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cpasolutions an educational guide for cpa products and services | 2011

Accounting for Change What You Need To Know As The Recovery Continues

Secrets of Due Diligence Revealed

Why CRM Should be Part of Your Competitive Strategy

Being the Media: How to Get Your Message Heard

Tracking CPE Online – The Way of the Future

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he 2011 inaugural issue of CPA Solutions is a complete guide to information, products and services for CPAs and other financial professionals across the country. In these pages you will find ways to improve your audits, your presence in the media and the management of your firm’s staff, as well as services that will make your business more efficient and more profitable. Please contact our contributors and advertisers for additional information about the ways they can help you, and enjoy the first issue of CPA Solutions. EDUCATION 4 Carlow University Offers New Program in Fraud and Forensics 5 A Solution to the Shortage of Seasonal Tax Preparers


6 3 Steps to Better Audits Using Data Analysis 7 Add Revenue, Enhance Relationships and Gain Clients with BIQ MARKETING 8 Tax Planning Letters: The Best of Both Worlds 9 Presenting Information with the Right Data Graphic 10 I Want My CNBC! How to Meet the Media 12 Getting Your Message Heard REGULATIONS 14 Risk in the 21st Century 15 ALL Speeds Up CPA License and Firm Registration Process 16 Preserving the Assets of People with Special Needs 18 Electronic Payments Reaching Critical Mass Management 20 Supporting Firm Performance Through Engagement Reviews 21 Track Time, Save Money with Time and Billing Software 22 Capitalizing on the Employee Benefit Space 23 What CPAs Need to Know About Self-Directed Retirement Accounts SERVICES 24 What Your Clients Want: Nationwide Survey Findings 25 Online Tracking of Credits will Revolutionize Compliance 26 Due Diligence Secrets Revealed! 28 Selecting a Sales Task Management Service 30 Should Your Competitive Strategy Include CRM?

Timothy M. Warren Chairman

©2011 The Warren Group Inc. All rights reserved. The Warren Group is a trademark of The Warren Group Inc. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: The Warren Group, 280 Summer Street, Boston, MA 02210. Call 800-356-8805.

Timothy M. Warren Jr. CEO & Publisher

Vincent Michael Valvo Group Publisher & Editor in Chief George Chateauneuf Publishing Division Sales Manager

Christina P. O’Neill Custom Publications Editor Cassidy Norton Murphy Associate Editor

David B. Lovins President

Emily Torres Advertising, Marketing & Events Coordinator

John Bottini Creative Director

Jeffrey E. Lewis Controller/Dir. of Operations

Stefanie Magner Advertising Account Manager

Scott Ellison Senior Graphic Designer Ellie Aliabadi Graphic Designer

CPA Solutions 2011 | 3


Carlow University Offers New Program in Fraud and Forensics

Online Degree FocuseS on White-Collar Crime


eginning with the fall 2011 semester, Carlow University, located in Pittsburgh, Penn., will offer a new master of science degree in fraud and forensics that is dedicated to the detection, investigation, prevention, and remediation of white-collar crime. “Carlow University developed this program to meet ‘the next great need:’ preventing, investigating, and finding solutions to white collar crime. At the core of the program is Carlow’s ongoing commitment to ethical and professional conduct,” said Dr. Mary Hines, the president of Carlow University. “With the guidance of experts in the field from across the United States, faculty worked diligently and rapidly to provide a broad-based, learner-centered, this accessible and short-term program can be completed online in a year.” The program, which is offered entirely online, was designed with the help of licensed experts from law enforcement, government agencies, accounting firms and the corporate community, making it the first of its kind in the region, and one of few of its kind in the United States. Carlow’s program also fulfills the requirements for the certified fraud examiner (CFE) exam, and also meets Pennsylvania’s 150-hour requirement for the certified public accountant (CPA) exam. “Carlow’s fraud and forensics master’s degree program is a response to the need for advanced training and education in the field of white-collar crime, as a result of global financial crises, increasing rates of whitecollar crimes, and the growing instances of occupational fraud,” said Margaret K. McLaughlin, Ph.D., the provost of Carlow University. According to the 2010 Report to the Nations on Occupational Fraud and Abuse from the Academy of Certified Fraud Examiners (ACFE), organizations lose 5 percent of annual revenues to occupational fraud, which is more than an estimated $2.9

Carlow University introduced its new master’s degree in Fraud and Forensics with a press conference on March 16. Pictured at the press conference are, from left: Andrew Richards, U.S. Postal Inspection Service; Ken McCrory, from the accounting firm of McCrory & McDowell; John Schwab, from the law firm of Pietragallo Gordon Alfano Bosick & Raspanti, LLP; Dr. Diane Matthews, Carlow University; Jackie Weibel, a Carlow alumna and detective in the Allegheny County District Attorney’s Office, Fraud Investigation Unit; Stephen Zappala, district attorney, Allegheny County; James W. Kraus, Pietragallo Gordon Alfano Bosick & Raspanti, LLP; and William Miller, Allegheny County District Attorney’s Office, Fraud Investigation Unit.

trillion of the gross world product. The report goes on to state that “certified fraud examiners are the first line of defense for safeguarding organizations, investments and the economy.” “Carlow is offering a program that helps students join the frontline in uncovering and preventing fraud like Ponzi schemes, identity theft, misuse of funds, hidden assets, and other white-collar crimes,” said Diane Matthews, Ph.D., director of the Fraud and Forensics program and associate dean of the School of Management at Carlow. “At the completion of the degree, students will be prepared to work for organizations that investigate fraudulent activities.” A partial list of such organizations include the Federal Bureau of Investigation, the Department of Defense, the Department of Justice, the Internal Revenue Service, the U.S. Postal Service, insurance companies, health care organizations, financial institutions, accounting and forensic accounting firms and law firms. The Carlow program in fraud and forensics is flexible and can be completed in one year (August to August). In addition, the program: • Emphasizes ethical and professional conduct.

> visit Carlow University online at 4 | CPA Solutions 2011

• Develops investigative, analytical, and critically analysis skills. • Organizes, simplifies, and synthesizes results of discovery. • Strengthens oral and written communication skills; behavior analysis skills; interpersonal skills; management skills; and leadership skills. • Integrates accounting, auditing and investigative skills. “Additionally, Carlow’s partnership with ACFE gives students access to the latest news and resources for forensic examiners,” said Matthews. The 11 courses each can be taken in fiveweek intervals. Local and national experts currently working in their respective fields, as well as Carlow faculty, will teach classes and seminars. Two of the courses offer real-time online seminars that students can participate in from anywhere in the world. It’s not too late to apply for fall 2011. For more information about Carlow’s master of science degree in fraud and forensics or to apply for the program, please call 1-800-333-2275 or 412-578-8764.


A Solution to the Shortage of Seasonal Tax Preparers By Chuck McCabe


PAs are rarely taught how to prepare individual and small business tax returns in college. Those who have become competent tax preparers have usually learned this skill through continuing education after passing the CPA exam. Many large CPA firms have developed their own in-house education institutions and faculty to provide practical continuing education for their employees. Small and mid-sized CPA firms are more likely to outsource education. CPA firms that provide tax services typically have at least one partner who is a tax expert. However, individual and small business taxpayers may not be willing or able to pay the high hourly rate of a tax partner to prepare their returns. Therefore, most CPA firms need to develop a source of lower-cost qualified tax preparers, including paraprofessionals who are available on a seasonal basis. Unfortunately, there is not an abundant pool of qualified tax preparers available to meet this need. The Income Tax School (ITS) provides affordable practical solutions for CPA firms to develop qualified tax professionals in-house. ITS offers two options: (1) a turn-key system for the CPA firm’s tax partner(s) to provide live classroom instruction with minimal preparation required; and (2) e-learning courses

and seminars supported by ITS instructors or by the CPA firm’s tax professional.

Option 1: Classroom Instruction Classroom instruction includes student texts and instructor guides complete with lesson plans, homework assignments, quizzes and exams, and teaching techniques and aids. The instructor needs only tax knowledge and communication skill to teach the courses. Instructor preparation is limited to reading the student text and reviewing the instructor guide to ensure an understanding of the topics and the answers to the quizzes, homework assignments and exams. Benefits of live classroom instruction: • Observe candidates before hiring them • Teach interview techniques through roleplaying • Student interaction enhances learning • Instructor develops a rapport with students

Option 2: Online Instruction All ITS courses and seminars are available as interactive e-learning programs that enable students to study independently any time, 24/7, wherever there is Internet access. The e-learning management system automatically

grades homework, quizzes and exams and provides instructional feedback. Instructor support is provided by email and a student forum is available. The curriculum is the same as for live classroom instruction. Benefits of e-learning include: • Accessible from any computer with Internet access • No classroom teaching and equipment required • Automatic grading on all homework, quizzes and exams • Easy monitoring of students’ progress • Easy online access to useful resources • Students can work at their own pace • Accommodates students unable to attend live classes CPA firms can also use a combination of classroom and e-learning to reduce the number of classroom hours for the instructor and the students, while still providing live interaction. Chuck McCabe is president and CEO of Peoples Income Tax, Inc. and The Income Tax School, Inc. For more information, call 800984-1040.

> visit The Income Tax School AT

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Access and analyze large volumes of data in seconds to: Identify errors and detect fraud Extend your auditing capabilities Meet documentation standards For a free demonstration CD of IDEA, contact us at or call 888-641-2800.

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CPA Solutions 2011 | 5


3 Steps to Better Audits Using Data Analysis B y C a ro ly n J . N e w m a n can help you develop more specific questions during preliminary analytical review.

Step 2: Dig into the Analysis


lient retention remains at the top of the priorities list for CPAs, and fee pressures can be alleviated when a firm adopts data analysis technology to help lower the costs of their audit and add more quality to their work – including wowing their clients with what they’ve found. For example, firms like Macias Gini & O’Connell – a statewide CPA and business management firm based in Scramento, Calif., ranked among the fastest growing CPA firms in the nation – handles numerous government clients, entities with thousands of employees processing hundreds of thousands of transactions. The firm’s managing partner, Jim Godsey, believes data mining with good analytic tools changes everything, especially when you consider the only alternatives are random sampling and more aggressive interviewing procedures – both of which tend to underwhelm board members when it comes time for audit closing meetings. “The profession is relying heavily on internal controls. In a large company with a lot of transactions, you’re not in a good position with random sampling,” Godsey said. Audit closings based on random sampling get couched in theoretical terms; they describe probabilities of risk that are not well understood by the board members, he said. “It’s not as pressing as actually showing them, ‘Here are 500 transactions where your policy says these should have been

getting a second approval and that approval is missing.’ People at the board level, they’re fascinated by that. Their reaction is, ‘Whoa! That’s impressive.’” The best solution for firms that want to implement data mining tools for more effective (and profitable) audits is to first understand how their use changes the process of conducting each engagement. You can’t mine the data without obtaining the data. And you should always identify prior year procedures that can be dropped because of the powerful evidence data mining provides. Following are three steps to help you get started.

Step 1: Find the Mother Lode The general ledger (GL) is the core of the financial reporting system. First, request a detailed year-to-date GL report in electronic form, including detailed transactions with user input information. Data analysis tools allow you to analyze 100 percent of the GL data to gain an overall understanding of what has transpired during the year. Next, import the GL into the data analysis software, which can handle large amounts of data in all forms, from PDFs to ERP views or extracts. Once the data is imported, check the field statistics and perform a summarization to see the account activity. The summarized data will show the dollar changes in each account as well as the number of items or entries affecting each account. This information

> visit Audimation Services, Inc at 6 | CPA Solutions 2011

Data analysis software can be used “forensically,” to gain greater insight into the organization’s business activities and identify anomalies. The data can be extracted, sorted, searched, grouped and joined to look at the data from different angles. Some of the more commonly used features are field statistics/ manipulation, stratification, summarization and pivot tables. Using these capabilities, you can identify duplicate items, detect gaps in numeric/date/alphanumeric sequences and conduct an age analysis. Sampling is also key in testing a sub-set population, then using the results to draw a conclusion about the entire population.

Step 3: Review and Share the Results IDEA from Audimation Services, Inc., is the only data analysis tool that includes a project overview feature to present a graphical representation of the entire audit or investigation process, which may be shared with clients, or used to meet documentation requirements. The graphical overview includes all the actions performed within a Working Folder, including the creation, deletion, and modification of databases. Effective auditing requires the adoption of data analysis to get more work done with less effort, without compromising quality. For more than 20 years, top accounting firms have used IDEA® – Data Analysis Software to help improve audit performance, identify errors and detect fraud, and meet documentation standards. More importantly, IDEA helps CPAs keep their clients happy. Carolyn Newman, CPA, CISA, is the president and co-founder of Audimation Services, Inc., the sole U.S. distributor of IDEA® – Data Analysis Software.


Add Revenue, Enhance Relationships and Gain Clients

the Building Investment Quotient B y To n y B o n i fac i c


SSI has been doing CPA conferences across the nation for years, and after talking to thousands of CPAs, one thing is painfully clear – you folks are really busy! No wonder it’s hard to find new clients and grow your business. With all your work, new laws and rulings, there’s just way too much to do to pile on other specialties, no matter how much revenue it derives. Well, we have a solution that will allow you to grow your business, add thousands in new revenue, enhance your client relationships, and gain new clients at no cost to you. Surprisingly enough, we find that about 25 percent of the CPAs we speak with are not familiar with cost segregation. About 25 percent have had it applied for their clients, and while the other 50 percent are familiar with it, they nevertheless have not utilized this tax benefit for their clients. And the market is huge, over four million properties with less than 10 percent studied. One reason is because they aren’t engineers, and the IRS stipulates the use of individuals with building, construction, or engineering experience. Yes, the Big Four may have an engineering department, but how about you? Do you have engineers on staff available to do a cost segregation study? Or do the Sarbanes-Oxley directives regarding conflicts of interest preclude you from preparing an objective study? The government thinks so. Do you already have enough clients and revenue? Or are you simply overwhelmed?

An Automated Solution So how can you provide your clients the cake, and let them eat it, too? Easy, avail yourself of the BIQ! The what? The “Building Investment Quotient,” or BIQ, our patent-pending process that we can make available to you at no cost. While we have this available to bankers and real estate firms for analytical purposes, only CPAs can offer this as a turnkey service. That’s because

we know you understand depreciation and you have the figures in your possession to enable us to provide a quick and accurate feasibility study for you or your clients.

How Does it Work? We simply assign you an ID and password for entry into our server. You grab your depreciation schedule or cost information and provide the basics, like building type, location, date of acquisition or renovation completion and building cost. In about one minute – that’s right, about one minute in processing time – we will provide you with a complete analysis. We can do this because we have adjusted our algorithms on a continuing basis since day one and we have done over 6,000 properties of virtually every type. Our lead engineer developed this initial protocol for the attorney who worked on the landmark HCA case, the case that won these benefits for all commercial property owners.

Purchase Cost (purchased 1/1/10) Land Building Tax Rate 39-year straight line method Tax Year 39-year cumulative depreciation Cumulative after-tax benefit Cost Segregation Method Tax Year 5-year 7-year 15-year 39-year Total cumulative depreciation Cumulative after-tax benefit

What Exactly is Provided? You will get a complete analytical package and everything you need to save your clients a ton of money. The average return on investment for your client is 10 to 20:1 and the cash flow benefits come in at an average of $60,000 to $100,000 for every million dollars of building value. We’ve done projects in the hundreds of millions, and we’ve done projects for $300,000; beauty salons, apartment buildings, and office condos. The package includes: • Executive summary • Fee breakdown • Property analysis • Typical 25- and 40-year holding period NPV/FV • Engagement letter • Building information requirement list • Cost segregation overview

continued on page 27

$1,250,000 $250,000 $1,000,000 33 % 2010 $25,641 $8,452

2011 $51,228 $16,905

2010 $70,000 $10,000 $10,000 $17,227 $107,226 $35,384

2011 $140,000 $20,000 $20,000 $34,454 $214,452 $70,769

> visit Cost Segregation Services At CPA Solutions 2011 | 7


Tax Planning Letters

Printed and Online: The Best of Both Worlds B y M a rc u s W h i t i n g front desk, hand them out at meetings and conventions, and include them in client tax returns.

Online newsletter


hether in a profitable or a struggling economy, it’s essential to develop and maintain relationships with your clients and prospects. By consistently marketing your firm, you will be able to define your client base, create relationships, and achieve continued stability and growth. One of the most proven ways to market your firm and communicate with clients and prospects is with a newsletter. And one of the best marketing newsletters you can send focuses on the one topic individuals and businesses respond to more than any other – taxes and ways to cut them. Mostad & Christensen’s Tax Planning Letters are loaded with valuable information that is up to date, easy to read, and best of all, easy for you to provide to clients – in two formats: printed and online. The smart choice for the prudent accounting professional is to use both versions. Here’s why!

The best of both worlds Combining the use of printed and online newsletter formats allows you to cover all bases in your marketing strategy. Each format has its own advantages, including the following.

Printed newsletter Powerful image-builder. A well-designed, informative newsletter is perceived to be of value and gets read by most recipients. High response rate. Printed newsletters make the greatest impression on the reader and generate comparatively higher response rates than email. Higher retention rate. Printed newsletters are retained for longer periods of time (compared to visiting a website, for example). Prominently display your firm logo and contact information on the newsletter to keep your firm name in front of the recipient. Multi-use. There are many ways to distribute your printed Tax Planning Letter. Mail them to clients, display them at your

> visit Mostad & Christensen, Inc., at 8 | CPA Solutions 2011

Greater accessibility. More people can read your online newsletter from any location at any time. They can bookmark the link and return to it when they choose. Linkable to your social media accounts. Link to the online letter from your blog or Facebook accounts and post an announcement when each new issue is published. More announcement options. Send announcement emails to clients prompting them to visit your site to read the latest edition of your newsletter. Announce each new issue via Twitter and provide a teaser line that will prompt clients to read the articles. When you subscribe to M&C’s Online Tax Planning Letter, we’ll send you a “Client Email Alert” that’s ready to email to clients and prospects. Use it to announce that a new issue is on your site – you’ll boost letter readership and client engagements. No extra work on your part. Simply add the Online Tax Planning Letter link to your website to give your clients year-round access to current tax planning strategies. You can create successful client relationships by providing timely, valuable information and assistance when needed. By doing so, you will develop a rapport and level of trust with clients, who will then continue to use and recommend your services. M&C’s Tax Planning Letters help you achieve this important level of communication with clients. Our products are 100 percent guaranteed. No exceptions. No conditions. No time limits. Marcus Whiting is the web marketing director for Mostad & Christensen, Inc., a producer of marketing products for CPAs. For more information, call 800-654-1654.


Presenting information with the right data Graphic B y J u d y B o r s h e r a n d L i n K ro e g e r


hen presenting financial data, we use software tools to help enhance the message. Often we choose too many features to make the presentation beautiful or colorful and inadvertently reduce the clarity of the message. This article will help you understand “must-know” choices when using business graphics. Effectively presenting financial data requires identifying two important pieces of information: (1) What do you want the recipients of the data to take away from the data? For example, you may need to present detailed results of fundraising campaigns or allocations of personnel costs to programs. (2) What will the recipients do with the data? For example, recipients may need to understand demographic or geographic influences related to sales or cost allocations to program areas. Answering these two questions enables you to answer the presentation questions themselves: What format best represents the data? How should the format be used to send the intended message? The data need to be presented to meet your needs and the needs of the recipients.

What message are you sending and are they seeking to receive? Financial data drives decisions. Are the data you’re presenting enabling someone to commit funds to a project? Change the marketing options in a business unit? Justify the hiring or firing of employees? Set priorities for the coming year? Invariably, you will have a point of view, and the recipients will have a point of view. These two perspectives often differ, so you must analyze what both points of view are and how they are compatible or incompatible. Once you understand the data, you can decide how best to present the message. If the recipients of the data can’t easily identify the message, they will find a message in the data that suits their purposes, not those of the presenter. So the data require a title that states the message of the graph or table, and the

data should efficiently represent that message. For example, assume you are presenting data that show unexpected results for the quarter, and you believe those results are abnormal. Your audience, though, wants to use the unexpected results to justify a key decision to implement change. Your job is to present the data accurately, and clearly communicate that the data are the result of unusual circumstances and are unlikely to be repeated. You must limit the ability of the recipients to ignore the message and base a decision on data that doesn’t support that decision, so you would present the data with a title that communicates the message of the graph or table. In another example, you might present data that show a positive result from a series of recent financial decisions, and the audience is eager to have those positive results shared. So you will present the data with a title that communicates that the key financial decisions paid off with good results.

What format best represents the data? When considering how to present the data in graphic form or a table, rely on the message you are delivering. Choose a graph that sends the message of the data effectively: No matter how beautiful graphs can be, the role of the graph is to deliver information. Bar and column charts show comparisons; column and line charts accommodate time or frequency components; pie charts show how components compare to the whole. Experts in graphs tend to see the pie chart as the least useful because the messages they send are often sent more clearly with bar or column charts. Experts also suggest that unless a 3-D view clarifies the message, choose the 2-D option.

How should the format be used to send the intended message? Data need to be presented simply. Select an appropriate graph or table, and eliminate extra information such as unnecessary color, lines, images and extra fonts.

The requirement for effective presentation of financial data is to ensure the data communicate the message intended by the presenter and the information the recipients need. Unfortunately, using the many tools available can lead either to obscuring or clarifying the message(s) of the data. • Provide context for the data: Presenting results as absolute numbers doesn’t help recipients understand whether the data are beneficial or damaging. Consider presenting the numbers as percentages, or perhaps in comparisons to the previous or expected results. • Present financial data at an appropriate level of detail: Excessive detail masks the information, so present numbers as simply as required by the message the recipients need to understand. Consider eliminating decimal places or rounding up so that the recipient can understand the significance of the numbers without having to filter details. PowerPoint remains the dominant tool used to present financial data. Fortunately, PowerPoint is a rich tool with many appealing, sophisticated options for presenting data. Unfortunately, that richness can quickly become problematic. PowerPoint all too easily becomes distracting if too many special effects are used. It can be an effective tool for organizing thoughts and delivering content to a large audience of people with different learning styles, but presenters often depend too heavily on multimedia effects that overwhelm the main points. We strongly suggest that the three best message delivery tools are slides with bulleted lists or SmartArt bullets; slides with simple bar, column, and line charts; and a handout that includes supporting documentation. Judy Borsher, CPA, MBA, CITP, MCT, is president and Lin Kroeger is a business partner at SCG Training & Consulting Corporation. For more information about upcoming webcasts and classes, call 703-298-5692.

> visit SCG Training & Consulting Corporation at CPA Solutions 2011 | 9


I Want My CNBC!

How to Meet the Media By Joseph Finora


alk into any electronics store. Invariably you’ll find a few middle-aged men huddled around a big-screen TV watching CNBC. Visit a newsstand or book store. Financial magazines, newspapers and books dominate the selections. There is a plethora of financial websites, talk shows and publications – each regularly looking for knowledgeable individuals to provide readers/viewers/listeners with helpful information hopefully in a mildly entertaining manner. At the same time, it’s never been more difficult to find the right place to say the kind of things that will position you as an expert. This in turn can raise your profile and, if all goes well, bolster your bottom line over time. While appearing in the media does not automatically make your phone ring off the hook, a seasoned pro can help you navigate these sometimes tricky waters as a truly comprehensive mediarelations plan can provide extraordinary benefits to how your business is perceived by clients, prospects, competitors, employees, partners and even yourself. There’s not a firm on Wall Street that does not seek media relations counsel.

Finding Your Media Pro Just as an individual needs to be selective when interviewing a financial advisor, CPA firms have got to be careful with whomever you select to represent you to reporters and editors. It’s vital to have someone who thoroughly understands your business. A rep who has spent her career promoting the hospitality industry would probably not be a good fit for you. Someone who’s worked with lawyers or financial advisers, however, may fit the bill. Ask at the Chamber of Commerce or speak with related professionals for a recommendation. Be sure they’re not working for a direct or indirect competitor, as this would present a conflict of interest. But before interviewing professionals, the first question to ask is: “What’s my primary 10 | CPA Solutions 2011

objective?” In other words, why do you want to see your name (or your firm’s name) positively featured in the media? Your answer will determine how your media relations plan should be structured. You should refer to it from time to time to ensure that you’re remaining true to your original objective. What contribution can a comprehensive media-relations strategy make towards helping you achieve this goal? Stick with what you know and be prepared to stay with it for the long-term. It could be counter-productive to offer yourself as an expert in one area only to change a year or two later. When it’s time to pick a media relations firm, consider that a relatively small practice could be well served by a firm of about the same size. Check references. Look at track records. Did they place clients in the right media outlets? Be forthcoming when describing your office, its goals and where a media relations strategy may fit. Be comfortable with the person who will be working on your account. If you’re not ready for a long-term arrangement, ask about individual projects. This can be a good way to get to know each other without a long-term commitment, and many firms, especially smaller ones, are agreeable to this. Six months is a reasonable timeframe. Being called upon by a reporter or cable television producer lends credibility and exposure – valuable items which can be leveraged into business growth. Indirectly, there is often a great deal of value, mainly because this sort of exposure breeds client confidence that can be used to grow business.

I’ll Do It Myself This is one of the most common cries I hear when discussing media relations with CPAs. “I do it. My secretary does it. The intern does it. My wife (or husband) does it for me…” My answer: “What do you say when a prospect says he or she can prepare their taxes better than you can?” You might say something like, “I recommend a professional.” So do I, but the stubborn ones don’t usually buy this argument, preferring to go it alone. One or two occasionally do a good job; the rest often let any potential media relations benefits slip away. They generally don’t have the time or expertise to properly manage a comprehensive campaign.

You Advertise – So What? Never expect preferential editorial treatment because you advertise in the publication for which you’re being interviewed. The editorial and advertising departments are regarded as “church and state,” one is not to influence the other. By asking for editorial coverage because you advertise (or might advertise) is insulting to the editorial staff members, who are trying to provide unbiased reporting to their readers.

Avoid ‘Spinning’ Thanks to Washington politicians, the word “spinning” has entered the common American vocabulary. Avoid this and anyone who regularly advises it, as it often means being less than truthful or modifying a recollection of events to one’s advantage. As we frequently lecture our children, the truth is almost always discovered. It’s best to be the one providing the truth rather than the one running from it. A responsible journalist will double- and triple-check information before submitting her story, and with good reason. Do the entire industry a favor. Stick to the facts.

While it’s the media relations representative’s responsibility to get you in front of the press, realize that when dealing with a reporter, anything you say is on the record. Be sure it’s correct. Joseph Finora is a former Wall St. reporter, mediarelations executive and author of “Media Relations and Creative Marketing Tips for Financial Professionals.” He can be reached at

10 Media Relations Commandments 1. Have a long-term media relations objective 2. Speak only on qualified subjects 3. Do not “spin” stories 4. Respect reporters’ deadlines 5. Return reporters’ phone calls 6. Do not “buy” favorable coverage 7. Prepare a media (information) kit 8. Do not belittle/criticize competitors 9. Do not review stories prior to publication 10. Respect the media relations process

Tax Preparer Training Solutions for CPAs A turnkey solution for online and live instruction

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Instructor guide and student texts provided Minimal instructor preparation needed Observe candidates before hiring them Teach interviewing technique through role-playing

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Students study online 24/7 at their own pace Easy to understand text with real world tax scenarios Learn without tax software Immediate online grading and instructional feedback Hardcopy of texts available Instructor support by email Certificate of Completion Money Back Guarantee R CPA Solutions 2011 | 11


Being the Media

Getting Your Message Heard B y St e v e n L . Lu b e t k i n podcast show notes pages, etc.) to other sites and resources.

Get respect as an expert in your industry from podcasting


ost professional services firms know that it’s becoming more difficult than ever to get traditional news media to cover their organizations. Increasingly, your firm needs to “be the media” and produce high quality radio and TV style content to reach important constituencies like clients, prospects and the general public. One increasingly popular way to do that is through the creation of Internet radio and TV programs, often called “podcasts” – audio or video programs distributed via the Internet. Organizations as varied as insurance companies, banks, professional associations, and trade groups all have dipped their toes in the waters of the so-called “social media” by producing podcasts.

Why is web video and audio important? People don’t go to the Yellow Pages to find the services they need. They generally don’t

even go to your firm’s website. They search in Google (and to a lesser extent other search engines, but pretty much Google). Your firm needs to show up in the first page or so of a Google search. Search engine optimization (SEO) experts will urge you to keyword tagging techniques to raise your score in a search, but recent changes in Google’s search ranking formula have penalized some of these approaches for “gaming the system.”

Rich media content scores higher from search engines A better way to do it is to create compelling, original “rich media” content like video and audio podcasts, and online presentations and blogs – and to update the content on a regular, frequent basis. Google and other search robots give higher scores to pages that are frequently updated (like blogs), or have rich content (photos, videos, audio, RSS feeds) and lots of hyperlinks (blogs,

> visit Professional Podcasts LLC at 12 | CPA Solutions 2011

The real value of podcasting is to demonstrate your thought leadership or subject matter expertise in return for visibility and credibility. Firms that podcast can become the go-to resource for people who want to know how their particular industry works, or how consumers of that product or service can educate themselves to be more informed about using or comparing products or services in that sector. It’s all part of an overall marketing effort that focuses on where your potential audiences are, not where your business owners may want them to be – or think they are. Look at the top 100 podcasts listed in iTunes, and you’ll find the vast majority are professionally produced by major names in traditional broadcast media. People want great content produced with broadcast quality production values, by trusted brands. To the extent that your brand has that goodwill, content produced in podcast form will attract viewers and listeners. Lots of companies still think they will grow new customers/clients by putting ads in the newspaper. Most people under 35 don’t even read a daily newspaper, and a significant percentage of them only watch broadcast television by time-shifting technology (Tivo and DVR) and don’t even glance at commercials.

Podcasts are not a commercial If your audience believes you are delivering a purely commercial message, you will lose credibility. Effective podcasts should entertain and inform audiences, providing them with information useful to them whether they do business with your organization or not. Amboy Bank of Old Bridge, N.J., understood this concept when it produced

a podcast program to help its community learn about a new, internally developed reverse mortgage product aimed at senior citizens. Most reverse mortgage products use the federal model for their structure. The Amboy product was designed by the bank, and its closing costs can be significantly lower than costs associated with the federal reverse mortgage products – a competitive advantage for Amboy in the heavily banked New Jersey market. The Amboy podcast ( p10SEo-mr) features two interviews, one with customer Bud Addis, a retiree who describes how the Amboy reverse mortgage has helped him manage expenses on a fixed income, and the other with a bank reverse mortgage counselor who describes the terms of the product and the bank’s program for educating prospective customers and their families. Seniors frequently involve other family members in the reverse mortgage decision, said Dennis Kane, Amboy’s vice president and director of marketing. “This gives us an opportunity to let one of our satisfied customers speak in detail about

the Amboy Bank reverse mortgage in a medium that’s accessible 24 hours a day worldwide,” Kane said. In the professional association world, the National Pest Management Association, a trade association representing pest control professionals, produced a 14-episode series of podcast interviews with a pest expert explaining how to deal with a wide range of household pests ( Unlike broadcast advertising, which can be expensive to produce and place, or audio- and video-news release packages that may be used only on small broadcast stations late at night or not at all, podcasts are full-length programs that are delivered to a global audience 24 hours a day through Internet technology. Podcast programs are served via websites, through the Apple iTunes Music Store ( and through syndication technology known as an RSS feed, which alerts podcast listeners automatically when new program content is available. Podcasts extend the life of a seminar program by making it available to audiences that couldn’t attend in person. They

dramatically expand the reach of a professional service firm’s marketing dollars at a fraction of the cost of direct mail or advertising expenditures, because they reach pre-qualified audiences that self-select the content to which they listen.

Podcasts are cost-effective for many kinds of firms Podcasts can bridge the gap between professional consulting firms and widely dispersed consultants who travel frequently. They can be used to deliver news, updates about a firm’s activities, or training content for employees or clients, in a format that’s easy to manage and disseminate, either by web delivery, burned onto audio CDs, or loaded on digital audio players. Steve Lubetkin is managing partner of Professional Podcasts LLC, a producer of documentary audio and video podcasts for corporate clients, and is a senior research fellow of the Society for New Communications Research. He can be reached at

The answers are out there Every firm has its own set of challenges. If you’re looking for individualized support for your firm, CPA Mutual is here for you. CPA Mutual has provided risk management services to our member-owners for over 23 years. They all enjoy direct contact with us should the need for assistance arise. Whether its pre-claim assistance or avoidance, coverage questions on new services or clients, or engagement assistance, we are just a phone call away. No delays ... no wasted time. We’re ready to join your quest to make your firm a success – and to help you sleep at night.

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Risk in the 21st Century


quick question: does your practice face more or less risk today than it did five years ago? Most CPAs will say without hesitation: more risk. A lot more. There are several reasons for this, but some stand out more than others. Since 2000 – on the heels of the financial reporting fiascos associated with

against CPAs is the number of matters filed per staff member. In 1991, for every 108 staff members, CPA Mutual had one reported matter. In 2010, that number dropped to one incident per 67 staff members. And even more alarming, if you look at the same statistic based on only professional staff, it was 52 staff per matter reported in 1993. In 2010, it was 38!

“Becoming involved in a lawsuit is like being ground

to bits in a slow mill; it’s being roasted in a slow fire; it’s being stung to death by single bees; it’s being drowned by drops; it’s going mad by grains.”

Waste Management, Anderson/Enron, WorldCom, et al. – judges have been less likely to throw out cases against CPAs than they once were. Fewer motions for summary judgment are granted, and judges seem to require additional discovery before rendering decisions on cases. It seems that, in almost every case, CPAs are required to perform an extensive amount of discovery before they can possibly reach a settlement. Of course, this entails subpoenas, depositions, hiring expert witnesses and countless hours of time spent by member firms that happen to get sued. The claims experience of CPA Mutual, an insurance company assisting CPAs across the country, bears this out. Take, for example, the statistics on cases opened during the late ’90s and early 2000s. Prior to 1998, CPA Mutual incurred expenses on an average of 32.45 percent of reported claims. Since 1999, claims with expenses paid averaged 48.54 percent, a 41-percent increase. Something significant caused that jump. Another indication of rising claims > visit CPA Mutual at 14 | CPA Solutions 2011

– Charles Dickens Based upon our experience this past year, on average, a firm can expect at least one matter per year reported for every 38 professionals employed. The financial scandals of the past 20 years placed targets squarely on the backs of CPAs. The plaintiff ’s bar figured out early that accountants were usually the “last men standing” – and CPAs carry insurance. This, of course, equals deep pockets! CPA Mutual is now litigating more cases, and fees and cost have also increased. Second, the labor shortage in the profession, as well as the current economy, has added an increased burden on staff and management. A CPA Mutual employee overheard a plaintiff attorney say “there are too many ‘kids’ doing audits and not enough senior-level staff people to adequately supervise them.” He said this with glee in his voice! Firms need to slow down and remember they have only so many qualified individuals to handle the work load. So, before adding a new client, think long and hard, and make sure you have the qualified people working the engagement. There is

nothing worse than to hear at deposition, “I had no idea what I was supposed to do, and there was no one on the job to answer my questions” from a staff member. Last, but not least: electronic files. These include not only work papers, but also emails, text messages, instant messages, blogs and any other message stored electronically. Remember, it’s all discoverable (even information stored on personal home computers and phones used for business). And people write differently than they speak. Anderson wasn’t found guilty of performing a bad audit – it was found guilty of a cover-up based upon one bad email! Elder CPAs may not realize how prevalent this mode of communication is among the younger generation. Imagine plaintiff attorneys getting their hands on a text message from a junior staff person telling a friend that the senior on the job has no clue what he or she is doing. Not only might a document like this prove to be a “smoking gun,” but electronic documents are extremely expensive to produce. And there is a very complex set of rules for their retention and safekeeping once a claim is imminent or threatened. This alone will require the help of an attorney. Now, more than ever, CPAs need to be extremely careful with client retention and acceptance procedures. Ensure that qualified staff at every level works on those engagements, and make sure the firm has a document retention policy in place that includes electronic documents. It’s probably also a good time to remind staff that anything they write – regardless of its form – may be discoverable. It certainly makes a lot more sense to remind them now, rather than before they try to explain it to a judge and jury! It may also be time to consider the history of your current carrier. As these claims statistics worsen, companies that recently entered the accountants market only to grab market share will be heading for the exits. It happened in the mid-1980s and then again the early 2000s, so it should continued on page 27


Accurate and Reliable ALL Helps Speed up the CPA License and Firm Registration Process


iven the ever-changing regulatory environment, and the recent adoption of mobility legislation in most states, it is becoming increasingly difficult to remain up-to-date on the licensing and registration laws rules for individual CPAs and public accounting firms. As the representative of state boards, the National Association of State Boards of Accountancy (NASBA) offers the Accountancy Licensing Library (ALL) as a central resource to simplify and explain the CPA license and firm registration process across all states for firms and their professionals. NASBA’s Accountancy Licensing Library offers two main features – a research tool and state subscriptions. The ALL Research Tool allows users to quickly and easily compare state exam, licensing and other miscellaneous CPA requirements using various search criteria across multiple states with print and export options. State subscriptions are the highlight of ALL. Each state section has details about the various types of licenses and firm registrations available (initial, reciprocal, mobility/practice privilege and firm registration), full education, work experience and all other CPA licensing requirements, step-by-step instructions and application procedures and all official state board forms and applications offered in a convenient, fill-in PDF format. Basic CPE requirement information is also included for each state, as well as steps to properly relinquish a license. Subscribers even receive email alerts about changes to forms and

application procedures. Public accounting firms use ALL as a comprehensive solution to assist professionals with CPA licensing and firm registration. Some firms provide ALL as a resource for their licensing and compliance department for assisting and offering guidance to the firm’s professionals, while other firms make ALL available as a self-help resource for their professionals. Either way, ALL quickly becomes a reliable resource to busy professionals who value efficiency and accuracy. ALL alleviates the need to search multiple state board websites for updated information and forms, while ensuring accuracy through a rigorous maintenance process.

“McGladrey has been using ALL for several years now, and we could not be more impressed with the level of service and content the site offers,” says Helen Busness, regulatory compliance manager for RSM McGladrey. “My team receives many questions from our firm CPAs regarding licensing requirements, and oftentimes, our answers need to be immediate. Without ALL, we would have to spend many hours researching various state licensing requirements. But with ALL, we are able to provide quick, accurate answers that allow our staff to get back to what they do best – serving clients.” To learn more about this valuable compliance resource for firms, visit the ALL website at or contact NASBA by calling 866-627-2286 or via email at

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Pooled Special Needs Trusts

Preserving the Assets of People with Special Needs B y J oa n n e M a rc u s


pooled Special Needs Trust (SNT) is administered by a nonprofit organization that is governed by a volunteer board of directors. Pooled trusts are beneficial when the person with a disability comes into a sum of money or when a family member wants to provide financially for their loved one with a disability. The trust also preserves benefits for clients who receive Medicaid and Supplemental Security Income (SSI).

Advantages of a pooled SNT • A pooled SNT offers the advantage of lower administrative costs and greater opportunity for investment potential.

• The funds are pooled for investment purposes; individual sub-accounts are maintained. • Staff are experienced and knowledgeable about the needs of people with disabilities and the rules that will protect SSI and Medicaid benefits. • There is no minimum amount required to establish the trust.

Why establish a pooled SNT? A SNT allows the grantor, the person setting up the trust, the opportunity to provide funds that will enrich the quality of life of the beneficiary, the person for whose benefit the trust is established, who is living with a disability. The beneficiary may be

> visit Commonwealth Community Trust at 16 | CPA Solutions 2011

applying for or receiving Medicaid and SSI and want to protect benefits that are crucial in providing medical care and income necessary for support. In order to qualify for public means tested benefits, the disabled individual can have no more than $2,000 in cash assets. A monetary gift, settlement, or inheritance will disqualify the beneficiary from receiving much-needed assistance. Having funds in a pooled SNT will not jeopardize these important government benefits. A trust fund can be used to purchase a wheelchair, eye glasses, hearing aids, furniture, electronic equipment or clothing, and to pay for dental care, education, recreation, travel and transportation.

Two Types of Trusts The third-party SNT is funded by a third party, usually a close family member, and can be coordinated with the family’s estate plan. The SNT holds funds that the grantor leaves for the sole benefit of the beneficiary. The self-funded Pooled Disability Trust (PDT) is funded by the person with a disability, generally through a personal injury award. This trust is sometimes referred to as a Medicaid payback trust as people who receive Medicaid will have to pay back the state(s) for medical expenses incurred on their behalf with funds remaining in the trust upon the death of the beneficiary. This trust is codified in the Omnibus Reconciliation Act of 1993 (OBRA ’93) at 42 U.S.C. :1396 (d) (4) (c).

Role of the Trustee The master trust agreements allows the trustee to administer the trusts under the umbrella of the “master.” Both the selffunded PDT and the third-party special needs master trust agreements are generally written by an estate planning attorney with expertise in this area of the law and signed by the board of directors. The beneficiary of the trust is the person for whose benefit the trust was created; however, the beneficiary does not own the funds in the trust. The trustee has the legal ownership of the trust funds. Although the beneficiary, or someone acting on behalf of the beneficiary (e.g., designated advocate), has the right to request payment to vendors by the trustee, the trustee is not required to approve the request. At the same time, however, the trustee has a responsibility to ensure that the trust funds are available for supplemental needs that will improve, to the extent possible, the quality of life of the beneficiary. The trustee has the duty to be prudent. It is the fiduciary’s responsibility to safeguard the trust property for the beneficiary. The beneficiary of the trust and their legal representative (such as an agent under a durable power of attorney, guardian or conservator) and the advocate are entitled to an accounting from the trustee. The trust has been drafted in such a way that, provided the trustee follows certain guidelines, the beneficiary will continue to be eligible for Medicaid and SSI. Although the recipient of the trust does not have

legal title to the trust funds, the recipient is what the law calls the “beneficiary” of the trust. This means that the Department of Social Services for Medicaid recipients and the Social Security Administration for SSI recipients are notified of any deposits made to the trust and of distributions made from the trust. Generally, the following distributions would impact SSI benefits: food, mortgage (principal and interest), rent, real estate taxes, gas, electricity, water, sewer, homeowner’s insurance and cash payments to the beneficiary. There are additional rules for both Medicaid and SSI that are complicated and rigorous. Any distributions from the trust must be for the sole benefit of the beneficiary, the person for whom the trust is intended to benefit. Distributions from the trust must be limited to those that benefit only the beneficiary and not any other person. If a trust provides benefits to other persons, then it will not be considered a special needs trust, it will become a countable resource, and the beneficiary may lose government benefits. The trustee manages and invests the funds for the trust and approves disbursements that are for the sole benefit of the beneficiary. The trustee is knowledgeable about government agencies providing benefits and staying abreast of changing regulations.

Role of the Advocate An advocate is designated by the grantor (individual funding the trust) and is generally someone close to the beneficiary such as a family member, guardian, conservator, case worker or power of attorney, depending on the nature of the disability the beneficiary. The advocate works closely with the trustee in submitting requests for disbursements that will maintain the quality of life for the beneficiary. The grantor can provide a vision for the trust, and forms are available to assist in this.  Joanne Marcus, MSW, is executive director of the Commonwealth Community Trust (CCT), a national nonprofit organization providing an effective and affordable administration of third-party Special Needs Trusts and self-funded Pooled Disability Trusts. For more information, call 888-241-6039 or 804-740-6930, or email info@ CPA Solutions 2011 | 17


Electronic Payments Reaching Critical Mass By Ken Garen


he U.S. payment system is the envy of the world for the low cost per check for our paper check payments. This has held back the development and implementation of electronic payments. The U.S. payment system now finds itself catching up with the European system, with electronic payments as the standard of paying employees, and to a great extent, vendors. The electronic payment trend has reached critical mass at the federal level, and is reaching critical mass at the state level. The federal government has recently mandated that all benefits, entitlements, and tax refunds be paid electronically whenever possible. Some state governments have passed legislation to allow employers to require that employee receive their net pay electronically. The initial impetus for the electronic payment mandate was the Sept. 11, 2001, terrorist attacks, which resulted in all air traffic being grounded for three days. During that time all check processing was halted, leaving the U.S. in financial limbo, where banks had no idea what funds were good or not, because no clearing was occurring. This chain of events led to the Check

21 initiative, an act spearheaded by the National Automated Clearing House Association (NACHA) , a leading proponent of electronic payments in the United States. The impact of Check 21 can be felt when a consumer uses a paper check to pay for goods or services at a retailer, and the check gets converted into an electronic form, allowing the retailer to immediately give the consumer their check back as a form of receipt. When Check 21 was being developed, the government originally promised to always allow paper checks to be used when Check 21 was initiated. Business checks were excluded from conversion, but there have recently been changes that will allow for the conversion of business checks as well as consumer checks. This leads to some interesting legal issues when fraud has occurred because there is no original physical document that can be submitted as evidence of the fraud. As further evidence of this trend, when NAFTA came into being, there was a requirement to create electronic payment of federal taxes and businesses were going to be allowed to forever continue to pay the way they were currently paying

> visit Universal Computing Company at 18 | CPA Solutions 2011

(which was in paper check and an 8109 coupon to the bank). Effective Jan. 1, 2011, the federal government mandated that checks can no longer be in the paper form; rather, they must be paid and delivered electronically. Making payments electronically offers great benefits for businesses, including low cost and efficiency. For those employees that the industry calls the “unbanked” (those having no checking account), a debit card account can be created where the payee cannot overspend the amount of money that is in their account. This can greatly be seen as a benefit to the employees, because they do not need to go to a currency exchange or bank to get their check “cashed,” and if they have relatives in another country, they can deliver funds via the home country’s ATM network. Additionally, the employee no longer is a target for thieves as they leave the bank or currency exchange because they no longer have cash on their person. This electronic method coincides with the way federal and state government has been delivering food stamps and other benefits. There is a very high adoption rate because employees are familiar with how a debit card works. For public accounting firms and CPAs who do write-up work, this “electronification” of checks represents both a challenge and opportunity. If the work gets done in the same way as it has for the last decade or two, the time it takes to do it will continue to increase. If the work is done using software that embraces the new methods of issuing and clearing checks, then significant productivity increases are available. A similar version of this article was originally published in May 2011 by www.  Ken Garen, CPA, is the co-founder and president of Universal Business Computing Company, a software development firm of high-volume, high-productivity accounting and payroll technology. Contact Garen at or call him at 800-762-8222.

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Cloud-based financial management and accounting application Powered by Intacct Intacct Accountant Edition is a best-in-class online client accounting solution that delivers financial information to you and your clients in real-time. It enables you to provide customized financial reports, dashboards and KPIs to key firm and client stakeholders. Core modules include General Ledger, A/P, A/R, Cash Management, and more.

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American Institute of CPAs CPA Solutions 2011 | 19


Supporting Firm Performance Through Engagement Reviews By Nancy Wilkinson


ike any organization, annual performance reviews at professional financial services firms are an absolute necessity, but the task can be considerably more time-consuming and frustrating for both managers and employees in CPA firms, due to the nature of the business. For example, an accounting firm employee may work on a dozen different engagements, for a dozen different engagement leaders, in a dozen different locations during any given year. This reality makes year-end performance reviews a daunting task. Managers continually scramble to overcome their lack of firsthand insight into the engagements their employee participates in over the span of a year. The resulting feedback the manager provides the employee leaves much to be desired, as he or she is hamstrung by a lack of firsthand knowledge of the employee’s work. But there is a better way. By empowering engagement leaders to conduct reviews at the conclusion of every engagement, managers realize a decided advantage during year-end performance appraisals, as their discipline provides them with a significant head start. When engagement reviews happen at the end of every project rather than once a year, the frequency of the performance feedback not only accelerates professional development, but improves organizational processes. Employees become more engaged in their performance by default, leading to higher levels of customer satisfaction, which can be linked to recurring business and higher profits.

Because the engagement review process is initiated by those with firsthand knowledge of the engagement, the employee finds the feedback infinitely more credible and actionable. Rather than dealing in generalities, feedback is more relevant for employees because it is related to specific experiences. Good managers know that for feedback to change behavior, employees need to understand exactly what it is they need to continue to do, and what adjustments they need to make in order to improve. So why don’t more accounting firms conduct engagement reviews? Traditionally, the barrier has been the labor intensive nature of the process. It simply takes too much time, and for organizations that have difficulty getting annual reviews done, the idea of adding mini-reviews to the list is a non-starter. It’s also important not to overlook the ongoing desire of accounting firm managers to get from one job to the next as quickly as possible – even at the sacrifice of employee development. To overcome the barriers to implementing these reviews, CPA firms are turning to nextgeneration performance management software solutions. When review forms are easy to use, data from multiple engagement reviews is quickly consolidated, giving both managers and employees usable feedback that actively address performance trends. By keeping the system simple enough to be usable, yet robust enough to support effective and appropriate feedback, engagement reviews are quickly welcomed as a

> visit Halogen Software at 20 | CPA Solutions 2011

natural conclusion to the engagement process. Take for example two firms, Peterson Sullivan and PKF Texas, who have built engagement reviews into their performance management process. What both firms have in common is that they use a software solution that integrates engagement reviews with their performance appraisals and includes multirater assessments. This gives both managers and employees a complete performance assessment, accessible from one central location. PKF Texas was so keen on the value of engagement reviews that they tried to do them manually, using spreadsheets. But the process was complicated and there was administrative friction. Introducing technology designed to manage the process made participation and administration easy. For PKF Texas, success came simply from using the right tool for the job. Peterson Sullivan employed traditional performance management techniques, but needed to re-invent their process to better suit the nature of their business. Andrea Ballard, director of HR and administration, explains, “We decided to build the performance management process around project reviews. Rather than waiting until the end of the year, we ask the project leader to rate the team members on seven competencies at the end of the engagement, and to identify particular strengths and areas where associates can improve.” Introducing any new process into an organization means adding a new responsibility to your workforce’s mix, and in this case the burden falls on the engagement leader. However, as soon as they understand the benefits of the solution and the ease by which it can be implemented, the addition of the project review process will quickly develop talent and help improve client service.  Nancy Wilkinson is regional manager for Halogen Software, one of the leading providers of talent management software. For more information, call 1-866-566-7778.


Track Time, Save Money with Time and Billing Software B y T e d S h a n d ro


t some point in the life of an accounting firm, the owner or partners realize they need more than just a spreadsheet to run and manage their practice and a search for a simple time and billing solution begins. But what are the important criteria in searching for this solution? “Simple to use” is usually the first criteria, especially to a smaller firm. However, it’s important to keep in mind that accounting practices really have two components, the business side and management side, whose relative importance changes as the practice grows. Therefore, a solution that can accommodate both these components and grow with the needs of your firm is ideal. Smaller practices usually focus on the business side. They want to make sure they are billing their clients adequately for the time spent and services they provide. For these firms, simple time recording and knowing if they are billing adequately for the work is sufficient. These smaller firms in all likelihood do not need extensive billing realization by employee reporting, work flow management and work scheduling. And they probably don’t want software where multiple days of training are mandatory. Time is the only real asset of an accounting professional – and should be valued as such. It should be a simple task to record the time spent for each client, and when it comes time to bill, review the time spent, decide what to bill and how much to charge the client. If the firm or the employees are not in the habit of recording time as the work is performed, then it is a habit that needs to be fostered. Almost every firm that embarks on tracking time in an efficient manner say they see a payback almost immediately – most are surprised how much time they actually spend on some clients and how much money they let slip through their fingers. They realize they’ve been giving away services for free. So why wouldn’t an accounting firm track all of their time? Some common excuses are: It will take too much time, therefore it will

cost them money. They don’t have the time to invest in setting up a time and billing program, or they don’t have the additional staff needed to administer these kinds of programs. Or they simply believe they are getting by just fine, so why rock the boat? But if a firm doesn’t track their time, how do they produce a bill for a client for the work performed? Often firms will choose to simply bill based on what they “think” a client is willing to pay or based on what they have historically charged for the service. In a perfect world, this approach might work. Unfortunately, it’s not a perfect world, which means that most of the time the amount of a bill grossly understates the effort expended. Without any records of time spent, the partner, manager or employee has no idea if the amount they’d like to bill accurately reflects the true time it took to complete the job. What happens when a client questions the amount of an invoice? Everyone has a client or two that is surprised by the amount of their invoice and asks why it is so high. Having a record of the time logged on the client’s file will dispel any questions and will most likely point out how much the firm chose to write off. As the firm grows, the management aspect becomes more important. It is much more difficult to know what 10 or 20 employees are doing than three or four. Reporting by employee (chargeable/ non-chargeable ratios, targets and billing realization) becomes unmanageable, unless a good practice management system is in place. More analysis of the clients (profitability, work scheduling, work assignment, due dates and job tracking) is required to effectively administer the practice. Because the firm has grown in size, just looking at what’s in the bank account is no longer sufficient to run the practice. If the time ever comes to sell the practice or value it for new partners, how will they demonstrate the true value, not just the amount of billing, of the firm? Where did

the firm put its efforts? Which clients were the most profitable? Succession is something to be dealt with in every practice, so why not have the ammunition available to answer the inevitable questions? A time and billing program designed to suit the specific needs of a professional accounting firm will help analyze the three key things every accountant needs to know: • Who are the clients that keep the practice alive, and who are the clients that drain the firm’s resources? • Are we using the key talents of each staff member and partner effectively? • What activities that the firm undertakes are the most profitable and which ones drain the firm? A good time and billing that grows with the needs of your firm can lead to a more effective practice, happier staff, greater profitability and larger values upon succession. Ted Shandro is president of TPS Software, Inc., a provider of time and billing software to financial industry professionals. For more information, call 888-877-2231.

> visit TPS Software, Inc., at CPA Solutions 2011 | 21


Financial Advisors and Wealth Managers

Capitalizing on the Employee Benefit Space B y J o e To r e l l a

The world under “ObamaCare” will see an increased need for individual coverage and advisory services.


reater efficiency of financial assets and improved cash flow for your clients will continue to be a challenge – and an opportunity – especially given our current economic environment. In employee benefits, this need is even greater as CFOs continue to manage significant double digit increases with less income and increased employee demand. So, how do you offer strategies to your clients that will allow them to keep more of their income and invest their employee benefits budget more wisely? You do it by helping them manage their health care trend line in a positive direction, while demonstrating that you also understand the importance of your role as advocate for their human capital assets. Does this change under a national health care program? Probably yes, but not right away, and not in a way that eliminates the need for employee benefits advisors. For those of us who offer best-in-class advice and counsel, it’s quite the opposite. The world under “ObamaCare” will see an increased need for individual coverage and advisory services. Small groups will require assistance

digging out from a myriad of forms, along with advice on tax treatment/credit questions and pay or play decision-making. Your role will intensify – particularly in states where current regulations are a challenge that will increase whether health care is delivered nationally, regionally or locally. Only time – and legislative clarification – will tell. But the real opportunity today and going forward is with clients who have 100 employees or more. In this market space, the employee benefit cost is significant and the tools for bending the trend curve more formidable. Sure, the same need to assist with the complexity of tax treatment and incentives will exist, but the larger the group, the less likely corporate decision-makers will want to relinquish control of their health care (or human capital) investment to the state or federal government. Rather, they will seek out aggressive strategies for managing cost while keeping the employee experience neutral or better. To this last point, you can expect to see an increase in the need for, and interest in, voluntary benefits – a plan enhancement that’s typically cost neutral to your clients. It’s also possible that PEOs will become more prominent in the range of solutions you offer. But the most important thread weaving through 2011 strategies is a focus on helping clients manage claim costs, which have a direct impact on premium for clients and prospects with 100 or more employees. So, we must recommend plan designs that foster individual employee accountability and

> visit HUB International at 22 | CPA Solutions 2011

ensure that employees understand the cost and quality of their healthcare decision-making. What types of plan designs offer these advantages? They are high deductible health plans which eliminate waste and connect employees to the healthcare purchasing decisions they make. By eliminating copays, the true cost and quality of care can be made transparent and actionable. When we take that information and add in wellness strategies and incentives for healthier living, we can optimize several important outcomes: trend management, productivity, employee satisfaction and more. For wealth managers, the best part of this strategy is in moving clients from traditional/ managed care plans to high deductibles, because premiums better reflect utilization. My favorite example is the premium paid on behalf of a 25-year-old employee who thinks he/she is invincible and never incurs a claim. Here, high deductible plans are less expensive because the employer no longer pays a premium for underutilized benefits ala healthy 25-year-olds – a true wealth management strategy. Then, for gaps left by high deductible plans, you can introduce tax advantaged funding vehicles and/or voluntary products that back-fill this individual risk corridor and give even more control to your client. You might know these vehicles as Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs). They are quite effective and simple to work with once you’re familiar with them and the advantages they offer. Do we have more to cover? Sure, but this is enough to get started with your clients or to team up with a benefits broker. Joe Torella is president of the employee benefits division at HUB International Northeast and National Practice Leader of Employee Benefits, HUB International Limited. He can be reached at joe.torella@ or 908-790-6842.


What CPAs Need To Know About Self-Directed Retirement Accounts By Jaime Raskulinecz


s a CPA, you play many roles as a trusted advisor to your clients. From tax and estate planning and accounting to business audits to personal finance advice, businesses and individuals rely on their accountants in many ways to help them frame their financial futures. That might include the choices clients make about – and within – their retirement accounts. Did you know there is whole spectrum of wealth-building opportunities for people who wish to completely direct their retirement portfolios themselves through a self-directed retirement account?

What is a Self-Directed IRA? Self-directed retirement plans – whether traditional or Roth, SIMPLE or SEP – are accounts the individual investor controls himself. They are administered by financial services firms that specialize in the administration and support of self-directed retirement accounts. The account holder makes all the decisions about what types of investments to make within the IRA. This is where it gets really interesting for CPAs and their clients. Self-directed accounts offer tax-deferred and tax-free investing, with a less restrictive level of investment alternatives than with regular IRAs, 401(k)s or SEPs – often, products and strategies clients know and understand best, and might even be investing in already outside of their retirement accounts. Savvy investors may choose to self direct because of the potential to build a more secure future through

the creation of a more diverse portfolio. The investment opportunities in a selfdirected IRA include: • Precious metals such as gold and silver – held off-site without physical possession of the metals by the IRA holder • Real estate ownership: residential and commercial properties (U.S. and internationally), farmland, raw land, new construction, property renovation and development • Real estate debt financing • Business investments such as partnerships, joint ventures or private stock • Commercial paper and notes • Commodities • Hedge funds • Auto paper • Royalty rights • Equipment and leases The IRA buys and sells the assets, and all transactions are tax-sheltered to the extent allowed by law. Gains and losses all occur within the retirement plan.

Why You Need to Know about These Plans Although your clients would handle their investments themselves from a broad selection of nontraditional opportunities, they may come to you with questions you must be prepared to answer, such as which investments are permitted by the IRS or what the tax consequences are of rolling over another retirement account or 401(k) into a

self-directed IRA. Because there are certain restrictions about what the IRS will allow, it is critical that you, as a CPA, become educated about this type of tax-deferred account, to properly guide your clients towards building their retirement savings through these alternative investments. You may also want to control your own retirement fund through a self-directed IRA or SEP plan.

Who Administers a Self-Directed Plan? The other trusted partner in the equation is the firm that administers self-directed IRAs. These firms are not banks or brokerage houses; they are neutral third-party professionals who hold the assets, provide full administrative assistance, and file and manage all mandatory paperwork pertaining to the transactions. Many also provide education on self-directed retirement accounts to help individuals and their advisors make the best choices for their financial goals through these tax-advantaged plans. Let’s face it – the market over the past decade has been a real roller coaster ride. For those individuals who want to diversify and get more control of their retirement funds, self direction can be a great way to do that. As you work with your clients to plan their futures, why not be more proactive about it and discuss self direction with those investors for whom this strategy makes sense? It adds to your own strengths as their trusted advisor, and self direction could be a strong strategy for your own retirement plan. Jaime Raskulinecz is the CEO and founder of Next Generation Trust Services in Roseland, New Jersey, which specializes in comprehensive account administration and transaction support services for self-directed retirement accounts. For more information, visit www., call 973-533-1880 or email

> visit Next Generation Trust Services at CPA Solutions 2011 | 23


What Your Clients Want

Nationwide CCH Survey Findings B y M i k e S a bb at i s


ew concerns weigh more on the minds of accountants than the desire to satisfy, and retain, clients. As CPA firms look to build client loyalty and grow profitability, a CCH nationwide survey – the “CCH Accounting Firm Client Survey” – pinpoints what’s most important to keeping accounting firm clients, and why they leave. The independent survey commissioned by CCH, a Wolters Kluwer business, was issued to accounting firm clients including individuals and small, mid-size and large businesses. While the need for accounting firm services surged in the past decade and firms’ biggest concern was keeping up with growth, the survey reveals new pressures on the profession in terms of client expectations, demand for services, competition and service value. It’s clear that client needs are changing rapidly. As a strategic partner to professionals, CCH stays on top of trends in the accounting profession and delivers best in process solutions that help firms overcome obstacles and realize the opportunities before them. With highly integrated solutions and services, CCH helps professionals achieve new levels of productivity, profitability and client satisfaction – and enables firms to leverage the latest cloud technology to serve their clients best, anywhere, anytime.

Survey Results: Top Reason Clients Leave? Firm’s Failure to Keep Up with Client Needs The good news is that most clients view their CPA firm as a strategic advisor, are generally satisfied with their firm, and are willing to refer their firm to others. However, that does not guarantee client loyalty. In fact, 36 percent of business clients report they are likely to switch CPA firms in the next year. In this economy, few firms can afford the risk of this client turnover level. Ensuring the accounting firm client connection remains strong requires a continuous commitment. Firms need to have the right staff, the right processes and the right technology to ensure there are no boundaries to their ability to understand and meet clients’ current and evolving needs. Key findings of the CCH survey include: Clients almost universally recognize their CPA firm as a strategic advisor, with 94 percent of business clients and 81 percent of individual clients surveyed viewing their firm as such. Firms have a significant opportunity to better leverage this relationship by providing existing clients with extended services. Significant gaps exist between the volume of

> Visit CCH, a Wolter Kluwer business, at 24 | CPA Solutions 2011

tax, accounting, auditing and management advisory services clients need and the types of service in each of these areas they seek from their CPA firm. The top concern for both business and individual clients is minimizing taxes. Client needs are growing. Forty-five percent of business and 24 percent of individual clients say support needs will increase in 2011, while just 5 percent of business and 7 percent of individual clients say needs would decrease. Fifty-five percent of business and 29 percent of individual clients report the number of specialized services they need from their CPA firm is growing. Retention risks are real. Thirty-six percent of business clients are considering switching firms, and 55 percent report they are being prospected by other CPA firms. While 79 percent of business clients say they are generally satisfied with their CPA firm, of that group, only 17 percent are completely satisfied. The top reason clients would consider leaving their firm is if the firm does not regularly check with them on their changing needs. Firms’ overall expertise is a top driver in firm selection for business clients. For individuals, referrals most often drive selection. Business clients are leveraging technology and they expect their firms to do the same, whether it’s working in the cloud or digitizing more of their environment. A full report on the survey is available in the white paper “2010 CCH Accounting Firm Client Survey: Improving Retention through Better Client Connections” at CCH, a Wolters Kluwer business, is a leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. For more information, call 888-CCH-REPS (224-7377).


Online Tracking of credits will Revolutionize compliance B y K at i e F i s h


Over the course of their careers, the average CPA will spend more than $50,000 and devote around 1,600 hours to taking continuing professional education (CPE) credits in order to maintain licensure. Despite the fact that efficiently managing CPE information is necessary to remain compliant, it can be taxing for CPAs, who are already some of the most timestarved professionals in the industry. Managing CPE information involves two main components. The first is tracking CPE against reporting period deadlines in order to maintain compliancy, and the second is finding qualified CPE providers that meet CPAs’ specific needs. Most accounting professionals track their CPE information manually, storing hard copies of certificates of completion and entering data into an Excel spreadsheet. Some are fortunate enough to work for accounting firms that employ individuals dedicated to managing employee CPE, making it less of a burden for the individual. And while it is still the employee’s responsibility to complete his or her CPE, a compliance officer or department is tasked with the more tedious aspects of managing those credits. For CPAs who don’t have anyone managing their CPE information, the steps involved in keeping track of it are complex and varied, and omission of any of these steps may result in a CPA’s license lapsing, which could lead to a malpractice suit. And, in the event of an audit, if hard copies of certificates of completion are misplaced or lost, a CPA would be required to either re-take the course (or courses) or contact the CPE provider to obtain new certificates of completion. Some CPAs opt to use some type of CPE tracking/management system or software to help them organize their continuing professional education credits. Systems like this can be ideal for tracking CPE; however, many of the systems available still necessitate a lot of manual effort and can carry varying restrictions. For example, there are systems

available to automatically track CPE credits only if they are earned from specific providers, forcing CPAs to separately track credits earned elsewhere. CPAs have diverse goals when selecting CPE courses. Some want to find the least expensive courses in the most convenient format, while others are interested in finding courses based on particular competency models, allowing them to advance within specific roles within their organizations. CPE providers are just as diverse as the CPAs who are required to take their courses. Some offer only certain types of curriculum or courses specific to particular certifications, such as Enrolled Agents or Certified Financial Planners. Some offer courses in an online format only. Others only hold live events, such as seminars. Some offer the entire range of available course formats and curriculum. With so many varying needs among CPAs and so many options available from CPE providers, a solution was needed that would automate the continuing education process, as well as consolidate the steps involved in locating CPE providers. CE Convergence is doing exactly that. The company is slated to launch its webbased platform this fall, designed to eliminate the problems surrounding tracking and maintaining CPE credits. The two main components of its website will be tracking CPE credits against specific reporting period deadlines, and aggregating CPE providers and their courses based on custom search criteria. The search function of the website will allow accounting professionals to select specific criteria, such as preferred class types and styles, methods of delivery, location, price, and course availability. The search results will then deliver an unbiased, aggregated list of CPE providers that best match the user’s needs. CPE providers also benefit from using CEC’s platform. By making their courses available on its website, providers are

given an opportunity to instantly increase their visibility. And, because providers are displayed based on user search criteria, they have a chance to compete on more of a level playing field among all providers and offer better service to their clients. With CE Convergence’s website, the process will be reduced to the following steps: • Log on to the website. • View compliancy requirements. • Select a course. • Complete the course. The new process will make it easier for accounting professionals to locate the providers they need, as well as to keep track of their CPE credit, while concurrently helping CPE providers to sell more courses. It is specifically designed to assist both groups with the most time-consuming, tedious aspects of managing continuing professional education and aims to make the entire CPE process easier and more efficient. Katie Fish is the marketing director at CE Convergence in Erie, Penn., a web-based service company that provides CPE tracking and management to accounting professionals and firms.

> visit CE Convergence at CPA Solutions 2011 | 25


Due Diligence Secrets Revealed! B y J ay L e v i n e


our client just called and said he is buying a company. He has the last few years of tax returns and financial statements. He wants you to quickly look them over and make sure the business is okay. After all, the projections he received state the company is going to make a lot of money when he buys it. How should you approach this situation? Option 1: Do exactly what your client has asked you to do. Review the tax returns and financial statements, as well as any other documentation your client has in his possession. Give him your opinion, and move on to the next task awaiting your attention. Option 2: Call your client and tell him you will review the documents he has, but you think he really needs you to undertake due diligence before he makes a final commitment. You then review the financial situation of the company the client wants to buy. Finding no large red flags, you tell the client to proceed with the purchase and send him a bill for six hours of work. Option 3: Call your client and explain that due diligence in preparation for a business acquisition is a very complex process and it involves more than just reviewing a few surface reports about the company. You explain that you have some experience in due diligence, but you feel the client is better served by a referral to a due diligence expert. Then you make the referral. If you selected option 1, you know you took the easy way out and did a disservice to your client. If you selected option 2, you might have done a good job because you relied upon your training as a CPA and provided the best service you could to your client. However, there is a lot more that could have been done to help the client. Accountants give many reasons for failing to choose option 3: they have never heard of a due diligence expert; they believe they are perfectly competent to provide the needed services to their client; or they do 26 | CPA Solutions 2011

not fully understand the complexities and the potential pitfalls of the due diligence process. There are seven secrets about due diligence that should have led you to refer your client to an expert. Secret 1: Most CPAs work with a very narrow understanding of the meaning of due diligence. That definition must bbe broadened in order to maximize the value to the client. At its most basic level, due diligence is the process of investigating and corroborating what has already been told to you. Due diligence, however, can – and should – be much more. It should encompass all different aspects of the business, including organizational dynamics, social, financial, management, personnel and legal issues, because all of these aspects are connected together. You cannot simply look at any issue in a vacuum. All of the pieces are inter-related. Secret 2: Due diligence focuses on what the buyer must understand about the business he plans to purchase. Due diligence checks to ensure that what was represented to the buyer is true and it identifies issues and challenges that help the client understand how successful he can expect the business to be before making the purchase. Secret 3: Due diligence is as much about what you do not know as about what you do know. Due diligence opens the doors and finds the skeletons in the closet. It uncovers errors, oversights and potential problems. In this way, it is very powerful. Very few buyers understand how important it can be. Due diligence looks for hidden liabilities, but often uncovers hidden assets, as well. Secret 4: There is no substitute for seeing the company. A visit to a factory, plant or office often yields tremendous value. A lot can be learned by just observing the business first hand. Taking a “boots on the ground” approach and talking to the various people in the organization at all

levels can often provide great information, such as the workers’ temperature toward the new ownership. Secret 5: Due diligence is not the place to save a few dollars; this is often a huge investment to your client, who may buy one or two businesses in a lifetime. Nobody buys a house without a home inspection. Why buy a business without one? By looking at the business issues, due diligence often brings tremendous value. While it can be costly, due diligence, with very few exceptions, pays for itself over the long term. Secret 6: The client needs to know things about the seller, no matter how well he might think he knows the seller. The need to see beneath the surface does not change because the client knows the seller at a certain level. The client needs to know several things, for example: • whether the reputation of the business is built on relationships that belong to the company or to the seller. • what the seller’s leadership and management style are. • what they know about the seller in one context might not be indicative of how that person behaves in another context.

Building Investment Quotient continued from page 7

21st Century Risk continued from page 14

The brunt of the tax season is over. Now, what can you do to increase business, ingratiate yourself with clients, add new clients, or increase revenue? How about plugging in the info for clients who own commercial property into the BIQ and bringing them the good news: “We’re eliminating the rest of this year’s quarterly tax payments, or a whole lot more.” That works better than sending another bill. By offering a $60,000 to $100,000 cash injection (for every $1 million in value) to a client, or a prospect, will surely move a prospective client over to your firm. That extra arrow in your quiver can set you apart from your competition. Why not take advantage of this great tool?

not come as a surprise to receive a nonrenewal letter in the mail, informing the firm that the company it paid premiums all these years won’t be around to service claims. And, of course, the last thing a firm wants deal with is claim litigation being serviced by an insurance company that no longer serves its market! This is exactly why CPA Mutual was formed and has serviced the CPA marketplace since 1987. CPA Mutual, a company whose objective is to provide coverage to CPAs, is not going to withdraw from the market when the going gets tough. So, if you’d like one less thing to worry about – and your insurance company should not be one of them – please contact us. Visit our website at www.cpamutual. com, where you can learn a little more about our history, policy information and contact information. We look forward to hearing from you.

For more information about cost segregation services, visit, email MQ@costsegserve. com or call 800-344-7671.

This is very important in protecting clients from significant blind spots. Secret 7: Due diligence can identify issues relevant to planning a transition that allows the new owner to hit the ground running. By doing the steps above, the new owner has a large reservoir of information to facilitate the transition to his ownership. Learning curves are shortened and opportunities for your client’s success are heightened. Isn’t this what it is all about? Bonus secret: By working with the due diligence expert, the CPA will often have an increase in volume of work they do for the client. They will still have a lot of the analysis work and will be part of the M&A team. The due diligence expert will focus on the business issues. Due diligence experts are profoundly committed to achieving the best outcome for the client. The due diligence expert is the solution that can help you provide superior service to your clients. Jay Levine, CPA, is a partner with LFL Veritas in Teaneck, New Jersey, and heads their due diligence group. He specializes in small and medium size enterprises. He can be reached at CPA Solutions 2011 | 27


7 Questions to ask When Selecting a Sales Tax Management Service B y D a n i e l a S au n d e r s


magine that you’re a small retailer and you want to set up shop online. You’ve registered a domain name, set up a shopping cart, created a logo, and done all the other tasks involved in starting a retail website, and now you’re starting to think about collecting sales tax. You discover, to your dismay, that your shopping cart requires you to manually input every state and local sales tax rate – which could be as many as 13,000 possible entries – and you have to identify which items are tax-exempt in which states. Surely there’s a better way, you think. There is. Sales tax management services provide, in real time, the applicable sales tax rate for every tax jurisdiction in the United

28 | CPA Solutions 2011

States. They monitor sales tax laws and automatically implement any changes, and they provide tax exemption information, too. They make it much easier for an online retailer of any size to collect sales tax. As an accountant, you can help your clients choose the best sales tax management service for them. Read on for questions to consider.

Has a sales tax management service been integrated with your client’s shopping cart? Virtually all online retailers use a thirdparty “shopping cart” to process orders and payments. If your client’s shopping cart has already integrated a sales tax management

service, it will be much easier for your client to use that service – usually, all they need to do is check a box in order to get started. However, most sales tax management services will happily work with a shopping cart to integrate the service if they receive a request from a client. If your client has chosen a sales tax management service and then discovered that it’s not integrated with their shopping cart, it may be worth checking with the service (or the shopping cart) to see if it can be integrated.

How is your sales tax management service delivered? Sales tax management services use different methods to supply sales tax rates

– some offer “software as a service,” which is an application that is housed on the internet rather than downloaded onto a local computer, while others provide tax tables to download and install. Softwareas-a-service providers are better suited to keeping up with constant rate and jurisdiction changes than downloaded tax tables.

Has the service been designated a certified service provider? The Streamlined Sales and Use Tax Agreement (SSUTA) is a set of sales tax simplification guidelines that make it easier for multistate retailers to collect sales tax. A limited number of sales tax management services have been designated SSUTA “certified service providers” through a year-long certification process that tests and verifies that the service complies with SSUTA’s regulations and provides accurate sales tax rates. The CSP designation is currently the only proof that a service has been positively evaluated by an outside agency. It also guarantees that the service complies with SSUTA guidelines, which makes it easier for the service to interact with the 24 SSUTA member states.

Will this service still work when sales tax laws change? Laws surrounding the collection of sales tax by online retailers are continuing to evolve and change. In fact, a new bill due to be introduced soon will allow the states that have adopted SSUTA to require all retailers to collect sales tax, regardless of nexus. And more and more states are passing laws that add “in-state affiliate marketers” to the list of ways to create nexus. With sales tax laws constantly changing, your client’s sales tax management service needs to be able to

comply with current and future regulations. Any federal sales tax legislation will rely on the sales tax simplification guidelines of the SSUTA. Since CSPs are guaranteed to comply with SSUTA regulations, selecting a CSP as your sales tax management service means that it will be able to comply with future national sales tax laws.

Would it be advantageous to have sales tax amnesty in some states? Georgia, Ohio, Tennessee and Utah all offer sales tax amnesty for retailers that use certified service providers. If your client has nexus in these states, but has not collected sales tax there in the past, it’s in your client’s best interest to use a CSP, so they will receive amnesty for any uncollected taxes. But keep in mind that in order to receive amnesty, the retailer must volunteer to collect sales tax in all 24 SSUTA member states.

How many states does my client have nexus in? You’ll want to make sure that the sales tax management service your client chooses operates in every state where they have to collect sales tax. Your expertise as an accountant will be crucial for your clients in determining where they have nexus. If your client plans on expanding to other states, make sure that their sales tax management service makes it easy to add new states. Also consider how the states where your client has nexus assign sales tax rates. In many states, the five-digit zip code alone is not sufficient to calculate accurate sales tax – sometimes the ZIP+4 (e.g., 06851-5715) or even an exact address is needed. The sales tax management service your client chooses should include an address verification feature, which will automatically add the ZIP+4 to each consumer’s address.

What is the total cost of using this sales tax management service? Different services have different fee structures. For example, some services charge for each lookup. Since consumers frequently add items to their carts but abandon the checkout process before the purchase is finalized, your clients may end up paying for many lookups without making a sale. If your client has customers that are resellers, ask whether there is a fee to maintain and track exemption certificates. Also consider if the service charges a fee to file the client’s sales tax returns or prepare detailed reports, or if those features are included. And be sure to ask if the service requires a contract, locking your client in at certain rate for a certain amount of time. The total cost of sales tax management services can vary widely – some charge for certain actions, some have a flat monthly fee, and some – such as TaxCloud – are even free. Make sure your client compares not just the cost of the service, but also the features included in that cost. TaxCloud is a free, easy-to-use sales tax management service for retailers. It’s the only service that was designed to comply with the Streamlined Sales and Use Tax Agreement at a scale to support all online retailers. TaxCloud determines the applicable sales tax rate for a transaction, automatically incorporates changes to tax codes and rates, files sales tax returns, generates monthly reports, and handles all exemptions and audits – all at no cost to the retailer.  Daniela Saunders is vice president of marketing and business development for FedTax, a provider of online sales tax management services. For more information, call 206-452-1686.

> visit FedTax at CPA Solutions 2011 | 29


Should Your Competitive Strategy Include CRM? By Naseem Saab


igher client expectations and economic demands are causing firms of all sizes to re-evaluate how technology can help them strengthen client relationships and grow their practices. As businesses focus on improving efficiency and increasing productivity, they need to also ensure that their business development efforts are as effective as possible. A wellintegrated customer/client relationship management (CRM) system supplements practice management initiatives and pays significant dividends with improved client retention, direct referrals and new client acquisition. Firms that incorporate a CRM system consider it an important part of their competitive strategy. CRM provides these firms with reliable and centralized client data, strategic marketing advantages and improved client satisfaction. Once considered a luxury reserved for large enterprises, CRM software has become a critical component for success that is accessible to any firm.

What is CRM? CRM software offers a central resource to track and manage all of your firm’s critical information, including pending and past business transactions, inquiries,

communications, as well as projects, schedules and client interactions. Anyone speaking with a client or prospect can refer to the CRM contact record and immediately know everything they need to respond appropriately and answer their questions. For a small CPA firm, CRM helps the firm to grow and ensures that each and every client and prospective client get timely and appropriate follow-up, all deadlines are met, and interactions of every kind are managed and documented, and perhaps most importantly, this data is organized and retained as a company asset. For larger CPA firms, CRM can be used for all of this in addition to standardizing and managing the new client acquisition process, providing direct oversight and reporting capabilities for managers and partners and adding a critical mechanism for business development forecasting and analysis to maximize and plan for growth. Firms used to consider this type of centralized and comprehensive information resource a desirable option. As the speed of business increases and the amount of information grows, CRM has become a necessity for all firms that need to do more with fewer resources.

Benefits of CRM With a good CRM system in place, firms can expect to increase revenue, reduce costs and improve cash flow. Once all client, prospect, vendor and employee information is centralized, the CRM provides business continuity and makes your business information a truly valuable business asset. Your CRM system becomes the source of knowledge that tells you your most valuable business sources and where to focus your marketing efforts. Whenever you pick up the phone or engage an email, your CRM system becomes your information hub; it’s where you go to immediately know who it is you’re engaging, how you know them, what they were promised, what was

> visit Results Software at 30 | CPA Solutions 2011

delivered and even know if there is a balance due on the account. With CRM, firms can maximize productivity, manage workflow and ultimately stay competitive.

CRM Integration When a CRM solution is designed to be fully integrated with Outlook and QuickBooks, the CRM system becomes allencompassing to the data that matters from communications, to operations to finance. No one needs a case study to tell them that it’s time-consuming and frustrating to search for a particular email or document. When the CRM system integrates with Outlook and also has a document management capability such as SmartVault, the contact record becomes the only place you need to look for client-related emails, documents and notes. Likewise, when a CRM system properly integrates with QuickBooks, bidirectionally and at the transaction level, it provides everyone in the organization visibility to the data they need without having to switch applications. CRM empowers organizations to respond to requests and opportunities with great speed and efficiency, regardless of whether they are small practice or the largest, most wellstaffed corporation.

Conclusion Firms use CRM to stay competitive and become more productive. CRM is effective for managing workflow, improving client satisfaction and maximizing business development efforts. If you are not currently using CRM to supplement your practice management systems, this may be a good time to consider the many ways your organization would benefit by implementing an integrated CRM solution.  Naseem Saab is president and founder of Results Software, a Virginia-based provider of CRM solutions. For more information, call 800-713-7013.

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CPA Solutions 2001  

In the 2011 issue of CPA Solutions, you’ll find all the answers you need to questions you never knew you had. Article topics include how to...

CPA Solutions 2001  

In the 2011 issue of CPA Solutions, you’ll find all the answers you need to questions you never knew you had. Article topics include how to...