New Jersey CPA - September/October 2014 by New Jersey Society of CPAs

Magazine of the

New Jersey Society of Certified Public Accountants

Sept â&#x20AC;˘ Oct 2014

NJ Treasurer Gives Us a View from the Top

p. 18

Soft Skills Branding Yourself as a Leader Digital Soft Skills Developing Client Relationships Through Trust Managing Interpersonal Conflict

Traphagen Financial Group Congratulates the New Jersey Society of Certified Public Accountants’ CPA-List Award Recipients and our partners for practicing at the highest levels of accounting disciplines

James A. Lawrence, CPA, CCPS recognized for his expertise in Taxation

Christopher M. Chudyk, CPA, CITP recognized for his expertise in Technology

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September • October 2014

features

Ralph Albert Thomas, CGMA Chief Executive Officer & Executive Director rthomas@njscpa.org

Ellen C. McSherry, CGMA

Don Meyer

Director, Communications & Marketing dmeyer@njscpa.org

David Plaskow

Managing Editor dplaskow@njscpa.org

Jeanette L. Miller Editorial Assistant jmiller@njscpa.org

Janice M. Celeste Multimedia Specialist jceleste@njscpa.org

Editorial Advisory Board Daniel R. Arcuri, CPA Neil B. Becourtney, CPA Timothy A. Burley, CPA Salvatore A. Collemi, CPA Rebecca B. Fitzhugh, CPA Catherine Z. Horn, CPA Bernard M. Kiely, CPA Ryan J. Lapinski, CPA Gregory Levine, CPA Marcella LoCastro, CPA David A. Lopez, CPA Anthony F. Marone, CPA Marc D. Mintz, CPA Margaret Van Brunt, CPA

The New Jersey Society of Certified Public Accountants 425 Eagle Rock Avenue Roseland, NJ 07068-1723 973-226-4494 njscpa.org #njcpamag ReadNew NewJersey JerseyCPA Read CPA digital at digital at njscpa.org/newjerseycpa. njscpa.org/newjerseycpa.

Design/Production/Advertising Lionheart Publishing Inc. 506 Roswell Street, Suite 220 Marietta, GA 30060 President – John Llewellyn 770-431-0867 x209 llewellyn@lionhrtpub.com

Branding Yourself as a Leader Discover what personal branding is and the questions you need to ask yourself in order to brand yourself as a leader.

Chief Operating Officer emcsherry@njscpa.org

Digital Soft Skills Learn soft skill basics and nuances for a variety of digital media such as email, video conferencing, social media and more.

Developing Client Relationships Through Trust See how by carefully and properly cultivating relationships with your clients, you can turn them into referral-generating machines.

Managing Interpersonal Conflict Find out the best ways to diffuse potentially volatile situations in the workplace.

Close Up Choose Your (Buzz)Words Carefully

23 Tax Talk Preparing a SALT Study for Expanding Clients

News Briefs

25 Tech Center Don’t Be Afraid of the IT Help Desk

14 A&A Buzz Costly Accounting Missteps of Nonprofit Foundations

26 CPA-List

16 Best Practices What to Look for in a Marketing Director

42 Student Outlook Should You Be Paid for Your Internship?

18 Business & Industry Insights The NJ State Treasurer Gives Us a View from the Top

43 Legislative Views Legislative Happenings

20 Financial Planning The Tale of Two Financial Minds 21 Forensic File CLE Provider Opportunities for CPAs 22 Small/Sole Practitioner Selling Yourself to a Potential Buyer

44 Member Profile This CPA Gets a Kick Out of Coaching Society Pages CPE Offerings and Events, 36 Get Involved, 38 Member Benefits, 39 NJ State Board of Accountancy Report, 40 Classifieds, 41

New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue-Suite 100, Roseland, NJ 07068. Issue No. 47 Copyright © 2014 New Jersey Society of Certified Public Accountants. Annual membership dues includes $8 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues. Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723. The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.

Choose Your (Buzz)Words Carefully B y David P laskow, NJ SC PA Comm unications M anager

can honestly say I’ve finally reached the breaking point – or should I say the “tipping point” – when it comes to hearing and reading the amount of corporate-speak used in business on a daily basis. I suppose it sounds good and lends an air of professionalism. The first time I really gave it any thought was about 10 years ago when I heard the now-infamous “low-hanging fruit.” To be honest, I thought it was catchy and painted a picture – which all writers can appreciate. But corporate-speak has gotten to the point where it’s comically ubiquitous. Let me underscore this with a story. I have a friend in finance who works for a Fortune 500 corporation. Prior to a meeting one day, my friend’s colleague told him that at some point during the meeting he was going to both invent and insert some sort of corporate-speak – a bit of a sociology experiment if you will. About halfway through the meeting, during intense discussions of capital improvements, cost accounting and foreign exchange rates, this individual mentioned that the group was complicating the issues, that “we’re making the sauce too red here.” While the rest of the group appeared to have their minds’ blown by the analogy, my friend smiled and knew his colleague had just made good on his promise. In my capacity as managing editor of this fine publication, I receive many unsolicited communications about becoming an author. I’m grateful for their interest and can always use another good writer. However, there was one recent inquiry that took corporate-speak to a new level. “Dear Mr. Plaskow … My writing tends to be less 10,000-feet content and more street view in terms of its implementationspecific nature.” Now, I’ve heard of the 10,000-foot, 30,000-foot and even the spectacular 50,000-foot views all applied to programs and projects.

Dave''’s Top 10 Annoying Corporate Buzzwords

1. Sweat equity (sounds gross more than anything) 2. Organic growth (does anyone ever discuss inorganic growth?) 3. Bandwidth 4. Thinking outside the box (enough with this one already!) 5. Boil the ocean (too apocalyptic) 6. Granular (opposite of 30,000-foot view) 7. Mission critical (users secretly want to work for NASA) 8. Holistic approach 9. Best of breed (only permissible regarding the American Kennel Club) 10. Pain points I remember when the word “overview” was good enough. And between you and me, those heights sound pretty dangerous. But now I’m not even sure if I want the 10,000-foot view or the street view. Which one is better? I’m completely vexed. I needed to dig a little deeper as to the reasons why people use corporatespeak and if that’s a good or bad thing. So rather than “reaching out,” I emailed Montclair State University Professor Emeritus of Linguistics Dr. Alice F. Freed: “As a linguist, I feel the more creative language is, the better. ‘Group talk’ helps define the group, and certain terminology may be expected within the group. Corporate-speak isn’t necessarily good or bad; it really depends on the interpretation or judgment of the person leading the group.” That led me to get the perspective of someone in the C-suite – or what people used to call senior management. I contacted Paul Peterson, CPA, managing partner at Wiss & Company, and here’s what he had to say, “Buzzwords and jargon can mask real meaning. If they become part of your everyday vocabulary, no one is going to believe or trust what you have to say. It’s better to be real.” While language can be fun, you need to choose your plain-speak or

corporate-speak words carefully. If it sounds too pretentious and over-thetop, it probably is. So, if you’re having trouble arranging a meeting, just say it’s challenging or difficult; please don’t tell me it’s like herding cats.

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2014/15 Board of Trustees Executive Committee President – Brad E. Muniz, CPA President-Elect – Frank R. Boutillette, CPA Secretary – Edward I. Guttenplan, CPA Treasurer – John M. Szczomak, CPA Immediate Past President – Gerard Abbattista, CPA CEO & Executive Director – Ralph Albert Thomas, CGMA Trustees Sharon J. Bishop, CPA Leonard N. Brooks, CPA William A. Cadmus, CPA Joseph C. DiFalco, CPA Michael W. Gutwetter, CPA Robert P. Herman, CPA Sarah Krom, CPA Edward G. O’Connell, CPA William J. Ryan III, CPA Audrey J. Sherrick, CPA Lorenzo T. Vanore, CPA Joseph A. Zielinski, CPA

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NEWS

briefs

FASB Improves Financial Reporting of Repurchase Agreements

The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update No. 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures, which changes the accounting for repurchase-tomaturity transactions and repurchase financing arrangements. It also requires enhanced disclosures about repurchase agreements and other similar transactions. The new guidance aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. Going forward, these transactions would all be accounted for as secured borrowings. The guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement, which has resulted in outcomes referred to as off-balance-sheet accounting. The new guidance also brings U.S. Generally Accepted Accounting Principles (U.S. GAAP) into greater alignment with International Financial Reporting Standards (IFRS) for repurchase-to-maturity transactions. The update requires a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. The

Ellen C. McSherry, COO of the New Jersey Society of CPAs, was honored by Executive Women of New Jersey at its “Salute to the Policy Makers” 2014 Awards Dinner in May. Ralph Albert Thomas, NJSCPA CEO & Executive Director, was on hand to present the award to McSherry.

update also requires expanded disclosures about the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings.

Digital Accountability and Transparency Act Becomes Law

President Barack Obama signed the Digital Accountability and Transparency Act (DATA Act) in May, which calls for the disclosure of direct federal agency expenditures and will link federal contract, loan and grant spending information to federal programs, thereby enabling taxpayers and policy makers to track federal spending more effectively. It requires the U.S. Department of the Treasury and the Office of Management and Budget to adopt a nonproprietary, platform-independent data standard, such as eXtensible Business Reporting Language (XBRL), for the reporting of federal budget and spending information. Use of a data standard like XBRL will provide consistent, reliable and searchable

2014 Special Olympics USA Games in NJ by the Numbers 117,500,000 Expected influx of income to NJ in dollars 2,000,000 Dollar amount the state of NJ allocated to the event 1968

Year of the first Special Olympics Games

269 Number of athletes from Team NJ 16

Number of sports at the games

government-wide spending data that is displayed on usaspending.gov.

PCAOB Releases Staff Guidance on Economic Analysis in PCAOB Standard Setting

The Public Company Accounting Oversight Board (PCAOB) released Staff Guidance on Economic Analysis in PCAOB Standard Setting which sets forth four main elements of economic analysis for setting auditing and related professional practice standards (1) describing the need for a rule; (2) developing a baseline for measuring the effects of a rule; (3) considering reasonable alternatives to the rule; and (4) analyzing the economic impacts of the rule, and rule alternatives, including the benefits and costs. Visit pcaobus.org to learn more.

IRS Enrolled Agents Can Prepare and File NJ Transfer Inheritance Tax Returns

The New Jersey Judiciary’s Committee on the Unauthorized Practice of Law issued Opinion 51 wherein it found that it is in the public’s interest to permit enrolled agents licensed by the Internal Revenue Service (IRS) to prepare and file New Jersey transfer inheritance tax returns on behalf of clients. In reaching its recent opinion, the committee reviewed the requirements necessary for an enrolled agent to obtain and maintain a license from the IRS and found that enrolled agents are capable of filing a NJ transfer inheritance tax return and, as long as enrolled agents follow the

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same client notification requirements that New Jersey CPAs are required to follow under N.J.A.C. 18:26-12.2, the public interest is protected. Per N.J.A.C. 18:26-12.2(a)1.iv, before beginning work on a New Jersey transfer inheritance tax return, CPAs, and now enrolled agents, must notify the client in writing that “review of the return by a qualified attorney may be desirable because of the possible application of legal principles to the preparation of the tax return.” A copy of the properly executed notification must be filed with the transfer inheritance tax return. For more information, visit irs.gov/ tax-professionals/enrolled-agents.

IASB and FASB Issue Revenue Recognition Standard

The International Accounting Standards Board (IASB) and the FASB have issued a converged standard on the recognition of revenue from contracts with customers. The standard will improve the financial reporting of revenue and improve comparability of the top line in financial statements globally. The boards have developed new, fully converged requirements for the recognition of revenue in both IFRS and U.S. GAAP – providing substantial enhancements to the quality and

consistency of how revenue is reported while also improving comparability in the financial statements of companies reporting using IFRS and U.S. GAAP. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements. Visit fasb.org.

for the auditor’s evaluation of a company’s identification of, accounting for, and disclosure of transactions and relationships between a company and its related parties. The new standard supersedes the board’s interim auditing standard, AU Sec. 334, Related Parties. The amendments regarding significant unusual transactions include specific audit procedures that are designed to improve the auditor’s identification and evaluation of such transactions and to enhance the auditor’s understanding of their business purposes. The new standard and amendments will be effective for audits of financial statements for fiscal years beginning on or after December 15, 2014.

PCAOB Adopts Auditing Standard No. 18, Related Parties

FASB Seeks to Simplify Accounting Standards

The PCAOB adopted a new auditing standard and amendments to other auditing standards to strengthen auditor performance requirements in three critical areas of the audit: related-party transactions, significant unusual transactions, and a company’s financial relationships and transactions with its executive officers. Auditing Standard No. 18, Related Parties, requires specific audit procedures

The FASB has added two short-term projects to its agenda to simplify U.S. GAAP: (1) simplifying the measurement of inventory; and (2) simplifying income statement presentation by eliminating extraordinary items. Stakeholders who have suggestions and potential solutions to simplify existing GAAP for all public companies, private companies, not-for-profit organizations and employee benefit plans can email their suggestions to fasbcomments@fasb.org.

njscpa.org Spotlight

Time to Update Your Profile

Member Activity Thanks to the following NJSCPA members who were the most active Connect users during the first half of 2014: 1. Amy Lowenstein, CPA – Amy Lowenstein, CPA 2. Howard J. Bookbinder, CPA – Howard J. Bookbinder, CPA 3. Tony Novak, CPA 4. Steven B. Shaiman, CPA – Steven B. Shaiman, CPA 5. Kenneth Heaslip, CPA – Loscalzo Associates, Ltd. 6. Edward Mendlowitz, CPA – WithumSmith+Brown 7. F red Bachmann, CPA – Giordano, Cohen, Fastiggi, Luciano & Co., P.A. 8. Gary Feinman, CPA – Gary Feinman, CPA 9. Howard Kutcher, CPA – Kutcher Tax Careers, Inc. 10. William A. McGovern, CPA – William A. McGovern, CPA

Have you looked at your profile on Connect, the New Jersey Society of CPAs online community, lately? As with LinkedIn, it’s important to periodically review and update your Connect profile as your career progresses. Equally as important is uploading a profile photo. Not having a photo on your social networking profiles is like attending an event with a paper bag over your head. Here’s how to update your Connect profile and photo: 1. Go to njscpa.org/connect and login. 2. Click on the Profile link in the upper right corner. 3. Review each section of the profile. To edit a section, click the arrow to the right of the section. 4. If you already have an up-to-date profile on LinkedIn, there’s a tool available for you to import sections of your LinkedIn profile into your Connect profile. 5. To add a profile photo, click the arrow above the default profile photo and then click change picture. Click Browse to find the photo on your computer and then click Upload.

Learn More Want to learn how to use all of Connect’s features? Attend our free webinar on Thursday, November 6, 2:00-3:15pm. Register at njscpa.org/catalog.

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Branding Yourself as a Leader What do you think of when you hear the names Warren Buffett (financial wiz?), Bill Gates (tech icon?), and Steve Jobs (marketing guru?). You hear those names and they almost paint a picture in your head of what they and their organizations are all about. That’s the essence of personal branding.

By Paul L. Peterson, CPA Wiss & Company LLP

The term “personal branding” dates back to the mid-1990s and describes the process by which individuals differentiate themselves by identifying and articulating their unique value propositions, whether professional or personal, and then leveraging them across platforms with a consistent message and image to achieve a specific goal. As such, individuals can enhance their recognition as experts in their fields, establish reputation and credibility, advance their careers and build self-confidence. Branding yourself as a leader is not about self-promotion and showcasing your achievements and success stories. Your personal brand represents the value you consistently deliver to those with whom you regularly interact – co-workers, clients, media, vendors, the public and others. It is the sum of your experience, skills, training and personality that you convey to others that brands you as a leader. Your personal leadership brand is defined by your leadership objectives and how you address challenges and

position yourself in each situation. Your approach to leadership greatly influences the performance and productivity in the workplace. Developing your brand requires honest introspection. The first step to branding yourself as a leader is to ask yourself these key questions: • What results are important for you to achieve for the organization over the next year? Create a concise list of very specific goals and identify the clear results you hope to achieve, with a focus on preserving the interests of key stakeholders (clients, employees). Take into account team dynamics. Do you have the right people in place? Does your team believe in the vision, and will it rally behind it? • What do you value above all else? What are you delegating to overcome? How can you use your strengths to help motivate others? • What do you want to be known for? What do you want the firm to stand for? Any leader in the firm should think of himself or herself as an extension of the firm’s brand. Basic leadership qualities must include honesty, transparency, ethical behavior and authenticity. Bring these values and core beliefs to life, both within the corporate culture and out to your clients. Knowing the specific values that are most important for your organization allows you to encourage your team to live up to these standards. • How would you define your leadership style? A leader needs to

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put the interests of the organization and stakeholders before his or her personal ambition. He or she must have the ability to inspire and make the team feel invested in the accomplishments of the firm and to generate enthusiasm. The goal should be to work to create sustainable success that does not require your constant presence and intervention or guidance. This means that your leadership brand should be tied to developing exceptional managers with distinct talents who are focused on fulfilling clients’ expectations. It means making a commitment to lifelong learning and the promotion of your employees – whether at your firm or somewhere else – and building the skills they need to be effective now and in the future. Part of your leadership brand should include inspiring your employees to consistently make good on the firm’s promises. This means holding yourself to the highest standards when it comes to being a great role model and mentor and leading by example.

• How do you navigate challenges? More importantly, how can you help others around you navigate challenges? Every firm experiences times where the team is deeply mired in the day-to-day tasks. There are times when morale is low and energy levels are fading. As a leader, you need to appreciate that the work has to get done and recognize the dedication of the team. Appreciating the hard work is the first step in keeping spirits up. Knowing what type of leader you want to become and what you want to achieve is important, but you need to be able to clearly describe your vision to focus the firm on implementing the right strategy. If you are not effective at communicating your vision, your team won’t be working toward the same goal. How you communicate energizes your leadership brand into thoughts and action and is essential to an effective personal leadership brand. Conviction, passion, authenticity and transparency are essential to gaining commitment.

A brand is a promise, and you have to live it. Once you’ve thought about your personal leadership brand, you must continually ask yourself if you are living it. How are you living up to the goals and standards you have defined? Examine your interactions and approach to situations and have the flexibility to make changes to bring things into alignment. It is also important for leaders to be approachable and open to feedback from people they trust. The people you trust will ensure that you are living your leadership brand. Don’t take yourself too seriously, but take your personal brand very seriously. Be authentic and don’t fake it. Show your passion, fight for what you know is right and hold the needs of the firm and the development of the people within the firm above all else when making decisions. Paul L. Peterson, CPA, M.B.A., is the managing partner for Wiss & Company LLP. He is a member of the New Jersey Society of CPAs. Contact him at ppeterson@wiss.com.

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Digital Soft Skills As channels and styles of communication have evolved, the principles remain the same: It’s about connection, not just output. Despite the illusion of being more connected than ever before, quality interpersonal relationships are challenging to create and maintain without being in the same room. Intermediated communication technologies – telephone, email, texting, chat, videoconferencing, webinars and social media – require an extra set of soft skills to generate those relationships. The following are a few suggestions for converting face-to-face soft skills into those effective in digital channels. Strategy

By Jaime Campbell, CPA, and David Campbell Tier One Services, LLC

The purposes for digital communication in our profession always boil down to delivering service and/or building influence. Get clear on your mission with each channel that you use. In your endeavors with either one, building trust is key. One entrepreneur writes: “Across a virtual team, colleagues develop trust very differently [than they would in face-to-face environments] through reliability, consistency and responsiveness.” This applies much more broadly than just to members of a professional team. It includes any and all relationships that require trust. Let’s examine a few digital channels and how to use soft skills in those channels to develop trust through reliability, consistency and responsiveness in delivering service and building influence.

Digital Channels

Email and Texting – Responsiveness is key. Use these tools for quick, brief

exchanges, not manifestos. Pick up the phone if something is still unresolved after two or three exchanges. Translation: How long would you shout to someone in another room before just going in there? Chat – Set the expectation for responsiveness from the start. Whether you’re using Skype, Lync or some other medium with a status indicator, use it to show when you’re available and when you’re busy or have stepped away. Translation: You wouldn’t want to speak to an empty room thinking that someone is standing there. Digital Work – Consistency is the winner here. Everyone in the organization needs to use a consistent naming convention and filing convention. Don’t store files on your local machine if you work in a team environment. And if you use digital tools that are meant to convey real-time data, like workflows and calendars, keep them updated contemporaneously. Translation: Offices that have gone

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• Include your photo in your online accounts to increase the feeling of being connected.

Emotions and Digital Media

• When discussing something that could be emotional in nature, use a medium that most facilitates the human presence. Choose a video call over email. Choose a phone call over texting. • Be fully yourself while being professional. Laugh. Be expressive. • Deliver as full a communication as possible for your target audience. Interjections (Ha! Ugh! Hooray!) and bracketed body language <chuckle> <sigh> are effective if they are authentic and appropriate for the audience.

paperless are finally rid of the periodic query, “Has anyone seen the XYZ file?” Store digital files such that others can efficiently find them. Social Media – Reliability is the shining star for social media, which is about influence. Deliver your social media posts with a frequency such that your audience will come to expect your communication, but not experience information overload. In order to experience connectedness, you need to first be clear on your answers to these questions: What do you want your professional future to look like? Who do you need in order to create that future? What do they need to count on you for in order to see how you can be an asset to them? Are they using LinkedIn, Facebook or Twitter? Go forth and deliver on that reliably, and enjoy the rewards. Remember that the harvest is seldom in the same season as the planting. Translation: Do you enjoy listening to someone who talks at you nonstop? On the other side of the spectrum, how often do you think about the person in the office who never says a word? The key is to remember that your social media connections are people on Earth, not abstract entities in cyberspace. Share thoughts, experiences, questions, resources,

invitations and opportunities deliberately and thoughtfully. Invite interaction. Don’t post articles without a personal note inviting them to weigh in or highlighting why readers might find it compelling. Translation: Would you shout out the headline of an article to a roomful of people and then stand quietly?

Digital Soft Skill Basics

• Don’t use all caps or all lower case for one-to-many communications. • Choose quality over quantity of messages and connections. • Follow-up timely. • Be wary of auto correct before you send a message.

Nuances

• When a public exchange narrows between you and one other person to work out a specific issue, move the discussion to a private communication channel. • Focus your message for the digital environment in which you’re posting. • Communicate in a way that makes sense for your audience so it is thinking about your quality content, not your writing style. • If you have a criticism of someone, do it privately and verbally, not written or in a public forum. • Watch the length of your messages.

Video

• Create an environment free of auditory or visual interruptions. • Make sure that your lighting works for you and that your webcam, microphone and speaker transmit clearly. • Consider a physical screen or a digital green screen behind you if you’re not working in a professional-looking environment. • Even if you work from home, dress professionally during a professional video call. • Look at your webcam, not your screen. • Move naturally instead of sitting stiffly, and make sure that you stay on camera. Your communication includes much more than verbal or written content; it showcases who you are. So translate your soft skills into this digital channel and maximize both your effectiveness and your enjoyment. See Jaime expand on digital soft skills at njscpa.org/newjerseycpa/ sepoct14. Jaime Campbell, CPA, CGMA, M.B.A., and David Campbell are the principals of Tier One Services, LLC. Jaime is a member of the New Jersey Society of CPAs Technology Interest Group. Contact the authors at 704-837-0185.

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Developing Client Relationships

Through Trust

If you think your clients find you through your advertising or online marketing, you’re likely mistaken. According to a 2013 study of more than 700 companies conducted by Hinge Marketing, nearly 87 percent of businesses found their CPAs through referrals from a friend or business associate. Less than 10 percent said they found their CPAs through traditional advertising or marketing.

By Theodore S. Byer, CPA Smolin Lupin & Co., P.A.

The study’s findings likely confirm what many CPAs already know: Building and maintaining quality relationships with clients is critical to success. Your clients aren’t just sources of revenue; they’re also the most effective marketing tool at your disposal. By carefully cultivating powerful relationships with your clients, you can ensure their loyalty while also turning them into referralgenerating machines. Of course, the question for many CPAs is exactly how to do that. It’s often hard to know how and when to transition into a more personal relationship.

All Relationships Start with Trust

Before you can develop a strong business relationship with a client, you first have to establish a strong personal relationship. These relationships often start with trust. If clients can’t trust you in professional dealings or consultations, they’re unlikely to develop a personal relationship with you or hold you top-of-mind when giving referrals. In fact, if a client doesn’t trust you, he or she probably

won’t be your client for very long. One of the best ways to build trust is to approach every conversation with an honest and straightforward mindset. Give clear and concise answers, and don’t try to provide information that you’re not clear on. One of my colleagues says that his favorite words to say in client meetings are, “I don’t know.” Why? When you tell clients, “I don’t know,” you’re telling them that you’re not afraid of being completely honest, even if it doesn’t make you look great. That kind of honesty builds trust. He embraces telling clients when he doesn’t know something, but quickly follows that up with a promise to find out. Sincerity also plays a huge role in building trust and a strong professional relationship. When you ask questions, clients can tell whether or not you have a sincere interest. Far too many CPAs ask general questions like: “How’s the family?” Instead, take good notes about their families, kids and interests so you can ask specific and sincere questions the next time you see them. Questions like, “Did your wife get that job she was interviewing for?” or “Did your son decide on a law school?” are far more effective and show that you have a real interest in the answers.

Transitioning to a Personal Relationship

Transitioning your relationship to a personal level might sound tough, but it just means helping clients with issues that extend beyond professional services. It means being there to help with any issue, regardless of

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had stolen tens of thousands of dollars. The client wasn’t so concerned about the money, but his faith in his employees and his own judgment had been severely shaken. The CPA was scheduled to fly out of town for a conference. However, he dropped it all to go meet with the client, review how it happened and design processes to prevent it from ever happening again.

whether it falls under the accounting umbrella. When you reach that type of relationship, you’ll become their most trusted business advisor. One good place to start is with your own network of clients and associates. Your network is probably one of your strongest professional assets. Why not use it to help solidify and strengthen your relationships with clients? One way to do that is by sending referrals to your clients. One of my colleagues regularly sends business back and forth between his clients. In fact, he does it so much that he often has clients call and ask for references for things like contractors and physicians. Clients are also appreciative for any activity that gets them out of the office. An afternoon at the golf course or at a baseball game can be a good way to get the formalities of business out of the way and just have a friendly conversation. Many CPAs tell me they make more progress at these types of informal events than they do in client meetings. While golf may be an obvious choice for an out-of-the-office activity, it’s important to remember that not everyone plays golf. Instead, choose something that shows you know your client’s interests. One CPA recently told me that she knew her client was looking to buy a boat. The CPA and her husband invited the client and his wife to join them for dinner and then to attend the local boat and RV convention with VIP passes. They spent the evening looking at boats and having great conversation. They ended with a handshake agreement for the CPA to expand the scope of her consulting work with his company.

Just Being There Can Be as Important as Anything

Relationships are built on action, not promises. Perhaps the most effective way to build strong relationships with your clients is to simply be there for their needs. I give my clients 24-hour access, meaning they can literally call me with anything at anytime. I know of CPAs who have dropped everything to be there for their clients. One CPA told me of a time that his client found out that a key employee

Clients appreciate knowledge, experience and expertise. What they really want, though, is sincerity, trustworthiness and a strong and honest relationship. You can give them what they want by living those ideals in every client interaction. When you do that, you’ll find that your clients will be eager to share your name and information with anyone who will listen. Theodore S. Byer, CPA, is a partner at Smolin Lupin & Co., P.A. He is a member of the New Jersey Society of CPAs. Contact him at tbyer@smolin.com or 973-439-7200.

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Managing Interpersonal

Conflict

Everyone goes through interpersonal conflict at work, and for some it can be a daily occurrence. When left unmanaged, interpersonal conflict can cost time, money, productivity and even your health.

By Catherine Z. Horn, CPA Alcatel-Lucent

The potential for conflict abounds. It can take the form of a supervisor demanding a report sooner than planned, a colleague being late in providing critical information or a client paying invoices in a consistently delinquent manner. So, what are you to do? Thankfully, the general steps to manage conflict are relatively the same. There are three basic choices for managing interpersonal conflict: (1) address the situation head-on by clearly communicating your concerns; (2) separate yourself from the situation; or (3) accept the situation. The good news is that every situation is an opportunity for some kind of positive outcome. When properly addressed, the interpersonal conflict could result in corrective action, a positive change or getting what you want. In all cases, there is also an opportunity for your own personal growth. Ask yourself: “What can I do to create a positive outcome, to create that all-too-important win-win scenario?”

Address the Problem Head-On

In most cases, the appropriate action is to address the situation directly and work your way to a resolution. To do

that, first decide the root of the conflict from your perspective. Then, think about what the other person might say is the root cause of the conflict. According to Stephen Covey, author of the hugely successful book The Seven Habits of Highly Effective People, one should seek to understand. The key to success in this step is to always be respectful of the other person. Do not treat the other person as a hostile defense witness, particularly if you don’t have all the facts. Seek to validate your hypothesis – do not assume you are correct. You may be surprised to learn that you were wrong, and an equitable compromise is a step away. Are the demands being made of you fair, reasonable or understandable? Or, are they unrealistic or outside the scope of your relationship? Ask yourself the same questions about the demands you are making. Decide what you need to eliminate the conflict, and seek a reasonable counter-offer. Always come from the perspective that a win must be mutually beneficial. Realistically decide what is the minimum that you need from this situation? Address the issue directly, clearly and calmly – which is not always easy to do. To revisit our previous examples: Renegotiate a deadline with your supervisor; ask other colleagues if they can provide the missing data; or offer the client a mutually convenient payment schedule. Even if the attempt is not successful, when we make a sincere and positively framed attempt, we will feel less like a victim and more in control of the

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situation. But with a thoughtfully carried out conversation, respecting the other person’s position as much as your own, you may be able to successfully work through your differences and come to an equally acceptable resolution.

Separate Yourself

There will be times when it is not possible to work through a conflict with another person. After you have given it your most positive goodfaith effort, you still may be left with a situation that is untenable. When you are unable to work through and find a solution that is acceptable for both parties – and you know that you are unable or unwilling to accept the situation as it is – you may need to separate yourself from the situation. It might be as simple as resigning a volunteer position or changing desks. But it probably will mean

Of the 767 U.S. workplace violence fatalities in 2012, New Jersey accounted for 22, which ranked the state 11th nationally.

something more dramatic, such as looking for a new job, severing your relationship with a client or dissolving a partnership. There are ramifications for all of the actions we take, as well as the ones we don’t take. Before you take an irreversible action that will forever impact your relationship with someone, consider separating yourself from the situation.

Acceptance

When is it advisable to accept the current situation and not try to change it? There may be a time when after evaluating a situation that is rife with interpersonal conflict and a source of great stress it is best to accept things as they are. One reason this could occur is when you gain new information that is significant enough to shift your perspective. While the facts that upset you have not changed, with a deepened understanding of what is causing the other person’s behavior or actions, you might now be able to understand and accept them. Another reason we sometimes choose to accept a situation is because something bigger and more painful has taken its place, which happens

to us all the time. This is a defense mechanism that our hearts and minds use to reconcile smaller conflicts to concentrate on the larger ones. For example, a co-worker’s periodic interruptions to ask personal advice may not ultimately be interpreted as a major issue when you find out that the co-worker’s father has terminal cancer. We cannot change the behaviors and actions of other people, but we are the owners of our own reactions. Interpersonal conflicts should not be ignored. The fiscal and physical costs are too high. Following the aforementioned steps to deal with these conflicts by removing yourself from them or accepting them will result in a more productive work environment, a more profitable business and a less stressful life. Catherine Z. Horn, CPA, CGMA, SPHR, is a human resources director with Alcatel-Lucent. She is a member of the New Jersey Society of CPAs Volunteer Relations Committee and the Editorial Advisory Board of New Jersey CPA magazine. Contact her at cathy.horn@ alcatel-lucent.com.

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A&A

buzz

Costly Accounting Missteps of Nonprofit Foundations By Audrey J. Sherrick, CPA, Friedman LLP

iscussions of accounting and auditing issues for nonprofit foundations first require an understanding of the use of the word “foundation.” Since there is frequent confusion as to its meaning, practitioners often look to the tax code for clarification as to whether the organization is merely another nonprofit/public charity with the word “foundation” in its name, or whether it is truly a private foundation – the accounting (and auditing) for which will be significantly impacted by specific tax law. The leading tool used to measure private foundation compliance is annual Form 990-PF. According to Jeffrey Haskell of Foundation Source, costly reporting errors can result from the following accounting missteps:

Miscalculating the minimum distribution requirement (MDR) – Each year, a private non-operating foundation must distribute approximately 5 percent (with certain adjustments) of its noncharitable use assets, such as cash, bonds and other investments. Failure to meet the MDR in a given year subjects the foundation to a 30-percent penalty on the shortfall amount if it doesn’t meet the MDR in the 12 months following the end of the fiscal year. Any portion undistributed after two years is subject to an additional 100-percent tax. If the penalty is assessed, the foundation will also be ineligible to qualify for a reduced excise tax rate for five years. Neglecting to count legitimate administrative expenses toward MDR

satisfaction – The MDR can be satisfied by a combination of grants and certain (not investment-related) administrative expenses. Neglecting to use investmentrelated expenses to offset investment income – Although private foundations don’t normally pay income tax, their investment income (dividends, interest, capital gains) less investment-related expenses are subject to an excise tax of either 1 or 2 percent. Failing to determine eligibility for the reduced 1-percent tax rate – After its formation year, a foundation may qualify to cut its tax liability in half for any year that the percentage of its qualifying distributions for charitable purposes, as a percentage of net non-charitable use assets, exceeds the average distribution ratio of the preceding five years.

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Failing to properly account for expenditure responsibility grants – A foundation may grant to an organization that isn’t a public charity if the grant is for a charitable purpose and the foundation properly reports on and complies with special procedures, including monitoring and overseeing the grantee’s disbursements. However, if specific mandated procedures are not strictly followed, the foundation can be subject to a penalty of 20 percent of the grant. Failing to properly calculate excess grant carryover – If a foundation grants significantly more than its MDR, the excess may be banked up to five years as grant carryover to satisfy a future year’s MDR. Using the accrual method of accounting to show MDR satisfaction – Treasury regulations mandate that cash basis accounting be used to determine whether a foundation has met its MDR.

Failing to track foundation insiders – A private foundation is expected to track all individuals and organizations that are considered insiders, including those companies and individuals that make contributions beyond a certain mathematically calculated amount. Insiders generally are prohibited from engaging in financial transactions (sales, loan, leases) with the foundation. Engaging in them may result in a self-dealing violation and 10-percent penalty. Failing to recognize and avoid selfdealing situations – Private foundations cannot engage in transactions with disqualified persons, even if conducted at arm’s length. Such persons include foundation managers; substantial contributors; friends or family of disqualified persons; and employees, suppliers, customers or other business associates of for-profit businesses owned more than 35percent by disqualified persons. The Internal

Revenue Service may impose sizable excise taxes (from 5 to 200 percent of the amount involved in the act of selfdealing) with no maximum liability limits set on the self-dealer. The penalties and missed savings associated with failing to properly account for private foundations in the context of tax law can be significant. Since these rules and regulations are complex and different than those pertaining to public charities, accounting policies and procedures for private foundations should be designed with these rules in mind. Auditors also must consider these rules and regulations due to the financial impact of noncompliance. Audrey J. Sherrick, CPA, is a partner at Friedman LLP. She is a member of the New Jersey Society of CPAs Board of Trustees, Audit Committee and Nonprofit Interest Group. Contact her at asherrick@friedmanllp.com.

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BEST

practices

What to Look for in a Marketing Director By Adam Wolf, SaxBST, LLP

he marketing director’s position at an accounting firm is often difficult to fill. A fundamental challenge is the lack of understanding as to what truly constitutes marketing, together with a misalignment of expectations between firm leaders and the marketing director. I’ve witnessed many examples where this disconnect can lead to a breakdown, and I’d like to share some tips to avoid that unpleasant scenario.

Defining the Role

The first challenge is to define the role. I’ve often observed accountants talking about marketing in the context of bringing in sales. If that’s the premise and the expectation is that the marketing director – unaided by any formal sales support or sales processes – is expected to bring in business, that expectation is

likely to remain unfilled; the firm will be disappointed and the marketing director will become frustrated. Marketing is one discipline; sales (aka business development) is entirely another. To most effectively bring in business, however, both functions must be staffed by competent people who understand their roles and are aligned successfully. If a firm has a sophisticated partner group that understands business development, a strong marketing director can help identify new business opportunities and position the firm and its partners for business development success. If, however, the partner group is not sophisticated about business development, having the strongest marketing director in the world is not going to lead the firm to significant new business. Operationally defined,

marketing is the identification of opportunities and the positioning of an organization to develop those opportunities. It’s putting the firm’s brand out in the marketplace in the right channels so it can find and be found by referral sources and prospects.

Key Attributes

If the partners are up to the task of developing opportunities and only need the marketing “support,” there are a few key attributes to look for in a successful marketing director. Research skills are very important. A successful marketing director will be able to research trade groups, associations and other organizations to determine if they are good channels for the firm to market to. Written and oral communication skills are vitally important for success.

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Having the ability to cogently write about topics about which they may not be totally fluent is a key. This can include articles that help position the firm and its partners as thought leaders on topics of importance to the industries they serve, as well as generating proposals and other collateral materials. The ability to track and manage multiple projects, moving each along incrementally, is very important. Having a follow-up system with partners and managers is a key challenge. Here, flexibility in communication style is definitely an asset. Find someone who is familiar with the DISC communication style system or a comparable system for understanding different communication styles and how to communicate with them. On occasion, a marketing director’s ideas may get overruled by partners. That’s okay. The ability to have a thick skin and roll with the punches is very important to maintaining sanity.

Things under the marketing director’s control, however, that can be easily measured include a certain number of contacts added to the firm’s database, a set number of client and prospect communications developed and delivered in a given timeframe and a series of industry-specific events (with target attendance numbers) held within a budget.

The first challenge is to define the role. Evaluation

To effectively evaluate the marketing director, establish metrics at the outset, clearly communicate them and make them measurable. There are many ways efficacy can be measured. If the marketing director is supporting the partners who are doing the actual business development activities, tying the director’s performance to quantifiable new business results may not be the best measure because he or she is being evaluated on something beyond his/her control.

Partners should support their marketing director beyond just a budget allocation. Partners should allocate the time to work with the director, to hear ideas and help create an environment where the partners can get invested in helping make it all work. Even the most talented marketing director would be doomed to a low level of success without firm support and buy-in from senior management. Adam Wolf is the director of marketing and business development at SaxBST, LLP. Contact him at awolf@saxbst.com.

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BUSINESS & INDUSTRY

insights

The NJ State Treasurer Gives Us a View from the Top B y David P laskow, NJ SC PA Comm unications M anager

ew Jersey State Treasurer Andrew P. Sidamon-Eristoff was kind enough to speak with me on June 24, a mere six days before the state budget needed to be ratified:

How did you find the budget process? It’s essentially always budget season. It actually begins in the early fall and takes roughly eight months. We begin by debriefing all of the agencies and go

through multiple public hearings. But it’s appropriate because the budget is the central policy document of state government. Are you concerned over the recent reports about tax-base migration – some $70 billion leaving the state over the last decade? Yes. Notwithstanding the administration’s efforts, we still have a highly uncompetitive tax structure here. We’re known as a very high tax jurisdiction. Property taxes are through the roof. But our business and individual taxes are also at the very high end of the spectrum – both regionally and nationally, if not internationally. If NJ continues to be an outlier with respect to its gross income tax, or we continue to have a transfer inheritance tax and an estate tax with a very low threshold, that’s problematic in dealing with competition from other states in the region. What do you tell financial professionals who advise clients not to die in NJ due to the estate tax? At $675,000, our exemption level is completely uncompetitive with our neighbors and out of sync with the trend nationwide. At a time when New York is matching the federal exemption level of $5 million indexed in the future, we're still stuck at $675,000. That’s a problem. What’s the long-term status of the millionaires’ tax and the gasoline tax?

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Governor Christie has thrice vetoed the proposal to add a higher marginal rate at the top of the tax bracket. We feel that would be very bad policy mid- and long-term and an economic disaster for NJ. So, I don’t anticipate the governor will change his position on that. As for the gasoline tax, we have a relatively low level of tax compared to other states. The governor has resisted efforts to raise this tax in the past, and it’s my understanding he’ll continue to view it skeptically going forward. He’s not about raising taxes. He believes that NJ has to meet its obligations through spending control. Is there any activity on having the NJ tax system “piggyback” the federal? It’s an ongoing technical question, and this issue informed the way we approached some of the 2011 tax cuts. At that time, we adopted changes designed to mitigate about 50 percent

of the differential between New Jerseyans having a gross income tax versus the national net income tax model – basing your system on federal adjusted gross income (AGI). So, the delta is declining, and we still have a one-year phase-in on that. Nevertheless, I believe long-term it makes sense for NJ to make the transition to a net income tax paradigm or at least base our tax on federal AGI. However, the transition is quite challenging technically. Currently, we’re committed to continuing to phase in the adjustments we enacted in 2011. We’ll see where that leaves us, determine if it has met our expectations and then take another look at the federal AGI issue.

flow and long-term borrowing needs. I believe we can craft a solution to our current challenges that puts us on an appropriate path and gives some comfort to the ratings agencies and other stakeholders that New Jersey’s fiscal challenges are being managed appropriately. Of course, this situation is yet another clarion call for pension and health benefit reform. A huge proportion of our year-to-year increase in budget is going to be devoted to pensions and health benefits as well as debt service. We need our partners in the legislature to work with us to revisit this issue and create long-term reform.

Are you concerned that the pension situation has caused a downgrade in the state’s bond ratings? We’ve experienced a relatively minor impact on the finance cost for cash

To read the complete interview and see a video of Treasurer Sidamon-Eristoff discussing what soft skills he values, visit njscpa.org/ newjerseycpa/sepoct14.

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FINANCIAL

planning

The Tale of Two Financial Minds B y E dward R. Collins , Artisan Wealth M anagement, L L C

s financial counselors, we are constantly trying to effectively and efficiently assist our clients in making prudent decisions with regard to their wealth. However, if you have been in practice for any period of time, it is likely that you have come to realize the very people we are trying to help often derail this laudable goal. In recent years, financial professionals have begun experimenting with the psychology of decision making to steer clients toward better behaviors. This advance toward adopting and implementing a behavioral finance approach to client counseling has come about due to the realization that clients are really ruled by two competing minds: the intuitive mind and the reflective mind. Unfortunately, without proper guidance, the intuitive mind all too often wins out to the financial detriment of our clients. Buy low and sell high. A reflective mind sees the wisdom in these words. However, as we entered March 2009, how many investors held firm to this rational mantra? The intuitive mind is susceptible to more than just fear and greed. People often take solace in blending in with the crowd. The herd mentality, however, can often push an investor into buying high and selling low as the new hot idea is bantered around at cocktail parties or viewed on CNBC. Overconfidence is just as problematic as the herd instinct. It can seduce an investor into believing he or she can consistently outperform the markets by trading stocks at an irrationally high rate. The reality is, however, that no one has a crystal ball. Another nugget of truth is that Goldman Sachs is faster than the average investor. Its speed and those of other large institutional investors have been dramatically boosted by advances in computerized high-frequency trading

and the proximity of their servers to those of the markets on which they trade. Day trading may be exciting for an individual investor, but the long history of investing shows that few investors truly understand that hindsight is not foresight and that investment success stories are as misleading as lottery success stories. How can we, as purveyors of financial guidance, help steer our clients past the noise of everyday distractions? One method is to employ The Ulysses Strategy. This strategy engages the reflective mind in the present to bind an investor to a particular course of action in the future. It is modeled after the strategy that Ulysses used in his journey home from the Trojan Wars. In that journey, his ships were to pass dangerously close to the Sirenusian Islands, famous as the abode of the Sirens whose songs seductively enticed passers-by to leap into the water to their demise. Ulysses was determined to be the first to hear the Sirens’ songs and live. He instructed his men to fill their ears with beeswax, tie him securely to the ship’s mast and ignore any pleas he may make for his release until they were safely beyond the islands.

The Ulysses Strategy

Step 1 – The financial professional educates a client about the psychology of decision making and how emotions and outside influences have the potential to knock a well-healed person off his or her feet. It is important that clients come to learn that the misguided impulses of the intuitive mind are natural, but the

path guided by the reflective mind is the more prudent one to follow. Step 2 – The financial professional and the client agree on a strategy regarding the client’s wealth. Whether it is an investment strategy, a risk management strategy, a tax minimization strategy or some combination of wealth management strategies, developing a plan of action in advance when things are calm can help ensure it can be adhered to when the financial networks start singing a Siren’s song. Step 3 – The financial professional and the client formalize the mutually decided strategy in a commitment memorandum. While not legally binding, the practice of writing down the agreement and affixing one’s signature may help investors resist the Sirens’ songs they are bound to encounter in their journey toward financial success. Edward R. Collins, CFP, AAMS, RFC, is a founding partner and wealth advisor at Artisan Wealth Management, LLC. Contact him at 908-366-7630 or ecollins@artisanwealthmanagement.com.

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Forensic

file

CLE Provider Opportunities for CPAs B y R ebecca B . Fitzh u gh , C PA, Sobel & C o. , LLC

s of January 1, 2010, attorneys licensed to practice law in New Jersey are required to do what New Jersey CPAs have been doing for years: complete mandatory continuing education. Professionals – and the clients they service – benefit from continuing education, especially in the legal and accounting disciplines, where laws and regulations constantly change. NJ-licensed attorneys must take 24 hours of continuing legal education (CLE) every two years, including at least four hours of ethics and/or professionalism. The new CLE requirement presents an opportunity for CPAs to demonstrate their expertise to, and develop beneficial relationships with, attorneys. Many CLE characteristics are familiar to CPAs. A credit hour is 50 minutes of instruction, ethics is required each reporting period, written materials must be provided to attendees and there are different specialty areas under which the courses are classified.

Getting Approved

Providers of CLE to New Jersey attorneys must be certified by the Board on Continuing Legal Education of the Supreme Court of New Jersey. In NJ, a provider may be approved on a percourse basis or granted approved service provider status (at least five courses must be submitted when applying for this status) which is valid for two years. The CLE courses provided by an approved Number of Lawyers per 10,000 Residents

1. DC.............803 2. NY............... 85 3. MA.............. 64 4. CT................ 59 5. IL................. 49 6. NJ................ 46

service provider are presumptively approved and need not be approved by the CLE board on an individual basis. Becoming an approved service provider in New Jersey does not make you eligible to offer CLE credits for another state. New York and Pennsylvania have different requirements and approval processes. Keeping up with the multitude of rules and reporting obligations can be a fulltime job if you are trying to present frequently for different jurisdictions. New York requires that a licensed attorney be substantially involved in presenting CLE courses, which can create a hurdle for a provider without an attorney on staff.

Documentation

The documentation and reporting process for New Jersey CLE providers is fairly rigorous, though much of it is now done online, rather than via paper; and providers must keep their records for three years. An announcement must be submitted each time a course is presented – preferably before but no later than 30 days subsequent to the date of the course. Attorneys are required to sign in and out of a course, written materials must be distributed to attendees and state-specific CLE certificates must be provided.

Attorney Exposure

Law firms try to fulfill a certain percentage of their attorneys’ CLE requirements in-house because it is a less-expensive alternative to commercial offerings. My firm has found that a good way to get in front of our target audience is to offer a CLE “lunch and learn” or CLE breakfast. Since all attorneys need CLE, and they usually like to eat, combining the two is a sure way to fill a room. It can be difficult to get in-depth on a topic in a single hour, but some subjects are better presented

in small doses. It also lets you schedule multiple sessions with the same law firm if you break a class up into several smaller bites. Many law firms have multiple offices where participants take CLE by videoconference. A course must be specifically approved for presentation via live videoconference, and the presenter must have a process for verifying the presence and participation of all off-site attendees. Another option is to host multiple hour CLE sessions at a public venue, where attorneys from many different firms may attend. You can either charge a fee for these or provide them gratis. This is a great option if you have a topic that attorneys really need. While the paperwork and recordkeeping can be daunting, mandatory CLE for attorneys is a great opportunity for CPAs to demonstrate their expertise to the legal community, make valuable contacts and perhaps generate a little revenue. Rebecca B. Fitzhugh, CPA, CFF, CFE, CIGA, is a senior manager with Sobel & Co., LLC. She is a member of the New Jersey Society of CPAs Business Valuation and Forensic Litigation Services Interest Group and the New Jersey CPA magazine Editorial Advisory Board. Contact her at rebecca.fitzhugh@ sobel-cpa.com.

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Small/Sole

practitioner

Selling Yourself to a Potential Buyer B y J oseph A. Tarasco, C PA, Acco untants A dvisory G roup, L L C

any small and sole practitioners put in a lifetime of hard work in building their practices, but they often don’t devote the time necessary to consider how to properly position and promote their firms when it’s time to sell. The more the seller prepares, the more successful the outcome is likely to be. The first step is for the selling practitioner to come to grips with the fact that a sale of the firm is a natural part of the business cycle. Timing the sale of the practice is one of the keys for maximizing the value of the transaction. Timing the sale in relation to favorable market and business conditions, rather than to a retirement date, will also allow the seller to maximize the selling price. (The worst time to sell a firm is when you absolutely have to.) Unfortunately, this is a rather common scenario in today’s market where many firms don’t have a succession plan in place. Selling a practice can be a very stressful process and take much longer than planned. However, properly structuring the selling process and laying the groundwork for a sale way ahead of time can result in a successful exit strategy and transition. Consider the following before selling your practice: • Sales of small practices can involve a significant amount of emotions and confusion. Engaging a consultant, business advisor or other third party can be extremely valuable in providing impartial guidance. Through an objective and knowledgeable perspective, a consultant can guide the seller through all of the issues and suggest possible approaches in dealing and negotiating with potential buyers. The consultant should be engaged at least two to three years before the sale date to assist in developing an exit planning strategy so that the plan can be implemented

successfully in a reasonable time period, such as (1) introducing and initiating follow-up meetings with potential buyers that have been prequalified to meet the exit planning strategy criteria; (2) assisting in negotiating and developing the transaction details and structuring the deal terms that are acceptable to the seller; and (3) developing promotional emails and collateral materials to sell the benefits of acquiring the practice at the stated selling price. • Getting your house in order many years prior to selling will add more value to a potential buyer. The practice’s quality of clients, client retention success, growth potential and cash flow will matter most to a potential buyer. A practitioner planning to sell should not wait until the practice is declining before starting the sales process. It’s an easier sell and a greater perceived value to potential buyers if the firm is still in a growth mode. • Have a marketing consultant develop a sales brochure in both print and digital versions that includes the firm’s estimated revenue, a description of the client base, a description of the services provided and firm’s reputation in the community, staff bios, growth potential and future benefits of ownership, owner financing, office location and any other selling points that promote the value and benefits of acquiring the practice. • Target and promote the firm to prospective buyers via email and through LinkedIn, Twitter and other social media. This will enable the selling firm to reach as many prospective buyers as possible with the goal of maximizing the deal terms in favor of the selling

practitioner. Finding a buyer who will take the seller’s existing resources and plug them into his or her firm to have a positive impact on the combined firms will potentially maximize the selling price. Advertise the firm for sale on the local state CPA society websites in the mergers and acquisition section and on sales exchange websites. • The seller should communicate a clear picture of growth and opportunity, articulate underlying assumptions and value drivers, and outline how these opportunities will be captured. Significant issues, concerns, possible deal breakers and selling price multiples should be discussed early in the process to avoid problems later. Joseph A. Tarasco, CPA, is the president of Accountants Advisory Group, LLC, a consulting firm to the CPA profession. He is a member of the New Jersey Society of CPAs. Contact him at joe@ accountantsadvisory.com.

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

TAX

talk

Preparing a SALT Study for Expanding Clients B y David P oill ucci, C PA, With um Smith + Brow n

n order to remain competitive and increase revenue in today’s challenging business environment, companies will need to expand operations into neighboring states, if not nationally. Whether soliciting sales or creating distribution facilities, activities that generate profits and increase market share can frequently create exposure to state and local taxes. Helping a client navigate the state and local landscape and understand how certain activities can create multistate tax obligations is instrumental as clients expand their businesses. Whether a client needs to obtain authority to conduct business in a particular state or is seeking to minimize exposure to state and local taxes, these important multistate aspects of expanding a business can greatly impact a client’s profitability.

The process for helping a client identify exposure to state and local taxes is complex and involves a deep understanding of which specific activities give rise to a state or local tax. As such, preparing a state and local tax (SALT) study for an expanding client provides the methodology for gaining a deep understanding of the client’s business activities and the tools necessary to navigate the state and local tax landscape. The goals of a SALT study are to gain extensive knowledge of a client’s potential nexus-creating activities and evaluate those activities – considering each state’s laws – to quantify nexus exposure to various taxes including income, sales, use, franchise, property and gross receipts. The study can then be used as a decision tool to prioritize states as well as reduce multistate tax

exposure and manage tax compliance in each location. The optimal time to perform a SALT study would be before the client’s multistate activity begins or operations are expanded to another state. However, preparing a SALT study for a mature multistate business is also important as these clients generally have a greater exposure resulting from unknown tax liabilities that may have accumulated over time. Preparing a SALT study not only helps those concerned understand the state tax obligations of a particular state, but in some cases can guide a client to structure its activities effectively in order to reduce its overall state tax obligation. For example, a company might consider expanding between two geographic locations based on tax incentives offered by a local economic

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

development organization. Preparing a SALT study should be broken down into these three main steps:

Step 1

Collect information about the client to identify activities that may give rise to nexus. This is typically accomplished through questionnaires and interviews with management and other employees whose job functions can impact nexus (e.g., salespeople, truck drivers). It is also necessary to review the current state tax filings and policies to understand the accuracy of the compliance process. Based on how in-depth of a discovery process the client desires, it will also be beneficial to perform a reverse audit which provides a comprehensive review and analysis of specific transactions, including invoices and contracts.

Step 2

Once a client’s multistate activity is

thoroughly understood, determine what states consider these activities to create a sufficient connection. Is nexus definite, likely or unlikely? This is accomplished by analyzing client information in combination with state law, administrative guidance and court decisions which help interpret a state’s position on certain activities.

Step 3

Prepare a report for the client outlining the specific activities annualized, whether or not the activities create a sufficient connection to a state or local jurisdiction, and quantify the amount of tax exposure in locations where nexus exists. A SALT study can offer many other benefits to clients that yield significant tax savings. For example, a SALT study may conclude a company is filing tax returns in jurisdictions where there is no nexus, possibly resulting in

Is nexus definite, likely or unlikely? discovering tax overpayments that can be recovered. Also, after reviewing a client’s internal multistate compliance process, a SALT study can often identify process efficiencies and cost reduction measures that will ultimately enhance the quality of the internal reporting function. David Poillucci, CPA, M.S.T., is a senior manager at WithumSmith+Brown. He is a member of the New Jersey Society of CPAs. Contact him at dpoillucci@ withum.com.

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TECH

center

Don’t Be Afraid of the IT Help Desk B y A nthon y M ongel uzo, PC S

hen a computer problem happens, everything stops and it becomes the focus of your workday. Your first thought? I need to call IT or contact the dreaded help desk. Will it take hours to get a response, will you understand the problem (so that you can prevent the issue in the future), and can you implement the fix or must a computer tech do it? Everyone eventually deals with some form of IT, but there are ways you can facilitate a solution with a few simple strategies. Should you outsource? – The general rule of thumb is if you have 150-plus computer users (not employees) and are not willing to pay a salary of at least $50,000 to an IT person, then outsourcing is preferable. If you do wind up outsourcing, look for a flat-rate service. The months that you don’t get billed if it’s an hourly arrangement will make you glow with satisfaction, but when you have that nightmare problem – and you will – you’ll be thankful no one is looking at the timer. Also, they don’t necessarily have to handle accounting firms, but do they provide IT outsourcing to professional service firms? If all of their clients are gift stores and veterinarian practices, you might want to look elsewhere. Explain your communication preference – As an outsourcing IT specialist, more than 80 percent of our help desk activity is digital. We receive the request via email, connect to clients’ computers and solve the problem. However, sometimes an urgent problem also requires a phone call. Sometimes the accounting firm simply prefers a phone conversation. Don’t guess. Tell your IT person or vendor what your preference is. How important is it? – Communicate the degree of urgency. If just a single computer is freezing up, this may be less urgent. However, if the entire server is down, the help desk needs to understand

the urgency. This will let the help desk decide how quickly it needs to respond. If you’re using an internal IT person, he/she should understand the obvious pecking order for trouble. If not, it’s the client’s job to instruct him/her. If you’re using an outside firm, the more carefully you explain the issue, the quicker it can respond with the best person. All techs are not created equal, and some have specialties. This way, if you have a serious disruption, your IT firm can send someone who regularly deals with similar issues. Create a trouble ticket system – If your firm is large enough to have an IT person, a ticketing system is vital. There are free versions, but even paid ones are inexpensive. If you use an outside help desk, insist that it has such as system. If it doesn't, be wary. Why? A ticket system keeps a record of any issues related to the problem or complaint. It prevents miscommunication if a tech or an employee leaves, because you still have a digital history of issues. More importantly, it can track a history. Is it a hardware, software or human issue? A ticketing system will allow you to

know which employees constantly need help, which means they may need some additional training. If you’re outsourcing your IT service, it allows the provider to know if its tech isn’t as proficient as he or she should be. Write it down – It’s old-school advice, but invariably the client has one or more other issues that have been cropping up but it hasn't called about. Teach your staff to keep a basic log so that the next time they talk to a tech, they can bring up the smaller issues. This prevents annoyances from possibly becoming major problems, and your firm saves time by not reaching out repeatedly for assistance when you could solve the issues in one digital swoop. The important stuff – Keep a list of all your products and warranties. This can save countless hours for your IT person or the outside help desk when a problem arises and, more importantly, can save you a bundle if you’re still under warranty. Anthony Mongeluzo is the president and CEO of PCS. Contact him at 856596-4446 or anthony@helpmepcs.com.

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

The New Jersey Society of CPAs is pleased to announce its inaugural “CPA-List.” These 67 CPA practitioners and Society members were selected for their continuing impact on the accounting profession in the Garden State and beyond. CPA-List categories include Accounting & Auditing, Financial

NJSCPA Announces Its “CPA-List”

Planning, Forensic Accounting, Governmental Accounting, Health Care Accounting, Nonprofit Accounting, Taxation and Technology. Selection criteria included career expertise, key accomplishments at their respective companies, NJSCPA engagement and community service. The NJSCPA congratulates these honorees:

Accounting & Auditing

Michael T. Adago, CPA

Brent M. Ashton, CPA

Frank R. Boutillette, CPA

The Curchin Group

WithumSmith+Brown

Accounting & Auditing

Walter J. Brasch, CPA

Robert Fodera, CPA

ParenteBeard, LLC

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Accounting & Auditing

Lawrence S. Gray, CPA EisnerAmper LLP

Accounting & Auditing

Carol D. Iocca, CPA Wilkin Guttenplan, P.C.

Accounting & Auditing

Christopher M. Lovasz, CPA

Brad E. Muniz, CPA

Deloitte

Sobel & Company, LLC

Accounting & Auditing

Renee Rampulla, CPA

James H. Ruitenberg, CPA

Kyle M. Sell, CPA

John M. Szczomak, CPA

Rampulla Advisory Services, LLC

Bederson LLP

Deloitte

Smolin Lupin & Co., P.A.

CONGRATULATIONS TO HENRY RINDER & JOHN M SZCZOMAK ON MAKING THE PRESTIGIOUS NJSCPA CPA-LIST!

STRENGTH IN NUMBERS SINCE 1947 NEW JERSEY • NEW YORK • FLORIDA N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Financial Planning

Jeffrey Christakos, CPA

Diahann W. Lassus, CPA

Financial Planning

Michael R. Steiner, CPA

Jeffrey I. Ziment, CPA

Christakos & Company

RegentAtlantic Capital

Financial Planning

Guy McPhail, CPA

Lassus Wherley

The GM CPA Group

Forensic Accounting

Keith S. Balla, CPA

Ziment Financial Advisors

O’Connor Davies, LLP

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Financial Planning

Kenneth B. Shapiro, CPA

Shapiro Financial Securities Group

Forensic Accounting

Sharon J. Bishop, CPA Bishop & Bishop, P.C.

Congratulations!

The partners and staff at Bederson congratulate our friend and colleague,

James H. Ruitenberg CPA, CFP®, PSA

Contact Mark Mazza, Managing Partner 973.530.9146 • mmazza@bederson.com Fairﬁeld and West Orange, New Jersey bederson.com

Jim was selected as a winner in The New Jersey Society of CPAs NJSCPA CPA-List for his work in Accounting and Auditing. Jim’s leadership and high standards are an inspiration to all of us.

Forensic Accounting

Robert J. Brown, CPA

Forensic Accounting

Michael A. Gould, CPA

Lloyd F. George, CPA

Cowan, Gunteski & Company, P.A.

Lloyd F. George, CPA, LLC

Forensic Accounting

Roy H. Kvalo, CPA

Sharyn Maggio, CPA

The Curchin Group

Forensic Accounting

Rotenberg Meril Solomon Bertiger & Guttilla, P.C.

Forensic Accounting

Randall M. Paulikens, CPA

Marcum LLP

WithumSmith+Brown

ParenteBeard is proud to join The New Jersey Society of CPAs in honoring the 2014 NJSCPA CPA-List members, including our own Partners Walter Brasch, Robert Fodera, Louis Feuerstein and Thomas Spychalski.

Audit | Accounting | Tax | Business Advisory ParenteBeard.com | 732.388.5210 | 856.330.8100

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Forensic Accounting

Ilan Hirschfeld, CPA Marcum LLP

Forensic Accounting

Kenneth Pogrob, CPA WeiserMazars LLP

Forensic Accounting

Henry Rinder, CPA

Forensic Accounting

June M. Toth, CPA

Governmental Accounting

Robert W. Allison, CPA

Scott A. Clelland, CPA

Rotenberg Meril Solomon Bertiger & Guttilla, P.C.

Smolin Lupin & Co., P.A.

ZBT CPAs & Consulting

Governmental Accounting

John F. Dailey Jr., CPA

David J. Gannon, CPA

Carole A. Hedinger, CPA

Bowman & Company

Wiss & Company, LLP

NJ State Lottery

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Wiss & Company, LLP

Governmental Accounting

Ainsley A. Reynolds, CPA

The NJ Department of the Treasury

Governmental Accounting

Health Care Accounting

Robert E. Swartz, CPA

Lewis D. Bivona Jr., CPA

Ford Scott & Associates

Professional Medical Management Consultants

Health Care Accounting

Deborah A. Nappi, CPA

Jonathan E. Perelman, CPA

SaxBST

Health Care Accounting

Louis H. Feuerstein, CPA ParenteBeard, LLC

Health Care Accounting

Daniel J. Vitale, CPA

Friedman LLP

WithumSmith+Brown

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Health Care Accounting

Deirdre Hartmann, CPA Nisivoccia LLP

Nonprofit Accounting

Lynn L. Albala, CPA InfoSight Partners LLC

Nonprofit Accounting

Catherine E. Bendall, CPA

Donna Foxman, CPA

Ronald G. Matan, CPA

Carl Specht, CPA

Taxation

Howard J. Bookbinder, CPA

James B. Evans, CPA

WithumSmith+Brown

Howard J. Bookbinder, CPA

Donna Foxman, CPA

Sobel & Company, LLC

Kulzer & DiPadova, P.A.

Taxation

John C. Genz, CPA

Kenneth A. Hofsommer, CPA

Citrin Cooperman & Company, LLP

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Costantino, Specht, Templeton & Co., LLC

Hunter Group CPA, LLC

Taxation

Barry S. Kleiman, CPA

James A. Lawrence, CPA

Taxation

Barry D. Shapiro, CPA

Thomas A. Spychalski, CPA

Untracht Early LLC

WithumSmith+Brown

Randy Paulikens CPA/ABV/CFF/CITP, DABFA, Partner Forensic Accounting

Taxation

Vinay S. Navani, CPA

Traphagen Financial Group

Wilkin Guttenplan, P.C.

Taxation

ParenteBeard, LLC

Christine G. Pronek, CPA O’Connor Davies, LLP

Technology

George E. Williams, CPA

Thomas M. Angelo, CPA

Frank Boutillette, CPA/ABV, CGMA, Partner Accounting and Auditing

Dan Vitale, CPA, Partner Healthcare

Ross, Rosenthal & Company, LLP

Barry Shapiro, CPA, Partner Tax

Taxation

Spire Group, P.C.

CONGRATULATIONS TO WS+B’S DISTINGUISHED PROFESSIONALS WHO ARE RECOGNIZED IN THE 2014 CPA-LIST.

Jim Bourke, CPA.CITP, CFF, CGMA, Partner Technology

Cathy Bendall, CPA, PSA, CGMA, Partner Not-For-Profit

Great leaders in business not only set the bar for themselves, but inspire and empower others to push to new heights. Our partners makes their imprint every day with their enthusiasm for the growth of our Firm, and with the passion they have for their specialized practice areas. They are the influencers of tomorrow’s generation of CPAs, leading with inspiration and vision.

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Technology

James C. Bourke, CPA

Jaime Campbell, CPA

Christopher M. Chudyk, CPA

Rosemarie A. Fisher, CPA

Technology

WithumSmith+Brown

Tier One Services

Traphagen Financial Group

Real Possibilities, LLC

Visit njscpa.org/cpa-list to view the CPA-List. Robert P. Herman, CPA Net@Work

Victoria Kosuda, CPA

Beyond Financials Consulting

We create conditions that are exactly right. ................................................ ...................................... ........................ NJSCPA CPA-Listtt tttttttttttttttttttttttttttttttttttttt F.. m... ..f..m.ti.. pl.... c....c.: J.m.. Bl.k. .......-..-Ch...., N.w J....y ...ctic. 732.205.2064 J.m...Bl.k.@.............c.m ... ...... .......-..-Ch...., S..v.c.. .. L..d... 732.205.2008 ......h.......@.............c.m

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

SOCIETY

pages

CPE Offerings and Events Upcoming Education Foundation Events Date

Event/Code

Location

9/22

Make Money for You and Your Clients: Surgent’s Top Business Tax Planning Strategies (E1409101)

Voorhees

CPE Credit 8/TX

9/22

Introduction to Business Valuation (E1409191)

Roseland

8/MT

9/22

New Jersey Law and Ethics Webinar (E1409034)

N/A

4/PE

9/23

The Top 50 Mistakes Practitioners Make and How to Fix Them: Individual Tax and Financial Planning (E1409111)

Iselin

8/TX

9/24

A&A Year in Review: Exploring the Latest Issues and Challenges Facing CPAs (E1409091)

Voorhees

8/AA

9/25

Business Continuity and Disaster Recovery Planning for Your CPA Firm, Company or Client (E1409143)

Voorhees

8/MT

9/26

Loscalzo’s Compilation and Review Practice Guide (E1409181)

Iselin

8/AA

9/26

A Complete Guide to the Yellow Book (E1409081)

Roseland

8/AA

9/29

Excel Best Practices (E1409393)

Roseland

8/MT

9/29

Acquisitions to Grow the Business: Strategy, Structure, Integration and Due Diligence (E1409203)

Roseland

4/MT, 4/AA

9/29

A Practical Guide to Small Business Health Insurance and Fringe Benefits: 2014 and Beyond (E1409133)

Iselin

8/TX

9/29

Loscalzo’s Financial Reporting Framework for Small and Medium-Sized Entities and Professional Ethics for New Jersey CPAs (E1409171)

Voorhees

4/AA, 4/PE

9/30

Business Valuation, Forensic Investigation and Litigation Services Conference (E1409410)

Edison

8/SK

9/30

Creating the Best Projections You Can: Insights and Techniques (E1409212)

Roseland

4/TX

9/30

Excel Pivot Tables for Accountants (E1409383)

Roseland

8/MT

9/30

Getting More Active with the Passive Activity Rules and the New Net Investment Income Tax (E1409121)

Iselin

8/TX

10/1

Advanced Compilation and Review Engagement Issues: Striking the Right Balance Between Compliance, Client Service and Practice Management (E1410151)

Iselin

8/TX

10/1

Budgeting, Forecasting and Business Analytics (E1410423)

Roseland

4/AA, 4/MT

10/1

A Practical Guide to Small Business Health Insurance and Fringe Benefits: 2014 and Beyond (E1410493)

Roseland

8/TX

10/2

Firm Administrators Appreciation Breakfast (E1410250)

Iselin

N/A

10/2

Real-World Fraud: War Stories from the Front Lines (E1410193)

Roseland

8/AA

10/6

Alternatives to GAAP – Using Special Purpose Frameworks (E1410281)

Iselin

8/AA

10/7

Construction Contractors: Accounting, Auditing and Tax (E1410291)

Iselin

8/AA

10/15

New Jersey Law and Ethics Webinar (E1410034)

N/A

4/PE

10/16

Annual Update for Compilation and Review Engagements (E1410331)

Voorhees

8/AA

10/16

A&A Year in Review: Exploring the Latest Issues and Challenges Facing CPAs (E1410091)

Iselin

8/AA

10/16

Internal Control Essentials for Accountants and Auditors (E1410303)

Roseland

8/AA

10/16

Facebook for Business Webinar (E1410584)

N/A

1.5/CS

10/17

Clarified Auditing Standards: What You Need to Know (E1410321)

Voorhees

8/AA

10/17

Compilations and Reviews: Engagement Performance and Annual Update (E1410161)

Iselin

8/AA

10/17

IT: Risks and Controls in Current and Emerging Environments (E1410313)

Roseland

8/AA

10/20

Excel Financial Reporting and Analysis (E1410433)

Roseland

4/AA, 4/CS

10/20

Getting More Active with the Passive Activity Rules and the New Net Investment Income Tax (E1410111)

Roseland

8/TX

10/20

Loscalzo’s Deceptive Revenue Recognition and Other Accounting Techniques – Recognizing the Warning Signs (E1410043)

Iselin

8/AA

10/20

Financial Reporting Framework for SMEs (E1410353)

Voorhees

8/AA

10/21

FASB Review: Common GAAP Issues Impacting All CPAs (E1410363)

Voorhees

8/AA

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

Date

Event/Code

Location

CPE Credit

10/21

Surgent’s Limited Liability Company and Partnership Tax Return Preparation Workshop (E1410211)

Roseland

8/TX

10/21

Cloud Computing (E1410443)

Roseland

6/CS, 2/AA

10/22

Small Business Internal Controls, Security and Fraud Prevention and Detection (E1410453)

Roseland

4/AA, 4/CS

10/22

Fair Value Accounting: Making the Complex Issues Understandable (E1410223)

Roseland

8/AA

10/23

OCBOA: Preparing and Reporting on Cash, Modified Cash and Tax Basis Financial Statements (E1410231)

Roseland

8/AA

10/23

Surgent McCoy’s Federal Tax Camp (E1410010)

Edison

8/TX

10/23

Financial Manager Skills for the 21st Century (E1410383)

Jamesburg

8/MT

10/23

The Top 10 Tax Topics of 2014 (E1410131)

Iselin

8/TX

10/24

Shortcuts to Tax Cuts: Individual Tax, Social Security and Retirement Planning Tools and Strategies (E1410101)

Iselin

8/TX

10/24

Advanced Controller and CFO Skills (E1410393)

Jamesburg

8/MT

10/24

Compilations and Reviews: Engagement Performance and Annual Update (E1410241)

Roseland

8/AA

10/27

Choosing the Best Entity Structure Under the New Tax Law in 2014 (E1410141)

Roseland

8/TX

10/27

Business Law Refresher: What Every Financial Manager Should Know (E1410263)

Jamesburg

8/MT

10/27

Accounting for Deferred Income Taxes (E1410401)

Iselin

8/AA

10/27

The 25 Most Important Tax Aspects of Real Estate Transactions and Investments (E1410171)

Voorhees

8/TX

10/28

Audit Workpapers: Documenting and Reviewing Field Work (E1410341)

Iselin

8/AA

10/28

Gary Zeune’s Fraud: 2014 Alert for Small and Midsized Entities (E1410463)

Iselin

8/AA

10/28

Cut Legal Costs: Prevent Problems, Save Money (E1410273)

Jamesburg

8/MT

10/28

Loscalzo’s Tax Practitioner’s Guide to Accounting and Reporting Issues (E1410071)

Roseland

8/AA

10/28

The 25 Most Important Tax Aspects of Real Estate Transactions and Investments (E1410181)

Roseland

8/TX

10/29

Gary Zeune’s Fraud: Detecting and Preventing Internal Theft and Abuse 2014 Update (E1410473)

Iselin

8/AA

10/29

Loscalzo’s Not-for-Profit Industry Update and Major Accounting and Disclosure Issues (E1410061)

Iselin

8/AA

10/30

Loscalzo’s Guide to Compliance Auditing – Step by Step (E1410051)

Roseland

8/AA

10/30

Gary Zeune’s Fraud in the Affordable Care Act: 15 Biggest Risks for 2014 (E1410482)

Iselin

8/AA

10/31

Surgent’s Handbook for Mastering Basis, Distributions and Loss Limitation Issues for S Corporations, LLCs and Partnerships (E1410081)

Freehold

8/TX

Upcoming Chapter Events Date

Chapter

Event/Code

Location

CPE Credit

9/23

Bergen

Financial Planning (E1409579)

Paramus

4/CS

9/23

Passaic County

2014 Scholarship Golf Classic (E1409659)

Parsippany

N/A

9/24

Passaic County

New Jersey Law and Ethics (E1409439)

Paterson

4/PE

10/1

Mercer

Eldercare Issues (E1410829)

West Windsor

2/CS, 2/TX

10/3

Bergen

Practitioners’ Forum (E1410709)

Hackensack

N/A

10/7

Bergen

Accounting and Auditing (E1410699)

Paramus

4/CS

10/17

Atlantic/Cape May

Tax Topics with Cooper Levenson (E1410739)

Somers Point

4/TX

10/17

Essex

Elder Care Issues (E1410599)

East Hanover

4/AA

10/18

Union County

New Jersey Law and Ethics (E1410769)

Garwood

4/PE

10/20

Southwest Jersey

Social Security (E1410789)

Voorhees

2/TX

10/21

Union County

U.S. v. Windsor (DOMA)/Social Security Planning (E1410759)

Garwood

2/CS, 2/TX

10/22

Monmouth/Ocean

New Jersey Law and Ethics (E1410509)

Neptune

4/PE

10/23

Bergen

New Jersey Law and Ethics (E1410519)

Paramus

4/PE

10/23

Bergen

Bankers Cocktail and Networking (E1410729)

Paramus

1/CS

10/28

Mercer

Business Valuations (E1410839)

West Windsor

4/CS

AA – Accounting & Auditing MT – Management

CS – Consulting Services PD – Personal Development SK – Specialized Knowledge

KEY

EC – Economics PE – Professional Ethics TX – Taxation

MC – Multiple Categories PM – Practice Management

Please note: Events are subject to change. For a full listing of all NJSCPA events, visit njscpa.org/catalog. N E W J E R S E Y C P A • september • october 2 0 1 4

SOCIETY

pages

Get Involved Cybersecurity Tips You Can Implement Now

The aforementioned steps are by no means all-inclusive, nor are they guaranteed. But they will get you a step or two closer to feeling more secure and help you move in the right direction to keep client and personal data safe.

By Victoria Kosuda, CPA, Beyond Financials Consulting, LLC Cybersecurity concepts have always seemed so complex to me and often make me feel like we’re in a no-win situation. They are usually presented in a way that’s unnerving, and I walk away not sure where to begin. At the New Jersey Society of CPAs Convention and Expo, cybersecurity expert Paul Rosenzweig, Red Branch Consulting, spoke on some ways we can be more secure. And for the first time, I came away from this scary and complex issue with action items that were doable even for the non-tech-savvy professional: Always have up-to-date virus and security software running – We all download security software at some point, but whether we keep it up to date is another story. This is your first line of defense for something dangerous getting onto your computer. It’s not a difficult step, and it’s a must. Encrypt your hard drive – Your Windows password is not enough to keep someone from accessing your data if your laptop gets stolen. Encryption software – such as Bit Locker, Pretty Good Privacy, Folder Locker and others – are good options to ensure data stored on your laptop cannot be accessed by others. If you don’t know what it is, don’t click – Typically, the most damage is done when people click on links from some unknown email they receive. By doing so, they’ve invited a bug or hacker onto their computers and opened the door for a multitude of headaches. Remember: Click smart. Use secure, unique passwords – We’re so afraid of losing our passwords that we create a password that is very easy for us to remember, and we use it anywhere and everywhere. There are many password-generating tools that can create one-of-a-kind passwords. You should also use a personal method to create passwords that would only be possible for you to recall, like the first letters from the title of your favorite movie (in mixed case), some numbers together with other special characters. Start using a secure password manager – Software like Last Pass enables you to save and easily manage your passwords. This tool enables you to make your passwords complex enough for a higher level of security, without the fear of losing them or keeping track of them in an unsecure way – like on a piece of paper in your desk drawer. When you access a website where your log-in information is required, Last Pass will log in for you. You then need a very secure password for your password manager and must keep that in a very safe place, such as a bank safety deposit box. Encrypt your files before putting them in the cloud – Rosenzweig likes the cloud and file sharing services like Dropbox. Although Dropbox does have a layer of encryption, once a hacker is inside Dropbox, he or she can turn off the encryption and access files. In order to keep using these services securely, encrypt the files before saving them to Dropbox. There are complex ways to do this with zip files and folders, or you can simply encrypt an individual file.

Victoria Kosuda, CPA, CITP, is the leader of the NJSCPA Technology Interest Group. She is the owner of Beyond Financials Consulting, LLC, a firm specializing in helping small business owners manage their accounting needs through training and software solutions. Contact her at 908-358-4680.

NJ CPA Companies Complete First Annual Month of Service The first annual NJ CPA Month of Service culminated on May 31. Organized by the NJSCPA, this month-long volunteer service program represents the CPA profession’s ongoing commitment to serving the communities where its professionals live and work. CPAs from 18 companies across the Garden State, along with NJSCPA staff, volunteered for a variety of organizations. Participants raised money, collected shoes and food, painted classrooms, read to children, sent care packages to the troops and much more. Here are some highlights: • Southwest Jersey Chapter members participated in the 10th Annual Junior Achievement Bowl-A-Thon in Cherry Hill, raising $4,600-plus for financial literacy education. • Staff at Hill, Barth & King LLC raised $2,800 for the Crohn’s and Colitis Foundation of America. • Staff from Alloy Silverstein helped move more than 30,000 pounds of food at the Food Bank of South Jersey. • Bedard, Kurowicki & Co., CPAs, collected 127 pairs of shoes for Soles4Souls.

NJ CPA Month of Service Gets Rolling. Agostino & Associates at the 10th Annual Accountants Bowl-A-Thon in May in support of the inaugural NJ CPA Month of Service.

N E W J E R S E Y C P A • S E P T E M B E R • O C TO B E R 2 0 1 4

• WithumSmith+Brown’s “Team Withum” walked in support of the March of Dimes “March for Babies,” raising $1,500. • Staff at CohnReznick LLP helped paint classrooms at the Morristown Neighborhood House. • Smolin Lupin & Co., P.A., organized a food drive for the InterFaith Food Pantry in Morris Plains. • Untracht Early participated in the Dress for Success of Morris County’s 8th Annual Live/Silent Auction Gala. To see photos of participants in action during the NJ CPA Month of Service, visit njscpa.org/service.

Get Involved Now Sign up to volunteer with the NJSCPA anytime at njscpa.org/getinvolved. Here are a few activities that need your support now: Young CPAs Food Drive – The NJSCPA Young CPAs Council is sponsoring a food drive for the Community FoodBank of New Jersey Monday, September 15 - Friday, November 21. Support the drive by (1) bringing nonperishable items to NJSCPA headquarters in Roseland. Additional

drop-off locations are listed at njscpa. org/youngcpas. Invite your co-workers to participate; and (2) packaging and sorting food at the Community FoodBank of New Jersey on Tuesday, November 11, or Tuesday, November 18. Contact Lauren Walsh at lwalsh@njscpa.org to participate. Pay It Forward Speakers – Revisit the hallowed halls of high school as a speaker during Pay It Forward week beginning November 10. Tell high school students about the career opportunities that come from pursuing an accounting degree. Our ready-to-go presentation – which includes speaking points, fun facts, quizzes and videos – makes it fun, easy and rewarding. Pick the school or location where you would like to speak when you register online at njscpa. org/payitforward. Contact Lauren Matullo at lmatullo@njscpa.org for more information. NJSCPA Mentor Program – CPA members under age 36 are needed to be mentors for the 2015 NJSCPA High School Scholarship recipients to provide guidance throughout their college careers. Apply online by December 12 at njscpa.org/mentor. Contact Janice Amatucci at jamatucci@njscpa.org for more information.

ADVERTISERS INDEX New Jersey CPA is the only way to reach each of the 15,500 members of the New Jersey Society of CPAs, and 55 percent of readers take action after seeing an advertisement in the magazine – by either purchasing the product, contacting the advertiser, visiting a website or recommending the product or service to a client. For advertising opportunities, contact: Companies A-L Aileen Kronke 770-431-0867 x212/aileen@lionhrtpub.com Companies M-Z John Davis 770-431-0867 x226/jdavis@lionhrtpub.com ADP 3 accountant.adp.com/grow Accounting Practice Sales accountingpracticesales.com

Bank of Ameica Merrill Lynch 15 baml.com Bederson LLP bederson.com

Investors Bank myinvestorsbank.com

Kolinsky Weatlh Management, LLC kolinskywealth.com

Nisivoccia LLP nisivoccia.com

Receive the many rewards listed below when all of the New Jersey-based CPAs at your company are members of the New Jersey Society of CPAs. Here are just some of the benefits of becoming a 100% Member Champion: CPA Candidate Coaching – Receive Society-facilitated instruction for your company’s CPA candidates to help them navigate the CPA Exam application. Education Center Rental Discount – Get a 10-percent rental discount for the NJSCPA education center in Roseland. Visit njscpa. org/rental. Media Opportunities – Become an NJSCPA resource for press interviews and editorial opportunities. New Member Dues Discount – Obtain $25 off the first year of membership for each new fellow member.

ParenteBeard, LLC parentebeard.com

Personal Service – Have a key contact at the Society for questions or concerns. Professional Development – Each CPA staff member can receive two free CPE credits when your company hosts the Society’s free business communications, social media or professional issues seminars. Recognition – Get listed on the Society’s website and at NJSCPA events throughout the year, and receive electronic and print-ready versions of the 100% Member Champion icon for websites and company publications. Tax Time Treats – Enjoy treats delivered to your offices to help keep staff members’ energy levels up during tax time. Learn more at njscpa.org/100percent. Become a 100% Member Champion by contacting Susan Dyer at 973-226-4494 x266 or sdyer@njscpa.org.

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Provident Bank C3 providentnj.com Ross, Rosenthal & Company, LLP rossrosenthal.com

Smolin Lupin & Co., P.A. smolin.com

Spire Group, P.C. spirecpa.com

Traphagen Financial Group C2 tfgllc.com Untracht Early LLC untracht.com

USA VoIP Systems usaphone.com

WeiserMazars LLP weisermazars.com

WithumSmith+Brown 34 withum.com XCel Federal Credit Union xcelfcu.org

N E W J E R S E Y C P A • september • october 2 0 1 4

CAMICO/Bollinger C4 camico.com/momentum

O'Connor Davies, LLP odpkf.com

Reap the Rewards of 100% Membership

SOCIETY

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NJ State Board of Accountancy Report Big Changes Affecting Practitioners on the Horizon Legislative Matters

Newark (June 19) President's Remarks

Board President John F. Dailey Jr., CPA, mentioned he recently attended a northeast regional meeting of the National Association of State Boards of Accountancy (NASBA). Dailey indicated that there were three significant areas discussed at the meeting that the state board should follow closely: (1) upcoming changes to CPE, such as blended learning, nano learning and CPE targeted to specific practice disciplines; (2) significant changes to the peer review program over the next couple of years; and (3) radical changes to the CPA Exam in 2017. Dailey also requested more NASBA participation from the board.

The board accepted as informational a document concerning a change in the extension process for contested cases and public hearings.

Committees

Peer Review Oversight – The board is very satisfied with the New Jersey Society of CPAs peer review program and voted to continue its sponsorship for another year. Also, the American Institute of CPAs may put forth changes in the near future regarding ERISA audits. Some in attendance speculated on upcoming changes to HUD and single audits. Reciprocity – The Society had sent a letter with recommendations for the board to review and consider, which it will do. Monitoring Profession – A document was referenced that summarized changes to

the Uniform Accountancy Act regarding firm mobility, suggesting that state boards work with their respective state CPA societies moving forward. The NJ State Board of Accountancy will take a wait-and-see approach to firm mobility.

Public

NJSCPA President Brad E. Muniz, CPA, mentioned the Society’s upcoming Career Night on October 1 and talked about the recent successful ABT Show (approximately 600 participants) and NJSCPA Convention and Expo (nearly 1,000 attendees). On the legislative front, Muniz indicated that the Society continues to monitor A2921 regarding the number of professionals on the NJ State Board of Accountancy; as well as S1645, a federal mobile workforce bill.

Live quarterly updates from the CEO & Executive Director on issues that impact CPAs and financial professionals.

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N E W J E R S E Y C P A • september • october 2 0 1 4

CLASSIFIEDS Marketing Support Save 20 percent on PR, marketing, branding and coaching services with PRCounts, an NJSCPA Member Benefit Provider. Contact Eileen Monesson at 609-570-2150 or emonesson@ prcounts.com; prcounts.com.

Mergers/Acquisitions New Jersey practices for sale: Englewood/ Bergen County practice, gross $74K; northern Monmouth County practice, gross $360K; Newark EA practice, gross $190K. For more information, call Bradley Holmes at 800-397-0249 or visit accountingpracticesales.com to view all listings and register for free email updates. Are you a CPA building your practice? I am a sole practitioner with staff and a significant practice in central New Jersey interested in bringing in a future partner. Please contact me to see if this might be a win-win situation for us both. Please fax your contact information to 609-890-7598 and reference NJCPA in the cover letter. Well-established Essex County firm seeks small to medium-sized firms contemplating client services succession and/or expansion. We put our clients above all else. Office space accommodates 30-plus. Contact us to align with a growing brand of CPAs like you. File 12213 Brick, NJ, CPA firm seeks tax/accounting firm or retirement-minded practitioner to merge/acquire practice. Contact Ron, 732-295-7100 or ron@ ronrapkacpa.com. Traphagen Financial Group, a well-established firm in Bergen County with diverse client base and credentialed support staff, is seeking small firms and sole practitioners for acquisition or merger. We are looking for firms ranging in size from $300,000 to $700,000. This is an opportunity to align with a quality firm while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity, please email us at iaishia@tfgllc.com. Parsippany, NJ. Three-partner CPA firm seeks retirement-minded practitioner to merge/acquire practice ranging from $100K and up. Please contact Carl Gutt, 973-451-0800 x22 or cgutt@ dglcpa.com. The Curchin Group, LLC, a central NJ, Monmouth County firm is seeking to merge-in near-retirement sole practitioners and small firms needing succession planning. Other individuals seeking growth and expansion are welcome to inquire. Initial practice continuation also an option. Reply in confidence to Peter Pfister, CPA, at 732-747-0500 or ppfister@curchin.com.

Essex County CPA looking toward retirement: gross $300K. Looking for CPA to eventually take over practice. Small existing client base and strong tax background desirable. File 060914 Morris County CPA firm with retirement-minded partner seeks CPA to acquire practice. Remaining partner and key employee will stay on during transition. Practice is 95-percent tax prep, grosses $450K and is peer reviewed. Call 973-971-9966 or email pgmcpa@aol.com. Thinking of selling your practice? Accounting Practice Sales is the leading marketer of accounting and tax practices in North America. We have qualified buyers waiting and the experience to help you find the right fit for your firm and negotiate the best deal possible. For information about our risk-free and confidential services, call Bradley Holmes at 800-397-0249 or email bradley@apsleader.com. Buyers see listings and register for free email notifications at accountingpracticesales.com.

Real Estate Real estate appraising/consulting. Commercial/industrial/residential; expert witness; business valuations. Contact Charles A. McCullough, CPA, M.B.A., State Certified General Real Estate Appraiser, American Society of Appraisers member: cmccullough@camcpavalue.com, 609-923-5879; renwickandassociates.com, 856-779-7050. Professional office building for sale: 39 Tallman Place, Englewood, NJ. Fully renovated multi-level, professional, freestanding building located in the heart of Englewood with 15-plus ample parking spaces. Call Peter at 551-265-3733.

Classified Advertising Replies to ads with file numbers should be sent to:

Seize a merger/acquisition opportunity with benefits for you. Tired of dealing with issues of running a firm? We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across northern NJ, Westchester and the Hudson Valley region. Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit glcpas.com; email me, Phillip Goldstein, CPA, managing partner, philg@ glcpas.com; or call 800-839-5767 to have a confidential conversation.

File______________________ New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723 To see additional classified listings or to place an ad, visit njscpa.org/classifieds.

Young Union County CPA firm is looking to acquire a firm in the $300,000 to $800,000 range. Please contact Spiro Leunes at 908-358-0503 or sleunes@llicpa.com.

Professional Services Add a wealth management division to your accounting practice. Successful Bergen County high net worth financial planning and money management firm wants to work with your firm to create a financial services division. For 30-plus years we have been successfully implementing professional partnerships with CPA firms to increase their revenues by offering financial products to their clients. Contact Steven Kolinsky at 201-474-4012 or skolinsky@ kolinskywealth.com.

Magazine of the

Nov • Dec 2014

November/December – Coming Attractions

Tax Matters l

Annual Update

Notice of Bulk Sale

Cloud Computing and Taxation

Tax Return Identity Theft

N E W J E R S E Y C P A • september • october 2 0 1 4

New Jersey Society of Certified Public Accountants

STUDENT

outlook

Should You Be Paid for Your Internship? B y J oseph R. Hark II, Bentle y Universit y

n a June 2013 hearing, U.S. District Court Judge William Pauley ruled that Fox Searchlight Pictures was liable for violating federal labor laws by failing to pay interns on the set of the movie Black Swan. Since that decision, many unpaid interns have been suing former employers for back pay. It may be worthwhile for you to understand the basic labor laws surrounding unpaid internships at both the federal and state levels. The federal government has adopted a six-part test to determine if an internship can be unpaid, based on guidelines from the 1947 Supreme Court case Walling v. Portland Terminal Co. New Jersey has also made it more difficult to permit unpaid internships by implementing an eight-part test. For both tests, all requirements must be met for the internship to be unpaid.

Federal Test

• The internship, even though it includes actual facility operation of the employer, is similar to training which would be given in an educational environment. • The internship experience is for the benefit of the intern. • The intern does not displace regular employees, but works under close supervision of existing staff. • The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded. • The intern is not necessarily entitled to a job after the internship. • The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

New Jersey Test

• The intern must be at least age 16. • The activity must be related to a

•

• •

•

formal school-to-work transition plan for the intern. There is collaboration and planning between worksite staff and school staff resulting in clearly identified learning objectives related to the nonpaid activities. Any productive work is incidental to achieving learning objectives. The intern receives credit for time spent at the worksite, and the intern is expected to achieve the learning objectives. The intern is supervised by a school official and a workplace mentor. The nonpaid activity is of a limited duration, related to an educational purpose and there is no guarantee or expectation that the activity will result in employment. The intern does not displace an employee.

Perhaps the most difficult criteria for businesses to meet is determining which party ultimately derives benefit: the business or the student. For the student to benefit, he or she must develop skills that could be applied in the future and at varied employment settings. If the student is simply performing clerical tasks, then the benefit is clearly to the business. To be unpaid, the business must derive no value from the intern’s work, and if it should happen it should be accidental. If the intern is doing work that could displace other workers or if the intern does not have continual close supervision, regulators and investigators will likely see the internship as failing to meet the required test. In fact, government regulators have stated that internships should only be unpaid in very rare circumstances.

Nonprofits

Federal regulation permits unpaid internships in the public sector and in nonprofit organizations as long

as the intern volunteers without the expectation of wages. However, this could potentially change in the near future as the regulation is currently under review. Although federal law has differing regulations governing forprofit and nonprofit organizations, New Jersey law treats nonprofits the same as for-profit businesses. Consequently, nonprofits hiring interns in New Jersey are subject to the eight-part test. New Jersey is generally much more stringent than the federal government with unpaid internship regulation. State regulation requires that formalized school-towork transition plans be in place as well as designated school officials and workplace mentors for the student. Companies should review their internship programs with an attorney to make sure they comply with federal and state regulations. Many attorneys advise their clients to compensate all interns simply as a safeguard against future lawsuits. The Department of Labor’s website (dol.gov) is a good source of information for regulations and updates. Joseph R. Hark II is a student at Bentley University. He is a New Jersey Society of CPAs Student Member. Contact him at josephhark@gmail.com.

N E W J E R S E Y C P A • september • october 2 0 1 4

LEGISLATIVE

views

Legislative Happenings B y J effre y T. K aszerman , NJ SC PA Government R elations D irector

NJSCPA Issues Recommendations to Improve Local Government Audit Process

In late 2013, the New Jersey Society of CPAs organized a task force of members with expertise in local government auditing to draft legislative recommendations to improve local government audit and internal control processes in New Jersey. After reviewing New Jersey’s and other states’ governmental auditing laws, the task force focused on developing practical recommendations that could be incorporated into legislation. These recommendations were provided to Assemblywoman Nancy Munoz who has expressed an interest in introducing legislation to address these issues. The task force’s primary recommendations are: • Require local government entities to have audit committees. • Require basic financial training for all members of the governing body of local government entities. • Provide more follow-up on the implementation of corrective action plans by making this oversight a key responsibility of the audit committees. The Society looks forward to working with Assemblywoman Munoz on shaping legislation that will improve accountability and transparency for local governments in New Jersey.

Society Lobbies Congressional Delegation to Oppose Accrual Accounting Requirement

The NJSCPA is working with the American Institute of CPAs to educate the NJ congressional delegation on the negative impact that proposals to require certain businesses to switch

from cash to accrual basis accounting (for tax purposes) would have on these businesses. The proposed Tax Reform Act of 2014, issued by House Ways and Means Committee Chair Dave Camp, included such a provision as did a tax reform discussion draft released by the Senate Committee on Finance. Although there are some differences, both discussion drafts include a proposal to eliminate the use of cash basis accounting for most pass through entities and personal service corporations that have gross receipts of more than $10 million. The proposals would require virtually all service companies with gross receipts greater than $10 million currently using the cash method of accounting to change to the accrual method of accounting, which would increase administrative burdens on such taxpayers. Congressman Camp’s proposal, part of a comprehensive tax reform proposal, has not picked up any traction in Congress and seems moribund. However, various provisions in the proposal could easily be introduced as separate pieces of legislation or incorporated into a future version of comprehensive tax reform legislation. Restricting the use of cash accounting would significantly affect organizations that perform services in the fields of health, law, engineering, architecture, accounting, actuarial services, farming, performing arts and consulting. The CPA profession is unduly harmed as firms must be capitalized solely by the individual professionals who together own the firm and cannot raise capital from outside investors. The NJSCPA sent letters to the NJ congressional delegation voicing opposition to the provision. Senator Cory Booker and two House members agreed to sign the letter opposing the

switch. We will continue to monitor the issue and lobby against this provision being included in any tax legislation that Congress considers.

New Law Makes It Easier to Track Federal Spending The Digital Accountability and Transparency Act, signed by President Barack Obama in May, paves the way for easier tracking of federal spending data. The NJSCPA, AICPA and many other state CPA societies strongly supported this legislation. The new law calls for the disclosure of direct federal agency expenditures and will link federal contract, loan and grant spending information to federal programs, thereby enabling taxpayers and policy makers to track federal spending more effectively. It requires the U.S. Treasury Department and the Office of Management and Budget to adopt a nonproprietary, platform-independent data standard, such as eXtensible Business Reporting Language (XBRL), for the reporting of federal budget and spending information. Use of a data standard like XBRL will provide consistent, reliable and searchable governmentwide spending data that is displayed on usaspending.gov. “The new law will make it possible for NJ residents to track federal spending through the use of a data standard like XBRL,” said NJSCPA CEO & Executive Director Ralph Albert Thomas, CGMA. “XBRL allows for easier access to more transparent information, and the ability to follow the flow of federal dollars is a cornerstone of good government.”

N E W J E R S E Y C P A • september • october 2 0 1 4

MEMBER

profile

This CPA Gets a Kick Out of Coaching By David Plaskow, NJSCPA Communications Manager

atrick M. Trombetta, CPA, had a pretty typical childhood growing up in Woodbridge. He had the typical love/ hate relationship with his brother and sister, and he immersed himself in sports such as soccer, baseball and wrestling. While it probably didn’t seem like it at the time, he made a life-changing decision in high school where he took his first accounting class. “It was an entry-level class that I really enjoyed,” says Trombetta. “I’m an analytical guy who’s always liked math. Later on, I decided to major in accounting at Seton Hall.” Trombetta graduated with a B.S. in accounting in 1984 and took a staff accounting position at a firm that’s changed names a few times through mergers and acquisitions, which today is MSPC, and it’s where he’s been ever since. “I became a partner 10 years ago, and my specialty is auditing employee benefit plans in the construction sector,” notes Trombetta. “I prefer the public sector because you get to work with different companies on a greater variety of projects.” Trombetta admits that the first time he took the CPA Exam, he may have taken it a little too lightly. “I basically fell on my face,” he explains. “So, the second time I took the exam I gave it the full-court press and locked myself away for a summer just studying.” He got the accreditation in 1987, calling it “one of the most important things needed for advancement in the profession.” The following year, Trombetta joined the New Jersey Society of CPAs. “The Society does a great job of keeping you abreast of current issues impacting accountants,” he declares. “The information we receive from the NJSCPA is extremely helpful.”

When he’s not reviewing the books of builders and construction unions, Trombetta likes to travel. “I like the islands, places that aren’t heavily populated where the phone isn’t ringing off the hook and there’s no email service,” laughs Trombetta. “Not long ago, a few of us partners at MSPC and our spouses took a trip to Italy which was a great time.” But it’s that passion for sports – and coaching in particular – that’s in Trombetta’s blood. He was even the captain of the MSPC softball team. You would think Trombetta would have had his fill coaching his three children’s sports teams while they were growing up. But no; in 2004, he answered a newspaper ad from the Princeton Day School looking for a soccer coach for middle school boys. “I wanted to gain more coaching experience so I could one day coach at the high school or college level,” says Trombetta. He achieved this goal in 2007 by being promoted to varsity coach of the girls’ soccer team. “Princeton Day School is small, but the staff and parents are very supportive and the kids are great,” he adds. In 2008, in just his second season as coach, Trombetta’s team won the state prep championship, followed by another title in 2010. Trombetta’s crowning achievement came in 2013, however, when he helped win the school’s first-ever county championship. “What makes this title

special is that Mercer County soccer is very competitive, and we had to beat some large public school powerhouses,” says Trombetta proudly. Trombetta’s efforts didn’t go unnoticed. In 2013, he was named soccer coach of the year in Mercer County. “There are 20 schools in Mercer County that voted, and it was very gratifying to receive this award from my peers,” says Trombetta. His coaching has also been recognized by The Star-Ledger, The Times of Trenton and The Princeton Packet. “I’m really grateful to the partners at MSPC and especially to my family who afford me the time to coach and recognize that it’s important to me,” says the Cranbury resident. Much of his coaching philosophy applies to his professional life as well. “Team chemistry is very important, along with being a good leader and a good teacher. In soccer, as in accounting and life itself, you need to be an effective communicator and goal oriented.”

N E W J E R S E Y C P A • september • october 2 0 1 4

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