Disclosures: May/June 2015

BROUGHT TO YOU BY THE VIRGINIA SOCIETY OF CPAs

Expand your practice

MAY/JUNE 2015 I VOL. 28 NO. 3 I WWW.VSCPA.COM

Life after closing the deal

FINDING THE RIGHT FIT: M&A advice

HTTP://DISCLOSURES.VSCPA.COM

When the whistle blows

advisory

helping clients navigate the operating complexities across a wide range of risks in an ever evolving global landscape

Internal Audit & Compliance | Finance & Process | Technology Services | Regulatory Solutions & Risk Management

At Dixon Hughes Goodman, we combine deep industry experience, comprehensive advisory services and a strong commitment to provide exceptional service to our clients. Many of our advisory leaders have held executive level roles within large public and private organizations in addition to professional services firms, which translates into more robust understanding and insights. Our consulting and advisory clients include Fortune 500 companies across a variety of industries in all 50 states and internationally. As part of Praxity™, a global alliance of independent firms, we offer the resources of a large global firm with the responsiveness that a personal relationship delivers.

Jay Alverson, III, CPA, CIA | Partner | jay.alversonIII@dhgllp.com Ben Sady, CIA, CISA | Director | ben.sady@dhgllp.com Rob Mancini | Director | rob.mancini@dhgllp.com Trusted CPAs and Advisors Assurance | Tax | Advisory | dhgllp.com

ment

tment public g and s and m with

INSIDE this issue

Interested in expanding your practice? There are several things to consider beforehand (page 14), as well as important factors when the ink is dry (page 18).

FEATURES

ARTICLES

SO YOU WANT TO EXPAND YOUR PRACTICE

MERGERS & ACQUISITIONS 14

There are key issues to thoroughly consider before, during and following a (potential) acquisition. You must develop a firm strategy and tackle items such as clients served, geographic footprint, services provided, size and even firm culture.

AD INDEX 12

Aon Beth A. Berk, CPA Digital Benefit Advisors Dixon Hughes Goodman LLP Keiter Nationwide PNC Bank Poe Group Advisors

You bought a CPA firm and want to make sure you’ve got all your new clients secured. Entering into a strong noncompete agreement is essential to ensure both sides get what they need.

SECTIONS LIFE AFTER CLOSING

18

The merger or acquisition is done. Now what? There are essentials to living happily ever after. Mergers and acquisitions are much like any other marriage — the success of the match comes once the parties are living and functioning together.

WHEN THE WHISTLE BLOWS 24 Data shows that employee tipoffs continue to be the best way companies find out about fraud. Are you doing all you can to encourage an environment where people can speak out?

BACKTALK

4

LINE ITEMS

6

DATA DRAFT

8

ADVOCACY

10

VSCPA NEWS

28

VSCPA EDUCATIONAL FOUNDATION

33

I AM THE VSCPA

34

CLASSIFIEDS

35

DISCLOSURES

•

MAY/JUNE 2015

21 23 17 2 36 13 5 35

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

Our mission is to enhance the success of CPAs.

•

HTTP://DISCLOSURES.VSCPA.COM

3

VIRGINIA SOCIETY OF CPAs

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

BACKTALK you said it FROM THE VSCPA FACEBOOK PAGE >>

RUNNING FOR MONEY — AND A CAUSE

disclosures

Watched Tom Visotsky cruise to a great finish! You are a winner and great inspiration! Hugs to you and Rhonda.

http://disclosures.vscpa.com EDITORIAL STAFF Jill Edmonds Managing Editor disclosures@vscpa.com

ELSIE ROSE, CPA Richmond

Chip Knighton Contributing Editor cknighton@vscpa.com

@VSCPANews @SportsBackers Thanks for the great article.

Training hard in spite of snow and ice! — @TOMVISOTSKY1

David Bass Public Relations & Communications Director dbass@vscpa.com EDITORIAL TASK FORCE Joan D. Aaron, CPA Lindsay S. Andrews, CPA Adam G. Chaikin, CPA David L. Cotton, CPA Gary D. Dittmer, CPA Elizabeth M. Helle, CPA Clare K. Levison, CPA Kevin S. Matthews, CPA David R. Peters, CPA George D. Strudgeon, CPA Barbara C. Sukramani, CPA Thomas L. Visotsky, CPA

I found the article “Leading with Values, Not Money” very on-point. I think Values Based Leadership will distinguish one CPA firm from another, and be an important factor recruiting and retaining talent — one of the biggest challenges facing firms right now.

BRYAN NEWLIN, CPA Winchester

DEADLINES Articles and advertising for future issues are due by 5 p.m. on the following dates: July/August 2015 Sept./Oct. 2015 Nov./Dec. 2015 Jan./Feb. 2016 March/April 2016 May/June 2016

VIA EMAIL >>

May 4, 2015 July 6, 2015 Sept. 1, 2015 Nov. 2, 2015 Jan. 4, 2016 March 1, 2016

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

VIA CONNECT >> This discussion has been very helpful to me.

I work out of my home and don’t have the advantage of being able to bounce things off of colleagues, so this group serves as my partner down the hall.

LESLIE AUERBACH, CPA Norfolk

Professional Membership Fees to an org. just raised from free to $55. It's a price I pay for one of the best organizations.

— @KATIEOCON @ProfMitchell did a magnificent job with the @VSCPANews yesterday. So good I renewed my membership last night. :-) — @PROFKUSHJENKINS Thanks,@ProfKushJenkins! So great catching up with you at the VCCS Peer Group Conf! @VSCPANews membership is amazing!

— @PROFMITCHELL

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

Get in touch

DISCLOSURES

TWITTERSPHERE >>

FACEBOOK: www.facebook.com/VSCPA

VSCPA ENDORSED PARTNERS

4

From the

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

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

LINE items

Focus on profession pipeline

MOBILE WORKERS? YES, PLEASE!

Recommendations from the Pathways Commission on Accounting Higher Education are moving full-steam ahead, according to the American Institute of CPAs (AICPA) and the American Accounting Association (AAA). In 2010, the Pathways Commission recommended ways the profession can increase and support the pipeline of talent into the profession. Its report, released in 2012, detailed several projects that are nearing implementation by the AICPA and AAA. The transition will be finished by Aug. 1.

The VSCPA continues to support mobile workforce legislation. In advance of the U.S. Senate considering the Thune-Brown Mobile Workforce reserve fund amendment to the Budget Reconciliation bill, the VSCPA wrote a letter to Sens. Tim Kaine and Mark Warner (D-Va.) in support of the bill. The VSCPA has supported mobile workforce legislation in the past and wrote Warner and Rep. Bob Goodlatte (R-Va.) in February in support of two such bills. Find more in the “Advocacy” section of vscpa.com. n

Projects include proposing an Advanced Placement (AP) accounting course; developing and distributing the Pathways Vision Model, which emphasizes professional judgment; integrating professionally oriented faculty into accounting schools; and more.

Check out more information on the Pathways Commission’s projects and progress at http://tinyurl.com/PathwaysCommission. n

>> EXCELLENT EXCEL: NEW WINDOW As accountants and auditors, we love to prepare and hate to audit, respectively, multi-tab workbooks with amounts that are linked from one schedule to another. They are so cool and scary to both groups of CPAs. As an accountant, it is great that you can enter an amount in one cell and it automatically updates 20 different sheets. On the other hand, to us auditors out there, it makes us nervous to think one mistake in a formula will make the links not work as planned. In our quest to ensure that everything is working correctly, we spend hours visually inspecting the workbook.

If you are wasting time clicking back and forth between worksheets, consider using the New Window button under the View tab in your ribbon. Each time you click the New Window button, Excel will open another instance of the

6

DISCLOSURES

•

MAY/JUNE 2015

•

same workbook. As you update your workbook, all instances will update. It gets cooler! If you have more than one monitor, you can place each instance of the same workbook on each of your monitors, with each displaying a different worksheet. With the New Window button and say, 20 monitors, you can visually check ALL those linked worksheets without flipping between tabs. n GEORGE D. STRUDGEON, CPA, CGFM, is an audit director at the Virginia Auditor of Public Accounts in Richmond. He is a member of the Disclosures Editorial Task Force. Email him if you have Excel topics you want him to cover. george.strudgeon@gmail.com connect.vscpa.com/GeorgeStrudgeon

HTTP://DISCLOSURES.VSCPA.COM

LINE items

THE VIRGINIA ECONOMY >>

Facing challenges head on “Virginia’s talent is right for the times.” That’s how Maurice Jones, the Commonwealth’s secretary of commerce and trade, described Virginia’s workforce during his Economic Development Update on Sept. 29, 2014, at the VSCPA Top Firms Roundtable.

START SEARCHING >>

What are you looking for?

The VSCPA has been working diligently behind the scenes to enhance the search capabilities at vscpa.com, and the fruits of that labor are here!

Using the same search box in the top right corner of the website now brings you a wealth of options to find the content you need.

You can customize your search in several new ways. The search results page allows you to narrow your search down by fields of interest, date, relevance and now several specific VSCPA outlets. You can tailor your search to focus on: >> >> >> >>

Website articles CPE classes and events Disclosures articles Connect discussions

>> >> >> >> >>

Upgrade Virginia’s infrastructure Pick the right sectors to catalyze Overall business climate Entrepreneurship Talent

Barry DuVal, president and CEO of the Virginia Chamber of Commerce, said one of the Chamber’s top priorities is promoting the Blueprint Virginia business plan, intended to strengthen and expand the Virginia economy and ensure the Commonwealth remains a top state for business and technology.

Visit vscpa.com today to give the new search capabilities a test. It’s never been easier to find what you need! n

DuVal pointed out that Forbes ranks Virginia as the top state to do business, and that the Commonwealth ranks no lower than 12th in any business ranking his organization has seen. But, as he says, Virginia is “going in the wrong direction.”

RENEWAL IS ON! Lock in your benefits for the 2015–2016 VSCPA membership year and renew today at vscpa.com/Renew! You will get access to enhanced and new programs, partnerships and information along with your favorite benefits. It’s going to be a great year! n

DISCLOSURES

That talent will be important as the Commonwealth faces challenges ahead. For the first time, Virginia’s economic growth projections fall behind the U.S. growth rate for the next five years, and the Commonwealth is growing low-wage jobs at four times the rate of middle- and upper-income jobs. Jones and his boss, Gov. Terry McAuliffe have the following priorities when it comes to facing those downturns:

•

He cited the challenges of shrinking defense spending, the unpredictable federal political landscape, a tough tax and regulatory climate, Affordable Care Act implementation and a potential workforce shortage. He also took time to discuss Virginia’s difficulties in getting a budget passed during the 2014 General Assembly session, emphasizing the importance of protecting the Commonwealth’s AAA bond rating.

He echoed Jones’s call to diversify the economy in order to create a better foundation that can weather changes in federal funding.

Visit vachamber.com/blueprint for more info on the Chamber's Blueprint Virginia business plan. n

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

7

DATA draft

Transparency slips in Virginia Virginia does a decent job of being transparent when it comes to its spending, but it is slipping slightly. The U.S. Public Interest Research Group (US PIRG) Education Fund gave the Commonwealth a B-, down from a B+, in its sixth annual report, “Following the Money 2015: How the 50 States Rate in Providing Online Access to Government Spending Data.”

That B- is still a lot better than the lowest possible grade (the US PIRG rates states A through F).

The best workers are in the Commonwealth That may sound like bragging, but the data shows it’s true — “Virginia boasts one of the best-educated and most productive workforces in the country,” according to the Virginia Performs website from the Council on Virginia’s Future. And there are stats to back it up.

Ohio comes in with the top marks and an A+ rating, while California lags behind the pack with an F. With its rating, Virginia is considered an “advancing” state in the report, and it “could improve by posting reports covering a greater number of years.”

Download the report at http://uspirg.org/reports/usp/ following-money-2015. n

>> NO. 1: Ranking among states for percentage of workforce in science and engineering jobs (7.6 percent)

DID YOU KNOW?

>> NO. 4: Ranking among states for percentage of workforce for most master’s degrees (10.8 percent)

The average American household spends $2,089 on real estate property taxes each year. Virginia residents spend an average of $1,369.

Source: WalletHub n

>> NO. 14: Ranking among states for worker productivity.

Virginia’s output-per-worker value was $79,114 in 2012.

These stats are great, but there’s a glaring mark on Virginia’s record. In 2012, 12.1 percent of adults in the Commonwealth did not have a high school diploma — putting Virginia as the 29th highest among all states.

Data shows the highest non-graduation rates are in the southwest and southside areas of the state. n Source: vaperforms.virginia.gov

>> BY THE NUMBERS

$3.35 BILLION The amount generated from Virginia’s agricultural and forestry exports in 2014 — a growth of 14 percent over 2013. China is by far the biggest importer for the Commonwealth, representing $691 million. Top exports are soybeans, soybean meal and oil, lumber, pork, tobacco leaves, poultry and more. n

8

DISCLOSURES

•

MAY/JUNE 2015

•

PUBLIC-SECTOR EMPLOYERS RANKED AMONG THE TOP 20 EMPLOYERS IN VIRGINIA 1.

3.

7.

8.

10.

11.

13.

14.

16.

17.

18.

20.

U.S. DEPARTMENT OF DEFENSE FAIRFAX COUNTY PUBLIC SCHOOLS U.S. POSTAL SERVICE FAIRFAX COUNTY U.S. DEPARTMENT OF HOMELAND SECURITY PRINCE WILLIAM COUNTY PUBLIC SCHOOLS VIRGINIA BEACH CITY PUBLIC SCHOOLS LOUDOUN COUNTY PUBLIC SCHOOLS UNIVERSITY OF VIRGINIA VIRGINIA TECH VIRGINIA COMMONWEALTH UNIVERSITY U.S. DEPARTMENT OF COMMERCE n

Source: Virginia Secretary of Commerce and Trade Maurice Jones.

List as of June 2014.

HTTP://DISCLOSURES.VSCPA.COM

DATA draft

Problem solving vs. number crunching

2 MILLION: The number of jobs Virginia will need to fill over the next decade 1.4 PERCENT: Projected 2014 job growth rate for Virginia

Which does accountants prefer?

Turns out, solving problems whets the whistles of more finance professionals than working with numbers. An online survey from Robert Half Finance & Accounting asked professionals from financial and accounting fields which part of working in their profession they enjoy the most. The survey found: >> 41 PERCENT prefer problem solving >> 22 PERCENT enjoy number crunching >> 17 PERCENT like making strategic business recommendations >> 9 PERCENT prefer learning new technologies >> 8 PERCENT like collaborating with others

n

34: Where Virginia ranks in projected job growth >> GOOD TO KNOW The Virginia General Assembly meets annually, beginning on the second Wednesday in January, for 60 days in even-numbered years and for 30 days in odd-numbered years, with an option to extend annual sessions for a maximum of 30 days. n

DON’T FORGET TO RENEW BY MAY 31!

Thank you for being a member!

vscpa.com/Renew

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

9

ADVOCACY

Debit card repeal highlights successful session The 2015 Virginia General Assembly Session adjourned with nearly unprecedented quickness, and that efficiency was reflected in the way the VSCPA’s top issues were handled.

The Society accomplished all of its top legislative priorities for 2014. Read on for the latest updates on the legislation the VSCPA fought to protect.

DEBIT CARD REPEAL The VSCPA supported two bills that reinstated the paper check option for Virginia individual income tax refunds. Previously, taxpayers could only get their refund by direct deposit or using a prepaid debit card.

The issue has been resolved, as SB 701 and HB 1286 moved quickly through the Assembly. Gov. Terry McAuliffe signed the bills into law on March 10 and March 17, respectively.

BOARD OF ACCOUNTANCY TECHNICAL UPDATES The VSCPA also supported SB 1125, which made technical updates to the Virginia accounting statutes related to the new financial statement preparation service under the American Institute of CPAs’ (AICPA) Statements on Standards for Accounting and Review Services (SSARS).

The bill also clarified requirements for out-of-state CPA firms practicing in Virginia. Gov. McAuliffe signed it into law March 17.

TAX CONFORMITY Heading into session, it was up in the air whether or not conformity would even come into play in 2015. But after Congress passed tax extenders legislation, it was necessary for Virginia to conform with the U.S. Internal Revenue Code (IRC) with regard to those extenders.

Two bills were drafted to address the issue: HB 1727 and SB 1044 (introduced by VSCPA member Sen. Walter Stosch, CPA, in his final session before retirement). Both bills passed with little opposition, and Gov. McAuliffe signed them into law Feb. 13 and Feb. 16, respectively.

Because each bill contained an emergency clause, conformity took effect upon McAuliffe’s approval.

10

DISCLOSURES

•

MAY/JUNE 2015

•

Brad Nicklin, CPA, right, met with Del. Tag Greason (R-Ashburn) during 2015 CPA Assembly Day in Richmond on Jao. 20. Dozens of VSCPA members and staff met with legislators to discuss issues important to the CPA profession and taxpayers.

FINANCIAL LITERACY GRADUATION REQUIREMENT As detailed in the March/April issue of Disclosures, shepherding Virginia’s one-credit economics and financial literacy high school graduation requirement into effect was no simple task. Keeping it in place hasn’t been a slam dunk, either, but the VSCPA was again successful in protecting the requirement from various bills that would have weakened it.

Three House bills — HB 1619, 1627 and 2088 — would have had detrimental effects on the financial literacy graduation requirement.

None of those bills made it out of committee, keeping the requirement in place as the first graduating class affected prepares to graduate.

We’ll continue our vigilance in protecting this vital tool for Virginia’s economic future.

Did you know? All VSCPA positions and advocacy efforts are online. Check out the Advocacy section at vscpa.com. n

HTTP://DISCLOSURES.VSCPA.COM

Together Protecting Virginia CPAs 2015 VSCPA LEGISLATIVE HIGHLIGHTS

VIR

G INI A GE NE

RA

LA

52

I S L AT I V E G E L H

Supported by VSCPA PAC

IG

TS

2015

IGH

VS

HL

C

MBLY

140

PA

SSE

DEBIT CARD REFUND REPEALED

VIRGINIA CANDIDATES

VSCPA PAC CONTRIBUTIONS:

$64,750

LEGISLATORS VISITED TO

ON 2015 CPA ASSEMBLY DAY

VIRGINIA CANDIDATES

52

SUBM

D

117

MEMBERS REGISTERED FOR

2015 CPA ASSEMBLY DAY

DISCLOSURES

IT TE

ACTION LETTERS SUBMITTED

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

11

MERGERS and acquisitions

Buying a CPA firm? What you need to know about noncompete agreements

BY BRANNON POE, CPA

A few years ago I read “The Snowball: Warren

Buffett and the Business of Life” by Alice Schroeder. One of the business adventures the Oracle of Omaha encountered in his career happened when he bought a company from an 89-year-old seller without a noncompete agreement. Whatever the reason for this huge oversight — perhaps the seller’s age played into Buffett’s decision-making — it proved to be a costly mistake. A few years later the seller opened a competing business literally next door.

When I learned about this story, I could not believe that such a savvy businessman could spend millions on an acquisition without any sort of noncompete agreement. Apparently though, Buffett learned his lesson.

When he negotiated a new deal years later with the same seller, he was sure to include a noncompete agreement.

This story demonstrates (1) the importance of noncompete agreements, and (2) that even experienced buyers make mistakes. If you are going to buy a CPA firm, you’ll want to make sure that your noncompete agreement will protect you if the seller decides to get back into public accounting. The noncompete agreement should be negotiated and agreed upon when you and the seller are negotiating all of the sale terms such as price, payment terms and transition assistance.

FOUR THINGS TO KEEP IN MIND When buying a CPA firm, be sure to consider these key issues that relate to noncompete agreements:

1. MAKE SURE YOUR NONCOMPETE AGREEMENT CONTAINS A PROVISION FOR DISTANCE. The main purpose of a noncompete agreement is to prevent the seller from serving the clients of the business that is being sold.

Most noncompete agreements contain a provision for distance that stipulates, for example, that the seller not serve clients within a certain metropolitan area. This provision is necessary even when a seller agrees not to seek the business of previous clients. In theory, if a seller opened an office next door to her old practice, but agreed not to serve her past clients, then her new practice should do the buyer no more harm than if another CPA began competing in that same location. In reality, though, her opening a practice right next door would be very confusing to clients. Moreover, it would be very difficult to police and track whether the seller was in fact accepting previous clients. Including a distance

12

DISCLOSURES

•

MAY/JUNE 2015

•

component to a noncompete agreement can prevent this kind of situation. (In our hyperconnected world, however, distance is becoming less and less of a factor.)

2. BE SURE THAT YOUR NONCOMPETE AGREEMENT IS ENFORCEABLE UNDER YOUR LOCAL LAWS. Most jurisdictions will not enforce noncompete agreements that cover too much geography or too long a period of time, so check your state or provincial laws to determine whether your agreement is enforceable.

(As a general guideline, most of the agreements my practice sees last about five years and cover roughly the metropolitan area where the accounting practice operates.)

3. ASCERTAIN THE SELLER’S INTENTIONS. Pay very close attention to the seller’s plans for after the sale. Don’t simply listen to what the seller is saying. Look at his life circumstances as well. Often, how a seller behaves during the negotiations of the noncompete agreement can give the buyer a glimpse of the seller’s struggles with exiting or his or her commitment to leaving public practice for good. Here are two scenarios that illustrate this point: Example A: The seller is 75 years old, and his spouse retired last year. They have just purchased a retirement home in Palm Springs, where their daughter also lives and is expecting their second grandchild in a few months. He and his wife have both had successful careers, and they have lived below their means and have plenty of savings to enjoy a comfortable retirement.

He is retiring in order to move and to spend time with his grandchildren.

Example B: The seller is 55 years old, and she is just tired of the demands of practicing. She says she may take a few months off and then look for a job in industry. She likes some aspects of public practice, but gets overwhelmed with the administrative and managerial responsibilities.

The owner in Example B may do exactly as she’s indicated. She may go into industry and never pose a competitive threat. Or, after some time off, she may feel refreshed and decide to return to public practice. However, the owner in Example A, who’s older and has a firm retirement plan in place, is far less likely to become competition.

HTTP://DISCLOSURES.VSCPA.COM

MERGERS and acquisitions 4. IF THE SELLER WANTS TO KEEP SOME OF THE BUSINESS, MAKE SURE THE NONCOMPETE AGREEMENT IS SPECIFIC AND CLEAR. We generally recommend that sellers hand over their entire business to buyers, but they often wish to keep a few clients or, in some cases, entire segments of the practice. Sellers who are older, for example, may want to keep working but lack the energy or desire to do so full time. Keeping a small handful of clients can be a way for them to stay helpful and useful to others while easing into retirement. Other clients sell segments of their practices to focus on areas that they have more desire to pursue. Wealth management is the most common example.

Our experience with these sellers has been very positive when they have a successful history with the segment that they want to pursue. In both these cases, though, buyers need to make sure sellers are crystal clear and specific about which clients they are keeping and why. The noncompete agreement should include a complete list of all of the clients being kept by the seller and should include a description of the services that the seller will be allowed to provide after closing. And, as always, keep in mind that noncompete agreements executed as part of the sale of a firm can have tax consequences.

The noncompete agreement is a critical component of every deal, whether it’s buying or selling a practice or negotiating an agreement with a partner, shareholder or key employee. It’s one area even an icon such as Warren Buffett can’t afford to overlook. n

BRANNON POE, CPA, is the founder of Poe Group Advisors, an accounting practice brokerage firm. He is the author of “Accountant’s Flight Plan: Best Practices for Today’s Firms” and “On Your Own! How to Start Your Own CPA Firm.” bpoe@poegroupadvisors.com poegroupadvisors.com/blog

This article originally appeared in CPA Insider. ©2015, AICPA. Reprinted by permission.

In the Nation, exclusive discounts are just the beginning.

Virginia Society of Certified Public Accountants members are rewarded.

Doesn’t it feel great to belong?

As a member of VSCPA, you can save with special discounts on Nationwide® auto insurance. In addition, when you add rewards like Vanishing Deductible® ,* you can take $100 off your deductible for every year of safe driving, for up to $500 in savings.

You wouldn’t be involved with VSCPA if you weren’t passionate about being part of a group that shares your values. We understand that feeling, because we treat customers like members. It’s one of the things that make us a different kind of insurance company.

Call Ronnie Shriner at (877) 683-3364 or visit nationwide.com/cps/pc-affinity-vscpa.htm for a quote today!

Nationwide may make a financial contribution to this organization in return for the opportunity to market products and services to its members or customers. Products Underwritten by Nationwide Mutual Insurance Company and Affiliated Companies, Columbus, OH 43215.

Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Subject to underwriting guidelines, review, and approval. *Vanishing Deductible is an optional feature. Annual credits subject to eligibility requirements. Max. credit: $500. Details and availability vary by state. Products and discounts not available to all persons in all states. Nationwide, the Nationwide N and Eagle design and Vanishing Deductible are service marks of Nationwide Mutual Insurance Company. © 2015 Nationwide Mutual Insurance Company. AFC-0144AO.1 (04/15)

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

13

MERGERS & acquisitions

SO YOU WANT TO EXPAND YOUR PRACTICE. Now What?

BY TOM MISHOE, CPA, CMA, MBA

14

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

MERGERS & acquisitions

CPA firm growth may occur either organically or through acquisition.

As a result, many CPAs and CPA firms leave “money on the table” in their own exits.

Important items to consider include:

Firms often choose to acquire other practices to (1) more quickly achieve desired client, revenue or profit growth, (2) fill existing or expected partner/employee, geographic or service capability deficits, (3) obtain higher quality or specialized talent, or (4) reduce fixed “infrastructure” costs. If you are considering an acquisition, proceed with caution. While acquisitions can be effective in meeting these firm objectives, they are not without significant challenges and risks.

>> When will we exit? Is the expected exit driven by a predetermined date, age of one or more key partners, an event or some other determining factor?

There are key issues to thoroughly consider before, during and following a (potential) acquisition. An experienced mergers and acquisitions (M&A) advisor can provide further information about the topics discussed below and can be instrumental in helping to implement an efficient, effective and successful acquisition process. Experienced advisors will significantly reduce the acquirer’s potential risk by helping to develop an acquirer strategy, develop acquisition target attributes, provide due diligence, structure transactions, close transactions and, in some cases, implement post-acquisition procedures.

There are many CPA firms with partners at, or approaching, retirement age — but with no viable exit strategy. While this represents a significant opportunity for acquiring firms, these acquisitions should be pursued ONLY if the acquisition would otherwise fit within the strategy of the acquiring firm.

DEVELOP A TYPE OF EXIT STRATEGY Before you initiate the acquisition of another CPA firm, develop your own future exit strategy. There are not many companies, particularly smaller firms, who do this well.

>> To whom will we sell? The answer to this key question determines whether the exit plan will be internally or externally focused.

An internally focused approach requires a well-developed and implemented business succession plan. Key questions include: How long will key partners continue to lead the organization? Are there identified successor(s) and do they have the skills to continue to effectively lead the firm? If not, are there viable plans to ensure the successors will be adequately prepared for leadership roles? Are the identified successors fully committed? Is there an agreed-approach to firm valuation and transaction structuring, pricing and funding? Can the successors make agreedupon payments?

An externally focused approach requires significant thought about the buyer(s) who might best be able and/or willing to purchase your firm at the desired exit point. Key determinants important to a potential buyer include selling firm attributes such as size, geographical footprint, client list, particular areas of service focus, capabilities of the partners/employees, culture and general reputation.

DISCLOSURES

•

MAY/JUNE 2015

•

Whether preparing for an internally or externally focused exit strategy, it is critical for the firm to ensure its own long-term financial health while moving toward its own exit plan.

In addition to an exit strategy, this includes appropriate compensation plans to recruit, retain and reward key employees to serve the firm’s current and future clients. Additionally, the owner must have appropriate succession plans. Statistics indicate only 30 percent of firms have buy-sell agreements, and of those, only 30 percent are adequately funded. This means less than 10 percent of firms have an identified and properly funded succession plan.

So what happens to the firm if an owner or key employee has one of the following events: disability, death, divorce, bankruptcy or the owner becomes hostage to the business because of the lack of a meaningful exit strategy? Asked another way: how would you like to be in business with your former partner’s wife’s new husband’s lawyer?

Appropriate succession strategies with adequate funding mechanisms are critical to ensure the firm’s long-term survival.

Without appropriate plans in place, an event like one described above will significantly decrease (if not totally destroy) the value of the CPA firm. Properly structured plans and funding mechanisms can prevent forced firm liquidation, buy time for a firm to replace a “key man” who has died or become disabled, provide collateral to support a loan or provide an alternative source to meet borrowing needs. These plans, agreements and funding mechanisms should be reviewed on a periodic basis to ensure adequate protection to the firm in the case of unforeseen events. u

HTTP://DISCLOSURES.VSCPA.COM

15

MERGERS & acquisitions

While this can be difficult to define, think about the following types of questions: What is truly important to the firm? How are clients and employees treated? How does the firm work to achieve its objectives? What are the personalities of key partners, employees and clients?

WHAT DO YOU WANT TO BE WHEN YOU GROW UP? To find and acquire the appropriate firms, you must determine “what you want to be when you grow up.” In other words, you must develop and clearly enunciate your firm strategy, which is critical to determining and identifying the parameters for an acquisition.

This strategy must be proactive and developed PRIOR to beginning the acquisition process.

Examples of firm attributes with strategic implications to an acquisition include: >> Clients served: Do you serve particular industries or companies of a particular size or business mode (profit, nonprofit, governmental, etc.)? Do you intend to continue in your existing industry/market niches, expand into peripheral industries/ markets or engage with new industries/market? >> Services provided: What services do you currently provide to your clients?

Do you intend to maintain these current services or expand your client service offerings? Does the desire to expand services simply reflect a desire to enter into a potentially lucrative new market(s) or is this expansion critical to your ability to retain existing clients who have entered new industries, become more “complicated” or simply “demand” other services? What is the ability of your existing employee base to meet current and anticipated client needs?

IDENTIFY AND LOCATE POTENTIAL ACQUISITIONS An experienced M&A advisor will provide invaluable assistance in identifying and locating potential acquisition candidates.

Based upon the firm’s strategy, “best attributes” for an acquisition can be identified.

Subsequently, specific acquisition targets can be identified and contacted to determine interest in a potential transaction. This may best be performed by the M&A advisor, who can make discreet contact with acquisition targets, determine the potential interest of these targets and maintain confidentiality of the acquiring firm until serious interest has been established.

The due diligence process is critical to verify information provided by the acquisition target, identify areas that require additional information and/or analysis and recognize areas of potential risk or value. While the list of items deserving some level of due diligence attention can be quite long, examples of important items include:

>> Size considerations: How large are you? How large do you want to become? What ability do you have to adequately absorb an acquisition? >> Culture: What is the firm’s culture?

DISCLOSURES

•

MAY/JUNE 2015

>> Partners & employees: Important information related to a prospective group of partners and employees include: partnership and employment agreements, desired timing of transitions and exits, salary, benefits, bonuses and other compensation, longevity, current and planned education and certifications, status of continuing professional education requirements, summary performance reviews, identification of individual performance issues, areas of existing or contemplated specialization and identification of clients served and length of time and dates served on specific client engagements.

DUE DILIGENCE

>> Geographical footprint: What is the geographical footprint you currently serve? What additional geographical area(s) present viable opportunities AND can be managed by existing and potential acquired personnel?

16

prospective client base to understand include: services provided to each client, fee structure, client revenue and profitability by component services, client longevity by component services, identification of existing or potential firm liabilities and/or litigation related to client issues, identification of potential future projects, identification of other services desired by clients, length of time client has been served by current engagement teams and planned client transitions.

•

>> Service capabilities: The respective service capabilities of the buyer and the seller should be compared and contrasted to determine overlap of service capabilities as well as potential new service capabilities available to the acquiring firm.

>> Financial results: An acquirer should fully understand all aspects of the financial status of the acquisition target. This provides for the opportunity to identify areas of opportunity as well as plan for corrective action where financial results are lacking. Leases, contracts, insurance policies, etc. should be thoroughly reviewed.

STRUCTURING TRANSACTIONS

>> Clients: While respecting theconfidentiality of client information, important aspects of a

Transaction structuring reflects the negotiation between the parties. There is certainly some truth to the old M&A saying

>> Culture: See above for brief discussion of culture. The importance of compatibility of the respective organizational cultures cannot be overstated.

HTTP://DISCLOSURES.VSCPA.COM

MERGERS & acquisitions

acquisition compensation for all employees, firm management and ownership and postacquisition firm leadership.

of “a deal where both parties are not (at least somewhat) irritated is a deal that will not close.” All parties will have certain issues that are highly important and, if not effectively resolved, will likely destroy a deal. In other cases, it is possible for contentious issues to not preclude a closing but, because the issues were not resolved in an appropriate manner for both parties, the result will be significant post-acquisition challenges. While all parties want to “get a good deal,” both parties must realize that appropriate compromise and agreement on significant issues may not only determine whether a deal closes but the future success of the acquisition.

CLOSING TRANSACTIONS

The two most significant assets in a CPA firm sale are clients and employees. Acquiring firms must remember that acquired employees have the ability to move their employment (potentially to direct competitors) and that clients, if unhappy with their postacquisition engagement teams, can “require” team changes, follow key engagement team members to a new firm or seek bids from other firms. While this does not mean an acquiring firm should give a selling firm “everything they want,” it does mean the acquirer should think long and hard about the consequences of certain negotiating positions and decisions to the ability to close a desired transaction and effectively integrate and manage the acquisition.

While many items may be negotiated, issues typically critical to the structuring process include: acquisition price, payment schedule, fixed versus variable acquisition pricing, client retention, partner transitions, post-

Game Change.

We just broke the mold in the

Both parties in an M&A transaction often fail to move expeditiously toward closing.

While I am not suggesting taking transaction shortcuts or failing to “dot each ‘i’ and cross each ‘t,’” I believe one should be diligent in completing transaction-related activities as quickly as possible and moving forward to the next transaction activity. Things can rapidly change — buyers or sellers can become distracted with their own internal issues and challenges or see what appears to be a “better deal.”

Additionally, this approach will limit time being wasted on a transaction that will never close. If you are going to get to “NO,” it is to the benefit of all parties to get to “NO” as soon as possible. Good M&A advisors will continually drive the transaction toward closing. Both buyer and seller should have a dedicated deal team to ensure tasks are quickly completed and issues are identified and solved.

AFTER THE CLOSING

benefits industry. We’re offering the

Post-closing efforts should be focused on implementing the plans that were developed prior to closing. If you are developing postacquisition plans following closing, it is highly likely you will end up with a failed, or at least much less successful, acquisition.

single most critical benefit for you and your clients — advice. Sound, actionable advice. This changes everything.

Game On?

Finally, exhibit the utmost integrity, both legally and morally, in all deal activities and decisions. Fulfill your promises, exactly.

Word quickly gets around the professional and business communities. You may want to acquire another firm in the future! n

Endorsed by the VSPCA

TOM MISHOE, CPA, CMA, MBA, is the founder and president of FinOpStrat Advisors, LLC, in Richmond, providing financial, operational and strategic advisory services. tom.mishoe@finopstratadvisors.com

B r i a n M a r k s , P r i n c i Pa l 877.998.7272 e M a i l : bmarks@digitalbenefitadvisors.com v i s i t : www.digitalbenefitadvisors.com/vspca

call:

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

17

MERGERS & acquisitions

Life After Closing:

THE ESSENTIALS TO LIVING HAPPILY EVER AFTER

BY IRA S. ROSENBLOOM, CPA

18

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

MERGERS & acquisitions

Mergers and acquisitions are much like any other marriage. While the courting and planning are exciting stages, the success of the match comes once the parties are living and functioning together. There is no such thing as a perfect CPA-firm merger, but like marriage, some are much happier and more successful than others. business are vital to success. Like any marriage that is strategic in nature, there are many important priorities that need to be addressed, including governance, compensation systems, staff development, quality control, transition/ succession, geographic reach, multiple office management, client acceptance, fee platform, financial discipline and vision. Because both parties generally enter into these unions for the long haul, these transactions take more time and are often more complex.

There are three primary types of marriages in the world of public accounting, with different priorities associated with each:

EXIT-ORIENTED Practitioners who expect to completely retire, after a merger match, need the longest runway to ensure their marriage will be a good one. Their priorities are tied to security: client retention, economic dependability of the successor and stability of professional resources.

GROWTH-MOTIVATED Some practitioners see mergers and acquisitions as an important part of their growth formula. Any growth-oriented upside will relate to adding to the top line, increasing market presence and picking up marquee clients. Niche-based acquirers will want to tuck in a practice that can deliver more of the industry or specialty in which they have a niche or niches. Firms with wealth management success, for example, will be attracted to a strong Form 1040 practice to bolster the pool of potential investment clients.

STRATEGIC MERGERS Strategic combinations are the ultra-marriages of practitioner mergers, and they can bring significant operational hurdles. The long-term co-existence of the leadership of both firms and the branding of a new, more forceful

DISCLOSURES

•

MAY/JUNE 2015

•

Generally, the parties sitting at the merger table put a great deal of time and thought into the negotiating and vetting process. In order for the vision for the deal to come closer to fruition, here are 15 best practices to help ensure a smooth integration and long-term contentment:

1

EMBRACE THE TOP CLIENTS OF EACH FIRM. The top 20 clients of the smaller of the two firms should be welcomed personally by the leadership of the new/combined firm.

When describing the new organization, it is paramount for the emphasis to be on the upside of the merger or acquisition, for both the clients and the former leaders of the old firm. Convenient accessibility to the old and new regime must be stressed and actualized.

Check-in, by either internal marketing staff or outside professionals, should take place every 30 days for the first six months of the combination to confirm satisfaction and to uncover areas that need to be addressed. u

HTTP://DISCLOSURES.VSCPA.COM

19

MERGERS & acquisitions

2 UNIFY AND, IF NEED BE, CREATE

JOB DESCRIPTIONS FOR EACH MEMBER OF THE ORGANIZATION.

Confusion over performance expectations is common in many mergers. Be clear as to what the daily and career expectations are, and use a cross-section of players from both sides of the table to create or modify the descriptions.

The more input the affected parties have, the more buy-in to the change, and the upside of the transaction.

3 EMPLOY A BUDDY SYSTEM.

The first message issued about the new firm will make a lasting impression, so it is vital to construct a well-planned and thoughtful communication plan for the announcement.

Partner your staff with acquisition counterparts and encourage both formal and informal interaction. There will be anxieties on both sides, by most players, so the more easily information can be shared — from mundane issues like codes, passwords, whom to avoid and whom to win over — to the complexities of techniques and policies, the better the outcome in the long run.

4

IMPLEMENT CONSISTENT AND TRANSPARENT TIME MANAGEMENT AND CASH FLOW CONTROLS. Matters like the common unit of measure (quarter-hour or tenth of a unit) and the frequency of time entry need to be agreed upon. Formatting for bills and statements should be compatible and determined in advance of preparation. A documented series of policies on billing frequency, collection controls and job cut-off is imperative.

Full accounts receivable history must be migrated, and an agreement on collection responsibilities and priorities for receipt must be understood as well.

5

BRAND AND BROADCAST THE EXPANDED/COMBINED FIRM. The first message issued about the new firm will make a lasting impression, so it is vital to construct a well-planned, thoughtful communication plan for the announcement and the focus of the change. The messages should be consistently imparted, both

20

DISCLOSURES

•

MAY/JUNE 2015

•

internally and externally, so there is no conflict of expectations and performance. Media outlets need to be advised of the expansion/ combination, and social media and collateral materials should be used to your advantage.

The website will need to be updated, and the sequencing for such a conversion should be disciplined and not secretive. In a multioffice situation, signage must be handled and landlords should be notified. Finally, an ongoing communication strategy should be established and implemented to ensure brand continuity.

6

DEVELOP A MILESTONE CALENDAR. Significant items should be posted by a specific date or by the beginning or end of a month. Items that would commonly be on a milestone calendar include: the switch over for payroll and benefits, announcements, business cards and letterhead updates, notification of malpractice carrier, move date, fit up, evaluation and supervision transition, marketing and social media initiatives (such as brochures, website, LinkedIn, database integration), software integration and training.

7

ALIGN QUALITY CONTROL PROCEDURES AND REGIMENS PROMPTLY. The last thing a firm needs is a separate set of rules for one practice, one office or one practitioner, and another set for the rest of the firm. Policies for return review, client acceptance and turn-around time must be hammered out early in the process and complied with across the board. Engagement letter protocols and consistency must be established, and privacy and confidentiality must be addressed.

8

IMPLEMENT A NEW CLIENT CONTACT PROGRAM. Relying on an announcement will be inadequate for a comfortable clientrelationship conversion. Create a welcome letter to be issued within two weeks of the

HTTP://DISCLOSURES.VSCPA.COM

MERGERS & acquisitions

announcement, and regiment a follow-up outreach plan so that each and every client will be contacted. At a minimum, the welcome letter should introduce key members of the firm, crucial service areas, billing and collection policies and contact information.

A client who was a low-level client for the predecessor could be an important one for the successor. Following up and communicating with clients enhances the likelihood of retention and the potential for service growth.

9

FOCUS ON THE “FRIENDS OF THE FIRM.” Both firms have prospered in part because of strong referral sources and advocates.

Schedule a social event or events for the centers of influence, and routinely follow up with them during the first six months of the combination.

10 NURTURE PERSONNEL. Unwanted and untimely personnel departures are a common fallout of a merger.

Synchronizing benefits, compensation and policies are important, but there are often changes for one or both parties.

Communicating the changes in a sensitive, business-like manner will be most productive.

Creating contacts for grievances and support during the transition is equally as important as communicating the changes. Scheduling

a series of internal focus groups for the postclosing time period will bring important intelligence to management, and reflect the care that management has for the entire team. In addition, a merger is often the right impetus and an ideal time to implement an internal mentoring program.

11 USE CLIENTS TO CREATE A “ONE-FIRM” PLATFORM.

Utilizing staff from each of the firms to service clients — who were not previously serviced by the originating firm, prior to the combination — will set the stage for a one-firm platform and will allow for bonding between employees and owners of both organizations. u

The AICPA Professional Liability Insurance Program

looks at insurance from a fresh perspective…

When you sit down with a client, you strive to see their business from their perspective and make recommendations based on their unique situation. We operate similarly.

Whether your CPA firm is a one person operation or national in scope, the AICPA Professional Liability Insurance Program offers insurance products and solutions designed to fit your needs: • Insurance created to cover the unique exposures of CPA firms • Premium credits designed to reflect the way CPAs do business • All size firms and areas of practice are eligible

YOURS

More CPA firms depend on the AICPA Professional Liability Insurance Program than any other plan.

Please call Rich Bacher at Aon Insurance Services at 800.221.3023 or visit www.cpai.com/premierad today!

Endorsed by:

Underwritten by:

Administered by:

Aon Insurance Services is the brand name for the brokerage and program administration operations of Affinity Insurance Services, Inc.; (TX 13695); (AR 100106022); in CA & MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services Inc.; in CA, Aon Affinity Insurance Services, Inc., (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency and in NY, AIS Affinity Insurance Agency.

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. Copyright © 2015 CNA. All rights reserved.

E-10486-515 VA

E-10486-515 VA.indd 1

3/11/15 10:40 AM

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

21

MERGERS & acquisitions

O Effective communication will set the stage for a “happily ever after” post-closing reality.

12 PROFILE CLIENTS INTERNALLY. Each of the organizations will have their own top 10 clients. All of the members of the new/combined firm should be aware of their predecessor’s top 10 list, and understand the longevity of the relationship, the importance of the client and the prominence, if any, within an industry. Being aware of the top clients will allow multiple interested parties within the organization to have their ears to the ground for any potential top client dissension or dissatisfaction.

13 STRATIFY CLIENTS WITH A GRADING SYSTEM.

Every firm will have clients who are graded on a scale from A to D. Once the firms are combined, the grading should be recalibrated.

Resource allocation becomes even more critical through a transition. Confirmation that prioritizing clients is based on an agreedupon scale will lower tensions and enhance achievement within the organization.

14 TRANSITION RELATIONSHIPS TACTFULLY.

Some combinations are going to be driven by exit/succession requirements of a practitioner. Others may be driven by resource requirements, or a combination of both factors. For those exit-oriented combinations, it is essential to keep the former partner in charge involved in the relationship with the new partner in charge. Depending on the frequency of client contact, the migration from one custodian to the next will take on a different timeline. Furthermore, the target date for retirement or scale-back is an important factor as well. Creating the

22

DISCLOSURES

•

MAY/JUNE 2015

relationship-building process early will bring significant benefits, no matter when the retirement or scale-back occurs. Including the partner from the previous firm in the relationship will create client comfort, especially when that partner is supportive of the new/expanded team. Scripting approaches for both the new and previous partner can be helpful and effective.

15 EMPHASIZE CARE AND CARING. Post-closing operations must be conducted at a higher level than normal. Clients will naturally be concerned that a larger firm will mean that they are less important and that client service will be less impressive.

Upgrade client response time and, if you currently do not have a policy in place, create one. Examples of possible programs include: phone calls returned the same day or sooner, automatic email reply, call-in hours, postconference executive memos and phone call follow-up. Staff will also be concerned about job security. Create a career goals program and an owner-driven employee interface routine.

these changes, and the more input, the better received the changes will be, with minimal fallout. Creating a checklist of process actions or turning to an expert who has experience navigating these transitions will help you create a specific integration plan that will result in a very positive and successful migration. Effective communication and enthusiastic pitching of the transaction, along with sensitivity to the concerns of the players (including clients, owners and staff), will set the stage for a “happily ever after” post-closing reality.

Mergers, like marriages, are very significant commitments, and businesses like to see a healthy return on their investment for these commitments. Accounting firms are businesses like any other, although many will say that CPA firm mergers are a business unto themselves. The bottom line is that you should invest your time well in planning, monitoring and integrating the transaction, as these are the keys to making your negotiations worthwhile and producing the best, long-term return on investment for all involved parties. n

Depending on the type of transaction you are pursuing, the priorities of transition and integration will differ. Exit-oriented transactions will have a different timeline than strategic and/or lateral transactions.

The challenges of a strategic merger and a merger of equals typically require much more planning and lead time than a conventional exit-oriented deal.

Change can be very exciting but it can also be worrisome and uncomfortable. Every merger/ acquisition/combination will bring change.

The more time that goes into planning for

•

HTTP://DISCLOSURES.VSCPA.COM

IRA S. ROSENBLOOM,CPA, is the chief operating executive of Optimum Strategies, LLC, a consulting firm focused on helping small and medium-sized CPA firms enhance business performance and profitability, and foster practice continuity. ira@optimumstrategies.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 Serving clients and professionals as an Independent Recruiter since March 2005

PRACTICE management

WHEN THE WHISTLE BLOWS: Successful resolutions start with effective policies.

BY PETER B. REILLY, CPA, CVA

24

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

PRACTICE management

In a scene from the

movie To Have and Have Not, Lauren Bacall’s coo, “You know how to whistle, don’t you, Steve? You just put your lips together and … blow,” remains one of the most provocative and tantalizing scenes in movie history. Bacall certainly made whistling seem easy, and Harry “Steve” Morgan (Humphrey Bogart) also whistled effortlessly as Marie Browning (Bacall) sauntered from the room. A lesser man may have perhaps cowered or, at the very least, reached for a cigarette.

It seems that not much has changed in the last 70 years. Since the making of To Have and Have Not, whistleblowing remains emotionally charged for some, of little bother to others and, in some instances, suppressed. The recently released “Report to The Nations on Occupational Fraud and Abuse: 2014 Global Fraud Study” from the Association of Certified Fraud Examiners (ACFE) found that the number one fraud detection measure continues to be employee “tipoffs.” More than 42 percent of all fraud detections in 2014 were the result of employee tipoffs, whereas internal and external audits combined only discovered fraud in less than 18 percent of all cases.

Even worse, external audits resulted in uncovering misappropriation of assets in only 3.3 percent of all detections. These misappropriations resulted in an average loss of $185,000 to an organization.

The continuation of this trend should amplify the importance of listening to employees. The ACFE report states, “Tips were the most common detection method for organizations with and without hotlines, but the benefit was much more

pronounced in organizations with them.”

Even so, organizations that are aware of the effectiveness of employee tipoffs still do not develop and implement effective whistleblower policies. All too often, the whistleblower is seen in a negative light and is treated with disdain by members of the organization.

him and continually threaten to fire him. This gross and perverse retaliation is exactly the kind of behavior that a flawed whistleblower policy produces, which defeats the implementation of professional development programs that employees expect as part of their workplace benefits.

Most fraud cases included in the ACFE 2014 Report occurred in the banking and government sectors, with average losses in the $180,000 range. If wasteful government spending is indeed at a high level, one would think discouraging fraudulent activities by providing an effective whistleblower policy would be of paramount importance. Unfortunately, recent cases have suggested otherwise.

Hundreds of notable whistleblower cases are listed in Wikipedia. Some have resulted in favorable outcomes, while others, not so much. Even in our office, we experienced an inability to provide a viable tool for employees willing to point out discrepancies in the workplace. Some time ago, our then-managing partner placed an old, bright red mailbox in the kitchen to serve as a “suggestion box.”

Ideas were percolating tirelessly. During the course of one of our staff member’s annual reviews, it was discovered that the staff member had placed a suggestion in the box several months prior and, apparently, no one was monitoring the box to determine if there were any suggestions given. The lesson? Should you supply such a hotline for your employees, make sure the box is checked regularly and that suggestions are taken seriously.

The federal government recently settled a whistleblower retaliation complaint filed by a former C&O Canal chief ranger. The ranger had suffered nearly eight years of reprisals from the U.S. National Park Service (his employer).

The reprisals started once Robert M. Danno, the ranger, complained to the U.S. Department of the Interior’s Inspector General about improprieties in a treecutting arrangement along the scenic Potomac River. After reporting these improprieties, Danno was removed from his chief ranger position; stripped of his authority to carry a gun; wrongfully accused of theft, which led to criminal charges (of which he was acquitted); and eventually reassigned to issue picnic permits. In 2006, the Interior Department’s Inspector General found that the Park Service had violated its own policies, as originally reported by Danno, and continued to marginalize

DISCLOSURES

•

MAY/JUNE 2015

•

The Office of Personnel Management’s (OPM) “2013 Federal Employee Viewpoint Survey” (with similar numbers for 2014) shows “…no slowing of the ongoing decline in overall employee satisfaction across the federal government.” The government-wide “global satisfaction” index measures an employee’s willingness to recommend their organizations as a good places to work and indicates their overall job satisfaction. The global satisfaction u

HTTP://DISCLOSURES.VSCPA.COM

25

PRACTICE management

Employee tipoffs are the No. 1 fraud detection measure, according to Association of Certified Fraud Examiners.

index across all federal government sectors decreased from 63 percent positive responses in 2012 to 59 percent in 2013. In a 2010 survey, the index stood at 67 percent. Overall job satisfaction dropped from 68 to 65 percent, and recommending the organization as a good place to work decreased from 67 to 63 percent as pay satisfaction slid from 59 to 54 percent in 2013. Hopefully, the government is taking measures to fix this trend. A workplace environment where more than two thirds are satisfied with their job is the kind of workplace that cultivates and enriches employees.

adherence to these enhanced revisions would help reverse the trend and at least make for a better workplace.

As reported in The Washington Post, less than a third of employees say they think promotions in their offices are based on merit. When it comes to trusting senior leaders to maintain “high standards of honesty and integrity,” only 49.5 percent agreed, down from 53.6 percent in 2012.

Only 38 percent of employees agreed that their senior leaders inspire a high level of motivation and commitment to their jobs, down five points from 2012. Just half say senior leaders maintain high standards of honesty and integrity, down five points from 2012. Colleen M. Kelley, president of the National Treasury Employees Union, said in a statement that the 2014 survey “should serve as a wake-up call for federal managers to find creative ways within existing constraints to improve morale and employee retention.”

But it’s not all bad news. Recently reported in The Washington Post, when Thomas Perez took over as U.S. Secretary of Labor in July 2013, he and his leadership team set out to raise morale at an agency that had ranked near the bottom of the “Best Places” list for several years. They started one-onone meetings with employees; provided a suggestion box for new ways to do business; and implemented a program that offers employees a chance to work for several months in a different office or at a different job within the agency.

The Department of Veterans Affairs (VA) earned certification for whistleblower protection, a sign that the agency is correcting widespread problems with retaliation against employees who report wrongdoing. VA said it earned the certification in part by requiring supervisors, managers and executives to complete training on whistleblower rights and protections every two years.

WHISTLEBLOWING AND THE LAW Congress enacted the Whistleblower Protection Act of 1989 to protect whistleblowers from retaliatory personnel authorities. More recently, in 2012, the Whistleblower Protection Enhancement Act was passed and the Presidential Policy Directive was put into place, prompting numerous revisions to the Whistleblower Protection Act. Sen. Charles Grassley (R-Iowa), an original coauthor of the 1989 Act and advocate for better whistleblower protection, believed

26

DISCLOSURES

•

MAY/JUNE 2015

•

In March 2014, Grassley announced plans to create a Senate Caucus to uphold the Whistleblower Protection Act. He was quoted as saying whistleblowers are “… often treated like skunks at a picnic,” then adding, “Whistleblowers are a very important part of government operations.

By exposing waste, fraud and abuse, they work to help keep government honest and effective. For their loyalty, they are often penalized, fired, demoted and harassed.”

And a recent article in the American Institute of CPAs’ Journal of Accountancy suggested communicating to employers the importance of implementing a “hotline,” referring to it as an “open line” or “help line,” and ensuring the policy is not circumvented by establishing standardized steps.

HTTP://DISCLOSURES.VSCPA.COM

PRACTICE management

Lack of management review accounts for 23 percent of detected frauds.

THE PROBLEM WITH BULLYING Besides ineffective whistleblower policies and abuse, bullying can wreak havoc on employee morale. Anti-bullying programs have long been established in most of our nation’s grammar and high schools. Perhaps we shouldn’t have been surprised that the NFL will be the next to implement a nationwide antibullying program. In 2013, Coach Joe Philbin of the Miami Dolphins took the blame for allowing the environment within his organization to reach a toxic point. Philbin also acknowledged that the Jonathan Martin/Richie Incognito incident took a toll on the entire Miami Dolphins organization.

After the NFL’s Independent Council Report on the Martin/Incognito matter, owner Steven Ross stated, “We must work together toward a culture of civility and mutual respect for one another.” Further, Dolphins owner Stephen Ross has contracted with New York University School of Law, the New York University Center for Sports and Society, and the Jackie Robertson Foundation to implement “a curriculum which emphasizes accountability and educates athletes on a standard code of conduct, appropriate use of language, and the elimination of disrespectful and unacceptable behavior in sports, including discrimination or harassment because of race, gender or sexual orientation. We are also exploring possible legislation and conduct pledge that would be instituted in all organized sports throughout the country to elevate the core value of respect.”

In any event, what happened to the Miami Dolphins organization has turned out to be a very expensive

proposition. Few things are as dear to an NFL organization as early draft picks.

Benjamin Graham, regarding investing, once wrote, “…that price is what you pay and value is what you get.” In the case of Jonathan Martin, the son of two Harvard graduates, the perceived value to the Dolphins must have been both brawn and intelligence. With the left side of the Dolphins offensive line in rehabilitation, and millions of dollars down the drain, we are left to wonder about a good investment gone sour.

Part of any organization’s professional development program must be to listen to what is being said and understand what is being seen.

This isn’t a case of the old adage that “boys will be boys,” nor that fans just don’t understand life in the locker room.

Instead, this is an enterprise that has condoned an environment in which employees are not treated with mutual respect.

•

MAY/JUNE 2015

Next time you are walking down the hall for a cup of coffee, ask yourself: Is there bullying taking place in our corporate departments? Is our language reflective of our desired culture? Are our environment and interactions reflective of our mission?

Is someone stealing? Money? Integrity?

Image? How would we react to the fraud of one of our most productive managers bullying those in his/her department?

Are preventative measures in place?

How can damage done by those who act contradictory to our mission be rebuilt?

Fraudulent activity can be quantified through good forensic accounting once a whistleblower policy is in place. However, how much cost or damage is caused by bullying and contrary behavior?

Not all organizations are in a position as fortunate as the Miami Dolphins to assemble a team of universities, foundations, and lawyers to repair the damage done to their mission and reputation. We need to follow in the footsteps of Harry Morgan, who both whistled and listened. n

All too often, today’s corporate mission statements are catchy taglines serving more as advertisements rather than reflecting the entities’ core values.

On the TV show “Undercover Boss,” many times the owner is shocked by the abusive behavior of one of his/her managers. After the occasional mishap, the aforementioned managing partner used to say, “…there is the company I think I run, and there is the company I actually run.” It all boils down to a lack of management connectivity. Even the ACFE report states, where ineffective internal controls contributed to 37 percent of the detected fraud, lack of management review accounted for 23 percent of detected frauds. Basically, management needs to stay connected.

DISCLOSURES

IT PAYS TO PAY ATTENTION

PETER B. REILLY, CPA, CVA, is president and managing partner of Councilor, Buchanan & Mitchell, PC. He co-authored the book, “Minding Your Family Owned & Managed Business” and teaches accounting Northern Virginia Community College. preilly@cbmcpa.com

•

HTTP://DISCLOSURES.VSCPA.COM

27

VSCPA news

Participants in the 2014 VSCPA Leadership Academy brainstorm and share ideas during a strategy building activity.

EDUCATORS: GET THE UPDATES YOU NEED AT THE EDUCATORS’ SYMPOSIUM ON JUNE 4 You’re continuously helping students in

the classroom, so now it’s your turn to sit back and let the VSCPA provide you with helpful resources you can take back to your college or university. Explore trends, share ideas and discuss important topics affecting the CPA profession and academia. Session highlights include:

CALLING YOUNG PROFESSIONALS>>

The VSCPA Leadership Academy is for you!

>> Ways to prepare students for the school-to-work transition from a recruiter’s perspective >> The next version of the CPA Exam launching in 2017

The VSCPA is pleased to announce its third annual Leadership Academy, set for Nov. 16–18 at the CPA Center in Glen Allen. Young CPAs will delve into identifying and cultivating their leadership strengths in order to develop skills they need to excel in the CPA profession. To be eligible for the Academy, applicants must be VSCPA members aged 35 and under with a valid CPA license and at least three years of experience in the CPA profession.

Visit vscpa.com/LeadershipAcademy to learn more.

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

1 CPE e the ious

• • • • •

Online Programs Planning Task Force Speaking & Community Engagement Ask a CPA Email Program Chapter Officer VSCPA Writer

Visit www.vscpa.com/VolunteerSchedule for more.

28

DISCLOSURES

•

MAY/JUNE 2015

•

n

n

>> Virginia Board of Accountancy (VBOA) initiatives impacting students, CPA Exam candidates, educators and Virginia CPAs >> Federal financial reporting >> Teaching with case materials >> And more The Symposium will take place at the CPA Center in Glen Allen.

Educators can also satisfy their annual 2-hour Ethics requirement by taking Virginia CPA Ethics: 2015 Required Course from 4:30 – 6:10 p.m. Separate registration required. Visit vscpa.com/ES to sign up! n

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

HTTP://DISCLOSURES.VSCPA.COM

VSCPA news

Congratulations to the following members!

APPOINTMENTS & AWARDS >>

MERGERS & ACQUISITIONS >>

SEAN O’CONNELL, CPA, of PBMares in Fairfax, was named chairman of the Mount Vernon-Lee Chamber of Commerce.

Richmond firms CHRISTOPHER A. ENRIGHT, CPA, and E. DOUGLAS WRIGHT have merged.

FIRM NEWS >>

PBMARES has acquired Baltimore firm TMDG. n

NEW HIRES >>

DIXON HUGHES GOODMAN has moved its Richmond-area office from Innsbrook in Glen Allen to the James Center in Downtown Richmond, on the 10th floor of 901 E. Cary Street.

LAURA ANDERSON, CPA, BRANDON GROGAN and JONATHAN WRIGHT, CPA, have joined Harris, Harvey & Neal in Danville as staff accountants.

Alexandria firm HALT, BUZAS & POWELL was ranked No. 28 on the Washington Business Journal’s 2015 list of the region’s top 50 accounting firms.

JOHN JOBE, CPA, has joined Cherry Bekaert in Richmond as a partner in the firm’s assurance practice.

McGLADREY has moved its Richmond office to the SunTrust Center at 919 East Main Street.

Sean O’Connell, CPA, and Adrian Taylor, CPA

TIMOTHY ROSS, CPA, has joined CohnReznick in Tysons Corner as a partner in the firm’s corporate tax practice.

PROMOTIONS >> RENE CHAZE, CPA, was named chief operating officer at Edelman Financial Services in McLean.

THOMAS CHERRY, CPA, has been promoted to president of C&F Financial Corporation and C&F Bank in Williamsburg.

Yount, Hyde & Barbour in Winchester announced four new principals: JENNIFER FILES, CPA, CHRIS FRYE, CPA, DAVID HENNING, CPA, and ADRIAN TAYLOR, CPA. JENNICA JARDINE WHITFIELD, CPA, has been promoted to manager at Alexandria firm Kozitska, Wicks & Co.

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

>> THE VSCPA’S NEWEST CPAs CHRIS NICKLE TRUMAINE PENDLETON MARY PRIESTER EVGENIY RIKOV MOLLY RYAN KRISTEN SALMON JOSH SHEFFEY MEREDITH SLAUGHTER AARON SWEGER TYLER TURNEY JAIME ULLOA STEVE WHITEHEAD NATALYA YASHINA HANG ZHAO JOHN ZIRONDOMU

ANMOL BAL MICHAEL BEATSON ANETA BROCATO RACHEL CASSIDY FRED FANUCCI LYDIA HEATWOLE LUCIA HONG TIMM HWANG CINDY KALKWARF JENNIFER KENNEDY AHMAD KHAN HANNAH KULAKOW KATIE LAICHE CHRIS MAYS TANISHA MCNEIL JUSTIN NANCE

List from February and March. Compiled March 25, 2015.

DISCLOSURES

•

MAY/JUNE 2015

•

n

HTTP://DISCLOSURES.VSCPA.COM

29

VSCPA news

Staff news We mourn the loss of: J. DENNIS FARRELL, CPA, a VSCPA life member from Mechanicsville. A partner at Farrell & Zarnegar CPAs and a U.S. Army veteran, he graduated from the University of Richmond and was an active member of St. Ann’s Catholic Church in Ashland. He served on the VSCPA Peer Review Committee from 1994–1999.

Top: Maureen Dingus, CAE, Beth Bickford, CPA, Emily Walker, CAE, Darshae Dabney. Bottom: Janie Medley, Diane Jones, Tara Pennington.

MAUREEN DINGUS, CAE, has been promoted to chief operating officer at the VSCPA. BETH BICKFORD, CPA, has been promoted to vice president of finance and administration and EMILY WALKER, CAE, has been promoted to vice president of advocacy. DARSHAE DABNEY has been promoted to regulatory and legislative affairs manager.

Two employees celebrate their ninth anniversary with the VSCPA:

JOHN NEWBY, CPA, of Norfolk. The longtime controller at Domestic Fuels and Lubes in Chesapeake, he graduated from Old Dominion University and was a member of Coastal Community Church in Virginia Beach. He served as treasurer of the Windsurfing Enthusiasts of Tidewater.

Education Specialist JANIE MEDLEY on June 5 and Finance and Human Resources Manager DIANE JONES on June 19.

WILLIAM TEMPLE, CPA, of Chesapeake. A U.S. Air Force veteran, he graduated from Old Dominion University and was a member of Centerville Baptist Church. n

Chief Operating Officer MAUREEN DINGUS, CAE, celebrates her eighth anniversary with the VSCPA on May 15.

Education Coordinator TARA PENNINGTON marks three years with the VSCPA on June 18. n

>> STAFF SPOTLIGHT: BRENDA FOGG, CAE, IOM TITLE: Member Relations Director

with their alumni associations.

BIRTHPLACE: Newtown, a small country town about an hour from Richmond

WHAT’S YOUR FAVORITE PART OF YOUR JOB? My favorite part of my job has to be spending time with our members and getting to know them.

If I have too much time in the office without interacting with our members, I start to get antsy. I am astonished at all the interesting ways that our members have parlayed their CPA licenses

PREVIOUS JOB: Most of my career has been in the association field. Prior to coming to the VSCPA, I worked for my alma mater, the University of Richmond (UR), in the alumni office and

30

DISCLOSURES

•

MAY/JUNE 2015

•

into rewarding careers. The CPA profession is versatile, challenging and fascinating. I also like getting to know our members outside of their work … what they enjoy doing! n

HTTP://DISCLOSURES.VSCPA.COM

VSCPA news

1

2

4

3

5

>> WHO’S WHO 1.

(Front row, from left) Employees of McPhillips, Roberts & Deans, in Norfolk, took pies in the face for National Pi Day on March 14. The firm raffled off the opportunity to smash the pies and raised $3,140 for PAWS of Hertford County, N.C.

2.

Lauren Hill, left, and Mandy Nevius of Keiter visited the VSCPA for a presentation on March 28.

3.

(From left), Steven Moos, CPA, WJLA reporter Kimberly Suiters, Glenn Shelton, CPA, Monique Ford, CPA, and Ernie Sanders, CPA, pose after members worked a tax phone bank at WJLA in Washington, D.C.

4.

Julie Deaver, CPA, of Fahrenheit Finance, gave a presentation at the VSCPA on March 28.

5.

(From left) Thomas Blackburn, CPA, Jim Shepherd, CPA, David Berry, CPA, and Tommy Turner, CPA, take tax-related questions on the NBC 12 Tax Call-In Show on March 16. n

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

31

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 Black Marlin CPA (Ann Black CPA 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 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

32

DISCLOSURES

•

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 Fritz & Company, PC G4 CPA Firm, Inc. 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 Hogan & Reed, PC, CPAs Holland & Brown LLP Homes, Lowry, Horn & Johnson, Ltd. Honeycutt & McGuire CPAs Hortenstine and McCown, CPAs, PC Hottel & Willis, PC 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 & Company CPA, LLC Jones CPA Group, PC Jones, Madden & Council, PLC Jones & McIntyre, PLLC

MAY/JUNE 2015

•

JS Morlu, LLC 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 Meadows Urquhart Acree & Cook, LLP Michael B. Cooke, CPA, PC Michael R. Anliker, CPA, PC Mitchell, Wiggins & Company, LLP Moss & Riggs, PLLC Murray, Jonson, White & Associates, Ltd., PC Nicholas, Jones & Co., PLC Norris & Associates, PC PBMares, LLP Pearson&Co., PC R.P. Willis, PC R.T. McCalpin & Associates Renner & Company, CPAs, PC Ritchie, Withers & Masincup PC Robb Scott Bradshaw & Rawls, PC Robinson Consulting Group Roger L. Handy, PC Rubin, Koehmstedt & Nadler, PLC Russell, Evans & Thompson, PLLC Rutherford & Johnson, PC

HTTP://DISCLOSURES.VSCPA.COM

Salter & Associates, PC Saunders, Matthews & Pfitzner, PLLC Scheulen, Patchett & Edwards, PC Sells Hogg & Associates CPAs, PC Sherman, Spero & Safarino, Ltd. Spencer, Hager & Mosdell, PC Spitler, Stephens & Associates PLLC Stephen Merritt CPA, PC Stephen F. Perry, PC Stephen T. Shickel, CPA, PLC Steve Guy & Associates, PC Steve Walls & Associates, PLLC Stokes Office Solutions LLC Sullivan, Andrews & Taylor PC The Cahill Group, LLC The Davidson Group, PC The Foley Group, Ltd. Thomas E. Fraley, CPA Thompson Greenspon Tongelidis Consulting, LLC Updegrove, Combs & McDaniel, PLC Valderas Financial Solutions LLC Verus Financial Partners Wall, Einhorn & Chernitzer W.D. Sanders & Company, PC Wells Coleman Wilkinson Consulting & CPA PLC William B. May Jr., CPA, PC Wineholt & Associates, PC Yancey, Miller & Bowman, CPAs PLLC Yount, Hyde & Barbour, PC Compiled March 31, 2015.

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

VSCPA educational foundation

Scholarships In Action “The VSCPA Minority Scholarship allows me to explore the various aspects of accounting, such as intermediate and forensics accounting in my junior year of study. I am grateful that I have a chance to take advantage of this amazing educational experience.”

— Raven McGriff, 2014 Minority Scholarship Recipient

Join us in supporting students like Raven by contributing online at vscpafoundation.com.

Virginia Beach Retreat July 7–9, 2015 | Hilton Virginia Beach Oceanfront Grab your flip-flops and head to the beach for sun and CPE! Earn up to 26 CPE credits on topics including: • Accounting and auditing • Tax • Managerial accounting • Ethics vscpa.com/VABeachRetreat | #VABeachRetreat

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

33

I AM the vscpa BREAKING WITH FAMILY TRADITION >>

Two minutes with Vugar Shahtakhtinskiy

VUGAR SHAHTAKHTINSKIY, CPA >>

Extending CPAs’ influence to the government arena.

Vugar Shahtakhtinskiy, CPA, is a controller for CORT Business Services in Chantilly, where he has worked for the last 15 years. A native of Azerbaijan, he obtained his master’s in business administration from the University of New Orleans before moving to Virginia.

He has served on the VSCPA Educational Foundation Board of Directors since 2010 and has volunteered for the Society as a speaker and mentor. He lives in Alexandria with his wife, Gunay, and their two children.

I AM PASSIONATE ABOUT… Sharing my knowledge to help people in my community succeed in their personal and professional lives.

34

DISCLOSURES

•

MAY/JUNE 2015

PEOPLE DON’T KNOW THIS, BUT… I love outdoor activities and enjoy spending long hours in nature alone or with friends and family.

IF I WEREN’T AN ACCOUNTANT, I WOULD BE… Teaching finance. Before I completed my MBA program, my finance professor asked me to consider staying for a Ph.D. program in finance. It was not easy to decide to start my career in industry because I grew up in a family of college professors and knew I would enjoy teaching.

MY ADVICE TO FELLOW CPAs IS… Not to forget to give back and support your

•

profession by helping future generations understand its value.

I NEVER LEAVE HOME WITHOUT… Checking on my children. I consider my family as the most important achievement in my life.

I WISH CPAs KNEW… How much their knowledge and skills are needed for basic financial literacy in their communities.

I’M A CPA BECAUSE… I love the profession where I can help others to succeed and make a good living for my family at the same time. n

HTTP://DISCLOSURES.VSCPA.COM

CLASSIFIEDS GROWTH, SALES & ACQUISITIONS

POSITION AVAILABLE

BUYING OR SELLING AN ACCOUNTING PRACTICE? Selling? Download our FREE succession planning guide to getting your practice ready for market!

TAX ATTORNEY Glenn Feldmann Darby & Goodlatte, a Roanoke law firm seeks Tax Attorney. Ideal candidate will have five years’ experience in corporate tax and LL.M. in Taxation. Great Opportunity! Send letter of interest and resume and/or questions to employment@glennfeldmann.com

Buying? When you buy an accounting practice from Poe Group Advisors, not only will you get a great practice, you’ll get insight. We take special care to thoroughly understand each practice we sell. That understanding — combined with our years of unmatched experience with successful transitions of accounting practices — helps you get the valuable insight to help you succeed.

Please visit www.PoeGroupAdvisors.com or email us at info@poegroupadvisors.com. 888-246-0974 VA1054 Virginia Beach, VA VA1057 Richmond, VA

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

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

$399,000.00 $425,000.00

Looking for a change of scenery?

We will identify suitable candidates to carry on the success of the CPA firm you’ve worked hard to build. When the time comes to breeze into the next phase of life, we’ll be here to support the entire transition with our proven 5-step Seamless Succession™ process.

Thinking of selling? Learn about our unique process by going online to PoeGroupAdvisors.com or by scanning the code with your smart phone.

(Download the free Kaywa Reader in the app store.)

PoeGroupAdvisors.com • 1-888-246-0974 • info@poegroupadvisors.com

DISCLOSURES

•

MAY/JUNE 2015

•

HTTP://DISCLOSURES.VSCPA.COM

35

PRSRT STD US POSTAGE PAID PPCO

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

Change service requested

For complex valuation and forensic projects...

You need the Keiter team.

Josh Pruitt CPA/ABV, ASA, CFE

Ethan Hitchcock CPA

Harold Martin CPA/ABV/CFF, ASA, CFE

Forensic Services

Valuation › › › › › › › › ›

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

Asif Charania CPA/ABV, ASA

Greg Saunders

Litigation

Financial Investigations

› › › › › › › › ›

› › › › ›

Shareholder/Partner Disputes Breach of Contract Business Interruption Divorce Intellectual Property Infringement Post-Acquisition Disputes Securities Tortious Interference Wrongful Termination

Employee Embezzlement Management Fraud Investment Scams Vendor/Customer Fraud Computer Forensics

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