Magazine of the
New Jersey Society of Certified Public Accountants
July • August 2011
Emerging Leaders Programming Your GPS to Success How Higher Education Is Preparing Emerging Leaders Generation What?
Emerging Leaders in Their Own Words
“30 Under 30”
C JS N he T
The New Jersey Society of CPAs New Jersey Law and Ethics (2009-11) seminar contains information to help guide accounting professionals in their choices and decision-making skills. This course will prepare you to evaluate professional situations calling for judgment concerning ethics issues, and apply the New Jersey State Board of Accountancy rules to those issues. Earn four CPE credits in Professional Ethics (PE) to fulfill the mandatory requirement for the New Jersey triennial reporting period.
July • August 2011
Ralph Albert Thomas Executive Director firstname.lastname@example.org
Ellen C. McSherry Associate Executive Director email@example.com
8 Programming Your GPS to Success
Managing Editor firstname.lastname@example.org
Jeanette L. Miller Editorial Assistant email@example.com
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
Leaders Learn about the development models universities are using, along with some help from professional groups, to prepare emerging leaders.
16 Generation What? We’ve all heard the terms: Baby Boomer, Generation X, Millennial. The real issue is how do all of these groups effectively integrate into the firm?
18 Emerging Leaders in Their Own Words
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
12 How Higher Education Is Preparing Emerging
The Warren Group Design / Production / Advertising thewarrengroup.com firstname.lastname@example.org
28 Small/Sole Practitioner Moving Beyond Referrals
Find out the tough questions you need to ask yourself to chart a successful course in your career.
Director, Communications & Marketing email@example.com
27 Industry Insights The Communication Challenge of SAS 114
Meet a few rising CPA stars, and get their thoughts on the accounting profession.
Tax Talk Working with Government Tax Auditors in an Increasingly Aggressive Audit Climate
30 Tech Center Excel Tips for Reviewers 4
Close Up New Society President Committed to Member Service
48 Legislative Views Tax Reform Enacted into Law
6 News Briefs
49 Student Outlook Relocating as a Career Move
20 A&A Buzz You’ll Never Forget Your First Audit
50 Member Profile A CPA Who Thinks Locally, but Acts Globally
22 Best Practices Mentoring Versus Coaching
Society Pages CPE Offerings and Events, 32 The NJSCPA “30 Under 30,” 34 Get Involved, 40 NJ State Board of Accountancy Report, 44 Member Benefits, 45 Classifieds, 46
24 Financial Planning Thinking Inside the Investment Style Box 26 Forensic File The 21st Century Fraudster
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. 28 Copyright © 2011 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 Committed to Member Service C
arole A. Hedinger, CPA, Executive Director of the New Jersey State Lottery, earned her CPA license later in life than many Certified Public Accountants. She received her license in 1984, more than 15 years after starting her career in public accounting. For Hedinger, who became New Jersey Society of CPAs President as of June 1, taking the road less traveled has truly made all the difference.
How did you become involved in the NJSCPA? I married young and had children early, but as my kids entered high school I decided that I should get a credential in order to advance my career. When you’re in public accounting, as I was at the time, the CPA credential makes a big difference. I took the exam not long after my 40th birthday and passed the first time. I joined the Society immediately upon becoming a CPA. I was eager to join. I didn’t know anything about membership, but I felt like I had finally qualified for an elite club. I started out attending meetings of the NJSCPA Forensic, Matrimonial Accounting and Business Valuation committees to pick up information on those fields, and then I became involved with the NJ CPA Political Action Committee (PAC). Many years ago, a local assemblyman sponsored a bill to provide credentials to Public Accountants (PAs) in a way that could threaten the CPA credential. I wrote a paper on why PAs shouldn’t be afforded the credential, and the PAC fought it until it died. That’s when I learned what I could accomplish with the NJSCPA.
What are your presidential goals? My top priority is to promote service to members. I’ve always felt that if an organization doesn’t respond to members’ needs it has lost its way. That’s why I’m excited that last month we began a comprehensive member survey to identify members’ needs, motivations and interests. Our research partner, McKinley Advisors, surveyed members on a
wide variety of issues, including CPE, volunteer engagement and communications. The feedback will be essential in evaluating existing NJSCPA products, programs and services to make sure that they serve members. On a personal level, I want to be an example to other women in the profession, especially young women who may aspire to leadership positions. As NJSCPA President, I naturally represent all 15,500 members, but as the second woman to hold this office, I feel that I have a special responsibility to represent the women of the profession.
How can NJSCPA members benefit from involvement? There are global and national forces impacting the profession in New Jersey. The Society is a source of information to keep us aware and prevent us from becoming isolated. I’ve truly benefitted from the ability to network and share ideas with my fellow CPAs and members. And, of course, the NJSCPA is the best source for staying current on training and education. CPAs also benefit from the Society acting as a protector of our licenses and our businesses. The NJSCPA, through the NJ-CPA-PAC, actively advances our interests on a host of issues, whether it’s working to enact tax law reforms in New Jersey or fighting onerous national regulations, such as the recently repealed 1099 Form requirements. It’s in our own best interests to contribute and join the PAC, and I encourage all members to do so.
Any final thoughts? If I’ve learned one thing in my more than 25 years as a CPA, it’s that being a CPA means more than just putting a certificate on a wall. I never thought that I would get to this point. I went from preparing tax returns to protecting the helpless at the Ocean County Surrogate’s Office to running a state agency that manages billions of dollars annually. I’m living proof that once you get your CPA designation, the sky’s the limit.
NEW JERSEY CPA • July • August 2011
2011/12 Board of Trustees EXECUTIVE COMMITTEE President Carole A. Hedinger, CPA President-Elect Thomas F. Roche III, CPA Secretary Lloyd F. George, CPA Treasurer Walter J. Brasch, CPA Immediate Past President Robert S. Marrone, CPA Executive Director Ralph Albert Thomas
TRUSTEES Lewis D. Bivona, CPA Jose E. Bombino, CPA Susan Burke, CPA Rebecca B. Fitzhugh, CPA Linda Gibson, CPA Edward I. Guttenplan, CPA Karl A. Halteman, CPA Maryann Holloway, CPA Robert Nanfro, CPA Kenneth Pogrob, CPA Jody Rorick, CPA Mary E. Zago, CPA
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NEWS IRS Releases 2010 Data Book
The Internal Revenue Service (IRS) released its 2010 IRS Data Book, an annual snapshot of agency activities for the fiscal year. It describes activities conducted by the IRS from October 2009 through September 2010 and includes information about returns filed, tax collections, enforcement and taxpayer assistance, as well as the IRS budget and workforce. Printed copies of the 2010 IRS Data Book, Publication 55B, are available by writing to the Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954, or by calling 202-512-1800. An electronic version can be found at irs.gov/ taxstats/index.html.
PCAOB Issues Research Note on Chinese Reverse Mergers
The Public Company Accounting Oversight Board (PCAOB) issued its first public research note, which provides new data on the growth of reverse merger transactions involving companies from China and neighboring countries. The research note, “Activity Summary and Audit Implications for Reverse Mergers Involving Companies from the China Region (January 1, 2007, through March 31, 2010),” was prepared by the PCAOB Office of Research
and Analysis to provide further context to the issues discussed in Staff Audit Practice Alert No. 6 issued in July 2010. That alert was based on observations from the PCAOB inspection process, which found that some U.S. registered accounting firms may not be conducting audits of companies with operations outside of the U.S., in accordance with PCAOB standards. The number of reverse merger transactions in the study involving companies from the China region was almost triple the number of initial public offerings conducted in the U.S. by companies from the China region during that time. Learn more at pcaobus.org.
current trends and identify how internal audit professionals are responding to the changing demands of their profession. The survey covered internal audit organizational structure and career paths, use of international internal audit resources, board relationships, internal audit technology, risk management and internal audit anti-fraud efforts. To see a copy of Grant Thornton’s CAE survey, visit grantthornton. com/caesurvey.
AICPA, CIMA Approve International Accounting Designation
The American Institute of CPAs and the London-based Chartered Institute of Management Accountants (CIMA) approved a new not-for-profit venture that would promote a new, globally recognized management accounting designation covering more than 550,000 members and students worldwide. AICPA voting members with at least three years working in management accounting or a financial management role would qualify for an accelerated route to obtaining the new designation. Non-voting AICPA members in the United States would not be eligible. Those holding the new designation would commit to an ongoing, self-directed program of developing and maintaining
Survey Finds Majority of CAEs Don’t Believe in SOX Repeal
A new survey of more than 300 chief audit executives (CAEs) by Grant Thornton LLP finds that while nearly half believe that the shifting regulatory landscape poses the greatest threat to their company, a vast majority (88 percent) do not believe that the Sarbanes-Oxley Act (SOX) should be repealed. Of those who believe SOX should be repealed, the cost of compliance is the main reason for doing so. Grant Thornton conducted its first annual survey of CAEs to provide insights into
New Jersey by the Numbers 102,000,000 65,600,000 59,000 7,576 4
Tax credit value for Panasonic moving from Secaucus to Newark Lobbying expenditures in NJ last year Number of animals used in the state annually for research Average property tax bill per NJ household Percent increase in average property tax bill from last year
NEW JERSEY CPA • July • August 2011
competency in management accounting, leadership and strategy. This knowledge base would be derived from an expert-panel assessment of skills and competencies needed to succeed in various career paths in management accounting. This continuous career development model would be based on a contemporary, technology-enabled approach and would focus on competency maintenance rather than required hours in coursework.
Revisions to the Casino Control Act
P.L. 2011, c. 19, changed the manner in which the casino industry is regulated. Pursuant to this law, the Division of Taxation will now administer and collect several taxes that had previously been administered and collected by the New Jersey Casino Control Commission. The gross revenue tax is an 8percent tax on the gross revenues of a casino licensee. The casino hotel room fee is a $3-per-day fee on each hotel room in a casino hotel facility that is occupied by a guest. The multi-casino progressive slot machine revenue tax is an 8-percent tax on the casino service industry, multi-casino progressive slot machine revenue. This new requirement is applicable to returns for the above listed taxes that are due after April 30, 2011. Questions may be directed to the division’s Regulatory Services Branch at 609-292-5994.
Risk Alert: Audits of Nonpublic BrokerDealers
Auditors of nonpublic broker-dealers are now required to register with the Public
Company Accounting Oversight Board (PCAOB) and are subject to its oversight, unless an exemption is obtained from the PCAOB. A proposed rule that provides for an interim inspection program has not been adopted by the PCAOB as of the date of this article. This new requirement, a result of recent legislative changes to the oversight and registration requirements for auditors, may lead to unforeseen risks.
IRS Issues Interim Guidance on Employer-Sponsored Health Coverage Reporting
The IRS has issued interim guidance to employers on informational reporting on each employee’s annual Form W-2 of the cost of the health insurance coverage they sponsor for employees. This new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee’s income and is not taxable. Employers are required to report the cost of employer-provided health care coverage on the Form W-2. Notice 2010-69 made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012). The IRS provided further relief for smaller employers (those filing fewer than 250 W-2 Forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally
would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued. Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage. The 2011 Form W-2, Notice 2010-69 and Notice 2011-28 are available on irs.gov.
used for 504-eligible business expenses, and payments on that debt must be current for the last 12 months. Borrowers are able to refinance up to 90 percent of the current appraised property value or 100 percent of the outstanding mortgage, whichever is lower,
plus eligible refinancing costs. Loan proceeds may not be used for other business expenses. Existing 504 projects and government-guaranteed loans are not eligible to be refinanced. The program will be in effect through September 27, 2012.
njscpa.org Spotlight The CPA Life Cycle on NJSCPA.org The New Jersey Society of CPAs regularly posts member information at njscpa.org/members. Here you can find:
Look for a New Jersey CPA Magazine Reader Survey This Fall
New Jersey CPA, your member magazine, continually strives to offer you quality content in an enjoyable format. To do this, we need your help. Please take our brief readership survey, which will be sent electronically this fall.
Associate Members – Open to anyone who is a chartered accountant or its equivalent in any country other than the United States. CPA Candidates – Open to anyone who has received an undergraduate and/ or graduate degree (or its equivalent from a non-U.S. jurisdiction) within the last five years, meets the requirements necessary to take and demonstrates intent to complete the CPA examination; or, anyone who has successfully completed the CPA examination and has not met the education or experience requirements necessary to obtain a CPA certificate/license. Fellow Members – Open to anyone holding a CPA license from any state. Student Members – Open to anyone who is enrolled in an undergraduate or full-time graduate education program that will result in
SBA Opens Temporary Refinancing Program to Real Estate Mortgages
Small business owners with eligible commercial real estate mortgages maturing after December 31, 2012, will be able to secure more stable, long-term financing through the U.S. Small Business Administration’s temporary 504 refinancing program. To be eligible for the temporary 504 refinancing program, a business must have been in operation for at least two years, the debt to be refinanced must be for owner-occupied real estate and have been incurred no less than two years prior to the date of application and the proceeds
NEW JERSEY CPA • July • August 2011
qualification to take the CPA exam.
About Our Members – Public service activities, awards, promotions, speaking engagements and certifications, accreditations and degrees earned by NJSCPA members. Firm/Business Announcements – Firm/ business mergers, expansions, relocations, peer review completions, public service activities, awards and milestones. Members in the Media – Newspaper, magazine, journal or online interviews of, or articles published by, NJSCPA members. Television or radio appearances by NJSCPA members. Member/Firm Service – Announcements of community service/charitable activities of NJSCPA members and firms. Send submissions to email@example.com.
The NJSCPA lists its fellow members who have recently passed away. Send submissions to clabracio@ njscpa.org.
Programming Your GPS to Success How can you fast-track your career success? Just input the address into your GPS and follow the step-by-step directions! Certainly, it’s not quite that easy, but it does start and end with you. The success of your career is in your hands. If you are not happy where you are, then it’s up to you to change the course of your career. It’s time to move from the passenger’s seat to the driver’s seat. If you want your GPS to generate good directions, you have to input the right address. In this case, it’s the questions you need to ask and answer that will program your personal GPS to success. Who Are You?
By Catherine Z. Horn, CPA Alcatel-Lucent
Start with some honest introspection, and take a fresh look at yourself. Think about your education, certifications, training and the skills that you have developed over time. Expanding your horizons, think about how these skills might serve you in broader areas. What is important to you? Think about what you are passionate about, what motivates you and what gives you fulfillment. What creates that fire in your professional belly? Be as specific as you can about where your interests lie, what skills you possess and where you want to make your mark. How consistent are your personal goals with your professional goals? You can NEW JERSEY CPA • July • August 2011
only achieve true success if you have alignment across all of your priorities.
How Do Others See You? It is critical that you understand how you are perceived by others. Ask several colleagues who know you best for their honest feedback on your social skills, empathy, and ability to motivate and inspire. Do others trust and respect you? If their perceptions don’t match yours, why don’t they? Resist the urge to be defensive; approach this with an open mind and an open heart. Seek to understand your blind spots, and use this new insight to create real change. Do further research on emotional intelligence if necessary.
The Environment Assess your environment. What defines the challenges of your specific business environment today? Distinguish between what is within your sphere of influence and what is outside your circle of control. For business conditions outside your control, what choices can you make to create success anyway? You can’t stop the rain, but you can sell umbrellas. Determine how your skills and interests fit into your work environment and into the marketplace at large? Who is the customer or the client, and what are their needs that perhaps only you can fill? Last, and certainly not least, how will you market yourself? If clients are unaware of your full range of talents and capabilities, your GPS to success
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The Competition Who is your competition, and how do you compare against them? What are their strengths, and how can you outshine them? Identify their weaknesses and plan how you can turn them into an opportunity for you. How can you effectively differentiate yourself and become a client’s vendor of choice? Whether you realize it or not (and you really should begin realizing it) you are marketing yourself in everything you do.
Envision Your Future Close your eyes and visualize that you are a huge success. Place yourself into that future: two, five and 10 years from now. Be very specific. How does it feel? Do you own your own business or work for someone else? Are you in a Fortune 100 corporation or a small public accounting firm? Where are you located geographically? Who works with you and for you? Look backward from that
future and think about what steps you took and what critical decisions you made. Identify those key supporters who opened doors for you.
Make Choices Bring yourself back to the present and prepare to answer even more difficult questions. How hard are you willing to work? Are you willing to pursue an additional degree or certification to improve your situation? Are you willing to take risks, such as pursuing an international assignment? To succeed, you must step out of your comfort zone and try new things. Analyze how you spend your time each day and make firm choices about the changes you need to make. With choice comes sacrifice. So, what are you willing to risk? When you become absolutely clear about your priorities, you may end up redefining success – and that’s okay! But when you firmly establish your priorities and you are clear about whom you are and what you want, then take the steps you need to take to move forward.
Recommended Resources • Emotional Intelligence, Daniel Goleman • Now, Discover Your Strengths, Marcus Buckingham and Donald Clifton • The Peter Principle: Why Things Always Go Wrong, Dr. Laurence Peter and Raymond Hull • What Got You Here Won’t Get You There: How Successful People Become Even More Successful, Marshall Goldsmith • You’re in Charge, Now What?: The 8 Point Plan, Thomas J. Neff and James M. Citrin • The First 90 Days: Critical Success Strategies for New Leaders at All Levels, Michael Watkins • http://careerplanning.about.com/od/careerchoicechan/a/transferable.htm • quintcareers.com/transferable_skills_set.html • njscpa.org/career
See The Good.
At the Community Foundation of New Jersey, we’re focused on helping our donors use their donor advised 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 funds to make a difference:
• ShopRite Partners in Caring Fund. Since 1999, the
ShopRite Partners in Caring Fund has supported hungerfighting efforts in New Jersey and throughout the Northeast. To date, ShopRite has donated $24 million to hunger fighting organizations. A unique feature of the Fund is how it has become part of the ShopRite culture, receiving a variety of support from employees, customers and partners.
If your clients are looking to make a difference through charitable giving, we’d like to be of assistance. Please contact Hans Dekker at email@example.com | 973-267-5533.
• Great Companions Fund. A donor, inspired by her life’s
work of training and nurturing animals, created a fund to support causes and organizations throughout New Jersey that care for and promote the welfare of companion animals and wildlife, helping spread the joy and comfort animals can bring.
2011 Year-To-Date (May): Grants Issued - $5.8MM | Gifts to Donor Advised Funds - $18.1MM
© 2011 Community Foundation of New Jersey
NEW JERSEY CPA • July • August 2011
Take Action Don’t let a yield or detour sign slow down your career. Be responsible for your career success. Are you in the backseat along for the ride, or are you in the driver’s seat firmly gripping that steering wheel? To quote the great Yogi Berra, “You’ve got to be very careful if you don’t know where you are going, because you might not get there.” The GPS is in your hands. Take the time to enter the correct information now, and it will ultimately take you where you want to go! Catherine Z. Horn, CPA, SPHR, is an HR director with Alcatel-Lucent. She is a member of the New Jersey CPA magazine Editorial Advisory Board and the Immediate Past President of the New Jersey Society of CPAs Middlesex/Somerset Chapter. Contact her at 908-582-1967 or firstname.lastname@example.org.
KPMG LLP is proud to congratulate
Kevin DeTrizio and Sean Marikakis KPMG LLP is proud to support the New Jersey Society of Certified Public Accountants (NJSCPA). Congratulations to all of this year’s honorees. kpmg.com
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 66871NYO
NEW JERSEY CPA • July • August 2011
How Higher Education
Is Preparing Emerging Leaders College students today face a challenging economy and unprecedented job competition. Employers want graduates who can demonstrate creative problem-solving skills, decision-making ability, strategic and critical thinking, excellent communication skills and leadership. Regardless of academic discipline, organizational affiliation, cultural background or geographic location, students must be better prepared to serve as citizen leaders in a global community.
directed toward the entire student body. Because students experience leadership in many different settings – in and out of the classroom, on and off campus – virtually every student engages in some type of activity that involves leadership. Therefore, leadership programs are becoming a more visible learning endeavor on many campuses today. To that end, the National Clearinghouse for Leadership Programs is assisting colleges and universities in leadership development on their campuses. It supports leadership development in college students by serving as a central source of professional development for leadership educators.
Throughout higher education’s history, however, leadership development has primarily been targeted toward students holding leadership positions, such as student government officials, fraternity and sorority officers, resident assistants and athletic captains. Consequently, only a handful of students had the opportunity for a focused experience in leadership development. Colleges and universities are now looking to develop more and better leaders through education efforts
There are probably as many on-campus undergraduate leadership development models as there are institutions. One model, similar to many found on college campuses, is the Undergraduate Leadership Development Model at Rowan University. It recognizes the importance and value of preparing students for leadership roles on campus, within their communities and within the larger context of the world where they live, study and work. The program’s goals are to prepare
By Margaret Van Brunt, CPA Rowan University
NEW JERSEY CPA • July • August 2011
The Rowan Model
students for leadership positions by expanding their knowledge of leadership paradigms and enhancing their skills in self-management and ethical decision making; provide students with the opportunity to develop the individual talents and organizational tools necessary to foster and sustain healthy organizations; assist students in the exploration and use of leadership styles, self and group management, and leadership skills as they practice the art of leadership within campus-based and community-based organizations; and provide opportunities for undergraduates to obtain official recognition of their leadership development. To accomplish these goals, the following concepts are employed: Education – Students may enhance their leadership knowledge and skills through formal courses of instruction or learning through co-curricular
leadership programs, institutes, conferences, retreats and service learning opportunities throughout campus. Empowerment – Students who engage in leadership development through curricular and co-curricular programs gain important and useful skills that assist them in becoming effective leaders in their lives. The personal development, confidence and growth in self-esteem that accompany the learning of new leadership skills are key elements for both personal and professional success. Enriching – The contributions that student leaders make to their peers, colleges and universities, and communities are important to the continued growth and richness of their campus and the communities that benefit from their leadership. Students who serve the communities in which they live through leadership initiatives not only benefit them personally, but NEW JERSEY CPA • July • August 2011
also transform themselves and their communities. Rowan University considers five key categories of effective leadership: Leadership Theory/Style/ Approaches – Recognizing that there are numerous leadership theories upon which to draw, students explore a variety of leadership approaches to determine which of these resonate with their own values and beliefs. Self-Management – The first key to successfully leading others is the ability to know and lead oneself. Students explore ways to understand and enhance their abilities for self-management and ethical decision making. Characteristics of Effective Leadership – Students examine and enhance their ability to use effective leadership tools with others, including such skills as team building, effective communication, motivating others, respect and integrity,
listening, and the ideas of challenge and support. Organizational Management and Development – Leading others requires understanding the concepts of organizational development, visioning, group dynamics, goal setting, processes and procedures, role modeling, delegation of responsibilities and accountability. Students explore how these concepts are used to create successful group experiences. Leadership Experiences – Through self-selected leadership opportunities, students explore the use of leadership styles, group and self-management, and leadership skills to educate, empower and enrich their lives and those of the campus community.
Groups Supplementing Higher Education’s Efforts Many organizations assist colleges and universities in preparing emerging leaders for the accounting profession. The New Jersey Society of CPAs Scholars Institute provides high-achieving accounting students with a competitive edge.
During the two-day residency program, interactive programming helps students identify their goals and gives them the essential tools to reach them. The American Institute of CPAs Accounting Scholars Leadership Workshop is an annual invitational program for minority accounting students who plan to pursue the CPA designation. This event aims to strengthen students’ professional skills and understanding of the limitless possibilities and benefits of earning the CPA credential. Through speakers, panel discussions and interactive programs, students gain confidence and an enhanced understanding of the various career paths within the accounting profession. The Institute of Management Accountants Annual Student Leadership Conference provides students with an excellent opportunity to network with accountants and finance professionals, as well as learn from leading experts about leadership. Colleges and universities are invited to send students to the Beta Gamma Sigma
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Student Leadership Forum. Beta Gamma Sigma is the international honor society serving business programs accredited by The Association to Advance Collegiate Schools of Business. The forum brings together student members from colleges and universities across the country for a chance to improve their leadership skills. Leadership education of college and university students is an important and ongoing process within higher education. Through education, enrichment and empowerment, higher education is preparing students to become the leaders of tomorrow. Margaret Van Brunt, CPA, is the assistant dean of the William G. Rohrer College of Business at Rowan University. She is on the NJSCPA Educators Committee and the Editorial Advisory Board of New Jersey CPA magazine. She is also the treasurer of the Southwest Jersey Chapter of the NJSCPA. Contact her at vanbrunt@ rowan.edu or 856-256-4047.
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NEW JERSEY CPA • July • August 2011
Generation What? Generation X, Generation Y, generation who, what and why. Who are these people, what does it matter and what does this mean to a typical workday at an accounting firm? Depending on where you get your talent, you could have as many as five generations in your firm right now: the Silent Generation (ages 66-86) down to Generation Z (now age 16, in high school and ready to intern).
By Michael Mariano Leaf, Saltzman, Manganelli, Pfeil & Tendler, LLP, Certified Public Accountants
Some claim that it really doesn’t matter when we’re born, we’re all just a collection of individuals and need to be treated as such. We can’t pander to groups and stereotypes. After all, there are other groups that we should strive to treat on an equal footing: gender, race, religion and so on. Why are the groupings of generations any different, and why should the workplace pay close attention? One reason is that stereotypes of generational values hold true to those stereotypes more than the other groups. You can almost segment generations by their communication vehicles. Who at your firm makes the most use of smart phones, email, face-to-face communications? There are always exceptions, but there are less so here. This makes generational issues within a firm a tangible situation that, if dealt with effectively, can increase productivity and accelerate growth and profitability by attracting and retaining a high level of talent. The younger generations are the future of our firms. We must compromise some of our ways of thinking to adjust to them and let them transform our firms into a new hybrid of their new values and the existing traditional values.
NEW JERSEY CPA • July • August 2011
The Key Players Right Now The two aforementioned generations at the extreme ends are not the main players in this drama; it’s the Baby Boomers (ages 47-65), Generation X (ages 31-46) and Generation Y, or Millennials, (ages 16-30) that play at center stage right now in your firm. Millennials are entering the workforce with Gen Xers as their immediate supervisors and managers, and conflict is rife here. At a recent human resources seminar, attended mostly by Gen Xers, generational conflict came up and the moderator asked why there was a problem between Xers and Ys. The Gen Xers cited that Millennials have too casual an attitude, possess a sense of entitlement, lack accountability, are needy, don’t respect organizational structure and several other shortcomings. In fairness, there were positive attributes listed for Millennials, such as being innovative, team orientated and socially conscious.
The Gen X Squeeze When Gen Xers look in the other direction, toward executive management, they have resentment. The Baby Boomers were supposed to be leaving already and turning the reins over to them. But Baby Boomers are staying approximately 10 years longer in the workforce than they originally envisioned, for various reasons. Gen Xers are now concerned that they will get passed by in many firms for the more aggressive Millennials. Remember, the Millennials don’t respect the firm’s organizational structure and have no issue leapfrogging Xers.
Millennial Backlash Baby Boomers have put in 80-hour work weeks for much of their careers
so that they could become partners and finally have some well-deserved worklife balance. They have a tough time with Millennials, who want that balance starting on day one, because they believe they will be working into their 70s or 80s. The Millennials cite that the older partners have forgotten what it’s like to attend to a sick preschooler or perhaps never had to in the days before both spouses worked. Because Millennials don’t define themselves nearly as much by their jobs and work ethic as do Baby Boomers – and to an extent Gen Xers – Millennials are viewed by the two groups as not being totally committed to their firms. One example is the issue of dress. The New Jersey Chapter of the Association for Accounting Administration found Millennials prefer more casual attire. While there is a case to be made for casual wear within the office, attire when visiting a client has become a generational flashpoint.
issues in accounting firms of all sizes today, and stereotypes are holding up to form. But what do we do about it? Many firms ignore it and let everyone subtly fight it out. Unfortunately, situations like this rarely work themselves out and the result is constant tension. One option having some success is training the more entrenched generations on how to adapt to the Millennials. While it sounds counterintuitive, and I can see many a partner shaking his or her head, the Millennials will be the accounting profession in time. Why look back when it makes more sense to look ahead? Accounting firms, compared to many other business sectors, still operate in a traditional manner set forth by the Silent Generation, and the firms’ culture rarely, if ever, changes. Information is power and is therefore guarded, plus many of us don’t like to talk about our feelings. But if upper management made a stronger effort to enhance communications firmwide, many of these generational issues could disappear.
Where Do We Go from Here? It’s obvious that there are generational
Understanding and discussing the generational issues will help everyone understand their differences, create new expectations, foster empathy and prevent misunderstandings. Partners and managing partners need to be aware of these issues, be willing to reconsider internal policies and modify a firm’s culture to accommodate the incoming generations so everyone can work together better. For example, make sure new applicants are told about the firm’s culture and policies that may conflict with stereotypical norms of the applicant’s generation. We all need to try to overcome our fears of change and be willing to consider changes that may go against the way things have always been done just because “it’s the way things have always been done.” Michael Mariano, PHR, is the firm administrator at Leaf, Saltzman, Manganelli, Pfeil & Tendler, LLP, Certified Public Accountants. Contact him at email@example.com or 973-808-2336.
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Emerging Leaders in Their Own Words More than 70 percent of workers between the ages of 21 and 31 reported that “meaningful work” is one of the three most important factors in determining their career success, according to a Career Advisory Board at DeVry University study. They want a sense of accomplishment, and they want to help people. The New Jersey Society of CPAs spoke with four emerging leaders in the CPA profession who are finding that sense of accomplishment and are poised to move the profession forward. Brittany Figliolino, CPA, Senior Audit Associate, Wilkin & Guttenplan, P.C.
By Carolyn Hook NJSCPA Director of Operations and Membership
What do you do? My firm serves closely held, middle-market businesses and their ownerships – high-net-worth individuals, professional practices and real estate entities. I work in audit, mostly on common interest realty associations. I also do commercial audits, such as 401(k) benefit plans, insurance financing companies, dental practices and other real estate audits. I like the client diversity and will continue in the audit area. What aspect of the profession would you like to see change? People should stop believing that being a CPA is boring. We have fun at my office! We have themed lunches, Wii tennis tournaments and you may catch a partner or two NEW JERSEY CPA • July • August 2011
dressed up as Superman or a Jersey Shore cast member during busy season. What advice do you have for future CPAs? Take the CPA Exam as early in your career as possible, before your responsibilities grow to include reviewing the work of others in addition to your own work. It’s easy to feel like you don’t have time or that it’s not that important; it is important. What motivates you professionally? I always want to know more. Finding out about other areas of audit, tax and accounting is intriguing. I never work on the same area every day. It keeps my mind going and my skills current. As a young professional, there are many intelligent people to learn from, and my partners are available with guidance and support. Where do you see yourself in 15 years? As a partner at my firm.
Chase M. Franklin, CPA, Audit Supervisor, Meisel, Tuteur & Lewis, P.C. What’s your specialty? One of my first engagements included employee benefit plans. I enjoyed valuing the investments and properly investing the plan. Finding a specialty early on accelerated my progression, and I continue to work in this area. Why become a CPA? My dad does a lot of accounting for the Maryland Department of Public Safety and he encouraged me to become a CPA. He told me I’d always have a strong career path and be able to get a position at any company because I’d know the business from the ground up.
What aspect of the profession would you like to see change? More work/ life balance. Thankfully, it’s not about working you to the bone anymore. Today, it’s more like, “Get as much done as you can, and when you’re at a good stopping point, go home to your family.” How do you define success? It means providing value to others and knowing I did the right things for the right reasons. These themes have been consistent throughout my life and my career. Where do you see yourself in 15 years? I aspire to be a partner at my current firm.
Anthony LaVecchia, CPA, Assurance Senior Associate, BDO USA, LLP What’s been your biggest surprise about the profession? The unlimited job potential that accounting offers. My services can be used in any industry, anywhere in the country. Few professions offer that much flexibility and potential. What aspect of the profession do you enjoy most? The accounting field is always evolving. Every day is an opportunity to learn something new, and I enjoy working in a profession that is constantly growing. There are always new skills to be learned and new opportunities to pursue.
What motivates you professionally? People expect me to be very knowledgeable about a wide range of accounting areas. Accounting can be very complex, especially to an outsider, so it’s rewarding to share my expertise with others. It motivates me to learn as much as possible and to keep up with current developments. What advice do you have for young CPAs? Attend as many networking events as you can, and build lasting professional relationships. Having a strong professional network will become one of your biggest assets throughout your career. Where do you see yourself in 15 years? I hope to be a partner at a large public accounting firm and provide a good life for myself and my future family. Frequent vacations to Hawaii would also be nice.
Gary S. Mannuzza Jr., Staff Accountant, Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC What do you do? I try to provide our clients with superior service by becoming a trusted advisor and valuable resource as business owners and individuals attempt to reach their financial goals. What’s been your biggest surprise about the profession? Long gone are the
days of accountants being there only for tax time. Today’s clients require many different services. CPAs integrate themselves into clients’ business cycles to become a year-round resource that they can lean on. Why become a CPA? It’s a distinguishing factor in today’s business culture. This designation is held in the highest regard in the business community. I’m currently a CPA candidate and had recently taken the exam in May. What motivates you professionally? I enjoy working on diverse client scenarios across industries. I learn from each client’s situation and then apply it to other situations, which give me a sense of professional accomplishment and confidence. Client interaction, without question, is what I enjoy most. Explaining to them their different options is how we provide superior service to our clients. Where do you see yourself in 15 years? To still be providing clients steady guidance and service to help them build their businesses for future generations. The paramount goal is to have a high level of respect from clients, colleagues and the community. To read the complete interviews, visit njscpa.org/youngcpas.
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You’ll Never Forget Your First Audit B y James V. Provence, Fazio, M annuzza , Roche , Tankel, L a P ilusa , L L C
ne of the first things I did upon starting my career in the audit department was to talk with some of the other audit staff to gauge what I should expect. Fortunately, I gained tremendous experience in previous areas, including the firm’s best practices, which eased my transition. Some of my previous tasks helped prepare me for my first engagement, such as controlling the confirmation process, setting up the firm’s electronic engagement binders and organizing the workpaper trees. These seemingly simple tasks enabled me to grasp what is actually involved in a proper audit. It also made me realize how many different types of attest services the firm performed. In addition to the traditional financial statement audit engagements that I knew of, I was exposed to not-for-profit engagements, HUD reporting, employee benefit plan audits, agreed-upon procedures, reviews and compilations. The varying reporting requirements and terminology were a lot
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to absorb in the beginning, but having that knowledge before my first true audit experience was empowering. It allowed me to focus on learning the audit steps and thought process, rather than getting bogged down on firm procedures. I attended SAS 99 planning meetings early on and performed a few inventory observations, but I had yet to do any fieldwork. My team established time budgets and reviewed the client, providing a clear understanding of what we were going to do and why. Even with all of that preparation, it wasn’t until I actually went to the client and started applying the concepts that I understood what the rest of the team really meant. The company I was assigned to audit was a large international manufacturer with seven subsidiaries. The work volume, team size and six weeks of expected fieldwork were all slightly overwhelming. The fact that my supervisors knew I wasn’t going to know everything helped put me at ease, and they assured me to ask any questions I may have had. With the help of my manager and two of the seniors in my department, I was taken step-by-step through the whole process. They explained the procedures we were going to perform and what assertions they tested. When I got stuck, they guided me through the thought process to help me resolve the issue or ask the client the right questions. The initial time they spent getting me off the ground was invaluable and allowed me to be an asset – not a burden – to the team. It was also a great experience to start on an engagement with so many moving parts because I got to see more of the high-level issues that can arise, which provided me with an enhanced skill set going forward. Even after all the preparing I did going over the audit programs and procedures, there was still documentation that needed to be prepared which, with some assistance, went very smoothly. Some of the biggest challenges I faced were learning the proper way to document every source of information, knowing when you need to ask for something from the client and understanding the big picture. Learning how to properly prepare workpapers, tying in lead sheets to workpapers and documenting my thought process was like learning a new language. As I progressed through my first busy season, it got easier, but those first few days were definitely challenging. Overall, my first audit experience was positive. I learned a lot and was able to use that information on my subsequent engagements. I believe I met the team’s expectations and will be able to work more independently going forward. It also felt good to look back just four short months later and realize how far I’d come. With what I know now, I will be more prepared for the next busy season and look forward to sharing what I’ve learned with someone else who is going on his or her first audit.
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James V. Provence works in the audit department at Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC. He is a New Jersey Society of CPAs CPA Candidate Member. Contact him at firstname.lastname@example.org or 908-272-6200 x320.
NEW JERSEY CPA • July • August 2011
EQUAL OPPORTUNITY L E N D E R
Mentoring Versus Coaching B y Rachel Anevski , Smolin, Lupin & C ompany, P. A .
ike many fast-paced and demanding businesses, accounting firms are challenged with ensuring their staffs are engaged, knowledgeable and focused on serving clients’ needs. With an aging U.S. population, never before has senior-level talent been so important to the CPA profession, yet it is increasingly harder
to find. Technical knowledge used to be the only job expertise required. But, today, we recruit staff who has the ability and skills to communicate, as well as to grow into mentors and coaches for the next generation of accountants. However, many people confuse mentoring with coaching. While they are interrelated, they are not the same. A mentor may coach, but a coach does not mentor. Mentoring is relational, while coaching is functional. Furthermore, the world of coaching has become quite elaborate with business coaches, executive coaches and life coaches, oh my!
Coaching There are other significant differences between coaching and mentoring. Some characteristics of coaching are that managers coach their staffs as part of their job requirements. Coaching takes place within the confines of a formal manager-employee relationship. The focus is to develop individuals within their current job objectives. The interest of the relationship is functional, arising out of the need for individuals to perform the tasks required to the best of their abilities. Managers tend to initiate and drive this relationship. The relationship may be finite, ending when an individual has learned what the coach is teaching with respect to the specific job.
Mentoring Some organizations have difficulty determining whether they are running a mentoring program or a management coaching session. They rarely recognize that mentoring relationships can and should outlast an employment relationship. With respect to the characteristic differences for those participating in a mentoring relationship, you can find the following: • It occurs outside of the manager-employee relationship. • It generally requires mutual consent. • It is career-focused, yet mentoring relationships are personal. • Relationships may be initiated by mentors, mentees or employers. • Mentorship crosses job boundaries. • Relationships generally last for a specific period of time (nine months to a year) in a formal program, at which point an informal mentoring relationship may continue. In accounting firms, typically a mentor should be an experienced, well-balanced professional who is interested and willing to develop less-experienced employees. The relationship between mentor and mentee should be based upon mutual trust, respect and integrity. A mentor often occupies a senior-level assignment of authority and influence within the organization, knows the organization and has a broad view and multiple working experiences. This individual generally tells, advises, NEW JERSEY CPA • July • August 2011
instructs, suggests, gives opinions and, as an effective mentor, also knows when and how to coach. Some disparities between that of a mentor and a coach are as follows:
Mentor Individually based Facilitator with no agenda Self-selecting Perceived value
Coach Performance-based Specific agenda Job determines Position-based results
Affirmation and learning Life-related
Teamwork and performance Task-related
retired managing partners of top-tier firms instead of trained business coaches. Even newer to the world of mentoring and coaching is the life coach, a holistically rooted coaching style that aims to develop individuals and their true paths based on what makes them happy and how to get there through behavioral training. No matter where you are in your career – whether you are a mentor, coach, consultant or mentee – many people have gone further than they thought they could because someone else thought they could. Rachel Anevski, PHR, M.A., is the director of human capital at Smolin, Lupin & Company, P.A., where she directs the human resources department as well as the business development process. Contact her at email@example.com or 973-461-7323.
Many firms and organizations today have mentoring programs, either formal or informal. Most new employees are assigned buddies or mentors, while executives and partners often seek executive coaches to assist them with challenges they face.
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Et Cetera Executive coaching is an evolving profession. It is primarily practiced by trained professionals who help executives go through career transitions or assist them in particularly challenging times with their leadership responsibilities. Business coaching is traditionally seen less in the accounting profession. The firms engage consultants with CPA-firm experience or
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Thinking Inside the Investment Style Box By Bernard M. Kiely, CPA, Kiely C apital Management, Inc .
while the right column identifies growth stocks. The middle column is a blend of both. A growth stock is one that portfolio managers believe will grow faster than the market as a whole. Value stocks are ones that managers believe are undervalued. A blend fund includes stocks of both types. For example, an S&P 500 index fund is a large-cap blend fund. The rows indicate the market caplitalization of the stocks in a fund. Market capitalization is the total dollar market value of all outstanding shares of a company. Morningstar places the top 70 percent of market cap in the large category. The next 20 percent are midcap, and the remining 10 percent are in small-cap.
Style Drift Mutual fund prospectuses describe the funds’ investment styles, but fund managers frequently stray from their published styles, which is called style drift. Prior to the style box, a mutual fund manager could buy any stock he or she wanted. So, Morningstar now categorizes a fund’s investment style based on what it owns, not on the prospectus description. Many investment advisors will sell a fund if it tends to style drift.
n 1992, Morningstar introduced its style box. It is a ninebox grid that graphically represents the type of stocks held in a mutual fund. Morningstar also has a matrix for fixedincome funds.
Morningstar Equity Style Box
The style box allows investors and advisors to identify the size of the stocks in a fund (market capitalization) as well as the investment style. The left column identifies value stocks,
All Style Funds Some mutual funds aren’t locked into a specific investment style, which I call an “all-style fund.” The Muhlenkamp Fund is one example. Its prospectus’ objective is growth and income, but fund manager Ron Mulenkamp invests wherever he wants. In 2003, it was mid-cap value and today it is largecap blend. The equity style box is a useful tool in constructing portfolios that are properly diversified, where you have funds from each of the nine boxes, or at least owned on the corners. Diversification is like cooking a stew – each additional ingredent makes the stew better. The more asset classes you have, the better (and safer) the portfolio.
The Callen Periodic Table of Investment Returns There is a another useful tool that shows the relative performance of nine different asset classes over the last 10 years. Visit http://callan.com/research/download/?file=periodic/ free/457.pdf to get a copy of this chart. In 1999, MSCI Emerging Markets was the top-performing sector, up 66.42 percent. During the same period, Russell 2000 Value (a smallcap value) was the worst performing class, down 1.49 percent. The next year, they switched places: Russell 2000 Value was the best, up 22.83 percent, and MSCI Emerging Markets was the worst, down 30.61 percent. If you split your money evenly into the two classes for those two years, you would have been up 58 percent on average for both years. Typical investors
NEW JERSEY CPA • July • August 2011
bought emerging markets because it was doing well and sold small value because it was down. Smart investors did the opposite and were rewarded. If you invested exclusively in an S&P 500 index fund from the beginning of 2000 and held it until the end of 2009, you would have lost 9.1 percent for the 10-year period. According to a Cohen & Steers study, a portfolio equally divided into eight asset classes was up by 60.8 percent for the same 10-year period.
The Fixed-Income Style Box The Fixed-Income Style Box is also a nine-box matrix. The rows indicate the quality of the bonds in the portfolio. They can be high, medium or low quality. The columns represent the duration or maturity of the underlying bonds.
Morningstar Fixed-Income Style Box
In the current economy, many investors would want to be in the upper left box – high quality, short duration. If inflation increases, as many think it will, medium- and long-term bonds will lose principal. Bernard M. Kiely, CPA, is president of Kiely Capital Management, Inc. He is a member of the New Jersey Society of CPAs Personal Financial Planning Interest Group and on the New Jersey CPA magazine Editorial Advisory Board. Contact him at firstname.lastname@example.org or 973-455-1894.
NEW JERSEY CPA • July • August 2011
The 21st Century Fraudster By Sharon Bromberg, CPA, J.H. Cohn LLP
raud drains, on average, five percent of a company’s annual revenues, according to the Association of Certified Fraud Examiners (ACFE) 2010 Global Fraud Study. And, according to Kroll Inc.’s 2010/11 Global Fraud Report, fraud has affected 88 percent of survey respondents within the past year. While traditional forms of fraud still permeate, fraud has shifted in the new millennium through global business, an increased reliance on technology and enhanced business efficiencies. As such, the opportunities to commit fraud are broader than ever. Here are a few of today’s top fraud trends:
Asset Misappropriation According to the ACFE, approximately 86 percent of occupational (internal) fraud involves asset misappropriations. Its definition is broad and includes cash misappropriations, such as falsifying expense reports and forging company checks; non-cash misappropriations, which involve the theft or misuse of physical assets, such as inventory or equipment; and the misappropriation of proprietary information, such as sales data and market strategy. In a common example of asset misappropriation, management of one mid-sized manufacturer took the company’s inventory and – either individually or through a separate, wholly owned company – sold it to third parties. To give the appearance that the transactions were flowing through the company’s records, empty boxes were shipped to company principals and their relatives, and fictitious customer names were added to the client database, leaving a falsified trail. This fraud came to light when lenders informed the company that it intended to exercise its rights to perform a collateral examination on the company’s books. Instead of waiting for the bank’s auditors to uncover the
fraud, company management came forth and disclosed its illegal acts to the bank. The company ultimately filed for Chapter 11 and went out of business.
Financial Statement Integrity With credit again available and liquidity increased, there is a greater reliance on the sellers’ financial statements. Knowing the scrutiny companies are under given the economy, financial misstatements – including fictitious revenues, the concealment of liabilities or expenses, and inaccurate recording of assets – represented five percent of corporate fraud cases in 2010, with a median loss of more than $4 million, according to Kroll. Case in point: The buyer of a recently acquired manufacturer questioned, postsale, if the seller’s pre-closing financial statements were prepared in accordance with generally accepted accounting principles. Upon further forensic investigation, it was determined that the seller exerted unusual and extraordinary efforts to accelerate shipments of its products immediately prior to the sale, encouraged customers to defer product returns, engaged in channel stuffing and delayed recognition of sales allowances to hide margin erosion. Although these irregularities had been uncovered shortly after the acquisition, the damage was done in that the buyer had overpaid for the company. (An out-of-court settlement eventually reimbursed the buyer for damages.)
E-Crimes An increased reliance on technology has perpetuated the prevalence of e-fraud. Wire transfer fraud is one e-crime that has impacted countless companies via the installation of malware. Earlier this year, the Federal Bureau of Investigation warned of an ACH/wire transfer fraud scheme targeting businesses by responding via email to employment NEW JERSEY CPA • July • August 2011
opportunities posted online. The bureau cited the theft of more than $150,000 from one U.S. business via this method. The malware allowed the fraudster to obtain online bank credentials of the person authorized to conduct the company’s financial activities. While many executives recognize the prevalence of business-related fraud, they typically trust their own employees and may furthermore believe that their organization is already well protected against the potential risks. As a result, they may not be as proactive against these risks as is warranted and may fail to properly assess their risks and vulnerabilities to fraudulent activity. It is impossible to overstate the need to develop a forward-looking fraud-risk program that encompasses fraud-risk assessment, conflict disclosure, violation reporting procedures and whistleblower protection, among other components. Protecting a company from financially damaging fraudulent activities is essential to the long-term success of any business. Sharon Bromberg, CPA, CIRA, CFF, is a partner with J.H. Cohn LLP’s business investigation services group and co-director of the firm’s mergers and acquisition practice. She is a member of the New Jersey Society of CPAs. Contact her at email@example.com or 866-688-0700.
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The Communication Challenge of SAS 114 By Joshua A. Chananie, Sax, Macy, Fromm & Co., P.C .
ow in its fourth year, the American Institute of CPAs Statement on Auditing Standards (SAS) 114, Communication with Audit Companies, was established to increase effective two-way communication between employees and board members within an organization charged with governance and the auditor. The challenge of SAS 114 is how do we measure what is effective twoway communication with clients? Can that effective communication really occur during a 15-minute exit conference, or is it geared toward building a relationship over time with clients to really understand the nuances of their businesses? How can we ultimately develop an adequate audit plan and be in the position to make recommendations if we do not fully understand the client’s business? Effective communication involves three components (1) verbal messages, or the words we choose; (2) para-verbal messages, or how we say those words; and (3) nonverbal messages, or our body language. These three components are used to send clear, concise messages and receive and correctly understand messages sent to us. Client meetings should be face-toface, so that both parties can gauge the comments and reactions of the other party, especially if there are issues to be resolved. While a powerful tool, technology should not take the place of direct, interpersonal two-way communication. How many times do we find ourselves opting for an email in lieu of a face-to-face meeting, and how many times were messages misconstrued or not fully understood? What our firm strives for in client communications is to have meetings at least semi-annually, if not quarterly, with the owner, president and board to understand where the company is going and what risks are associated with
changes in business plans. We discuss controls and work with management to ensure that it has identified what preventative and detective controls are necessary to help mitigate fraud. These conversations not only strengthen client relations, but also help ensure there are no surprises during the audit. Speaking of surprises, it is never a good idea to have one going into a board meeting. If there are issues to be communicated to the board or owner, they should be discussed with management prior to the meeting. The fastest way to torpedo a client relationship is to blindside the CFO or other employee in front of superiors. This seems to be one of the biggest reasons why clients change accounting firms. Even though these employees are often not the final decision makers on retaining the accountant, they are the employees you and your staff must work with on an ongoing basis. As such, open, effective and frequent communications with them is vitally important to your success. As auditors, we have a responsibility to our clients, as well as to the profession, to communicate to those charged with governance any issues or concerns that we might have, even if we know the information will be received negatively. There will be those who are upset and those who will be thankful NEW JERSEY CPA • July • August 2011
for one’s honesty and loyalty, and that is the reason why we are there. At the conclusion of the audit, during the exit conference, our team has found that a presentation handout is successful. It should include all of the required SAS 114 communications, including internal control comments and recommendations, as well as speaking points about what the company is doing right and areas to improve. The presentation is something tangible that the client can review after the meeting and use as a tool going forward. It makes clients feel involved in the process and will spark questions and comments that create effective two-way communication, which is the goal of SAS 114. To truly be in compliance with the requirements of SAS 114 and build successful client relationships, open, ongoing two-way communication throughout the engagement should be standard operating procedure. It must be an ongoing process, not merely an annual event. Joshua A. Chananie is an audit manager with Sax, Macy, Fromm & Co., P.C., in the firm’s not-for-profit industry group. He is a New Jersey Society of CPAs CPA Candidate Member. Contact him at firstname.lastname@example.org or 973-472-6250.
Moving Beyond Referrals By David A. Lopez, CPA, David A. Lopez and Company, LLC
business growth. These sites provide a forum to introduce your firm and display your knowledge – in real time – to a wide audience at no cost. Our firm uses Facebook and Twitter on a daily basis by providing our friends and followers with the “Lopez and Company Business Tip of the Day.” These tips cover new tax laws, how to obtain bank financing, understanding the importance of financial statements and others. Since December of 2010, we engaged 10 new business clients simply by joining Facebook and Twitter.
Create Networking Opportunities
eferrals have always been the primary manner in which small practitioners have gained new clients. But in this increasingly competitive business environment, alternative methods of attracting new business must be employed if client base and revenue growth are organizational goals. As a small-firm owner with a staff of less than 10 professionals, referrals have been a catalyst to my practice’s growth and success. In recent years, I have learned that referrals alone cannot promote growth. Our firm is developing other proactive strategies that have proven effective in engaging new individual and business clients. We did it, and so can you.
Don’t Be Afraid of Social Media I resisted social media when it first became popular, but as I learned more about outlets such as Facebook and Twitter, I found that they can help with
I have always believed networking is an important part of growing my practice, even though I’ve found it difficult to find networking events that were attended by potential clients. As such, in June 2010 my firm created its own networking events. The plan was to create quarterly events centered on approximately 40 current and potential clients. The cost of these events range based on location and offerings, but we brokered an agreement with a local restaurant that enables us to host an event for less than $700. A perfect example of the effectiveness of these gatherings occurred at our recent April event. It was attended by a company looking for a new CPA. The owner, who was invited by a current client, was so impressed by the event and the conversations he had with a member of our staff that he decided to engage us to perform the firm’s monthly accounting function. The owner’s comment of “our previous accountant never called us for anything other than business” solidified the idea that clients want to build a relationship that can extend beyond the traditional accountant/client dynamic. As a NEW JERSEY CPA • July • August 2011
business owner, my $700 investment created 10 times that amount in annual billings from this new client.
Become a Public Speaker The thought of public speaking makes many people nervous, but presenting a timely topic to a group of individuals is a great way to introduce your firm to a new audience. Over the last several years, I have made it a point to accept any opportunity to speak in front of a group of potential clients. Recently, I gave presentations for the local Chamber of Commerce, a regional lawyers’ organization and a group of nonprofit CFOs. These no-cost opportunities allow you to communicate, to an interested group, your knowledge of a specific subject. There is no greater marketing tool than communicating your skills and experience in a forum where you are center stage. If done correctly, the audience leaves the presentation understanding that you are well versed in a subject and will remember you when the need for an accounting professional arises. These three strategies for moving past referrals have proven to be successful at our firm, and with detailed planning and commitment they can be effective tools in creating new opportunities for your practice as well. These strategies allow smaller practitioners to market their firms with little or no cost. These activities are also generally enjoyable and allow you to cultivate skills sets different from those of the traditional accountant. David A. Lopez, CPA, is the managing member at 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.
Working with Government Tax Auditors in an Increasingly Aggressive Audit Climate B y K imberly Mumme , E isner Amper LLP
ue to the current economy and the massive federal and state budget deficits, government agencies are much more aggressively auditing returns looking for money. Practitioners are receiving more notices for review of returns and proposed changes on both the state and federal levels. Taxpayers and practitioners should be prepared to work with these auditors who are operating in an environment of increased examination tools and required disclosures. Internal Revenue Service (IRS) examiners are better trained and currently have access to nearly 50 Marketing Segment Specialization Program Audit Guides that focus on developing highly trained examiners for a particular market segment. These guides contain common and unique industry issues, examination techniques, business practices, industry terminology and other information. The guides can be found at irs.gov/foia in the electronic reading room. More recently released guides cover segments such as the retail industry, new markets tax credit, low income housing credit and an update to certain areas of the partnership guide. Over the past decade, providing transparency in tax filings has occurred through changes concerning reportable transactions, requirements to provide the Schedule M-3 and, most recently, the required submission by certain corporations of the Schedule Uncertain Tax Position (UTP). The Schedule UTP provides the IRS with information that affects taxpayers’ U.S. federal income tax liabilities pertaining to uncertain tax positions that they have taken. Under a five-year phase-in, beginning with 2010, certain domestic and foreign corporate taxpayers that have assets equal to or exceeding $100 million and are included in or issue an audited financial statement
must file the UPT. For 2012, the asset threshold will drop to $50 million and starting with the 2014 tax year will drop to $10 million. Generally, Schedule M-3 must be filed with entity tax returns if the total assets reported on Schedule L or the adjusted total assets equal or exceed $10 million and the total amount of receipts is equal to or greater than $35 million. Increased transparency between book and tax reporting is the purpose of the form, along with the reduction in time to audit the tax return. This form provides a presentation method beneficial to the examiner to not only identify tax returns that should be examined, but also reflect issues that could be potentially subject to an audit. Additionally, trends in increased compliance risk can be identified. Identifying booktax differences on a transaction-bytransaction basis is required by Schedule M-3. Not only is this form beneficial for the examiners to use to identify returns and issues, but also assists with identifying trends. A practitioner has a number of considerations when working with an auditor from the state or federal government: • Verify that the agent is not a special agent if you do not know him or her personally. • Confirm a timetable for the audit, concur on the scope of the audit and agree with the auditor as to the turnaround time for Form 4564, Information Documentation Requests. • Maintain a record or chronological log of all files, workpapers and records provided to the examiner and have the auditor provide written indication for the receipt of documents. • Contact the agent to arrange for the client to produce requested information in the event the agent NEW JERSEY CPA • July • August 2011
contemplates making a third-party contact. • Disclose to the examiner obvious and/ or significant errors present in the return based upon previous agreement with the taxpayer. • Apply for the fast-track settlement procedure under Revenue Procedure 2003-40 if it is a large and mid-sized business examination. • Evaluate the consequences of not agreeing to sign a series 872 Form, Consent to Extend the Time to Assess Tax, should the agent request it. • Request that a draft of the Revenue Agent’s Report be provided to confirm that the issues are consistent with prior discussions and agreement. Tax compliance imposed through not only increased education of the examiners, but also by disclosure on the face of the filed forms, makes it more imperative than ever for practitioners to be prepared for a client audit. Kimberly Mumme is a tax services manager at EisnerAmper LLP. Contact her at firstname.lastname@example.org or 908-218-5002.
Excel Tips for Reviewers B y Jaime C ampbell, CPA, B artolomei Pucciarelli , L L C
pulling data from the correct source, on the Options tab, click Change Data Source to see that the correct tab is referenced and that all rows and columns of that database have been included. Since PivotTables do not refresh automatically if the underlying data changes, on the Options tab, click Refresh. Check for completeness by visually tying the Grand Total to the total from the underlying database. However, if filters are in use, the totals may not match. Click on the filter icon in the row or column to review the filters applied. In Excel 2010, use the Slicer, instead of an ordinary filter, since it provides an on-screen view of the filters in use.
Check for Uniqueness, Consistency and Reasonableness
eviewing someone else’s work has special challenges, especially in a freeform environment like Microsoft Excel. Even if the preparer used a template, formulas could have been altered, overridden with hard-coded numbers or not adapted appropriately to the situation. Use the following Excel techniques to look behind the spreadsheet results by checking the accuracy and flow of information in the work submitted to you for review:
Trace Formulas The quickest tools for understanding
information flow in your spreadsheets are the F2 key, which exposes the formula and references in the selected cell, and the formula auditing tools in the Formulas tab (Excel 2003: Tools menu), which produce hyperlinked arrows between related cells. Glance at the status bar at the lower left border of the Excel window to see if there are any circular reference messages.
Verify Completeness PivotTables, though powerful analytical tools, need some extra attention upon review. To verify that the PivotTable is NEW JERSEY CPA • July • August 2011
Excel 2007 and 2010 have a new tool to quickly indicate the presence of duplicates in a list. Click anywhere in the database containing your information. From the Data tab, click Remove Duplicates and select the desired columns. When you click OK, Excel will notify you as to whether duplicates were removed or whether no duplicates were found. If Excel found duplicates, you can click Undo (Ctrl+Z) and make a review note for your preparer. To make sure that formulas are consistently applied, press Ctrl+` on your keyboard. All formulas on that tab will display so the reviewer can scan visually for oddities, such as hardcoded data, in the midst of a column of formulas. To get a high-level look at a list of numbers for reasonableness, highlight the numbers and click on the Insert tab; select a line graph. Not only can you ferret out potential errors by spotting inconsistencies, you can see
EisnerAmper is Proud to Congratulate Three of Our Own the high and low points plus overall volatility.
Tips and Tricks In Excel 2007 and 2010, highlight at least two cells – even an entire column – to get the selection’s sum, average and count. Look in the right-hand side of the status bar at the lower right border of the Excel window. Excel 2003: only one metric at a time. To simultaneously view different tabs of the same workbook, from the View tab (Excel 2003: Window menu) click New Window and then Arrange All. Depending on how the information is arranged in the spreadsheet, select Horizontal or Vertical, followed by Windows of active workbook. Your tab is now displayed twice; pick a window, and select a different tab in the workbook. Keep the results on the top of your spreadsheet while viewing the details below: Freeze panes by positioning your cursor below the top area which you’d like to freeze. From the View tab, select Freeze Panes and in the submenu, click Freeze Panes again. Depending on the curser positioning, left-hand panes can also be frozen. Excel’s review tools far exceed those found on the Review tab. Cut down your review time in Excel, while increasing quality, by becoming fluent with your favorite techniques. These same practices will also enhance your self-review – before your own work gets into your client’s or reviewer’s hands. Jaime Campbell, CPA, M.B.A., CTT, MCT, leads the technology training services at Bartolomei Pucciarelli, LLC. She is a member of the New Jersey Society of CPAs Technology Interest Group and an officer on the NJSCPA Mercer Chapter Board. Contact Campbell at jcampbell@ bp-cpas.com.
EisnerAmper is extremely proud of our three managers who have been named to the “30 Under 30” class of New Jersey Society of Certified Public Accountants members who are significantly impacting the accounting profession. Congratulations on being selected to this prestigious group, based on your leadership and participation in the NJSCPA, the accounting profession and charitable activities. EisnerAmper LLP Accountants & Advisors www.eisneramper.com
New York | New Jersey | Pennsylvania | Cayman Islands NEW JERSEY CPA • July • August 2011
CPE Offerings and Events Upcoming Education Foundation Events Date
Loscalzo's A&A Staff Level 2 – Experienced Staff (E1107071)
New Critical Decisions in Selecting the Best Retirement Plan for Small Businesses in 2011 (E1107013)
Audit Workpapers: Documenting and Reviewing Field Work (E1107141)
FASB Review and Update: Common GAAP Issues Impacting All CPAs (E1107123)
New Jersey Law and Ethics (2009-11) Webinar (E1107054)
Loscalzo's A&A Staff Level 3 – In-Charge (E1107081)
Young Professionals Happy Hour at Rooney's (E1107280)
Advanced Controller and CFO Skills (E1107173)
The Top 50 Business Tax Mistakes Practitioners Make and How to Fix Them (E1107021)
Surgent McCoy's Handbook for Mastering Basis, Distributions and Loss Limitation Issues for S Corporations, LLCs and Partnerships (E1107031)
Surviving and Growing Your Company in Difficult Times: Essential Skills for the Finance Team (E1107193)
FASB Review for Industry (E1107183)
International Versus U.S. Accounting: What in the World Is the Difference? (E1107203)
Thirty-Plus Practical Tools and Techniques for Making Your Key Financial Decisions (E1107213)
The Top 50 Mistakes Practitioners Make and How to Fix Them: Individual Tax and Financial Planning (E1107041)
AICPA's Annual Update: Top 10 GAAP Issues Facing CPAs (E1107221)
AICPA's Annual Update: Top 12 Audit Issues Facing CPAs (E1107231)
Payroll Taxes, Benefits and 1099 Reporting: Everything You Need to Know (E1107113)
Advanced Auditing of HUD-Assisted Projects (E1108151)
Women as Powerful Leaders and Influencers (E1108360)
Advanced Real Estate Accounting, Auditing and Taxation (E1108183)
Construction Contractors: Accounting, Auditing and Tax (E1108191)
Annual Update for Accountants and Auditors (E1108201)
Variable Interest Entity Consolidation Rules: Not Just a Big Company Issue! (E1108211)
The Leadership Secrets of Football's Master Coaches, Leadership and Coaching Essentials for the CPA (E1108333)
How to Identify, Explain and Present Pertinent Financial Information to Non-Accountants (E1108343)
Audits of 403(b) Plans: A Challenging New Audit Area (E1108221)
New Jersey Law and Ethics (2009-11) Webinar (E1108044)
Thirty-Plus Practical Tools and Techniques for Making Your Key Financial Decisions (E1108233)
AICPA's Annual Update for Controllers (E1108243)
Choosing the Best Entity Structure Under the New Tax Law in 2011 (E1108011)
AICPA's Controllership: 25 Critical Lessons from the Trenches (E1108083)
New Jersey Taxation Conference (E1108350)
Loscalzo's 2011 FASB and AICPA Update (E1108051)
The 2011 Revised Yellow Book: Government Auditing Standards (E1108111)
Not-for-Profit Accounting and Reporting: From Start to Finish (E1108121)
Professional Ethics for New Jersey CPAs and Frequently Asked Questions in GAAP Financial Statements (E1108061)
Financial Forecasting and Management Decisions (E1108093)
Strategies and Tactics in the New War Against Higher Individual Taxes (E1108021)
The Best Federal Tax Update Course by Surgent McCoy (E1108031)
NEW JERSEY CPA • July • August 2011
The Fast Close, Soft Close, Virtual Close? Now Days, Not Weeks (E1108103)
Loscalzo's Disclosure – The Key to Financial Statements (E1108071)
Studies on Single Audit and Yellow Book Deficiencies (E1108131)
Planning for College Costs (E1108311)
Tax Staff Training – Level 1 – Individual (E1108321)
Forensics and Financial Fraud: Real-World Issues and Answers (E1108283)
Accounting for Business Combinations (E1108253)
Advanced Update for Compilation, Review and Accounting Services (E1108291)
Surgent McCoy's Individual and Financial Planning Tax Camp (E1108140)
FASB Review for Industry (E1108263)
Small Business Accounting and Auditing Update (E1108271)
AICPA's Annual Business Law Update (E1109173)
Tax Staff Training – Level 2 – Business (E1109351)
Public Company Update: SEC, PCAOB and Other Developments (E1109183)
Tax Staff Training – Level 3 – Advanced Issues (E1109361)
Annual Update for Accountants and Auditors (E1109191)
Accounting for Income Taxes – Applying Temporary and Uncertain Tax Positions (E1109201)
Financial, Estate and Tax Planning For Individuals Over Age 55 (E1109371)
Cash and Tax Basis Financial Statements – Preparation and Reporting (E1109211)
Introduction to Business Valuation: Critical Skill Set in Today's Fair Value Accounting World (E1109221)
Accounting for Stock Options and Other Stock-Based Compensation (E1109233)
New Jersey Law and Ethics (2009-11) Webinar (E1109114)
Upcoming Chapter Events Date
New Jersey Law and Ethics (E1107259)
Trenton Thunder Baseball Outing (E1108309)
KEY AA – Accounting & Auditing MC – Multiple Categories PE – Professional Ethics
CS – Consulting Services MT – Management SK – Specialized Knowledge www.njscpa.org/catalog
We Go To Work For You.
EC – Economics PD – Personal Development TX – Taxation
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 Pennsylvania 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.
1-800-397-0249 email@example.com www.AccountingPracticeSales.com
NORTH AMERICA'S LEADER IN PRACTICE SALES
NEW JERSEY CPA • July • August 2011
NJSCPA Announces Its
“30 Under 30”
Join us in congratulating these 30 young professionals who are making a name for themselves in the New Jersey accounting landscape and beyond. After receiving dozens of deserving nominations, the New Jersey Society of CPAs chose those who displayed a unique combination of Society participation, accounting profession involvement and community service dedication. Jerilyn Angotti, CPA
Christopher Cowan, CPA
WithumSmith+Brown, Princeton, joined the NJSCPA in 2005. She was a team leader at the Scholars Institute and a Pay It Forward presenter. She is the firm’s liaison to The College of New Jersey, helped launch Shadowing Day for college students and is its point person in the Princeton office for charitable initiatives. Her community service involvement includes the American Cancer Society and the American Heart Association.
Cowan, Gunteski & Co., P.A., Toms River, joined the NJSCPA in 2006. He is a member of the NJSCPA Accounting & Auditing Standards Interest Group and the Student Programs & Scholarships Committee. He has participated in Pay It Forward, Scholars Institute and Career Night. He has conducted both internal and external seminars, created firm podcasts and takes a lead role in the firm’s internship program. His community service involvement includes Shred Out Cancer and the Shore Builders Association.
David G. Calotta, CPA
Julissa M. Cruz, CPA Candidate
Untracht Early LLC, Florham Park, joined the NJSCPA in 2006. He is a member of the NJSCPA Personal Financial Planning and Technology interest groups and was a Pay It Forward presenter. He is a member of the American Institute of CPAs and an in-house staff trainer for Untracht Early. His community service involvement includes the Wounded Warrior Project and Habitat for Humanity.
Untracht Early LLC, Florham Park, joined the NJSCPA in 2007. She was a team captain for the NJSCPA/JANJ Bowl-A-Thon. She is a member of the AICPA, American Woman’s Society of CPAs and Association of Latino Professionals in Finance and Accounting. She participates in the VITA Program. Her community service involvement includes St. Joseph’s Parish, Holiday Express, Eva’s Village and Straight & Narrow.
Brad R. Caruso, CPA
Kevin DeTrizio, CPA
WithumSmith+Brown, New Brunswick, joined the NJSCPA in 2010. He is a member of the NJSCPA E-YoungCPA Writers Pool, participated in Ask the Experts and was a Pay It Forward presenter. He has held staff training seminars for his firm and contributed to Managing Your Tax Season as well as the company newsletter, The Journal. His community service involvement includes the Special Olympics, Embrace Kids Foundation and the American Cancer Society.
KPMG LLP, Short Hills, joined the NJSCPA in 2008. He is a member of the NJSCPA Scholars Institute Advisory Board and was a Pay It Forward presenter. He is a member of the AICPA and been an instructor for KPMG’s audit technologies in NJ. His community service involvement includes the Essex County Heart Walk and KPMG First Book.
Terrence J. Dotzler, CPA
Reynold P. Cicalese III, CPA
Morgan Stanley Smith Barney, Little Falls, joined the NJSCPA in 2007. He is a board member for the NJSCPA Middlesex/Somerset Chapter, a member of the Cooperation with Bankers and the Estate, Trust & Gift Taxation interest groups, and was a member of the Young CPAs Council. His community service involvement includes the Knights of Columbus, Chamber of Commerce, St. Francis School and the Rotary Club.
Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co., Cherry Hill, joined the NJSCPA in 2007. He is a member of the NJSCPA Young CPAs Council. He had developed the firm’s Externship Day program and was a member of the Paperless Committee. His community service involvement includes the board of Aqua Corps.
NEW JERSEY CPA • July • August 2011
Danielle Dvorak, CPA Candidate
Traphagen Financial Group, Oradell, joined the NJSCPA in 2009. She has participated in the NJSCPA Scholars Institute, Pay It Forward and Career Night. She is a Certified QuickBooks Advisor, a member of the American Woman’s Society of CPAs, developed presentations for the NJSCPA Bergen Chapter’s technology seminars and participates in the VITA Program. Her community service involvement includes the Chamber of Commerce and the America Cancer Society.
Noorus S. Khan, CPA
Smolin, Lupin & Co., P.A., Fairfield, joined the NJSCPA in 2004. She participated in the NJSCPA Scholars Institute. She has held CPE seminars and leadership training for the firm and participates in the VITA Program. Her community service involvement includes Habitat for Humanity and the Liberty Science Center.
Michael J. Kirchner, CPA
EisnerAmper LLP, Edison, joined the NJSCPA in 2008. He is an NJSCPA Mercer Chapter board member, was a Pay It Forward presenter and was a Scholarship interviewer. He was a judge at the 2010 DECA Regional Conference. His community service involvement includes Junior Achievement
Christina M. Fessler, CPA
WithumSmith+Brown, Red Bank, joined the NJSCPA in 2005. She is on the NJSCPA Scholars Institute Advisory Board and Young CPAs Council and was a Pay It Forward presenter. She is a WS+B Team Leader for 2011. Her community service involvement includes assisting in her church nursery and teaching Sunday school classes.
Donna L. Fleres, CPA
EisnerAmper LLP, Edison, joined the NJSCPA in 2007. She was a Pay It Forward presenter and has presented to The College of NJ Institute of Management Accountants Student Chapter, the TCNJ School of Business and her firm’s CPE course on audit documentation. Her community service involvement includes EsinerAmper Cares and Feed the Children.
Nora V. Jones, CPA
Paolini & Scout, LLC, Medford Lakes, joined the NJSCPA in 2007. She is a member of the NJSCPA Young CPAs Council and was a Pay It Forward presenter. She is a member of the American Society of Women Accountants. Her community service involvement includes Women’s Way and Hope Works ‘N Camden. She also volunteered at Haddonfield Friends School as finance director and is on the board of her homeowner’s association.
of New Jersey.
Sarah Krom, CPA
Sharpe, Kawam, Carmosino, & Co., LLC, Boonton Township, joined the NJSCPA in 2003. She is an NJSCPA Scholarship recipient, chair of the Young CPAs Council, a member of the Nonprofit Interest Group and has presented at the Society’s “Do It Herself” financial literacy event for women. She is a member of the American Woman’s Society of CPAs and the NJ Fuel Merchants Association. She has presented in-house CPE seminars, developed podcasts and been published in a variety of publications. Her community service involvement includes the United Way, the American Cancer Society and the AIDS Foundation.
Michael Levy, CPA Candidate
Deloitte, Philadelphia, joined the NJSCPA in 2006. He is a Tomorrow’sCPA Editorial Advisory Board member. He was a member of the RutgersCamden Accounting Society and Beta Alpha Psi. His community service involvement includes the American Cancer Society, Ronald McDonald House and the Boy Scouts.
NEW JERSEY CPA • July • August 2011
NJSCPA Announces Its
“30 Under 30” Josephine J. LoBianco, CPA Candidate
Anthony M. Mezzasalma, CPA
Johnson Lambert & Company, Red Bank, joined the NJSCPA in 2009. He is a member of the NJSCPA E-YoungCPA Writers Pool, has participated in Scholars Institute and was a Pay It Forward presenter. His community service involvement includes the Food Bank of Monmouth/Ocean County and the Salvation Army.
PricewaterhouseCoopers LLP, Florham Park, joined the NJSCPA in 2009. She participated in the NJSCPA Scholars Institute and was an NJSCPA student ambassador for Monmouth University. She is a member of the American Woman’s Society of CPAs and was a Becker Professional Education representative. Her community service involvement includes the Dover Township Animal Shelter and the Snow Riders Club.
Anthony R. Neglia, CPA Candidate
Sean Marikakis, CPA
KPMG LLP, Short Hills, joined the NJSCPA in 2008. He participated in the NJSCPA Scholars Institute and was a Pay It Forward presenter. He is a KPMG national instructor, co-author of a firm handbook, presented at Villanova University on the accounting profession and is coordinating a CPE seminar to firm alumni in the retail sector. His community service involvement includes KPMG’s R.B.I. Program and Families for Literacy.
Anthony F. Marone, CPA
Smolin, Lupin & Co., P.A., Fairfield, joined the NJSCPA in 2004. He has written for Tomorrow’s CPA and was a member of the Young CPAs Resource Group. He has prepared various in-house CPE seminars. His community service involvement includes Junior Achievement, Habitat for Humanity, the Chamber of Commerce and the Leukemia & Lymphoma Society.
Gerardo C. Pecoraro, CPA Candidate
Deloitte, Parsippany, joined the NJSCPA in 2009. He is an NJSCPA Exam Cram blogger, spoke at the CPA exam study session and participated in the NJSCPA Scholarship Fund and Scholars Institute. His community service involvement includes being a youth minster for St. Anthony’s RC Church in Hawthorne.
Capital Trust Inc., New York, joined the NJSCPA in 2004. He is on the NJSCPA Student Programs & Scholarship Committee, Scholars Institute Advisory Board and the New Jersey CPA and Tomorrow’sCPA editorial advisory boards. He was a Pay It Forward presenter and has written for New Jersey CPA magazine and the AICPA. His community service involvement includes being a chapter advisor for TKE Fraternity at Rutgers-New Brunswick.
Eddie L. Rivera, CPA Candidate
Ryan P. McDonough, CPA
PricewaterhouseCoopers LLP, New York, joined the NJSCPA in 2008. He is an NJSCPA Scholarship recipient, is on the Scholars Institute Advisory Board, on the Tomorrow’sCPA Editorial Advisory Board and is part of the Social Networking Workgroup. He is an Exam Cram blogger and has written for New Jersey CPA magazine. He participates in the VITA Program. His community service involvement includes Junior Achievement.
Joseph A. McGrath, CPA
Deloitte, Parsippany, joined the NJSCPA in 2006. He is an NJSCPA Pay It Forward presenter. He participated in an NJSCPA focus group for Deloitte interns and is the firm’s Audit Manager Champion for the NJSCPA. He has presented at Lehigh University. His community service involvement includes the Lehigh University Newman Foundation and the Sigma Phi Epsilon Alumni Volunteer Corporation.
Sax, Macy, Fromm & Co., P.C., Clifton, joined the NJSCPA in 2009. He is a member of the NJSCPA Cooperation with Bankers and Federal Taxation interest groups. He has also written for New Jersey CPA magazine. He has participated in the VITA Program. His community service involvement includes discussing accounting with students at William Paterson University and St. Francis Assisi. He is also involved with Habitat for Humanity and the Salvation Army.
Jacqueline Rudas, CPA
Chubb Group of Insurance Companies, Cranford, joined the NJSCPA in 2010. She is a member of the AICPA and the Association of the Latino Professionals of Finance and Accounting. Her community service involvement includes Big Brothers/Big Sisters of Essex County and Junior Achievement.
NEW JERSEY CPA • July • August 2011
Supporting the Entrepreneurial Spirit Sharpe, Kawam, Carmosino & Company, L.L.C. (SKC) is more than a CPA firm. Our specialty lies in guiding the financial success of entrepreneurial companies of all sizes. The SKC team delivers a personal and comprehensive service to our clients that goes well beyond “business as usual.” Our goal is to help every client achieve their goals. We thoroughly enjoy the work we do and value the relationships we have with each other and with our clients. We congratulate our own Sarah Krom who was selected as one of the “30 most influential CPAs under 30.” It is because of high-caliber, client-focused people like Sarah that SKC placed among the top ten best places to work in New Jersey.
Thank you Sarah! Thank you NJSCPA for recognizing her excellence.
The Entrepreneurs’ Accounting Firm 1 Mars Court, Suite 1, Boonton Township, NJ 973-335-1112 www.skcandco.com
NJSCPA Announces Its
“30 Under 30”
Anne M. Thermann, CPA
David M. VanHerwynen, CPA
J.H. Cohn LLP, Roseland, joined the NJSCPA in 2001. She has participated in the NJSCPA Scholars Institute and was a Pay It Forward presenter. She has been involved with new hire, employee benefit plan and mentor programs for the firm. She was a facilitator at Cohn’s Women’s Conference. Her community service involvement includes the American Cancer Society and the Make-A-Wish Foundation.
Nisivoccia & Company LLP, Newton, joined the NJSCPA in 2010. He has presented to the Stillwater Taxpayer’s Association on tax law changes. He has also presented to the Chamber of Commerce on the accounting profession and tax law changes. His community service involvement includes the Knights of Columbus and Habitat for Humanity.
Jennifer L. Wuensch, CPA
Laura L. Thompson, CPA
EisnerAmper LLP, Hackensack, joined the NJSCPA in 2003. She is a member of the NJSCPA Young CPAs Council and established a Young Professionals Group at her firm. Her community service involvement includes Autism Speaks, the American Cancer Society, the Adler Aphasia Center and the Bergen Volunteer Center.
Wilkin & Guttenplan, P.C., East Brunswick, joined the NJSCPA in 2007. She is a member of the NJSCPA Technology Interest Group. She holds the AICPA CITP credential and hosted an Excel CPE webinar. Her community service involvement includes Animal Alliance of Belle Mead, Inc., and Habitat for Humanity.
Congratulations Congratulations to the NJSCPA “30 Under 30” winners, especially Deloitte’s emerging leaders Michael Levy, Joseph McGrath, and Jerry Pecoraro. Locations: 100 Kimball Drive Parsippany, NJ 07054 750 College Road East Princeton, NJ 08540 www.deloitte.com As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2011 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited
NEW JERSEY CPA • July • August 2011
“30 Under 30”
C JS N he
WithumSmith+Brown Wilkin & Guttenplan, P.C. Meisel, Tuteur & Lewis, P.C. Nisivoccia & Company LLP BDO USA, LLP Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC Wilkin & Guttenplan, P.C. Citrin Cooperman & Company, LLP Wilkin & Guttenplan, P.C. WithumSmith+Brown
Cristina M. Annese, CPA Brittany L. Figliolino, CPA Chase M. Franklin, CPA Daniel Grant, CPA Candidate Anthony LaVecchia, CPA Gary S. Mannuzza Jr., CPA Candidate Samuel E. Schneider, CPA Candidate Ann Torno, CPA Gina M. Valente, CPA Candidate Julia Van Saun, CPA
Advertisers Index All advertising for New Jersey CPA magazine is managed by The Warren Group, a Boston-based real estate and financial information publishing company. New Jersey CPA is the only way to reach each of the 15,500 members of the New Jersey Society of CPAs, and 55 percent of readers take action after seeing an advertisement in the magazine – by either purchasing the product, contacting the advertiser, visiting a website or recommending the product or service to a client. For advertising opportunities, contact Advertising Manager George Chateauneuf at firstname.lastname@example.org.
Accounting Practice Sales accountingpracticesales.com
Alloy, Silverstein, Shapiro, Adams, Mulford, Cicalese, Wilson & Co. alloysilverstein.com
Askin, Weber & Reed, Inc. awrins.com
Audimation Services, Inc. audimation.com
Bank Leumi USA leumiusa.com
Community Foundation of New Jersey cfnj.org
CPA Mutual cpamutual.com
EisnerAmper LLP eisneramper.com
Investors Savings Bank isbnj.com
J.H. Cohn LLP jhcohn.com
KPMG LLP kpmg.com
Medallion Business Credit medallion.com
Nisivoccia & Company LLP nisivoccia.com
Pay My Taxes paymytaxes.com
PNC Bank pnc.com
PricewaterhouseCoopers LLP pwc.com
Sax, Macy, Fromm & Co. smf-cpa.com
Sharpe, Kawam, Carmosino & Co., LLC skcandco.com
Smolin, Lupin & Co., P.A. smolin.com
Sterling National Bank sterling4biz.com
Valley National Bank valleynationalbank.com
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 NEW JERSEY CPA • July • August 2011
Get Involved NJSCPA Volunteers Make a Difference
The New Jersey Society of CPAs is filled with bright, hard-working, creative members. For the nearly 2,000 of you who volunteered your time and talents this past year in support of NJSCPA activities, we say: “Thank you for your efforts in advancing the NJSCPA Strategic Plan,” Ellen C. McSherry, Associate Executive Director. “I’m consistently impressed with how giving our members are with their time. Thank you for being so generous,” Don Meyer, Communications & Marketing Director. “Thank you for teaching high school and college students, women, community groups and hundreds of New Jersey residents about financial literacy,” Diane Goochee, Marketing and Community Outreach Manager. “Franklin D. Roosevelt once said, ‘We cannot always build the future for our youth, but we can build our youth for the future.’ Our sincere gratitude for building youth for the future of accounting and the NJSCPA by sharing your own personal stories with New Jersey’s
high school and accounting students,” Janice Amatucci, Manager, NextGen Outreach. “Kudos to our members for embracing the Open Forum on NJSCPA Connect. I’m continually impressed by your willingness to share your knowledge and resources with your fellow members,” Rachael Bell, Online Communications Manager. “To all the young CPAs who wrote articles, donated food, liked us on Facebook and joined us at the NJSCPA Convention & Expo: Thank you for stepping up early in your careers!” Lauren Walsh, Membership Coordinator. NJSCPA members can volunteer and contribute when they get involved in short-term projects and assignments, local chapters, technical committees and interest groups, and Society leadership. Involvement contributes to members’ success as they learn new skills, share special knowledge, expand their competencies and visibility, and build relations that help their businesses and careers. Let us know how you’re interested in participating by completing the NJSCPA Volunteer Interest Profile at njscpa.org/getinvolved.
SAX MACY FROMM Certified Public Accountants & Advisers
Sax Macy Fromm & Co., PC is proud to congratulate our own Eddie Rivera on his selection as a 30 Under 30 by NJSCPA 855 VALLEY ROAD, CLIFTON, NEW JERSEY 07013-2483 973-472-6250 WWW.SMF-CPA.COM
NEW JERSEY CPA • July • August 2011
Nine Thousand Students Encouraged to Become CPAs
Society members made 382 presentations, reaching more than 9,000 students at 180 high schools, through the Pay It Forward Program in 2010/11. “It’s exciting to see our scholarship recipients, who are now CPAs or on the road to becoming CPAs, give back to the community,” says Carolyn Hook, NJSCPA Operations and Membership Director. “Many return to their own high schools where they were inspired to become CPAs through the Pay It Forward Program.” To see a list of members who made presentations or to complete the Volunteer Interest Profile to give a presentation in November 2012, visit njscpa.org/getinvolved.
Several volunteers said the questions were basic personal income tax questions, many of which were from senior citizens. Lempka feels that many callers were calling to get a second opinion. Pat Pepe, CPA, spoke to an elderly woman in search of a Schedule B who was disappointed to learn that the Internal Revenue Service doesn’t send the tax booklets anymore. David Eliran, CPA, directed a thankful caller to an IRS Taxpayer Assistance Center. “It may sound corny, but you really get more from giving than taking,” says Robert M. Saunders, CPA. “Being too busy is just an excuse. We have months to prepare for tax season. It’s not too hard to find the time.” To make sure you have time for next year’s call-in program, complete the Volunteer Interest Profile online at njscpa.org/getinvolved.
Tax Questions? No Problem for NJSCPA Volunteers
The annual NJSCPA tax-season call-in program was held in March and April at the offices of the Asbury Park Press and News 12 New Jersey. Society volunteers answered more than 400 questions from the public. Many thanks to these members for volunteering their time and expertise: Christopher M. Arunkumar, CPA Breakpoint Assurance Company
Peter J. Marchiano Jr., CPA Peter J. Marchiano Jr., CPA
Neil B. Becourtney, CPA J.H. Cohn LLP
Robert A. Mathers, CPA Hunter Group, CPA, LLC
Angela Deniz, CPA Frankel and Topche, P.C.
Pat Pepe, CPA Pat Pepe, CPA
David Eliran, CPA I. David Eliran, LLC
Christine Pronek, CPA Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC
Ralph Evangelista, CPA Frazer, Evangelista & Company, LLC Anthony J. Falcone, CPA Anthony J. Falcone, CPA Edward A. Lempka, CPA Edward A. Lempka CPA, MsTax, LLC
Young CPAs Get a Kick Out of Raising Money for a Good Cause
Robert M. Saunders, CPA Robert M. Saunders, CPA, LLC
The NJSCPA Young Professional’s Kickball Tournament, held in May in Randolph, raised more than $1,500 to benefit the Valerie Fund to support the families of children with cancer and blood disorders. Ten firm-sponsored teams competed for the grand trophy. Co-captains, Harry W. Carpenter, CPA, and David D’Angelo led the Deloitte team to victory. See the final tournament bracket, along with additional photos, in the June issue of E-YoungCPA. Visit www.njscpa.org/youngcpas.
Barry Shapiro, CPA WithumSmith+Brown George E. Williams, CPA Ross, Rosenthal & Company, LLP
So, why did these members volunteer right in the middle of tax season? “On the previous Friday, I wondered how I could be away from the office that Sunday,” says Anthony J. Falcone, CPA. “It actually did me some good to be away from the usual tax practice issues, and it’s a good feeling when you can help someone.” Edward A. Lemkpa, CPA, agrees: “Sure, I’m busy. But I’m not too busy that I can’t spend a little time to help out people who may have no clue about their tax situations. And, it makes me feel good.” George E. Williams, CPA, shares his favorite phone call from a young lady who was nervous that she did not receive a W-2 or a 1099 from her employer. “She wanted to report all of her income.” Williams then asked her what her profession was. “She told me that she was a stripper!” Williams kept his composure and told her she was doing the right thing by reporting all income, regardless of its source.
Technology Interest Group Members Have Their Heads in the Clouds
“In another five to seven years, there will be no premise-based software left in public accounting. We’ll all have moved to Software as a Service (SaaS)-based operations. Our job is to figure out what it is and how to make the change,” said technology expert, Greg LaFollette, CPA, CITP. LaFollette may have surprised the 100 attendees of the Technology Interest Group’s March webinar on cloud computing with that statement. “This is exactly why we wanted to do a session
NEW JERSEY CPA • July • August 2011
on this topic,” explained Technology Interest Group Leader Paul Natalizio, CPA. “Our members will be transitioning to SaaS, and we want to make sure they are prepared, know who the players are and are equipped to make good decisions for their businesses.” LaFollette explained that service is a big component of SaaS software: “It’s designed for one-to-many delivery over the Internet where the provider is delivering everything. The development, hosting infrastructure, application and people are all located, operated and managed somewhere else. It’s not just a hosted instance of an off-the-shelf application.” LaFollette discussed the pros, cons and risks of implementing cloud solutions for accountants and their clients: “One advantage is the initial costs for the hardware and software are mostly absorbed by the provider. Conversely, real standards for data migration and interoperable management are still a couple of years away. This means clients can be exposed to risks surrounding downloading and storing data, privacy and security, and using applications that aren’t customized for an organization.” LaFollette added, “In the new world, you have a new set of problems. You have to manage identity, integration, security, cultural
resistance, staff skills, regulatory and legal issues, and service-level agreements.”LaFollette closed with six key areas to decide if a provider is a good one in the SaaS world. Visit the Technology Interest Group community on NJSCPA Connect (njscpa.org/connect) to view LaFollette’s webinar and a list of the group’s upcoming meetings and webinars.
Get Involved Now
Volunteer opportunities are available throughout the year. Below is an activity that needs your support now. Let us know how you’d like to be involved at njscpa.org/getinvolved. Financial Literacy Webinar Presenters Needed – NJSCPA members are needed to present hour-long webinars on varied topics as part of the MoneyMattersNJ financial literacy program. Give back to the community and spotlight your firm. Contact Jennifer O’Leary at email@example.com or 973-226-4494 x251.
Achievement is something worth talking about. J.H. Cohn proudly congratulates
Anne Thermann for being named one of NJSCPA’s “30 Under 30.”
We tur n expertise into results. Call 877.704.3500 or visit jhcohn.com
NEW JERSEY CPA • July • August 2011
New Jersey New York Connecticut California
NJ State Board of Accountancy Report Magnitude of CPE Violations “Disheartening” Newark (March 17) President’s Remarks Board President Donald Jump, CPA, called the number of uniform penalty letters (UPLs) relating to CPE violations disheartening and was surprised by the number of practitioners who had zero credits and those who voluntarily surrendered their licenses rather than pay the fines and make up the credits.
Monitoring Profession – The CPE audit process continues, with 2,200 audit letters sent thus far. (People who did not take the New Jersey Law and Ethics class were selected for audit.)
New Jersey Society of CPAs President Robert S. Marrone, CPA, expressed his embarrassment with the amount of violations in New Jersey and in the profession. He offered to work with the board to improve communications with practitioners so that it eventually does not lead to onerous legislation. NJSCPA Executive Director Ralph Albert Thomas pledged to raise the matter of license violations with the NJSCPA board. Thomas mentioned that the Society was receiving many communications from its members relating to the ambiguity of self-study credit regulations.
Thomas mentioned that Society leaders attended Governor Chris Christie’s state budget address. Thankfully, no onerous business legislation was revealed.
Newark (April 21) Miscellaneous
A practitioner wrote to the board requesting clarification regarding professors getting CPE credit for teaching seminars outside of college and why adjunct professors receive CPE credit for teaching classes when full-time professors do not. There was a discussion about whether if a professor’s seminars/teachings outside of his or her professorship were completely unrelated to what he or she teaches, then could that person submit for CPE. The CPE committee will respond and include a copy of N.J.A.C. 13:29-6.5(c) 1.IV. NJSCPA Executive Director Ralph Albert Thomas requested the board clearly delineate which type of professor would or would not receive CPE credit related to teaching.
Peer Review Program – The new regulations are now on the board’s website. Each of the 3,300 firms registered in New Jersey will receive letters regarding the program and related forms, including Regulations, Enrollment, Affidavit for Exemption, and Compliance. The NJSCPA will prepare FAQs on the new peer review program and send to its membership. The Society would like to work with the board to send this communication to non-members as well. Statutes/Rules/Regulations – Per recent legislation, sunset reviews of rules and regulations will change from every five years to every seven years.
Newark (May 19)
NJSCPA Executive Director Ralph Albert Thomas asked for clarification on practitioners choosing to make-up for a CPE shortfall via self-study. The board indicated that the “onefor-one” rule is in effect with a 60-credit maximum. Thomas mentioned that Congress passed and President Obama signed legislation repealing 1099 reporting requirements. Thomas mentioned that the Senate and corresponding House committee passed patent reform legislation and it is moving through the process. This contains wording on tax strategy patents, which the Society opposes. He also talked about a possible international CPA credential in the works.
Nominating – The committee proposed the following as officers for next term: Keith Balla, CPA, President; John F. Dailey Jr., CPA, Vice President; Daniel J. Geltrude, CPA, Secretary; and Steven Weinstein, CPA, Treasurer. The board approved the aforementioned as officers for next term.
NEW JERSEY CPA • July • August 2011
CPA Examination – Site visits need to be scheduled for Hamilton, Fair Lawn and Clark. Peer Review Program – The mailing is complete and responses are starting to come in and will be reviewed. Monitoring Profession – Thus far, 323 UPLs have been mailed and there have been 239 responses. There have been 119 voluntary license surrenders and 39 people went inactive/paid. A total of $2.5 million in penalties have been assessed and there have been $378,000 in cash collections. Approximately 450 licensees still need to be reviewed.
New Jersey Society of CPAs President Robert S. Marrone, CPA, mentioned the state budget estimate being better than expected. He also indicated that several Society leaders are going to Washington to talk with legislators about wording in the tax preparer bill to help mitigate any confusion for the public. Marrone indicated that appeal bond cap legislation and the Financial Accounting Foundation’s Blue Ribbon Panel on private company generally accepted accounting principles are in holding patterns.
Stay on Track with the CPE Tracker
With nearly six months left in the current New Jersey reporting period, it’s time to take inventory of your CPE credits to ensure you are on target to earning the required 120 credits by the end of this triennial period on December 31, 2011. To assist you, the New Jersey Society of CPAs CPE Tracker provides members with a report of all CPE taken through the NJSCPA Education Foundation and the Society’s 11 chapters. Members may also enter CPE credits taken through other providers. Track your CPE at njscpa.org/cpetracker.
New Jersey Law and Ethics Course Requirement
As part of each triennial’s 120 credit requirement, all actively licensed New Jersey CPAs must take an approved New Jersey Law and Ethics course. To find this course or webinar, visit njscpa.org/ catalog and select the Professional Ethics topic.
Are You a Dual Licensee?
If you are a dual licensee in both New Jersey and New York, and your principal place of business is located in New York, you must take a New York-specific ethics course in addition to a New Jersey Law and Ethics course. If, however, your principal place of business is in New Jersey, you may take the New Jersey Law and Ethics course to fulfill both requirements.
CPE and End-of-Triennial Resources
• CPE course catalog: njscpa.org/catalog. • Members in industry strategic learning resources: njscpa.org/slr. • CPE requirements: njscpa.org/education. • End of the triennial FAQs: njscpa.org/education/triennial. • New Jersey State Board of Accountancy: state.nj.us/lps/ca/ accountancy. Questions? Contact the NJSCPA Education Foundation at 973-226-4494 or firstname.lastname@example.org.
NEW JERSEY CPA • July • August 2011
CLASSIFIEDS Mergers/Acquisitions New Jersey – CPA firm wishes to acquire or merge with progressive, small to mid-sized firms. File 0701 Northern New Jersey, growing, small regional CPA firm looking for sole practitioner, recent CPA, to merge-in with established firm. An ideal candidate must possess a book of business. Contact Blanche Hepplewhite at 973-226-0402 or email@example.com. The Curchin Group, LLC, a central NJ, Monmouth County firm is seeking to merge-in near-retirement sole practitioners and small firms needing succession planning. Other individuals seeking growth and expansion are welcome to inquire. Initial practice continuation also an option. Reply in confidence to Peter Pfister, CPA, at 732-747-0500 or ppfister@ curchin.com. Leading, suburban Essex County CPA firm with a quality-oriented work environment has a merge opportunity for sole practitioners or a small firm needing succession planning. We work with a diversified client base and have the benefit of a dedicated support staff. In addition, we offer support services in the areas of technology, consulting, litigation and financial planning. Reply to firstname.lastname@example.org. Bergen County CPA firm and investment advisor seeks transaction inclusive of RIA firm; sale or merger. Contact George Allen at 201-262-7878 or email@example.com. 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 firstname.lastname@example.org 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 www.accountingpracticesales.com. Central NJ, regional CPA firm with an outstanding environment is looking to merge-in sole practitioners, small firms, practices needing succession planning or growth-oriented individuals seeking a synergistic platform. Reply in confidence: email@example.com. Growing CPA firm with a first-class marketing culture in central NJ is looking to expand its practice. An ideal merge-in candidate is an accountant/sole practitioner/small firm with an established niche focus and strong business development skills or a practice in need of a succession plan. Reply in confidence to firstname.lastname@example.org.
The Open Door NJNY Inc., which provides free English classes to immigrants living in West New York, NJ, seeks a CPA to help with audited financial statements. Contact Luis Iza at 973-780-3818 or email theopendoor3_20@ yahoo.com.
Professional Services CPA and CFO Services offering complete services (payroll, bookkeeping, accounting, tax services, CFO services and CPA services) in the south Jersey area as of February 1, 2011. We also offer other CPAs a turnkey virtual office to process your returns through us. We also offer per diem services. See us at www.cpaandcfo.biz or call 866-246-2031. Immigration lawyers. We provide temporary visas (H-1Bs, L-1A, Investor, etc.) and green cards through employment/family to the U.S. and Canada – working with CPAs. Call 201-759-4333; www.visaserve.com.
The Stanton Reformed Church, Hunterdon County, seeks an accountant. Contact Kathy Carriere at 908-236-2381 or stantonchurchrca@ embargmail.com.
Replies to ads with file numbers should be sent to:
Community House of Prayer, a non-denominational group that offers a variety of services to the Newark community, seeks an accountant to help with a 501(c)(3) application, grants and the loan process. Contact Loretta Stevens at 908-305-5353 or 11steven56@ gmail.com. Washington Park Association of Hudson County Inc., Jersey City, a 501(c)(3), seeks an accountant to perform a financial audit of December 31 year-end statements and interim financial statements. Contact Tony Cunningham at 201-876-1120 or email@example.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.
September/October Coming Attractions Real Estate
Magazine of the
New Jersey Society of Certified Public Accountants
Sept • Oct 2011
n n n n
The Real Estate Market in NJ Real Estate Financing A Check-Up for Real Estate Clients Cost Segregation Studies
NEW JERSEY CPA • July • August 2011
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Tax Reform Enacted into Law B y Jeffrey T. Kaszerman , NJ SC PA Government R elations D irector
partisan battle between New Jersey’s Republican governor and Democratic Legislature over which party is more pro business nearly derailed two tax reform measures long supported by the New Jersey Society of CPAs. However, after weeks of haggling, both sides relented and the bills were signed into law in April. The bills, which lingered for years, moved quickly in 2010, but were vetoed by the governor in 2011. He supported them conceptually, but felt they should be passed as part of the budget process. Both bills were reintroduced shortly after the veto in a slightly different form, quickly passed by the Legislature and then signed by the governor.
S-2753 Single Sales Factor Reform This new law phases in a single sales factor allocation formula for New Jersey businesses over three years. New Jersey currently determines the portion of a company’s income that is subject to state corporate business tax (CBT) by considering the company’s property, payroll and sales in New Jersey. The presence of property and payroll as factors discourages capital investment and job creation in New Jersey. The new law will eliminate property and payroll as factors and base the CBT solely on sales.
S-2754 Small Business Tax Relief This bill gives small businesses whose owners pay their taxes through the personal income tax the same benefits as taxpayers who pay the CBT. It allows these businesses to carry forward net operating losses for 20 years. This carry-forward provision is phased in over a five-year period. The bill also phases in a change that allows businesses to offset gains and
losses from one category of income to another.
1099 Reporting Requirements Repealed In April, President Barack Obama signed legislation strongly supported by the NJSCPA and the American Institute of CPAs, the 2011 Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act (1099 Act). This law repeals both the expanded Form 1099 information reporting requirements mandated by last year’s Patient Protection and Affordable Care Act (PPACA) and the 1099 reporting requirements imposed on taxpayers who receive rental income as part of last year’s Small Business Jobs Act. The PPACA expanded the 1099 reporting requirements to include all payments from businesses aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a taxexempt corporation), and to include payments made for property, starting with payments in 2012. The 1099 Act repeals the expansion to payees that includes corporations by removing Sec. 6041(i). It also repeals the expansion to cover payments for property by removing the language “amounts in consideration for property” and “gross proceeds” from Sec. 6041(a). The act removes Sec. 6041(j), which granted the Treasury secretary authority to issue regulations under Sec. 6041, including “rules to prevent duplicative reporting of transactions.” These changes are effective for payments made after December 31, 2011 (when the new rules were to take effect), and they revert those portions of Sec. 6041 to their status before the PPACA. The Small Business Jobs Act required individuals who receive rental income to issue Form 1099 to service providers NEW JERSEY CPA • July • August 2011
for payments of $600 or more. It did this by specifying that “a person receiving rental income from real estate shall be considered to be engaged in a trade or business of renting property.” The 1099 Act strikes Sec. 6041(h) in its entirety, effective for payments made after December 31, 2010 (the original effective date of Sec. 6041(h)), placing individuals who receive rental income in the same position as if the expanded information reporting requirements had never been enacted. Due to the repeal, the 1099 reporting rules continue unchanged: Namely, under Sec. 6041(a), “All persons engaged in a trade or business and making payment in the course of such trade or business to another person” of $600 or more must report the amount, name and address of the recipient to the Internal Revenue Service (IRS) and to the recipient. The IRS Code applies this requirement to payments of “rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments or other fixed or determinable gains, profits and income,” and the Treasury regulations add “commissions, fees and other forms of compensation for services rendered aggregating $600 or more,” as well as interest (including original issue discount), royalties and pensions (Regs. Sec. 1.6041-1(a)(1)(i)). This required information must be reported each calendar year for payments made during that calendar year.
Relocating as a Career Move B y W endy S . Penman , C PA, PricewaterhouseC oopers L L P
his time last year, I really wasn’t considering a move. So, if someone told me that I would be writing an article from my new apartment in Richmond, Virginia, I likely would have just laughed. I had never seriously considered moving away from New Jersey, the place where I grew up, went to school and where my family and friends live. The decision to move wasn’t easy. It all started with a recruiter and a job opportunity in another state. I had been feeling like I needed a change for a while and, at the urging of a trusted aunt, I decided to talk to the recruiter and arrange some interviews. It’s challenging enough trying to interview at another company when you currently have a job, but interviewing in another state is completely another matter. You need to plan and manage all of your interviews within a short time frame and arrange time away from your existing job for multiple days, rather than just a morning or an afternoon. I wasn’t fully convinced that I was ready to leave the comfort of my first job, so I talked to someone in human resources prior to my outof-town interview. I actually did something that many professionals will tell you not to do: I admitted that I
was considering leaving and exploring opportunities elsewhere. I then asked if there was a way to transfer to our local Richmond office, or at least meet with someone when I traveled there for other interviews. Although I interviewed elsewhere, I ultimately chose to stay with PricewaterhouseCoopers and transfer offices. This required close coordination with teams in both cities to determine a move date that could be relatively seamless and cause the least interruption for everyone involved. Because some of the decisions were outside of my control, it was important to be flexible and adapt to the situation. This wasn’t an easy decision. I moved away from one of the largest offices that offered a broad range of experiences and diverse projects. I also moved away from my family and friends to a city where the only person I knew was a cousin. You also have to consider the logistics involved: finding a new place to live, changing driver’s licenses, getting settled in a new office – all within a condensed period of time. Another big factor is who is paying for the move, you or the company? This can often cost several thousand dollars. After five months at my new position, NEW JERSEY CPA • July • August 2011
transferring offices has a different feel than starting a new job. I feel that expectations were higher, given that I am bringing my experiences from another (larger) office at the same firm. My first busy season was challenging because I needed to not only handle the typically heavy workload, but also get acclimated to new clients. This balancing act was harder than I expected, but I got through it and learned much for next year’s busy cycle. One aspect that was easier than anticipated was getting my Virginia CPA license. Virginia is a reciprocal state, so it was simply a matter of submitting an application and a letter from human resources. Within two months of moving, I had my license approved. While I took a risk by being open about my interest in leaving the firm, I don’t recommend it for everyone. Based on my individual circumstances, I trusted that the firm would be supportive of my decision and help me where possible. When I told people that I was moving from one of our largest offices to a small office, most didn’t understand why. Some said it could hurt my career. I ultimately decided to make some career tradeoffs as I re-prioritized my life. I feel confident that I made the right choice to stay with the firm, but move to a different market. I’m excited about the many learning opportunities I’ve had and the ones yet to come. Wendy S. Penman, CPA, is a tax associate for PricewaterhouseCoopers LLP. She is a member of the New Jersey Society of CPAs and the Virginia Society of CPAs. Contact her at email@example.com.
Member Benefit Network with your peers at Young Professionals’ events. Visit njscpa.org/ members/career/youngcpas.
A CPA Who Thinks Locally, but Acts Globally By David Plaskow, NJSCPA Publications Editor
t’s fitting that this article appears right around July 4, as Ann Torno, CPA, is a true American success story. She and her four sisters came to the U.S. from a small town in the Philippines. For the first 12 years of Ann’s life, she and her sisters lived with her grandparents and uncles, while her parents lived in America so they could earn enough money to send Ann and her sisters to a private Catholic school in the Philippines. “Even though my parents were college educated, they had a tough time adapting to the workforce in the U.S. So, they took a variety of minimum wage jobs so that my sisters and I could have a better life,” says Torno. By age 12, the family was together and living in Jersey City. By her senior year in high school, Ann wasn’t sure which career path she wanted to follow. “I thought about the medical field or computers,” recalls Torno. “But growing up, my uncle was very knowledgeable and passionate about math. He guided my sisters and me through grade school, and I also became passionate about the subject. During my senior year, I took an accounting class and pictured myself doing that for a career.” So, Torno attended Rutgers-Newark, majoring in accounting, while working full-time in the recreation department of a nursing home in Hackensack. “Rutgers did a great job,” says Torno. “It taught me that accounting is far more than debits and credits. It set realistic expectations of what I would face in the workforce.” After graduating in 2006, Torno interviewed at several mid-sized firms. “I decided on Citrin Cooperman,” says Torno. “The firm offers the incentives
of the Big Four, but has a small-firm feel. You’re not pigeonholed here. Technically, I’m in the audit department, but I do tax as well. I’ve learned a lot doing both. Citrin also encourages a work-life balance, which is a nice benefit.” Torno focuses on real estate clients and auto dealerships. “I’d like to stay in public accounting because there’s so much excitement and opportunity,” adds Torno. It wasn’t enough for Torno just to be an accountant. She wanted those three letters after her name – CPA. “Citrin encourages its accountants to become CPAs. The firm has a mentor program which played a major role in me going for the CPA designation,” she notes. “I want to move as far up the ladder as possible, without anything stopping me.” After some trials and tribulations with the CPA exam, Torno passed it in 2009. Torno recently joined the New Jersey Society of CPAs and looks forward to becoming active on committees and at events with Glenys Merejo, CPA, her colleague at Citrin. In her spare time, Torno likes to travel, play with her iPad and spend time with her three dogs. She also enjoys helping her husband, Franco, with his schoolwork. He recently went back to school to learn how to be a respiratory therapist. NEW JERSEY CPA • July • August 2011
While Ann has been in the U.S. more than half her life, she hasn’t forgotten her roots. She has a genuine passion for the people and community where she grew up. “My sisters and I were lucky enough to go to a private school,” says Torno. “But, appallingly, many kids can’t even afford to go to public school because money used for school supplies is needed to feed the family, or older kids have to stay home and watch their younger siblings because there is no daycare available while the parents are working.” That bothered Torno and her sisters enough to form the KLARK Foundation. Each sister takes a portion of her paycheck and uses it for school supplies and tuition for children in grades 1-6 in their hometown of Pampanga. But Torno didn’t stop there. She became heavily involved in Maharajah USA, an organization once headed by her father. The group raises money to buy medicine and supplies for children and the elderly in the Philippines. “We’ve also raised money for streetlights and to fix a flooded church,” says Torno. “It’s truly gratifying to positively impact others’ quality of life and help kids get an education to free their families from a cycle of poverty.”
Our clients do their banking with banks. . . but when it comes to financing their business, they choose Medallion as their lender. What We Do Revolving lines of credit collateralized by accounts receivable, inventory, machinery and/or equipment and real estate ~ $250,000 or as much as $5,000,000. For Whom • Manufacturers • Distributors • Service providers • Finance companies Why Medallion • Stable financing solution • Competitive pricing • Committee- free approval process • Covenant-free agreements • Timely closings
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Many times the competitive advantage is a person With the focus often on new models, technologies and processes, it is important to recognize that people make our profession special. Those chosen by New Jersey CPA magazine as the “30 Under 30” of 2011 have all demonstrated excellence, integrity, professionalism and supreme commitment to client service. We are proud that our own Josephine Lo Bianco and Ryan McDonough have been included in this extraordinary group, a group who defines our profession in the most positive way.
© 2011 PwC. All rights reserved. “PwC” refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
The July-August 2011 issue of New Jersey CPA is all about the up-and-comers. A special section introduces the NJCPA’s “30 Under 30,” thirty...