Disclosures: January/February 2018

THE OFFICIAL MAGAZINE OF THE VIRGINIA SOCIETY OF CPAs

JANUARY/FEBRUARY 2018

DON’T BE A TARGET FOR CYBER FRAUD ALSO...

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contents

DON’T BE A TARGET FOR CYBER FRAUD page 18

Reduce your risk by following the cyber risk triangle and building a cybersecurity program.

Features 24

Don‘t let top talent walk out the door Retention tips from VSCPA members.

Columns

Departments

9

Professional Development

4

President’s Perspective

Emotional intelligence

6

Line Items

Leadership

8

Tech Talk

Fully charged leadership

12

Advocacy

Virginia Taxation

29

Leadership

Withholding requirements

30

VSCPA News

Young Professionals

34

Classifieds

10

14

16

Management skills

CONNECT: connect.vscpa.com

FACEBOOK: facebook.com/VSCPA

TWITTER: @VSCPANews, @FinancialFit

INSTAGRAM: instagram.com/VSCPA

LINKEDIN: tinyurl.com/VSCPALinkedInGroup

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president’s perspective 4309 Cox Road Glen Allen, VA 23060 (800) 733-8272 vscpa.com

disclosures disclosures.vscpa.com disclosures@vscpa.com

JANUARY/FEBRUARY 2018 Volume 31, No. 1 Managing Editor Jill Edmonds disclosures@vscpa.com Contributing Editor Chip Knighton cknighton@vscpa.com Public Affairs & Communications Director David Bass dbass@vscpa.com Editorial Task Force Olaf Barthelmai, CPA Adam Chaikin, CPA Cheri David, CPA Jennifer Eversole, CPA Genevieve Hancock Alesia Lewis, CPA Harold Martin Jr., CPA David Peters, CPA Mark Plostock, CPA Barbara Sukramani, CPA Disclosures is published six times a year by the Virginia Society of Certified Public Accountants (VSCPA). The magazine’s mission is to communicate information of value to VSCPA members, including professional issues and VSCPA initiatives. The materials and information in Disclosures are offered as material only and not as practice, financial, accounting, legal or other professional advice. Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of VSCPA officers, members or editorial staff. Publication of an advertisement in Disclosures does not constitute a VSCPA endorsement of the product or service.

Copyright © 2017 Virginia Society of CPAs.

VSCPA Preferred Providers

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New titles, same member focus

T

hose of you who have visited the “Our Team” page on the VSCPA website in the past few months probably noticed some changes. The old departments are gone, replaced by an alphabetical staff listing. Just as important are the dozens — hey, two dozen is still dozens, we’re a small organization! — of new titles. That’s what I want to talk about in this space.

Most of you probably know about the VSCPA2025 strategic plan we launched at Leaders’ Summit last May. (If you don’t, you can read about it at vscpa.com/2025.) The plan resulted from a year-plus effort on behalf of the VSCPA Board of Directors, other members and staff, and includes a new mission, vision and four bold strategies.

Those strategies are the basis of our recent staff reorganization and what we believe to be the best setup to help us see the 2025 plan through.

The reorganization started at the top of the org chart. Two of our vice presidents have new titles — Tina Bates, CAE, is now vice president, innovation, while Amy Mawyer is now vice president, learning. (A third bold strategy was already represented in senior management by Emily Walker, CAE, vice president, advocacy.) They’re leading staff units largely devoted to focusing on the four strategies: • • • •

Create a culture of learning Drive innovation and vision Advocate for members’ interests Influence students to become CPAs

The last of those strategies does not have a vice president devoted to it, but we’ve focused other staff members on accounting students, an area where we see the potential for a great impact.

While staying mindful of the need to operate as efficiently as possible, we wanted to put our staff in position to

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fulfill our 2025 plan. Our new logistics team, composed of members of our former CPE and member services teams, is aimed at keeping our events running as smoothly as possible, based on staff competencies across previous divisions.

The consolidation of those staff members will open up opportunities for other staff to dive deeper into providing member value. What are the needs of the sole practitioner in Virginia? What about members in corporate finance, or those at large firms? We’re now devoting staff specifically to those topics so they can build on existing knowledge and skills to deliver value to those membership segments.

Our staff restructure encompasses many goals and priorities, but it all flows from the VSCPA2025 strategies. The 2025 vision is based on what we view as the future of the accounting profession, and in the 21st century, the profession is characterized by rapid, increasing change. Our goal is to position our staff to react to those changes and help our members do the same. n Stephanie Peters, CAE, has served as VSCPA president and CEO since 2007. speters@vscpa.com @StephPeters connect.vscpa.com/StephaniePeters

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CGMA_Fu

GR WTH It’s what CGMA stands for.

Officially, of course, it’s Chartered Global Management Accountant.

A new designation representing accomplished professionals that drive and deliver business success, worldwide.

Copyright © 2012 American Institute of CPAs. All rights reserved.

Find out more at cgma.org

CGMA_FullPage_ADS.indd 1

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line items

Generation Z: Ambitious, optimistic It may seem soon, but those born from the mid-1990s to mid-2000s are just beginning to enter the workforce. What are they looking for in careers, and how do they feel about their futures? EY surveyed more than 1,600 of its interns to find answers.

The interns revealed: They are confident and optimistic.

Sixty-three percent feel they will be better off financially and happier at work than their parents. Thirty-one percent believe that higher career happiness is because employers now have a strong understanding of their employees’ needs.

They expect their work to evolve.

Gen Z workers understand that new technologies will significant affect their work, and a majority believe technology will not decrease the number of available

To educate taxpayers, the IRS has a new webpage: “Pay As You Go, So You Won’t Owe: A Guide to Withholding, Estimated Taxes, and Ways to Avoid the Estimated Tax Penalty.” The webpage offers tips for taxpayers on how they can avoid the penalty, such as checking their withholding amounts or paying at least 90 percent of their total tax liability during the year. Find it at tinyurl.com/IRSPayAsYouGo.

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They aren’t only chasing the money.

Only 1 percent of respondents said they prioritize money the most when looking for an employer. Instead, they look for the potential for career growth (84 percent) and flexibility (50 percent). They also believe that job satisfaction is just as important as financial stability.

They look up to young managers. Sixtyseven percent would prefer a millennial manager over a Gen X or Baby Boomer manager.

The American Institute of CPAs (AICPA) is on a mission to enhance audit quality. The Enhancing Audit Quality (EAQ) initiative, launched in 2014, focuses on the helping firms improve and enhance critical audit- and assurance-related activities. In a 2017 report highlighting its progress, the AICPA focused on five key accomplishments:

Approximately 10 million taxpayers are assessed an estimated tax penalty each year, according to the U.S. Internal Revenue Service (IRS). While average penalty was only $130 in 2015, the number of taxpayers receiving the penalty is growing; there was a 40 percent increase from 2010 to 2015.

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They don’t mind diversity. Eighty-four percent say they work well with people from different backgrounds and cultures.

Tracking audit quality

IRS OFFERS ‘PAY AS YOU GO’

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jobs. Two-thirds think that new technology will help them increase productivity.

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1. Peer review: The Peer Review Enhanced Oversight Program and peer review improvements 2. Documentation: Awareness campaign and documentation toolkit 3. Single audits: Awareness on single audit quality issues 4. Employee benefit plan audits: Reporting simplification 5. Quality control: Quality control standards and toolkit Check out the full report at tinyurl.com/EAQ2017report.

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line items

TICKER $666 BILLION The U.S. budget deficit for fiscal year 2017.

3.5 PERCENT The deficit percentage of Gross Domestic Product.

Assessing cybersecurity?

CPAs can do that

22 The number of years a retirement savings of $1 million would last a person living in Virginia. State expenditures average $45,423 (state rank: 34).

CPA auditors are uniquely suited to determine a company’s cybersecurity risk, according to a white paper from the Center for Audit Quality (CAQ). Audit firms offer these key strengths: 1. Core CPA values and attributes. CPAs exercise independence, objectivity and skepticism and are held to a code of ethics and rigorous external quality reviews.

12 The number of years a retirement savings of $1 million would last a person living in Hawaii. State expenditures average $83,834 (state rank: 50).

2. Experience in independent evaluations. CPAs’ experience in conducting independent evaluations, such as the financial statement auditors’ opinion, as well as completing other attestation and advisory services in IT security, makes them well suited to evaluate cybersecurity risk.

3. Multidisciplinary strengths. Audit firms often have CPAs with other credentials, such as Certified Information Systems Security Professionals (CISSP), Certified Information Systems Auditors (CISA) and Certified Information Technology Professionals (CITP). These designations provide extra training and support for IT-related issues.

2 The United States’ ranking in the world for economic competitiveness.

Switzerland is No. 1.

“The CPAs’ Role in Addressing Cybersecurity Risk: How the Auditing Profession Promotes Cybersecurity Resiliance,” includes details on the American Institute of CPAs (AICPA) cybersecurity framework. Download the paper at thecaq.org. For additional information, events and news on cybersecurity, visit the AICPA’s Cybersecurity Resource Center at at tinyurl.com/Cybersecurity-Resource-Center.

83 The United States’ ranking in the world for its macroeconomic environment.

$61.5 MILLION The amount in tax incentives data centers received in Virginia during the past years. $19 MILLION The approximate number in tax exemptions Facebook will receive for a data center it plans to build in eastern Henrico County.

SALARY INFO AT ONE CLICK! Wondering how your salary compares to others? According to a survey from the Association of International Certified Professional Accountants, the average salary of a CPA based in the United States is $119,000 per year. A new interactive online tool allows you to see how your salary compares to similar professionals in other states and chart your future income potential. Visit tinyurl.com/CPASalaryTool to check it out.

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tech talk

INPUT DATA THE FAST WAY

Is your mobile device secure?

You or your practice probably still has that client who shows up with a shoebox filled with receipts or stacks of paper forms. In the past, this meant hours of dedicated administrative time handkeying data into the system. Not only is it slow, it’s also prone to error — and firms that understand this spend even more time proofing their data entry.

In an environment where we work at all hours, away from the office, we need to ensure our mobile devices are secure so we can work efficiently. Take these tips from “4 Quick Tips to Improve Mobile Security,” an article from CGMA. Read the full piece at tinyurl.com/4MobileTips.

1. Keep the device locked, whether by passcode, fingerprint, facial recognition or another method.

There’s a solution: scan-and-input software. When you can’t have an all-digital environment, scan-and-input software is the next best thing. Using a desktop scanner, the software can read documents and identify the information you need, transferring it into your accounting or tax software (or into a more useable file to then export into your accounting software). It’s fast, highly accurate and frees up your administrative staff for more productive pursuits. While scan-and-input software is a must for practices transitioning their technology, it’s also good to have in firms that have transitioned fully; the time savings and improved accuracy will help ensure nothing is missed.

2. Install updates, especially those for your device’s operating system, because a phone with an out-ofdate operating system is more vulnerable to hacking.

3. Turn off Wi-Fi when you don’t need it so hackers can’t access your device.

4. Consider giving your IT department access to your device, which could track and remotely erase your device if it is lost or stolen.

Adapted from “3 Tax Technologies You Shouldn’t Ignore,” an American Institute of CPAs (AICPA) INSIGHT blog post. Read the full article at tinyurl.com/3-Tax-Tech.

EXCELLENT EXCEL...

Naming a cell in Excel (Say that three times fast) Does your blood pressure ever go up when the same amount should be used throughout a workbook but different amounts were used?

For example, auditors have to use the same Individually Significant Item (ISI) materiality throughout their engagements to plan their work. By using the box to the left of the Formula bar, the auditor can help ensure consistency and lower their blood pressure by naming the cell where they entered the ISI. I recommend just naming the cell “ISI” to make it simple to recall.

To name the cell, select the cell with the ISI amount and then click into the box to the left of the Formula bar and type in ISI followed

by Enter. It is important that the Enter key is used. (If the Enter key is not used, the cell’s name will not save.) After the name is saved, the auditor can go to any cell within the same workbook and type

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in =ISI and the amount the auditor entered in the cell named ISI will appear. Finally, if the auditor decreases the amount in the cell named ISI because of increased control risks, all cells referencing it will update with the new amount without an increase in blood pressure.

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

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professional development

Emotional intelligence in the workplace Emotional intelligence is the strongest predictor of workplace performance.

I

f you’re a Virginia CPA, you’ve gone through 150 hours of higher education and passed the CPA Exam, with all the grueling preparation that requires. But what if there’s a field of education that might be even more important to your career advancement?

The good news is that you’ve been learning about this field since the first time you opened your eyes. It’s emotional intelligence (EI), and it was the subject of several sessions at the Virginia Accounting & Auditing Conference with Alicia Cohen, associate director of diversity education and initiatives at Virginia Tech.

“When you start off in the workplace, you have to have that intelligence, those technical skills,” she said, “but as you advance in rank, you’re supervising more and more people. You still have to have that skill, but social and emotional intelligence becomes more important.”

EI refers to a set of emotional and social skills that collectively establish how well we perceive and express ourselves, develop and maintain social relationships, cope with challenges and use emotional information in an effective, meaningful way. Leaders and managers with high EI engender employee engagement and loyalty.

The numbers are stark when it comes to the downsides of a lack of EI. According to recent research, half of all employees lack the motivation to keep learning and improvising. Forty percent are unable to work cooperatively. And 70 percent of change initiatives fail because of EI-related issues — inability to lead, lack of teamwork, unwillingness to take initiative and inability to deal with change.

“We don’t have control over change. We do have control of how we deal with that change,” Cohen said. “You see it as an opportunity or you see it as something horrible.”

Organizations with high employee engagement and EI report less absenteeism, less turnover and fewer safety incidents. That’s because employees can expend mental energy on their work instead of dealing with other issues.

“People aren’t stressed, so they’re focused on what they’re doing and avoiding mistakes,” Cohen said.

intelligence. Leaders who lack EI aren’t self-aware and often have problems communicating with team members. They struggle to develop relationships and have trouble controlling their emotions.

This creates a stressful work environment and a disconnect with employees. Leaders who struggle with EI are viewed as poor communicators with no clear direction. That leads to a lack of confidence from employees and the corresponding slippage in performance.

When tested alongside 33 other workplace skills, EI graded out as the strongest predictor of performance, explaining 58 percent of success across different types of jobs. It undoubtedly affects an organization’s bottom line in that way — and that’s before you factor in the high cost of employee turnover.

It’s instructive to differentiate between personal and social competence, as well as what people see and what they do.

Observing your own personal competence engenders selfawareness and the ability to manage yourself.

Download a whitepaper on the conferences, including sessions like “Navigating the Economic and Political Landscape” and “50 Ways to Lose Your Tax-Exempt Status,” at vscpa.com/A&A2017. n

WHAT: 47th Annual Virginia Accounting & Auditing Conference WHO: 984 attendees at three locations WHERE: Hotel Roanoke & Conference Center, Fairview Park Marriott in Falls Church, Founders Inn in Virginia Beach WHEN: Sept. 25–26 (Roanoke), Sept. 28–29 (Falls Church), Nov. 16–17 (Virginia Beach) TOP THEMES: Emotional intelligence, upcoming Virginia elections, sustainability, fraud, nonprofit accounting, technology

It all stems from leaders who have, or don’t have, emotional

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leadership

Fully charged leadership The strongest leaders are not those who pretend they don’t feel emotion.

WHAT: VSCPA KnowledgeNOW Conference WHO: 245 in-person attendees, 27 via simulcast WHERE: Williamsburg Lodge WHEN: May 15–16, 2017 TOP THEMES: Business climate, technology, leadership, communication

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car with an empty gas tank won’t go anywhere, and the same concept is true of organizations. A leader who isn’t fully engaged and ready to leave does his or her organization no favors. So how can you make sure you’re providing your organization with the engaged leadership it needs?

what can happen under pressure when a leader isn’t in a good place.

Chip Colbert, cofounder and executive director of the Fully Charged Institute (FCI), deals with that issue every day. His session, at the KnowledgeNOW Conference, “Fully Charged Leadership,” covered how to find meaning in your life and work and using that meaning to be a more effective leader.

“The worst thing you can do as a leader and a human being is to be that inconsistent Dr. Jekyll and Mr. Hyde.

When pressure gets high, you just snap and take heads off around you,” he said.

“From my military experience, we have this antiquated notion of the strong, stoic leader who doesn’t feel emotion and has all the answers. We put a lot of stock into that strong leader prototype. But research shows that the strongest leaders aren’t those who pretend they don’t feel emotion.

It’s those who can regulate and manage.”

Colbert founded the FCI after a 20-year career as a U.S. Army officer, and his experiences with military command informed his second career. He witnessed all types of leadership, both effective and ineffective, while in the Army, and he saw

Colbert focused on three main factors in his session — meaning, interactions and energy — and how they play into one another. Meaningful work is the base of the pyramid. If you don’t find meaning in your work, you won’t be as effective. He cited

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leadership

a study from an Israeli radiology department that spoke to the importance of even small increases in meaning.

“They thought radiologists weren’t doing their due diligence and brought in researchers to assess the problem,” Colbert said. “One group did what they were usually doing, and the second group, all they did was append a small picture of the patient to the X-ray.

Twenty percent longer reports came out of that group, and there was 46 percent more diagnostic accuracy. When you see meaning, you create more.”

Part of that meaning involves initiating work rather than responding to issues, which is a major issue for workers in the U.S. and abroad. The average American spends 8.5 hours a day in front of a screen, unlocks his or her smartphone 110 times per day and spends 50 percent of his or her time checking emails and social media.

“It has almost become acceptable in today’s environment that just managing your inbox is a good day’s work,” Colbert said. “You fire up your email, see what you need to respond to and just sit there. Does that mean you’re going to go home and say you had a productive day?”

That practice comes from the tone set at the top of an organization. Leaders who set the expectation that emails must be dealt with quickly, even during off hours, create an environment where emails are the most important part of the job. That may be true in some cases, but it also means workers are tied to their smartphones at home, at the expense of their families. And that deprives them of a major source of meaning in their lives.

Family is another source of a main element of Colbert’s theory — interactions. He divides the day into “moments,” or three-second windows, and calculates that humans experience approximately 1,200 moments per hour, or 19,200 per day. Those interactions can add or subtract energy — and the subtractions are more damaging than you might think.

“Research shows that the negative interactions absolutely have more weight,” Colbert said. “When you have a good day at work, then drive home and someone cuts you off in traffic, what are you going to talk about? How do you try to set yourself up, and set up those around you, to have as many positive interactions as possible?

People who say they have a best friend at work are seven times more likely to be engaged in their jobs, and positive interactions are a major part of that. They’re more likely to want to be part of a team and to be engaged with that team.

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How you view the people around you, and how you interact with them, also plays a major role. Acting with more intent and assuming positive intent from others has real effects on your energy levels, and it’s a major way you can help others stay fully charged.

“So many of us are achievers. We write the thing we need to do down and we check it off,” Colbert said. “It’s what motivates us.

When I do something not on my list, I go back, write it down and check it off. But how often, as we’re so focused on achieving and knocking things down, do we give ourselves that moment of recognition for a small victory? And how good are you at doing that for those around you?”

Those moments of recognition can help recharge our energy banks, which is the third leg of Colbert’s energy stool. Assuming positive intent helps raise positive energy, and acting with intent leads to success and positive feelings, which has the same affect.

But there are other, more traditional ways to increase your energy level.

“The more you can get away from the highly processed, refined stuff and get back to a natural state, the better,” Colbert said. “And the amount of sugar we consume is incredible. What you put into your system really makes a huge difference in your health and overall well-being, and you should be conscious of how much sugar you put into your body, and there’s sugar in everything. The more natural, the closer to raw, the better.”

Exercise also helps stimulate brain activity, and sleep is important as well. Colbert saw plenty of evidence of that during his time in the military, the most famously sleep-deprived institution of them all. Even small tweaks like changing the temperature of your bedroom — a couple of degrees cooler than the rest of your house is ideal — can lead to real improvements in energy.

Colbert’s main point is that personal well-being is a strong predictor of high performance at work. Ruthlessly prioritizing your personal well-being enables you to perform better and do more for others, which leads to sustainable high performance.

“When you fly somewhere and they’re talking about the oxygen masks in an emergency, you’re told to put your own on first,” he said. “When you put your own on first, you’re going to be okay and able to help those around you. Why don’t we think about that in terms of our own well-being?”

Download a whitepaper on the conference, including sessions like “Fully Charged Leadership” and “Effective Communication: Adapting to Various Communication Styles in the Workplace,” at vscpa.com/KnowledgeNOW2017. n

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advocacy

Eyes on the Virginia capitol CPAs gear up for a new governor and the 2018 legislative session.

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he 2018 Virginia General Assembly session is almost here, and even more than usual, it’s a period of transition in downtown Richmond. Ralph Northam is replacing his old boss, Terry McAuliffe, in the governor’s mansion, and his fellow Democrats had a successful Election Day, altering the balance of power in the House of Delegates.

Based on initial election results, the Republicans will retain control 51–49, with three seats expected to go to recount, all currently called for Republicans.

(We’re taking our results from the State Board of Elections.) The Democrats will end with a minimum 15-seat pickup and ousted several senior Republicans, including a few committee chairs. One possible outcome, a 50–50 split, would likely result in a powersharing agreement but make it difficult to elect a Speaker, and with no tie-break on party-line votes, any

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50–50 vote breaking down on party lines would result in failed legislation.

The rise of the House Democrats is just one element complicating the landscape for advocacy organizations like the VSCPA over the next few years. At least 20 freshman legislators will join the House, and many longtime supporters of the CPA profession were voted out, making it crucial to forge relationships with the newcomers. Furthermore, the General Assembly office building is in the process of being demolished after holding one last session, and legislators and their staff will now pile into the smaller Pocahontas Building while a new structure is built. The realities of the smaller Pocahontas Building will necessitate changes to the VSCPA’s CPA Assembly Day in January, which is now a week-long series of smaller meetings between members and legislators.

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advocacy

All of those changes mean that relationships and reputation are more important than ever for advocacy organizations. The VSCPA won’t be able to visit legislators en masse, like we have in previous years. And our advocacy efforts are as important as ever as we aim to protect CPAs’ interests, as laid out in one of our VSCPA2025 bold strategies:

and tax reform. The 2017 session included a large number of proposed regulatory reform bills, with most aimed at reducing regulation, and both Northam and his Republican opponent, Ed Gillespie, discussed the issue on the campaign trail. With Democrats in the ascendancy, those efforts could be dampened in 2018, but we will continue to monitor the issue.

Advocate for members’ interests — Complexity, uncertainty and regulatory requirements are often roadblocks to CPAs’ success. The VSCPA will advocate for Virginia CPAs in legislative and regulatory arenas, protect their longstanding reputation and provide a unified voice to eliminate unnecessary challenges and barriers.

The tax reform issue was also a topic of discussion during the campaign. We expect that there will ultimately be a tax conformity bill introduced to deal with disaster relief measures introduced this year. The VSCPA’s efforts on this will include a large degree of outreach to the numerous freshman legislators to ensure they understand that a vote on a conformity bill does not constitute an endorsement of President Donald Trump’s proposed tax reform proposals, or even an enactment of any changes that take effect after Jan. 1, 2018.

It’s in times like this when the VSCPA’s painstaking relationshipbuilding comes in handy. Vice President, Advocacy Emily Walker, CAE, has worked in the VSCPA’s government affairs and advocacy departments for nearly 15 years, through several gubernatorial administrations and countless new legislators. Her work in front of the General Assembly, the Virginia Board of Accountancy (VBOA) and the Virginia Department of Taxation has helped the VSCPA establish continuity and better relationships with these groups.

Our members are another major part of this. We’ve cultivated a strong group of advocacy volunteers with extensive CPA Assembly Day experience, and our member-written Legislator’s Tax Guide has given us another touch point with legislators. Last year, we introduced a tax seminar for freshman legislators, a way for us to get in front of legislators early in their careers and build relationships that last. We’ll continue to focus on those connections as we work to build the best possible business climate for Virginia CPAs.

2018 LEGISLATIVE PRIORITIES When this issue went to print in mid-December, the VSCPA planned to introduce two bills for the 2018 session, both on behalf of the VBOA. The first deals with issues related to the VBOA’s schedule for licensing renewal, with the end goal of allowing the board to set one annual renewal date for all licensees. Currently, the expiration date of each individual CPA license is based on the initial date of licensure. This bill contains an emergency clause, so it would go into effect immediately upon Gov. Northam’s signature. The other bill would add the VBOA to the list of agencies that can decrease license fees without going through the Administrative Process Act.

If and when these bills are introduced, we’ll develop the necessary positions and plans of action and reach out to members for any help we may need. Thanks for everything you do for the VSCPA’s advocacy efforts! n

ALL-NEW CPA ASSEMBLY WEEK! Save the date for the Virginia Society of CPAs (VSCPA) CPA Assembly Week. If you’ve never attended, then this is a great year to start! We’re turning CPA Assembly Day into CPA Assembly Week to provide you with even more opportunities to participate.

Because the new General Assembly building is under construction and legislators will be housed in a separate building for the next several years, each time slot will be limited to the first 6 people. You can now choose from three dates and two time slots: > >

Monday, Jan. 22 from 9 – 11 a.m.

Monday, Jan. 22 from 2 – 4 p.m.

> >

Wednesday, Jan. 24 from 9 – 11 a.m.

Wednesday, Jan. 24 from 2 – 4 p.m.

> >

Thursday, Jan. 25 from 9 – 11 a.m.

Thursday, Jan. 25 from 2 – 4 p.m.

Register for the day and time that works best for you at VSCPA.com/CPAAssemblyWeek.

We’ll also be on the lookout for legislation related to regulatory

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virginia taxation

Withholding taxes: Are you compliant?

If your firm or clients have employees who perform work in other states, you must know those states’ withholding requirements.

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y law, employers generally are required to withhold income taxes — federal, state and sometimes local — for their employees. While state laws vary as to how they define employers subject to withholding requirements, withholding is generally required if an entity has one or more employees performing services in the state and is deriving income from doing business in the state.

Think about that: Withholding may be required in a state if services are performed in that state. So if you have a workforce that travels, such as accountants, attorneys, contractors, engineers, salespeople, human resource personnel, to name a few, you may have withholding requirements in states other than Virginia (and your employees may be subject to income tax filing requirements in those other states).

Terry Barrett, CPA

There is no uniformity among the states’ withholding

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requirements, which complicates the issue. As such, one cannot easily make reasonable generalizations in determining their withholding requirements.

Fortunately, though, there are exceptions to withholding requirements, but these, too, vary by state. These exceptions include reciprocal agreements among states and state withholding thresholds.

Some states have reciprocal agreements, typically with surrounding states, in which one state agrees to not require withholding of tax for nonresidents who work in the state, provided the state of the worker’s residence provides a similar exemption from withholding for its residents. This helps address issues created by residents living in one state and working in another, but not all states have reciprocal agreements.

In fact, fewer than half of the states have reciprocal agreements. Virginia has reciprocal agreements with Maryland, West Virginia and Pennsylvania.

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virginia taxation

In addition, due to specific statutory provisions in Kentucky and the Washington, D.C., no Virginia withholding on Virginia wages is currently required for residents of those jurisdictions who commute daily to a Virginia workplace — and vice versa. Virginia does not have a reciprocal agreement with North Carolina. Hence, Virginia requires Virginia tax withholding for North Carolina residents working in Virginia and North Carolina requires North Carolina tax withholding for Virginia residents working in North Carolina. That is problematic particularly for businesses located near the Virginia-North Carolina border.

A withholding threshold is an event that triggers an employer’s withholding requirements in a state. This may be based upon the working days (or portion thereof) in a state, the payment of wages above a certain level or some combination thereof.

For example, New York has a 14-day threshold for nonresident employees working in the states; Colorado requires withholding for nonresidents who perform services in the state for at least one day. California has a $1,500 threshold for wages earned within a year in the state; New Jersey a $1,000 threshold; South Carolina, $300. Other states tie the earning threshold to the income tax filing threshold.

In addition to withholding taxes, businesses may be subject to other employment taxes such as workers’ compensation and unemployment insurance in those states.

Employers are not the only ones affected by the various state withholding requirements. Employees generally must file income tax returns in states where income taxes are withheld. This may substantially complicate their individual tax filings. Fortunately, though, to reconcile the potential for taxation by multiple states of an employee’s wages when the employees perform services in multiple states, the states generally provide a credit for residents for taxes paid to other states.

Over the years, legislation has been introduced at the federal level that would limit a state’s ability to require withholding for nonresident workers. The “Federal Mobile Workforce State Income Tax Simplification Act of 2017,” H.R. 1393, passed the House back in the summer, and there is an identical bill on the Senate side (S. 540). The legislation prohibits a state from requiring the withholding of their state’s income tax for nonresidents who spend 30 days or less in a year in the state performing employmentrelated duties. There are limited exemptions from the act for athletes and entertainers, certain public officials and qualified production employees.

H.R. 1393 clarifies what constitutes a “day” for withholding purposes, as this is one of the areas where the states differ. Some states take the position that work performed for any portion of a

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day constitutes a day for which withholding is required. However, H.R. 1393 says that being present in a state for day (and thus a day for which withholding may be required) means that the employee performs a preponderance of his work in that state during the day. This means if an employee performs material duties in both a resident and nonresident state during the same day, the duties would be considered to have been performed in the nonresident state. If enacted, the legislation would be effective on Jan. 1 of the second year following its enactment date, thereby giving states and employers time to comply with the new rules. If this legislation is not successful, odds are similar legislation will be introduced again in 2018.

While the states do not like federal preemption of their rights, certainly this is an area where it is warranted and would be welcomed by employers and employees alike. Federal preemption with respect to withholding requirements is not new. Federal law currently restricts withholding by states for interstate motor, rail and water carriers. Only a state in which employees earn more than 50 percent of their wages can impose withholding requirements on such wages.

The disparate withholding state requirements are yet another burden on multistate businesses. There obviously are costs of compliance and noncompliance. Registering for, filing and keeping up with the various states’ rules are time-consuming and can be costly. However, employers can be found liable by state auditors for taxes that should have been withheld from employees’ pay and may be subject to penalties and interest. The states are actively auditing businesses for compliance with their withholding requirements.

Be aware that you may be subject to income withholding requirements in other states due to your hiring and business expansion efforts. Before you allow an employee to work remotely from another state, or hire traveling sales people, consider the potential requirements. And of course, a topic for another day is the potential of other tax implications from having employees work in multiple states. n

Terry Barrett, CPA, is a tax senior manager at Keiter in Glen Allen. She focuses on state and local tax consulting and primarily non-income tax issues, such as sales and use tax and business license and personal property tax, in Virginia and other states. tbarrett@keitercpa.com (804) 273-6254

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young professionals

5 attributes for a great manager Certain soft skills can go a long way in becoming a great boss.

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veryone has dealt with a vast array of managerial styles and individual personalities from different managers. Unless you are self-employed, you likely have a supervisor or manager that you have to learn to “manage upwards,” in addition to your managing responsibilities to any direct reports. Managing upwards can be a great indicator of leadership skills when it comes to communication. It is beneficial to note that this article is going to set aside technical skills and competencies in whichever role the manager is in. The attributes below address the highly valued soft skills of a leader, rather than a “boss.”

Genevieve Hancock

COMMUNICATION Active listening is key. Ensuring that both parties, the employee and the manager, are listening to understand and reflect back what has been said can end most miscommunications before they escalate.

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There are many styles of communication, and in none of them should the priority ever be to formulate what you want to respond with before understanding the conversation. While this may not be a direct interruption, it does disrupt the flow of a conversation before it is clearly concluded with everyone on the same page.

POSITIVE REINFORCEMENT I cannot emphasize this one enough! Working with managers who only have negative things to say — or even more than half the time — can be extremely demotivating. Positive reinforcement and support are key. Find the time to discuss and get on the same page, and then go into that big meeting knowing your manager supports your position. While this can’t always happen, generally if someone needs support and becomes vulnerable enough to ask for it, it means

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young professionals

This column, from the VSCPA Young Professionals Advisory Council (YPAC), covers relevant subjects requested by young professionals in the workforce.

they trust you. Make sure you follow through with what you have said and don’t break that trust. This is the foundation and core of maintaining relationships. In the same way, your manager likely also needs some accolades for a job well done and support in meetings as well, as long as the situation is right to speak up.

EMPATHY The ability of a manager to connect with others and their willingness to take time out to ensure that relationship is well maintained shows an investment in the relationship. This applies on both a personal and professional level, and requires cultivating empathy and understanding things that may affect the professional environment. The Theodore Roosevelt quote, “People don’t care how much you know, until they know how much you care,” can be applied to the emotional intelligence and empathy levels of any manager. No one wants disconnected and isolated direct reports, as this directly affect training costs, company turnover and communication.

Anyone in a professional environment has growth and development goals for themselves. Understanding and empathizing with why and how these goals fit in and benefit their performance is key when keeping morale elevated and employees engaged with the work and the company. A manager who organically cares about their team and creates an environment of caring will more likely have engaged and productive employees than one who does not. No one wants to stay in a place where they do not feel valued.

SETTING EXPECTATIONS One of the first things to do when starting a position, or as a mediator to reset any miscommunication, is meet to set clear and concise expectations. An engaged manager who checks in to ensure that understanding is maintained indicates not only a care for the quality of work, but also a care for their employees.

Whether it is a more involved style of management or a more hands-off, empowered version — clarified by setting clear expectations as to how the employee and employer work best together — a timely check-in and support where needed shows flexibility and team building.

A good rule of thumb for management is to never delegate based on an unwillingness to actively support on or perform a specific task. Understanding how and why work is performed is integral to understanding the outcome.

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ACCOUNTABILITY A great manager will hold themselves accountable for their responsibilities and what they have said. Situations may change, so adequate and proactive communication around the situation is a form of accountability. A manager who is great to work for will ensure that any unprofessional criticism will not make it down to you. We’ve all felt thrown under the bus for something that wasn’t our responsibility at some point in our careers — and a great manager will try to keep this from happening. Blame will not fix whatever the situation is, and moving forward by fixing it and remaining professional can help minimize any issues.

A GREAT EMPLOYEE So this addresses the great manager, but what about the great employee? There are many views on what makes a great employee, and most of them are subjective when it comes to specifics. A manager who appreciates someone taking initiative to improve a process versus a manager who appreciates not having to reassess efficiencies in a process each can have very different perspectives on the benefits of the same accomplishment.

Personally, I find writing to be a very subjective field when it comes to the amount of context a manager wants, or even a company. Many companies have their own unique “companied” style of writing memoranda. Keeping this in mind, staying flexible (within reason) and not taking criticism personally are under-rated attributes for both employees and managers.

A great amount of tension can be caused by whether the employee and manager are on the same page or have different styles. Any great employee can apply the same attributes listed above to their manager as well. n

Genevieve Hancock is a technical accountant specializing in complex modeling and changes in accounting guidance as a senior financial reporting analyst for Disney Parks & Resorts Controllership in Lake Buena Vista, Fla. She serves on the VSCPA Young Professionals Advisory Council (YPAC) and Disclosures Editorial Task Force.

T.Genevieve.Hancock@gmail.com connect.vscpa.com/GenevieveHancock linkedin.com/in/GenevieveHancock

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technology

DON‘T BE A TARGET FOR CYBER FRAUD Reduce your cyber risk by following the cyber risk triangle and building a cybersecurity program.

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Harvey L. Johnson, CPA, CGMA

Do you realize you have a target on your back?

services, can be breached, then how are smaller CPA firms supposed to stop a cyber breach? There is both good news and bad.

Cybercrime cost the global economy an estimated $450 billion in 2016. Unfortunately, the outlook for the future isn’t any better, with the estimated cost rising to $2.1 trillion by 2019. Cyber risk is not something you can ignore.

First, the bad. The bottom line is there is no such thing as a secure network. If your network is externally connected to the Internet, it can be breached. Just like there is a fraud triangle, there is also a cyber triangle (see Figure 1 on next page). A bad actor with the right combination of skill, time and resources will eventually breach any network if they have the motivation and desire to do so.

As a public accountant, you hold a treasure trove of information for bad actors. Just imagine the impact of a hacker gaining access to your firm’s tax software, which contains the personally identifiable information (PII) on all of your clients — names, addresses and Social Security numbers for individuals, their spouses and dependents. With most people e-filing their taxes, you probably have the routing number and account information on file for at least one of bank account per client, too.

And it’s not just the tax software. Your human resources department maintains PII on all of your employees.

You probably pay them via ACH, so you also have a least one bank account on file for most employees.

The depth and quantity of valuable data you have makes you, and all CPA firms, a desirable target for bad actors.

HOW CPAS FIRMS CAN PROTECT THEMSELVES If Deloitte, a recognized leader in cybersecurity

On the positive side, 99 percent of cyber attacks can be prevented if you have a strong cybersecurity program in place. The goal of a cyber risk program should be reducing the attack vector. Let’s look at how that concept works in relation to the cyber triangle.

Think of your business as a target, similar to one you might see at a shooting range. It doesn’t take a lot of skill to hit the target. Novices can often hit some part of the target in a round of shooting, but it takes real skill to consistently hit the center. The goal of your cyber risk program should be to reduce the attack vector so that only the skilled marksmen (hackers) could potentially hurt you.

BUILD A CYBERSECURITY PROGRAM When it comes to developing an effective cybersecurity program, you need to: 1) know your environment, 2) protect your assets (and client data), and 3) prepare your organization. u

Know this...

• All the personally identifiable information held by accounting firms makes them a prime target for cyber criminals.

• The first step to building a cybersecurity program is knowing your IT environment and developing a plan to protect your assets.

• Training your processes and people is key to preparing your organization for a cybersecurity incident.

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FIGURE 1.

THE CYBER RISK TRIANGLE TIME

Understanding the network environment allows your firm to implement policies and procedures around configuration and patch management, as well as physical and logical access controls. These policies and procedures will limit the likelihood and impact of cyber events.

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servers, laptops, printers, phones, etc.) and critical data on a spreadsheet. Update it whenever there are new devices or data added. This is easiest for smaller organizations to do.

Step 1: Know your environment Start with the basics. Determine what devices are connected to your network (e.g., servers, desktops, laptops, mobile devices, etc.). Recognize what sensitive data you have and, more importantly, where is it stored. And identify what key software and business applications you use. These are all areas where you have risk.

As you work your way through this process, use the following tips summarized from the Center for Internet Security’s “Implementation Guide for Small- and Medium-Sized Enterprises”: • Identify and classify the data on your network. Know where it is on your network and how it travels within the network from entry to exit.

• Create and maintain an inventory of all software and hardware on your network. For help with identification, consider: o

o

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A network scanner (commercial or open source) (a good option for larger organizations).

Keeping an inventory list of your hardware assets (e.g., computers,

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Cost-effective solutions such as Nmap, ZenMap and Spiceworks, which can identify devices and software on your network.

• Inventory the applications that are running on your system and the web services or cloud solutions your organization uses.

• Manually check the install/uninstall features of the operating system to get a list of software that has been installed on the system.

• Periodically check to see what software is running on your systems using available inventory or auditing tools.

What should you be looking for? Rogue software and devices within your environment can pose significant risks that must be mitigated. Also, seek out unpatched software and hardware. This is a common way for malware and viruses to infiltrate and attack your systems.

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Step 2: Protect your assets Once you have a handle on the network architecture and the key data that resides on it, you can begin to implement procedures to protect it. In this phase, you want to focus on: 1) asset configuration and change management procedures and 2) cyber training and awareness.

Asset Configuration and Patch Management. Bad actors take advantage of either insecure configurations or vulnerabilities in the applications that are running on the system. To protect your firm, you need to ensure that your operating system and applications, especially web browsers, are up-to-date and securely configured. In addition, you should identify and leverage the security and anti-malware functions that may be built in to your operating system to help secure your environment.

With so many devices connected to your network, you want to create a security baseline for each. When each device has the same security settings, that consistency reduces the risk of cyberattacks. This can be accomplished with Microsoft’s System Center Configuration Manager (SCCM), which provides remote patch management, software distribution, operating system deployment, network access protection and hardware and software inventory.

Once again, here are some tips from the Center for Internet Security to help you review your:

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technology

System configuration • Periodically run Microsoft Baseline Security Analyzer to identify which patches are missing for Windows products and what configuration changes need to be made.

• Use a commercial software scanner such as Nessus to perform vulnerability scans on both external and internal IP addresses and servers to identify vulnerabilities and additional configurations to enhance security.

• Ensure that your browsers and all plugins are up-to-date. Consider using a browser that automatically updates itself, like Google Chrome.

• Verify that all workstations and laptops are installed with the most recent antimalware software updates.

• Separate corporate from personal networks. In the world of Bring Your Own Device (BYOD) and “access from anywhere,” it is important to limit the access between personal devices and the corporate network. Allow approved personal devices to connect only through a separate staff or guest network.

Removable media and encryption • Limit the use of removable media (e.g. USB drives, CDs and DVDs) to those with an approved business need.

Considering your business operations, ensure any removable media is encrypted.

There is no such thing as a secure network. If your network is externally connected to the Internet, it can be breached.

• Use encryption for secure remote management of your devices and to pass sensitive information. u

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technology

• Encrypt hard drives, laptops and mobile devices that contain sensitive information.

• Require the use of strong, unique passwords or pass-phrases and multifactor authentication when possible.

• Require everyone to use “screen lock” on their mobile devices.

• Make sure all employees keep their devices and software updated and current.

Multi-factor authentication and remote access • Limit employee remote access to those who need it.

Phishing is the most common attack method. Be sure your employees can identify common and obvious indicators of a phishing attack. These can include someone creating a strong sense of urgency, asking for very sensitive or private information, using confusing or technical terms and asking the employee to ignore or bypass security procedures.

Also, be careful to check the spelling, overall content and grammar of the email.

Messages with obvious mistakes are good indicator of a phishing scam.

Best practices for internal cyber awareness include: • An information security policy.

Require all employees sign this policy upon hire.

• Use secure connections such as Virtual Private Networks to access the network remotely.

• Information security training.

Conduct on an annual basis to reinforce the firm’s security policies and inform employees how you protect their data, as well as that of your clients.

• Monthly or quarterly updates.

Share recent cyber trends and firm security procedures, especially updates or changes. You can also share free materials like the SANS OUCH! newsletter and MS-ISAC’s monthly cyber-tip newsletters. The National Cyber Security Alliance’s website, StaySafeOnline.org, is another good resource.

• A focus on common sense. This is ultimately your best defense. If something seems odd, suspicious or

• Require the use of multi-factor authentication where available, especially for remotely accessing your internal network or email.

You also want to control administrative accounts. That means limiting the number of individuals with administrator privileges to a very small number. General users should not be administrators. Remember, anyone with administrator rights will have the ability to make system changes.

Unique, strong passwords are imperative on these accounts. You also want to make sure your administrators have separate accounts for non-administrative functions like reading email, accessing the Internet and composing documents.

Cybersecurity Training and Awareness.

Cybersecurity is not just about technology, it’s also about processes and people.

Having security tools and software alone isn’t sufficient. Most cyberattacks incorporate a human element; more than 90 percent are due to human error.

Securing your firm requires that your employees practice strong cybersecurity behaviors, too.

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technology

An important part of any cybersecurity program is response planning. This should incorporate business continuity, disaster recovery and incident response planning. too good to be true, it is most likely an attack.

Step 3: Prepare your organization An important part of any cybersecurity program is response planning. This should incorporate business continuity, disaster recovery and incident response planning.

Creating and maintaining backups is one of the best ways to secure your data, recover after an incident and get your business back in operation. With the rise in ransomware attacks, where your files are encrypted and held for ransom, this is especially crucial.

A robust response plan, complemented by current and maintained backups, is the best protection when dealing with a cyber incident. When it comes to backups, be sure to: • Perform daily and weekly backups of all critical systems (as identified in step 1), preferably through an automated tool/process.

• Periodically test critical system backups by trying to restore a system using a backup.

• Ensure that at least one backup destination is not accessible through the network. This will help protect against ransomware attacks since those backup files will not be accessible to the malware.

Preparing for an incident. Creating an incident response plan is not an easy task. Larger firms may have the internal IT resources for this, but it’s typically most efficient to engage a third party to help draft your plan. Many insurance

cyber-related coverage. It’s equally important to understand your insurance provisions and disclaimers. As more and more incidents are reported, carriers are continuously looking for reasons to limit claim amounts. Some policies have windows for notifying the insurance carrier of a breach to ensure the claim is fully covered.

companies offer incident response assistance as part of either a cyber insurance policy or as an add-on service.

Essentially, the insurance company assists in coordinating and covering the costs of a cyberbreach (i.e., breach notification, forensics, data recovery, credit monitoring, etc.), which makes it an attractive offer for smaller firms.

For those willing to brave preparing an incident response plan on your own, here are some things to consider: • Identify the incident lead. Know who in your firm who will serve as the lead in case of an incident, mostly likely the IT director.

• Have a contact list. Include contact information for your IT staff and any third-party organizations. Also for those individuals whose assistance may be needed like legal counsel, insurance agents (if you carry cyber-risk coverage) and security consultants.

• Notification details. Familiarize yourself with your state’s data breach notification laws. Decide how you’ll prepare to notify any affected individuals whose personal information was involved in a breach.

• Cyber insurance. No incident response plan is complete without cyber insurance. There are two main types of cyber insurance: cyber liability and cyber breach expense. Both are important, but it’s imperative you understand the differences and have the right coverage. Consider working with legal counsel or a cybersecurity expert when considering your

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THE NEED WILL ONLY INCREASE As the world becomes more and more connected and automated, the importance of cybersecurity will only increase as new threats and vulnerabilities are identified. Once your firm has started to prepare and implement its cybersecurity program, it is important to perform a cyber risk assessment. By assessing the state of your cyber program and controls in place, leadership can use those results to prioritize and make better decisions about IT infrastructure and security.

Your firm’s client data is very enticing to a bad actor. You may not be able to prevent all cyberattacks, but you can definitely make the target on your back much smaller. n

Harvey L. Johnson, CPA, CISA, CGMA, is a partner with PBMares, LLP, and leads the firm’s Cyber and Control Risk Services group. He was named one of the VSCPA’s Top 5 Under 35 in 2012, and awarded the Top 40 under 40 by Inside Business and CPA Practice Advisory in 2016.

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hjohnson@pbmares.com. connect.vscpa.com/HarveyJohnson

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practice management

DON’T LET TOP TALENT WALK OUT THE DOOR! VSCPA members share how they hold on to their best employees.

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Chip Knighton

mployees leaving jobs is an established fact of life for partners and human resources professionals of all stripes, and the accounting profession is no exception. The average American worker changes jobs 12 times during his or her career, according to the U.S. Bureau of Labor Statistics, and younger employees are even more prone to job-hop in an effort to find the best fit.

each year. That’s a significant amount of overhead when you consider the cost of the hiring process for a replacement, onboarding the new hire and lost productivity as he or she gets up to speed.

That movement comes at a cost. The Society for Human Resource Management estimates that the average employer must spend the equivalent of six to nine months’ salary to find, hire and train a replacement for a departed employee, and that percentage goes up for higher-level positions. It’s even more acute for CPA firms — Robert Half’s 2018 Salary Guide for Accounting and Finance Professionals notes a “severe shortage of skilled candidates” in public accounting while stating that in corporate finance, 45 percent of CFOs surveyed are somewhat or very concerned about retaining their current staff.

“It all comes back to having the right people,” he said. “I would say that where we are as a firm really dictates the future in terms of the people. Every time you’re replacing your people, it’s costing you a fortune of money. That’s become more and more evident. If you keep someone in place, your firm will be more profitable.”

“The biggest issue that most of our clients face is the talent shortage and how hard it is to find good accounting and finance talent,” said VSCPA member Camden Hall, CPA, division director at Glen Allen recruitment firm Parker + Lynch. “The unemployment rate in Virginia is less than 4 percent, and when you break that down for accounting and finance, less than 2 percent. It’s hard to find good talent. It’s competitive to get good talent.”

VSCPA member Gary Thomson, CPA, told Virginia Business magazine that most CPA firms have an average turnover of 10 to 20 percent of accountants

VSCPA member Wayne Berson, CPA, CEO at McLeanbased BDO USA, calls retention “the engine that operates everything for us.”

Not all employees are created equal, though. Firms will go to greater lengths to retain those who they view as partner material, including raises, better working arrangements and even the proverbial “resigmotion” for highly valued employees who get job offers from elsewhere.

Keeping those employees is of paramount importance, but those efforts can lead to dissatisfaction with other employees. VSCPA member Beth A. Berk, CPA, CGMA, a self-employed independent recruiter based in Bethesda, Md., says communication is a major key to keeping both partner-track staff and employees who choose different career paths yet are valued contributors and well worth keeping around.

“The firms that have more honest dialogue with staff and truly discuss how they can move ahead will u

Know this...

• The average American worker changes jobs 12 times during his or her career, so the average employer must spend the equivalent of six to nine months’ salary to find, hire and train a replacement for a departed employee. That percentage goes up for higher-level positions.

• To retain top employees, some firms are allowing newer employees to generalize, which allows them to find the proper fit within the firm.

• Retention programs often focus on letting employees know they are valued.

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practice management

retain them at the level the professional feels they should be retained at — those companies win,” she said. “There will be some employees who feel like they got a raw deal, and maybe they did and maybe they didn’t, since the message being sent is that they don’t seem to care if these people leave.”

She added: “Some CPAs could do the same job for 15 years and be perfectly fine with it. Others might need change or to be promoted. You can’t treat everybody the same way because people have different ambitions.”

Thomson, the Mid-Atlantic regional managing partner at Dixon Hughes Goodman (DHG) in Richmond, noted that employees leave at higher rates during the first few years of employment and at the seven- to nine-year mark, when they often assess whether they want to try to become partner or potentially leave for positions in corporate finance. The first point can be a crucial moment in a CPA’s career, and one key factor is whether or not the employee feels constrained in his or her role.

To combat those employees leaving, some firms are allowing newer employees to generalize. This practice offers the benefits of keeping some employees around and allowing them to find the proper fit within the firm. Yount, Hyde & Barbour (YHB), a Winchester-based regional firm with offices across Virginia, places new hires into what it calls the “associate pool,” where they work with multiple service areas, partners and offices.

Some YHB employees even continue to do that several years into their career.

Dan Berlin, CPA, a supervisor in the firm’s Richmond office, does tax work during busy season, retirement plan audits through the summer and nonprofit audits and Form 990 returns the rest of the year

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and credits that flexibility for his level of engagement with the firm.

“Once you get into a specific department, if you want to migrate over and do something else, we have a process for that and we’ll support you,” he said. “We have a structure for that. We can move you to a different department, or if you’re someone like me, who wants to do more than one thing, you can do that.”

DHG, based in Charlotte, N.C., has taken another route in making employees feel wanted — the Recognition Awards for Valued Employees program, in which employees recognize each other, up and down the org chart, for outstanding work.

Employees accumulate points based on recognition they receive, which they can redeem for merchandise, gift cards and other prizes.

“It was about praise, and you had to be specific,” said former DHG employee Amanda Phelps, CPA, now employed with the city of Virginia Beach. “I would praise the partners as an associate, and they would be really happy with it.

“I found that upward and downward recognition really helped. You could turn in your points for gift cards, but people really responded well to that extra ‘good job.’ People in public accounting don’t always focus on that.”

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Of course, just as employers keep a close eye on the bottom line, financial rewards still carry a great amount of weight. DHG recognizes that with its Bonus Ownership Opportunity for Seniors Talent program, aimed at retaining senior associates and consultants. That program gives employees the option on receiving bonuses based on length of tenure, with the bonus increasing the longer it’s deferred.

Most of the retention programs above boil down to one thing: Letting employees know they’re valued. At DHG, that means peer-to-peer recognition; at YHB, it’s professional freedom within the organization. BDO, meanwhile, saw its retention rate increase the more it flattened its org chart and gave employees a forum for their opinion and ideas.

“People want to know that they’re at a firm where you’re able to voice an opinion.

People want to know that their opinion really counts for something,” Berson said.

“So often, I think what happens is that firms pay lip service to it. That’s really not how we operate. We really, genuinely ask people to give us ideas to contribute.”

BDO has numerous task forces devoted to meeting the needs of different employees, be it diversity and inclusion, early-career needs or a women’s group. What’s more, the firm pivoted one of its existing partners into the role of chief people officer, inspired by a similar move from Google.

Her initial job description was “Making people happy.”

“She’s on my executive team, a key partner in the firm,” Berson said. “One of our core values is ‘People first.’ I thought that if we were saying it’s a core value of the firm, we need to put our money where our mouth is.”

BDO actively listens to its employees when it comes to the programs that will keep them around. That’s in the macro, at the

company- or branch-wide, programmatic level. But listening on an individual level can be just as important.

“Companies don’t necessarily pay attention, or their managers may or may not pay enough attention, to single out those who want to be promoted versus those who don’t,” Berk said. “And if they miss the boat on that one person, that’s the person who leaves. It’s possible that the managers are so busy getting the work done that they don’t have enough time to truly focus on the professional development of their staff. Companies claim to care about professional development, but some are better at it than others.”

That extends to open communication about career paths and employee performance — both positive and negative.

And it requires partners and directors to listen to lower-level employees regarding their needs at their spot on the org chart.

“There has to be an open way to communicate and help somebody really develop and understand where they need improvement,” Berk said. “Maybe it comes up in their annual review, but if they’re not really being honest with somebody or really, truly expressing what they really want to say, they may be sending the wrong message to a person. So there’s a disconnect between the employee’s perceptions and the professional providing the feedback.”

“Perspective and career challenges are often different from men and women who are already leaders in the firm,” Berson said. “Those who are already leaders are involved in the strategy of the firm, but when you look at early-career opportunities for men and women, it’s important to get their feedback.”

UPCOMING ONLINE EDUCATION Jan. 17 & Feb. 27 — The High Cost of Turnover, and What to Do About It Jan. 24 — Millennials: Myths and Truths Behind the Next Gen of Leaders

no matter their career ambitions. Digging even deeper, that practice needs to be a real part of organizational culture, and it has to be intentional. Carefully planning organizational growth helps keep everyone at the firm on the same page and working toward the same goals.

“It has to be coupled with real firm growth as a business, more clients,” Berlin said.

“If you don’t have firm growth, you’ll keep employees and they won’t get promoted, and then they’ll leave.” n

Chip Knighton is communications manager at the VSCPA, as well as contributing editor at Disclosures magazine.

To sum up, employee retention often boils down to making employees feel wanted,

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JANUARY/FEBRUARY 2018

cknighton@vscpa.com connect.vscpa.com/ChipKnighton @ChipKnighton

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Attention CPAs:

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leadership

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to u:

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s

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The LEAD Round: What every leader needs Experienced professional? Or just starting out? Either way, download our Leadership Competency Ladder to get a comprehensive understanding on how to grow your skill-set.

Visit the VSCPA LEAD website at vscpa.com/LEAD. Hope Cupit, CPA

Brian Deibler, CPA

F

or all the talk about corporate culture, there’s no way to create a successful work environment without trust. You can’t foster teamwork with a team full of employees who are worried about whether their colleagues will do what they say they’ll do.

We tackled that issue in this edition of the LEAD Round. We asked two VSCPA members — a seasoned CPA and a young professional — about what they do to maintain balance during busy season. Here’s what HOPE CUPIT, CPA, president and CEO of the Southeast Rural Community Assistance Project in Roanoke, and BRIAN DEIBLER, CPA, partner at Malvin, Riggins & Co. in Newport News, had to say.

What is one characteristic you believe every leader should possess?

HC: The one characteristic that I believe every leader should possess is confidence.

A leader that shows confidence will most likely have others follow them and be more willing to support the leader in his or her role. Confidence brings about the feeling or belief that one can rely on someone. This mindset contributes to the belief that others will believe in the decisions and actions of the leader.

Displaying a strong leadership style is appealing and helps when working with others. Leadership is about making important decisions. These decisions may not always be popular with others, but a leader who is confident in his or her decision-making and choices will likely gain respect.

For example, we often want to accidentproof our decisions by covering all of the bases. We do this by wrapping ourselves in a cocoon of safe decisions. Self-confidence is what separates those leaders who need a mountain of statistical data from those who inspire us with their ability to lead us into the unknown. A fearful leader will agonize over decisions and always make the safe choice, while a confident leader will take the information they have and take action.

Not only does confidence allow you to make the tough decisions that people expect from a strong leader, but it’s reassuring to your team. Confidence allows you to lead meetings with authority, to accept truthfulness and open communication, allows the team to perceive your force of will and gives your team more faith in the company and its mission. As a leader, consider how well you deliver a company speech. If you deliver it with confidence, it inspires your team as intended, but

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the same speech delivered with doubt becomes a point of disdain.

Lastly, I would like to point out that confidence is important because people will be looking toward leaders on how to execute task, particularly if things aren’t going 100 percent right. Leaders must remain calm and poised; this helps their team members to react in the same manner. As a result, morale and productivity will remain high and the problem will be solved more promptly. If you panic and give up, team members will immediately know that things have simply gone downhill.

Great leaders have to demonstrate an appearance of confidence if they’re going to succeed. This should not be confused with self-righteousness or arrogance.

People want to look up to their leaders for inspiration and guidance not be torn down by their self-indulgence. As I have always said, it is important to note that leaders are admired and bosses are feared. So lead the way with confidence.

BD: This may sound strange, but I believe every leader should possess the characteristic of always being “on.” The truth is, this profession is demanding. CPAs are more than ever the trusted advisor u

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vscpa news

The LEAD Round, cont’d to our clients. With this demand comes great responsibility: to our clients, to our staff and to our families. The ability to have “off” days is just not provided. It sounds tough, but with a simple approach to each day, the right attitude and common-sense communications, being “on” is easily achieved.

When I say a simple approach to each day, what I mean is not coming in to work and having a “list” of items to cross off.

We all know that when we make that list, more times than not, we do not achieve all items, so we come down on ourselves. As a leader, our main job should be to assist others in crossing items off their list. We all know that the email, phone call or demand for staff assistance arises out of nowhere, so we need to be prepared to tackle. It is this simple approach that proves successful at the end of the day.

The right attitude sounds clichéd, but it is, and will always be, the key ingredient of a great leader. The culture of an organization is most certainly formed from the attitude of those at the top. Positive direction and positive reinforcement will most certainly show your clients and staff that you care and are willing to be by their side as they move along the path.

Common-sense communications should come naturally. A great leader should make sure they are responsive to their clients and can explain things to them in a manner that they understand. A great leader should always be available to their staff and working with them to teach, guide and mentor them through the maze of being a public accountant. The common sense part of communication is the ability to listen, absorb the issue at hand and respond in a manner that is appropriate and fair to all concerned. n

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Walker wins Arthur J. Dixon Award from AICPA

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he Tax Division of the American Institute of CPAs (AICPA) honored VSCPA member Deborah Walker, CPA, with the Arthur J. Dixon Memorial Award, the highest honor the accounting profession bestows in the area of taxation.

Walker, the national director of compensation and benefits at Cherry Bekaert in Vienna, received the award Nov. 8 at the AICPA’s Fall Tax Division meeting in Washington. She has 35 years of experience in a broad range of employment-related issues, including executive compensation, qualified retirement plans, employment taxes and domestic and international compensation agreements. In addition to her work at Cherry Bekaert, she edits for Bloomberg BNA as part of its Tax and Accounting Center and is the former editor-in-chief of the Journal of Taxation of Employee Benefits. She previously served as Deputy to the Benefits Tax Counsel in the U.S. Treasury Department’s Office of Tax Policy.

She has volunteered for the AICPA for 30 years, including a stint as chair of the association’s Tax Executive Committee. She currently serves on the planning committee for the AICPA’s annual Employee Benefit Plan Conference, where she previously served as chair and co-chair.

The AICPA established the award in 1981 to honor the late Arthur Dixon, former chair of its Tax Executive Committee, to honor outstanding CPAs in the field of taxation.

Walker is the second VSCPA member to win the award in recent years, joining former VSCPA Board of Directors chair Lisa Germano, CPA, who was honored in 2015.

THE VSCPA MOURNS THE LOSS OF...

Patricia Leviege of Bristow.

Chuck Tingler, CPA, a VSCPA Life member from Louisa. A graduate of the University of Richmond, he served in the Virginia Army National Guard and was active with the William A. Cooke Foundation, where he served as chairman of the board, and County Line Baptist Church. He served on the VSCPA’s International, Professional Ethics and CPE Steering committees.

JANUARY/FEBRUARY 2018

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DISCLOSURES.VSCPA.COM

vscpa news

Congratulations to the following members!

Jenny Bonsiewich, CPA, Bo Garner, CPA, John McDowell, CPA, Brian Plum, CPA.

NEW HIRES

FIRM NEWS

Fairfax firm Thompson Greenspon has hired Susan Sturgeon, CPA, as tax senior; Carey Besch, CPA, as tax staff; and Steven Mack as audit staff.

Vault.com ranked its best accounting internships for 2018. The following Virginia firms made the list:

PROMOTIONS Travis Brake, CPA, was named partner at Miller & Jameson in Harrisonburg.

Jennifer Lehman, CPA, was appointed CEO at Hantzmon Wiebel in Charlottesville, becoming the firm’s first female CEO. John McDowell, CPA, partner at Dixon Hughes Goodman, has moved to the firm’s Norfolk office from its Tysons office.

Charlotte Ramage, CPA, and Andrew Sledd, CPA, were named partner at Keiter in Glen Allen.

APPOINTMENTS & AWARDS The following members received the Top 40 Under 40 award from Inside Business in Norfolk: • Jenny Bonsiewich, CPA, senior manager at Dixon Hughes Goodman in Norfolk • Bo Garner, CPA, manager at PBMares in Newport News • Richard Groover, CPA, shareholder at Wall, Einhorn & Chernitzer in Norfolk Brian Plum, CPA, president and CEO of Blue Ridge Bankshares Inc. in Luray, was named chairman-elect of the Virginia Association of Community Banks board of directors.

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Elliott Davis Dixon Hughes Goodman KPMG BDO USA PricewaterhouseCoopers Baker Tilly Virchow Krause CohnReznick Elliott Davis Decosimo has rebranded itself to the name of one of its predecessor firms, Elliott Davis.

MERGERS & ACQUISITIONS Richmond-based firm Cherry Bekaert has acquired Berlin, Ramos & Co. in Rockville, Md., and Frasier, Dean & Howard in Nashville, Tenn.

Gross, Mendelsohn & Associates, a Baltimore-based firm with an office in Fairfax, has acquired Fairfax CPA and consulting firm Gurman & Co.

We want to hear from you! The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. Firm news, such as mergers and acquisitions and community service activities, is also welcome.

Email disclosures@vscpa.com if you have exciting news to share.

JANUARY/FEBRUARY 2018

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vscpa news

Richmond Chapter presents $7,750 in scholarships

STAFF NEWS

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he VSCPA’s Richmond Chapter held its annual CPE event and Past Presidents and Scholarship Dinner on Nov. 14 at The Place in Innsbrook, with presentations by VSCPA President & CEO Stephanie Peters, CAE, Sonya Waddell, director of regional economics at the Federal Reserve Bank of Richmond, and Ed Grier, dean of the Virginia Commonwealth University School of Business. The chapter awarded 11 scholarships for a total of $7,750. Manleen Bajaj of Virginia Commonwealth University received the chapter’s first Past Presidents Scholarship, while the following students received Accounting Excellence Scholarships: • • • • • • • • • •

Thabit Ababneh, Virginia Commonwealth University Yasar Aljaafar, J. Sargent Reynolds Community College Sarah Baldwin, Virginia Commonwealth University Brook Bishop, Virginia Commonwealth University Stephenson Botten, Randolph-Macon College Geordan Dent, Virginia Union University Kyrsten Jones, J. Sargent Reynolds Community College Mozhdeh Mirshahi, J. Sargent Reynolds Community College Margaret Raymond, Virginia Commonwealth University Sadonia Sylvester, Virginia State University

CONGRATS TO THE VSCPA’S NEWEST CPAs Gregory Amorosso, Norfolk Connor Arnone, Williamsport, Md. David Belt, Arlington Brittany Blanchard, Lorton Ted Kin Chen, McLean Ruth Condit, Abingdon Jameson Cooke, Richmond April Crandall, Newport News William D’Amato, Midlothian Rachael DeBoard, Midlothian John DeMarzo, Richmond Elena Dorogy, Washington, D.C. Michael Dwyer, Tysons Manuel Dwyer, Richmond Katherine Feeser, Richmond Jordan Ferguson, Richmond Logan Fitzgerald, Glen Allen Patrick Gibbons, Reston Sarah Golusky, Vienna

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Rohullah Hasher, Herndon Haley Henderson, Arlington My Hoang, Richmond Ramy Khalil, Annandale Richard Kunisaki, Arlington Wenqian Leng, Richmond John Longacre, Arlington Stuart Madden, Midlothian AshbyRose Nelson, Springfield Hang Pham, Arlington Nga Pham, Arlington Brian Ripley, Madison, Wisc.

Grant Sauer, Arlington Katelyn Scott, Abingdon Kathleen Sheets, Powhatan Jacob Spector, Bethesda, Md. Josef Storm, Fairfax Ryan Vosburgh, Herndon

JANUARY/FEBRUARY 2018

Feb 7: Technology Director Jen Syer (top right) & Vice President of Innovation Tina Bates, CAE (bottom left), both 18 years Feb 17: Amy Mawyer, vice president of learning (top left), 24 years

NEW HIRE Evan Taylor (bottom right) has joined the VSCPA as a membership marketing specialist. Previously, he was director of marketing and communications for Filtroil in Richmond. Welcome aboard, Evan!

DEPARTURE Learning Manager Valerie Vaughn has left the VSCPA. Good luck and best wishes, Val!

ONLINE CPE TEST Visit vscpa.com/CPE. Choose “On Demand” from the side filters to find the exam and others from previous

List from October and November. Compiled Nov. 28, 2017.

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ANNIVERSARIES

Disclosures issues.

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DISCLOSURES.VSCPA.COM

vscpa news

VSCPA 100% Member Firms VSCPA 100% Member Firms show their commitment to their employees, the profession and the association. A 100% Member Firm is simply a Virginia CPA firm or company that has all of its CPAs enrolled as members in the VSCPA. Interested in being listed as a 100% Member Firm? Contact VSCPA Membership Development Director Julia Henderson at jhenderson@vscpa.com.

A.F. Thomas & Associates, PC A. Rohm, Smith & Company, PC Actuarial Benefits & Design Company Adams & Co., PC Adams & Delp, PC Anderson & Anderson CPAs, PC Anderson & Reed, LLP Andrews CPA Associates, PC Atlas Financial Barnes, Brock, Cornwell and Painter Beale & Curran, PC Beck & Company, CPAs, PC Bennett, Atkinson & Associates, PC Bishop, Farmer & Co., LLP Bishop, Farmer & Co., LLP Black Marlin CPA (Ann Black CPA PLC) Boyce, Spady & Moore PLC Britt & Peak, PC, CPAs Bruce, Renner & Company, PLC Bullock & Associates, PC Burdette Smith & Bish, LLC Burgess & Co., PC, CPAs Burnett & Sneed, CPAs, LLC Cameron, Moberly & Hamrick, PC Charles H. McCoy, Jr., Inc. Charles W. Snader, PC Chesapeake Accounting Group PC Christopher A. Enright, CPA, PLC Cole & Associates CPAs, LLC Coley, Eubank & Company, PC Corbin & Company, PC Craver, Green and Company, PLC Creedle, Jones and Alga, PC CST Group, CPAs, PC Dalal & Company David L Zimmer CPA PC

Didawick & Company, PC Donald R. Pinkleton, CPA Donald W. Coleman, CPA, Inc., PC DT & Company, PLC DuvallWheeler, LLP Eggleston & Eggleston, PC Elmore, Hupp & Company, PLC Everett O. Winn, CPA, PLC Fritz & Company, PC, CPAs G.L. Roberson CPA, PLLC G4 CPA Firm, Inc. Garland & Garland, CPAs, PC Garris and Company, PC Graham and Poirot, CPA, PC Gregg & Bailey, PC Gregory & Associates, PLLC Gurman & Company, PLLC Hampton & Everett, PC Hantzmon Wiebel LLP Harris, Hardy & Johnstone, PC Harris, Harvey, Neal & Co., LLP Henley & Henley, PC Hogan & Reed, PC, CPAs Holland & Brown LLP Homes, Lowry, Horn & Johnson Honeycutt & McGuire, PC Hortenstine and McCown, CPAs, PC Hottel & Willis, PC Hughes & Basye, PC Hunt, Calderone & Abbott PC Jay E. Reiner CPA PLLC John M. Watkins, CPA Jones & Company CPA, LLC Jones & McIntyre, PLLC Jones CPA Group, PC Jones, Madden & Council, PLC JS Morlu, LLC Katherine L. Foley CPA, PC Keiter

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Kositzka, Wicks & Company Kris McMackin CPA L.P. Martin & Company, PC Lane & Associates, PC Larry D. Greene, CPA, PC Lauren V. Wolcott, CPA, PC Lent & Hawthorne, PC M. Lee Winder & Associates, PC Maida Development Company Mallard & Mallard CPA, LLC Malvin, Riggins & Company, PC Martin, Beachy & Arehart, PLLC McCallum & Kudravetz, PC Meadows Urquhart Acree & Cook, LLP Michael B. Cooke, CPA, PC Michael R. Anliker CPA PC Miller Consulting Group, LLC Mitchell, Wiggins & Company, LLP Moss & Riggs, PLLC Mulkey & Co., PC Murray, Jonson, White & Assoc., Ltd. Nicholas, Jones & Co., PLC PBMares, LLP Pearson&Co., PC R.P. Willis, PC R.T. McCalpin & Associates, LLC Renner & Company, CPAs, PC Robb Scott Bradshaw & Rawls, PC Robinson Consulting Group Roger L. Handy PC Rubin, Koehmstedt & Nadler, PLC Rumble & Associates, Inc. Russell, Evans & Thompson, PLLC Rutherford & Johnson, PC Salter & Associates, PC Saunders & Saunders, PC Saunders, Matthews & Pfitzner, PLLC Scheulen, Patchett & Edwards, PC

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Sells Hogg & Associates CPAs, PC Sherman, Spero, Safarino & Spencer, Hager & Mosdell, PC Spitler, Stephens & Associates PLL Stephen F. Perry, CPA, PC Stephen Merritt CPA, PC Stephen T. Shickel, CPA, PLC Steve Guy & Associates, PC Steve Walls & Associates, PLLC Stokes Office Solutions Sullivan, Andrews & Taylor PC T.L. Pyne, PC Terry L. Jones, CPA, LLC The Davidson Group, PC The Foley Group, Ltd. Thompson Greenspon Tongelidis Consulting, LLC Updegrove, Combs & McDaniel, PLC Valderas Financial Solutions LLC VanHuss & Associates, PLLC DBA Kimble Verus Financial Partners W.D. Sanders & Company, PC Wall, Einhorn & Chernitzer WellsColeman White, Withers, Masincup & Cannaday Wilkinson Consulting & CPA PLC William B. May, Jr., CPA, PC Wineholt & Associates, PC Yancey, Bowman & Helsley, CPA Yount, Hyde & Barbour, PC

Compiled Nov. 20, 2017.

Check vscpa.com/100Percent for a complete list.

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Open VSCPA volunteer positions Thanks to all the VSCPA members who have already signed up to volunteer! Visit the Volunteer Manager on Connect to see the full list of current opportunities at vscpa.com/volunteer.

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