The Magazine of the Illinois CPA Society
www.icpas.org/insight.htm | January/February 2009
In this issue
IFRS takes financial reporting global Compliance know-how could make you a star WAR: Economic ravages or riches? Gen Y wants to give and give and give... Can Illinois rebuild its real-estate investments? Plan for the worst, prepare for the best Donâ€™t let recession history repeat itself Does business succession have to be so taxing? Will strict liability provisions punish you?
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One World, One Standard By Kristine Blenkhorn Rodriguez International Financial Reporting Standards are crossing the globe.
Compliance Star By Selena Chavis Do you have the most in demand accounting skill internationally?
War & the Economy By Carolyn Tang Regardless of your political or moral take on the concept of war, it
can’t be denied that conflict impacts a country’s economy.
The Giving Generation
By Allison Enright For Generation Y, money isn’t the be-all and end-all.
The Money Pit
By Margaret Schroeder
January/February 2009 Vol.58 No. 5
Are Illinois real-estate investments a thing of the past?
By Allison Enright All businesses plan for the best, but only those that plan for the worst will weather the storm.
8 Recession Lessons
By Sheryl Nance-Nash The last round of economic woes and worries taught us something—don’t panic!
By Bradley K. Walton, CPA/CFP/CLU Minority interest could mean majority tax savings for business owners ceding to their heirs.
By Harvey Coustan, CPA
Strict liability provisions could penalize you!
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In the 1930s, the nation was gripped with talk of the Great Depression. And, sadly, we find ourselves talking about the same topic today. Our generation won’t quickly forget the financial bailout, the disappearance of banks and trading companies, the alarming foreclosure rate, the loss of retirement savings and, for each of us, a very personal moment when the global economic crisis hit home. For the CPA profession, the turbulent economy poses a challenge. But it also poses an opportunity. There are lessons to be learned from all of this. And who better than CPAs to teach the public about the types of financial literacy initiatives that will prevent them from digging a deeper hole. To do that, though, we’ll need to show the world that it’s CPAs, with their credentials, credibility, knowledge and experience, who are the ones to turn to for reliable financial guidance. Even before the financial crisis, people were grappling with issues like credit card debt, college education funding and retirement. If you haven’t seen it already, take a look at the Society’s video, Street Sense: What People Say about Money, Planning and CPAs, which is posted on our homepage [www.icpas.org]. In it, I take to the streets to interview everyday people about their finances, and to gauge their financial literacy. The conversations you’ll hear go a long way in highlighting the problem. We now have the chance to write our history. Shaping and enhancing the role of CPAs during this economic downturn not only carries out the Society’s mission to enhance the value of the profession, but also contributes to our personal, national and global well-being. Meet the challenges head on. Draw energy and optimism from your commitment to your profession. You’ll have a real impact on the crisis if you do.
ICPAS President & CEO
I C PAS O F F I C ER S Chairperson, Sheldon P. Holzman, CPA Virchow Krause & Company LLP Senior Vice Chairperson, Lee A. Gould, CPA Gould & Pakter Associates LLC Vice Chairperson, James P. Jones, CPA Edward Don & Company Vice Chairperson, Michael J. Pierce, CPA RSM McGladrey Inc. Vice Chairperson, Ray Whittington, CPA College of Commerce Depaul University Secretary, Charles F.G. Kuyk III, CPA Crowe Horwath and Company LLP Treasurer, Sara J. Mikuta, CPA The Leaders Bank Immediate Past Chairperson, Debra R. Hopkins, CPA Northern Illinois University CPA Review
I C PA S B O A R D O F D I R E C TO R S Brent A. Baccus, CPA Washington Pittman & McKeever Therese M. Bobek, CPA PricewaterhouseCoopers LLP Robert E. Cameron, CPA Cameron Smith & Company PC William J. Cernugel, CPA Alberto-Culver Company (Retired) Anthony Fuller Grant Thornton LLP William P. Graf, CPA Deloitte & Touche LLP Cara C. Hoffman, Blackman Kallick LLP Charlotte A. Montgomery, Illinois State Museum Gerald A. Olsen, Illinois Wesleyan University Annette M. O’Connor, CPA RR Donnelley Logistics Mary Lou Pier, CPA Pier & Associates Ltd. Marian Powers, PhD Northwestern University Daniel F. Rahill, KPMG LLP Lawrence H. Shanker, Shanker Valleau Accountants Inc.
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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 necessari-
ly 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
February 26, 2009 - Chicago, Illinois
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Generations Apart - Yet Only a Cubicle Away Dennis L. Faurote, CPA - President, The Faurote Group and Adjunct Professor, Kelley School of Business, Indiana University
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,
March 17, 2009 - Rosemont, Illinois
CONTROLLERS CONFERENCE: The Changing World of Corporate Finance. Are Your Ready?
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Executive Education Certificate Program Separate yourself from the pack. Complete the five core classes and three electives to receive your certificate. For more information, visit www.CCFLinfo.org c = Core Class
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SEEN HEARD NEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS
Employers Not Making the Grade In the eyes of today’s employees, says Adecco USA’s Employer Report Card 2008, American employers are earning only a “C” when it comes to leadership, communications, equality, work-life balance and diversity efforts. “Employers should take these survey results as a wakeup call,” said Bernadette Kenny, chief career officer and senior VP of human resources for Adecco. “Despite the slowing economy, it is more challenging than ever to recruit and retain top talent. Employers who want to maintain a competitive edge must create the best work environment possible. This report card should serve as a baseline guide for organizations to see where improvements need to be made.”
Alloted to the economic stimulus and financial rescue packages signed into law during FY08. www.whitehouse.gov
Palmtree Enhances e-Government+ Software solutions and services provider PalmTree Inc. has significantly enhanced its e-Governance+ compliance software to further help companies address today’s ever-evolving compliance initiatives and streamline their internal audit processes. e-Governance+ centralizes the tools needed for planning, documenting, testing, reporting, analyzing and remediating compliance efforts at a time when companies have standardized their Sarbanes-Oxley (SOX) compliance programs and are beginning to turn energies inward to fine-tune other audit processes. PalmTree Inc. VP Ted Stone says, “Now that SOX is maturing, companies are able to refocus on improving the efficiency of their internal audit department. As companies look to rebalance internal audit, they will be able to reduce time, costs and manpower by utilizing e-Governance+.” e-Governance+ promises to enhance communication and collaboration, standardize and streamline processes, and reduce the number of man hours spent performing administrative tasks. This highly customizable solution can be tailored to fit any business specification. Three different editions are available (Standard, Professional and Enterprise), allowing clients to choose those features specific to their needs.
To learn more about the benefits of e-Governance+ or to request a demo, call 312.521.7200 or visit www.egovernanceplus.com. 6
$807 billion Appropriated by Congress for supplemental & annual funding of the Global War on Terror from Sept. 2001 through Sept. 2008. United States Governmental Accountability Office.
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The Rich are More Likely to Underreport Income In their study of income tax noncompliance, Andrew Johns of the IRS and Joel Slemrod of the University of Michigan cautiously concluded that, as taxpayers’ “true” adjusted gross income (AGI) increases, so too does the underreporting of taxable income.
Of the 36,699 2001 tax returns used for the study, on average 21 percent of those with true AGI between $500,000 and $1 million underreported taxable income. Twenty percent of those between $200,000 and $500,000 underreported taxable income, while 16 percent between $1 million and $2 million, 13 percent between $100,000 and $200,000, and 11 percent over $2 million underreported taxable income. The numbers are particularly staggering when compared to the 5.6 percent average number of misreports among individuals with true AGI between $1,000 and $100,000.
Estimated total transition cost from US GAAP to International Financial Reporting Standards (IFRS) for the first 110 large companies eligible for early adoption.
Whether the misreporting is intentional or accidental, the fact that high-income taxpayers underreport their taxable income by much higher multiples than middle- and low-income classes may be cause for concern. Taxpayers and preparers should exercise caution accordingly as fines for non-compliance increase.
Securities & Exchange Commission
The complete study can be downloaded at www.bus.umich.edu/OTPR/DITN%20091308.pdf.
Finance Pros are in High Demand Given the current economy, certain skill sets remain difficult to find, according to Robert Half International’s 2009 Salary Guides. The recently released guides point to modest overall salary increases for accounting roles, and highlight the fact that specialized expertise— like account reconciliation and credit / collections experience—can enhance a professional’s marketability. Overall, a 3.4-percent salary increase for finance and accounting professionals is expected in 2009. Companies are showing the most interest in professionals who can help their firms streamline processes and boost profits, and those professionals who are familiar with International Financial Reporting Standards (IFRS). Three in-demand finance and accounting positions are:
• Staff and Senior Accountants To oversee core duties such as maintaining the general ledger, performing account analysis and reconciliation, correcting journal entries, and performing the monthly close. Demand is strong for CPAs with at least three years experience. • Public Accountants In anticipation of Baby Boomer retirees, firms continue to look for highly skilled professionals to address fundamental accounting, tax and audit issues. • Credit and Collections Specialists In response to the current credit crunch, organizations are hiring professionals who can help to reduce inefficiencies and enhance profitability. Visit www.rhi.com/SalaryGuides for more. 8
TAX & ACCOUNTING
The Giving Generation For Generation Y, money isn’t the be-all and end-all. By Allison Enright
o into plastics” was the career advice Ben Braddock received in the opening scenes of 1967’s The Graduate. And for early Baby Boomers, the industry offered what many sought in a job: A solid opportunity to earn a paycheck that wouldn’t bounce. While we still hope our paychecks won’t disappoint us, Generation Y expects something more; namely, an employer that will “do good” and “give back.” Older, more experienced workers may have a hard time understanding what Generation Y perceives work to be. But a lot of formative influences have taught younger workers to behave—and expect—differently. And with Boomers angling towards retirement, human resources departments at companies large and small are scrambling to satisfy the available pool of young talent, for whom dollar signs aren’t the be-all and end-all in job satisfaction. “Gen Y has been labeled the entitlement generation. Growing up, they were given prizes for coming in 13th place. What that’s done is put more pressure on employers to make a working environment that is attractive to recruit and retain some of the most talented young minds. Students and twenty-somethings are interviewing potential employers more diligently and are evaluating not just the package but the cultural fit,” says Nicholas Aretakis, author of No More Ramen: The 20-Somethings Real World Survival Guide (Next Stage Press, 2006). David Morrison is president of Twentysomething Inc., a consulting and research firm based in Philadelphia that focuses on the Gen Y demographic. He says that the generation has expectations of what work should be, and isn’t used to settling for second best. “It’s important to remember that these are the offspring of the ‘Me Generation.’ Generation Y grew up in an ‘everybody wins’ environment where teamwork was integral.
Top 10 Most Socially Responsible Employers 1. Peace Corps 2. Teach For America 3. Mayo Clinic 4. US Air Force 5. US Army 6. Ernst & Young 7. US Customs and Border Patrol 8. Internal Revenue Service 9. KPMG 10. HCA Source: Universum IDEAL Employer Survey 2008, Stockholm, Sweden.
They’ve been highly empowered since the day they could crawl and expect the world to yield to their preferences.” The dotcom boom also played a part in reclassifying the role of work in the lives of Generation Y. “The dotcom culture defined work as an environment that could actually be fun, engaging and exciting. It was hyped in the media to no end and redefined the expectation of what the workplace could be like,” says Morrison. At Google Inc.’s main campus, for example, the company zeitgeist means employees can bring their dogs to work, bicycles are provided to get around the campus, and free lunch is handed out every day in an environment that encourages creativity. The events of 9/11 also changed perceptions of work almost instantly. “On 9/11 people didn’t call their employers, they called their friends and family. Immediately our firm saw the pursuit of the dollar fall a few rungs on the ladder insofar as importance,” says Morrison. As a result, today’s Gen Y workers seek to balance work and life, want to express their desire to give back, and place high impor-
The best and the brightest interns are at your fingertips.
The Illinois CPA Society has made it easier than ever to identify the up and comers in the accounting profession. Just visit the Illinois CPA Societyâ€™s Career Center and search student resumes to fill your next internship. All across the state, Illinois CPA Society student members have uploaded their resumes for you to view online. These students represent the future of the profession and your guidance as a seasoned member of the profession can put them on the right track. These students are available for summer, fall or spring internships.
You can search by various criteria, including: Geographic Location Timeframe Paid or College Credit Internships
Visit www.icpas.org and click on www.icpas.org/insight.htm the Career Center. www.icpas.org/insight.htm NOVEMBER/DECEMBER JANUARY/FEBRUARY 2008 2009
tance on feeling good about the choices they make, particularly in an employer. Human resources departments are rushing to respond, in part because corporate social responsibility initiatives lay the groundwork for a company to participate in its community, and partly because the competition for Gen Y talent is growing fierce, particularly among financial services firms. A look at the demographics finds that there simply aren’t enough young workers to replace the brain drain left behind by workers entering retirement. What’s more, the tenure of workers under the age of 34 at any given company averages just 20 months, says Morrison. So the need to recruit and retain workers is forcing companies to rethink the work environment and cater to more of the demands of the generation. “There is a major battle to fill the ranks with quality talent, and companies that adhere to the status quo are getting stung deeply,” says Morrison, author of Marketing to the Campus Crowd (Kaplan Publishing, 2004). “There is a war for talent, and the organizations that win the war will be the most successful in the future,” says Deb DeHaas, vice chairman and Midwest regional managing partner at Deloitte in Chicago. “Our business is based on our clients and our people, and the only way that we can successfully work with the best clients is to have the best people to work with them. It is essential to respond to the needs of Gen Y with authentic programs that are outcomes-focused.” One tactic gaining steam in human resources circles is to develop corporate volunteerism programs, which fill several voids
Military Service Tax Preparation Project An opportunity to serve those who have served our country. Volunteer your time and expertise! Provide free personal income tax return filing assistance to members of the U.S. Armed Forces in Illinois.
You’ll give: Your time and talents
You’ll get: Orientation materials, IRS resources, and a great opportunity to help our service men and women.
To learn more and volunteer, contact Jill Wiles at 312.993.0407, ext. 277 or email@example.com
at once. These programs help to satisfy Gen Y’s desire to make a difference, their need for social interaction and a work group environment, and their desire to develop leadership and management skills. For companies, these programs produce a workforce that is focused on developing long-term skill sets, and a team that is engaged and therefore more likely to stick around. In 2007, Deloitte’s annual Volunteer IMPACT survey, which focused on Gen Y’s attitudes to volunteerism and workplace choices, found that 62 percent of respondents preferred to work for a company that provided opportunities to apply skills to benefit nonprofit organizations. Thirty-nine percent of respondents said their companies currently provided them with these opportunities. In 2008, the Deloitte survey looked at the potential for volunteer programs to cultivate leadership skills. Ninety percent of corporate human resources professionals “strongly or somewhat agreed” that contributing to a nonprofit in a volunteer capacity could be an effective way to develop these skills. However, only 16 percent of companies intentionally offer skills-based volunteer opportunities for employee development on a regular basis, according to the survey. Deloitte’s Gen Y employees (not part of the survey sample) prove just how effective community involvement is. In Chicago, Deloitte sponsors its annual IMPACT Day in which about 2,000 employees utilize their professional skill sets to assist more than 40 nonprofit organizations. In 2008, these organizations included the United Way of Metropolitan Chicago, the American Red Cross of Greater Chicago and Chicago Public Schools. “A number of projects have really been initiated by our Gen Yers. They teed up projects that they have taken ownership of and are driving their execution. Frankly, it’s a great way to develop the skills of our people,” says DeHaas. Deloitte also offers year-round opportunities for employees to volunteer in the community. At KPMG LLP, volunteer programs have become an important point of differentiation among new recruits, says Sean Treccia, Midwest director of campus recruiting. The company, which ranks No. 9 in Universum’s annual survey of the most socially responsible employers, offers year-round volunteer opportunities in the Chicagoland community. It also offers every employee the chance to “donate” 12 hours of work time annually to charity; Treccia says the majority of the workforce uses at least a portion of that time. What’s more, the company’s INVOLVE committee ensures the availability of volunteer opportunities throughout the year, essentially taking out the legwork and taking care of any registration fees. Two larger initiatives for the company include KPMG’s Family for Literacy program, which helps to bring reading materials to underprivileged school children, and the Reviving Baseball in Inner Cities (RBI) program, a partnership with Major League Baseball, which helps inner-city youths learn life skills. KPMG volunteers also help to coach teams and provide scorekeeping for games. “This generation of students likes volunteer work. They like doing things in groups and this helps them bond with people they might not work with. They create more networks and they are happier at work because they know more people,” says Treccia. Treccia, who works directly with students on college campuses, notes that the general feeling about volunteerism has changed over time. Whereas 10 years ago students had to seek out opportunities, those opportunities are now part of the norm. “College campuses have so much going on around social responsibility and are used to seeing it everyday; they expect it. It’s just a given,” he says.
Illinois CPA Society
town hall forums Please be our guest.
January 21, 2009 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A Wyndham Glenview Suites 1400 Milwaukee Avenue, Glenview, IL
Oak Brook January 26, 2009 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A The Wyndham Drake 2301 York Road, Oak Brook, IL
Come for complimentary breakfast and hear the latest international, national and Illinois trends impacting your day-to-day practice: > International Financial Reporting Standards (IFRS) They ARE coming and WILL impact you. > Ethics Standards Know the current rules. Avoid seeing your name in the press! > Merging Generations in the Work Place Skills to develop tomorrowâ€™s leaders. Donâ€™t miss this opportunity to share your thoughts and ideas with Elaine Weiss, ICPAS President & CEO, and Sheldon Holzman, Chair of the ICPAS Board of Directors.
January 27, 2009 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A The Crowne Plaza 733 West Madison, Chicago, IL
Bring a Young Professional Colleague Help develop the future of our profession. This is an excellent opportunity for young professionals to network with colleagues and hear first-hand the latest developments within the profession.
1 CPE Credit Hour. COST IS FREE.
To REGISTER for this complimentary program in your area, call 800-993-0393.
The Money Pit Are Illinois real-estate investments a thing of the past? By Margaret Schroeder
f the many ways to protect and hopefully grow your assets over the years, real estate has often been considered a solid investment. Just a few years ago, values appreciated at record rates, creating a wave of flip-it millionaires and new construction gurus. That bubble burst, though, as many predicted it eventually would. Today, property values have plummeted, inventory is sitting on the market, and property owners are facing foreclosure. Even more troubling, the mortgage crisis is being blamed for rupturing the financial stability of the entire nation and even the world. With the real-estate market on a month-tomonth downslide, is investing in the Illinois housing market a dead and buried thing? As with any investment, risk is part of the bargain. The prognosis varies greatly depending on the type and location of real estate you’re talking about. A quick look at the numbers from the Illinois Association of Realtors shows home sales fluctuating but continuing on a downward trend. In fact, overall home sales (including single-family homes and condominiums) were down more than 25 percent from mid-2007 to mid-2008. The second quarter figures also indicate a 6.8-percent drop in median sales prices during the same period. On the residential front, the question is, “Are you buying or selling?” For buyers trying to purchase property at a fair price, things may look much better now. “It’s not necessarily a bad time to be buying,” says Patrick McNally, lead partner of Blackman Kallick’s Corporate Finance Consulting Group. But, he cautions, “If you buy a piece of property now because you think it’s cheap, you’d better be prepared to hold it.” McNally’s colleague John Barsella, a tax partner with Blackman Kallick, describes prices when the bubble was intact as “way out of whack.” “I still see good deals getting done,” he says, but for both single family 14
homes and high-rise condominiums in Chicago and the surrounding area, “things are very soft and will continue to be so for 12 to 18 months.” Barsella adds that 10 to 15 of his clients have built or moved into new homes and still own their old homes. “You didn’t see as much of that before.” Philip Rushing, adjunct professor of finance at the University of Illinois at Urbana-Champaign has had firsthand experience of the housing downturn. “My home in Champaign is for sale, and I suspect I’m looking at a two-year process at best.” Kay Wirth, president of the Illinois Association of Realtors, notes that sales picked up a bit across the state during the early spring and summer months of 2008. All the same, says Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) at the University of Illinois, “Prospects for a rapid recovery of the housing market were significantly dampened by the turmoil in the financial markets. While interventions by the federal government in the financial sector will help to stem a more precipitous slide in the housing market, the longer-term recovery of this market will now be increasingly dependent on the economy’s recovery. Continued job declines both nationally and in Illinois have generated a need to address economic development issues more forcefully.” Current economic indicators show more bad news. The November 2008 Institute of Government Public Affairs Illinois Economic Review reported that, nationally, 240,000 jobs were lost in October 2008, raising the total to 1,078,000 since January 2008. In the same month, Illinois lost 11,700 jobs, raising its total to 28,000 over the same time span. The overall downturn in values doesn’t mean the long-term outlook has changed, however. As with any investment, short-term ups and downs mean less the longer the asset is held. “It’s all temporary, because eventually it goes up again,” McNally explains sagely.
With the economy in the current state of extreme flux, the outlook for any area of real estate is cloudy. Even so, commercial real estate seems to have fared better. “Commercial real estate in Illinois is an excellent investment, depending on the exact location,” says Rushing. However, will it hold onto its position? “Up until recently the whole commercial market seems to have held up well, but now we’re starting to see some cracks,” McNally candidly states. Shari Albert, director of CBIZ Accounting and Tax Advisory Services in Chicago, explains that, “Commercial real estate is a derivative market, in that the value of real estate is a function of the health and viability of its underlying users. So, as commercial businesses continue to struggle in a declining economy, the corresponding realestate values will also continue to decline. The values will increase once the fundamentals of the economy and the profitability of the commercial real-estate users begin to improve.” There may, of course, be pockets that thrive, depending on their use and location. “The growth in the industry is going to come from more unique developments in specialized niches,” predicts Matthew L. Brenner, CPA, of PricewaterhouseCoopers in Chicago. “For example, there is going to be a need to reduce costs in supply chains; therefore, being able to leverage the transportation hub that Illinois and specifically Chicago is, and make transit of goods more efficient will enable growth in the intermodal sector.” Brenner suggests another niche would be energy-efficient “green” facilities. For now, though, says Albert, for anyone investing in any type of real estate, “Liquidity is key. Real-estate developers and owners must maintain adequate cash reserves so that they can remain viable during difficult economic times.”
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Business Interrupted All businesses plan for the best, but only those that plan for the worst will weather the storm. By Allison Enright
Midwest ice storm can snap the power lines feeding your business without notice. An aging water main can burst and flood your office basement. The guts of your computer server can become a cozy new home for the office mouse. And all can result in business interruptions for days or more. While some risks to your business continuity can be predicted, many are unforeseen, which is why having a thorough, upto-date disaster plan is essential for survival. As Damian Walch, director of enterprise risk services and security and privacy services at Deloitte & Touche in Chicago, explains, “So many times when these discussions come up, they limit themselves to natural disasters and large infrastructure disruptions. What you quickly realize is that Murphy’s Law, which says if anything can go wrong, it will, comes into play. The oddest things affect business operations. Rest-
InfoBox Disaster-planning resources are available to help small and mid-sized businesses develop solid business continuity plans. Here are a few to check out. www.PreparedSmallBusiness.com A service site that allows contingency planners to post their services, and answers questions on filing claims and planning. www.disastersafety.org The Institute for Business & Home Safety offers an “Open for Business® Toolkit,” which contains all the essentials to get a business started on the road to continuity planning. Online tutorials are also available. www.acp-international.org The Association of Contingency Planners connects businesses with local contingency planning resources. www.fema.org The Federal Emergency Management Agency site provides information by geography, and offers insight into the infrastructure risks particular to your local area. Tools help to calculate your risk levels.
rooms overflowing into data security rooms. Pollen from dogwood trees plugging up building cooling systems,” for example. Risks to business continuity also encompass technology problems like server crashes, virulent computer bugs and simple human error, such as an employee deleting or mishandling a critical file. How a company reacts in such a crisis largely depends on how well prepared it is to manage it. At a minimum, every business needs to have adequate insurance coverage for property damage in case of physical interruptions caused by weather, fire or infrastructure failures. Businesses also can 16
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opt for an add-on to their policy that covers monetary losses due to the interruption, says Donna R. Childs, president of global micro-financing firm Childs Capital and co-author of Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, 2008). Early in her career, Childs worked in the reinsurance industry, where her responsibilities included helping global corporations prepare for disaster and recovery. The foresight she gained from that experience served her well. On Sept. 11, 2001, Childs’ office was in the immediate impact zone of the terrorist attacks, and while it sustained little physical damage, the building was off limits for a week. When authorities allowed access to the building, tenants found it operating without essential services. Losses were palpable and monetarily significant, but Childs had kept copies of her essential records up-to-date and off-site, expediting the 100percent payment of her claim. “You have to be prepared to make your claim. You have to be able to access three years of tax returns, your lease and payroll documents. In the aftermath of a disaster you are going to have an extraordinary period of expenses to pay,” she says. She cautions business owners against accepting the default terms of most business interruption insurance policies, which call for waiting periods or payments paid out over 90 days. “Any dispute you have works against your interest, and it’s a costly delay you can’t afford,” she says. Childs Capital was back in full operation less than a month after the terrorist attacks, and has been featured in the US Department of Homeland Security’s “Ready for Business” campaign, a public
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service intended to help companies get back on track after a disaster strikes. Disasters like 9/11 don’t happen every day, but coping strategies for crises large and small can be prepared for in the same way. “The first thing that a company should do is understand those threats and risks, and then understand what they are going to do to mitigate those risks,” Walch advises. The best way to understand internal risk is to start a conversation. Collaborate with the employees, partners and suppliers you rely on heavily to find out what your greatest risks are, then develop back-up systems in case those risks materialize. Employees are an essential element in your continuity planning. Set up a communication system with contact numbers, assign key people to specific tasks in the event of a disaster, and keep the system up-to-date. “A common thing that we see is that executives want to have a piece of paper that says ‘do these things.’ Honestly, those things get out of date and they don’t know where to find those papers,” Walch admits. “Most small to mid-sized companies are underprepared from the point of view of how to get back to business. Businesses will say they have a pretty good contact list and a lot will say they’ve done some kind of data back-up, but most, in the same breath, will acknowledge they can do more,” says Diane McClure, VP and director of business protection at the Institute for Business & Home Security. There are a growing number of resources available to help datadriven companies get back up and running in a crisis scenario. From a technology perspective, the cost of hosting or backing-up your company data via an offsite supplier has dropped significantly in the last few years, says Stephanie Balaouras, principal analyst at Cambridge, Massachusetts-based Forrester Research. “I think there are affordable options out there. A lot of independent players, like AmeriVault or EVault, allow businesses to back-up over the Internet and don’t require a lot of bandwidth. What they can do in a disaster is quick-ship your servers and restore your data for you,” she says. In reacting to business interruptions, speed is of the essence. “Every day that you are out it makes it a little bit harder to come back,” Balaouras warns, pointing to the small and mid-sized businesses that never got back on their feet after Hurricane Katrina devastated New Orleans. Childs saw the same thing after 9/11. “In my office building—and these were businesses that could pay Wall Street rents before 9/11—two-thirds went out of business in the months following. I would walk down the hallway and two-out-ofthree doors had eviction notices taped to them,” she says. “Business interruption is a painful way to learn a lesson. The longer you are down, the longer it takes to restore to normal revenues.” Still, the key is planning for and being prepared to react to situations that may be out of your control. “So many executives want a silver bullet. If there’s a problem they want to be able to buy something and make it go away. It’s not that easy. They need to understand their risks and what they are going to do. They want to be able to decrease the chaos and increase decision-making capabilities,” Walch explains. McClure backs up the point. “Half the challenge is convincing businesses to do this planning, all while they are busy in the daily performance of their jobs. The motivational factors of this are, if there is a disaster, the years they put into building the business— all the energy and capital, and all the employees they care about— that can go away very fast.”
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8 Recession Lessons The last round of economic woes and worries taught us something—don’t panic! Sheryl Nance-Nash
here is no more Wall Street,” says Adam Mesh, CEO of Adam Mesh Trading Group, in New York City. The financial landscape has indeed been altered. There’s the disappearance of Lehman Brothers and Bear Stearns. The venerable Goldman Sachs had to be propped up in part by a $5 billion investment from Warren
Buffett. Merrill Lynch had a shotgun wedding with Bank of America. The government spent billions to bailout AIG, and it took over Fannie Mae and Freddie Mac. Then there’s the largest failure in US banking history—Washington Mutual and a nearly 800-point decline in the stock market, the most ever in a single day when Congress failed to pass the $700 bailout plan. It’s beginning to look like the end of tradition. While the debate over whether we’re in the midst of a bona fide recession have volleyed backwards and forwards for months, in early December experts put an end to discussions by declaring that we are indeed in a recession. It’s not the first time that the economy has taken everyone for a wild ride. The past can teach us a whole lot about the present.
Lesson 1: Too little too late Some say emergency tax and spending bills seldom do significant good. Fiscal stimulus almost always arrives too late, after the recovery has already begun, David Frum, a resident fellow of the American Enterprise Institute pointed out in a public radio commentary earlier this year. Worse, the usual result is a net economic nothing. The government borrows to give to consumers who use the money to reduce borrowing. Demand remains constant, he said.
Lesson 2: Pain isn’t evenly distributed The US economy is broad and deep. “After the S&L crises, the real-estate market in Dallas was crippled for a decade, while the Northeast boomed. There are many state economies around the country that are doing just fine. Their markets are totally unaffected by the real-estate meltdown in California and Florida,” says William Gamble, author of Freedom: America’s Competitive Advantage in the Global Market (Praeger Publishers, 2007). Some local economies can avoid the problems other areas are having because of 20
Outstanding Leadership in Advancing D
Nominations for the
Outstanding Leadership in Advancing Diversity Award are now being accepted. The Illinois CPA Society is seeking nominations to honor the work of exceptional CPAs. The Outstanding Leadership in Advancing Diversity Award is designed to recognize individuals who have made a marked contribution to diversity within the accounting profession. Nominees can be employed in any area of accounting or finance; including public accounting, industry, not-for-profit, education, government or consulting. Criteria considered for the ideal candidate include: A CPA credential, but nominees do not need to be a current Illinois CPA Society member. Unique and creative contributions to the profession in advancing diversity. Level of impact on the accounting profession. Diversity efforts with measurable results. Channel through which the nominee has advanced diversity outside or in addition to his/her day to day job function. Breadth of diversity and related activities. For more information and to nominate a candidate, please visit www.icpas.org.
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demographics and other factors, adds Jeff Secord, a certified financial planner with Clifton Gunderson in Peoria, Ill. The degree to which a national recession affects the local economy may vary.
Lesson 3: Don’t try to time the market People sometimes make the mistake of trying to anticipate the bottom. They think things are settled when they are not. “Things get worse before they get better. Let the market show you when it’s over,” says Mesh. “You want to dip and not dive in this market. Now that 500 point swings on the DOW have become commonplace, a buy-and-hold strategy means holding your stock when you go to lunch. The key to success in this market is a willingness to take quick losses, protecting your profits (which can now be 20 percent in a day) and staying light.” Avoid taking the “head fakes” of the market. Remember that the day-to-day market is extremely volatile. Longer-term investment assets are generally best served by remaining invested over the market cycle. Don’t assume the worst, panic and sell. Doing so turns a temporary market decline into a permanent loss, says Secord. Unless you physically take the money out, it’s still an unrealized loss. “Markets do eventually recover,” he adds.
Lesson 4: Recognize that this is a bit of a different beast The most unique thing about the current economic climate is the impact it has had on real estate, financial companies and the American taxpayer. We have not seen this kind of upheaval since the Great Depression. What it compares to in some respects, says Secord, is the late 1980s, with the 1987 stock market crash. The areas that will be profitable most likely aren’t the ones that have been successful in the past, Gamble predicts.
“Emerging markets will not do very well. Financial stocks will have problems for some time. The housing market will recover somewhat, but not boom. Commodities will not bounce back. On the other hand, there are opportunities as good investments have been knocked down with the rest of the market. There will be a boom in alternative energy technology,” says Gamble. Simply put, don’t assume that battered sectors are going to immediately bounce back. “Markets are built on trust,” he explains.
Lesson 5: Think global When the US economy sneezes, the world economy catches a cold. Global economies are more tied together now than they have ever been in the past. “What happens here to some degree affects other economies and vice versa,” says Secord. Mesh agrees. “This is now a global financial crisis. In the past there was more of a trickle-down effect; now the impact happens almost simultaneously,” he says. But keep your perspective. “The disasters taking place in other markets—Russia is down 64 percent and China is down 67 percent—are due partially to the United States, but more so to local messes,” Gamble explains. Then too, other economies may not be ailing to the same extent, and therefore may be ripe for opportunities. “Right now, as long as the dollar stays relatively weak, US products are more affordable for foreign buyers. This can be a great time for US companies to either start their international sales efforts or expand them if they already exist.” “While much has been written about the global slowdown, the global economy is still growing, albeit at a slower pace,” says
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Jason Hancock, president of Sowilo Consulting, an Arlington, Va. company that provides executive-level international business development strategies. Going global, he says, is one of the surest ways to stabilize a company’s revenue stream, since foreign sales can pick up the slack of a weak domestic economy. However, one mistake many US firms make is neglecting their foreign buyers as soon as the US economy rebounds. “That’s a mistake because when they later turn their attention back to foreign buyers they get a chilly reception. No one wants to be neglected, especially when their supplier is on the other side of the planet,” says Hancock.
Lesson 6: Tweak rather than make radical changes While you likely don’t want to pull all your assets out of the stock market, depending on when you need to tap your money, a slight pull back to safety may be in order, says Mesh. “Some people might want to be a little more conservative. Treasuries might be okay. At a time like this, preservation of capital may be more important than growth,” he explains.
Lesson 7: Recognize the opportunities During recessions, companies of almost every size are tempted to rein in their spending, especially in marketing. They withdraw from the market, decreasing their presence and their visibility, says Hancock. “Now, while it may seem counterintuitive given the nature of a recession, the fact that so many firms retreat from the market presents a great opportunity for a company to expand its presence. And that means the last thing a company should do is decrease its marketing efforts. Once the economy recovers, the
company that ramped up its marketing efforts during the recession will have already gained share or will be positioned to do so quickly as the economy grows,” he says. Similarly, much as you might think it backward to launch a small business in this climate, it can be a great time, says Washeed Qureshi, founder and chairman of Zenprise, a high-tech company in Fremont, Calif. “When times are good, it’s hard to get anyone’s attention, investors as well as top talent,” he explains. Qureshi points to Google as an example—a company that started in the late 90s and stood by its vision through the dotcom bust. “Google was left standing there when others failed,” says Qureshi. “If you’ve done your due diligence, know you’re going to fill a niche and know that the potential is there, think differently— be innovative about how to get your company off the ground.”
Lesson 8: Be objective As investment losses and insolvency risks infect international financial networks, experts are not debating the inevitability of government bailouts and bankruptcies from the fallout, but rather the extent of them, says Frank Mack, managing director of Conway Mackenzie & Dunleavy, an international consulting firm in Chicago. Furthermore, he says, if conditions in global capital markets do not stabilize and return to predictability in the short-term, then business failures and bankruptcies will extend beyond the financial sector. But Gamble is optimistic. “The US has the best legal system, the best financial system and the best labor markets in the world. What is needed is a free flow of information and trust that markets actually work. Because of all of these advantages, the United States will be flexible enough to recover quickly.”
Tax Tackle Minority interest could mean majority tax savings for business owners ceding to their heirs. By Bradley K. Walton, CPA/CFP/CLU
state and gift tax rates can have a major impact on your business, particularly when you’re transitioning it to a successor. In fact, the need to pay taxes is second only to family conflict on the list of reasons why family businesses aren’t passed on to an owner’s heirs. The good news, though, is that there are some very effective estate tax planning strategies out there. These strategies revolve around the transfer of minority interests. To assess and pay estate taxes, you have to place a value on the business. This value commonly recognizes that an interest in a privately held company is not as marketable or liquid as an interest in a publicly traded ones. The business value is reduced even more when a minority interest is being transferred. The rationale behind the minority interest discount is that the value of a controlling interest in a business is much greater than an interest that can’t exert control. Just look at the public markets. The share price of a publicly traded stock reflects the value inclusive of the minority discount. If this company was bought by a single purchaser, the transaction generally would be completed at a significantly higher price than the price at which the stock was being traded on the exchange. This higher price reflects the removal of the minority interest discount when control of the company was purchased in a single transaction. If a $1 million business is to be passed in equal parts to an owner’s four children, then he or she could make a gift of 25 percent to each child. Each, individually, is a non-controlling interest and would be eligible for the minority discount. The entire company could be gifted at a discount of 20 to 35 percent. If the owner wants to transfer the company to only one child, an annual gift of a one-third interest could be made over the course of three years to achieve the same 24
savings. In determining gift tax values, the value of each individual gift is calculated. However, in determining estate tax values, the interest owned by the estate is calculated, which means that, if the owner continued to own the company until death, it would be valued at $1 million for estate tax purposes even if the estate was divided equally among four children. Also, a controlling interest of less than 100 percent might be subject to a “control premium.” If 49 percent of the company is worth less than $490,000, and 51 percent is worth more than $510,000, then the owner should transfer more than 50 percent through lifetime gifts to fully realize the tax savings. Depending on the value of the company, the number of heirs, the owner’s life expectancy and his or her willingness to pay gift taxes, transferring 51 percent of the business through lifetime gifts can be very difficult. Their effectiveness can be leveraged by recapitalizing the company with voting and non-voting stock. Assume the $1 million company had 1,000 shares of common stock outstanding, worth $1,000 each before the minority discount. If the company was recapitalized with 900 shares of non-voting common stock and 100 shares of voting common stock, control of the company could be accomplished by transferring 51 of the voting shares worth $51,000 before the discount’s application. Even if the owner retained the remaining 949 shares, he or she would receive the minority interest discount when later valued in the estate. Now that it’s clear that a repeal of the estate tax is not going to happen, techniques which allow for a significant reduction in the business’s taxable value are instrumental in keeping the business in the family. Bradley K. Walton, CPA/CFP/CLU is a shareholder in Signature Advisers Group, Ltd., a graduate of the University of Illinois and former Elijah Watts Sells Award recipient.
Mark Your Calendar!
2009 SPRING CONFERENCES IRS Collection Half-Day
Estate & Gift Tax
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January 15 - Chicago, IL
May 21 - Chicago, IL May 27 - Chicago,IL
January 28 - Chicago, IL
March 17 - Rosemont, IL
April 29 - Rosemont, IL April 30 - Springfield, IL
May 28 - Rosemont, IL
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May TBA - Springfield, IL
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Forensic Accounting Half-Day May 13 - Chicago, IL
Taxation on Real Estate May 14 - Chicago, IL
IRS Audits & Appeals Half-Day May 15 - Chicago, IL
For the most current info or to register, visit www.icpas.org. Dates and locations are subject to change. All conferences offer CPE Credit; check our website for info on CLE and other specialty credits.
Penalty Zone Strict liability provisions could penalize you! By Harvey Coustan, CPA
ast September, the Internal Revenue Service published temporary regulations interpreting the “strict liability” provisions of Code Section 6707A, which penalizes the taxpayer’s failure to disclose reportable transactions. The temporary regulation verbiage doubled as the text for the proposed regulations. To refresh your memory, temporary regulations have the same effect as final regulations. Using them as proposed regulations (which are usually not effective until final regulations are issued) means that the IRS is looking for comments before they’re issued in final form. However, in the interim, they have the same impact as final regulations. Disclosure of listed and other reportable transactions is required under Regulations Section 1.6011-4 for income tax returns. Other sections require disclosure of certain transactions for estate tax (§20.6011-4), gift tax (§25.6011-4), employment tax (31.60114), and certain excise tax purposes. Taxpayer penalties for failure to disclose are quite severe. Section 6707A has one set of penalties for “listed” transactions and another for reportable transactions that are not listed. This seems logical, because listed transactions are those that the IRS has targeted as “tax avoidance transactions,” and has specifically identified in published guidance. If an individual taxpayer fails to disclose a listed transaction, the penalty is $100,000. A taxpayer that is not an individual, (e.g., a corporation) will pay $200,000. The penalty for an individual taxpayer who fails to disclose a reportable transaction that is not a listed transaction is “only” $10,000, and the penalty for a taxpayer other than an individual is $50,000. Since a taxpayer can’t claim there was a “reasonable cause” for non-disclosure, the penalty seems especially severe. The IRS does have the ability to rescind the penalty if the failure to disclose doesn’t involve a listed transaction. A significant portion of the temporary regulations is devoted to discussing factors the IRS will consider in mak26
ing a decision to rescind. Nevertheless, the decision is not subject to judicial review so the IRS’s word is final, which is why I call this penalty a “strict liability” penalty. First, a quick review of the disclosure requirements of Treasury Regulations §1.6011-4. There are four categories of reportable transactions other than listed transactions. 1. Confidential transactions: Those offered under conditions of confidentiality so that the taxpayer’s disclosure of the structure or tax aspects of the transaction is restricted or limited. This applies even if the restriction or limitation is not legally binding. Also, the taxpayer needs to have paid the advisor a minimum fee of $250,000 for corporate taxpayers and $50,000 for most other taxpayers. 2. Contractually protected transactions: Where the taxpayer has been contractually protected against total or partial loss of tax benefits. Contingent fee arrangements are one example. 3. Losses in excess of certain threshold amounts deductible under Section 165: Thresholds for corporations are $10 million in a single year and $20 million in any combination of years, with other thresholds for other taxpayers. 4. Transactions of interest: Those for which the IRS does not have sufficient information to classify as “listed” transactions. Listed transactions are those that the IRS has identified specifically in published guidance as tax avoidance transactions, and those that are “substantially similar” to the identified transactions. The transaction has to be disclosed on the tax return for each year the taxpayer participates in the transaction, with a copy also sent to the IRS Office of Tax Shelter Analysis (OTSA) in the first year of participation. If an amended return is filed, the disclosure statement must be included. A special rule applies if a taxpayer receives a timely K-1
less than 10 days before the taxpayer’s return due date. The current prescribed form is Form 8886. If the transaction becomes a listed transaction or a transaction of interest after the taxpayer’s return is filed, but before the end of the statutory period for additional assessments, then the disclosure statement has to be filed with the OTSA within 90 days after it becomes a listed transaction or a transaction of interest. The temporary regulations impose a penalty for each failure to file, as well as for an incomplete filing, but only one penalty will be imposed if the taxpayer fails to disclose a transaction and fails to send the required copy to the OTSA. The temporary regulations generally adopt the same list of factors that the IRS has previously considered when deciding to rescind a penalty (see Revenue Procedure 2007-21), but with one significant addition involving materiality. The factors are: • The taxpayer, upon becoming aware of its failure to file, files a complete and properly prepared Form 8886 (or successor form). This factor will weigh heavily in favor of rescission if it is filed prior to the IRS’s first contact with the taxpayer concerning an IRS examination of the return for the year in which the taxpayer participated, and other circumstances suggest that the taxpayer did not delay the filing until after the IRS had taken steps to identify the taxpayer’s participation in the reportable transaction. • Failure to disclose was due to an unintentional mistake of fact despite the taxpayer’s reasonable attempt to ascertain the correct facts with respect to the transaction.
• The taxpayer has an established history of properly disclosing other reportable transactions and complying with other tax laws.
• The taxpayer establishes that the failure to disclose arose from events beyond the taxpayer’s control.
• The taxpayer cooperates with the IRS by providing timely information requested by the IRS while rescission is being considered. • Assessment of the penalty weighs against equity and good conscience, including the fact that the penalty is disproportionate to the tax benefit received, the taxpayer demonstrates that there was reasonable cause, and that it acted in good faith with respect to the failure to properly disclose the transaction. (This is where materiality is considered and the only place where having a reasonable cause for the failure may be helpful.) Section 6707A also imposes penalties on SEC registrants that do not disclose penalties assessed under §6707A for failure to disclose listed transactions and certain other penalties. This penalty is not subject to rescission. Final regulations in this area are yet to come, but my hunch is that there will be few substantive changes. In the meantime, these temporary regulations became applicable to disclosure statements due on September 12 of last year and after. Harvey Coustan is an Ernst & Young retired partner. He is presently consulting on substantive technical and professional standards issues and has been an expert witness in a number of cases.
O NE W OR L D
International Financial Reporting Standards are crossing the globe. By Kristine Blenkhorn Rodriguez
t’s amazing how quickly behemoths can move when $2.5 trillion is at stake. When the US Securities and Exchange Commission (SEC) announced last August that it would consider allowing some corporations to voluntarily adopt International Financial Reporting Standards (IFRS) at the end of 2009, they were rousing the sleeping giants of American business; not that many didn’t already have their eyes on IFRS, particularly those with extensive overseas operations. But few were springing into action to prepare for the change. Now, with approximately 110 companies representing about $2.5 trillion in market capitalization eligible to be IFRS early adopters, the giants are anything but asleep. Only a smattering seem to be biding time to see if the SEC’s planned cost/benefit evaluation in 2011 leads to a mandatory requirement in 2013. “Most of the companies are quite large and have a heavy concentration of foreign operations,” says Mike Gould, PricewaterhouseCoopers (PwC) partner and the firm’s IFRS lead for the greater Chicago market. “So they are used to complexity. While converting all operations to the same standards can be daunting, these are the firms best up to the task.” It’s the next tier down that worries Gould. “After the initial wave, the next set of organizations to adopt these standards will probably need extensive help with implementation,” he says. “And right now, they may not realize how much.” www.icpas.org/insight.htm
CFO Mike Harden is not overjoyed about how the change may affect his company, The Savannah Bancorp, Inc. “We have no international ops and it’s unlikely we ever would. I can’t think of a single benefit right now to our organization in adopting these standards, so we’ll take a wait-and-see approach and do it when we have to.” Harden says he’s not being naïve, just pragmatic. “I am very aware that our current accounting system is rules-based and theirs is principles-based, but my initial response is that it’s worrisome. It’s completely different from what we’re used to and how we as CPAs were trained. This is likely a sea change for the accounting profession.” Harden’s response falls within a predictable spectrum, according to Deloitte & Touche survey results announced last May. While 30 percent of CFOs and other senior finance professionals said they would consider adopting IFRS within the next three years if given the choice by the SEC, another 28 percent said they either lacked sufficient information to make a decision or were simply undecided. More than 60 percent said they lacked an adequate number of personnel in US operations with a collective level of knowledge sufficient to adequately address an IFRS conversion. So, while large multinationals may move for faster adoption (already, about 40 percent of the Fortune 500 use IFRS, according to their financial statements), companies below that tier will face an entirely different set of challenges. With several years before a possible mandatory implementation, some organizations do not view the SEC’s announcement as an imperative for action. But any seasoned executive looking at PricewaterhouseCoopers’ high-level schematic for converting to IFRS might begin to worry. The firm recommends an initial phase of at least a few months of planning strategy for the change and understanding the financial reporting impact. It recommends a year or two to identify necessary operational changes, work through any issues, execute the change and build IFRS into daily business. Think you’re done then? Not a chance. PwC execs predict the need for two years of dual reporting under US Generally Accepted Accounting Principles (GAAP) and IFRS in order to refine decisions and fully transition to the international standards. 30
Granted, consulting firms love long projects, but in this case they aren’t just drumming up business; the smart company seems to be the one that doesn’t delay getting up to speed and doesn’t rush the implementation. “Everyone hears that IFRS consists of 2,500 pages versus US GAAP’s 25,000 pages and breathes a sigh of relief,” says John McGaw, Midwest IFRS lead for KPMG LLP. “But companies will have to apply more judgment with the new accounting standards. Some believe IFRS may allow them to tell their story more accurately, but the application guidance is far below what is currently spelled out in US GAAP.” Many company execs will need to be schooled in short order on how to interpret a principles-based reporting system rather than a rules-based one. “The first reaction of most senior executives,” explains Gould, “is that IFRS conversion is an accounting-driven exercise. They think it’s really just for the finance people to worry about. They also seem to think that their team can just read a few books and figure it out. It takes very little time and explanation for them to see otherwise.” The “otherwise” that they come to see shows how IFRS affects tax structure, treasury and cash management functions, internal controls and processes, technology and financial reporting systems, human resources and compensation. And that’s just for starters.
Areas of Difference While no one article can effectively detail the differences between US GAAP and IFRS, major areas of differentiation are highlighted for you here. The following list is by no means comprehensive, but it will illustrate why so many functional areas of a company are affected by the conversion. Revenue recognition. “There’s less detailed application guidance in this area than there has been under GAAP,” says McGaw. “Right now, under US GAAP there’s more specific guidance on allocating revenue streams in multiple element arrangements.” Gould says that IFRS focuses more on risks and rewards, as well as on whether control has been transferred. “If a company sells a computer, then software to go with it, then upgrades to the software, and then adds in implementation services, the revenue streams add up. Under IFRS, certain companies can have a more accelerated revenue stream.”
“[C]ompanies will have to apply more judgment with the new accounting standards. Some believe IFRS may allow them to tell their story more accurately, but the application guidance is far below what is currently spelled out in US GAAP.” Overall, the discounting of revenue to present value is more broadly required under IFRS than under US GAAP. Under IFRS, it’s required in instances where the inflow of cash or cash equivalents is deferred. Component depreciation. “Here, IFRS means more work,” says McGaw. “Under US GAAP, a company that owns a building generally lists it as one asset and there’s just one component that depreciates. IFRS requires identification of the useful life of various components—maybe the roof depreciates over 20 years and the HVAC system over five years.” Impairment. When you have an asset on your books that no longer has economic value, you write it down. Goodwill is currently evaluated at the reporting unit, says McGaw, but will be evaluated under the cash-generating unit under IFRS, which may be at a lower operating level. Additionally under IFRS, impairment of long-lived assets other than goodwill utilizes a one-step approach as opposed to US GAAP’s two-step method. By starting with discounted cash-flows, rather than US GAAP’s undiscounted cash-flows, many companies will recognize impairment earlier under IFRS. Research & development costs. “Under US GAAP, R&D costs are expensed as incurred,” says McGaw. “With IFRS, development costs are capitalized once certain criteria (such as technological and economic feasibility) are met. The costs are capitalized and amortized over the benefit period.” This change will obviously impact an organization’s balance sheet and income statement. Contingencies. “Currently in the United States, you recognize a contingent liability when probable,” says Gould. “Under IFRS, you use a ‘more-likely-than-not’ threshold for recognition. This is a big difference for companies that are litigating.” Implications. “Net income and earnings per share will most likely be different under IFRS than under US GAAP,” states Gould. “There’s probably no silver bullet, but education is key. The initial onus is on companies to educate the street on how they’re managing their businesses.” Footnotes will abound, says McGaw. “Under IFRS, we will see expanded footnote disclosures because companies will be asked to explain how they interpreted the standards.”
Early Planning is Key Despite the lack of fanfare from many executives, IFRS actually will be a boon to many organizations, says McGaw. “You will see certain companies turning voluntarily to IFRS sooner rather than later because once they’re over the learning curve, they’ll realize IFRS allows them to tell their business and financial story more consistently with international competitors currently reporting under IFRS” The sooner approach may be more appealing to some rather than others, says Gould. “Companies are surprised when we start to talk about the initial year of adoption, and what their overseas subsidiaries may have already done to adopt IFRS without consulting the head office. Companies need to start to figure out what elections have been made...around the world, and understand what impact that will have on their ultimate IFRS reporting on a consolidated basis.” Financial services and insurance companies may be among the first to adopt, says Gould, if Europe and Asia are any indication. “These organizations are driven by heavy data transaction processing, so they in particular need to be ahead of the curve.” Companies planning on implementing a new ERP system should be, if not early adopters, heading for conversion to IFRS with a firm timeline. “If you have a new ERP system in your near to mid-term future and you haven’t started planning with IFRS conversion in mind, you’re probably already a year behind where you need to be to meet the IFRS adoption dates,” says Gould.
Conversion Approaches Gould sees most companies use one of three types of approach to IFRS conversion, some of which work better than others. The Big Bang approach. “They do everything fully and switch over once—today,” says Gould. “This approach entails the most cost, the most effort and is potentially high risk.” The phased approach. “Organizations utilizing this approach conduct a methodical assessment, followed by detailed analysis, and ultimately embed the changes into the company's systems and processes. Companies should assess which country operations should convert first, or may have already adopted, then decide what models they want to follow, before rolling out across the organization. This is a reasonable, methodical approach,” says Gould. www.icpas.org/insight.htm
The wait-and-see approach. “These organizations don’t want to be leading edge in this area. They will wait until the SEC or the analysts or their bank forces them to make the change. This approach is the highest risk and traumatic when you finally have to do it. There is no timeframe,” he explains. McGaw pinpoints the six factors that define a company that will minimize the challenges and probably succeed with the fewest headaches. 1. They planned ahead. 2. They ensured senior sponsorship existed, and those sponsors dedicated resources to getting the conversion done right. 3. They had resources that expanded beyond the finance department and into all functional areas affected. 4. They had proven change-management expertise—or they hired it for the conversion. 5. They synchronized the IFRS conversion with other initiatives— a new ERP system or a move to shared services, for example. 6. They identified resources prior to the IFRS conversion. No lastminute scrambling.
The Analyst Perspective Even if organizations get IFRS right in theory, in practice it means more work for the analyst community. “IFRS is definitely on our radar,” says Rita Spitz, principal with Chicago-based investment firm William Blair & Company. “But it seems overall, given the turmoil in the market right now, it’s just not getting widespread mindshare.” Spitz seems neither a fan nor an opponent of IFRS, but does admit that, “Do I think there will be more clarity as a result of this change? Not necessarily. You’ll have to do a lot more analysis and stripping away as an analyst to get to the heart of the business.” New accounting research or database vendors may play a key role. “At the end of the day, some entrepreneur will come up with
a way for investors to understand this conversion more painlessly and it will jumpstart the process,” says Spitz. Given that the IFRS model is based on flexible transparency rather than uniformity or consistency across companies and industries, the development of a turnkey system seems unlikely at present. As accounting professor and attorney Kurt Schulzke remarked in his June 14, 2008 Schulzke Brief, “The transition to IFRS is not a mere technical accounting exercise. It requires a major change in mind set [sic] from the current model in which questions and transactions often revolve around technical compliance with bright lines that mathematically yield a single right but arbitrary answer (think operating vs. capital leases)—‘show me where it says I can’t do it’—to a new paradigm in which clients and auditors ask whether a proposed accounting treatment is consistent with a foundational IFRS principle and fairly provides necessary information to users.” The implication for this new paradigm is a lack of consistency among industries and even among companies within the same industry, making it harder for Spitz and her colleagues to do their jobs. IFRS lures with the promise of high transparency, but it will be up to US companies to actually provide it—and analysts to ask the hard questions again and again until a clear and doubt-free picture emerges for each company under analysis. That vision is enough to cause insomnia for any analyst old enough to remember the details of Enron and Tyco. How would they have fared under IFRS? Schulzke goes on to mention that finding the “right” answer buried in the multitude of pages comprising US GAAP will fade as a skill set. He then throws down the gauntlet with a gutsy claim: In an IFRS system, licensed professional accountants don’t all need accounting degrees. In his view, critical thinking and effective communication are top of the skill set. It prompts an entirely new meaning for “ready or not.”
Academics ask for more classroom materials
With the focus so heavily on how companies should be preparing today for IFRS, it’s easy to overlook the pipeline for tomorrow: The academic sector. “Academia is behind the curve on IFRS,” says Marvin Gordon, who teaches accounting courses at some of Chicago’s major universities and is a retired Deloitte partner working for accounting firm Frost, Ruttenberg & Rothblatt PC. “Northwestern University is offering an international accounting course this winter. And at the University of Illinois (UIC), I had a full class of 40 with a standby list in 2007 for a similar course. But academia in general is behind in its offerings to address IFRS.” Jim Young, accountancy chair at Northern Illinois University (NIU), says the delay is understandable. “Is IFRS coming? Yes. But when is it coming and when do we then logically start to educate future practitioners? Given that about half of our students go into the Big Four or public accounting firms, when is the right time? Is there going to be ‘Big IFRS’ and ‘IFRS Lite’?”
Gordon and Young are not alone in their concerns, according to survey results released last September by KPMG LLP and the American Accounting Association. A whopping 89 percent of college faculty surveyed said textbooks were a high priority, followed by case studies at 76 percent. The current dearth of IFRS educational materials is delaying IFRS’ incorporation into many syllabi; only 22 percent of the 535 professors surveyed indicated that they could incorporate IFRS into 2009 curricula in any significant way. Faculty members surveyed predicted that the first class of graduating seniors likely to have a “substantial” amount of IFRS education will be the class of 2011. Young mentions the high demand for a Master’s degree-level international accounting course offered a couple of years ago at NIU. “We’re threading that material into our undergraduate intermediate courses for juniors and seniors. But we’re also realizing we’re going to have to self-develop materials to adequately teach IFRS right now. There just isn’t enough material out there. What we really need is more specific guidance and some classroom materials.”
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Compliance Star Do you have the most in demand accounting skill internationally? By Selena Chavis
t’s a constant game of cat and mouse. As companies become more global, executives find themselves in an endless race to keep up with an ever-changing regulatory environment and an increasingly complex compliance landscape abroad. And it’s not just about the biggest players anymore, says Jerry DeVault, the America’s Midwest advisory leader for Ernst & Young (EY). “Fortune 1000 companies are globalizing at a very fast rate,” he says, pointing to trends with mid-sized companies as well. “Many have really pushed into emerging markets. Just the sheer complexity of regulatory environments is enormous.” In its Strategic Business Risk 2008—The Top 10 Risks for Business report, EY identified regulatory and compliance risk as the number one strategic risk facing businesses. The findings came from interviews with more than 70 analysts from 20 disciplines that shape the business environment, including law, finance, the sciences, business strategy, geopolitics, regulation, medicine, economics and demographics. “Regulatory compliance risk is going to be with us for some time,” notes DeVault.
An industry veteran for more than 25 years, Paul Oetter, audit partner-in-charge of Blackman Kallick's Manufacturing and Distribution practice, agrees, emphasizing that, “The body of knowledge that accounting professionals must master has grown exponentially over the years, and I have no reason to believe that will change. Compliance issues are going to get more and more complicated.” So what does this mean for the average accounting professional? Experts say that to stay competitive in the industry going forward, you’ll need to get ready for a continuous learning curve. “Professionals are going to have to embrace a learning mindset,” DeVault warns. “You can either view it as a challenge or an opportunity. With the current compliance landscape, it’s actually a great time to be an accountant.” Proactive efforts in many firms have already begun. Oetter notes that within auditing and accounting at Blackman Kallick, “All of us are constantly focusing on upgrading our skills.” Accountants and finance professionals in US companies seeking to expand globally will need to understand how to operate abroad. “Under the old regime, you prepare your financial statements in the United States under US GAAP,” Oetter explains, adding that, globally, a company will first have to prepare its financial statements according to the accounting principles laid out by each country it operates in. “In order to consolidate, you have to first convert from other countries’ accounting standards to US GAAP. That’s a very complicated task to undertake.” The challenges for managing operations on a global scale are far greater for mid-market companies, says Oetter, who notes that many are already struggling to comply with changes in US GAAP. As the 36
global regulatory outlook becomes burdensome for them, many will be forced to look outside of their companies for expertise. “In many cases, mid-sized companies are having to hire outside people to keep up,” he says, suggesting that this need will continue to open up independent and firm-based consulting opportunities for accountants with the right skill sets. “The cost of compliance for mid-sized companies has risen dramatically. For these companies, it’s not realistic to hire people to do this full-time.” In the case of larger Fortune 1000 companies, the dynamic nature of the regulatory landscape abroad will increase the need for more specialization, says DeVault, who points out that some companies have expanded to as many as 30 or 40 countries. In particular, he notes that companies are already seeking specialized skills related to compliance in emerging markets. Ernst & Young’s study supports this assertion by identifying company supply chains that have extended beyond more traditional markets such as Europe, North America and the BRICs (Brazil, Russia, India and China) as one of the primary escalating compliance burdens. “In an emerging market, what may be a basic tenant to us is brand new to them,” says DeVault, adding that each market will be at a different level of maturity with accounting standards, and those standards are constantly changing. Compliance challenges will be particularly strong in highly regulated industries such as banking, insurance, pharmaceuticals and biotech, “where the regulatory burden is increasing fast, and where firms are feeling pressure to demonstrate a return on investment for long-term risk management initiatives,” the study states. The result will be a need for better management and mon-
itoring of an organization's structure, work flows, chain of authority and management information systems. Oetter feels that, as pressure mounts across many verticals, the internal control piece will become a much greater focal point for businesses. “The internal control strategy is an issue for public and private companies,” he says. “Companies are going to have to continue to invest in resources to strengthen internal controls.” This need to effectively manage all risks within an organization will continue to raise demand for compliance skills across the public and private sectors. In fact, having a strategy in place that creates a culture of compliance will be integral to any business moving forward, DeVault explains, adding that companies will seek to “set a culture where employees are in compliance with regulations or there will be penalties.” Experts are quick to point out that escalating compliance pressures are not just associated with public entities; there is a trickledown effect that will increasingly blur the line between public and private company expectations. “Certain regulations are not really private or public,” says DeVault. "Institutions such as banks and auditing firms that require financial statements will begin to demand the same type of reporting on both levels. At some point, people will not want reporting done in two different languages.” Some believe that future adoption of the International Financial Reporting Standards (IFRS) will signal the confirmation of these expectations. Today, nearly 100 countries require or allow the use of IFRS for the preparation of financial statements by publicly held companies, and this growing acceptance puts increasing pressure
on the United States to converge these standards with its own, says Oetter. Estimates suggest that more than 12,000 companies are currently reporting under IFRS, including listed companies in the European Union. Other countries, including Canada and India, are expected to transition to IFRS by 2011. Some experts believe that the number of countries requiring or accepting IFRS could grow to 150 in the next few years. “It’s accelerating; it’s playing out much more quickly than we expected,” Oetter explains. “When we ultimately get to a global accounting standard, compliance issues for multinational companies should be significantly simplified.” In the meantime, though, US companies that operate abroad will have to continue to work under the framework of many regulatory environments, while also pursuing an understanding of IFRS in expectation of the changeover. On August 27, 2008, the US Securities and Exchange Commission (SEC) unanimously voted to issue a proposed roadmap for continued progression towards acceptance of IFRS for public companies by 2014. The proposed roadmap would make 110 of the largest publicly held companies in the United States eligible to begin using IFRS at the end of 2009 in connection with their 2010 filings. In 2011, the SEC is expected to evaluate the progress and determine the feasibility of mandating the use of IFRS by all US public companies in 2014. “It’s time to start making those moves within a company,” DeVault states. “You will have to keep up with both GAAP and IFRS coming together.” www.icpas.org/insight.htm
WAR & the economy Regardless of your political or moral take on the concept of war, it can’t be denied that conflict impacts a country’s economy. The Keynesian economic school of thought suggests that when a country goes to war, government spending increases, production increases and unemployment decreases. What’s more, since a greater percentage of the labor force is employed, more people have the means to buy goods, which means personal consumption also increases and the economy is stimulated.
By Carolyn Tang
he impact of World War II on the US economy seems to illustrate this theory. From a global perspective, the war spurred an increase in consumption. Both the Axis and the Allies required a steady influx of resources such as petroleum, metal and grain, and the United States was willing to provide those materials without bias. Production stirred the country from the Great Depression, and the economy gradually grew a little stronger. Then came the bombing of Pearl Harbor. The United States was no longer an uninvolved supplier. Now, the country was at war. All sectors of the economy shifted into warrelated production. The country saw a lift in technological innovation, which led to the need for even more manufacturing, which in turn created jobs. Then, as more and more troops were sent overseas, even more jobs were created. The United States exited the Great Depression and became an economic and political superpower. The question remains, though: If the United States had not entered World War II, would the economy have recovered from the Great Depression on its own? Some economists suggest this is possible. Consider Henry Hazlitt’s Broken Window Fallacy, in which a boy throws a brick through a shop window. Because of this, the shopkeeper has to buy a new window, and contracts a window maker for the job. The window maker, now flush with cash, visits the tailor and buys a new suit. The transactions continue and the economy grows.
FUNDS WERE BEING SPENT FOR A WAR, OR USED FOR
ALTERNATIVE PROGRAMS, WE MUST ASK, WAS
THIS THE BEST PLACE
TO SPEND OUR MONEY? ARE WE ANY SAFER?”
However, the fallacy occurs when you consider what the shopkeeper might have done with his money had he not been required to buy a new window. Perhaps he would have opened a new store, creating more jobs. The economy would have benefited regardless of whether or not the boy threw the brick. Similarly, Mike Moffatt, an economist at the Richard Ivey School of Business in London, Ontario, explains that the extra money spent on the war in Iraq and Afghanistan may have been spent elsewhere, and the economy may have benefited from the alternative allocation. You can’t assume that a war stimulates an economy, he contends. “When you consider that the spending is diverting economic activity from other productive ends to military spending, and the loss of able-bodied labor, overall the effect is a negative one. It is not enough to consider the tanks and equipment the army is producing without considering what would have been produced instead with the raw materials and man hours it took to produce those items,” Moffatt explains. In fact, he says, the health of the economy may have been negatively impacted by the current war. He explains that in order to support the cost of the war, the government must accumulate 40
funds by increasing taxes, decreasing spending in other areas, and/or increasing debt. None of these methods necessarily result in economic growth. Increased taxes lead to a reduction in consumer spending. Decreased government spending in other areas, such as social services, reduces public-sector benefits, forcing recipients to spend their money on non-subsidized services rather than on other purchases. And increasing debt merely shifts the cycle to a later date. “While there is a short-term demand side-boost to any kind of government spending, including government spending on military equipment, this is more than offset by the increased debt load of the Federal government to pay for these purchases. This government debt has a crowding-out effect on private-sector investment,” Moffatt explains. David Tatkow, a University of Chicago MBA, agrees that government war spending has curtailed domestic spending. “The war has hurt the monetary flexibility of the government in stimulating the economy. It has run up a huge government deficit—money that could have been used domestically,” he says. Jeff Johnson, a Chicago-based finance and investment analyst, agrees that there is a “loss cost” associated with US involvement
in the Middle East. “Could we have initiated programs for clean/green technology to curtail our dependency on foreign oil and energy?” he asks. “Alternative programs such as nuclear and clean coal, hydrogen vehicles and the like may already have been established with these funds. Whether these funds were being spent for a war, or used for alternative programs, we must ask, was this the best place to spend our money? Are we any safer?” Johnson questions. Then again, perhaps current war spending is shoring up weakness in the US economy. Dr. Louis Cain is an economics professor at Loyola University of Chicago and at Northwestern University in Evanston, Ill. He explains that the aggregate economy is the sum of the private sector and the public sector. “It seems likely that the private economy has been in recession for several months,” he says. “But the stimulus provided by military expenditures has compensated for this with respect to the aggregate economy. We have experienced a very slowly growing aggregate economy.” Cain also notes that the war against Iraq and Afghanistan is being fought with volunteer forces, so the impact on the domestic labor force has been small. And, as full-time military have fulfilled their terms, the government has to offer higher pay to attract replacements. “Overall, government expenditures on military labor have increased, so more income has been inserted into the economy.” He points out that there are other differences in how the US government responded to World War II as compared to Iraq and Afghanistan. “This has been unlike the major wars of the 20th century in which the tax dog chases the defense rabbit and never catches up,” he says. “We have not had the type of mobilization in which the private sector has to give way to the public sector. We have not seen the forced saving that accompanies most wars.” However, Cain does note a similarity when he compares the current US economy to that of World War II. He explains that housing starts in the mid-1920s were at their highest level of the 20th century. “The result was an excess supply of housing. By early 1928, the construction industry was in decline. Small builders who used the proceeds from the last house to start the next house simply walked away from their current projects. The result was a lot of partially completed housing that was eventually torn down. This seems eerily similar to today,” he says. Cain also points out that the credit market tightened in 1930, which may be another similarity shared by both economies. However, he is quick to say that, while these indicators can predict a serious downturn, it’s not necessarily one of Great Depression proportion. “The reason we had a deep and long-lasting depression is that policy decisions were completely the opposite of what we believe today. Both fiscal and monetary policy proved contractionary as the Federal Reserve reduced the growth of the money supply in an attempt to maintain the gold standard, and Congress raised taxes in an attempt to bring the budget back into balance. If we have learned our lessons, we should be able to avoid a Great Depression this time around,” Cain stresses. Nevertheless, a serious economic downturn related to wartime activities is not out of the question. In fact, earlier this year, Nobel Prize-winning economist Joseph Stiglitz testified before the Senate’s
Joint Economic Committee, stating that involvement in Iraq has long been “weakening the American economy.” Stiglitz, co-author of The Three Trillion Dollar War (W. W. Norton, 2008), points out that when US troops invaded Iraq in 2003, the war was predicted to cost less than $2 billion. However, he and his co-author, Harvard University professor Linda Bilmes, suggest that the cost is closer to $5 trillion to $7 trillion, because of indirect costs such as debt interest, futures borrowing, and veteran healthcare and counseling, which were not factored into initial estimates. “What is different today is that although we can save the maimed from death, they are then forced to live with conditions that will prove enormously expensive for some time to come,” he explains. “We simply haven’t budgeted for the physiological and psychological support that veterans of the war on terror are going to need for decades.” Today’s economy is vastly different from that of World War II, says Johnson, simply because it is more global in scope. “During World War II, we still had a high percentage of manufacturing jobs here in the United States. Domestic companies continued to manufacture airplanes, transportation and our own infrastructure,” he explains. “Today, companies will go to China, India and South America, so jobs will be created abroad versus here. The current crisis is global and systematic in nature.” What’s more, “World War II involved hundreds of thousands of troops and required vast technological and supply support,” says Tatkow. “Producing the materials necessary to fight a war on a global scale against well-organized, powerful enemies necessitated huge human resources on the home front. This war in Iraq just doesn’t require that level of support.” However, it’s important to note that the current state of our economy cannot be entirely attributed to the war. The credit crunch and housing crisis may be separate factors contributing to a weak economy—factors that were born of poor investment decisions in the housing market. “They are largely independent events,” says Cain. “The credit crunch/housing crisis is the result of highly paid people forgetting that their sophisticated models had a downside risk. This was characterized as a bubble many years ago, and the bubble burst quite awhile ago. Nonetheless, these financial geniuses carried on as if nothing had happened.” Cain concludes on a positive note, suggesting that the war in the Middle East may act as a stimulus on the US quest for alternative energy sources. "I would like to think that, since part of the war involving Iraq involves oil, there has been an incentive to develop alternative energy sources. We need to continue to search for new deposits of oil as well, but given the fact that fossil fuels are nonrenewable resources, that is a short-run need at best. Our demand for electricity continues to increase, and if we choose to minimize the use of nuclear power in the long run, we need to improve the efficiency of electrical generation by solar, thermal and wind power.” All of which, of course, would create jobs, stimulate spending and grow the economy. Perhaps, regardless of impetus, the economy continues to be cyclical in nature. www.icpas.org/insight.htm
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JOBS CFO, TOWNSHIP SCHOOL TREASURERS OFFICE, MANAGE INVESTMENTS, IT, WIRE TRANSFERS, BANK LEDGERS AND MONITOR DISTRICTS CASH BALANCES. CPA OR CERTIFIED SCH BUSINESS OFFICIAL. EQUAL OPPORTUNITY EMPLOYER, SEND YOUR 1 PG RESUME AND COVER LETTER TO:
TREASURY OFFICE 1935 SO PLUM GROVE RD #323 PALATINE, IL 60067
D AY ! TO R TE IS G RE
March 17, 2009 Donald E. Stephens Convention Center Rosemont, Illinois
The Changing World of Corporate Finance: Are You Ready?
Featuring Innovative Sessions on: > Economic Outlook for 2009 > International Financial Reporting Standards > Accounting Update for Corporate Finance Professionals > Forecasting > Green Business Practices Time: 8:20
8 Credit Hours (CLE Pending)
> Engaging Your Talent to Drive Growth and Innovation
> Customer Profitability
> Top Technologies for Corporate Finance
$325 Members $395 for Non-members
Register by February 24, 2009 and receive $25 off your registration fee.
For further information or to register, call 800.993.0393 or visit www.CCFLinfo.org.
Standing Ovation Everyday, Illinois CPA Society members provide countless volunteer contributions that deserve applause. Whether it’s speaking to college students, providing pro-bono tax preparation, or lending technical expertise, their volunteer activities support a strong accounting profession and make us proud to be CPAs.
CPAs Enhance the Profession’s Image through Media Relations
Successful relationships with the media are essential to the Society’s mission of enhancing the value of the CPA profession. Thanks to members who serve as experts on a wide range of topics, the Society is able to provide interviews that result in radio, TV and print coverage of the profession and its issues. These members often assist on short notice with little time for preparation and make themselves available despite hectic schedules or unusual hours. With their willingness to help and share their expertise, they have made a significant contribution to the success of the Society’s media relations efforts.
A standing ovation to our recent media relations volunteers: Alan S.Alport, CPA Blackman Kallick LLP Chicago, IL
Cara C. Hoffman, CPA Blackman Kallick LLP Chicago, IL
Mary Lou Pier, CPA Pier & Associates, Ltd. Chicago, IL
Christopher F. Beaulieu, CPA Clifton Gunderson LLP Oak Brook, IL
Debra R. Hopkins, CPA Northern Illinois University DeKalb. IL
Ira Solomon, CPA University of Illinois Champaign, IL
Sidney A. Blum, CPA GreenLight Fee Only Advisors Evanston, IL
James P. Jones, CPA Edward Don & Co. Chicago, IL
Michael J. Singer, CPA Michael J. Singer & Co, P.C. Northbrook, IL
Paul E. Dillman, CPA P & L Accounting and Tax Service LLP Oak Forest, IL
Irwin H. Lerman, CPA Lerman, Boudart & Associates, LLP Chicago, IL
Paul Raymond Todoric, CPA Michael J. Singer & Co., P.C. Northbrook, IL
Linda H. Forman, CPA Linda Forman, CPA, P.C. Evanston, IL
Betsy Matthews, CPA Lake County Neurosurgery LLC Libertyville, IL
Bradley K. Walton, CPA Signature Advisors Group Arlington Heights, IL
Geoffrey J. Harlow, CPA Kessler Orlean Silver & Company, P.C. Deerfield, IL
Morris M. Oldham, CPA McGladrey & Pullen LLP Chicago, IL
Lawrence A. Wojcik, CPA DLA Piper US LLP Chicago, IL
Members interested in being one of the Society’s media relations volunteers should contact Judi Kulm,
Communications and Media Manager at 1-312-993-0407 ext. 251 or email@example.com.
We have done our best to compile the full list of volunteer names. However, if we missed anyone, we deeply regret the omission. To submit information for an upcoming “Standing Ovation,” please email Judi Kulm at firstname.lastname@example.org.
Published on Dec 15, 2008
INSIGHT is the magazine of the Illinois CPA Society. January / February 2009 issue. INSIGHT Magazine presents global and local issues of par...