November/December 2013 - Florida CPA Today | Volume 29, Number 6

F L O R I D A

florida C P A

TODAY

contents NOVEMBER/DECEMBER 2013

VOLUME 29, NUMBER 5

A P U B L I C AT I O N O F T H E F LO R I DA I N S T I T U T E O F C E R T I F I E D P U B L I C A C C O U N TA N T S

cover story

24

departments 5

Chair’s message

18 News briefs 28 Staff reports 34 On the move 36 Marketplace

The Affordable Care Act FICPA Offers Private Health-insurance Exchange

features 6

FICPA Membership What’s in it for you?

10

FICPA Launches Exclusive Social-media Platform

14 16 20 30

Stronger Together: Focused on the PAC

32

Web Digest Independence and the 2011 Government Auditing Standards

38 DOR update

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CPAs Rock Annual Accounting Show Clients: Knowing When to Walk Away CPA Expert Witnesses, Beware Say Goodbye to Frye, Bonjour to Daubert

FLORIDA CPA TODAY

www.ficpa.org

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F L O R I D A

PRESIDENT/CEO Deborah L. Curry, CPA, CGMA SR. DIRECTOR OF MARKETING & COMMUNICATIONS Jan Dobson, CAE, IOM EDITOR Suellen D. Wilkins GRAPHIC DESIGNER Loleta K. Bolden PUBLICATIONS COORDINATOR Dianne Dearduff EDITORIAL COMMITTEE Michael S. Kridel, CPA, chair David J. Hochsprung, vice chair Douglas E. Day, CPA • Lynda M. Dennis, CPA

www.ficpa.org/PACcontribute FICPA Governmental Affairs Department | (800) 342-3197 Contributions are strictly voluntary and are not deductible for federal tax purposes. The Florida CPA/PAC is an entity completely separate from the FICPA. The Florida CPA/PAC is supported solely by the voluntary contributions of members of the FICPA and others. The Florida CPA/PAC is register as a corporation with the Florida Division of Corporations and as a Political Committee with the Florida Department of State.

Casey A. Fletcher, CPA • Troy Y. Manning, CPA Vicki H. Meyer, CPA William C. Quilliam, CPA, Ph.D. All articles submitted to Florida CPA Today are subject to technical review, Editorial Committee review, space availability and editing requirements and restrictions. Please contact the editor before submitting unsolicited manuscripts.

Florida CPA Today publishes letters to the editor in its Members’ Forum. For information about the guidelines, visit www.ficpa.org/letterstoeditor.

Statements expressed herein are those of the identified authors and not necessarily those of the Florida Institute of Certified Public Accountants, Inc., nor should statements be considered endorsements of products, procedures or otherwise.

The FICPA reserves the right to reject any editorial material or paid advertising that does not meet Florida CPA Today criteria or detracts from its ethical and professional standards.

PENSERVCO

Florida CPA Today is published bimonthly by the Florida Institute of Certified Public Accountants, Inc., P.O. Box 5437, Tallahassee, FL 32314. Telephone: (850) 224-2727 or (800) 342-3197. (Street address: 325 West College Ave., Tallahassee, FL 32301.) Visit our website at www.ficpa.org.

This magazine is provided to members of the FICPA. No specific amount of your dues, either expressed or implied, is for this publication. This magazine is not available for purchase by either FICPA members or nonmembers.

For display advertising information, contact the FICPA Marketing Department at (850) 224-2727, Ext. 270. © 2013 by the Florida Institute of Certified Public Accountants, Inc. All rights reserved. Reproduction in whole or part is prohibited without the express written consent of the FICPA.

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chair’s M E S S A G E

CPA Insurance Marketplace is Open for Business!

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believe our members, like many business people, are overwhelmed by the responsibility of finding health care and other types of insurance for themselves and their employees. Our latest member benefit – CPA Insurance Marketplace – is open and ready to save you significant time.

To help members avoid shopping all over for health insurance, we’ve created a Marketplace of choice. There you’ll find a range of health and other insurance plans from leading providers in one easy-tonavigate website.

The Marketplace website is managed by Member Benefits Inc. They are licensed insurance experts who can answer your questions and, upon request, assist you with quotes and other insurance-decision support.

To get started, read the cover story on page 24; visit www.memberbenefits.com/ficpa; or call Member Benefits at (800) 282-8626.

Plans can become effective as early as Jan. 1, 2014, so now is the time to find out what the Marketplace can do for you.

As excited as I am about the new insurance benefit, I’m still recovering from 2013 tax filings. It was Benjamin Franklin who said, “Certainty? In this world nothing is certain but death and taxes.” I think old Ben would be surprised to learn just how difficult timely tax payment compliance has become, thanks to all the tax-return due dates.

In talking with CPAs throughout Florida, I know I’m not the only one who thinks we just survived the worst tax seasons ever.

The AICPA summed up the mind-boggling process well: “Schedules K-1 arrive late, FLORIDA CPA TODAY

Ken Strauss, CPA

sometimes within days (before or after) of the due date of their personal returns and up to a month after the due date of their business returns. Late K-1s make it difficult, if not impossible, to file a timely, accurate return.”

The AICPA and your Florida AICPA Council members, together with CPA leaders throughout the country, are working to make things better – and change can’t come soon enough. Last May, more than 400 Council members met with their members of Congress to share their views on tax reform and to express support for H.R. 901 and S. 420, the Tax Return Due Date Simplification and Modernization Act of 2013.

The Act would improve tax administration by establishing due dates focused on promoting a chronologically correct flow of information between pass-through entities and their owners. I urge you to lend your support to tax reform and to read more about the AICPA Recommendations here: www.aicpa.org/interestareas/tax/ resources/taxlegislationpolicy/pages/ duedatesproposal2010.aspx.

With tax season thankfully behind us, I am reminded of another bit of wisdom from Ben Franklin: “Never leave that till tomorrow which you can do today.” As we approach the holidays, Franklin’s words ring especially true. Let’s all use today to express appreciation to our colleagues, family and friends. We have so much to be thankful for.

Wishing you all the season’s joys.

FCT

www.ficpa.org

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FICPA Membership

What’s in it for you?

By Lynn Hepner, FICPA membership development manager, and Dr. Will Quilliam, CPA, CIA

T

he FICPA was founded in 1905 by four men whose vision helped establish public accounting as a highly respected profession.

Their lobbying efforts created the first accountancy law in the southern states, as well as an accountancy exam.

Reorganized in 1916 as the Florida Society of Certified Public Accountants, we were one of the first societies to tackle state-level issues. These included unlicensed activity; mandatory CPE; defining the practice of public accounting in Florida; the debate about mandatory peer review; allowing national firms into the state; and the fifth-year/150-hour requirement.

In 1955, with 811 members, the Society was renamed the FICPA. The Institute moved its headquarters from Gainesville to Tallahassee, which was instrumental in monitoring accountancy issues in the Legislature. Thanks to our founders – and you – we now are more than 18,500

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members strong. Because our profession traditionally was male dominated, 98 percent of our Life Members are male. Today’s membership has a more even gender distribution.

The Baby Boomers are retiring in record numbers.

Twenty-eight percent of our members are older than 60.

This means we need to replace 5,215 members of our profession. Excluding our student members, associate members and non-CPAs, the percentage grows to 32 percent. A substantial percentage retired this year, but many have remained members.

We like nothing better than to see our members succeed, and eventually to retire with us. We are committed to you, and to the profession. FCT For more information contact Lynn Hepner, FICPA membership development manager, at (800) 342-3197, Ext. 350 or hepnerl@ficpa.org.

Here’s What’s in it For You

Student Staff Accountant CPAs Owner/Partner CPAs in Industry CPAs in Public Accounting CPAs in Government Accounting Educator Firm Administrator (Non-CPA) Retired

Advocacy x x x x x x x x x

CPE x x x x x x P x

Preferred Member Saving Opportunity Communities Programs Engine x x x x x x x x x x x x x x x x x x x x x

Networking & Leadership Opportunities x x x x x x x x x

Insurance Programs x x x x x x x

Table 1: Benefits by membership category

Your Voice, Your Association, Your Future Here’s what members in various membership categories have said about the value of belonging to the FICPA. Student Member Elizabeth Hewey “FICPA leaders have innovatively multiplied human capital by offering student memberships. You could call this the WOW factor – it differentiates our leaders as being willing to be a little unconventional if it means that they can better serve the needs of the profession.

“Giving students opportunities to engage with the best minds in their field is an excellent expansion of the classroom experience. Imagine listening to a lecture about corporate tax issues from Dr. Roger W. Guyette, a renowned professor in the accounting and finance department of the University of West Florida (UWF), then attending a West Florida Chapter meeting with community CPA experts grappling with corporate tax issues. The best part is that students participate in both, making this a 360-degree educational experience. Could there be a more adventurous, creative way of crafting the future?

“UWF College of Business administrators, faculty and staff work diligently to build lasting organizational and business partnerships on the students’ behalf. As a leading stakeholder in this endeavor, the FICPA provides FLORIDA CPA TODAY

important scholarships, mentoring and professional leadership. The fact that the FICPA elevates students into this professional experience is invaluable. We thank the FICPA leaders and the West Florida Chapter members for inspiring us with the WOW factor.”

Student Member Kenneth Keenan “I became an FICPA student member more than a year ago because of the tools, resources and opportunities membership provides. Since then, I’ve received internship opportunities through professionals I’ve met at local chapter meetings. The FICPA offers invaluable resources on qualifying to sit for the CPA exam and entering the profession. Most importantly, I’ve maintained relationships with members I trust, and from whom I can seek career advice. It’s the place to be as a student transitioning into the accounting profession.”

Life Member Michael Stone “I’ve been an FICPA member for more than 40 years. I joined because I wanted to meet and interact with other CPAs, and because I knew of no other organization that took steps to protect our profession.

I’ve served on committees, as a regional representative and on the Board of Governors. My involvement has allowed me to be ➡ www.ficpa.org

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proactive in the development of our profession. I require that my staff members get involved with our local chapter early in their careers. I highly recommend that every Florida CPA become an active FICPA member.”

Partner/Owner Member Mindy Rankin “Our local chapter meetings have been a tremendous asset to my small firm because of the outstanding CPE. In our rural area, live CPE is at a premium. The FICPA has provided us with top-notch speakers and relevant topics. At one course, Mark Whitacre, the character Matt Damon portrayed in the movie “The Informant,” gave exciting testimony on committing fraud in a large Fortune 500 Company. It was the most interesting CPE we’d ever had. And because it was affordable and local, the entire office attended and gained valuable insight.”

Student Member and Foundation Scholarship Recipient Matthew Buck “Through the generosity of the FICPA’s Educational Foundation, I’ve achieved one of my greatest accomplishments: earning my accounting degree and completing the 150 hours required for licensure. The scholarship has been an important part of my journey toward becoming a CPA. Through its student memberships, the FICPA connects accounting students with various Florida activities and events, and provides resources to students interested in accounting careers.”

Get What You Need

Take the FICPA Membership Survey

The value of FICPA membership is in the eyes of each member, and needs differ. But many members aren’t aware of the array of benefits the FICPA offers – or that what they save through their benefits can help pay for their annual membership dues.

To ensure that we stay strong, and that we have a succession-planning strategy in place, the FICPA needs your ideas and feedback. Retaining our current members and recruiting new ones is crucial. With more than 5,300 registered CPA firms in the Florida, our work is cut out for us. Offering the right mix of benefits in each of our membership categories is a priority, and a challenge.

Table 1 on page 7 has a summary of the benefits in each of our membership categories. Please tell us your story and let us know how we can help you by taking our membership survey at www.ficpa.org/ BenefitsSurvey.

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Young CPA Member Ashley Fagan “My involvement with various FICPA committees has significantly expanded my professional network with other Florida CPAs. Those connections are invaluable as I progress and branch out in my career. It also has been a privilege volunteering for the Institute in ways that have a direct impact on current and future Florida CPAs. It’s professionally and personally rewarding to see the efforts of the Institute’s staff and volunteers translate into tangible membership benefits.”

Retired Member Joseph Cote “I’ve been a CPA since 1970 and I’ve worked in many different areas in the profession – public accounting, industry, education and not-for-profit.

All have been rewarding. But wherever I worked, I stayed involved in professional accounting associations, at the national and state levels. Since I retired in January 2011, I’ve found that professional associations are the best way to stay informed and connected.

“The FICPA’s publications and website are a wonderful source of information. I’ve joined a couple of FICPA committees to stay current, and to give back to the profession that’s been so good to me. I’m enjoying retirement, but I still want to know what’s happening. Perhaps its ‘professional’ or ‘idle’ curiosity – or maybe I’m affirming the wisdom of my career choices – but I like to know what others are doing, and if there’s anything I should learn from or contribute to events. It’s fun! As a retired person, I can ‘spy’ on others without feeling the angst of responsibility. It’s nice to be laid back in an informed way.”

Accounting Educator Members Lynn Clements, John Stancil and Will Quilliam “Our FICPA membership is invaluable. We strongly urge all accounting educators to join and reap the wonderful benefits.

The FICPA has helped us and our students during our years as active members. We’ve served in leadership positions, participated on committees and met numerous CPAs. The FICPA provides us with speaking opportunities and interaction with practicing CPAs, keeping us abreast of the issues and changes they face.

We enjoy giving back to the profession we love, and our students benefit from our FICPA networking relationships.

Because we can quickly identify “good fit” internship and job opportunities, our FICPA involvement enhances our credibility with our students and administration.” FCT

FLORIDA CPA TODAY

www.ficpa.org

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FICPA Launches Exclusive Social-media Platform

By Dave Cone, FICPA senior webmaster

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n the world of Facebook, Twitter, Instagram, Pinterest, YouTube and the throng of other socialmedia platforms, it can be hard to know where to turn for trusted information – especially CPA-related information.

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Enter FICPA Connect: The social-media platform dedicated to Florida CPAs. The FICPA launched the new platform – its very own – in October. The goal is to give members a dedicated spot

How do I log into FICPA Connect?

Go to www.ficpa.org/connect and enter your FICPA.org website username and password.

Does it cost anything to use?

No. FICPA Connect is included with membership. on the Web to interact, learn and connect with other Florida CPAs. “FICPA Connect is an upgrade to our wildly successful, member-exclusive Listserv area,” FICPA President/CEO Deborah Curry said. “We built the new platform with our members in mind and it has many memberrequested features.”

From username and password logins to the overall look and feel, we’ve seamlessly integrated the platform into the current ficpa.org website.

And although FICPA Connect is much more than a Listserv, this functionality is deeply rooted in the new design.

The platform has the Listserv features on which FICPA members rely.

I need to create a specific group that fits my needs.

Is this possible?

Yes. Any member may request a new group.

Can I start new topic and reply to discussions via email, as with the old Listserv?

Yes. Are discussions moderated like the Listserv was?

Yes. FICPA staff moderate all discussions and users must adhere to FICPA website policies.

Can I update my profile via the web?

Yes. Simply log into FICPA Connect and click My Profile, then Update Profile.

“The Listserv discussion forums and email notifications, and the ability to post replies via email, were at the forefront during pre-design meetings.

We wanted to expand the areas members were using,” Director of Technology Cyrus Yazdanpanah said.

With the Listserv functionality (now called discussions) intact, new features take the spotlight. One of the best is the ability to create a private social space for all FICPA member groups. Committees, sections, section leaders, chapter officers, member firms and any other group can have their own group in FICPA Connect.

Members also can request to have a new group created if there isn’t one that fulfills their needs. These groups facilitate the collaboration and ➡ FLORIDA CPA TODAY

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interaction members have asked for and allow discourse at the desired interest level.

job history, as well as personal blogs where members can share their ideas.

Groups also have the ability to share resources. Each group has a dedicated area for uploading documents, images and files.

Curry believes FICPA Connect is a resource that will significantly benefit members in their day-to-day business operations. She says it’s a step into the future direction of the profession.

“This is a great feature in FICPA Connect. Now members can more easily share not only ideas, but documents outlining those ideas,” Yazdanpanah said. “This allows for more effective collaboration.”

Users also will have access to features such as group news, events and links, as well as Facebook feeds.

FICPA Connect also includes private messages, letting members connect with one or more fellow members, committee members, employees and/or FICPA staff outside the group setting. Private messages make it easy to reach out to others via an integrated user-search feature. There also are rich user profiles housing members’ company information, position, biography, interests and

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“As one of the country’s premier CPA associations, our goal is to give CPAs tools that will help with their incredibly demanding jobs,” Curry said. “FICPA Connect will do just that.” FCT Dave Cone is the FICPA’s senior webmaster. He can be reached at (800) 342-3197, Ext. 388, or dcone@ficpa.org.

Log into FICPA Connect at

www.ficpa.org/connect

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S

ince 1905, Florida CPAs have understood the power of having a collective voice in Tallahassee to maintain the value of the CPA certificate. More than 100 years later, the FICPA’s advocacy efforts through the Florida CPA/PAC (PAC) help ensure that the profession remains front and center with Florida leaders and participates in the democratic process.

Antonio L. Argiz MBAF

W. David Ellrich Jr.

Moore, Ellrich & Neal, PA

Karyl H. Neal

Moore, Ellrich & Neal, PA

C. Todd Burg

McClanathan, Burg & Associates, LLC

Blain Heckaman

Kaufman, Rossin & Co.

Anthony M. Palermo

Ahearn, Jasco & Company, PA

Lori R. Sims

CliftonLarsonAllen LLP

Matt C. Smith

Matthew S. Stohlman Moore, Ellrich & Neal, PA

Moore, Ellrich & Neal, PA

Winston Howell

Marshall D. Gunn Jr.

Jeffrey P. McClanathan

Moore, Ellrich & Neal, PA

Thomas Howell Ferguson, PA, CPAs

Ronald E. Jackson Saltmarsh, Cleaveland & Gund

GunnChamberlain, PL

Byron E. Shinn

Shinn & Company, LLC

W. Henry (Hank) Hurst Jr. Frederick Carroll 14 NOVEMBER/DECEMBER The Hurst Company, CPAs, 2013 PA Carroll and Company, CPAs

Terri Melton

McClanathan, Burg & Associates, LLC

Michael Stone

Stone, Parker & Company, CPA, PA

Jeffrey Tuscan

Tuscan & Company, PA

In 2012, more than 390 candidates vied for election to the Florida Legislature’s160 seats.

The PAC was actively engaged in the extensive screening of all candidates on behalf of the FICPA membership. As a result, the PAC successfully helped elect 88 percent of the candidates it supported.

The PAC relies heavily on the support of FICPA members who know the value of electing candidates who understand the profession.

Many members contribute individually and 15 firms have joined the PAC’s efforts this year through the Top 250 firm-fundraising campaign.

Firms that participate in the annual campaign help ensure the profession is represented at the highest level, and that it supports candidates who best represent CPAs. “We couldn’t be effective advocates on behalf of the FICPA membership without those who support the Florida CPA/PAC,” said FICPA President/CEO Deborah Curry, CPA, CGMA. “They are the leaders in our profession.”

Term limits in the Legislature, along with Florida’s ever-changing political landscape, make it even more crucial for CPAs to be engaged in the political process. The firms supporting the Top 250 campaign are protecting what generations before them built. We hope many others will join their efforts to maintain the profession’s visibility among the leaders who impact it.

Again, we thank these firms and managing partners for keeping your Florida CPA/PAC, and the CPA profession, front and center. FCT

Stronger Together: Focused on the PAC Platinum Club ($5,000) MBAF Kaufman, Rossin & Co.

Antonio L. Argiz Blain Heckaman

Miami Miami

Gold Club ($2,000) Ahearn, Jasco & Company, PA CliftonLarsonAllen LLP Moore, Ellrich & Neal, PA

Thomas Howell Ferguson, PA, CPAs

Anthony M. Palermo Lori R. Sims W. David Ellrich Jr. Matt C. Smith Matthew S. Stohlman Terri Melton Karyl H. Neal Winston Howell

Pompano Beach Orlando Palm Beach Gardens

Tallahassee

Silver Club ($1,000) Gregory, Sharer & Stuart GunnChamberlain, PL McClanathan, Burg & Associates, LLC

Saltmarsh, Cleaveland & Gund Shinn & Company, LLC Stone, Parker & Company, CPA, PA The Hurst Company, CPAs, PA

James G. Newman Marshall D. Gunn Jr. Jeffrey P. McClanathan C. Todd Burg Ronald E. Jackson Byron E. Shinn Michael Stone W. Henry (Hank) Hurst Jr.

St. Petersburg Jacksonville St. Petersburg Pensacola Bradenton Port Richey Amelia Island

Bronze Club ($500) Carroll and Company, CPAs Tuscan & Company, PA

Frederick Carroll Jeffrey Tuscan

Tallahassee Fort Myers

Help support our Florida CPA/PAC by contributing online today at

www.ficpa.org/paccontribute

Contributions are strictly voluntary and are not deductible for federal tax purposes. The Florida CPA/PAC is an entity completely separate from the FICPA. The Florida CPA/PAC is supported solely by the voluntary contributions of members of the FICPA and others. The Florida CPA/PAC is register as a corporation with the Florida Division of Corporations and as a Political Committee with the Florida Department of State.

FLORIDA CPA TODAY

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CPAs Rock Annual

By Jan Dobson, FICPA senior director of marketing and communications

Lance Mirrer of Pembroke Pines has attended more than a dozen FICPA Annual Accounting Shows. “The Annual Show is always a great place to catch up with friends, update your skills and learn new ones, and obtain CPE,” Mirrer said.

“With its ‘Rock the Show’ theme, the 28th Annual Show was no exception.”

Held in Fort Lauderdale’s Broward County Convention Center, the September event featured more than 50 CPE sessions on a range of accounting topics, taught by expert speakers.

“The Accounting Show is always a great opportunity to hear quality speakers on a variety of timely topics. Once again, I wasn’t disappointed,” said Cindy D’Artagnan of Fort Myers.

Attracting almost 800 participants, the three-day show included Keynoters Rick Telberg, veteran analyst, advisor and publisher of CPA Trendlines; and generational expert Karl Ahlrichs. Telberg discussed the top 10 game-changing trends the accounting profession faces. Telberg identified cloud computing as one of the biggest CPA-game changers. He said the key to value pricing is for CPAs to understand their impact on business and on their clients’ lives.

Keynoter Ahlrichs used humor to illustrate the major challenges and opportunities in managing today’s workforce.

“Our workplaces are comprised of no less than five generations,” Ahlrichs said.

He urged older workers to continue adapting to new technology and suggested using smart phones to effectively embrace technology. Ahlrichs reminded younger generations that, although it’s easy to search the Web for information, the only way to gain wisdom is through experience.

Attendees earned up to 23 hours of CPE at the show and two complimentary online hours after the show. Attendees received complimentary “Rock the Show” T-shirts and were encouraged to wear them on T-shirt Friday. Between live CPE sessions CPAs flocked to the exhibit hall, which showcased business solutions from more than 80 exhibitors.

The exhibit-hall floor bustled with activity as exhibitors and attendees networked and enjoyed fun product demonstrations, including the chance to literally kick the tires of two luxury Jaguar autos on display.

New this year was breakfast service in the exhibit hall. Exhibitors and attendees took advantage of the expanded show floor hours.

Next year’s Annual Accounting Show will take place Sept. 17-19 at the Broward County Convention Center. Exhibitor space already is available and attendee registration will open in spring 2014.

“We look forward to returning in 2014,” said exhibitor Glenn Gordon of Prime Lenders Mortgage Corporation. “The 2013 Show was an amazing experience. The attendees’ friendliness exceeded our expectations.” FCT

Accounting Show Celebrating Winners Between the raffle for a great cause and a rocking exhibit hall, the 28th Annual Accounting Show produced many winners.

Congratulations to: • Best All-around Exhibitor Award: PayMaster Payroll Service • Rookie of the Year Exhibitor Award: Prime Lenders, LLC • Half-price Exhibitor Booth Winner: Ability Commerce • $500 Educational Foundation Raffle: Les Adler, Miami • $100 Exhibitor Card Winner: Janet Grossman, Coral Springs • $50 Exhibitor Card Winners ◊◊ Linda Carson, Boca Raton ◊◊ Julie Edstrom, Wilton Manors ◊◊ Angela Gantt, Ocoee ◊◊ Patricia Gordon, North Palm Beach ◊◊ Patricia Hartman, Hollywood ◊◊ Sue Schoenfeld, Boca Raton ◊◊ Jeff Smith, Margate

Honoring Planning Committee Members Paulette Holder, chair Randee Abramson Joseph Cote Richard Dotson Gary Fracassi Cindy Gallagher

Jim Luffman Bill Maloney Roger Michels Pat Patterson Rick Shapiro Poornima Srinivasan

Thanking Our Sponsors • Luncheon Sponsor: ADP • Morning Refreshment Break Sponsor: Bisk CPEasy • Name badge Lanyard Sponsor: Thomson Reuters • “Rock the Show” T-Shirt Sponsors ◊◊ AICPA – ITMA ◊◊ Ceridian ◊◊ MR Valuation Consulting ◊◊ Office Tools Professional

NEWS

briefs Tommye Barie Installed as AICPA Vice Chair FICPA Past President Tommye E. Barie recently was installed as vice chair of the AICPA Board of Directors. A member of the AICPA Council, Barie is chair of the AICPA Finance Committee and serves on the Audit and Compensation committees.

She is immediate past chair of the AICPA’s National Accreditation Commission and has served on the Strategic Planning and Nominations committees.

“We are so proud that the AICPA has recognized Tommye’s tremendous leadership skills and the depth of her knowledge about the profession,” said FICPA President/ CEO Deborah Curry, CPA, CGMA. “ We congratulate her on her success, thank her for her dedication and look forward to her year as Board chair.”

Tommye Barie, CPA

Barie is a member of Mauldin & Jenkins, LLC where her primary focus of practice is auditing governmental, not-for-profit and construction entities. She serves on the firm’s Assurance Committee, which is responsible for the audit and accounting phases of the firm’s practice. She is a member of the Government Finance Officers Association, where she serves on the Special Review Committee for the Certificate of Achievement for Excellence in Financial Reporting.

Barie has served on the FICPA’s Board of Governors, Executive Committee and Finance Committee. She will be installed as chair of the AICPA Board of Directors in October 2014. FCT

Alfredo Riverol Receives Outstanding CPA in Government Impact Award City of South Miami CFO Alfredo Riverol recently received the AICPA’s 2013 Outstanding CPA in Government Impact Award.

The award recognizes the impact of a CPA’s significant contributions to Alfredo Riverol, CPA the efficiency, effectiveness and innovative service delivered to his or her employer organization. Riverol received the award at the annual AICPA National Governmental Accounting and Auditing Conference in Washington, D.C. FCT To read the AICPA press release, visit www.ficpa. org/Content/News/Spotlight/Alfredo-Riverol. aspx.

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AICPA Offers Free Whitepaper on Top Firm Issues The AICPA recently released its 2013 PCPS CPA Firm Top Issues Diagnostic Report. The report highlights the results of a recent survey that gathered information from a range of practitioners, in firms of different sizes, about the critical challenges they face.

The 2013 top issues for firms include: Sole Practitioners 1. Keeping up with changes and complexity of tax laws 2. Bringing in new clients 3. Seasonality/workload compression 4. Retention of current clients 5. Effect on firms of new federal and state regulations Firms with two to five professionals 1. Keeping up with changes and complexity of tax laws 2. Succession planning 3. Finding qualified staff 4. Bringing in new clients 5. Seasonality/workload compression

Firms with six to 10 professionals 1. Succession planning 2. Finding qualified staff 3. Bringing in new clients 4. Retaining qualified staff 5. Owner/partner accountability and unity Firms with 11 to 20 professionals 1. Bringing in new clients 2. Finding qualified staff 3. Succession planning 4. Retaining qualified staff 5. Retaining of current clients Firms with 21+ professionals 1. Owner/partner accountability and unity 2. Bringing in new clients 3. Retaining qualified staff 4. Succession planning 5. Finding qualified staff FCT To read the entire report, visit www.aicpa.org/InterestAreas/ PrivateCompaniesPracticeSection/.

From FICPA staff reports

FICPA Members Named Among Most Influential Business Women Marcum LLP Partner-in-Charge Cecelia Garber and Modernizing Medicine Inc. CFO Karen O’Byrne have been named among the South Florida Business Journal’s Most Influential Business Women in 2013. The award recognizes 25 top South Florida businesswomen who demonstrate strong leadership, exceptional innovation in their industries and meaningful community involvement. FCT

Cecelia Garber, CPA

To view the entire list, visit www.bizjournals.com/southflorida/blog/2013/09/southfloridas-influential-business.html.

Karen O’Byrne, CPA

FICPA Representatives Attend Ambassador Training Program Florida’s newest CPA Ambassadors, pictured left to right with their AICPA trainers (front row): Chris Almonte, AICPA; Ken Strauss, Berkowitz Pollack Brant Advisors and Accountants; Megan Cavasini, Berkowitz Pollack Brant Advisors and Accountants; Jessica Morgan, KPMG LLP; Michael Sigman, ComCore Consulting Group.

Back row: Racquel McIntosh, Grau & Associates; Eric Santa Maria, Paul Garcia, PA; Tony Palermo, Ahern, Jasco & Co; Nadine Olmann, Your Tax CPA; and Paul Brown, FICPA.

The FICPA recently hosted the 2013 AICPA Ambassador Program in Fort Lauderdale.

Several FICPA members and staff participated in the program, a communitybased media and publicspeaking program. Michael Sigman of ComCore Consulting Group was the program trainer and Chris Almonte was the AICPA program coordinator.

“Media training is critical in helping CPAs communicate FLORIDA CPA TODAY

our value as a profession,” said FICPA President/ CEO Deborah Curry. “This program provided an excellent opportunity to learn how to effectively educate the public about the importance of our work.”

The AICPA launched the program in cooperation with state CPA societies, and CPAs participate in the program throughout the U.S. Program attendees are trained in four quadrants:

• Restoring confidence in the CPA profession and American business • Financial literacy • Student recruitment • Partnering with small business for success CPAs also may emphasize the profession’s commitment to battling fraud; improving auditing standards and quality; and shoring up small businesses. FCT

AICPA Produces Video on GASB Changes During a recent Communications Initiatives Conference Call, AICPA staff members discussed the new GASB pension standards for state and local governments. A sixminute video highlighting two new standards and how their implementation improves transparency is available at aicpa.org.

FCT

www.ficpa.org

19

Clients: Knowing When to Walk Away

By CNA Accountants Professional Liability Risk Control

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he AICPA Professional Liability Insurance Program has demonstrated that malpractice claims often arise in engagements in which CPAs took actions they believed were in a client’s best interest, but ignored related liability risks to their accounting firms. When CPAs place client demands above potential liability exposure, they often face lawsuits filed by clients and third parties.

To effectively manage this exposure, CPAs must recognize the need to discontinue certain client relationships and take prompt, formal action.

Be aware of the risk indicators Client behaviors and circumstances indicating the need for termination may include, but are not limited to: • Fee nonpayment or consistently late payment • Frequent price or service complaints • Disagreements or disputes between the CPA and the client (about issues such as fees, aggressive tax positions, or accounting treatments) • Disputes among the client’s partners or shareholders • Difficulty obtaining, or consistent delays in receiving, requested information • Patterns of failing to follow and/or ignoring advice • Consistently negative reactions to improvements the CPA firm suggests • Lack of management integrity • Lack of internal controls • High accounting and management turnover • Poor treatment of CPA firm staff • Poor treatment of the client’s accounting department, or evidence that accounting/fiscal oversight is not a priority for the client’s management • Potential and actual conflicts of interest between the CPA and the client (e.g., divorcing or divorced clients) In addition, a client’s strategies, structure, complexity or business relationships may change. This adds risk that the firm may not be willing to assume. In the end, the firm must make a judgment call to determine the time to walk away.

A substantial level of fraud in Florida has created a potential for risk exposure in client engagements. According to the U.S. Attorney’s Office, Southern District of Florida, it ranks second in the nation in securities and investment fraud investigations and prosecutions. In 2010, it announced the formation of the Securities and Investment Fraud

20 NOVEMBER/DECEMBER 2013

Initiative. Infamous names in Florida Ponzi scheme history include Gerald Payne (Greater Ministries International Church, $448 million); Kenneth Thenen (Premium Sales, $300 million); Nevin Shapiro (Capitol Investments USA, $930 million); and Scott Rothstein (Rothstein Rosenfeldt Adler law firm, $1.2 billion).

In many Ponzi schemes, fraudsters align themselves and their entities with established professional service firms to lend legitimacy to their business activities – and those firms typically become the subject of litigation. Effective clientacceptance procedures can help avoid association with fraudsters and problem clients. However, identifying the warning signs after the relationship has been established is a critical step in the timely termination of “high-risk” client engagements.

Terminate clients formally and effectively When a decision is made to terminate a client relationship, the decision should be communicated in writing. Clients may take negative actions after a termination decision, and in the absence of proper notification, that may harm the firm if third parties operate under the impression that the firm continued to serve the client. Moreover, complaints to state boards have arisen when a client was unaware of the firm’s termination and, therefore, missed a tax-compliance or regulatory-filing deadline, or a commitment to submit financial statements to a shareholder, lender or other third party.

Without written documentation, it is difficult to prove the firm no longer was associated with the client at the time of any alleged wrongdoing. Written evidence can strengthen a CPA’s defense against a claim if it includes these elements: • The nature of services and when they ended (generally the date of the termination letter) • Issues regarding any work in progress • Fees due to the firm • The status of original client records • The firm’s record-retention policy and guidelines for responding to a request for copies of client records • Items requiring the client’s follow up or completion, such as tax-return due dates and the need to engage another accounting professional or tax attorney to assist the client going forward

that require the client’s follow-up, such as internal-control deficiency observations and recommendations; potential noncompliance with tax law; or misclassification of independent contractor versus employee status, a separate findings letter may be necessary. The findings letter should accompany the client termination letter. The firm should send the letter(s) using a delivery method that creates evidence of receipt, including the date.

Mitigate the risk These strategies can help mitigate risk when terminating a client relationship:

The client-termination letter should inform the client of the date on which the service(s) ended and should be limited to the issues noted here.

This process requires caution. If the client is facing an imminent tax or regulatory deadline that will be difficult to meet because of the termination, the firm should consult with an attorney and its professional liability insurance carrier before proceeding. If there are exhaustive matters

• In the engagement letter, include a clause stating the CPA reserves the right to withdraw for any reason.

Failure to pay fees on time also should be indicated as a basis for withdrawal.

• In the client-responsibilities section of the engagement letter, state that it is the client’s responsibility to inform the CPA, in writing, of a need for services that fall outside the scope of the engagement letter.

• Ensure the firm workpaper documentation reflects circumstances leading to a withdrawal, as well as follow-up requests for information. ➡

• Consult the professional standards for any requirements to formally communicate other matters, such as communications with those charged with governance in an audit engagement.

• Consult the Florida State Board of Accountancy Statutes and Rules regarding responsibilities to clients, including responding to records requests.

This is addressed in Rule 61H1-23.002.

Consider the lessons learned The firm should evaluate the client-termination experience. Were red flags ignored in the acceptance or continuance process? Did the client contact the firm after working with several other accounting professionals in the past? Did the client refuse to allow the firm to contact the predecessor CPA? Was the client averse to agreeing to terms of the engagement through a formal engagement letter? Was the client significantly delinquent in tax compliance (income, payroll, sales, etc.)? Did the client respond to follow-up inquiries and/or requests for information? Did third parties contact the firm for information about potential debt or equity investments with the client?

22 NOVEMBER/DECEMBER 2013

When a firm says in hindsight, “We should never have taken this engagement in the first place,” the red flags ignored in the acceptance process should be considered when developing future client-acceptance practices.

After a withdrawal determination has been made and the client has been informed, the CPA should not provide any further professional services to the client. FCT This article provides information, rather than advice or opinion. It is accurate to the best of the authors’ knowledge as of the article date. This article should not be viewed as a substitute for recommendations of a retained professional.

Such consultation is recommended in applying this material in any particular factual situations.

Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides actual terms, coverages, amounts, conditions and exclusions for an insured. All CNA products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2013 CNA. All rights reserved.

FLORIDA CPA TODAY

www.ficpa.org

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FICPA Offers Private Health-insurance Exchange

Enrollment opens Nov. 1 for coverage beginning Jan. 1 From FICPA Staff Reports

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eginning Nov. 1, the FICPA will launch a private health-insurance exchange, the CPA Insurance Marketplace, to help individual members and employers secure health-insurance coverage as part of the FICPA’s member-benefits package.

Member Benefits Inc. will administer key enhancements to the FICPA’s existing health-insurance program, creating the new Marketplace. The company will provide decisionsupport tools and live customer service to help FICPA members determine their best course of action.

“The Patient Protection and Affordable Care Act has created complex changes in the health-insurance market,” said FICPA President/CEO Deborah Curry, CPA, CGMA. “Shortly after the federal act was passed, Member Benefits Inc. analyzed this complex law and designed a private health-insurance exchange. The CPA Insurance Marketplace will offer Florida CPAs more choices, within the law, than any other option the Institute has seen.”

In March 2010, President Obama signed the Patient Protection and Affordable Care Act into law, with the intent of making preventive care more accessible and affordable for many Americans. Although some provisions of the law already have taken effect, many more will be implemented in the coming years.

“We’re pleased that our members will have access to expert assistance from Member Benefits Inc. when open enrollment begins,” said FICPA Board Chair Ken Strauss.

Strauss said the private Marketplace is built on a custom technology platform coordinated by Member Benefits Inc. “We know many big changes are coming in 2014,” he said. “We want to make sure our members have access to expert guidance to help them efficiently navigate the changes in health-care reform.” ➡ Pg. 27

24 NOVEMBER/DECEMBER 2013

The Affordable Care Act

IRS releases guidance on health-insurance premium tax credit

By Mike Whitney, CPA

Note: Implementation of the Patient Protection and Affordable Care Act (ACA) reporting-requirement provision and its employer shared-responsibility (“play-orpay”) provision has been delayed for one year to Jan. 1, 2015.

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he IRS recently issued proposed regulations implementing the health-insurance premium tax credit created by the Patient Protection and Affordable Care Act of 2010. The guidance is significant because beginning in 2014, under the Act’s sharedresponsibility provisions (often referred to as play or pay), certain employers may be subject to penalties if just one employee receives the credit.

The credit helps eligible taxpayers purchase individual coverage through a healthinsurance exchange. The regulations provide employers with additional guidance on determining whether their employer-sponsored plans satisfy the requirements to disqualify employees for the credit, which allows businesses to avoid play-or-pay penalties.

Understanding the Affordable Care Act rule book Beginning Jan. 1, 2015, the Affordable Care Act requires “large” employers to offer fulltime employees a “minimum value” of “affordable” health coverage. Employers risk a penalty if at least one full-time employee receives a premium tax credit for purchasing individual coverage through one of the new, affordable insurance exchanges.

Determining large-employer status A large employer is one with at least 50 full-time employees (defined as ➡ Pg. 26

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➡ Continued from Pg. 25

someone employed at least 30 average hours per week, or 130 hours in a calendar month), or a combination of full-time and part-time employees whose hours become “equivalent” to a full-time employee when added together. Large-employer status is determined in part by calculating full-time equivalent employees (FTEs). For a given calendar month, this calculation requires totaling the hours of service for all part-time employees and dividing that figure by 120. For example, an employer with 40 part timers who average 90 hours per month would have 30 FTEs (40 × 90 = 3,600; 3,600/120 = 30).

They must be added to the number of full-time employees (those working at least 130 hours during the month) when computing the 50-FTE threshold.

For hourly employees, the proposed regulations require that employers calculate hours based on records of hours worked and hours for which payment is made or due for vacations, holidays, illnesses, incapacities (including disabilities), layoffs, jury duty, military duty or leaves of absence.

For salaried employees, the proposed regulations provide three methods of determining the hours: 1. The same method used for hourly employees 2. A days-worked equivalency method (each worker is credited with eight hours for each day worked), or 3. A weeks-worked equivalency method (each worker is credited with 40 hours for each week worked) You may apply different methods for different classifications of non-hourly employees, as long as the classifications are “reasonable and consistently applied.”

Employers must determine, based on their employees’ actual hours of service during an employer-chosen measurement period of three to 12 months, whether they’ll be considered a large employer for the next year.

Don’t roll the dice Correctly calculating minimum value Under the Affordable Care Act, a health plan provides minimum value only if the plan’s share of the total allowed costs of benefits provided to an employee (minimumvalue percentage) is at least 60 percent. Minimum26 NOVEMBER/DECEMBER 2013

value percentage is defined as the ratio of the share of total costs the plan pays, compared to the total costs of covered services.

Earlier this year, proposed regulations defined the minimum-value percentage as the anticipated covered medical spending for benefits (accounting for the plan’s cost sharing, such as deductibles and co-pays) provided under a particular essential health benefits (EHB) benchmark plan for the standard population, divided by the total anticipated allowed charges for EHB coverage provided to the standard population. “Standard population” is the population of individuals covered by typical self-insured group health plans, as determined by the Department of Health and Human Services (HHS).

Those regulations provide that a plan can determine whether it provides minimum value by: • Using the minimum value calculator available at cciio. cms.gov/resources/regulations/index.html (adjustments are permitted based on an actuarial analysis of plan features that are outside the calculator’s parameters) • Complying with one of the safe harbors established by the HHS and the IRS (generally, plans that provide certain benefits within specific deductible, co-pay and other cost-sharing limits) • Obtaining actuarial certification of minimum value (for a plan with non-standard features that are incompatible with the minimum-value calculator and the safe harbors), or • Meeting the requirements for any of the levels of “metal coverage” (bronze, silver, gold or platinum) for a plan in the small-group market, which are based on costsharing levels.

Until now, employers were uncertain which health benefits would be considered in calculating minimum value – specifically for determining the share of benefit costs a plan pays. This uncertainty caused concern that employer-sponsored, self-insured plans and insured largegroup plans would need to cover every type of benefit. The proposed regulations clarify that minimum value is based only on the anticipated spending for a standard population.

Earn a free spin with HSA and HRA contributions The proposed regulations also address whether employer contributions to health-savings accounts (HSAs) and health-reimbursement arrangements (HRAs) count toward the plan’s share of benefit costs for purposes of determining minimum value. Under the proposed regulations, all amounts contributed for the current plan year to an HSA are considered. Amounts newly made available under an HRA that’s integrated with an eligible employer-sponsored plan for the current plan year also count toward the plan’s share of costs – if the amounts may be used only for cost sharing, and not to pay insurance premiums.

The proposed regulations also cover the effect of HRA contributions on affordability. They provide that amounts made newly available for a current plan year – that can be used only for premiums, or either for premiums or costsharing reduction – are treated as the employee’s earnings and can be considered available to the individual to increase the affordability of health coverage.

Don’t pass go with wellness programs Unfortunately, reduced cost sharing in most wellness programs doesn’t count toward minimum value under the proposed regulations. The exception is a nondiscriminatory wellness program designed to prevent or reduce tobacco use. Employers with such a program may calculate a plan’s share of benefit costs assuming that every eligible individual satisfies the terms of the program and, therefore, qualifies for reduced cost sharing. The proposed regulations also disregard most wellnessprogram incentives that reduce premiums when assessing the affordability of coverage. FCT Mike Whitney, CPA has more than 25 years of diversified audit and tax experience. As part of Carr, Riggs, and Ingram CPAs and Advisors’ governmental audit team, he participates in Florida municipal audits, Florida county audits and other Florida governmental-agency audits.

Whitney is an FICPA and AICPA member and earned an AICPA Certificate of Educational Achievement in Governmental Accounting and Auditing.

Reprinted with permission of the Tallahassee Society of Association Executives from the Fall 2013 issue of Capital Executive.

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➡ Continued from Pg. 24

How it works Individual members Member Benefits Inc. staff will help members and their staff determine whether they qualify for a premium tax credit through the federal government. Participants then will be directed to the least costly source to purchase a health plan.

Members who are directed to the CPA Insurance Marketplace first create an online account. They then shop for benefits for themselves and their families, choosing from a variety of health plans that compete for enrollment within the exchange.

Decision-support tools guide consumers to the best health plan for their needs. Members also can purchase dental, vision, life and disability insurance at special pricing.

Employer groups On Sept. 13, 2013, the IRS issued Notice 2013-54 disallowing the common practice of allowing employers to reimburse employees for the cost of their personally owned healthinsurance policies. The ability for employers to provide employees with a defined contribution in the form of a “pre-tax” reimbursement for premiums was an integral feature and key attraction of the private exchange for employer groups. Unless this IRS guidance is reversed (which some believe it could be), the definedcontribution exchange technology must be adjusted to accommodate “post-tax” employer contributions.

The FICPA hopes to make an employer-defined contribution private exchange available.

However, it first must make the adjustments required to comply with IRS Notice 2013-54.

FCT

For more information, contact Member Benefits Inc. at (800) 282-8626 or visit www. memberbenefits.com/ficpa. www.ficpa.org

27

STAFF

reports

From FICPA staff reports

Educational Foundation

By Jason Zaborske, FICPA educational foundation development director and Brittany Butler, event coordinator

Scholarships Change Students’ Lives Consider the Foundation for Year-end Contributions

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stablished in 1959, the FICPA Educational Foundation has provided more than $3 million in scholarships and education programs to Florida accounting students. Through FICPA members’ generous donations, the Foundation provides more than $200,000 in scholarships annually to Florida’s future CPA leaders.

Giving can be as easy as donating online! Please visit our website, www.ficpa.org/waystogive, to learn more about the Foundation and see what option is best for you. FCT For more information about Foundation membership or scholarship programs, contact Jason Zaborske, FICPA educational foundation development director at (800) 342-3197, Ext. 417; (850) 224-2727, Ext. 417; or zaborskej@ ficpa.org.

We hope you’ll consider the Foundation when making year-end contributions.

At the Ocean Reef Family Retreat in July, scholarship recipients Jasmine Holmes and Simone Oladejo spoke at the Beach Luau Dinner. If you were one of the 200 attendees, you understand how a scholarship can impact a student’s life.

Holmes is in her senior year and has an internship waiting as she studies for the CPA exam.

She received the scholarship for consecutive years because of her continued academic growth and

Jasmine Holmes

Simone Oladejo

success. Because of her scholarship, Simone Oladejo went back to school, graduated and obtained a job as an auditor with the State of Florida Auditor General.

There are numerous ways to give – named endowments, legacy, annual memberships and firm giving. Membership commitments may be paid as one-time contributions or during a five-year period. Members who increase their contributions will receive credit for the preceding level and move to the membership level applicable to their pledge.

Please think about becoming a Life Member ($500), a Friend of the Foundation ($1,000) or an Annual Member of the Foundation ($50).

These are just two examples of support the Foundation has provided to thousands of recipients.

Upcoming Foundation Events Save these 2014 Dates April 15

25th Anniversary of the 1040K Run/Walk in Coconut Grove

May 2

Suncoast Scramble in Oldsmar

May 16 and Oct. 24

Jeans for Scholarships

July 31-Aug. 3

Ocean Reef Family Retreat in Key Largo

28 NOVEMBER/DECEMBER 2013

The Foundation also has several fundraising events throughout the year. Please join us for the 1040K Run/Walk, the Suncoast Scramble or our biggest event, the Ocean Reef Family Retreat in Key Largo.

Each event provides an opportunity to network with other CPAs and talk with the Board of Trustees about becoming involved with the Foundation.

New Members

The FICPA happily welcomes many new members throughout the year. To see a list of members who have recently joined, visit the FICPA website at www.ficpa.org/ meetnewmembers.

FLORIDA CPA TODAY

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29

CPA Expert Witnesses, Beware

Say Goodbye to Frye, Bonjour to Daubert

By William L. “Larry” Houff, CPA, ABV, CVA, CFF and Shannon L. Novey, JD

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onsider this situation. You are a highly qualified CPA with 25 years of audit, tax and financial accounting experience. You are licensed by the state of Florida as an public accountant and are certified in financial forensics by the AICPA. A plaintiff has engaged you to form a professional estimate of lost profits in a litigation case. You’ve worked for six months on your methodology and calculations to arrive at your conclusion.

You are proud of your work and ready to testify.

“Until recently, Florida was one of only 10 remaining holdouts relying on the Frye requirements.

Now, all civil litigation in Florida involving expert-witness opinion testimony is inadmissible unless the testimony is based on theory and methodology that passes the Daubert test.”

30 NOVEMBER/DECEMBER 2013

The big day arrives. You’re called to the witness stand to provide your opinion to the judge and jury. But before you open your mouth, opposing counsel raises a Daubert challenge, arguing that your testimony shouldn’t be heard. She contends your work isn’t based on sufficient facts or data and is not the product of reliable methods and principles. After the attorneys finish arguing whether the court should hear your testimony, the judge, as gatekeeper, makes the determination that your testimony is inadmissible and you are excused.

You are done in more ways than one. The client and attorney who hired you are stunned and upset because their case just went down the drain. You may have to worry about malpractice litigation. And, you realize that you’ve substantially hurt your chances of ever being hired as an expert witness again.

Welcome to the new world of expert-witness testimony in Florida. If you’re active in this practice area, you should familiarize yourself with the new law that changes the standard for the admissibility of expert

testimony from Frye to Daubert. The effect and purpose of this new law is to pattern the Florida rules for civil litigation after Rule 702 of the Federal Rules of Evidence as amended in 2000.

The 90-year old Frye standard (named after a 1923 U.S. Supreme Court case) allowed expert witnesses in civil cases to render an opinion if it was based on principles generally accepted within the relevant scientific community. The Frye standard has been the standard in Florida since 1995. However, as of July 1, 2013, the Daubert standard is law in Florida. This means experts in a Florida courtroom can be excluded from testifying if they cannot prove to a judge that their testimony is 1) based on sufficient facts or data, and 2) is the product of reliable principles and methods, and that they have applied those principles and methods reliably to the facts of the case.

The Daubert standard originates from the U.S. Supreme Court’s 1993 decision in Daubert v. Merrell Dow Pharmaceuticals Inc. In that case, the Court found that the Federal Rules of Evidence govern the admission of scientific evidence in a trial held in federal court.

The rules require the trial judge to act as a gatekeeper before admitting evidence, determining that the evidence is scientifically valid and relevant to the case. The Court implicitly overturned the Frye standard for federal litigation and replaced it with what is commonly referred to as the Daubert standard.

Because CPA expert witnesses don’t offer scientific theory evidence in their testimony, the new Daubert standard had little effect on them and their financial expert testimony until the release of the 1999 Kumho Tire Co. v. Carmichael opinion. In that case, a technician – not a scientist – presented the evidence in question.

The Supreme Court determined the standard in Daubert could apply to mere technical evidence presented for the court’s consideration. As a result, the Daubert criteria became applicable to all types of expert testimony, including financial testimony

by CPAs and other financial experts, in federal trials.

Much of the litigation upon which CPAs are called for expert opinion is civil litigation tried in state or local, not federal, courts. Until recently, Florida was one of

only 10 holdouts relying on the nearly century-old Frye requirements. Now, all civil litigation in Florida involving expert-witness opinion testimony is inadmissible unless the testimony is based on theory and methodology that passes the Daubert test.

Accounting and consulting firm PricewaterhouseCoopers (PwC) studied Daubert challenges in published court opinions for 13 years (2000 to 2012) after the 1999 Kumho Tire decision.1 Their study classified 12,553 cases that cited either Daubert or Kumho, and found 5,964 cases referencing Kumho Tire resulting in 7,756 challenges to experts. The study identified trends during this period indicating the number of challenges to all expert witnesses increased from a low of 253 in 2000 to a record high of 879 in 2010. In 2012, 836 expert testimonies were subjected to a Daubert challenge with 382 testimonies (46 percent) excluded in whole or in part.

Of the 7,756 Kuhmo challenges for the 2000-2012 period identified in the PwC study, 1,400 targeted financial expert witnesses. Plaintiff’s witnesses were challenged more frequently, consistently two to three times as often as defense experts. In 2012, the number of Daubert challenges to financial expert witnesses reached a 13-year high of 192. Of these challenges, 86 expert witnesses (45 percent) had their testimony excluded.

Economists and accountants are the most frequently challenged financial expert witnesses. In 2012, appraisers were the most likely to survive a challenge and economists were the least likely to survive. Intellectual-property experts experienced the highest exclusion rate. The top reason financial experts are excluded, according to the PwC study, is lack of relevance. Exclusions more commonly result from the misuse of accepted methodologies than from the introduction of unusual or untested analytical methods.

So, what does this mean for CPAs who provide expertwitness testimony? Now, more than ever, witnesses and lawyers must work together to show that the witness’ theory or technique is tested; that the theory has been subjected to peer review generally accepted within the financial community; and that it has been applied reliably to the facts in the case.

Opponents of the new standard contend that a shift FLORIDA CPA TODAY

to the more expansive Daubert standard will lead to an increase in costs; mini-trials; prolonged litigation; and parties retaining experts to testify about other experts’ testimony and the reliability of the principles and methods.

There is little precedent regarding Florida’s application of Daubert, and there are concerns that it will waste money, time and precious judicial resources. But, the law is here to stay. Those of us in the CPA community who spend time in court will be advised to prepare our methodology and testimony to comply with the new standard or find our work, opinion and testimony excluded from the courtroom. FCT Endnotes PricewaterhouseCoopers study, Daubert challenges to financial experts; a yearly study of trends and outcomes. www.pwc.com/en_US/ us/forensic-services/publications/assets/daubert-challenges.pdf.

1

Larry Houff has taught undergraduate and graduate accounting courses at St. Leo University and the University of Tampa. He joined Carr Riggs & Ingram as a tax and consulting partner in 1996 and started their Litigation and Business Valuation Services Group in 1999. He specializes in business valuation, litigation support, financial forensics and taxation services.

Shannon Novey is a 1999 graduate of the Florida State University College of Law. She has worked an assistant chief counsel with the Pension Benefit Guaranty Corporation and has represented clients’ interests in administrative litigation before the State of Florida, Division of Administrative Hearings. Since joining Novey Law, she has applied her expertise in complex corporate financial and regulatory transactions to individuals’ interests in the practice of family law. Novey is board certified by the Florida Bar in marital and family law.

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digest

Independence and the 2011 Government Auditing Standards Early Lessons Learned

By Lynda M. Dennis, CPA, CGFO

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ith the 2011 revision to the Government Auditing Standards (Standards)1, the Government Accountability Office (GAO) significantly changed how government auditors2 evaluate non-audit services3 and their potential effect on the auditor’s independence. Among other things, the 2011 Standards establish a conceptual framework auditors are required to use to identify, evaluate and apply safeguards to address significant threats to independence. The Standards also establish requirements for and guidance on 1) independence when auditors also perform non-audit services, and 2) the documentation necessary to support adequate consideration of the auditor’s independence.

The 2011 revision of the Standards encompasses several changes to the 2007 revision. However, only the conceptual framework and the related independence considerations in the audit of an entity’s financial statements are discussed here.

32 NOVEMBER/DECEMBER 2013

Government auditors engaged to audit an entity’s financial statements under the Standards must4 be independent and should be independent not only during the period covered by the financial statements under audit, but the period of professional engagement.5 In some cases, an audit entity may ask its auditor to provide non-audit services in connection with the audit. FCT Lynda M. Dennis, CPA, CGFO is a full-time lecturer at the University of Central Florida School of Accounting, as well as an AICPA author and CPE discussion leader. Her areas of expertise are accounting and auditing for governmental and not-for-profit organizations. She serves on the FICPA’s Continuing Professional Education Committee, State and Local Government Section and Accounting and Auditing Section. She is a past chair of the AICPA CPE Committee and a member and past chair of the FICPA Editorial Committee.

To read this article in its entirety, visit the FICPA’s website at www.ficpa.org/FCT/Technical.

ON THE

move director in the State and Local Tax Services practice; and Adam Lang to Associate director in the Forensic and Business Valuation Services practice.

Transitions

Julio Barina

Birmingham, Ala.: Warren Averett LLC introduces a new brand image of their firm, updating its visual identity reflecting the firm’s reputation in the Southeast.

Visit www.warrenaverett. com/brandvideo.

Sandra Sarria

Boca Raton: Michael Kridel has joined Rehmann as a principal in the firm.

Miami: Moore Stephens Lovelace announces that Michael Gossman has been admitted to the shareholder group.

Boynton Beach: Liggett, Vogt & Webb announces the firm’s membership with DFK International/USA Group.

Thomas A. Brockway

Bradenton: CS&L announces the promotion of Kinga Huse and David Reali to tax supervisors.

Fort Lauderdale: Marcum LLP announces that Mark Agulnik and Adam L. Firestein have been promoted to partners. Also, Robert Burton and John L. Heller were promoted to directors in the South Florida Advisory Services Division.

Ana del Cerro-Fals

Fort Lauderdale: Moss & Associates has promoted Joanna Clarkson to vice president of finance.

Fort Myers: Markham Norton Mosteller Wright & Company announces the additions of Tina McGrath and Julio Barina to the firm’s tax team.

Michael Gossman

34 NOVEMBER/DECEMBER 2013

Fort Myers: Myers, Brettholtz & Company has opened an office in Collier County at 999 Vanderbilt Beach Road, Suite 200, Naples.

Miami: Goldstein Schechter Koch (GSK) announces that after five years as CEO, Howard Lucas officially “passes the torch” to Sanford B. Horwitz.

Kelsey Thompson

Miami: Berkowitz Pollack Brant Advisors and Accountants announces the addition of James W. Spencer as a director in the International Tax Services practice, along with these promotions – Hector Aguililla and Shea Smith to associate directors in the Audit and Attest practice; Karen Lake to associate

Miami: Morrison, Brown, Argiz & Farra announces that Ana del Cerro-Fals and Sandra Sarria have been promoted to directors in the Tax and Accounting Department and Steven Morrison has been promoted to director in the Audit Department.

Naples: Hill, Barth & King introduces Gerd Franke as a new principal of the firm, along with these promotions – Edee Adams to manager and Anthony Giacalone to senior.

For more news about members and other Florida CPAs, visit CPAs in the Spotlight at www.ficpa.org/Content/News/Spotlight.aspx.

The space for Who’s News, Transitions and other announcements published on this page is limited to news focusing on promotions and new hires for FICPA members; speeches by members at professional conferences; and other firm news, such as recognition of business achievements. We do not publish FICPA committee appointments as a part of this feature because of space limitations.

Submissions for On the Move can be emailed to communications@ficpa.org.

Sarasota: Accounting firm Koontz & Parkin has joined its sister company, law firm Koontz & Associates, in expanded quarters at 1819 Main Street, Suite 910.

Tampa: Warren Averett announces these promotions – Melissa Britton and Cindy Burbine to senior managers and Nick Turner to manager.

West Palm Beach: Holyfield & Thomas announces the addition of Thomas A. Brockway as partner.

Who’s News Sean M. Azpiazu of Purvis, Gray and Company in Gainesville has achieved the designation of Certified Public Accountant in Florida.

Patrick Gannon of Kaufman, Rossin & Co. in Miami has been named a

FLORIDA CPA TODAY

Power Leader in Health Care by the South Florida Business Journal for the third consecutive year.

David J. Goddu of audit services with the City of St. Petersburg has achieved the designation of Certified Internal Auditor.

Inside Public Accounting named these Miami FICPA member firms among its 2013 Best of the Best Firms: Berkowitz Pollack Brant Advisors and Accountants LLP; Kaufman Rossin Group; and MBAF. James Moore announces the firm has been awarded the Daytona Beach News Journal’s 2013 Readers’ Choice Award for best accounting firm.

Kerkering, Barberio & Co. in Sarasota announces that its Young Professionals, in conjunction with Leading Edge Alliance, recently participated in the third annual Global Volunteer Week. The group collected more than 250 pet supplies and more than $1,200 in cash for the Humane Society of Sarasota County.

Terry I. Parker of Clifton, Lipford, Hardison & Parker in Macon, Ga. has been named chair-elect of the Georgia Society of Certified Public Accountants.

Kelsey Thompson of Markham Norton Mosteller Wright & Company in Fort Myers recently passed the Association of Certified Fraud Examiners (ACFE) exam and met the requirements to become a Certified Fraud Examiner (CFE). FCT

www.ficpa.org

35

MARKET

place

Positions available Established Winter Park/ Orlando CPA firm seeking career minded individuals w/a desire to pursue & advance in the public accounting field. The firm is forward thinking & uses the advantages of technology wherever possible. Ideal individuals will have previous public exp or be near the completion of their educational goals. Firm seeks individuals in the tax & audit departments.

Firm has long-term relationships w/its diverse client base & our mindset is focused on servicing our clients. We have a friendly & supportive work environment. We value our employees & work w/ them to achieve their long-term goals. Strong salary, 401K match, PTO, along w/other standard benefits. Explore our website at www.borcheckandgase.com & submit a resume to us at borcheckandgase@yahoo.com.

Duggan, Joiner & Company, CPAs, an established firm in Ocala, seeks experienced CPA w/3-5 yrs of recent public accounting experience in financial, tax and/or audit services.

Attention to detail with advanced communication and organizational skills is needed for this position, as well as computer proficiency using accounting, tax and audit software. The firm offers excellent compensation, fringe benefits and flexible hours. Visit us at www. djcocpa.com. Fax resume to (352) 867-1370, attn: C. Wright.

Ahearn Jasco + Company, one of Broward’s oldest & most recognized public accounting firms is hiring tax accountants w/2-3 yrs of exp in public accounting.

Bachelor’s degree in accounting, CPA or actively pursuing CPA certification by sitting for all scheduled exam sections. Compiled F/S through the tax preparation of individual, corporate, partnership & S corp returns is required, along w/ strong account reconciliation skills.

We offer motivated graduates a competitive salary & benefits & a friendly, team-oriented environment to start achieving their accounting goals. Visit our website at www. ahearncpa.com & send your resume to hr@ahearncpa.com.

Ownership Opportunity – S. Florida firm w/revenue of $1 million is seeking a talented individual to join our succession as a potential partner. Ideal candidates will have an entrepreneurial spirit, along w/ strong client management, tax, accounting & business-consulting skills. This is an outstanding opportunity for the right person.

Replies will be held in strict confidence. Reply to reply@ficpa. org & reference file number K PA 11 12 13.

James W. Walker, PA in Naples, a small, growing CPA firm w/a diverse tax, auditing & accounting practice has these positions available: Tax manager/supervisor – looking for an individual who has previous mgmt, tax & communication skills. The qualified individual will be responsible for preparing & reviewing bookkeeping services, corporate, partnership, LLCs, individual, trust & estates, gift tax & nonprofit tax returns. The qualified individual will supervise & review staff in preparing year-end bookkeeping, compilations, reviews & preparation of income-tax returns; assist clients & staff; work directly w/clients & partners as needed; perform tax research; obtain clients for firm; & provide administrative assistance for firm activities as necessary. Auditing background a plus, but not a requirement.

Tax preparer/supervisor – looking for seasonal/part-time per diem individuals who have a min of 3 or more yrs of tax exp w/a CPA firm & have excellent communication skills. The qualified individual will be responsible for preparing & reviewing bookkeeping services, corporate, partnership, LLC,

individual, trust & estates, gift tax & nonprofit tax returns. The qualified individual will supervise & review staff in preparing year-end bookkeeping, compilations, reviews & income tax returns; assist clients & staff; work directly w/clients & partners as needed; perform tax research; & provide administrative assistance for firm activities as necessary.

Email resumes to info@ jameswalkercpa.com.

Ownership Opportunity – Retirement-minded sole owner of established South Florida audit firm w/$600k+ revenues looking for association w/seasoned CPA individual or firm w/shared values for transition to mutually agreed upon withdrawal and buyout.

Replies will be held in strict confidence. Reply to browaud@ gmail.com.

Auditor – Southwest Broward firm looking for career-minded experienced auditor. Applicant must have recent public accounting experience and strong clientmanagement and audit skills.

Attention to detail and organizational skills required for this position.

Competitive salary and benefits.

Email your confidential resume to rmtcpa@gmail.com.

Forrester, Hart, Belisle & Whitaker, PL, a Fort Myers-based CPA firm, is currently seeking a full-time staff accountant. Candidate must have a 4-yr accounting degree, CPA candidate or CPA. Responsibilities would include individual, corporate, partnership & payroll-tax preparation, extensive work in Quickbooks & preparation of financial statements, as well as the ability to communicate effectively w/clients on a daily basis. Competitive salary & benefits. Email resume to lenore@ forrestercpa.com.

For complete classified policies, visit www.ficpa.org/Content/CPAResources/ClassifiedsJobs/Classifieds.aspx.

36 NOVEMBER/DECEMBER 2013

Lutheran Services Florida Inc. (LSF), corporate offices in Tampa, is seeking a vice president/finance.

LSF is a growing, $140+ million, not-for-profit social-services organization employing 750 people w/locations in Tampa, Largo, St. Petersburg, Pensacola, Jacksonville, Orlando, Fort Myers, Fort Lauderdale & Miami. The applicant must demonstrate a successful record as a senior financial executive in a notfor-profit organization w/extensive knowledge of GAAP & federal & state contracts; grants-mgmt regulations; auditing & reporting requirements.

Exp w/the State of Florida Rule 65E14 and/or the Office of Head Start programs is a plus. Email resumes to gwallace@lsfnet.org.

Nelson & McKay CPAs, in the Westshore area of Tampa, seeks experienced CPA w/3-5 yrs of recent public accounting exp in tax and/or financial services. The ability to multi-task & proficiency in computers is vital. The firm offers excellent compensation & fringe benefits. Interested candidates may email their resumes to snelson@ nm-cpa.com.

Nelson & McKay CPAs, in the Westshore area of Tampa, seeks a recent accounting graduate/CPA candidate w/0-3 yrs of public accounting exp for permanent employment. The firm offers excellent compensation & fringe benefits. Interested candidates may email their resumes to snelson@nm-cpa.com.

Leesburg CPA firm of 18 employees seeking CPA w/1-3 yrs exp.

Compensation is commensurate w/exp. Please email resumes to gpadgett@pwycpas.com.

Positions wanted Jacksonville – recently retired & relocated CPA/tax manager seeks per diem work preparing and/or reviewing all kinds of tax returns.

Please call (904) 683-7374.

Broward & Palm Beach Counties – CPA seeks fixed-priced/per-return tax preparation work for all types of entities. Exp includes local firms FLORIDA CPA TODAY

& Big 4. Please call (561) 3034523. Purchase opportunities also considered.

Office space Long-established quality Fort Lauderdale CPA firm seeks practice from retirement-minded CPA w/ transition of your choice. Email inquiries to ajcpapa@aol.com or call Cary at (954) 985-1040.

Miami/Dadeland-area ofc available for lease in CPA suite. Furnished ofc, floor-to-ceiling windows, conference room, kitchen, telephone & other ofc equipment, filing cabinets, Internet access included. Free parking.

Inquiries please call (305) 598-4478 or email ronweintraubcpa@bellsouth.net or cmf16cpa@aol.com.

Practices wanted for purchase or merger Tampa CPA wants to purchase or merge w/a Tampa Bay-area CPA firm in the $300K to $400K range. Reply to (813) 833-3344.

Miami sole practitioner w/quality practice seeks CPA w/some practice for affiliation leading to succession.

Email responses to reply@ficpa.org and reference B PW 11 12 13.

Southwest Broward sole practitioner w/non-audit practice grossing $300,000 seeks association leading to eventual retirement. Reply to hmamdur@cs.com.

Growing S. Florida CPA firm looking to purchase a practice from a retirement-minded CPA in Dade Cnty. Favorable purchase terms offered w/continuing employment opportunities available. Please contact Jeffrey Taraboulos at info@ ksdt-cpa.com or (305) 670-3370.

For sale

what Akins Professional Brokerage provides. Specializing exclusively in the brokerage of CPA firms, we have no upfront fees. List your firm w/a professional. Call David Akins, CPA, at (877) 277-0272. Visit our website at www.ProfessionalCPAbroker.com.

Buy-Sell-Merge-Finance your practice w/U.S.A.’s No. 1 Accounting Brokerage Firm. Selling practices in Florida for over 30 yrs. We have cash buyers waiting. Practices available include Miami $225,000; Martin County $175,000; Broward County $500,000; North Tampa $112,000+; Orlando $485,000; North Orlando area $300,000; Tampa Bay-Bradenton area $350,000; Tampa-Zephyrhills $150,000+. Others available on our website at www.cpasales. com. Contact Erwin Rosenblatt (561) 666-6737 or Leon Faris, CPA (800) 729-9031 w/Professional Accounting Sales.

Small Wesley Chapel CPA firm w/ annual revenue of $32K w/2 domain names included for sale; asking $45,000. Respond to reply@ficpa. org and reference file number A FS 11 12 13.

Miscellaneous CPA back office; fast turnaround; special pricing for CPAs; SEC filings; Bhupinder S. Sood; (615) 400-3361; pinder321@gmail.com.

Automate all your financial reporting documents (e.g. EDGAR filings/ financial statements) w/awardwinning software! Minimize time on repetitive tasks, drastically improve your turnaround & build in diagnostics to ensure consistency.

Finalstretchconsulting.com.

Successful transitions require experienced, confidential, professional services you can trust. This is www.ficpa.org

37

DOR

update

By Barbara O’Donnell, revenue program administrator

to taxpayers whose companies were C corps at one time and now are S corps. Completing and returning the notice allows DOR to update corporate status records.

Also, DOR recently discovered a programming glitch related to filing extensions for corporate returns (F-7004). DOR has corrected the glitch, which may have led to unintended delinquency notices.

DOR is reviewing additional options to identify S corp status and filing obligations, such as changes to the Application for Registration (DR-1). This would allow DOR to capture more information initially and reduce taxpayer workload.

DOR compromises audit penalties DOR frequently receives questions about compromise of penalty in connection with a compliance audit.

DOR Better Identifies S Corps Compromises Audit Penalties

I

f your company is an S corporation (S corp) or you have clients that are S corps, you may have received a Florida Department of Revenue (DOR) notice regarding a delinquent corporate income-tax filing for an entity that didn’t have a filing obligation.

DOR is aware of the problem and is taking steps to more accurately identify S corporations.

Many corporate taxpayers have a filing obligation even though no tax is due, and the corporate delinquency program is aimed at obtaining those returns. DOR isn’t always aware that an entity is an S corp before generating a delinquency notice. For example, some notices are issued

38 NOVEMBER/DECEMBER 2013

In 2005, DOR initiated rulemaking with the intent of adopting an expert system to determine penalty compromise. The initial system was developed in response to feedback about DOR’s approach to penalty abatement at the conclusion of a compliance audit, and contained a scoring aspect. During the workshops, DOR received considerable comment and carefully deliberated this feedback during the revision process.

Ultimately, DOR discarded the response weighting and scoring aspects of the system.

Auditors now use a penalty-compromise checklist that follows Rule 12-13.007, F.A.C. to assist with consideration of penalty compromise.

The outcome of the audit – agreed or unagreed, paid or unpaid – is not a basis for denying a compromise if facts and circumstances suggest a compromise is appropriate.

DOR continues compromising penalty for a firsttime audit and imposing penalty on any portion of tax that is collected but not remitted. FCT For more information, contact Barbara O’Donnell at odonnelb@dor.state.fl.us

F L O R I D A

Florida Institute of Certified Public Accountants P.O. Box 5437 Tallahassee, FL 32314-5437