Disclosures: March/April 2014

BROUGHT TO YOU BY THE VIRGINIA SOCIETY OF CPAs

MARCH/APRIL 2014 I VOL. 27 NO. 2 I WWW.VSCPA.COM

Government accounting cost compliance

Tax credits for government contractors

Cyber threats against accounting firms

WATCHING WASHINGTON’S PIGGY BANK page 18

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INSIDE this issue

COVER STORY >>

There’s a group in Washington keeping a close eye on the federal government’s finances. And they’re accountants and CPAs. Learn more about what the Congressional CPA and Accountants Caucus is doing to help right the fiscal ship.

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ARTICLES

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FEATURES The Congressional CPA and Accountants Caucus has many fiscal issues in play on Capitol Hill.

PLAY BY THE RULES

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There are basic government cost accounting compliance requirements you must meet if you want a chance to contract services with the federal government.

ACCOUNTING FIRMS FACE GROWING CYBER THREAT If you or your firm collects sensitive personal information or financial data, you are a prime target for a security breach.

SECTIONS 12

BACKTALK

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Top 12 business tax issues identified by KPMG

LINE ITEMS

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DATA DRAFT

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ESTATES AND TRUSTS

PROFESSION’S PAST

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What do Virginia’s Commissioners of Accounts do exactly?

GOVERNMENT CONTRACTING

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Valuable tax credits in Virginia, Maryland and D.C.

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VSCPA NEWS

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MEMBER NEWS

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VSCPA EDUCATIONAL FOUNDATION

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CLASSIFIEDS

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I AM THE VSCPA

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disclosures

AD INDEX AON Beth A. Berk, CPA Digital Benefit Advisors Keiter PNC Bank Poe Group Advisors

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

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Our mission is to enhance the success of CPAs.

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BACKTALK you said it

VIRGINIA SOCIETY OF CPAs

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

FROM VSCPA.COM >>

A TRIBUTE TO JIMMY STRICKLAND, CPA

disclosures

Jimmy is a class act. I still remember my visit with him at Goodman and Company while I was a student at ODU. He impressed me then and also as I saw his firm succeed. Best to you.

EDITORIAL STAFF

JOSE SIMON Piedmont Natural Gas Company, Charlotte, N.C.

http://disclosures.vscpa.com

Jill Edmonds Managing Editor disclosures@vscpa.com Chip Knighton Contributing Editor cknighton@vscpa.com

VIA FACEBOOK >>

Jenny Chu, CAE Marketing & Communications Director jchu@vscpa.com EDITORIAL TASK FORCE Joan D. Aaron, CPA Lindsay S. Andrews, CPA Adam G. Chaikin, CPA David L. Cotton, CPA Elizabeth M. Helle, CPA Clare K. Levison, CPA Kevin S. Matthews, CPA David R. Peters, CPA George D. Strudgeon, CPA Thomas L. Visotsky, CPA DEADLINES Articles and advertising for future issues are due by 5 p.m. on the following dates: March 3, 2014 May 5, 2014 July 7, 2014 Sept. 1, 2014 Nov. 3, 2014 Jan. 5, 2015

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.

VSCPA ENDORSED PARTNERS

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TWITTERSPHERE >> Looking forward to speaking with @StephPeters @VSCPANews today about the top issues facing accounting firms in 2014 #wellscoleman — @GEORGEFORSYTHE Thank you to @vscpa @VSCPANews for choosing me to participate in their 2014 Economic Outlook Survey.

— @PROFKUSHJENKINS

Gary D. Dittmer, CPA

May/June 2014 July/Aug. 2014 Sept./Oct. 2014 Nov./Dec. 2014 Jan./Feb. 2015 March/April 2015

From the

Start 2014 on the right financial foot w/ these $ saving tips from Dr. Phil Umansky — @360CPAVOLUNTEER Today’s VaNews, brought to by day sponsor @VSCPANews http://bit.ly/19zxhKm — @VPAPUPDATES Do you know the rules of volunteering your CPA services? Find out from our very own Kevin Matthews and @VSCPANews — @GRFCPAS @NovaAccess & @Mason_SOM Accounting Students, Consider applying for the @VSCPANews Leaders’ Institute!

— @PROFMITCHELL

While other VSCPA members were meeting with their legislators, Ryan Losi, CPA, was getting more bang for his buck. Here he is testifying about IC-DISC legislation in front of the Virginia Senate Finance Committee.

The bill passed the committee in a unanimous vote. Great job, Ryan!

VIA FACEBOOK >> VSCPA member Jim Holland, CPA, was elected chairman of the Chesterfield Board of Supervisors. He becomes the first black chairman in board history. Congratulations, Jim!

CORRECTION In the Super CPAs list published in the January-February 2014 issue of Disclosures, Niki White, CPA, of First Capital Bank in Glen Allen, was inadvertently omitted from the list of winners in the “Financial Managers, CFOs and Controllers” category. The VSCPA regrets the error.

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

Get in touch

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, blog comment or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

LINE items VSCPA ECONOMIC OUTLOOK SURVEY >>

CPAs show increased optimism for Virginia’s economy

AP ACCOUNTING >>

HIGH SCHOOLS NEED HIGH-LEVEL ACCOUNTING CLASSES The city of Roanoke lights up at night.

Virginia is a pretty good place to

be after all. Eighty-five percent of CPA respondents to the 2014 Virginia Economic Outlook Survey said they felt excellent or good about the Commonwealth’s economy relative to neighboring states — up 9 percent from 2012.

And while Virginia CPAs are increasingly more optimistic that the United States has begun a sustainable economic recovery, health care concerns and the impact of sequestration weigh heavily on their minds, survey results revealed.

A slight 51 percent majority said they were optimistic for economic recovery, although 37 percent believed the recovery will take more than four more years. In addition, a majority of CPAs think budget sequestration will have a marginal effect on the national economy but a major effect in Virginia.

Calculus, American history, English …

Accounting? If the accounting profession has its way, an Advanced Placement (AP) course in accounting will join the repertoire of classes available to high school students. AP courses are academically rigorous and designed to be equivalent to college courses; colleges and universities often offer credit for incoming students who achieve certain scores on AP exams.

outlook can more than likely be attributed to implementation of the Patient Protection and Affordable Care Act. The Virginia Economic Outlook Survey did reveal some regional differences in responses.

For example, 50 percent of respondents in southwest Virginia thought the economic recovery will take more than four more years, compared with 37 percent statewide.

CPAs from southwest Virginia were overall “somewhat pessimistic about the state of the national economy versus the “somewhat optimistic” result statewide. Southeast Virginia was similarly pessimistic, with workers’ compensation costs and the tax climate more often cited as factors in the costs of doing business as compared to Northern Virginia. n

In a Dec. 13, 2013, letter to The College Board President & CEO David Coleman, the VSCPA stated, “Accounting education not only ensures our students gain valuable skills to help them navigate our challenging economy, but it also provides a gateway to a thriving career path that will only strengthen Virginia’s business community.” n

Check out a PDF of the full survey results by scanning the QR code with your smartphone.

Despite the economic optimism for Virginia, results reveal health care costs as the state’s top overall problem as well as the top problem for Virginia businesses. These results mirror the survey from two years ago. The negative

DISCLOSURES

In December 2013, the VSCPA joined an initiative by the Pathways Commission, the American Accounting Association and American Institute of CPAs (AICPA) to encourage The College Board to implement an AP accounting course. If approved, the course would become the first high school business class to receive AP credit.

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A successful CPA Assembly Day On Tuesday, Jan. 21,

VSCPA members and staff braved a frigid morning and snowy afternoon to visit the Virginia General Assembly for CPA Assembly Day. Attendees met with Virginia legislators to discuss issues important for CPAs, including: >> Tax conformity, particularly related to the Earned Income Tax Credit >> IC-DISC export incentives >> Patent infringement >> The CPA exemption from private investigator licensure requirements Attendees also fielded questions from legislators on tax-related legislation and other financial bills. The VSCPA contingent also attended the legislative session, where they were recognized on the House and Senate floors.

Thanks to everyone who attended and participated virtually!

n

Top: VSCPA members, leaders and staff gathered in Richmond on a cold day in January to meet with legislators. Bottom: Andrew Martin, CPA, met with a staffer of Del. Ron Villanueva (R-Va. Beach).

>> TAKING ACTION ON THE FEDERAL FRONT The VSCPA has responded to the following federal legislative proposals. Visit the “Advocacy” section of www.vscpa.com to read position letters in full.

“COST RECOVERY AND ACCOUNTING DISCUSSION DRAFT” — On Dec. 19, 2013, the VSCPA sent a letter to Sens. Tim Kaine (D-Va.) and Mark Warner (D-Va.) expressing “deep concern” over the limitation on the use of cash accounting proposed by Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, in his “Cost Recovery and Accounting Discussion Draft” proposed in last November. Baucus’s proposal would eliminate exceptions for numerous professions that currently allow the use of cost accounting, forcing them to switch to the accrual method of accounting if their gross receipts exceed $10 million.

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“AUDIT INTEGRITY AND JOB PROTECTION ACT” — On Jan. 2, 2014, the VSCPA sent a letter to Sen. Mark Warner (D-Va.) to strongly support this act and encourage him to cosponsor. The bill would limit the Public Company Accounting Oversight Board (PCAOB) from requiring mandatory audit firm rotation for public companies. The PCAOB issued a concept release on audit firm rotation in 2011; the VSCPA noted that 91 percent of commenters on that release opposed mandatory rotation because of “costs, negative impacts on audit quality, enhanced fraud risks and uncertain benefits.” n

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LINE items >> EXCELLENT EXCEL

An even faster way to clean an ugly report To follow up on my last tip in Disclosures on how to copy down data that is not repeated on each line to create a continuous block of data, which can be used as the foundation for pivot tables, a co-worker and a VSCPA member both informed me of a much faster and simpler way to achieve the same results.

New clients wanted!

What keeps CPA firm partners and owners up at night? Well, it all depends on how big the firm is. The 2013 PCPS CPA Firm Top Issues Diagnostic Report details the top issues affecting firms by size, gleaned from responses to the 2013 PCPS CPA Firm Top Issues Survey. While smaller firms are busy keeping up with tax law complexity, larger firms have staffing and succession planning concerns. All segments, however, have bringing in new clients as one of their top five issues. Here are the top three issues in each firm size:

SOLE PRACTITIONERS 1.

2.

3.

Keeping up with changes and complexity of the tax laws Bringing in new clients Seasonality/workload compression

FIRMS WITH 2–5 WORKERS 1.

2.

3.

1.

Highlight column with blank cells between the data you want repeated on each line.

2.

In the Home Ribbon, click on “Find & Select” (looks like a pair of binoculars), then click on “Go To Special” (or just hit F5 on the top of your keyboard to pull up the same dialog box).

3.

Select “Blanks” using the radial button, then click OK.

4.

Go into the formula bar and write a formula to make the first cell selected equal to the cell just above it.

5.

After you write the formula, here is the tricky part! Hit Ctrl + Enter to leave the formula bar. If your formula is only in one cell, Excel did not register that you hit Ctrl + Enter, which should enter the same formula into all highlighted cells using relative cell referencing.

While it may sound complicated, it is actually very simple. Give it a quick try and see how it works. n

Keeping up with changes and complexity of the tax laws Succession planning Finding qualified staff

GEORGE D. STRUDGEON, CPA, CGFM, is an audit director at the Virginia

FIRMS WITH 6–10 WORKERS 1.

2.

3.

Auditor of Public Accounts in Richmond. He is a member of the VSCPA Editorial Task Force.

Email him if you have Excel topics you want him to cover. * george.strudgeon@gmail.com. connect.vscpa.com/GeorgeStrudgeon

Succession planning Finding qualified staff Bringing in new clients

FIRMS WITH 11–20 WORKERS 1.

2.

3.

Bringing in new clients Finding qualified staff Succession planning

FIRMS WITH 21+ WORKERS 1.

2.

3.

Owner/partner accountability and unity Bringing in new clients Retaining qualified staff n

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DATA draft

Where are all the millionaires? Maryland.

They’re in Virginia, too, but according to a new study from Phoenix Marketing International, there are more millionaire households (those with investible assets of $1 million or more) per capita in Maryland than any other state. Here are the top five.

(Virginia and Washington, D.C., come in at Nos. 7 and 10, respectively.) n

1. Maryland

2. New Jersey

3. Connecticut

4. Hawaii

5. Alaska

WHO CLAIMS WHAT? An interactive map from the Pew Charitable Trusts demonstrates how differently taxpayers claim itemized deductions around the country.

On average, one in three households (32 percent) itemize on things like housing, charity contributions and more — all told, approximately $1.3 trillion in deductions in 2011 (that equals $182 billion given up by the government in revenue). But there are great disparities state by state.

>> A DECADE OF IMPROVEMENT? Many financial executives believe women in finance and accounting can more easily climb the corporate ladder now than they could 10 years ago, according to Robert Half.

Forty-two percent of executives surveyed said women have somewhat more or significantly more opportunities for career advancement. But more than half, 53 percent, reported no change and 4 percent cited somewhat fewer or significantly fewer opportunities.

The mixed results lead to the question: Is there improvement in the past decade if only half of executives believe it to be true? Many experts say there is increased opportunity, but the C-suite is still difficult to crack. n

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>> MARYLAND: Highest percentage of U.S. taxpayers itemize in Maryland, at 47.9 percent. >> WEST VIRGINIA: In Maryland’s neighboring state, the lowest number of Americans itemize, at 18.8 percent.

Visit Pew Charitable Trusts at http://www.pewstates.org for more.

>> BY THE NUMBERS

848 The number of pages in the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed by President Barack Obama in 2010. n

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PROFESSION’S past 25 YEARS AGO >>

The turf battle among standard setters

BY DAVE COTTON, CPA

It is easy to take for granted the way the profession is today — and assume it’s always been that way. Ours is an evolving and dynamic profession. This column looks at the way we were a quarter-century ago.

The July 1989 issue of Disclosures (Vol. 2, No. 7) featured an article by Phillip A. Jones Sr., Ph.D., professor of accounting at the University of Richmond: “GASB vs. FASB: Jurisdiction vs. Comparability.”

The Governmental Accounting Standards Board (GASB) was the new kid on the standards-setting block, having attained U.S. Generally Accepted Accounting Principles (GAAP) standard-setter status in 1984.

GASB’s jurisdiction was state and local governmental accounting and reporting. One might have imagined that the Financial Accounting Standards Board (FASB) would be relieved at having GASB take over this major area of the GAAP workload. Friction between the two standard-setters emerged when GASB began taking positions for governmental entities that were in conflict with FASB pronouncements for non-governmental entities. Jones summed up the nature of the turf battle as follows: “One might assume that two entities entering into the same transaction should record and report it in the same way, regardless of the fact that one is a private firm and one is public. There are public and private hospitals, public and private universities, public and private utilities, etc., providing similar to identical services.

Two different sets of GAAP make comparability difficult, if not impossible.”

The areas for conflict were actually a bit greater than simply governmental versus non-governmental. When GASB was given its mandate by the Financial Accounting Foundation, “it was given pre-eminent authority in setting [GAAP] for the public sector; [FASB] statements … can be overridden for public entities by GASB pronouncements.” So, are nonprofit organizations public or private?

and Management’s Discussion and Analysis — for State and Local Governments. Initially called “the dual-perspective reporting model,” Statement 34 called for two sets of financial statements: one at the entity-wide level using accrual accounting and the other using traditional fund accounting principles. The adverse reaction by organizations like the Government Finance Officer’s Association (GFOA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT) threatened GASB’s existence. But, of course, GASB survived.

GASB continues to press forward to fulfill its mission “[t]o establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports, and guide and educate the public, including issuers, auditors, and users of those financial reports.”

GASB’s biggest battle may be just over the horizon: Service Efforts and Accomplishments (SEA) reporting. The SEA project has been ongoing at GASB since 1987, but so far has percolated just at the conceptual and guidelines (non-mandatory) level. Let’s say, for example, you and your family decide to move to another part of the country. In deciding what towns to narrow your residence search to, wouldn’t it be nice if local governments published performance information on how well they use tax dollars, the quality of education, public safety and so forth?

Many governments voluntarily publish such information. Making SEA reporting mandatory, however, could upset governments not wanting to incur the costs of such reporting (or perhaps governments not optimistic about how their data might compare to others). Stay tuned.

Is GASB fulfilling its mission? SEA reporting as mandatory GAAP for state and local governments: A good idea, or not worth it?

Send me your views on these questions. Send your thoughts and perspectives to Disclosures Contributing Editor Chip Knighton at cknighton@vscpa.com. We will compile the results and share these views in a future edition of Disclosures.

To learn more about GASB, including more about SEA reporting, visit www.gasb.org. n DAVE COTTON, CPA, is partner at Cotton and Company, LLP, in Alexandria. He is a former VSCPA Board of Directors member and currently sits on the VSCPA Editorial Task Force.

He joined the VSCPA in 1981. * dcotton@cottoncpa.com connect.vscpa.com/DavidCotton

Over the ensuing years, most jurisdictional issues were resolved: GASB’s focus narrowed to state and local governments; and most nonprofits were deemed to be in the FASB arena. The two boards eventually agreed that GASB GAAP could differ from FASB GAAP if there was a rationale or need for the different accounting treatments.

But, GASB’s emergence as a standard setter continued to ruffle feathers.

In 1999, GASB issued Statement 34: Basic Financial Statements —

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TAXATION

2013 TAX SEASON STATS ARE IN The jury is out

on how this year’s tax season will go, but statistics are now available for the 2013 season. >> E-filing continues to grow: More than 122 million returns were e-filed. The IRS received more than 45 million returns from taxpayers who prepared and e-filed their own returns — up 4.6 from 2012. >> Ninety-one percent of all returns filed by individuals are prepared using tax prep software, improving accuracy.

Tuition deductions: Employment status matters

>> During 2013, the IRS issued more than 109 million refunds worth almost $300 billion. >> Almost 77 percent of refund recipients chose to receive their refunds through direct deposit. n

If you have a client who wants to deduct tuition, make sure you review employment status! In a December 2013 decision, the U.S. Tax Court ruled against a business student who tried to deduct the cost of tuition for his Masters of Business Administration (MBA) program, a case that could have major implications for other MBA students who may want to claim qualified tuition expenses.

In 2009, Adam Hart enrolled in an MBA program with a concentration in finance. While getting his MBA degree, he worked for a number of companies — none of which required him to attend MBA courses; he then obtained a position as a drug representative. He received a Form 1098-T tuition statement for 2009 reporting qualified tuition expenses of $18,600. He and his wife then filed a joint return and claimed the same amount as an itemized deduction for unreimbursed business expenses on Schedule-A, noting that it was for “MBA tuition,” and after a 2 percent of adjusted gross income, reduced their itemized deductions amount to $17,138. Hart claimed that he was in the business of selling pharmaceuticals and that the MBA classes enabled him to obtain employment in 2009.

The court noted that in Section 162 of the Tax Code and in Internal Revenue Service (IRS) regulations, a taxpayer must be established in a trade or business before any expenses can be deductible. The IRS argued that Hart was not established in a trade or business before he entered the MBA program. The judge agreed with the IRS and wrote “After reviewing the record in this case, and despite an effective pro se representation, we find that petitioner husband was not established in a trade or business before enrolling in the MBA program, and therefore his expenses are not deductible.” n Source: NIQ Smart Brief

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>> RESOLVE TAX DISPUTES QUICKLY The Internal Revenue Service (IRS) launched a new program in November 2013 to help resolve tax disputes for small businesses and the self-employed at the earliest possible stage. The Fast Track Settlement Program (FTS) from the IRS Small Business/Self-Employed Division and the IRS Office of Appeals is a customer-driven approach that helps taxpayers save time and avoid lengthy litigation. The program is designed to resolve audit issues during the examination process within 60 days from acceptance of the application. To apply, the taxpayer must submit Form 14017, Application for Fast Track Settlement.

Check out all the IRS programs for dispute resolution at www.irs.gov/Individuals/ Alternative-Dispute-Resolution. n

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TAXATION

Help for the (tax season) weary Pull yourself across the finish line of tax season with a little help. Visit www.vscpa.com/TaxResources for more info.

THE GREATEST PEER FORUM AROUND: Did you know your peers are only a click away? Become active in the taxation community of Connect, the VSCPA’s online member forum. This forum replaces the old VSCPA tax list server, and members consistently use this tool to ask questions of their fellow Virginia CPAs. If you don’t know the answer, we bet someone else does!

COFFEE DISCOUNTS: Is this the most important item? You be the judge. VSCPA members get 44 percent off Keurig machines, plus a discounted K-cup refill program. And you can even personalize your machine or mugs with your corporate logo (or VSCPA logo, if you desire).

TAX PRACTITIONER’S TOOLKIT: In this marketing kit, available from the American Institute of CPAs (AICPA), you’ll find tons of

resources, like a one-pager to help clients understand all the taxes they will pay. Letters, copy for websites and newsletters, a fiscal cliff presentation, advertisements and more promotional materials are all included in the kit.

2014 AICPA TAX SEASON RESOURCES: In one place, you’ll find tax season news and developments, resources and tools by practice area, the AICPA's Tax Practice Guides and Tax Checklists and much more.

SAVINGS ON OFFICE SUPPLIES: VSCPA members get deep discounts from Office Depot on 150 office supply items, like paper and toner (up to 40 percent off the already discounted best market price).

EXPERT ADVICE: During tax season, you may need to consult tax publications from CCH (25 percent discount for members) or tax and legal research from NIQ (30 percent off). n

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When you choose the AICPA Premier Plan, you’re on the right path to your firm’s future.

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One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. The statements, analyses and opinions expressed in this publication are those of the respective authors and may not necessarily reflect those of any third parties including the CNA companies. CNA is a registered trademark of CNA Financial Corporation.

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TAXATION

Top 12 Business Tax Issues for 2014

BY JASON BRAMWELL

to tackle these issues, which could have a significant impact on their business operations and, possibly, their corporate reputations.

1. MANAGE EFFORTS RELATED TO THE FATCA. “Implementation has evolved since the enactment of FATCA, but it is clear that implications surrounding this new regime are wide-ranging for foreign institutions, U.S. financial institutions and nonfinancial entities that make withholdable payments to non-U.S. entities,” KPMG noted. “Companies will need to continue assessing their FATCA status and their resulting compliance obligations.”

2. MONITOR U.S. BUSINESS TAX REFORM DEVELOPMENTS.

From taxation of cloud-related activities and the prospect for U.S. and international business tax reform, to the implementation of the Foreign Account Tax Compliance Act (FATCA), there are several key tax issues facing business executives in 2014, according to Big Four firm KPMG LLP. “Almost every business decision has tax and, potentially, reputational implications,” Jeff LeSage, vice chair of tax services for KPMG, said in a written statement. “With up to 40 cents of every dollar at stake, keeping an eye on key tax issues is a competitive necessity for CFOs, board members and tax departments, especially as companies put new plans in motion at the start of the new year.”

He added that as businesses assess these and other tax developments, executives should weigh the potential impact on their companies’ bottom lines and plan how to best respond to the challenges and opportunities they may present.

According to KPMG, the following are 12 key tax issues that should be on business executives’ radars for 2014 — and what they should do

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“There continues to be a strong desire among some members of Congress, the Obama administration and the business community for a tax system that is simpler, more competitive and conducive to economic growth,” the firm stated. “The current debate on government funding and the debt limit has temporarily moved tax reform to the sidelines.

Nonetheless, companies will need to keep a close watch on the issue as it will continue to remain ‘on the table.’”

3. UNDERSTAND BASE EROSION AND PROFIT SHARING. “Increased concern about base erosion and profit shifting (BEPS) has triggered a public debate about the tax affairs of multinational companies and a call to action at the highest levels of government,” according to KPMG. “Companies need to be aware of public perceptions, guard against reputational risks and prepare for the reality of potential changes in tax rules and standards.”

4. UNDERSTAND OPPORTUNITIES CONNECTED WITH THE NEW REPAIR REGULATIONS. “Beginning in January 2014, every business with at least some fixed assets must comply with the final so-called ‘repair regulations’ — issued by the U.S. Treasury Department and the Internal Revenue Service (IRS) in September 2013 — that established the federal tax standards for costs incurred to acquire, maintain or approve and dispose of tangible property,” the firm noted. “Certain industries, such as retail, manufacturing, hospitality and utilities may be particularly affected.

“Some taxpayers would be wise to review their capitalization policies before 2014 in order to comply with new elections and to enhance potential benefits, while others should also consider filing accountingmethod changes early for 2012 or 2013 to take advantage of certain provisions in the final regulations.”

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TAXATION

5. CHECK PROGRESS OF MARKETPLACE FAIRNESS ACT. “Other major issues in front of Congress, as well as political and business opposition, may have currently moved the Marketplace Fairness Act off the fast track, but companies need to continue to stay alert to potential tax compliance requirements under the proposed law if the situation changes,” according to KPMG. “The bill, which would allow states to require online and other out-of-state merchants to collect and remit sales and use taxes on products and services they sell, is now in the hands of the House Judiciary Committee after Senate passage earlier in 2013. The committee is considering possible changes to the Senate bill.”

6. ADD TAX IN THE CLOUD TO YOUR BUSINESS CONVERSATIONS. “The movement of computing services and resources to the cloud is expected to continue to drive both back- and front-office business transformations during 2014,” KPMG stated. “It’s critical that tax executives take a more active role in getting a ‘seat at the table’ early for their company’s cloud discussions. Not doing so may lead to missed incentives and planning opportunities, as well as increased potential for risk and unforeseen liabilities down the road.”

7. NAVIGATE A SHIFTING LANDSCAPE FOR TRANSFER PRICING. “Tax authorities worldwide are continuing to sharpen their focus on transfer pricing arrangements, especially higher-risk/higher-value transactions,” the firm noted. “Taxpayers should expect heightened enforcement — including increased documentation requirements, examination of uncertain tax positions and expanded tax return disclosures — to continue during 2014 and should consider how they can address these challenges.”

8. INCLUDE YOUR TAX DEPARTMENT IN BUSINESS OPERATION TRANSFORMATION. “Leaders would be wise to include their tax departments in any business improvement and operational transformation programs they consider to mitigate risk and enhance value opportunities,” according to KPMG. “Moving people, assets or revenue streams can have an impact on direct and indirect taxes and the underlying processes to comply with various tax regulations. Ensuring tax is a part of any business transformation process will help determine that compliance and financial reporting processes are captured and tax management opportunities are spotlighted.”

9. EXPAND ENHANCED IRS SCRUTINY. “Recent announcements from the IRS on its plans to change examination procedures for large corporate taxpayers are making

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enhanced engagement between the IRS and these taxpayers a priority for 2014,” KPMG noted. “Taxpayer-friendly changes to the IRS Information Document Request (IDR) process that now require IDRs to be more narrowly issue-focused and a call for more taxpayer involvement in the determination of information due dates are balanced by a new set of nearly automatic enforcement triggers — if due dates are breeched — which start a series of delinquency notices, pre-summons letters and summonses.”

10. FOCUS ON UNCLAIMED PROPERTY LIABILITIES. “Potentially significant and costly audit assessments for corporate unclaimed property, coupled with an expanded definition of property reportable as unclaimed, make this an issue to watch in 2014,” according to the Big Four firm. “Companies in all industries — especially retailers, financial institutions, insurance companies and even energy suppliers — need to closely evaluate their reporting requirements as unclaimed property remains an important source of revenue for state jurisdictions throughout the country.”

11. USE FOREIGN-TRADE ZONES TO MEET INTERNATIONAL TRADE CHALLENGES. “As continued economic pressure on international trade leads many companies to look for new ways to strengthen their global competitiveness, the benefits of U.S. foreign-trade zones (FTZs) may be an answer for some,” KPMG noted. “These areas, secure within the United States but outside U.S. customs territory, can help companies improve cash flow, manage inventory costs, reduce or eliminate U.S. customs duties and generate distribution savings.”

12. BETTER ALIGN TAX-EXEMPT ACTIVITIES WITH CORPORATE STRATEGIES. “The coming year may be a good time for companies to review their corporate responsibility and philanthropy activities, not only to foster compliance with their tax-exempt status, but also to enhance their alignment with business strategy,” KPMG concluded. “A strategic review of employee volunteer programs, partnerships with not-for-profit organizations, philanthropy and grant making and overall financial support through the lens of corporate identity and goals can help determine whether the programs are benefiting the organizations they serve and aligning with corporate strategy.”

Reprinted with permission from AccountingWEB (www.accountingweb.com).

Article is available online at http://tinyurl.com/KPMGTop12. n

JASON BRAMWELL is a staff writer with AccountingWEB (www.accountingweb.com). * jason.bramwell@sift-media.com

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ESTATES and trusts

Virginia’s Commissioners of Accounts: Who They Are and What They Do

BY JOAN D. AARON, CPA

Virginia’s Commissioner of Accounts system dates back to an 1849 revision in the Code of Virginia. There have been changes over the years, but the basic structure remains intact.

Virginia Circuit Courts, present in every city and county in the state, have ultimate responsibility for the system. Circuit Court judges appoint the commissioners, who must be lawyers. Commissioners supervise, review and approve the inventories and accounts of estate and trust fiduciaries, guardians, conservators and, increasingly, the work of foreclosure trustees.

There has been some speculation that foreclosures may eventually comprise the bulk of commissioners’ job loads. Foreclosures continue

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to escalate, and revocable living trusts, which are not subject to probate and thus do not fall under the commissioners’ purview, are being used instead of estates.

In no other state is there a commissioner system that closely parallels Virginia’s. Some states have no official participation in the probate process. Others operate networks of probate courts, generally funded with tax dollars.

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ESTATES and trusts

Commissioners supervise, review and approve the inventories and accounts of estate and trust fiduciaries, guardians, conservators and, increasingly, the work of foreclosure trustees.

Commissioners and judges frankly acknowledge that the public comprehends little about the system and about its purpose. In fact, even the legal establishment may have an imperfect understanding of the system.

A no-nonsense attitude pervades the rules. The math on inventories and accounts must be correct — literally to the penny. (This sometimes frustrates CPAs, who are accustomed to rounding their financial statements and their tax returns up or down to the nearest dollar.)

Details are important: Every dividend, every interest payment, must be separately reported. Each stock the decedent owned — even if it is one of a hundred — must be individually listed on the inventory.

The work can be tedious, even for professionals. An attorney who no longer does the actual addition and subtraction admits that it was hard for him “to get the figures to balance.”

A daughter who had been named her father’s executor recently revealed, “I was sure I could do the work myself.” After the commissioner rejected her work for a third time, the woman engaged a CPA. An executrix is responsible for the preparation of the inventory and account. Because the document preparation was delegated to a paid professional, the commissioner will have to reduce the maximum fee that the daughter could charge.

Although it may be unique and not well understood, Virginia’s system is widely considered to be both efficient and cost-effective. Virginia commissioners get no tax money. Their income derives from the fees they charge for their services. They pay their own operating expenses: office rent, assistant salaries, office supplies, computer expenses, etc. Their take-home pay is the net, which can be considerable. One commissioner disclosed that his taxable income in his first year on the job was in excess of $100,000. He had been advised that he was under no obligation to make the disclosure, but he nevertheless chose to do so.

The revelation was in response to a newspaper inquiry.

operate as a sole proprietor. He can be a partner in a prestigious law firm. He can be shareholder in a professional corporation. He can work full or part time. If he wishes, he can even run for elected office. One commissioner is serving as a member of the current Virginia General Assembly and several are former members.

Some legislators, among them both Republicans and Democrats, are concerned about how commissioners are currently appointed. Members of the General Assembly appoint the Circuit Court judges and those judges in turn appoint the commissioners of accounts. Some legislators question if this system could give rise to a perception of impropriety.

Commissioners’ releases, available online, leave the reader with the impression they truly want to do what is fair. Their rules are framed so as to take into consideration rights of all concerned — beneficiaries, creditors and the government. Before an executor makes distributions to estate beneficiaries, he must satisfy himself that funeral bills have been paid. All necessary federal and state tax returns must be filed; all taxes must be paid. If an executor fails to deliver a specific bequest within a year, he becomes liable for interest on the funds.

So, has consideration has been given to permitting CPAs to become commissioners? After all, CPAs are frequently involved in the hands-on preparation of inventories and of accounts. Actually, yes.

Current law is clear. Only “attorneys-at-law, discreet and competent,” may serve as commissioners of accounts. In 2012, the Virginia Senate reviewed a bill that would have allowed “certified public accountants licensed in Virginia” to serve as commissioners. The VSCPA neither supported nor opposed the bill, and the Senate forwarded the bill to the Courts of Law. By a unanimous vote of the Court’s seven lawyers and five non-lawyers, the bill was “passed by indefinitely.” It was dead, so lawyers remain the only commissioners of accounts in the Commonwealth. n

The Circuit Court, not the commissioners, sets commissioner fees, and the current fee schedule had to receive approval from the Virginia Supreme Court. This schedule mandates that fees should be based on a percentage of the value of properties involved and/or on a percentage of the income such properties generate. However, if a commissioner performs extra work, he or she may, with Circuit Court permission, raise the fee.

JOAN D. AARON, CPA, works part-time with Malvin Riggins & Company, PC, in Newport News. She is a life member of the VSCPA and serves on the VSCPA Editorial Task Force. She also served on the Virginia Board of Accountancy. * jaaron@malvinriggins.com connect.vscpa.com/JoanAaron

Each commissioner controls his or her personal work situation. He can

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GOVERNMENT contracting

Government Contractors: Are You Missing Out On Valuable Tax Credits?

BY MICHAEL L. COLAVITO JR. AND JAMES D. FENNEL, CPA

If you’ve ever had the nagging suspicion that your company or your clients are paying too much in taxes, chances are you’re right.

A wide variety of state tax credits available within the mid-Atlantic region often go unnoticed by government contractors and other eligible companies in Virginia, Maryland and Washington, D.C. Being in compliance with the state and local tax filing requirements is a key priority for most businesses — and justifiably so. Often, however, companies become so focused on maintaining the proper levels of compliance that they fail to be strategic in their tax planning approach, ultimately missing out on valuable credit opportunities and leaving significant tax dollars on the table.

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Government contractors doing business in Virginia should take note of the Major Business Facility Job Tax Credit, which is ultimately a job creation credit that allows for a $1,000 credit per employee (over the 50th employee) for companies that have a central management location in Virginia. For companies headquartered in an economically distressed area, the employee threshold goes down to 25. This credit, which can be carried forward 10 years, requires that a Form 304 be filed 90 days before the return is filed, making now a great time to start preparing.

Virginia employers may also be eligible for the Telework Expense Credit. It should come as no surprise to anybody who drives on the

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GOVERNMENT contracting

beltway each morning that this program is designed to reduce traffic in the state by encouraging employers to transition current employees into telecommuters. In order to qualify for the credit, which maxes out at $50,000 per year, a company must have formal telework policies and agreements in place. Employers should visit telework.gov for more information on how to put a formal telecommuting program in place.

While the deadline for applying for this year’s credit has already passed, companies should keep it in mind for next year and start planning their telework strategies today.

The state of Maryland recently rolled out a Cybersecurity Investment Tax Credit that allows Qualified Maryland Cybersecurity Companies (QMCC) — specifically those that secure investments from investors selling cybersecurity products — to claim a refundable tax credit of up to 33 percent of the investment. While similar to the state’s biotechnology investment credit, this program allows the company to take the credit, rather than the investor. This may be a potentially beneficial credit for many companies, but the application procedure, which began on Dec. 9, 2013, will require a fair amount of documentation. As such, interested businesses are encouraged to consult with a tax advisor and to start preparing paperwork immediately.

As another example, some Maryland taxpayers may be eligible for the Employer Security Clearance Costs (ESCC) credit, which includes provisions for security clearance administrative expenses, Sensitive Compartmented Information Facility (SCIF) costs, and first-year leasing costs for small businesses. Applications for this credit must be submitted by Sept. 15 following the year in which the eligible expenses and costs were incurred, and taxpayers must then file an amended return to claim the credit once certification has been procured.

Washington, D.C., taxpayers should be aware of the jurisdiction’s various Qualified High Technology Company credits (QHTC) and incentives. There are various QHTC incentives, including a reduced franchise tax rate, a five-year corporate franchise tax and entity-level unincorporated business tax exemptions, as well as credits related to the hiring and training of qualified disadvantaged employees, employee relocation costs and much more. While the District is having some difficulty properly administering their programs, well-prepared and researched applications have the potential to net major tax savings for qualifying companies and activities.

This is by no means an exhaustive list of available tax credits. For a more complete picture, companies should consult with their tax advisors and consider several key questions:

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1.

Where are you performing work? For example, if you are headquartered in Virginia and performing work in Maryland and D.C., you might be eligible for multiple jurisdictional credits.

2.

What type of work are you performing? There are a wide variety of work categories that are eligible for tax credits.

3.

What triggers do you have in place to identify available credits?

As your business model, services and locations change, it is important to have a system in place to track data and revenue in consideration of tax credits.

The bottom line is that with the myriad of tax credits available to businesses in the region, eligible government contractors and companies alike have the opportunity to take advantage of considerable tax incentives and, in the process, save a significant amount of money in the coming years. If your business is not making tax planning part of your core operational strategy, you’re very likely leaving money on the table. n Reprinted from AronsonBlogs, courtesy of Aronson, LLC.

MICHAEL L. COLAVITO JR. is a senior manager in Aronson LLC’s Tax Services Group, where he provides multistate taxation services pertaining to income, franchise, sales and use and property taxes.

JAMES D. FENNEL, CPA, is a partner in Aronson LLC’s Government Contract Services Group. He has extensive experience in helping a wide array of clients with matters such as audits, financial statement review and compilation and government regulation compliance.

* *

mcolavito@aronsonllc.com jfennel@aronsonllc.com

WANT MORE? Visit http://tinyurl.com/AronsonWebinar to watch a program from Aronson LLC on tax credits for government contractors.

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WATCHING WASHINGTON’S PIGGY BANK: An inside look at the Congressional CPA and Accountants Caucus

BY TOM VISOTSKY, CPA

ADVOCACY

Budget deficits, fiscal cliffs, debt ceilings, sequestration … Who ya gonna call? A seemingly never-ending stream of financial issues faces us and practically begs for help from CPAs to make the process more non-partisan, or at least more transparent.

Well, there is an answer: The Congressional CPA and Accountants Caucus for the 113th Congress is composed of a bipartisan group of 10 CPAs and two accountants with a goal to do just that. It is also bicameral, with 10 members from the House and two from the Senate.

The Caucus provides Congress “a forum to discuss and advance innovative policies on issues affecting CPAs, including tax administration and compliance, accounting and auditing standards. The caucus’ members will also use their accountancy experience to provide input on budgetary and fiscal issues.” Caucus membership comprises nine Republicans and three Democrats, including one female CPA. Members come from all areas of the country, hailing from California, Texas, Florida, Kansas, Minnesota, Mississippi, Ohio, South Carolina, Wyoming and Wisconsin.

CAUCUS GOALS Rep. Michael Conaway (R-Texas), the co-chair of the caucus, said that “the members of the Congressional Caucus on CPAs and Accountants have specialized experience in budgeting, taxes and accounting (and) know what it means to draft a budget — and stick to it.” Rep. Brad Sherman (D-Calif.), his co-chair, stated that “the CPA caucus allows us to . . . share our expertise in financial accounting, budgeting and tax administration (and that) our bipartisan, bicameral structure ensures that members on both sides of the aisle in both the House and Senate get a straightforward CPA perspective to the critical fiscal and budgeting issues facing the country.”

“Fiscal sanity begins with knowing the numbers, and no one knows numbers better than accountants” said Sen. Mike Enzi (R-Wyo.), who is “working with [his] colleagues to address our fiscal crisis and to get America’s finances in order.” Sen. Ron Johnson (R-Wisc.) added that he is “pleased to be joining with colleagues on both sides of the aisle who bring … practical, private sector experience — and that Congress could

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use more elected officials with a background managing budgets.”

EXCHANGING IDEAS The Caucus holds periodic roundtable discussions. Members attend as often as their schedules allow, but much work is accomplished at the staff level. Experts are invited in to brief the group in their specialty areas. David Walker, founder, president and CEO of the Comeback America Initiative and former U.S. comptroller general, spoke to the Caucus recently on fiscal cliff issues. Leslie Seidman, immediate past-chairman of the Financial Accounting Standards Board (FASB), recently discussed a number of issues including convergence. Greg Anton, CPA, CGMA, immediate past chair of the American Society of CPAs (AICPA) Board of Directors, has briefed members of the Caucus on the government’s financial statements.

RECENT INITIATIVES The Caucus partners with the AICPA and many state CPA societies join in through grassroots efforts. VSCPA Government Affairs Director Emily Walker said the VSCPA “weighs in on issues through position letters and in-person visits with the Virginia Congressional delegation, generally consistent with AICPA positions.” She added, “It’s nice to know that as we continue to navigate through issues of importance to the CPA profession and accounting community that there are CPAs and accountants in Congress who can help carry our message.” A summary of recent and ongoing issues likely to involve AICPA and Caucus interaction includes:

FISCAL RESPONSIBILITY According to the Government Accountability Office (GAO), “the Government’s debt-to-GDP ratio is projected to increase continuously over the next 75 years and beyond if current policy is kept in place,

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ADVOCACY

Congressional Caucus on CPAs and Accountants

Source: American Institute of CPAs

which implies that CURRENT POLICY IS NOT SUSTAINABLE” (emphasis added). (For the actual reports and condensed “Citizens Guide,” visit www.fms.treas.gov/fr).

Anton founded the Institute’s “What’s At Stake” initiative (http:// www.aicpa.org/advocacy/pages/cpainsight.aspx) which reviews the federal government’s latest financial report, analyzes our current and projected financial status and disseminates the information in the hopes of promoting federal fiscal discipline. Rep Patrick Murphy (D-Fla.), “thank(ed) Greg and the AICPA for bringing much-needed attention to the role the government’s financial statements should play in the federal budget process to help us find common sense solutions to our fiscal challenges. This is important given that so many of the challenges we are dealing with are math problems. The ‘What’s at Stake?’ initiative provides valuable insight into how we can better ascertain the situation to make the best decisions for our nation’s future.” The AICPA Board of Directors also passed a resolution supporting two non-partisan efforts: the Campaign to Fix the Debt and the Comeback America Initiative.

CASH VS. ACCRUAL ACCOUNTING The AICPA opposes proposals in the House Ways and Means Committee and Senate Finance Committee that would accelerate revenue collection by requiring the use of accrual accounting by all businesses exceeding $10 million in revenues. These proposals would impact many professional services sector firms such as CPAs, actuaries, architects, attorneys, consultants and engineers. Conaway and Sherman

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stated that “despite the disruptions this change would cause … [it] will not offer any real benefits … [and] the proposed change simply shifts a tax burden forward, increasing revenues today, but decreasing revenues in the future.”

CONVERGENCE The AICPA continues to advocate for the U.S. adoption of International Financial Reporting Standards (IFRS) to provide transparent and comparable financial statements globally, based on a single set of highquality accounting standards. As IFRS may take some time to obtain approval from the U.S. Securities and Exchange Commission (SEC), the AICPA supports “convergence” of specific accounting standards between IFRS and U.S. Generally Accepted Accounting Principles (GAAP) in order to minimize the differences and make future adoption of IFRS easier.

THE DATA ACT The Digital Accountability and Transparency Act (DATA Act) would hopefully do for the federal government’s financials what eXtensible Business Reporting Language (XBRL) did to corporate financials, by requiring standardized data tags. Sen. Rob Portman (R-Ohio), a lead co-sponsor of the bill, indicated that he was “grateful to Sen. Mark Warner (D-Va.) for working with [him] . . . to craft and introduce the DATA Act. For many, financial transparency may not be the most exciting topic; but it is absolutely critical to helping taxpayers know

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ADVOCACY how their money is spent, eliminating waste and fraud, and finding new opportunities for savings. … Our bill makes it easier to compare federal spending across federal agencies by requiring the establishment of government-wide financial data standards.” House sponsors of the companion bill are Reps. Darrell Issa (R-Calif.) and Elijah Cummings (D-Md). The bill has cleared several hurdles this Congress, including passing the House 388–1 and being favorably reported by the relevant Senate Committee on a voice vote. It now awaits Senate action and will then need to be reconciled with the House bill before it can be enacted into law.

MOBILE WORKFORCE The AICPA supports the Mobile Workforce State Income Tax Simplification Act of 2013, in order to strike a balance between interests of states in collecting taxes on work done within their borders by nonresidents, and the need for businesses to be able to operate efficiently.

DUE DATES The Tax Return Due Date Simplification and Modernization Act of 2013 would generally improve tax administration by establishing a

set of due dates focused on promoting a chronologically correct flow of information between pass-through entities and their owners. The AICPA and state CPA societies continue to work to encourage members of Congress to cosponsor this legislation in the House and Senate.

CONCLUSION The fact that the GAO says the government is currently on an “unsustainable” fiscal path means many of these issues will be with us for years to come. You may be frustrated by what has been going on in Washington, but not known what to do about it. CPAs, inside and outside of Congress, can be a valuable independent and/or non-partisan resource. You can keep up to date on national legislative and regulatory issues at www.aicpa.org/advocacy. Then, reach out to a legislator on issues important to you. Each of the 12 members of the Caucus has indicated a willingness to address these issues and accept input from other CPAs and accountants. Should you wish to contact any of them, it is best to go through either the AICPA or the designated staff in each office that handles Caucus issues. You can also contact your own U.S. congressman or senator. Your representative will likely appreciate the perspective of a CPA in their district.

In future issues of Disclosures, we will delve into the government’s financial statements and provide further analysis of the challenges our country faces. n

Are you ready for health care reform changes?

TOM VISOTSKY, CPA, is a

Your dedicated Digital Benefit Advisors team of experts will guide you through how to make the most sound benefits decisions for your business and your clients.

VSCPA past president and is currently an independent consultant in Richmond. He is also a member of the VSCPA Editorial Task Force.

*

tvisotsky@comcast.net connect.vscpa.com/TomVisotsky

Brian Marks, Executive Director P: 877.998.7272 www.digitalbenefitadvisors.com/vscpa

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GOVERNMENT contracting

Play By the Rules: Basic Government Cost Accounting Compliance Requirements If you or your company wants to bid on government contracts, you must comply with certain accounting system requirements — or that contract won’t be yours.

BY SAM DAVIDSON

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GOVERNMENT contracting

Even in today’s economic

environment, there are many companies, both startups and established businesses, that want to do business with the federal government and its various agencies. To be successful, these companies must recognize that contracting with the government requires using more of their accounting system and associated internal controls than working with companies dealing only in the commercial marketplace.

Government contract accounting, while based on U.S. Generally Accepted Accounting Principles (GAAP), cares little about traditional debits and credits. The emphasis is on: 1.

Identification of costs as direct and indirect costs,

2.

Collection of direct costs by contract, contract line item number (CLIN) or other interim or final cost objective,

3.

Establishing a method of allocating or assigning indirect costs to contracts, contract line item numbers (CLIN) or other interim or final cost objectives,

4.

Identification and segregation of unallowable costs,

5.

Development and implementation of a labor recording system applicable to all employees,

6.

Existence of policies and procedures documenting all aspects of the accounting process, and

7.

A code of ethics and business conduct.

The requirements for an adequate accounting system are defined in the Federal Acquisition Regulation (FAR) at 9.104-1(e), Responsible Prospective Contractors — General Standards; 16.301(a)(1), Cost Reimbursable Contracts; Part 31, Contract Cost Principles and Procedures; and the Defense Federal Acquisition Supplement (DFARS) at 252.2427006, Accounting System Administration.

anticipated contract requirements — without the contractual requirement, the costs would not be incurred. Costs incurred for the same purpose in like circumstances must be either direct costs or indirect costs; they cannot be both [FAR 31.203(b)]. Once identified, they must be recorded in specific general ledger accounts established for accumulating these costs.

If a contractor is proposing on a government contract, they must be able to certify that their accounting system is compliant with these regulations and adequate for government contracting as defined at 53.209-1(f), Preaward Survey of Prospective Contractor Accounting System (SF1408). If they cannot make this certification or pass a preaward audit as would be performed by a cognizant government auditor, they will not be awarded a government contract.

COLLECTION OF DIRECT COSTS

Compliance with these requirements, while not an impossible task, becomes even more complex if the company intends to have a mix of government and commercial contracts.

Below are the areas essential to develop and implement an adequate cost accounting process for government contracting.

ALLOCATING OR ASSIGNING INDIRECT COSTS

IDENTIFICATION OF DIRECT AND INDIRECT COSTS

Indirect costs are not identifiable to any one contract or cost objective; they are support costs that need to be allocated or assigned to the direct efforts they support. Indirect costs should be accumulated in homogeneous pools of cost and related to direct costs that have a “cause and effect” relationship to the pooled indirect costs (FAR 31.203). As an example, fringe benefit costs that are incurred for the benefit of your employees have a u

The accounting process must be established to allow identification of all costs as either direct [costs incurred “directly” as the result of contractual efforts (FAR 31.202)] or indirect [costs incurred in support of business operations and not identifiable with any specific contractual commitments (FAR 31.203)]. Direct costs are “but for” costs incurred solely in response to actual or

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Once costs have been identified as direct, the accounting process must be able to collect these costs by the contract, contract line items (CLIN) or cost objective for which they were incurred in what is called a “job cost ledger.”

Direct costs incurred relative to contractual commitments need to be collected in the same detail as proposed and negotiated. On government contracts, costs can be recorded in more detail, but not less. This facilitates the tracking and comparison of actual costs to those that were proposed and negotiated.

Establishment of appropriate charge numbers consistent with the contractual work breakdown structure (WBS) is a critical cost accumulation and control process.

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O

If a contractor is proposing on a government contract, they must be able to certify that their accounting system is compliant with government regulations. relationship to direct labor, and general and administrative expenses are related to all of the efforts incurred in performing on contracts and other cost objectives. These allocations are expressed as a percentage of the base over which they are allocated. During a given fiscal year, all indirect costs incurred must be allocated to all direct costs incurred.

There should be no residual indirect expenses not allocated.

IDENTIFICATION AND SEGREGATION OF UNALLOWABLE COSTS There are certain costs incurred by contractors that the government will not reimburse. These unallowable costs are defined in FAR 31.2012 and identified in FAR 31.205, Selected Costs, or possibly in your contract. Expressly unallowable [those specifically identified in FAR 31.205 or agreed to be unallowable costs along with directly associated costs (those normally allowable costs incurred as a direct result of incurring an unallowable cost)] must not be included as a direct or as an indirect cost in any billing, claim or proposal to the federal government (FAR 31.201-6).

Penalties are associated with non-compliance with this requirement. Account or charge numbers must be established to segregate unallowable costs within the accounting system. Unallowable costs incurred as a part of an established allocation base must remain in the allocation base to absorb their allocated share of indirect costs.

The reality of unallowable nonrecoverable costs is difficult for companies in the commercial marketplace to understand. It is the responsibility of all employees to recognize that costs being incurred are not recoverable and directly impact the organization’s profitability. The best practice is to not incur these costs at all.

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DEVELOPMENT AND IMPLEMENTATION OF A LABOR RECORDING SYSTEM Labor generally represents one of the most significant costs incurred by a contractor. It is essential that a labor recording process be established that is applicable to all employees, direct and indirect, recording the total hours worked by each employee by authorized account and/or charge number. Every employee should record their time at least on a daily basis, indicating the time spent on both direct, if applicable, and indirect activities including sick time, vacation, etc. The process for recording hours may be manual or electronic and must include the ability to track all changes made to the hours as initially recorded, documenting who made the change and why. All time recorded must be approved by the employee and his or her supervisor before processing.

EXISTENCE OF POLICIES AND PROCEDURES Even if a contractor is compliant with all of his accounting processes, he or she must maintain written policies and procedures documenting responsibilities and established policies and practices. When evaluating a contractor’s accounting system adequacy, the first thing reviewed by the government auditor are the established policies and procedures. They are also an insurance policy providing guidance that compliant accounting practices will be performed consistently from period to period.

A CODE OF BUSINESS ETHICS AND CONDUCT

employees. Larger contractors need to provide training for all involved employees, agents and subcontractors. The company must exercise due diligence in preventing and detecting criminal conduct and promptly disclose any non-compliances to the appropriate government agency. The appropriate hotline posters must be displayed.

Whatever your accounting process, even if it is manual, be sure to include these basic requirements to ensure compliance and to increase your ability to become successful. If you are preparing to propose on a government contract or are anticipating performing in the government prime or subcontracting marketplace, be sure to read the FAR website at https://acquisition.gov/far and DFARS on the Defense Procurement and Acquisition Policy website at http://www.acq.osd.mil/ dpap/index.html for further definition of the compliance requirements. Using an experienced government contracting consultant might also be a valuable and recoverable decision. n

SAM DAVIDSON, of GovConConsulting2013, has more than 50 years of government contracting experience in both industry and as a consultant.

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The government also looks for an established code of business ethics and conduct, defined in FAR 52.203-13. The code must be in writing and made available to all involved

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GovConConsulting2013@Gmail.com

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

CPA Ambassador for the state of Maryland, sponsored by the AICPA and Ethics Instructor for VSCPA

Serving clients and professionals as an Independent Recruiter since March 2005

TECHNOLOGY

Accounting Firms Face Growing Cyber Threat

BY JAKE KOUNS

Bad news about data security is everywhere you look these days. With major breaches at Target and Neiman Marcus grabbing headlines, it might seem like data security is a problem for only the largest organizations handling millions of credit card transactions a year.

Unfortunately, no business is immune from a security breach.

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TECHNOLOGY

All organizations that gather or hold information such as Social Security numbers (SSN), account numbers or other sensitive financial data are prime targets for identity thieves. In fact, the number of data breaches in 2012 hit a record high with more than 3,100 publicly disclosed incidents, exposing more than 264 million records.

According to the National Cyber Security Alliance, an astonishing one in five small businesses falls victim to cybercrime each year. Even more frightening: According to an August 2013 story in PCWorld, of those small businesses whose systems are breached, roughly 60 percent go out of business within six months after the attack — and it’s understandable why. The costs of notifying affected individuals, credit monitoring, responding to lawsuits or regulatory investigations and system recovery add up quickly.

For professional service providers such as accounting firms, there are many causes of a data breach. Stolen laptops, improper equipment disposal and accidental disclosure via emails or websites are common causes of small scale breaches. But the more significant risk lies with hacking and social engineering attacks. A review of reported breaches in the United States shows that accounting firms are being specifically targeted for tax fraud schemes and identity theft. According to Cyber Risk Analytics, hacking and fraud accounted for nearly 70 percent of the total records lost at professional service firms since June 2007. To make matters worse, especially sensitive data such as Social Security Numbers and dates of birth make up the majority of records lost in these types of attacks.

Small and mid-sized firms are an especially attractive target for hackers and other cyber criminals. Recognizing that most smaller organizations lack a full-time security administrator or the budget for frequent system updates, criminals are able to easily take advantage of weaknesses in computing environments. The use of automated programs and hacking kits require little effort to implement and can be difficult to trace, making cyber crime an easy and low risk endeavor. But even the most secure systems can fall prey to a well-orchestrated phishing scheme.

It only takes one person clicking on a suspicious link or inadvertently giving up their password to result in a serious data breach.

In some cases, it’s not the data criminals are after. Small firms can also be a valuable target for the access they provide to larger organizations.

Hackers seek out financial service providers with established and trusted connections to banks and other financial institutions. Criminals know if they gain access to one link in the chain, they may have an opportunity to compromise a much larger target.

view accountants as a portal to large sums of money, and at the end of the day, most criminals are simply looking for the easiest way to steal it.

Firms of all sizes need to recognize they are a likely target for malicious activity. By doing so, principals can focus on the necessary processes to reduce their firm’s exposure to a data breach and put in place a plan to respond should the worst case scenario happen. Furthermore, a well-documented information security program can go a long way in proving to clients and regulators that the firm took action to protect sensitive data.

Recommendations to help reduce your exposure include: >> Determine where your most important information assets are located and work to implement security controls. >> Don’t send sensitive information via email. Any information you send in an email can potentially be read by others on the Internet. Think of sending an email as a postcard. >> Don’t click on unknown or untrusted links and don’t respond to unsolicited emails. Most cyber criminals will start their attack with what is called a phishing attack, trying to trick you into clicking on a malicious link or providing sensitive information. >> Keep your anti-virus, firewalls and spam filters up to date. >> Be careful what you share on social networks. Check out www.staysafeonline.org for more tips. >> When receiving various communications, ask yourself “Is this likely?” and think before you act. Be wary of communications that implore you to act immediately, offer something that sounds too good to be true or ask for personal information.

With tax season upon us we can expect cyber crime to increase, as it does every year around this time. Not only do firms need to be mindful of protecting their own organization, it’s a good reminder to help clients understand the need to protect one of their most valuable assets: their identity. n

JAKE KOUNS is the chief information security officer for Risk Based Security and co-authored the books “Information Technology Risk Management in Enterprise Environments” and “The Chief Information Security Officer.”

Principals may wonder why hackers and cyber thieves would be interested in breaking into their systems. After all, the amount of data available to steal can be limited and accounting firms don’t necessarily have regular access to client funds. Whether real or perceived, hackers

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VSCPA news

Thomson serves Virginia’s business community VSCPA member Gary Thomson, CPA,

was elected chairman of the Virginia Chamber of Commerce during the Chamber’s annual winter board meeting in late January.

Thomson, the Virginia regional managing partner at Dixon Hughes Goodman, will serve a one-year term and focus on promoting the Chamber’s Blueprint Virginia business plan with the goal of strengthening and expanding Virginia’s economy and ensuring the Commonwealth remains a top state for business and technology.

“I’m honored to be elected chairman of the Virginia Chamber of Commerce,” Thomson said in a release. “In my own leadership role at Dixon Hughes Goodman, I focus on implementing goals that will profitably grow our firm through these economically challenging times. As chairman of the Virginia Chamber, I will continue to use my own business leadership experience for the good of Virginia’s business community as a whole.”

Thomson, a Chester resident, is a member of the VSCPA Political Action Committee (VSCPA PAC) Board of Trustees. He served as chair

of the VSCPA PAC Steering Committee in 2010–2011 and has served on numerous VSCPA committees.

He is the former chairman of the Governor’s Advisory Council on Virginia Business-Education Partnership Program, the former vice chairman of the Commonwealth’s School to Work Advisory Committee and a former member of the Governor’s Blue Ribbon Commission on Higher Education. n

2014 VSCPA Conferences — Save the Date What are you doing this spring? Join the VSCPA for CPE, networking and meeting fellow CPAs from around the state!

• • • •

Virginia State & Local Government Day | March 11 Nonprofit Conference | April 22 Business & Industry Conference | May 19–20 Educators’ Symposium | June 6

For registration and more information, visit www.vscpa.com/Conferences.

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VSCPA news

>> VSCPA ANNUAL MEETING AND 2014–2015 BOARD OF DIRECTORS SLATE

VSCPA named one of the best places to work The VSCPA was recently named one of

the 2014 Best Places to Work in Virginia. The annual list of “Best Places to Work” was created by Virginia Business and Best Companies Group.

The VSCPA has made the list every year since its inception.

This survey and award program was designed to identify, recognize and honor the best places of employment in Virginia, benefiting the state’s economy, its work force and businesses. The Best Places to Work in Virginia list is made up of a total of 100 companies split into three groups: small employers (fewer than 100 employees) mid-sized employers (100–250 employees) and large employers (more than 250 employees). The VSCPA has been named one of the Best Places to Work in Virginia in the small employer category.

“The knowledge and talent of the staff are key to so many of our successes,” VSCPA President & CEO Stephanie Peters, CAE, said.

“Our staff truly cares about the CPA profession and is dedicated to promoting and supporting our members. Providing a competitive work environment is critical to meeting our mission.” n

APPLICATION DEADLINE FOR 2014 LEADERS’ INSTITUTE Educators and students: The VSCPA is seeking applicants for its 2014 Leaders’ Institute, set for June 13–14 at The Mason Inn on the campus of George Mason University. The Leaders’ Institute is a two-day, all-expenses-paid program developed by the VSCPA and founding sponsor Baker Tilly that seeks to develop future leaders in the CPA profession. Students will gain access to potential employers, possible mentors and networking opportunities.

The VSCPA Annual Meeting will be held Friday, May 16, 2014, at 11:30 a.m. at the Richmond Hilton Hotel & Spa in Short Pump. During the meeting, the Nominations Committee will present the following nominated members for election as 2014–2015 officers and directors: CHAIR Colette Wilson, CPA CHAIR-ELECT Lisa Germano, CPA VICE CHAIRS Marc Filer, CPA Staci Henshaw, CPA Andrew Martin, CPA Jamie Wohlert, CPA

AT-LARGE DIRECTORS Dian Calderone, CPA Susan Ferguson, CPA Richard Groover, CPA William Hardy, CPA Bradley Haun, CPA Victoria Jones, CPA Bradley Nicklin, CPA A. Marshall Northington, CPA Gary Thomson, CPA Mike Wagner, CPA n

RENEW TODAY! Spring means two things around here — taxes and the end of the membership year. The VSCPA is already accepting renewals, so go ahead and get 2014–2015 taken care of. And if you renew now, we promise to not email you about it later! Visit www.vscpa.com/Renew to get started. n

Applications are due April 1. Visit www.vscpa.com/Institute2014 to apply. n

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VSCPA news

April is Financial Literacy Month The VSCPA and Virginians across the Commonwealth will focus on financial fitness throughout the month of April during Virginia Financial Literacy Month, as proclaimed by Virginia Gov. Terry McAuliffe.

The VSCPA offers plenty of ways to help Virginians increase their financial literacy, including its award-winning Financial Fitness initiative. Here are some ways the VSCPA will encourage wise money management during Financial Literacy Month: >> ASK A CPA EMAIL PROGRAM: Virginia CPAs will answer questions from the public via emails submitted at FinancialFitness.org. Free advice is available from experts on financial planning, tax planning, military taxes and disaster recovery. Questions will be answered by volunteer VSCPA members within three business days. Members from across the state are encouraged to participate. >> FINANCIAL FITNESS WORKSHOP: The VSCPA will hold a free financial fitness workshop for the public. The date and topic of the workshop were not confirmed when this issue went to press. Check www.FinancialFitness.org for updates. >> MEDIA RELATIONS: A commemorative Financial Fitness logo will be available, and the VSCPA will conduct media relations around the state to promote money management topics, as well as tie in Financial Fitness topics to the @VSCPANews and @FinancialFit Twitter feeds.

>> WE WANT TO HEAR FROM YOU! 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.

Firm news, such as mergers and acquisitions and community service activities, is also welcome.

Feel free to send headshots, but please make sure they are highquality, 300 dpi JPG files. Due to space constraints, we cannot print degrees or designations awarded to members. n

To volunteer for the Ask a CPA Email Program, contact VSCPA Public Relations Manager David Bass at dbass@vscpa.com or (804) 612-9440. n

>> STAFF SPOTLIGHT: AMY MAWYER POSITION: Vice President of Strategy & Development BIRTHPLACE: Pittsburgh FAMILY: Husband, Chris, stepson Ethan (10), dogs Mocha and Maddy FAVORITE VACATION SPOT: Anything with water, sand and fruity drinks!

RECENTLY READ BOOK: I’m much more of a movie and TV junkie!

PREVIOUS JOB: I had a variety of administrative jobs before coming to the VSCPA, including working as a receptionist at Avis Rental Car corporate office, filing engineering

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blue prints for AMF Bakery Systems and administrative duties for the American Red Cross.

WHAT’S KEPT YOU AT THE VSCPA FOR 20 YEARS? Variety and encouragement. The VSCPA has always supported continued improvement and learning. I’ve grown so much and obtained skills that I never imagined over the past 20 years. I haven’t had more than two consecutive years that my duties have been exactly the same.

As much as the CPA industry changes and evolves, so do our needs to provide new and innovative services.

It’s been a wonderful and challenging

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experience, and I feel fortunate to work with such amazing members and staff every day!

WHAT DO YOU LIKE TO DO OUTSIDE OF WORK? This time of year and being from a big sports town, I love NFL season — watching the Pittsburgh Steelers, going to games and playing fantasy football with friends. My other winter hobbies include being in a bowling league and playing the game Candy Crush. n

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VSCPA news

Congratulations to the following members!

Top: Dian Calderone, CPA; Lisa Chiccehitto, CPA; Bob Cochran, CPA; Caron Crouse, CPA; Tyrone Dickerson, CPA; Chip Helme, CPA. Bottom: Brad Hoffman, CPA; Jim Holland, CPA; Andrea Kilmer, CPA; Marc Moyers, CPA; Pete Reilly, CPA; Ben Sady.

NEW HIRES >> LISA CHICCEHITTO, CPA, has been named a partner at Updegrove, Combs & McDaniel in Warrenton.

Thompson, Greenspon & Co. in Fairfax has hired KATIE DALEY, CPA, as a manager and JUSTIN MIKOL as a senior in the tax department.

RALPH DAMONE, CPA, has joined Matthews, Carter & Boyce in Fairfax as a manager in the firm’s tax practice.

JOANNA FRIEDMAN, CPA, has joined Biegler & Associates in Richmond as senior manager in charge of audit.

BRAD HOFFMAN, CPA, has been promoted to partner at DeLeon & Stang in Leesburg.

DONITA HARPER, CPA, has joined Petersburg Public Schools as director of business and finance.

BEN SADY has joined Dixon Hughes Goodman as a director and risk advisory services leader in Virginia.

P.J. WALLIN, CPA, has joined Verus Financial Partners in Richmond as an investment advisor representative.

The town of Culpeper has named PON YUSUF, CPA, finance director.

PROMOTIONS >> Updegrove, Combs & McDaniel has promoted LORI CALLOWAY, CPA, to supervisor and SHERYL RADER, CPA, to manager in its Leesburg office.

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McPhillips, Roberts & Deans in Norfolk has promoted ANGELYN GIBSON, CPA, to senior; JOE LaFOND, CPA, MARK PRYOR, CPA, and MARK TRASK, CPA, to supervisor; JON MASKELL, CPA, to manager in its assurance practice; and BRANDY MEEKER, CPA, to supervisor in its tax practice.

STEVE JONES, CPA, has been named president, chief executive officer and managing shareholder of Strickland & Jones in Norfolk.

STEVEN KOONS, CPA, and MEREDITH SHEARS, CPA, have been elected partners at Cotton & Company in Alexandria.

Yount, Hyde & Barbour has promoted DEREK MCCARTY, CPA, to supervisory senior on its Winchester tax team, DANIEL ROBERTSON, CPA, to manager on its Richmond bank team and DREW THROCKMORTON, CPA, to manager in its Richmond office.

MOLLY OELLERICH, CPA, and KAITLIN LEIGH MASON, CPA, have been admitted as partners and shareholders at Klausner Bendler + Associates, PC, in Bethesda, Md.

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VSCPA news TowneBank Mortgage in Suffolk named JONATHAN MOTLEY, CPA, senior vice president and chief financial officer, DAVID PATTERSON, CPA, senior vice president and chief accounting officer and ANGELA SHEALY, CPA, assistant vice president.

PETE REILLY, CPA, has been elected president and managing partner of Councilor, Buchanan & Mitchell in Bethesda, Md.

APPOINTMENTS & AWARDS >> Several VSCPA members have been named to National Association of State Boards of Accountancy (NASBA) committees: • • • • •

DIAN CALDERONE, CPA (Ethics and strategic issues) BOB COCHRAN, CPA (Education) TYRONE DICKERSON, CPA (Diversity task force chair) ANDREA KILMER, CPA (Legislative) MARC MOYERS, CPA (Global issues)

EDWARD BLAIR, CPA, and DAPHNE WALKER, CPA, were elected to the Henrico Business Council, part of the Greater Richmond Chamber of Commerce.

MICHAEL COUNCIL, CPA, has been appointed to the TowneBank Chesapeake Board of Directors.

CARON CROUSE, CPA, managing partner at Dixon Hughes Goodman’s Norfolk and Virginia Beach offices, was honored with a 2013 Women in Business Achievement Award from Inside Business.

CHIP HELME, CPA, has been elected to CPAmerica’s 2014 Board of Directors.

JIM HOLLAND, CPA, was unanimously elected chairman of the Chesterfield County Board of Supervisors.

BETH MOORE, CPA, was named Entrepreneurial Woman of the Year by the Virginia Peninsula Chamber of Commerce.

HEATHER SUNDERLIN of Wall, Einhorn & Chernitzer in Norfolk was a delegate to CPAmerica International’s 2013 Firm Administration Roundtable.

MERGERS & ACQUISITIONS >>

CLIFTONLARSONALLEN has acquired Massachusetts-based Bankers Advisory Inc., a consulting firm that works with mortgage institutions on regulatory compliance and quality control.

Regional firm ELLIOTT DAVIS has acquired Richmond firms VALDERAS & FISHEL and VANHUSS & ASSOCIATES.

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Alexandria firm HALT, BUZAS & POWELL will hold its Semi-Annual Nonprofit Symposia March 20 at the Hilton Baltimore BWI Airport and March 25 at the Hilton Old Town Alexandria. The events cover topics including organizational leadership, fiduciary best practices and enterprise risk management. Attendance is free, although seating is limited and advance reservations are preferred. The events provide up to 4 hours of CPE credit. Visit http://tinyurl.com/py4ddvl to sign up.

THOMPSON, GREENSPON & CO. has rebranded and changed its name to THOMPSON GREENSPON.

CHAPTER NEWS >> The VSCPA RICHMOND CHAPTER awarded $2,500 in scholarships and made $1,250 in donations to five Richmond-area colleges and universities at its Young Professionals Night event on Nov. 19. Four of the $500 scholarship winners were VSCPA student members: • • • •

VU NGUYEN, Virginia Commonwealth University CINDY TOLOGO, Virginia State University LAUREN VONDRACEK, Randolph-Macon College KICHE WEAVER, Virginia Union University

Emily Lopes of the University of Richmond also received a $500 scholarship. The Richmond Chapter also donated $250 to each college or university’s business school. n

>> OPEN VOLUNTEER SPOTS The VSCPA is accepting volunteers for various opportunities at different times throughout the year, although some opportunities are open year-round.

Volunteer opportunities currently open are: • Chapter Officers • Speakers Bureau • Ask a CPA Email Program You can sign up for the following volunteer opportunities in June and July:

CHERRY BEKAERT has acquired Glen Allen firm WALKERCHANEY CPAs.

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FIRM NEWS >>

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• Editorial Task Force • Management of an Accounting Practice Task Force • CPA Day of Service

Visit www.vscpa.com/VolunteerSchedule to sign up for your desired opportunity. n

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VSCPA news

We mourn the loss of:

>> CONGRATS TO VIRGINIA’S NEWEST CPAs

THOMAS DAWSON, CPA, of Winchester. He was employed at Yount, Hyde & Barbour.

MICHAEL FULLER, CPA, of Richmond. A financial advisor and former manager with PricewaterhouseCoopers, he was a graduate of Washington and Lee University and Loyola College.

LAWRENCE GULICK of Glen Allen. Formerly of Keiter, Stevens, Hurst, Gary and Shreaves, he was a member of ACCA Legion of Honor and served as commodore of ACCA Yacht Club and on the ACCA Temple Board of Trustees. n

The VSCPA lost one of its most honored members when WILLIAM BRUCE OVERSTREET JR., CPA, died Dec. 29.

A VSCPA life member, Overstreet served as a captain in the 357th squadron of the U.S. Army Air Force during World War II and was awarded hundreds of medals for his service. Overstreet was most famous for flying underneath the Eiffel Tower in combat and received France’s Legion of Honor in 2009. At that ceremony, Pierre Vimont, the French ambassador to the United States, said he led “some of the most heroic actions that we have ever heard of” during the liberation of France.

After the war, Overstreet ran his own practice in Roanoke and worked with numerous charities and veterans groups. n

Sachin Agarwal Alexia Arama Gascon Alica Bachledova Lauren Beauman Christopher Bedard Samantha Bell Amanda Bresko Adam Briones Maria Calloway David Clarke Michael Daly Ryan Dayton Matthew Dowell Ryan Failla David Fitzsimmons Michael Hartsfield Scott Hoffmann David Horton Fang Jiang Emily Khan Hae Kim Jeffrey Knighton Christoph Koch Tristan McNair Peter Minutolo Madel Miranda

Staff news

Namuun Munkhbat Megan Murray Nikolay Musarskiy Jeehyae Park Gabriel Ratti-Angulo Lori Ream Gary Roth Neda Saadati Robert Schimaneck Motielall Shivtahal Brett Snell Alexandra Staeben Benjamin Stearns Jared Stone Michael Tesser Daniel Truong LaKrisha Watson Robert Wright Leah Zacherl Yan Zhao Yimeng Zheng

List from December 2013 and January 2014.

Compiled Jan. 17, 2014. n

WHERE IS THE CPE TEST?

Government Affairs Director EMILY WALKER celebrates her 10th anniversary with the VSCPA on April 1.

Looking for the Self-Assessment Exam for 1 CPE Credit? We are no longer printing the test questions in Disclosures to save space, but it is still available online for credit at www.vscpa.com/ March2014DisclosuresExam. n

Two employees are celebrating their third anniversary with the VSCPA: Marketing Specialist TALLEY KING on March 9 and Accounting Coordinator CATHERINE MEEHAN on March 14.

Education Manager RICHARD GORDON marks two years with the VSCPA on March 12. n Clockwise: Emily Walker, Talley King, Richard Gordon, Catherine Meehan

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VSCPA news

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>> WHO’S WHO?

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House Majority Leader Kirk Cox (R-Colonial Heights), left, listens to VSCPA member Gary Thomson, CPA, and Government Affairs Director Emily Walker on CPA Assembly Day

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George Forsythe, CPA, at the Management of an Accounting Practice event on Jan. 14

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Aida Thomas, CPA; Stuart Thomas, CPA; and Chuck Pearson, CPA; at the MAP event

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Sen. Walter A. Stosch, CPA, at the Virginia FREE Luncheon on Dec. 10, 2013

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Collins LeClair, CPA; Chris Edmunds, CPA; and Jamie Walker, CPA, at the Virginia FREE Luncheon n

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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 Member Relations Director Brenda Fogg at bfogg@vscpa.com or (804) 612-9409.

A.F. Thomas & Associates, PC Anderson & Anderson CPAs, PC Anderson & Reed, LLP Anderson, White & Company, PC, CPAs Andrews, Barwick & Lee, PC Barnes, Brock, Cornwell & Heilman PLC Beale & Curran, PC Beck & Company, CPAs, PC Bennett, Atkinson & Associates, PC Biegler & Associates, PC BlackHeath Company, PLC Bowling, Franklin, & Co., LLP Boyce, Spady & Moore PLC Britt & Peak, PC, CPAs Bruce, Renner & Company, PLC Bullock & Associates, PC Burdette Smith & Bish LLC Burgess & Co., PC, CPAs Cameron, Moberly & Hamrick, PC Charles H. McCoy Jr., Inc. Charles S. Pearson Jr., CPA Charles W. Snader, PC Cherie A. James, CPA, PLC 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 Diane Y. Smith CPA PC Didawick & Company, PC

Digital Benefit Advisors Donald R. Pinkleton, CPA Donald W. Coleman, CPA, Inc., PC Douglas L. Thompson, CPA PLLC Duvall Wheeler, LLP Eggleston & Eggleston, PC Elmore, Hupp & Company, PLC Everett O. Winn, CPA, PLC First Capital Bank Frank Edward Sheffer & Company Fritz & Company, PC Garland & Garland, CPAs, PC Garris and Company, PC G.L. Roberson CPA, PLLC Graham and Poirot, CPAs, LLC Gregg & Bailey, PC Gregory & Associates, PLLC Gurman & Company, PLLC Hantzmon Wiebel Harris, Hardy, & Johnstone, PC Harris, Harvey, Neal & Co., LLP Henley & Henley, PC Henry R. Hortenstine III, CPA, PC Hogan & Reed, PC, CPAs Holland & Brown LLP Homes, Lowry, Horn & Johnson, Ltd. Honeycutt & McGuire CPAs Hughes & Basye, PC Hunt & Calderone, PC, CPAs J. Goddin & Associates, PC Jay E. Reiner CPA PLLC John M. Watkins, CPA Johnson, Equi & Co., PLC Jones, Adams & Delp, PC Jones, Madden & Council, PLC Jones & McIntyre, PLLC JS Morlu, LLC

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Katherine L. Foley CPA, PC Keiter 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 CPAs, LLC Malvin, Riggins & Company, PC Martin, Beachy & Arehart, PLLC McPhillips Roberts & Deans PLC Michael B. Cooke, CPA, PC Michael R. Anliker, CPA, PC Miller Foley Group Mitchell, Wiggins & Company, LLP Moss & Riggs, PLLC Murray, Jonson, White & Associates, Ltd., PC Nicholas, Jones & Co., PLC Norris & Associates, PC Paul Mitchell CPA CFP PBMares, LLP R.T. McCalpin & Associates Renner & Company, CPAs, PC Robinson Consulting Group Roger L. Handy, PC Rubin, Koehmstedt & Nadler, PLC Russell, Evans & Thompson, PLLC Rutherford & Johnson, PC Salter & Associates, PC Saunders, Matthews & Pfitzner, PLLC Scheulen, Patchett & Edwards, PC

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Sells Hogg & Associates CPAs, PC Spencer, Hager & Mosdell, PC Spitler, Stephens & Associates PLLC Stephen Merritt CPA, PC Stephen T. Shickel, CPA, PLC Steve Guy & Associates, PC Steve Walls & Associates, PLLC Stokes Office Solutions LLC Strickland & Jones, PC Sullivan, Andrews & Taylor PC Terry L. Jones, CPA, LLC The Cahill Group, LLC The Davidson Group, PC Thomas E. Fraley, CPA Thompson, Greenspon & Co., PC Tongelidis Consulting, LLC Updegrove, Combs & McDaniel, PLC Valderas & Fishel, PC Verus Financial Partners Wall, Einhorn & Chernitzer Wells, Coleman & Company, LLP Wilkinson Consulting & CPA PLC William B. May Jr., CPA, PC Wineholt & Associates, PC Yancey, Miller & Bowman, CPAs PLLC Yount, Hyde & Barbour, PC

Compiled Jan. 17, 2014.

Check www.vscpa. com/100Percent for a complete, up-todate list.

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VSCPA educational foundation

VSCPA Educational Foundation donors Thank you to all our generous contributors who gave to the VSCPA Educational Foundation in 2013. Want to join the list? Support your profession today at www.VSCPAFoundation.com!

James M. Shepherd, CPA James W. Steer, CPA Monique T. Valentine, CPA Wall, Einhorn & Chernitzer, PC

$5,000 AND ABOVE Kearney & Company

$2,500 – $4,999 Hantzmon Wiebel, LLP Meadows Urquhart Acree & Cook, LLP Virginia Society of CPAs

$1,000 – $2,499 Patrick E. Corbin, CPA Dixon Hughes Goodman LLP Martin A. Einhorn, CPA James E. Harris, CPA Bruce R. Heymann, CPA Andrew and Holly Martin Matthews, Carter & Boyce, PC Bradley P. Nicklin, CPA Saunders & Saunders, PC Stephanie S. Saunders, CPA Vugar T. Shahtakhtinskiy, CPA John L. Vincie III, CPA VSCPA Tidewater Chapter James K. Walker, CPA

$500 – $999 Anonymous W. Barclay Bradshaw, CPA Michael B. Cooke, CPA Thomas M. Crutchfield, CPA Susan Q. Ferguson, CPA Thomas F. Flood, CPA Freddie Mac Foundation Richard A. Garbee, CPA Gerald L. Hagen Jr., CPA Staci A. Henshaw, CPA Mr. and Mrs. Keith Middleton Kenneth E. Miller, CPA James L. Phillips, CPA Elsie L. Rose, CPA Lawrence D. Samuel, CPA Lawrence W. Schwartz, CPA Randolph Shapiro, CPA

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Mark A. Watts, CPA Frederick L. White, CPA Kristin L. White, CPA Colette Y. Wilson, CPA Jamie C. Wohlert, CPA

$250 – $499 Anonymous (2) Sandra Ballowe, CPA Courtney S. Barrack, CPA Rebecca Bartholomae, CPA Timothy G. Benusa, CPA Beth A. Berk, CPA Thomas M. Berry Jr. Beth Anne Bickford, CPA O. Whitfield Broome Jr., CPA Dian T. Calderone, CPA Dixon Hughes Goodman DC Metro Christopher A. Enright, CPA, PLC Samuel A. Derieux, CPA Ellis M. Dunkum, CPA Wayne R. Eggleston, CPA Nishon R. Evans, CPA Heather K. Flanagan, CPA Lisa C. Germano, CPA Richard E. Groover, CPA Anna M. Hunter, CPA Victoria W. Jones, CPA Donald W. Knotts, CPA Cecilia S. Kuhn, CPA Thomas J. Lyden Jr., CPA Charles F. Marginot, CPA Mark A. VanDeever PC John B. Montoro, CPA William C. Morrison Jr., CPA Robert J. Neuland, CPA A. Marshall Northington, CPA Stephanie R. Peters, CAE John J. Renner II, CPA Gary E. Romer, CPA Joseph M. Squeri, CPA Keith L. Wampler, CPA

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$100 – $249 Joan D. Aaron, CPA Alliant Techsystems Operations LLC Anonymous (7) Nancy Bagranoff, CPA, DBA Victor F. Bouril Jr., CPA James W. Brackens Jr., CPA Jerry G. Bridges, CPA Maria T. Bridges, CPA W. A. Broadus Jr., CPA William P. Brown, CPA William R. Brown, CPA Richard S. Burke, CPA Patrick S. Callahan, CPA Adam G. Chaikin, CPA Edward N. Coffman, CPA William H. Cole Jr., CPA J. Phillip Coley, CPA Richard W. Crutchley, CPA Mensel D. Dean Jr., CPA

Damon L. DeSue, CPA Harry D. Dickinson, CPA Gary D. Dittmer, CPA Charbet M. Duckett, CPA Bert Tvedt Edwards, CPA Bruce H. Elliott, CPA Charles F. Equi Jr., CPA Marc E. Filer, CPA Robert A. Foster, CPA Harry B. Franklin Jr., CPA Stanley C. Gibbs, CPA Gladys M. Gomez, CPA Melvin R. Green, CPA Robert W. Grigsby, CPA Jan H. Grossman, CPA Gerald A. Hahne, CPA Herman W. Hale, CPA Roger L. Handy, CPA Oksana G. Hoey, CPA Bruce C. Holbrook, CPA Robert C. Johnson, CPA R. Chapin Jones II, CPA Andrew N. Killgore, CPA Andrea M. Kilmer, CPA David F. La Mar, CPA Tina Lambert, CAE Lanigan, Ryan, Malcolm & Doyle, PC

>> SCHOLARSHIP APPLICATIONS ARE DUE APRIL 1 Educators, be sure to remind your students that VSCPA Educational Foundation scholarship applications are due April 1! Scholarships for the 2014–2015 academic year range from $1,000 to $5,000, and our online application makes it easy to apply. The application is available at www.vscpa.com/Scholarships. n

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CLASSIFIEDS Thomas J. Lantz Sr., CPA Gregory F. Lawson, CPA Clare K. Levison, CPA James L. Martin, CPA Harriett G. McCune, CPA Julie A Melampy, CPA Marian R. Millikan, CPA Sean R. O'Connell, CPA Roy D. Peters, CPA Dilys J. Phillips, CPA Richard P. Pontynen, CPA Ann Gresham Rankin, CPA Robin A. Ransom, CPA Julia W. Rogers, CPA Tom E. Rosengarth, CPA, CMA Joanne N. Satterfield, CPA Howard C. Seal, CPA Randall R. Spurrier, CPA Julie D. Stepp, CPA Laura A.Tate-Smith, CPA David H. Tikkala, CPA Kevin S. Ubelhart, CPA Wendy S. Ulmer, CPA Gregory D. Walker, CPA Heather N. White, CPA Beth R. Worrell, CPA Donna P. Yenney, CPA Dr. & Mrs. Douglas E. Ziegenfuss Norman J. Zwahlen, CPA

$50 – $99 Anonymous (6) Paul M. Beito, CPA Christopher R. Brogan, CPA Michael E. Buckley, CPA Nicole M. Burkart, CPA Louis C. Carr Jr., CPA Robert J. Cochran, CPA Lisa R. Cusack, CPA David H. Berry, P.C. William D. DuVal, CPA Benjamin S. Equitan, CPA David W. Faeder, CPA Linda J. Glass, CPA Bernard M. Gordon, CPA John D. Gordon Jr., CPA Maria G. Guerrera, CPA James K. Hall, CPA Kelly Hines, CPA John W. Inman, CPA Ahmed Ismail, CPA Kathleen M. Kauffman, CPA

Thomas A. Kelly Ronald T. Kouzel, CPA E. Jeffreys Love, CPA William J. Madigan Jr., CPA Roy C. Madsen, CPA Claude Delaney Mayo, CPA John F. Myers Jr. Sarah Neary Elizabeth H. Nolte, CPA Frederick H. Norvelle, CPA Barbara L. Owens, CPA Palladium Wealth Management LLC Phillip B. Payne, CPA Vicki L. Petitt, CPA Charlie F. Pollard Jr., CPA Melanie E. Randall, CPA Abbas A. Rawoot, CPA Kathleen M. Rusinski, CPA Duff A. Scudder, CPA William L. Sickenberger Jr., CPA Gerald E. Singh, CPA Alan R. Stewart, CPA Melody Stone, CPA Richard L. Strean, CPA Frederick D. Streb Jr., CPA C. Frederick Stump, II, CPA George Miller Thoma Jr., CPA Carl A. Thompson, CPA Philip R. Walsh, CPA Molly Wash, CAE William H. Watson Jr., CPA Daniel Williams Gordon L. Williams Russell W. Williams, CPA William J. Withrow, CPA Terry E. Zerwick, CPA n

Visit www.VSCPA Foundation.com for the complete list of donors!

Donations listed were received between Jan. 1 and Dec. 31, 2013. Every effort has been made to ensure the accuracy of our list. Please contact the VSCPA Educational Foundation at (800) 733-8272 or info@vscpafoundation. org to report errors or omissions.

DISCLOSURES

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NEW! ONLINE CLASSIFIEDS at www.vscpa.com/Ads The VSCPA now offers online classifieds! Post and search in these categories: Mergers & Acquisitions Office Space Services Monthly posting starts at $250. Plus, manage your ad online, include your logo and more!

Prefer printed classifieds in Disclosures?

Contact us at classifieds@vscpa.com or visit www.vscpa.com and click on “Advertise, Sponsor or Partner” under “For Members.”

MARCH/APRIL 2014

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HTTP://DISCLOSURES.VSCPA.COM

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I AM the vscpa HAVING FUN AT WORK >>

Two minutes with Vince Nadder, CPA

VINCE NADDER, CPA >>

This Keiter partner is NOT a champion poker player.

Vince Nadder has been a partner at Glen Allen firm Keiter since 2012. He has spent 19 years in public accounting, providing tax and consulting services to privately held companies, mostly professional services firms and real estate companies. He is the chair of Keiter’s Professional Services Industry team and the partner in charge of the firm’s cost segregation and historic rehabilitation tax credit certification services.

I AM PASSIONATE ABOUT... Making Keiter a great place to work. CPAs, like many other professionals, spend quite a bit of time at work. When that workplace is fun, fulfilling and full of energy, it is easy to do a great job for clients.

PEOPLE DON’T KNOW THIS, BUT… A few years ago I attempted to win my way into a World Poker Tour event by playing a small “qualifying” tournament. I was so jacked up and excited. I was prepared for a grueling 14-hour day of poker with a bag full of energy bars and vitamin water. I knew that once I knocked out the 50 other bums, I would be playing alongside the big boys for real money in a 500-player tournament. Unfortunately, I

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busted out in less than 30 minutes and had to make the walk of shame out of the casino.

MY ADVICE TO ASPIRING CPAs IS… Take a public speaking class. The role of a CPA is not just sitting at a desk crunching numbers. A significant part of our job involves talking with clients, giving presentations and even teaching classes. The more comfortable you are speaking in front of people, the more skilled you will become at providing valuable information and being viewed as an expert in your field.

I NEVER LEAVE HOME WITHOUT… A hug from each of my three kids and my wife.

Even if they are asleep, I make sure to give them a hug goodbye. I made the mistake of leaving early one morning without telling my youngest son goodbye. He was sound asleep and I didn’t want to wake him. At 8 a.m. I received a scathing call from Nicholas (then 4 years old) about how I should never leave without giving him a hug and if I ever, EVER did that again, I was going to be in BIG trouble. I will not make that mistake again!

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I WISH CPAs KNEW… Everything.

My clients ask me questions about almost everything: insurance, retirement, college, weddings ... you name it. It is an honor to know they trust me to answer so many things; however, sometimes the questions fall outside the scope of my knowledge. I am pleased to say that because of the many great connections with other professionals that I have made over the years, I can typically get an answer for my client.

WHEN I TOOK THE CPA EXAM… I thought passing it meant I was brilliant and the rest of my career would be a cakewalk. I was wrong. Every day for the last 19 years I have learned something new. Of course, the thousands of pages of changes to the tax code enacted by Congress every year also manages to keep me on my toes.

I AM A CPA BECAUSE… I am not good at poker! But seriously, being able to look under the hood and analyze the issues behind the numbers is exciting. Having the opportunity to help my clients achieve their goals as a company, while minimizing the tax impact, is why I’m proud to be a CPA. n

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ite! s b e w r u o on w e n s ’ t a h w ors.com is v d a p u o r check out w g e o ww.p

PRSRT STD US POSTAGE PAID PPCO

Virginia Society of CPAs 4309 Cox Road Glen Allen, VA 23060

Change service requested

Team with the Experts Experienced, Independent Specialists

Josh Pruitt

CPA/ABV, AM, CFE

Brian Burns

CPA/ABV/CFF, ASA

Harold Martin

CPA/ABV/CFF, ASA, CFE

Valuation › › › › › › ›

Financial Reporting Tax - Estate, Gift, Income Transactions - Mergers and Acquisitions Stock-Based Compensation Buy/Sell Agreements ESOPs Appraisal Reviews

Peter Thacker

Asif Charania

CPA/ABV/CFF, ASA, CFE

CPA/ABV, ASA

Ethan Hitchcock CPA

Forensic Services Litigation

Financial Investigations

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For complex valuation and forensic projects...

You need the Keiter team.

Contact: Harold Martin | 804.273.6240 | hmartin@keitercpa.com

www.keitercpa.com