Magazine of the
New Jersey Society of Certified Public Accountants
Leisure and Entertainment Having a Devil of a Time with a Pair of CPAs CPA Opportunities in the Leisure and Entertainment Sector The Celebrity Client What NJ Is Doing to Bolster the L&E Sector
July â€˘ August 2012
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July • August 2012
Ralph Albert Thomas, CGMA Executive Director firstname.lastname@example.org
Ellen C. McSherry, CGMA Associate Executive Director email@example.com
Having a Devil of a Time with a Pair of CPAs Hear from two CPAs who are leading the financial team for one of the NHL’s most successful franchises.
Don Meyer Director, Communications & Marketing firstname.lastname@example.org
David Plaskow Managing Editor email@example.com
Jeanette L. Miller Editorial Assistant firstname.lastname@example.org
CPA Opportunities in the Leisure and Entertainment Sector Sure there’s glitz and glamour, but there’s also a lot of hard work needed for CPAs to make it on this stage.
Editorial Advisory Board Neil B. Becourtney, CPA David M. Capodanno, CPA Rosemary F. Ervin, CPA Rebecca B. Fitzhugh, CPA Christopher W. Frey, CPA Catherine Z. Horn, CPA Bernard M. Kiely, CPA Marcella LoCastro, CPA Anthony F. Marone, CPA William C. McNamara, CPA Marc D. Mintz, CPA John F. Raspante, CPA Joseph F. Scutellaro, CPA Margaret Van Brunt, CPA
The New Jersey Society of Certified Public Accountants 425 Eagle Rock Avenue Suite 100 Roseland, NJ 07068-1723 973-226-4494 Fax: 973-226-7425 njscpa.org
The Celebrity Client Learn about a few personality types of celebrity clients and the unique challenges they pose to their CPAs. What NJ Is Doing to Bolster the L&E Sector Despite some well-publicized challenges, NJ has a lot to offer travelers. See how the state is successfully getting the word out.
4 Close Up New Society President Keeps Showing Up 6 News Briefs 18 A&A Buzz The Need for Royalty/ Licensee Audits 19 Best Practices The Value-Added Giveaway 20 Financial Planning The Life and Times of Life Settlements 21 Forensic File Measuring Revenue in a Cash-Intensive Business 22 Industry Insights Would Thou Work for a Religious Group? 2 3 Small/Sole Practitioner Using a Third-Party Credit Card Processor
2 4 Tax Talk Bonus Depreciation for Retail and Restaurant Property 25 Tech Center The World of Virtualization and Licensing 26 NJSCPA Women of Note 48 Student Outlook Three Cheers for “Me Time” 49
Legislative Views NJSCPA Advocates to Eliminate the “Five-Year Death Penalty”
50 Member Profile Taking Aim at Safety Society Pages CPE Offerings and Events, 38 Get Involved, 40 Member Benefits, 44 NJ State Board of Accountancy Report, 46 Classifieds, 47
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New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue-Suite 100, Roseland, NJ 07068. Issue No. 34 Copyright © 2012 New Jersey Society of Certified Public Accountants. Annual membership dues includes $9 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues. Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723. The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.
New Society President Keeps Showing Up B Y DO N MEYER, NJS CPA C OM M U NI C AT I O NS & M AR K E T I N G D I R E C TO R
oody Allen once said “80 percent of success is showing up.” If true, then Thomas F. Roche III, CPA, a partner at Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC, is the living embodiment of those words. Roche has been “showing up” at New Jersey Society of CPAs events and meetings for more than 30 years. This year, his involvement has culminated with his election as NJSCPA President. “I’ve been involved with the Society for so long, I think my greatest attribute is that I know a lot of people,” said Roche, who resides in Westfield with his wife, Nancy. How did you become involved in the Society? To be honest, I didn’t really have a choice. My boss and mentor was Marvin Strauss, CPA, who was always active with the Union County Chapter. As soon as I earned my license in 1981, Marvin called the Society’s Executive Director, Bob Garrity, CPA, and asked how I could get involved; it was just expected. I started attending Young CPAs events where I met future leaders, such as past presidents James Hannan, CPA, Bernie Gingras, CPA, and Robert Marrone, CPA, and current secretary Brad Muniz, CPA. I also became active with the Union County Chapter, eventually becoming president in the mid-1990s. I was chair of the Young CPAs, Chapter Operations and Special Events committees and the Insurance Trust, as well as served on a host of Society committees and groups, including the Nominating and Planning committees and the NJ-CPA-PAC. I really had a natural and gradual progression to the presidency. What are your presidential goals? I’m not a believer in being reactionary. I want to stay on the steady course set by my predecessors. One of my areas of interest is the group with which I got my start – the Young CPAs. There’s a great deal of talent in the under-age-40 segment. These members have energy and ideas that we need to tap into. I want to figure out how we move them
up through the Society’s ranks. I also want to devote time to growing participation in and donations to the NJ-CPA-PAC. The current administration in Trenton seems receptive to the Society’s positions, and we need to keep our name out front. How can NJSCPA members benefit from involvement? When I mention my Society involvement to non-CPAs, they sometimes ask, “Why do you want to meet other accountants?” Where else can you meet, network and build relationships with business professionals who can play such a vital role in the growth of your business? I know from personal experience that firm mergers have come about as a result of partners’ involvement with the Society. In 1998, the NJSCPA held its out-of-state convention (now known as the Professional Development Conference) in Ireland. Past president John LaPilusa, CPA, and I worked out the merger between our firms over the Atlantic Ocean and during the convention. Today, the NJSCPA Convention & Expo in Atlantic City enables members to network and discuss business with more than 500 of their peers. I don’t know where else a CPA would be afforded that kind of opportunity. Any final thoughts? I can’t overstate what an invaluable resource the Society can be for both individuals and firms. If we have questions or need help, we call Roseland. We encourage our firm’s staff to be active with the NJSCPA to help raise our firm’s profile. I’m our firm’s second partner to serve as NJSCPA President. We’ve also had numerous partners and staff serve as chapter presidents and committee leaders and make presentations to students. Each role increases our firm’s visibility and helps make us stronger. I hope I can carry that message of involvement to the members so that one year from now the Society is stronger than it’s ever been.
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2012/13 Board of Trustees EXECUTIVE COMMITTEE President Thomas F. Roche III, CPA President-Elect Gerard Abbattista, CPA Secretary Brad E. Muniz, CPA Treasurer Walter J. Brasch, CPA Immediate Past President Carole A. Hedinger, CPA Executive Director Ralph Albert Thomas, CGMA TRUSTEES Jose E. Bombino, CPA Susan Burke-Leichner, CPA William A. Cadmus, CPA Edward I. Guttenplan, CPA Michael W. Gutwetter, CPA Karl A. Halteman, CPA Robert P. Herman, CPA Maryann Holloway, CPA Kenneth Pogrob, CPA Jody Rorick, CPA Mary E. Zago, CPA Joseph A. Zielinski, CPA
Cover Photo NJ Devils Executive Vice President of Finance and Administration Gordon Lavalette, CPA (right), and Executive Vice President and Chief Financial Officer Scott Struble, CPA, on the ice at the Prudential Center.
briefs Corporate Business Tax Memo
NJ Congressman Scott Garrett (right) meets with New Jersey Society of CPAs Executive Director Ralph Albert Thomas, CGMA, during a May visit to Capitol Hill as part of the American Institute of CPAs Council.
House Passes Mobile Workforce State Income Tax Simplification Act
In May, the U.S. House of Representatives passed H.R. 1864: Mobile Workforce State Income Tax Simplification Act of 2011, which would establish a uniform national standard governing the withholding of state income taxes for nonresident employees. The bill would establish a uniform requirement that nonresidents would have to work in a state for more than 30 days before becoming subject to out-of-state income taxes. The bill now moves to the Senate.
State Tax Expenditure Report Available Pursuant to P.L. 2009, c.189, a state tax expenditure report must be included in the governor's annual budget message. It includes tax expenditure categories, description, objectives, administration costs and more. You can view this report at state.nj.us/treasury/taxation/pdf/ taxexpenditurereportFY2013.pdf.
The New Jersey Division of Taxation issued a technical advisory memorandum concerning the use of intercompany transfer pricing and advance pricing agreements in the context of intercompany and related-party transactions. Intercompany and Related-Party Transactions – New Jersey is a separate-entity reporting state for corporation business tax purposes. Corporations or business entities, even those that are related or affiliated, report income and deductions on a separate-entity basis and not in a group or combined report. Pursuant to N.J.A.C. 18:7-11.15(a), corporations are not permitted to file consolidated returns except for those companies that hold a license pursuant to the Casino Control Act, operate as air carriers or are compelled to report income in a consolidated filing to reflect the “true earnings of the taxpayer on its business carried on in this state” as provided in N.J.S.A. 54:10A-10(c). Separate-entity reporting may not accurately reflect income earned within the state’s borders in the context of intercompany and related-party transactions when arm’s-length terms and rates are not utilized by the parties. Advance Pricing Agreements – Under Internal Revenue Code (IRC) section 482, the Internal Revenue Service (IRS) has the authority to “distribute, apportion or allocate gross income, deductions, credits or allowances” between businesses and organizations that are “owned or controlled directly or indirectly by the same interests.” To reduce administrative burdens and help provide some level of taxpayer certainty, the IRS has a voluntary advance pricing agreement program whereby the IRS and taxpayers may resolve transfer pricing issues
Amazon.com in New Jersey by the Numbers 65,000,000 Proposed Amazon dollar investment in NJ 2,400,000 Proposed square feet of warehouse space to be added in NJ 1,500 Estimated jobs creation 22 Months of a sales tax holiday requested by Amazon 2 Number of proposed warehouses to be built N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
under section 482 of the IRC in a cooperative manner on a prospective basis. An advance pricing agreement (APA) is defined in the IRS APA Study Guide as “an agreement between the IRS and a taxpayer on transfer pricing methods to allocate income between related parties under IRC section 482 and the associated regulations.” Revenue Procedure 2006-9, as modified by Revenue Procedure 2008-31, sets forth the current procedures for negotiating and administering APAs.
GASB Issues Statements No. 65 and No. 66
The Governmental Accounting Standards Board (GASB) issued Statement No. 65, Items Previously Reported as Assets and Liabilities, which clarifies the appropriate reporting of deferred outflows of resources and deferred inflows of resources to ensure consistency in financial reporting. Statement No. 66, Technical Corrections – 2012, enhances the usefulness of financial reports by resolving conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting. The provisions of both statements are effective for periods beginning after December 15, 2012, and would be applied on a prospective basis. Early adoption is encouraged. Visit gasb.org for more information.
Society Officially a Great Place to Work
In a recent NonProfit Times’ list of the country’s “50 Best NPT’s BEST Nonprofits to Work for NONPROFITS in 2012,” the New Jersey TOWORK FOR ★2012★ Society of CPAs was ranked seventh overall and third among small employers (15-49 employees). Congratulations to the staff of the NJSCPA.
The Real Story on NJ’s Gift Card Law
In 2010, New Jersey’s Legislature passed a bill that protects gift cards buyers by preventing gift card issuers from depleting and then taking consumers’ unused balances. The law prevents gift card sellers
njscpa.org Spotlight Want Less Email?
from charging exorbitant inactivity fees that deplete and ultimately eliminate the value of cards. Under the 2010 law, once card value is transferred to the state, consumers are protected if a business declares bankruptcy and they can receive the unredeemed value of their gift cards. The law also provides that unused balances be transferred to the state after two years of inactivity, rather than be taken by the card issuer. Every penny the state holds in unused gift cards can be reclaimed by consumers forever. And the card value is available to the customer – with interest – forever. Visit state.nj.us/treasury/ news.shtml.
NJSCPA Members Appointed to NJ State Board of Accountancy Governor Chris Christie has appointed several members of the NJSCPA to the NJ State Board of Accountancy, the state’s licensing and regulatory body for CPAs, for a three-year term: • Jorge A. Caballero, CPA, Deloitte • John F. Dailey Jr., CPA, Bowman & Company LLP (reappointed to the board) • Sara DeSmith, CPA, PricewaterhouseCoopers • Harold Model, CPA • Ainsley A. Reynolds, CPA, Department of Treasury, Division of Investment • Michael H. Runge, CPA, Kim and Wright, PC
IRS Changes EIN Limit to One Per Day
The Internal Revenue Service (IRS) now issues only one employer identification number (EIN) per responsible party each day, a change from the current limit of five per day. This limit applies to all requests for an EIN whether online or by phone, fax or mail. This policy was implemented to ensure fair and equitable participant access and effective system operation.
The 2012 PCPS/TSCPA National MAP Survey Is Open
The PCPS (Private Companies Practice Section) and TSCPA (the Texas Society of CPAs) National MAP Survey covers key practice management issues that will let your firm compare its performance to other firms and gain strategic insights into building a more profitable and rewarding practice. Targeted benchmarks include billing rates, chargeability ratios and other key performance indicators. Survey results will also help accounting firms benchmark themselves against same-sized firms geographically. Each participant will receive a free report that contains key performance metrics plus a host of additional ratios and statistical analyses. The survey deadline is Friday, July 20. Open to all firms, you can access the secure survey at map.pcps.org. For more information, visit aicpa.org/pcps. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Did that headline catch your attention? We thought so! The New Jersey Society of CPAs only wants to send you e-newsletters and emails for programs and services that you are interested in. Take advantage of the following opportunities to customize emails you receive from the Society:
Areas of Interest
Many of the emails we send announcing upcoming CPE programs are sent to members based on their Areas of Interest. Make sure that we know your Areas of Interest by updating your profile. 1. Go to njscpa.org/profile. (You will be prompted to login. Your username is your email address; your password is your member ID unless you’ve changed it.) 2. Scroll down to the Areas of Interest section and make your selections.
Email Preference Center
We recently launched a comprehensive Email Preference Center. This feature allows you to opt in and out of the NJSCPA’s various e-newsletters and email categories. 1. Go to njscpa.org/epc. 2. Type in your email address. (Be sure to use the email address where you receive Society emails. If you need to update your email address, access your profile by using the above instructions.) 3. Review the options and make sure that each email you want to receive is checked off.
Having a Devil of a Time with a Pair of CPAs
The New Jersey Devils hockey team is one of sports’ most successful franchises. It has made the playoffs 21 out of the last 23 seasons, had 19 straight seasons with a winning percentage of over .500 and won three Stanley Cups in the past 17 years.
By David Plaskow NJSCPA Publications Editor
The Devils home – the Prudential Center in Newark – is also home to the Seton Hall basketball team, concerts and other events. New Jersey CPA magazine spoke with a pair of CPAs, Executive Vice President of Finance and Administration Gordon Lavalette and Executive Vice President and Chief Financial Officer Scott Struble, about how they make the Devils a winning financial team. NJCPA: How do you successfully compete in the massive New York/ New Jersey market, especially during a tough economy? GL: We’re sensitive to the economic climate and we do things like dollar hot dog days to help fans have a good time and want to come back. We also work with our sales force to convey a return on investment for corporate N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
clients – that’s where accounting really comes in. SS: The Prudential Center is the sixth busiest arena in the U.S. But people in this area have many options for entertainment: other hockey teams, other sports and other activities, such as the theater. Sports seasons are also getting longer and longer. We just have to communicate to the fans that going to a Devils hockey game is a good use of their discretionary incomes. We are Jersey’s team, we take pride in that and we’re not afraid to tell people. NJCPA: How is sports accounting different from other types of accounting? GL: It’s very data intensive: ticket data, prices, packages, trends. You need very good attention to detail and analytic skills. You use customer relationship management software to mine the enormous amount of financial data. For example, we found that on our dollar hot dog days, it not only brings in more people to the arena, the average expenditure per person as well as total concession revenues go up. SS: We operate under a collective bargaining agreement with the players. So, there are contractual restrictions, salary caps with regard to players’
compensation and league-wide reporting requirements. As the league reporting is done on a different basis from generally accepted accounting principles, we have to keep a second set of books under a second set of guidelines.
NJCPA: What were your career paths? GL: I worked at KPMG, went to law school and then got an LL.M. in tax. I later worked at a pharmaceutical company and then became the chief operating officer of a technology startup company. I wasn’t consciously
See The Good.
At the Community Foundation of New Jersey, we’re focused on helping our donors use their funds to create real impact in their communities and see the good their charitable giving creates. Here are two recent examples of innovative ways our donors are using their CFNJ funds to make a difference:
• Impact 100 Garden State Fund: There are advantages of working together to achieve desired results. Recently six New Jersey women started their own grant-making organization with the help of the Community Foundation: Impact 100 Garden State Fund. Every year 100 women each contribute $1000 and, after soliciting applications from various non-profits, they hold a vote to select one recipient for that year’s $100,000 grant. By focusing the entire fund on one organization every year the impact will be especially meaningful.
looking to get into sports, I basically fell into this great opportunity, which is not the typical path to sports accounting. SS: I worked at E&Y and through one of my clients learned about this position at the Devils. In public accounting, just as you start to build a camaraderie with
• Afghan Girls Financial Assistance Fund: When two local businessmen created AGFAF in 2008 at the Community Foundation, their hope was to change the life course of the first young Afghan woman selected to attend college in the US. Their program is now assisting 20 students and growing everyday. In 2012, Newsweek, http://newsweekpakistan. com/scope/911, honored a scholarship recipient by naming Noorjahan Akbar “one of the 150 fearless women in the world” for her work as an activist in Kabul launching Internet cafés for women. If your clients are looking to make a difference through charitable giving, we’d like to be of assistance. Please contact
Hans Dekker at firstname.lastname@example.org | 973-267-5533.
2012 Year-To-Date (May): Grants Issued - $9.31MM | Gifts to Donor Advised Funds - $10.35MM Follow us:
© 2012 Community Foundation of New Jersey
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a client, you leave to go to another client. In industry, you can create a stable team of people who share your philosophy. Having a passion for sports and being a Jersey guy, it was great to land with a local team. NJCPA: How were things different when the Devils were part of YankeesNets? GL: Back then, there were some Securities and Exchange Commission reporting requirements. Also, the ownership dynamic was different; it was wider. SS: The owners were very involved in the details under YankeesNets. NJCPA: Why become a CPA? GL: It provides instant credibility and prepares you for the rigorous requirements we operate under. It gives you technical skills and lays the foundation for client, communication and teamwork skills. SS: It opens doors, is recognizable and speaks to a person’s intelligence and character. It shows a commitment and focus, that you set goals and follow through. I don’t think I would have been considered for my current role here without it. NJCPA: How did that help you on obtaining financing for the Prudential Center? GL: The locale and partnerships really dictated much of the construction project. We worked with the City of Newark when it issued the bonds. It also involves a unique set of skills. There’s pure accounting as well as project planning and management. You learn that there’s a lot of moving parts and everything is interdependent. For example, if a concrete vendor says “I can’t make it Tuesday, but I’ll be there Thursday,” it can lead to huge delays in other areas. NJCPA: How has being a member of the New Jersey Society of CPAs helped? GL: The NJSCPA has a great reputation along with great programs. It always helps to be part of a successful organization that you can lean on if you need a resource. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
NJCPA: What would you suggest for accounting students and young practitioners who wish to get into the sports sector? GL: Seek out an internship. Most employment opportunities in sports, and in general, come from networking and relationships, and there is no better way to establish those relationships than through internships where students can show their skills and abilities. Students should focus on their core studies so they can stand out in their fields, while also focusing on communication skills. With the various informal communication and social media tools out there, strong oral and written communication skills are sometimes lacking. NJCPA: Is it true that part of the team may be for sale? SS: We can’t comment on any potential sales rumors. NJCPA: What has been the financial impact of the Prudential Center on Newark? GL: More than seven million people have come to the Prudential Center since its opening in 2007. It created a significant number of construction jobs, jobs at the facility, vendor business, increased transit ridership and new businesses, such as bars and restaurants, in the area. The impact has been enormous. NJCPA: What are your top three Prudential Center moments? SS: The arena’s first event, a Bon Jovi concert; the first Devils game against Ottawa; and when Martin Brodeur notched his record-setting 552nd goaltending victory in 2009. GL: Anytime the arena holds a mixed martial arts event (due to the crowd energy); the 2011 NCAA regional basketball tournament; and Marty’s 552nd victory.
Member Benefit Get discounts on select Devils home games at njscpa.org/index/members/ marketplace/devils.
Recognizing the significant need for long‐term care planning among our members, the New Jersey Society of Certified Public Accountants is pleased to announce a comprehensive new Long Term Care Insurance Program. This program offers a portfolio of comprehensive plans from multiple highly rated insurance carriers.
Through a partnership with Askin, Weber and Reed and Long‐Term Care Resources, New Jersey Society of Certified Public Accountants members now have a national network of long‐term care specialists available to explain the costs and benefits of this vital program.
More importantly, we have used the buying power of our association to obtain special discounted rates.
While we know this program is very valuable, insurance is not the right answer for everyone. However, information is your best weapon in the fight against the high cost of long‐term care and to determine if Long Term Care Insurance is right for you. Advanced planning is always the best approach. To request more information, call today 800‐616‐8759. Connect with us at: www.awrins.com N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
CPA Opportunities in the Leisure and Entertainment Sector For a CPA interested in the leisure and entertainment sector, the phrase “New Jersey and you, perfect together” is spot-on. New Jersey boasts a variety of casinos, restaurants, racetracks and sports teams, along with the many musicians, actors and professional athletes who call New Jersey home.
By Anthony D. Baker, CPA
Many opportunities exist for those CPAs who are willing to start small and build solid reputations over their careers. Whether your passion is sports, music or movies, a career in the entertainment industry can take you wherever you may want to go. There really is no road map for the path to success, but to increase your chances of success in this sector, at minimum, a bachelor’s degree in accounting, along with obtaining the CPA credential, aid in building your reputation and greatly increase your odds of success. Being skilled and prepared get you ready for the next opening at a television or film studio, production company, management firm or record label. One of the good things about this sector is that people all across the U.S. (and the world) enjoy leisure and entertainment activities, thus, your skills become portable. Also, don’t underestimate the power of internships, even if they are unpaid. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
This industry is built on relationships and networking. Below are just a few of the opportunities available in the leisure and entertainment sector, brief descriptions of the corresponding job functions and the skill sets needed to excel at the positions.
Business Manager, Personal Advisor, Management Accountant This CPA has typically developed a close, trusting client relationship. If the client is a celebrity, chances are there will be a high level of trust involved because the CPA will be paying personal bills, doing estate planning, organizing, investing and controlling the talent’s cash flow, essentially on a daily basis. The CPA will sometimes work in conjunction with another business manager or independent auditor. Having worked as a business manager, I’ve found the lines of the professional relationship can sometimes get blurred. Sticky situations include telling your client that it is not in his or her best interest to purchase another $125,000 vehicle until the last advance is recouped, or having to fund payroll for a world tour while dealing with different promoters in each city. Situations such as these can require advanced skills in dealing with various personality types. The key here is to expect the unexpected. But, if you enjoy attending the Oscars or getting back-
stage access to the hottest concerts, you could be looking at your dream job.
Production Accountants, Project Accountants This CPA manages the cash flow and maintains the financial records of a film or production. The dayto-day job responsibilities include preparing the budgets and ensuring that the production crew is able to stay within budget and on schedule. These accountants usually work on a freelance basis, so a project could take six months and the daily hours are long, but they may have a month or two between projects for that much-needed trip to Tahiti to catch up on lost sleep. These financial professionals must have a working knowledge of the industry in order to effectively add value to their clients. Production accountants sometimes work closely with the producer to secure project financing. If you are particularly adept at structuring finance deals and acquiring investors, you could become an executive producer and receive credit plus additional compensation for your efforts. On very successful projects, this compensation could be substantial.
Financial Analysts These business professionals rely on their expertise in reading contracts to
decipher royalty rates and payment periods worldwide. The CPA experience is added value, but knowledge of research and investigative techniques play a big part here. Knowing industry practices and understanding legalese help determine what monies are due to an artist, actor or copyright owner. Much of the opportunity in this sector has historically been at record labels and the big publishing houses. Most of the major publishing houses have recently downsized or merged with bigger houses, but there are still many untapped niches and needs in this market for the right professional. Currently, there is a very lucrative opportunity in finding undiscovered royalties for artists and copyright holders, both domestically and worldwide. Technology has made it somewhat easier to find missed revenue, but there are still many laws and regulations that can sometimes be a barrier to collecting undiscovered funds. It is not uncommon for an artist or copyright holder to find an undiscovered revenue stream in some distant part of the globe. All of the big firms and publishing houses are working diligently to leverage their catalogs, but there are many individual copyright holders who can’t chase down every penny due them. A good CPA who knows the industry can add value
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to any publishing business looking to collect all royalty monies due.
CPA Entrepreneur This is the jack of all trades in this arena. This CPA performs most of the aforementioned functions for his or her clients – and then some. This could be anything from tax preparation, shopping a demo or trailer, giving financial advice to preparing a business plan. If you are new to the leisure and entertainment sector and looking to hone your craft or are already in the industry and want to exercise your entrepreneurial muscle, what better way than by helping athletes, artists, actors and others on their ascent up the ladder of success? If you have what it takes to secure clients and love to network, this area could be a natural fit for you. Anthony D. Baker, CPA, is a Grammynominated recording producer and is currently the owner of an accounting firm specializing in the representation of athletes, artists and actors. Contact him at email@example.com.
Member Benefit Post your resume for free and find that dream job on our Job Bank at njscpa.org/career/job-bank.
Go with the biggest in the industry. We are North America’s leader in marketing accounting and tax practices because we understand the value of your firm, know how to market it and have hundreds of buyers in New Jersey who want a practice. Our biggest concern is you. Our wealth of experience culminates to make sure your comfort level is met, your questions are answered and everything is being done to sell your firm. Give us a call today so that we may go to work for you and produce the results you desire.
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NORTH AMERICA'S LEADER IN PRACTICE SALES
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Celebrity Client It is a big challenge to convince celebrities to understand and be involved in their finances from the beginning of their careers. The celebrity client has a unique psychology. Many of them experience a meteoric rise to the top at young ages. They tend to be competitive, confident, highly compensated and very mobile.
By Robert A. Raiola, CPA Fazio, Mannuzza, Roche, Tankel, LaPilusa LLC
Furthermore, many careers could abruptly end just as quickly as they started. Regardless of career trajectory, many celebrity clients don’t have the maturity, education and experience to handle sudden fame and wealth. While my expertise – and examples below – focus on the areas of professional athletes and broadcasters, these types of celebrity clients can also be found in any leisure and entertainment area, including music, movies and television.
The Uninformed I have a client who was a Major League Baseball player. Several years back, during the middle of the season, the player was traded to the Los Angeles Angels who were then owned by Disney. Upon learning of the trade, I spoke to the client and told him the Angels would deduct Social Security and Medicare, federal income tax, California tax (10.5 percent) and union dues from his paychecks. I cautioned him that the net check would be approximately 45 percent of his gross wages. I needed to emphasize this to him since most professional baseball players are only N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
paid during the season. Knowing what his net check would be was important for year-round budgeting. After the trade, the client was staying at a hotel at the team’s expense. When the client received his first check, he was surprised to see a deduction for DIS-SUI. He told me he was staying in a room provided by Disney, but he was not staying in a Disney Suite. I explained to him that the deduction was not for a suite, rather it was state disability and unemployment insurance.
The Spendthrift A few years ago, I was retained by a New Jersey-based professional athlete to handle an Internal Revenue Service (IRS) examination and prepare his 2010 individual income tax return. The examination was focused on the athlete’s employee business expenses for 2007 and 2008. Over the last few years, the IRS has increased its efforts in auditing professional athletes, particularly in the area of employee business expenses. The majority of these audits are correspondence audits, rather than the typical face-to-face meeting with an IRS agent. The athlete’s expenses consisted of agent fees, conditioning costs, telephone, travel and union dues. I provided the IRS with the proper documentation and, after some correspondence, was able to receive a no-change audit result for tax years 2007 and 2008. After I completed the IRS audit, I noticed that the New Jerseybased athlete had failed to complete New York non-resident income tax returns to report his New York source income for 2007 and 2008. I prepared the New York non-resident returns and
amended the New Jersey tax returns to reflect the credit for taxes paid to the State of New York. The athlete had also played in Pennsylvania. Pursuant to a reciprocal agreement between New Jersey and Pennsylvania, the taxpayer was not subject to tax in Pennsylvania. However, he was still subject to city taxes in Philadelphia and Pittsburgh. I amended the New Jersey return to take the credit for taxes paid to these cities. In addition, I was able to have New York state abate all of the penalties for the late-filed income tax return.
The Disconnected Back in 2010, I was retained by a local athlete to prepare his 2009 individual income tax returns. When I began reviewing his previous year’s tax returns, I asked him to request a copy of his final paystub for the prior year. In reviewing the paystub, I noticed deductions for union dues, some hotel charges and miscellaneous deductions in the amount of $7,000. I asked the player what comprised the miscellaneous amount. He was not aware of the deduction and had no idea what it represented. When I approached the team’s payroll department, the payroll manager told me he would research it. A few days later, he got back to me and stated that it was a mistake. The next day, the player received a $7,000 check reimbursing him for the erroneous payroll deduction.
The Bad Boy Athletes are often fined for rule infractions, which are sometimes bizarre. Some of the violations that athletes have been fined for include wearing a sombrero after scoring a touchdown, tweeting during a game, wearing the wrong wristbands and flashing a dollar bill at an official after a bad call. I am often asked, “Are the fines associated with these violations tax deductible?” The issue of deductibility hinges on whether or not the fines resulted from the offender breaking the law. If the fines were for breaking the law, such as traffic citations or other penalties associated with unlawful behavior, the fines are not deductible. Many of the fines that are commonly assessed on professional athletes by teams or leagues are classified as ordinary and necessary business expenses and, thus, deductible. For example, if an athlete is fined $50,000 for an excessive celebration, what is the tax benefit? Assuming an athlete is not subject to the alternative minimum tax and has enough business expenses to exceed the 2 percent of adjusted gross income floor, the actual tax deduction of $50,000 at the rate of 35 percent would equate to a $17,500 tax benefit and, thus, the actual cost of the fine would be $32,500 from a federal tax perspective. Professional athletes are a unique client type who need to understand that their careers can be short-lived.
Our job, as trusted business advisors, is to work closely with them to help them understand their circumstances and effectively plan for both today and tomorrow. Robert A. Raiola, CPA, is the sports and entertainment group manager at Fazio, Mannuzza, Roche, Tankel, LaPilusa LLC. He is a member of the New Jersey Society of CPAs. Contact him at rraiola@ fmrtl.com or 908-272-6200.
audimation.com N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
What NJ Is Doing to
Bolster the L&E Sector
When I travel and tell people that I’m from New Jersey, their first words revolve around Atlantic City. This casino town is internationally known, but when you investigate further, leisure and entertainment in New Jersey is much more than just the famous seaside town.
David A. Lopez, CPA David A. Lopez and Company, LLC
Places such as Six Flags, the many vineyards, ski slopes and the Meadowlands are just a few of the destinations that attract millions of visitors to the Garden State annually. With so many beautiful locations within our borders, government has worked hard to maximize the positive impact of tourism on the state’s economy.
The Numbers Don’t Lie Increasing awareness of New Jersey’s tourist destinations and enhancing the Garden State’s overall image are two of the tasks assigned to the New Jersey Division of Travel and Tourism. Since 2009, there has been a steady increase in the state’s tourism numbers, and the Trenton-based agency is working hard to ensure we don’t lose any momentum. “Between 2009 and 2011, the amount of tourists traveling to NJ rose from 68 million to 80 million,” notes Grace Hanlon, executive director of the NJ Division of Travel and Tourism. On the surface, this makes perfect sense. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Look at a map of the United States. New Jersey appears to be in the perfect location: coastline and beaches border the east, Philadelphia to the west and New York City to the north. Not only are these great cities close enough for New Jersey residents to enjoy, these locales provide a large traveler base from other states. This concept is documented in a 2011 study performed by Tourism Economics which explains that two-thirds of New Jersey’s visitors come from the tri-state area. That fact alone proves that the Travel and Tourism Division’s marketing efforts are producing the desired results. In 2011, travel and tourism activities – which include hotel stays, admission to local attractions and retail purchases – infused more than $38 billion into our economy. The current tourism demand has recovered the losses from the recession and is just shy of the all-time high reached in 2007.
Marketing Goes High Tech Hanlon adds that the division has undertaken a very aggressive marketing campaign to enhance New Jersey’s image and improve on the recent economic results. She notes that the agency has specifically pinpointed the surrounding states as an area where significant traveler potential can be cultivated. For example, the organization has some exciting
marketing programs currently running in the New York City area. Hanlon describes how the division has flooded the urban market with radio spots, television ads and roadside billboards. In addition, the division has utilized more tech-savvy methods, such as producing a 15-second video spot that airs in more than 3,000 New York City cabs. Even more impressive is the implementation of smart posters. Hanlon explains that the smart posters are part of a kiosk located in New York City; when pedestrians walk by the booth they are “pinged” by the device, which automatically sends a smart phone commercial to passersby without them even realizing they have it until the spot plays on their handheld devices. These advertising strategies show that the division takes its marketing efforts very seriously. Managers constantly analyze the effectiveness of their efforts. A study conducted by an outside firm highlighted that the return on investment realized by the division’s recent campaigns was approximately $314 for every dollar spent, an impressive accomplishment. This success has generated more than $676 million in incremental spending throughout the state.
Strategic Partnerships The division is also forging partnerships with other organizations, such as the Casino Reinvestment Development Authority, to attract tourists to the state. As the name suggests, the tandem is focused on the Atlantic City area and the manner in which the casino industry contributes to the local and statewide economy. With new casinos, such as the Revel, and the massive reconstruction project completed at the Golden Nugget, the division is excited about the increased tourism possibilities. Hanlon also explains that the division is marketing the southern beaches as a high-quality golf destination. With courses such as Blue Heron Pines, Harbor Pines and the Atlantic City Country Club, the state is working diligently to capitalize on the Atlantic City region being voted as one of the “Top Ten Golf Cities in America” by ForbesTraveler.com.
Challenges Even though the state has achieved much success with its marketing and partnerships, challenges still exist in achieving growth in our tourism industry. Many have a mental image of New Jersey being swampland, oil refineries and Snooki, and they simply don’t consider New Jersey when making travel plans. It is not considered a tourist destination in the vein of Florida, the Hamptons or Martha’s Vineyard. Finally, and perhaps most importantly, budget issues also limit the effectiveness of the state’s efforts. In recent years, the budget for tourism was cut by approximately $2 million. This unfortunate trend may continue in the upcoming fiscal cycle as government austerity is at the center of political debates.
On the Horizon The division looks forward to future events and the development of new travel destinations, such as WWE Wrestling, Formula 1 auto racing, upgraded horse racing facilities, Super Bowl XLVIII and, yes, even the Meadowlands American Dream complex. Super Bowl XLVIII alone is expected to inject more than $500 million into the economy. Hanlon is committed to creating an event that will put New Jersey among the top places to visit for both leisure and business and is working with executives from previous Super Bowl cities to make the event all that it can be. But the New Jersey Division of Tourism and Travel is putting a spotlight on all that the state has to offer, because the Garden State truly has something for everyone. David A. Lopez, CPA, is the managing member of David A. Lopez and Company, LLC. He is a member of the New Jersey Society of CPAs. Contact him at email@example.com or 215-732-9196.
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The Need for Royalty/Licensee Audits B Y A RTH UR ERK, CPA, AND AND RE W AD LE R , C PA, C I T R I N C O O P E R M A N
ompanies, artists, music publishers, writers, producers, directors, actors, production companies and others (licensors) who have growing and/or significant royalty licensing income should consider having their financial advisors conduct royalty/licensing audits of the companies (licensees) with which the artists have reporting agreements. It is good business practice to conduct such audits, as the results may increase the artists’ income and also provide information which could result in a better understanding of the contracting company’s business practices. There are several reasons to conduct an audit: • To help ensure that the artist is being accounted to in accordance with the agreement(s) governing the relationship. A simple desk audit of royalty statements can bring about significant benefits. For example, a review of the formulas used by the reporting company may disclose that the mathematical extension was not correctly performed and additional monies would be due. Depending on the agreement, audit costs may be reimbursable by the company being audited, should the claims resulting from the audit exceed a certain percentage of the royalty/ earnings reported. Typically, these claim percentages range from 2 to 10 percent. • Regularly scheduling audits of the companies with which artists have
contracts will put companies on notice that artists and their financial advisors are “looking over the companies’ shoulders” and make it more likely that they will accurately report monies due per the contracts. • In addition to discovering monetary underreporting, a good auditor can determine whether a licensee is not properly adhering to certain restrictions negotiated, such as free goods, non-royalty-bearing sales limitations, marketing to certain territories, expenditure limits that need written approval and so on. • Licensees may mistakenly deduct expenses that may not be attributable to the artist’s project or product. Even with current technology, humans still have to code expense items and may make mistakes with respect to the chargeable project. • Licensees may not report income due to the artist from all territories for which they have the right to exploit the artist’s product. An audit would disclose such non-reporting or, at a minimum, highlight that no income was reported for certain territories or certain licensed products. Such nonreporting can result in significant additional royalties/earnings due for clients. • It may be advisable to conduct audits of a licensee’s international operations when such information may not be readily available for review in the U.S. or when the licensee may refuse to provide such source information to the U.S. auditor. Performing such an audit may disclose earnings being held at the subsidiary and not reported to the U.S. company. A careful evaluation should be performed to determine that an international audit is warranted before a decision N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
is made. The cost of doing an international audit may outweigh the benefits. However, a licensor may want an audit conducted for reasons other than finding underreporting. A licensor may want to gain a better understanding of how the international market operates. • Royalty/licensee audits may also have the added benefit of determining the licensor/licensee relationship. If a licensee is resistant to an audit or continues to stall and not cooperate with the auditor, this may indicate that the licensee has something to hide or that the licensee may not have an interest in continuing the relationship. A royalty/licensee audit is a normal business practice. The companies being audited, in most cases, expect an audit. The auditor selected should never interfere with the licensor/ licensee relationship. However, if the licensee proves to be uncooperative, the auditor should advise the client as to possible steps to take to enable the audit to proceed as smoothly as possible. While the auditor is in an adversarial position, he or she should be a respectful client advocate. Audits are not always recommended, but when deemed necessary they may bring about recoupment of the licensor’s account much quicker, in which case a licensor can receive earnings that much sooner. Arthur Erk, CPA, is a partner and the practice leader of royalty and royalty administration in Citrin Cooperman’s entertainment, music, media and sports practice. Andrew Adler, CPA, is a manager in the firm’s business management and family office practice. Contact the authors at 212-697-1000.
The Value-Added Giveaway B Y LA RRY FEL D, H UNT E R GRO U P C PA LLC
mainstay among business marketing for decades, promotional giveaways are powerful, persuasive devices for branding because they work. On your desk right now is probably at least one branded pen, calculator or note pad. These inexpensive devices are hard at work reminding you daily of the people behind those imprinted logos – a passive touch that helps you feel positive about their products, people and services.
Considerations The right giveaway item is an accessory that must be matched to the venue, timing and message being promoted. The appropriateness of a giveaway is also key. It might not be appropriate to offer your fluorescent stress ball to the president of the multinational corporation you just met at an upscale awards dinner. Before browsing through those catalogs, consider the following: • What do you want to achieve from this investment: awareness, a call to action? • How will this fit with your overall prospecting strategy? Will this product reinforce other actions or simply stand alone? Typically, a giveaway supports some other activity, such as a trade show or meeting, or is mailed as part of a coordinated direct marketing campaign. • What is your message? The right item will support, or even amplify, your message. • Does the item connect with your service? The best items relate well to your work. • Will it give you maximum shelf life? A couple of chocolates are nice, but gone in a flash. A desk clock or coffee mug may be a client’s favorite item for years. • As always, what is your budget?
Premium Items and Executive Gifts While less-expensive toys, utility products or snacks might be wonderful for conferences and meetings, there are times when a more valuable product or service is appropriate to support your marketing, business development or client service needs. Saying “thank you” to clients or employees with some tangible gesture has become a very important part of the CPA firm operating budget over the last few years. While food products make terrific gifts, the challenge is always balancing the value of the experience verses purchasing a more lasting gift, such as a leather desk set. A fruit basket might be a bigger hit with the office support crew at your client, but the gold pen with the owner’s name engraved is likely to garner more attention from the person who pays your invoices. Even better, deliver a one-of-akind autographed sports item and have a custom engraved plate attached carrying your lasting message of appreciation.
Choosing a Vendor There is no shortage of promotional vendors. The American Specialty Institute (ASI) is the leading association in the promotional item marketplace. Its members are both suppliers and distributors, and products are sold utilizing a unique ASI number that makes it possible to catalog the vast number of products available as an industry standard. It is not uncommon to find different suppliers utilizing the same catalog, which is sometimes confusing to casual buyers. While the ASI helps standardize pricing and products, many of its members go through a certification program. With product quality and pricing fairly standardized, choosing your local supplier or an online vendor is more a matter of personal selection. Your N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
decision should be guided by the same criterion on which we hope competing CPA firms are judged: their ability to provide great insight, prompt response and reliable follow through. Your local promotional vendor is your buffer between the manufacturer, ensuring that the details – from logo colors and clarity to nuances in product quality and stringent delivery requirements – are handled professionally. In all fairness, some very good online suppliers, such as Branders.com or 4imprint.com, offer competitively priced products backed by solid customer service. Selecting an online vendor over a local supplier is a matter of personal preference; however, the pendulum often swings in favor of using a local vendor who can act as a nearby promotional Sherpa. Ultimately, their true value is only known when problems surface. Promoting your practice with the help of promotional giveaways is not to be feared or underestimated. Even mediocre execution of a promotional giveaway effort will help a CPA firm gain awareness in this increasingly competitive environment. Larry Feld is the director of marketing for Hunter Group CPA LLC. Contact him at firstname.lastname@example.org or 201-261-4030.
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The Life and Times of Life Settlements B Y GUY MCPHAIL , CPA , T HE GM C PA GRO U P PC
is age 82 with a few health issues, has a $1,000,000 face value policy with a cash surrender value of only $25,000 and is able to sell the policy for $130,000 instead of cashing it in for only the $25,000.
n today’s tough economic climate, people want the security of having extra cash. Most of your clients have heard of a reverse mortgage as a method to get cash out of an existing asset, but many may not have heard of life settlements. As a CPA, you can assist your clients with this addition to their portfolios.
What Is It? A life settlement is the sale of an existing life insurance policy to a third party for more than its cash surrender value, but less than its net death benefit. There may be changes in a client’s circumstances that may warrant a policy owner to choose to sell his or her life insurance policy. The policy owner may no longer need or want the policy and may wish to purchase a different kind of life insurance policy, or premium payments may no longer be affordable. There may be an opportunity for life insurance policy holders who need extra cash flow to create immediate income. There are many people who are having a tough time making ends meet because of poor stock market performance, job loss, illness, divorce or other issues. They can use this cash influx to mitigate a variety of issues and enhance their lives. Each life insurance settlement case is determined on an individual basis. Factors considered are age, policy
type, health and life expectancy. Life settlement providers are required to be registered in their respective states. The examples below describe policy owners who are older than age 65 where it may be a good choice to sell an existing life insurance policy. In some situations, life settlements provide a no-lose way to receive value in excess of the simple cash value of a life insurance policy, while gaining a tremendous tax advantage.
Example I A wife holds a term life insurance policy with her husband as beneficiary. Her husband predeceases her and she has no children. She wants to sell the policy and use the funds now because her retirement funds are running short, rather than leave the policy death benefit to another person. The woman is age 80 and in relatively poor health, and the insurance policy has a face value of $1,700,000 with a premium of $75,000 due this year. She contacted a life settlement provider and was able to realize $250,000 in a cash settlement instead of paying the premium.
Example II Someone owns a universal life policy with some cash surrender value. However, the policy could be sold for more than the cash surrender value, thus creating more cash. The person N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
In many cases, any amount paid for a policy in excess of the cash surrender value is treated as a capital gain. Assume $175,000 proceeds from a life settlement with a total face value of $1,000,000, a cumulative premiums paid cost basis of $70,000 (no tax due) and a total cash surrender value of $80,000. As such, $10,000 (the difference between the cost and cash surrender value) would be treated as ordinary income and the remaining $95,000 would be capital gains. The CPA should discuss the taxable consequence of the life settlement transaction as a life settlement agent may leave that component out. In recent years, life settlements have had their share of bad publicity, with companies taking advantage of people unfamiliar with the industry and practice. This is where the CPA can provide the necessary due diligence in assisting the client in appraising the true value of the policy in the secondary market. I recommend taking a CPE course on life settlements and talking to your fellow CPAs to get recommendations on life settlement agents. As CPAs, we owe it to our clients to understand their overall goals and needs. Guy McPhail, CPA, PFS, CFP, is the president of The GM CPA Group PC. He is the leader of the New Jersey Society of CPAs Personal Financial Planning Interest Group. Contact him at email@example.com or 609-737-6600.
Measuring Revenue in a Cash-Intensive Business B Y ROBERT J. BROWN J R. , C PA
ash plays an essential role in every business, and because cash can be used anonymously there will always be opportunities for tax evasion in cashintensive businesses. What is a CPA to do? How does a practitioner Certified in Financial Forensics approach such issues? The risk of tax evasion, whether it is unreported income, overstated expenses or both, is greatest in cashintensive businesses. There are many types of cash-intensive businesses, and forensic analysis in any of these presents unique circumstances and varied approaches to determine the extent to which revenues may be underreported. There are three main ways that tax evaders have historically misappropriated cash from a business: skimming cash receipts, stealing after revenue has been reported or fraudulent/improper disbursements. The most significant indicator that income has been underreported is a consistent pattern of losses or low-profit percentages that seem insufficient to sustain the business or its owners. Other indicators that may warrant further investigation include: • Unsupportable lifestyle of business owner(s). • Continued annual losses without apparent operational changes. • Bank/brokerage accounts increase. • Accumulation of assets. • Decreases in debts (of owner and/or business). • Significant disparity from industry benchmarks: gross profit, low sales. The Internal Revenue Service uses indirect methods to uncover these activities via bank deposit analysis, cash transactions analysis, source and application of funds, net worth, and percentage or unit mark-up. This last
method proves to be the most accurate and reliable. Observation of the location in operation, a restaurant for example, allows for testing of menu items and prices and follow-up interviews. In cases where many other products are sold, there is typically a subset of products that will account for the majority of total sales. At a pizzeria, sales can usually be reasonably estimated based on the amount of dough or number of pizza boxes purchased. In the case of other retailers, purchases can provide a distinct trail through the enterprise to estimate actual revenues. It may prove helpful to consider both methods to determine non-convergence of findings. Items to request for analysis include: • Invoice copies of all purchases during the year. • Estimate of average number of units of primary product sold. • Estimate of the number of units sold per unit of input (e.g., how many pizzas per sack of flour). • Estimate of any bulk or promotional sales. • Estimate of losses due to theft, spillage or other related factors. • Estimate of the average selling price per unit (per pizza, per bottle of soda). • The extent that applicable sales taxes are included in the selling price. • Estimate of a reasonable amount of beginning and ending inventories. To corroborate the pizza sales at a pizzeria or coffee sales in a convenience store, counting the pizza boxes purchased or counting cups and lids can be an adequate method to support other approaches. Pizza boxes, cups and lids, or other containers for sales are often obtained from a single supplier. Even with several suppliers, the container count should be easily determined. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Based on estimates of consumed containers, adjustments are considered for beginning inventories, any shrinkage loss or promotional giveaways in arriving at the estimate of sales. In the case of coffee sales, observation of operations can indicate the extent of customers using double cups versus sleeves for hot beverages. Similar techniques can be applied in estimating sales of complementary items, such as rolls, bagels, breadsticks and cookies. In the case of convenience stores, available space is limited, so typically only items that sell well occupy shelf or counter space. The other methods noted above – bank deposit analysis, cash transactions, source and application of funds, and net worth – should also be considered as avenues to explore to the extent that the information is readily available and there is reasonable expectation that the analysis will be time well spent. Unusual or recurring transactions should be investigated fully. As previously noted, time may need to be dedicated to in-depth analysis of the lifestyle of the business owner that does not comport with the reported income. Robert J. Brown Jr., CPA, M.B.A., ABV, CFE, CVA, CFF, CITP, is a member of the New Jersey Society of CPAs. Contact him at firstname.lastname@example.org or 732-747-5658.
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Would Thou Work for a Religious Group? B Y A B R AHAM AL S TON J R. , C PA, ALSTON & C O M PANY P C
he nonprofit sector has continued to be one of the fastest growing areas over the past several years. Religious groups are a significant part of this growing sector, and CPAs continue to play an important role. Although religious groups may not have been the catalyst for many of the significant changes made in the taxexempt industry in years past, they are directly impacted by those changes. The changes, coupled with increased government regulation and scrutiny, have required religious groups to take an enhanced look at their accounting procedures. Those who choose to work in this area must understand the accounting technical nuances and the uniqueness of the culture, value systems and needs inherent to this group. Here are a few considerations for CPAs who wish to work for religious groups:
The Governing Board In my 19 years of professional experience, I have worked closely with many churches and their governing boards. One must usually share a similar passion for faith and a commitment to the organization to be appointed to a governing board. Regardless of the religious group’s denomination, the CFO and/ or controller must work in tandem with the governing board to ensure its general understanding of governance, internal controls, financial reporting systems and compliance with federal and state regulations. This is especially true since the Internal Revenue Service, accounting regulating authorities and the public are requiring more accountability from board members who govern organizations. Therefore, establishing an effective governing
board is critical and should include individuals who are personally successful, have available time to serve on the board, understand and support the mission of the organization, possess knowledge of the industry, and have other skills and resources that will enable the religious group to accomplish its mission.
Internal Controls Internal controls must be evaluated carefully by the accounting professional. Since most of the individuals on the governing boards of these groups place a great amount of trust in each other, they generally feel internal controls are not a priority. However, according to the 2011 Marquet Report on Embezzlement, nonprofits and religious organizations combined account for nearly 16.5 percent of all major embezzlement schemes. Accounting professionals must emphasize the importance of developing, maintaining and enforcing established internal controls. These controls must be clear and effective processes that incorporate checks and balances and should not rely upon trust amongst individuals.
Financial Reports Financial reporting structures should be consistent and accurate. A sound reporting structure will help ensure internal and external accountability. Accounting professionals must identify the type of reports and how frequently they should be presented. Also, identifying recipients of the various reports will help determine the most effective format and type of information to present. Therefore, CFOs and/or controllers should help ensure that the organization N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
understands the information presented and determine the type of information the governing board, external auditors, members, the finance committee or other groups need to receive. External financial reports must meet the nonprofit reporting standards which are mainly in accordance with SFAS 116 and 117.
Bylaws It is also critically important to maintain and update relevant bylaws. Bylaws are the established rules by which the group will govern its affairs. Unfortunately, it is not unusual for religious groups to operate with outdated bylaws. This could prove to be a costly mistake, since bylaws are one of the main documents used to resolve legal disputes. An accounting professional must carefully evaluate the status of the religious group’s bylaws and policies in order to make recommendations that bear in mind the specific culture of the group. Being able to work for a religious group requires a great amount of expertise and patience. Not only can the group’s services benefit the community, it can certainly be rewarding to those CPAs who choose this unique career path. Abraham Alston Jr., CPA, is the principal at Alston & Company PC. He is a member of the New Jersey Society of CPAs Nonprofit Interest Group. Contact him at aalston@ acocpa.com or 732-431-5520.
Using a Third-Party Credit Card Processor B Y SA LVATORE M. G RA SSO, C PA, GR ASSO & C OM PAN Y, L L C
ccepting credit card payments today seems to be the rule if businesses want to remain competitive. A business – either your accounting practice or a client’s business – could simplify its recordkeeping and notice an increase in sales by accepting credit cards, but administrative concerns and costs should be researched thoroughly to determine if it would be suitable for each individual business. In selecting a credit card processor, it is important to familiarize yourself with the quality of its service. Checking references and asking other business owners about their experiences could be helpful. It would also be wise to test the card processor’s customer and technical support lines at various times of the day on different days during the week. Pay special attention to how long it will take for someone to assist you in the event you experience technical difficulties with processing your sales. The last thing a business wants is angry customers because someone cannot expedite sales. After a credit card processor is selected, the business must complete an application. Once approved, the business will enter into a contract, which generally lasts approximately three years and may automatically renew. Keep good records so that you are reminded of the renewal date should you want to transfer to another credit card processor. Early termination fees may apply and could be significant. Assuming everything is in order, you need to open a merchant service account. This can be done through a merchant service provider or financial institution. Merchant service accounts are tied into your credit card processor that electronically communicates with the customer’s bank to process
payments into your bank when a charge is transmitted. Merchant service account fees can be applied as a small percentage, usually 1 to 5 percent of the dollar amount charged. With most merchant service accounts, a fee is also charged for each credit card transaction processed and could range from 10 to 25 cents. A business with a high frequency of small-dollar sales may want to choose a fee structure with a low fee per transaction and a higher fee on the dollar amount of the transaction, whereas a business with a low frequency of high-dollar amount sales may benefit from a lower fee on the dollar amount of the transaction and higher fee per transaction. Here are some methods to consider for processing credit card sales: • The most common retail credit machine is a terminal where the credit card is swiped to process and record the charge. This piece of equipment can be purchased for anywhere from $300 to $600 or leased for approximately $35 per month. It can be hooked up either through a phone line, the Internet or a cellular network. • You can type in the sale to be processed through a computer software program. This method is commonly used for call centers and businesses that do recurring billing. • Point-of-sale terminals can accept credit cards and help you effectively and efficiently operate your business. N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Depending on the type of business being operated, reliability, efficiency and cost need to be considered when deciding which method to use for processing credit card sales. A restaurant may be more likely to get value out of a point-of-sale system to quickly process credit card charges and provide inventory control, as it is usually a fastpaced environment, whereas a doctor’s office would likely benefit from using the retail credit machine. In some cases, it may be advisable to have an alternate method available should you experience equipment failure. The added bookkeeping responsibilities of reconciling and crosschecking are just more things a business owner needs to deal with. However, monthly reconciling of charges processed and fees charged to dollar amounts credited in and debited out of the business bank account is a very manageable task with the right system of checks and balances in place. Salvatore M. Grasso, CPA, is the principal at Grasso & Company, LLC. He is a member of the New Jersey Society of CPAs. Contact him at sgrasso@ grassocpa.com or 201-963-6221.
Member Benefit Find convenient, affordable CPE via NJSCPA chapters at njscpa.org/chapters.
Bonus Depreciation for Retail and Restaurant Property B Y DIANE L . C APOBIANC O, C PA, M UR PHY, M I LLE R & B AG L I E R I , L L P
onus depreciation came into existence more than a decade ago, as part of the 2002 Job Creation and Worker Assistance Act, to encourage investment in equipment and spur economic growth. The bonus depreciation rules, which allow taxpayers to write off a percentage (30, 50 or 100, depending on when placed in service) of the cost of an asset in the acquisition year, have undergone many changes since they were initially introduced. For qualified property placed in service during the remainder of 2012, 50 percent of the cost can be written off currently for tax purposes, with the remaining 50 percent being depreciated over the class life of the asset. Qualified property includes most tangible personal property with a modified accelerated cost recovery period of 20 years or less, computer software depreciable over 36 months, water utility property and qualified leasehold improvements. The property must also be purchased new, not used. Qualified leasehold improvement property (QLIP) is defined in Internal Revenue Code Sec. 168(e) (6) by reference to 168(k)(3) as improvements to the interior portion of nonresidential real property, made pursuant to a lease with a nonrelated party (either by the lessee or lessor), which is placed in service more than three years after the building was first placed in service. QLIP belongs to the 15-year class of property through 2011 and must be depreciated using the straightline method. Meeting this definition allows accelerating depreciation over 15 years, as opposed to the 39-year period that previously applied
to most nonresidential building improvements. The definition of QLIP as 15-year property was only extended through 2011, so improvements placed in service in 2012 belong to the 39-year property class. However, for the remainder of 2012, under 168(k)(3), QLIP is still eligible for the 50-percent bonus depreciation write-off, even though the improvements are no longer 15-year property. Why is this important for retail store operators and restaurant owners? First, some additional definitions. Qualified restaurant property (168(e)(7)) refers to a building or improvement to a building if more than 50 percent of the building's square footage is devoted to the preparation of meals and seating for on-premises consumption of such meals. Qualified retail improvement property (168(e) (8)) refers to an improvement to the interior portion of a nonresidential building if (1) that portion is open to the general public and is used in the retail trade or business of selling tangible personal property; and (2) the improvement is placed in service more than three years after the date the building was first placed in service. There are also restrictions relating to enlargement of the building and common-area improvements. However, for property placed in service after 2008, qualified restaurant property and qualified retail improvement property are explicitly excluded from the definition of qualified property for purposes of bonus depreciation. But here is why the definition of QLIP becomes important. Both Congress and the Internal Revenue N E W J E R S E Y C P A â€˘ J U LY â€˘ A U G U S T 2 0 1 2
Service (IRS) have agreed that if property satisfies both the definition of qualified restaurant or qualified retail improvement property and QLIP, the property is eligible for bonus depreciation after 2008, assuming all other bonus depreciation requirements are met. Such property is referred to as dual character. This is great news to restaurant owners and retailers, as they could potentially take advantage of bonus depreciation on certain leasehold improvements in 2012 and depreciate the remaining balance over 39 years. Restaurant operators must remember that the actual building would not meet the definition of QLIP; however, certain building improvements could qualify. Tax preparers should be aware that certain improvements are specifically excluded from the definition of QLIP. Costs incurred to enlarge a building, build elevators or escalators, improve an area that benefits multiple tenants (e.g., common area) or change the internal structural framework of the building are specifically excluded. Bonus depreciation applies for both regular and alternative minimum tax purposes, but most states, including New Jersey, do not allow bonus depreciation. Refer to Revenue Procedure 2011-26 where the IRS provides additional guidance on recent changes to the bonus depreciation rules. Diane L. Capobianco, CPA, is a manager at Murphy, Miller & Baglieri, LLP. She is a member of the New Jersey Society of CPAs Financial Literacy Committee and the State Taxation and Federal Taxation interest groups. Contact her at email@example.com.
The World of Virtualization and Licensing B Y A NTHONY MONG E LU ZO, PRO C O M PU T E R SE RVI CE
n the “good ole days” of hardware usage, you bought a computer for each user and stocked it with the necessary software. If you played by the rules, you bought legitimate software and paid the software vendor by the number of users or processors. The process was clean, simple and fair. Then came virtualization, which almost made you hardware independent, and you asked: How does this affect my software licensing issues? You have to place the entire issue of licensing in perspective. Some businesses that have virtualized – or are considering it – believe that they somehow don’t have to pay for software licensing because it’s not “real” in the conventional sense. It is reminiscent of old-school technology piracy: “I didn’t steal anything, my buddy just passed along the disk.” The issue starts and ends with the end-user licensing agreement (EULA) linked to your software. This agreement provides the rules and regulations that apply to your software usage, including virtualization. Interestingly, earlier versions of Windows, such as Vista, had clauses in the end-user licensing agreements that denied use in a virtual environment. Microsoft then created its own virtualization program. For example, subsequent versions allowed Vista in a virtualized environment, but only if consumers used the Ultimate edition of its Hyper-V program. Microsoft cited security concerns, but according to many industry watchers, it was seen as a profit-only motive because Hyper-V hadn’t yet been released. What does this mean for businesses? “The salient point to consider in all of this is the current industry per-socket licensing clauses inherent in most
EULAs. If the operating system EULA stipulates a per-socket restriction, then, in theory, there is nothing to stop you from shoehorning multiple versions of the same operating system on the same physical host, as long as you don’t exceed the number of sockets on the physical host that you purchased the license for,” says GoVirtual CEO Gregory Perry (govirtual.tv). It may seem simplistic, but you really have to examine the EULA document and how it pertains to your virtual environment. This is a good time to have your information technology (IT) person pore over any stipulations about the number of licenses, cost and use of the software in a virtual environment. It also makes sense for your IT person to at least subscribe to any Microsoft updates related to licensing issues. Clients often mistakenly examine the agreement once and then fail to keep up with any new stipulations when they upgrade. It’s tedious but very important to stay current. Let’s say you don’t bother with any scrutiny and make an in-house judgment without a clear understanding of precisely how the EULA applies to you. While you may get away with that approach, you also face the possibility of a fine or lawsuit, which simply isn’t worth it. In several instances, companies were caught violating the EULA agreement because of a tech-savvy whistleblower. But what should you do if your IT consultant’s suggestions or your own idea of interpreting the licensing agreement differ with Microsoft? “There’s an old adage in the world of Microsoft licensing that says: ‘If you call Microsoft technical support and ask a question about licensing to which you don’t like the answer, just hang up and call back until you N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
get the answer you’re looking for,’” adds a half-joking Perry. If you follow this approach, keep a record of the conversation, the name of the person with whom you spoke, and the date and time. If Microsoft subsequently questions you, you will be on surer footing. I still encounter those who believe that with virtualization you can reduce your software costs. In most cases, it does not, which means you still must pay a licensing fee either per user or by processor. These costs simply don’t go away. Anthony Mongeluzo is president of Pro Computer Service. Contact him at 856596-4446 or firstname.lastname@example.org, or visit procomputerservice.com.
Congratulates the “Women of Note”
Congratulations to these female New Jersey Society of CPAs members who have and continue to change the face of the accounting landscape in New Jersey and beyond. It’s worth noting that the first female Society member, Dora Roworth, CPA, was admitted in 1912, so this year is the 100-year anniversary for women NJSCPA members. These accounting professionals and Women of Note (WoN) display a unique combination of Society participation, accounting profession involvement and community service dedication.
Lynn L. Albala, CPA, InfoSight Partners LLC, is a member of the NJSCPA Audit Committee and the Accounting & Auditing Standards, Federal Taxation, Nonprofit and Technology interest groups as well as a former board trustee and Accounting, Business & Technology Show leader. She holds the CMA and CGMA designations. Her community service involvement includes the Girl Scouts.
Sarah G. Avery, CPA, Friedman LLP, is a member of the NJSCPA Nonprofit Interest Group and the American Institute of CPAs. She has appeared in a variety of media discussing the topic of nonprofit accounting and has been a speaker at DFK conferences on topics such as tax-exempt organizations and executive compensation. Her community service involvement includes the Gift Planning Council of NJ, the Bergen County Salvation Army, United Way of Morris County and Make-A-Wish Foundation.
Ellen G. Amon, CPA, WeiserMazars LLP, was an NJSCPA Pay It Forward presenter and a Scholars Institute chaperone. She is co-chair of WeiserMazars’ Women’s Network and its Leadership Academy. She is a speaker and author and an officer of Toastmasters. Her community service involvement includes the Community Food Bank, American Cancer Society, Avon Walk for Breast Cancer, Edison Chamber of Commerce and NJ Women’s Theatre Co-Operative.
Friedman LLP congratulates Audrey Sherrick and Sarah Avery on being named Women of Note by the New Jersey Society of CPAs, and applauds their efforts to improve our firm, the NJSCPA and the community.
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Lynne Broza, CPA, Cowan, Gunteski & Co., P.A., is a member of the NJSCPA Business Valuation Forensic Litigation Services Interest Group. She holds the ABV, CFF and RIA credentials. She is a member of the NJ Association of Professional Mediators and is an NJ Rule 1:40 Qualified Mediator. She has given numerous lectures and authored a variety of professional articles. Her community service involvement includes Holiday Express, Monmouth County Legal Aid Society and Women Lawyers in Monmouth.
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NOTEWORTHY. APPLAUSE WORTHY. WELL WORTHY.
ROTHSTEIN KASS CONGRATULATES ITS OWN ROSALIE MANDEL AND ALL NJSCPA “WOMEN OF NOTE” HONOREES ON THIS WELL-DESERVED RECOGNITION. We applaud you for your strong leadership and ongoing commitment to the industry and the community.
Audit • Tax • Advisory Beverly Hills Dallas Denver Grand Cayman New York Roseland San Francisco Walnut Creek www.rkco.com
Olivia Campaniolo, CPA, Wiss & Company, LLP, is a former NJSCPA Scholarship Award winner and is involved with the Wiss Women’s Leadership Forum. She is a member of the AICPA and American Woman’s Society of CPAs (AWSCPA). Her community service involvement includes Junior Achievement of NJ, the Food Bank of NJ, Salvation Army, Jersey Cares, American Heart Association and Habitat for Humanity.
Megan A. Cicchetti, CPA, Sax Macy Fromm & Co., PC, is a member of the NJSCPA Business Valuation Forensic Litigation Services Interest Group and Student Programs & Scholarships Committee. She was an Exam Cram blogger and authored several professional articles. She is Accredited in Business Valuation and an AICPA CPA Ambassador. Her community service involvement includes the American Cancer Society, Habitat for Humanity and the Leukemia & Lymphoma Society.
Jaime Campbell, CPA, Bartolomei Pucciarelli, LLC, is a member of the NJSCPA Technology Interest Group and Financial Literacy Committee and is on the board of the Mercer Chapter. She is a Pay It Forward presenter and has written numerous technology articles and spoken at various technology seminars. She has taught at the college level and is certified by QuickBooks and Microsoft. Her community service involvement includes the Boy Scouts.
Carol Donatiello Iocca, CPA, Wilkin & Guttenplan, P.C., is a member of the NJSCPA Audit Committee. She is the partner-in-charge of her firm’s peer review. She has been recognized by Who’s Who, made various accounting and auditing presentations and has contributed to NJBIZ and The Record. She has been an adjunct professor at Felician College, teaching intermediate accounting. Her community service involvement includes St. Mary’s Hospital and Our Lady of Peace.
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Joan D’Uva, CPA, EisnerAmper LLP, is on the NJSCPA Strategic Planning and Volunteer Relations committees and is a former board trustee. She currently serves as the dean of the Litigation Services College at EisnerAmper University. She has been published in the NJ Law Journal and co-authored a chapter on divorce for The Valuation Expert in Divorce Litigation. Her community service involvement includes St. Luke’s Church and Habitat for Humanity.
Rosemarie A. Fisher, CPA, Real Possibilities, LLC, is an entrepreneur and a former NJSCPA board trustee and Mercer Chapter president. She is a member of the NJSCPA Technology Interest Group and was a speaker for the Middlesex Women’s Leadership Forum. Her community service includes the Princeton Chamber of Commerce, First Tee of Greater Trenton, Executive Woman’s Golf Association, Bries’ Buddies, CampFire Girls and Junior Achievement.
Rosemary F. Ervin, CPA, Hunter Group CPA LLC, is a member of the NJSCPA Federal Taxation and State Taxation interest groups and is on the New Jersey CPA magazine Editorial Advisory Board. She is a frequent lecturer and author and is a Pay It Forward presenter. She participates in the Commerce and Industry Association’s Women’s Leadership Initiative and is a member of the AICPA. Her community service involvement includes the Girl Scouts and the Volunteer Center of Bergen County.
Rebecca B. Fitzhugh, CPA, Sobel & Co., LLC, is a former NJSCPA board trustee, a current member of the NJSCPA Education Foundation Executive Committee and serves on the New Jersey CPA magazine Editorial Advisory Board. She is a member of the AICPA and the ACFE. She has authored articles for Construction Accounting and Taxation and Commerce and is a lecturer on the topics of fraud and forensic accounting. Her community service involvement includes Morris County Women in Business and the Morris County Chamber of Commerce.
Congratulations SHARON LAMONT ROMA BANK CHIEF FINANCIAL OFFICER
on being named Woman of Note by the New Jersey Society of CPAs.
1.888.440.ROMA (7662) www.romabank.com ■ strength
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Lois S. Fried, CPA, Capaldi Reynolds & Pelosi, P.A., is on the NJSCPA Student Programs & Scholarships Committee, is a past president of the Atlantic/Cape May Chapter and is a Pay It Forward presenter. She holds the CFE, CVA and ABV credentials. She is a recipient of the Legal Services of NJ Equal Justice Medal. Her community service involvement includes Cape Atlantic Literacy Volunteers, Jewish Federation of Atlantic-Cape May and Congregation Beth Judah.
Debra E. Hahn, CPA, Grant Thornton LLP, is a member of the NJSCPA Professional Conduct Committee and is an instructor for the Society’s NJ Law and Ethics CPE course. She is actively involved with Grant Thornton’s Women’s Initiative. She was a speaker for the Foundation for Accounting and at the NYSSCPA Ethics Conference. Her community service involvement includes St. Paul’s Church, the March of Dimes and the Susan G. Komen Race for the Cure.
Henrietta G. Fuchs, CPA, J.H. Cohn LLP, is a member of the NJSCPA Young CPAs Council and the Student Programs & Scholarships Committee, a past Scholarship Award recipient and a Pay It Forward presenter. She is a member of J.H. Cohn’s Professional Women’s Program and a board member of the Bergen Community College Academic Advisory Committee. Her community service involvement includes the Make-A-Wish Foundation of NJ.
Carole A. Hedinger, CPA, New Jersey State Lottery, is the Immediate Past President of the NJSCPA. She is an NJSCPA Education Foundation trustee, serves on the Finance and the Retirement Savings Plan committees and is a former NJ-CPAPAC chair. She has given CPE seminars on eldercare, guardianships and probate. Her community service involvement includes Health South Rehab Hospital and being a board member for Stockton College.
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Congratulations to our own Megan Cicchetti for receiving the “Women of Note” Award. We know more great things are in store.
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Joan Dâ€™Uva, CPA Partner, Litigation Services
Deborah Kovalik, CPA Director, Litigation Services
EisnerAmper LLP Accountants & Advisors Independent Member of PKF International
Congratulations to Joan and Deborah, both of whom have helped change the face of the accounting landscape in New Jersey and beyond.
Catherine Z. Horn, CPA, AlcatelLucent, is a former NJSCPA board trustee and Middlesex/Somerset Chapter president. She is currently a member of the New Jersey CPA magazine Editorial Advisory Board. She holds the SPHR and CGMA designations and is a member of the American Society of Women Accountants. She has authored numerous professional articles on accounting and human resources. Her community service involvement includes Bryan’s Dream Foundation and the Our Lady of Fatima Parish.
Sarah Krom, CPA, Sharpe, Kawam, Carmosino & Co., LLC, is chair of the NJSCPA Young CPAs Council, a former Scholarship Award recipient and a “30 Under 30” honoree. She presented an NJSCPA financial literacy seminar on identity theft and has authored a variety of professional articles. She is a member of the AICPA and the AWSCPA. Her community service involvement includes the United Way of Ocean County and the American Cancer Society. Sharon L. Lamont, CPA, Roma Bank, was the first female president of the NJSCPA and is a former president of the Scholarship Fund and the Mercer Chapter. She is currently a member of the State Taxation and Federal Taxation interest groups. She was a member of the AICPA Council and the AICPA Vision Leadership Team. Her community service involvement includes Robert Wood Johnson Hospital and the YMCA.
Deborah L. Kovalik, CPA, EisnerAmper LLP, has given CPE presentations to the NJSCPA Mercer and Hudson chapters. She is on the Women of EisnerAmper LLP Committee. She is a CFF, CFE, CFFA and CVA and has given numerous seminars and authored a variety of forensic accounting articles. She received the YWCA’s 2008 Tribute to Women in Industry Award. Her community service involvement includes the Market Street Mission and the Park Avenue Foundation.
Reason says: applaud the achievement.
Instinct says: admire the effort.
Behind every great achievement lies talent, dedication and inspiring perseverance. On behalf of the Grant Thornton professionals who live and work here in New Jersey, we are proud to salute Debra Hahn for being selected as a Woman of Note. To see how we help unlock the potential for growth for businesses and organizations here at home and around the world, visit GrantThornton.com.
Grant Thornton refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd.
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Diahann W. Lassus, CPA, Lassus Wherley, presented a seminar at the NJSCPA Do It Herself financial literacy conference. She has been recognized as a leading wealth manager by New Jersey Monthly, Wealth Manager and Worth. She is on the board of the NJ Chamber of Commerce and the Center for Women’s Business Research and is a past board member of NAPFA. Her community service involvement includes SAGE Eldercare’s Meals on Wheels and the NJ Battered Women’s Services. Marcella LoCastro, CPA, MLoCastro Consulting LLC, is a member of the NJSCPA Technology Interest Group and the New Jersey CPA magazine Editorial Advisory Board. She has been recognized by NJBIZ, Garden State Woman, the CIANJ and the NJAWBO. She has been a keynote speaker for the AWSCPA, Montclair State University and Women in Public Policy. Her community service involvement includes being a board member for the Executive Women of NJ and the West Essex Chamber of Commerce.
Sharyn Maggio, CPA, Maggio & Co., Inc., is a former NJSCPA board trustee and NJSCPA Matrimonial Accounting Interest Group leader. She is a member of the AICPA and noted author and lecturer in forensic accounting. Her community service involvement includes the Joan Dancy & PALS Foundation.
Rosalie A. Mandel, CPA, Rothstein Kass, is a founder of Rothstein Kass’ women’s initiative (LIFE), has been recognized by NJBIZ and was a speaker at the Impactful Women’s Association event and the AICPA Women’s Global Leadership Summit. Her community service involvement includes the Alzheimer’s Association, Juvenile Diabetes Association, American Cancer Society and Hedge Funds Care.
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Section Mary Parente, CPA, Fazio, Mannuzza, Roche, Tankel, LaPilusa LLC, is a member of the NJSCPA Federal Taxation and State Taxation interest groups. She is a member of and article author for the CIANJ and is chair of her firm’s Women’s Initiative Program. She has given CPE sessions on estate tax planning and compliance. Her community service involvement includes the American Heart Association, Alzheimer’s Fund, Race to Cure Blindness and American Cancer Society.
Deborah R. Mathis, CPA, Cowan, Gunteski & Co., P.A., is a Certified Health Care Business Consultant and a member of the AICPA and the Medical Group Management Association. She was a speaker for the NJSCPA and has authored numerous articles for professional journals. Her community service involvement includes the United Way of Ocean County and the Southern Ocean Medical Center Foundation.
Ellen C. McSherry, CGMA, New Jersey Society of CPAs, is the Associate Executive Director of the NJSCPA, a Pay It Forward presenter and was a former chair of the NJSCPA Scholarship Committee. She was a staff training conference leader for a Big Four accounting firm. Her community service involvement includes St. Thomas the Apostle Church, NJ Battered Women’s Services, Newark Salvation Army and the Montclair Girls Basketball Booster Club.
Kimberlee S. Phelan, CPA, WithumSmith+Brown, was the first female partner at WS+B and created the firm’s Women’s Leadership Development Initiative. She has authored articles for NJBIZ, New Jersey Business and Commerce. She has participated in the Middlesex County Chamber of Commerce’s Women’s Leadership Summit. She has been recognized by the Princeton YMCA and the NJ Women’s Fund. Her community service involvement includes Learning Ally and St. Charles Borromeo.
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www.NextGenerationTrust.com N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Hunter Group CPA LLC salutes our own Rosemary Ervin, CPA, a true professional who has taught us the value of lifelong learning, continual reinvention and paying if forward.
Christine Pronek, CPA, Fazio, Mannuzza, Roche, Tankel, LaPilusa LLC, is former NJSCPA board trustee and Estate Tax Interest Group leader. She participates in the tax call-in and Pay It Forward programs. She was an estate planning speaker for the Accounting, Business & Technology Show and the Do It Herself financial literacy conference. Her community service involvement includes Cancer Care of NJ and the Hunterdon Valley Medical Center Charitable Foundation.
Audrey J. Sherrick, CPA, Friedman LLP, is the Immediate Past President of the NJSCPA Atlantic/Cape May Chapter. She holds the AICPA Certificate of Education Achievement in Not-for-Profit Accounting and Auditing. She is a member of the Stockton College School of Business Advisory Board and the Accounting Advisory Board of Atlantic Cape Community College. Her community service involvement includes the John R. Elliot Foundation and the First Methodist Church of Mays Landing.
Gail Rosen, CPA, Gail Rosen, CPA, PC, is a member of the NJSCPA State Taxation and Federal Taxation interest groups and is chair of the NJ-CPA-PAC. She has participated in Scholars Institute and the Do It Herself financial literacy conference. She has been recognized by NJBIZ, the Somerset County Business Partnership, the Courier News and Business News of New Jersey. She teaches “Starting Your Own Business” for the NJ Office of Unemployment. Her community service involvement includes Crime Stoppers of NJ.
Anne Skalka, CPA, Anne Skalka & Associates, is a former NJSCPA board trustee, Mercer Chapter president and chair of the Volunteer Relations Committee. She was a speaker at several women’s financial literacy events and authored a series of guidebooks, Tax Deductions A to Z. Her community service involvement includes the Princeton Education Foundation and HiTops.
Wiss proudly congratulates
Olivia Campaniolo for being honored as a Woman of Note
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Section Margaret Van Brunt, CPA, Rowan University, is on the board of the NJSCPA Southwest Jersey Chapter and a member of the Educators Committee and the New Jersey CPA magazine Editorial Advisory Board. She organizes the annual Working Together conference with the IRS and participates in the VITA program. Her community service involvement includes the Entrepreneurship Forum of South Jersey and the Rowan Employee Campaign.
Carolyn J. Slaski, CPA, Ernst & Young, is a member of the E&Y Gender Equity Task Force and a 2009 recipient of the E&Y Chairman’s Value Award. She is a member of the AICPA and an accredited IFRS instructor. She is a member of the NJ State Steering Committee and a keynote speaker at the Rutgers Business School. Her community service involvement includes being a board member for the NJ Chamber of Commerce and the Liberty Science Center.
Margaret K. Watson, CPA, KPMG LLP, is co-chair of KPMG’s Women’s Advisory Board and a member of its National Diversity Council. She was recognized by the Diversity Journal and NJBIZ, received the Helen Keller Women Who Make a Difference and the Boy Scouts Woman of the Year awards, and was named the 2008 Garden State Woman magazine “Woman of the Year.” Her community service involvement includes board positions on the NJ Chamber of Commerce and the YWCA of Union County.
Lisa M. Thouin, CPA, Mercadien, P.C., CPAs, is a past president of the NJSCPA Mercer Chapter. She is a co-chair of Mercadien’s Nonprofit Services Group and is a frequent author and lecturer in the nonprofit area. She was an instructor for The Center for Continuing Studies at Mercer County Community College. Her community service involvement includes board positions for the Millhill Child and Family Development Corporation and Mercer County Dress for Success.
P R O U D LY C O N G R AT U L AT E S
ELLEN AMON FOR HER WELL-DESERVED RECOGNITION AS A
NEW JERSEY CPA WOMAN OF NOTE N e w J e r s e y O f f i c e : 7 3 2 - 5 4 9 - 2 8 0 0 | www.WeiserMazars.com
WeiserMazars LLP is an independent member ﬁrm of Mazars Group.
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CPE Offerings and Events Upcoming Education Foundation Events Date
New Critical Decisions in Selecting the Best Retirement Plan for Small Businesses in 2012 (E1207103)
The Best Income Tax, Estate Tax and Financial Planning Ideas of 2012 (E1207111)
Estate and Life Planning Issues for the Middle-Income Client (E1207131)
The Top 50 Mistakes Practitioners Make and How to Fix Them: Estate Planning and Administration (E1207121)
Advanced Real Estate Accounting, Auditing and Taxation (E1208223)
Women's Conference (E1208110)
Construction Contractors Advanced Issues (E1208231)
Employee Benefit Plans: Audit and Accounting Essentials (E1208241)
Audit Workpapers: Documenting and Reviewing Field Work (E1208251)
Young Professionals Happy Hour at Rooney's (E1208210)
Excel Financial Reporting and Analysis (E1208023)
OMB A-133 from A to Z (E1208151)
A Complete Guide to the New 2011 Yellow Book (E1208161)
QuickBooks Advanced Features, Tools and Techniques (E1208061)
Audits of 401(k) Plans (E1208261)
Enterprise Risk Management – Accountability Framework (E1208383)
Compilation and Review Engagement Essentials (E1208271)
Advanced Employee Benefit Plan Topics (E1208281)
Auditing Real-World Frauds: A Practical Case-Application Approach (E1208293)
AICPA's Guide to Business Combinations, Goodwill and Other Consolidation Issues (E1208313)
Loscalzo's 2012 FASB and AICPA Update (E1208031)
Governmental and Nonprofit Annual Update (E1208301)
The Best Federal Tax Update Course by Surgent McCoy (E1208171)
Hot IRS Tax Examination Issues for Individuals and Businesses (E1208181)
Frequent Frauds Found in Governments and Not-for-Profits (E1208321)
Forensic Accounting: Fraudulent Reporting and Concealed Assets (E1208333)
Loscalzo's Compilation and Review Essentials – The New Rules for Local Practitioners (E1208041)
Loscalzo's Deceptive Revenue Recognition and Other Accounting Techniques – Recognizing the Warning Signs (E1208053)
Surgent McCoy's 2012 Annual Tax-Planning Guide for S Corporations, Partnerships and LLCs (E1208191)
Studies on Single Audit and Yellow Book Deficiencies (E1208341)
FASB Review for Industry: Targeting Recent GAAP Issues (E1208353)
Surgent McCoy's Multistate Tax Update (E1208201)
Advanced Update for Compilation, Review and Accounting Services (E1208361)
Audits of 403(b) Plans: A Challenging New Audit Area (E1208371)
Planning for College Costs (E1208071)
Streamlined Tax Staff Training – Level 2 – Business (E1208081)
Surgent McCoy's Individual and Financial Planning Tax Camp (E1208120)
Streamlined Tax Staff Training – Level 1 – Individual (E1208091)
Tax Update for Financial Executives (E1208103)
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Internal Controls Design, Evaluation and Communication for Smaller Entities (E1209173)
Effectively and Efficiently Reviewing Audit Workpapers: The Line of Defense Against Deficient Audits (E1209181)
Small Business Accounting and Auditing Update (E1209331)
Public Company Update: SEC, PCAOB and Other Developments (E1209283)
Annual Update for Accountants and Auditors (E1209271)
Upcoming Chapter Events Date
2012 Scholarship Golf Classic (E1209419)
New Jersey Law and Ethics (E1209169)
KEY CS – Consulting Services MT – Management SK – Specialized Knowledge
AA – Accounting & Auditing MC – Multiple Categories PE – Professional Ethics
EC – Economics PD – Personal Development TX – Taxation
Achievement is something worth talking about. Congratulations to Henrietta Fuchs on being named one of New Jersey CPA’s Women of Note. — The Partners of J.H. Cohn
We turn e xp e rtise in t o re su lt s.
New Jersey . New York . Connecticut . Massachusetts . California
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Get Involved Data Security Basics
Tax Questions? No Problem for NJSCPA Volunteers The annual New Jersey Society of CPAs tax-season call-in program was held in March and April at the Asbury Park Press and News 12 New Jersey. Society volunteers answered more than 500 questions from the public. Many thanks to these members for volunteering their time and expertise: Christopher M. Arunkumar, CPA Breakpoint Assurance Company Neil B. Becourtney, CPA J.H. Cohn, LLP Barry M. Bertiger, CPA Rotenberg Meril Solomon Bertiger & Guttilla, P.C. I. David Eliran, CPA I. David Eliran, LLC Ralph Evangelista, CPA Frazer, Evangelista & Company, LLC Pishoy Fahmi, CPA PNF Accounting, LLC Anthony J. Falcone, CPA Anthony J. Falcone, CPA Michael H. Hoffman, CPA Adeptus Partners LLC Lisa N. Keenan, CPA Keen Accounting Edward A. Lempka, CPA Edward A. Lempka CPA, MsTax, LLC Peter J. Marchiano, CPA Peter J. Marchiano Jr., CPA Pat J. Pepe, CPA Pat Pepe, CPA Joseph R. Petrucelli, CPA PP&D Accounting Services, Inc. Christine Pronek, CPA Fazio, Mannuzza, Roche, Tankel, LaPilusa LLC Barry D. Shapiro, CPA WithumSmith+Brown Antonio Torchia Jr., CPA Rotenberg Meril Solomon Bertiger & Guttilla, P.C. James A. Toto, CPA WeiserMazars LLP N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Customer data is what drives a company; however, protecting this information is often secondary. In a recent NJSCPA Technology Interest Group webinar, data security expert David Campbell, managing partner of Tier One Services, LLC, covered three key areas: Internet safety, data security and backup. There are some easy things you can do to defend your computer, such as installing updates, logging off or locking your computer, backing up files and keeping your antivirus software current. But there’s more to it than that, since identity theft and fraud occur every day, even to those who think they’re invulnerable. Here are some of Campbell’s tips to keep your company and personal information safe: • Create strong passwords with at least eight characters using a combination of uppercase and lowercase letters, numbers and special characters. Don’t use dictionary words; use something like M#caRowni. Don’t share your passwords or store them on your phone or computer, lock them up in a safe. Treat your passwords with as much care as the information they protect. • Think before you click is a best practice for protecting sensitive data. Be suspicious of attachments and links. Look for https (the “s” is for secure) and the closed padlock on sites where you are entering data. Beware of alarming messages like “A virus has corrupted our database, please confirm your information now!” Reputable companies don’t usually send emails to request sensitive information. Confirm the request is genuine by contacting the company with information you already have. If you’re dubious about a website, visit a site like snopes.com, which reports scams. • Be smart about wireless hotspots. Make sure you’re connected securely and that the network assigns you a unique password. Find out if the
Valerie Murray, CFP® Executive Managing Director, Client Services
connection is encrypted by checking for a privacy statement on the network’s website. Don’t bank or make financial transactions at a wireless hotspot. Turn off the wireless connection when you’re not using it. Data security matters because of increased regulations, risks to your company’s reputation and hacktivism – when company networks and systems are attacked for political purposes. Both small and large businesses are targets. Attackers seek to acquire information and assets and disrupt normal business operations. In 2006, it was reported that the loss of just one laptop through a virus, theft, spyware or breach could cost a company $90,000 or more in fines, credit monitoring, damage control and/or class action litigation. Access the complete webinar at njscpa. org/news/article/data-security-basics. Join the Technology Interest Group at njscpa.org/getinvolved.
TRUST & ESTATE
Undivided attention, unparalleled service.
At Beacon Trust, we are focused on providing exceptional service. Every day, we watch the market, analyze trends, check performance reports and touch base with our clients. When we see something that affects their portfolio, we call – we don’t wait for them to call us.
Magazine of the
New Jersey Society of Certified Public Accountants
Sept • Oct 2012
You will also find that we take the time to develop solid asset allocation strategies based on your client’s financial risk preference – not ours. So if your client isn’t getting the personal attention they deserve, call Valerie Murray at (973) 845-4282 for a complimentary consultation. We’re confident you will see the difference.
September/October Coming Attractions Mergers and Acquisitions (M&A) n n n n
Due Diligence in M&A M&A at Accounting Firms Cultural Issues During M&A Tax Aspects of M&A
(866) 377-8090 163 MADISON AVENUE, MORRISTOWN, NJ
SECURITIES AND INVESTMENT PRODUCTS: NOT FDIC INSURED • MAY GO DOWN IN VALUE • NOT FINANCIAL INSTITUTION GUARANTEED • NOT A DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
will have to trade the phone in to Apple to have it replaced. The Network – The 4S is available for use with the AT&T, Sprint and Verizon networks with prices starting at $199 when combined with a multi-year agreement. The 4S is not capable of utilizing a 4G network. However, the 4S is capable of accessing newer 3G HSPA networks whose performance falls between conventional 3G and 4G. The Camera – The built-in camera can film 1080p HD movies and take 8 megapixel pictures. With flash, focus and zoom, the 4S is a passable replacement for your digital camera without the fancier camera features.
The iPhone 4S and iOS 5 By Robert N. DelPriore, CPA, and Ryan J. Lapinski, Johnson Lambert & Co., LLP
Sporting Apple’s powerful A5 dual-core processor and a nimble, user-friendly functional iteration of the popular iOS operating system (iOS 5), the iPhone 4S is Apple’s latest foray into the smartphone market, which was revolutionized by its iPhone in 2007.
The Battery – The built-in lithium-ion battery handles up to eight hours of talk time over 3G. The battery power will wane over time, and a major limitation of the device is that the battery is not readily replaceable – one
Email – This received some necessary and useful updates in the iOS 5 software. Now supporting simple-font formatting, messages will look more professional. And you can now flag messages requiring a response or containing important information. Most importantly, the mail application will sync with your company’s Microsoft Exchange server allowing you to access your work email instantly while on the go. Reminders – This helpful addition lets you create multiple to-do lists with each event’s date and time. A unique feature of Reminders is the ability to create a location-based event. For example, if you set a reminder to “call mom when you get home,” the app will recognize your registered home address and send you a notification when you arrive at the destination. The Reminders application has an easy-to-use scrollable calendar, allowing users to track and add new events effortlessly. Security and Recoverability – Security received a boost in the new iOS 5 operating system with Apple’s Find My iPhone application which lets users find stolen or misplaced devices. If the device is connected to a network, a user can access Find My iPhone through a web browser which displays the device’s location using a GPS. The Find My iPhone app can also send a message to the phone, remotely lock it N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
and, most importantly, delete all data if the phone is stolen. Siri – The Siri voice command system can do a variety of things, including sending text messages and emails, setting up reminders or getting directions. Most of these commands can be done on other voice command platforms, but it’s Siri’s ability to understand casually spoken English that sets it apart. Most of Siri’s capabilities are handled with a few screen taps, eliminating efficiencies of use, and its repeated requests for instruction confirmations can be frustrating. While an innovative addition, this battery-draining service does not really live up to the hype and is far from the device’s strongest feature. The iPhone 4S with iOS 5 is an excellent choice for a person who wants to respond to emails or check the score of a favorite sports team while on line at the supermarket. It doesn’t hurt that there are more than 500,000 apps, ranging from games to valuable business tools, which can be added to the device. Robert N. DelPriore, CPA, senior associate, and Ryan J. Lapinski, audit associate, are with Johnson Lambert & Co., LLP. Both are members of the NJSCPA Technology Interest Group and can be reached at email@example.com and firstname.lastname@example.org, respectively.
Get Involved Now
Volunteer opportunities are available throughout the year. Here is an activity that needs your support now. Let us know how you’d like to be involved at njscpa.org/ getinvolved. NJSCPA Student Ambassador – Student members are needed to reach out on their college campuses and encourage students to consider accounting as a career choice and publicize NJSCPA programs, such as scholarship opportunities, Career Night, Scholars Institute and membership, to their fellow students. The top ambassador earns a free registration to the NJSCPA Convention & Expo. Contact Lauren Matullo at lmatullo@ njscpa.org or 973-226-4494 x241.
Still Haven’t Renewed Your Membership? Because you are... • Retired • A full-time student • Raising a family • Disabled • Unemployed
You have options... • Partial payments • Reduced membership rates – temporary and permanent
Contact us! Call 973-226-4494 and ask for the Membership Department or email email@example.com. We will work with any circumstance to ensure that you continue to enjoy the many benefits of membership.
THE BUSINESS DIVORCE GROUP AT LOWENSTEIN SANDLER
DISPUTES AMONG CO-OWNERS OF A BUSINESS RAISE DIFFICULT QUESTIONS: Should I buy out my partner? Should we sell the business? Is my partner stealing from the business? Is my partner breaching his or her fiduciary duties? Can I be fired? What are my rights? Should I sue?
SOMETIMES IT’S MORE THAN JUST BUSINESS. The litigators and transactional attorneys in Lowenstein Sandler’s Business Divorce Group have decades of experience representing clients in business divorce and shareholder disputes. They possess the practical and broad-based knowledge to help clients achieve nonlitigated resolutions of business divorces and obtain court intervention if negotiations fail. Business divorce matters are complex and the stakes are too high to proceed without an experienced advisor. Lowenstein Sandler—The Right Answer Practice leaders: Steven B. Fuerst and Nicholas San Filippo – 973 597 2500
www.lowenstein.com/businessdivorce New York Palo Alto Roseland 65 Livingston Avenue Roseland, NJ 07068 © 2012 Lowenstein Sandler PC. In California, Lowenstein Sandler LLP.
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Crossword by Myles Mellor 1
See the answers on njscpa.org/newjerseycpa.
Across 1 Jets 2012 acquisition
4 Michael Mina's Atlantic City debut 8 Elopement words 9 Slot machine video poker, "____ or better" 10 "Snooki" 11 Stray
1. Jets 2012 acquisition 4. Michael Mina’s Atlantic City debut 8. Elopement words 9. Slot machine video poker, ____ or better 10. Snooki 11. Stray 13. Met display 14. Borgata Comedy Club offering 15. “Sherry” singers, The ___ Seasons 19. Beachgoer’s hope 20. Bar buy 21. Mark Sanchez was a ____, before he was a Jet 22. Business promotion 23. Very small 25. Comes before nuptial agreement 26. ____ ball, way off the basket 27. Atlantic City casino and resort 28. Arrest 30. Knicks’ craziness? 31. Stroke at Arthur Ashe stadium 33. Alongside 34. ____ Boys show 35. Club for use at Ballyowen
1. Trump’s development 2. Make money on a race at the Meadowlands perhaps (three words) 3. _____ guy! 4. James Gandolfini played one 5. Completely 6. Actress Taylor 7. 2012 Super Bowl hero 12. Right guard, for short 15. Entertainment 16. Be __ cloud nine 17. Fantasy Island offerings 18. Dined 19. Brady was tagged for one against the Giants in the 2012 Super Bowl 22. Newark Airport abbreviation 24. Memorable times 25. DJ on “Jersey Shore” 27. It goes in a slot machine 29. Good looking girl and Yankee great 30. J.F.K.’s successor 32. Spelling stinger 33. “Let It __”: Beatles advice
Down 1 Trump's development
2 Make money on a race at the Meadowlands perhaps (3 words) 3 _____ guy! 4 James Gandolfini played one 5 Completely
Young Professionals Resources That6 Never Get Old Actress Taylor 13 Met display
7 2012 Superbowl hero 14 Borgata Comedy Club offering The time between college graduation and becoming a licensed CPA CPA Exam Preparation – Don’t go it alone, attend a CPA Exam Right guard, for short 15 singers, ___ Seasons for young professionals. 12 review can"Sherry" be exciting, busy The and overwhelming session to learn tips and tricks for studying for and passing Entertainment TheBeachgoer's New Jersey hope Society of CPAs is here to help ease that transition 15 the CPA exam. Get a peek into the lives of young professionals 19 through various events, information and volunteer opportunities 16 preparing for the Be __ cloud nineexam by reading the Exam Cram Blog at 20 Bar buy that are designed to help young professionals achieve their CPA 17 njscpa.org/examcram. Fantasy Island offerings 21 Mark Sanchez was a ____ , before he was a Jet licenses and career goals: 18 Dined 22 Network Business– promotion Have fun while networking with your peers at events “The NJSCPA’s young CPAs initiatives have provided me Brady wastraining, tagged networking, for one against the Giants in and the 2012 23 Very small tournaments, beer breaks and happy hours. See 19 leadership such as kickball technical support more. Superbowl the current schedule at njscpa.org/youngcpas. They’ve led to priceless introductions to colleagues who’ve 25 Comes before nuptial agreement Improve Your Skills – Contribute articles by joining the and confidants. I couldn’t imagine my 22 become Newark friends, airport mentors abbreviation 26 ____ ball, way off the basket E-YoungCPA writer’s pool at njscpa.org/news/pubs/e-youngcpa. 24 professional career without the benefits of these programs,” says Memorable times 27 Give Atlantic casino and resort BackCity – Collect canned goods and non-perishables for the Sarah Krom, CPA, Young CPAs Council Chair. 25 DJ on "Jersey Shore" 28 Arrest food drive held each fall to benefit the Community Food Bank of NJ; Not sure where to start? Visit njscpa.org/youngcpas or call 27 973-226-4494 It goes in a slot machine participate in our kickball tournament which supports the Valerie to learn more about opportunities and benefits for 30 Knicks' craziness? 29 young Good professionals. looking girl and Yankee great Fund of NJ. 31 Stroke at Arthur Ashe stadium 30 J.F.K.'s successor 33 Alongside N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2 32 Spelling stinger 34 "____ Boys" show 44 33 "Let it __": Beatles advice
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N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
NJ State Board of Accountancy Report Board Gets Influx of New Members Newark (April 19) Miscellaneous
A licensee contacted the board regarding an issue where a former employer was withholding his CPE certificates due to an acrimonious split. The board reminds licensees that it is both imperative and their responsibility to save copies of their CPE certificates. Robert S. Marrone, CPA, New Jersey Society of CPAs Immediate Past President, submitted a letter to the board on behalf of the Society requesting that the board change the current regulation that defines didactic instruction, which the Society feels is overly restrictive and vague. The board will send to the Statutes/Rules/ Regulations Committee for a recommendation.
Peer Review Program – Due to the volume of program participants and the lead time for report generation, anyone who initiates the peer review process by June 30, 2012, will not be considered noncompliant. The committee is also in the process of creating categories electronically assigned to each firm to help facilitate the process.
New Jersey Society of CPAs Executive Director Ralph
Albert Thomas, CGMA, echoed concerns about a rigid June 30 deadline for firm peer reviews due to the expected influx of those being reviewed. Thomas discussed a reciprocity bill at the New Jersey Legislature that attempts to streamline the process across all professional licensing boards. Marrone thanked the board for the consideration of his letter on didactic learning regulations and reiterated the potential for widespread penalties unbeknownst to licensees under the current regulations.
Newark (May 17)
schedule due to timing and workload. The board will take it under advisement and refer the matter to the RMA Committee. There are currently 176 Registered Municipal Accountants in New Jersey.
Ethics – There are currently seven approved sponsors and one inquiry regarding webinar guidelines. Nominating – The following board members were elected to serve a oneyear term from May 2012 to May 2013: Keith Balla, CPA, president; John F. Dailey Jr., CPA, vice president; Daniel J. Geltrude, CPA, secretary; and Albertus Jenkins, treasurer.
Board President Keith Balla, CPA, welcomed five new board members and asked them to read the oath of office. Balla also thanked the recently retired members for their years of service.
Executive Director’s Remarks
Board Executive Director William Mandeville also welcomed the new board members and wished them luck and long service.
A licensee requested a change to the RMA testing
New Jersey Society of CPAs Director of Government Relations Jeff Kaszerman welcomed the new board members and mentioned that much of Society leadership was in Washington, DC, for the American Institute of CPAs Council and 125th anniversary celebration. Society members met with several legislators on Capitol Hill on a host of federal issues. Also, the House has passed H.R. 1864: Mobile Workforce State Income Tax Simplification Act. Finally, Kaszerman mentioned the NJSCPA’s upcoming Professional Development Conference in Florida November 7-11.
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Wilkin & Guttenplan would like to Congratulate
Carol Donatiello Iocca, CPA on being selected as one of the NJSCPAs 2012 Women of Note
1200 Tices Lane East Brunswick, NJ 08816 732 846 3000 www.wgcpas.com firstname.lastname@example.org
Growing CPA firm with first-class marketing culture in central NJ is looking to expand its practice. Ideal merger candidates are sole practitioners or small firms with established niche focus and strong business development skills and/or in need of a succession plan. Reply in confidence to email@example.com.
Livingston sole practitioner seeks CPA with practice to assist in servicing clients leading toward association. Staff and office space available. Reply to firstname.lastname@example.org. Parsippany, NJ, three-partner CPA firm seeks retiring practitioner to merge/acquire practice ranging from $100K and up. Please contact Carl Gutt, 973-451-0800 x22 or email@example.com.
Professional Services Peer Reviews – Kurcias, Jaffe & Company LLP has been providing peer reviews since 1990. Available for consulting, pre-issuance reviews and monitoring; 516-482-7777, firstname.lastname@example.org or email@example.com.
New Jersey practices for sale: Camden County CPA tax practice; $560K gross; highly profitable practice comprised of 71 percent tax and 29 percent accounting; excellent cash flow; more than 60 percent of gross. Middlesex County CPA tax practice; $108K gross; well-established practice with good fee structure. Call Bradley Holmes, 800-397-0249, or visit accountingpracticesales.com to see all listings and register for free email updates.
Peer Review – Do you need a practical system or engagement reviewer? Obtain a free quotation at firstname.lastname@example.org. Audits – Does your client need an audit, but you don't provide audit services? You do the tax work, and I'll do the financials; contact bbertscha@ yahoo.com.
Do you keep telling yourself that this tax season was your last? If so, we have an opportunity for retirement-minded practitioners looking for merger/succession plans or outright sales of their practices. We are a well-established CPA firm in Essex County with a diverse client base and wonderful support staff. Practices with $200K-$1 million in business clients are welcome to call 551-655-1600. We can offer your clients the continuity and great service they deserve.
Real Estate Real Estate Appraising – Tax appeals, eminent domain, unusual properties, consulting, business valuations. Charles A. McCullough, CPA, M.B.A., State Certified General Real Estate Appraiser, American Society of Appraisers member; camcpavalue.com, renwickandassociates.com, email@example.com, 856-779-7050, 609-923-5879.
The Curchin Group, LLC, a central NJ, Monmouth County firm is seeking to merge-in near-retirement sole practitioners and small firms needing succession planning. Other individuals seeking growth and expansion are welcome to inquire. Initial practice continuation also an option. Reply in confidence to Peter Pfister, CPA, at 732-747-0500 or firstname.lastname@example.org.
Classified Advertising Replies to ads with file numbers should be sent to:
Klatzkin & Company, LLP, an established firm with offices in Mercer County, NJ, and Pennsylvania is looking to acquire or merge-in small firms or sole practitioners in need of succession planning. We offer our clients an extraordinary and individualized level of commitment, a dedicated staff and a broad spectrum of available services. We work with a constantly expanding, diversified client base. Firms seeking growth and stability are encouraged to inquire. Reply to bsnyder@ klatzkin.com.
File________________________ New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723 To see additional classified listings or to place an ad, visit njscpa.org/classifieds.
Goldstein Lieberman & Company LLC, one of the region's fastest growing CPA firms, wants to expand its practice and is seeking merger/acquisition opportunities in northern NJ and the entire Hudson Valley region, including Westchester. We are looking for firms ranging in size from $300,000 to $5,000,000. To confidentially discuss how our firms may benefit from one another, please contact Phillip Goldstein, CPA, at email@example.com or 800-839-5767. Want to sell or merge your accounting practice? Accounting Practice Sales has qualified buyers waiting and financing available to sell your practice quickly and get you the best deal possible. For information regarding our risk-free and confidential services, call Bradley Holmes at 800-397-0249. Buyers see listings and register for free email notifications at accountingpracticesales.com. New Jersey – CPA firm wishes to acquire or merge with progressive, small to mid-sized firms. File 0701
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Three Cheers for “Me Time” B Y M ICHEL L E MORRIS , W I T HUM SM I TH+ B ROW N
mentor once said to me, “Don’t be one dimensional.” This lesson is among the most important that a young accountant can learn. Certainly, it’s important for us to have thorough business knowledge and be proficient at what we do. But what will distinguish you in the vast sea of accountants is not necessarily how well you know Internal Revenue Service regulations or the latest pronouncements from the Financial Accounting Standards Board. What will set you apart is, well, you. I’ve been told I’m not your typical accountant. In my position with WithumSmith+Brown, I do all the typical work of an accountant: prepare
Atlantic/Cape May Chapter Scholarships The Atlantic/Cape May Chapter awarded NJSCPA chapter scholarships to the following students from The Richard Stockton College of New Jersey: Kevin Brandis
tax returns, foot workpapers, meet with clients and endure the long hours of busy season. But it’s what I do when I’m not at work that makes me atypical: I double as a cheerleader for the National Football League’s (NFL’s) Philadelphia Eagles. Dancing is a passion of mine, enhancing my quality of life. That, in turn, makes me an even better performer at my day job. How? Doing the thing that I love the most rejuvenates me after a long, sometimes stressful, day at work. It makes me feel alive and ready to take on the challenges of tomorrow. Being part of a first-class organization, like the Philadelphia Eagles, has given me the opportunity to grow as a performer and as an individual in so many ways. Just this past April, the Eagles held final cheerleader auditions in front of a sold-out crowd at the Kimmel Center in Philadelphia. I’m happy to announce that I made it back on the squad for my fourth season. Later that month, I was on stage at Radio City Music Hall in Manhattan for the 2012 NFL draft, introducing myself to thousands of football fans. Being able to take part in high-profile events like the draft gives me the confidence to excel in social business events and networking. Through the Eagles, my life is more fulfilling by being able to take part in community initiatives and having a positive impact on others. As a cheerleader, I’ve been able to give back to the community by participating in the Eagles Youth Partnership Playground Build, where all members of the organization renovate Philadelphia school playgrounds. Believe it or not, by being an NFL cheerleader I can also bring awareness to environmental issues. As part of the Eagles Go Green initiative, the cheerleaders produce an eco-friendly N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
calendar as a way to bring awareness to environmental issues, such as the need for ocean conservation and protecting the global water supply. All of our bathing suits and accessories used in the photo shoots are made from eco-friendly material, and the calendars are printed on recycled paper. Last year, our squad was the first in the NFL to create a cheerleader calendar mobile app. Talk about going green, no paper was used at all. As a cheerleader, I’m an ambassador for the entire Eagles organization. Having done many corporate appearances, charity benefits and fan events prior to games has strengthened the contributions I make to WithumSmith+Brown. I know what it means to be an ambassador for WS+B and how to represent the firm professionally. It also helps with my time management skills. And, having the dance training didn’t hurt when it came to learning the choreography for our WS+B flash mob in NYC this past year. Check it out at withum.com/ careers. Everyone has their thing that they make time for. For some, it’s going to the driving range after a long day at the office, while for others it might be coaching their children’s sports teams. Being able to make time to do the things you love and are passionate about makes you a better employee. As a result, you will feel more fulfilled about your career and life choices. It’s so important to have a work-life balance, so make it a point to carve out some time to make your life multidimensional. And you, too, will be among the atypical accounts who are going places. Michelle Morris is a staff accountant at WithumSmith+Brown. Contact her at firstname.lastname@example.org or 908-526-6363.
NJSCPA Advocates to Eliminate the “Five-Year Death Penalty” B Y JEF FREY T. KAS ZERM AN, NJ SC PA GOVE R NM E NT R E L AT I O N S D I R E C TO R
he New Jersey Society of CPAs is working with lawmakers to eliminate an unusual state law that CPAs not so jokingly refer to as the “five-year death penalty.” This provision is in a statute that also applies to many other licensed professions in New Jersey that are required to pass an exam for licensure. Under the current law, if a New Jersey-licensed CPA lets his or her license expire for more than five consecutive years, then that CPA must pass the CPA exam again to get his/ her license back. The law does not apply to CPAs who apply to the NJ State Board of Accountancy to be on inactive status. Their licenses are not considered to be expired. This law creates havoc for CPAs who are unaware that they can apply for inactive status and instead let their licenses expire for five or more consecutive years. When they reapply
for licensure, they are informed that they need to sit for the CPA exam again. While some are able to get licensure in another state and then apply for reciprocity in New Jersey without taking the exam, it is an arduous process. In late 2011, Senator Steven V. Oroho and Assemblyman John J. Burzichelli introduced legislation that would replace the requirement to retake the exam with giving professional boards the flexibility to tailor remediation to address educational needs, either as a condition precedent to restoration of the license or as a requirement to be completed within a specified time frame after reactivation or reinstatement. The bill also creates a streamlined reciprocity process, superseding provisions in individual professional practice acts, by allowing for quick
Society Supports Mobile Workforce Bill
licensure upon proof of out-of-state licensure from jurisdictions with substantially equivalent standards, even if there is no mutual reciprocity. The legislation expired in early 2012 when the legislative session ended. The NJSCPA is working with Senator Oroho, who was a licensed CPA in Pennsylvania before becoming a financial planner in New Jersey, to have the bill reintroduced. Senator Oroho, who has a keen understanding of the issues facing CPAs and the business community, has been a tireless advocate for the Society’s legislative agenda and is the ranking Republican on the Senate Budget Committee and a member of Governor Christie’s Red Tape Review Commission.
Member Benefit Get text alerts on key accounting issues at njscpa.org/news/text-alerts.
a uniform national standard for state nonresident income tax withholding would significantly simplify the current complex system of nonresident income tax withholding laws and increase compliance. H.R. 1864 would create a uniform national standard and limit state or local taxation of the compensation of any employee who performs duties in more than one state or locality to (1) the state or locality of the employee's residence; and (2) the state or locality in which the employee is physically present performing duties for more than 30 days. In May 2011, the House Judiciary Commercial and Administrative Law Subcommittee held a hearing on H.R. 1864 at which the AICPA and groups representing small businesses testified in support of the legislation. In November 2011, the House Judiciary Committee favorably reported the bill out of committee and on May 15, 2012, it passed the full House. The NJSCPA and AICPA will now lobby for its passage in the Senate. To see the AICPA position paper on this issue, visit aicpa.org/advocacy/issues/ downloadabledocuments/interstatetaxationmobileworkforce/ mobileworkforce_paper_5-19-11.pdf.
Businesses, including small businesses and familyowned businesses, that operate interstate are subject to a significant regulatory burden with regard to compliance with nonresident state income tax withholding laws. U.S. Representatives Howard Coble, a Republican from North Carolina, and Hank Johnson, a Democrat from Georgia, have introduced H.R.1864, the Mobile Workforce State Income Tax Simplification Act of 2011, to address this problem. The NJSCPA and American Institute of CPAs strongly support H.R. 1864 because a uniform national standard would eliminate an unnecessary burden on small businesses, and the bill strikes a balance between the interests of the states in taxing work being done within their borders and the needs of businesses to be able to operate efficiently, especially in the current economy. There are 41 states that impose a personal income tax on wages and partnership income, and there are many differing tax requirements regarding the withholding for income tax of nonresidents among those 41 states. Having
N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Taking Aim at Safety BY DAVID PLASKOW, NJSCPA PUBLIC ATIONS EDITOR
rank Bianco, CPA, had a couple of epiphanies at the beginning of the new millennium: His accounting career took a turn toward the health care sector, and he developed an interest in firearms – more on that later. Accounting first appealed to Bianco while he was in high school. “I had a teacher who made accounting more interesting, he took it beyond just bookkeeping.” Nevertheless, Bianco began at Rutgers-New Brunswick as a biology/ pre-med student. “After a few semesters, I realized I wasn’t happy,” says Bianco. “I really enjoyed business. I’m a logical person and good at math, and there’s an exactness to numbers that I like.” After graduating from Rutgers in 1987 with a B.S. in accounting, Bianco worked for a variety of household names such as Sony, Panasonic and Nabisco. In 2001, after Nabisco merged with Kraft, Bianco went into health care and took a position at Medco as the director of financial planning and analysis. He followed that up in 2005 as the vice president of finance for MultiPlan, a preferred provider organization. In March of this year, he became the senior vice president of finance at Integra Partners LLC, a company that provides medical equipment. So, why was public accounting’s loss industry’s gain? “I like a hands-on focus on a single business,” notes Bianco. “Being a decision maker and contributing directly to business outcomes are exciting to me.” Bianco studied for the CPA Exam while commuting on the train to Manhattan for work. “The CPA designation sends a clear message that you are an expert and a professional,” comments Bianco.
While he’s been a CPA for more than 20 years, Bianco only recently joined the New Jersey Society of CPAs. “I was originally licensed in Maryland and later in New York. In 2011, I knew I would be leaving MultiPlan and realized I was certified in two states, but not my home state,” says the Rahway resident. “As a Society member, I look forward to networking with peers and possibly getting help on other accounting issues from experts.” In his spare time, Bianco coaches youth softball and basketball, and he likes to cook using the ingredients from his vegetable garden. He is on the boards of the Rahway Police Athletic League, Hazel Wood Cemetery and the Italian-American Club of North Plainfield. Bianco heard a lot of talk during the 2000 presidential election about further restricting gun owners’ rights. He thought it was time to exercise those rights before it became too late. With the guidance of his father-in-law, who is a Certified NRA Instructor, Bianco purchased a Ruger GP100 revolver. “In order to use this weapon safely, I thought it was important to know as much as possible and be as proficient as possible,” says Bianco. He read at length and practiced at the shooting range. “People started coming up to me and asking questions,” adds Bianco. “So, I’ve been teaching people for 10 years and have been a Range Safety Officer and a Certified NRA Instructor since 2011.” N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 2
Though he doesn’t compete in official events, Bianco can shoot a three-inch grouping at 25 yards. “I’m really more interested in the teaching aspect than the marksmanship aspect,” notes Bianco. One area where Bianco would welcome more government intervention is requiring mandatory training for first-time buyers of firearms. Bianco is a member of the Old Bridge Rifle and Pistol Club. “It has approximately 500 members who have different interests, including marksmanship, defense and hunting. You’d be surprised at how many accounting and finance professionals are among our ranks,” says Bianco. What are a couple of misconceptions about gun ownership? “When tragedies, such as school shootings happen, people blame the firearm when they should blame the individual,” comments Bianco. “And if there is a major push to have more restrictions on the purchase of firearms, crime will not decrease, as we’ll only be restricting those who are already obeying the laws.” How does Bianco’s hobby complement his profession? “They both gravitate toward precision and accuracy,” says Bianco. “You need to put in the time to get the right results.”
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