Exploring the issues that shape today’s financial world icpas.org/insight.htm
CPA Firm 2020 Are You Ethical? Guessing at Obamacare
Biz Models Reinvented Small Biz on the Fiscal Cliff
Nonprofit CFO Search Big Business in Illinois
2013 Young Professionals
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SPRING 2013 | www.icpas.org/insight.htm
How to Be a Fearless Leader This one is for the movers and shakers. The up-at-5-a.m. yoga warriors. The run-during-lunch and network-after-work crowd. The I’m-taking-this-class-because-it-interests-me set. The that-office-hasmy-name-written-all-over-it group.
CPA 2020 Nearly three years ago the Illinois CPA Society asked CPAs what they thought the profession would look like in 2020. Now, with only seven short years to go, we take a look at what needs to be topof-mind among finance leaders looking to the future.
Are You Ethical? Six strategies for navigating moral quandaries in the workplace and keeping your reputation intact.
Strategy Models for Recovery Economic doom and gloom has given rise to today’s most compelling, cutting-edge models for business growth.
Nonprofits CFO Hunting Three strategies for nonprofits in search of the perfect executive hire.
Economy Big Business Illinois The state is working hard to make itself evermore attractive to businesses far and wide.
Small Business Gripping the Edge What do 2013’s tax law changes really mean to the nation’s small-business owners?
Healthcare The Obamacare Effect With new provisions on the horizon, healthcare is still something of a mystery.
Diversity Empower the Future Minority students find the inspiration to pursue illustrious careers in the accounting field.
columns 4 6 10
First Word A message from ICPAS leadership. Seen Heard Sound bytes, sound advice and practical business tips. Tax Decoded Use & Abuse? A new Cook County use tax is raising some pretty big issues.
Capitol Report New Faces, Same Issues With the Spring Session in effect, we’re returning to old issues sorely in need of some resolution.
Forensics Insider Sights on the Endgame How do you define success in the business of forensic accounting?
PFP Advisor Not-So-Sexy Investing Trade tantalizing short-term predictions for long-term investing success.
Must-read-must-know news for young accounting pros.
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Allow Me To Introduce Myself
INSIGHT MAGAZINE Publisher/ICPAS President & CEO Todd Shapiro Editor-in-Chief Judy Giannetto Assistant Editor Derrick Lilly
hirty years ago, I launched my career in public accounting because I liked math. But I also wanted to be an advisor, a professional that business leaders could trust—not to mention that the career offered security during a poor economic time. While a lot has changed in the profession—and the profession has had its fair share of road bumps along the way—many things still remain the same: The trust and respect CPAs earn, the professional and personal rewards, and the security the CPA credential provides. Whether you’re a CPA in public accounting, industry, education, government or another valuable endeavor, as a group, we’re looked upon as leaders, thinkers and consummate professionals, and the profession remains promising for existing and new professionals alike. In serving as this year’s Board Chair, it’s my intent to make sure we continue to promote these distinctions, to encourage Society engagement, and to work towards what’s best for Illinois’ CPAs. Working together is important to me, so I’m going to try to talk with members as much as I can. Since I am just the band’s conductor, I’ll also encourage my fellow directors to try to make themselves available to hear the perspectives of Society members. I hope this initiative will enable the Society to continue advancing its mission to fulfill the needs of its diverse and dynamic membership. The Society prides itself on supporting and guiding members in need of technical assistance, legislative and regulatory updates, continuing education and development, and career and business networking. Under my watch, we will continue to push the future of professional education and advance the core competencies of CPAs with our innovative learning products. I also want to set the pace for the next generation. Throughout the year, we hope to roll out a variety of programs that engage our expanding student and young professional member bases. Over the last 30 years, I learned that developing the right network early and having a core group of people to discuss career opportunities and business issues with, and even develop lasting friendships with, forms the foundation of a fulfilling career. It just happens that the Society’s membership consists of the best and brightest in the state, and it’s been a steadfast reason for my increased participation with the Society year after year. Whether you’re a CPA or pursuing it, the Society is here to support you every step of the way. I’m sure you’re getting the point I’m driving at: Being a member of the Illinois CPA Society is important to our professional and personal lives. I think being a member is a valuable investment for every CPA, and I will continue to promote that by proudly and honorably serving in this leadership position and establishing myself as a role model for others. I invite you to join me in standing with both the profession and the Society.
Creative Services Director Gene Levitan Creative Services Manager Rosa Garcia National Sales & Advertising Natalie Matter DeSoto YGS Group, 3650 West Market Street, York, PA 17404 P: 800.501.9571 x127 F: 717.825.2171 E: firstname.lastname@example.org Circulation/Member Services Director Carl Siska Editorial Offices: 550 W. Jackson Blvd., Suite 900 Chicago, IL 60661
ICPAS OFFICERS Chairperson, William P. Graf, CPA Deloitte & Touche LLP Vice Chairperson, Daniel F. Rahill, CPA, JD FGMK, LLC Secretary, Edward J. Hannon, CPA, JD Freeborn & Peters LLP Treasurer, Mary Lou Pier Pier & Associates, Ltd. Immediate Past Chairperson, James P. Jones, CPA Edward Don & Company
ICPAS BOARD OF DIRECTORS Linda S. Abernethy, CPA, McGladrey LLP Rosaria Cammarata, CPA, CME Group Inc Rose G. Doherty, CPA, Legacy Professionals LLP Gary S. Hart, CPA , Gary Hart & Associates Ltd Margaret M. Hunn, CPA, CFE, CFF, CITP, Rozovics Group PC Paul V. Inserra, CPA, McClure, Inserra & Co., Chtd. David V. Kalet, CPA, MBA, BP Products North America Michael J. Maffei, CPA, GATX Corporation Marcus D. Odom, PhD, CFE, CPA Southern Illinois University
Floyd D. Perkins, CPA, Ungaretti & Harris J. Bradley Sargent, CPA/CFF, CFE, CFS, Cr.FA, Sargent Consulting Group LLC
Find William P. Graf’s bio online at www.insight.org/graf.htm.
Marcus F. Schultz, CPA, Dugan & Lopatka CPAs PC Scott D. Steffens, CPA, Grant Thornton LLP
William P. Graf, ICPAS Board Chair
Thomas L. Zeller, PhD, CPA, Loyola University Chicago
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 24,000 CPA members and professional affiliates. Statements or articles of opinion appearing in INSIGHT are not necessarily the views of the Illinois CPA Society. The materials and information contained within INSIGHT are offered as information only and not as practice, financial, accounting, legal or other professional advice. Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication. It is INSIGHT’s policy not to knowingly accept advertising that discriminates on the basis of race, religion, sex, age or origin. The Illinois CPA Society reserves the right to reject paid advertising that does not meet INSIGHT’s qualifications or that may detract from its professional and ethical standards. The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within INSIGHT, and makes no representation or warranties about the products or services they may provide or their accuracy or claims. The Illinois CPA Society does not guarantee delivery dates for INSIGHT. The Society disclaims all warranties, express or implied, and assumes no responsibility whatsoever for damages incurred as a result of delays in delivering INSIGHT. INSIGHT (ISSN-1053-8542) is published four times a year, in Spring, Summer, Fall, Winter, by the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA, 312.993.0407 or 800.993.0407, fax: 312.993.7713. Subscription rates for non-members: $20 US, $28 Canada, $30 Mexico and $40 for international addresses. Copyright © 2013. No part of the contents may be reproduced by any means without the written consent of INSIGHT. Permission requests may be sent to: Publications Specialist, at the address above. Periodicals postage paid at Chicago, IL and at additional mailing offices. POSTMASTER: Send address changes to: INSIGHT, Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA.
NEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS
percent of U.S. & Canadian professionals who think they will land their next job through networking. Source: Right Management
Need a Vacation? If you didn’t take much of a break last year, you weren’t the only one. According to surveys by talent and career management firms Right Management and Adecco, most employees didn’t use all their vacation time in 2012. Repeating the findings from 2011, 70 percent of respondents to Right Management’s survey indicated that they didn’t take all the time due to them, and 75 percent of respondents said the same to Adecco. This trend grew during the recession and indicates that employees are still under a lot of pressure. To bring some balance back into the workplace, Right Management advises senior management to lead by example and encourage employees to take breaks in 2013. After all, vacation is key to a healthy workforce, and without it employers are likely to see unnecessary turnover, declining retention and higher absenteeism.
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Writing an Ethical Resume If you’ve gone a while with no call-backs, you may be tempted to “dress up” your resume. Don’t do it! These tips from the Elephants at Work blog will keep you on the straight and narrow: n Don’t use a different job title than the one your employers have on record for you. n Exclude short-term employment or jobs left on negative terms. n Don’t claim accomplishments you weren’t responsible for. n Don’t leave off or misrepresent your degree information. n Don’t exaggerate your skills—not even a little. 6
Fraud Risks Rise with Crowdfunding Internet crowdfunding activity is rising sharply on the coattails of the Jumpstart Our Business Startups (JOBS) Act, says the North American Securities Administrators Association (NASAA). Crowdfunding started as an online money-raising strategy for the public to donate small amounts of money through social networking and other websites to help finance projects or causes. Now, small businesses and entrepreneurs are anticipating that the SEC will allow them to raise investment funds online. Nearly 6,800 domains that include “crowdfunding” have appeared since the JOBS Act became law in April 2012. Seeing this as a fraud catalyst, NASAA is creating a new taskforce to monitor crowdfunding and other Internet offerings, and is developing investor and industry awareness programs aimed at preventing fraud.
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investors who checked into their investment professional’s background in the last five years. Source: FINRA Foundation
New Name, New Look, Same Great Content Have you seen the new, improved corporate financial leadership eNewsletter Inside Finance [www.icpas.org/insidefinance.htm]? If your answer isn’t a resounding, “Yes!” then waste no time. Scouring the nooks and crannies of the World Wide Web, Inside Finance brings you the latest, most topical stories to inform, educate and even entertain. Don’t miss the Apri l 25 issue!
A New Twist to Mentoring Four Steps to a Fitness-Minded CPA Firm The Illinois CPA Society’s Women’s Executive Committee (WEC) recently launched its “Mentoring Circles” initiative, specifically intended to benefit women of all ages and at all stages of their careers. Each Circle is comprised of 8 to 10 women of varying levels of experience from a wide range of practice areas, who meet anywhere between 4 and 12 times a year. These Circles not only offer the opportunity to mentor future women leaders, but also encourage honest feedback, which ultimately promises to help to hone management skills. Also, unlike one-evening events, the Circles are an opportunity to build strong personal and referral relationships with women throughout the profession. For more information on the program, contact Gayle Floresca at email@example.com.
READ THIS! Experts interviewed for our Spring issue recommend these must-read books on leadership:
The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, by William M. Thorndike (Harvard Business Review Press; October 23, 2012). Leadership Agility: Five Levels of Mastery for Anticipating and Initiating Change by William B. Joiner and Stephen A. Josephs (Jossey-Bass; October 20, 2006). The Little Black Book of Leadership by Todd Dewett, Ph.D. (TVA Inc.; December 1, 2010). INSIGHT icpas.org/insight.htm
We’re about a quarter of the way through 2013; how are those New Year’s Resolution fitness plans holding up? If they’re slipping by the wayside, now is a good time to encourage wellness among your employees. Here are four tips from the Intuit Small Business Blog to elevate your office’s activity levels. 1. Create a fitness-friendly workplace: Organize lunchtime walks, provide bike storage areas, hold stand-up meetings, and plan monthly activities that everyone can participate in. 2. Add incentives: Offer recognition and rewards for participating in office-wide “Biggest Loser” or other wellness-related competitions. 3. Participate in special events: Encourage Visit www.icpas.org/volunteer employees to train together for local charity fun to learn about the many runs, marathons, triathlons, walks, or other sporting tournaments that they can sign up for volunteer programs offered as a team. through the Illinois 4. Set the right example: If you encourage emCPA Society. ployees to participate in an after-work jog, get your running shoes on and get out there with them.
Want to Volunteer?
Seek ‘Hire Knowledge’ Read the new ICPAS Hire Knowledge blog by long-time Society member, recruiting expert and Be Fearless Young Professionals Conference speaker (May 31, see p. 48) Renee Beckman. Take a look at the latest CPA CareerSpace eNewsletter [www.icpas.org/careerspace.htm] or visit eINSIGHT [www.icpas.org/insight.htm] for Renee’s latest post!
Deloitte Predicts Increased Divestitures in 2013 According to Deloitte’s Sharpening Your Strategy survey, 81 percent of executives say that pruning their businesses of non-core assets with limited growth potential, nonsynergistic products, or poor performance is one of the most important reasons for divesting. Although about 51 percent reported that their divestitures over the last 24 months took longer than expected, valuations remained strong, with 68 percent saying values met expectations, and 17 percent saying they exceeded expectations.
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Use & Abuse? A new Cook County use tax is raising some pretty big issues. By Keith Staats, JD
Keith is a senior manager of Grant Thornton’s State & Local Tax practice, based in Chicago. Previously, he held the position of general counsel of the Illinois Department of Revenue, where he developed tax policy, evaluated and reviewed tax-related legislation, and oversaw tax-related litigation. * email@example.com
ffective April 1, 2013, businesses and individuals located in Cook County, Ill. became subject to a new tax on purchases of tangible property made from sellers located outside the county. Specifically, a 1.25 percent “use tax” is imposed based on the value of non-titled tangible personal property acquired from sellers located outside Cook County, when the property is first subject to use in county. Rather than being imposed and collected at the time of the sale, the tax has to be reported and paid by purchasers located in Cook County. Simple enough on the face of things, but a number of significant statutory and constitutional issues have been triggered by this new tax. The tax imposes new compliance burdens on Cook County-based businesses and individuals. In price competitive situations, this additional 1.25 percent cost may sway Cook County-based purchasers to favor Cook County sellers rather than sellers located outside the county. Also, it appears that the county doesn’t have the legal authority to impose this tax. The Cook County Board of Commissioners passed the non-titled use tax ordinance last November as part of its budget for FY2013. It justified the ordinance as a means to close “tax loopholes” and to promote the purchase of non-titled property within the county for use within the county. Every person in Cook County who, “in the course of business,” acquires non-titled property from outside the county will be required to register with Cook County’s Department of Revenue to remit the tax. There’s no explicit requirement for individual residents to do so, however. Returns must be filed on or before the 20th of each month, remitting tax due on any transaction that occurred in the preceding month. The Department has yet to circulate the form and precise filing procedures.
A credit will be available for the first nontitled property valued at $3,500 at the time of first use within the county, which is applied against the taxpayer’s aggregate county use tax liability for the taxable year. As a result of the credit and practical problems associated with tracking purchases made outside the county, it’s unlikely that many individual residents will register and pay the tax. The ordinance exempts boats, automobiles and any other item required to be titled and registered with an Illinois government body. It also exempts groceries; medicines; drugs; medical appliances used by publicaid recipients in nursing homes; and insulin, urine-testing materials, syringes and needles used by diabetics. What’s more, non-titled property that is exempt from the Illinois use tax is also exempt from the Cook County use tax “to the extent that the exemptions contained therein are not inconsistent with the provisions of this article.” Also, the use tax doesn’t apply to certain “uses” within the county, such as the temporary use of non-titled property by a non-resident who is merely passing through the county, and the temporary storage of nontitled property destined for use solely outside the county. Moreover, the tax doesn’t apply to non-titled property used by a non-resident individual or business that uses the property in the course of business and relocates to the county, or opens an office, plant or other facility in the county, if the property has been used outside the county for at least the three previous months. Rolling stock moving in interstate commerce and used by interstate carriers for hire is also exempt. It’s arguable that on its face the tax violates the state constitution and laws. The Illinois legislature hasn’t granted Cook County the authority to impose a non-titled use tax. In fact, it expressly prohibits Cook County or a “home rule county” from imposing a use tax
or other tax on the use, sale or purchase of nontitled tangible personal property “based on the gross receipts from such sales or the selling or purchase price of said tangible personal property.” The county may try to support its ordinance by arguing that the use tax is not “based on the gross receipts from...the selling or purchase price,” but rather applies to the “value” of the property when it is first used within the county. In reality, though, the value of newly purchased property is the same as the sale or purchase price. Regardless, the Illinois Constitution prohibits an “ad valorem personal property tax” or a tax based on value. Also, it could be decided that the tax discriminates against interstate commerce in violation of the Commerce Clause of the U.S. Constitution, due to the fact that the county’s new use tax rate exceeds the rate of the corresponding sales tax, which, in effect, gives preferential treatment to a Cook County-based vendor versus a vendor located outside the county or state. What at first seems straightforward is in fact a hotbed of debate. We’ll watch over the next few months to see where the debate finally lands. Please note: This article was written jointly with two of my Grant Thornton colleagues, Chuck Jones, a director, and Hannah Yoo, a senior associate, both in the Chicago office.
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icpas.org/insight.htm | SPRING 2013
New Faces, Same Issues With the Spring Session in effect, we’re returning to old issues sorely in need of some resolution. By Marty Green, Esq.
Marty is the ICPAS VP of Government Relations, a practicing lawyer and member of the Illinois Bar...and a Lieutenant Colonel in the National Guard. He previously served as executive assistant attorney general for Illinois Attorneys General Lisa Madigan and Jim Ryan, and as director of the Governor’s Office of Citizens Assistance and assistant to the Governor for Public Affairs, both under Governor James Edgar. * firstname.lastname@example.org @icpasgovt
he 98th General Assembly was sworn into office at the beginning of 2013. Including more than 33 new members, many of the same unresolved issues confront the newly constituted legislative chambers. No progress was made during the fall Veto Session and winter Lame Duck Session on the state’s hemorrhaging public pension debt, or the social issues of banning assault weapons and recognizing same-sex marriages. There’s no clear or direct path to resolving these enormous issues, and they continue to bog down the legislative process. Looking to the Spring Session, the Illinois CPA Society’s top priority is the passage of legislation to renew and update the Illinois Public Accounting Act, which sunsets on January 1, 2014. Each professional regulatory act expires every 10 years to allow the General Assembly to review the statute and decide whether the regulation should be updated or eliminated altogether. House Bill 2726, sponsored by Rep. Robert Rita and Rep. Raymond Poe, updates the Illinois Public Accounting Act and extends the sunset to January 2024. (More information on the legislation can be found at www.icpas.org.) Last year, the Illinois CPA Society introduced legislation to update the Public Accounting Act, a year ahead of our sunset date. However, it was never called for consideration. Rather, the General Assembly extended those acts sunsetting in 2013 for six months, and these, together with acts sunsetting in 2014, will now have to be reviewed during the Spring Session. The CPA profession is well represented from a legislative standpoint. Rep. Natalie Manley (D), representing the 98th House District, began her first term as a member of the House of Representatives. Rep. Man-
ley, a licensed CPA, was formerly with Wermer, Rogers, Doran & Ruzon, LLC. Rep. Pam Roth (R), representing the 75th District, begins her second term as a member of the House. A registered CPA, Rep. Roth previously worked in business and industry. Sen. Patricia Van Pelt-Watkins (D) began her first term representing the 5th Senate District. Sen. Van Pelt-Watkins, a licensed CPA, has a Ph.D in the management of nonprofits and has served as a public appointee to various boards. Sen. John Mulroe (D) begins his second term representing the 10th District in Chicago. Sen. Mulroe, a registered CPA and attorney, is engaged in the private practice of law and previously served as an auditor with Arthur Anderson. Sen. Michael Hastings (D), representing the 19th District, began his first term as a member of the Senate. A graduate of West Point and former Army Captain, Sen. Hastings is completing the final stretch of the academic requirements to sit for the CPA Exam. (For more biographical information, visit the Illinois General Assembly website at www.ilga.gov.) In the coming months, we will be working closely with these legislator CPAs to renew the Public Accounting Act and resolve other issues pertinent to the profession. On the Federal level, we were able to avoid going over the Fiscal Cliff at the beginning of 2014. And as spring approaches, we are nearing Fiscal Cliff Part 2, with sequestration fast approaching, which will result in enormous budget cuts across the board. Finance experts opine that such drastic cuts could push our fragile economy back into a recession. AICPA council members from Illinois will be visiting with members of the Illinois Congressional Delegation later this spring. Our council members will visit Illinois con-
gressman, who serve on the Financial Services Committee and House Ways and Means Committee, to discuss federal issues of interest to the CPA profession. With so many new legislators in the Illinois General Assembly and new members of the Illinois Congressional Delegation, the Government Relations Office has been working hard to reset its grassroots initiatives. To that end, I’m asking ICPAS members to join the highly effective Legislative Contacts Program, which brings us that much closer to our goal of having one-onone contact with legislators. Contacts are occasionally asked to contact a legislator or member of Congress on behalf of the profession either in support of or in opposition to an issue or pending legislation. If you know or have an established relationship with a legislator or congressional member, I encourage you to sign up for the program either by visiting www.icpas.org or contacting me directly. And if you’ve already served as a Legislative Contact, thank you for your time and willingness to help to support and shape the profession.
Day of Service A Good Day for Doing Good Be part of the Illinois CPA Society’s fourth annual CPA Day of Service. It’s as easy as 1-2-3: Choose a community organization or charity to help. Register your volunteer activity plans at www.icpas.org/CPADayofService.htm. Receive a free CPA Day of Service t-shirt (while supplies last, free to Illinois CPA Society members). Volunteer as an individual, or get a group together and volunteer as a team.
Questions? Please contact Taylor Banister at email@example.com or 800.993.0407, ext. 231. CPAs for the Public Interest (CPAsPI), the community service arm of the Illinois CPA Society, links the expertise of CPAs and finance professionals with Illinois not-for-profit organizations and community needs.
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icpas.org/insight.htm | SPRING 2013
Sights on the End Game How do you define success in the business of forensic accounting? By Brad Sargent, CPA/CFF, CFE, CFS, Cr.FA, FABFA
Brad is the managing member of The Sargent Consulting Group, LLC, which specializes in forensic accounting and financial investigation. He is a frequent lecturer and chair emeritus of the American Board of Forensic Accounting. A member of the Illinois CPA Society since 2002, Brad also serves on the Society’s Board of Directors. * email@example.com
uccess comes in many forms. In professional services, it’s usually equated with a happy client. For CPAs in financial planning, it’s a matter of maintaining and growing principal while creating ongoing revenue streams. Forensics is a beast of a very different nature, however. Often, the goal at the start of an engagement is vague, with everyone having different notions of the next steps and the end game. One example: I’ve had a CEO tell me that their CFO wouldn’t maintain eye contact, which had to mean financial wrongdoing. Good luck putting a work plan together around that! What we do all know (or think we know) is that something is wrong, something is missing and/or someone is lying. While it’s vital to define success early on, it may need to be redefined often. After all, a typical forensic engagement involves multiple phases, during which many factors can change. This is the key point: Goals and expectations are a continuous dialogue. Remember that the client is most likely new to financial investigations. It’s up to the attorneys and accountants to bring the experience needed to avoid the pitfalls that wreck an engagement. Why is this so important? Because without regular communication each party may operate under different assumptions and move further afield from others’ expectations and understanding. This dynamic usually results in unhappy accountants, attorneys and clients, and overall failure. Patrick S. Coffey, Esq. leads Whyte Hirschboeck Dudek S.C.’s Corporate Compliance & White Collar Defense Team. He has more than 25 years of experience in successfully representing companies and individuals in a wide range of complex investigation and white-collar defense matters at the federal, state and local levels. He is experienced in defending complex investi-
gations and representing clients in highstakes litigation, and also advises clients on all aspects of corporate compliance. Coffey states that, “There is little doubt, among all of the other challenges in significant tax disputes and other cases, that setting expectations for clients as well as counsel and consultants stands out as a key and oftentimes difficult task. There is little question, however, that efforts to ensure that everyone is seeing the matter in a similar way as the case unfolds are essential to success in the handling of difficult cases.” Consider this hypothetical situation: An experienced team of attorneys and forensic accountants conducts a detailed investigation and identifies millions of dollars in damages as the result of fraudulent acts. The accountants provide critical analyses and expert opinion in a report submitted to the court. The attorney argues a persuasive, fact-backed case, aided by incisive testimony from the accountants. The collective work of the investigative team leads to a successful lawsuit and a whopping judgment levied against the perpetrators. Cue the champagne because, by all definitions, this case is now successfully closed. But wait; several months later, the client has had zero success in collecting on the judgment because the defendants have no assets. But, they stole millions! How can this be? The world’s greatest forensic investigation can be for naught with millions of dollars in legal and accounting fees spent, simply because the team failed to define success as “recovery of assets” from the beginning. Eric (“Rick”) S. Rein, Esq. is a partner at Horwood Marcus & Berk Chartered, specializing in international asset recovery. Rein concentrates his practice in multijurisdictional litigation, specifically the recovery of foreign claims and assets. He is also well regarded for his knowledge of international legal systems and frequently serves as spe-
cial counsel to the financial services industry, corporations, attorneys, accountants, trustees, receivers and high-net-worth individuals. He explains that, “The key to any engagement is to accomplish a recovery. Therefore, at the outset, one needs to determine if there can be a recovery, and what it would entail. One also needs to communicate with the client as to what the client would consider to be a successful recovery in order to manage expectations.” Inexperienced forensic accountants may often run up substantial fees without considering what assets are available for recovery, and wind up with a lesson they will never forget. They need to consider recovery at every point along the way, regardless of the many twists and turns an investigation may take. I was fortunate to see this firsthand. Years ago, I was asked to perform an investigation into an entity’s revenue recognition policies and procedures, specifically to identify any possible revenue overstatement. The business owners (who were not management) were pursuing an initial public offering and sought an audit opinion from a large international CPA firm rather than the “super-regional” firm they’d used for years. The entity’s CFO quit unexpectedly the day before the big firm commenced fieldwork. As a result, the CPA firm backed away and insisted that an independent forensic accountant investigate allegations of potential revenue overstatement and the circumstances around the CFO’s sudden resignation. I met with the Csuite and began my investigation, defining success as verification of revenue and a plausible comfort level regarding the CFO’s departure. Several weeks into my work, documents surfaced indicating that upper management was aware of material issues in the revenuerecognition function. Immediately, the entire course of the investigation changed and I was now investigating the people I’d been working with for weeks. More details were uncovered that clearly demonstrated upper management not only had knowledge of material misstatements on the financial statements, but also had actively worked to suppress evidence in our investigation. Success was now co-defined as “termination of management not acting in the entity’s best interest.” This particular business was extremely profitable, which certainly made me ask why it would inflate already stellar revenue. The business owners cleaned house, and what I thought was going to be a rather discreet accounting project turned into a much larger and more complex investigation. It was extremely fortunate that the attorneys and forensic accountants were seasoned professionals who were able to switch gears quickly, communicate with ownership effectively and not alert management to the change in course. Even if your success target changes throughout an investigation (which often happens), your team’s ability to effectively revisit and revise the work plan will have the greatest positive impact on achieving success. The inherent ambiguities in forensic work makes developing a work plan a challenge. Therefore, when I approach projects, I often first look to the finish line—or success target—and reverse-engineer a course back to the start. I remind my team to constantly ask themselves whether what they’re doing is moving things towards the success target or in another direction. And I ask them to continue collaborating and communicating with the relevant parties throughout the project. Defining what constitutes success, staying the path and actively communicating with your team is the simplest and best way to get where you need to be.
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Not-So-Sexy Investing Trade tantalizing short-term predictions for long-term investing success. By Mark J. Gilbert, CPA/PFS
t’s always in vogue for big-name investors and noted investment managers and financial planners to predict how the Dow and S&P 500 will perform for the year, and which of their favorite stock picks and economic sectors will be the year’s hottest players. It’s so common, in fact, that many investors think investing is all about picking the best stocks or funds and selling or shunning everything else. Instead, you need to stress investing for the long term, with an eye on personal goals, financial objectives and investment risk tolerance. This investment style may not be nearly as sexy, and it certainly doesn’t produce any notable sound bites, but it’s far more practical. A principal in the financial planning firm of Reason Financial Advisors, Inc., Mark’s 25-plus years of finance and accounting experience includes 13 years in personal financial planning. An ICPAS member since 1982, Mark currently serves in the IA/PFP Member Forum Group and on the Structure & Volunteerism Committee. * firstname.lastname@example.org
Diversify, Diversify, Diversify To their credit, investors, managers and planners frequently follow up their “Best Stock of the Year” rants with a comment or two about diversifying assets. But that part of the conversation usually gets lost. So what does diversification really mean? Simply, it’s the process of simultaneously investing in a portfolio of different securities and asset classes at any given time, some of which may go up, while others go down. This is by design, since, from day to day, month to month, quarter to quarter, and year to year, it’s virtually impossible to time the markets to successfully buy the bottoms and sell the tops. Plus, it theoretically reduces the risk of sustained portfolio losses in the face of economic uncertainty and market distress brought about by unexpected natural disasters, geopolitical events, and the like. Ideally, portfolio diversification is achieved by investing in a broad mix of stocks, bonds and alternative investments, like real estate or commodities (or funds that invest in these securities) whose prices move independently of each other. A generation ago, it was easy to find non- or low-corre-
lated US and international stocks and bonds to achieve strong portfolio diversification, but this is probably the greatest challenge in portfolio design today. Following the 2008 financial crisis and stock market crash, these assets have shown a frustrating tendency to move in sync with each other, with the sole exception being US Treasury notes and bonds. That said, investors and analysts are increasingly speaking of the “risk-on, risk-off” nature of the securities markets, where diversification seemingly means being all in the markets or on the sidelines in lowyielding government bonds. Nevertheless, as the global economy slowly returns to measurable growth, I expect that correlations between various stock and bond asset classes will once again diverge, and the importance of a truly diversified portfolio will rise.
Realize the Risks Risk tolerance is a key component of deciding how to diversify investments. Regardless of past performance or expected portfolio returns, investors have to consider how well they can stomach wild stock market swings. In other words, what is an investor’s tolerance for their holdings losing 10 or 20 percent or more? The answer is highly subjective. Some people are simply risk-takers while others are entirely riskaverse, and only by understanding both the positive and negative risks can one properly design a portfolio that will allow an investor to sleep well at night regardless of day-to-day market fluctuations.
Focus on a Financial Plan Investment risk tolerance is only one aspect of portfolio design; you also have to focus on a plan. For example, an extremely riskaverse investor may unwittingly create financial risks by limiting his or her portfo-
lio to overly conservative investments. Let’s say a conservatively managed portfolio is expected to produce a 4-percent annual rate of return, yet it needs to earn 6-percent annually to meet the investor’s needs, then the selected portfolio design obviously isn’t appropriate. The converse also may be true if a portfolio is set up to take unnecessary risks to earn a higher rate of return than is really needed.
Only after developing a financial plan can investors make the right investment decisions. Investors need to start by quantifying their financial and lifestyle goals, and considering all anticipated future sources of income, like Social Security, pensions and deferred compensation. Next, taxes and inflation need to be accounted for so investors can estimate the required rate of return to meet their objectives. Finally,
investors can use these estimates to make informed decisions about where to invest. There’s no denying that picking securities that achieve excellent or at least reasonable returns is critical to successful investing. But it’s not the only consideration. Thinking about appropriate portfolio diversification, investment risk tolerance and the financial plan should also factor into every investor’s decision-making process.
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Models for Recovery Economic doom and gloom has given rise to today’s most compelling, cuttingedge models for business growth. By Carolyn Kmet
he economy’s downward spiral over the past few years has been a negative force felt by just about everyone. But out of adversity ingenuity is born. The rise of four business models in particular are a shining example of that.
1. Conscientious Capitalism In 2008, the economy was spinning down the drain. In an effort to stay afloat, many companies were slicing budgets and dicing staff. Shaun Walker, a young ad man from New Orleans, was one among many who lost their jobs. Undeterred, he partnered with an account manager friend and, in 2009, founded HERO|farm, an ad agency with a social mission: “To do great work, but also accomplish good for the world while doing it.” 18
Fast forward four years, and you have an award-winning marketing agency that does at least one pro bono campaign a year for a nonprofit, and maintains a client list of firms “that have admirable missions of their own.” HERO|farm serves on the marketing boards of the local Boy Scouts of America, March of Dimes and Big Brothers Big Sisters, among many more. And the company has done pro bono work for WRBH FM, the only fulltime reading service for the blind and print handicapped on the FM dial in the United States, and the New Orleans Mission, the oldest privateservice provider for the homeless in the city. HERO|farm and its mission of conscientious capitalism represent a new way of doing business—and a profitable one at that. “Since our founding, we have doubled our revenue every year,” Walker explains. “When you add value to a person’s everyday life, you do more than just sell a product; you create a lasting relationship of goodwill and a connection that goes far beyond sell-buy-consume.” In 2011, Rajendra Sisodia, David Wolfe and Jagdish Sheth studied firms such as Trader Joe’s, CarMax, Wegmans and Toyota, and determined that companies that upheld the principles of conscientious capitalism outperformed the market by a 9-to-1 ratio over a 10-year period. The authors present their findings in the book Firms of Endearment, published by Pearson Prentice Hall. Additionally, from a consumer standpoint, we see that more and more purchase decisions are being influenced by purpose over product.
Public relations firm Edelman recently issued the Goodpurpose study, canvassing 8,000 consumers in 16 countries. According to the study, “social purpose” as a purchase trigger has risen 26 percent since 2008. These numbers are not easily dismissed.
2. Subscription The subscription or membership model is another business model to have evolved out of a down economy. Rather than referring to newspapers and magazines, however, today’s subscription model allows consumers to subscribe to any number of products, from toothpaste to underwear. According to a 2011 Gartner study, subscription commerce will generate revenue for 35 percent of the Fortune 2000 by 2015. One of the big players in this arena is New York-based OrderGroove, which raised $6.7 million in venture capital financing last November. OrderGroove enables retailers to launch subscription programs on their site, with the objective of increasing total customer lifetime value, overall profitability and the frequency of customer purchases. “When merchants tap into the power of convenience, they turn new and existing customers into repeat buyers, which means higher recurring revenues, new data and analytics, increased purchasing rates and stronger brand loyalty,” explains Katie Shea, director of marketing for OrderGroove. “For consumers, it means time and money saved on frequently purchased products.” To date, OrderGroove’s clients include wellknown retailers and brands such as CVS, L’Oreal, Grainger, Jockey and Teavana. “In the past year, OrderGroove has experienced over 350-percent revenue growth while tripling its client roster,” Shea adds. Robbie Kellman Baxter, president of Peninsula Strategies, a Silicon Valley-based consulting firm with specific expertise in subscription models, explains how nimble companies are using membership models to thrive. “Getting the model right and keeping it right can mean billions in terms of market valuation,” he says. “In the past, we’ve called it an annuity, and today we just call it recurring revenue. But it has always been something that investors love because it guarantees future income.” The subscription model has disrupted entire industries such as financial services, hard goods and even airlines. Baxter attributes much of this growth to major changes in technology and increased access. “Anyone who runs a company that sells ‘stuff’ and isn’t thinking about the implications of the membership economy runs the risk of being blindsided by new busi-
ness models that rent, lend or offer unlimited or premium access instead of just ownership,” he explains.
3. Social Influence New business models are extending beyond the sales arena to revitalize the marketing industry as well. Just take a look at Facebook, Twitter, YouTube and Pinterest—all companies whose inventories con-
sist of user-generated content. This amorphous, dynamic content drives the concept of social influence, which brands and retailers are eagerly striving to harness. Social influence exists when one person broadcasts his or her opinion, either good or bad, about a life experience or interaction to their online social circle. This opinion then influences the beliefs and actions of that person’s personal audi-
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ence, which, when scaled to exponential levels, can move entire markets. For example, in 2011 Target partnered with Italian designer Missoni to create a line of clothing and housewares. The line was heavily promoted via social media, and it quickly went viral as excited fans tweeted and posted about the upcoming release. So much hype was generated around the new release through social media that when the products were finally launched, the onslaught of traffic brought down Target’s website and sold out the entire line within hours, leaving many disappointed consumers and a subsequent social media backlash. Social media has evolved since then, and now more and more brands are learning how to use it to reach hundreds and thousands of potential customers in minutes. “And it’s cost effective,” says Stephanie Lichtenstein, president and founder of Micro Media Marketing, a social media management agency. “You can use it to drive traffic, share important announcements, launch special promotions, improve customer service, crowdsource, and more.” What’s so interesting about the social media marketing model is that size doesn’t matter. Large companies, small companies and independent business owners are able to participate. Social media levels the playing field for these smaller businesses to compete with larger, more established brands. And small businesses have certainly taken advantage of that. According to Lichtenstein, in 2007 Facebook had 100,000 business pages, which, back then, were known as groups. By 2012, that number had grown to a whopping 42 million pages. “The social media channel is unique because the opportunities for a business are endless. You can spend the entire day on Twitter interacting with people on specific keywords related to your business in real time. You can find people looking for your business or service that are geographically in your area,” says Lichtenstein. As such, businesses need to recognize social media as part of their daily marketing and communications agendas. “It’s just like opening your door, replying to your emails, answering your phone. Social media is just as important as those activities, if not more so, because it takes place in the public arena. If you reply, if you don’t reply, your actions are seen by others,” she says.
4. Performance Marketing A level playing field isn’t solely the domain of social media, however. Performance marketing, which is also known as affiliate marketing, refers to online marketing and advertising programs in which ad rates are paid out only after a consumer completes a transaction. That transaction could be a completed purchase, or even a submitted sales inquiry. “In performance marketing, advertisers and marketers only pay for successful transactions,” explains Rebecca Madigan, executive director of the Performance Marketing Association. “The trackability of performance marketing isn’t based on estimates but on actual results, meaning that a marketing program’s effectiveness is accurately determined, down to the mouse click.” Often, performance-based ads are called “recession-proof,” because the ad rates aren’t based on speculation, but on actual sales. “Performance-based ad rates are typically set as a percentage of the sale, so the performance marketer isn’t paid unless a sale is made, and the advertiser doesn’t pay for the ad until after the transaction. There’s no up-front cost,” Madigan explains. However, there are some potential tax concerns associated with this particular model. “For retailers with performance marketing programs, there may be some sales tax collection implications in states where the retailers aren’t physically located,” Madigan warns. To date, nine states have passed laws that say if retailers are running performance-based ads on websites owned by third-party websites or companies located in those nine states, then those third parties constitute a physical nexus and therefore the retailer must collect sales tax for that state. “The US Constitution says that a state can’t require a retailer to collect its sales tax unless the retailer has a physical presence in the state, typically defined as a store or sales force,” says Madigan. “However, federal legislation is pending that would reform sales tax laws, requiring all retailers to collect sales tax in all states, whether or not they have a physical presence in the state.” Madigan believes this legislation will pass this year. Despite the legislative uncertainty, Madigan feels that the performance-marketing model will persevere. “It will begin to dominate ad budgets, as cost-minded CEOs take the lead from advertising giants like Proctor & Gamble, and shun ad campaigns that can’t be measured.”
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CFO Hunting Three strategies for nonprofits in search of the perfect executive hire. By Chuck Green
almost paralyzingly constraining, mining for candidates to assume high-level finance positions such as CFO and controller remains hard work, to put it mildly. Here, then, are three budget-conscious strategies that make use of resources easily within a nonprofit’s reach.
1. The Boardroom & Beyond
ack in 2005, The Bridgespan Group published The Nonprofit Sector’s Leadership Deficit, which suggested the single greatest organizational weakness nonprofits faced was leadership development and succession planning for senior leadership positions. It also found that nonprofit organizations promoted from within with far less frequency than for-profits, typically sourcing 30 to 40 percent of senior leaders through internal promotion versus 60 to 65 percent in the for-profit sector. Bridgespan’s analysis estimated that by 2016 nonprofits would need more than half a million new senior managers as the sector continued to expand and Baby Boomer leaders retired. Eight years on, all indications are that Bridgespan’s report was on the mark. In the world of nonprofits, where budgets can be hideously, 22
“Boards of directors are a potentially rich source of connections to financial and accounting talent, as are a nonprofit’s corporate sponsors and donors, who are keyed into alumnus from their own organizations who are between opportunities,“ explains Jim Wong, founder of Chicago financial and accounting recruitment firm ClearFocus Financial Search. Ironically, though, these sources “are the most overlooked sources of networking for nonprofits. Despite the fact that they’re already connected to the organization and its mission, the hiring manager, CEO or COO that’s helping to fill the position of CFO or controller doesn’t necessarily think, ‘Hey, send it to our board’ or ‘Send it to our volunteers; they might have good suggestions,’“ says Heather Eddy, president and CEO of Alford Group Executive Search in Chicago. “So there’s a lot of networking that nonprofits could and should be doing that they typically don’t. They don’t necessarily think they can proactively leverage their own networks.“ Advisors to nonprofits, such as banks and legal practices, also make quality partners in the search process. “These types of businesses have a vested interest in ensuring a qualified candidate is recruited and hired for the position,“ observes Renee Beckman, co-founder and senior partner at Marco & Associates in Chicago, specializing in financial and accounting recruitment. “No audit firm wants to work with an organization that lacks a qualified CFO/financial leader,“ adds Eddy. “They want solid, top leadership involved in the process.“
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Beyond the boardroom and volunteer/donor pool, LinkedIn can be a very productive next destination, says Beckman. “Think about the number of people you can reach instantaneously with InMail on LinkedIn; it’s quite remarkable,“ she says. And, in fact, in its most recent survey, ClearFocus Financial Search found that the majority of respondents trusted LinkedIn as a valued research site for top talent. But there’s a caveat. “Just saying, ‘We’re looking for a CFO’ could take an organization in 100 different directions. And just because someone was a CFO elsewhere doesn’t mean they’re the right fit for your organization,“ explains Marilyn Bird, Chicago district president of Robert Half International. “Therefore, knowing what you are as an organization and what you’re looking for, not to mention the ability to clearly articulate it, will help to draw better candidates more quickly.“ Otherwise, you’re opening yourself up to an application free for all.
3. Interim Pros For nonprofits intent on finding just the right person for the job, but without the luxury of time to conduct their in-depth search, an interim CFO or controller may be the way to go. This strategy allows you to “try before you buy,“ in a manner of speaking. “More and more companies love that option just because they get to know each other better and can make sure they’re the right fit for one another. So many times these decisions are made and it’s more about the fit of the culture to the candidate rather than just the skill set,“ says Bird. “Often, this strategy works out well for companies,“ adds Beckman. “Using an interim consultant allows an organization to spread the cost of a recruiting fee over a period of time that they otherwise would have to pay up front.“ But, again, there is a caveat. “Deciding to onboard an executive-level consultant as a possible future hire at times can be tricky,“ Beckman notes. “The success of this strategy relies heavily on the organization’s leadership team in how they empower the consultant. It is critical to send the message to staff that this individual is backed 100 percent by management to implement change or spearhead initiatives.“ Is there a perfect solution? Unfortunately not. But there are methods budget-stretched nonprofits can use to spread the word and gain access to skilled and much sought-after candidates.
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icpas.org/insight.htm | SPRING 2013
Big Business Illinois The state is working hard to make itself evermore attractive to businesses far and wide. By Selena Chavis
ob growth in Illinois is moving in a positive direction. Unemployment figures are improving. Things, it seems, are looking up, at least Dan Seals, assistant director at the Illinois Department of Commerce and Economic Opportunity (DCEO), thinks so. He eagerly quotes unemployment numbers that have moved from 11 percent to roughly 8.7 percent (as of mid-February) and the addition of 160,000 jobs since 2010. Building off this momentum, Seals says that a number of initiatives are in the works to attract more jobs and new business to the state. Rather than focusing on a specific industry or company, the DCEO’s philosophy is “to strengthen the ecosystem that creates the jobs,” he says.
Groundwork for Growth With this goal in mind, the state has committed $43 billion to strengthen its infrastructure, including everything from the introduction of highspeed rail to clean water and broadband expansion. “We’re at the crossroads of the country,” says Seals. “When infrastructures that support such things as travel aren’t up to snuff, the business climate suffers.” Illinois celebrated the introduction of its 110-mph rail service last October, an historic step towards securing the state’s position as the Midwest’s transportation hub. Part of a $2-billion federal and state investment, the rail project created and supported more than 6,000 construction jobs, as well as jobs related to production and equipment manufacturing. Governor Quinn explained that, “A 21st century rail system in Illinois will create jobs and drive economic development throughout the 24
Midwest, while making travel across Illinois faster, safer and more reliable.”
Support for Innovation According to Seals, a number of initiatives are underway to “help to accelerate the pace of innovation” and create a climate supportive of entrepreneurial growth. The state has partnered with Argonne National Laboratory, for example, to bring a new research facility to Illinois to create the next-generation battery over the next five years—a battery that is five times cheaper and will last five times longer than current market competitors. What’s more, a public-private partnership with the University of Illinois and the National Center for Supercomputing Applications (NCSA) will position the state well in the manufacturing sector, says Seals, by bringing together large and small companies to learn about and use some of the world’s most sophisticated tools and software. The NCSA is home to one of the nation’s most powerful collections of supercomputers. The state also has helped to create 1871, a coworking center for digital startups. Located in Chicago’s well-known Merchandise Mart, the center is already home to more than 200 startups. In fact, Chicago’s technology community helped the city make Startup Genome’s latest top 10 analysis of entrepreneurial hotspots.
Focusing on Exports According to Seals, the state has made a pledge to double exports by the end of 2014. Statistics reveal that notable inroads have already been made in reaching this goal. In 2009, Illinois recorded $41.63 billion in exports, which grew to $50.06 billion in 2010, representing a 20.26 percent increase. In 2011, exports grew by 29.5 percent to $64.82 billion, nearly double the average U.S. growth rate of 16 percent. “There’s been a big push to educate small and midsized businesses on how to export,” Seals explains, “and the state also has been able to subsidize the cost for businesses to participate in trade missions to strengthen bilateral cooper-
The Illinois CPA Society
THE FOLLOWING INDIVIDUALS WHO EARNED THEIR CPA CERTIFICATE IN 2012. A
Timothy Abbott Sameer Abdulhadi Mathai Abraham Mohammed Abufarha James Adams Jeremy Adams Brian Adamson Wade Adamson Weston Adcock Adesoji Adeboye Eyiwumitoluwafif Adeloye Olabisi Adesida Kayode Adetayo Katie Adler Mariana Aguilar Brendan Ahern Gavin Ahern Seong Ahn Andrea Aimi Eric Aintabi Okezie Akandu Elmira Akhmetova Sayyed Farooq Akhtar Mizuho Akiyama Antonia Aladjova Eyad Albayouk Lindsay Albert Angelica Alday Elaine Alexander Jeffrey Alexander Kolawole Alimi Abeer Alkhatib Charles Allen Christopher Allen Christopher D. Allen Jeffery Alton Jose Alvarez Evaldas Ambrazaitis Joshua Ampil Brett Anderson Erik Anderson Mark Anderson Max Anderson Nicole Anderson Ryan Anderson Sarah Anderson Ema Ando Daniel Anelli Megan Angle Molly Antell Joseph Antonacci Daniel Apel Craig Apgar Michael Aplington Antoinette Aquino Nuzahat Ara Yoshimitsu Arahata Ramzi Arbid Aristotelis Archos Faidat Aremu Bradley Armour Jonathan Aronstam Emily Asmuth Sara Atchison Nsikak Attang Samuel Aul Tyann Austin Jorge Avila Kristin Ayres James Azriel
Sruthy Babu Tracey Babula Melissa Baeza Soroush Bahmanyar Michael Bahng Yunfei Bai Andrew Baibak Autumn Bailey Robert Baker Linda Bakhshian Allison Baldwin William Baldwin Rutchelle Ballesil Alina Bancescu Adam Bandeali Sarah Bandukda Melissa Bang David Bansley Yuanyuan Bao Allison Baranick Kristine Barchard Meghan Barlow Mollie Barouh Leah Barry Ashley Barsema Brian Bartels Gregory Bartholomew Ashley Barton Michelle Bartosik Muhammad Basathia John Bateman Lillian Bauer Whitney Beaver Eric Beck Lindsay Becker Bryan Beckner Malgorzata Bednarz Bradley Beebe Gregory Beeler Paul Beery Heather Begley Lior Bela Emily Bell Rowen Bell Daniel Bender Robert Benedict Jordan Benson Whitney Bercek Stephen Berenson Jason Berg Maxwell Bernard Ross Bernardi Victor Bernardi Gregory Bernert John Bernier Dustin Bernstein Aaron Bernstetter Christine Berry Michael Berry Bradley Berthold Dale Beutel Ektaa Bhatia Imran Bhatty Nicholas Bialorucki Kara Biasca Dustin Bishop Thomas Bishop Tim Bissaillon Sean Black Daniel Blackburn
Ryan Blackburn Joel Blaies Lauren Blaies Justin Blanchet Denisa Blass Kathryn Blonn Lindsay Board Nicole Bobowski Clint Bodilly Rebekah Boeckman Ivo Boev Kristen Bogdanowicz Gabriela Boldan Brian Bollinger Maria Boncza-Skrzynecki Cesar Bonilla Paulina Boonman Geoffrey Boosey Elizabeth Boothby Brett Bork David Bos Serge Arthur Bossogueno Nana Alan Bouchier-Hayes Alexandra Bowes Cara Bowling Cody Bowman Joshua Bowser Margaret Boyich Martin Boyle Thomas Boynton Nicole Brackert Paige Bradshaw Tyler Brady Kierstin Brandt Garrett Branisel Mitchell Brann Larry Brannon Jennifer Braswell Caroline Braunstein Paula Braxton Aaron Breen Nathan Breier Benjamin Bremen Becky Brennan Sarah Brett Russell Brewer Ryan Brickl Alexander Brickner Mark Briden Evan Brothers Andrew Broucek Michael Browder Claire Brown Jillian Brown Lyndsay Brown Michael Brown Tiffany Brown John Brozyna Jeremy Bruck Arielle Bryant Melissa Buck Kevin Bufalino Patrycja Bukowski Joshua Bullock Michael Buoniconti Eldron Burbridge Jaclyn Burke Daniel Burns Laura Burns Louis Butryn
Claire Byrne Jon Bzdawka
C Catherine Cahill Molly Cain Liliana Calderon Zachary Caldwell Christopher Callahan Jason Callow Colin Campbell Brianne Canova Zuoxin Cao Meaghan Caragher Rosa Carrillo Jessica Carroll Steven Carroll Michael Cavanaugh Robert Cerle Oksana Chaban Andy Chan Dennis Chan Iris Chan Judy Chan Katie Chan Lillian Chan Nicholas Chan Roneel Chand Deanna Chang Jennifer Chang Shelly Yih-Wen Chang Nicholas Chapleau Mei Ki Chau Wallace Chau Cen Chen Congyuan Chen Joyce Chen Jueqing Chen Jun Chen Lang Chen Ming Ming Chen Sammi Chen Stephanie Xiao Chen Szu-Ying Chen Xinqin Chen Xue Yin Chen Yue Chen YunTzu Chen Zhiqin Chen Zhiyan Chen Jie Cheng Vincent Cheng Vincent Chevalier Bryan Cheverud Joseph Chiczewski Yen-Lin Chien Bill Chiu Yen Hua Chiu Hyun Cho Hong Sun Choi Juliana Choi Vladislava Choneva Rajeev Chopra Katy See Kei Chow Bryan Christoff Yiou-Lun Chuang Cindy Chung Tyler Churchward Luigi Ciardelli Jeanette Ciccone Daniel Ciecierski Katarzyna Cios
Victoria Cisek Christine Cisneros Colleen Clark Greyser Clark James Clark Jason Clark Kevin Clark Thomas Clarke Georgina Clarkson Megan Clayton Stephen Co Anil Cobo Alexandra Cochran Krista Coffey Chase Coffin Sean Cogan Ian Cole Jatana Coleman Ryan Coli Ryan Collins Carl Comstock Phillip Conforti Ryan Connery Joshua Contant Kristen Contos Carey Cookus Kelsey Cooper Brian Copsey Kyle Corcoran Veronica Cordova Eric Corn Lisa Corona Diana Corral Marcy Cox Eric Crabbe Tiffany Crawley Nadejda Craye Charles Crookshank Kevin Crotteau Patrick Crowley Aaron Cruz Alyssa Cruz Wenjin Cui Katherine Culhane Joseph Cunningham Gerald Curran Trevor Currie Stacy Curry Jordan Cutler Catherine Cygan Mateusz Cyran Maria Czepiel Robert Czupryna
D Kolade Dada Anna Dai Anand Dalal Peter Darch Alexander Dardi Kuntal Das Kateryna Daufeldt Christopher Daugherty Laura Davidson Joshua Davis Kathleen Davis Tiffany Davis Nicholas De Jong Allison Dean Christine DeCicco Lawson Dees Andrew Deferville
Dawn Degand Alex Delamar Kyle DeMus Luis Depetris Vincent DeSapio Cynthia Descamps Charles Deutch Chhavi Devgun Manpreet Dhillon Jessica DiCesare Halle Dichoza Bryan Diehl Christina Diles Jessica DiMeo Jacob Dively Hamid Djebelli Christina Doan Kelsey Doherty Adam Domanico Adam Donahoe Shane Donaldson Brian Donenberg Daniel Donlon Mark Donovan Michelle Donovan Brian Doorn Chanel Doree Alireza Dorestani Lauren Doser Scott Doty Ming Dou Genetta Douglas Elizabeth Dousias James Dowd Tonya Downard Jeffrey Downs Ryan Downs Nathan Doyle Timothy Doyle Nicholas Draus Stephen Drolet Melissa Drumsta Lin Du Maryna Dubinina Allan Dudkiewicz Sam Duehr Jennifer Duffett Patrick Duffner SyamaladeviPrasa Duggirala Jayana Dulla Scott Durco Stephanie Durkin Daniel Dvorak Austin Dwyer Jo Anne Dy Neal Dyer Artur Dzierzanowski Robert Dzike
E Stephen Earnhardt Christopher Easton Kenneth Eberhardt Zamreen Ebrahim Justin Eddington Roxanne Edralin Mark Edwards Jonathan Eessalu Richard Egert Christopher Ehas Jeffrey Eichinger
Jared Eischeid Hesham El Shaboury Manissha Elavia Matthew Elberts Douglas Eldridge Curtis Ellergodt Kevin Ellsworth Kimberly Elsey Isimeme Emafor John Enders Jeremy Enuson Peter Enyart Matthew Erker Alison Erskine Bronson Eshleman Pasquale Esposito Ashley Estoque Andrea Etienne Matthew Etter George Evangelou Daniel Eveloff Angela Evenhouse
F Timothy Fagan Christopher Fallon Hong Fan Yanrong Fan Huijia Fang Lucas Farrell Maura Farrell Jennifer Fassbinder Megan Faulkner Daniel Favela Syed Fawwad Jason Feldgreber Brandon Fellows Shana Felman Mira Fendy Jiyuan Feng Brydon Ferguson Douglas Ferguson James Ferm Phyllis Ferrera Ryan Ferros Michael Feuerstein Tiffany Finke Jennifer Finn Craig Fiorito Kelsey Firszt Robin Fishbein Brent Fisher Ellen Fisher Katherine Fisher Daniel Fishman Scott Fitzpatrick Alison Flener Frank Flesch Jordan Flicher Jacob Flori Robert Flux Christine Folliard Laura Foltz Fonny Fong Scott Forbes Jason Forlenzo Nicole Fosburg Rebecca Foster Daniel Fox Sean Fox Deborah Francis Kevin Frank
CERTIFICATE RECIPIENTS Lara Frankel Mary Frawley Neil Freeman Terence Freitas Angela Freund Martha Freund Yehuda Friedman Shannon Fritz Mitra Froustis Jennifer Fuerst Shannon Funchion
G Troy Gaeth Brittany Gaffney Matthew Gainey Christopher Galasso Nicholas Galich Noelle Gantz Nan Gao Dana Garber Abraham Garcia Carolyn Garcia Emmanuel Garcia Stephanie Gareau Tamar Gargir Kathryn Garrow Jennifer Gart Thomas Garvey Linh Garza Rodolfo Gasia Salazar Thomas Gazdziak Daniel George Christopher Georgiou Cheng Hsiao Ger Vinod Gera Lauren Gerdes Matthew Gerdes Brett Gerig Christopher Gibson James Gilbert Stacy Gilbert Peter Gilboy Daniel Gilpin Matthew Gissal Kailey Glazebrook Matthew Gledhill Timothy Gleich Jason Glickley Seth Glickman Chakriya Goatcher Stephen Godawa Amy Goertz Dorota Golda Michal Goldstein Melissa Gomes Pragati Gondhalekar Ryan Gones Kathryn Gonner Joanne Gonzalez Jennifer Gonzalez Irizarry Evan Goran-Dry Steven J. Gorski Steven Gorski Ekaterina Gorzheltson James Gottselig Michael Gould Laura Gourley Sarumathi Govindasamy Marta Grabinska Scott Graham Karina Granados Adam Granback Ryan Grandin Marie Graver Evelina Grebenarova David Green Megan Green Sarah Gremonprez Jed Griffen Jennifer Griffith Bradley Grimes Jennifer Grimmer Robert Grob Elizabeth Grubb Jonathan Grubb Gabe Grzeskiewicz
Valeria Guder Bethany Guerin Papa Gueye Gui Gui Li Guo Goldy Gupta Robert Gutek Brandon Guyette Thomas Guzi Christiana Gyang
H Thomas Hagenberg Anne Hagerty Jarrod Halberg Patrick Haley Kelly Hall Rena Hall Charles Halloran Kenneth Halloway Gregory Halper Robert Halpert Megan Halverson Nicholas Hamley Matthew Hammack Malik Hammad Drew Hammen Rui Han James Hanasik Krystal Handlin Kaitlin Hanekamp Kyle Hangartner Tiffany Hankis Katrina Hanna Katherine Hannan Mark Hansen Joseph Hanson Devorah Haouzi Gina Harkness James Harmsworth Kyle Harmych David Harper Jessica Harper Adam Harris Jerry Harris Marc Harris Andrew Harrison Ashley Harrison Mary Harte Michael Hartz Allan Harvey Parviz Hasanov Merion Hasimi Lindsey Hasselbring Kimberly Hastings Kassandra Hasty Derrick Hawthorne Ruslan Haydarov Brennan Hayes Kevin Hayes Jamie Hazekamp Jiaxu He Jinli He Mengyin He Ping He Bradley Hedlund James Heidrich Jason Heinrich Alexandra Helmuth Steven Helmuth Lauren Hemington Andrew Hendricks Edward Hendry Sharon Hennig Robert Henrich Thomas Henrikson Meghan Herbert Darrin Hernandez Ryan Hess Amanda Hill Ryan Hill Elizabeth Hillman Amanda Hills Ashley Himmel-Krewer Erik Hinkle Clayton Hinton Jeffrey Hlynski
Michelle Ho Tina Ho Tuyet Ho Kathleen Hobby Denise Hodges Christopher Hoekstra Shan Hofer Erin Hoffer Andrew Hoffman Caitlyn Hoffman Kathryn Hoffman Rachel Hojnacki Laura Holakovsky Brandon Holl Ali Holmes Jana Holt Carl Holzhauser Lynsey Honegger Tianli Hong Jeffrey Hood Laban Hoover Roland Hopkins Rowaida Hormiz Lauren Horowitz Anya Hostetler Xiaoying Hou Ying Hou Heather Howard Travis Hoyne Hsiu-Ting Hsu Rita Hsu Xiaopan Hu Yun Hu Chenyu Huang Fan Huang Hsin-Yi Huang Jimmy Huang Meng Huang Ya Juan Huang Joseph Hubbard Jason Huber Kathryn Hughes Thomas Hughes Qi Hui Donald Hultquist Enrika Hunt Kristina Hunt Lindsay Hupp Robert Huppert Humaira Hussain Kevin Hyams
I Aneiya Ibe Aamir Ibrahim Junko Ichikawa Alexander Igolnikov Alice Ilievski Christine Ingling Tomoyuki Ino Hau Yan Janice Ip Ricardo Iriart Ashley Ishmael
J Lauren Jack Heather Jacobson Ethan Jaeger Paridhi Jain Mohamed Jalloh Kyle Janczak Jennifer Janick Eric Janowski Farid Jasemi Zarcani Marcin Jasinski Maria Lourdes Javier Jason Jennings Nicholas Jensen Therese Jensen Sahil Bharat Jhaveri Jing Ji Wenxiao Ji Yinrui Jian Anna Jiang Yunfang Jiang Ziqi Jiang Yan Jin Caleb Johnson
Jared Johnson Jordan Johnson Kathleen Johnson Kirby Johnson Myles Johnson Russell Johnson Steven Johnson Travis Johnson Eli Johnston Antonio Jones Benjamin Jones Chad Jones Michael Jones Sylvia Jordanov Jeffery Joschko Jason Joseph Allan Jubenville Arslan Jumakuliyev Soo Hee Jung
K Radka Kacharkova Christopher Kackert Alissa Kahan Sannah Kakal Robert Kakareka Alexandra Kalashian Prachee Kale Nkiru Kalejaiye Vidhya Bhavani Kalyanaraman Laura Kaminski Arthur Kan Donna Kang Robert Kang Anthony Karafiat Kevin Karam Sunga Karl Kelsey Karmell Eugenia Kasich Patricia Katsigiannis Georgia Katsoolias Michael Katz Mitchell Kaufmann Timothy Kay Avinaya KC James Keate Ashley Keeler Brett Keenan Mark Keller Ellison Kelling Kenneth Kelly Mark Kelly Michael Kempf Donna Kenyon Daniel Keogh Christian Kerr Matthew Ketron Meredith Keyser Gulnar Khalikova Rishabh Khamesra Zain Khan Nila Khanal Koirala Michael Khayyat Amy Khiani Alex Kibrit Tyler Kiefner Neil Kiernan Andrew Sangwook Kim Benjamin Kim Jong Kim Kyung Woo Kim Nayoung Kim Taeyoung Kim Young Ok Kim Matthew King Patrice King David Kipp Brian Kirkendall Brian Kirkley Andrew Kita Darius Kizys Timothy Klagos Julia Klann Matthew Klassen Jamie Klein Yuliya Klenshina
Jennifer Klinger Steven Klink Elizabeth Kloster Heather Knoelk Kathleen Knuth Alan Ko Alice Ko Kevin Ko Chad Kohorst Danielle Kole Ryan Koller Ryan Koltonuk Mariya Kondrakova Jessica Kong Christopher Koralik Yulian Korataiev Brian Korbesmeyer Henry Korenblum Robert Korzeniowski Adam Kostopoulos Kazuhiro Kosuge Derek Koth Christine Kourouklis Michail Koynoff Stephen Kozlowski John Kratschmer Theresa Krause Anna Kristen Alexander Krog Margaret Krusing Kelly Krzmarzick John Krzyston Ina Kuechler YoSeph Kuh Alexis Kuhlmann Evan Kuk Rahul Kulkarni Zachary Kulow Agnieszka Kurlapska Brian Kurtz Michael Kustanovich Arpit Kuvadia Haley Kwait Fat Chun Kwan
L Anthony LaChiana Steven Lackowski Bethany LaCombe Benjamin LaCrosse Ryan Ladwig Leo LaFranco Sarah LaGrand Soehardjo Lai Xinchi Lai Yongzhi Lai Tracey Laibovitz Michael Laier Astrid Lakats Keval Lakdawala Prince Lala Andrew Lam Carole Lamarche Katherine Lanagan Walter Landrum John Langer John Langert Matthew Langford Amanda LaRocca Eric Larson Shannon Larson Joyce Laske Chi Ting Lau Jonathan Lau Judy Lau Katie Lau Eric Laurent Jesse Lawrence Kelli Lawrence Melissa Lawson Katherine LeBon Morgan Lechowicz Andrew Lee Calvin Lee Chloe Lee Hoseok Lee Jennifer Lee
Joonmo Lee Jordan Lee Mackenzie Lee Pamela Lee Richard Lee Ruby Lee Seung Il Lee Katharine Leginski Lijun Lei Kayle Leibold Ned Leiby Jessica Leiferman Cody Leigh Jennifer Leimbach Amanda Leinard Thomas Leisten Bertrand Lemieux Danielle Lemon Audrey Lenkiewicz Jason Lenzen Lauren Leonard Samantha Leonard Shu Mei Leong Kathryn Lerner Harry Lesner Rachael Lesperance David Leung Kevin Leung Steven Levin Jonoy Lewis Rikki Lewis Alice Li Amy Chi Wai Li Cheuk Yui Gary Li Jingwei Li Li Li Lu Jie Li Sha Li Tangtang Li Tianyi Li Xiao Xiong Li Hai Liang Jingjing Liang Young Lim Allison Lima Betsy Lima Christopher Limberger Alina Lin Chen-Wen Lin Chi-Hou Lin Scott Lin Jacob Lindquist Siew Ying Liow Keith Lipka Lawrence Lipp Haixi Liu Melody Liu Nan Liu Qian Liu Renxian Liu Shirley Liu Xiaoming Liu Xicong Liu Xinhe Liu Meredith Locasto Joshua Lockwood Marie-Eve Logan Peter Yiu Tim Lok Steven Lombardo Yue Long Kyle Looft Melanie Lorenz John Losby Nick Lotysz Mary Lovewell Christopher Lozynski Cheng Lu Chun Lu Fei Lu Ping Lu Xiaoling Lu You Lu Yu Lu Nga Man Juliana Lui Nicholas Lukes Ruslan Lukyanovskiy Alfred Lumbera
Louisa Lun Maevalene Luna Brett Lundberg Chen Luo Man Luo Yan Luo Tammy Luong Christine Lux Philip Luzod David Ly Quan Ly Andrew Lyons Kevin Lyznicki
M Diana Ma Nan Ma Qiaosheng Ma Yefei Ma Matthew MacEwen Bryan Macfarlane Rooksby MacPherson Adel Madbouly Owen Madrick Kristin Maes Miles Major Samantha Malicdem Shawn Manaloto Daniel Manchulenko James Mandich Megan Mangahas Gina Maniola Brett Mann Nicole Manning Marie Manny Cristiana Manoila Anish Mansuri Derek Mantel Anthony Manzella Kristin Marano Rocco Marcantonio Allie Marconi Adina Marcu Randy Margalith Wyatt Margulies Michael Marianer Matthew Markiewicz Helene Marois Hector Marquez Patrick Marshall Andrew Martinez Camerin Martinez Cardo Martinez Monica Martinez Megan Martis Melissa Marty Joanna Martyn Dylan Masi David Mason Christopher Massie Michael Massoud Takeshi Masuda Kristen Mathys Justin Mauter Emma Maxey Pawel Maziarka Jerome McCabe Aisling McCarthy Alexandra McCarthy Erin McClure Casie McCoy Mary McDonnell Jeannine McDonough Candace McGee Matthew McGee Jeffrey McGinnis Michael McGrady Sean McGroarty Bina McGuire Kevin McHugh Skyler McKean Amanda McKenzie James McKillen Ryan McKinnon Sarah McLellan Lisa McLuckie Thomas McManigal
CERTIFICATE RECIPIENTS Mary McNerney Ryan Meenahan Habib Meghjee Rahim Meghji Valerie Melrose Richard Mendelsohn Jacqueline Mendiondo Jaclyn Mendoza Hui Meng Ying Meng Alireza Merchant Andrea Messmer Michael Mester Mark Metz Carrie Meyer Jay Meyer Jonathan Meyers David Michael Roma Miksyte Peter Milan Edwin Miles Christopher Miller Dana Miller Elizabeth Miller Joshua Miller Katie Miller Mark Miller Sarah A. Miller Sarah Miller Jason Misuinas Christina Mitchell John Moffat Daniel Mogan Mehvish Moid Donald Mondano David Money Allyson Montalto Scott Montes James Moon Wonshin Moon Andrew Moore Francisco Moreno Ellarey Morgan Eric Morgan Michael Morgan Nicole Morgan Adam Morke Sean Morrison Marian Moscicke Daniel Moser Jennie Motto Jonathon Moulden Brian Moynihan David Mrazek Lisa Mrzlack Andrew Muehling Antje Mueller Joane Mui Ryan Mui Margaret Mulchrone Ryan Mulvihill Lawrence Mundy Minaz Munshi Maria Murillo Sean Murphy John Murray Jarod Musgrave Eric Muskopf Jodi Muzevich Daniel Myers Samuel Mynsberge
N Joanna Nabozna Wasilewska Brennan Nagle Jason Nagy Brian Naiden Husam Najib Ryohei Nakamura Emanuela Nakova Nomie Namie Katie Napier Laura Naples Husain Naqvi Yuichiro Naruto Amanda Nawara Jordan Nazario
Mia Nelson Samantha Nelson Bryan Netzly Jared Neuhausen Alexander Newlin Michael Newlin Daniel Newman Jeff Ng Pei San Ng Andrew Nicholas Katherine Nichols Benjamin Nickel Elizabeth Niedringhaus Brittany Nielsen Milena Nikolova Akihiko Nio Jeffrey Noble Samuel Noh Nicholas Nolan Thomas Nonnenmann Michelle Norini Jonathan Norman John Norton Kevin Nosek Randy Nott Michael Novack Katherine Novel Brian Nowack Michael Nowicki Ioannis Ntokos Morgan Nusbaum Onamma Nwosu Cindy Nystrom
O Barbara Obregon Peter O'Callaghan Amanda Ochsendorf Adrian O'Connell Bridget O'Connell Raheem Odeyale Daniel O'Donnell Olawunmi Oduyebo Krista Oei Mindy Offutt Robert Ogburn Takuma Oishi Olatunde Olanrewaju Kristin Oleson Kristina Oleynik Ryan Olliges Amy Ollinger Brian Olson Gregory Omolecki Keng Soon Ong Natalie Opeka Michael Oppold Eli Orlofsky Angie Ortega Noam Osher Ryan Osolin Ayako Ota Hannah Ott Brent Outinen Knoxie Overton Olapeju Owoyemi Aaron Oye
P Justin Padiak Donald Paeth Gregory Paetow Anthony Paihr Jeffrey Paisley Regina Jade Palafox Borislav Palankov Brittany Palumbo Nicholas Panarese Erin Pankiw Vasillios Papatheofanis Eric Paquette Daniel Paquin Raaj Parikh Joseph Parisi Jihwan Park Daniel Parrillo Jason Paseli Molly Passella
Audrey Passuello Ajay Patel Keyuri Patel Neepa Patel Nita Patel Payal Patel Priti Patel Sagar Patel Shuhani Patel Snehal Patel Amanda Paterimos Udaivir Pathania Nicholas Patterson Stephen Patterson Stephen Paul Irina Pavchinskaya Danielle Paventi Darek Pawlik Phillip Pawlowski John Payne Stephanie Pazdan Jayson Peace Meghan Pearl Anna Peckhart Patrick Pecora Brian Pedersen Rachel Peirick Chiung-Yi Janet Peng Sandhya Rani Penmatcha Ashley Pennell Emily Penrod Joel Pepin Theresa Peschges Stacy Peterlin Daniel Peterson Jeffrey Peterson Jordan Peterson Matthew Peterson Thomas Peth Kimberley Pfeiffer Trisha Phadke Duyen Pham Tam Phan Courtney Phillipp Pawel Piatek David Pickel Jeffrey Pickerd Michael Pidgeon Caitlin Pier Adam Pierce Jeffery Pierucci Joseph Pikel Tyler Pinter Malgorzata Piotrowska Kate Piper Seth Pirc Brian Pircon Rusty Planert Marc Plein Marguerite Plesko Steven Plettau Kevin Poczatek Danielle Poetschke Melissa Pohlman Christopher Poirot Mark Pollard Julie Polywka Ashley Pommerening Lauren Poppen Maureen Pordugal Colin Porter Marni Pozan Gregory Poznic Amanda Preston Bernard Prevost Jared Price Katherine Price Lindsey Priebe Heather Priest William Prindible Magdalena Prorok Christopher Prystawsky Monika Przybylek Jennifer Psutka Miroslaw Purpura Timothy Purvis
Q Afaf Qayyum Angela Qian Huiyuan Qiu Brandon Quach Christine Quast Erin Quick Patrick Quirke Jeremy Qunell
R Stephanie Raaf Natalya Rackett Michael Raczka Carrie Radon Reinhold Raekers Waqar Rafiqi Neil Rago Mushfiqur Rahman Saravanan Rajendran Sushmita Ramakrishnan Ramune Ramanauskyte Asta Ramoskaite Adnan Ramzan Daren Raoux Joshua Rapoport Basit Rasheed Ahmad Rashid Sakina Rashid Krishna Ratnasabapathy Elaine Ratner Matthew Rauba Jesse Ravage Lucas Ray Ruben Rayel Sarah Rayfield Craig Raymond Noor Raza Susanna Reding Brandon Reed Elizabeth Reed Doug Reilly Matthew Reilly Carolyn Rendos Paul Renner Sabrina Renwick Wolfe Repass Daniel Reznick Pernell Rhame Liam Rhatigan Brent Rhodes Brian Rice Christopher Richter Kristin Richter Jacob Rickmon Carly Rieger Kyle Riekena Bernard Riel Zeid Rihani Thomas Riley Daniel Rimkus Albert Rinella Kari Rios Robert Ritchie Robert Rizza Brent Robbs Steven Roberts Samuel Robertson Terin Robertson Dennis Robin Mark Roderique Christiaan Rodriguez Jennifer Rodriguez Daniel Roe Blaine Roeder Landon Roemersberger Asher Roffel Ryan Rogina Martin Rohan L. Daniel Roman Sarah Romberg Michael Rondinella Anny Pei Jing Rong Conner Roos Eliza Rosario Patricia Rosenberg
Zachary Rothman Joseph Rouse Randall Royer Jorge Rubi Elisha Rubin Steven Rucks Jordan Rudanycz Rhys Ruelo Alex Ruff Maria Ruiz Ramirez William Runowski Jonathan Rusnak Brian Russell Jake Russell Alexander Rusticus Brad Rutenschroer Jason Rutta Thomas Rybicki Magdalena Rybka
S Anthony Sabatino Matthew Saccomanno Whitney Sackett Ahsan Sadiq Katarzyna Sadowska Miroslaw Sak Muayad Salameh Ariel Salazar Maybeline Saliendra Brian Salkowski Menghistu Sallehu Andrew Saltz James Sammarco Katherine Sample Jordan Samples Sabina Samra Stacey Sams Christina Sanchez Jieun Sanders Gail Sanecki Amendeep Sangha Barinder Sangha I. Matthew Santell Maria Piera Santoro Erin Santos Leslie Sauer Daniel Saunders Victorita Savage Casey Savatski Aristide Sawadogo James Sawdon Vance Sawyer Larry Sayler Anthony Scarcello Kristin Schaefer Rafe Schaefer Kevin Schell Nick Schenk Michael Scherpenberg Michael Schertz Thomas Schmale Joseph Schmid Amelia Schmidt Arne Schmidt Nicole Schmidt Charles Schmitt Steven Schneider Michael Schnell Maria Schodtler Maura Schoen Frank Schoenburg Sara Schoenfish Joshua Schoot Brock Schroeder Kaitlin Schroeder Christopher Schulte Michael Schulte Jason Schultz Laurel Schuster Kyle Schwab Jordan Schwartz Michael Scichili Nicholas Scott James Sederquist Natalie Sedia Lora Seibold Lauren Seidner
Carrie Seiffert George Semaan Masha Sergeeva David Sever Nicholas Severson Bhavikkumar Shah Jalpa Shah Nigam Shah Riki Shah Junaid Shaikh Peter Shaker Logan Shalett Hany Shamshoum Jiayuan Shao Ying Shao Yunyi Shao Steven Sharp Robert Sheehan Abdul Sheik Talha Sheikh Annie Sheley Jia Shen Wei Shen Xin Shen Joshua Shenton James Shepherd Brittany Sherry Victor Shevlyagin Jessica Sheynman Dong Hyun Shim Chinatsu Shimanaka Anthony Shimizu Seong Hye Shin Anthony Shirahama Arif Shivji Frederick Shoaff Jennifer Short Don Siegel Jeff Sikora Adam Silver Chelsea Simmons Mark Simpson Diana Sinclair Lorna Sinclair Riki Singh Sundeep Singh Melina Siomos Kelly Sitarz Lori Sketoe Tara Skole Jeffrey Slade Laura Sleeman Alex Smith Chelsea Smith John Smith Justin Smith Kyle Smith Matthew Smith Meagan Smith Neal Smith Patrick Smith Ryan Smith Maria Snelgrove Amy Snyder Raymond So Takayuki Soai James Sollitto Alykhan Somani Shinhyeong Song Yuliya Sonsyadek Brandon Soris Brian Soto Jacinda Southworth Matthew Sowers Michael Speelman Donna Spence Garret Spiek David Spitz Samantha Spitz Samuel Spread Patrick Stack Victoria Stadnyk Jennifer Stahl William Staker Sarah Stanley Kathleen Staton Jeffrey Stauber
Calvin Stauffer David Stecko Dunja Stefanovic Anthony Steil Christopher Stein Jason Stephens Sean Stephens John Stern Christina Sterzel Kathryn Stevens Stacey Stewart Zachary Stiltz Ernest Stinsa Kaylin Stoddard Rachel Stoddard Scott Stoddart Christine Stoka Miriam Stowell Kalina Stoykova Camelia Stratan James Striska Matthew Stroh Patrick Stumpf Thomas Stutesman Daniel Styron Prarthana Subramanian Martha Sucsy Megan Sujack Greer Sullivan Shannon Sullivan Brent Summerfield Sen Sun Yuanming Sun Yuting Sun Carol Sung Chien-Hung Sung Parag Surati Muhammad Umair Suria Brian Susmarski Christopher Swanson Kyle Swatkowski Patrick Sweeney Matthew Sweet Najia Syed Jennifer Sykes Lindsay Szabo Laura Szejka
T Tracey Ta Toshihiko Tabuchi Daniel Tadder Man Wah Tai Aki Takahashi Hiroki Takamura Manabu Taketani Chia Lynn Tan Jianying Tan Lei Tan Sara Tan Nick Tanev Hong Tao Nicole Tavares Jennifer Tekkey Mark Temple Jeffrey Tennill Peter Terluk Melissa Terrill Eric Teubel Prakriti Thapa Nathan Thom Kyler Thomas Matthew Thomas Peter Thomas Shane Thomas Ewelina Thompson Saadiqa Thompson Jill Tice Kyle Timson Lisa Tinant Andrew Tolbert Brian Tornga David Torres Paul Torres Peter Torrieri Yan Triolo Steven Tripp Steven Trkulja
CERTIFICATE RECIPIENTS Simon Trottier Kathryn Trowitch Jay Trudell Tommy Truong Lisandro Tsai Ktisifon Tselentis Pai Chi Tsui Vivian Wing-Man Tsui Kevin Tunney Nicole Turosky Simina Tyiran Robert Tyse Anthony Tzemopoulos Simeon Tzolov
Bradley Veeck Blake Veldhuis Anna Marie Verch Kristen Vercruysse Manoj Verma Matthew Vertin Nicholas Vicino Daniel Villegas Sandra Villegas Ryan Vincent Adam Vitek Mary Ann Vittitow Tsveta Vlaeva Sarah Vogt Kathleen Volkert Ben Volpe Andrew Volz Branislav Vucen
U Greg Udouj Joseph Umhoefer Colin Umphreys Adam Underwood Michael Untiedt Saurabh Upadhyay Bolor Urjinee Kyle Urtel Hiromi-anne Usui Caroline Uy Victor Uy
V Murtaza Valika George Valsa Genevieve Van Domelen Todd Van Hoy Lauren VanBlaricum Kelly VanDeKreeke Chad Vangsness Ann VanVooren Courtney Vargas
Robert Wadsworth Matthew Waggoner Cheryl Wagner Amy Wake Amanda Walker Cameron Walker Erin Walton Annie Wang Bo Wang Lijuan Wang Liping Wang Qingying Wang Ruirui Wang Victor Wang Xian Wang Xiaofeng Wang Ying Wang
Yixing Wang Yu Jia Wang Yuan-Ling Wang Christine Ward Daniel Ward Thomas Wasilowski Marc Wasserman Robert Waz Jodie Wehner Guang Wei Jia Wei Yu-Shiun Wei Jacob Weinberg Blake Weisbrod Thomas Welch Belinda Wen Byron Wendte Zachary Wensch Christian West Gregory Westbay Warren Wetter Matthew White Ryan White Brian Whitfield Ashley Wikle Alissa Wilkerson Meghan Wilkosz Janet Willoughby Ashley Wilson Caitlin Wilson Cassie Wilson Michelle Winkleman Katrina Winogradzki Madeline Winter Kasia Wiska Megan Wisniewski Kevin Wittmeyer
Meghan Woelfel Brandon Wolber Brianne Wolf James Wong Nancy Wong Kirk Wonio Brian Woo Ella Wood Daniel Woodall Elizabeth Woodson Heather Woolfitt Stuart Wright Andrew Edward Wu Chia-Hsin Wu Chuyen Wu Hsin-Fang Wu Ting Wu Xinyi Wu Yanfang Wu Yanfei Wu Yuping Wu Zhenyu Wu Joshua Wyrick Daniel Wywrot
X Jing Xia Furong Xiang Rufen Xiao Youfei Xiao Lu Xie Yanna Xie Ersu Xu Li Xu Shelley Xu Shixiao Xu Shiying Xu
Krista Zessin Sida Zhai Cailiang Zhang Jie Zhang Jinjing Zhang Ke Zhang Ling Zhang Mengya Zhang Qingsu Zhang Rong Zhang Tongying Zhang Wenfei Zhang Wenting Zhang Xiaokang Zhang Xiaorui Zhang Yangchun Zhang Ying Zhang Yuhong Zhang Ziling Zhang Ling Zhou Min Zhou Jiang Zhu Shengdong Zhu Wansheng Zhu Wenye Zhu Andrew Ziegler Justin Zieman Steven Zienty Mariola Zoltowski Ephraim Zucker
Yuan Xu Zengsan Xu
Y Shuhei Yamaguchi Yumi Yanagita Eve Yanaki Bin Yang Ju Yang Lin Yang Qida Yang YueYang Yang Diki Yangzom Xi Hong Yao Samuel Yau Richard Yeh Chiahsuan Yen Brian Yoder Jeremy Yoder Youngjae Yoo Yu Yoon Brian Young Joshua Young Stephen Young Steven Young Ya-Hsin Yu Yi Yuan Keith Kai Ho Yuen
Z Adam Zaabel Jeffrey Zabor Gregory Zagar Timothy Zakrzewski Brent Zavitz Robert Zeman Si Zeng
ILLINOIS CPA SOCIETY 2012 EXCEL AWARD RECIPIENTS The Excel Award is granted to Illinois CPAs who achieved a total average score of 90 or more and completed all four parts of the exam within two consecutive testing windows and were in the top five percent of the scores of those who completed all the requirements in 2012 in Illlinois.
ICPAS GOLD MEDAL RECIPIENT
ICPAS SILVER MEDAL RECIPIENT
ICPAS BRONZE MEDAL RECIPIENT
Indiana University, Bloomington, IN KPMG LLP, Chicago, IL
University of Notre Dame, South Bend, IN Deloitte, Chicago, IL
University of Iowa, Iowa City, IA PricewaterhouseCoopers, Chicago, IL
Xiaomin Wang University of Notre Dame, South Bend, IN
EXCEL AWARD RECIPIENTS Katherine Davidson
University of Illinois, Urbana-Champaign, IL Ernst & Young LLP, Chicago, IL
University of Notre Dame, South Bend, IN PricewaterhouseCoopers, Chicago, IL
Boston College, Chestnut Hill, MA KPMG LLP, Chicago, IL
Northern Illinois University, Dekalb, IL Deloitte, Chicago, IL
Indiana University, Bloomington, IN KPMG LLP, Chicago, IL
Indiana University, Bloomington, IN Deloitte, Chicago, IL
University of Notre Dame, South Bend, IN J.P. Morgan, Chicago, IL
Villanova University, Villanova, PA AbbVie Inc., North Chicago, IL
University of Florida, Gainsville, FL Wells Fargo Securities LLC, Charlotte, NC
DePaul University, Chicago, IL Ernst & Young LLP, Chicago, IL
University of Wisconsin-Madison, Madison, WI Deloitte, Chicago, IL
University of Illinois, Urbana-Champaign, IL
University of Wisconsin-Madison, Madison, WI Ernst & Young LLP, Chicago, IL
Miami University, Oxford, OH Ernst & Young LLP, Chicago, IL
University of Notre Dame, South Bend, IN Ernst & Young LLP, Chicago, IL
Ruixue Yao University of Illinois, Urbana-Champaign, IL
ation in manufacturing, agriculture, biotechnology and education. The hope is that the end result provides small to midsized businesses with access to some of the world’s fastest-growing markets.” The effort is backed by a $1.07 million federal grant through the U.S. Small Business Administration’s State Trade and Export Promotion Program (STEP). A three-year pilot initiative, funding is being used to raise export sales in Illinois by providing high-impact financial and technical assistance to more than 150 companies.
Illinois Pathways Initiative This initiative was born of a need to address a skills gap that had emerged in the state. Funded through federal Race to the Top funds, the effort will help to prepare students for college and careers in new and growing fields. “The Initiative provides for strong collaboration in Illinois’ business and education communities,” says Jeff Mays, president of the Illinois Business Roundtable. “The whole idea is that you align your resources. By education collaborating with real-world business, students learn real-world problem-solving skills. They’re going to be aware of the careers available to them and what they have to do to get them.” Current research reveals that of 100 kids entering the 9th grade, only 42 will enter college, and only 20 will graduate. Pathways hopes to help the state reach its goal of having 60 percent of adults attain a college degree or a career certificate by 2025.
Advantage Illinois Capital is key to the success of every business venture. The Advantage Illinois program therefore was created specifically to address the need for capital among start-ups and companies looking to expand. “We will work with local banks to do vetting of businesses needing loans. If a bank can only lend a certain amount, we will augment it,” says Seals. “It’s targeting those folks who are on the fence, who have trouble getting resources to grow.” The program is leveraging $78 million in federal funding to support innovative ideas and new products, and to accelerate job creation and economic growth. Three program components are intended to spur institutional lending, and one program leverages private venture capital in start-ups and high-growth businesses. Specifically, n The Capital Access Program (CAP) encourages financial institutions to make loans to small and new businesses that don’t qualify under conventional lending policies. n The Participation Loan Program (PLP) supports businesses with projects that create or retain jobs and/or modernize practices to improve competitiveness. Specifically, one component of the program is devoted to minority/women/disabled/veteran-owned businesses (MWDV PLP). n The Collateral Support Program (CSP) establishes savings accounts or CDs to provide cash collateral support to lending institutions to enhance the equity and/or loan collateral levels of small-business borrowers. n The Invest Illinois Venture Fund Program (IIVF) is a new venture capital program to support young, innovative companies that show high-growth potential, can demonstrate their place in the market and already have other investors. Illinois’ dynamic business community promises to continue on its fruitful path as the national economy gains momentum and we begin to see a glimmer among the clouds.
Providing timely, relevant updates from leading experts. May 9 | Chicago
Estate & Gift Tax May 13 | Oakbrook Terrace May 14 | Springfield
Government May 21 | Chicago
Employee Benefits May 22 | Chicago
Business Valuation Symposium June 4 | Chicago
Taxation on Real Estate June 5 | Chicago
Fundraising Rules and Regulations Half-Day June 11 | Springfield June 12 | Chicago
Not-for-Profit Advanced and Emerging Accounting and A-133 Issues June 20 | Chicago
Forensic Accounting Workshop July 18 | Chicago July 23 | Springfield
IRS Practice & Procedures
Register at www.icpas.org/education.htm icpas.org/insight.htm | SPRING 2013
Gripping the Edge What do 2013’s tax law changes really mean to the nation’s small-business owners? By Kristine Blenkhorn Rodriguez
ignificant revenue provisions of The Patient Protection and Affordable Care Act, enacted in March 2010, became effective January 1, 2013, concurrent with the American Taxpayer Protection Act of 2012, enacted on January 2, 2013. The result is a changed tax environment not only for the high-net-worth taxpayers who have emblazoned “Fiscal Cliff” headlines, but also for the nation’s small-business owners. Here, we recap on five changes that impact small-business tax planning in 2013.
1. Stock If you’re working with small-business corporations with less than $50 million in assets, read the tax law changes for Section 1202 with care, cautions Jeremy Dubow of NDH Group. “There is one aspect of the law that few people have captured appropriately,” he explains. “But in Chicago especially, where private equity financial investment dollars are funneling into tech companies focused on innovation, this is a key piece of the Fiscal Cliff legislation.” From October 2010 through December 31, 2011, Section 1202 excluded 100 percent of the gain realized from the sale of investment in a small-business corporation, if it met certain criteria (namely, if investors hold stock for five years or more). It allowed for tax-exempt investment for the greater of up to $10 million or an amount equal to 10 times your basis in the stock. After December 31, 2011, the 1202 provision went back to its original form, so only 50 percent of the gain was excluded; the other 50 percent was taxed at a flat 28 percent. An AMT adjustment was also added. The 2013 law changed the 2012 rules retroactively. Consequently, the 100-percent exclusion applies from October 2010 through December 31, 2013, providing a huge tax benefit for many Chicago-area tech investors. It all sounds quite simple until you figure in the conversion of a young start-up into a corpo26
ration, says Dubow. “The implication is a bit buried in the law, and even some of the larger law and CPA firms have not paid attention to it.” Many start-ups originate as state law LLCs and then are converted into corporations to better attract Series A funding. Most venture capitalists prefer C corporations because they have a simpler capital structure, better understood in the VC community. Generally, conversion to a corporation is done in one of two ways. The most common is the statutory merger, in which a new corporation is created and merged with an existing LLC, with only the corporation surviving the merger. A formless conversion, popular with Delaware corporations but not available in Illinois, allows conversion to a corporation simply by signing the correct forms. If you choose either method for your client, because of the way statutory mergers and formless conversions are treated for federal tax purposes in terms of the form of the transaction, you may lose the ability for the corporate stock to qualify as Section 1202 stock. In other words, your client won’t reap any of the 100percent gain exclusion. To guarantee the Section 1202 benefits, Dubow recommends using the “assets up” or “interest over” approach per Revenue Ruling 84-111. “Think of the implications five years down the road of a $1 million dollar investment in what turns out to be a $100 million company,” he says. “Ouch!”
2. Tax Breaks Tax breaks for small businesses have been extended through 2013. And according to the SBA, 97 percent of small businesses will not see their income taxes increase. In addition to this good news, the package of tax breaks that small businesses enjoyed in 2012 will be extended through 2013. This package includes:
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Section 179 deductions: Along with retroactively applying to 2012, the $500,000 deduction limit also has been applied to 2013. So if you’re planning to invest in equipment, hardware or software, do it before the limit falls back down. The American Taxpayer Relief Act of 2012 also extended the bonus depreciation rate of 50 percent for certain new fixed-asset purchases through 2013, which was set to expire at the end of 2012. These accelerated depreciation provisions eventually will expire, so it may be a good idea to take advantage of them while you can. Work Opportunity Tax Credit: Businesses that hire veterans or individuals from underserved communities will continue to earn tax credits based on the new hire’s income. Research and Experimentation Tax Credit: Along with applying retroactively to 2012, this tax credit also will be in place throughout 2013.
3. Business-related Investments The plight of high-net-worth taxpayers in the midst of the Fiscal Cliff has been much discussed in the news. More moderate highincome taxpayers, however, will see a 3.8 percent surtax on net investment income (for those with taxable income exceeding $250,000, $200,000 for singles). While investment income traditionally referred to capital gains, interest and dividends, it is very broadly defined for the Medicare surcharge to include rental income, as well as profits from passive investments (for example, when a person puts money into a business but is not active in it). For the purposes of this tax, net investment income includes interest, dividends, annuities, royalties and rents other than such income that is derived in the ordinary course of a trade or business, less allocable deductions. Net investment income also includes
realized capital gains attributable to the disposition of investment assets, as well as income from a passive business activity or from a trade or business of trading in financial instruments or commodities. A passive activity includes a trade or business activity in which the owner didn’t materially participate during the year, as well as most rental activities. To meet the material participation requirement, the owner’s involvement in the activity must be regular, continuous and substantial. IRS regulations provide seven tests for meeting this requirement. For example, under one of these tests, an owner materially participates in a trade or business activity if he or she participated in the activity for more than 500 hours during the tax year. Small-business owners could be affected because more than 90 percent of businesses file tax returns as S corporations or partnerships in which profits flow through to the owners and are taxed at the individual level, explains Mark Sellner of the University of St. Thomas School of Law in Minneapolis. There was a loophole for S corporation owners who minimized their salaries and instead paid out business profits as distributions, which are not subject to the surtax. Complex trusts will be especially hard hit.
4. Home Offices Home office workers have a new safe harbor option. To reduce paperwork burdens, the IRS will allow qualified taxpayers to deduct $5 per square foot for home office expenses, up to a maximum of $1,500. In addition, they’ll be able to deduct 100 percent of the interest on their mortgage and 100 percent of the real estate taxes as itemized deductions on Schedule A. The traditional home office deduction required apportioning those costs between the home office on Form 8829 and Schedule A. Two traditional requirements, however, still apply: The home office must be used regularly and exclusively for business and must be necessary for the conduct of the business.
5. Rental Income Net rental income is subject to the 3.8 percent Medicare Contributions Tax (MCT), unless the rental income is earned in the ordinary course of a trade or business, says Andrew Klemens of Wolf & Company LLP. “A trade or business activity generally doesn’t include the rental of real property. Therefore, business owners who own real property outside of their business and rent this property to their business will be subject to this new tax. For example, if you operate your business as an S corporation and your business rents the warehouse space used in its operation from a partnership that you also own, the net rental income will be includable in net investment income subject to the MCT.” According to Klemens, business owners who face the MCT on rental income from a related lessee have options to consider that may reduce or eliminate the tax’s impact. “For example, if the rent charged exceeds market rents, the rental amount can be reduced to decrease net rental income subject to MCT. Alternatively, you can eliminate exposure to the MCT by restructuring your business and rental activities so that the business uses the real property directly instead of renting it from the owners,” he explains. “This can be accomplished generally taxfree through a contribution of the real property to the operating entity. Using a holding company with wholly owned subsidiaries that operate the business and own the real property can preserve legal liability protection yet eliminate separate rental income subject to MCT. Each business owner’s situation is unique.”
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The Obamacare Effect With new provisions on the horizon, healthcare is still something of a mystery. By Christine Bockelman
n these months leading up to many of the healthcare provisions of President Obama’s Affordable Care Act (which takes effect on January 1, 2014), small businesses across Illinois and the nation are navigating the unchartered waters of healthcare reform—and hoping to stay financially afloat. While the broad strokes of the Act have been hashed out in the media and at board meetings since it was signed into law in 2010, almost four years later the details of how this is all going to play out are still rather murky. For instance, it’s known that Obamacare intends to provide affordable, government-regulated health insurance to Americans currently without coverage, and that it forbids exclusion based on gender or pre-existing conditions, expands Medicaid, and eliminates some copayments. However, what we don’t know is how much this is going to cost, especially for small businesses, many of which will be mandated to offer health coverage to all fulltime employees for the very first time. Although many of the hard numbers of the new healthcare landscape aren’t known, there is one number many business owners are stuck on: 50. Firms with at least this many employees working 30 hours a week or more must choose between offering coverage or paying a $2,000 fine for each full-time worker, minus the first 30 employees. The fine jumps to $3,000 per employee if they use tax credits to purchase insurance on the upcoming healthcare exchange. It might be a little hard to believe, but paying the fine—a fixed cost—just might be a less expensive option for some firms. “No one knows what the numbers are going to be,” says Mary Pat Wesche, CPA/PFS/CFP®, senior advisor and CFO of Forum Financial Management, LLC in Lombard, Ill. “I think people think costs are going to skyrocket, but there’s no way to tell at this point.” This lack of concrete information is concerning for small-business owners across the country. A January 2013 Wells Fargo/Gallup Small Business survey found that more than half (54 percent) of small-business owners think healthcare costs are 30
hurting their operating environment “a lot.” Also, 61 percent are not hiring because of “worries about the potential cost of healthcare.” Here’s what is known: Obamacare requires each state to set up a healthcare exchange, a competitive marketplace where the uninsured can go to comparison shop for coverage. The exchanges will be government regulated, but each state can choose how to set theirs up. Illinois has decided to operate an exchange with the federal government for 2014, while neighboring Kentucky is going a different route and will run its own. Illinois has not projected the number of small businesses likely to participate in the exchange but estimates that 149,000 employees will receive coverage through exchange-offered plans—a figure that climbs to 443,000 by the year 2020. Employees will have a few options for enrolling in the exchange health plans. The federal government will run a website, a call center and options for in-person exchange enrollment assistance. None of these have been set up yet in Illinois. “The thing that makes it difficult to move at this point is that we don’t know what the Illinois exchange is going to be,” says Mike Tomasek, a partner in the law practice of Freeborn & Peters LLC in Chicago. “If we knew the quality and costs of the exchanges then it becomes a real thing to debate.” There is every expectation that if the big players in Illinois insurance—companies like Humana and Blue Cross—are involved in the exchanges, the health plans offered will be high quality. “If the Illinois exchange is moderately low cost and very good quality then the average small business is going to seriously consider paying the penalty and letting employees go to the exchange,” Tomasek explains. And if the exchanges are both low cost and high quality, they would be a big draw away from employer-based coverage for a lot of small and midsized companies, Tomasek adds. Wesche’s company is advising small-business owners to get HSAs combined with a high deductible, either through the exchange or on their own. “That way, you keep the premium dollars down and assume more risk yourself,” she says.
Another option is to incentivize employees toward better health. “We’ve been told by some insurance consultants that we should offer wellness plans—start smoking cessation programs and offer gym memberships to help lower costs,” says Wesche. A firm hovering around that sticky 50 headcount has a few strategies open to it, too. For instance, it could reduce an employee’s hours from 30 a week to 29, therefore taking that person off the full-time employee roster. Similarly, some full-time workers could be allocated as contractors. “I think there should be some incentive for employers to look at their workforce and see who might be more properly categorized as an independent contractor or part-time if count is critical on a cost basis,” says Tomasek. “Overall though, I hope this problem is corrected by legislation or regulation so that Obamacare better encourages job growth and creation.” Regardless, until the major players in the exchanges are known, and financial information is available, there isn’t much a firm can really do. Small businesses are basically in a holding pattern. And there’s a lot to accomplish before January 2014. In addition to setting up the exchanges and helping the public with enrollments, Illinois also has to work to expand its Medicaid program, which could enroll up to 500,000 additional people in 2014 thanks to new regulations. “Our clients’ concerns about Obamacare are all over the map,” Wesche admits. “They just don’t know enough about it to know what to do.” While all the details are being determined and the tax laws are changing, small businesses should do their own research and consult some experts. “Small businesses need to be aware of the rules and financial implications, but there are many other factors that need to be considered before they decide how to navigate this,” Butcher stresses. “They need to think about their business decisions, their long-term goals, the costs of the exchanges, the type of care they want to offer and how it is a component of their business.” “2013 is a time to think,” adds Tomasek. “Spend some time weighing all the options, think about what you want to do and read as much as possible about the pros and cons of every decision.” Obamacare might keep at least one thing the same, says Wesche. “Healthcare costs have been a wild ride for years now, so this is just a new chapter.”
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Check out the course catalog today at www.icpas.org/education.htm Another way your Illinois CPA Society membership is working for you.
icpas.org/insight.htm | SPRING 2013
Empower the Future Minority students find the inspiration to pursue illustrious careers in the accounting field. By Kari Natale
his time last year, Takabvekure Buranda, an accounting student at Harold Washington College, thought he might be working as a busboy for the rest of his life. His opportunities were limited and resources were scarce. All that changed, however, after attending the Illinois CPA Society’s Mary T. Washington Wylie Internship Preparation Program at the recommendation of both his professor and career advisor. Ultimately, Buranda was one of 10 program participants to accept a paid internship at a notable accounting firm. “Being a Mary T. Washington Wylie Scholar will take me to places in my life I never even knew were possible,” says Buranda. “I believe this program has forever changed my future, my life and my family’s life.” The program is an integral part of the Illinois CPA Society’s commitment to increasing the diversity and strength of the accounting profession, and continues Mary T. Washington Wylie’s remarkable legacy. The first female African-American CPA in the United States, Washington made it her mission to support African-Americans aspiring to be CPAs in Illinois and across the country. Now, her legacy is impacting the 25 minority students who participated in the inaugural Internship Preparation Program in January 2013. The program is made up of various components, all of which offer students a fun, interactive way to connect with a diverse group of working accounting professionals, engage in practical training not typically found in the classroom, and participate in open Q&A forums. On the first day, a panel of five young professionals spoke to students about their career experiences and what it took for them to
Pay it Forward All expenses for the Mary T. Washington Wylie Internship Preparation Program are funded by donations to the CPA Endowment Fund of Illinois’ Mary T. Washington Wylie Opportunity Fund. This fund was founded by Lester McKeever, CPA, J.D., managing principal, Washington, Pittman & McKeever, LLC, and offers the community an opportunity to promote diversity and strengthen the accounting profession. In addition, the CPA Endowment Fund of Illinois’ Herman J. Neal Scholarship Fund supports AfricanAmerican students in their pursuit of an accounting education and the CPA designation. This year the fund will provide three scholarships of up to $4,000 each to African-American accounting students who show significant potential to become CPAs and demonstrate achievement as well as financial need. The support of individuals and organizations make a tremendous impact on the lives of hundreds of future CPAs every year. For more information on how you can lend your support visit www.icpas.org/annualfund.htm.
stand out, land an internship and ultimately get hired full-time. They also provided advice on factors to consider when determining a career path in accounting, and how to overcome the challenges of transitioning from school to work. Marco Pineda, a University of Illinois student, is already applying for internships at accounting firms. He explains that, “I saw the excitement that real-world CPAs can have about their jobs. Meeting CPAs from several accounting career paths and at different stages in their careers gave me the motivation I needed to place myself in one of those positions. They are passionate about what they do and truly believe in the importance of the profession.” Internships are extremely competitive, and extra training can really set candidates apart. With this in mind, the program included presentations on the importance of diversity in the accounting profession, business etiquette, leadership competencies, ethics and the CPA Exam, and gave students the opportunity to connect with potential mentors. Key to the program’s success were the ICPAS’ partnerships with the National Association of Black Accountants, the Association of Latino Professionals in Finance and Accounting, accounting faculty in Illinois, and a number of accounting firms and organizations in the Chicagoland area, including Crowe Horwath LLP, Deloitte LLP, Ernst & Young LLP, Grant Thornton LLP and KPMG LLP. These firms provided guidance on key areas such as the resume review process, and set up mock interview sessions—all of which provided invaluable insight into what these particular accounting firms look for when assessing potential interns. “I really appreciated the opportunity to get resume, interview and internship advice from the perspective of people working in the accounting firms where I aspire to begin my career,” says Sharnay Bradford, a junior at McKendree University. “The networking and interview experience is invaluable to me because it gave me exposure that I might not have gotten coming from a smaller school.” On the final day, participating firms conducted informal interviews and had the opportunity to extend internship invitations. The extent of the program’s reach is impressive, with students from 16 Illinois schools (including community colleges and twoyear schools) participating. Most importantly, the program attracted students from schools where accounting firms may not typically recruit, providing access and educational opportunities to individuals who otherwise wouldn’t receive them. “This is a program that works, and it’s a program that we think is worth a significant investment,” explains Javier Magallanes, campus recruiter for Deloitte. “It’s important to us to identify and help prepare the top minority students across the state, and this program reaches students that we might not otherwise have the chance to interface with.” Another significant barrier these students face is financing for their educations. As college costs continue to rise, scholarship support is becoming increasingly critical, which is why all 25 students also received a $500 scholarship upon acceptance to the program. “This program opened my eyes even further to the importance of doing well in college,” says Buranda. “I’m inspired to keep learning and growing.” Kari Natale is development manager for the Illinois CPA Society and the CPA Endowment Fund of Illinois. She can be reached at email@example.com or by calling 312.993.0407 ext. 290.
2013 | call for nominations
The Illinois CPA Society, together with the AICPA, is once again looking for outstanding women who have made significant contributions to the accounting profession, their organizations, and to the development of women as leaders.
AWARDS WILL BE GIVEN IN TWO CATEGORIES:
experienced leaders • mentoring other professionals • community service • major or unique contributions to the profession • leadership in workplace improvements • authorship of professional articles
emerging leaders • demonstration of leadership • contributions to the profession • creation and implementation of unique initiatives in the workplace • community service • involvement with her alma mater
Candidates must be members of the Illinois CPA Society (ICPAS) and American Institute of Certified Public Accountants (AICPA). Not a member? Visit www.icpas.org and/or www.aicpa.org. Applications must include information supporting the individual’s qualifications (resume, biography, letters of support, etc.) and can be sent to: Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661-5742, Attn: Gayle Floresca, Women to Watch Awards. For more information, call 800.993.0407, ext. 254 or visit www.icpas.org/womentowatch.htm.
Deadline for submissions is June 30, 2013 icpas.org/insight.htm | SPRING 2013
how To Be a FearLeSS Leader This one is for the movers and shakers.
The up-at-5-a.m. yoga warriors. The run-during-lunch and networkafter-work crowd. The I’m-taking-this-class-because-it-interests-me set. The that-office-has-my-name-written-all-over-it group. There are few reluctant leaders. Most are made, not born; selfmade, with help along the way from family, mentors and the school of life. Becoming a leader is an intentional pursuit, born from humble beginnings. You may be in the smallest cubicle in the most obscure corner now, but you’re ready for the next step, aren’t you? Good. Your timing is perfect. By Kristine Blenkhorn Rodriguez 34
INSIGHT icpas.org/insight.htm icpas.org/insight.htm
he good news is, your firm is motivated to promote you in ways they haven’t been for quite some time, due to the simple law of supply and demand. In the 2011/2012 Trends in Executive Development Benchmark Report (issued by Executive Development Associates and the Pearson TalentLens Group), chief learning, human resources and executive development officers cited the importance of being proactive in accelerating the development of both “high potentials” and emerging leaders. Survey participants emphasized the need for clear succession plans and a well-developed group of hopefuls in light of the high percentage of executives who plan to retire in the next 5 to 10 years. How do they plan to develop you as a leader? For top executives and vice presidents, survey participants cited the use of executive coaching as the number one development strategy. For vice presidents and high potentials, the use of developmental job assignments and internal custom programs were listed as popular methods, followed by mentoring and coaching. To give you a bit more insight into what the future might hold in the leadership department, we talked with people who make a business of coaching boss material—people who have forged their own steps all the way up to the C-suite, and who spend a lot of their time studying and writing about leadership. Here, then, is their advice on key areas you need to shore up on before hitting the hallowed halls of upper management.
THE SOPHISTICATED SCHMOOZE In a nutshell, build confidence in your ability to network, communicate and connect. Can you succeed without making connections? In rare cases, yes, says Mel Toomey, scholar-in-residence at the Center for Leadership Studies at the Graduate Institute, Bethany, CT, and we’ve all seen it—or been an unfortunate subject to it. “Those executives who are a favorite of one particular company leader and are promoted solely on that basis—well, they’re like a blind squirrel finding a nut. They’re anomalies. Maybe they’ve done one phenomenal thing, but they couldn’t repeat it to save their lives. Find me one of those and I’ll find you someone who works in a vacuum. Leaders don’t do that.” In IBM’s 2012 Global CEO study, Leading Through Connections, collaboration was listed as the number one trait CEOs look for in their employees, with 75 percent calling it critical. It’s safe to say they expect it tenfold in their leaders. When asked to highlight personal characteristics most crucial to the future success of employees, the top two cited were collaboration (75 percent) and communication (67 percent). How do you become a truly confident collaborator and communicator? Follow these eight steps.
1. Carve a niche Networking is hard for some young professionals because they aren’t sure what they have to offer in return. John Mattone, a master corporate executive coach, says becoming a subject matter expert in a niche area is one way to bring something to the table. “So many higher-level executives don’t have the time or purview to specialize. They appreciate someone stepping up to the plate and filling the void. There’s nothing wrong with being the go-to person in one area if it gets you noticed and you continue to broaden your skills.” 36
2. Be real. In Mattone’s experience, those executives who can’t be vulnerable might well get ahead, but they won’t stay ahead. “If you aren’t willing to raise your hand when you don’t know something, you’ll stumble. And it’ll be apparent to everyone that you overstepped your limits instead of asking for expertise when it was needed.”
3. Choose your favorites Formal mentoring programs usually fall short, says Mattone, because you can’t force chemistry. “There needs to be a natural affinity between the people being matched up,” he explains. He recommends going to executives you admire on your own. “Choose two to three that you feel you can learn from. Ask them to lunch or walk to the office from the train with them in the morning—whatever they’re willing to give you. You need to hear their stories—what they faced, how they handled it, what they’d do differently—because the likelihood of you going through similar situations is high.”
4. Project authenticity While online connections are the tool du jour, Leslie Marquard, CEO and managing director of executive coaching and corporate strategy firm Marble Leadership Partners, cautions against relying on them solely. She finds young professionals very skilled at creating an online presence but sees them fall short when it comes to face-to-face networking. The cure? Executive presence training. “Most successful executives have had this training in some way, shape or form,” she explains. Everything from dining skills and the first impression you give when entering a room, to elocution and improvisational skills. For instance, “Are you good on your feet in a room?” she asks. If you’re a mumbler, “then take singing lessons. It’s all about learning to talk from the diaphragm, not the throat. And it matters. How many executives have you seen rise to the top that are truly inarticulate or inaudible?”
5. Gather supporters In practical terms, executive presence doesn’t win the war. You need supporters and cheerleaders to help you do that, says Marquard. “Host a meet-and-greet. Reach out to a select group of 10 people. Meet at the Metropolitan Club at Willis Tower if you’re in Chicago, or somewhere else people ahead of you in the game will go. Forget your local bar—that’s for your informal work buddies.”
6. Make the hard online call Marquard urges you to make a similar distinction online. “If you’re networking via LinkedIn, who are your contacts? High school friends or pros you want to learn from? It sounds basic but I see people make poor judgments on who to include quite often. And you pay for it. One stupid posting by an old friend can be a career burner. Accept and extend online networking invitations with care.”
7. Think small(er) Working for a smaller firm was an advantage during his younger years, says SRAM CFO Mike Herr, because he was invited to events hosted by accounting firms, tax firms, banks, etc. that did work for his employer. At a larger firm, more senior executives would have taken his slot.
8. Watch and learn Although technical communications are the standard in today’s business world, face-to-face interaction is still an extremely important skill to master. “Meet people and go to events,” Herr encourages. “That’s where you can hone your communication skills in a
at the ICPas Young Professionals leadership Conference Join like-minded, leadership-oriented young professionals at the Illinois CPA Society’s Young Professionals Leadership Conference at the Metropolitan Club, Willis Tower, on May 31. This half-day program opens with a thought-provoking keynote discussing core leadership challenges presented by nationally renowned leadership expert Todd Dewett, Ph.D., president of TVA Inc. and Professor of Management and Robert J. Kegerreis Distinguished Professor of Teaching at Wright State University in Dayton, Ohio. Sessions also broach the gray areas of ethical leadership, and offer the chance to make connections through breakout sessions on topics such as finding work/life balance and transitioning to a manager role. Don’t miss this great opportunity to make the connections that will help to build your leadership future. The small print: Seats are limited and space fills up fast, so visit us at www.icpas.org/fearless.htm or call 800.993.0407 ext. 275 today to register. The conference costs $55 for ICPAS members, and offers 4 hours of CPE, including 1 hour of Ethics credit. more low-pressure environment. Watch the ones who do it well and learn.” Watch your own interactions as well, Herr advises, particularly the hurried electronic ones. He cautions that smiley faces and BFFs should be reserved for your, well, BFFs. Keep them out of office communications.
EMOTIONAL INTELLIGENCE More than a catchphrase, emotional intelligence and confident self-awareness are qualities increasingly recognized as cornerstones of strong leadership. Individuality trumps tradition in today’s business world. Just look at Steve Jobs, who liked to fast or eat only one type of food for weeks at a time. Unconventional, yes, but he felt it led to moments of enlightenment and creativity. And what about Padmasree Warrior, Cisco’s Chief Technology and Strategy Officer, who spent 19 years working on increasing her meditation time from 2 to 20 minutes daily. She dedicates her weekends to family, haiku and painting, explaining that these activities help her maintain the big picture and a broader understanding of humanity. With more than 1.4 million Twitter followers and a ranking on Forbes’ list of “Power Women,” her approach seems to be working for her. And let’s not forget Henry Singleton, the mathematician who founded conglomerate Teledyne in the early 1960s. Singleton played chess blindfolded to find his inner leadership strength. According to William M. Thorndike’s book, The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success, if you had invested $1 in Teledyne in 1963, it would have been worth $180 when Singleton retired as chairman in 1990, during a bear market. The company outperformed the index multiple times during his tenure. Introspection is only one component of emotional intelligence, however. Another is “the alignment of how you see yourself with how other people see you,” Mattone explains. “Neither works without a dose of reality from its counterpart.” Marquard calls this “fielding the landing.” “It’s not enough to know your own values and emotions. You have to know how your leadership style lands on other people.” The coach says she’s worked with many executives who readily admit to being control freaks—and seem proud that they can identify that weakness. “But do you know how that trait feels to the people you manage and lead? Do you know what it translates into? How it impacts and hinders their ability to be successful?” Without that crucial secondary knowledge, self-awareness doesn’t take you very far, she says.
At the other end of the spectrum, Herr does indeed possess that secondary knowledge when he speaks of his days as a young auditor. “You’re auditing all different kinds of companies and get exposed to just as many personalities. Many people think you’re just this young auditor and you don’t know anything. Most of the time they treated me and their employees pretty much the same. I understand where my younger employees are coming from. I remember what that felt like. And I give them time to learn. They need to learn fast, but I don’t withhold respect because they’re green. We hired them so we obviously think they come with the potential to contribute. I treat them accordingly.” Sometimes dismissed as a soft issue, Marquard explains that, “Emotional intelligence comes from healing past wounds, in part, and recognizing patterns. The best leaders have done their internal work—and they bring that health to the workplace. They leave the dysfunction behind.” She recommends reading Leadership Agility: Five Levels of Mastery for Anticipating and Initiating Change by William B. Joiner and Stephen A. Josephs to get insight into why emotional intelligence matters.
TABLE STAKES Or, to put it in plain English, building knowledge and mastering technical skills. “Understanding standard accounting practice and the latest technical changes is key, yes,” says Marquard. “But the skills that catapult you to CFO are systemic and holistic, strategic. CFOs are forward thinkers.” They’re also good risk assessors. “When you’re a CFO, taking on risk intentionally is necessary. Being risk-averse is not really an option if your company is to thrive in the long run…. A CFO takes on risk with careful scenario planning—if X happens, we’ll do this. If Y happens, this, etc.,” says Marquard. If you lack the opportunity to gain experiential leadership skills in your current position, volunteering at nonprofits, for industry associations and finance-related professional organizations is an excellent way to broaden and deepen your base. Relatively speaking, it’s stress-free resume-building. An MBA also may be a goal you’ll want to set in order to level the leadership playing field. “One can’t lead unless they’ve mastered management, but there needs to be a platform to build upon,” says Toomey. “In addition to the technical skills necessary to be a good financial executive and CPA, a good MBA program is key if you want to be considered seriously for a future leadership position. Much of the industry knowledge you can get on the job, via continuing education or self-generated on the Web. Not so with the knowledge you gain from an MBA.” icpas.org/insight.htm | SPRING 2013
CPA 2020 Nearly three years ago the Illinois CPA Society asked CPAs what they thought the profession would look like in 2020. Now, with only seven short years to go, we take a look at what needs to be top-of-mind among finance leaders looking to the future. By Derrick Lilly
uring a Town Hall Forum on a cold and misty Monday morning in January, former Illinois CPA Society President and CEO Elaine Weiss spoke to 139 Chicagoland CPAs about the state of the profession and some of its top concerns. She asked, “Is the worst behind us or is it still to come?” The overwhelming response was that the worst was behind us—and no, they weren’t talking about the weather. So, even while Weiss pointed out that small businesses are on edge, unemployment remains stubbornly high, CFOs are guarding their treasuries, and the nation’s politics and economics are strained at best, the audience of CPAs from firms and businesses of all shapes and sizes simply nodded in agreement but remained resolute. No matter what headwinds the profession faces, CPAs remain confident that better times lie ahead.
“The years 2008 through 2011 were not particularly kind to the profession. We saw the commoditization of services and firms aggressively pursuing work with competitive bidding (i.e. lowballing); there was a major price war that took place,” says Allan D. Koltin, CPA, CEO of Chicago-based Koltin Consulting Group. “But we are coming out of that now, and those years taught us that even in a prolonged recession, clients, individuals and businesses still need accountants and accounting firms.” The Koltin Consulting Group specializes in practice management consulting for firms with roughly $3 million to $700 million in revenues. What Koltin’s clients saw in 2012 marked a turning point—the first uptick in five years. “The bleeding has stopped, we are seeing good things happening, and we are seeing true organic growth through new projects, new clients and new opportunities,” he says. When a person named by Accounting Today as one of the “Top 100 Most Influential People” in the accounting profession for 13 consecutive years says, “good things are starting to happen,” it might well be time to gear up for a dynamic marketplace. Intuit put it best in its Intuit 2020 Report: “The next decade will be a period of rapid change and continuous churn for the accounting profession. The industry will exist in a state of permanent whitewater, requiring new levels of business agility and flexibility.”
“You have to continually reinvent yourself. We’re seeing firms increasingly trying to help their clients with all of their business and financial problems, whatever they may be, rather than sticking to the mindset that they’re just an accounting, tax, or audit firm,” says Koltin. “We’re entering an era of differentiation where leaders clearly have to be focused on taking the trusted business advisor role to the next level.” The emerging trend identified by the AICPA’s CPA Horizons 2025 Report is for CPAs to “extend CPA offerings beyond traditional services” by positioning themselves as “strategic partners who can bring together experts from different specialties to solve problems.” Calling on the expertise of specialists to assist in servicing all of a client’s needs is now the norm, especially for small firms, because it’s “pretty tough to be everything to everybody anymore,” says Currier. “If you’re going to remain a small firm, you’re going to have to collaborate with other professionals because the larger firms have that expertise in-house and they’re going after the exact same clients.” As harsh as it sounds, “The biggest failure of a small firm is to try to be all things to all people. You simply can’t overstep your skill set,” says Bodtke, who sees positive business opportunities for those who realize this fact. “We used to feel that we owned our clients, but that’s not the case anymore. Local firms are opening up to other local firms, and the secretive non-disclosure mentality of, ‘If they find out who my clients are, they’ll steal them’ has gone away; it’s given way to more robust professionalism.” This newfound collaborative spirit is allowing firms to hone their expertise in specific target markets and in specialized areas rather than trying to keep their doors open as Jacks-of-all-trades. The CPA Horizons 2025 Report explains that specialization “offers CPAs the opportunity to increase their value to clients and employers through broader guidance and insight. Just as many CPAs today choose to work in specific areas—preparers, auditors, tax specialists, wealth managers and fraud examiners are just a few examples—specialized areas will grow.”
Firm Churn “The graying of the profession” is one factor really shaking things up—a shift Jim Bodtke, CPA, MSA, CEBS, president and founder of Bodtke & Stewart CPAs, feels will lead to dramatic changes in the marketplace. “Given the recent economy, no-one forecasts more than three to five years ahead because that’s just too far down the telescope to see anymore, and that’s a cause for concern,” he says. “Many firm leaders haven’t taken enough steps to replace themselves; a lot of firms are going to go out of business, not for lack of demand or profitability, but because of manpower.” “More than 50 percent of partners in local and regional firms are over the age of 55; it’s a ticking time bomb,” adds Koltin. “Do we have the next generation, the B Team of future leaders and partners to take over for the partners that are, and will be, retiring? Unfortunately, for probably half of the firms we consult to, the answer is no.” This troubling truth has Koltin predicting “massive consolidation of firms across the profession and continuing M&A activity year after year.” This trend, coupled with the resilient demand for CPA services, means that firm owners will be doing everything possible to increase their business values. “Their retirements count on it, and a lot of professionals are going to be looking to sell their practices to capture the greatest value before they need to retire; it’s their nest egg,” says John Currier, CPA of John W. Currier & Company Ltd. and immediate past chair of the Chicago Southland Chamber of Commerce. Bodtke sees this as a unique opportunity thanks to the very low interest rate environment we’re experiencing now and predictably into the near future. “Reasonable loans are very achievable,” he says, “and I think it’s a great time to be buying businesses or improving your business.” Of course, this raises an important question: “How are you going to grow the value of your business?” 40
Talent Wars The Crain’s Chicago Business article, “Who knew accountants could be so popular?” points out that everything from changes in business structures and increasing M&A activity, to navigating complex regulations/tax policy and wealth management/estate planning for Baby Boomers is increasing the demand for specialized CPAs. The article also states that surging demand is setting off a new recruiting rush at some notable Chicago accounting firms. McGladrey LLP expects to hire 300 to 500 people over the next five years, for example, and Deloitte has more than 700 positions to fill between its Chicago office and other locations. Ernst & Young LLP, too, is planning to recruit around 600 new graduates and experienced pros in 2013 alone. If there’s one bright spot in the nation’s labor market, it’s certainly in accounting. The U.S. Department of Labor’s Occupational Outlook Handbook, 2012-13 Edition predicts accountants and auditors will lead job growth with 190,700 new positions in the business and financial operations industry that’s forecast to grow by 1.2 million jobs from 2010 to 2020, and Yahoo! Education recently called accounting and auditing “red hot” careers.
The trouble is that there simply isn’t enough talent to go around. “There’s definitely a shortage of talent out there, and the price of skilled talent is being driven up,” says Currier. “Plus, trying to find recruits with the right personality to fit in with the firm’s culture is always hard.” Bodtke attributes much of the recruiting challenge to the fact that there are fewer young people entering the profession. As a professor of accounting at Illinois’ Bradley University and a visiting professor at Minnesota’s St. Cloud State University, he’s finding that “more young people are looking at industry as the place they want to land instead of public accounting. Nobody wants to be a ‘stodgy’ mid-tier CPA partner; everybody wants to be the CFO of Hot & Glam Inc. with an IPO ready to go and stock options.” What’s more, “A lot of talent hunkered down during the recession, and what we are seeing since the second half of 2012 is some attrition of staff; they’re either taking opportunities in private industry or defecting to other accounting firms,” says Koltin. “What this tells firm leadership is that they need to get back to the basics if they want to win the widening war for talent. That means focusing on being an employer of choice, a best place to work, and paying best wages.”
Retain & Recruit Accepting the fact that the profession is working through a generational shift and embracing changes in workplace culture are crucial if firm recruiting and retention efforts are to succeed now and into the future. “We’re going to have to change as employers because the next generations are not going to change for us, and they don’t have to. They aren’t going to give up what they want in their lifestyle, and money is not a motivator because money is assumed to them,” stresses Bodtke. “Firms need to understand their culture—they don’t mind working 35 hours a week and getting paid for that; they’re not going to work 60 hours while getting paid for 40 like it used to be.” “I’m looking for evolution, not a revolution; there’s got to be a meeting in the middle,” says Koltin. “Firms can have a family friendly environment with more flexibility, where professionals don’t have to always be in the office or kill themselves during tax season, where there’s appreciation for work well done and there’s camaraderie.” After all, isn’t getting a superstar part-time a lot better than no one full-time? Firms will have to use those perks as differentiators, because traditional benefits just won’t cut it anymore. “If you want average talent, these things don’t apply, but if you want to win the war on talent, and you want to recruit and retain the best and brightest talent, there are three fundamentals you need to provide,” says Koltin. “First, you have to be able to pay top wage; a lot of firms want top talent but they just can’t afford it. Second, firms need to keep growing to offer career advancement and professional growth; high-profit, high-growth firms have a huge advantage over other firms. Third is training: Employees want more than just a financial investment; they want customized training based on the talents needed to advance in the firm and continually self-improve.”
Tech Targets Technology is one thing making it easier for firms to self-improve. Thanks to the Internet and constant, rapid advancement in hardware and software offerings, all of a firm’s resources and documents can be available at the touch of a button anytime, anywhere.
“Technology has been the biggest game-changer over the last decade; the advent of the microchip forever changed and will continue to change the accounting profession,” says Koltin. “You don’t have to have the bricks and mortar; you don’t have to physically be in the office anymore.” The truth is, people don’t want to come to the office, says Bodtke. “Half of our employees work onsite and half work offsite. The realestate-centric firm model isn’t going to survive very long.” The same is true for clients. “New companies are using the Internet a lot more and don’t necessarily need traditional accounting firm services,” says Currier. “They need more real-time, cloudbased systems and services. I see a growing client base coming from young people starting up Internet-based businesses.” The challenge for most firms and professionals is keeping up with changes in technology and deciding which devices, hardware and services are needed to be relevant to current and future clients. Our experts say the best choice is to “hire really good technology consultants” to help to navigate the challenging areas. However, Koltin warns, “If you’re not going to do what’s needed to support or understand the technology, then you’re just wasting money.” Currier, in fact, has “someone working on growing our website and online reputation, making sure we’re involved in Google Local, Google Plus, Facebook, Twitter, Yelp and all of those other things to ensure our image is positive and prominent when people search for us.” And Bodtke explains that his firm sets aside “a budget for technology and independent consultants to assist us in achieving our objectives. Security alone is a huge regulatory issue that you shouldn’t attempt to do on your own. The cost of a data breach is huge; it will be an expensive lesson for the unprepared.”
Regulations Overload As for the regulatory environment as a whole, the outlook is mixed. Bodtke thinks we have enough regulations on the books, Currier expects only more to come at the federal and state levels, and Koltin simply thinks it all comes in cycles. “Regulatory and standards overload has been part of the industry’s vocabulary since I joined the profession 32 years ago,” he says. “Regulations come until there’s a push back from professionals saying, ‘Enough already, you’re choking us.’ I think that’s the feeling today. I think most regulation will be on a holding pattern until firms have a chance to breathe and return to pre-recession levels along with the world economies.” Most importantly of all, however, CPAs can’t lose sight of what’s necessary to run their firms successfully. “If you don’t grow, you die, and unfortunately you die a slow death. You have to be about continuous growth and reinvention, winning the war on talent, and being passionate about profitability. So many firms are busy being busy that they lose track of the basic principles of what it takes to have a successful business year after year,” says Koltin. “In the simple, yet profound words of Carl George, former managing partner and CEO of Clifton Gunderson LLP, ‘The vision of CPA firms has to be on two things and two things only: Take care of your clients, and take care of your people; everything else will follow.’” icpas.org/insight.htm | SPRING 2013
ETHICAL? Six strategies for navigating moral quandaries in the workplace and keeping your reputation intact. By Clare Fitzgerald
Fitting in with colleagues. Impressing supervisors. Proving your worth. It’s the same laundry list of must-dos for young finance pros only just beginning their careers. Abstract concepts like ethics and values may not be quite as top of mind. So when you find yourself in the middle of an ethical dilemma,
what do you do?
rofessionals at every stage of their careers face the temptation to cut corners, fudge details or simply look the other way. But with their low-man-on-the-totem-pole status, young professionals can be particularly at risk of making a bad decision—or misinterpreting someone else’s actions. That’s why, in addition to paying close attention to an organization’s ethics guidelines and staying up-to-date with professional ethics training requirements, young finance pros in the public and private sectors also need to take the time to reflect on their personal values and mentally prepare for how they will navigate—or avoid altogether—the types of sticky situations that could negatively impact the profession, their organizations and their careers. “Most people, most of the time, want to do the right thing,” says C.K. Gunsalus, author of The Young Professional’s Survival Guide and director of the National Center for Professional and Research Ethics, an online ethics resource developed by the University of Illinois Coordinated Science Laboratory in Urbana. “Most people really care about being known as a person of integrity. But meaning well and being a good person aren’t always enough.” These six strategies will help you make the jump from meaning well to doing right.
icpas.org/insight.htm | SPRING 2013
1. Know thyself Classes can only get you so far. At some point, you’ll need to depend on your own moral code to navigate an ethical dilemma, which is why ethics experts say that identifying your values early on is so important. “Values are deeply personal as well as professional,” explains Gunsalus. “Take some time at the beginning of your career to think about what really matters to you. Ask yourself, ‘Who do I want to be?’” Frank Bucaro, a Bartlett, Ill.-based ethics and values leadership consultant, explains that, “You need to agonize over these things. Being ethical often means making a tough decision with a payout in the long run, versus an easy decision with a payout up front. Know where your line in the sand falls. Evaluate what’s acceptable and what’s not within your own values system. That will give you your ethical guidelines.” Once you’ve identified your values, Gunsalus suggests talking about them early and often. “You need to be able to articulate where you stand and what values you hold dear,” she says. “Talk about your values and ethics in your very first interview. You don’t have to sound holier than thou. Just find ways to talk about your values in your own voice. You’ll get labeled as an ethical person.” To stay true to your values, Gunsalus recommends avoiding the “just this once” tendency. “You’ll always be able to find a way to rationalize something,” she says. “Once always leads to more. There’s never going to come a day when you say, ‘I have enough; now I can be ethical.’ Start as you mean to go on.” Perhaps the simplest strategy for staying on the ethical up-andup, however, is to ask yourself what your mom would think. “People tend to complicate ethics,” says Lauren Bloom, a Springfield, Va.-based business ethics consultant and author of Elegant Ethical Solutions. “Ethical dilemmas are usually quite simple to figure out. If you had to tell your mother what you were doing, what would she say? It sounds very pedestrian, but it’s true. People try to be too clever, and that’s where they get into trouble.”
2. Anticipate questionable scenarios The potential for inappropriate workplace conduct will always exist despite tighter regulations and the stricter corporate environment in place since the collapse of Enron and Arthur Andersen 12 years ago. After all, there’s no shortage of pressures, temptations and emotions that can contribute to bad decisions and test even the most ethically inclined people. Monetary restrictions, time constraints, ambition, fear, embarrassment and the desire to please are just a few of the trials we face. Bloom warns young professionals to prepare for situations that raise red flags, such as feeling railroaded to do something quickly or being promised something they know they’re not entitled to. Professional ethics training can prepare CPAs for accounting and auditing-specific ethical standards relating to accepting gifts, stock ownership, conflicts of interest and maintaining independence. But other situations undoubtedly will arise where you see or are asked to do something that feels inappropriate—whether it’s seeing a mentor inflate a business expense, hearing about a ques44
tionable relationship or sketchy deal, or being asked to doctor a document for a colleague. Gunsalus suggests discussing hypothetical situations such as these with friends. “Lots of things can come up,” she says. “Learn about how things can go wrong. Think about the scenarios you might encounter and how you would handle them.” Knowing what you might say if caught off-guard—and how you should say it—is crucial. Gunsalus suggests preparing “personal scripts.” “Develop some thoughts about what you might say. There are ways to say no without sounding sanctimonious,” she says, noting that young professionals can find ways to laugh off a request, change the subject or simply say they’re afraid of getting caught or need to look it up and get back to the person. “At the very least, have a personal script for buying time.”
3. Get the facts Although it’s important to prepare a response, Bloom also warns that you need to tread very carefully and watch your tone when bringing up an ethical concern. “A lot of times young professionals think they have an ethical dilemma when they really don’t,” she says. “Take a deep breath and make sure you know what you’re being asked to do and why. Avoid the temptation to get up on your high horse.” Bucaro agrees. “If you see something questionable, ask yourself if the behavior is acceptable. Don’t immediately throw out accusations, because 9 times out of 10, actions are misinterpreted. Newbies rarely have all the information they need. Seek out more knowledge on the subject.” Asking questions is critical, says Bucaro, but ask them diplomatically. “There are ways to ask questions without being offensive or unprofessional,” he says, and suggests using phrasing such as, “I need your wisdom here,” “What am I missing?” and “I think I’m a little confused.” “Find out what you don’t know before you pass judgment,” he adds. “A lot of times there is a good explanation.” It’s also vital to seek out people you can trust. “Look for mentors and seasoned veterans you can go to if you have a concern. Think ahead about who you might go to when you need guidance, and work to build trust and solid relationships with those people,” says Bloom. “Find people throughout the organization who you can go to and ask ‘What do I do?’”
4. Consider the consequences “Be aware that unethical behavior costs the time and resources of others,” says Gunsalus. “Young professionals need to consider who else is going to be affected. Think strategically about the consequences of any questionable decision or action.” Bucaro likens unintended consequences to the waves that radiate from a rock thrown in a pond. “The bigger the rock, the bigger the waves,” he says. “People need to think about their actions when the rock is in their hands, before they throw it. You never make a decision in isolation. It’s always going to affect other people.”
And workplace wrongdoing can creep into your personal life as well, affecting health, sleep, family, relationships and overall career prospects, a phenomenon that Bucaro calls the “moral spiral.” Be aware of the repercussions on your organization. Those young professionals working in accounting firms need to be especially aware of independence guidelines. “There’s no wiggle room on anything that impairs a firm’s independence,” says Chris Rabin, director of quality assurance at Sikich LLP in Naperville, Ill. “Mistakes in that area could cause the firm to have to resign from a client engagement. An honest mistake can have fairly severe consequences for the firm.”
5. Evaluate the tone at the top Although an organization’s ethical tone is typically set at the top, it’s the young professional’s job to evaluate whether that tone matches his or her personal values and whether the organization actually functions according to its ethical codes. “See if the organization’s actions and informal culture match the words on the wall,” Gunsalus advises. “Remember, Enron had a terrific code of conduct. You need to watch to see if management is actually walking the talk.” Look for proof of the organization’s commitment to ethical codes of conduct. At Sikich, for example, Rabin’s position is solely dedicated to quality control and making sure the firm and its staff are compliant with professional guidelines and ethics. Depending on an organization’s size and sector, it may or may not have staff dedicated to ethics, but as Bucaro notes, organizations should display their ethical convictions in a visible way, whether it’s showing that everybody plays by the same rules or by swiftly disciplining or removing staff members who cross ethical lines. “Young people starting out in their careers should focus on what they truly believe internally and look at how that matches the company’s values system,” says Bucaro. “Look for symmetry between what you believe and what the organization that hired you believes.” Also remember to stay current, since “Societal values and public standards of ethics change over time,” says Bloom. To keep up with those changes, she recommends periodic reviews of professional standards, taking more than the minimum requirements for ethics training, using social networks to find forums and groups that discuss ethical issues, and reading up on ethics issues in the news.
6. Be proactive If you do find yourself caught in an ethical bind, the best thing to do is proactively seek out a path to correct or address the problem. According to Bloom, a good strategy is to simply suggest an alternative that you feel more comfortable with. And if something goes wrong, and you’re responsible, then deal with it immediately. “Don’t let time pass,” says Bucaro. “Be proactive about informing your superiors. Things can often be rectified, but they need to be brought to the organization’s attention immediately. Remember, your reputation and your company’s reputation is at stake.”
Take Stock Identifying your values isn’t always easy, but selfassessment tools like values inventories can be helpful, says Gunsalus. Several free, online worksheets can help to clarify and prioritize your values and determine whether your work life and career goals match your personal principles. Here are just a few: n lifevaluesinventory.org n careerperfect.com/content/ insight-values-inventory/ n appliedpsychologyresources.com n whatsnext.com/content/life-valuesself-assessment-test
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The CPA Endowment Fund of Illinois thanks our generous donors for their annual contribution or pledge. The support of these donors makes a tremendous impact on the lives of hundreds of future CPAs every year with support for tuition, textbooks, the CPA Exam and more. For more information on how you can lend your support visit www.icpas.org/annualfund.htm. April 1, 2012-March 31, 2013
President’s Pavers $30,000 and up Ernst & Young LLP
$20,000-$29,999 Deloitte LLP Illinois CPA Society KPMG LLP
$10,000-$19,999 Loop Capital Edilberto and Carmelita Ortiz
$5,000-$9,999 Brian Hunt Sikich LLP Ernest Wish
$1,000-$4,999 Alverin M. Cornell Foundation Therese Bobek BP Foundation Daniel Cadigan Cameron Clark CNH America LLC Lawrena Colombo Joseph D'Amico Wayne Ebersberger Arthur Farber William Flowers Follett Corporation Carl George William Gifford Lee Gould Sharon Gregor Thomas Havey John Hepp Sheldon Holzman Kenneth and Jacqueline Hull ICPAS O'Hare Chapter ICPAS Women's Executive Committee Leadership Breakfast Proceeds ICPAS Young Professionals Group Fundraiser Proceeds James and Ellen Jones
Kenton Klaus Anne Kohler David Landsittel Rocco and Roxanne Martino James Maurer Lester McKeever Belverd Needles Ann Marie and Michael Norsk Beth Pagnotta Floyd Perkins Marian Powers Bonifacio and Leilani Rodrigo J. Bradley Sargent Michelle Scheffki Ronald Sonenthal Scott Steffens Duane Suits Myra Swick Richard Thompson Vincent Villinski Mary Ann Webb Ray Whittington Cheryl Wilson Nancy and Lawrence Wojcik Donna Zarcone
Amy Egelston Eileen Felson Mary Fuller Russell Holmgren James Johnston Trudie Kanter Wendy Kelly Jill Loftus Louis Margner Krista McMasters Ilaria Mocciaro Elizabeth Murphy Annette O’Connor Daniel Rahill Jennifer Roan Rockoff, Harlan, Rasof Ltd. Elizabeth Roghair Francis Rosczyk Rozovics & Wojcicki, P.C. Danny Sardon Mark Schultz Gerard Swick Monica Walker Connie Watkins Ingeborg Wegner Thomas Winkler Thomas Zeller Richard Ziegler
Up to $249 $500-$999 Baker Tilly Search & Staffing Kath Carter Gary Fish Kathryn Garlow William Graf Lisa Hartkopf Margaret Hunn Jeffrey Krol Kathryn McAlpine Sara Mikuta Erwin Ortiz Bhaveshri Patel Gilda Priebe Kimberly Rice John Rogers Joyce Simon Marites Sy
$250-$499 Anonymous Linda Abernethy Helen Barrick Barbara Dennison
Anonymous (15) Ernest and Carol Achtien Anne Adams Kevin Ake Angela Allen Jacqueline Babb Benchmark Aspen & Associates, Ltd. Leanne Berry Rona Bezman Ann Biermann Gerald Brighton Genevieve Burns Benjamin Burstyn M. David Cain Martrice Caldwell Maryanne Calistro Kathleen Candela Margaret Cartier Gerald Catalano Jennifer Ciszewski Susan Coats Corbett, Duncan & Hubly Thomas Curatolo
Mark Davis Carla Denison-Bickett Sharon Ferrin Anne Fisher James Forhan Linda Forman Zachary Fortsch Judith Freeman Paula Galbraith Judith Garber Sandra Gentry Carolyn Gomez Silviano Gomez Robert Grottke Melanie Hacket Torrence Hammond Kathy Hannan Edward Hannon Christine Hanover Noel Hastalis Patsy Hasty Harry Heifeiz Kathy Herder Frank Hladik Kathy Horton Cynthia Hunt Paul Inserra Kenyetta Jackson John Kaiser Kathleen Kedrowski Gary Kemnitz Jason Klein Jeffrey Korman Constance Kravitz Lloyd Kurkowski Megan Lee Leif Jensen & Associates Ltd. Sara Leone Stephen Levin Helema Lewis Connie Lindsey Michael Maffei Carole Maguire Carlton Marcyan Randy Markowitz Linda Martin Gail Mathews Rita McConville Natalie McHugh Renee Messing Terry Michaels Lawrence Mish Charlotte Montgomery Edward and Susan Nadler
Kari Natale Teresa Nauman William O'Malley Edward Odmark Eileen Ouska Michael Pakter Stephen Panfil James Perkins Eileen Phelan Michael Pierce Ernest Potter Kathryn Preston Denise Price Prigge, Simon, & Hedrick LLC James Quaid Roy Raemer Christopher Randles Kathy Reinhardt Joseph Rieber, CPA, Ltd. Deborah Ringer Joseph Rivkin Starr Robinson Susan Rojek Stella Marie Santos Sasser Family Holdings Inc. Laura Schimek Barbara Sloan Christine Smith Chris Sokolowski Myron Solomon Laurence Sophian Robert Soule Elizabeth Stanier Carrie Stanton Reva Steinberg John Stewart John Stuckey Susan Suchy Abigail Sullivan Mitsue Suzuki Steven Swan Kimberley Szalkus Kathryn Trebonsky Andrea and Scott Urban Nancy Wallace Chan-Yu Wang Michael Wenzel Jay Wilensky Laura Wilhelm Joseph Wisniewski Theresia Wolf-McKenzie Doyoung Yong Anthony Zordan Christiana Zouzias
Donors with a multi-year pledge are recognized for the full amount of their pledge in the first year and for the amount of their pledge installment paid in the remaining years of the pledge. Every attempt was made to acknowledge all donors who have given during this time period. If you note a discrepancy please call (312) 993-0407, ext. 290.
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10 Reasons Why You’ll Want to Be at This Event On May 31, we’re presenting Be Fearless, our ICPAS Young Professionals Leadership Conference at the Metropolitan Club, Willis Tower, Chicago. Here are my top 10 reasons why it’s an event not to be missed (top 11 if you count seeing me there!). 1. Take charge of your career: The theme of this event is how to lead fearlessly. That includes knowing how to deal with ethical gray areas, making work/life balance work for you, and navigating your way from junior staff to manager level. 2. Meet new people: This conference is about more than professional issues. It’s your chance to meet a group of like-minded young professionals, discuss what’s important to you, and even do lunch. 3. Gain skills you can apply right away: It’s a no-brainer. Making it in the leadership game means learning the right skills—soft skills, that is. This year’s presenters will give you the insights you need to master those communication hotspots. 4. Become more involved: This isn’t a sit-back-and-do-nothing kind of event. This is your chance to discuss hot topics and get engaged. 5. Increase your value at work: The things you learn about leadership at this conference and apply at work will get you noticed. You’ll shine! 6. Refresh your perspective: You may think that boosting your emotional intelligence is a far-off dream, or that a leadership position lies somewhere over the distant horizon. But that’s not necessarily so. 7. Build your network: Connections are everything in today’s business world. And although online connections are easy to make, it’s the face-to-face ones that people remember. 8. Invest in your future: The whole point of a leadership conference is to look to the future, and start working towards a welldefined goal—one where you’re in the corner office. 9. Learn to balance life and work: It’s top of everyone’s list of lofty objectives. And while you may think you won’t be able to strike that balance, there are ways to make it happen. 10. Have fun—it’s Friday! All work and no play...well, you know how it goes. You’ll have the chance to get to know your peers during the event, and after the event finishes at noon, we’re offering the option of signing up for a group lunch outing.
Want to know more? Check out our ad on page 23, visit www.icpas.org/fearless.htm, or call me, Sarah Haight, at 800.993.0407 ext. 275.
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Published on Apr 9, 2013
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