Disclosures: January/February 2016

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Changes to nonprofit financials

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INSIDE this issue

COVER STORY >>

The typical organization loses 5 percent of revenue each year to fraud — amounting to an annual $3.7 trillion globally. That’s not chump change. Luckily, there are ways you can keep your money where it belongs.

ARTICLES

FEATURES

TAXATION

5 STEPS TO FRAUD AWARENESS

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Through collaboration, communication, training, setting the right tone at the top and effective investigations, your company can combat fraud.

BIG CHANGES AHEAD FOR NONPROFIT FINANCIALS

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They’re coming: the largest changes for nonprofit financials since 1993.

SSARS 21: A NEW ENGAGEMENT REALITY

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SSARS 21 is the most significant change to the standards on accounting and review service since 1978.

VSCPA CHAPTERS

AD INDEX 10

Beth A. Berk, CPA Digital Benefit Advisors Keiter Poe Group Advisors

The ‘FATCA effect’

MARKETING MATTERS

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Build better client connections

SECTIONS BACKTALK

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PRESIDENT’S PERSPECTIVE

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DATA DRAFT

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VSCPA NEWS

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CLASSIFIEDS

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I AM THE VSCPA

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disclosures is published bimonthly for members of the Virginia Society of CPAs.

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Joining your local VSCPA chapter is a great way to network, jumpstart your career and attend events.

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VIRGINIA SOCIETY OF CPAs

4309 Cox Road Glen Allen, VA 23060 (800) 733-8272 Fax: (804) 273-1741 www.vscpa.com

BACKTALK you said it

From @VSCPANews on Twitter

disclosures http://disclosures.vscpa.com EDITORIAL STAFF Jill Edmonds Managing Editor disclosures@vscpa.com Chip Knighton Contributing Editor cknighton@vscpa.com David Bass Public Relations & Communications Director dbass@vscpa.com

Standing room only at #JMU for today’s #VBOA meeting! This is awesome to see. @VBOANews @VSCPANews — @VSCPAEMWALKER

EDITORIAL TASK FORCE Olaf Barthelmai, CPA Adam Chaikin, CPA Cheri David, CPA Jennifer Duff, CPA Keith Gray, CPA Genevieve Hancock Alesia Lewis, CPA David Peters, CPA Mark Plostock, CPA George Strudgeon, CPA Barbara Sukramani, CPA DEADLINES Articles and advertising for future issues are due by 5 p.m. on the following dates: May/June 2016 July/Aug. 2016 Sept./Oct. 2016 Nov./Dec. 2015 Jan./Feb. 2017 March/April 2017

March 1, 2016 May 2, 2016 July 5, 2016 Sept. 1, 2016 Nov. 1, 2016 Jan. 2, 2017

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers, members or editorial staff.

VIA LINKEDIN>> Electronic payments are a great idea. I would suggest adding fraud protection products your bank offers like Positive Pay or ACH positive pay if you plan on sharing your account information.

DIANE HOLLAND, Washington

Often business owners do not include their “compensation” in a budget. Essentially they are working for free. This can lead to a false sense of how much manpower is behind their company's output.

MELINDA MAY, CPA, Fredericksburg

VSCPA ENDORSED PARTNERS

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TWITTERSPHERE >> Enjoyed presenting “Speak Volumes without Saying a Word” to a “listening” audience at the #VSCPA A&A conf. on Thursday @VSCPANews — @YOUACHIEVE Standing room only again! Thank you @mwwash for speaking w/ @NovaAccess students about the @VSCPANews!

— @PROFMITCHELL Took a couple of months,but finally did my @VSCPANews Day of Service @fellow @ArlChamberVA member @TheReadingConn — JAYTHECPA

CONNECT: http://connect.vscpa.com TWITTER: @VSCPANews, @FinancialFit LINKEDIN: tinyurl.com/VSCPALinkedInGroup FACEBOOK: www.facebook.com/VSCPA INSTAGRAM: www.instagram.com/VSCPA

Get in touch

4

From the

At the Virginia Society of CPAs, we love to hear from you.

Whether it’s a quick email to a staff member, chat on the phone, Disclosures letter to the editor, tweet tweet,or blog something comment different or something altogether, different let usaltogether, know whatletyou’re us know talking what you’re about, how you talking feelabout, about how different you feel issues about affecting different CPAs issues and how affecting we can CPAs help. and how we can help.

PRESIDENT’S perspective VSCPA ADVOCACY >>

The importance of relationships This month marks the

beginning of a new era, as the Virginia General Assembly convenes its first session since 1982 without Sen. Walter Stosch (R-Henrico), a VSCPA member who retired at the end of 2015 after a combined 33 years in the House of Delegates and Senate.

Sen. Stosch was a marvelous asset for the Society, as his financial acumen and authoritative knowledge of accounting and business issues helped immeasurably in getting CPA-friendly legislation passed.

Without the backing of one of the General Assembly’s most respected veterans, it’s on us at the VSCPA to find other ways to fight for CPAs’ interests each session. The good news is that we’ve been planning for this — we knew Sen. Stosch wasn’t going to serve forever, and our staff has worked diligently to build relationships with other legislators. We think we’re in good position, but we can't be complacent.

That’s where you, our members, come into play. We have a dedicated core of members who are active in our advocacy efforts, but as we enter the post-Walter era, having a membership that is actively engaged and willing to reach out to their legislators is more important than ever.

Your first major chance to show that comes this month. CPA Assembly Day, scheduled for Tuesday, Jan. 19, is an annual event where VSCPA members visit the General Assembly and speak with legislators about issues important to CPAs. These visits — along with the Legislators’ Tax Guide, which members and staff distribute to each legislator on CPA Assembly Day — show legislators that CPAs

are go-to experts on tax and economic issues.

Relationship-building and “show of force,” for lack of a better term, are the goals of CPA Assembly Day in the macro sense. Taking a more short-term view, these visits are crucial in getting legislation passed and defeated each year. That almost always means tax conformity legislation, and there are generally tax reform issues and challenges to the economics and personal finance high school graduation requirement to deal with.

This year, we’re also monitoring these other issues:

a respected CPA in the General Assembly was the main factor in our advocacy success.

That’s why we can’t rest on our laurels.

We’ve lost our safety net, and our advocacy initiatives will sink or swim based on the efforts of our members and staff. And legislatively, as we go, so goes the profession, because we’re the only ones watching the General Assembly, the Virginia Board of Accountancy, the Virginia Department of Taxation and other regulators with an eye on CPA issues. If we don’t speak up for ourselves, who will? n

>> A potential sales tax on services >> “Ban-the-box” bills that would prohibit employers from asking in employment applications whether or not an applicant has a criminal record >> Deregulation of licensed professionals initiatives We’ve been fortunate to have Sen. Stosch on our side the past 33 years. We’ve also been lucky to have a great legislature more often than not, as well as regulators who have understood of the needs of the CPA profession. We have wonderful legislative counsel in Bill Axselle (a former Virginia legislator) and Patrick Cushing from Williams Mullen.

STEPHANIE PETERS, CAE, has served as president and CEO of the Virginia Society of CPAs since 2007. speters@vscpa.com connect.vscpa.com/StephaniePeters

And we have high-level staff lobbying on our behalf at the General Assembly — in addition to our fantastic Vice President of Advocacy, Emily Walker, CAE, I also serve as a registered lobbyist. And our Board shows strong support of our efforts; I’ve always been pleased how seriously our leadership takes our advocacy activities. But having a member and

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New accounting association could be on the way

>> COOL NEW TAX SEASON TOOLS

Annual uncertainty about the renewal of expiring tax provisions and how they’ll affect your tax season complicates your work.

The American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA) have a recent history of working together. In January 2012, the two organizations launched the Chartered Global Management Accountant (CGMA) designation. Now, they have their sights on a new goal: integrate their operations, strategy and management through a newly formed association.

While the AICPA would still serve its members and protect, promote and grow the CPA profession, and the CIMA would still serve management accountants in 179 countries, the new association would provide a broader platform for further enhancing advocacy, promoting public and management accounting on campuses and with employers

and clients, and developing new research and educational offerings.

The AICPA believes the proposal would bring together the entire accounting profession and extend the influence of a CPA-led accounting profession in the United States. Strengthening the bond between the two organizations would streamline resources and create efficiencies to help both organizations move faster to market. The proposal needs a bylaws change to move forward, which requires an AICPA member ballot with approval from two-thirds of those voting.

The AICPA wants member input.

Visit www.aicpa.org/horizons for more info and to offer your feedback. n

CPA ASSEMBLY DAY COMING FAST We’d love to have you on board for the 2016 edition of CPA Assembly Day, the annual event where VSCPA members visit their elected representatives at the Virginia General Assembly. It’s scheduled for TUESDAY, JAN. 19, 2016.

Your presence shows Virginia legislators that CPAs are committed to being an integral, active part of the legislative process. If you can’t attend in person, sign up for Virtual Participation and send a letter or email to your legislators. Visit www.vscpa.com/CPAAssemblyDay for more details. n

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Want to reduce your workload and educate your clients? Check out the Tax Practitioner’s Toolkit from the American Society of CPAs (AICPA), a suite of easy-to-use resources: READY-MADE TWEETS More than 100 ready-to-go tweets can be used on Twitter or for LinkedIn and Facebook posts. See www.vscpa.com/TaxSeasonTweets.

YEAR-END POWERPOINT Clients or community groups may want year-end tax planning help.

This PowerPoint will bring them up to speed on tax changes, and you can modify it with local or statespecific info.

INFO ON TAX CONCERNS Your clients may have questions about tax issues — especially around insurance and the Affordable Care Act. The toolkit has seven resources to conquer these concerns, with summaries and detailed FAQs.

You’ll find the Tax Practitioner’s Toolkit, chock full of these and other resources, at http://tinyurl. com/2015TaxToolkit. n

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EXCELLENT EXCEL >>

Retired CPA status a possibility

Using carriage returns to aid in formatting Have you ever placed text on more than one row so that it would line up correctly and look pretty? For example, let’s say you want to title a column “Year End 2015,” and you want the “Year End” part to be directly above “2015.” However, the column is so wide that applying wrap text formatting will not work. To fix your conundrum, you may have placed “Year End” in one row with “2015” in the cell directly below.

But you can keep all your information in a single cell. Just place a carriage return (old term — Google it if you are young and have never used a typewriter) after “Year End” so that Excel places “2015” on a new line within the same cell.

To do this, after “Year End” hit Alt+Enter to place your carriage return within the cell, start typing “2015” and then exit the cell as you normally would. Tip: You may need to adjust the height of your row so that it all shows. n

GEORGE D. STRUDGEON, CPA, CGFM, is an audit director at the Virginia Auditor of Public Accounts in Richmond. Email him if you have Excel topics you want him to cover. * george.strudgeon@gmail.com connect.vscpa.com/GeorgeStrudgeon

There is currently no unified approach

among states on how to deal with retired CPAs. Some states, like Virginia, have an inactive CPA status; others have a separate retired status. A lack of guidance in the Uniform Accountancy Act (UAA) has led to a wide range of differing state policies.

Now, the National Association of State Board of Accountancy (NASBA) and American Institute of CPAs (AICPA) are addressing the issue. The UAA Committee is proposing a uniform Retired-CPA status, and would like to allow those retired CPAs to offer a limited array of volunteer, uncompensated services to the public.

The committee recommends that inactive CPAs ages 55 and older should be allowed to use a Retired-CPA status upon appropriate registration with their state boards of accountancy. If competent, they could then offer volunteer tax prep services, participate in governmentsponsored business mentoring programs and/or serve on nonprofit boards. They would not, however, be allowed to provide services that require signature and use of the CPA title.

Comments are due by Feb. 2, 2016. Check out the draft at http://tinyurl.com/RetiredCPADraft. n

>> INSIDE THE NEW VSCPA WEBSITE The VSCPA flipped the switch, so to speak, on its website redesign on Oct. 1, 2015. We undertook the site’s first major revamp since 2010 to transition to a cleaner look and make the site more usable for mobile visitors.

Another major reason for the redesign?

To incorporate elements from the

responsively to provide an optimal viewing experience on all devices.

VSCPA’s 2014 brand refresh. This effort resulted in changes to the VSCPA’s logo, corporate colors and font usage.

We hope you like the new look!

Visit www.vscpa.com/Redesign for more information. n

As for the mobile portion, nearly 15 PERCENT of 2015 visitors accessed the site using a mobile device (smartphone or tablet). For the first time, VSCPA.com is designed

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DATA draft

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Nabbing criminals, IRS style

SURVEY SAYS >>

Virginia’s tax system is pretty fair How closely does a state’s tax

system match public perception? That’s what WalletHub wanted to find out.

The site analyzed a survey that assessed what Americans think a “fair” state and local tax system looks like, and then ranked states based on how their tax systems matched perception. Turns out, based on public opinion, Virginia’s system is pretty fair, with Maryland not far behind.

Rankings are:

The U.S. Internal Revenue Service

(IRS) is cracking down on fraudulent activity — and it has the numbers to back it up. The IRS Criminal Investigation (CI) 2015 annual report reveals a focus on tax-related identity theft, money laundering, public corruption, cybercrime and terrorist financing. CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. Stats from the annual report include: >> CI initiated 3,853 cases in FY 2015. >> CI had the highest conviction rate in all of federal law enforcement — 93.2 percent. >> 2015 had some of the most successful cases in CI’s history, including convicting the creator and owner of the “Silk Road” website (sentenced to life in prison and ordered to forfeit more than $183 million).

1. MONTANA 2. OREGON 3. SOUTH CAROLINA 4. DELAWARE 5. IDAHO 6. MINNESOTA 7. UTAH 8. VIRGINIA 9. COLORADO 10. MARYLAND Hawaii, Georgia and Washington bring up the rear with the tax systems deemed “least fair.” The survey discovered that most Americans think “fair” state and local tax systems impose higher taxes on higher-income households than on lower-income ones.

Check out where other states land and learn more about WalletHub’s key findings at www.wallethub. com, or scan the QR code with your smartphone. n

>> CI is coordinating with police agencies and governments in 33 countries in the ongoing investigation of FIFA.

>> BY THE NUMBERS

Check out the full report at http://tinyurl.com/ IRSCIAnnualReport. n

going down After ranking No. 1 for four straight years, Virginia continues to fall in the Forbes list of the best states for business. Now at No. 7, Virginia is beginning to suffer from higher business costs and a declining economic climate. n

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29 percent The turnout of total Virginia voters in the 2015 November general election, in which 140 seats in the Virginia General Assembly were up for election. There were 1,509,864 votes cast. Source: Virginia Board of Elections n

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Attention CPAs:

Whether A Decision Maker Looking To Upgrade Your Talent, Or A CPA Looking to Upgrade Yourself/Your Skills, Ask Yourself: Who really chose who in joining your company?

Are you/your professional staff really at the right level where you should be/you need them to be?

Are you/your staff in a position that truly suits your/their personality, values, and professional and personal needs?

Why leave your future to chance?

If you’re seriously interested in making the “right” move for your next hire, I can help you.

I am an actively licensed CPA in Maryland and Virginia with over 20 years of experience including public accounting (E&Y) and consulting (KPMG), financial accounting (American Cancer Society), internal audit (Moneyline Telerate), and recruiting (Acsys, formerly Don Richards). As a networker who truly enjoys helping others and sharing my career experiences to guide fellow professionals, here is how I can help you: Decision Makers:  Ask you questions, and most likely ask many more questions than other recruiters about your company, duties involved, skills required, corporate culture and more  Work with you on finding the “right” professional that is the “right fit”  Provide you with valuable information about the professionals I work with, the marketplace, what your competitors pay, and more Career Seekers:  Guide you on career paths available in public accounting and industry  Enable you to capitalize on your strengths  Coach you on how to put your best foot forward to find the “right fit”  Advise you when to stay in your current position if that is the right move If you’re interested in working with a recruiter who understands your background, skills, and is genuinely interested in helping you find the “right fit”, then I welcome meeting you!

BETH A. BERK, CPA, CGMA Independent Recruiter

Phone: 301-767-0670 Email: BethABerk@msn.com

Specializing in CPA Firm, Accounting & Finance Positions in Metropolitan DC & Nearby Suburbs/Baltimore/Richmond/Tidewater Connecting You To Your Next Hire

TM

Contingency & Retained Staffing Solutions

matching skills, experience & values with needs Serving clients and professionals as an Independent Recruiter since March 2005

TAXATION

The ‘FATCA effect’: A case study Make sure your clients understand U.S. tax rules regarding foreign income and assets.

BY OLAF BARTHELMAI, CPA

U.S. taxpayers are somewhat unique

in the world, as the United States taxes its citizens on their worldwide income regardless of where they reside. According to the Tax Foundation, the African nation of Eritrea is the only other nation that taxes based on citizenship, while all other countries tax income based on residency. For the United States, taxing based on citizenship extends to green card holders, permanent residents of the United States, and of course residents based on physical presence in the United States.

Therein lies, in large part, a lack of familiarity among taxpayers and

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tax preparers with foreign account reporting, resulting in a lack of compliance, ranging from many expatriates not filing tax returns to simply just not filing all required forms. However, this lack of information also extends to taxpayers living and working in the United States, especially regarding foreign bank accounts and other foreign assets.

I would like to tell the story of one taxpayer’s difficulties in dealing with the complexities of compliance and explain some of the rules along the way. In addition, having signature authority over foreign bank accounts

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TAXATION

also requires the filing of Form FinCEN 114, which is overlooked even more frequently than the filing when taxpayers own foreign accounts.

By now, most CPAs should know about the Foreign Account Tax Compliance Act (FATCA), passed by Congress in 2010, but few have been intricately involved in preparing Form FinCEN 114 (also known as FBAR, formerly form TD F 90-22.1) or Form 8938 (Statement of Specific Foreign Financial Assets). And even fewer are aware that although the U.S. Internal Revenue Service (IRS) is the civil enforcement agency entrusted with assessing penalties for failure to file or filing incomplete or incorrect forms, it is the Financial Crimes Enforcement Network (FinCEN), another part of the U.S. Treasury Department, that brings criminal cases regarding foreign financial accounts and other specific foreign assets.

Ultimately, this means the agency in charge of compliance is prosecuting criminal cases and thus generally assumes taxpayers who are not in compliance are hiding criminal enterprises or have evaded U.S. taxation on foreign source income. While some are, the vast majority of taxpayers are simply uninformed.

The penalties can be high. Civil penalties are generally a minimum of $10,000 per year per violation, and as much as 100 percent of the foreign assets for “willful” violations. Some cases have resulted in large penalties, including the case of a Florida resident, Carl Zwerner, whose penalty was 50 percent of the foreign account value each year for multiple years (200 percent total), and who recently settled for 100 percent of the foreign account value, losing all of his assets outside the United States. Being accused of willfully failing to file could not be overcome without appealing, and the 87-year old Zwerner did not want to spend the time it would take at his age, so he settled with the IRS for $1.8 million.

For the last two years, I have been working on a case which illustrates the compliance problems arising in this context. Every U.S. taxpayer (citizens, permanent residents and “tax residents”) is required to complete Form 1040 Schedule B Part III (if more than $1,500 of interest and dividend income) and file Form FinCEN 114 (FBAR) online/ electronically by June 30 of the following year if the taxpayer has a total of $10,000 or more in foreign bank and financial accounts at any time during the year. This form is filed with the Financial Crimes Enforcement Network either by individual filers at http://tinyurl. com/NoRegFBARFiler, or institutional filers at http://tinyurl.com/ FinCENenroll. Tax preparers must file as institutional filers unless the filing of FBAR forms is integrated into their tax filing software.

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The due date for the FBAR form is changing, however. As a result of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, the FBAR form due date moves to April 15, 2017, after being due on June 30 for the last time in 2016.

The case I handled involved a taxpayer who immigrated to the United States many years ago, but whose parents stayed abroad. As a result of the parents’ deaths a number of years ago, the taxpayer inherited a foreign variable life insurance policy, which included underlying investments in securities, as well as an investment account with mutual funds. The taxpayer was able to “step in the shoes of the deceased” under foreign law, and thus the life insurance was not paying any taxable income under foreign law.

The taxpayer paid foreign income taxes out of the securities account, but did not report the income or foreign taxes paid in U.S. returns. The taxpayer was unaware of any U.S. reporting requirements regarding income, as well as FBAR or Form 8938. When the taxpayer learned of the FBAR reporting requirement, she did not consult with her CPA, who was unfamiliar with the rules, but instead called the IRS. The agent advised her to enter the 2011 Offshore Voluntary Disclosure Initiative (OVDI), which is a way to “come forward” for taxpayers and pay all relevant income taxes, penalties and interest without facing criminal prosecution.

What the IRS agent did not mention was the mandatory 25 percent penalty (in lieu of the $10,000 per year) that taxpayers agree to pay when entering the program. CPAs and tax preparers need to be familiar enough with the requirements around foreign account reporting and how to disclose if any reporting has been missed, as my case will show. Initially it took the IRS about five months to accept the taxpayer into the program, but the long list of requested information was overwhelming. The taxpayer sent some of the information in her possession over the next year, but only after we discussed the case when the taxpayer asked me to represent her did she even become aware of the penalties she agreed to. The 25 percent penalty applies to the highest balance in all foreign accounts for the past seven years prior to entering the program.

Since Tax Year 2011, U.S. taxpayers with a certain amount of specific foreign financial assets must also file Form 8938 with their tax returns, and CPAs may be held liable under Circular 230 if reasonable inquiries have not been made regarding foreign assets. For residents living in the United States, the filing threshold is $50,000 (single) or $100,000 (married) at year-end or $75,000 (single) or $150,000 (married) at any time during the year, and these thresholds are significantly higher u

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counterparty that is not a U.S. person.

for U.S. taxpayers living abroad.

Specific foreign financial assets include: 1.

Financial accounts maintained by a foreign financial institution.

2.

The following foreign financial assets if they are held for investment and not held in an account maintained by a financial institution: a. Stock or securities issued by someone that is not a U.S. person (including stock or securities issued by a person organized under the laws of a U.S. possession), b. Any interest in a foreign entity, and c. Any financial instrument or contract that has an issuer or

The civil penalties are similar to not or late filing the FBAR form.

After determining all information needed by IRS, our case mainly involved establishing that the foreign life insurance would qualify as life insurance under U.S. law, as it otherwise represented another foreign investment.

Because of its passive nature in underlying corporations, this is called a Passive Foreign Investment Company, which is subject to additional penalties and filings. In the end, we could not persuade the IRS regarding the life insurance issue despite good evidence — but we could not agree to the 25 percent penalty, since the taxpayer had not done anything purposely to avoid paying U.S. taxes. The only way she could avoid paying the penalty was to

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opt out of the program and leave it up to the discretion of IRS to fully audit her and still assess civil penalties.

When we re-calculated the past returns required to be filed as part of the offshore voluntary disclosure, we discovered that although some additional tax was due in some years, other years resulted in refunds, which were of course outside the statute of limitations. If all returns had been filed correctly, the taxpayer would have received additional tax benefits overall during the seven-year period.

The IRS threatened a full audit and was unclear regarding the civil penalties, and despite the taxpayer’s facts fitting the Q&A criteria of no penalty under the newest OVDI, there was a risk of penalty assessment.

Finally, in June 2014, the IRS issued new streamlined procedures to deal with cases like this, resulting in a reduced 5 percent penalty. Without going into all details, this still required the taxpayer to pay all taxes and penalties as well as interest on any returns with tax due, but facing audits and a long process it was the best option.

The moral of the story is to ensure you know your clients well enough to be sure all information returns related to foreign accounts have been filed! n

OLAF BARTHELMAI, CPA, CGMA, is principal at Barthelmai Tax & Export Consulting, Inc., in Salem. He is a member of the Disclosures Editorial Task Force. obarthelmai@btec-inc.com connect.vscpa.com/OlafBarthelmai @IC_DISC_Expert linkedin.com/in/barthelmai

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MARKETING matters SEIZE THE OPPORTUNITY >>

Build better connections with clients

BY DAVID PETERS, CPA Stay: Reasons and Consequences of Inertia in Financial Services,” in Managing Service Quality, suggests that while discontentment with services generally increases over time, consumers are generally reluctant to switch banks due to the perceived complexities and time involved. In other words, it is not great service that keeps people at the same bank.

People just think it is too hard to change, so why bother?

While these studies may appear disheartening on the surface, they point out a tremendous opportunity for those working in service industries.

Customers within your industry may not be so overly enamored with the services they are being provided that they would never switch to your firm. However, the circumstances have to be right.

Have you ever wondered what separates

one financial services firm from another? Yes, I know. We may have different specialties or customers that we target. For example, one CPA firm may cater more to small businesses, while another may push their international tax services. Similarly, certain banks may target high net worth customers, while others may prefer small retail accounts.

However, even with these differences, these firms are not usually the only firm specializing in these areas. I am also not convinced that the way a tax return gets filled out at one firm is all that different from the way it gets filled out at another firm.

So what makes a customer choose one firm over another? And more importantly, from a business standpoint, is there anything that can be done to help customers choose my firm more often? How do we connect with our current clients so they never want to leave? How do we build strong connections with new clients? While these questions are difficult, answering them can help us build more sustainable practices — regardless of the type of service industry we are in.

A place to start is to look more closely at how people shop for financial services (and what keeps them from switching). Certainly, we don’t think of picking a CPA firm in the same way that we think of buying a box of cereal or a big screen TV. However, a recent research study in the Journal of the Academy of Marketing Science suggests that impulse buying can actually exist in service industries under the right conditions. The authors put forth the notion that impulse buying of services is highly predicated on the transparency of the services being provided, how difficult those services are to evaluate and tangibility.

Your job as a financial service provider is to make the circumstances ripe for new customers to switch — and make it so your existing customers never want to leave.

My intent here is not to suggest some new marketing approach for firms. (I am not a marketing guy by any stretch — just ask my colleagues!) Certainly, most financial services firms are highly regulated, and there are limits in how we can market ourselves.

However, within these limits, there would seem to be opportunities to connect with clients that perhaps we have not fully taken advantage of.

My goal over the next few issues of Disclosures is to give you some ideas of how to make these deep connections with clients, so you can keep the clients you have happy, and maybe win some new clients too. n This is the first in a series of Disclosures articles focusing on marketing trends and tips for CPA firms.

DAVID PETERS, CPA, is the strategic relationship manager and financial advisor for Carroll Financial Inc., in Charlotte, N.C. He is also an adjunct professor in accounting, insurance and ethics, a doctoral student in financial planning and sits on the Disclosures Editorial Task Force.

In short, people are more likely to jump to a new firm if they can see the value they are getting and potentially touch the product in a meaningful way.

dpeters@carrollfinancial.com connect.vscpa.com/DavidPeters www.carrollfinancial.com

Another research article on the banking industry, “Why Customers

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FRAUD

5 steps to fraud awareness

BY KEVIN DOYLE, CPA, CFE, CFF, CGMA

How much is your company losing each year to fraud?

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According to the 2014 Report to the Nations on

Occupational Fraud and Abuse from the Association of Certified Fraud Examiners (ACFE), survey participants estimated that the typical organization loses 5 percent of revenue each year to fraud. If applied to the 2013 estimated Gross World Product, this translates to a potential projected global fraud loss of nearly $3.7 trillion. That’s not a small amount of money.

Look at your company’s financial statements and calculate 5 percent of revenue. I’ll bet that’s not a small amount, either. Fraud has both directly and indirectly measurable costs.

Theft of assets (tangible and intangible) and their associated costs of investigation can be reasonably determined; however, the collateral costs associated with fraud and abuse, such as loss of business, reputational damage, eradication of employee morale and trust, etc., are more difficult to assess.

Combating fraud takes five elements: collaboration, communication, training, a robust “tone at the top” and effective investigative protocols. Remember, starting an effective fraud awareness program will take time and needs patience, but a measured, steady approach will render results. The process will take twists and turns and the approach will need adjustment and reassessment.

COLLABORATION Collaboration is working with others to do a task and achieve shared goals. What better way to manage the risk of fraud than working together? Everyone knows fraud is bad and everyone wants to help to minimize its adverse consequences. The key here is to create an environment in which open and honest dialogue is encouraged and welcomed.

Fraud can no longer be the “dirty little secret” that no one talks about. Standing still and accepting the status quo is inviting potential abuse.

The “tone at the top” is discussed below, but it’s important to note here that leadership must firmly and effectively support open dialogue.

Talking about fraud in a proactive manner can be a substantial paradigm shift for some and make others uncomfortable, so leaders must model that collaborative behavior.

COMMUNICATION Corporate leaders understand that effective communication is one of the most important cornerstones of a successful business.

Research shows that a proactive approach to fraud awareness will not only minimize the loss of theft, both in dollars and opportunity, but also provide earlier detection.

The 2014 Ethics Communications Best Practices Report released by Ethisphere refers to this statistic from the 2013 Edelman Trust Barometer: Only 19 percent of survey respondents believe that business leaders make ethical and moral decisions. (The Edelman Trust Barometer annually measures trust in government, business, media and non-governmental organizations.)

I liken fraud awareness and corporate ethical behavior to movie background music. I think we all agree movies would probably be just okay without music, but music undoubtedly adds to the experience. An effective communication plan can be the ethical background music that employees stream.

The goal is to create effective messaging that is relevant, timely, practical and notable. Message frequency is sometimes art and sometimes science. The key is to not overexpose fraud awareness to such a level that employees tune it out. We don’t want messaging to devolve to “junk mail” or TV commercial status! Collaborate with your communications department, human resources and other disciplines that message to employees on a regular basis.

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Once the communication program is up and running, think about ways to measure its effectiveness. Determine if you can assess touch points such as clicks on emails, hits on the company’s intranet, attendees at presentations and the like. Identify ways to report results to leadership. Having said that, there is no better way to communicate fraud awareness than in person. Connecting the message to the messenger is invaluable.

Employees are very busy and, at times, at distant locations with limited real-time access to “corporate.” Communicating ethics and fraud awareness via impersonal methods such as email, slides, texts, etc., may diminish the desired impact and result in indifference.

It’s about trust and transparency. An effective communications program will go a long way in establishing or enhancing an important cornerstone for a successful business.

TRAINING The importance of fraud training cannot be understated. Based on the ACFE report, less than 50 percent of respondents say u

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they provide fraud training to their employees, yet companies lose 5 percent of their topline revenue to fraud! These two statistics appear to be at odds with each other. Typical companies lose money to fraud, yet more than one-half of the surveyed companies don’t provide necessary training to help minimize such losses.

Company employees are the best asset to combat the fight against fraud. Educated employees enhance the return. We accountants are notorious for wanting more review, additional levels of approval and multiple signatures, yet such recommendations need to be balanced against head count, payroll costs and the like. Just think of positive impact your company will enjoy by having many more pairs of eyes supporting the company’s need to minimize its business risk of fraud. It’s a win-win: Additional control with little incremental cost.

This is not to suggest that training will arm employees to be fraud investigators, but it can enable them to identify a possible issue and then have the wherewithal to properly report it. A word of caution: The training needs to make clear that should an employee witness a possible violation of law or company policy, they cannot act on it other than to report it. Too often, I have been involved in investigations in which the proper reporting protocols were not followed, which led to evidence spoilage, interference and other complications No single training platform can apply to any one company. Designing an effective program must be the result of an exhaustive, collaborative process that considers management goals and objectives, culture (corporate and geographic), industry, risk vulnerabilities, cost benefit and so on. The American Institute of CPAs (AICPA), the Institute of Internal Auditors (IIA) and the ACFE have developed a guidance paper called Managing the Business Risk of Fraud: A Practical Guide, which provides general recommendations around establishing an environment to effectively manage an

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organization’s fraud risk. The guide has tools, outlines and other information for developing effective fraud risk mitigation processes.

When it comes to training, the adage “what gets written gets done” is spot-on. Fraud and/ or ethics training should be included as part of overall corporate training and tailored to address roles and responsibilities. This achieves a couple of objectives: it advises employees about the investment the company is making into doing the right thing and it reinforces the “tone at the top.” A change in employee status should include training to reflect her or his new duties. Including fraud/ ethics training as part of employee annual goal setting is another effective measure.

You should also require employees take a post-session quiz or questionnaire and achieve a “passing” score to measure desired comprehension.

Fraud/ethics training must be required for new hires. Other elements of new-hire training should include code of conduct, policies and procedures, their role within the internal control framework, fraud prevention and detection, whistleblower policy, etc.

Part B, Chapter 8 of the U.S. Sentencing Guidelines outlines prescriptive steps that an organization must consider to prevent and detect criminal conduct. One such step is: Communicate the program’s standards and procedures throughout the organization, including training that is tailored to members of the governing authority, high-level personnel, substantial authority personnel, the organization’s employees, and applicable agents of the organization.

Accordingly, in many corporations, an effective training program in not only a good idea, but required.

create the depth and breadth needed to enhance the quality and character of their words.

Without such actions, the words will ring hollow, employees will lose faith in leadership and the corporate ethic could begin to fray.

Your company will enjoy a positive impact by having many more pairs of eyes supporting the company’s need to minimize its business risk of fraud. Unfortunately, the opposite is true if employees lose trust; they may turn a blind eye toward fraud. Leadership must exhibit clear and unequivocal support through both words and actions.

All of this presumes, however, that the right people are in place to set the tone and they display the proper attitudes for ethical behavior. The board of directors should ensure it is governing properly and the company’s hiring, training, job descriptions and expectations for senior leadership are proper.

Logical and consistent discipline is important.

Extreme care must be exercised when considering whether or not to share the results of disciplinary actions. Please make sure all internal resources are consulted, including, but not limited to, legal and human resources.

Having said that, when an investigation is ongoing, employees know something is going on.

When employees see these kinds of actions taken by leadership, they see the “tone at the top” in action.

How many of us have heard a commentator say the following during a football game: “Did you hear the hit the linebacker put on the running back? He is sending a message and setting the tone for the rest of the game!”

Wouldn’t it be wonderful if a company’s employees hear the same “hit” (tone, quality and character of sound) from leadership and carry out that message?

TONE AT THE TOP

EFFECTIVE INVESTIGATIVE PROTOCOLS

“Tone at the top” is an organization’s general ethical climate as established by its board of directors, audit committee and senior management. Effective action by leaders will

The common thread of these four elements is that they are all proactive measures a company can take to minimize their business risk of fraud. I liken these proactive measures to

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emergency evacuation plans we see posted near elevators. They generally say something to the effect of “In case of emergency, do not take the elevators and go to the nearest marked exit” along with a schematic with arrows to instruct where to go. These measures should achieve the same; when an employee, customer, vendor identifies a possible violation, there should exist protocols that instruct what to do “in case of emergency.”

According to the ACFE report, nearly 43 percent of frauds are identified from tips — and nearly 50 percent of those tips come from employees. Management review is responsible for uncovering 17 percent of fraud, followed by internal audit (14 percent), accident (7 percent), account reconciliation (7 percent), document examination (4 percent), external audit (3 percent) and other (5 percent). (It’s interesting to note that the survey found it is twice as likely for a company to identify fraud by accident than by external audit.)

Here is the important takeaway: Your employees are your best resource to surface fraud. Having effective and proactive collaboration, communication, training and tone at the top will go a long way to minimize a company’s risk of fraud.

Effective investigative protocols help lash these four elements together.

It is not an overstatement that organizations prefer to avoid internal investigations.

Investigations are a drain on resources: they disrupt business at hand, create commotion and disturbance in the workplace and so on.

However, investigations can and will happen, and having effective processes in place will help minimize their adverse consequences.

As the ACFE report found, employees surface almost one-half of frauds; your employees are your biggest asset! Enable employees to recognize possible wrongdoing and make sure they understand how and where to report it.

The means by which employees can report

matters must be prominently communicated, advertised and distributed in posters, emails, newsletters, envelope stuffers, webinars or any other media that best gets the message out.

Be prepared to advise employees about matters that they may deem to be “too small.”

An effective reply is to advise employees that if they believe they have seen an impropriety, they should report it, even if it is simply to their superior. Effective investigative protocols stress that the superior report it to his or her superior, so that it reaches the proper level of stakeholder involvement. This achieves many things: it creates a data point that can be captured and merged with other data to possibly identify previously unknown vulnerabilities, it permits the properly trained resources to assess the seriousness of the matter, it reinforces effective collaboration and communication and it supports the tone at the top.

It is equally important that employees do not do their own investigation. Leave it to the pros!

After a matter has been reported and it is determined an investigation is needed, an investigative team should be created. Some companies have standing teams and others are ad hoc. The team members should be as independent as possible from the matter and be properly trained so that a prompt, competent and confidential investigation is performed. Based on the complexity of the matter, consideration should be given to engaging outside counsel and/or other thirdparty resources.

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In addition to work plans, it helps to create a timeline of events and persons linked to those events in a chart. Generally, I will include time on the Y-axis, the person on the X-axis and the event in the grid. Filtering information is also important, because it comes fast and furious and in many different forms such as interviews, email reviews, internet searches, data analytics, etc. This information is captured in silos and filtering helps reorganize it in a different manner. It is very important to “park” information so that it is readily available. Something originally deemed insignificant could possibly be an important fact later. Mixing and matching information from the filter and timeline will uncover trends and relationships and provide an effective way to cross-reference investigative findings.

To avoid reactive measures to fraud, the proactive measures of collaboration, communication, training and tone at the top can go a long way to keeping your company’s revenue in its own pocket. n

KEVIN DOYLE, CPA, CFE, CFF, CGMA,

The Internet is stocked with investigative programs that can address just about any kind of fraud, from cash theft to books and records, corruption, bribery, etc. Depending upon the age, formality, sophistication and resources of the investigative discipline, there will be varying levels of internal, historical information that can be leveraged as well.

Whether you are pulling something from the Internet, using prior work papers or some combination of both, it is important to take

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the time to modify the current program to reflect the uniqueness of the investigation. No two investigations are the same. Investigations are iterative: the more we learn, the more we do not know. It is vitally important to continually test and retest hypotheses and a well-documented work plan will greatly assist in that task.

is a forensic consultant who conducts investigations of fraudulent, illegal or improper activities and assists organizations in managing their business risk of fraud. kevinedoyle@comcast.net connect.vscpa.com/KevinDoyle

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NONPROFIT

Big changes ahead in nonprofit financials Nonprofit financial statements will see the largest changes since 1993.

BY MELISA GALASSO, CPA

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On April 22, 2015, the U.S. Financial Accounting Standards Board (FASB) issued Proposed Accounting Standards Update (ASU) 2015-230, Not-forProfit Entities (Topic 958) and Health Care Entities (Topic 954), Presentation of Financial Statements of Not-for-Profit Entities. It proposes some of the largest changes for nonprofit financial statements since Financial Accounting Standards (FAS) 116 and 117 were issued in 1993.

While the proposed ASU does not make changes to recognition or measurement, the impact on the presentation and disclosures for nonprofit financial statements is vast.

FASB’s Not-for-Profit Advisory Committee was instrumental in requesting that financial statements be updated to help better communicate the financial situation for nonprofit entities, which include private colleges and universities; private hospitals; and religious and charitable organizations, in addition to foundations and trade associations.

FASB has faced many challenges in proposing a standard that would meet the needs of this diverse industry. We’ll break down the proposed changes by financial statement affected.

STATEMENT OF FINANCIAL POSITION One of the biggest proposed changes for the statement of financial position is the reduction of net asset classes. Currently, nonprofit entities present three classes of net assets: Unrestricted, temporarily restricted and permanently restricted. Each class comes with its own set of issues.

First, the term “unrestricted” is often interpreted to mean that there are no restrictions on spending. However, that is

typically not the case. Unrestricted indicates that there are no donor restrictions, but there could be board, legal or contractual restrictions, or the amount may be in assets that are not spendable. Therefore, in the exposure draft, FASB proposed renaming this class “net assets without donor restrictions” to more clearly label the true intention of the classification.

In addition, in the world of the Uniform Prudent Management of Institutional Funds Act, many boards have policies to prudently spend from their permanently restricted net assets. With this ability, there was some discussion over whether something was permanently restricted if an organization was able to spend it. Therefore, FASB proposed to combine the current temporarily and permanently restricted net asset classes and call the new classification “net assets with donor restrictions.”

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Currently, some nonprofit entities disclose information about board of directors’ designations. In the proposed ASU, organizations would be required to disclose board designations, appropriations and transfers that impact self-imposed limits on the use of resources. Organizations would be required to disclose the description of the purpose, amounts and types of transfers and qualitative and quantitative information about any period-end balances. These disclosures would include quasi-endowments, liquidity reserves and any other campaigns for which the board restricts the use of funds for a given purpose or time period.

Liquidity is another area affected by the proposed ASU. Many nonprofits were greatly impacted by the recession in the latter part of the 2000s. Many found that while they had endowments or other investment vehicles, the illiquidity of the assets caused serious issues.

As a result, the proposed ASU would require both qualitative and quantitative disclosures about the organization’s liquidity. A nonprofit organization would also have to disclose a selfdefined time horizon for the consideration of liquidity. It would then need to breakdown its financial assets between u

While this may appear to reduce the information to the user, this change only occurs on the face of the financial statements.

In fact, the required disclosures actually increase the information required to be provided to users. Information about the restrictions imposed by donors on the use of contributed assets, including their potential effects on specific assets, and on liabilities or classes of net assets, would be required to be disclosed. Additionally, the

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proposed ASU would require the disclosure of the composition of net assets with donor restrictions at the end of the period and how the restrictions affect the use of resources.

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One of the biggest proposed changes for the statement of financial position is the reduction of net asset classes.

those that were available within the selfdefined time horizon and those that were not.

It would then disclose the amount of financial liabilities due within the same period of time.

Qualitatively, the organization would disclose how it determined the time horizon, as well as the organization’s strategy, for addressing entity-wide risks that could affect liquidity and if the entity had a policy for establishing liquidity reserves.

Another proposed change to the statement of financial position includes presenting underwater endowments within the “with donor restrictions” class of net assets.

STATEMENT OF ACTIVITIES The statement of activities has some major proposals to give it a remodel. The first includes adding an intermediate measure of operations for all entities. The exposure draft

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proposes using two dimensions — availability and mission — to separate the statement of activities into operating and non-operating.

Mission would be all items related to the nonprofit’s purpose. In addition, only those items that are considered “available,” meaning there were no donor or board restrictions on use, would be considered operating. The goal is to provide more comparability between nonprofits.

Currently, nonprofits in the health care industry are required to present a performance indicator. The proposal would remove the requirement of a performance indicator and require all nonprofits to present an “intermediate measure of operations.”

The proposal also requires the presentation of transfers on the face of the statement of activities. Transfers out of operations occur when the board (or its authorized designees) takes a portion of net assets, makes them currently unavailable and requires they be used in a future period. On the other hand, a transfer into operations occurs when the board makes net assets available that were previously unavailable — through a spending policy, for example. These transfers would show as line items within a separate section called “transfers” on the face of the financial statement. In addition to showing those transfers, organizations would be required to disclose the purpose, amount and types of transfers in the notes.

Using the concept of transfers and intermediate measure of operations, the proposed statement of operations would have at a minimum five subtotals: change in net assets, change in net assets with donor restrictions, change in net assets without donor restrictions, operating excess (deficit) before transfers and operating excess (deficit) after transfers. While this may seem a little overwhelming, FASB offers flexibility in how to present these required subtotals: a one- or two-statement approach.

Under both approaches, the same net number will be used. In addition, there will always be

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a total for operating amounts, non-operating amounts and donor-restricted amounts. In a one-statement approach, all the subtotals would appear in one statement. Check out examples of these statements at www.vscpa.com/NonprofitTables.

In Table 1, all the items in light blue include the intermediate measure of operations. The dark blue indicates those items that are nonoperating because they are either not related to the mission or not available. The items in the purploe box would include any donorrestricted amounts.

In Table 2, the statement is broken up into two separate statements. The first is the statement of operations, which includes all items in the intermediate measure of operations (all items in light blue that are available and missionoriented). Then in a separate statement, the final value from the statement of operations is carried over and the items that are nonoperating (dark green), and donor restricted (purple) are added in a statement called the “Statement of Changes in Net Assets.”

In both examples, all the same items are shown. It would be at the preference of the organization to decide to use either a onestatement or two-statement approach.

The exposure draft also requires all nonprofits to disclose all operating expenses by both nature and function in one place within the financial statements. FASB says this can occur within the statement of activities, in a separate statement of functional expenses or in the notes to the financial statements. Natural expenses would be typical general ledger classifications (i.e., salaries, rent, utilities etc.).

Functional expenses would analyze expenses between the various programs of the entities, with a separate category for supporting activities. Because the supporting activities are mission-driven, they would be considered operating expenses and included in the analysis. Non-operating expenses would only be required to be reported by nature.

In addition, FASB proposes changes to the presentation of investment income.

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Organizations would report investment returns net of any related external and direct internal investment expenses. Investment return net would then be presented as one line item in the non-operating section of the statement of activities. The draft also proposes disclosing the amount of internal salaries and benefits that have been netted against investment return.

STATEMENT OF CASH FLOWS The cash flow statement also has several proposed changes; most notably is the requirement to use the direct method of cash flows for all entities. Currently all entities — public, private and nonprofit alike — have the option to use either the direct or indirect method under FASB. Those entities that follow the U.S. Governmental Accounting Standards Board (GASB), however, are required to use the direct method. Many people believe that the direct method is easier for users to understand and provides clean explanations for how cash was received and spent. Conversely, many preparers feel it is more difficult to prepare. Currently, if an entity prepares the cash flow statement using the direct method, they must also present a reconciliation similar to the indirect method.

In the proposal, the FASB eliminates the requirement to also present the reconciliation and would only require the direct method.

The reconciliation would be permitted but not required.

The exposure draft proposes a reclassification of certain items within the cash flow statement. The goal would be to more closely align the cash flow statement with the statement of activities and the new concept of “operating.” Some of the proposed reclassifications include presenting purchases of long-lived assets, contributions restricted to acquire long-lived assets and sales of long-lived assets as operating cash flows.

Payments for interest on borrowings and cash contributions restricted for long-term (non-programmatic) investing would be treated as financing cash flows. Finally, cash receipts of interest or dividends would be

treated as financing cash flows. Cash receipts or payments for interest or dividends that are programmatic in nature because of their mission orientation would continue to be treated as operating.

the staff proposed and FASB agreed to split the exposure draft into two workflows.

THE BIG PICTURE The exposure draft proposes retrospective adoption of all the changes included in the proposal. It did not include an expected effective date, but did include a question for respondents on whether the effective date should be the same for all types of nonprofits. The draft was issued with a 5-2 vote; FASB Chairman Russell G. Golden and Vice President James L. Kroeker both voted against the proposal. In the basis for their dissent, they indicated their support for many of the features, but felt that some areas in the proposal were not unique to nonprofits and should not be included.

FASB OUTREACH FASB received 264 comment letters from academics, accounting firms, preparers, users and other interested individuals. In addition to the comment letters, FASB held 10 workshops to solicit feedback in five cities across the United States. They also held three public roundtables: two in FASB’s hometown of Norwalk, Conn., and one in California.

I had the opportunity to attend the afternoon session in Norwalk as a representative of the North Carolina Association of CPAs (NCACPA). The discussions were lively and attendees passionately discussed the topics. All FASB members were present at the roundtable I attended. In addition, we had users, preparers and auditors in the room. It was a great experience to see due process in action.

At FASB’s Oct. 28, 2015, meeting, they discussed constituents’ feedback. The staff concluded that, overall, constituents support the objectives of the project. Concerns include the diversity of the nonprofit industry and the further divergence from for-profit entity financial statements. Based on the feedback,

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Those items that could be completed by June 30, 2016, as enough feedback was provided, will be considered workstream 1. Those items that the staff felt could be deliberated in one day include net asset classes presented as two classes, disclosure of board designated funds, underwater endowment classification, as well as requiring expenses by both nature and function and changes to investment expenses. Items that could be completed by June 30, 2016, and that are included in workstream 1 but would require more than one meeting, include the direct method of cash flows and liquidity disclosures.

Items that would be deferred until workstream 1 is complete include the operating measure and the realignment of the statement of cash flows.

The FASB has considerable work ahead of them to get a final ASU issued. I expect additional discussions and outreach for the near future. Nonprofits, users of nonprofit financial statements and auditors of nonprofit statements should continue to monitor the progress. n

MELISA GALASSO, CPA, is a senior manager in the Audit Professional Practices Department at Cherry Bekaert LLP in Charlotte, N.C., where she assists with technical issues and quality control of the firm’s assurance services practice. A VSCPA speaker, she was recognized as a Super CPA by Virginia Business magazine in 2007. hoffmamf@aol.com connect.vscpa.com/MelisaGalasso

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ACCOUNTING

SSARS 21 A new engagement reality

BY NEENA SHUKLA, CPA, CFE, CGMA

The Statement on Standards for Accounting and Review Services (SSARS) No. 21, Statement on Standards for Accounting and Review Services: Clarification and Recodification — better known as SSARS 21 — is effective for the calendar year end 2015.

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Many have heard about SSARS 21 in some form or other. But do you really know what it entails and the changes this new guidance brings?

SSARS 21 is the most significant change to the standards on accounting and review service since their inception in 1978. The American Institute of CPAs (AICPA) Accounting and Review Services Committee’s (ARSC) efforts to clarify and revise standards for reviews, compilations and engagements to prepare financial statements resulted in SSARS 21 in October 2014. Why? A big factor was that the submission trigger, which determined the applicability of the compilation standards, was no longer practical in today’s technology age.

The need for an engagement-driven standard consistent with review and auditing standards led to SSARS 21.

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SSARS 21 is broken out into four sections: Section 60 — General Principles, Section 70 — Preparation of Financial Statements, Section 80 — Compilation Engagements and Section 90 — Review of Financial Statements.

While early adoption was permitted, the guidance is effective for periods ending on or after Dec. 15, 2015.

SECTION 60: GENERAL PRINCIPLES FOR ENGAGEMENTS This Section replaces AR section 60 — Framework for Performing and Reporting on Compilation and Review Engagements and helps accountants understand their professional responsibilities. It includes guidance on ethics, professional judgment, conduct of the engagement, engagement level quality and acceptance and continuance.

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Section 60 adds engagement partner responsibilities and acceptance and continuance requirements to all SSARS engagements and now a signed arrangement letter is required for all preparation engagements.

in accordance with SSARS unless they believe that relevant ethical requirements will be satisfied, that they will receive reliable information needed to perform the engagement and that they have no cause to doubt management’s integrity.

The standard refers to an “Engagement Partner,” defined as the person who is responsible for the engagement. It can be a partner or any other person in the firm who has overall responsibility for the engagement and, when required, has the appropriate professional legal or regulatory authority.

Firms will have to decide who they will designate as this engagement partner.

SECTION 70: PREPARATION OF FINANCIAL STATEMENTS

AR-C 60.19 states that the engagement partner of a SSARS engagement should possess adequate competence and capabilities to perform the engagement. So what is the engagement partner responsible for?

AR-C 60.20 says: >> Overall quality of the engagement >> Directing, supervising, planning and performing the engagement to comply with all applicable professional standards and ethical and legal requirements >> Appropriateness of the accountant’s report, if applicable >> Performing the engagement in accordance with the firm’s quality control policies and procedures The engagement partner must emphasize that quality is essential in a SSARS engagement by ensuring that the performance of work complies with applicable professional standards and regulations and the firm’s quality control policies and procedures.

Additionally, it’s critical to issue an appropriate report when applicable to be able to raise concerns without fear of reprisals.

AR-C 60.24 states that an accountant should not accept an engagement to be performed

assisting in preparing financial statements (i.e. bookkeeping, which is not subject to SSARS).

Table 1 (page 24) provides guidance.

This section applies to an accountant in public practice engaged to prepare financial statements but not engaged to perform an audit, review or compilation. This is a nonattest service, so the determination of independence is not required. However, if the client or an affiliate is also an attest client, the performance of this service could affect independence. The guidance of Interpretation 101-3 of the Code of Professional Conduct remains applicable.

A report is not required to be issued, but the standard does require that, at a minimum, each page of the financial statements should indicate “no assurance is provided.” This will allow users of the financial statements to know that there is no assurance provided.

If a statement cannot be included on the face of each statement, then the accountant is required to issue a disclaimer so it is clear that no assurance is provided or perform a compilation in accordance with section 80.

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If the financial statements are prepared in accordance with a special purpose framework, the CPA is required to describe the financial reporting framework used. The financial statements must disclose, either on the face of the financial statements or in a selected note or notes, any material misstatements such as those caused by a known departure from the applicable financial reporting framework or inadequate disclosures.

Using a comprehensive disclosure checklist will be important to capture all required disclosures for a preparation engagement.

So how is a preparation engagement different to a compilation engagement? Well, both need an engagement letter that is signed by management. There is no determination of independence for a preparation u

It is a significant challenge to determine whether an accountant has been engaged to prepare financial statements or is just

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You may be asking whether the new financial statement preparation service that has been created by SSARS 21 is the same as the pre-SSARS 21 management — use only compilation engagement. These are not the same, even though they are both nonreporting options. SSARS 21 Section 70 enables the CPA to prepare financial statements for use by a third party, not just management, without having to issue a compilation report.

In a management-use-only compilation engagement, a CPA would state in the engagement letter that material departures from the applicable financial reporting framework may exist and that the effects of those departures, if any, may not be disclosed.

If there are modifications that would otherwise be in an accountant’s report on the financial statements, then these must be included in the notes to the financial statements, or if disclosures are not included, on the face of the financial statements.

These include, but are not limited to, departures from U.S. Generally Accepted Accounting Principles (GAAP), special purpose frameworks, omitted or incomplete disclosures and going concern modifications.

DISCLOSURES

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ACCOUNTING

TABLE 1: IS IT STATEMENT PREPARATION OR BOOKKEEPING? EXAMPLES OF SERVICES FOR WHICH SECTION 70 APPLIES

EXAMPLES OF SERVICES FOR WHICH SECTION 70 DOES NOT APPLY

Preparing financial statements prior to audit or review by another accountant

Preparing financial statements when the accountant is engaged to perform an audit, review or compilation of such financial statements

Preparation of financial statements for an entity to be presented alongside the entity’s tax return

Preparation of financial statements with a tax return solely for submission to taxing authorities

Preparation of personal financial statements for preparation alongside a financial plan

Preparing personal financial statements for inclusion in written personal financial plans prepared by the accountant Preparing financial statements in conjunction with litigation services that involve pending or potential legal or regulatory proceedings Maintaining depreciation schedules Preparing financial statements in conjunction with business valuation services

Preparing a single financial statement, such as a balance sheet or financial statements with substantially all disclosures omitted

Drafting financial statement notes

Preparing or proposing certain adjustments, such as those applicable to deferred income taxes, depreciation or leases Using the information in a general ledger Entering general ledger transactions or processing payments (general to prepare financial statements outside bookkeeping) in an accounting software of an accounting software system system

engagement, but this does need to be considered for a compilation. For a preparation engagement you need a statement on each page of the financial statements indicating there is no assurance and a report is required for a compilation. Third-party use is allowed for both preparation and compilation engagements. Omission of disclosures is allowed, if disclosed for both, and departures from the applicable framework must be disclosed for both as well.

There are many similarities between the two engagements, and the new preparation engagement now allows more flexibility in being able to provide services to clients to fit their needs.

SECTION 80: COMPILATION ENGAGEMENTS This section applies to engagements to compile and report on financial statements. It does not matter if the financial statements are for management use only or used externally — either way, a report is required. Under SSARS 21, accountants perform compilations when engaged to do so. The submission trigger that drove whether or not to compile has been removed.

Accountants are required to obtain an engagement letter signed by the accountant and management or those charged with governance, as appropriate. Management must sign the letter to ensure they have read it and understand the terms.

The compilation report is now streamlined with no headings, so as to differentiate it from a review and an audit. The report is also much shorter; one paragraph instead of three and no title, but the city and state where the accountant practices should be included.

Additional paragraphs are required for the following: >> Special-purpose framework >> Substantially omit all disclosures >> Independence impaired

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revised financial statements differs from the accountant’s review report on the original financial statements

>> Known departure from applicable financial reporting framework >> Supplementary information

>> Supplementary information that accompanies reviewed financial statements and the accountant’s review report thereon

SECTION 90: REVIEW OF FINANCIAL STATEMENTS This section applies to engagements to perform a review of financial statements. A signed engagement letter by the accountant and management is required for all review engagements. There are very few changes to this section other than getting it in line with the clarity redraft.

The review report does look different because it uses headings and the accountant is required to name the city and state of the issuing office.

This can be achieved by using letterhead.

While pre-SSARS 21 guidance stated that emphasis paragraphs were never required, the new guidance requires an “emphasis of matter” and “other matter” paragraphs to be included in the accountant’s report for the following items: >> Financial statements prepared in accordance with a special purpose framework >> A changed reference to a departure from the applicable financial reporting framework when reporting on comparative financial statements >> Reporting on comparative financial statements when the prior period is audited >> Reporting a known departure from the applicable financial reporting framework that is material to the financial statements >> Reporting when management revises financial statements for a subsequently discovered fact that became known to the accountant after the report release date and the accountant’s review report on the

to provide to a client to best suit their needs.

It allows an accountant to prepare financial statements without the issuance of a report and does not require the consideration of independence.

>> Required supplementary information If the accountant expects to include an emphasis of matter or other matter paragraph in the accountant’s review report, the accountant should communicate with management regarding this expectation and the proposed wording of the paragraph.

The accountant is required to obtain evidence that the financial statements reconcile to the accounting records. This is most commonly done by comparing the financial statements to the entity’s general ledger or trial balance.

If other accountants have audited or reviewed the financial statements of significant components, such as a subsidiary, then the accountant should obtain and read these reports. If responsibility for the other accountants’ work is not assumed, then reference to the review or audit report should be made.

The accountant is required to accumulate and evaluate misstatements while performing a review and determine whether modifications should be made to the financial statements.

In addition, if there are material known departures from the applicable financial reporting framework, the accountant should consider whether modifications to the standard review report are adequate or whether he or she should withdraw from the engagement.

SUMMARY SSARS 21 is here. It’s the new reality and it’s effective for calendar year 2015. The new standard has created a new service: a preparation engagement. Preparation engagements allow flexibility in what service

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SSARS 21 now requires an engagement letter signed by management to ensure they understand the terms. Compilation engagements are now driven by what the accountant has been engaged to perform and not the old submission trigger — and a report is always required. The compilation report is streamlined to distinguish it from assurance reports. Review engagement guidance was basically updated to conform to clarity standards but now emphasis of matter and other matter paragraphs are required.

The new guidance needs to be adopted by firms and will require staff training and updates to the quality control policies. This is an opportunity to have those discussions with clients to find out what they really need; if a preparation engagement meets their needs, it should be implemented. The new reality is here and you should now be ready to embrace it. n

NEENA SHUKLA, CPA, CFE, CGMA, is senior assurance manager and government contracting niche leader at PBMares, LLP, in Fairfax. She is also the leader of the firm’s technical and emerging issues group. nshukla@pbmares.com connect.vscpa.com/NeenaShukla

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CHAPTERS

A regional focus: VSCPA chapters Networking at the chapter level

monthly meetings and activities to involve you in the VSCPA at the local level. You may join any chapter you’d like, regardless of where you live or work. Each chapter has a separate application and dues structure, and you must be a member of a state society to join a chapter.

is a highly valued benefit of membership.

Chapters are one of the best ways to jump start your involvement in the profession and your community. There are 10 regional VSCPA chapters, some of which hold regular

NORTHERN BLUE RIDGE

BATTLEFIELD

THOMAS JEFFERSON RICHMOND ROANOKE CENTRAL HIGHLANDS PIEDMONT

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BATTLEFIELD Areas served: Culpeper, Fauquier, Gainesville, Fredericksburg, Manassas, Rappahannock, Spotsylvania, Stafford, Warrenton and Woodbridge Website: Visit the Battlefield Chapter website, http://battlefieldvscpa.com, for additional information about membership and upcoming chapter events.

Current officers: >> President: Andrew Grossnickle, CPA, Robinson, Farmer, Cox Associates

TIDEWATER Areas served: Accomac, Capron, Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Smithfield, Suffolk, Virginia Beach, Williamsburg, York County and surrounding areas

THOMAS JEFFERSON

ROANOKE

Areas served: The counties of Albemarle, Augusta, Buckingham, Fluvanna, Greene, Louisa, Madison, Nelson, Orange and Rockbridge and the cities located within these counties Membership: Dues are $45 per year, which also includes event discounts for the year.

Meetings: The membership gathers monthly from May until December for CPE and networking events scheduled by the chapter officers. The meetings are held at the Omni Charlottesville Hotel. Events are open to nonmembers.

Website: Visit the Thomas Jefferson Chapter website, www.tjvscpa.clubexpress.com, for more information or to become a member.

Website: Visit the Tidewater Chapter website, www.tcvscpa.com, for additional information about membership and upcoming events.

Current officers: >> President: Brian E. Deibler, CPA, CGMA, Malvin Riggins & Co., PC >> Vice President:Kevin Stewart, CPA, Stewart & Company >> Secretary:Angie Hetherington, CPA, sole proprietor >> Treasurer:Nicole J. Wood-Sabo, CPA, MS, McPhillips, Roberts & Deans, PLC

DISCLOSURES

Membership: Dues are $40 for CPAs and $20 for non-CPAs, due on July 1. There are also free student and retired membership rates.

Meetings: The membership meets the fourth Thursday of each month except November, December and March. All meetings are held at The Shenandoah Club in Roanoke. Special meetings, like CPE and Student Night, are held at the Roanoke Country Club.

Current officers: >> President: Keith Gray, CPA, Brown, Edwards & Company, LLP >> Treasurer: Deana L. Sentman, CPA, Cherry Bekaert LLP

Current officers:

Membership: Annual dues are $150 per year ($145 if paid by May 31).

Areas served: Blacksburg, Christiansburg, Clifton Forge, Covington, Lexington, Pearisburg, Pulaski, Radford, Roanoke, Rocky Mount, Salem, Stuart

>> President: Charron Montgomery, CPA, McCallum & Kudravetz, PC

Special thanks to Barbara Sukramani, CPA, a member of the Disclosures Editorial Task Force, for her help compiling this information.

>> Vice President: David R. Bendahan, CPA, General Dynamics >> Secretary: Margaret M. Reisser, CPA, General Dynamics >> Treasurer: Christine A. Allison, CPA, The Core Knowledge Foundation >> Past President: Gregory M. Johnson, CPA, MartinWren, PC

>> WHAT CAN A CHAPTER DO FOR YOU? There are many benefits to joining a chapter. If you are a young pro, chapters can help you beef up your leadership skills. Network locally and keep up with what is happening in your own back yard. There are opportunities for CPE, mentoring (either as the mentor or mentee) and volunteering. Contact your local chapter to find out how you can get involved!

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CHAPTERS

NORTHERN

RICHMOND

Areas served: Alexandria, Arlington, Dale City, District of Columbia, Fairfax, Falls Church, Loudoun County, Manassas, Springfield, Vienna, Woodbridge, suburban Maryland

Areas served: Ashland, Blackstone, Colonial Heights, Goochland, Kenbridge, Kilmarnock, Mechanicsville, Montross, Petersburg, Richmond, Tappahannock

Membership: The full membership year of the Northern Chapter began in September 2015 and ends in May 2016. Dues for 2015– 2016 are $210 and include: >> Five dinners and two breakfasts at our meetings >> 2–4 hours of CPE offered at each dinner meeting

Membership: Dues are $125. Benefits include: >> Included CPE >> Several networking events with other CPAs and potential referral sources >> An annual dinner to recognize past presidents and scholarship recipients

>> 1–2 hours of CPE offered at each breakfastmeeting​

>> Coordinated support of the VSCPA’s legislative monitoring and lobbying of the Virginia General Assembly

>> Discussions on issues affecting CPAs and the profession

>> Dynamic, informative and motivating speakers

>> Interaction with attorneys, planners, legislators, tax officials and others

>> Giving back to the profession by supporting local high school and college accounting and business programs

>> Networking opportunities >> Leadership opportunities

>> Giving back to the community in a CPA Day of Service event

Website: Visit the VSCPA Northern Chapter website, www.northernchaptervscpa.com, for other information, including on short year, associate and student memberships.

Website: Visit the VSCPA Richmond Chapter website, http://richmondcpas.org, for additional information and the latest events.

Current officers:

Current officers:

>> President: Edward Douthett, CPA, Ph.D, George Mason University

>> President: Donna Yenney, CPA, Tredegar Film Products

>> President-Elect: Carolanne Petrusiak, CPA, CFE, PBMares, LLP

>> Vice President: Kristin White, CPA, WellsColeman

>> Secretary: Vivian H. Walton, CPA, sole proprietor

>> Secretary: Rachel Cassidy, CPA WellsColeman

>> Treasurer: Taylor Dean, CPA, CGMA, Gross Mendelsohn & Associates, PA

>> Treasurer: Henry Davis III, CPA, VCU

>> CURRENTLY INACTIVE The following chapters are currently inactive. We would love to talk to members in these areas interested in activating the chapter. Contact Brenda Fogg, VSCPA director of member relations, at bfogg@vscpa.com for more information.

Blue Ridge Areas served: Amissville, Bridgewater, Broadway, Edinburg, Front Royal, Harrisonburg, Luray, Middleburg, New Market, Staunton, Waynesboro, Winchester, Woodstock

Central Virginia Areas served: Altavista, Amherst, Appomattox, Bedford, Burkeville, Farmville, Lynchburg

Highlands Areas served: Abingdon, Bluefield, Bristol, Galax, Grundy, Lebanon, Marion, Norton, Pennington Gap, Richlands, Tazewell, Wise, Wytheville

Piedmont Areas served: Bassett, Chatham, Danville, Martinsville, South Boston n

>> Past President: Julie Deaver, CPA, Tredegar Film Products

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VSCPA news

VSCPA chair wins prestigious tax award from AICPA

MEMBERS ELECTED TO NASBA BOARD OF DIRECTORS

The Tax Division

of the American Institute of CPAs (AICPA) honored VSCPA Board of Directors Chair LISA GERMANO, CPA, with the Arthur J. Dixon Memorial Award, the highest honor the accounting profession bestows in the area of taxation.

The AICPA established the award in 1981 in honor of the late Arthur Dixon, former chair of its Tax Executive Committee, to honor outstanding CPAs in the tax field. Germano, president at Actuarial Benefits & Design in Midlothian, received the award at the AICPA’s Fall Tax Division meeting in Washington on Wednesday night. She is a nationally recognized expert on pensions and employee benefits and has served on the U.S. Internal Revenue Service’s (IRS) Information Reporting Program Advisory Committee.

Dickerson, a sole proprietor from Richmond, was elected as an at-large director. He was a Virginia Board of Accountancy (VBOA) member from 2005–2013 and served as chair in 2010–2011 and 2012–2013. He will serve a three-year term on the NASBA board.

She has volunteered with the AICPA and the VSCPA for 25 years, having served on the VSCPA and VSCPA Educational Foundation Boards of Directors and the VSCPA Political Action Committee (VSCPA PAC) Board of Trustees, along with numerous committees and task forces.

For the AICPA, she has served on the organization’s Governing Council, Board of Directors, Tax Executive Committee, Financial Literacy Commission and many other committees and task forces.

In the community, she is a co-founder of the Joan Grossmann Fegely Foundation for Ovarian Cancer, Education and Research and Rapids Baseball Incorporated, a youth leadership nonprofit, and is active with several other groups, including the National Multiple Sclerosis Society. n

>> VOLUNTEER SPOTS •

FIND THE CPE TEST ONLINE Visit www.vscpa.com/CPE. Choose “On Demand” from the side filters to find the exam and others from previous Disclosures issues. n

DISCLOSURES

until Jan. 16) NBC 12 Tax Call-In Show

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The VSCPA’s Richmond Chapter will hold its 2016 CPE Meeting on Jan. 26. The event, which offers 4 hours of CPE, will be held at the Cultural Arts Center at Glen Allen. The Richmond Chapter has three more events on the schedule — networking events Feb. 25 and April 28, as well as a networking event in March that includes a CPE element.

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Speaking & Community Engagement

Visit www.vscpa.com/VolunteerSchedule.

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Saunders, a partner at Saunders & Saunders in Virginia Beach, was elected as the MidAtlantic Regional Director. She has been on the VBOA since 2012 and is the current chair.

She was elected to a one-year term and can serve two additional one-year terms. n

RICHMOND CHAPTER CPE EVENT JAN. 26

Nonprofit Finance Summit (open

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VSCPA members TYRONE DICKERSON, CPA, and STEPHANIE SAUNDERS, CPA, were elected to the National Association of State Boards of Accountancy (NASBA) Board of Directors at the NASBA Annual Meeting on Oct. 27, 2015.

Visit www.richmondcpas.org.

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VSCPA news

Congratulations to the following members!

Norfolk firm McPhillips, Roberts & Deans has promoted JASON McKENZIE, CPA, and NICOLE WOOD-SABO, CPA, to senior manager; JAMES STEBBINS, CPA, and CHRISTINE VERFURTH, CPA, to manager; PAMELA MORROW, CPA, to supervisor; ERWIN HUGHES, CPA, ALEX MUNDORFF, CPA, and KRISTEN WHITLOW, CPA, to senior associate in its tax practice; and KATYA LEASE, CPA, to senior associate in its assurance practice.

Dixon Hughes Goodman has promoted KELLY WEST, CPA, to manager in its Chester office; BRITTNEY GREGERSON, CPA, to senior associate in its Newport News office; JULIE PELLILLO, CPA, and KIMBERLY TRUXELL, CPA, to manager and PAVLINA NOVAKOVA to senior associate in its Norfolk office; THOMAS BAILEY, CPA, and PATRICK MAREK, CPA, to senior associate in its Richmond office; and ANGELA TUMWA, CPA, to senior manager in its Virginia Beach office.

APPOINTMENTS & AWARDS >> BILL BROADUS, CPA, and STEVE HOLTON, CPA, were among 41 recipients of the American Institute of CPAs’ (AICPA) Sustained Contribution award.

BRYAN CAMPBELL, CPA, of Dixon Hughes Goodman in Norfolk, received the Top Forty Under 40 award from Inside Business.

JOHN COPELAND, CPA, a sole proprietor from Ruther Glen, was elected to the Caroline County School Board.

Top: Thomas Bailey, CPA; Bill Broadus, CPA; Bryan Campbell, CPA. Middle: Jim Holland, CPA; Steve Holton, CPA; Patrick Marek, CPA. Bottom: Mary Leigh McDaniel, CPA; David Peters, CPA; Kelly West, CPA.

JIM HOLLAND, CPA, an accounting professor at Virginia Commonwealth University, was re-elected to a third term on the Chesterfield County Board of Supervisors.

NEW HIRES >>

MARY LEIGH McDANIEL, CPA, a partner at Updegrove, Combs & McDaniel in Warrenton, was elected to the Fauquier County Board of Supervisors. n

LARRY KIRK, CPA, has joined Malvin, Riggins & Co. in Newport News as senior tax and accounting manager.

DAVID PETERS, CPA, has joined Carroll Financial in Charlotte, N.C., as a strategic relationship manager and financial advisor.

CLINT THOMAS, CPA, has joined Updegrove, Combs & McDaniel in Leesburg as a partner.

PROMOTIONS >>

Email disclosures@vscpa.com if you have exciting news to share. The VSCPA prints news of members’ awards, appointments and promotions, as well as new hire and job change announcements. We do not print degrees or designations awarded to members. n

Udpegrove, Combs & McDaniel has promoted CATHERINE BROWN, CPA, to senior in its Leesburg office.

Biegler & Associates in Richmond has promoted MICHELLE GRAVES, CPA, and CATHY STEMPLE, CPA, to principal.

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>> WE WANT TO HEAR FROM YOU!

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VSCPA news

Staff news

>> FIRM NEWS

Amy Mawyer, Jen Syer, Tina Lambert Bates, CAE, Valerie Vaughn.

Fairfax firm BURDETTE, SMITH & BISH was named a 2016 Best Place to Work by Virginia Business magazine and Best Companies Group. MALVIN, RIGGINS & COMPANY was also named a Best Place to Work, with locations in Newport News, Virginia Beach, Fairfax and Ashburn.

The Greater Richmond Chamber of Commerce honored DIXON HUGHES GOODMAN with the 2015 Young Professional Workplace Award.

Vice President of Strategy & Development AMY MAWYER celebrates her 22nd anniversary with the VSCPA on Feb. 17.

Two employees celebrate 16 years with the VSCPA: Technology Director JEN SYER on Jan. 10 and Vice President of Member & Public Relations TINA LAMBERT BATES, CAE, on Feb. 7.

Conference Manager VALERIE VAUGHN marks her fifth anniversary on Feb. 7.

NEWLY LICENSED VSCPA MEMBERSPAS YOUSRA ABOULATTA BRAD AEFSKY JOSEPH D’AMATO REBEKAH FASZEWSKI ALEX FENZL CHRIS FETTIG TYLER GRACHAN ALLEGRA HELMS KYLE HOLBROOK MISTY LEINBERGER ROBERT LIVENGOOD ROBIN LOEFFLER JASON MOORE JESSE SMITH CHARLES SUBLETT List from October and November. Compiled Nov. 25, 2015. n

100% MEMBER FIRMS The list of VSCPA 100% Member Firms has been omitted due to space.

A full list is available at www.vscpa. com/100Percent. n

n

We mourn the loss of...

MORTY GOLDMEIER, CPA, a VSCPA life member from Norfolk. A U.S. Army veteran who served in World War II, he worked at Goodman & Co., later Dixon Hughes Goodman, for 38 years. He was active in the Tidewater Jewish community and was a founding member of the Temple Israel synagogue in Norfolk, later serving as treasurer and vice president, and led the effort to establish the Beth Sholom Village nursing home in Norfolk. He received numerous awards, including the Brotherhood Citation from the National Conference of Christians and Jews and the Thomas L. Hofheimer Community Award. He served on numerous VSCPA committees, including a stint on the Board of Directors from 1970–1972.

A.J. SMITH, CPA, a VSCPA life member from Pulaski. He served on the Virginia State Board of Corrections and the Pulaski County Electoral Board and was a longtime member of the Jaycees and the Pulaski County Republican Party. n

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Leading Edge Alliance Global honored Glen Allen firm KEITER with its 2015 Edge Award for Best Marketing Initiative in a niche area for its EmergingRVA program, aimed at educating and advising emerging companies through their next stages of growth.

MCGLADREY has changed its name to RSM US LLP. Glen Allen firm PIASCIK has joined PrimeGlobal, an association of independent accounting firms.

Alexandria firm RENNER & CO. was named Overall Business of the Year by the Alexandria Chamber of Commerce.

WALL, EINHORN & CHERNITZER has moved to 150 W. Main Street, Suite 1200, in Norfolk. Affiliates WEALTHQUEST FINANCIAL SERVICES and E:COUNTABLE have moved to 150 W. Main Street, Suite 1860, in Norfolk, and 999 Waterside Drive, Suite 2220, in Norfolk, respectively. n

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VSCPA news

2

1

4

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>> WHO’S WHO 1.

Dixon Hughes Goodman’s Nick Harrison, CPA, Blair Jeffress, LaKrisha Watson, CPA, Chris Kalafatis, CPA, Kerry Jussen, Lindsey Bates, Chris Caputo, CPA, Patty Shelby, Garrett Murphy, Gerard Shaia, CPA, Dale Burgess, CPA, and Gale Adamczyk, CPA, at the Greater Richmond Chamber of Commerce’s IMPACT Awards Celebration Dinner on Nov. 4.

2.

Keith Gray, CPA (right), president of the VSCPA’s Roanoke Chapter, and Edward Jones financial advisor Ben Hartman at the Roanoke Chapter’s event at Roanoke Country Club on Nov. 2.

3.

Pat Corbin, CPA, Craig Poppen, CPA, Andrew Martin, CPA, Damon DeSue, CPA, and John Montoro, CPA, at the VSCPA’s 45th Annual Accounting & Auditing Conference in Virginia Beach on Nov. 19.

4.

Elsie Rose,CPA, spoke at the Collegiate School in Henrico County on Nov. 30.

5.

(From left) Katrina Gochenour, CPA, Jason McDaniel, CPA, and Crystal Stewart, CPA, take part in a sticky note exercise at the VSCPA Leadership Academy at the CPA Center on Nov. 17. n

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VSCPA news CLASSIFIEDS GROWTH, SALES & ACQUISITIONS POE GROUP ADVISORS: ACCOUNTING PRACTICE SALES, MERGERS & ACQUISITIONS — The new M&A season is underway. Let us help you find your next opportunity. Bank financing available, so sellers can receive cash at closing. Visit our website www.poegroupadvisors.com for resources and to see listings. Also, check out our latest articles published in The AICPA CPA Insider™.

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ADVERTISE HERE Classified ads are a great way to reach VSCPA members — 94 percent rate the information in Disclosures as excellent or good. What are you waiting for?

Contact us at classifieds@vscpa.com or visit www.vscpa.com/Classifieds for rate information. Members receive a discount.

Looking to impact the profession or inspire a CPA? Become a mentor with MentorMatch, a new VSCPA LEAD program designed to help professionals enhance their leadership skills.

Learn more about MentorMatch on Connect at http://connect.vscpa.com.

Enroll in MentorMatch Today!

DISCLOSURES

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I AM the vscpa A YOUNG PRO >>

Two minutes with April Jung, CPA

April Jung, CPA, is a forensic accountant

MY ADVICE TO FELLOW CPAs IS… To always invest in people.

with PricewaterhouseCoopers in Tysons Corner. She is a graduate of the University of Virginia’s McIntire School of Commerce and the 2015 VSCPA Leadership Academy. She enjoys traveling for business or leisure and visiting any of Virginia’s beautiful wineries.

IF I WEREN’T AN ACCOUNTANT, I WOULD… Work with a refugee program, as I did as an intern in college. I worked mainly with Somali refugees who were employed by one of the college dining halls and were paid for two hours a week to learn English through the program.

I AM PASSIONATE ABOUT... Learning foreign languages. My first language is Korean, and I learned Spanish in school and some Mandarin during college. I often worry about forgetting them, so I try to find every opportunity to practice them.

PEOPLE DON’T KNOW THIS BUT… I used to be left-handed as a child. My parents, who are Korean, considered left-handedness a superstition and discouraged me until I finally became dominant in my right hand. Ironically, my dad is left-handed.

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I NEVER LEAVE HOME WITHOUT… Lip balm, and one last check of the weather.

I WISH CPAs KNEW… There is a lot more work ahead after taking the CPA Exam. It’s easy to get burned out.

I’M A CPA BECAUSE… It is a well-respected and multifaceted profession. I’ve wanted to be an accountant since high school, when I took my first accounting class and got my first job as a teller at a credit union. n

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PoeGroupAdvisors.com • 1-888-246-0974 • info@poegroupadvisors.com DISCLOSURES • JANUARY/FEBRUARY 2016 • HTTP://DISCLOSURES.VSCPA.COM

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