COCPA NewsAccount - September/October 2019

NEWSACCOUNT COLORADO SOCIETY OF CPAs • SEPTEMBER/OCTOBER 2019

Reaching Denver’s Development Goals PAGE 16

Women to Watch PAGE 7

The New Minimum Wage Law PAGE 21

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NewsAccount | September/October 2019

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Contents Features 4

CPA Evolution: Licensure in the Future How must the profession evolve to be relevant into the future while continuing to protect the public interest? That’s the question state CPA society, AICPA, and NASBA leaders are exploring.

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Last Comic Standing to Headline CPAs Make A Difference Critics have said Josh Blue is not a cerebral palsy comic; he’s a comic who happens to have cerebral palsy. Borrowing a line from the musical Hamilton, you’ll “want to be in the room” when Blue brings it, Nov. 7.

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Women to Watch: Leading By Example On August 23, six women were recognized for their leadership, mentorship, and contributions to the accounting profession and their communities.

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28 Departments

Reaching Denver’s Development Goals: Inclusive. Sustainable.

Connected.

The River Mile, slated for development at the current site of Denver’s Elitch Gardens, will be an urban district designed to be a “social catalyst.” It’s Canadian Rhys Duggan’s vision for creating spaces for all generations to enjoy.

The New Minimum Wage Law and Colorado Small Business The new law enables Colorado cities and counties to set minimum wages which would become effective, Jan. 1, 2021. Small businesses must decide what they’ll do in response.

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Asking for Help and Paying It Forward Last winter, Denver Public School teachers went on strike. Here’s how one family took advantage of the opportunity to do something meaningful with the down time.

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Financially Fit Aging: Getting Your Document Life in Order This fourth article in the series focuses on pulling together all those important documents now, before they’re needed for critical decision-making.

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Chair Column

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Movers & Shakers / Classified Ads

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In Memoriam

CONNECT WITH COCPA

Follow us on social media and hear about recent news and upcoming events!

September/October 2019 | www.cocpa.org

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CHAIR COLUMN

NEWSACCOUNT

A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 65, No. 3 September/October 2019

Slowing Down and Tuning into Change

Officers

Benjamin T. Hrouda, Chair Sharon S. Lassar, Vice Chair Christopher J. Telli, Treasurer Victor A. Amaya, Immediate Past Chair Mary E. Medley, Secretary

Directors

Kristine M. Brands, Toby Clary, Audra Dixon, Renny Fagan, Georgia Z. Phillips

At a time when every bit of news from the business world is screaming at us to move forward at the speed of light, use data or become obsolete, and accept that robots are going to start doing our jobs, I’m going to tell you to do the opposite – just for a minute – starting right now.

Editorial Board

Jack Allgood, Alan D. Bennett, Steve Corder, Peggy Jennings, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Ariana Cassard, Blue Ocean Ideas, Design NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave., Suite 200, Englewood, CO 80111. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication.

Membership dues include a $9.00 one-year subscription to NewsAccount.

Periodical postage paid in Englewood, CO, and additional mailing offices.

POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111 Net press run = 6,743 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,688; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 35; total distribution = 6,708; office use, leftovers, spoiled = 35; returns from news agents = 0; total sum = 6,743; percent paid and/or requested circulation = 99%.

303-773-2877 • 800-523-9082 Fax: 303-773-6344

NewsAccount is available online at www.cocpa.org.

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top. Take a deep breath. And let it out.

I get it. Change is hard. Change is challenging. Change is uncomfortable. But change also typically causes a metamorphosis into something far greater and better than we’d ever anticipated. How often after a particularly challenging time period, whether personally or professionally, have you reflected and admitted, “Yes, that was hard, and it certainly wasn’t pretty, but it was worth it.”

Right now, it’s time to start grinding through the tough stuff to get to the good stuff on the other side.

As I continue to talk about change in the profession, my fear is that it will be overwhelming for one or possibly both of the following reasons: you’re sick of hearing about it, or you’re scared of hearing about it.

My hope is that you won’t allow either to stop you, because the good news is that the COCPA is here to help you find your path and make your way.

You, the COCPA, and the accounting profession have been weathering change for

“Yes, that was hard, and it certainly wasn’t pretty, but it was worth it.”

decades. We’ve seen consolidation – Big 8, Big 6, Big 4, and the merger of countless regional and local firms. We’ve seen changes to how tax returns are prepared and by whom – remember when American Express and H&R Block burst onto the tax prep scene, alarming everyone? And how about the changes which resulted from Enron and Sarbanes Oxley?

What do all of these historical events have in common? CPAs changed and flourished. It’s what we do best.

The COCPA is already at the forefront, working with the AICPA, other state CPA societies, and CPE providers to help you acquire the knowl-

edge and skills you need, not just to get by, but to lead the charge by being open to change and new ways of doing things. I’m not saying the future will be easy, but it will be bright. And I’m reminding you that you’re not alone. You have a strategic partner in your COCPA. So, don’t tune out; tune in. And lean into the changes coming. We will work together to meet them head on and thrive.

Email Ben Hrouda at ben.hrouda@flywheelcap.com.

MOMENTS ON THE 2019 CHAIR TOUR

Roaring Fork August 6, Aspen

Western Slope August 7, Grand Junction

West Central August 8, Montrose

Four Corners August 8, Durango

San Luis Valley August 9, Alamosa

Northeast August 15, Sterling

September/October 2019 | www.cocpa.org

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FUTURE FORWARD

CPA Evolution: Licensure in the Future

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irst, a little history and context: In the late 1990’s, the AICPA and state CPA societies undertook an unprecedented, national effort to “enable the profession to create its future” through what was dubbed the CPA Vision Project. The process included a series of member forums held across the U.S., during which the top five core values, competencies, and services were identified. The core purpose - “CPAs making sense of a changing and complex world” - and vision statement were developed at the National Future Forum in January 1998, creating a blueprint for the profession’s evolution by 2011.

Roll forward to 2010, when members once again looked into the future, with an eye to 2025. The CPA Horizons 2025 report updated some of the original Vision Project elements.

And, while the core purpose, core values,

and core competencies continued to be relevant, members determined, “The services provided by CPAs have become so varied and diverse that the concept of core services is no longer representative of the profession.”

THE CPA VISION PROJECT

CPA HORIZONS 2025

Vision Statement - CPAs are the trusted professionals who enable people and organizations to shape their future. Combining insight with integrity, CPAs deliver value by:

Core Values: The essential and enduring beliefs that we uphold over time. Core Values enable us to retain our unique character and value as we embrace the changing dynamics of the global economy. They are: Integrity, Competence, Lifelong Learning, Objectivity, Commitment to Excellence, and Relevance in the Global Marketplace.

• Communicating the total picture with clarity and objectivity • Translating complex information into critical knowledge • Anticipating and creating opportunities

Core Competencies: A unique combination of human skills, knowledge, and technology that provides value and results to the user.

Enhancing our Core Competencies is key to sustaining a competitive and differential advantage in the marketplace. They are: Communications Skills, Leadership Skills, Critical-Thinking and ProblemSolving Skills, Anticipating and Serving Evolving Needs, Synthesizing Intelligence to Insight, and Integration and Collaboration.

• Designing pathways that transform vision into reality Core Values – Continuing Education and Lifelong Learning, Competence, Integrity, Attuned to Broad Business Issues, Objectivity Core Services – Assurance and Information Integrity, Technology Services, Management Consulting and Performance Management, Financial Planning, International Services Core Competencies – Communications and Leadership Skills; Strategic and Critical Thinking Skills; Focus on the Customer, Client and Market; Interpretation of Converging Information; Technologically Adept

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As noted in that report, “The research shows that the entire profession — from sole practitioners to medium and large firm members to members in business and industry to those in government and academia — has a bright future and will need to respond

NewsAccount | September/October 2019

“As the pace of change continues to accelerate, CPAs (must) demonstrate their ability to swiftly adapt and anticipate changes thus positioning themselves as leaders in advising clients and employers on how to adapt and respond.” quickly and competitively to the shifting ground on political, economic, social, technological and regulatory fronts.”

In 2019, leaders in the profession once again are asking, “How must the CPA profession evolve to be relevant into the future while continuing to protect the public interest?”

Today, the focus is on the need for licensure requirements to be as agile as the times.

That’s why the AICPA is collaborating with the National Association of State Boards of Accountancy (NASBA) to investigate if and how licensing requirements should change.

This past summer, state CPA society boards of directors and member groups across the country discussed five principles that may shape a new CPE licensure model (visit cocpa.org/Five-Principles). You can find more detail in this podcast episode from the Journal of Accountancy (visit cocpa.org/JOA-licensure).

While the feedback period ended in August, you’re encouraged to check out evolutionofCPA.org for answers to frequently asked questions about the initiative.

CPAs make a DIFFERENCE

2019 HEROES & HEROINES SOUGHT Nominations Deadline: September 20

Each and every day, away from the headlines, in businesses large and small across Colorado, and in others’ lives, CPAs make a difference. We will honor those contributions with the 2019 Everyday Heroes and Heroines Awards, to be presented at the CPAs Make A Difference Celebration, Nov. 7, at the Grand Hyatt, 1750 Welton St., Denver.

If you know a CPA who should be considered, please submit a nomination. Send a narrative, not to exceed three pages, explaining why you believe the candidate should be recognized and detailing his or her accomplishments.

Josh Blue to Headline 2019 Celebration

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ollowing his groundbreaking win on NBC’s Last Comic Standing in 2006, Josh Blue has risen through the ranks to become a well-established headliner at venues throughout the world.

In 2018, Josh crushed his set on The Tonight Show Starring Jimmy Fallon. In the same year, he was honored with a performance at the William H. Macy Gala at the prestigious Just for Laughs Comedy Festival in Montreal, Canada. Josh wrapped up 2018 by recording his fifth hour special at his home club, Comedy Works, in Denver, Colo.

Josh does over 200 shows a year, continuing to spread laughter and break down stereotypes of people with disabilities. His stand-up routine is in a constant state of evolution and his off-the-cuff improvisational skills guarantee that no two shows are alike.

Critics have said Josh is not a cerebral palsy comic; he’s a comic who happens to have cerebral palsy.

Join Josh for an unforgettable evening, Nov. 7, at the 2019 CPAs Make A Difference celebration, to be held at the Grand Hyatt, Denver. Everyday Heroes and Heroines and newly licensed CPAs will be recognized, and the Wine Wall to benefit the Educational Foundation of the COCPA will return, as well. For details, go to cocpa.org. To nominate a CPA for the Heroes and Heroines awards, contact Terry Cervi, terry@cocpa.org.

Nominees must hold a CPA certificate and be a COCPA member. They should be “everyday” heroes and heroines who haven’t been recognized widely for their contributions.

Nominees should demonstrate significant service in one or more areas: INVOLVEMENT: Describe the nominee’s level(s) of involvement, length of involvement, and time devoted to nonprofit organizations and community activities.

LEADERSHIP: Describe the nominee’s position(s) held and substantial accomplishments achieved in one or more community organizations, including taking the lead in identifying and solving a problem, founding or rescuing an organization, or developing an innovative program.

IMPACT: Describe how the nominee’s actions benefited the community, improved the overall quality of life, helped others overcome adversity, or served as a role model for CPAs exemplifying the profession’s core values of integrity, competency, and objectivity.

For more information and to submit your nomination electronically, contact Terry Cervi, terry@cocpa.org, 303-741-8610.

September/October 2019 | www.cocpa.org

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GOVERNMENTAL REPORTING

Colorado PERA: GASB 68 Update

BY LAWRENCE MUNDY, CPA

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nnually, the Colorado Public Employees’ Retirement Association (PERA) provides information to Colorado governmental entities that participate in the defined benefit pension plans administered

by PERA to assist them with their reporting requirements under GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Participating employers of the State, School, Judicial, and Denver Public Schools (DPS) Division Trust Funds noticed a number of changes to the information PERA provided for the year ended Dec. 31, 2018. Certain entities, which participate in these Division Trust Funds and are not included in the State of Colorado’s (State’s) financial reporting entity, have new reporting requirements to comply with if they determine they have a special funding situation as defined in GASB 68.

The informational items include a schedule of employer allocations and a schedule of collective pension amounts and the related notes. Changes primarily are due to the statutory requirement that the State of Colorado make a direct distribution of $225 million annually to PERA. This payment began on July 1, 2018, and is allocated among the State, School, Judicial, and DPS Division Trust Funds based on the covered payroll of each division.

The entire amount of the payment allocated to the School and the DPS Division Trust Funds and a portion of the amount of the payment allocated to the State and Judicial Division Trust Funds have been recognized on the Schedule of Employer and Nonemployer allocations as a nonemployer contribution that meets the definition of a special funding situation. (See GASB Statement No. 68, paragraph 15.)

Participating employers, not included in the State’s financial reporting entity, that determine this direct distribution payment meets the definition of a special funding situation for their financial reporting purposes, are required to include additional information in their financial statements and note disclosures to comply with GASB 68. For information about additional reporting requirements that may be applicable to these entities, see 6

guidance issued by GASB Statement No. 68 on special funding situations (i.e. paragraphs 80 (a) (1) (2) and 80 (j)). For information about how the direct distribution payment was recognized on the Schedule of Employer and Nonemployer Allocations, employers should review the Notes to the Schedule of Employer and Nonemployer Allocations and Schedule of Collective Pension Amounts for these Trust Funds.

Additionally, as participating employers review the Schedule of Collective Pension Amounts, they will notice that the amount of the collective net pension liability for these funds is significantly lower compared to the prior year. The majority of the decrease is attributed to a provision of governmental accounting standards for pensions that requires future benefit obligations to be measured at a lower discount rate when certain conditions exist.

In 2017, the application of the required GASB test mandated use of a blend of the assumed investment rate of return and a municipal bond index rate. This resulted in discount rates ranging from 4.72 percent to 5.41 percent to value the collective total pension liabilities for these Division Trust Funds. For 2018, the application of the GASB test did not trigger the need to blend two rates. As a result, the assumed investment rate of return of 7.25 percent was used as the discount rate to value the collective total pension liability. The primary factors that contributed to the use of the assumed investment rate of return as the discount rate included: the increases to future contributions from members and employers, the State’s direct distribution payment to PERA, and changes to benefit provisions required

by Senate Bill 18-200.

PERA is developing educational materials on accounting for a special funding situation and will notify participating employers by email when available.

Lawrence Mundy, CPA, is an accounting/ financial reporting manager with Colorado PERA’s Financial Reporting Team.

Contact him at lmundy@copera.org.

NewsAccount | September/October 2019

CDOR Issues Guidance for Marketplaces The marketplace provision of the recently passed Colorado House Bill 19-1240 goes into effect, Oct. 1, 2019. The Colorado Department of Revenue has published guidance that discusses marketplaces and the related impacts.

Commencing Oct. 1, the legislation requires marketplace facilitators to collect and remit sales tax on behalf of marketplace sellers that enter into a contract with a marketplace facilitator that facilitates the sale of the marketplace seller’s tangible personal property, commodities, or services through the marketplace facilitator’s marketplace.

Marketplace facilitators are allowed to retain the vendor fee for collection and remittance of the sales tax on sales made by marketplace sellers on its marketplace.

The new law provides the marketplace facilitator with audit relief if the marketplace facilitator can demonstrate that it made a reasonable effort to obtain accurate information regarding the obligation to collect tax from the marketplace seller.

The law specifies that the marketplace seller does not have the liabilities, obligations, and rights of a retailer, if the marketplace facilitator is required to collect and remit sales tax on its behalf. This includes sales tax licensing, collection, and remittance requirements.

For complete details, go to cocpa. org/Marketplaces-Sales-Tax.

PROFILES IN LEADERSHIP

Leading By Example On August 23, in collaboration with the AICPA, the COCPA honored the following individuals with the 2019 Women to Watch Award. Leaders of Note have attained leadership positions within their organizations, have made notable contributions to the accounting profession, help improve their workplaces, and mentor others. Emerging Leaders have demonstrated leadership and have made significant contributions to the profession and their communities, while on the path to the highest levels of advancement.

LEADER OF NOTE

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o has worked in the accounting profession for over 15 years, with a Big Four firm, as a controller at an oilfield services company, and in internal audit where she spent ten years “mentoring and leading a team of auditors that admired her deeply,” writes colleague Danielle Tully, CPA, CFE.

While all of her professional endeavors were successful, Jo found herself wanting to make a greater impact. So, in May 2018, President, Audit. Consulting. she launched Audit. Consulting.

Education. LLC, Brighton Education. LLC. As President and Owner, Jo specializes in providing progressive and impactful internal audit strategies, management consulting, and education services. Her clients come from many industries including oil and gas, transportation, agriculture, higher education, and telecommunications.

Amanda Jo Erven, CPA, CIA, CFE

Jo also teaches principles of accounting, intermediate accounting, and introduction to business courses at two Denver institutions of higher education and mentors future business and accounting professionals.

Jo spends much of her volunteer time with Susan G. Komen Colorado - as a past member of Komen Colorado’s Young Americans Outreach Initiative Committee and current member of the “More than Pink Walk” Leadership and Corporate Sponsorship committees.

Her most recent professional accomplishment was publication in March 2019 of her first book on her trademarked concept, Total Quality Auditing: How a Total Quality Mindset Can Help Internal Audit Add Real Value and the accompanying workbook. Jo took the 14 principles of Total Quality Management (TQM) and melded them into six Total Quality Auditing points of focus - on meeting customer needs, creating permanent process improvements and solutions, and influencing positive management and culture changes.

Jo’s motto is simple and powerful: “Good things come to those who wait... but don’t. You deserve better than good.” Read the many LinkedIn recommendations others have written, and you know why Jo Erven has been so successful as an entrepreneur and as a professional and personal leader in her community. She is the definitive Leader of Note.

LEADER OF NOTE

Stephanie Drew, CPA, CFE Partner, RubinBrown LLP, Denver

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tephanie joined RubinBrown as a manager in the Business Advisory Services group in 2011, not long after the firm expanded its presence in Denver. Already a CPA, Certified Fraud Examiner, and Certified in Financial Forensics, Stephanie determined that expanding her understanding of complex tax issues would help her provide superior service. So, as a single mom with two children, she went back to school and earned her Masters of Taxation from the University of Colorado Denver in 2016.

Stephanie’s commitment to RubinBrown’s core values of Innovation and Continuous Improvement, Teamwork, and Superior Quality and Service, fueled her promotion to partner in June 2018. Colleague Rhonda Sparlin writes in her nomination letter, “I quickly recognized Stephanie is an extremely smart woman who displays passion for her career and cares deeply for the team and culture at RubinBrown.”

Melissa Kerin Reagan, with Sherman & Howard, Denver, adds, “The cases and projects I’ve worked on with (Stephanie) usually involve high stakes litigation matters that are extremely demanding and complex.

She is a team player, selfless, and is (always) available. She understands the importance of teaching and making sure everyone is involved and learning. It is her willingness to do whatever she can to make the entire team successful, while completing projects in a timely, thorough, and ethical manner, that makes her so well respected.”

Denver attorney Michael T. Gilbert says Stephanie’s analytical skills and dedication are “extraordinary, as is her commitment to excellence. She works tirelessly to support me and the other lawyers. And, in each case, she is more than a consulting expert. She is a valued and trusted member of the litigation team, intimately involved in strategic and tactical decisions. In short, Stephanie is extraordinarily skilled, committed, and devoted.”

Colleague Rick Feldt, RubinBrown partner in the Business Advisory Services Group, sums it up: “Stephanie is devoted to helping us be our best in Denver and across our markets. She is a true leader of note.”

CONTINUED ON PAGE 8 September/October 2019 | www.cocpa.org

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PROFILES IN LEADERSHIP CONTINUED FROM PAGE 7 LEADER OF NOTE

Kelly Kozeliski, CPA Partner, Plante Moran, Denver

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elly joined EKS&H, now Plante Moran, in 2006 as a manager, became a partner in 2012, and leads the firm’s healthcare practice group which consists of business technology, advisory, tax, and audit professionals.

A University of Northern Colorado graduate, Kelly earned her masters degree in business from Colorado State University.

She serves as chair of the UNC Accounting Program Advisory Council.

As the leader of a large healthcare practice, Kelly must remain at the forefront of rapid changes in the industry. She sharpens her professional skills through involvement with the Healthcare Financial Management Association, Colorado Hospital Association, Colorado Healthcare Strategy and Management, Women in Healthcare, and through service on the Denver Chamber of Commerce Healthcare Committee.

Kelly also is active through her faith community, serving on the Archdiocese of Denver’s finance council. Within the broader community, Kelly is involved with the Colorado Women’s Chamber of Commerce, where she’s served as a board member and treasurer.

As a charter member of the Women’s Leadership Foundation, she helped form the organization’s mission to provide training and resources for women to advance their careers beyond middle management roles.

Within the firm, Kelly conceptualized, formalized, and continues to drive the Rocky Mountain Region women’s network which was created in 2016 to ensure consistent focus on advancement of women throughout the firm. Beyond her work to advance women, Kelly supports all staff, whether personally mentoring them or helping them to achieve work/life balance.

Plante Moran partner Shane Brown writes, “I deeply admire Kelly for the depth and breadth of expertise she brings to Plante Moran and for her unwavering commitment and contributions to improve our workplace, advance our profession, serve the community, and mentor our staff. Clearly, she is deserving of this recognition.”

Colleague Diana Moore adds, “I know that Kelly’s greatest achievements will never be on a stage or on a spreadsheet. They are the new mom returning to work; the staff struggling through their first busy season; and the partner coping with personal loss. In a business about numbers, Kelly chooses to focus on the person.”

Kelly is the epitome of servant leadership.

LEADERS OF NOTE Past Recipients 2012 Mira Finé Dianne Ray Karen Turner

2014 Stacey Hekkert Tracy Huggins Judy Vorndran

2013 Peggy Jennings Lynne Lehr-Buck Sandy Shoemaker

2015 Lori Gibson Katrina Salem Laura Srsich

EMERGING LEADER

Janeen Hathcock, CPA

2016 Judy Cain Christine Noel Debbi Warden 2017 Laurie Anderson Jane Everhart 2018 Kimberley Higgins Sharon Lassar Leslie Schaus

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aneen took a nontraditional path to public accounting. She joined Eide Bailly in 2013 as an associate member of the audit team, working primarily in the government practice area, after 16 years in industry. As Brian P. Callahan, CPA, Colorado Partner in Charge, puts it, “...especially unique. But that’s Janeen. She has a uniqueness that sets her apart.”

Despite her lack of public accounting firm experience, she makes the most of every opportunity. She is a career advisor to associates and senior associates. With her colleagues in the firm’s scheduling group, she helps to improve staff sharing across industry areas. Callahan adds, “Janeen has been selfless in accepting our many requests to lead multiple internal projects. Her infectious attitude is remarkable and touches those of us in the office as well as her team members in the field.”

Senior Manager, Eide Bailly LLP, Denver

Recently, Janeen has facilitated and participated in Eide Bailly First Focus, an initiative that provides training and mentoring for women seniors and managers looking to advance in the firm. Also, she provides the firm’s Colorado offices with technical guidance and quality control for Colorado’s GASB 68, Pensions, and Other Post Employment Benefit (GASB 75) requirements.

This go-to person on technical government topics, Janeen has spoken on single audit topics for the Colorado National Association of Housing and Redevelopment Officials and COCPA. Mother of two teenage sons, Janeen spends much of her nonwork time attending their sporting events and other extracurricular activities - in itself a full time responsibility.

When you work with Janeen, you can expect her to listen to what you need. If she doesn’t know the answer, you can count on her to find out and provide you with the best resources. You can expect to develop a positive relationship built on respect and trust. Partner Kimberley K. Higgins, CPA (a 2018 Women to Watch Leader of Note), writes, “Janeen is the whole package.” We agree.

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NewsAccount | September/October 2019

EMERGING LEADER

Elizabeth Maldin, CPA Senior Manager, Plante Moran, Denver

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lizabeth leads Plante Moran’s financial services practice and specializes in providing services to private equity, venture capital, broker dealers, and asset management companies. She also creates financial services training materials for presentation to partners and managers. A leader in the firm’s technology group, serving software and software as a service clients, Elizabeth forges strong relationships with clients and colleagues who routinely express how much they value her insights and guidance.

Elizabeth is one of the most sought after mentors, and team members gravitate to her because they know she’ll provide skilled direction and valuable feedback. When asked what she likes best about working at Plante Moran, Elizabeth says, “My favorite part is connecting with people and building relationships. I love listening to my clients to determine what their concerns are and being able to help them. As for my team, I really enjoy helping others shine and develop professionally.”

Community service is a priority for Elizabeth, too. Since 2012, she’s been a member of the Mile High United Way Emerging Leaders Council for young leaders. She served on the Mile High United Way Steering Committee for four years and co-chaired the firm’s Workplace Campaign Committee. Thanks to her leadership, Mile High United Way formally recognized the firm for “going the extra mile” in its fundraising.

A member of the Denver Metro Chamber Leadership Foundation’s fall 2018 Impact Denver class, Elizabeth helped to revamp the Animal Assisted Therapy Programs of Colorado, the group’s community action project.

Partner Karla Whittenburg, CPA, puts it this way: “It’s been a true pleasure to manage and work alongside Elizabeth. I would say I expect great things from her, but she’s already exceeding my expectations.” Regional Managing Partner Joe Bertsch, CPA, adds, “ Elizabeth’s focus on elevating others is what being a great leader is all about. I’m incredibly proud of Elizabeth for her many achievements and for her commitment to community service, leadership, and contributions to the profession.”

EMERGING LEADERS Past Recipients 2012 Sheila Balzer Nina Currigan Megan Donohue 2013 Jami Coulter Georgia Phillips Kelly Rodriguez Rhonda Willert

2014 Mary-Margaret Henke Jennifer Scholz Jessica Seidlitz 2015 Tyra Litzau Monica Martinez Shauna Shafer

2016 Erin Breit Meghan Mahala Dack Kerri Hunter 2017 Ksenia Popke Rebecca Kelley Andrea Geerdes

EMERGING LEADER

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n her more than 11 years in the profession, both in public accounting and in industry, Rosie has demonstrated outstanding leadership as a young professional and in her philanthropic endeavors. A manager in the firm’s nonprofit practice, she specializes in nonprofit and 403(b) audit and Form 990 filings.

Denver Botanic Gardens Controller and former work colleague Tracy Zabel writes, Rosie Sanchez, CPA “(Some of) the words I use to Manager, ACM LLP, Denver describe Rosie - dedicated, passionate, kind, authentic, tenacious, professional, genuine, problem solver with a great sense of humor! Colorado is lucky to have her as a CPA serving the nonprofit community.”

Rosie believes the best way to mentor is to provide guidance and believe in people. She approaches her mentorship knowing how much the people with whom she works are capable of and challenges them while making sure they understand, comprehend what they’re doing from a risk perspective, the rationale, and more. One of her mentees says, “Rosie has provided me with learning opportunities by allowing me to work through many different files and workpapers, enabling me to learn in the process of doing the work.”

Rosie teaches from a place of understanding and personal experience. Through her own growth, she helps empower others who have not yet found their voices. She often raises her hand for speaking engagements and training opportunities.

Earthlinks, an innovative, urban nonprofit based in Denver, benefits from Rosie’s service on its board of directors. The organization provides a work program for people who are or have been homeless and low income, giving them skills to create earth-friendly products. Board member Susan Goldbach writes, “The first time I met Rosie, I knew immediately this woman is energetic, very smart, and a real leader. I can’t say enough about Rosie’s talents and ambition.

Earthlinks is very lucky to have such a person with integrity and a professional attitude who always is focused on the success of the organization and the people in our community.” Rosie serves on the organization’s Finance, Governance, Fundraising, and Board Development committees. She also is chairing the 2019 Gala Committee.

Rosie is passionate about her hobbies, as well, from climbing to camping to biking - completing the Triple Bypass - to traveling. She also gives her time to animals, serving on the board of Zuma’s Rescue Ranch and running the Chicago Marathon in support of PAWS. ACM CEO and Chairman Greg Anton writes, “We are proud to have Rosie at ACM. She is dedicated and passionate and continues to make a difference every day. I believe she is the embodiment of this award.”

2018 Kristin Holthus Danika Greiner

September/October 2019 | www.cocpa.org

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CAMICO – Sponsored Provider of COCPA since 1998 “The COCPA chose CAMICO twenty-one years ago because it offered top-level expertise and support – by CPAs for CPAs. The same is true today. CAMICO consistently delivers outstanding customer service, regardless of market or economic conditions.”

Mary E. Medley, CEO COCPA

Why CAMICO? • For more than 33 years, CAMICO has been protecting CPAs with insurance solutions tailored to the professional services and concerns faced by CPA firms every day.

• CAMICO’s depth of services for CPA firms is unmatched by other insurance programs.

• CAMICO policyholders have unlimited access to proactive loss prevention and potential claims assistance.

• Policyholders can call CAMICO as often as needed and consult with in-house experts on loss prevention, tax, and accounting and auditing issues — all at no additional cost.

These are just some of the reasons why COCPA selected CAMICO as the Society’s sponsored provider of Professional Liability Insurance.

Alpa (Keily) Evans Account Executive T: 800.652.1772 Ext. 6720 E: aevans@camico.com W: www.camico.com

Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. © CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved.

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NewsAccount | September/October 2019

GOVERNMENTAL AUDITING

Independence Requirements Clarified in 2018 Yellow Book Revision

BY PEGGY E. JENNINGS, CPA, AND LORI ANNE REINWALD, CPA

The recently released 2018 Revision of Government Auditing Standards, also known as the Yellow Book (2018 Revision), is effective for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, 2020, and for performance audits beginning on or after July 1, 2019. Early implementation is not permitted. Several updates were made in the 2018 Revision including a clarified format that clearly identifies requirements (requirements are boxed in for simplicity) and provides application guidance.

O

ne of the most significant clarifications is in the area of independence.

Adherence to generally accepted government audit standards (GAGAS) requires auditors to be independent from an audited entity during any period of time that falls within the period covered by the financial statements and during the entire period of professional engagement. For example, if the auditor performs non-audit services, such as preparing the financial statements for the year ended June 30, 2019, this service would likely fall in “the period of professional engagement” for the June 30, 2020 audit. Therefore, the application of the 2018 Revision needs to be applied to those non-audit services. In other words, these new requirements have been in effect since July 1, 2019.

The 2018 Revision, paragraph 3.27, requires the use of the conceptual framework approach to identify threats, evaluate the significance, and apply safeguards, as necessary. The Revision also clarifies that preparing financial statements in their entirety from a client-provided trial balance or underlying accounting records creates significant threats to an auditor’s independence. Auditors should document the threats and safeguards applied that eliminate or reduce threats to an acceptable level. This article will focus on clarifications within the 2018 Revision that affect documentation and

evaluation of threats specific to preparation of financial statements and financial records.

SERVICES THAT IMPAIR INDEPENDENCE Any non-audit service the auditor provides must be evaluated and documented to determine if the service would impair independence. In other words, by performing the non-audit service, does a significant threat to independence exist? Under the conceptual framework, there are broad categories of threats which include: self-interest, self-review, bias, familiarity, undue influence, management participation, and structural. Paragraph 3.87 states, “Auditors should conclude that the following services involving preparation of accounting records impair independence with respect to an audited entity: a) determining or changing journal entries, account codes or classifications for transactions, or other accounting records for the entity without obtaining management’s approval; b) authorizing or approving the entity’s transactions; and c) preparing or making changes to source documents without management’s approval.” These specific services are considered clear threats of management participation and self-review.

Other non-audit services, such as financial statement preparation, have been less clear in the past but have been clarified in the 2018 Revision.

Part of evaluating threats to independence includes ensuring that management takes responsibility and assigns an individual with the skills, knowledge, or experience (SKE) to oversee the non-audit services. The individual with SKE is not required to reperform the non-audit servic, but must have the ability to identify material error, omission, or misstatement. If management is unable to provide an individual with SKE to oversee the non-audit service, paragraph 3.78 is clear that this would cause independence to be impaired and that no safeguards could be put into place to reduce the threat to independence to an acceptable level.

One way an auditor can assess if the individual assigned to oversee the non-audit service has SKE is to consider why management is requesting the non-audit service in the first place. Are they requesting this service because they do not have the capacity (time) to do the task themselves?

Or are they requesting it because they don’t know how to perform this service? Another assessment of SKE is to consider how the individuals assigned to oversee the non-audit service respond when presented with the final deliverable. Are they reviewing the financial statements and footnotes? Are they asking questions? This would help indicate if management is really taking responsibility for the non-audit service.

MANDATORY PRESUMPTION OF SIGNIFICANT THREAT Paragraph 3.88 of the 2018 Revision states, “Auditors should conclude that preparing financial statements in their entirety from a client-provided trial balance or underlying accounting records creates significant threats to auditors’ independence and should document the threats and safeguards applied to eliminate and reduce threats to an acceptable level in accordance with paragraph 3.33 or decline to provide the services.”

CONTINUED ON PAGE 12

September/October 2019 | www.cocpa.org

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GOVERNMENTAL AUDITING CONTINUED FROM PAGE 11

“Auditors should conclude that preparing financial statements in their entirety from a client-provided trial balance or underlying accounting records creates significant threats to auditors’ independence...”

By prescribing the mandatory presumption conclusion, the auditor is now required to identify and apply safeguards specific to any identified significant threat and then assess the effectiveness of the safeguards that either eliminate the threat or reduce it to an acceptable level. Most auditors consider the preparation of financial statements to create significant threats of self-review and management participation. Therefore, applying this requirement under the 2018 Revision will require the consideration and documentation of such threats and related safeguards in regard to preparation of the financial statements.

APPLYING SAFEGUARDS Just because the preparation of the financial statements from a client-provided trial balance creates significant threats does not mean that the non-audit service cannot be performed. It simply means that the auditor must apply safeguards to reduce the significant threats to an acceptable level. Determining the appropriate safeguards is key and may be different from client to client and the threats identified.

An example of a safeguard might include having management sign their approval of proposed audit adjustments and reclassifications.

This would reduce some of the threat of management participation but does not address the threat of self-review. Another safeguard is an engagement quality control review, which would address the threat of self-review but does not address management participation.

As you can see, it is important to ensure that the appropriate safeguards are being applied to address the identified threats.

Many safeguards seem easy enough to implement if the audit firm is of significant size that it has the staff and capability avail-

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able to provide these safeguards. It will be more difficult for sole practitioners or firms with few skilled employees to implement some recommended safeguards.

OTHER NON-AUDIT SERVICES – CLARIFICATION OF DOCUMENTATION REQUIREMENTS The 2018 Revision also clarified documentation requirements when auditors provide other non-audit services related to preparing accounting records and financial statements other than preparing financial statements in their entirety. Paragraph 3.89 states, “Auditors should identify as threats to independence any services related to preparing accounting records and financial statements, other than those defined as impairments to independence in paragraph 3.87 and significant threats in paragraph 3.88. These services include: a) recording transactions for which management has determined or approved the appropriate account classification or posting coded transactions to an audited entity’s general ledger; b) preparing certain line items or sections of the financial statements based on information in the trial balance; c) posting entries that an audited entity’s management has approved to the entity’s trial balance; and d) preparing account reconciliations that identify reconciling items for the audited entity management’s evaluation.”

This discussion of other services is not new to Yellow Book guidance. What is new is the documentation requirement discussed in paragraph 3.90 that states, “Auditors should evaluate the significance of threats to independence created by providing any services discussed in paragraph 3.89 and should document the evaluation of the significance of such threats.” What the 2018 Revision clarifies is that, even when the auditor believes the other services are not significant threats, they MUST document their consideration

NewsAccount | September/October 2019

of the threats and why the identified threats are not significant. This will require professional judgment. The application guidance in the 2018 Revision provides several factors to consider.

Additionally, the 2018 Revision is clear that the auditor should reevaluate threats to independence and any safeguards applied when new information or changes occur that could affect the threat and safeguards. For example, if a chief financial officer was the individual assigned to oversee the non-audit service, and he or she leaves the organization during the period of engagement, management must assign a new individual with SKE to oversee the non-audit service. And the auditor must document that this new individual has the appropriate level of SKE. If the new individual does not possess the appropriate level of SKE, the auditor must document whether the safeguards applied are still appropriate.

IN CONCLUSION The requirement under GAGAS that auditors be independent from an audited entity during any period of time that falls within the period covered by the financial statements and during the entire period of professional engagement should lead all of us immediately to consider the non-audit services provided to our clients. To comply, auditors must begin the process of documenting the application of the conceptual framework, which includes the identification of threats and the application of safeguards to either eliminate or reduce the threat to an acceptable level. Documentation will be critical. Auditors should review Figures 1 and 2 of Chapter 3 that contain flow charts of independence considerations for preparing accounting records and financial statements. Doing so will help ensure that all the requirements are considered and performed in the proper order, as well as ensure complete documentation.

Peggy Jennings, CPA, with Eide Bailly LLP, Denver, may be contacted at PJennings@eidebailly.com. Lori Anne Reinwald, CPA, Arvada, may be contacted at LReinwald@LoriAnneReinwaldCPA.com.

EXCLUSIVELY FOR MEMBERS

ONLINE DISCUSSION COMMUNITY CONNECT is the COCPA online community for members to ask questions, raise issues, explore ideas, and share information. In this occasional column, we’ll look at a question or comment posted on CONNECT and one or more responses. Our thanks to Bruce Nelson, CPA, for the following information.

QUESTION An architect client had a research and development credit study done by an R&D tax credit research firm. I’ve researched whether architects are in the category of businesses that are allowed to claim the R&D credit and have found no definitive answers. My client also checked with the AIA and was not given a clear answer. I would appreciate any feedback on the issue of architects qualifying for the credit.

For all your tax questions and insights

RESPONSE The confusion comes from thinking that there is a “category” of businesses that qualify, and so one has to look at whether your particular business is in that category.

In fact, any business can qualify. There have been cases involving printers, engineers, banks, software companies, manufacturing companies - just about any trade or business you can think of.

The question is not what type of business it is. The question is only whether the activities involve “research undertaken to discover information of a new or improved business component. The research must relate to elements of a process of experimentation for a functional purpose, i.e., it must relate to a new or improved function, performance, reliability, or quality.”

Specifically, qualified research must meet the following four criteria. The research must be:

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

• for the development of new or improved products, processes, or software; • technological in nature; • for the purpose of eliminating uncertainty; and • for the process of experimentation.

If the research meets those qualifications, it doesn’t matter what type of business it is. Examples of qualified research for an architectural firm could include determining new and alternative structural designs or materials; alternative plumbing or electrical delivery systems; or even improving a structure’s acoustical qualities.

CONNECT.COCPA.ORG

Customize all settings, including alerts and email notifications.

For connecting with colleagues on professional topics

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

September/October 2019 | www.cocpa.org

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EDUCATIONAL FOUNDATION OF COCPA

Foundation Awards $115,000 in Scholarships The Educational Foundation of COCPA Board of Trustees awarded $2,500 scholarships to 46 juniors, seniors, and graduate students for the 2019-2020 academic year - $115,000 spread across 13 Colorado colleges and universities. Congratulations to the following future members of the profession.

2019-2020 EDUCATIONAL FOUNDATION OF COCPA BOARD OF TRUSTEES Diego Baca, CPA, President EY LLP, Denver Patrick Lytle, CPA, Vice President SM Energy Company, Denver Ingrid Stiver, CPA, Treasurer PwC LLP, Denver Kyle Green, CPA Wall Smith Bateman Inc., Alamosa Theresa Hilliard, CPA Fort Lewis College, Durango Lisa Kutcher, CPA Colorado State University, Fort Collins Scott Ranby, CPA, CFP Kuhn Advisors Inc., Denver Laura Theiss, CPA Holben Hay Lake Balzer CPAs, LLC, Denver

ACM LLP Scholarships Qinyan Guo, University of Colorado Boulder Michael Mussi, University of Colorado Colorado Springs Crowe LLP Scholarship Haley Butler, University of Colorado Denver David M. Dirks Memorial Scholarship Christian Allognon, Metropolitan State University of Denver Deloitte LLP Scholarships Riley DeFazio, Colorado State University Fort Collins Emma Hultgren, University of Denver Eide Bailly LLP Scholarship Lydia Lawton, University of Colorado Colorado Springs EY LLP Scholarship Michael Kaufman, University of Denver Gordon Scheer Scholarship Joanna Kempton, Colorado State University Fort Collins Hugh C. Braly Scholarship Tyler Blohm, Fort Lewis College KPMG LLP Scholarship Karissa Schroeder, University of Colorado Denver

Karen Turner, CPA University of Northern Colorado Retired, Greeley Mary Medley, CEO Colorado Society of CPAs, Englewood Alicia Gelinas, CPA Executive Director Educational Foundation of COCPA, Englewood

Mark J. Smith Scholarships Brent Meyer, University of Colorado Colorado Springs Erin McMichael, Colorado State University Fort Collins Elisabeth Hensley, Metropolitan State University of Denver Moss Adams LLP (Formerly Hein & Associates LLP) Scholarship Kyle Rodman, Regis University Otto and Betty Butterly Scholarship Sydni Rose, Colorado Mesa University Plante Moran (formerly EKS&H LLLP) Scholarships Kristin Chudler, Metropolitan State University of Denver Jeremiah Jasso, Metropolitan State University of Denver Haley Johnson, University of Colorado Boulder Ben Lindstrom, Colorado Christian University Matthew Macarus, Adams State University Past Presidents Scholarship Kathryn Kewley, University of Colorado Colorado Springs PwC LLP Scholarship Megan King, University of Denver Soukup Bush & Associates Scholarship Luke Monington, University of Northern Colorado

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

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

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NewsAccount | September/October 2019

Thomas J. Kundinger Scholarship Stephanie Long, Metropolitan State University of Denver

SAVE THE DATE

Wipfli LLP Scholarship Lucia Nava Suarez, Colorado Mesa University General Scholarships Steven Cruz, University of Denver Jeff Dokmo, University of Colorado Colorado Springs Bonnie Drake, University of Colorado Boulder Jordon Durrah, Metropolitan State University of Denver Ashley Gorman, Colorado State University Fort Collins Madeline Helfer, University of Denver Colton Jackson, University of Denver Brittany Jones, Metropolitan State University of Denver Ethan Locke, University of Denver Brenna Mellum, University of Denver Claire Milligan, University of Denver Astride Mukabagula, University of Colorado Colorado Springs Taylor Munchrath, University of Denver Laura Nguyen, Colorado State University–Global Campus Colin Orlowski, University of Denver Elizabeth Poskey, University of Colorado Colorado Springs Catherine Ray, University of Denver Jordan Reynolds, Colorado State University Fort Collins Haley Simpson, Colorado State University Fort Collins Evan Wiemers, University of Colorado Colorado Springs

Established CPAs can make a difference for aspiring CPAs by giving to the Educational Foundation. Your dollars provide scholarship support for highly qualified accounting students at Colorado colleges and universities. Invest in the future of the CPA profession in Colorado.

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NewsAccount | September/October 2019

Reaching Denver’s Development Goals: Inclusive.

Sustainable.

Connected.

BY NATALIE ROONEY

A

s a native Canadian, Rhys Duggan says he’s financially conservative by nature. That hasn’t stopped him from feeling bullish about an ambitious new development project in the heart of Denver: The River Mile.

Why this project? And why Denver? Duggan, President and CEO of Revesco Properties, says he looks out his office windows in Denver’s LoHi district and sees dozens of cranes – a sign that the market continues to be strong. “I’m a big believer in Denver and the Denver market over the long term,” he says.

The River Mile, slated for development at the current site of Elitch Gardens, is a new urban district centered around the South Platte River and designed to transform a mile-long stretch of the river into a “social catalyst.” Homes, restaurants, retail, and entertainment offerings will open up to the river.

Duggan’s vision for The River Mile first percolated two decades ago when he relocated from Vancouver to Denver. “Vancouver was going through the growth and maturing process,” he recalls. “It was adding density, jobs, and retail that made downtown much more livable.” When Duggan saw the Elitch’s CONTINUED ON PAGE 18 September/October 2019 | www.cocpa.org

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ON THE FRONT RANGE CONTINUED FROM PAGE 17 site, he envisioned it through the lens of the Vancouver development. “The opportunity was very similar.”

Duggan has been working with area neighbors and the City and County of Denver for the past three years to bring his vision to life.

HOW DENVER DEVELOPMENT HAPPENS Denver’s recently adopted citywide Comprehensive Plan 2040 sets a vision for the city for the next 20 years and will inform all other plans and initiatives, starting with Blueprint Denver, the citywide land use and transportation plan. The plans were adopted through a three-year community-led process called Denveright.

Denver creates plans that set long-term visions and policy recommendations for smaller areas of the city, which is where the Downtown Area Plan falls. The most recent amendment to that plan focused on the Central Platte Valley – Auraria District, which is where The River Mile is located.

The three-year process for the five plans that comprise Denveright addressed land use and growth, mobility, parks, and recreation.

“All five plans are about advancing a vision for an inclusive, healthy, and connected Denver,” says Sarah Showalter, the citywide planning manager for the City and County of Denver. Community Planning and Development (CPD) led the process for the comprehensive plan, which Showalter describes as the “grandmother” of all the plans because it is the most holistic, broad, and interdisciplinary. “It touches on everything the city does and shapes what we want the city to be over the next 20 years. We have a lot of goals about wanting to be inclusive, more conscious, and more equitable – building a city that all types of economies can live in.”

Showalter says funneling private market growth into areas where it makes the most sense to see more intensity and density and is close to transportation helps address equity and quality of design.

ENTER THE RIVER MILE Kristofer Johnson is a principal city planner in CPD’s Planning Services Division and led the creation of new zoning and design standards for The River Mile project. City staff worked with Duggan and the Revesco team to create a development agreement that promises certain community benefits associated with the construction of the large area. “It will eventually comprise an entirely new downtown area,” Johnson says.

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Community amenities will include: • Affordable housing • One mile of South Platte River improvements • Three riverfront parks • 137,900 sf of public space - recreation center, daycare, school • Regional flood control improvements • Two bike and pedestrian crossings of the South Platte River • New bridge crossing of CML Rail at 7th Street • Pedestrian tunnel under Speer Boulevard • Two new pedestrian crossings over CML at light rail stations • Horizontal city improvements - including dedicated bike lanes The project’s parks and open space provisions are above and beyond what is typical for developments and current city standards,

there is community support,” he says. “That especially applies if there’s going to be a change in zoning as with The River Mile.

It’s the developer’s responsibility to obtain support, and it must be in line with the plans we already have in place.”

Johnson says the challenge was to take Revesco’s vision for The River Mile and ensure it was aligned with the City of Denver’s existing policy guidance and how that would translate to regulations that will apply to the area so a certain level of intensity and building density could be allowed in that area. “When The River Mile people came to us with their vision, existing zoning didn’t allow for it,” he says. “We had to move through regulatory updates.”

What appealed most to the City of Denver?

The River Mile property is directly adjacent to the existing downtown. “Much of the property and adjacent property is made up of surface parking lots right now,” Johnson

“It shapes what we want the city to be over the next 20 years – building a city that all types of economies can live in.”

HEY! WHAT ABOUT ELITCH’S? Duggan tells fans of the park not to despair. Elitch Gardens has many years still ahead of it.

“Come to the park,” he exhorts. “I can’t say that enough.” In fact, in April, the park opened a new themed ride, Kaleidoscape, in cooperation with Meow Wolf. Duggan says the park’s ownership is committed to relocating it and is scouting locations.

as are the affordable housing provisions. “We negotiated with the developer and the city to provide a strong community benefits package as part of the ability to build something beyond existing zoning,” Johnson explains.

Johnson adds that while the city’s departments establish plans and provide the vision for the future of the city, which includes recommendations and strategies on achieving that vision, individual development plans and master planned areas, such as The River Mile, are established by the property owner/ developer. “There is always a prerequisite for outside community engagement to ensure

NewsAccount | September/October 2019

says. “Frankly, it’s an underutilized area of downtown. There has long been a vision of what the future could be down there, and Revesco came to the city with some ideas.”

Those ideas led to a lot of discussion and about 15 months of community process to establish the plans and guidance to support the plans and necessary zoning changes.

The result was a two and a half year effort to evaluate what the future vision looked like – not just with the city and the developer, but with the surrounding neighbors.

For Duggan, The River Mile just fits with the Mile High City. “There is great job

growth and livability,” he says. “It’s just a great place to be.”

GROWING UP: THE VERTICAL TREND If you look at any of the artist’s renderings of The River Mile (rivermiledenver.com), you’ll notice something: the height. The trend toward vertical development is happening across the country and around the world.

“The world continues to urbanize,” Duggan explains. “A larger percentage of the population is moving to major cities as a result of job growth. Cities have realized that the sprawl model isn’t sustainable – not economically or environmentally. People get sick of having longer and longer commute times.”

These things are a sign of a city’s maturity, according to Duggan. “Denver is realizing it needs to be more thoughtful about how it uses land. We don’t have constraints north, south, and east, but that doesn’t mean we have to sprawl.”

Also, younger generations, more than prior generations, understand urbanism and downtown culture, Duggan says. And they’re less attached to their cars. “Denver is realizing that we need to do things differently. We need to be more open to new models of development.”

The River Mile’s way of doing things differently is a combination of factors: it is

downtown, adjacent to two light rail stops, and provides the opportunity to add both jobs and residential space in an area that won’t result in displacement and gentrification, which Duggan says are big (negative) buzz words.

Showalter adds that downtown Denver’s enormous transit and mobility structure provide a great starting point for The River Mile. “We knew there was an existing infrastructure we could work with.”

DOWN BY THE RIVERSIDE There’s another key performance metric that’s critical to The River Mile: the river itself.

“How many people can we bring down to the river – walking, running, tubing, fishing?”

Duggan asks. In many major U.S. cities,

downtowns have turned their backs on their rivers, using them as industrial dumping grounds. As cities reclaim their rivers, there’s an opportunity for Denver to do it as well. “I really want to activate the river downtown.”

Ultimately, what Duggan sees for The River Mile is adding residential density to downtown Denver that focuses on demographic groups other than millennials. “Denver has done a great job of building a city for millennials, and that’s what you see,” he observes. “But as a city matures, it needs a broader demographic. That’s what The River Mile does. Community centers, schools, day care – things that families and seniors need – make it more well-rounded. That will make it a success.”

YOU CAN LEARN MORE ABOUT DENVER DEVELOPMENT AND THE RIVER MILE AT: • www.Denvergov.org/denveright • www.denvergov.org/content/denvergov/en/community-planning-and-development/planning-and-design/plans-in-progress/Downtown_Area_Plan_Amendments.html • www.therivermile.com

September/October 2019 | www.cocpa.org

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NewsAccount | September/October 2019

WORKFORCE ISSUES

The New Minimum Wage Law And Colorado Small Business

BY NATALIE ROONEY

Colorado state law has blocked local governments from enacting their own minimum-wage laws for decades. That changed, May 7, 2019, when Gov. Jared Polis signed House Bill 19-1210. The new law enables cities and counties to set their own minimum wages starting in 2020. The new wages would take effect in January 2021. That timing gives cities almost a year and a half to decide whether it’s something they want to do. And, small businesses have decisions to make, too.

A

s of Jan. 1, 2019, Colorado’s minimum wage is $11.10 per hour ($8.08 per hour for tipped employees), one of the highest minimum wages in the country and higher than the Federal Minimum Wage of $7.25. The minimum wage applies to most Colorado employees, with limited exceptions including tipped employees, some student workers, and other exempt occupations.

The Colorado minimum wage was last changed in 2008, when it was raised $4.08 from $7.02 to $11.10. Colorado’s minimum wage rate is linked to the Consumer Price Index, which is intended to raise the rate along with inflation. The current minimum wage rate is re-evaluated yearly based on these values.

Denver Mayor Michael Hancock raised the minimum wage for city employees and contractors to $15 an hour this year and has signaled a willingness to do the same for the private sector. Boulder has increased what it pays its employees, as well, and Mayor Suzanne Jones has said removing the state pre-emption was one of the city’s 2019 legislative goals.

A LIFETIME OF MINIMUM WAGE There are limits on what local governments can pass under HB 19-1210. Cities and counties can’t increase their minimum wages by more than 15 percent per year, and local increases must coincide with the annual increases in the state minimum wage which happens only in January.

Even though Colorado’s minimum wage is higher than the federal minimum wage, those who lobbied for the bill’s passage point out that a full-time employee making $11.10 per hour in the state’s more expensive cities still can’t live on that. Should they be able to?

This is where pro-small business groups are speaking up because they, along with their members, aren’t thrilled with the new law and the challenges it creates for Colorado’s small business community.

Tony Gagliardi is the Colorado and Wyoming state director for the National Federation of Independent Business (NFIB) which represents more than 7,000 members in Colorado with five to nine employees. He says anytime there’s a cost increase in labor, a business owner has to manage those costs whether by reducing hours, a slower hiring rate, or an increase in prices. And now that HB 19-1210 allows Colorado’s 64 counties and 272 municipalities the ability to set their own minimum wage for employers in their jurisdictions, complications for businesses are multiplying.

“Unfortunately, contrary to what the general public believes, increasing labor costs doesn’t automatically mean the owner can simply increase prices because they are set by the market, whether that’s for widgets, restaurants, or manufacturers,” Gagliardi says. “Prices are set by your competitors.

So, it’s not an easy fix to raise prices. It just doesn’t work that way.”

What’s important is understanding the typical employee making minimum wage. Over half are age 16 – 24. The retail, leisure, and hospitality industries account for almost 60 percent of minimum wage jobs, and many are tipped. In Colorado, there is a credit for tipped employees, and restaurants pay a lower minimum wage (currently $8.08 per hour).

“Everyone talks about having a higher minimum wage to move people off of public assistance and out of poverty,” Gagliardi says.

However, he adds, “Minimum wage has never gotten people out of poverty and never will.”

With his 25 years of small business experience, Gagliardi tends to take a stern approach when he hears about individuals who have worked somewhere for 15 years but have never made more than minimum wage. “Maybe there should be some self-examination. What job skills have you acquired? What is your work ethic? There’s something else going on here.”

Gagliardi says the Colorado legislature has invested millions in job training, and a plethora of workforce training programs are available – some of them are even free. “Not everyone is cut out for college, and trades such as construction, electric, and plumbing are looking for people to join their programs.

When they finish, they’re making $60,000 to $80,000 a year.”

LOGISTICAL ISSUES One of the biggest issues HB 19-1210 creates is a logistical one: Are employers going to run into a patchwork of different minimum wages across the state?

For example: An HVAC business based in Denver services Denver, Boulder, Fort Collins, Greely, Adams County, and Broomfield. An individual departs the Denver shop at 7:30 am and goes to Boulder. At noon, he goes to Broomfield and is there until 5pm. The employer must account for the time spent in Boulder at its rates. And if the Broomfield rate is different, the employer also must account for that rate.

HB 19-1210 created a host of penalties for employers, as well. An employer who has paid the wrong rate can face fines from the local government or municipality. No notice is required to be given to the employer. Fines and penalties include payment of unpaid CONTINUED ON PAGE 22

September/October 2019 | www.cocpa.org

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WORKFORCE ISSUES CONTINUED FROM PAGE 21

wages or unpaid overtime, liquidated damages, and interest on damages. In addition, the person who is suing is eligible for reimbursement of attorneys’ fees and court costs.

No such luck for the employer. Even if the employer proves it operated correctly and wins, it still is liable for its own court costs and fees. “There’s no equality in this bill,” Gagliardi says. “It’s an unlevel playing field.

Bottom line: It’s an incentive for employers not to hire.”

OUT IN THE FIELD Gagliardi says NFIB members are taking a hard look at their workforces as a result of increased costs, an increasing regulatory environment, and increased health insurance costs. “Is it any wonder that when you go into a restaurant like Arby’s or Applebee’s that there’s a kiosk on your table?” he points out. “Someone may seat you and deliver your food, but that’s it. This is what an increase in labor costs does. When those costs go up, employers have to figure out a way to handle the new reality.”

Nick Hoover, manager of Government Affairs with the Colorado Restaurant Association, and Carolyn Livingston, the organization’s 22

“This is what an increase in labor costs does.

When those costs go up, employers have to figure out a way to handle the new reality.”

NewsAccount | September/October 2019

communications director, say HB 19-1210 is worrisome for their industry. “The restaurant industry tends to have a very low profit margin,” Hoover says. “When one of your biggest costs, like labor, increases, it has a significant impact on your business.”

As for municipalities having the ability to set their own minimum wage, it’s a huge unknown. “It’s an issue Colorado has never had to deal with before,” he says, noting that Denver Metro area members think it will be like picking winners and losers. “Imagine two businesses on opposite sides of the street but in two different municipalities. One business can operate at a much lower required labor cost while the other has to operate at a higher required rate. A higher cost to consumers would put the second restaurant at a significant competitive disadvantage.”

Hoover shares concerns about the complicated scenarios for employees who move through different municipalities over the course of a shift. A pizza delivery driver could be in six different jurisdictions in a mile. “How is the employer going to know where the employee is and for how long?”

Hoover asks. “This is a huge concern for our members. While there were amendments to

the bill to try and address these situations, it’s not even close to being cut and dried.”

Hoover says every restaurant owner is looking at different models to absorb costs.

Unfortunately, there isn’t a lot of wiggle room. “Ninety-five cents of every dollar before tax in a restaurant goes back to the people, the place, and the food,” he explains.

“So, after taxes, there’s not a lot of room to grow and absorb costs.”

Jurisdictions can’t take action until Jan. 1, 2020, and any actions can’t go into effect until Jan. 1, 2021. That means restaurants won’t be able to make plans until they know what their jurisdictions will do. “What we do know is that members are trying to find creative ways to cope with increasing labor costs,” Hoover says. “Some have chosen to eliminate certain positions.” These include support positions such as bussers, bartending assistants, and prep cooks. Servers are expected to bus their own tables, bartenders to stock their own bars, and cooks to do their own prep work.

Livingston says across the country, restaurants are changing their models and moving to counter service. “They’re trying to reduce the labor portion of their expenses because it’s getting larger and larger.”

Instead of having a four-table section on a busy night, servers may cover a six-table section. “Restaurant owners are expecting more out of the staff they do have,” Hoover says of the trend. “Simply raising prices doesn’t work. It’s a bell curve. People won’t pay $35 for a hamburger and another $8 in tips. Quick service is growing faster than full service in terms of new restaurant concepts.”

As with many industries, technology is playing an increasing role. Customers order at a kiosk or on an iPad rather than talking to a server. “You don’t have to pay an hourly wage to an iPad,” Hoover says.

Ironically, Hoover says HB 1210 isn’t benefiting the very people the measure was designed to help, and in addition, it’s changing the industry significantly. “A lot of restaurants are just going out of business,” he says. “Owners are realizing they’re no longer profitable enough to be in the business.”

In Colorado, 75 percent of restaurants are independently owned and operated. “These aren’t large chains,” Livingston says. “They don’t have deep pockets to develop the technologies to augment their staff. It’s a real challenge.”

“Small businesses can’t just cut hours because that also affects revenue. So, we start exploring labor and costs. It prompts some good conversations.”

INFLATED WAGES Centennial Container of Denver sells cardboard boxes and packaging supplies and typically has a staff of ten. President and Owner Jim Noon says no one on his staff is currently making minimum wage, “even with the inflated wage at the moment,” but some jobs at the company are definitely non-skilled, such as separating cardboard boxes. He describes government changes to minimum wage as partly psychological.

“Three years ago, someone making $12 an hour was making 60 to 70 percent more than minimum wage,” he says. “When January 2020 comes, they’ll be making minimum wage. Real wages aren’t increasing as fast as minimum wages are increasing so there’s pressure to increase above and beyond. If I were hiring someone to sort boxes and throw them away, I’m not sure that’s worth a lot more than $12 an hour.”

Noon says he hates to have discussions with his employees about these things, but it’s all part of his decision set because if wages go up, other benefits will have to suffer. “I look at how much it costs to have an employee here doing a job. That includes workers’ comp, health insurance, dental insurance, and life insurance. So, if the wage has to go up faster than it should, maybe we don’t have as good a health insurance plan or reimburse the same percentage we did before.”

Noon says the company used to offer full health insurance coverage. “If I’m forced, for political reasons, to raise everyone to $20 an hour, it’s going to have an impact.”

“I really dislike the trend and the government thought process as to how it deals with businesses,” Noon adds. “Now they expect every business to be an expert on every single location in the state for their minimum wage. We have to know a lot more than we used to, and none of it has anything to do with selling cardboard boxes.”

CLIENT CONVERSATIONS Changes to the minimum wage are frequently a point of conversation between CPAs and their clients. Victor Amaya, CPA, who works extensively with small businesses, says he lays it all out for his clients. “Your cost of labor is about to go up X percent. It’s going to eat X percent out of your bottom line. Here are your new projections.”

Amaya says sometimes clients are OK with the new projections, but if not, it’s time to go through iterations to figure out how to make up the difference. When was the last time you raised prices? What is the competition doing? Do you want to raise prices? What will it do to your profit?

“It’s challenging for small businesses to change gears if they’re already staffed up for a certain number of people and hours,” Amaya says. “Small businesses can’t just cut hours because that also affects revenue.

So, we start exploring labor and costs. It prompts some good conversations.”

Amaya shares Hoover and Livingston’s concerns when it comes to HB 19-1210. “If a client has restaurants in three different cities, the amount they’d pay might be different if an employee switched between restaurants,” he says. “I’d have to set up three different cost structures or wages to pay that person overall based on which restaurant they’re in. There are more things for us to keep track of. It’s a headache because there are potentially more things to miss.”

On the positive side, Amaya points out that municipalities could help themselves in ensuring they don’t create a situation where they’re burdening local businesses. For example, rural locations can choose not to be subject to a statewide change. “Municipalities can control their own destiny.”

September/October 2019 | www.cocpa.org

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FUTURE FORWARD

Use

Anticipation to Turn Disruption Into Opportunity

BY DANIEL BURRUS

For the longest time, cable television was a miraculous technology that not everybody had in their homes, mostly because not everybody could afford it. Now, not everyone has it in their homes because YouTube TV, Sling TV, and other new, emerging technologies have disrupted the broadcast industry. So why didn’t Spectrum think of it first? Why did it become the disrupted and not the disruptor?

A

t some point, Spectrum and many others established a cash cow — a product or service that generates the majority of income and profits — and got comfortable building a successful business around it while protecting and defending it. The fact that most of us are all busy, focused, and needing to meet or exceed our quarterly numbers keeps us from looking far enough ahead in our industries to see disruption.

In order to thrive in this time of exponential change, it is imperative to actively scan far outside of your industry looking for new ways to disrupt yourself first. When you discover a new technology or disruptive technology-driven trend, it is important to separate the Hard Trends that will happen from the Soft Trends that might happen.

Anticipating disruption before it happens defines whether you’ll be the disrupter or the disrupted, using predictable Hard Trends to 24

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create the new cash cows that will disrupt your competitors and grow your future.

Another reason so many companies fail to see disruption is that the strategy most often invoked is to protect and defend the status quo.

The amount of time and money organizations spend protecting and defending their current cash cows is astounding, as in the past, this was a valid strategy producing good results. However, digital disruption is different, as it tends to be game-changing with a low cost of entry.

A key to success for an established company that’s facing early-stage disruption is to adopt a strategy of embrace and extend. Spectrum continues to spend millions on bringing in customers for cable, Internet, and phone packages, mostly campaigning on the grounds that you can’t watch sports without cable. Unfortunately, Spectrum and

other cable providers saw Internet TV like YouTube or Sling as a Soft Trend, much as Blockbuster viewed Netflix, that could be protected and defended against. It was definitely a Hard Trend. YouTube and Sling have conquered broadcast sports and are quickly leaving Spectrum in the dust.

THE DANGEROUS ASSUMPTION The assumption that disruption won’t happen to you and your business is dangerous. Today, there are many industries still ripe for disruption. Taking the time to look outside of your industry at the Hard Trends shaping the future will amaze you. Understanding that digital disruption will happen to you if it has not already happened is important.

Ask yourself if you are looking inside and outside of your business.

What are your blind spots? What fundamental assumptions about the “way things will always be” do you operate on? And what are you doing to become your own disruptor?

What is a hotel? What is a taxi? What is a bookstore? Companies like Marriott and Barnes & Noble, and even government agencies like New York’s Taxi and Limousine Commission, thought they knew the answers to those questions, and Spectrum and other cable providers are currently thinking the same way.

WHAT DO YOU THINK YOU KNOW ABOUT YOUR INDUSTRY? The connectivity of the Internet has changed so many industries.

The emergence of Netflix, Hulu, and even Spotify for music has not only revolutionized the entertainment media industry and consumers’ consumption of said media, but it has also closed up some of the loopholes that fostered piracy of content. They are problem solvers, and now they are solving the problem of customers having to pay exorbitant fees to companies like Spectrum and DirecTV to merely cling to one favorite sports channel.

If these cable providers offered a cost-effective alternative with a price and framework similar to YouTube TV’s, they would be using this current disruption to their advantage. But is it too late for them?

Are the days of cable as we know it over? Better yet, will Spectrum shrink exponentially until it’s merely an Internet provider? If so, it’d be foolish to ignore the possibility that a more affordable means of accessing the Internet is on the horizon as well.

Letting your ideas about consumers calcify and ceasing to adapt or anticipate is when you start inadvertently digging your own grave, no matter how outlandish the disruption may seem. Believing that your business is immune to changing circumstances is the common thread between all disrupted organizations. The fundamental assumptions of so many industries have turned out to be wrong.

You need to become your own disruptor, your own best competition.

Don’t get comfortable. Disrupt yourself, or someone else will.

Daniel Burrus is considered one of the World’s Leading Technology Futurists on Global Trends and Innovation and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends to help clients understand how technological, social, and business forces are converging to create enormous untapped opportunities. He is the author of seven books including the newest, The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage. Burrus also is the creator of The Anticipatory Organization™ Learning System– named a Top 10 Product of 2016. Contact Rebecca Campbell, rebecca@cocpa.org, for information on the program.

Early Bird Special for COCPA Members

Visit cchcpelink.com/COCPA for the publications included in this promotion and to order at these special prices. This promotion ends, Sept. 30, 2019.

September/October 2019 | www.cocpa.org

25

PERSPECTIVE

Asking for Help and Paying It Forward

BY JULIE SCATES AND ADELAIDE MCLAIN

On Feb. 11, 2019, Denver’s teachers went on strike which left families scrambling to find ways to occupy students’ time. Julie Scates, president and founder of J2T Recruiting, and her niece Adelaide, had a unique experience after Julie reached out to her professional network. It’s possible that their very special day may be the start of Colorado’s next generation of CPAs. Here is their story.

JULIE WRITES: On Monday, Feb. 11, at 6:10pm, I emailed my network of Denver women in business hoping ONE would say “YES” to my request.

“As many of you are probably aware, Denver Public School teachers went on strike today. I am a product of Denver Public Schools, as is my sister and Co-Founder of J2T, and her husband. Their four children (my nieces and nephew) are all in Denver Public Schools. My mom has been with DPS for over 35 years as a teacher, principal, and administrator. DPS runs in our veins and is near and dear to us. With negotiations on hold we are trying to be thoughtful and purposeful about how best to support BOTH sides: teachers and administrators, students and parents. We are looking to create LEARNING opportunities for our kids while this situation resolves. As such, we are taking the kids to work on Tuesday.

I will have my niece, Adelaide, who is a sophomore at Thomas Jefferson High School (my alma mater), with me all day.

Would you be open to a 30 – 60-minute coffee or lunch with us to discuss your company, your role, how you arrived there, industry intel, and anything else you’d like to share with this budding generation? We promise to make it the highlight of your week!”

Within two hours, I had 11 offers. The outpouring was tremendous, and our (14 hour) day was one of the coolest experiences I have had as an aunt and business owner.

My niece’s recap perfectly sums up the day. I will let her words speak for themselves.

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ello. My name is Adelaide. Yesterday, the teachers in my school district, Denver Public Schools, went on strike. I have three siblings and on the first day of the strike, we all attended school in support of our teachers. This was emotionally exhausting, and by the end of the day, we knew we needed a solution for the remainder of the strike.

My mom wanted us to find a meaningful, purposeful, and productive way to spend the time away from school. I was given the opportunity to shadow my aunt and follow her to all of her meetings and events.

At the beginning of the day, I knew that J2T worked to place accounting and financing candidates in suitable positions, but I had no idea what any of that meant or how any of that worked.

The first morning meeting we had was with Carolyn Bradford. We talked a lot about her career journey and the most important lessons she has learned. I began to grasp an understanding of how accounting careers are shaped and how accountant positions are organized within a company. Most importantly, I learned from Ms. Bradford that it is important to try many different jobs in many different companies because it helps you to understand what motivates you and what makes you most passionate.

Carolyn has worked as an accountant at Crocs and a software company. She realized that she understood the end product of the Crocs company which made it more fun to analyze than the end product of the software company. She and I both like to see the fruits of our labor and understand exactly what it is on which we are working.

Carolyn also taught me that it is incredibly important to find a balance between life and work. Finding time for both your career and your family makes you a more complete person. Her opening remark in our conversation was that she believed it was important to make her own money because it allows her to be independent, and she doesn’t have to rely on a partner or a parent to support her. I also believe that being self-reliant and self-sustaining can be incredibly freeing.

After that, Aunt Julie and I drove to the Gamma Phi Beta headquarters to meet with its CEO, Megan. She was lovely, and we discussed the real estate, donations, events, and connections that are all managed by the office. I learned about the many branches of the nonprofit that bring together all of the aspects of the international sorority. I learned about how it brings together women and how different sorority life is from the stereotypes.

Our next meeting was downtown at Xcel Energy. We had lunch with Megan, Kath-

erine, and Sarah, who are all accountants.

They were all pretty young, so I got to hear a perspective close to mine. I learned about their college choices, what they wish they could have done differently, and the many different ways the three of them approached their accounting careers. I learned about how an accounting career shapes your life and your ambitions, and I learned that public accounting involves a lot of travel!

Going into this meeting, I was asking a lot of questions because I was fairly confused about the whole concept of accounting.

Finally, after we had finished all of our meetings, Aunt Julie and I drove up to Boulder for a J2T Women’s Networking Event. We spent the evening talking to many important Colorado women about their careers and the challenges that they have faced being surrounded by so many men in so many different career fields. Our speaker for the night was Emily Isaacs, executive director for Women’s Wilderness. The nonprofit strives to empower young girls with the confidence to create friendships and challenge themselves. They work to empower women to step out of their comfort zones and ask for more opportunity. This event was incredible, and even though I am not a 28-year old accountant, I related to a lot of the conversation, and I understood a lot of the challenges.

“I learned about how an accounting career shapes your life and your ambitions.”

When I grow up, I want a career that excites me and engages me. I thought of accounting as mostly numbers and spreadsheets which didn’t really seem all that interesting.

I asked these three women how they got to be passionate about accounting and one of them answered, “You don’t.” They further explained that the business and the product behind the numbers is what makes them excited. The processes behind electricity and Xcel’s new green initiative have made their jobs ten times more exciting.

The next woman we met with was a stellar example of someone who is passionate about her accounting role. Ann works for a gold mining company that is focused on protecting the environment, spreading democracy, and providing jobs in the country of Armenia.

It currently has a huge project taking place in this third world country, and so even though I didn’t learn a lot about Ann’s accounting job, I now have a full education on the political and environmental news in Armenia. Ann was so passionate about this project that she shared with us countless stories, pictures, and drone videos of the project. It was truly fascinating. At the conclusion of our meeting, my aunt asked Ann what her advice to me would be. Ann said that no matter where I go in life, no matter the job, it is important that I stay true to my morals and uphold them in every situation.

I feel that with the correct platform, younger generations can help to propel the mindset and the direction of the business world.

I spent the day surrounded by successful, powerful, and inspiring women. I could not be more grateful for the experience. By the end of the day, I had a deeper understanding of J2T and how the recruiting process works. I also gained a serious understanding of accounting, the education required, the importance of a CPA, public accounting and the travel that goes along with it, and industry accounting that varies in many different business realms.

Most importantly, throughout the day, I heard over and over again a few themes. First, women can be extremely competitive and important. Second, it is important to stay true to your morals, passions, and aspirations.

Third, balancing life and work can be one of the hardest things to do. Many people get too caught up in their jobs and forget the reasons why they wanted to make money in the first place. Travel, family, and faith can all get swept away with too much focus on a career.

Fourth, work may not always be intriguing or interesting, but if you find an incredible business or vision to support, passion will follow. And finally, work ethic and intelligence are important, but if you are not willing to try new things and ask for new opportunities, you will miss out on your full potential.

September/October 2019 | www.cocpa.org

27

PLANNING STRATEGIES

Financially Fit Aging: Getting Your Document Life in Order

BY AMY KING, CPA, CGMA

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This is the fourth article in our series about helping your clients – and perhaps your family and you – prepare for the many aspects of aging beyond financial planning.

ould you be able to help with medical information if a loved one were suddenly incapacitated, or you needed to get at legal and financial or even household information quickly? And what about your elder clients?

Are they and their families prepared? As a trusted advisor, this is certainly something about which to remind them.

If you are like most people, the answer to these questions is no. Everyone seems to procrastinate when it comes to putting “life” documents in order. Why? Well, it certainly isn’t something anyone likes to think about. It elicits a variety of emotions: sadness, denial, fear of the unknown, and even thoughts about tempting fate. It can be hard just to bring up the subject; never mind that the task itself can seem so daunting and complicated that it’s hard to know where to begin.

But what most people don’t realize is that tackling this project before a crisis occurs can provide peace of mind and save stress, frustration, and even anger at a time when you also may bedealing with grief. Going through this process can even be helpful for other periods in life – a prolonged illness or rehabilitation period when an individual can’t take care of the usual household/financial activities, downsizing, and transitioning into a new living situation.

AREAS OF FOCUS: LEGAL, MEDICAL, FINANCIAL, PERSONAL/HOUSEHOLD When people talk about being prepared, estate planning is usually the first thing that comes to mind. Ideally, discussions already have been had with an attorney to set up an estate plan and assign an executor/ 28

trustee to manage the estate. The end result is several documents that will be needed to manage affairs. But even more important are the discussions about understanding not only an individual’s wishes and end of life choices but also everyday matters that make up one’s life and existence.

Addressing the legal aspects through a Power of Attorney grants the ability to take care of issues, but Power of Attorney is really just the beginning of the breadth of information needed to help as a caregiver or executor/fiduciary. There are also financial and personal/household circumstances that need to be addressed. Would you have any idea of the various accounts your loved one has in his or her name? Do you know where important keys are kept? Are those keys labeled? You may have heard about states with unclaimed property. Why is it unclaimed? Because family members didn’t know it existed!

The following lists offer a fairly comprehensive guide of the critical documents and knowledge needed to carry out fiduciary responsibilities. Feeling overwhelmed? The key is to break things down into manageable subsections and tackle a little bit at a time.

Gather all the documents and information, and then put them together into one resource readily accessible to identified family members or the designated estate administrator. The materials can be kept in a fireproof safe or online secure file storage.

Note that documents can be scanned and viewable, but original documents will be needed in some instances. If the documents are small and manageable, consider using a large binder. As you might guess, having wills, medical power of attorney, or even

NewsAccount | September/October 2019

financial power of attorney stored in a lockbox at a bank can create some problems if an emergency arises.

To make things easy to find, consider color coding by topic or subtopic. This also helps make updating and adding new documents more efficient. Planning guidebooks and organization systems can be purchased, or you can simply create your own process.

Once you have a system set up, the hard part is over. Don’t forget to keep the information and documents updated as things change.

It’s recommended that you review the information once a year – like an annual New Year’s Resolution – maybe while preparing for tax time.

Please note, you are compiling a lot of critical and private information in one place. In this age of identity theft, take precautions to keep all information in a protected and secure environment (whether physical or digital).

DIGITAL ASSETS The digital world did not exist a few years ago but is now something that must be

The digital world did not exist a few years ago but is now something that must be considered in your estate plan.

Other • Birth Certificate • Social Security Card considered in your estate plan. Digital assets include things like social media accounts, email, computers, phones, blogs, websites, and maybe even cryptocurrency. Gaining access to a loved one’s accounts can be difficult and often is listed as one of the top challenges when helping to provide support or estate work for deceased. Most states are addressing this issue by passing laws that allow family/executors to access accounts and information, but it’s important to spell out clear instructions on this.

SAMPLE CHECKLISTS Here are a few sample checklists to guide your planning: Legal • Will/Estate Plan • Durable Power of Attorney • Medical Power of Attorney • Advanced Health Care Directive/Physician Orders for Life-Sustaining Treatment • Trust Agreements • Other Agreements (Homecare, Senior Housing)

Financial Information • Banking – Checking/Savings/Credit Card • Investments - Stock Certificates, Mutual Funds, Annuities, CDs, REITs, Treasury, Savings Bonds,

• Driver’s License/Organ Donor Card • Marriage Certificate/Divorce Decree • Education/Military Records • Passport • Keys (clearly labeled) • Safe Deposit box (bank location, key)

• Retirement Benefits- 401k, IRAs, Pension, Veteran Benefits, Social Security

• Household Vendor List (utilities, phone, services - lawn, garbage, cleaning)

• Assets/Liabilities – House Title, Mortgage Statement, Property Titles and registrations (auto, land, other deeds), Lease Agreements, Loan Agreements, list of valuables/collectibles – valuations

• Pets/Veterinarian

• Insurance Policies – auto, home, property, liability umbrellas • Tax returns Health/Medical • Health Insurance Policy • Health ID cards • Life Insurance • Long Term Care • Primary care/specialist doctors used/ contact info • Pre-purchased Funeral Services/Cemetery Plots

• Warranties for any personal property • Subscriptions • Digital accounts: Passwords/email While planning and getting organized now is sensitive, emotional, and time consuming, those who are proactive truly are providing a gift to their loved ones.

Amy King, CPA, CGMA, is a wealth advisor with RubinBrown Wealth Advisory Services Group, Denver. She is a member of COCPA’s Financial Literacy Committee and counsels her clients about the choices available to them as they age. Contact her at amy.king@rubinbrown.com.

September/October 2019 | www.cocpa.org

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MANAGEMENT ACCOUNTING

Modernizing Cost Management Systems in Emerging Economies This article first appeared in CGMA Magazine. For more articles, sign up for the daily email update, CGMA Advantage at http://bit.ly/2svn2AY.

BY ANIL KSHATRIYA, ACMA, CGMA

To reach their full potential, small and midsize companies in emerging countries must pay special attention to modernizing their cost management.

C

ompanies in emerging economies that are labor-intensive and technologically under-invested must give special attention to cost management. A strong culture of cost-consciousness translates into bottom-line growth, but limited resources and the presence of operational bottlenecks tend to become barriers to the progress of these enterprises.

Most operate with traditional accounting systems and techniques not commonly used in developed markets. As a result, up to 70% of micro, small, and midsize companies in emerging markets lack access to credit, according to the World Bank.

Adopting best practices of cost management and cost control helps a small and medium-size enterprise (SME) in exploiting its full potential.

COST CONTROL In small and midsize enterprises, cost is often considered a given phenomenon. Junior-level employees and managers don’t think beyond their routine practices of producing the output according to the pre-defined standard. The entire focus is on the “output” side. There is little or no discussion around cost control. Cost cutting is not the same as cost control. Owners of SMEs tend to be more concerned with cost cutting, which often leads to resource cutting.

Such cost-saving exercises are ad hoc and made on a case-by-case basis. Cost control is a planned and systematic process. Holding back resources has implications on behavioral aspects within a company.

Using low-quality raw materials also has implications. Motivation of people is affected and the quality of output suffers in those cost-saving exercises.

Controlling costs may not always result in resource cutting. Changing the source of the raw material by exploring better logistical feasibilities is an example of planning for controlling costs. But replacing the superior source of raw material with an inferior, cheaper variant is what SME managers end up doing as an alternative cost-saving mechanism.

COST MEASUREMENT Another important factor that affects cost efficiency of SMEs is the system of costing itself. SMEs in India, for example, generally don’t have well-defined cost systems that can measure costs of operations accurately for various cost centers of the enterprise. The process of costing is unscientific and vague. Direct costs are fairly traced to the final output, but the method of tracing indirect costs and overheads is not appropriate. Indirect costs are usually bundled into a single aggregate expense and then spread across various products, using a trial-and-error method of allocation such as volume of production or labor hours per category of product.

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Such simplification in measuring and reporting of costs does not give a clear picture of how costs behave for each of the categories of products sold by an SME. Unavailability of unit-level and product-level data then becomes a major constraint in keeping track of costs.

ADAPTABILITY IS KEY The biggest advantage enjoyed by any learning enterprise is its ability to adapt to change. SMEs are agile organizations. Because they are small and nimble, it is easier to change their cultural structuring. SMEs have tremendous opportunity to shape the cost-conscious behavior of their people. It pays off by giving them insights into business problems that are not apparent and obvious to owners.

“Digitization and artificial intelligence are likely to change the job market in emerging economies much faster than the pace at which these economies adapted to the challenges of globalization.”

Midsize companies in developing countries can benefit greatly from reconfiguring processes and practices because they cater to the demands of consumers who are sensitive to prices.

Digitization and artificial intelligence are likely to change the job market in emerging economies much faster than the pace at which these economies adapted to the challenges of globalization. They have to shape strategies that will integrate every aspect of technology-driven value creation within a very short span of time. Better control on cost will become an imperative to function in the coming decade. The sooner they get ready to innovate for these changes, the better their chances to survive the wave of technological transformation.

ACTION PLAN TO IMPROVE COST-CONSCIOUSNESS A good action plan for enterprises ready to make improvements but

not ready for a full-scale cost transformation initiative might include these three steps: 1. Owners of small and medium-size enterprises (SMEs) should look at establishing a modern costing system as an investment that yields returns over a long period of time. Having a good system of cost accounting is not a statutory prerequisite for a small company. Therefore, the normal tendency of SME founders is to avoid spending time and effort in laying foundations of costing for a newly started company. But visionary founders and good enterprises always look at it as one of the key elements in creating future success of their business.

Indian companies that have ramped up their operations from small scale to large scale are the ones that concentrated their effort on monitoring their financial performance from time to time. Modern manufacturing systems demand modern costing systems. SMEs should adopt techniques such as activity-based costing for overhead cost allocation and customer profitability management.

An activity-based approach of costing traces costs to an individual product category using cost drivers that drive the resource consumption. In an activity-based environment, a company can control costs by controlling its activity-driven resource consumption.

YOU’VE 30 YEARS YOU’VE SPENT 30SPENT YEARS BUILDING YOUR NEST EGG. BUILDING YOUR NEST EGG. 2. Creating awareness about cost control among employees is another step towards cost-consciousness.

Training managers to deal with cost NOW COMES THE HARD NOW COMES THE HARD data helps them in creating the right outlook. Review meetings must be held with discussions about how and what goes into product costs.

PART: IT LAST PART: MAKING ITMAKING LAST Every section or department of the company must be made aware of the impact of their respective actions on overall cost of production.

Suggestions and ideas must be welcomed across the organization to make the system of costing fully robust.

ANOTHER 30.ANOTHER 30.

Sometimes company owners fail to perceive an operational issue, but challenges facing The retirees challenges facing are today’s unique. retirees are unique. workers on the shopThe floor might have a better understanding of thetoday’s Low interest rates, sky-rocketing Low interest healthcare rates, sky-rocketing costs, healthcare longer costs, longer problem at hand. A culture of cost-consciousness can resolve such life expectancies, and complex life expectancies, Social Security and complex Social rules Security all rules all matters in a timely manner and avoid undue complexities that lead to make much of the conventional make much retirement of the conventional wisdom retirement of wisdom the of the a drain in financial resources. past obsolete. In this new era, past it’s obsolete. crucial In this new that era, you it’s crucial take that you take Bottom-up communication should be encouraged rather than topa fresh look at the challengesa fresh ahead look atand the challenges create ahead a and create a down, unidirectional communication. It may be a good idea to involve comprehensive plan to address comprehensive them. plan to address them. an external expert in reviewing the costing system because over time the system tends to become less dynamic.

3. Finally, SMEs should link the performance of people to the cost For 25 years, we’ve been For 25 years, we’ve been management process.working Management control systems such as budgetwith people like youworking with people like you ing and variance analysis be definedthe to measure and manage to address the challenges to should address challenges the contribution of managers towards cost-consciousness.

Without of the transition from of the transition from linking rewards to performance, the possibility of continuing with a Mark Kuhn Mark Kuhn Scott Ranby, CFP ®® Scott Ranby, CFP their nest egg accumulating their nest egg accumulating President & Founder President & Founder Advisor FinancialFinancial Advisor systematic approach for cost management remains low. Hence, there to using it to support their to using it to support their should be standard operating procedures for achieving targets set for retirement lifestyle.CALL Get in retirement lifestyle. Get in CALL 303-803-1016 303-803-1016 cost management and control. touch today to schedule a LEARN touch today to schedule a TO MORE LEARN MORE TO Innovative initiativescomplimentary for managing cost must be included as part of the complimentary consultation. consultation. appraisal for future progression within the enterprise. All the functions from manufacturing to sales should be given equal importance and weights. Cost-effectiveness is not the responsibility of the shop floor 2373 Central Park Blvd., 100 Suite 100 2373 Central Park Blvd., Suite alone. Only when it becomes part of the entire organizational culture Denver, Colorado 80238 Denver, Colorado 80238 does it find meaningful acceptance across the enterprise.

Phone: 303-803-1016 Phone: 303-803-1016

+

+

KuhnAdvisors.com KuhnAdvisors.com

Anil Kshatriya (akshatriya@imtnag.ac.in) is an associate professor of accounting at the Institute of Management Technology in Certified Financial Planner Board of Standards Inc. owns Certified Financial the certification Planner Board of Standards marks Inc. CFP®, owns the certification Certified marksFinancial CFP®, Certified Financial Planner™ Planner™ Nagpur, India. and CFP® in the U.S., which it awards to individuals who and CFP® successfully in the U.S., which it awards complete to individuals CFP who successfully Board’s complete initial CFPand Board’songoing initial and ongoing certification requirements. Kuhn Advisors, Inc. is a registered certification requirements. investment Kuhn Advisors, adviser.

Inc. is a registered Moreinvestment information adviser. More about information Kuhn about Kuhn

© 2017 Association of International Professional AccounAdvisors, Inc., Certified including its advisory services and fee Advisors, schedule, Inc., including can its advisory be found services and in fee itsschedule, Form can ADV be found Part in its Form 2, which ADV Part 2,is which is available by calling 919-493-3233 or visiting kuhnadvisors.com. available by calling 919-493-3233 or visiting kuhnadvisors.com. tants. All rights reserved.

September/October 2019 | www.cocpa.org

31

MOVERS & SHAKERS WILLIAM C. SANDEN, CPA Gov. Jared Polis appointed William C. Sanden, CPA, SSA PC, Retired, Colorado Springs, to the Western Museum of Mining & Industry Board of Trustees. Sanden also serves as a director and past president of the Colorado Educational & Cultural Facilities Authority and as treasurer of Peak Vista.

MARK W. PLANTZ, CPA Mark W. Plantz, CPA, Dalby, Wendland & Co., P.C., Montrose, was elected charter president of the newly formed Black Canyon Rotary Club, Montrose. He also recently was promoted to Tax Manager with the firm.

DALBY, WENDLAND & CO., P.C. Dalby, Wendland & Co., P.C. announced the following promotions: Sarah J. Fischer, CPA, and Lisa Thon-Kollar, CPA, to Associate Principal; Brian J. Hollingsworth, CPA, to Audit Manager; Sean P. Tankersley, CPA, Gregory M. Ward, CPA, and Lucas D. Warth, CPA, to Tax Manager; and Loren L. Hofer, CPA, to Tax Supervisor. Vicki L. Goetter, PAFM, joined the firm as its new Chief Operating Officer.

LeadFit Gets It Done LeadFit is designed for CPAs and CPA-track accountants looking to grow professionally and personally. Participating this year are: Ken Fichter, Kundinger, Corder, and Engle, Denver Evelyn Kelley, Spicer Jeffries LLP, Denver Jeff Koski, SM Energy Company, Denver Anna Overlee, Seigneur Gustafson LLP, Lakewood Tiffany Osborn, SM Energy Company, Denver Lacey Puls, Eide Bailly LLP, Denver Sarah Ray, SM Energy Company, Denver Heidi Rosellen, SingerLewak LLP, Denver Amy Shaw, Soukup, Bush & Associates, Fort Collins For information on how you or a colleague can apply for the 2020 class, contact Terry Cervi at terry@cocpa.org.

JAMES E. RAE, CPA Gov. Jared Polis reappointed James E. Rae, CPA, The Adams Group, LLC, Denver, as the CPA serving on the Advisory Committee on Governmental Accounting.

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32

NewsAccount | September/October 2019

LICENSE RENEWAL COMING SOON To retain your Colorado CPA license in active, inactive, or retired status, you must renew it by Nov. 30, 2019. Watch for the email from the Colorado State Board of Accountancy, to your email address on file, notifying you the online system is open for renewal processing. Update your email address now, if it’s changed since you last renewed. Go to www.colorado.gov/pacific/dora/DPO_Update_Contact and log in to your account.

If renewing in active status, you will attest that you have or will have completed the required CPE between Jan. 1, 2018, and Dec. 31, 2019 - 80 hours for the two-year period, including four hours in Ethics. No more than 16 hours can be in Personal Development.

IN MEMORIAM

TAX STUDY GROUPS

We extend our sympathy to the families and friends of the following COCPA members:

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

Nancy Couse Member since 1986, Golden, Colorado

Wednesday, Sep. 18 and Wednesday, Oct. 23

Timothy DeTine Member since 1983, Littleton, Colorado

This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd., Boulder, BYO Bag Lunch. Additional 2019 Meeting Dates: Nov. 20, and Dec. 18.

For additional information, contact Lynn M. Mitton, CPA, MT, MPA, 303-499-7445, or email lynn@flewellingcpa.com.

Gerald Stewart Member since 1982, Denver, Colorado Dean Haave Member since 1965, Evergreen, Colorado

Denver Tax Study Group AT THE COCPA OFFICE

Charles A. Taylor

Tuesday, Sep. 24 and Tuesday, Oct. 22

July 31, 1924 - July 27, 2019 COCPA President, 1974-1975

This informal roundtable discussion group meets over lunch, the last Tuesday of most months, at the COCPA office, 7887 E. Belleview Ave., Ste. 200, Englewood. Additional 2019 Meeting Date: Dec. 3. Register at www.cocpa.org.

Chuck Taylor always had a story to tell, a round or match to play, and a leadership role in the profession and in politics, behind the scenes. A Brighton, Colo. native, Chuck graduated from the University of Denver and opened his practice first in Brighton and subsequently in Boulder. He and his wife, Pearl, retired to Vail in 1974 where Chuck continued to pursue his passions for exercise and sports.

Retired COCPA Executive Director Gordon Scheer recalls, “Chuck Taylor and I had a special relationship that didn’t exist with any other (Society) president because we both were active in state Republican Party politics. Chuck chaired the Adams County Republican Party, and I became chairman of the Arapahoe County Republican Party. Together, we worked for good in the party and in the Colorado General Assembly. We had a lot of fun in those days.”

An avid skier, tennis player, and competitive amateur golfer, Chuck typically won every golf event the Society held - until Jim Nussbaum (COCPA President, 1980-1981) began playing in them too.

He remembers, “That first year I played in the Society’s annual golf event, I edged out Chuck, a many-times winner. He was not happy. Nonetheless, we became great friends on the course and in the profession. For Chuck, any ball was playable, including on one occasion, a ball almost buried in mud. Not only did he hit the ball out of the mud but also he chipped it onto the green and made par.”

Chuck was the first Society president for whom I worked, having joined the COCPA during his term. He immediately made me feel welcome and deserving of the opportunity to hear his notorious stories, none of which I could ever repeat. He led with dedication to doing right by the profession and those it served, along with a healthy dose of humor. I shall always be grateful Chuck and Gordon Scheer were among the handful of leaders who introduced me to the Colorado accounting profession.

Memorial gifts may be made to Castle Peak Senior Care Activity Fund for its exercise programs, castlepeak.org.

Mary E. Medley

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.

“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

September/October 2019 | www.cocpa.org

33

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