Insight Magazine - May / June 2010

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icpas.org/insight.htm

May/June 2010

Exploring the issues that shape today’s financial world

Pulse Readings The present, future & world view for CPAs

THE MAGAZINE OF THE

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cover story 34

Pulse of the Profession

By Derrick Lilly The present, future and global outlook for today’s CPAs.

columns 6

Chair’s Message From 2010-2011 ICPAS chair, Sara Mikuta, CPA.

16

Technology

Smart Phone IQ

By Daniel Dern Are smart phones smart enough for CPAs?

20

Fraud

Red Flag Warning

By Carolyn Tang How will the FTC’s Red Flags Rules impact you?

index

22

Banking

Which Business Bank?

By Selena Chavis The experts weigh in on making the best choice for your business.

26

Risk

Defense Plan

By Sheryl Nance-Nash Do you need professional liability insurance?

MAY/JUNE 2010 Vol.60 No. 6

28

Green Business

Green This

By Kristine Blenkhorn Rodriguez Good for the environment, good for business.

32

Education

MBA ROI

By Christine Bockelman

regulars 4

Do CPAs in public accounting need an MBA?

First Word A message from the Illinois CPA Society’s President & CEO.

8

Seen & Heard News bytes, sound advice and practical business tips.

12

Tax Insight

Right on Schedule

By Harvey Coustan, CPA

icpas.org /insight.htm

Changes to business income tax return reporting could mean a roadmap for IRS audit examinations.

14

Retirement Insight

Off the Clock

By Mark J. Gilbert, CPA/PFS When’s the right time to retire?

42

Classifieds

42

Advertiser Index

44

Time & Talent A shout out for ICPAS member volunteers.

Finding the perfect fit doesn’t have to be a challenge, it’s what we do.

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Our team unites employers with the right accounting and finance talent for direct hire, temporary and consulting assignments. We look and listen beyond the job description to combine the right skills with the desired experience.

To learn more about our dedication to finding the right fit, visit us on the web or call your local office.

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FIRST WORD

A MESSAGE FROM THE ICPAS PRESIDENT & CEO

INSIGHT STAFF Publisher/ICPAS President & CEO Elaine Weiss Editor-in-Chief/Director of Publications Judy Giannetto Creative Services Director Gene Levitan Creative Services Manager Rosa Garcia Publications Specialist Derrick Lilly National Sales & Advertising Angie VanGorder YGS Group, 3650 West Market Street, York, PA 17404 P: 800.501.9571 x176 F: 717.825.2171 E: angie.vangorder@theygsgroup.com Circulation/Member Services Director Ron Jankowski Editorial Offices: 550 W. Jackson Blvd., Suite 900

In an analysis conducted by CareerCast, “accountant” ranked 9 out of the “20 best jobs in 2010” cited. CNN Money ranked CPAs at 6 in a list of the “Top 50 Best Jobs in America.” The Bureau of Labor Statistics predicts the employment of auditors and accountants will grow by 22 percent between 2008 and 2018, fueled by changing financial laws and government regulations, globalization and a greater emphasis on accountability, transparency and controls in financial reporting.

And although all signs point to the fact that the profession is doing well, even in a tough economy, the numbers don’t tell the whole story.

Chicago, IL 60661

ICPAS OFFICERS Chairperson, Sara Mikuta, CPA Leaders Bank Vice Chairperson, Robert E. Cameron, CPA Cameron Smith & Company PC Secretary, Daniel F. Rahill, CPA KPMG LLP Treasurer, James P. Jones, CPA Edward Don & Company

It’s still a challenging, volatile work environment out there. You need to remain valuable in a changing marketplace; perhaps you’ve taken on new responsibilities and need to fine tune your skills to keep on top of them; perhaps you’ve made a job change and find that you’re faced with unfamiliar issues.

In good times or bad, there can be a discrepancy between the global picture and the local one, between what you know and what you need to know. The Society is here to close the gaps. With an ear to what our members are saying, we’re continually developing tools and programs with you in mind.

Trying to attract new customers? List your business in our new Find a CPA directory.

Immediate Past Chairperson, Lee A. Gould, CPA/ABV, JD, CFE, CFF Gould & Pakter Associates LLC

ICPAS BOARD OF DIRECTORS Brent A. Baccus, CPA, Washington Pittman & McKeever William P. Graf, CPA, Deloitte & Touche LLP Edward J. Hannon, CPA, JD, Freeborn & Peters LLP John A. Hepp, CPA, Ph.D, Grant Thornton LLP Cara C. Hoffman, CPA, Blackman Kallick LLP Geralyn R. Hurd, CPA, Crowe Horwath LLP Leif J. Jensen, CPA, Leif Jensen & Associates Ltd.

Need to brush up on the hiring process? Our online Career Center offers members-only programs on subjects like social media, professional relationships and transitional stress.

Want to know more about what’s going on in the field or the latest professional developments? Low-cost webcasts keep you up-to-date on trends and developments, and our conferences, courses, member forums and chapter events offer opportunities to learn and network.

If you haven’t visited our website [icpas.org] lately, just take a look at what we have to offer.

There always will be a demand for what CPAs do. And when CPAs need a little balance between life’s realities and their own personal growth and success, the Illinois CPA Society is here to help.

Elizabeth A. Murphy, CPA, PhD, DePaul University Annette M. O’Connor, CPA, RR Donnelley & Sons Company Michael J. Pierce, CPA, RSM McGladrey Inc. J. Bradley Sargent, CPA, Sargent Consulting Group LLC Edward H. Stassen, CPA, Recycled Paper Greetings Inc.

Elaine Weiss, JD, ICPAS President & CEO

Reva B. Steinberg, CPA, BDO Seidman LLP INSIGHT is the official magazine of the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA. Its purpose is to serve as the primary news and information vehicle for some 23,000 CPA members and professional affiliates. Statements or articles of opinion appearing in INSIGHT are not necessarily the views of the Illinois CPA Society. The materials and information contained within INSIGHT are offered as information only and not as practice, financial, accounting, legal or other professional advice. Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication. It is INSIGHT’s policy not to knowingly accept advertising that discriminates on the basis of race,religion, sex, age or origin. The Illinois CPA Society reserves the right to reject paid advertising that does not meet INSIGHT’s qualifications or that may detract from its professional and ethical standards. The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within INSIGHT, and makes no representation or warranties about the products or services they may provide or their accuracy or claims. The Illinois CPA Society does not guarantee delivery dates for INSIGHT. The Society disclaims all warranties, express or implied, and assumes no responsibility whatsoever for damages incurred as a result of delays in delivering INSIGHT. INSIGHT (ISSN-1053-8542) is published six times a year, in February/March, May/June, July, August, September/October, November/December, by the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA, 312.993.0393 or 800.993.0393, fax: 312.993.0307. Subscription rates for non-members: $30 US, $40 Canada and international addresses, $42 Mexico. Copyright © 2010. No part of the contents may be reproduced by any means without the written consent of INSIGHT. Permission requests may be sent to: Publications Specialist, at the address above.

Periodicals postage paid at Chicago, IL and at additional mailing offices. POSTMASTER: Send address changes to: INSIGHT, Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA.

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INSIGHT icpas.org/insight.htm

Renew your membership!

What does being a CPA mean to you?

integrity

trust

respect

pride

Set yourself apart by being a proud ICPAS member.

Look for your Illinois CPA Society dues statement in the mail or simply renew online at www.icpas.org.

Questions?

Please contact Member Services at 800.993.0393.

CHAIR’S MESSAGE

FROM THE 2010-2011 ICPAS CHAIR, SARA MIKUTA, CPA

I am humbled by being elected to the chair of the Illinois CPA Society. Being a CPA has opened so many doors in my life. This profession is one that I am proud to be a part of.

From the time I walked across the stage to receive my certificate in 1980 to now, 30 years later, the words Certified Public Accountant have been very important to me. And I know those words are just as important to all of those who are members of the Society.

It is that membership that the Board of Directors and I are very proud to serve. It has been our focus to “Enhance the Value of the CPA Profession,” and we do it through so many programs that I must admit I’m continually amazed by what’s available to our members—all at the click of a mouse.

Let me tell you about a few of our areas of focus.

With the economy continuing to batter those in all areas of our profession, and with so many of our fellow members out of work, we will continue to provide career transition services, trying to steady footings in a shaky job market.

In the face of standards and regulation overload, we will continue to bring you up-todate webinars and conferences to help you effectively navigate our changing environment, with significant value for the dollars spent.

About Sara Mikuta, CPA Current Position CFO, Leaders Bank, Oak Brook, IL CPA Certified 1980 ICPAS Board Service Treasurer (2008-09); Vice Chairperson (2007-08/2008-10); Director (2005-07) Current Committee Service Community Structure & Volunteerism Task Force (2005-10); Executive Committee (2008-10); Finance & Treasury Committee (2008-10, chair 2008-09); Finance Committee (chair, 2008-09); Illinois CPAs for Political Action (2008-10); Industry & Business Advisory (2008-10); Lifetime Achievement Award Task Force (2006-10); Young Professionals Group (2007-10).

Former Committee Service Audit Committee (2008-09); Banking Conference Task Force (1993-2006); Board Governance & Leadership Task Force (2007-09); CCFL Advisory Group (2007-08); Financial Institutions Committee (2000-08, chair 2003-07); Financial Literacy Advisory Task Force (2006-07); Future of the Show Task Force (2008-09); Public Service Award Task Force (2005-06).

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We will continue to ensure that this is a career of choice for high school and college students through the work of our Students and Young Professionals Group and Student Ambassadors. I really can’t wait for the new CPA banquet and to shake hands with our future, emerging leaders. I challenge all of you to bring them into your organizations and learn from them.

What’s more, diversity continues to be paramount in making the profession vibrant and exciting, and we will continue our efforts in this area as well.

So many of the things the Society does are immeasurable—funny coming from a CPA. But if just one person finds new employment through our services, a firm gains a new client who searched our Find a CPA directory, a student benefits from one of our many scholarships, a recent grad becomes a CPA, or a member of the military gets their taxes done by one of our volunteers, that’s success to me.

I think opportunities to give back to the community are also very much needed in this environment. Being a CPA has led me to explore philanthropic work. My family knows that I’ve always had a hard time saying “no” to volunteering for another committee, board or association, but it has always been a wonderful part of my career. It’s my way of giving back to a profession that has done so much for me. In fact, I often think it has been the best part of my career. I often tell people that I earn more “psychic” income from this; it really has made me a richer person.

The Society provides such wonderful volunteer opportunities for all of us, and you may be surprised by what you learn when you do something that stretches you a bit and takes you out of your comfort zone.

I look forward to this next year and assure you that the Board and I will have your best interests at heart.

Lastly, I would be remiss if I didn’t thank Lee Gould for his guidance as our chair this past year. The Society could not have asked for a better person to guide us.

Sara Mikuta, CPA

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SEEN& HEARD

NEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS

Fraudulent Activity Rising The Institute of Internal Auditor’s Knowledge Alert: Emerging Trends in Fraud Risks study has found that acts of fraud have risen since the recession began, and likely won’t slow down anytime soon. Theft of company property and resources is the fastest-growing fraud reported, followed by embezzlement, including expense-account and third-party/vendor fraud.

To lower your chances of being a victim, take a page out of internal audit’s book: n Increase fraud awareness, communication and training throughout the organization. n Review systems in place and their corresponding policies, procedures and controls. n Perform regularly scheduled audits that monitor highrisk areas. n Implement a continuous audit process. n Perform risk assessments and risk-based audits. n Increase coordination and cooperation with internal and external groups and other organizational programs. n Conduct or assist in fraud investigations. n Perform data-mining and analysis.

Seven Links to Free Cash Love Your Job? According to an annual Adecco Group North America [adeccousa.com] online survey, fewer US workers (72 percent) love their jobs in 2010 than in 2009 (78 percent). Just having a job isn’t cutting it anymore, either. Only 39 percent feel the economic situation has caused them to appreciate their jobs more, down considerably from the 55 percent a year ago. What’s more, a mere 17 percent of workers are willing to work harder to avoid layoffs, and only 19 percent are willing to work longer hours. The survey also reveals that 26 percent of Generation Y workers are nervous about the instability of their jobs, and 27 percent are less satisfied with their jobs than last year. Among Generation X workers, 51 percent say they would "do over" their careers.

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80%

of employers that suspended or reduced their company matching retirement contributions in 2009 plan to reinstate or increase them in 2010 Source: hewitt Associates

State treasuries and other agencies are holding billions of dollars in unclaimed assets from inactive checking and savings accounts, payroll checks, utility deposits, tax refunds, stock certificates, certificates of deposit, insurance benefits, pension payments and safe-deposit box contents. These websites will help you determine whether any of it is yours or your client’s. unclaimed.org: The National Association of Unclaimed Property Administrators (NAUPA) is a nonprofit organization representing state governments that actively find and protect unclaimed funds. missingmoney.com: An NAUPA-endorsed website that provides searchable databases of lost funds for nearly every state and provincial government. irs.gov: The site will help you track down unclaimed tax refund checks. demutualization-claims.com: Find unclaimed stock shares in major insurers that have converted from mutual life insurance companies to publicly traded firms. pbgc.gov: Search the Pension Benefit Guaranty Corp.’s directory to see if you’re owed employee benefits. fdic.gov: Access a list of unclaimed insured deposits at firms that closed between 1989 and 1993. treasurydirect.gov: Track down lost or forgotten savings bonds, and Treasury notes and bonds from 1974 or later.

Source: Kiplinger

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SEEN& HEARD

50 percent

of executives in large companies say office politics get in the way of business and need improvement.

Source: nfi research

Business Lunches Pay for Themselves Breaking bread with key contacts is good business, according to a recent Robert Half Management Resources [roberthalfmr.com] survey of 1,400 CFOs. In fact, 36 percent of executives surveyed said their most successful business meetings outside of the office are conducted over a meal.

Follow these tips to make your next out-of-the-office business meeting a winner: n Choose the right location: Select a restaurant that is quiet, easy to find, and provides excellent food and service. Make sure the menu has enough variety to accommodate anyone with dietary restrictions. n Arrive early: Plan to get to the meeting before your guests, so you can select a comfortable spot and be there to greet them. n Stay on schedule: Postpone talking shop until after you've ordered, and don't let the meal go on too long if your client has limited time to meet. n Give them your undivided attention: Never take cell phone calls or check email at the table.

As the host, it's your job to make sure the meeting is productive and on topic.

Confidence in Retirement In an Investment Company Institute [ici.org] survey of 3,000 households, 73 percent said they are confident that retirement plan accounts can help people reach their retirement goals. Seventy-eight percent of defined contribution plan participants and IRA owners expressed confidence. Even larger majorities supported 401(k) system features, such as tax advantages and payroll deductions.

UN Calls on Former ICPAS Chair The United Nations Conference on Trade and Development (UNCTAD) recently invited Belverd E. Needles Jr., Ph.D/CPA to join the Consultative Group to its Intergovernmental Working Group of Experts on International Standards on Accounting and Reporting (ISAR). This group strives to assist developing countries and countries with economies in transition in their efforts to harmonize national reporting standards and codes with IFRS requirements.

“More than 100 countries in the world have adopted IFRS. Most of those countries are developing countries and emerging economies. The problem they have is whether they have the technical expertise in those countries to actually carry out those standards,” says Needles, a member of the Illinois CPA Society since 1972, the Society’s former board chair and current president of the CPA Endowment Fund of Illinois Board of Directors.

As Needles explains, “Most countries adopt IFRS except in the areas they don’t want to.

Singapore, for example, has adopted IFRS, but there are eight major categories where they have not adopted IFRS standards, so their statements are not comparable with those of other countries. What that does is undercut the major objective of harmonization of reporting standards, which is to get comparability from country to country.”

With 30 years of involvement in international standards, Needles is “excited about this opportunity,” and hopes his participation in this select group will help to “achieve some good.”

“When you think about it, a lot of developing countries only have a handful of public companies that have their stocks traded, and they depend a lot on foreign investment in order for their countries and capital markets to grow,” says Needles, who is also an Ernst & Young Distinguished Professor of Accounting at the School of Accountancy at DePaul University, vice president of education at the American Accounting Association, and a partner at Needles & Powers Inc. in Winnetka, Ill. “This will facilitate the flow of capital into those countries in a very legitimate way.”

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Bonuses Are Best The majority of today’s finance execs say cash is still king in employee recognition. Forty-six percent of the CFOs Accountemps [accountemps.com] interviewed for its survey cited bonuses as the most effective way to acknowledge hard work and a job well done. Other leading rewards for accounting teams include: Time off (21 percent), department lunches and social gatherings (15 percent), and tickets to sporting or entertainment events (4 percent). Twelve percent of CFOs offer no rewards.

96 %

of bank executives oppose governmentset compensation parameters.

Source: Grant Thornton

“It means I have the financial support to continue my education.”

Paving the way for tomorrow’s CPAs THE CPA ENDOWMENT FUND OF ILLINOIS Provides Scholarships for Accounting Students | Funds Career Awareness Programs Advances Diversity in the Profession | Develops New Leaders

For more information or to make a tax-deductible gift: Julie Lenner, Director of Development, 312.993.0407, ext. 290 or go to www.icpas.org.

The CPA Endowment Fund of Illinois, working in cooperation with the Illinois CPA Society, raises philanthropic support to fund programs that nurture and sustain the CPA profession.

TAX INSIGHT

Right on Schedule Changes to business income tax return reporting could mean a roadmap for IRS audit examinations.

IRS

Harvey Coustan, CPA is an Ernst & Young retired partner who currently consults on substantive technical and professional standards issues. He has also served as an expert witness in a number of cases.

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Announcement 2010-9 (the Announcement), issued on January 26, proposes a separate disclosure schedule to be filed with business income tax returns whose total assets exceed $10 million. The disclosure schedule will require information regarding “uncertain tax positions”—specifically, a concise description that will allow the IRS to determine the nature of the issue (including the rationale for the position) and a concise general statement of the reasons the position is uncertain.

The description must contain: n “The Internal Revenue Code sections potentially implicated by the position.” n “A description of the taxable year or years to which the position relates.” n “A statement that the position involves an item of income, gain, loss, deduction, or credit against tax.” n “A statement that the position involves a permanent inclusion or exclusion of any item, the timing of that item, or both.” n “A statement whether the position involves a determination of the value of any property or right.” n “A statement whether the position involves a computation of basis.”

In addition, the schedule will require the maximum amount of potential federal tax liability attributable to each uncertain tax position.

The Announcement indicates that disclosure will be required for each position for which a reserve has been established either under FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (FIN 48), or pursuant to other Generally Accepted Accounting Principles (GAAP), such as International Financial Accounting Standards (IFRS) and country-specific generally accepted accounting standards. In addition, disclosure will be required for uncertain positions in certain situations where reserves have not been established, such as where the taxpayer has determined that the IRS has a general administrative practice not to examine the issue.

Although the IRS cites United States v. Arthur Young (465 U.S. 805, 815 [1984]) as support for compelling the taxpayer’s risk assessments and reserve amounts, the Announcement indicates that the schedule will not require those items. It also indicates that the IRS

is proposing to otherwise retain its existing policy of restraint described in a 2002 announcement, as well as its Internal Revenue Manual, which describes the situations in which the IRS will ask for “tax accrual workpapers” (generally where a taxpayer has entered “listed” transactions).

The Announcement invites comments on the proposal with particular interest in: n “How the maximum tax adjustment should be reflected on the schedule so that it provides the Service with an objective and quantifiable measure of each reported tax position (e.g. specific dollar amount or by appropriate dollar ranges).” n “What alternative methods of disclosure of the amount at issue would allow the Service to identify the relative importance of the uncertain tax positions.” n “Whether the calculation of the maximum tax adjustment should relate solely to the tax period for which the return is filed or to all tax periods to which the position relates, and whether net operating losses or excess credits should be taken into account in determining the maximum tax adjustment.” n “How the related entity rules should be applied.” n “Whether the scope of the Announcement should be modified regarding the uncertain tax positions for which information is required to be reported (e.g. positions for which no tax reserve has been established because the taxpayer determined the Service has a general administrative practice not to examine the position).” n “Whether transition rules should be used or criteria modified to either include or exclude certain business taxpayers (e.g. the proposed threshold of $10 million total assets).” n “How the new schedule should address taxpayers that initially did not record a reserve for an issue, but in later years do record a reserve.” n “Whether the list of information proposed to be included should be modified, including whether certain information should be requested in some circumstances upon examination rather than with tax return.“ It’s easy to see how the use of this schedule can dramatically change the relationship between taxpayers and the IRS, and, alarmingly, between taxpayers and tax preparers. Implementation of FIN 48 has already caused concern among businesses whose financial statements are subject to that FASB Interpretation. Disclosure to auditors has long been problematic for clients who are worried about the loss of attorney-client privilege in instances where auditors request third-party opinions written to discuss the tax aspects of transactions. In the Textron case, which may end up in the Supreme Court, the First Circuit Court of Appeals supported work-product protection for tax-reserve analysis workpapers shown to auditors, but then withdrew its opinion and issued an opinion that went the other way.

As far as the schedule that Announcement 2010-9 eventually might require, privilege or work-product protection are not issues. This information will be disclosed with the return.

According to a report of a comment made by Heather Maloy, commissioner of the Large and Midsize Business Division of the IRS, last February, the IRS needs this information in order to cut down on the audit time necessary to identify issues—estimated at 25 percent.

Ms. Maloy stated that the new schedule is anticipated to first apply to 2010 returns filed in 2011. She also mentioned, according to the report, that although corporate taxpayers are the primary focus, the Announcement was not clear on its effect on other entities meeting the criteria. She believed that the most likely penalty for non-compliance would be the penalty for filing an incomplete schedule. Interaction with preparer penalties also is being looked at. The close of the period for comments was originally set for March 29, but in February, the AICPA asked for a 60-day extension.

I believe that a schedule providing more detail regarding uncertain tax positions ultimately will be required. If that’s the case, it will result in a number of things. Some taxpayers will not be as candid with their tax return preparers. Others will resist challenging the IRS on various positions. And it seems likely that identifying issues won’t be a significant part of the IRS’ examination of reporting taxpayers. Hopefully, it will apply a realistic approach to issues whose potential for additional tax assessment is immaterial.

More later.

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icpas.org/insight.htm

MAY/JUNE 2010

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RETIREMENT INSIGHT

Off the Clock When’s the right time to retire?

W

hen you’re talking about retirement, client conversations sometimes evolve beyond the technical to something far more personal, and even emotional. And it can make for some pretty uncomfortable moments on both sides of the desk. Some clients might feel so emotionally paralyzed by the topic of retirement that they can’t take action or make the decisions they need to make.

The longer decisions aren’t made and plans aren’t laid, however, the more difficult it is to deal with the issue, and particularly with the allimportant question, “When should I retire?”

In my experience, people tend to have a preconceived notion of the right time to retire.

Maybe it’s due to a formative experience (such as when a parent or other influential adult retired) or maybe it’s based on a strong desire to be done with a less-than-satisfying company relationship. In any event, the idea of the right age to retire is a powerful motivator.

Added to that are the emotions wrapped up in a person’s sense of purpose. Some clients will use the time that retirement frees up to pursue the things they couldn’t pursue while working—perhaps art or travel. Some will begin volunteer work with favorite charities. Some will care for loved ones. Whatever the case, without addressing how they plan to fill up those hours, retirement might not be as rewarding as they’d hoped.

I’ve even seen clients opt to return to work.

And while there is no right or wrong answer to the question of when to retire, there are factors that will affect the decision.

14

Mark J. Gilbert, CPA/PFS

Health

is a principal in the financial advisory firm of Reason Financial Advisors, Inc. His 25+ years of finance and accounting experience includes 13 years in personal financial planning. An ICPAS member since 1982, Mark currently serves in the Society’s IA/PFP Member Forum Group and on its Committee on Structure and Volunteerism.

Most clients will retire healthy enough to do the things they enjoy, regardless of their planned retirement date. Unfortunately, though, others will need to shorten their time in the workforce because of their or their loved ones’ health issues. Advise your clients to frankly discuss their situations with their physicians, and to weigh the pros and cons of working until a certain retirement age.

INSIGHT icpas.org/insight.htm

Lifestyle Expenses Clients need to estimate their planned retirement living expenses—even if it’s just a best guess. All things being equal, the larger these expenses, the later a client’s retirement, and the bigger their nest egg.

To arrive at an estimate, ask them to exclude expenses related to work (such as transportation, business wardrobe, unreimbursed business expenses, etc.) and factor in other expenses that are specifically associated with post-retirement—such as leisure activities.

Discuss factors they might not have considered, such as inflation, future potential medical and long-term care costs, and income tax consequences.

Income Sources To determine expected income streams while in retirement, take a look at your client’s IRA and other account balance plans, pensions and Social Security. Bear in mind that the age at which optimal benefits are paid out will vary.

IRAs and similar account balance-type retirement plans likely provide the greatest flexibility in starting benefits. IRAs may be drawn upon with no penalty after reaching age 59½, and earlier under specific circumstances. Traditional pension plans may provide benefits as early as age 55 at a substantially reduced level, while normal retirement age is likely defined as age 62 or 65. Social Security benefits generally can begin as early as age 62 at a reduced level, while normal retirement age may be anywhere from 65 to 67. If the client defers Social Security benefits until age 70, the benefit amount increases.

Financial Resources The amount of liquid and illiquid investment assets accumulated over a lifetime of work is a strong indicator of a client’s wherewithal to retire at a certain age.

How much is enough to retire? A rule of thumb is that if withdrawals are limited to 4 percent of the investment portfolio in the first year, then increased annually for inflation, a balanced investment portfolio should grow sufficiently to last throughout the client’s life. Some planners argue that the 4percent figure should be increased to as much as 5.5 or 6 percent, with somewhat less confidence that assets will last throughout the client’s life.

However, rules of thumb don’t consider unique situations. A customized retirement projection which considers specific financial facts and lifestyle goals is the better way to go. Discuss your client’s unique financial issues and encourage them to work with a qualified planner.

As a trusted advisor, you can provide your clients with the objective financial information needed to make an informed decision about when to retire. You can also provide them with some insights into the emotional factors they’ll need to deal with.

making your life easier

www.CCFLinfo.org

upcoming events May 27, 2010 - Chicago, IL

How to Measure Financial Success Thomas L. Zeller, PhD, MBA, CPA Professor of Accountancy and University Scholar in the School of Business Administration at Loyola University Chicago

September TBA, 2010 - Chicago, IL

Designing & Implementing a Balanced Scorecard Framework Mark Frigo, PhD, CPA, CMA Director, The Center for Strategy, Execution and Valuation, Kellstadt Graduate School of Business, DePaul University

December TBA, 2010 - Chicago, IL

Strategic Cost Analysis: Tools for Lowering Your Company’s Costs John W. Hill, PhD, JD Arthur M. Weimer Chair in Business, Kelley School of Business, Indiana University Additional executive education classes and networking breakfasts are being added throughout the year.

The Center for Corporate Financial Leadership is a service of the

Illinois CPA Society

icpas.org/insight.htm

MAY/JUNE 2010

15

TECHNOLOGY

Smart Phone IQ Are smart phones smart enough for CPAs?

By Daniel Dern

I

t's an increasingly rare professional who isn't using a smart phone like an iPhone or BlackBerry these days.

For those lingering in the minority, a smart phone is a mobile device that's not only a cell phone, but also a PDA that can run local applications (or “apps”) and access the Internet. "A smart phone offers instant-on email, calendar and contacts, and, of course, phone," explains TabletPCTalk.com Website Manager Chris de Herrera. "These are the major things that everybody looks for."

But beyond the hype, are smart phones smart enough to meet the work demands of out-of-office, on-the-go CPAs? Are the apps CPAs need available?

And what can't smart phones do (or not do easily)?

Of the many business-useful smart phone apps, there are a growing number specifically relevant to CPAs and their clients. For example, "All the major accounting software vendors, like Intuit [Intuit.com], Thomson Reuters [cs.thomsonreuters.com] and CCH [cch.com] are moving elements of their products to smart phones," says Rick Telberg, president and chief executive of Bay Street Group LLC, which provides custom research, marketing, strategic consulting As a visit to any electronics or wireless phone store makes clear, and other services to the professional you've got a large—sometimes overwhelming—range of smart tax, accounting and finance community. phone choices, priced from around $100 to $600. This Intuit QuickBooks Online, for instanincludes the highly visible BlackBerries and Apple iPhones, ce, is available for the iPhone and Blackalong with a plethora of makes and models from vendors like Berry, while Intuit's GoPayment can HTC, Motorola, Nokia, Palm and Samsung. And there's quite a accept credit card payments on mobile choice of potential carriers as well, including AT&T, Sprint, T-Mobile, Verizon, and sundry smaller players and resellers. devices. What’s more, ProOnGo ExpenFactors that should drive your smart phone decision include, se with Receipt Reader from Chicagon Which phones and carriers will support the apps you need? based ProOnGo LLC [ProOnGo.com] n Which phones include the functional features you’ll need to allows CPAs and their clients to enter deal with business outside of the office, for instance camera, expense receipts by taking a picture with video, keyboard, minimum display size, battery run-time? their mobile phone, extracting the data, n Which carriers offer coverage where you need it? For infilling out an expense report, and archivstance, do you expect to travel outside the United States, ing a copy of the receipt image. ProOnand if so, do you want to use a single phone?

Go is available for BlackBerry, iPhone, n Will you need to "tether”—in other words, let your noteWindows Mobile and Android. book/netbook (or other smart-phone users) access and use "For CPAs, it means clients are subthe smart phone's broadband data connection, via a cable, mitting accurate data on time and have Bluetooth and/or WiFi? (Not all carriers offer plans that reliably archived receipts, suitable for allow this.) audits," says Phillip Leslie, ProOnGo

Smart Phone, Smart Choice

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TECHNOLOGY

CEO. "A small-business owner can snap a photo of their receipts, and their CPA sees the transactions show up in QuickBooks."

ProOnGo also works with PayServe Systems and, according to Leslie, "We integrate with Excel spreadsheets, XML files, fax machines, and more."

Along with its broader browser-accessed SaaS (Software-as-aService) offerings, NetSuite [NetSuite.com] offers NetSuite for iPhone, which includes BI (business intelligence) Business Performance dashboards, and access to customer and sales data, amongst other functions.

"Our biggest strength is the ERP, the relationship of all the data to accounting," says Malin Huffman, principal product manager for NetSuite. ”The iPhone app is really a viewer, a lookup and reporting tool,” Huffman notes, "It's not intended for data entry; it's more of an analytics tool formatted for the iPhone display."

"There are a few smart phone tools that CPAs really like," says De Herrera. "One, spreadsheets like Excel, and two, an HP 12c financial calculator application, which emulates the still popular HP 12c, and is used for quick calculations like interest, which you can't do easily in Excel."

One challenge, De Herrera cautions, is that "most smart phones can view spreadsheets, but only some smart phones can also create or edit them. This is both device and carrier dependent, in terms of which applications come pre-installed."

Along with CPA-specific and CPA-relevant applications, there’s a wide range of other smart phone business applications that CPAs find useful. Nathan Clevenger, mobile practice director for the ITR Group, an IT services group, recommends Pixily [Pixily.com], a document management and scanning service that makes documents searchable online. (Pixily will either return or shred and recycle paper originals.)

Follow the Markets...for Free Yahoo Finance: Keep up with market activity, get the day’s top financial news, personalize your portfolio, and follow companies that are important to you. n MarketWatch: Keep up with breaking market and business news, real-time commentary and market data quotes. You can also create a customizable market data watch list. n CNBC: Track real-time quotes and interactive charts before, during and after market hours direct from the NYSE & NASDAQ. n Bloomberg: Create a customizable home page from one of America’s most trusted sources of financial information. n Morningstar: Garner highly respected independent investment research, and check out top mutual fund and stock picks. n Thomson Reuters News Pro: Stay current on the latest news, extensive global financial data, corporate information and interactive financial charting. You can also create a customizable watch list. n Black Gold Oil, Gas and Gold Price Tracking: Monitor pricing for crude oil, gold, gas, natural gas and heating oil while you’re on the go.

Source: YoungMoney.com n

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INSIGHT icpas.org/insight.htm

Smart Safety Tips Smart phones pose the same security risks as any other mobile device, so be sure to, n Password-protect the device. n Encrypt any sensitive data. n Encrypt confidential data stored on removable media. n Use VPNs or other secure connections to access company networks or related websites.

In his article, "11 Apps For the Business Professional" (iPhone Life, Winter 2010), Clevenger recommends scanR Business Center [scanr.com] for creating PDFs for email or faxing, using your smart phone camera; DayTracker [TheDayTracker.com], which captures mileage—including via Google maps or GPS—to Excel reports; and iDcrm [numenes.com], an iPhone client for organizations that use Microsoft Dynamics CRM. What’s more, "Citrix's GoToMyPC [gotomypc.com] can be hugely valuable if it helps you retrieve a document you left at the office," says Telberg. There are also e-fax apps like MyFax, he says, which allow CPAs to receive faxes as message attachments.

For BlackBerry users, Telberg recommends tools available from appworld.blackberry.com, including RepliGo Reader (similar to Adobe Reader); inForm, for creating and distributing forms, surveys, databases, and micro-applications; and Database Viewer Plus.

One big thing that out-of-office CPAs need is access to work documents—the ability to find, view and forward Word documents, spreadsheets, PDFs, email messages, et cetera. Content management systems like Autonomy iManage WorkSite [interwoven.com] allow CPAs do this from their Blackberrys, incorporating functionality for printing or faxing documents, without having to go through IT or somebody else back at the office.

"The iPhone or smart phone is not a replacement for a netbook, however," De Herrera states. "It doesn't have the screen size, readability, typing speed, CPU speed, or ability to run regular Windows desktop applications."

For some models and apps, you can finesse the display and keyboard size by accessorizing with a RedFly Celio [celiocorp.com], currently available with a 7-inch or 8-inch 800x600 display and a full-sized keyboard. With Windows Mobile, that's enough to edit some Excel spreadsheets. But not all applications will scale properly to the Celio's display.

Clevenger points out that, "A lot of mobile workers in the accounting industry bring their own 17-inch laptops, plus a second monitor, plus a laser printer. But if a smart phone can make you productive for even one or two extra hours a week, you'll be recouping your investment—and being a lot more responsive to your clients."

"A smart phone lets you do anything the client can do, so you can be in touch with your client the way the client wants you to be in touch," says Telberg. "For example, if the client is moving data and documents through their smart phone, they expect you to be able to track it through yours. Our research for the white paper, The Connected Accountant: The Growing Mobility Trend, demonstrates that CPA smart-phone users are more efficient, happier in work/life balance, make more money, and generally run their businesses better."

keep your career on track

Career Center A benefit of your Illinois CPA Society Membership

Job Listings | Resume Postings | Career Coaches* Workshops and Other Career Resources Check out the Career Center today at

www.icpas.org *fee-based service

FRAUD

Red Flag Warning How will the FTC’s Red Flags Rules impact you?

By Carolyn Tang

I

n 2009, the number of identity fraud victims in the United States reached 11.1 million, up 12 percent from 2008. They totaled a projected $54 billion in losses, according to a Javelin Strategy and Research study.

In an effort to target identity theft at its point of origin, the Federal Trade Commission (FTC) has established the Red Flags Rules, which require certain types of business to implement a written Identity Theft Prevention Program that includes four elements: Reasonable policies and procedures to identify red flags; procedures to detect the identified red flags; a statement of appropriate actions to be taken when red flags are detected; and periodic re-evaluation of the program to reflect any new risks. “Red flags” are defined as suspicious patterns or practices that indicate the possibility of identity theft.

Although the Rules don’t necessarily shift the burden of bad debt away from creditors, they do add a new element. “The creditor who shares debtor personal information with third parties, like a collection agency, is now potentially liable for any breach leading to the debtor’s identity theft,” explains Brad Sargent, managing member of The Sargent Consulting Group, LLC. “Businesses that provide credit must know the policies and procedures of all of their strategic partners regarding identity theft.”

While the Rules have been in effect since 2008, actual enforcement was delayed until June 1, 2010 to give businesses time to develop and implement their written Identity Theft Prevention Programs.

The Red Flags Rules specifically apply to “financial institutions” and “creditors,” although these terms are broadly defined. And it’s partly for this reason that there’s been a delay in enforcement— institutions are asking, do we fall under the Rules or not?

The FTC defines financial institutions as “a state or national bank, a state or federal savings and loan association, a mutual savings bank, a state or federal credit union, or any other person that directly or indirectly holds a transaction account belonging to a consumer.” Creditors are defined as “businesses or organizations that regularly defer payment for goods or services, or provide goods or services and bill customers later.” The FTC cites finance companies, car dealers, mortgage brokers, utility companies and telecommunications companies as examples. However, it also states that “accepting credit cards as a form of payment does not, in and of itself, make an entity a creditor.”

“Covered accounts generally relate to customers who are potential ID theft targets, individuals or small companies such as sole proprietorships,” explains Don Blumenthal, principal of DMB Associates, LLC and an adjunct professor at the University of Michigan School of Information. Entities whose only clients are major corporations, he adds, likely would not have to be concerned with the Red Flag Rules on a day-to-day basis. He emphasizes, though, that the Rules do impose an obligation of periodic client reviews to ensure that status under the Rules doesn’t change.

20

INSIGHT icpas.org/insight.htm

Having the resources to comply with the Rules is another bone of contention, especially for smaller businesses. “As a small-business owner myself, it can be a tremendous drain on company resources to design, implement and document a new program,” says Sargent.

“Training staff and monitoring the program takes additional time and energy. Certainly, larger entities with greater resources are more capable of responding and complying.”

Historically, says Blumenthal, the FTC has taken risk-based approaches to information security and privacy issues. “There are no rigid ‘one-size-fits-all’ requirements. A business’ written Identity Theft Protection Program has to include elements outlined in the regulations, but the details of those elements can be tailored to the business realities of any given organization,” he explains.

Having said that, Sargent does expect the FTC to enforce the Rules vigorously. “I would expect to see some high-profile entities facing large fines soon after enforcement begins—a tactic that usually provides extra incentive to other financial institutions and creditors to comply,” he says.

While many organizations already have fraud detection measures in place, the Red Flags Rules ensure that those measures address elements proven to be critical in the prevention of identity theft. And, since the Rules focus specifically on identity theft, one of the fastest-growing sectors of fraud, they are very precise. “This is far more specific than the typical fraud prevention program,” Sargent explains.

The Rules also make it a point to engage the highest echelons of management. This may impact smaller businesses as well. “The Rules are very clear regarding the responsibilities of boards, officers and others within a business that simply may not exist at small to mid-sized companies,” says Sargent.

Lawyers are a single exception to the Red Flag Rules. Earlier this year, the American Bar Association (ABA) was successful in a motion for summary judgment for declaratory and injunctive relief from the Rules.

“The ABA is gratified that the court recognized the historic role of active state regulation of lawyers, the dearth of examples of identity theft involving lawyers and their clients, and the absence of any evidence that Congress intended the Red Flags Rules to apply to lawyers,” said Carolyn B. Lamm, ABA president.

Whether this exception will set a precedent for other professions can only be determined by a court; however, the American Medical Association and the American Institute of CPAs (AICPA) are also working to achieve the same exemption.

Per the FTC’s interpretation, the Rules apply to public accountants because CPA firms typically bill clients for services rendered, therefore technically qualifying those firms as “creditors.” However, the AICPA filed a lawsuit in the US District Court for the District of Columbia, stating that the Red Flags Rules would impose onerous and unnecessary requirements on AICPA members, and further that in doing so, the FTC would be exceeding its statutory authority. The AICPA case, filed in November 2009, references the ABA decision that exempts lawyers from the Rules. (Note: There had been no Senate action on the bill at press time.)

“We do not believe that there is any reasonably foreseeable risk of identity theft when CPA clients are billed for services rendered,” said AICPA President and CEO Barry Melancon in a November press release. “As trusted advisors, CPAs are personally acquainted with their clients and already adhere to strict privacy requirements governing identifying information.”

Will the rules work? Sargent suspects that if they were in place earlier, there might have been a material reduction in the amount of mortgage/loan fraud that contributed to the real estate market meltdown. What’s more, when companies adhere to the Rules, it’s very likely that many cases of identity fraud will be prevented before they even happen. Certainly keen awareness is one of the best deterrents, and at the very minimum, the Red Flags Rules will accomplish this goal.

“If nothing else, the publicity concerning the Red Flags Rules—good, bad, or indifferent—has raised awareness of the issues and signs that could indicate the potential for identity theft,” says Blumenthal. “As protection programs are implemented, I’m certain that they will catch identity theft red flags that otherwise would have gone undetected.” icpas.org/insight.htm

MAY/JUNE 2010

21

BANKING

Which Business Bank?

The experts weigh in on making the best choice for your business.

By Selena Chavis

I

n the world of business banking, one size does not fit all. Each option—from megabanks to boutique community banks—brings with it a unique culture and client approach.

While it’s not rocket science, industry professionals agree that the responsibility of selecting a business bank shouldn’t be taken too lightly, and that best practices are a must. In an era where so many banks are facing crisis, best practices are more important than ever, in fact.

Consider this: 140 banks failed in 2009, according to FDIC statistics, and predictions suggest that many more are on the way. “We still have 400 to 500 banks that are expected to fail in this economic climate,” explains Sam Thacker, a business finance expert with Allbusiness.com. “The FDIC estimates that there will be a good percentage of regional banks that will be under a great deal of pressure this year.”

Here, then, are Five Best Practices for Selecting a Business Bank.

1. Weigh the risk

Business Bank Finder SBA.gov Find active SBA lenders in your area.

Bankrate.com Determine whether a bank is safe to do business with via Bankrate’s Safe and Sound system.

TheStreet.com Assess your business bank’s health.

JDPower.com Access a rating of commercial banks.

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INSIGHT icpas.org/insight.htm

Assessing a bank’s potential risk is a crucial first step in making an informed decision, says Thacker. Specifically, he says, gain knowledge of its Tier 1 Capital—essentially the measure of a bank’s financial strength based on core capital, comprised of equity capital and disclosed reserves. You can usually find this information in quarterly and annual public filings and documents.

“Eight percent and above is good,” Thacker explains. “If below 5 percent in Tier 1 Capital, you need to look closely at that bank and whether it will survive over the long haul.”

Other things to look out for are how much “underwater” real estate a bank may be holding, as well as the amount of consumer credit card debt. “There is a commercial real estate issue that has not flown through the economy yet,” says Thacker. “A question you might ask a bank is, ‘How much commercial real estate do you have in your portfolio?’”

In terms of credit card debt, he notes that, historically, the consumer credit card write-off for banks runs about 2-percent higher than the national unemployment rate. The industry expectation is that banks may write off upwards of 14 percent in the coming year.

2. Value relationships; watch fees “Relationships are key when it comes to banking,” notes Ken Gaebler, president of Gaebler Ventures, a Chicago-based investment firm. “When choosing a bank, you really have to assess not only the services offered, but also the personnel. Find out who will be managing your relationship and make sure you feel comfortable with that individual.”

It’s about aligning philosophies, which means that a company will want its bank to understand its processes, says Mark Robertson, CPA/CFF/CIRA/CM&AA, a director with Blackman Kallick.

ILLINOIS CPA SOCIETY

Monthly Chapter Activities Central Chapter – Central Illinois Various

CPE Meeting – Quarterly – Various locations

Chicago Metro Chapter – Chicago Last Wed 3rd Mon

Chicago Metro Chapter Meeting – Monthly - Chicago – (Downtown) Chicago Metro Chapter Networking Breakfast – Chicago – (Downtown)

CHAPTERS

Chicago South Chapter – Far South Chicago and Southwest Suburban Chicagoland 3rd Thurs 1st Thurs Next to Last Wed 3rd Tue 3rd or 4th Tue (varies) 3rd Thurs Last Wed

CPE Meeting – Monthly – Palos Heights Networking Breakfast – Homewood Networking Breakfast – Orland Park (1) Practice Management Forum – Tinley Park CFO/Controller Forum – (Location Varies) Networking Breakfast – Chicago (Beverly) Networking Breakfast – Orland Park (2)

Fox River Trail Chapter – Far Northwest Suburban Chicagoland Last Thurs 2nd Fri

CPE Meeting – Monthly – Lake Zurich Networking Breakfast – Fox River Grove

Fox Valley Chapter – West Suburban Chicagoland Various 1st Wed 2nd Tue 2nd Wed 4th Mon 4th Fri

CPE Meeting – Naperville Networking Breakfast – Oakbrook Networking Meeting – Will County Networking Breakfast – Naperville Small Practitioner Tax Group – Wheaton Networking Breakfast – St. Charles

North Shore Chapter – Far North Chicago and North Shore Suburban Chicagoland 3rd Tue 2nd Mon 1st Mon 1st Fri

CPE Chapter Meeting – Monthly – Northbrook Chapter Industry & Business Forum – Monthly–Skokie Chapter Networking Breakfast – Monthly-Chicago Chapter Networking Breakfast – Monthly-Glenview

O’Hare Chapter – Northwest Suburban Chicagoland 3rd Wed 2nd Thu 3nd Fri

CPE Meeting - Monthly – Schaumburg Networking Breakfast –Buffalo Grove Networking Breakfast – Elk Grove Village

Western Chapter – Western Illinois Various

CPE Meeting – Various locations

Check the ICPAS website weekly for new events posted.

Please view the most current schedule and get meeting details at

www.icpas.org Questions:

Contact: Becky Whitehurst, Chapter Relations Coordinator Email: whitehurstb@icpas.org or call 800.993.0407 (Illinois only)

BANKING

“Whether you are an accountant or a widget maker, the bank needs to understand the business,” he explains. “Do you want a bank to cut its teeth on a new industry through your organization?

“Banks that are more likely to give you access to senior bankers may have higher fees,” he continues. “Unfortunately, the trend these days is that many banks put junior employees on the front lines of relationship management. If you find that your contact at the bank is inexperienced with limited authority to make decisions, you may want to consider talking to another bank. I once worked with a small boutique bank. The fees were much higher than if I had gone with the megabanks, but I felt like the bank could do more for me in terms of providing access to capital, so the fees were worth it.”

That said, Gaebler also cautions organizations not to be “nickel and dimed.”

“All things being equal between two banks, you clearly want to go with the bank that has lower fees. However, it's sometimes a labyrinth of fine print that you have to work through to understand the bank's fees,” he explains.

Pay attention to the entire relationship package, says Robertson “Some may entice you with a low interest rate loan, but then they may charge you higher-than-average fees on daily transactions and services,” he warns. Look out specifically for fees associated with transactions such as wire transfers and stop payments.

3. Don’t buy into “bigger is better” Thacker classifies banks into three categories—megabanks, regional banks and community banks. Currently, of the 8,000 banks in the United States, approximately 7,500 fall into the community bank category, or those with assets of less than $1 billion.

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INSIGHT icpas.org/insight.htm

With the exception of a few services that would be used by large, international companies, Thacker feels that there are very few differences in the types of services you get from a megabank versus a community bank. “The types of things the megabanks can offer often can be done on the community bank level,” he explains. “The vast majority of accounting professionals will find the best opportunities for relationships among community or regional banks.”

On the flip side, Robertson cautions that being the largest customer a bank services is a big red flag. “You can potentially cause problems for a bank from a regulatory perspective,” he explains.

He describes a situation where a startup organization established a relationship with a community bank and then grew to a level where it needed a $20 to $30 million loan. Based on a bank’s capital, ”Its board of directors or loan committee may not be able to approve such a large loan for a single customer due to the risk to the bank should the loan go bad,” he explains. “Bank regulators also pay close attention to concentration risk in a bank’s loan portfolio and may take issue with a single customer representing a large portion of the bank’s total loans.”

4. Find a bank that understands your industry “There was a time when banks tended to specialize in a particular industry,” says Robertson. “But it seems they have gotten away from that for the purposes of diversifying their loan portfolios.”

Nevertheless, he suggests that businesses still ask for references from customers within the same industry or from those who are at least aligned with the industry.

“A banker who knows a particular industry well can serve business interests better than a banker who doesn't understand the economic climate or current challenges for a business,” says Gaebler. “For example, a startup financial services firm may want to obtain an SBA loan. In this case, it makes sense to look for banks that have a strong track record in SBA lending. Always check the bank's recent lending activity. If it was an SBA active lender three years ago but is no longer actively involved with SBA loans, that's an important thing to know.”

From an accounting perspective, Thacker explains that some banks have a strong “professional and executive (P&E)” lending department geared towards specific professions, such as accounting, legal and medical. “They cater more to those groups than a normal commercial lender would,” he says. “The bank’s goal is to bring in the firm’s business—as many deposit relationships as possible. A lot of CPAs don’t know to ask about a P&E department.”

5. Get advice from the trenches At the end of the day, professionals agree that one of the best practices in choosing a business bank is to ask around. Word-of-mouth referrals are an underrated resource.

“Comparison charts can be misleading. A banker once gave me a comparison chart that indicated his bank was the best in the area. Based on the chart, it looked like he was correct,” Gaebler recalls. “However, the piece of the puzzle that wasn't readily apparent was that the bank only worked out of grocery stores, and there was no separate treatment for business accounts. Business owners had to wait in line along with other bank patrons, and those lines were incredibly long. So, on paper the bank looked great, but in reality it would have been a nightmare.”

2010 | call for nominations

Women toWatch AWARDS The Illinois CPA Society, together with the AICPA, is once again looking for outstanding women who have made significant contributions to the accounting profession, their organizations, and to the development of women as leaders.

AWARDS WILL BE GIVEN IN TWO CATEGORIES:

experienced leaders • • • • •

mentoring other professionals public or community service major or unique contributions to the profession leadership in workplace improvements authorship of professional articles

emerging leaders • demonstration of leadership • contributions to the profession • creation and implementation of unique initiatives in the workplace • public or community service • involvement with her alma mater

For more information or to nominate a deserving woman, visit www.icpas.org, or call 800.993.0407, ext. 220.

Deadline for submissions is June 7, 2010

RISK

Defense Plan Do you need professional liability insurance?

By Sheryl Nance-Nash

M

Want to reduce your premium costs?

Prepare a thorough insurance submission Educate insurers on your exposures, explain the trends you’re seeing, and communicate regularly, especially about claims and circumstances; don’t give them any surprises, says Lemme.

Develop & adhere to a risk management program “Include rigorous client acceptance and continuation policies,” Lemme advises. “Furthermore, don’t allow general partners to go beyond their expertise, and encourage or even mandate the involvement of specialists and consultants when necessary.”

Exclusions & Limitations All policies contain exclusions and other limitations. “Take extra care in understanding how these provisions affect your coverage, and seek the advice of a qualified insurance broker or legal counsel,” Lemme advises.

Develop a faultless track record

Supplementary Benefits

“What (juries) care about is CPAs getting it right,” says Parisi. “[I]f something looks irregular, it probably is. Investigate it, document it, communicate it, and get it right.”

Also check for additional or supplementary benefits such as loss prevention and tax hotlines, subpoena services, and pre-claims legal counsel, which are provided free of charge by some carriers. “Some will provide such services but put restrictive limits on the amount of access to them,” warns Ronald Parisi, CPA/JD, national program director for CAMICO Mutual Insurance Company.

Avoid conflicts of interest Participating in business deals with clients is often a mistake.

Advising both parties to a transaction, or helping them resolve a dispute, is also risky.

Avoid lawsuits for fees Lawsuits for fees and countersuits almost always result in CPAs spending far more in attorney fees and in lost billable time than is warranted for the fees owed to them.

26

istakes happen. Things go wrong. Not all clients are happy clients.

“Maybe you prepared a financial statement for someone who now says they suffered a loss because of the statement, or you advised a client on a business decision and the business partner now says you did something wrong, or unknowingly a client’s information gets into the hands of a third party and they sue you for disclosing confidential information,” explains Peter Sullivan, a partner with the law firm of Hinshaw & Culbertson. “It could be that embezzlement occurred at a client’s place of business and the client suffers loss. They will then look for a deep pocket because the person who stole the money has long spent it. So they sue the accountant for failure to detect the embezzlement. The situations are endless and not always foreseeable. But when you get sued, you have to defend yourself.”

Professional liability insurance, in essence, is your safety net. “Anyone who delivers professional services to clients needs professional indemnity insurance. This includes the firm, its current and former partners, members and principals, directors and employees,” explains Ken Rand, a senior VP at Marsh, which provides insurance program management.

What can a professional liability policy do for you? “Generally, it provides the insured (CPA firm and its subsidiaries) coverage for any claims based on a negligent act, error or omission in the rendering of professional services as defined by the policy,” explains Mario Lemme of Lemme Insurance Brokers and Consultants. Basic policies may include accounting services only, or may add activities such as consulting, trustee work and financial planning. Some also may broadly define professional services as advice given or services performed for others of whatever nature, as long as a portion of the fee inures to the benefit of the insured, says Lemme.

This checklist will help you find the right policy.

INSIGHT icpas.org/insight.htm

Coverage Amount Deciding how much coverage to buy is tough. “The old rule of thumb is one times fees or $100,000 per licensed employee,” says Bill Thompson, president of CPA Mutual RRG. “But some state boards have minimum requirements. There are a number of key considerations.”

“Asking, ‘What is the firm’s annual revenue?’ is a good starting point. Policy limits chosen by firms tend to approach their annual revenue,” says Parisi. In his experience, as long as the policy limit is sufficient, relative to the net worth that can be legally reached, plaintiffs generally will accept the amount available under the policy. “We are not advocates of a ‘buy as much as you can afford’ strategy,” he says. The size of a policy limit can unfortunately motivate plaintiffs to exaggerate their damages and make it harder to negotiate a reasonable settlement. “The best size is neither too big nor too small,” he says.

Policy Limits Also consider the fact that entities such as LLCs and LLPs require certain liability insurance limits, and that the types of services your firm offers can affect those limits. For example, will you need a single-limit policy or a split-limit policy, which has a per-claim limit as well as an aggregate limit? Claims from audit services tend to be relatively large, while claims from tax services tend to be smaller and to occur more frequently, says Parisi. A higher single-limit policy might work better for a firm specializing in audit services, while a split-limit policy might make more sense for a firm specializing in tax services.

Furthermore, if you have one or more high-net-worth clients, or audit clients with significant lines of credit or loans to the business, the amount of damages that may be claimed as a result of an error or omission will affect how high the policy limits should be. Also, certain types of industries and services—such as construction, financial services, investments, etc.—pose a higher risk than others.

Carrier Reputation “You want an insurance carrier that is Rated A or above by AM Best,” says Randy Mrozowicz, executive vice president for Monitor Liability Managers, LLC. Have an idea, too, about the insurer’s commitment to the accounting market. When the market turns, companies will exit for more profitable lines, says Thompson. Furthermore, what’s the company’s claims handling reputation? “Ask a local attorney about the insurance company’s claims processing. Are they slow pay, no pay or what?” he asks.

Loss Prevention The loss prevention services the carrier provides are just as important as any other factor, says Parisi. Avoiding a claim can result in significant savings to a firm. Lost billable hours spent in legal proceedings can be substantial, as can damage to a firm’s reputation.

Cost “The cost of professional liability insurance for a CPA firm can be significant—even, perhaps, its largest expense after payroll and rent,” says Lemme.

But while premium matters, it shouldn’t be the main factor in deciding which policy to buy. “If a firm is just shopping the market for cheap price quotes, it will end up with a cheap policy. However, a cheap policy could end up being more expensive in pre-claims or claims situations because of the carrier disclaiming liabilities or taking inappropriate or detrimental actions,” says Parisi.

What’s more, you need to understand what impacts cost. “The actual premium cost is difficult to generalize, as it depends on a number of factors such as revenue, professional headcount, geographic footprint, management structure, subsidiaries, areas of practice, industries served, client bankruptcies/insolvencies, commitment to risk/practice management and claims experience over the last 5 to 10 years,” Lemme explains. “Another important consideration is insurance market conditions. The insurance market is cyclical in nature and there are periods when supply (or insurance capacity) exceeds demand, resulting in competitive market conditions.”

Once you’ve picked a policy, review it on a regular basis—at least once a year for large firms, and every other year for smaller firms. Make sure you have appropriate limits and coverages for your firm, and that you’re receiving the services you need at the right prices.

However well-prepared and well-researched you are, though, bear the law of averages in mind. “[J]ust about every CPA will experience at least one claim in his or her career,” says Parisi. icpas.org/insight.htm

MAY/JUNE 2010

27

GREEN BUSINESS

Green This Good for the environment, good for business.

By Kristine Blenkhorn Rodriguez

A

ccording to the National Recycling Coalition, the amount of waste recycled in the United States has almost doubled over the last 15 years, clocking in at 33 percent today. Much of that effort has been spearheaded by our cities and the managers of the buildings in which we work.

Professional services firms haven’t exactly been on the leading edge of this trend, but they are catching up. The Chicago Green Office Challenge [chicagogreenofficechallenge.org], which aims to reduce the amount of global warming-related pollution Chicago offices generate, boasts a heavy concentration of professional services firms in its latest participant list. Using a Green Office Scorecard, participants are acknowledged for efforts in up to 50 green strategies.

Peter Steinmeyer, an attorney in Epstein Becker & Green P.C.’s Chicago office, talks about his firm’s participation in the Challenge: “We have reduced our electric bill by 15 to 20 percent since joining the Challenge. We’ve reduced paper usage and costs by one-third. And we spent almost nothing to participate in this program. The ROI has been great.”

He cites tasks as simple as unplugging unused computer equipment and fixing malfunctioning motion/light sensors. “We ask people to turn off the lights in conference rooms, bathrooms and copy rooms when they’re not in use. We ask them to use doublesided printing when possible. We purchased a set of plates for the break room. No more throwaways. It has really been painless and yet is saving us money.”

Priceless Greening: No-cost ways to create an eco-friendly office. n

n n n n n n n

28

Paper Purge mailing lists—check out go-green.com for tips on how to reduce unwanted mail, including removing the name of your business or employees from major mail databases and purging former employees from existing mailing lists.

Add a “Think Before You Print” tag to all email signatures.

Implement a double-sided or “duplex” print policy.

Use single-spaced type and adjust page margins to the minimum in order to fit as much type as possible on a single page.

Encourage employees to create email files rather than printing.

Supplies Organize your office supply inventory to avoid redundant ordering. Also make it a policy to reissue unused supplies.

Ask employees to bring in their own mugs, plates and cutlery; do away with the disposable stuff.

Opt for green office supplies, such as refillable pens and pencils and dual-powered calculators (solar and battery), provided by local and/or green suppliers.

INSIGHT icpas.org/insight.htm

n n

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Recycling If not already in place, work with the office of the building to contract with a recycling company.

Issue employees with recycling bins for paper, cans, glass bottles, plastics, etc., or set up a recycling area in the office. Make sure staff have easy access to this area.

Ene rgy Reduce the number of appliances in your offices—no minirefrigerators or coffee-makers at individual desks.

Consolidate spaces, such as storage rooms, to reduce the number of areas requiring maintenance.

Switch off and/or unplug all equipment when not in use.

Switch off lights whenever leaving a space that is not in use.

Maximize on natural light sources—change desk orientations to better access windows, etc.

Don’t heat/cool corridors, storage rooms and unused spaces.

Turn the temp up/down one or two degrees in the winter/summer.

Opt for CFL light bulbs.

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GREEN BUSINESS Establishing a recycling program isn’t hard, says Mike Mitchell, executive director of the Illinois Recycling Association [illinoisrecycles.org]. “About 75 percent of the buildings in Chicago’s Loop are recycling. If this was rocket science, if they weren’t saving money, if it was expensive, they wouldn’t be doing it.”

Paul Forrester, partner and chair of Mayer Brown LLP’s Chicago office Green Committee, says his firm “went for the quick, relatively painless actions that would have immediate real impact,” including buying paper with greater recycled content, duplex (two-sided) printing, replacing Styrofoam cups with china mugs, and using tap water over bottled water. With approximately 1,000 people in two different Chicago office locations, these small steps had a significant impact on Mayer Brown’s waste stream and costs.

“Most firms think about paper but forget about things like bottled water and soda cans,” says Mitchell. “If you average two drink containers per person per day and you’re not recycling, think about how much extra you’re paying for waste.” In an office the size of Mayer Brown’s, a firm would generate 40,000 drink containers per month.

While greening was the “right thing to do,” client demand also spurred the effort, says Forrester. “When we’ve filled out RFPs over the past year, our large institutional clients have begun to ask about our carbon footprint. They want to know how green we are.”

For those businesses whose buildings may not have a recycling program in place, the Illinois Recycling Association will be rolling out a web-based workplace recycling kit this summer. It will include a service provider list and instructions for starting an office recycling program.

Mitchell breaks it down into four simple steps: 1. Understand how garbage “works.”

Find out how your building’s garbage is collected and what recycling opportunities already exist.

2. Do a waste audit.

“You can pay a company to do a really thorough job and give you a binder with a fancy printed report, but you can also do this on your own,” says Mitchell. “It’s really just figuring out where your waste is generated and what it consists of—is it paper, water bottles, etc.?”

30

INSIGHT icpas.org/insight.htm

3. Target your materials.

“In an office setting, the most valuable resource is usually paper,” says Mitchell. “So put your recycling bins in the most convenient spots. Mark them clearly. Educate people beforehand via a memo or brief meeting. If you put a recycling bin back by the loading dock and they have to go down two floors to get to it, forget it.”

4. Appoint a coordinator.

You need someone to communicate regularly on the program’s progress and successes.

Upper management is extremely important to the greening effort.

“Even if the boss has nothing to do with running the program, the boss must set the example and tone for everyone in the office if you want people to take it seriously,” says Chelsea Gleis, owner of Office Greeners LLC. “And unless your cleaning/maintenance crew is familiar with your recycling program, you may not achieve the savings you intended.“ Those savings, says Gleis, can be upwards of 25 percent in terms of carting or waste-hauling costs alone.

“If you take it from the angle of efficiencies and saving money, no one argues,” says Gleis. “Even the least green employee can’t argue with saving money.”

The National Recycling Association posits that if offices were to push recycling rates even 10-percent higher for things like aluminum and steel cans, plastic PET and glass containers, newsprint and corrugated packaging, the amount of energy saved would: n Heat 1.5 million American homes in a moderate climate for one year. n Provide electricity to 1.8 million homes for one year. n Save Americans about $957 million in costs for barrels of crude oil not purchased.

The days of convincing management to go green should be history, says Epstein. “When I was a brand new lawyer in 1990, the firm I worked for introduced a rudimentary recycling program.

The partners joked about having to go to ‘trash training.’ Please.

Those days are over. We’re all more enlightened. Management gets it. You just have to show them it will save money instead of costing them.”

join CPAs from across the state help those in your community get a free t-shirt

Day of Service

have fun

Be a part of the Illinois CPA Society’s first CPA Day of Service on September 24, 2010.

How it works: 1. Choose a community organization or charity to help. Ideas include working at a soup kitchen, cleaning a local park, or painting a homeless shelter.

2. Register your volunteer activity plans at www.icpas.org/volunteer.htm 3. Receive a free CPA DAY OF SERVICE t-shirt (while supplies last).

Volunteer with your work colleagues, your friends, or by yourself – JUST VOLUNTEER! Questions? Please contact Jill Wiles, Public Service Manager at wilesj@icpas.org or 800.993.0407, ext. 277.

EDUCATION

Business Master Do CPAs in public accounting need an MBA?

By Christine Bockelman

T

he CPA is still the undisputed king of accounting certifications, but there’s a sea of other three-letter designations that can supplement it. Of these, it’s one of the more high-profile, the MBA, that also tends to be the most contentious.

A Masters of Business Administration, a degree held by many of the country’s best and brightest business leaders, would seem to go hand-in-hand with a CPA. “I think an MBA prepares a person for the dynamic changes they’re going to have in their careers as the business world, and the whole world, changes,” says Joseph Ament, professor of accounting and taxation at The Walter E. Heller College of Business Administration at Roosevelt University in Chicago.

Unfortunately, it’s not all black and white. For starters, earning an MBA is a huge investment in time and money—up to $90,000 and two years off work. And then there’s the whole question of public versus private sectors.

“In the public accounting model, an MBA isn’t as critical as it is in some other industries,” explains Warren Stippich, partner and Chicago practice leader of Business Advisory Services at Grant Thornton. “When I’m going through the criteria of whether or not to promote someone, I measure them on client service, technical ability, business development skills and the ability to work in a team environment; not if they have an MBA,” says Stippich. “An MBA can help round out someone’s base of knowledge, but I will not promote John over Suzie because he has an MBA. In some public accounting firm service lines, the MBA has less impact.”

Stippich doesn’t necessarily carry the unanimous vote on this point, however.

“The combination of being a CPA and an MBA, from my perspective, is optimal,” says Dorri McWhorter, CPA, a partner in the Chicago office of Crowe Horwath. Working in the public accounting sector, “I think it gives me such a greater depth of understanding from a business perspective, and it allows me to take a more comprehensive approach to solving problems.

Business models are changing so quickly and if accountants don’t really understand those models or concepts, we risk becoming irrelevant to some degree.”

“I don’t think an MBA is a required criteria for advancement in public accounting, however I do see where it could provide some benefits,” says Steve Ferrara, partner and assurance services business line leader at BDO. “A public accounting firm is still a business. It needs to be run by people who can help it grow, and an MBA will help give them a broader view of business.

“I recently met with our senior managers to discuss the skills needed to make it to the partner level,” he adds. “One is business development skills, including finding new clients, and the second is business advisory skills when working with clients. An MBA would help our team broaden their focus in developing such skills.”

In the end, though, the value of an MBA is up to the individual to weigh against investments of time and money. Although, even here, recent history may be throwing MBA seekers a bone.

The story begins in 2006, when 47-year-old Lori Singleton-Clarke filed her 2005 return.

According to the Wall Street Journal, Singleton-Clarke claimed about $50,000 of income, several smaller deductions, and $14,787 of expenses for an MBA from the University of Phoenix.

Typically, complex tax laws discourage students from taking the deduction. The IRS challenged her on the education deduction, but she refused to back down, believing that it was allowed according to IRS Publication 970. She sat before Judge Stanley Goldberg in late 2008, and almost one year later, in December 2009, was victorious.

While the ruling doesn’t mean everyone will be able to deduct their degrees, experts say it might just put the tax-deductible MBA within the realm of possibility.

32

INSIGHT icpas.org/insight.htm

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Class of 2010, the Illinois CPA Society applauds your magnificent achievement.

Hailey D. Adams Ryan M. Adams Jason Aguiar Emmanuel Akwafo Aiden Allen Jennifer Alma Courtney Ambrosch Jason F. Ananias Brett Anderson Danielle Anetsberger Ben Antao Jeremy Archibald Stephen H. Arendt Dana Armon Azam A. Azeem Afthab Badimoole Susannah Baney Lazeric Banks Tombari Bariker George Barnett Matthew J. Barr Michelle Bartosik Kathryn P. Batkiewicz Amber Beach Ryan M. Beckmann Michael C. Beesley Megan C. Betancourt Shruti Bhat Asta Bickauskaite Gina A. Biel Denise Biggs Thomas Bishop Allison N. Blackburn Lauren N. Blaies Tracy Blasiak Amber Blatt Belinda B. Boddy Cesar Bonilla Paulina Boonman Lonnie D. Branch Kierstin D. Brandt Alexander S. Braser Jared H. Breslaw Ryan Brickl Jennifer L. Briner Mustansir Broachwala Andrea M. Brown David Browne Laura E. Brumlove Julia Buhnerkempe Diana Burbick Gregory T. Burke Devin Buswell Jessica L. Buterbaugh

Wei-Ying Chen Xiaoxi Chen Michelle K. Chin Steven M. Chin Brandi Cho You Jin Cho Daniel Christensen Tyler Christianson An-shiuan Chuang Yin Chen Chuang Christine Cisneros Megan Clare Kevin E. Clark Ryan A. Clark Jennifer K. Clement Kendrick C. Coleman Adam T. Corbin Adam M. Corbitt Amanda. Craig Jaclyn R. Creek Mark A. Cynova Matthew Daggett Brittany R. D'Arcy Jennifer L. Davidson Joshua R. Davis Tim Deets Dawn A. Degand Bethany N. Deien Andrew P. Deising Brian Demijan Manuel A. DeMoya Luke M. Derheimer Marti Desjarlais Nam R. Devadas Joseph Diamond Dorina Diaz Rodolfo Diaz Devon L. Dickson Therese A. Djatche Madeline F. Dort Samantha L. Drake Nick Draus Lisa V. Drew Stacie M. Droege Stephen J. Drolet Natalia M. Dudzinska Dariusz Dziurdzik Sarah C. Earnhart Karl M. Erickson

Amber Faber Brittany Falconio Sara R. Falk David J. Farber Ellen Farrell Megan E. Farris Andrea Cantrell Andrew S. Fedele Erminio Caporale Steve Fekety Brendan Carey Jenna Feldhake Nathan A. Catt Yasemin M. Celebi-Ener Gina Fieramosca Ashley M. Francis Pang-Yu Chen Jessica M. Frechette Wei Chen

Shannon Fritz Rachel Froemel Phillip M. Frohn William R. Frost Jennifer Fuerst Eric D. German Jessica Gibbens Kelli J. Gibson Jessica Gildens Jeff Glickman Joanna Golebiewska Laura A. Golightly Andrew Gorup Pattie Grain David Granstrom Craig Green Kevin Gregori Anthony John Griglione Bradley Grimes Richard Gross Anna Gueorguieva Brandon Guyette Sarisa Hall Trista Hanauer Kyle Hangartner Bailey Jo Hasemeyer Laura Hayes Yoon HeeJin Kyle Hempen Lauren Hendrickson Charmaine Henning Carly Herst Denise C. Hodges Sarah M. Hoedebecke Wade T. Hoey Danielle Hoffman Rachel Hofmann Kaitlin A. Holcomb Richard J. Hollowood Jacoby Holtz Jennifer L. Hosmon Adam J. Hruskocy Chih - Ming Hsiang Tongjie Hu Xuan Hu Jianjia Huang Qing Tian Hubschmitt Elizabeth Hudon Elizabeth Hudson Marlow D. Hudson Olivia S. Hugh Sean E. Hughes Kuo-Wei Hung Brian Hwang Heriberto Ibarra Alexander Igolnikov Whitney W. Innes Ryan C. Jackson

Andrew N. Jadin Jennifer A. Janick Katherine Jaronczyk Kenneth S. Jenke Yan Jin Bryan Johnson Timothy C. Johnson Wesley R. Johnson Jacob T. Johnston Joy M. Jones Samuel T. Jones Ashley L. Jozsa Christopher Kadonsky Christopher Kalogcropoulos Andrew Kamphuis Katie Kamykowski Rajashree Kanungo Kevin F. Karam Kevin Karpiel Adam E. Keene Katie A. Kelch Christine E. Kelinske Nikki C. Kemp Theresa Kengott Tim C. Kenwick Maysara Kereytova Sean Kerschen Allison L. Kief Ji Hye Kim Kevan J. Kim Young Suk Kim Kara M. King Kevin J. King Elizabeth Kitchin Heather Knorr Hina Kochhar Lisa J. Koengeter Claire A. Koerner Corie A. Koesler Danielle C. Kole Jarrad Koon David Kosmowski Manali Kothari Usman A. Kothawala Joseph D. Kott Matthew D. Kowalczyk Elizabeth Kraft Bethany Kramer Carly R. Krizmanich Kyle M. Kruke Paula S. Kuester-Coy Supriya S. Kumar Michelle Kwan Jessie S. Lai Matthew Lampugnano Nora K. Lander Whitney F. Lang Michael B. Lange Matthew P. Larson Steven Laube

Boban Lazarevskiy Jessica Q Lee Joseph Lee Ham Li Ling Li Shan Liang Soo Jin Lim Weichun Lin Andrew Litwin Chang Liu Innokentiy Loos Erin P. Lowenthal Jessica Lubczynski Mark Lyznicki Yong S. Mai Krystle M. Malic Olga Malkiman Diana C. Mammoser Sarah A. Manijak Adam R. Manning David R. Mapes Melanie A. Maple Tara Mareth Jeffrey T. Marinier Kristina Marinkovich Jennifer Mark Shanin M. Marshall Lisa Martin Leonel Martinez Kateryna Marynenko Ryan L. Masterson Caitlin McCabe Matt McDonald Michael T. McElyea Beatriz Mendoza Jennifer C. Meyer Brandon L. Miller Christopher R. Miller Joseph M. Park Miller Susana Millinovich Laurence R. Milstein Brittany Minkler Samantha Mirza Renaldo Misrasi Jennifer Mokry Linda J. Montee Monica Moore Sean Morrison Alison J. Moss Sachi An-Thu Moy Ryan M. Mroz Claire Mueller Sean P. Mulchrone Anne F. Munaretto Jerry Munk Kelsey Myers Zachary L. Myers Paul D. Natalino Jennifer A. Neff Michael J. Nejedly Jeremy E. Nelson

Stephanie Nelson Bradley S. Nemeth Dominique T. Nettles Andrew Nicholas Renscher Nicholas Debi Nicoue Rumiana Nihtianova Matthew P. Noffke Patricia Norek Michael A. Novack Tolkynbek Nurgaliyev Beth N. Olson Kenneth M. Orth Andrew Oster Tara Osterhoff Mark H. Paik Thomas Parker Danicka Parks Arjun Patel Reenie Patel Tulsi A. Patel Meghan E. Pearl Amanda Peckinpaugh Akushla Peduruhevage Carissa Pekin Martha V. Perez Lauren M. Peterson Michelle D. Petty Erica Piotrowski Michael W. Plahm David Pociask Kevin A. Pojman Kate Polak Sadiq Poonawala Elizabeth A. Postlewait Amy N. Price Michael Prieto Stephanie Proffitt Kyle K. Putzstuck Lucas Raab Imanuel Rabrich Robin Ragsdale Jason Rahn Ali M. Rampurawala Cameron V. Randle Mary Rathert Joseph A. Raupp Michael Rayfield Adam Rebidas Amanda N. Reed Matthew Reed Paul Reed Ryan Reed Lindsay Regan Thomas A. Reynolds Jamie Richards Robert M. Ritchie David A. Robb Lanita C. Robinson Ryan A. Rogina

Joseph M. Rossi Melody Dawn Rowe Michelle C. Rusin Jonathan Ruswak Brad S. Rutenschroer David Rybak Elnara Safronova Eddie Salcedo Patrick Saliba Benjamin Sanchez Shaely M. Sands Craig M. Sanford Amelia M. Scales John M. Schaffner Ryan R. Schleich Amelia Schmidt Kyle Schmitz Janelle Schoon Brian Schreiber Samantha E. Schreiner Calvin Schultz Kelsey R. Schumacher Adam M. Searles Tim Seong Jai P. Shah Puja S. Shah Logan M. Shalett Danielle Sharp Kayla E. Sharpe Muneer Shehadi Nadia Sheikh Yang Sheng Krunal S. Sheth Victor Shevlyagin Alex J. Shumate Caitlin G. Siedlecki Julia Siegfriedt-Wilson He Siyao Alison A. Skaife Matthew R. Slama Amela Smajkan Ryan A.Smith Tyler H. Smith Samantha Smolin Bryce A. Soer Anthony Solano Kelly Solomon Cindy Song Florence Soyinka Laura Speck Matthew A. Speicher Holly Spence Marcin J. Spik Calvin Stauffer Ronald J. Steele Emily D. Sterling Christina M. Sterzel Susan M. Stoever Justin Stryker Chelsea Sullivan John S. Sullivan Roman Svir

David Sweet Yi-Chun Tang Bryan P. Taylor Tam M. Thai Daniel S. Theisinger Kyle A. Tichy James M. Tolles Taylor Troemel Rebecca Trudeau Joe M. Tulig Molly E. Twigg Jillian Urbelis Lisa A. Vahling Christine M. Valentino Julie Valentyn Joan VanderLaan Jeremy Varel Nicole Vari Sailesh Venkatraman Alissa L. Ventrelli Debbie Wallace Alison L. Walton Ching-Hsien Wang Yan Wang Yan Lin Wang Aaron D. Weiman Kristine A. Weiss Andrew J. Weissenburger Byron R. Wendte Jacqueline C. Wessel Elizabeth L. White Jeff D. White Brian J. Whiting Clarissa D. Wilkerson Meghan Wilkosz Jessica L. Wilson Nichjira Witayanonaketavee Krissy L. Wolfe Kortney M. Wollert Allyson Wolsfeld Pin-Chu Wu Ruey Wu Ruoxi Xiong Anqi Yan Sisi Yi Jeanna Yoon Jennifer C. Young Kaci Young Ronnie Zakhem Walid D. Zeidat Jia Zeng Kevin Zhang Ruojin Zhang Tingting Zhang Huan Zhao Puyu Zhu Amanda C. Zukoski

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INSIGHT icpas.org/insight.htm

Pulse

of the

Profession The present, future and global outlook for today’s CPAs.

By Derrick Lilly

In December 2009 the Illinois CPA Society (ICPAS) Strategic Planning Committee—a subcommittee of the ICPAS Board of Directors—launched an initiative to identify and explore the major trends and challenges facing CPAs and their profession.

Combining their observations and experiences with those of other ICPAS committees, as well as task forces, chapters, member forum groups and the ICPAS LinkedIn community, the Committee gained multifaceted insight into what is influencing and concerning today’s CPAs. The truth is, the profession is facing a future of change and challenge. And let’s be honest, it’s downright unnerving for some.

But the best way to overcome—or at least alleviate—the uneasiness and uncertainty is to be watchful and plan strategically.

During his December 2009 address to fellow board members, Jim Jones, CPA, ICPAS Board treasurer, and COO and CFO of North Riverside, Ill.-based Edward Don and Company, said, “There is always a lot of eye-rolling when you hear ‘strategic planning.’” Contemplating the “Pulse of the Profession” observations, he questioned, “Why on earth should we be thinking and talking about blue-sky issues when we are all on the ground struggling to survive with our jobs, our 401(k)s, our very futures on the line?...There are trends developing and in play that could have a significant impact on our world, our economy, our livelihoods. I can guarantee you that there are some issues out there that if you are not thinking about them…you should be.”

THE HERE AND NOW At the forefront of concerns is the state of the economy—and rightly so. The fallout from failed attempts to take on excessive credit and financial market risk has plunged our economy into depths from which it’s taking extraordinary efforts to surface. The ensuing volatility and growing uncertainty surrounding business and consumer investing and spending has affected nearly every aspect of our economy and lives. As a nation, we’ve been trying to recover from a recession that seemingly nobody expected or was prepared for. Even accounting, which is often labeled “recession-proof,” has felt the pain.

“Most CPA firms are business-to-business service providers,” says Charlie Kuyk, CPA/ABV, CFE, CrFA, CVA, co-chair of the Strategic Planning Committee and a director at Crowe Horwath LLP in Chicago. “In this recession there are fewer business transactions, and thus, reduced need for accounting assistance.”

“CPAs at all levels are experiencing layoffs, pay cuts and underemployment,” adds Annette M. O’Connor, CPA, co-chair of the Strategic Planning Committee and director of corporate financial planning & analysis at RR Donnelley & Sons Company in Chicago.

Financial results reported by Deloitte, Ernst & Young, KPMG LLP and PricewaterhouseCoopers, aka the Big Four, reflect some of the struggles the accounting industry is facing. Citing tough external conditions, slow global economic growth, cost-conscious clients, and sluggish merger and acquisition activity, the Big Four saw their combined revenues for a difficult 2009 fall nearly 5 percent. After years of continuous revenue growth, even a slight decline is a bit of a shock to the system and a real gauge of the economy.

While the Big Four’s cumulative decline isn’t necessarily overwhelming compared to declines in other segments of the financial industry, if the largest accounting firms in the world are showing signs of weakness you can bet their small and mid-sized counterparts are feeling the pressure as well.

Many of our troubles stem from the frozen credit markets brought on by the collapse of Bear Stearns and Lehman Brothers.

With these markets as yet unthawed, the abilities of even able businesses to finance their operations and future investments remain severely crimped. As a result, many organizations continue to weigh the options of additional service and job cuts—all at a time when our economy seems stuck on a merry-go-round of compounding layoffs and budget cuts. As we’ve witnessed in one form or another, layoffs = less spending = less demand = budget cuts, bankruptcies and mergers = more layoffs. This cycle ultimately means more fiscal challenges for businesses and consumers to overcome.

Thomson Reuters’ review of global investment banking activity during 2009 revealed global M&As totaled a mere $1.97 trillion, a 32-percent drop from 2008 ($2.89 trillion) and down a significant 53 percent from the record high set in 2007 ($4.17 trillion).

Hopefully a sign of brighter days ahead, the review also showed an encouraging 32-percent increase in M&A activity during the fourth quarter of 2009, which was the biggest quarter for private equity-backed M&As in 18 months, and the biggest quarter for global IPOs in two years. Consequently, Thomson Reuters sees total 2010 deal activity improving, which could save or even bring back jobs, as long as the capital markets continue to recover and business confidence makes a lasting return.

There may be another silver lining hidden among the lingering whispers of gloom and doom. Despite shedding 10,800 private-sec36

INSIGHT icpas.org/insight.htm

tor accountant positions between December 2008 and December 2009, the Bureau of Labor Statistics (BLS) is anticipating increased demand for accountants in the coming years. The BLS estimates positions will increase 21.7 percent, adding some 498,000 accounting jobs, to reach a total of 1.57 million employees by 2018.

Another boon may come in the form of the US government.

“About 10 years ago I jokingly said to a colleague, ‘We’re all going to end up working for the government,’” says Mary Lou Pier, CPA, president of Chicago-based Pier & Associates Ltd. And, in fact, the excessive credit and market risks and rising cases of financial fraud have incited waves of renewed oversights and regulations that may offer CPAs employment opportunities in new and expanded government agencies. Lending support to the BLS estimates, jobs are expected to follow in the private and public sectors, as organizations realize the importance of enhancing compliance efforts.

“There’s never been a more dynamic time in our industry,” says Jones. “The only one who can stand between all the regulations and the practical application of them is a CPA.” “And the recent big fraudulent schemes such as the Madoff scandal, as well as Foreign Corrupt Practices Act (FCPA) violations, have been a wake-up call,” adds Kuyk, who foresees opportunities increasing for internal auditors, risk managers and fraud investigation professionals.

Looking a little deeper, the CPA’s role and competencies are expected to expand to keep pace with industry and regulatory changes. The ICPAS Board foresees CPAs becoming more involved in certain areas of tax, fraud prevention and detection, risk management, cost control, financial forecasting, loan brokering and estate planning. Expertise in emerging specialties like XBRL (eXtensible Business Reporting Language) and IFRS (International Financial Reporting Standards) could open doors to new opportunities and entirely new CPA roles. And while the CPA credential remains the gold standard, exploring additional niche certifications may help CPAs to stand out from their peers.

Employment aside, another near-term concern persists, namely rising taxes. An unfortunate outcome of the government’s string of bailout and stimulus efforts and recession-hit tax revenues is a skyrocketing national debt and budget deficit. Now, instead of focusing purely on rejuvenating business operations, the ICPAS Board warns that businesses will need to watch out for tax increases and tax credit cuts at the state and federal levels.

“We ran up a lot of debt and that can’t be solved with more debt; you cannot pay off debt with more debt,” Jones stresses. “The government is going to have to raise taxes and they’re going to have to tax things that traditionally have been untaxed. The government has no choice; it needs to get more tax revenue.”

“As a business leader you have to anticipate that taxes are going to rise, and you have to make sure you have more contingency to cover that eventuality,” says Ed Stassen, CPA/MBA, ICPAS Board member and CFO of Chicago-based Recycled Paper Greetings Inc. Unfortunately, he says, “It’s really tough to plan for it because you just don’t know the magnitude until it shows up on the radar screen.

“What I’ve already observed is a lot of state agencies being more aggressive in collecting their fair share of taxes…more audits, more aggressive attempts to make sure they’re getting all of the taxes they’re owed,” says Stassen.

For practitioners, rising taxes and business expenses coupled with ongoing recessionary impacts will likely push clients’ feesensitivity beyond its already heightened level.

“The pressure on fees is huge, and unfortunately the accounting service a client thinks will decrease next year just isn’t going to happen,” says Pier. What’s more, “There’s a standards overload out there, and clients don’t want to deal with it anymore. They’re having hard times with their banks, and anything relating to their numbers—when their numbers are bad—they don’t want to deal with again,” she explains. “A CPA is just another expense.”

As such, the fear of less demand and fewer opportunities for CPAs in the future raises the question, ”Will need outweigh costs?”

The old adage claims that a picture is worth a thousand words. But when someone outside of the industry or corporate world pictures a CPA, can they think of a thousand needs for one?

Countless consumers—individuals and businesspeople alike— still have no idea what “CPA” stands for, let alone what services one can provide. And if consumers don’t recognize a CPA’s importance, then business opportunities will be cut short.

“It’s important that people understand that we are trusted advisors, and you absolutely have to prove your value,” says Pier.

“Even if it isn’t as clear-cut as, ‘What I did for you saved you $6,000,’ you have to explain your work.”

Volunteerism Boosts Careers Shine a positive light on your career and your profession by giving something back. These volunteer opportunities offered through CPAs for the Public Interest, the community service arm of the Illinois CPA Society, give you the opportunity to use your financial expertise to help those in need, and educate the public on the services the CPA profession provides: n

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College Financial Aid Application Assistance – Help Chicago Public School students complete their FAFSA forms.

CPA Board Connection – Serve on the board of directors of a not-for-profit organization.

Habitat for Humanity: Building Financial Foundations – Provide financial management guidance to Habitat for Humanity homeowner families.

IRS Disaster Assistance / Emergency Relief – Help disaster victims understand the services and benefits available to them.

Junior Achievement: Dollars and Sense for Kids – Teach money management skills to elementary and middle schoolaged children.

Military Service Tax Preparation – Provide free tax preparation services for members of the military in Illinois.

Pro-bono Consulting Opportunities – Support small and emerging not-for-profits as they strengthen their financial management systems.

Tax Preparer for Low-income Families – Volunteer to help low-income individuals and families at tax time.

Workshop Presenters – Present a financial workshop for small not-for-profit boards and staff and/or the general public.

To get involved contact Jill Wiles, community service manager, at 800.993.0407 ext. 277 or wilesj@icpas.org. Alternatively, visit us online at icpas.org/volunteer.

THE ROAD AHEAD Taking a forward look at the concept of the CPA image, O’Connor contends that, “The CPA brand needs a serious makeover for both the public and students considering a career in the profession. The CPA image—all work, no fun, no life—needs to be updated to reflect the rewards and opportunities of the profession.”

Without a steady flow of new students pursuing those opportunities, the generation gap already affecting the profession will widen. With Baby Boomer retirement on the horizon, we can’t afford to have the influx of new talent stymied.

The Strategic Planning Committee predicts that the first wave of Baby Boomers will begin stepping down within the next two years, and as they do, the gaps in ownership, executive and management ranks will need to be filled with qualified successors. Consequently, for organizations with an aging staff, succession planning, mentoring programs, leadership training and recruiting strategies will require a more focused approach.

“The real key to succession planning—that I see firms consistently make a mistake on—is planning early. A 5-year ‘route out’ is an absolute must for owners or upper management at that stage,” says Rob Cameron, CPA, ICPAS Board vice chair and principal of Cameron Smith & Company in Springfield, Ill. “Many US companies and organizations have not trained, prepared, or secured sufficient numbers of mid-level managers to fill the executive ranks nationally. A talent pool shortage among those with executive quality potential significantly affects the level of competitiveness of US industries and the quality of service,” warns the American Society of Association Executives and The Center for Association Leadership in Designing Your Future: Key Trends, Challenges, and Choices Facing Association and Nonprofit Leaders.

“Owners need to come down and do more,” says Cameron. “I spend huge amounts of time showing my younger staff how 150 different clients may only create three or four different kinds of work. I show them the patterns and walk them through the thought process.”

What Keeps You Up at Night?

We asked our committees, LinkedIn community and Young Professionals Group, “What four trends or issues do you see on the horizon impacting the CPA community?” Here’s what they had to say: Committees 1. Less need for CPAs 2. Fewer opportunities 3. Complexity of standards increasing 4. Lack of leaders in the profession LinkedIn Community 1. IFRS 2. IFRS 3. IFRS 4. IFRS Young Professionals Group 1. IFRS 2. Finding or keeping jobs 3. Shortage of accounting Ph.Ds 4. Less need for CPAs

12 Trends to Watch Using the American Society of Association Executives and The Center for Association Leadership’s Designing Your Future: Key Trends, Challenges, and Choices Facing Association and Nonprofit Leaders as its guide, the ICPAS Board of Directors identified 12 trends they believe will have the biggest impact on CPAs and the CPA profession going forward: 1. Growing financial market risks and uncertainty, which create turbulence and impede economic recovery.

2. Evolution of decentralized and highly networked companies that utilize freelance and project-based employees. Also, growing demand for transparency and accountability.

3. Baby Boomer retirement, leading to talent shortages. Plus, financial pressures forcing many into post-retirement employment or unretirement.

4. The Internet transforming government, governance and business communications and accountability.

5. The rising economic strength of China and India, which represent an increasing share of global GDP, and may overtake the United States in coming years.

6. Generation Y influencing change in the workplace and society.

Similarly, Pier spends “a lot of time trying to analyze the way I work and define those checkpoints and quality measures to pass on to the person next in line. The grooming of young people to come in and buy you out is just a portion of succession planning.”

Added to the issue of hiring and retention is the issue of retirement—and, specifically, its changing definition. Factors like longer life expectancies, higher living expenses, and declines in retirement savings are forcing many professionals to postpone their retirement plans, opt for phased retirements and even seek part-time work over traditional retirement. Essentially, that translates into fewer growth opportunities for younger generations impatient for promotion. The risk is that talented young professionals will simply move from one company to another in order to achieve their goals.

In response, Dan Rahill, CPA, ICPAS Board secretary, explains that, “It’s important to build a culture within your organization that promotes professional development, transparency, recognition, camaraderie and good team morale. Creating an environment where employees like and respect each other and their managers, and where they want to be a part of the organization is critical.”

Rahill is KPMG LLP’s partner-in-charge, tax for the Chicago metro business unit, and a recruiter and advisory board member at Notre Dame and the University of Illinois.

For now, the Bureau of Labor Statistics predicts that Baby Boomers will continue to stick around, but their overall numbers in the workforce will steadily decline. The number of workers aged 55 and over is projected to make up only one-quarter of the labor force in 2018, whereas Generation Y workers will make up nearly 50 percent. Professionals prolonging their careers will need to adapt to the management style and workplace attitudes of their younger colleagues, who will soon make up the vast majority.

In fact, the way business is conducted is likely to change drastically as Gen X and Y rise in influence. The challenge is to calm tensions and harness each generation’s unique abilities and qualities.

“You have to be nimble and you have to think outside the box,” says Cameron.

“Sometimes there’s conflict because the older professional doesn’t want to give, but open-minded people who are seeking a common goal can have a great meeting of the minds; both parties can coexist very well,” says Jones. “How we meet the goals may be dramatically different, but the method to get to the goals is really secondary.”

They are “digital-natives,” civically engaged, and more politically and socially tolerant than their elders.

7. The widening generation gap between employees, which is creating tensions.

8. The increasing popularity of online versus classroom education.

9. Population diversity (minorities make up one-third of the US population), which affects political and economic outlooks.

10. Rising US personal and federal debt, which impacts the US’ overall financial stability.

11. Deepening US outsourcing, which raises concerns over employ-ment opportunities, cost control and competitiveness.

12. US loss of political and financial influence internationally due to currency weakness, financial market turbulence and adverse reactions to foreign policy.

Drawing on next-generation influences, companies are evolving their strategies to capitalize on new technologies, and therefore keep their competitive edge. “You either adapt to these changes or face an eroding client base and high employee turnover, or both— at least over the long-haul,” says Kuyk.

As a result, accountants, CFOs and other finance professionals are being called upon to analyze and consult on IT spending and investments, therefore finding the most flexible, cost-effective and profitable solutions.

“You definitely need to understand technology. The exceptional CFO or CPA is one that has the vision of how this expenditure can support the initiative to move a business forward,” says Jones.

Gartner Financial Executives International’s 2009 Technology Issues for Financial Executives Survey, reveals that 42 percent of IT organizations report to the CFO, and that statistic is expected to grow.

“A lot of companies have eliminated the COO job and have rolled those responsibilities over,” says Jones. “Now the finance guy is involved with not only finance but operations and technology as well. That’s a pretty big triumvirate of responsibility.”

The evolution of technology in the workplace continues to influence the way we complete our tasks. Today, there’s a greater demand for transparency, accountability and seamless delivery of services; we’re seeing blogs, the Internet, mobile devices, virtual networks, data rooms and cloud computing playing greater roles in supporting business transactions and customer service; and social networks are increasingly becoming interwoven into communications with staff, partners, clients, customers and shareholders.

“People have raised their expectations,” says Jones. “Connectivity is enormous; you can really set yourself apart with it.”

“Everything happens more quickly than it used to because technology has us connected all of the time,” says Stassen. “The speed of decision-making has accelerated because you are operating in a 24/7 environment.”

“The business model is shifting,” Kuyk explains. “A small firm can be as competitive as a big firm, and can provide services for less money. That’s a window of opportunity for smaller firms to play in a bigger environment. You can have a small company in a suburb of Chicago selling products or services to international customers much easier than you ever could before.” icpas.org/insight.htm

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THE WORLD AROUND US Internet World Stats [internetworldstats.com] reports Internet users in China and India have increased by more than 1,500 percent over the last decade, and China alone now has more users than the United States. On that note, it’s no surprise that emerging markets are now taking on higher-value tasks and maturing into formidable players on the global stage.

“The coupling of the Internet and global business is a dynamic that is affecting all accountants today. You just have to pay attention to it; your competitor is not necessarily the CPA down Madison Street,” says Kuyk. “It could be the chartered accountant in India.”

In its Global Portfolio Strategy report, “The BRICs Nifty 50: The EM & DM Winners,” Goldman Sachs points out that BRIC (Brazil, Russia, India and China) companies are becoming increasingly competitive on cost—and on an international scale. This means that US professional services companies, like accounting and investment firms, are being compelled to offshore and outsource tasks to drive top-line growth.

“With a tough economy people are looking for value all of the time. Without compromising quality, in order to achieve a lower price point in this economy many firms and companies are looking to outsource,” says Jones.

“There is almost no accounting function that isn’t being looked at by international service providers,” says Kuyk. “It’s not just the back-office credit card operation; foreign outsourcing is permeating all levels of business enterprise. The outsourcing of jobs is with us today, and will likely continue.”

India’s call centers, for example, known primarily for their computer and electronics customer service and tech support, are evolving into accounting, consulting and tax service providers.

Investment banks are also increasingly outsourcing parts of their research divisions to India and other emerging markets.

“The market says it wants the best product for the best value. It’s a very easy decision, and competing against that decision is going to be pretty ineffective,” says Cameron. “To stay ahead in today’s economy you have to be nimble and you have to be open to change because the market is much freer to choose the direction it wants to go.”

The long-term perspective, then, points to emerging markets taking market share from the United States. Based on Goldman Sachs’ estimates, BRIC economies are expected to account for 50

In Touch with Technology Respondents to Gartner Financial Executives International’s 2009 Technology Issues for Financial Executives Survey say execs should explore these technologies: n n n n n n n n n n n n

Web-oriented software (37.1 percent) XBRL (29 percent) Governance Risk and Compliance or GRC (24.8 percent) Social Networking (19.5 percent) Cloud Computing (16.7 percent) Software-as-a-Service or SaaS (15.7 percent) Green IT (14.8 percent) Service-Oriented Architecture or SOA (13.8 percent) Corporate Social Networking (13.3 percent) Unified Communications (11.9 percent) Carbon Accounting (6.2 percent) Enterprise Mashups (6.2 percent)

percent of global GDP by 2050, and the ongoing financial and economic troubles in the United States and other developed markets seems to be accelerating this trend.

What’s more, the United States’ global influence and economic contributions continue to be diminished by the dollar’s volatility, lingering concerns over our financial stability and fears of slipping into a “double-dip” recession. It’s widely believed that a weak dollar bolsters international demand for US products and services, but it also weakens its status as a legitimate reserve currency.

Our skyrocketing national debt and budget deficit, for example, is causing uneasiness among major foreign holders of US debt. If investors demand higher interest payments and reduce or stop future US Treasury purchases, the government's ability to finance its borrowing could be at risk; it could be facing its own personal credit crisis.

An international shift away from the US dollar as a preferred currency reserve also could alter the allocation of foreign direct investment in the United States, and change the balance and location of global assets held by corporations, governments and other investors.

Furthermore, as the countries within BRIC, the European Union and the Middle East grapple for more economic and political influence, the world will become increasingly “multi-polar,” meaning that the US’ preeminence will further diminish. Globally, political and economic influences will become more universally intertwined.

“As globalization trends continue, accountants increasingly will be expected to bring international understanding and perspective to their clients,” says Rahill. “We’re seeing it now with many of our global clients, and expect this to increase in the years ahead.”

CPAs therefore will need to become much more focused on being competitive in an international, rather than local, marketplace.

Bureau of Labor Statistics researchers emphasize that, “Continued globalization of business will lead to more demand for accounting expertise and services related to international trade and accounting rules and international mergers and acquisitions.” As such, the potential US adoption of IFRS will likely become increasingly significant to US practitioners—sooner rather than later.

For professionals educated on the matter and up-to-date on international trends, IFRS adoption and a truly global marketplace can present an array of opportunities around the globe. “If and when the United States moves toward conversion to IFRS, there clearly will be opportunities for accountants and other professionals with solid IFRS knowledge and experience to bring value to their clients,” says Rahill.

The AICPA points out that business and finance globalization has led to IFRS adoption by more than 12,000 companies in approximately 113 countries. And in the next two years, major US trade partners, Canada, India, Japan and Mexico will join their ranks.

“You’re going to want to translate the financials of your competitors and see what they’re doing,” says Stassen. “For that reason, pressure will certainly start to build to understand IFRS standards and to be able to read the financial statements.”

The AICPA predicts that, “Once a critical mass of non-US companies in a certain industry sector begin to report their financial results using IFRS, there will likely be pressure for US issuers to do the same.” The bottom line, according to the AICPA, “is that CPAs need to begin to prepare for the day in the not-so-distant future when the SEC could designate a date for voluntary, or even mandatory, adoption of IFRS by all US public companies.” icpas.org/insight.htm

MAY/JUNE 2010

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MERGER/SALES

BUSINESS SERVICES

Successful Northshore CPA Firm seeksWe are a 65 person full

Look at our D N A We are KUTCHINS, ROBBINS & DIAMOND, LTD., a growing Schaumburg Illinois full service CPA firm. Come meet with us to hear first-hand about how we are Different, New and Attractive –

service CPA firm that would like to discuss purchasing and/or merging with your wi firm. We have completed 15 such planning and transactions over the growth. past 30 years. Please contact me at An excellent earlh@msco.net to opportunity for begin building our future together.

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We have openings in our audit and tax departments for the right professionals with two or more years of experience.

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SEEKING MERGER PARTNER IN MISSOURI OR SOUTHERN ILLINOIS Conner Ash P.C. a progressive, dynamic and growing firm is seeking a merger with a quality firm that is committed to creating and maintaining Raving Fan service. We offer a full range of services including attest services, income and estate tax planning and compliance, accounting and outsourced controllership services, payroll processing, strategic planning and wealth management. We would prefer our merger partners to become part of our management team but will certainly consider retirement minded practitioners. We consider our employees to be our greatest asset and we value a true work life balance. If you are interested in exploring how teaming with Conner Ash may benefit you, your firm and your clients please contact Howard Rosen at 314-317-6500 or hrosen@connerash.com.

ADVERTISER INDEX Visit these websites for more information on the services and products provided by advertisers featured in this issue of INSIGHT.

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27 Back Cover

Inside Back Cover 21 Inside Front Cover

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INSIGHT icpas.org/insight.htm

Successful Northshore CPA Firm seeks to merge in a practitioner with existing client base for succession planning and growth.

An excellent opportunity for someone interested in achieving a clear path for ownership and growth on many levels. e-mail to: jdcpanet@aol.com

BUY OR SELL AN ACCOUNTING OR TAX PRACTICE ILLINOIS PRACTICES FOR SALE: Grayslake CPA Practice gross $491K; Rochelle CPA Practice gross $106K; Peoria Area Tax & Accounting Practice gross $137K; Springfield Area CPA Practice gross $135K. For details, call 1-800-397-0249 or visit us at www.accountingpracticesales.com to inquire about available opportunities and register for free email updates. THINKING OF SELLING YOUR PRACTICE? Accounting Practice Sales is the leading marketer of accounting and tax practices in North America. We have a large pool of buyers, both individuals and firms, looking for practices now. We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and get the deal done. To learn about our risk-free and confidential services, call Trent Holmes with The Holmes Group at 1-800-397-0249 or email trent@accountingpracticesales.com

ACCOUNTING OPPORTUNITY Small CPA firm with many high earning clients located in Buffalo Grove looking to bring in a Junior CPA for future partnership.

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Mark Your Calendar!

2010 CONFERENCES Taxation on Real Estate May 13 – Chicago

Not-for-Profit Complex & Emerging Accounting and A-133 Issues June 21 – Chicago

Business Valuation Symposium May 14 – Chicago

Rainmaker Academy Workshop™ v.2.0 Employee Benefits May 17 – Chicago

Business Development, Branding, Client Communication and Pricing for Profit July 20, – Chicago Full-day workshop co-sponsored by the Illinois CPA Society

Estate & Gift Tax May 18 – Chicago

Forensic Accounting June 2 – Chicago The Illinois CPA Society

Business Tax

Annual Midwest Accounting & Finance Showcase

June 10 – Chicago

August 24-25, 2010

Business Tax

Donald E. Stephens Convention Center, Rosemont IL Free Access to Exhibitors 16 hours of CPE for $ 280

June 15 – Springfield

For the most current information or to register, visit www.icpas.org.

Dates and locations are subject to change. All conferences offer CPE Credit; check our website regarding CLE and other specialty credits.

TIME&TALENT A SHOUT OUT FOR ICPAS MEMBER VOLUNTEERS

Junior Achievement— Dollars & Sense for Kids In the fall of 2009, the Illinois CPA Society (ICPAS) began a partnership with Junior Achievement (JA) to match ICPAS CPA members with JA volunteer opportunities in Illinois. Through this partnership, ICPAS member volunteers were invited to lead fun, hands-on activities to teach K-8th grade students in Chicago, Mount Prospect and Carol Stream all about money management, the workings of the economy and the value of an education.

This new partnership means that CPA volunteers are able to become professional role models to young students, while teaching and reinforcing vital life skills.

Spring 2010 Junior Achievement volunteer opportunities in Chicago and suburban communities are available through May 2010. In the fall of this year, the Society will offer JA volunteer opportunities to communities in both the Chicago area and Central Illinois. Interested members are invited to attend a volunteer training session; all activities are presented using JA learning materials.

Thank you to those ICPAS members who shared their time and energy to present Junior Achievement last fall:

FOR MORE INFO Contact Jill Wiles, ICPAS community service manager, at wilesj@icpas.org or 312.993.0407 ext. 277. Or visit us online at icpas.org/volunteer to learn about upcoming volunteer opportunities.

Serve on a Not-for-Profit Board Not-for-profit organizations in your community are looking for the skills and expertise that only CPAs can provide to their boards of directors. Serving on a board of directors, and lending your financial skills and professional experience, is a valuable way to take an active role in strengthening your community and supporting a cause or organization that is important to you.

The CPA Board Connection is an online directory of more than 150 organizations across Illinois that are actively seeking a CPA to join their boards. Find the board service opportunity that fits your specific skills, time requirements and areas of interest by accessing the directory at icpas.org today. Note that previous board experience is not required.

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INSIGHT icpas.org/insight.htm

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The Paychex Partner Program from AICPA Business Solutions is a valuable resource in this challenging economic environment. Paychex will ensure that your firm and clients are staying up to date with ever-changing legislation–including the new tax incentives and COBRA premium subsidy programs. Learn why over 20,000 CPA firms rely on the Paychex Partner Program to continually keep their firms and clients in compliance with all the latest regulations.

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