Getting to Know Them PAGE 4
What the Hemp? PAGE 15
Flexible Time Off: Could It Work For You? PAGE 20
COLORADO SOCIETY OF CPAs â€¢ MARCH/APRIL 2020
FROM SEED TO SALE
NewsAccount | March/April 2020
Getting to Know Them: Nominees for COCPA Board of Directors and Educational Foundation Board of Trustees Relevancy of the profession, cyber security, keeping up with technology and the pace of change, and the student pipeline top the list of issues and concerns these leaders think about both day and night.
Best Practices for Preparing 2019 Colorado Income Tax Returns The 2019 guide includes information on new credits and subtractions; new tax legislation; tax professionals resources; the new Donate to a Colorado Nonprofit program; and more.
Where Are They Now: Scholarships Equal Success Founded in 1958, the Educational Foundation of COCPA provides scholarships to Colorado accounting students who are on the path to a CPA career. Meet some of the more recent scholarship recipients and learn what they’re up to today.
What the Hemp? What CPAs Need to Know About this Growing Industry Do you raise your eyebrows when you hear the word “hemp”? If so, it’s probably because the word historically has been used interchangeably with marijuana. It’s important to know the difference. How to Succeed at Succession: A Case Study Western Slope-based Dalby, Wendland & Co., P.C., has been in business since 1948. Its leaders share the firm’s story and how they’re succeeding at succession.
Flexible Time Off: Could It Work For You? Gallup’s 2017 State of the American Workplace Report showed that 53 percent of employees say it’s “very important” to have a job that allows them greater work-life balance and personal well-being. An FTO policy could be an option.
Depression and the CPA Challenges associated with mental illness can be overcome with the right help. Here is one professional’s story.
24 Departments 2 32
Chair Column In Memoriam, Movers & Shakers, Classified Ads
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March/April 2020 | www.cocpa.org
A Year of Change
A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 65, No. 6 March/April 2020
Benjamin T. Hrouda, Chair Sharon S. Lassar, Vice Chair Christopher J. Telli, Treasurer Victor A. Amaya, Immediate Past Chair Mary E. Medley, Secretary
Kristine M. Brands, Toby Clary, Audra Dixon, Renny Fagan, Georgia Z. Phillips
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 $12.00 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 = 6,388 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,312; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 20; total distribution = 6,332; office use, leftovers, spoiled = 56; returns from news agents = 0; total sum = 6,388; 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 BEN HROUDA, CPA
his past year serving as COCPA Chair has been eye-opening in many ways. Before I took on the role, I thought I knew everything the COCPA does for members. After all, I’d been involved since my college days, and I’d served in other COCPA leadership roles. I discovered so much more goes on day-to-day, behind the scenes, to make the right things happen. I am grateful to COCPA President and CEO Mary Medley and her team for all their efforts to support members in solving issues, learning what they need to know, tapping into resources and opportunities, and advocating on behalf of the profession locally and nationally. As I traveled across Colorado on the Chair Tour, I gained a broader understanding of what members are dealing with depending on where each of us is physically located - whether we live in the highly populated Front Range, on the Western Slope, or in smaller cities and towns. As accounting professionals, we’re addressing many of the same issues. But how we address them is different, whether it’s client services, recruiting and retaining our teams, or accessing resources.
is this: No one is better positioned to lead that charge than our incoming COCPA Chair Sharon S. Lassar, PhD, CPA, John J. Gilbert Endowed Professor and Director, School of Accountancy at the University of Denver Daniels College of Business. As an educator, she brings a unique and important perspective to the challenges ahead of us.
The issue of resources is where the COCPA shines for us. Regardless of where we’re located, the COCPA is here for us all. Our organization serves each and every member. That became so apparent to me as I have traveled nationally and met with CPAs from other states.
It’s been a year of transition and change – from passage of legislation to continue the Colorado State Board of Accountancy to a proposed new model for the Uniform CPA Examination to staff changes at the COCPA to continued implementation of a new association management system and so much more. Change and transition always are challenging, but thanks to the COCPA leadership and staff, we are well positioned to forge ahead and thrive.
Looking to the future of our profession, I’m most excited to see how the concept of the CPA as the trusted advisor continues to evolve. At the end of the day, we ARE the
Thank you to my family and my team at Flywheel Capital for supporting me so I could serve this amazing and critically important profession. It wasn’t always easy
“At the end of the day, we ARE the trusted advisor, but what does that mean for the future?” trusted advisor, but what does that mean for the future? It’s TBD! We will continue to maintain that role even though it may look and feel a little – or even a lot – different down the road. The CPA Evolution initiative reminds us that change in the business environment doesn’t change our roles as that trusted advisor to business. It does change how we provide services to our clients, employers, and organizations. As a result, we need to change how we educate our accounting students and future professionals. The good news
to balance the responsibilities, but the COCPA is family, too, and you take care of your family. Though my year as Chair is ending on April 30, I look forward to continuing to be connected with you, my CPA friends and colleagues. When you have connections like these, you want to stay involved. I hope you’ll be involved, too. Thank you for an incredible year! Email Ben Hrouda at email@example.com.
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GETTING TO KNOW THEM:
Meet the 2020 Nominees for COCPA Board and Educational Foundation Relevancy of the profession, cyber security, keeping up with technology and the pace of change, and the student pipeline top the list of issues and concerns these leaders think about both day and night. Here’s a brief look at who they are, what they’ve accomplished already, and what they’d like you to know about them.
COCPA BOARD CHAIR NOMINEE
Sharon S. Lassar, PhD, CPA COCPA Board Chair Nominee Sharon S. Lassar, PhD, CPA (Florida), is the John J. Gilbert Endowed Professor and Director, School of Accountancy at the Daniels College of Business, University of Denver, Denver. Sharon is a distinguished academic leader and business advisor with expertise in multijurisdictional taxation, banking, and insurance. Recognized for her ability to distill complex transactions into their essential elements, Sharon is an international speaker to executive audiences, frequent contributor to media, and commentator who is a trained spokesperson for the American Institute of CPAs (AICPA). Sharon has over 20 years of experience leading organizations through strategic initiatives that anticipate disruptions, build diverse workforces, and transform business practices for fiscal effectiveness and regulatory compliance. She designed compensation plans to drive strategic results.
Foundation Trustee, including a term as President. She has served as president, chair, or member of many similar entities. Sharon chaired the AICPA’s Academic Executive Committee from November 2015 to March 2018, where she steered policy regarding the licensing of CPAs and initiated the CPA Evolution. As the AICPA’s representative on a task force, Sharon reformed accreditation standards to engage business leaders in the evaluation of academic programs beginning in 2020. Throughout her career, Sharon has successfully transformed entrenched cultures to drive strategic initiatives. She applies academic research to business problems for improved results. Earlier in her career, Sharon was vice president of the Florida Institute of CPAs, where she implemented key organizational changes, including establishing standing programs on financial literacy and women’s leadership development. She also served as minority issues chair of the Taxpayer Advo-
“CPAs are uniquely positioned to help business use new tools to increase the productivity of their workforce.” Sharon has been involved with the COCPA since her move to Colorado in 2010. She has served on the Careers Committee, the Board of Directors, and as an Educational
NewsAccount | March/April 2020
cacy Panel, which advised the Internal Revenue Service on strategies to serve millions of taxpayers with limited English proficiency.
Among the top issues for the profession, Sharon cites two: “The pace of change is both a challenge and an opportunity for CPAs. New technologies are introduced so frequently that it is hard to keep up with the ways companies can automate processes and use data to make better decisions. CPAs are uniquely positioned to help business use new tools to increase the productivity of their workforce. “The war for talent is another challenge for the profession. We need the new generation, the digital natives, to choose accounting. Other professions need the same pool of talent, and the national focus on STEM education has encouraged some of the best students to enter engineering and science programs rather than business programs. Although we observe AI and automation reducing the number of hours needed to provide some services, the profession still struggles to staff teams at desired levels.” Sharon adds, “I treasure my involvement with the COCPA because of what I learn about the profession through the interactions. I bring issues back to faculty for research; I incorporate new skills into curricula; and I better anticipate future business disruptions. “In my free time, I like to work with my hands. I garden, sew, refinish furniture, and repurpose old items. I am also a history aficionado. I like to visit historical places, read historical novels, and cook old-time meals. “I am a strong advocate for my students, my university, and my profession. I believe in making the institutions I serve better and more inclusive. I want to hear from COCPA members on how we can make our organization stronger and more meaningful for us.”
COCPA BOARD VICE CHAIR/CHAIR-ELECT
Randy L. Watkins, CPA, CGMA, CCIFP COCPA Board Vice Chair/Chair-elect Nominee Randy L. Watkins, CPA, CGMA, CCIFP, ACM LLP, Greeley, is partner-in-charge of the firm’s Northern Colorado office. He specializes in auditing and advising governmental and nonprofit organizations, as well as privately held and publicly traded companies in various industries including construction and technology. A former member of the AICPA’s Government Audit Quality Center Executive Committee and the AICPA’s annual Government Accounting and Auditing Conference planning committee, Randy regularly presents on technical topics at the AICPA’s Government and Construction conferences. Randy received his BSBA from the University of Northern Colorado and chaired its Accounting Academic Advisory Board; served on the UNC Foundation Board; and served as president of the UNC Alumni Association. He also is active in the community, currently
serving on the United Way of Weld County Board of Directors as its incoming chair; on the Partners Mentoring Youth Advi-
into the future,” Randy says are top issues the profession must address. A second generation CPA, married to his CPA spouse Nicole, he is excited about his continuing involvement with the COCPA. “I’ve been incredibly blessed by this profession, through the support of organizations like the COCPA. If I have anything to offer in return, I happily and enthusiastically share.”
“I’ve been incredibly blessed by this profession, through the support of organizations like the COCPA. If I have anything to offer in return, I happily and enthusiastically share.” sory Council; the Community Council on Education; and on the Greeley Chamber of Commerce Board of Directors and Executive Committee. “Harnessing technology and a multi-disciplined service model to maintain relevance
This avid Beatles fan is dad to two active and ambitious daughters, Lennon and McCartney, and Starr, the family Yorkie, who enjoys golf, glamping in a 5th wheel, water sports, and traveling with his girls. Ask him about all three Paul McCartney concerts he’s experienced - the first when he was just 16. CONTINUED ON PAGE 6
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Find your perfect professional match at COCPA.org/talent March/April 2020 | www.cocpa.org
LEADERSHIP NEWS CONTINUED FROM PAGE 5
COCPA BOARD TREASURER NOMINEE
Peter J. Derschang, CPA
An accounting and finance professional for 37 years, Treasurer Nominee Peter J. Derschang, CPA, is CFO for Leeds West Group, Greenwood Village, an automotive repair management platform. The company owns and operates 100 Midas and Big O stores around the U.S. Previously, he was CFO of Brakes Plus, Inc., Denver. For ten years, Peter taught various accounting courses for the University of Denver as an adjunct professor, giving back to his alma mater at which he earned his BS in Accounting and his MBA. “I’ve always enjoyed teaching and being able to talk about accounting concepts in plain English, helping people understand not just what the numbers are but also what the numbers mean,” he says. Currently, Peter serves on the DU School of Accountancy Advisory Board and on The Cable Center Investment Committee. A Denver area native, Peter and his spouse Kathy are proud parents of three young adults and Harper, their four-year-old yellow Lab. Sports are Peter’s passion, having played competitive soccer along with bicycle racing, ski racing, and just plain racing - completing two half marathons. Today, he enjoys cycling - he put over 2,000 miles on his road bike last year, skiing, flying RC airplanes, and golf. He likes to do home improvement projects and travel with Kathy, too. Top issues on Peter’s mind? Keeping up with technology and applying it for better efficiency; cybersecurity and keeping data safe; and, as a CPA in industry, dealing with accounting pronouncements that may work for public companies but have little value for a non-public company.
“I’ve always enjoyed... helping people understand not just what the numbers are but also what the numbers mean.” When Peter first began working in industry 30+ years ago he always took COCPA CPE classes. He got to know staff members and served on the Not-for-Profit, Careers in Accounting, and CPE committees as a way to give back to the profession. “They were all great experiences,” he recalls.
NewsAccount | March/April 2020
COCPA BOARD OF DIRECTORS NOMINEE
Jim Brendel, CPA, CFE
COCPA Board of Directors Nominee Jim Brendel, CPA, CFE, is the Regional Managing Director for Moss Adams LLP, Denver. Prior to joining Moss Adams, he was managing partner of Hein & Associates LLP, Denver. Jim has over 40 years of experience providing audit and accounting services for public and privately held companies. He specializes in SEC reporting and provides public companies with compliance and consulting services for SOX 404 compliance, mergers and acquisitions, initial public offerings, and other complex accounting issues, along with litigation support services and expert witness testimony. Jim primarily serves clients in the oil and gas, technology, and manufacturing and distribution industries. A Colorado State University graduate with a BSBA in accounting, Jim is involved with many organizations including the Association of Certified Fraud Examiners, the Colorado Technology Association, COPAS, the Association for Corporate Growth, and the National Association of Corporate Directors. He served on the AICPA Center for Audit Quality SEC Regulations Committee for two years. Jim, too, cites technology as a top issue. “Keeping pace with the impact of technology (AI, data analytics, blockchain, etc.) on not only how we are delivering services to our clients but also what we are delivering - clients still need the judgment and experience CPAs provide, but we need to be able to leverage the power of technology to remain their trusted advisors.” He cites embracing change, as well. “As (AICPA President and CEO) Barry Melancon likes to say, ‘Today is the slowest rate of change that you will experience for the rest of your career.’ More than ever before, being a lifelong learner will be essential for all of us.” Jim became involved with the COCPA thanks to a CPA. “My neighbor Clem Bueche was a past president of the COCPA. When we moved in across the street from him and he found out I was a CPA, he told me, ‘The best thing you can do is get involved in the COCPA!’ Through the Accounting Careers Committee, the Public Company Practice Forum, and the SEC & PCAOB Conference planning committee, I’ve learned skills that helped advance my career. More importantly, I’ve made a lot of good friends.” When not working, Jim enjoys traveling with his spouse Pam and spending time with their three adult children. He also likes all sports and particularly cycling and golf. Jim says he has “a brain filled with useless information; I can recite the name of almost any college sports mascot.”
COCPA BOARD OF DIRECTORS NOMINEE
Mary-Margaret Henke, CPA COCPA Board of Directors Nominee Mary-Margaret Henke, CPA, is General Auditor with Liberty Services, Denver, which provides specialized stimulation services to optimize well production. Throughout her career, Mary-Margaret has transformed organizations by leveraging a rare combination of accounting, technology, and regulatory governance expertise. She brings over 25 years of business experience in diverse industries including financial services, energy, and professional services. Mary-Margaret started her career with nearly 10 years at PricewaterhouseCoopers and, most recently, joined Liberty, a new public company, to head up the audit function. Prior to Liberty, she spent over 12 years at Western Union, a leader in global payment
services. During her tenure, she held a wide variety of leadership roles including service as General Auditor navigating the continually evolving regulatory environment and increasingly complex technology landscape. With her passion for team learning and development, Mary-Margaret led significant advancement in talent development and audit data analytic capabilities. She was tapped to take over the critical Settlement Transformation technology program, a multi-year, multi-phased program replacing end-of-life, antiquated systems. She led various other CFO strategic initiatives including the global Oracle and Wallstreet System technology upgrades, enterprise risk management as well as acquisition and integration activities.
COCPA BOARD OF DIRECTORS NOMINEE
Kelly Kozeliski, CPA COCPA Board of Directors Nominee Kelly Kozeliski, CPA, is a partner with Plante Moran PLLC, Denver. As the leader of the firm’s healthcare practice in the Rocky Mountain region, she specializes in advising clients on financial best practices and industry trends. She possesses extensive expertise in internal controls, financial reporting requirements, mergers and acquisitions, and a variety of technical accounting matters related to healthcare, insurance, and the financial services industries. Most of Kelly’s clients are hospitals and health systems, physician practices, insurers, and senior care and living centers. She says, “The ability to work with people is what attracted me to this career. Healthcare has always been a passion of mine — and I enjoy being part of an industry that’s fundamentally designed to help people.” In the more than 10 years she’s been with the firm, Kelly has had many successes. Among them, she was a member of the team that built and expanded the firm’s healthcare
practice. And, she helped to launch the firm’s Rocky Mountain region women’s network, which aligns with her love of mentoring team members in their professional development. A member of the Healthcare Financial Management Association (HFMA), Colorado Hospital Association, Colorado Healthcare Strategy & Management, and Women in Healthcare, Kelly chairs the University of Northern Colorado Accounting Program Advisory Council. She is a past member of the Innovest advisory board. That’s not all, though. Kelly belongs to the Denver Chamber of Commerce Healthcare Committee, the Women’s Leadership Foundation (charter member), and the Colorado Women’s Chamber of Commerce (former board member and treasurer). In 2019, COCPA named Kelly one of three Women to Watch Leaders of Note. When not assisting her clients, this UNC graduate with her BSBA in accounting and MBA from Colorado State University enjoys spending time with her family, volunteer-
Mary-Margaret received her BS in Accounting, summa cum laude, from the University of Denver. At the top of her issues list are the student pipeline and concern with fewer people joining the profession. She says she became involved in COCPA “to pay it forward. The DU (University of Denver) School of Accountancy changed my life. I could only afford to attend DU because of the numerous accounting scholarships I was awarded from the accounting profession (COCPA and AICPA). I want to do the same for others.” Mary-Margaret spends her non-work time with her husband and three adult children, her church family, and friends, plus gym time, hiking, and walking around Denver’s Washington Park. Her ideal vacations involve the two H’s – Hiking and History. “Add my adult children plus a few extras - friends or extended family - and it creates the perfect mix for an outstanding experience.”
ing at church, playing golf and tennis, and staying connected with friends. Although she grew up without pets, aside from an occasional fish, she and her husband now have three dogs — in addition to their two children under age seven. Kelly cites the speed of change – in technology, industries, and regulations - along with career relevance and opportunity for the long-term, specifically for younger professionals, and diversity and the pipeline of future professionals as top issues. She said yes to COCPA involvement “to actively contribute to the profession in a way I haven’t historically done – to bring ideas to the table. There is also great camaraderie within the COCPA, and I’d like to bring that sense to others who have not been active or haven’t realized the COCPA’s benefits, relevance, and importance.” Kelly says she truly enjoys listening to and connecting with people. “Although I’ve spent my entire career on a somewhat linear track in public accounting, I’m passionate about helping others in the profession carve their own unique path – it’s more than okay to challenge the status quo.”
CONTINUED ON PAGE 8 March/April 2020 | www.cocpa.org
LEADERSHIP NEWS CONTINUED FROM PAGE 7
EDUCATIONAL FOUNDATION BOARD OF TRUSTEES NOMINEE
Alexandra (Alexie) Tune, CPA EDUCATIONAL FOUNDATION BOARD OF TRUSTEES NOMINEE
Kathleen (KED) Davisson, CPA Educational Foundation Board of Trustees Nominee Kathleen (KED) Davisson, CPA, is a Teaching Professor and the Assistant Director of the School of Accountancy in the Daniels College of Business at the University of Denver, Denver. She received her BSAcc and MAcc degrees from the University of Denver. KED’s primary teaching areas are accounting information systems and managerial accounting. She is a two-time winner of the Daniels Award for Excellence for Faculty and a winner of the C. Thomas Howard Innovative Teaching Award. She has served on the COCPA Careers Committee for over a decade. Prior to entering academia, KED spent eight years as the VP of Finance for Colorado Computer Institute, an international computer networking training company based in Englewood, Colo. At the top of her issues list, KED says, “The profession needs to address the rapid change of the business world. The changing workforce (Gen Z entering, now) and changing technologies are creating a new landscape. The profession must keep up with those changes or risk becoming irrelevant.” After attending a COCPA leadership conference in the early 2000s, KED was asked if she would like to get involved. She joined the Careers Committee, “and the Society has kept me quite busy ever since.” In her non-work time, KED enjoys attending DU sporting events – hockey, lacrosse, and volleyball are her top three. Her passion? “I am very passionate about students. They are the future of the profession, so what we do with them now has impact for many years to come.”
Educational Foundation Board of Trustees Nominee Alexandra (Alexie) Tune, CPA, is a managing director in the Deloitte LLP audit practice. She serves as the Denver Office Private Audit leader and also leads the Technology and Emerging Growth Company group. A University of Denver graduate with a BSBA in Accounting and MAcc, Alexie has spent her entire career with Deloitte, in both the audit and mergers and acquisitions practices.
“I’m looking forward to being involved with the Educational Foundation to assist students with accessibility to the accounting profession through education.” Alexie chairs the University of Denver School of Accountancy Advisory Board and serves on the Denver Scholarship Foundation Audit and Finance Committee. Previously, she served on the Board of Directors and chaired the Finance Committee for Open World Learning; chaired the board of College Summit Colorado; and was president of the Alliance of Professional Women. In her free time, Alexie enjoys playing the piano and spending time with her husband Cameron and their twin sons Colin and Jackson. They enjoy hiking, particularly in Castlewood Canyon, and biking around their neighborhood. Alexie took a roundabout path to becoming a CPA, having begun her college career as a music major. An Introduction to Accounting course at a Wyoming community college, during the summer break between her sophomore and junior year, led her to accounting. “Finding ways to develop and use technology to help solve relevant problems as well as anticipating the use of technology in a fast-changing environment” are at the top of Alexie’s list of issues the profession must address. She adds, “I first became involved in the COCPA as a new CPA, right after receiving my license. I’m looking forward to being involved with the Educational Foundation to assist students with accessibility to the accounting profession through education.”
NewsAccount | March/April 2020
Spring & Summer 2020 FEATURED CPE EVENTS
Save the Dates Not-For-Profit Conference May 19, 2020 Virtual Technology Update: Get Ahead of the Curve July 29, 2020 Marijuana Business Symposium August 13, 2020 Technology Conference August 26-27, 2020 Womenâ€™s Summit August 28, 2020 Leadership Series August-December, 2020
Visit cocpa.org/learning to see these and the entire COCPA CPE catalog. March/April 2020 | www.cocpa.org
Best Practices for Preparing 2019 Colorado Income Tax Returns Annually, the Colorado Department of Revenue (CDOR or Department) publishes its Income Tax Best Practices Guide for preparing Colorado Income Tax Returns. You can download the 2019 edition at bit.ly/2019CDORBestPractices. All the forms, guidance publications, and webpages referenced may be found at Colorado.gov/Tax, the official Taxation Division website.
he 2019 guide includes information on new credits and subtractions; new tax legislation; consumer use tax updates; filing relief for natural disasters; Revenue Online; fraud detection and prevention; tax professionals resources; due dates; the new Donate to a Colorado Nonprofit program; and more. FILING ERRORS AND TIPS TO AVOID THEM Business Personal Property Credit for Individual Business Owners: This credit is available only if business personal property tax was paid to a Colorado county in 2019 and the business had business personal property valued at $18,000 or less. Submit a copy of the assessorâ€™s statement with the return. See the Business personal property credit calculation worksheet in the DR 0104 booklet. Reacquisition of Colorado Residency During Active Duty Military Service Subtraction: This subtraction is allowed only to active duty military service members. In order to qualify for the subtraction, the service member must meet all of the following criteria: have Colorado as his or her home of record; after enlisting in the military, have acquired legal residency in a state other than Colorado; and, on or after Jan. 1, 2016, have reacquired Colorado residency. A military service member who meets these requirements can claim a subtraction for any compensation included in his or her federal taxable income that he or she received for active duty service after reacquiring Colorado residency. In order to have acquired residency in another state, the service member must 10
NewsAccount | March/April 2020
have: been physically present in that state; intended to make that state his or her permanent home; and intended to abandon the previous state of legal residence. In order to reacquire residency in Colorado, he or she need not be physically present in Colorado but must intend both to make Colorado his or her permanent home and to abandon the previous state of legal residence. In order to claim this subtraction, a service member must include with his or her return: a completed DR 0104AD; a military form showing Colorado as his or her home of record; evidence of acquiring residency in another state; and evidence of reacquiring residency in Colorado during the tax year. Evidence of acquiring residency in another state and reacquiring residency in Colorado must come in one of the following forms: voter registration; records reflecting the purchase of residential property or an unimproved residential lot; motor vehicle titling and registration; notification to the prior state of legal residence of his or her intention to change the state of legal residence; and preparation of a new last will and testament reflecting the state of legal residence. If the service member qualifies for this subtraction, enter the amount of compensation received for active duty military service on line 16, and submit all required evidence of residency with the return. Other Subtractions from Federal Taxable Income: Donâ€™t include amounts earned outside Colorado, net operating losses, K-1 adjustments, military income, wage adjustments, or donations made to the Military Family Relief Fund on this line. Include a clear explanation of the subtraction being claimed on the return. For information, see
Colorado.gov/Tax/Income-TaxSubtractions. Voluntary Contributions: Be sure to include a Voluntary Contributions Schedule, DR 0104CH, with the return. The voluntary contributions cannot be amended. Special Instructions for Bankruptcy Estates: For bankruptcy estates with a Colorado filing requirement, complete the DR 0105, and provide supporting documentation for the estate only. DO NOT complete, submit, or attach the Colorado form DR 0104 for individuals as part of the Colorado
filing for a bankruptcy estate. For Colorado returns, the DR 0105 is NOT used as a transmittal for the debtor’s form DR 0104. The filing of the bankruptcy estate’s tax return does not relieve debtors from the requirement to file individual income tax return for Colorado income on the form DR 0104. VOLUNTARY CONTRIBUTIONS Colorado taxpayers now can donate to a qualified organization by entering its ID on the Voluntary Contributions Schedule (DR 0104CH) of the Colorado Individual Income Tax Return. There are two ways to look up the information:
the Charity Lookup Tool and the List of Qualified Non-Profits/Charities. To use the tool, go to Colorado.gov/Tax/ CO-Non-Profit-Number. Enter the full or part of the charity’s name in the Search Box. The Search function is not case-sensitive. Enter the Tax Year you are filing for. If you cannot find the charity you are looking for, the Advanced Search may help. Click Advanced Search under the “Search” button. Enter specified information to narrow down the search results. Once you find the charity, enter its 11-digit Registration Number on the DR 0104CH. If using a printed form, enter the 11-digit Registration Number and the charity’s name as it appears in the Charity Lookup Tool in the boxes under line 19. Do not leave a space at the beginning of any entry in the fields. Your search may not produce any results. Search results are listed for up to ten registration IDs on each page. Use the page number at the bottom of the page to navigate to a different page. The Download Records button located at the top right of the screen enables you to export your search criteria results. In Advanced Search, Name, Activity, City, County, State, and Zip code can be searched alone or together in any combination. PRACTITIONERS’ HELPLINE The Tax Practitioners’ Helpline, 303-2322419, is reserved for tax professionals, and it receives priority attention. Tax Examiners are available from 8:00 a.m. to 4:30 p.m., Monday through Friday, except on state holidays. After hours, you may leave a message. Calls are returned the next business day. Please do not provide this telephone number to your clients. This line is a service for tax professionals only. HELP FOR THE PUBLIC CDOR customer service representatives are available from 8:00 a.m. to 4:30 p.m., Monday through Friday, except on state holidays, at 303-238-SERV (7378). For EFT/Electronic Payment help, call 303-205-8333. For Collections, call 303-205-8291. For Discovery, call 303-205-8292. For Field Audit, call 303355-0400. To report Tax Evasion, Fraud, or Scams, call 303-205-8262.
March/April 2020 | www.cocpa.org
EDUCATIONAL FOUNDATION OF COCPA
Where Are They Now: SCHOLARSHIPS EQUAL SUCCESS BY NATALIE ROONEY DANIELLE GAFFNEY, CPA, TAX MANAGER, STOCKMAN KAST RYAN + CO., COLORADO SPRINGS
Founded in 1958, the Educational Foundation of COCPA provides scholarships to Colorado accounting students who are on the path to a CPA career. Scholarships of $2,500 are awarded for the fall term and may be applied to tuition, textbooks, fees, and on-campus room and board. Applicants must be COCPA members and must be juniors, seniors, or graduate students attending eligible Colorado colleges and universities.
The number of scholarships awarded has grown from 21 scholarships in 2010 to 46 scholarships in 2019. One scholarship recipient, Sheila Balzer, became a CPA and eventually became the President of the Educational Foundation’s Board of Trustees. She also served as COCPA Chair in 2014. Meet some of our more recent scholarship recipients and learn what they’re up to today.
anielle heard about the COCPA scholarships after a professor at the University of Colorado Colorado Springs sent an email to the class. She had been taking an increased course load throughout her time at UCCS which added to her tuition costs every semester. “I’m a driven person, and I was trying to graduate early, but the added costs made doing so just out of my reach,” she says. Once she received the scholarship in 2012, which offered welcome financial relief, she was able to focus on school and pursuing internships.
During Gaffney’s last semester, she interned at Stockman Kast Ryan + Co. where she began work full time right after graduation. “Since then, I’ve worked hard and climbed the ladder to become a tax manager,” she says. “Now I can pay it forward and help other students with internships and training. The internship during my last semester at UCCS got me the job and has propelled my career ever since. In addition to scholarships, I worked full time while in school to save for my CPA studying software.” Gaffney credits that purchase with helping her pass the Uniform CPA Examination just six months after graduation. “I’m incredibly lucky,” she says. “Ultimately, I was able to graduate without any student debt because of the financial support through small scholarships which I received from multiple organizations like the COCPA.” CHRISTOPHER BATTRAW, CPA, CMA, MPACC, STAFF AUDIT AND TAX MEMBER, KUNDINGER, CORDER, & ENGLE, PC, DENVER
hris received the Foundation’s Hugh C. Braly Scholarship in 2015. His professors at Metropolitan State University of Denver encouraged him to become involved with the COCPA to network and learn about career opportunities. “That led me to finding out about the Foundation’s scholarships,” he says.
A non-traditional student, Battraw had dropped out of high school, earning his GED through the assistance offered at a homeless shelter. Through discussion with the shelter’s representative and Battraw’s immediate family members about career options, “It seemed like there would be a lot of opportunities if I pursued accounting,” he recalls. While participating in COCPA’s Student Interview Day, Battraw met with Steve Corder of Kundinger, Corder, & Engle. “I thought the nonprofit sector sounded like a great niche,” he says. “I was very fortunate to have found out about the firm.” He accepted KCE’s offer and joined the firm two months after graduation. Battraw credits the scholarship and his COCPA student membership as critical to his success. “The greatest thing to me was the presence of the COCPA itself,” he says. “It allowed me to connect with professionals.” Battraw worked while in school and tried to pay off student debt but acknowledges it was tough. “The COCPA scholarship helped with that at the end.” He has continued his COCPA membership since graduation. “I realized I wanted to get more involved,” he says. “I love the COCPA and the things it does. I’m so thankful for the opportunities.”
NewsAccount | March/April 2020
MATT LAUSTEN, CPA, CFE, MPACC, PARTNER, BETZER CALL LAUSTEN SCHWARTZ, DENVER
att was awarded an Educational Foundation scholarship while he was a graduate student at Metropolitan State University of Denver. No stranger to the scholarship process – he was awarded the Boettcher Scholarship as an undergraduate student – Matt was grateful for the additional support while pursuing his Master’s in Accountancy. “I felt very lucky,” he says. “Financial support changes your life.”
“The greatest thing to me was the presence of the COCPA itself. It allowed me to connect with professionals.”
A longtime COCPA member, Matt “did everything in reverse professionally.” He attended Colorado College and earned a degree in economics with a minor in history. He worked for several years doing technical data work at a consulting firm but saw that the partners were all CPAs. “I was never going to make partner without the designation,” he says. “The CPA designation opens a lot of doors beyond what people think of as the traditional roles.” He decided to take evening courses at Metro to earn his CPA and CFE credentials. A couple of years later, he returned to Metro to pursue his master’s in accountancy. Through a COCPA networking event, Matt met COCPA member Sheri Betzer, CPA. She asked him to assist on a Ponzi scheme investigation and later invited him to join her firm. Betzer offered Matt an opportunity to guest-lecture in her graduate-level class at Metro, which eventually led to him pursue his graduate degree and develop the class in data analytics he now teaches. Currently, Matt is a partner at with the firm, which specializes in forensic accounting work. He leads the firm’s data analytics practice and offers expert testimony in forensic accounting, accounting reconstruction, fraud investigation, lost profits, and economic damages. Matt received the Foundation’s Gordon Scheer Scholarship in 2012, which was particularly meaningful as Scheer is a family friend. “I’m so grateful to the Educational Foundation and the Society,” he says. “I talk to my students about being involved in the profession now. Teaching is how I give back to the professional community. In my classes, I emphasize that the CPA credential and career path offer many different options.”
OLIVIA HUNSINGER, CPA, STAFF ACCOUNTANT, FORT COLLINS HOUSING CATALYST, FORT COLLINS
hile attending Adams State University, Olivia had the good fortune to hear a presentation by a COCPA staff member who talked about the organization and the various opportunities for students. “She talked about scholarships and Student Interview Day,” Olivia recalls. “I realized I could earn scholarship money for being an accounting major. I thought I’d take a chance and apply. I thought it was great that money was out there for people, and it was nice that it was accounting specific. Every little bit helped a lot.”
Olivia calls the scholarship “a real blessing” and adds that years later, she continues to reap long-term benefits from the financial award she received in 2014. “It took me five and a half years to graduate, but I finished school without any student debt,” she says. “I didn’t realize then how much that would impact me until I talked to coworkers who have high loan debt and are constantly struggling.” Olivia says she was able to begin contributing to her retirement immediately while others couldn’t afford it. “If you compound what I’m able to contribute now, it will go a long way toward my retirement,” she says. “I have always been able to contribute above the match from the beginning. I couldn’t have done that without the scholarship assistance.” For more information or to apply for an Educational Foundation of COCPA Scholarship, visit students.cocpa.org. March/April 2020 | www.cocpa.org
Reporting Changes Proposed for Gifts-in-Kind
he Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) intended to improve transparency around how not-for-profit organizations present and disclose contributed nonfinancial assets, also known as gifts-in-kind. Examples of contributed nonfinancial assets include fixed assets such as land, buildings, and equipment; the use of fixed assets or utilities; materials and supplies, such as food, clothing, or pharmaceuticals; intangible assets; and/or recognized contributed services. The proposed ASU would require a not-forprofit organization to present contributed nonfinancial assets as a separate line item in
the statement of activities, apart from contributions of cash or other financial assets. It would also require a not-for-profit to disclose: • Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets, and • For each category of contributed nonfinancial assets received: - Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods. If utilized, a description of the programs
or other activities in which those assets were or are intended to be used. - A description of any donor restrictions associated with the contributed nonfinancial assets. - The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market) if significant, in accordance with the requirements in Topic 820, Fair Value Measurement. The proposed ASU, including a “FASB In Focus” overview and information about how to submit comments, is available at fasb.org. Stakeholders are encouraged to review and provide input on the proposed ASU by April 10, 2020.
Office - 866.260.2793 Kathy Cell - 501.514.4928 Christy Cell - 501.499.4357
500 Amity Rd, Suite 5B-68 Conway, AR 72032
Kathy Brents, CPA, CBI Broker, Managing Member
Christy Hudson, CBI
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Let us make it simple. 14
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HEMP? WHAT CPAS NEED TO KNOW ABOUT THIS GROWING INDUSTRY
BY NATALIE ROONEY
o you raise your eyebrows in suspicion when you hear the word “hemp”? If so, it’s probably because the word historically has been used interchangeably with marijuana. It’s important to know the difference as both the hemp and cannabis industries continue their exponential growth. HEMP 101 Hemp, also referred to as industrial hemp, is a variety or species of the genus plant Cannabis Sativa L and is distinct in that it does not contain greater than 0.3 percent tetrahydrocannabinol (THC) on a dry weight basis. The low concentration of THC contained in the hemp plant does not cause the psychotropic effects associated with Cannabis varieties which contain higher THC concentrations. Cannabidiol (CBD) is a dominant phytocannabinoid identified in hemp and unique to the Cannabis plant genus. Hemp-derived CBD is a naturally occurring compound concentrated in the resinous flower of the plant. CBD, among many others of the more than 100 phytocannabinoids in hemp, does not cause a psychotropic or intoxicating experience. Let’s repeat that one more time for the folks in the back: Hemp cannot get you high. Hemp is a durable crop that grows in a variety of climates and soil types. It is used in clothing, biofuels, plastics, personal care, feed, and food.
Hemp-derived CBD has surged in popularity. Economic experts predict a multi-billion-dollar U.S. hemp industry by 2020 - yes, this year. During most of the last century, the U.S. imported all of its hemp. It was illegal to grow in the U.S. because it was mistakenly classified as a controlled substance. That all changed a few years ago when the U.S. Congress and more than 40 state legislatures permitted hemp cultivation as part of a research pilot program. China, France, Canada, and Australia are large-scale producers and exporters of hemp, and the U.S. is known to be the largest buyer of hemp worldwide. President Obama enacted the American Agricultural Act of 2014 (the “2014 Farm Bill”), which included Section 7606, titled The Legitimacy of Industrial Hemp Research. This allowed states to pass legislation authorizing their state Departments of Agriculture to promulgate rules and regulations and permit licensing of hemp pilot programs, including marketing research. Hemp isn’t just for making clothes or rugs; it has a growing following for its medicinal uses. Steve Smith, co-founder and president of Pet Releaf and a former CPA with Big 4 experience, founded the company in 2014 because he wanted to find non-opiate pain relief options for Mattie, his family’s aging dog.
Through research, he found more than 1,000 clinical, peer-reviewed studies with mice that showed humans could achieve the benefits of cannabis – pain relief, immune system boost, reduced inflammation – without getting high. Mattie died before Smith could find a solution for her, but he and his wife, Alina, set out to find a natural pain solution for animals. They relocated from Florida to Colorado to be closer to holistically minded veterinarians and forward-thinking people who thought of their pets as family members. Today, Pet Releaf sells and distributes a variety of edible and topical hemp products and supplements for dogs and cats. REGULATORY RIGOR The Smiths founded Pet Releaf as an LLC domiciled in Florida and had little trouble establishing the company as a DBA in Colorado, but they weren’t able to register any products until the last two years because of a lack of clear guidance from the federal government. Regulatory regimes are a states’ rights issue. Many states still won’t register hemp products but also won’t actively take them off of retail shelves. Thirty states allow the sale of hemp products although some have more strict rules. CONTINUED ON PAGE 16 March/April 2020 | www.cocpa.org
EMERGING INDUSTRIES CONTINUED FROM PAGE 15 Smith says there is a misconception that the 2018 Farm Bill signed by President Trump legalized hemp everywhere. “In Mississippi and Idaho, for example, if you sell our products at a pet store and have twenty pounds of CBD products, you’ll be charged as if you’re selling heroin,” he explains. “It is still a serious regulatory question mark.” Smith says because their family income came from the hemp industry, personal financial issues have been challenging. “We couldn’t even get a normal bank to give us a home loan.”
“It is still a serious regulatory question mark.” It wasn’t until the Bank of the West began a pilot program Smith and Pet Releaf were invited to join that the financial strain began to ease. While hurdles still remain, it has been a big step forward. HELPING THE RULEMAKERS Smith sits on the board of the U.S. Hemp Roundtable which he describes as a hemp-focused chamber of commerce. Launched in 2017, the Roundtable is a coalition of dozens of hemp companies – representing every link in the product chain from seed to sale – and all of the industry’s major national grassroots organizations. The group secured passage of bi-partisan legislation in Congress that established hemp federally as an agricultural commodity, permanently removing it from regulation as a controlled substance. But Smith stresses that the battle for full legalization is far from over. Some states have not yet joined the cause, and fears of over-regulation by local and federal agencies continue. Smith and the Hemp Roundtable have been working with states and the federal government to write rules to govern the hemp industry. They were instrumental in writing the Hemp Farming Act of 2018, a proposed law to remove hemp from Schedule I controlled substances and make it an ordinary agricultural commodity. Its provisions were incorporated into the farm bill that became law on Dec. 20, 2018. “As leaders, we want this industry to move forward in an intelligent fashion,” Smith says. “It’s worse than the wild west, and we know we have to protect ourselves.” 16
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Four board members, including Smith, have helped the Food and Drug Administration (FDA) write the rules. “We have provided information on how consumers can get tricked with potentially dangerous products,” he says. “It has been collaborative.” A HEADS UP FOR CPAS The codified rules are due to come out in 2021 which will be important for CPAs who may have hemp clients and need to understand the financial and legal implications. Smith recommends that any CPA taking on a hemp client ensure that the client has achieved the U.S. Hemp Authority seal on its products.
In addition, police tests said the load was “hot,” with a THC of 0.5 or 0.6. The company shipping the hemp had tests showing the load was 0.3 percent or below. This interstate transportation case demonstrates just one of the many challenges still facing the hemp industry. The case is being watched closely because it highlights conflicts among state hemp laws and disagreements over interpretation of federal law. The U.S. Department of Agriculture (USDA) continues its work on finalizing regulations for the domestic hemp production program. It issued guidance in May 2019 on the interstate transportation of industrial hemp. In his legal opinion, Stephen Vaden, general
The U.S. Hemp Authority Certification Program is our industry’s initiative to provide high standards, best practices and self regulation, giving confidence to consumers and law enforcement that hemp products are safe and legal. In an effort funded by the U.S. Hemp Roundtable, and joined by organizations such as the Hemp Industries Association, industry leading firms, top-tier testing laboratories, and quality assessors developed comprehensive guidance for growers and processors of hemp.
Earning the seal requires an intensive thirdparty audit and proves the hemp does not contain marijuana which would be a Racketeer Influenced and Corrupt Organizations (RICO) Act violation. “The seal makes it 100% legal to possess and transport hemp anywhere in the U.S.,” Smith says. “I would strongly urge CPAs not to do business with a client until it has achieved the seal.” In Colorado, the testing of the plants is constant. They are followed all the way through the growth cycle. And the harvest cannot take place until the Colorado Department of Agriculture (CDA) can prove it was, in fact, a hemp field. The biomass is weighed pre- and post-extraction to prove that it is the same certified hemp. Smith says some states don’t have this level of weighing regulation. He adds that the CDA will even perform surprise inspections and take samples. WHAT CPAS NEED TO KNOW Last year, a truck carrying a load of hemp from Oregon to Colorado for extraction was stopped in Idaho, where hemp is not legal, and the load was seized. “Hemp buds look just like marijuana,” Smith says. “You wouldn’t know the difference if you saw the buds laying on a table.”
counsel for the USDA, says states cannot bar transport of hemp legally produced under the 2014 or 2018 farm bills. In October 2019, the USDA opened a public comment period on proposed hemp regulations that laid out basic regulatory guidelines for hemp manufacturers. The proposed regulations cover a wide range of issues, including licensing, THC testing requirements, and the disposal process for crops that exceed potency limits. Advocates and industry stakeholders have expressed mixed feelings about the proposed rules including allowing growers to address “hot” hemp containing excess THC before the crops are ripped up and thrown out and testing for THC limits. As regulations evolve, Smith encourages CPAs to trust their clients, but verify, verify again, and then verify yet again. “As we move ahead and things come out of the gray area we’ve been operating in, more and more people are going to move into this industry,” Smith says. “It’s important for CPAs to understand the regulations and know that their license could be on the line if they’re duped by a client.”
From Seed to Sale: One Colorado Company’s Story BY NATALIE ROONEY
he hemp industry is nascent in both research and commercialization pipelines. Wendy Mosher, President and CEO of New West Genetics, Fort Collins, is on a mission to change at least part of that reality. Mosher co-founded New West Genetics in 2014 with Dr. John McKay and Dr. Rich Fletcher. Their goal was to develop U.S.bred, seed-based varieties of hemp for various market applications. New West Genetics uses genomic technology coupled with traditional breeding to create the varieties to be mechanically cultivated, enhancing the sustainability of the industry and paving the way for large-scale product development. Mosher and McKay are married and relocated to Colorado when McKay accepted a position at Colorado State University. McKay, a professor of plant evolutionary genomics at Colorado State University, leads a research group on the genetics of adaptation in crops and model systems with a focus on drought and sustainability. Mosher has a Master’s in education and was teaching in California. During the summers, she would help McKay with field research. “Against my will, I absorbed the genetics speak,” she laughs. When they decided to launch New West Genetics, she took on the business side while McKay headed up the genetics. Fletcher, formerly the head of Cargill’s canola breeding program, headed up the breeding side. “We’re focused on increasing the sustainability of the industry,” Mosher says. “Right now, production is highly resource intensive, as it’s grown using a horticultural method. Seed-based production also creates an alternative, or at least a rotation, to couple with farmers’ more traditional crops.” The top use for hemp is the flower which is used for extraction in the CBD market. Secondarily, hemp is used as a grain. There are also fiber applications for hemp. “Right now, fiber can be a value add from the crop farmers already are producing, but there is no large market for it yet,” Mosher says.
PRODUCING A BETTER PRODUCT Mosher emphasizes that New West Genetics isn’t using genetically modified organisms but rather is using the genomics to make informed choices for selection and to speed up the breeding process. The company is well known for compliance – it does not release seed until it has proven to be U.S. Department of Agriculture (USDA) Interim Final Rule (IFR) compliant seed. “We have enhanced CBD varieties that are compliant with the testing and sampling protocol the U.S. has said is needed,” Mosher says. Colorado has the strictest sampling protocol of any state. Mosher says New West Genetics has bred its hemp seed to be below the 0.3 percent THC threshold set by the federal government. “We feel good about
“Colorado has the strictest sampling protocol of any state.” putting compliance first.” She emphasizes that 90 percent to 95 percent of the strains people are buying for CBD production aren’t compliant and are over the 0.3 percent THC mark. “This is why people are pushing to change protocols from the USDA rather than changing genetics. The good news is compliant genetics are here.” Over the past six years, Colorado has made up half of the hemp acreage in the U.S. Mosher says the most recent data she has seen indicate that up to 44 states intend to issue their plans to the USDA so they can legally comply and begin growing hemp. ONGOING CHALLENGES One of the biggest problems facing the hemp industry is harvest technology. “No one is really sure yet which way to harvest flower is best,” Mosher says. Manufacturers already are working with hemp producers like New West Genetics to address the harvesting issues and perfect the process. Hemp is adaptable to different environments, and New West is growing it from
Canada to South Carolina. Colorado’s dry climate is good for growing a plant to harvest its flower and seed storage. Wet climates have amazing soil and potentially higher yields but are not so great for storage. “We like Colorado because we’re familiar with it and have been participating with the regulatory matters here for the past six years,” Mosher says. “We love the yields from the Pacific Northwest, but you lose some stability with the moisture. It’s all give and take based on the environmental conditions and the regulatory atmosphere.” Mosher and New West Genetics are also out in front on the regulatory issues facing the hemp industry. “We want regulations in place to protect the consumer on the cannabinoid side,” she says. “There are so many bad actors who rushed in to make money, but they didn’t have safe practices. We support balanced regulation.” Mosher emphasizes (and then emphasizes again) that hemp seeds have no cannabinoids; the cannabinoids are created as the plant creates the flower. “It’s important for regulators to continue to hear that,” she says. That understanding has been a long time coming. “Half of our job is education,” Mosher says. “People are becoming more informed, and more people with expertise in different areas are entering the field. We’re all still learning though – no expert has all the answers.”
March/April 2020 | www.cocpa.org
How to Succeed at Succession: A Case Study
BY NATALIE ROONEY
Dalby, Wendland & Co., P.C., the largest public accounting firm headquartered in western Colorado, has been in business since 1948. The firm’s partners have cultivated a succession plan to make sure Dalby Wendland’s 72-year run stretches on indefinitely. Their leadership shares the firm’s story and how they’re succeeding at succession. WE DON’T HAVE IT ALL FIGURED OUT Chris West, CPA, Dalby Wendland’s CEO and principal, joined the firm in 1996, became a principal in 2009, and was named CEO in 2019. While it may sound like a natural career progression for West, it’s actually the result of a carefully orchestrated succession plan with decades of thought and planning behind it. In addition to tax, audit, business advisory, and client accounting services, Dalby Wendland provides specialized advisory services, including succession planning. The partners pass on their knowledge and experience with their own succession to their clients. “But we certainly don’t have it all figured out,” West says, explaining that while Dalby Wendland’s succession plan is a formal process with a lot of time and experience behind it, it’s also a process that’s continually evolving. “We appreciate what other firms are going through as boomer partners retire and the next generation is coming up. It’s a challenge. We’re feeling the same pain.” In fact, the firm is currently in the process of transitioning – from former CEO Greg Keller, CPA, PFS, to West. The process will be complete on June 30, 2020, when Keller officially transitions out and West becomes president and CEO. Keller has served as a transition president, bridging the gap between former president Steve Carver and West. “About six years ago, Steve was looking at retirement,” Keller explains. “That’s when we kicked off our succession planning process.” THE SPECIAL SAUCE Dalby Wendland’s leadership has discussed, but does not have, a mandatory retirement age. Rather, when an individual is ready to begin preparing for retirement, the formal succession process begins two years before they sell their stock. An announcement is made that the stock will be sold back and the deferred compensation plan will help fund the buyout. A critical part of the process is preparing what West refers to as a transferrable legacy. “When you retire, you are paid out a sum of money over ten years that is built up based on the value you create,” he explains. “Part of that value is highly dependent upon how well you transitioned clients prior to announcing your step down from partner status.” The succession process places great importance on transitioning clients so that other people – the up and comers – become involved in client relationships. “It’s imperative to train and develop the careers of others and to make sure clients are introduced and connected to others in the firm and
NewsAccount | March/April 2020
other service lines,” West says. “That’s the special sauce. Partners have to show they are building a transferrable legacy. Dalby Wendland needs to continue into the future, and the retiring partner needs to help make that happen.” Dalby Wendland doesn’t just pay lip service to the process of creating a transferrable legacy. West says there are teeth written into the deferred compensation plan. “You can get paid for ten years, but you could lose that if you don’t demonstrate you’ve done the work to build the transferrable legacy,” he says. “If you as a partner are keeping all the clients to yourself, letting them know only you, when you leave, that client will leave. That is a killer for the succession planning of a firm.” Ultimately, if the firm’s board of directors determines that a partner didn’t follow the transition process as it is mapped out, the partner’s ten-year compensation plan may be in jeopardy. “We want to show clients we’re a team and not just a solo person,” West says. “Our board of directors saw the need to do this. I appreciate the forethought. The board knew we needed to have something in place that perpetuates the firm.” CALLING FOR BACKUP Keller says the firm had done good succession planning in its individual offices, but from a firm-wide standpoint, it was siloed. “We were four separate offices, each doing its own thing, not sharing procedures. That needed to change. We needed to act as one firm, sharing work.” To accomplish that goal, Keller sought expert advice. With the board’s blessing, the firm worked with Upstream Academy which helps firms get the most out of their structure and build the best clients. “We spent a couple of years going through that process and building our new strategic plan,” Keller says. “That led to the transition from Steve to me to Chris.” The Carver – Keller – West transition has taken place over the past six years. In addition to working with Upstream Academy, the firm held many internal, principal, and shareholder meetings. “We wanted input from all levels, working to understand the process and figure it out,” Keller says. “This has been a significant topic of discussion for the last four years. Everyone knows the big picture, including at the staff level. Everyone appreciates being involved and knowledgeable.”
West says the collaborative approach Dalby Wendland took was helpful, talking to peer firms at conferences, and then asking, “What works for us?” In addition, the firm worked with attorneys well versed in different compensation plans to stay in line with any legalities. “We wanted to be sure we were thinking about the big picture and the types of things we wanted to have in the plan.” TOP TIPS Wondering how to get started on succession planning? West’s top tip: “Start talking about it, and don’t stop!” He adds that as it has become increasingly difficult to hire and maintain good staff, succession planning means looking at your bench strength list, determining which managers are getting
“Really, just do it,” West encourages. “People say they need to do it, and then it never happens. It feels hard, and it is, but establish a peer group, get a consultant involved, and then actually get it done.” FOR FUTURE GENERATIONS The Dalby Wendland succession plan has changed in minor ways over the past 12 to 15 years. In fact, West says the firm is currently taking a fresh look at the plan and asking if it needs to change. “We’re looking at the next generation of leadership who will lead the firm in ten to twenty years and asking the hard questions. Will they be excited by the plan that exists now? Should we be making significant changes?”
“Do you have enough first-year people this year so that you’ll have enough three-year people in three years?” closer to becoming principals, which supervisors are getting close to becoming managers, and which seniors are getting closer to becoming supervisors. “You have to be thinking about the rookies you’re bringing in,” he says. “Do you have enough first-year people this year so that you’ll have enough threeyear people in three years? It’s a challenge, but you have to be constantly going through the process, or you’ll find holes. We’re doing it all the time, and we still find holes. This is why a lot of firms are bought or merge. They didn’t have the people to continue.” West also suggests: • Develop peer relationships with firms, the same size or larger, that have figured out the process. • Engage a consultant and be willing to pay. Consultants can help you start thinking about things and even take you to the next level. • Talk to your next generation of leaders. Don’t keep this at the partner level. Talk to your up-and-comers who show potential. Take their pulse as to what motivates them. What attracts them to becoming a partner? • Create a succession plan that incentivizes and encourages partners to do the things that truly build a transferrable legacy in the firm. That involves annual reviews of partners and peers, upward and downward, and holding partners accountable.
West says the firm is confident that the base plan will continue to have the hallmarks of the plan already in place, especially building a transferable legacy and the role the partners play in ensuring the firm perpetuates itself through managing clients, building skill sets, growing the people, and collaborating. West adds that the firm always is looking at the technicalities, dollars, and formulas built into the current plan and asking if anything should change. Should it be simpler? More attractive to the next generation? “The topic is on our board agenda and shareholder retreats at least once a year, and more likely, two or three times a year,” West says. “This is not a static document. It’s always a topic of discussion.” Keller says he and West continue to talk about the process, even as they approach June 30. “If you’re doing succession right, you’re doing it every day,” Keller says. “It’s not just succession of the client contact. It’s a succession of our knowledge. We’ve got to teach the young kids what someone taught us.” More than a decade ago, a larger firm wanted to merge Dalby Wendland into its practice. The decision ended up being no. “We decided not to pursue the merger because we wanted to continue the Dalby Wendland legacy,” Keller says. “We’ve been around more than 70 years. We thought we had what we wanted right here - and we want it to continue well into the future.” March/April 2020 | www.cocpa.org
Flexible Time Off: Could It Work For You? BY NATALIE ROONEY
n recent years, flexible time off policies (FTO) - allowing employees to take time off when and how they need it - have become more popular.
While the policies are still rare in Corporate America – just one to two percent of companies offer the benefit, according to the Society for Human Resource Management (SHRM) – the perk is starting to seep into industries outside Silicon Valley, where FTO first took hold. Gallup’s 2017 State of the American Workplace Report showed that 53 percent of employees say it’s “very important” to have a job that allows them greater work-life balance and personal well-being. Research from Glassdoor shows that nearly 80 percent of workers prefer additional benefits over income increases. Ninety percent of millennials say they prefer benefits to pay raises. To address these statistics, Grant Thornton LLP introduced its FTO policy in November 2015. “It was part of our strategic priority to attract and retain talent,” says Lori Davis, CPA, managing partner of Grant Thornton’s Denver office. Grant Thornton was the first of the top ten public accounting firms to launch a flexible PTO program. At the time, the firm was going through what Davis calls a culture journey – being intentional about the company’s culture and values. “We really want people to live those out by bringing their whole selves to work,” Davis says. “To do that, we needed to offer a benefit that would meet the needs of our people and also give us a way to attract and retain talent. We thought this would be a good way to give our employees flexibility and still get their jobs done.” In 2012, CLA rolled out its FTO policy to managers, directors, and principals. “We wanted our people to have the flexibility to decide how and when to use their PTO. We trust our team members to choose the amount of flexible PTO they need for personal obligations, while still meeting the needs of the firm. Above all, we expect team members to use their time off to refresh, reenergize, and take care of their personal and family wellness,” says Barbara Nevin, CLA Director of Wellness. In 2017, based on the success of the pilot program, CLA expanded its flexible PTO policy to include the firm’s exempt team members. “At CLA, we encourage our people to build their inspired careers - they’re
NewsAccount | March/April 2020
of workers prefer additional benefits over income increases. empowered to make choices about their career paths, experiences, and more. That means we also want our people to have the benefit of choosing how they manage their home and work lives. The flexible PTO policy provided a new way for CLA to attract and retain talent,” Nevin says. HOW IT WORKS At the beginning, Davis and Nevin both say there were a lot of questions about how the programs would work. “Since it was so new, people didn’t understand it at first,” Davis says. “We had to provide a lot of very intentional communication, not just from our national office but on the local level as well.” Partners and senior managers made sure they were meeting with teams. “There was actually a concern that people would take less vacation if it weren’t a set amount they had to take,” Davis adds. The concern was a valid one. Research compiled by Sage Business Researcher showed
that companies offering unlimited vacation found that in many cases, an unlimited policy actually encouraged employees to take less time off. Other research shows that FTO may even create competition to take fewer days off. “If you tell people they have three weeks of vacation, they track it and make plans because they don’t want to lose it,” Davis says. “FTO took that away. There was no way for them to lose it.” At first, Nevin says some struggled with the idea that there was no “bank” of hours or set number of PTO weeks. “People still wanted to know how much time they could take off,” Nevin says. Nevin emphasizes that flexible PTO isn’t unlimited PTO. The focus is on flexibility. Team members sit down with a supervisor to discuss when they want to use their PTO and determine how they’ll also meet the needs of the firm. “We want to create opportunities for our people to live well and be happy, and flexible PTO is designed for that. Someone might take more time this year for a wedding or a death, a life event, or a big trip. Next year, they might take a little less. We find it evens out over time. We have a culture of trust,” Nevin says. Grant Thornton and CLA both have formal processes in place to manage their FTO policies. At Grant Thornton, employees request their desired time off and then meet with managers of their current jobs to figure out where they’re scheduled, how work might be shifted, or how someone else could help cover the time. “It’s about controlling your own work environment and workload along with your manager,” Davis says. “It takes an enormous amount of communication.” The system is even designed to accommodate employees who want or need to take time off during tax season. “They work with their managers and are transparent with clients,” Davis says. “We want to make sure we can still serve clients.”
While it does take a lot of communication, Davis says the firm also recognizes how important it is to empower employees to control their destiny between their work and personal lives. “You can utilize FTO to do things that are very meaningful to you as an individual, so you’re refreshed and energized to be your best self at work.” At CLA, team members still code their hours in a timekeeping system, but there’s no set number of days that accrue and there is no bank of PTO hours. “Team members choose for themselves, consistent with the firm’s business needs, how much flexible PTO to use,” Nevin says. The time is requested, and employees are expected to exercise good judgment. “We encourage them to consider deliverables and deadlines when requesting their time off.”
“They know we trust them to do the right thing and manage their schedules with their managers in the right way.”
Nevin says during the rollout, they also explained what flexible PTO is not - it’s not a substitute for short-term disability or initiating a leave of absence. Flexible PTO also is not designed to be a schedule change – team members should not be coming in late or leaving early on a daily basis. “It really has been positively received,” Nevin says. “It’s a nice benefit we can offer people at CLA.” EXPERIENCING THE BENEFITS In the first year after implementing FTO, Grant Thornton saw its attrition rates drop significantly – ten basis points. Davis says the firm doesn’t know if it’s solely attributable to the FTO policy since it was going through its culture conversion at the same time. “But there was a definite impact on our retention and actually attracting talent,” she says. “We talk a lot about the FTO policy when we recruit on campuses. It’s attractive to this generation. They have things outside of work they want to accomplish. Knowing they have this flexibility and empowerment to get their job done and do what they want to do outside of work is attractive and helpful to our recruiting.” While for the most part, Davis says the policy has been very effective, there were a few hiccups at the start that stemmed mostly from miscommunication. “We needed to be sure people were getting the right requests to the right people and that everyone on a team was aware of what was going to happen for people to take their FTO,” Davis says. Overall, Davis says the benefits have outweighed any negatives. “There were a few very isolated incidents,” she says. “Those
helped us shape the process moving forward.”
ideas fit our culture and needs. We want to hear from them.”
Davis adds that the level of trust the FTO process has built between the firm and employees has helped overall employee engagement. “They know we trust them to do the right thing and manage their schedules with their managers in the right way.”
As a member of Grant Thornton’s national board, Davis says the firm is looking at how technology is changing public accounting work – specifically how audits are done. In the future, she says there will be less emphasis on charging by the hour and a move toward the value delivered.
WHAT’S NEXT? FTO seems like the greatest thing ever so what could possibly be better? The next idea may come from employees themselves. CLA’s CEO Denny Schleper encourages team members to reach out and share their thoughts. “We ask our CLA family to bring us their ideas,” Nevin says. “We’ll see if those
“There’s a lot of discussion about value versus time-based billing which will again change how we assess and evaluate our people,” Davis says. “It will become more about the value we bring and may offer even more flexibility. We’re not there yet, but we can see those changes coming.”
March/April 2020 | www.cocpa.org
APPLAUSE OR STANDING O:
Keys to Effective Nonprofit Board Presentations BY NATALIE ROONEY
When Steve Corder, CPA, CGMA, managing director and shareholder of Kundinger, Corder & Engle, P.C., Denver, asked his mentor, Tom Kundinger, how to make it to partner, Kundinger gave him sage advice. “He told me you need to be an effective communicator to rise to the top,” Corder says.
ut Kundinger’s advice didn’t end there. “He also told me I needed to teach and learn, know the materials, and communicate an understanding to others,” Corder adds.
Corder flew off to New York City to attend a three-day class about how to be a good instructor. He soaked up the information and began teaching for the firm, the COCPA, and clients. He hasn’t stopped since. He still meets and presents to a large percentage of the firm’s 160 clients every year. So, when Steve Corder offers you advice on how to effectively present to a board, you should listen. LEARNING FROM EXPERIENCE Corder has been on both sides of the table as a presenter and a board member. For the past three decades, KCE has provided audit and tax services exclusively to metropolitan Denver nonprofit organizations. Corder himself sits on boards, and he has had plenty of opportunity to see the good, the bad, and the ugly when it comes to audit committee presentations. He offers some suggestions to make sure your audience is getting your message and understanding it, as well. Be Prepared Being prepared sounds so obvious, but you’d be surprised how often people aren’t actually prepared, so knowing your materials backward and forward comes in at the top of the list.
Tell Your Story In addition to being prepared, Corder encourages thinking a little more deeply about what you’re going to say. “Know the important things you want to communicate,” he says. “Ask yourself, ‘what’s the story I need to tell?’” What can catch a nonprofit board’s attention? You’re in a heap of trouble; here’s why you’re bleeding; you have no cash and no money coming in. And there’s the classic: You’re darn near flat broke. “You hope none of these come as a surprise,” Corder chuckles. “But the point is you need to know the important things you need to convey.” Presenters from KCE’s team hand out bullet points of their presentations. Corder refers to the practice as their secret sauce. “We go through the list point by point, and we tell a story,” he says.
Practice, Practice, Practice Corder has younger team members prepare and then give a practice presentation to him. “We talk about what is important for these board members to know,” Corder says. He emphasizes the WIFM approach (What’s In it For Me?). “Generally, we’re presenting to volunteers. They’re leading busy lives. They don’t have time to waste. Cut to the chase, tell them what’s important, and get on with it.” Don’t Read from the Materials One of Corder’s biggest pet peeves is presenters who read straight from their prepared materials. “I’ve seen great auditors give some of the worst presentations,” he cautions. “Don’t read from your materials. Keep your head up. Look people in the eye. Move your glance around. Don’t read an audit opinion verbatim, especially if you’re presenting to other financial professionals.” Know Your Audience What do they know, and what don’t they know? While there are a lot of smart people out there, most of them are unlikely to be experienced in the nonprofit realm. What do they need to know? Because nonprofits are evaluated on how they spend their money, Corder suggests using various metrics to explain the client’s program spending ratio, the overall norm for charities, and the benchmark for their peer group/industry.
“The numbers give context to help them benchmark even if they don’t understand the nonprofit world.” 22
NewsAccount | March/April 2020
“Metrics are good because there are often a lot of savvy business people in the room,” Corder says. “The numbers give context to help them benchmark even if they don’t understand the nonprofit world.” Metrics also help the nonprofit newbies understand what benchmarks are important. For example, a standard number for nonprofits is raising at least $3 for every $1 of fundraising expense. “Board members often aren’t aware of that, and it can be an ‘aha’ moment,” Corder says. Less Can Be More This is the next step up from knowing your audience. Corder says finance committee members likely will have a higher tolerance for in-depth, longer presentations if the presentation is interesting. “Some people really get into it,” he says. “They’re comparing this organization to one they’ve worked with before and are using as the norm. It generates good discussion. They soak it all up.”
But there also are boards which just want you to communicate the high-level information in five or ten minutes so they can move onto other board matters. Read the Room Did you notice that guy sitting beside you, looking at his phone? Or the woman about to nod off? If you’re seeing any of this – and if it’s happening, you should be seeing it because remember, you’re supposed to be scanning the room – you’re losing your audience. “Read the room,” Corder says. “As you’re speaking, look at everyone. Are they engaged, or are their eyes rolling back in their heads? If that’s happening, be prepared to change things up.” Don’t Be Monotone Bueller? Bueller? Bueller? Anyone? Anyone? If you don’t have any voice inflection, it’s time to get some. Corder says a big mistake novice presenters make, along with reading the presentation, is failure to change the pace. “It leads to a terrible discussion,” he says. “Why
not have a big statement with a little bit of excitement, and then back off a bit. It engages an audience. You capture them.” LEVEL UP Back in the day, Kundinger offered Corder some motivation before he went into a presentation by saying there were three levels of achievement to attain: • Level One: Applause. “He told me if you finish and they clap, that’s great,” Corder says. • Level Two: Standing Ovation. “Tom told me that only happened to him once,” Corder says. • And then there is Kundinger’s Level Three. That’s when they hoist you onto their shoulders and carry you out of the room. “That’s how he wanted me to think going into presentations. Go for Level Three,” Corder exhorts. “I still think about that every time I give a presentation.”
Working together to make a
difference 40TH ANNUAL
May 19, 2020 • Denver or Webcast • CPE: 8.0 Register at COCPA.ORG/NOTFORPROFIT March/April 2020
Depression and the CPA BY MARK J. COWAN, CPA, J.D.
Challenges associated with mental illness can be overcome with the right help. Here is one professional’s story.
o matter where you work, there is a good chance that depression is right in front of you - in yourself, a colleague, a friend, or a client. Most of us don’t see it, and, if we do, we don’t talk about it.
I write about depression, not as an expert on mental health, but as an accountant who lives with it. I have the low-grade, chronic kind known as persistent depressive disorder or dysthymia. But I have also experienced major depressive episodes when the symptoms are much harder to bear. I am, reluctantly, sharing my experience because I have not seen much discussion of mental health issues within the accounting profession. Mental illness is common (see the sidebar “Depression: A Common Mental Disorder”). In the United States, per the National Institute of Mental Health (NIMH), in 2017 nearly 20% of adults lived with a mental illness; 7.1% of adults had at least one major depressive episode; and suicide was the 10th-leading cause of death. THE NATURE OF DEPRESSION The World Health Organization defines depression as: [A]n illness characterized by persistent sadness and a loss of interest in activities that you normally enjoy, accompanied by an inability to carry out daily activities, for at least two weeks. In addition, people with depression normally have several of the following symptoms: a loss of energy; a change in appetite; sleeping more or less; anxiety; reduced concentration; indecisiveness; restlessness; feelings of worthlessness, guilt, or hopelessness; and thoughts of self-harm or suicide. Depression is a medical condition (see the sidebar “Information About Depression”) that is best treated by seeking professional help in the same way you would pursue treatment for other medical conditions such as heart disease or a broken arm. Unfortunately, a stigma lingers. Unless you have experienced depression, it is hard to comprehend what it is like. The symptoms may be different for others than they are for me. Understandability and comparability are elusive because depression affects individuals in different ways. Brain chemistry, family issues, relationship conflicts, work problems, and a variety of other issues can coalesce in myriad ways. In my personal experience, depression arrives without warning. When it leaves, I know its return is probable, but its timing
NewsAccount | March/April 2020
is not reasonably estimable. When I am depressed, I lose interest in things I once enjoyed, which causes me to discontinue operations and keep others at arm’s length. I lose my objectivity and experience what mental health professionals call cognitive distortions — where I irrationally view everything as negative. SILENCE, STOICISM, AND STIGMA Discussions of mental health issues in the accounting profession are scant. A study published in Psychiatric Rehabilitation Journal by Albert Woodward, Rachel Lipari, and William Eaton found that financial-related professions ranked 19th out of 32 occupations in percentage of major depressive episodes from 2005 to 2014. Mental-health-related discussions are easier to find in the legal and academic professions, which (like accounting) involve long hours, stress, and pressure. For example, the ABA Journal featured an article in which lawyers shared their experiences with depression (Jeena Cho, “The Many Faces of Depression,” April 2019), and The Chronicle of Higher Education covered the suicide of economics professor Alan B. Krueger (Emma Pettit, “A Prominent Economist’s Death Prompts Talk of Mental Health in the Professoriate,” March 19, 2019). Articles like these express three messages. First, highly accomplished professionals are humans; no amount of intelligence or success can shield them from mental illness.
Second, professionals need to talk more about mental health to remove the stigma and let others know that it is OK to seek help. Third, we need to watch out for one another and reach out if we think a colleague may be struggling. Like lawyers and academics, accountants are not immune from mental health problems. So why the relative silence? It is no secret that the profession tends to attract the stoic. Even accounting students show this trait. For example, when I put students in small groups during class, they appear anxious — until I assure them they will be solving problems, not discussing their feelings. Life in public accounting reinforces that stoicism. What stressed-out new associate hasn’t been told something like “that’s just the way it is,” “grin and bear it,” “we all go through it,” or “you wouldn’t be here if you couldn’t handle the pressure”? In our earliest professional experiences, we learn not to complain.
Embedded in a culture where mental health issues are not discussed, CPAs might assess the inherent risk of a stigma and not seek professional help — even though they can do so confidentially. Meanwhile, the high-stakes pressure of busy season has the potential to cause accountants with depression to suffer even more at certain times of the year. At any time of year, an accountant with depression might think, “No one else seems to be having troubles; I am alone.” We need to make sure they know that they are not alone (see the sidebar “What to Do If You Are Depressed”). MY EXPERIENCE For me, depression slows everything down: walking, talking, thinking. I had depression for years but didn’t know it. Through childhood, college, public accounting, private industry, and academia, I would frequently feel down. I was never sure why; I just thought it was a personality trait. For years I would not even talk about it with my doctor, afraid of the stigma. Eventually, things got so bad that I decided to speak up during a checkup. I was prescribed an antidepressant, and within a few weeks my life changed. It was as if someone had turned the lights on. I felt better. And I felt fortunate; medications don’t always work, and sometimes the first medication prescribed doesn’t work, but another medication might. Although I was feeling better, I still felt embarrassed about having depression and taking the pills. I told hardly anyone. In hindsight it seems absurd, but I was even self-conscious when I would visit my pharmacy. Once, my doctor had called in a refill, but the pharmacy had no record of it. As I was discussing the issue with the phar-
some stresses and losses that resulted in a major depressive episode. It came in the summertime. My flexible summer schedule sometimes made it easier to deal with the depression, but the lack of distractions sometimes made it more difficult. When the episode failed to pass after a couple of weeks, I clung to the illusion that I could keep it a secret and deal with it on my own. Despite being exhausted, I could not sleep. I lost my appetite. For the first time in my life, my emotions were out of control. So much so that, while working, I sometimes had to retreat to the restroom or go outside to calm myself. I should have stuck to the former; when doing the latter, someone would inevitably ask me for directions. While sunglasses hid my red eyes, there was no cover for my brittle voice when I dutifully explained how to get to a local park. Like all CPAs, I knew the importance of both disclosure and confidentiality. I chose the easier path of confidentiality. I was embarrassed and didn’t even want to discuss my troubles with my closest friends. When walking into work one day a colleague asked how I was doing. I gave the boilerplate answer: “fine.” I must have done a poor job hiding the substance beneath the form because she then asked, “Are you sure you are OK?” I assured my colleague that I was. In reality, I was not. Desperate, I finally called a trusted friend. It was painful to reveal what I had been going through, but my friend was incredibly supportive. His assessment was blunt: “Mark, you are in need of care.” I was thunderstruck. But hearing the truth put so starkly induced me to take action.
His assessment was blunt: “Mark, you are in need of care.” I was thunderstruck. But hearing the truth put so starkly induced me to take action. macist, a neighbor — a wonderful but nosy person — came up behind me and joked with the pharmacist: “Don’t believe him! He’s just trying to score drugs!” Before I realized my neighbor was there, the pharmacist mentioned the name of the medication. Foolishly, I felt ashamed. Still, I was feeling better than I ever had. It didn’t last. A few years later, I experienced
I reluctantly started therapy. While the self-examination that was part of the process was challenging, the therapy, combined with a change in medication, gradually helped me improve. Because of therapy, I have a new perspective, and I am better equipped to understand and manage my depression.
DEPRESSION: A COMMON MENTAL DISORDER Depression affects people of all ages and all circumstances, according to the World Health Organization, which has published the following information about depression: • The risk of becoming depressed is increased by poverty, unemployment, life events such as the death of a loved one or a relationship breakup, physical illness, and problems caused by alcohol and drug use. • Depression causes mental anguish and can affect people’s ability to carry out even the simplest everyday tasks, with sometimes devastating consequences for relationships with family and friends. • Untreated depression can prevent people from working and participating in family and community life. • At its worst, depression can lead to suicide. • Depression can be effectively prevented and treated. Treatment usually involves either a talking therapy or antidepressant medication or a combination of these. • Overcoming the stigma often associated with depression will lead to more people getting help. Talking with people you trust can be a first step toward recovery.
PROFESSIONAL SKILLS FAIL US I learned the hard way that a CPA mindset is of no use in fighting depression. My therapist frequently told me to “stop thinking like a tax accountant.” CPAs are habituated to seeing tangible results from hard work. The harder we work, the more billable hours we generate, the more problems we solve, and the more knowledgeable we become. We are rewarded with raises, bonuses, promotions, job offers, and the esteem of our clients, colleagues, and community. Furthermore, CPAs are adept at using procedures, flow charts, frameworks, worksheets, rules, and checklists to solve problems and make sense of chaos. We sift through shoeboxes of receipts CONTINUED ON PAGE 26 March/April 2020 | www.cocpa.org
HUMAN RESOURCES CONTINUED FROM PAGE 25 to extract relevant documents and discern meaning. We translate the messy world of commerce into the language of business. It is easy to see why many CPAs believe, as I once did, in the myth that analytical people can solve their own problems. As if depression were a new accounting standard to apply, a deal to structure, a tax return to prepare, or a messy problem to solve. Depression cannot be cured by following a checklist. It does not follow a linear path or adhere to the periodicity assumption. Cognitive distortions will thwart efforts to work, will, or reason our way out. We cannot recover from depression by leaning on our professional skills. If you often feel down or otherwise think something is wrong, talk to a trusted friend and to your doctor. Don’t put it off as I did. Don’t be afraid to seek help. Doing so may not seem ordinary, but it is necessary. Per the NIMH, approximately 57% of adults with a mental illness don’t receive professional help. In this respect, many CPAs are fortunate that at least one potential barrier to care is removed. Many of us have financial security, insurance plans, and employee-assistance plans. In many cases, those of us who need help have the means to pay for it. And in the case of urgent distress or a crisis, the National Suicide Prevention Lifeline (800-273-8255) provides free, confidential support. IT’S TIME TO TALK The profession as a whole needs to talk more about mental health in general and depression in particular. Doing so would help remove the stigma and help CPAs who are suffering in silence know that they are not alone. The reality that CPAs get depressed and sometimes need help must become generally accepted.
At the individual level, we need to be looking out for one another. Although our professional skills won’t help us address our own depression, they can enable us to help others. CPAs pay attention to detail, exercise skepticism, and notice what others don’t. When it comes to the well-being of our colleagues, we all must become auditors. We must listen and watch to see the pain behind the smiles and encourage those who are struggling to get professional help.
CPAs pay attention to detail, exercise skepticism, and notice what others don’t. When it comes to the well-being of our colleagues, we all must become auditors. The truth is there is no accounting for the darkness of depression. The professional toolkit that has helped us succeed in our careers will fail us. But if we seek help when we need it, and help others do the same, we can find a path to the light and ensure that each of us remains a healthy and thriving going concern.
IF YOU ARE DEPRESSED Depression is a common illness that fortunately can be treated. Here is what you should do if you think you are depressed, according to the World Health Organization: • Talk to someone you trust about your feelings. Most people feel better after talking to someone who cares about them. • Seek professional help. Your local health care worker or doctor is a good place to start. • Remember that with the right help, you can get better. • Keep up with activities that you used to enjoy when you were well. • Stay connected. Keep in contact with family and friends. • Exercise regularly, even if it’s just a short walk. • Stick to regular eating and sleeping habits. • Accept that you might have depression, and adjust your expectations. You may not be able to accomplish as much as you do usually. • Avoid or restrict alcohol intake and refrain from using illicit drugs; they can worsen depression. • If you feel suicidal, contact someone for help immediately. Mark J. Cowan, CPA, J.D., is a professor at Boise State University, where he teaches graduate and undergraduate courses on tax law. This article originally appeared in the Journal of Accountancy. ©2019 Association of International Certified Professional Accountants. Reprinted by permission.
INFORMATION ABOUT DEPRESSION • Common mental disorders are increasing worldwide, according to the World Health Organization (WHO). Between 1990 and 2013, the number of people suffering from depression and/or anxiety increased by nearly 50%. Close to 10% of the world’s population is affected by one or both of these conditions. For more information, visit who.int.
NewsAccount | March/April 2020
• Lack of treatment for common mental disorders has a high economic cost: New evidence from a study led by the WHO shows that depression and anxiety disorders cost the global economy more than $1 trillion each year. • The most common mental health disorders can be prevented and treated, at relatively low cost.
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Financially Fit Aging: Diminished Capacity and Your Client – Part Two BY AMY KING, CPA, CGMA
This is the sixth, and final, article in our series about helping your clients – and perhaps you and your family – prepare for the many aspects of aging beyond financial planning.
n the January/February 2020 NewsAccount, we covered information about diminished capacity, dementia, and the warning signs to look for in clients. In Part Two, we address how to work with those who may end up with diminished capacity. There are many sensitive situations to consider regarding privacy, risk, and family dynamics that can add to the complexity. How can you as a professional continue to serve these clients, protecting them while also protecting your organization? THE RISKS Sure, you could choose to ignore telltale signs of diminished capacity and continue on as usual – right up until the point that your client does something financially harmful. Or what if, due to a cognitive vulnerability, your client becomes a victim of financial exploitation or fraud? If the client feels you could have prevented it, or even the family/heirs feel you didn’t take action, this could result in potential legal action, a tarnished reputation, and most likely a lost client. This doesn’t have to happen. BE PROACTIVE Aging and cognitive decline are not a single event; this is a process over time. Don’t wait until it’s an issue – be proactive and start communicating with clients about it now. • As a starting point, firms should develop a senior client program and identify policies to help both the firm and clients navigate
through the situations that arise and mitigate risks for all parties concerned. A small workgroup is perfect to start this endeavor. The group could include individuals from compliance, risk management, and the legal department, and, if you have someone, a specialist in aging. • For existing clients, identify those who warrant tailored attention. This could be all clients over 65 or clients who are vulnerable (i.e. no family members, single, widowed). Make it a policy to have minimum items in their client file. - A trusted contact (not necessarily with fiduciary powers) - A listing of the client’s durable Power of Attorney/copy of document - Beneficiaries - Successor trustees • Going forward, pick a specific life milestone to introduce the topic of the future and aging (for instance in new client engagement meetings or hitting a milestone such as age 50 or 65). Since the subject matter can be sensitive and hard to broach, indicating that it is standard office protocol can make it just a part of doing business. It can indicate to a client that you are truly a partner in his or her financial life, looking out for financial interests, and being transparent about aging issues. • Increase frequency of communication. Check in more often than usual, just to hear how things are going and discern any changes.
RED FLAGS CHECKLIST • Pattern of not remembering discussions or contacting you several times and not remembering previous episodes • Frequently repeating questions and trouble understanding your responses • Having trouble understanding basic financial concepts, financial terms, or math concepts • Unable to follow basic directions • Difficulty performing familiar tasks or simple tasks such as signing a form • Showing disorientation (place and time) when they come into your office • Problems with abstract thinking
NewsAccount | March/April 2020
• Changes in mood or behavior, personality – unusual, or erratic, outbursts, anger, or withdrawn – anything out of the individual’s normal character • If you happen to find out they are forgetting to pay bills or other financial obligations • Difficulty in speaking or writing words • Increased disorganization – this may appear with scheduling – they forget an appointment, or when they come in they aren’t sure why they are there or for what purpose • Change in appearance – looking disheveled, unkempt, change in hygiene
RESOURCES • North American Securities Administrators Association (NASAA) • Consumer Financial Protection Bureau (CFPB) • Financial Industry Regulatory Authority (FINRA) • National Adult Protective Services Association • U.S. Securities and Exchange Commission Office of the Investor Advocate
Be in contact frequently and consistently. Refer to the red flags checklist at these moments to compare their behavior with warning signs. • Document observations and notes from meetings and conversations. This builds a client history and can be critical in identifying patterns. It also can provide a benchmark to determine if things have markedly changed. • Document client goals and values in your meeting notes. This can help you recognize when something comes up out of the blue that seems inconsistent with the usual pattern of behavior. • Get to know your clients’ family members, develop connections, and build trust with them. If no immediate members exist, or negative dynamics are in play, suggest the client consider outside parties they can utilize as their trusted fiduciaries. HOUSTON, THERE IS A PROBLEM If a client is suspected of having capacity issues, what happens next? It helps to have options outlined in advance versus in the heat of the moment. Develop parameters that guide staff on how to respond when they suspect a client is having issues: • What are the escalation parameters? • Is it a series of events, or a certain magnitude that may trigger moving up the management chain? • Who in the firm should be involved in reviewing and confirming the matter? Actions to take: • Suggest some testing or medical diagnostics. • Ask to bring a trusted family member or advocate in for meetings. • Consider if it is time to invoke a client’s financial power of attorney. • Or with exploitation and fraud, is it time to report to outside agencies? • Consider adding an authorization document whereby the client gives advance consent for the firm to contact the designated
fiduciary or family member if signs of diminished capacity are observed. Some firms have added language that if the client refuses to sign such a document, the firm is held harmless from any potential legal claims. One of the most sensitive issues is client privacy. You have a duty not to divulge personal information, but you also have a duty to protect the client. Make sure you understand your organization’s privacy policies, state policies, and what information you are able to share with third parties. TRAINING Firms should train employees and staff not only on the policies and procedures developed as part of a senior client program but also on various aging issues in general. Training will enable individuals to help recognize situations earlier and be able to support clients through later life stages. Topics can include: • Identifying warning signs for diminished capacity, dementia • Components of elder exploitation, fraud schemes • Working with complicated family dynamics • Communicating with elder clients • Working with regulatory agencies, state and federal authorities If you haven’t dealt with diminished capacity in your clients, you will. As an accounting and finance professional, you can help them manage through the complexities that it brings, without having to end the relationship due to risk. Advance planning for potential issues can make a world of difference, and developing a protocol within your organization should be a top priority - it is not something that happens overnight. Amy King, CPA, CGMA, is a wealth advisor with RubinBrown Wealth Advisory Services Group, Denver. She is a member of the COCPA Financial Literacy Committee and counsels clients about the choices available to them as they age. Contact her at firstname.lastname@example.org. March/April 2020 | www.cocpa.org
Stop Itemizing Everything and Move Beyond Competition BY DANIEL BURRUS, CEO, BURRUS RESEARCH
uman beings are competitive in all circumstances, and this has only intensified in today’s predominantly technologically advanced world. No matter the industry or particular field, competition is fierce, and regardless of what you and your organization do in terms of products or services, there’s inevitably someone else offering a competitive alternative. In that case, your goal becomes to “beat” or outdo those competitors, whether that means greater sales, more customers, or some other benchmark relevant to your industry. But what if you could move beyond the idea of competition and no longer needed to see the competition as “competition,” necessarily? Would this be a bona fide game changer for you and your business, allowing you to move your organization past an “us versus them” struggle and into innovation without a constant knee-jerk comparison to what others in your industry are doing that you might not be? This can happen, but it involves unplugging a well-established mindset and developing an anticipatory outlook that both redefines and reinvents what you do. COMPETITION IS DANGEROUSLY SYNONYMOUS WITH DISASTER There are dozens of real-world examples of organizations that tried to compete, only to encounter enormous problems and often disaster because of it. A whole industry tried to compete by way of lawsuits when the Internet spawned the ability to download music, which translated to individuals feeling as though their favorite artists were suing them for being diehard fans who wanted nothing more than easier access to their favorite music. Meanwhile, Apple debuted iTunes, which was redefining the idea of buying music through the convenience of purchasing single MP3’s as opposed to whole albums, combating illegal downloads. Years later, Spotify capitalized on this turbulent industry by streaming music for a subscription fee.
NewsAccount | March/April 2020
In so many words, while industries as big as the music and entertainment industries hunkered down in competition, others were using redefinition and reinvention to move well past that. Moving beyond the idea of competition through reinvention and redefinition doesn’t involve a mere tweak to an existing product or service or some other variation on a theme. It means complete, utter change – a one-way move into the future, with no doubling back or second-guessing the plan. Looked at another way, the music industry debuts hundreds of top singles every year via the Internet and streaming services, which simultaneously gives individuals the opportunity to listen to said singles as many times as they’d like. Another arm of the music industry still surprisingly alive and trying desperately to win through competition is the world of mainstream radio. Even the initial draw of offering talk shows is being replaced by podcasts found on Spotify as well. There’s no way you’re going to sit and wait for hours by a radio to hear your favorite song again. CHANGE THE DEFINITION OF BENCHMARKING Competition inherently invites comparison and the idea of benchmarking or itemizing everything you do in comparison to the competition. Another person or organization is offering this product or service or has reached a certain level of sales, causing you to note those comparatives and focus only on exceeding them. The problem is you may be inadvertently limiting your success by way of benchmarking against a lackluster product or service, causing you to continually fall behind as competitors move on to something much greater. Anticipation allows you to jump far ahead of what may be considered conventional benchmarks by paying attention to the Hard Trends shaping your industry from both inside and out. In effect, it allows you to ask yourself, “How can I completely remake
something instead of merely changing it - and, in so doing, move beyond merely competing?” Here’s an example. One definite hard trend is convergence—things of all sorts coming together, from products capable of a greater number of functions to entire industries converging. That leads to all sorts of anticipatory-focused questions. What products does your organization offer that could benefit from convergence and, in effect, move beyond competition? One could speculate that Spotify may replace Sirius satellite radio in automobiles one day, where you don’t even need your smartphone to play music from your Spotify account in your car. Further, how will your industry be affected by convergence, and what resulting opportunities can you anticipate? Using my example in the previous paragraph, how would Spotify benefit from that type of convergence with automobiles, and how would that leave some sort of gap in the business of smartphones and mobile devices? The anticipatory mind-set moves you and your organization past the simple, limiting one-upmanship of competition by redefining and reinventing. 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, email@example.com, for information on the program. Reprinted with permission.
BY JENNIFER H. ELDER, CPA/CFF, CGMA
orking for a construction business through Florida hurricanes has made Jennifer Elder, CPA/CFF, CGMA, an expert in disaster recovery and business continuity. She offers these tips for organizations. Understand the necessity and the objectives. “It’s sort of a false sense of security when people say, ‘This will never happen to me,’” Elder says. A disaster plan should outline a two-part process. The first part involves boarding up windows, making sure employees are safe, and taking steps to minimize the immediate damage. The second part should describe business continuity. “Now you figure out how to get back to [your] normal level of business,” she says. Consider the most likely scenarios. These may not be natural disasters. “Right now, for every company, the most likely disaster ... is an IT disaster,” Elder says. “What happens if you get hit with malware or ransomware? What happens if there’s a power outage, and you can’t access your computer database? ... Everybody should have a plan for
“Right now, for every company, the most likely disaster ... is an IT disaster” that.” Forming a team from various parts of your organization can help you brainstorm for possible scenarios and determine the biggest risks. Assess your operations. Decide what’s truly critical and make plans to protect it in various scenarios. “As much as I’d love to say the
accounting department in an organization is critical, if you’re trying to recover from a disaster, it’s probably not your number one focus,” Elder says. Your response strategies will differ depending on the nature and likelihood of the risk and the potential threat to critical operations. “We can ignore them. We could defend against them. We can insure them. Or we can just plan for a response. So we need to tailor how we respond.” Put your plan in writing. The plan can be simple. “Disaster planning doesn’t have to be a monstrous event,” according to Elder. “This doesn’t require a consultant. This doesn’t require a plan that’s a hundred pages long.” It’s natural for people to panic or feel great stress when a disaster strikes, and this can have a negative effect on decision-making. A written plan can help guide a rational response. Review your plan regularly — and test it, too. A friend of Elder’s saw power in a company’s building go out shortly after a generator was installed as part of a business continuity plan. The company hadn’t had time to test the generator when the building lost power. It turned out that the building was too large for the generator to handle, and it broke under the strain. “Testing your plan and making sure you haven’t missed anything is as important as putting it together,” she says. Editor’s note: This checklist was adapted from a JofA podcast, “Why You Can’t Wait to Prepare for Disaster,” May 6, 2019. Jennifer H. Elder, CPA/CFF, CGMA, is owner and president of The Sustainable CFO consulting firm. She is co-author of the book, Faster Disaster Recovery: The Business Owner’s Guide to Developing a Business Continuity Plan, available at aicpastore.com (#PMA1901P).
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MOVERS & SHAKERS DAVID M. DIRKS NAMED SCHOLARSHIP FUND Thank you to all who contributed to the scholarship fund established in memory of David M. Dirks, CPA, past COCPA president and Educational Foundation Board of Trustees president. Because of your support, worthy accounting students will receive much-needed financial assistance to pursue their accounting careers. BRIAN J. HOLLINGSWORTH, CPA, AND KELSA D. TINSLEY, CPA Brian J. Hollingsworth, CPA, and Kelsa D. Tinsley, CPA, Dalby, Wendland, & Co., P.C., Grand Junction, attained certification in Employee Benefit Plans Audit (EBP) from the Association of International Certified Professional Accountants. Hollingsworth obtained the Intermediate Employee Benefit Plans Audit Certificate, and Tinsley obtained the Advanced Employee Benefit Plans Audit Certificate. The certifications are designed for auditors with three to seven years of experience in performing EBP audits and ensure the recipient has the ability to plan, perform, and evaluate EBP audits in accordance with AICPA standards and Department of Labor and IRS requirements. To obtain certification, recipients must pass a three-and-ahalf hour examination. JILL TURNER Congratulations, Jill Turner, Peer Review Coordinator, on 30 years with the COCPA! Your dedication to member service makes a difference every day.
We extend our sympathy to the families and friends of the following COCPA members: Robert Leatherwood Member since 1972, Denver, Colorado Charles “Chuck” Lehman Member since 1959, Central City, Colorado Roger Nittler Member since 1960, Denver, Colorado Bruce Schilken Member since 1963, Littleton, Colorado
CLASSIFIEDS PRACTICES FOR SALE, PURCHASE, OR MERGER Selling your firm is complex! ACCOUNTING BIZ BROKERS can help! We have been selling CPA firms for over 15 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: Mesa County Gross $113k; Denver (Central) Gross $500k; Central Mountains CPA Firm Gross $123k; Arvada Gross $156k (Sold!). Kathy Brents, CPA, CBI, at 866-260-2793 or Kathy@AccountingBizBrokers.com, or visit our website at www.AccountingBizBrokers.com.
Careers At ACM, we work hard, play hard, and greet each day with optimism. This commitment is shared by each and every member of our firm – and it’s why we’ve been consistently recognized as one of the best accounting firms to work for in Colorado and across the nation.
CALL FOR APPLICATIONS The Governor’s Office of Boards and Commissions is looking for qualified candidates to fill positions that statutorily require Certified Public Accountants. Boards that require a CPA including the State Board of Accountancy, the Colorado State Fair Authority Board of Commissioners, the Limited Gaming Control Commission, and the Colorado Lottery Commission, among others. The Office of Boards and Commissions accepts all applications on a rolling basis, and applications are valid for two years. In the application, please note your status as a CPA in the “Memberships in Organizations and Offices Held” portion of the application. Contact the Office of Boards and Commissions at 303-866-5232. The application can be found at colorado.gov/governor/boards-commissions-application.
NewsAccount | March/April 2020
“ACM is a family. It’s an amazing group of people who bring their best to the table each and every day.” - melissa k. hooley, partner-in-charge, employee benefit plan services
“ACM encourages each employee to take on new challenges and grow professionally – all while being able to maintain a quality family life. -
dennis tschacher, partner
“I love working at ACM because we’re given opportunity for personal and professional growth. You can pick your own path and your own pace.” -
tim stueven, audit director
303.830.1120 ∙ www.acmllp.com/careers Denver ∙ Boulder ∙ Northern Colorado ∙ Laramie
TAX STUDY GROUPS
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Income Tax Regulations: Tax Cuts and Jobs Act Final, Temporary and Proposed Regulations Supplement By CCH Tax Law Editors List Price: $135.00
Product Number: 10071565-0002
Visit www.cchcpelink.com/cocpa to order with your COCPA member discount. Following publication of the Winter 2020 Edition of the Income Tax Regulations, the IRS issued additional Treasury Decisions and Notices of Proposed Rulemaking, many of which implement and interpret provisions of the Tax Cuts and Jobs Act. Due to the significance of such guidance for 2019 tax compliance and for planning purposes, Wolters Kluwer has published this Supplement to the 2020 Edition. Income Tax Regulations: Tax Cuts and Jobs Act Final, Temporary, and Proposed Regulations Supplement includes the text of final, temporary, and proposed regulations issued after Nov. 6, 2019, through Jan. 15, 2020. Final and temporary regulations begin on page 1, and proposed regulations begin on page 657. The Summer 2020 Edition of the Income Tax Regulations will include all final, temporary, and proposed regulations issued after November 6, 2019, through publication of the Summer Edition.
Boulder/Longmont Tax Study Group AT THE MEADOWS BRANCH PUBLIC LIBRARY
Wednesday, Mar. 18 This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd., Boulder, BYO Bag Lunch. For additional information, contact Lynn M. Mitton, CPA, MT, MPA, 303-499-7445, or email firstname.lastname@example.org.
Denver Tax Study Group AT THE COCPA OFFICE
Tuesday, Mar. 24 and Tuesday, Apr. 28 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 2020 Meeting Dates: May 19, Jun. 23, Jul. 28, Aug. 25, Sep. 22, Oct. 27, Dec. 8. Register at www.cocpa.org.
The AICPA Benevolent Fund was established in 1933 by AICPA members to assist other members through temporary periods of financial difficulty. When our members face difficult circumstances that are beyond their financial means, the Fund is here to help. Financial assistance grants are provided on a caseby-case basis, depending on financial need and circumstances surrounding that need. Some examples of the types of assistance available are temporary living expenses and temporary medical expenses. Onetime emergency grants also are available to help with natural disasters and other unexpected events. If you need assistance, simply visit the Benevolent Fund web page on aicpa.org and follow the instructions to apply. You may also contact the Benevolent Fund administrator via phone at 866.527.2228 or email at Benevolent_Fund@aicpa.org..
If you wish to make a charitable gift to the Benevolent Fund, visit our web page at aicpa.org/benevolentfund The Benevolent Fund is a 501(c)(3) organization.
March/April 2020 | www.cocpa.org
Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076
Make This Your FINAL SEASON! Bill Anecelle, CPA, MBA
Kevin Overberg, CPA/PFS, CFP
Sr.Practice Transition Consultant
Practice Transition Consultant
(303) 670-3623 Delivering Results One Practice At a time
800-859-8250 | www.APS.net