can find Toby at home with his partner-in-crime Jill, his son Miles, daughter Magnolia, and dog Winnie, or on his bike getting ready for the next century ride.

AUDRA DIXON, CPA COCPA BOARD OF DIRECTORS NOMINEE Senior Audit Associate, EY LLP, Denver Audra is an AICPA Leadership Academy graduate, a COCPA LeadFit graduate, and a CityBuild Activator - an initiative of the Downtown Denver Partnership. She will join the Board of Directors after completing a three-year term on the Educational Foundation Board of Trustees. On her mind: “In a digital, automated age, I see less time spent on emotional intelligence and interpersonal skills training. And, I’m concerned about competing with high tech and other more progressive industries for talent.” She knows all the advances in technology eventually will make CPAs’ work easier, save time, allow focus on more important areas, and provide more value and precise insights into financial information. What keeps her up at night, because it’s so important to her: “Keeping my team happy and supported.”

Audra graduated from the University of Colorado, Boulder, with a B.A. in Sociology. The shift to accounting and becoming a CPA came six years later when she completed the necessary coursework at Metropolitan State University of Denver. She began her career in tax with a local CPA firm. Later, she also began teaching accounting as an adjunct instructor for Red Rocks Community College. Then, she decided to make the leap to auditing, joining a larger local CPA firm before landing at EY in 2017. Audra loves architecture and design. She has been a vegetarian for 20 years - something not nearly so mainstream two decades ago. She cares about people and nurturing relationships; she doesn’t care about meat. CONTINUED ON PAGE 10

Strut Your Skillset

DO SOC I ET

Demonstrate competency, expand your knowledge, enter new areas of practice, and earn the associated badge you can place on your social media platforms. Buy a COCPA Season Pass and bundle your purchases to save!

GOVERNMENT CERTIFICATE of ACHIEVEMENT

PUB

LIC ACC

Earn the Governmental Certificate of Achievement and enhance your professional competence with practical skills you can apply immediately.

Audit Staff Essentials supports auditors as they take on new roles and responsibilities.

Tax Staff Essentials is a comprehensive, integrated curriculum that provides tax training for four different experience levels.

Learn more at cocpa.org/certificate-programs March/April 2019 | www.cocpa.org

LEADERSHIP NEWS CONTINUED FROM PAGE 9

INGRID STIVER, CPA EDUCATIONAL FOUNDATION TRUSTEE NOMINEE Senior Manager, PwC LLP, Denver

ducational Foundation Trustees-elect Lisa Kutcher, Ingrid Stiver, and Karen Turner will serve three-year terms. Kyle Green will serve a one-year term on the Foundation Board, completing the unexpired term of a former trustee.

LISA KUTCHER, PH.D., CPA EDUCATIONAL FOUNDATION TRUSTEE NOMINEE Department Chair, Professor, and Deloitte Faculty Fellow, Colorado State University, Fort Collins Lisa joined the Colorado State University faculty in 2008. Her research and teaching interests focus on financial accounting, and she is particularly interested in how regulation impacts financial reporting practices. Her research investigates the valuation effects of various disclosure choices and alternative accounting methods. Lisa’s research has been published in a variety of academic journals, including the Journal of Accounting and Economics, Review of Accounting Studies, and National Tax Journal. Lisa teaches financial accounting at the graduate and undergraduate levels, and she is currently focusing on the intermediate sequence for undergraduate students. Prior to joining the faculty at Colorado State University, Lisa served on the faculty at the University of Oregon and The Ohio State University. She, understandably, is concerned about decreasing enrollments in accounting programs. “As a profession, we need to do a better job of providing the value-add of an accounting degree and the CPA license. I am particularly concerned with attracting more students into accounting. We are losing outstanding students to other majors, so we need to be doing a better job of attracting these students.” Another concern is being on top of the impact of technology. “Access to ever-increasing amounts of data has changed how audits are completed. CPAs have to be tech savvy, but it is more than that. The importance of critical thinking and problem solving are more important than ever – being able to ask the right questions of the data we have available to us.” Lisa asks, as an educator of future CPAs, “Are we addressing the needs in our curriculum of what is coming for the profession? While we are constantly assessing our curriculum, I am always thinking, ‘Are we doing enough? Can we be doing this better?’ These days, it all centers on data analytics.” This first generation college graduate is always up for conversation about important topics over coffee – her family is part owner of a local coffee business. “We love good coffee!”

NewsAccount | March/April 2019

Ingrid is a senior manager at PwC’s Health Research Institute (HRI), a dedicated research group that provides new intelligence and perspective on major health-related business issues. She leads HRI’s analysis of major trends impacting health insurers, employers, and providers. Formerly in PwC’s assurance practice, Ingrid returned to the firm after a five-year hiatus during which she held positions at Catholic Health Initiatives (CHI) and the Denver Health Medical Plan. At CHI, Ingrid worked for the Institute for Research & Innovation where she focused on streamlining the administrative aspects of clinical trial start up and ongoing trial management for CHI’s hospitals and provider practices. Most recently, Ingrid worked for the Denver Health Medical Plan overseeing large group employer and individual health insurance products. Top issues facing the profession from Ingrid’s vantage point are the impact of artificial intelligence and robotic process automation on the accounting function – “a great opportunity but also a challenge to rethink how we staff, train, and retrain”; understanding the next

“The next generation will improve the profession.” generation of CPAs - “what motivates them and what is important to them - without judgment because the next generation will improve the profession”; and the need to maintain trust in a global society “where trust seems to be eroding.” What keeps this University of Denver graduate up at night is concern about the rising cost of healthcare in the U.S. and the concurrent decline in U.S. life expectancy. In her free time, Ingrid enjoys yoga, exploring new places, returning to old haunts, hiking, camping, eating plant-based food, and spending time with her friends and family, especially her partner Michael and two black labs Ramsey and Kiwi. She took a sabbatical during her first stint with PwC, spending six weeks in India at yoga teacher training.

KAREN TURNER, PH.D., CPA

KYLE GREEN, CPA

EDUCATIONAL FOUNDATION TRUSTEE NOMINEE

Professor Emeritus in Accounting, University of Northern Colorado, Greeley

Tax Manager, Wall, Smith, Bateman, Inc., Alamosa

Karen holds a B.A. in Secondary Education and M.A. in English from Texas A&M University. She received her M.S. and Ph.D. in accounting from the University of Texas at Arlington. She has taught at Texas A&M University, Baylor University, and Valdosta State. Before joining UNC, she was Department of Accounting, Economics & Finance chair at the University of Mary Hardin-Baylor. At UNC, she served as Chair of the Department of Accounting and CIS, Associate Dean, and Interim Dean of the Monfort College of Business. Karen served two four-year terms on the Colorado State Board of Accountancy and a three-year term as Western Regional Director on the board of the National Association of State Boards of Accountancy (NASBA). She also chaired its Education Committee. Karen has served on the boards of the Colorado Society of CPAs, Women-2-Women of Greeley, the Small Business Development Center, the UNC BizHub, and the Greeley Center for Independence. She currently is serving on the NASBA Nominating Committee. Karen has been honored with the Dean’s Builders Award and Research Achievement Award, the Monfort College’s Service Award, and as Accounting Professor of the Year. The COCPA recognized her as a 2012 Woman to Watch, and BizWest named her a 2014 Woman of Distinction in Education.

“Colorado has provided me with so many professional opportunities, so my continued involvement with the profession is my way of paying those opportunities forward.” Having retired from UNC in summer 2018, Karen has staying involved in the Colorado accounting profession through her work with NASBA and the COCPA. “Colorado has provided me with so many professional opportunities, so my continued involvement with the profession is my way of paying those opportunities forward. Accounting is a wonderful profession but with its own challenges such as staying on top of changing regulations, training for new technologies and strategies such as data analytics, and attracting talent to the profession at all levels.” For those who know Karen, she reports: “I am thoroughly enjoying retirement and not worrying about anything very important.”

This younger professional sees technology, cyber security/data privacy, and the shift in the skills required to be a successful CPA as top concerns for the profession. “If leveraged correctly, the impact of new technology, being developed at such a rapid pace, can be a massive boost to the accounting profession. Using these new developments as a supplement to, rather than a replacement of, the services we provide will only increase our value to those we serve.” Kyle began his career in public accounting at Wall, Smith, Bateman in January 2010, shortly after graduating from the University of Colorado at Colorado Springs. His primary focus is on individual, partnership, and corporate taxation. Kyle has extensive knowledge of farm and ranch taxation, which are the leading industries in the areas surrounding Alamosa. He also has experience in estate, trust, and gift taxation, the compilation of financial statements, and payroll. He is part of the committee that oversaw implementation and maintains operation of the firm’s paperless tax preparation software. Top of mind for Kyle is how to be a good advisor, providing clients with proactive advisory services they might not have realized they need. Kyle currently is president of the COCPA’s San Luis Valley Chapter. In summer 2015, Kyle co-led the effort to revive the chapter after more than 25 years of dormancy. Kyle is a 2017 graduate of the COCPA LeadFit program, making the roundtrip from Alamosa to Denver and home again, to attend all the sessions. He enjoys honing his leadership skills through any opportunity he can seize. As just one example, in spring 2017, Kyle taught a four-week financial literacy course on behalf of the church he attends with his family. Kyle had no intention of becoming a CPA because “tax season interfered too much with ski season. Almost 10 years later, I don’t regret it for a minute! And, living close to Wolf Creek helps.”

HONOR HIS LEGACY Contribute today to remember Past Foundation President David M. Dirks with a perpetual named scholarship to help carry on his commitment to future CPAs.

coloradogives.org/DaveDirksCPA To contribute by check or stock donation, contact Alicia Gelinas, alicia@cocpa.org.

March/April 2019 | www.cocpa.org

STATE AND LOCAL TAXES

Wayfair – A Cover for Other Mischief? BY BRUCE M. NELSON, CPA

ore than 20 states have adopted South Dakota’s nexus threshold of $100,000 or 200 separate sales transactions.1 The Colorado Department of Revenue seeks to join the Wayfair bandwagon. From my vantage point, the Department is using the change to increase taxes on Coloradans who are otherwise unaffected by the U.S. Supreme Court’s Wayfair decision. Among the many complexities of Colorado sales tax is the fact that the state’s cities

fall into one of two buckets. First, there are the 209 state-collected cities, counties, and special districts that piggyback off the state’s sales tax registration, filing, and tax base. Then there are the 96 home-rule cities, 71 of which have their own individually separate registration, licensing, and filing requirements with tax bases that not only differ from the state tax base but also from each other. Layer all that with 60 different tax rates, 34 various tax districts, and a partridge in a pear tree, and a Colorado retailer can face up to 756 sales tax combinations.2 With this complexity, even the Colorado Department of Revenue (CDOR) failed to register businesses within the proper taxing district 11 percent of the time, according to the Colorado Office of the State Auditor.3 And no,

your software provider doesn’t get it right either. Probably no one can. Nevertheless, CDOR proceeded with an Emergency Regulation issued Sept. 11, 2018, and effective, Dec. 1, 2018. The Department encouraged all vendors to become compliant immediately, however it provided a grace period until May 31, 2019. The Emergency Regulation makes two key changes. First, CDOR adopted a new nexus threshold. Any retailer who has, in the previous or current calendar year, gross revenue of $100,000 or 200 or more separate sales transactions of any amount into Colorado must collect all state and state-administered sales taxes.4 Second, CDOR changed the sourcing rules for collecting the 209

Those states include California, Colorado, Hawaii, Indiana, Iowa, Illinois, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Jersey, North Carolina, North Dakota, Rhode Island, South Carolina, Utah, Vermont, Washington, Wisconsin, and Wyoming.

See the Colorado Department of Revenue report at https://leg.colorado.gov/sites/default/files/images/committees/2017/170711sales_and_use_tax_simplification_task_force_ presentation_colorado_department_of_revenue.pdf

Colorado Office of the State Auditor, Department of Revenue Local Sales Taxes Performance Audit (November 2015). Proposed Reg. 39-26-105(4)(a)(II).

NewsAccount | March/April 2019

state-collected sales taxes.5 Instead of collecting local city, county, and special district taxes for only those locations in which the vendor has a permanent place of business, Colorado vendors must now charge and remit sales tax for the state-collected jurisdictions in which the purchaser receives its goods or services.

A Colorado retailer can face up to

sales tax combinations. From time immemorial, taxpayers did not have to collect sales tax for other state-collected cities, counties, and special districts unless they had a permanent place of business in that location, a position supported by statute, regulation, and numerous CDOR publications.6 The practice was straightforward: “Only collect sales tax from those purchasers with whom you share jurisdiction.” Thus, if a Denver vendor, with only the one location in Denver, were to mail goods from its store to a purchaser in Julesberg, Colorado, the vendor would collect only the state sales tax. It would not have to collect either the Julesberg city or Sedgwick county sales tax.7 Under the Emergency Regulation, the Denver vendor must collect all the state-collected sales taxes at the location at which the purchaser received the goods - also known as “destination sourcing.” Thus, in this example, instead of collecting only the state sales tax, the vendor must Proposed Reg. 39-26-102.9(3)(b).

Colo. Rev. Stat. §39-26-102(3); Reg. 39-26-102.3., and FYI 10 – Consumer Use Tax (December 1, 2013)

For background, see Bruce Nelson, “Doing Business in Colorado – A Nexus Quagmire,” State Tax Notes, December 18, 2017, p. 1195, and Judy Vorndran, “Rally Cry Intensifies for Sales and Use Tax Reform,” State Tax Notes, February 5, 2018, p. 573. See also FYI General 10 - Consumer Use Tax (December 1, 2013).

Legislators Take Aim at New Regs BY BRUCE M. NELSON, CPA

The following bills were introduced for the Colorado General Assembly’s consideration, in response to the emergency rules the Colorado Department of Revenue adopted in the wake of the Wayfair decision. Bruce M. Nelson, CPA, provides his perspective on each. To monitor progress, go to the links shown.

B19-130 - Sales Tax Administration: Concerning sales tax administration, and, in connection therewith, simplifying the collection of sales tax by retailers without physical presence and reversing the Department of Revenue’s destination sourcing rule for Colorado retailers. Sponsored by Sen. Bob Gardner and Rep. Janice Rich and Rep. Colin Larson leg.colorado.gov/bills/sb19-130. SB19-130 is an attempt to bring Colorado in line with the simplification standards of the Streamline Sales Tax (SST) initiative. See www.streamlinedsalestax.org. The SST is a joint effort by states to create a national simplified process for charging, collecting, and remitting sales tax. South Dakota is one of 23 states that belong to the SST, and the U.S. Supreme Court remarked favorably on that participation in the Wayfair decision. While it is not clear whether the Court believed it was necessary to meet constitutional muster, the justices did indicate that the SST simplification along with South Dakota’s de minimis threshold ($100,000 in sales or 200 sales transactions) were important to their decision. Of course, that immediately raises the question as to whether Colorado’s adoption of the South Dakota de minimis threshold without simplification is sufficient. This legislation tries to address that omission. Whether it can do so without requiring simplification by Colorado’s home rule cities is debatable. The Colorado Department of Revenue, by its adoption of the standard, doesn’t think it is necessary. I and others are not so sure. In addition, there is some question as to whether we can adopt such a simplification program without running afoul of TABOR. In any case, it is a move towards simplification. SB19-131 - Exempt Certain Businesses From Destination Sourcing Rule: Concerning an exemption for certain businesses from the destination sourcing rule for sales tax collection requirements. Sponsored by Sen. Rob Woodward and Rep. Kevin Van Winkle and Rep. Jeni James Arndt leg.colorado.gov/bills/sb19-131. SB19-131 addresses the problem identified in my article on page 12 that small Colorado retailers, because of the de minimis threshold for remote sellers, will be at a disadvantage to those sellers. This bill would solve that problem and provide a lot of simplification for smaller retailers. Of course, it only solves the problem with respect to state collected cities, and so it is only a partial measure. Nonetheless, the bill would move Colorado a little bit closer to simplification and equity between instate and out-ofstate sellers. Editor’s Note: As we go to print, both these bills are no longer moving forward. They were postponed indefinitely by the Senate Finance Committee. New bills may be introduced later in the 2019 legislative session. More to come.

CONTINUED ON PAGE 14 March/April 2019 | www.cocpa.org

STATE AND LOCAL TAXES CONTINUED FROM PAGE 13 collect the Julesberg and Sedgwick sales taxes as well. I know what you’re thinking: It really doesn’t matter because the Julesberg purchaser would have owed city and county use tax on the purchase. Not true. Oddly enough, state-collected jurisdictions assess use tax on only two things: motor vehicles and building materials. Thus, the purchaser in Julesberg never owed use tax on purchases from Colorado sellers outside her city and county because there was, and is, no use tax due on the purchase.8 Now, all in-state vendors, and any remote sellers meeting the new sales thresholds, must charge and remit sales tax for all state and state-collected

sales in the state. That is not true of vendors located in Colorado. Under the Emergency Rule, every Mom-and-Pop business in Colorado must charge and remit state-collected sales tax on every sale to anyone in Colorado. So, if a vendor makes a single sale to someone in Julesberg, Colorado, it must open an account for those two locations (city and county) and collect the taxes due. And, these smaller vendors have the least personnel or financial ability to implement such compliance. The Colorado Constitution limits the amount of taxes state and local governments are permitted to spend and retain. TABOR, the Taxpayer’s Bill of Rights, requires voter

Wayfair provided an opportunity to change the sourcing rules for local taxes on the grounds that “it puts everyone on a level playing field.” But does it? jurisdictions in Colorado. It is curious that CDOR included the sourcing change with the new nexus threshold because it was not necessary. The Emergency Regulation could have been limited to the adoption of the new sales volume nexus threshold. In fact, CDOR had been trying to implement the sourcing change for at least the past five years, primarily through audits. Taxpayers were being assessed back taxes under the destination sourcing concept. They would protest the assessments and then often accepted settlement offers from CDOR. The Department then would waive the assessment if the taxpayer would start collecting on a go forward basis. Wayfair provided an opportunity to change the sourcing rules for local taxes on the grounds that “it puts everyone on a level playing field.” But does it? For example, a remote seller need not collect the state-collected local taxes until it has at least $100,000 in gross revenue or 200 or more

approval to enable state and local governments to increase taxes.9 It may be argued that CDOR’s sourcing change is a TABOR violation. As one attorney commented, “The new rules impose taxes on transactions that were never previously taxed, with no input from the General Assembly, the taxing jurisdictions, or the voters in those taxing jurisdictions. Yet, by administrative fiat, the Department of Revenue is now imposing tax on previously non-taxable transactions. This is arguably a new tax or an increase in the tax rate applicable to the transaction, which is invalid under TABOR. At a minimum, it is a change in tax policy that results in increased revenue for the taxing jurisdiction that may violate TABOR.” That said, CDOR might argue that the sourcing change is not an increase in tax and look for support to a recent Colorado Supreme Court decision, Tabor Foundation v. Regional Transportation District. In Tabor, the Court ruled on the constitutionality of state leg-

islation that adjusted sales tax exemption differences between the Regional Transportation and Scientific and Cultural Facilities tax districts. The legislation removed and added sales and use tax exemptions for the districts to realign their tax bases to the state tax base. The Court held that the legislation did not create a “new tax” but “merely an administrative adjustment to an existing tax.” The legislation’s “intended purpose” was to “simplify the administration and collection of sales and use tax,” and its effect on revenue was de minimis. It is likely the Court will have another opportunity to revisit this question. The Colorado Department of Revenue originally granted a grace period for compliance only to March 31, 2019, and subsequently extended it to May 31, 2019. This extension could be critical. The Colorado General Assembly convened its legislative session on Jan. 4, 2019. It will adjourn on May 3, 2019 - plenty of time to decide whether to allow this “simple regulatory change” to take effect. More to come. Bruce M. Nelson, CPA, has more than 30 years experience working with multistate public and privately held businesses. The opinions expressed are his own. Contact him at brucenelsoncpa@outlook.com. This commentary is reprinted with permission of State Tax Notes, www.taxnotes.com.

LEGISLATIVE UPDATE: COLORADO SALES TAX

May 16, 2019 Attend this webcast with Bruce M. Nelson, CPA, to learn about the impact of legislation the Colorado General Assembly may pass on destination sourcing and sales and use tax. Register online at cocpa.org/LegislativeUpdate

FYI General 10 – Consumer Use Tax (December 1, 2013); the Department of Revenue changed the wording of the FYI issued July 1, 2017, but has now currently withdrawn it, and the website indicates the FYI is “under review.”

For background on TABOR see Billy Hamilton, “TABOR’s Day In Court Settles Nothing,” State Tax Notes, July 20, 2015, p. 257 and Billy Hamilton, “25 Years Later, Colorado Is Still Trying to ‘De-Bruce,’” State Tax Notes, October 30, 2017, p. 427.

NewsAccount | March/April 2019

MISSING

SAY HELLO TO COMING SOON â&#x20AC;&#x201C; EXCLUSIVELY FOR MEMBERS

Three active forums currently, with more on the way:

ONLINE DISCUSSION COMMUNITY Find answers, ask questions, share knowledge, and connect with the entire COCPA community.

TAX FORUM For all your tax questions and insights

OPEN FORUM For connecting with fellow members about any professional topic

Read and post messages on any device via cocpa.org or your email.

An interactive forum for every group you are a part of.

Customize all settings, including alerts and email notifications.

TECHNOLOGY USERS GROUP For members interested in technology, sharing new resources, and learning new tech related skills

March/April 2019 | www.cocpa.org

SUCCESSION PLANNING

A Case Study

BY NATALIE ROONEY

few years ago, Tim McCutcheon, CPA, partner with Eide Bailly, Denver, broached the idea of his retirement with his firm partners, noting that while he didn’t yet have a particular date in mind, it was time to put the succession wheels into motion.

“It’s always hard to identify a specific date, but a couple of years ago, I thought I was probably two or three years out,” McCutcheon recalls. “I thought I’d start by identifying where the dart board was and then work to find the bullseye date.” Those early conversations evolved into a carefully planned and communicated strategy that has involved staff at every level of the firm. “Everyone wants to ensure the same thing – a smooth transition for all parties involved.” 16

NewsAccount | March/April 2019

LAYING THE GROUNDWORK McCutcheon says a lot of planning and forethought goes into coordinating partner activity at Eide Bailly – whether those partners are coming or going. “You always want to have the right people in the right place at the right time,” he says. “It’s been important for a number of years now that our advancing stars are able to move into partner positions as older partners move

into retirement. Succession planning is critical for our firm, our clients, and our staff. My plan has been in the air and on our minds for the past two years or so, and everything has flowed from that.” Eventually, things began to fall into place. McCutcheon chose his bullseye: April 30, 2019, which coincides with the firm’s fiscal year end. It’s also when retiring partners typically depart and new partners assume their new roles. Once the date was set, it was time to meet with clients and discuss the transition process. CONTINUITY IS KEY McCutcheon says the initial days of internal meetings and planning focused on ensuring the continuity of client relationships and asking, “How deep is our bench?” “The client relationship never rests with a single person,” he says. “We brought the entire group together to decide who would be the point people going forward so that clients would feel comfortable that they were receiving the best service from us.” Enter Ksenia Popke, CPA, JD, Eide Bailly senior audit manager, who has worked with McCutcheon for the past 10 years. She was the natural choice to step into his partner role. “Ksenia had been growing in her career and experience and had been working with these clients for a long time.” McCutcheon emphasizes that part of the overall plan was making certain there was, in fact, a succession chain that included someone who had earned the trust and respect of clients prior to his departure. Over a several-month period, the succession team studied the client list and mapped out their relationships with the partners, senior managers, managers, and even with lower level staff. Popke calls it the waterfall effect, and it all ties back to succession planning. “When new staff start, they want to experience everything, and we try to give them that opportunity,” McCutcheon says. Staff members don’t specialize for their first few years, allowing them to gain exposure to a lot of different clients and fields and to get a feel for what they want to do. Then they choose up to three areas on which to focus. McCutcheon describes the process as “a complex clockwork that you have to keep functioning and keep moving people through. If we have turnover, we adjust for that. It’s in a constant state of flux. The overarching principle is that we keep succession planning going on a continuous basis so that when the transition happens, it happens smoothly.”

For her part, Popke will have been working with her clients for years at the time she becomes a partner. “I’ve built my career around them,” she says. “We have a lot of recurring clients, and that has helped tremendously. Now that the transition is here, the clients feel comfortable.” She says Eide Bailly has one of the highest staff retention rates in Denver. “We’ve been able to have the same teams and the same clients for a number of years. People grow and step into different roles, but hopefully with the continuity we have, clients won’t feel any bumps during the transition.” The transition from McCutcheon to Popke has gone so smoothly that McCutcheon jokes no one is going to miss him. “The clients may be thinking I should have retired earlier,” he laughs. “But it’s been important for the firm to plan well. We want to position Ksenia to succeed and grow. She has a whole career as a partner ahead of her, and we don’t want any disruption for clients. She’ll step into her role as trusted advisor just fine.” McCutcheon says clients reacted positively to his retirement announcement. “They’re happy for me, thanked me for my service, and expressed excitement and confidence in Ksenia. From our perspective, it couldn’t have gone better.” THE CLIENT PERSPECTIVE Eide Bailly client Donald Tallman, executive director of the Colorado Railroad Museum, can attest to how smoothly the transition from McCutcheon to Popke has been. McCutcheon has been the museum’s auditor for the past decade. Coincidentally, Tallman and McCutcheon are retiring within months of each other. “We had been discussing our retirements for a while,” Tallman says. “It’s interesting, because we have become good friends, but we still maintain a professional relationship when we’re dealing with Museum business.” The pair discussed their plans and how Popke was preparing for her new role. “I had already worked with Ksenia for years,” Tallman says. “She has been the boots on the ground for our audit process.” Tallman credits both McCutcheon and Popke not only for their own efforts but also for bringing new recruits into the nonprofit arena. “Eide really encourages that cross-industry experience, which is important,” he says. “We don’t deal in widgets here. Nonprofit organizations have a lot of unique qual-

ities. Tim and Ksenia give the first-year folks a taste of what the nonprofit engagement will be like.” Tallman says he has watched as McCutcheon has prepared Popke to take on his role by having her become more and more involved in client relationships. Popke, in turn, has worked to prepare others to take on her role. “She has taken on higher level activities and handling client relationships in a much more hands-on way,” he says. As someone who is preparing for succession on both sides – as a client and within his own team – Tallman encourages organizations to identify potential candidates early if they’re going to promote from within. “It’s important for an organization’s culture to identify what a career path looks like, especially in the nonprofit sector,” he says. “You want to be able to attract really good talent.” He emphasizes that the client development piece has to be inculcated by the senior partner. “There’s that selling piece that they have to learn. It’s about grooming those individuals and showing them how you acquire new clients and maintain your client base, because relationship development is one of the keys to a successful practice.” Tallman gives McCutcheon high praise for how the process has gone. “He has helped Ksenia develop that next skill set, exposing her to new client opportunities. You can have someone who’s great with the existing client base, but then how do they build new clients? That is very important.” THE HAND OFF McCutcheon and Popke both admit that early on they were a bit nervous. What would happen if clients didn’t want to stay? Ultimately, their fears were unfounded. “Don’t be afraid of what will happen with your clients,” McCutcheon says. “Trust them. Rely on the goodwill you’ve developed with them over the years and the friendships you’ve formed.” He emphasizes that if you’re already in a great relationship with your clients, they’ll be supportive. “You’ll be pleasantly surprised at how happy they are for the retiring partner and how pleased they are for the partner-in-waiting. Bring your clients in early, be honest and up front, tell them the plan, and they’ll be open to anything that comes up.” Popke says building relationships early and at all levels is critical, emphasizing that CONTINUED ON PAGE 18 March/April 2019 | www.cocpa.org

SUCCESSION PLANNING

CONTINUED FROM PAGE 17 McCutcheon’s efforts to bring her to board meetings and client lunches early in her career were important in the process. “He’s done it not just with me but also with other managers and seniors in our group. It shows that as a firm, we’re comfortable with transition. We’re building people up and growing a strong bench. It’s that waterfall effect again. It builds confidence and relationships early. Clients have seen that next person be capable of handling situations with or without the partner present.”

Donald Tallman and Tim McCutcheon

ALL THE POSSIBILITIES When McCutcheon retires on April 30, he’ll have been a CPA for 40 years. “I’m 62 and love to travel and exercise, and I want to do more of all of that, but at a relaxed pace,” he says. He describes himself as a curious person who also loves to learn new things, so he plans to monitor classes he has always been interested in but never been able to take. He anticipates some DIY projects on his kids’ houses, too. First and foremost, he has year one of his retirement set aside to “settle into a rhythm I can only imagine now. I got my first job when I was 12 and have pretty much worked every year of my life since then. So, imagining retirement right now is kind of ethereal. I’ll see how things shake out and see what I might want to do. I’m open to all possibilities.” For her part, Popke is looking forward to her new role and making a difference for those who are coming along the career path behind her. “It has always been a strong desire of mine to train people,” she says. “I love seeing their professional and personal growth. Being in a position to help someone with a lot of potential become interested in the nonprofit industry gives me a lot of fulfillment.” Popke wants to help clients continue to grow and achieve their goals, too. “I like being in that consultative role where clients feel confident they have someone to turn to,” she says. She originally gravitated to the nonprofit sector because “I love the nonprofits’ missions and what they do in their communities.” While she always 18

NewsAccount | March/April 2019

Donald Tallman and Ksenia Popke

has enjoyed going to museums, concerts, and the theater to experience firsthand the results of nonprofits’ work, now she equally enjoys helping them achieve their goals. “Our clients don’t always have the resources, so working with them to create strong business management and financial reporting capabilities has helped us forge close friendships with them. They see us as advisors.” McCutcheon encourages anyone in public accounting who is nearing the retirement age bracket to start thinking about exit strategy and who will take over the clients. “We emphasize empowering our clients by

sharing information and training them on sound business practices, accounting standards, and reporting trends. We want our clients to be independent and able to stand strong on their own. It’s a big disservice to make them overly reliant on us. The same goes for our staff. We want them to grow and become complete professionals. There has to be strength on all fronts for these relationships to work. Hopefully, we’ve been successful.” Regardless of how smoothly everything has gone, parting is still sweet sorrow. “We’ll miss Tim a lot,” Popke says. “I know I will.”

MANAGEMENT ACCOUNTING

Tech-up or It’s Game Over

ost finance teams and professionals are not evolving their skills fast enough to account for the impact of artificial intelligence, robotic process automation, and other technologies according to a new AICPA report.

The report revealed that over 50 percent of finance leaders globally believe the competencies of their teams must “change significantly” over the next three years as new technologies take over traditional tasks. The upside: Businesses expect a stronger focus on value creation with the automation of repetitive tasks. Expertise in areas such as data analytics, cyber risk management, and business models will facilitate the shift. Supporting this also will be the need for a shift in mindset to constantly learn, unlearn, and relearn new skills to deal with complexity and operating in an increasingly agile environment. The report is based on insights from a study of more than 5,500 finance professionals across 2,000 organizations in 150 countries. The study was conducted by the Association of International Certified Professional Accountants (the Association), the global member organization formed by the AICPA and the Chartered Institute of Management Accountants (CIMA). “Technological advancements such as cloud computing, robotic process automation, and AI are radically changing our world and the way business is conducted,” says Ash Noah, CPA, CGMA, managing director of CGMA Learning, Education & Development at the Association. “For finance professionals, this means there is an imperative to move beyond their comfort zones to develop digital intelligence to meet the new demands of business.”

“For finance professionals, there is an imperative to move beyond their comfort zones.” To help finance professionals develop the skills and competencies to future-proof their careers, the AICPA offers a library of learning tools and leading-edge resources focused on technology, including: • Updated Chartered Global Management Accountant (CGMA) Competency Framework, which provides employers and professionals with a roadmap to identify the necessary skills and competencies and assess where there are gaps. The updated framework includes a new area of digital skills along with the four core existing knowledge areas of technical, business, leadership, and people skills. • CGMA Finance Leadership Program, which offers an on-demand, personalized, learning journey to guide finance professionals to develop a mastery of the technical, business, leadership, and people skills required for business today.

KEY FINDINGS

of finance professionals expect over 20 percent of finance tasks will be automated in the next 3 years.

already have seen a move toward ‘somewhat’ automated processes. Hindsight reporting still makes up

of a finance team’s report outputs.

• Go beyond+ disruption Learning Series, which includes certificate programs, courses, webcasts, and podcasts in areas such as blockchain, data analytics, cybersecurity, artificial intelligence, robotics process automation, and more. • Human Intelligence Series, which includes a new e-book and library of videos to help professionals develop must-have competencies such as people management and decision-making. For more information about the future of finance research and to download a copy of the report, visit cgma.org/future-finance-white-paper.

March/April 2019 | www.cocpa.org

FEDERAL REGULATION

Parking Expense Guidance Released BY KIM C. HUNWARDSEN, CPA

ne of the changes made to the tax laws by the Tax Cuts and Jobs Act was to disallow a tax deduction for qualified transportation fringe benefits businesses provide to their employees. Qualified transportation fringe benefits (QTFs) include: • Transportation in a commuter highway vehicle between an employee’s residence and place of employment • Any transit pass • Qualified parking

Tax exempt organizations did not escape this law change. They are required to increase their unrelated business taxable income (UBTI) by the amount of QTFs that would otherwise be nondeductible if they were a taxable entity. While the loss of the QTF deductions affects the tax paid by employers, taxable or not, the QTF-defined benefits are still excluded from an employee’s income up to the limits provided. There was a problem in applying the new deduction disallowance/UBTI rule. Due to the lack of specific language in the Act, many employers, including tax-exempt organizations, did not have the guidance necessary to determine how the amount of 2018 parking expense that is nondeductible, or treated as an increase in UBTI, was to be calculated. The tax applies to expenses incurred after December 31, 2017. As such, even fiscal year taxpayers will need to determine the impact of the rules for tax years ending in 2018. In response to these guidance questions, the IRS released Notice 2018-99 on Dec. 10, 2018. It provides interim guidance for employers to use to determine the amount of nondeductible parking expenses or the corresponding increase in UBTI. The notice also specifically states that said guidance can be relied upon until further guidance, most likely in the form of proposed regulations, is issued. Due to the late release of this guid-

NewsAccount | March/April 2019

Due to the lack of specific language in the Act, many employers did not have the guidance necessary to determine how the amount of 2018 parking expense that is nondeductible was to be calculated. ance, taxpayers who have already adopted reasonable methods in 2018 to determine these amounts may continue to use those methods instead of the methods proposed in the guidance.

SPECIAL RULE FOR 2018 The Notice provides an important special rule permitting employers who utilize reserved employee parking spots to retroactively reduce, all the way back to Jan. 1, 2018, the amount of their nondeductible parking

If an employer pays a third party for employee parking: The nondeductible parking expense is the employer’s total annual cost for employee parking paid to the third party. Special calculations are necessary if the amount paid to a third party for any employee exceeds the monthly limitation on the amount that can be excluded from employee wages (currently $260/month). If the employer owns or leases all or a portion of a parking facility: The nondeductible parking expense “may be calculated using any reasonable method.” Using the value of employee parking to determine expenses allocable to employee parking in a parking facility is not a reasonable method of allocation. The Notice provides an alternative “safe-harbor” method that involves the following four-step calculation:

expenses or UBTI adjustment. This can be accomplished by changing their parking arrangements to eliminate or reduce the number of reserved employee parking spots if done by March 31, 2019. According to the IRS, this special rule should enable “churches, schools, hospitals, and other tax-exempt organizations” to reduce or eliminate their potential increase to UBTI for 2018. METHOD FOR CALCULATING NONDEDUCTIBLE PARKING / UBTI ADJUSTMENT The methods provided in the guidance for determining the nondeductible amount of parking expenses (and the increase to UBTI) depend on whether the employer pays a third party to provide parking for its employees, or the employer owns or leases a parking facility where its employees park.

• Percentage of reserved employee spots. This percentage times the total parking expenses for the parking facility will be nondeductible, or, for tax-exempt organizations, includable in UBTI. As noted previously, eliminating the reserved spots before March 31, 2019, will result in the ability to treat these as not reserved retroactively to Jan. 1, 2018. • Primary use of the remaining parking spots. If the primary use (for this purpose, greater than 50 percent) of the remaining parking spots is for the general public (e.g. customers, clients, visitors, students, patients), the remaining parking expenses will be deductible (or excluded from UBTI of tax-exempt organizations). Primary use is determined during the normal business hours of the organization. • Percentage of parking spots reserved for non-employees. If the primary use is not for the general public, the portion of parking expenses reserved for non-employee use will generally be deductible (excluded from UBTI).

expenses to employee use of any remaining parking spots may be based on actual or estimated usage by employees to determine any additional nondeductible amount (or amount includable in UBTI). Actual or estimated usage may be based on the number of spots, the number of employees, the hours of use, or other measures. The Notice provides additional details on each of these steps as well as examples illustrating the calculations for both businesses and tax-exempt organizations. Total parking expenses, based on the Notice, should include repairs, maintenance, utility costs, insurance, property taxes, interest, snow and ice removal, leaf removal, trash removal, cleaning, landscape costs, parking lot attendant expenses, security, and rent or lease payments or a portion of a rent or lease payment (if not separately stated). However, parking expenses do not include depreciation. According to the Notice, IRS officials believe the retroactive elimination of the reserved employee spots and the “primary use” test should minimize or eliminate the amount of UBTI related to parking expenses for many tax-exempt organizations. In addition, exempt organizations are only required to pay tax on unrelated business income in excess of $1,000. It is likely many tax-exempt organizations will not have more than $1,000 of additional UBTI after applying the above calculations and therefore will not be required to file Form 990-T. Kim C. Hunwardsen, CPA, is a partner with Eide Bailly LLP, in its Exempt Organization Tax division. She is based in Minneapolis, Minn. Contact her at KHundwardsen@eidebailly.com. This article originally appeared in Eide Bailly’s Insights, Dec. 17, 2018. It is reprinted with permission.

• Typical employee use of any remaining parking spots. The allocation of parking

March/April 2019 | www.cocpa.org

PERSPECTIVES

Why Going Back to Work Might Be the Best Decision You Ever Make BY NATALIE ROONEY

el Thompson had a great career. After 33 ½ years with the City and County of Denver, he retired as Deputy Executive Director for Finance and Administration for the Department of Safety, the largest department in the city. During his tenure, he worked for six different executive directors and three different mayors. What began as a 20-year-old’s way to pay for college at the University of Colorado Denver evolved well beyond seasonal work. After graduation, Thompson moved from seasonal jobs to various permanent positions, first as an account clerk, then as an accounting supervisor, and eventually moving to the auditor’s office. It was truly a career built from the ground up. At age 54, Thompson decided to call it a day. He had worked 50 hours a week for more than a decade and was ready to dial back a bit.

He had the biggest retirement party the city had ever thrown. The governor, the mayor, and the police chief all came to wish him well. “I thought I was done with the city,” he says. “I had an incredible career, was highly respected, and walked out doing well.” WHEN PLANS DON’T PAN OUT Thompson had plans for his retirement. He wanted to take the first year to slow down. Pretty quickly, he found that strategy wasn’t going to work. “I went from going 100 miles an hour to doing nothing,” he reflects. “I got kind of depressed. All of those things they tell you about the changes when you retire – they’re true.” He decided he needed to do something else. His whole life, he had dreamed of being a construction worker. So, he got a job with a small construction company. That’s when he discovered that laying concrete in Novem-

ber’s 20-degree temperatures is brutal. “I remembered that I went to college because I didn’t want to be a construction worker,” he chuckles. “It’s hard work.” While Thompson was battling the elements, changes were happening at the City and County of Denver. In the late 1990s and early 2000s, employees had been offered incentives to retire as a big push to reduce the number of full-time employees. Fast forward to the early 2010s, and workers were in great demand again. The concept of early retirement buyouts had vanished, and organizations were desperately trying to hire competent people into vacated positions. Denver City Council came up with a plan to bring retirees back to the city, capping their hours at 1,000 per year. “The board was worried too many people would come back and undermine the pension fund because they weren’t paying into it anymore,” Thompson says. “But this new system allowed retirees to work and collect their pensions.” Thompson didn’t know about the program until a former colleague who was working for Parks and Recreation gave him a call. He asked Thompson to come back in one of the on-call roles. Thompson seized the opportunity and now is a Senior Financial Analyst for Parks and Recreation for the City and County of Denver. A WIN-WIN SITUATION It didn’t take Thompson long to discover that life on the part-time side is really, really good. The team he works with is able to draw upon his vast accounting and finance experience and his decades of managerial leadership skills. The experience Thompson is drawing from – and sharing with his new colleagues – is vast. During his first three decades with the city, he ran accounting departments, oversaw budgets, went through multiple audits, created the city’s TABOR model and compliance structure, ran the city’s Y2K project, oversaw and implemented the transition to PeopleSoft, and a lot more, all while Denver experienced double digit growth rates for more than a decade.

NewsAccount | March/April 2019

“People appreciate that I understand the policy, the policy development, and what has happened in the past,” Thompson says. But the experience Thompson is sharing goes beyond his technical skills. He says he is now a happier, more balanced person who brings a lot more to the workplace. “The value of bringing senior executives back comes from balancing retirement and continuing to contribute,” he says. Thompson’s work schedule, which is typically 9am-2pm, Monday-Thursday, allows him the flexibility to spend time with his ten grandchildren, support his wife who had a kidney transplant 16 years ago, and volunteer with a favorite charity. “I can rearrange my schedule around my wife’s appointments or my grandkids,” he says. “I’m adding value, still getting out and doing things, and learning new technology.” Being restricted to 20 hours a week means Thompson must be efficient with his time.

“It’s a benefit to both me and the city,” he explains. “I don’t get burned out, and I’m a much happier worker working fewer hours. It seems counterintuitive, but I’m excited to come to work, and I’m not always ready to leave at 2pm. But I do - I want to enjoy time with my grandkids.” Thompson says he originally thought he’d walk out of work at age 54 or 55 and live happily ever after without ever working again. But now, “I believe I’ll work in some capacity for some time. Maybe until I’m 70. I enjoy my life better when I’m adding value. Some people retire and volunteer, which I do as well, but I didn’t want to go home and just do taxes. I like the idea of being an employee, not a contractor, which tends to have a negative connotation. I like the idea of being part of a team.” The key, says Thompson, is having a project-based environment where retired employees feel valued and can have a flexible

schedule. “I’m not making entries to journals or budget documents,” he says. His current project is conducting an in-depth fee analysis so that Denver City Council can set its park fees. “I understand the processes and accounting systems and am able to offer advice and mentoring,” he says. He fills in different roles as people depart and before new people are hired. “One of the really wonderful things that has happened is that although I’m in a much lower position classification, people have known me for years in other roles and treat me as if I have the knowledge of an executive,” Thompson says. “I’m invited to meetings and policy discussions. I contribute but don’t have the burden of ownership.” Thompson says he has been blessed to have the opportunity. “Even though it’s at a lower level and lower pay, it’s the most rewarding and fulfilling job of my career.”

Interested in attending LeadFit or sponsoring someone from your organization? Request an application from Terry Cervi at terry@cocpa.org, or 800-523-9082, ext. 110. Complete and return it. You’ll be notified of your acceptance. Your sponsor will be invoiced for the $1,465 program fee, which is payable on receipt and no later than July 1, 2019. The program is recommended for 24 hours of CPE credit in the Communications field of study.

2019

APPLICATION DEADLINE: JUNE 27, 2019

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, multifunctional teams, and working in fast-paced, challenging environments.

MAJOR SUBJECTS •

Relationship Building – listening and presence; professional and personal

•

Managing a Team v. Leading a Team – goal setting; conflict resolution

•

Performance Evaluation and Feedback – acknowledgement; confrontation; resolution; rewards

•

Negotiation – message tailoring; requesting

•

Rainmaking – thinking styles; generational styles

•

Role Definition – qualitative and quantitative

•

Defining Your “Best Work” – linking to purpose, commitment, and boundaries

SESSION DATES July 11 - Welcome BBQ

September 13 - Half Day Session

July 12 - Full Day Session

October 17 - Debrief Happy Hour

August 13 - Half Day Session

November 1 - Full Day Session and Graduation Celebration

March/April 2019 | www.cocpa.org

PLANNING STRATEGIES

Financially Fit Aging: Plan Now To Have Options Later BY NATALIE ROONEY

This is the first of a series of articles about helping your clients – and perhaps you and your family – prepare for the many aspects of aging beyond financial planning.

he COCPA Financial Literacy Committee starts off each meeting by giving everyone the opportunity to update the group on what’s going on in their lives. While every story is unique, of course, the members noticed a theme. “In some way, whether it was for ourselves, our parents, or our clients, we all were dealing with the challenges of aging,” says Amy King, CPA, CGMA, a wealth advisor at Rubin Brown Wealth Advisory Services Group in Denver. “As CPAs, we serve others. But when you’re dealing with your own parents while trying to work full time, it’s overwhelming. Where do you start? Where do you go for answers? How do you even advise your clients?” King had just moved into her wealth advisory role when she became engrossed in the myriad issues people face when they’re aging. “It goes so far beyond simply preparing financially for retirement,” she says. And with 10,000 people a day turning 65, the aging industry is huge. In a quest to help her clients, King began researching how to fill the void about issues facing older adults. She discovered the Society of Certified Senior Advisors (SCSA) which educates and certifies professionals who work with seniors through its Working with

NewsAccount | March/April 2019

Older Adults education program and the Certified Senior Advisor (CSA) credential. The credential isn’t just for those in financial planning; it’s for nurses, attorneys, contractors, caregivers, clergy, and anyone else who works with older individuals. “We’re trying to stay out in front of so many issues,” King says. They include the obvious, such as financial planning and wealth issues, and other, not-so-obvious topics, such as: •

Housing: Will you stay in your home (age in place), downsize, or move to a facility? What are the costs and alternatives, and how will they affect your future finances?

•

Elder fraud: Unfortunately, someone always is trying to scam the elderly population in new and creative ways. What safeguards do you have in place?

•

Health care: What are the options, considering Social Security and Medicare?

•

Document access: Are you authorized to access important paperwork if someone is incapacitated or dies?

King says advance preparation in each area is important so that arrangements are in place before a life-changing event occurs that automatically eliminates certain options. “Suddenly you have to address an issue - not in the ten years you thought you had,” she cautions. “When that happens, if you’re not prepared, you’re cut off from some choices.” In her work, King is helping clients organize their documents and create processes

to help families know how to access them. “Simply put, do you have people who can take care of things and know where to go to find important documents? We’ve been helping clients focus on this process so that it helps them, and their families, sleep at night.” Part of the need for so much prior planning stems from cybercrime. While it’s reassuring to know that companies are protecting our information, that also makes it hard on families. “Companies aren’t going to talk to anyone except the individual whose name is on the account, and it puts you in a bind when you’re trying to accomplish something on their behalf,” King says. And as the saying goes, “It takes a village.” Part of financially fit aging means creating a team to handle the various aspects of your plan, including CPAs, attorneys, health care providers, home care providers, insurance agents, and more. “This is way beyond estate planning,” King asserts. “As a firm, we’re having discussions with clients and asking what’s going on in their lives. Have they thought of this?” King says she doesn’t hold herself out as an expert in any of the fields other than finances. Rather, her goal is to help people identify the issues and direct them to appropriate resources. Talking about these topics isn’t easy, but it’s important to take the time. “Creating a team and knowing how and where to find information is a great first step,” King says.

Forbes America’s Top 250 Wealth Advisors 1 2018

ourney to a Brighter Financial Future

GINS WITH THE RIGHT PATH.

1 1 Forbes ForbesAmerica’s America’sTop Top250 250Wealth WealthAdvisors Advisors 2018 2018

1 ng by M.J. Smith &Forbes Associates, a new online management tool that combines America’s Top wealth 250 Wealth Advisors 2018 enience and cost efficiency of online investing and index funds/ETFs with professional guidance from an ced, client-focused financial advisor.

The TheJourney JourneytotoaaBrighter BrighterFinancial FinancialFuture Future

The BEGINS Journey to aWITH BrighterTHE Financial FuturePATH. BEGINS WITH THE RIGHT RIGHT PATH.

ath™ is a new service for managing wealth created for everyone, from entry-level investors to cost-conscious ™ Introducing by M.J. M.J. Smith Smith && Associates, Associates, a new a new online online wealth wealth management management tool tool that that combines combines , you gain access to our easy-to-use digital platform, terans, withIntroducing at least $100,000 to invest.byWith wealthpath thethe convenience convenience and and cost cost efficiency efficiency of of online online investing investing and and index index funds/ETFs funds/ETFs with with professional professional guidance guidance from from anan a nationally recognized team of financial professionals who are ready to assist you in creating your portfolio. experienced, experienced, client-focused client-focused financial advisor. Introducing byfinancial M.J. advisor. Smith & Associates, a new online wealth management tool that combines ™the convenience and cost efficiency of online investing and index funds/ETFs with professional guidance from an ™ ™ ath offers:Wealthpath is a is new a new service service forfor managing managing wealth wealth created created forfor everyone, everyone, from from entry-level entry-level investors investors to to cost-conscious cost-conscious Wealthpath ™ ™ experienced, client-focused financial advisor. * to , you , you gain gain access access to to our our easy-to-use easy-to-use digital digital platform, platform, market market veterans, veterans, with with at at least least $100,000 $100,000 to invest. invest. With With wealthpath wealthpath or all in” cost structure that is typically 50% less than those offered by traditional banks, brokerage firms

BEGINS WITH THE RIGHT PATH.

asas well well asas a nationally a nationally recognized recognized team team of of financial financial professionals professionals who who areare ready ready to to assist assist you you in in creating creating your your portfolio. portfolio. anceWealthpath company ™platforms is a new service for managing wealth created for everyone, from entry-level investors to cost-conscious ™ ™ ™ olio market structured around your goals with ongoing monitoring and guidance from an M.J. Smith & Associates offers: offers: wealthpath wealthpath , you gain access to our easy-to-use digital platform, veterans, with at least $100,000 to invest. With wealthpath * * or to help you stay on track than than those those offered offered by by traditional traditional banks, banks, brokerage brokerage firms firms oror • • An An “all “all in” in” cost cost structure structure that that is typically is typically 50% 50% less less as well as a nationally recognized team of financial professionals who are ready to assist you in creating your portfolio. insurance company company platforms platforms oss harvestinginsurance and disciplined rebalancing ™ offers: wealthpath • •Portfolio Portfolio structured structured around around your your goals goals with with ongoing ongoing monitoring monitoring and and guidance guidance from from anan M.J. M.J. Smith Smith && Associates Associates d diversification usingtolow-cost index funds/ETFs * advisor advisor to help help you you stay stay on on track track • An “all in” cost structure that is typically 50% less than those offered by traditional banks, brokerage firms or choicesinsurance from many ofharvesting the industry’s largest rebalancing names • •Tax-loss Tax-loss harvesting and and disciplined disciplined rebalancing company platforms •features •Broad Broad diversification diversification using low-cost low-cost index index funds/ETFs funds/ETFs unt security from Raymond James, awith nationally recognized is part from of theanS&P • Portfolio structured aroundusing your goals ongoing monitoringfirm andthat guidance M.J.500 Smithindex & Associates • • Fund Fund choices choices from from many many of of the the industry’s industry’s largest largest names names advisor toand help you stay gital dashboard mobile appontotrack monitor your investments anytime from anywhere • •Account Account security security features features from from Raymond Raymond James, James, a nationally a nationally recognized recognized firm firm that that is part is part of of thethe S&P S&P 500 500 index index • Tax-loss harvesting and disciplined rebalancing • •A A digital digital dashboard dashboard and and mobile mobile app app to to monitor monitor your your investments investments anytime anytime from from anywhere anywhere Broad diversification THE•FIRST STEP. using low-cost index funds/ETFs sit our and answer a few questions tolargest see if you qualify, then talk to an M.J. Smith & Associates • website Fund choices from many ofSTEP. the industry’s names TAKE TAKE THE THE FIRST FIRST STEP. ™ portfolio orseeiftoyou have us then compare the cost savings of o either create your very own wealthpath • Account security features from Raymond a nationally firm that part of the S&P 500 index Simply Simply visit visit ourour website website and and answer answer a few a James, few questions questions to to see ifrecognized you qualify, qualify, then talk talk toisto an an M.J. M.J. Smith Smith && Associates Associates ™ ™ ™ running toward your ideal financial future! the fees you pay now. From there, you’re off and ath to portfolio portfoliooranytime orto tohave have ususcompare comparethethecost costsavings savingsof of advisor advisor to toeither eithercreate create your yourvery veryown wealthpath wealthpath • A digital dashboard and mobile app toown monitor your investments from anywhere ™ ™ to to the the fees fees you you pay pay now. now. From From there, there, you’re you’re off off and and running running toward toward your your ideal ideal financial financial future! future! wealthpath wealthpath rtMyWealthPath.com today. Visit Visit StartMyWealthPath.com StartMyWealthPath.com today. today.

TAKE THE FIRST STEP.

Investment advisory services offeredto through Smith & Associates. Simply visit our website and answer aInvestment few questions see if M.J. you qualify, then to an M.J. Smith & Associates Investment advisory advisory services services offered offered through through M.J. M.J. Smith Smith &talk Associates. & Associates. M.J. Smith & Associates is not a registered broker/dealer and is independent of Raymond James Financial Services. ™ M.J. Smith Smith & Associates & Associates not is not a registered awealthpath registered broker/dealer broker/dealer and and is or independent is independent Raymond James James Financial Financial Services. Services. portfolio to haveof of usRaymond compare the cost savings of advisor to either M.J. create your very isown K™ Research, LLC. Data as of 6/30/18. The ranking, developed by our partner Shook Research, is based on in-person and telephone due-diligence meetings and aand ranking algorithm forforadvisors who havea a a DataData provided provided by SHOOK™ by SHOOK™ Research, Research, LLC.LLC. DataData as ofas6/30/18. of 6/30/18. The The ranking, ranking, developed developed by our by our partner partner Shook Shook Research, Research, is based is based on in-person on in-person andand telephone telephone due-diligence due-diligence meetings meetings and a ranking a ranking algorithm algorithm advisors for advisors whowho havehave ™ to the fees you pay now. From there, you’re offand toward your ideal financial future! wealthpath f experience. Criteria retention, industry experience, compliance records andcompliance firm nominations asand wellnominations asrunning quantitative criteria such as assets management andand revenue generated fortheir their minimum minimum of seven of includes seven years years ofclient experience. of experience. Criteria Criteria includes includes client client retention, retention, industry industry experience, experience, compliance records records and firm firm nominations as well as well as quantitative as quantitative criteria criteria suchsuch asunder assets as assets under under management management and revenue revenue generated generated for for their ance is notfirms. afirms. criterion because clientis not objectives and risk tolerances vary, and rarely have audited performance reports. Ranking are based onare the opinions SHOOK Research, LLC, which does notnot Investment Investment performance performance is not a criterion a criterion because because client client objectives objectives and and riskadvisors risk tolerances tolerances vary,vary, and and advisors advisors rarely rarely havehave audited audited performance performance reports. reports. Ranking Ranking are based based on the on opinions theof opinions of SHOOK of SHOOK Research, Research, LLC,LLC, which which does does not Visit StartMyWealthPath.com today. receive receive compensation compensation from from the advisor the advisor or their or their firms firms in exchange in exchange for placement for placement on a on ranking. a ranking. For For more more information information see see www.SHOOKresearch.com. www.SHOOKresearch.com. 1. Advisors 1. Advisors are are judged judged on individual on individual contribution, contribution, but but total total team team assets assets are are shown; shown; in m the advisor or their firms in exchange for placement on a ranking. For more information see www.SHOOKresearch.com. 1. Advisors are judged on individual contribution, but total team assets are shown; inin

some some cases cases significant, significant, noncustodied assets assets are not not included included because because of verification of2. verification difficulties. difficulties. 2. Minimum 2.sizes Minimum account account sizessizes are are general, general, sincesince theythey can can varyvary depending depending on aonrange aofrange of circumstances. of circumstances. ases significant, noncustodied assets are not noncustodied included because ofare verification difficulties. Minimum account are general, since they can vary depending on a range circumstances. Raymond Raymond James James Financial Financial Services, Services, Inc.Inc. andand its advisors its advisors do do notnot provide provide advice advice on on taxtax or legal or legal issues. issues.

Raymond James Financial Services, Inc. and its advisors do not provide advice on tax or legal issues.

Investment advisory services offered through M.J. Smith & Associates. M.J.5613 Smith & Associates isSuite not a650, registered broker/dealer and is80111 independent of Raymond James Financial Services. www.mj-smith.com 5613 DTC DTC Parkway, Parkway, Suite 650, Greenwood Greenwood Village, Village, COCO 80111| |720.643.5621 720.643.5621 | |www.mj-smith.com March/April 2019 | www.cocpa.org

5613 DTC Parkway, Suite 650, Greenwood Village, CO 80111 | 720.643.5621 | www.mj-smith.com

a provided by SHOOK™ Research, LLC. Data as of 6/30/18. The ranking, developed by our partner Shook Research, is based on in-person and telephone due-diligence meetings and a ranking algorithm for advisors who hav

CHANGE MANAGEMENT

Change – From the Inside Out BY DANIEL BURRUS

Here’s a question I like to ask my consulting clients. When you make business changes, are they coming at you from the outside in or inside out? At first, it seems like a trick question, but there is some good logic behind it. Your answer can reveal a lot about your preparedness for the future. In other words, are you anticipatory or reactionary?

n my experience working with top leaders from business, healthcare, government, and education on five continents over the past 30 years, I have found that the majority of change comes from the outside in. The list of examples is long: • When a new law is passed, you have to make changes in order to comply with it. • When a new competitor offers lower prices, you probably have to change some aspect of how you do business to compete. • If you’re in charge and you change the corporate strategy, you may notice your employees scramble to react. • When a new technology comes out that changes customer behavior, you’ll most likely request that your IT department get the new products in order to keep up with the accelerating changes. Change from the outside in can affect our personal lives as well. For example, when gas prices go up, you may be inclined to change your spending and/or driving habits to even things out. If you or your spouse is laid off, your daily focus shifts to finding work. The truth is, most of us are being conditioned to make changes based on outside factors. For example, when the stock market goes down, people often sell, and when it goes up, they buy. That’s what concerns me about outside-in changes. Whenever change comes from the outside, we are forced to react to it. Rather than being proactive, we find ourselves constantly putting out fires and managing the latest crisis. CRISES COME FROM THE OUTSIDE IN This is such a common problem that probably a hundred business books have been written about it – and that’s a modest esti-

NewsAccount | March/April 2019

Whenever change comes from the outside, we are forced to react to it. Rather than being proactive, we find ourselves constantly putting out fires and managing the latest crisis. mate. Most of those books will tell you that the key to a successful future is the ability to be agile. In other words, they say, you need to react fast! Reacting fast to external change is good, but using agility as your main strategy tends to keep you locked in a crisis management mode. When you spend most of your time putting out fires, day after day, month after month, year after year, the future tends to unfold in an uncontrollable and often less desirable way. In other articles, I have sometimes referred to agility as a pivot. Using my examples at the beginning of this article: • When the competition launches a new product, you react quickly and decisively to combat it. • When a new IT technology becomes available, you buy it in order to change business conditions.

• And, when a law takes effect, you factor it into your day to day – but it’s almost always after the fact. Think of it this way: In basketball, a pivot requires you to keep one foot planted and is a maneuver that stops forward motion. OPPORTUNITY COMES FROM THE INSIDE OUT Instead, let’s look at some of the most powerful new products. Did the crowdsourcing disruptor Kickstarter become a dominant force because it was agile? Was agility the driving force in Facebook’s dominance in social media? Of course not. One reason for Facebook’s unprecedented success is that it picked up where the limitations of other platforms like MySpace left off. In the case of Kickstarter, the developers took a popular altruistic concept – used by Caring Bridge and others – and applied it to entrepreneurship. I sometimes call this approach to innovating a new business going in the opposite direction.

GAINING CONTROL OF YOUR FUTURE Inside-out thinking is part of what it means to be anticipatory, which is a mindset I describe in my book, The Anticipatory Organization. One of the salient principles of the Anticipatory Organization system is the Hard Trend Methodology. Think about the Hard Trends that are important to you and your organization. Think about the problems and opportunities that derive from those Hard Trends. What can you do now to not only presolve those problems before they become genuinely disruptive but also leverage those Hard Trends into game-changing opportunities that you can identify and manage?

5 TIPS FOR THINKING INSIDE OUT 1. Build thinking time into your schedule. Try spending a minimum of one hour a week unplugging from the present crisis and plugging into future opportunity. 2. Find certainty in chaos. Instead of feeling blocked by all the things you are uncertain about in your work and life, ask yourself: What am I certain about? Those are the Hard Trends. 3. Be anticipatory. Based on Hard Trends, think through these key questions: What is sure to happen in the next two to three years? What problems will your company be facing? What problems will your customers be facing (and how can you address those pain points)? 4. Dream a little. Another good question to ask is: What is my ideal future? What are the steps to get there – whether it’s a business goal or a retirement dream? Or it could be a bit of both. 5. Put ideas into motion. Once you are clear on your vision and have identified the Hard Trends that will impact you, spend some of your opportunity time solving problems before they happen.

For instance, one clearly defined Hard Trend is that there will be greater government regulation in the future, not less. For many, that’s merely a headache that has to be endured. By contrast, given that greater regulation is a certainty, what opportunities derive from that? They’re certainly going to be there, whether you like it or not. By using strategies such as Hard Trends (those things we know for certain are going to occur) and Soft Trends (those that may occur but are open to influence), you can anticipate the future. And from there, you can plan accordingly. That’s a dynamic force that moves from the inside out, rather than just outside in. I would argue that the only way to positively influence your future is to drive some of the change from the inside out. This is true for both organizations and individuals. That’s the crux of inside-out thinking; you get to ask yourself what steps you can take to shape the future now – not later. The reality is, there will still be more fires to put out tomorrow and the day after. Build the opportunity hour into your calendar now. If you don’t, the future you end up with might not be the one you would have wanted.

AN EXAMPLE OF INSIDE-OUT ANTICIPATION Let’s say your organization is highly regulated by the government. When you’re anticipatory, you’re constantly on the lookout for new laws that will impact your business. You routinely monitor new legislation and learn about a bill that will affect your company’s tax structure. It seems likely to pass, so you get to work with your attorneys to restructure your employee benefits plan accordingly. The bill becomes law, and your organization is already set to leverage the new rules. Because you are ahead of the game, you find ways to not just adhere to the new guidelines but turn them into an opportunity. By contrast, other organizations also affected by the legislation are forced to scramble after the fact. This example illustrates how being anticipatory can presolve a problem before it becomes a major headache. The level of pervasive disruption that you need comes from the inside out (making the first move) rather than the outside in (moving in response to something). What events and developments can you anticipate by using your insideout thinking? 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 seven books including the newest, The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage. Burrus also is the creator of The Anticipatory Organization™ Learning System – named a Top 10 Product of 2016. Contact Rebecca Campbell, rebecca@cocpa.org, for information on the program. Reprinted with permission.

March/April 2019 | www.cocpa.org

MOVERS & SHAKERS CHERYL A. WENZINGER, CPA The University of Northern Colorado Monfort College of Business, Greeley, has named Cheryl A. Wenzinger, CPA (Inactive), the recipient of its 2019 Business Excellence Award. The award was created to recognize individuals who have displayed academic excellence, exceptional service, and leadership in business, or have notably advanced the development and success of the college. Wenzinger will be honored at the college’s 50th anniversary celebration, May 17, 2019. SCOTT NORQUIST, CPA Colorado Biz magazine recognized Scott Norquist, CPA, ACM LLP, Denver, as one of the 2019 GenXYZ winners, recognizing the 25 Most Influential Young Professionals in Colorado and their impact on the state’s economy.

IN MEMORIAM We extend our sympathy to the families and friends of the following COCPA member and former members: Steven I. Levey Joined in 1978, Rancho Santa Fe, California Marvin “Smitty” Smith Joined in 1954, Denver, Colorado William H. Suhonen Joined in 1963, Highlands Ranch, Colorado

THANK YOU TAXLINE9 VOLUNTEERS

RONALD W. LAY, CPA The City of Brighton named Ronald W. Lay, CPA, its new Finance Director.

PLANTE MORAN Fortune magazine named Plante Moran to its 100 Best Places to Work list for the 21st year in a row. RENEE CLARK AND LESLIE O’DONNELL Former COCPA finance team member Renee Clark joined the National Environmental Health Association, Denver. Leslie O’Donnell, former Membership Development Coordinator, joined the National Coalition Against Domestic Violence, Denver. We wish them all the best in their new roles.

CLASSIFIEDS OFFICE SPACE AVAILABLE Spacious office with a mountain view, 19’ X 13’, in a shared suite. Conveniently located near Arapahoe Rd. and Quebec St. in Centennial, Colo. Amenities include: reception area, conference room, copy and assembly room, and kitchen. Access to high-speed fiber optic Internet is available. Suite is shared with an Elder Law practice, as well as a wealth management practice. Office furniture is available if needed. Contact Dave at 303-475-0980 for additional information. PRACTICE FOR SALE, PURCHASE, OR MERGER Selling your firm is complex! ACCOUNTING BIZ BROKERS can help! We have been selling CPA firms for over 14 years, and we know how to simplify the process. We have a large database of active buyers. We work with industry specific lenders ready to assist buyers with financing. Contact us today to receive a free market analysis or to start the sales process. Current Listings: Loveland Gross $300k (New); Larimer County Gross $395k; Pagosa Springs Gross $230k (SOLD). Kathy Brents, CPA CBI at 866-2602793 or Kathy@AccountingBizBrokers.com, or visit our website at www.AccountingBizBrokers.com. 28

NewsAccount | March/April 2019

Thanks to TaxLine9 volunteers (left to right) Dave Taylor, CPA, ACM LLP, Denver; Anna Overlee, CPA, Seigneur Gustafson LLP; and Greg Truitt, CPA, HRTH LLC, Aurora, who answered callers’ tax questions, February 15. Ron Seigneur, CPA, and Brenda Clarke, CPA, of Seigneur Gustafson LLP will join Anna Overlee for TaxLine9, March 15. Volunteers also will answer callers’ questions on March 29, from 6:45 to 8:00 a.m.

TAX STUDY GROUPS

Accountants and Consultants www.acmllp.com

Boulder/Longmont Tax Study Group AT THE MEADOWS BRANCH PUBLIC LIBRARY

Tuesday, Mar. 19 This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd., Boulder, BYO Bag Lunch. Additional 2019 Meeting Dates: May 21, June 18, July 16, Aug. 20, Sep. 17, Oct. 22, Nov. 19, and Dec. 17. For additional information, contact Lynn M. Mitton, CPA, MT, MPA, 303-499-7445, or email lynn@ﬂewellingcpa.com.

locally owned. locally Committed.

Denver Tax Study Group

Accounting For How You Do Business imAgine tHe possiBilities

AT THE COCPA OFFICE

Tuesday, Mar. 26 and Tuesday, April 30

ACM

This informal roundtable discussion group meets over lunch, the last Tuesday of most months, at the COCPA office, 7887 E. Belleview Ave., Ste. 200, Englewood. Additional 2019 Meeting Dates: May 21, June 25, July 30, Aug. 27, Sep. 24, Oct. 22, and Dec. 3. Register at www.cocpa.org.

303.830.1120 Denver ∙ Boulder ∙ Northern Colorado ∙ Laramie

Your Clients Have a trusted CPa.

+ Mark Kuhn

President & Founder

Scott ranby, CFP® Financial advisor

StrategieS aNd ServiCeS oFFered:

We would like to be their trusted financial advisor.

investment management education funding 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.

North CaroliNa 919.493.3233

Colorado 303.803.1016

March/April 2019 | www.cocpa.org

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

Periodicals Postage

Experiencing

March Madness?

Make This Your FINAL SEASON! Bill Anecelle, CPA, MBA

Kevin Overberg, CPA/PFS, CFP

Sr.Practice Transition Consultant

Practice Transition Consultant

Bill@atp4s.com

Kevin@atp4s.com

(303) 670-3623 Delivering Results One Practice At a time

(720) 988-4334

800-859-8250 | www.APS.net