The Journal Entry - April 2014 by UACPA

April

2014,

Vol.

| Enterprise Risk Management

The Herculean Task of Taming Your Risk Monster Thomas G. Green, MBA, CIA James Andrus, CPA Sam Belnap

www.uacpa.org the journal entry | April 2014

Mission,Vision,Values

ExecutiveBoard

Mission

president................................................. Paul O. Skeen president-elect..................................... Jonyce Bullock vice president..................................... Hollie S. Andrus secretary................................................... Mark Palmer treasurer................................................. Kyle J. Pexton member-at-large....................................Larry A. Deppe immediate past president.................. Kent L. Thomas AICPA Council..........................................Dan Griffiths ceo......................................................... Susan A. Speirs editorial staff........................................ Amy Spencer

The UACPA Leadership supports and challenges members through advocacy, professional education, leadership development, networking, and community service, to help them succeed in a competitive and changing world.

Vision At the UACPA, our vision is to be a world-class professional association essential to our members. We unite a vibrant community of CPAs to enhance the success of our members and champion the values of the profession; Integrity, Competency, and Objectivity.

Values

The Journal Entry is published quarterly, by the UACPA 1240 E. 2100 South, Suite 500 Salt Lake City, UT 84106 tel: 801-466-8022 toll-free in Utah: 1-800-676-2776 e-mail: mail@uacpa.org

Advocacy The UACPA represents the profession at the legislature and other regulatory bodies and promotes the value of the CPA to employers, the business community, and the public at large.

The UACPA provides leadership and service within the profession, within the UACPA and within the community.

Send address changes to UACPA 1240 E. 2100 South, Suite 500 Salt Lake City, UT 84106 email: membership@uacpa.org or log on to www.uacpa.org to update your address and member profile online

Professional Development

Cover photo by Kristan Jacobsen, kristanjacobsen.com

Leadership & Service

The UACPA supports and encourages continuing education and leadership development.

(l-r) Thomas G. Green, MBA, CIA, James Andrus, CPA and Sam Belnap of Piercy Bowler Taylor & Kern

Professional Community The UACPA reinforces peer accountability to encourage members to maintain integrity and high ethical standards. We â&#x20AC;&#x2039;â&#x20AC;&#x2039; provide member to member networking opportunities and networking opportunities with other professions. We value belonging to a distinguished organization and believe that we serve as the primary resource and point of contact for Utah CPAs.

UACPA Statement of Policy CPAs have common problems and interests. This magazine has been created to share information relating to the practice of accounting. The opinions, views and articles expressed in this magazine are not necessarily those of the Utah Association of Certified Public Accountants. This magazine should not be deemed an endorsement by the UACPA or its committees or editorial staff of any views, opinions or

Diverse Population Outreach

positions contained herein. Because of the complexity of tax laws and

The UACPA believes in reaching out to under-represented populations, those returning to the profession or choosing it as a second career, and other professions.

accounting transactions and the changing status of the law, as well as variations in practices and procedures among accountants, information in the magazine should not be used, acted or relied upon, as a substitute for independent accounting or legal research and advice.

the journal entry | April 2014

in this issue | April 2014

feature story

Enterprisewide Risk Management 127 New Members............................................................................................4 Movers & Shakers......................................................................................5 President's Message ..................................................................................6 Message from the CEO............................................................................. 7 Cover Story: Elements of Enterprise Risk Management......................8

Accounting Challenges and Public Utilities 21

By the Numbers: Financial Literacy...................................................... 14 A Different View of Risk......................................................................... 15 Do You Believe You Will Never be Sued?............................................. 19 Accounting Challenges for Regulated Public Utilities ...................... 21 Managing Risks with Telecommuting..................................................27 Social Media and CPAs: Curse or Bonanza.........................................29 SMEs Driving & Adopting Sustainable Business Strategies..............33 UACPA Members Celebrate 25 Years ..................................................36

Meet a Member: Jared Mair

Top UACPA Supporters..........................................................................37 Photos, Financial Literacy Day on the Hill..........................................38 Meet a Member: Jared Mair...................................................................39 Meet the Executive Board......................................................................40 Board Bullets............................................................................................ 41 Meet the UACPA Staff............................................................................. 41

Board Bullets: News from the UACPA

Education..................................................................................................42 the journal entry | April 2014

New Members/ Movers & Shakers

NewMembers Congratulations to the following individuals/CPAs who were approved for membership or affiliate status in the UACPA as of February 20, 2014.

Fellows

Duke Heninger Tanner LLC

Student Affiliates Stevens Henager – 1

Bryan Auernig Bountiful, UT

Adam Jowers Christensen & Company, PC Senior Accountant

Jarom Casey PricewaterhouseCoopers LLP

Jacob Mangum Lehi, UT

Kyler Cheesman Tanner LLC

Tory Norman Squire Accountant

Jeffrey Adams Security Nation Life Ins. Co.

Andrew Cooper Barrick Gold of North America, Inc Jennifer Cowley HJ & Associates LLC Trenton Doman Defense Contract Audit Agency Krey Ellis Farr West, UT Ashton Ferrin Niederhauser & Davis LLC Thomas Fishler HJ & Associates Tax Accountant David Gertsch HintonBurdick CPAs & Advisors Tyler Hall Savage Esplin & Radmall, PC Accountant

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Jihye Park Wisan, Smith, Racker & Prescott, LLP Brett Redd Squire Manager Business Advisory Steven Sheffield No Employer Listed Alpine, UT Tarrence Warenski Kenworth Sales Jeremy Wilkey Hawkins & Cloward & Simister, LC Audit Staff Brian Winegar Heber City, UT

Dixie State College – 2

University of Phoenix – 1 University of Utah – 9 Utah State University – 1 Utah Valley University – 2 Weber State University – 1 Western Governors University – 1 Westminster – 7

Movers & Shakers

Movers&Shakers HJ & Associates has announced Jayme McWidener, CPA as a partner at their firm. McWidener joined the firm in 2004 as a member of their Audit and Assurance team. In her 10 years with HJ & Associates, Jayme has demonstrated her technical Jayme McWidener expertise, created a firm-wide training program and has been a valuable resource to her clients. She received her bachelor’s and master’s degrees from Drake University in Des Moines, IA.

Shane Grant

Ken Oveson

Shane Grant, CPA, Partner has been announced as the new tax department head at Mantyla McReynolds, replacing Ken Oveson who is stepping down in preparation for his retirement. “Ken has given so much to the company for the past 16 years and will be greatly missed,” says Kim McReynolds, CPA, Managing Partner. Grant acknowledges that Oveson has “left big shoes to fill,” adding that “he has been an excellent tax department head, and we will continue to rely upon his experience and expertise to allow us to continue to provide great service, skill, and knowledge to our clients.”

Douglas Woodbury, a graduate of Brigham Young University and Tyson Irwin, a graduate of Utah State University, have received the 2013 Elijah Watt Sells Award. These individuals were among the 55 candidates who received the highest scores across all four sections of the Uniform CPA/Examination. They scored a cumulative average above 95.50 and among more than 94,000 individuals. Woodbury is employed with Ernst & Young in Salt Lake City and Irwin is employed at PricewaterhouseCoopers in Salt Lake City.

Eide Bailly has announced Daniel Capener, CPA is joining as consulting manager for the Technology division in the Ogden office. Capener brings more than 20 years of experience in implementing and maintaining enterprise accounting system. The Daniel Capener Weber State University graduate and Microsoft Certified Database Administrator will work on the Business Applications team. Robert J. Cole, CPA has been named Tax Practice Leader for the Utah office of CBIZ MHM, LLC. Cole has served as Managing Director for 14 years at CBIZ MHM, LLC and is a Shareholder at Mayer Hoffman and McCann P.C. With nearly 30 years of experience, Robert J. Cole Cole has contributed significantly to the growth of the tax practice and will be responsible for the financial health of the tax practice segment, including revenue growth tax, personnel development and client service delivery. Cole received his Bachelor’s and Master’s degrees in accounting from Utah State University. Mary Kay Griffin, CPA was honored with the Pathfinder award during the Salt Lake Chamber’s 37th Annual Women & Business Conference and Athena and Pathfinder Awards Luncheon. The Pathfinder Award was given to five honorees in recognition of their Mary Kay Griffin community leadership and history of support for women and women’s issues. Griffin is the managing director of CBIZ MHM, LLC and a shareholder of Mayer Hoffman McCann, P.C. Grant Thornton LLP and Mantyla McReynolds were among 35 businesses of "Best Companies to Work for" in Utah Business magazine. Both were featured in the small companies category. the journal entry | April 2014

President's Message

President's Message Paul Skeen, CPA Paving the way for Diversity, inclusion and education within Utah's Professional Network

would like to begin my first official written remarks as President of the UACPA with a sincere thank you to Kent Thomas. His leadership has been critical in navigating the UACPA through some monumental changes which supports the profession more effectively. His focus on ethics, competency and diversity will continue to drive discussion for years to come. I hope to engage our membership on discussions surrounding two topics: Diversity and Inclusion and Education. By educating ourselves on these two topics, we can take a proactive approach in addressing the staffing crisis our profession is sure to face moving forward.

Studies vary widely on the numbers of impending retirements for accounting professionals, some estimating that as many as one-third of all CPAs could retire within the next 10-15 years. Regardless of statistics, one could walk around the halls of accounting firms, or better yet, attend a UACPA conference and see that a large number of our membership may be leaving the profession soon. We need to address this and find ways to introduce and diversify the next generation of accountants.

Diversity and Inclusion

This header alone may have caused a few to stop reading, but for the brave souls, who continue to read on, please know that the discussion of diversity The 2013 Private Companies Practice and inclusion doesn’t need to be scary. Section (PCPS) CPA Firm conducts Diversity is simply being different from surveys to decipher the issues firms one another and inclusion is finding in our industry face. More than 1,000 ways to embrace and leverage the difrespondents represent various practice ferences for the benefit of the group. I types and sizes. The results were broken hope to focus discussions on what we into the following categories: Sole prac- can do to retain and promote the taltitioners, Firms with 2–5 professionals, ented women and minorities entering Firms with 6–10 professionals, Firms the accounting profession. with 11–20 professionals and Firms with 21 or more professionals. Education Interestingly enough, the concern of “finding qualified staff (at all levels)” ranked in the top five for all size categories except for sole practitioners. Also ranking in the top five for all categories except sole practitioners was “retaining qualified staff (at all levels)” and “succession planning.” 6

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spend a little time on this website. Here you will find highlights of the opportunities and key selling points for the profession. I hope to see a few future accountants from my daughter’s class. In closing, it is a great honor to have the opportunity to serve as the UACPA President for the coming year. I look forward to engaging as many of you as possible in meaningful discussions on the topics of diversity and inclusion and education and awareness. If you have any suggestions or ideas on how we can better prepare ourselves, our industry or the future of the profession, please let me know.

Recently, I had the opportunity to participate in a 7th grade career fair at my daughter’s junior high. In preparaThank you and see you soon. tion for this event, I spent some time on the AICPA’s “Start Here, Go Places” website — www.startheregoplaces.com. Paul O. Skeen, CPA If you’ve ever had a difficult time selling UACPA President why accounting is a great profession,

CEO’s message

CEO's Message Susan Speirs, CPA Invest in the future of the profession when you renew your membership

s another dues cycle begins for the 2014-15 year, the UACPA is excited to announce our 100% Membership Program. Firms and companies with an eligible staff of 10-or-more individuals are recognized for their enrollment in the UACPA. Our programs are strengthened when companies reach 100% participation and CPAs demonstrate their commitment to the highest professional standards as the public experiences our aim to improve our communities.

worked during the legislative session.

• Utah State Tax Commission: SB19 addresses appointment and qualifications of members of the Utah State Tax Commission specifically requesting that one or more members be CPAs licensed to practice in Utah.

• Nonprofit entity receipt of money: HB283 addresses the

audits of nonprofit entities and enacts the Nonprofit Entity Receipt of State Money Act which defines terms, imposes requirements on a nonprofit entity’s receipt of state money and authorizes the issuing state entity to seek return of state money if the nonprofit entity fails to comply with By renewing your membership, you increase your clout, requirements set forth as well as technical changes. Thanks letting clients and colleagues know you adhere to a high level to the UACPA’s Nonprofit Committee for overseeing changes of professional standards. The UACPA offers networking to the language that could have hurt smaller nonprofit opportunities through conferences and events and provides entities. a place for CPAs to meet likeminded individuals through committees and task forces. Financial Literacy: SB40S1 addresses the funding of If you would like to enroll in the 100% Membership Program, please contact UACPA Membership Coordinator Tisha Smith, ts@uacpa.org or call 801-466-8022.

•

Not only does your UACPA membership help you advance in the profession, but you will save time and money through special offers selected exclusively for members. Additionally, the UACPA frequently receives calls from companies who need CPA board members or fields requests from our legislative members seeking CPAs for committees. Maintaining your membership lends you additional possibilities to serve the public. As the UACPA continues to serves its members through advocacy, below are some examples of where we have

financial and economic literacy. The UACPA partnered with the Utah Jump$tart Coalition for Financial Literacy to push this bill through the legislature. The bill requires end-ofcourse assessment for the financial literacy course, adopts course standards that are to be updated bi-annually and implements a teacher endorsement stipulatingqualifications needed to effectively teach the course.

Your investment in your future serves as a reminder of your dedication to the profession. You worked hard for your license and we work hard to protect it. Renew your dues and get involved by calling us at 801-466-8022. the journal entry | April 2014

the journal entry | April 2014

It's All Greek To Me

Utilizing Your External Auditor, IT Department and Internal Audit Function in your ERM Process Thomas G. Green, MBA, CIA Sam Belnap James Andrus, CPA Photos by Kristan Jacobson

Feature story

n Greek Mythology, the Hydra was a gigantic serpentlike monster with many heads, which haunted the lake in ancient Lerna, a region of springs near Argos. What made the Hydra so dangerous was to destroy it one would have to decapitate it. However, as one head was dispensed with, two or three more sprung up, and one head was immortal. For his Second Labor, Hercules was sent to destroy the Hydra. Knowing he could not destroy it alone, Hercules employed the assistance of his nephew, Iolaus, even though he was specifically prohibited from doing so. Through a careful strategy and important team work, the Hydra was ultimately defeated. Modern business owners can face risks as overwhelming and multi-headed as the inhabitants of Ancient Lerna. Just as one calamity seems to be averted or controlled, two or three more often come from out of nowhere. Identifying a strategy to overcome the business-Hydra is a constant problem facing business leaders. Over the years, frameworks and approaches have been developed to help organizations attack their risk monsters, not by a single person or through simple brute strength, as was initially contemplated by Hercules, but strategically and as a group. One approach has been Enterprise Risk Management (ERM). ERM is roughly defined as a framework with methods and processes used to take advantage of opportunities and manage risks. This is typically accomplished with the assistance of various stakeholders â&#x20AC;&#x201D; including the board, management and others â&#x20AC;&#x201D; in setting a risk-reducing strategy across the enterprise. This effort is designed to identify risks to the entity and manage these risks. Organizations, in the past, have often relied on internal audit or the external auditors to help identify and slay all serious threats. Or they have relied on various, uncoordinated efforts throughout the organization to help tame the beast. ERM has suggested a team-focused approach. By their very nature, uncoordinated risk-managing functions will often include some efforts that are better than others. By coordinating efforts, and working as a team, an organization can accomplish the Herculean task of identifying risks and effectively decapitating them. In this article, we will address ERM principles from a financial reporting, Information Technology and business operations (internal audit) perspective. We recognize there are other perspectives, but covering it from these perspecthe journal entry | April 2014

It's All Greek To Me tives cover a significant amount of the overall risks facing many organizations.

Financial Reporting

Risk assessing and ERM have progressed in recent years as organizations see value in identifying which risks they can live with, which risks must be mitigated and which risks can provide a strategic advantage or opportunity to the organization. Various frameworks have come into vogue in recent years attempting to provide tools for organizations grappling with the multi-headed monster, RISK. One prominent framework is the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Enterprise Risk Management — Integrated Framework (Framework). This Framework focuses on achieving an organization’s objectives, set out in four categories: • Strategic – high-level goals, aligned with and supporting its mission • Operations – effective and efficient use of its resources • Reporting – reliability of reporting • Compliance – compliance with applicable laws and regulations Strategic and Operational Objectives are generally the purview of the board and management. And, of course, the board and management also have a responsibility for the Reporting and Compliance Objectives. However, as the Framework’s Executive Summary states “[a] number of external parties, such as customers, vendors, business partners, external auditors, regulators, and financial analysts often provide information useful in effecting enterprise risk management, but they are not responsible for the effectiveness of, nor are they a part of, the entity’s enterprise risk management.” The external auditor’s primary concern is on the risk of material misstatements in financial reporting and, thus also, have a direct and an indirect role with the Reporting and Compliance Objectives as set forth in the Framework. Unlike Hercules’ directive to perform his Labors without 10

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assistance, ERM encourages cooperation among many interests. And, although the external auditors are generally prohibited from being a formal part of an organization’s ERM process, they often “provide information useful in effecting enterprise risk management.” ERM also requires a holistic and comprehensive view of risks, otherwise the effort cannot truly be categorized as enterprise-wide. The risk of material financial reporting misstatements has seen significantly more press in the past several years. This trend is not likely to subside any time soon. Consequently, the risk of a material misstatement goes beyond the actual dollars of the misstatements and reaches into the very heart and soul of an organization. Indeed, the very existence of an organization can be called into question if the misstatement is both material and fraudulent. Recent history provides many examples of this. The board and management of any organization would be terribly remiss if they did not view all interested outside parties of their organization as partners in providing information pertaining to risks that ought to be addressed. External auditors often have risk insights well beyond their primary role of auditing an organization’s financial statements. To disregard or diminish the insight of an organization’s external auditors may be at the very peril of the organization itself. Wise boards, audit committees and management will be receptive to all input regarding risks faced by their organization. External auditors stand in a unique position to see risks beyond their formal obligations. Placing significance credence on their insight can tend to only benefit an organization as it does battle with the business Hydra, Risk.

The board and management of any organization would be terribly remiss if they did not view all interested outside parties of their organization as partners in providing information pertating to risks that out to be addressed.

Feature Story (l-r) James Andrus, Thomas Green, and Sam Belnap bring a Herculean attitude to PBTK.

Information Technology

gun, moving into business processes with the invention of ENIAC (Electronic Numerical Integrator and Computer) Greek Mythology reaches back many millennia. The prac“The world's first electronic digital computer” in the fall of tice of accounting reaches back almost as far. Evidence of 1945. When computers were introduced to businesses, the accounting can be found in the ancient Mesopotamian concept of auditing around the system was also introduced. culture as documented in a 2005 article from Redorbit.com. The risks, then involved in computers, was considered “In fact, the first known writing system emerged some 5,000 trivial. years ago in Mesopotamia in the form of written accounting A short 70 years after the introduction of ENIAC, computrecords.” The next great evolution in accounting took place ers are the center of nearly every accounting and business 4500 years later during the Renaissance when Luca Pacioli published “Summa de arithmetica, geometria, proportioni et process. Organizations now rely on machines, rather than proportionalità” in 1494. Heralded as the father of account- humans for virtually all transactions, storage of records, ing, Pacioli popularized the double entry booking standard and development of financial statements. Because of this it is critical that IT systems are fully integrated in the ERM we know today. Nearly 400 years later, in 1868, modern accounting was born with the inception of the balance sheet programs. “as a way to summarize the results of double entry accounting,” according to Kirk Loury in an article featured on Imagine hand writing every credit card number for every transaction manually or consolidating all accounts to generwallstreetb2b.net. ate financial statements, or printing and mailing catalogs to all customers, and hand pressing each of those catalogs on By contrast, the information technology age has just bethe journal entry | April 2014

It's All Greek To Me printing presses. This should provide an insight into the impact the sudden loss of all information technology systems would have on ones organization. The past 50 years have seen an integration of technology processes into nearly every aspect of nearly every business. This pervasive use of technology has never before been seen, and we may never see it again. ERM can no longer ignore the technology risks, or auditing requirements, around any business process using technology. Instead of relying on a separate IT risk program, organizations should embed IT risk assessments within and throughout the ERM program. To begin, every organization needs to consider how IT, in general, impacts risk. A common, but serious mistake made by many organizations is defining who owns IT risks. Too many organizations place all accountability directly on the IT department and absolve themselves from responsibility. ISACA’s COBIT (Control Objectives for Information and related Technology) framework states that “Senior management and governing bodies collectively have responsibility and accountability for … the risk in accomplishing those objectives.” Second, align accountability, and then define the risk culture of IT. A 2009 Businessweek article entitled What’s Your Company’s Risk Culture? explains that “Risk culture influences the decisions of management and employees, even if they are not consciously weighing risks and benefits.” When the tone at the top approach does not understand the impact of technology it significantly increases the organization’s risk. Also, when a culture exists that thinks of IT only as a support organization, and not as a critically essential department, risk is often overlooked. For example, new initiatives don’t involve IT, security equipment and systems often run on aged equipment, industry regulations such as PCI (Payment Card Industry), GLBA (Gramm-Leach-Bliley Act), or Sarbanes Oxley are downplayed, etc. When this occurs, critical technology risks are often not fully understood and may not even be included in ERM. Although the risk culture and the tone at the top for technology is critical, the same concepts apply to both risk appetite and tolerance. A clear understanding of how technology supports the organization, likelihood and impact of an external threat, and internal risks to technology failure is required to fully define the risk appetite and risk tolerance. 12

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In many organizations, IT is both their best competitive advantage as well as their greatest risk. Developing an ERM that fully address IT allows the maximization of the benefit and mitigation of the risk.

In many organizations, IT is both their best competitive advantage as well as their greatest risk. Developing an ERM that fully addresses IT allows the maximization of the benefit and mitigation of the risk. Internal Audit Internal auditing is defined as an independent, objective, assurance and consulting function designed to evaluate the risk management effectiveness of an organization. Indeed, it may be said that without risk, internal audit would not be needed. Consequently, the role of the internal audit function in ERM would naturally seem comprehensive and perhaps even the ones championing ERM. But, as ERM principles and the definition of internal audit indicate, internal audit’s role needs to be limited. All agree that it is everyone’s responsibility in an organization, in some fashion or another, to identify and manage risks. But ultimately, the board has overall responsibility to ensure risk is managed, and management has day-to-day risk management responsibilities. So what role can and should internal audit play? Independence of the internal audit function implies an ability to report failings at the highest level of the organization without fear of retribution. Objectivity implies the inability to implement controls. This is so because once the internal audit function implements what should be management functions and decisions, it cannot later go back and evaluate those functions and decisions without, at the very least, the appearance of foregoing objectivity. However, the internal audit function lives and breathes in the fiery breath of risk and they have a consulting function built into their definition. So what role can the internal audit function play?

Feature Story In an article by the Institute of Internal Auditors (IIA) in 2009 entitled IIA Position Paper: The Role of Internal Auditing in Enterprise-wide Risk Management, a spectrum of internal audit’s activities and roles in ERM are listed. As the spectrum moves from left to right, the role of internal audit in ERM requires greater safeguards to ensure the principles of independence and objectivity are maintained. Some of the activities that are most clearly appropriate for internal audit in its ERM role include giving assurance on and evaluating management’s risk management processes and activities, and evaluating how management reports on key risks. Certain other activities such as facilitating how management identifies and evaluates risks, coordinating the ERM process and championing the ERM process are more of a consulting role for internal audit and should only be engaged in if there are proper safeguards to make sure internal audit is not engaged in a managerial role for these activities and does not exert undue pressure to implement ERM. Taking accountability for or implementing ERM are much more clearly prohibited activities for internal audit with regards to ERM. Likewise, setting an organization’s risk appetite or imposing a particular risk management process also fall within the prohibited activities if internal audit is to stay within its proscribed definition of remaining independent and objective. The definition of internal audit also states that the function can and should “add value and improve an organization's operations.” For internal audit, combining the principles of independence and objectivity in its assurance and consulting activities, and adding to the value of an organization can be as tricky as slaying a multi-headed beast. But with careful planning, proper team work, adherence to time-proven principles and a firm understanding of the benefits of ERM to the organization and the internal audit function allow internal audit to be a full partner with management and the board in establishing ERM. At the end of the day, ERM responsibility ultimately resides with the board of an organization. But both parties inside and outside have a role to play in assisting this effort. Understanding these various roles, restrictions and limitations will greatly assist any organization in taming the Risk Monster. n

James A. Andrus, CPA is an Audit Partner and leads the Utah office for Piercy Bowler Taylor & Kern (PBTK). After graduating from Southern Utah University, Andrus began his career at a national CPA firm in Las Vegas where he spent 10 years in public accounting. He returned to Utah to develop a franchised food operation and returned to public accounting in 2000. Sam Belnap focuses on IT risk assessments, audits, strategic planning, business alignment, process improvements, and thought leadership. Belnap unifies the separate strategies of IT, business, and external compliance requirements into a single, simple, and sustainable approach. His experience crosses the public, private, government, and reservation-based organizations.

Thomas G. Green, MBA, CIA is a Principal and Director of Internal Audit for PBTK. The Utah native graduated from BYU and has more than 17 years experience. Green has served as president of the Institue of Internal Auditors for the Salt Lake City Chapter and is currently the Advisory Board Chairman for Utah Valley University's Internal Audit Program. Green has taught internal controls, auditing, accounting and fraud classes at the University of Phoenix since 2004. Piercy Bowler Taylor & Kern (PBTK), founded in 1990, is a full-service CPA firm with qualifications ad resources that are frequently compared to those of the Big 4. In addition to providing the highest level of audit, tax and consulting services, the firm's goal is to identify profit enhancement opportunities for clients. With approximately 100 professionals between Salt Lake City and Las Vegas, clients include publicly-traded companies (including accelerated filers), privately-owned businesses, governments, not-for-profit organizations, professional firms, and high net work individuals.

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by the

Numbers

These numbers reflect a 2013 Financial Literacy Survey from the National Foundation for Credit Counseling (NFCC) and the Network Branded Prepaid Card Association (NBPCA) where 2,037 adults were surveyed.

April is Financial Literacy Month

78 40

percentage of U.S. adults who feel they could benefit from additional advice and answers to everyday financial questions from a professional percentage of adults who gave themselves a grade of C, D or F on their knowledge of personal finance

26 18 19 14

percentage (61 million people) who say they are worried about servicing their debt commitments

percentage of individuals (42 million Americans) who indicated fear of job loss as a major concern. percentage who were worried about their credit score and/or lack of access of credit overall.

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percentage of Americans indicated they are worried over a lack of savings.

Enterprise Risk Management: A Different View of Risk By Mary Peter

nterprise Risk Management (ERM) has become a part of our everyday vocabulary, yet it remains challenging to explain. From a strategic decision-making perspective, ERM allows us to view risk in a different light. Boards of directors now want a more transparent view of risk and to know how it is being managed. In a more aggressive regulatory environment, larger financial institutions and insurance companies are being told by regulators that they must implement ERM. Third parties are also now interested in the ERM process. Rating agencies are looking at how a company’s ERM program affects business and financial risk, which may impact their credit rating. The definition and implementation of ERM varies by the industry, size and complexity of the organization seeking to embrace the concept. To break down ERM into a simplified outline, we begin

with the definition of risk: • Risk is typically thought of as encountering a loss, danger or hazard • Risk is the deviation from what is expected; the effect of its uncertainty on objectives • Risk includes looking at the upside, or consideration of what can provide opportunity Historically, the evolution of ERM began with the root of risk management. Today, ERM has become the vehicle as to how an organization decides to respond to its risks, both the upside and the downside. Due to the nature of risk, we must continually look at risk from different perspectives and with a wider lens. A commonly used definition of ERM from COSO (Committee of Sponsoring Organizations): “Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in a strategy setting and across the enterprise, the journal entry | April 2014

A Different View of Risk designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.” The definition of ERM from the Risk Insurance Management Society (RIMS): “A strategic business discipline that supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as interrelated risk portfolio.” The key to a value-driven ERM program is how you build the foundation and create a risk culture. Structuring the foundation and framework includes: • Top level executive and board support • Defined roles and responsibilities • Establishing risk appetite and risk tolerance • Determine risk criteria to measure risk in an aggregated manner • Establish a sustainable process

organization’s strategic objectives. This provides a view of internal and external risks. How the organization chooses to prepare and respond to these risks will span the choices of accept, mitigate, manage, transfer or exploit the opportunity the risk brings. The graphic on the opposite page is the ERM view of a sample risk universe:

Corporate Risk Universe Risk appetite and risk tolerance can be the most challenging elements to establish. Using the analogy of eating an apple, your risk appetite is how much you are comfortably able to eat (or risk that you are able to take on) in pursuit of nutrition and enjoyment. Risk tolerance is the amount and number of apples you absolutely can tolerate in pursuit of nutrition and enjoyment (aggregate amount of risk before risk of loss).

Advantages to ERM is that it takes a holistic, cross functional and top-down look at risks and how it impacts an

The risk criteria is how you are going to measure the risk; in terms impact and probability; inherent and residual; as well as velocity and significance. Determining risk criteria allows you to customize the manner which you rank, measure and display risk data. Most organizations utilize some type of data warehouse or risk matrix where

Historical View

Today

Hazard Risk Management Insurable financial risks

Enterprise Risk Management Operational, strategic, financial reputation and insurable risks

Focus on preservation of tangible assets

Recognition of the value of tangible and intangible assets

Silo Approach Each department/function manages its risks independently

Holistic approach Coordinated at the highest level within the organization

Risk management separate function

Risk management is a corporate wide daily concern and is embedded in the operations

Risks are threats - Focused on avoidance of negative events

Risks can be threats and opportunities

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Enterprise Risk Management External

Market 

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New competition Industry Consolidations

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Anti-Trust Communications Security Trade Customs Labor Practices Pension Product Safety Health and Safety Environment Tax



Pricing Pressures Product Demand Socio-Political

Financial

Regulatory 

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    



Governance

Liquidity Credit Capital Internal Controls Tax Actuarial

    

External

Capital Availability Energy Costs Material Costs

Hazards & Third Party Actions

Legal Code of Conduct Compliance Fraud Reputation

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Internal



Operations      

Value Chain Sales and Marketing People Recruiting Product IT

the risk information is stored and complied. Keeping ERM in a step by step process helps break down the tasks to build and sustain the activities of risk identification, assessment, evaluation, response and monitoring. Recognizing the existing and good risk management practices currently in place is a key to tailoring ERM to fit your culture. Building upon this foundation will encourage the engagement of those in cross functional areas to work together. Listed below are ways to be sure an ERM program is strategic: • Value & opportunity focused • Emphasis on a few key risks that drive disproportionate gains or losses • Risk-taking to maximize and preserve the value of the organization • ERM is a key part of strategic and operational decisions • Top management is engaged and encourages everyone to practice risk management

Strategic   



Strategy & Initiatives Mergers & Acquisitions Management Oversight Stakeholders



Natural Events/ Catastrophes Terrorism Social Media Piracy/ Counterfeiting Fraud Lawsuits Reputation

ERM may not become a requirement as expansive as Sarbanes-Oxley; however, the pressure is mounting from regulators, rating agencies, boards and third party vendors for organizations to implement an ERM process. Enterprise Risk Management is here to stay and organizations that link strategic planning and ERM are creating a competitive advantage for continual improvement of their ERM process. n

Mary Peter is Director of Enterprise Risk Management at Eide Bailly LLP and leads the ERM Consulting Practice for the firm. She is a member of the U.S. Technical Advisory Committee and is a frequent speaker on the topic of ERM. Peter has more than 25 years of experience in risk management and insurance industries as well as 10 years as a risk manager. She can be reached at mpeter@eidebailly.com

the journal entry | April 2014

What's In It For Me? 10 benefits of being a member of the UACPA 1

Enhanced Value

The UACPA and its members are recognized for their education, ethics and strong leadership within the community and we remind the public through articles and other resources that a CPA is an asset to any type of financial need.

Networking Opportunities

Through conferences and exclusive member activities, UACPA members connect and grow through empowering interactions.

3 4 5

Advocacy

The UACPA is the voice of the profession in Utah and we regularly meet with groups to ensure CPAs and the public's interests are met.

Increase Visibility

The UACPA actively promotes the profession through media appearances and advertising.

Education by CPAs for CPAs

6 7

Leadership Opportunities

Make a difference by serving on the UACPA's various committees. Dozens of opportunities allow you to volunteer and lead.

Professional Advancement

Up-and-coming CPAs are learning and leading through ProNet, the UACPA's young professional group. Leadership Academy provides a retreat where valuable skills are learned.

Professional Resources

Have questions about licensing or the ethics exam? The UACPA website and staff offer you a go-to destination for answers.

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Member Discounts

Save money on CPE, products and services.

News and Updates

Get local and national updates that are important to your needs as a CPA through Facebook, Twitter, LinkedIn and in your mailbox and email constantly.

Conferences and classes are coordinated by UACPA members who have a pulse on what's most important to you.

Do You Believe You Will Never be Sued?

Taking precautions for unexpected events in your firm By Ronald C. Parisi, CPA, JD

ome CPAs believe that they will never be sued and therefore believe they do not need professional liability or other forms of insurance. The reasons I’ve heard for this position vary, but some common ones include, “I don’t make mistakes,” “All of my clients are friends,” or “I do tax work only.” The problem with this approach is that it is not effective risk management and could put even the most cautious CPA firm at risk. It is important, of course, for CPAs to take every precaution feasible to ensure error-free work, but that may not be enough to ensure a firm’s security. In our litigious society a firm should be prepared for any unexpected bump in the road. To shed more light on this point, the following are some responses to five common reasons CPAs cite for not having insurance:

1. “I have a low-risk practice”

Having a lower-than-average risk profile still leaves you vulnerable. For example, claims stemming from tax work,

perceived as lower risk, occur more frequently than other types, representing about 60 percent of all claims (see chart on page 20, “Claims by Frequency vs. Severity”). Tax claims can also be severe (i.e., in large dollar amounts) when triggered by issues such as estate taxes or foreign financial interests. You may be sued for damages you never anticipated, such as a client losing funds from embezzlement in their offices.

2. “I’ve known my clients for years"

Good working relationships with clients don’t always hold up if the client becomes disappointed for any reason, even if it is unrelated to the CPA’s work. Any significant loss can lead to a dispute. Claims files are brimming with cases of good CPA-client relationships souring due to a variety of problems.

3. “I don’t make mistakes"

Even when the CPA is doing everything by the book, an unfavorable jury verdict can still put the firm or CPA in jeopardy. Public expectations of CPA responsibilities have the journal entry | April 2014

Do You Believe You Will Never Be Sued?

Get Involved! The Utah CPA PAC works to enhance the image of the profession and increase the incluence of the Association with decision makers in Utah.

With support from members of the UACPA, our goals are to: 1) Improve the quality of our community through good government 2) Assure that the UACPA is invited to the table on taxation, business policy and other relevant community issues 3) Have access to the decision makers in State Government when needed

Learn more by searching "PAC" at uacpa.org

risen significantly over the years, putting even the best and most cautious CPAs at risk.

4. “I don’t have insurance in order to avoid being sued”

A CPA who avoids insurance coverage does not always avoid a lawsuit. The party filing a lawsuit won’t even know whether the CPA is covered, and a CPA’s lack of insurance won’t stop an attorney from going after the CPA’s personal assets. The CPA in a claim situation sometimes needs to be defended in a court of law, and professional liability insurance pays for that defense as well as any legal counsel designated by the insurance company to defend the CPA.

5. “All of my assets are in my spouse’s name"

With technology so thoroughly integrated into society, it’s easier than ever to track down someone’s assets. Putting assets in a spouse’s name will not make them immune from a lawsuit. A prudent approach to risk management begins by having a reliable insurance program that includes comprehensive risk management resources designed specifically for CPAs. When the firm fully engages in utilizing those resources, it is well on its way to a more secure future. n Ron Parisi is executive vice president of risk management for CAMICO.

the journal entry | April 2014

Accounting Challenges for Regulated Public Utilities By Matthew A. Croft, CPA, Charles E. Peterson, CRRA and J. Robert Malko, Ph.D., CRRA

ccurately portraying financial information in a Company’s 10-K report can be a challenge for any company. Regulated energy utility companies face an even greater challenge as they try to meet financial reporting requirements established by state regulators and the Federal Energy Regulatory Commission (FERC)1. “Sets of books” takes on a whole new meaning for many regulated energy utility companies. In addition to the GAAP books and tax books which are often spoken of, a utility may have several other sets of books which are needed for various regulatory reporting purposes. PacifiCorp (which operates as Rocky Mountain Power in Utah) for example, has at least seven sets of books in addition to the tax and GAAP books already kept — one each for the FERC and the six states that it operates in. A utility’s set of books may include a Results of Operations (ROO) report for each state in which the utility operates as well as a report for the FERC (FERC Form 1 for electric utilities, FERC Form 2 for natural gas utilities). The ROO is used by regulators to assess whether or not a utility is over or under earning its commission authorized rate of return,

TABLE 1: RETURNS ON EQUITY CY 2012 Questar Gas Company

PacifiCorp

10.24% 8.48%

8.90%

8.62%

8.46%

7.18%

10-k

ROO ROO Total Utah Company

10-K

ROO ROO Total Utah Company

as well as review compliance with various commission accounting and other regulatory orders. The FERC Form 1 “is a comprehensive financial and operating report submitted for Electric Rate regulation and financial audits.2” While there are several accounting similarities the journal entry | April 2014

Accounting Challenges for Regulated Public Utilities between a regulated energy utility and a non-regulated business, there are differences. Accounting differences can also exist between the three types of utility reports (10K, ROO, FERC Form) mentioned previously. As can be seen in Table 1, these accounting differences can lead to significant differences in return on equity for Utah’s two largest state regulated energy utilities: Rocky Mountain Power (division of PacifiCorp) and Questar Gas Company. A high level review of these accounting differences, including examples, will be given in terms of presentation, recognition and measurement.

Background As a background, it is important to understand the rate setting process for a regulated energy utility. While the process can be different for each utility in each state, there are some common themes. Rates are typically established through general rate cases and/or other rate recovery

mechanisms such as fuel adjustment clauses or balancing accounts. When a utility files a general rate case with a state public service commission, its application is based on a revenue requirement that will be needed to recover both expenses3 and a reasonable return on rate base4 over a given time period (test year) which can be historical based or forecasted5.

Presentation As mentioned previously, a ROO report is typically filed with a state in which a regulated utility operates. At a first glance of the ROO, one would immediately notice a difference in the type of “statements” presented when compared to a 10-K report. A ROO report includes a form of an income statement but does not include a cash flow statement or a balance sheet. However, a ROO report does include a statement of rate base which includes many of the same liability and asset elements that are found on a

TABLE 2: FINANCIAL REPORTING FOR REGULATED PUBLIC UTILITIES

FERC FORM1

Regulatory Adjustments

Income Statement

SEC 10-K Income Statement

FERC Chart of Accounts

Balance Sheet Assets & Liabilities

Stockholder’s Equity

Regulatory Adjustments FERC Chart of Accounts Regulatory Adjustments

Balance Sheet

Regulatory Adjustments

Assets & Liabilities

FERC Chart of Accounts

Stockholder’s Equity

FERC Chart of Accounts

Cash Flow 22

Regulatory Adjustments

the journal entry | April 2014

Regulatory Adjustments

Cash Flow

State ROO Income From Operations

Rate Base

accounting & Assurance balance sheet. The values of these assets and liability elements can be the same as, but are often times different, than the values included in the 10-K report. The nature of these “adjusted” elements will be discussed later. (See also Table 2) The net amount of these adjusted assets and liabilities constitutes a rate base value that represents “the investor-supplied plant facilities and other investments required in supplying utility service to customers.6” ROO reports do not typically classify items as long or short term and there is generally more line item detail as opposed to a 10-K report which includes aggregated “other” categories. The FERC Form report includes a more traditional income statement and balance sheet but they are formatted and classified to conform to FERC’s chart of accounts7. A FERC Form includes the same notes to the financial statements as a 10-K report but also includes extensive detail of many of the FERC accounts as well as operating statistics such as generation by plant or load data. As such, a FERC Form 1 for a utility like PacifiCorp can be hundreds of pages long. Several classification differences also exist between the 10-K and FERC Form, many of which can also carry through to a state’s ROO. For example, working capital balances between the FERC Form and 10K can be very different due to classification differences between current assets and current liabilities.

Recognition The matching principle requires revenues to be matched to related expenses. In the world of regulated

Balance Sheet Items CY 2012 (in millions)

18,057

Questar

PacifiCorp 12,913

7,478

1,278 Property, Plant, & Equipment (Net)

460 Shareholder’s Equity

energy utilities, such matching is not always possible in the traditional sense. This is due to the rate setting process. A regulated utility cannot immediately change rates (prices) to recover certain costs incurred. The process of changing rates can take several months to occur and several more months or years may pass before that change in rates will fully recover certain incurred costs. Given this unique circumstance, US GAAP (FAS 71, ASC 980) allows regulated energy utilities to recognize regulatory assets (future cost recovery) and liabilities (future refund to customers). For example, a utility may incur a significant, unexpected cost from a storm or change in tax law. The utility could apply for recovery of such costs with its state regulatory commission. Assuming a commission order is granted to recover such costs, the utility would recognize a regulatory asset on its books and begin to amortize the asset over a period of time. The recovery of that

5,737 888 Total Rate Base

859 Utah Rate Base

amortization expense would likely begin when rates are established in a general rate case. However, it should be noted that even with a commission order to establish a regulatory asset, the related amortization expense may or may not be included in future rates. Rates determined in a general rate case or other rate recovery mechanism are often settled without a line item detail of which costs are going into such rates (“black box settlement”). Therefore, while the theory behind FAS 71 (ASC 980) may consider the “matching” of revenues and expenses as probable, the reality may be problematic. While the recognition of regulatory assets and liabilities is something unique to regulated utilities, there are other recognition differences that exist between a regulated energy utility’s 10-K Report and its state ROO. Many items which are recognized under GAAP are not recognized in the ROO. As a general rule, items are not included in the ROO unless the journal entry | April 2014

Accounting Challenges for Regulated Public Utilities they are considered recoverable and are the same types of costs, revenues and rate base items that were included in rates established in a previous general rate case. To complicate matters even more, each state has its own “rules” or past commission orders that specify what costs or revenues should or should not be included. As such, there can be a complicated sifting process that goes on between the GAAP data and a utility ROO for each state in which a utility operates. Many expenses and revenues recorded under GAAP may be removed from a ROO because they relate to activities not established through a general rate case or similar proceeding or, they may be items specifically disallowed by the regulator such as costs determined by a commission to be imprudently incurred. Other items may be recognized for ROO purposes but not under GAAP. For example, utilities are often allowed to recover a return on a cash working capital balance (i.e. a rate base item). This balance can be determined in several different ways, one of which is through a lead-lag study. At a simple level, a lead-lag study attempts to calculate the difference between the average time it takes to collect revenues and the average time it takes to pay expenses. This difference is then multiplied by the average daily expenses to arrive at a cash working capital balance which is included in rate base. Assuming that revenues lag behind expenses, shareholders would receive a return on this rate base item. The process of developing a lead lag study can take considerable time. As such, new studies are often only conducted once every few years. While GAAP serves as a starting point for the ROO, many adjustments must be made in order to properly present financial results of operations for state regulators.

Measurement A utility’s 10-K and FERC Form balance sheet will show property plant and equipment at year end values. For ROO purposes, property, plant and equipment (“plant in service”) may be measured using an averaging methodology that covers a historical 12 month period. This concept ties back to how rates are established in a general rate case. The general idea is that rate payers pay for plant that is in service and providing benefit to customers. If a $100 million capital addition is forecasted to go into service during the last month a test year, rate 24

the journal entry | April 2014

Revenues and Income CY 2012 (in millions)

Questar

4,882

PacifiCorp

935

862 47 Revenues (10 K)

537

Net Income (10 K)

68 Total Reg. Oper. Rev. (ROO)

402

Utah Reg. Oper. Rev. (ROO)

payers should pay for the one month of service received rather than for the full 12 months of a test year. Thus, when actual plant in service balances are reported they can be reported as an average for the 12 month period. This same averaging methodology can also be applied to other rate base items. Another item that may be measured differently for ROO purposes is interest expense. Interest expense may be recalculated based on a utility’s rate base being applied to a utility’s average cost of debt. A utility rate base may not include interest expense related items that would otherwise be found on a balance sheet such as capital leases for equipment. A third item that can cause considerable complication is the calculation of state income taxes. This is especially the case when a utility provides service in multiple jurisdictions. The general concept here is that a given state should only be responsible for its “share” of income taxes. For ROO purposes, questions often arise as to how that share should be determined. Should total state income taxes for the utility be re-allocated back to the states or should each state’s income taxes be calculated independently of other states? Such calculations can involve complex and often controversial cost and revenue allocation methodologies. PacifiCorp for example, operates in six different states including Utah. A multi-state process (MSP) has been established whereby representatives from the states meet several times a year to discuss these allocation issues.

accounting & Assurance

Conclusion

Given the provisions of FAS 71 (ASC 980) regulated energy utilities are unique in that they record regulatory assets and liabilities. In addition to the 10-K report, a regulated utility’s financial reporting requirements may include a ROO report for each state in which the utility operates as well as a FERC Form. Although based on the same GAAP data, each report has its own variation of how financial information is presented, recognized and measured. Preparers of these reports face the challenge of sifting through all the differences and ensuring that the users of the reports are given accurate and timely information to perform their regulatory functions. State regulators need such information in order to address the interests of both rate payers and investors. Without careful attention to and understanding of specific details, the analyst, who is attempting to interpret and utilize financial information from the different reports, can be “so close, yet so far away.” n Sources 1 See Jonathan A. Lesser and Leonardo R. Giacchino, Fun damentals of Energy Regulation, Public Utilities Reports, Vienna, Virginia, 2013, page 192. 2 http://www.ferc.gov/docs-filing/forms.asp#1. Note, not all state regulated energy utilities file a FERC Form. In Utah, PacifiCorp (Rocky Mountain Power) files a FERC Form (FERC Form 1) while Questar does not. 3 Expenses include depreciation, income taxes, operation and maintenance and general and administrative costs. See J. Robert Malko and William J. Evans, “An Economic Exam for Energy Utilities,” The Journal Entry, January 2013, pg. 15-16. See also James E. Suelflow, Public Utility Accounting: Theory and Application, Michigan State University, Institute of Public Utilities, East Lansing, Michigan, 1973, pg. 18-19, Chapters 4-6. 4 As discussed in the Presentation section, rate base is the net value of certain assets and liabilities (some of which are adjusted) that can be found on a Utility’s balance sheet. 5 A test year is the period, usually 12 months, for which the new rates from a rate case are assumed to apply to. For more discussion on test years see Joni S. Zenger, Charles E. Peterson, J Robert Malko,“The Utah Test,” Public Utilities

Fortnightly, May 2010, pg. 36-40. 6 Robert L. Hane and Gregory E. Aliff, Accounting For Public Utilities, Sec.4.0, 4-1 (Matthew Bender) 7 See Charles F Philips, Jr., The Regulation of Public Utilities: Theory and Practice, (Arlington, Virginia: Public Utilities Reports Inc., 1988), Chapter 6. See also Marvin P. Reeser, Introduction to Public Utility Accounting, Chapters 5-6.

Matt Croft, CPA is a Utility Technical Consultant for the Utah Division of Public Utilities. He has testified before the Utah Public Service Commission in several cases on topics that include plan addition accounting and forecasting, pollution control equipment approvals and others. Croft graduated from University of Utah. He can be reached at mcroft@utah.gov

Charles Peterson, CRRA is a Technical Consultant at the Utah Division of Public Utilities. Charles holds a M.S. in Economics and M.Stat degrees both from the University of Utah. He has more than 30 years of financial analysis and economic consulting experience.

J. Robert Malko, Ph.D is a Professor of Corporate Finance at the Jon M. Huntsman School of Business at Utah State University. He has served as Chief Economist at the Public Service Commission of Wisconsin and as a Program Manager at the Electric Power Research Institute. Malko has served as President of the Society of Utility and Regulatory Financial Analysts. the journal entry | April 2014

Golf Tournament Tuesday, August 19 Time: 8 a.m. Shotgun Start Location: Thanksgiving point, 3300 W. Club House Dr., Lehi Fees $450 per team; $115 per individual Bring your swing to the UACPA's annual golf tournament where 36 teams of four will be playing to benefit the Utah CPA Foundation, supporting financial literacy in Utah. Prizes and raffle will take place during lunch.

Save the Date

For info about the tournament and sponsorships, contact Tisha Smith, ts@uacpa.org

the journal entry | April 2014

Annual Member Summit &Awards Banquet September 26, 2014

Professional Issues Update by William E. Balhoff, CPA, CGMA, CFF, AICPA Chair More details coming soon!

Managing the Risks That Come with Working Remotely by Randy Johnston

undamental building blocks that all firms must have to mitigate risk include 1) firewalls, 2) spam control and 3) anti-virus protection. The bad news for 2014 is that each of these three major product classes doesn’t do as good or comprehensive job as they did last year or in many of the years before that. Why? The intruders and bad guys are getting more sophisticated at writing their code and creating effective attacks. Even the best of the firewall, spam and AV providers are now routinely letting more attacks, bad messages and malware through. Firewall vendors such as Cisco, WatchGuard and SonicWALL are the best options for protecting your firm today, and entry level versions of these products should be considered for use by telecommuters. Home vendors like DLink, Belkin and Linksys have no chance of protecting your firm, and little chance of protecting telecommuters. As more firms choose to use hosting companies as a public cloud strategy, and more firms allow telecommuting using private cloud technologies like Citrix, Microsoft Remote Desktop Protocol (RDP, the former Terminal Services),

GoToMyPC, LogMeIn Pro or other remote access products, you will need to manage the risks of the remote users and home environments. The best anti-virus products have been debated among technical suppliers and network administrators on a regular basis. Products that work well when used with CCH, Thomson and Intuit products include GFI Vipre, and McAfee. Products that tend to cause more issues include Symantec, Kaspersky, and Panda. It is still wise to use different anti-virus products on your desktop and server computers than you do on your firewalls. In prior times, we recommended a third different product for your servers, but this strategy is much harder for an IT team to execute properly today. Further, the end-point protection suites don’t seem to do a better job AND they run slower. One final note: with Windows 8, the built in Microsoft Security Essentials anti-virus isn’t perfect, but it may be “good enough,” which should reduce your need to license AV on every desktop.

the journal entry | April 2014

Managing the Risks that Come with Working Remotely

Getting Mobility Right for Telecommuters Many of you have invested in tablets, smartphones and of course portable computers to improve the productivity of your team members, professionals and firm. Have you protected your firm properly by managing all of these mobile tools? Our fundamental advice is to encrypt all mobile devices. Managing mobile devices properly is difficult. There are many technologies involved from 1) hosting software such as Citrix XenApp, Citrix XenDesktop or VMware View, to 2) wireless and cellular data connections to 3) the devices themselves. If a computer is used on a team member’s home network, other users in the home can infect the team member’s machine and access to your office can be granted via these other home machines. 4) We recommend isolating telecommuter’s business computers from other home users using a hardware firewall. Finally, it is wise to have 5) software that can manage all of your firm’s mobile resources. Remote workers must be savvier and understand how to use cellular data cards or shared cellular wireless access points (MIFI) or WIFI. Remote users frequently find that MIFI is not quick enough to provide satisfactory performance although this is improving with the new 4G coverage in the larger cities in South Carolina. Your firm should have control procedures for using wireless. Some firms do not allow the use of any public wireless, which is a reasonable safety position. Wireless access in most people’s homes is not secure enough to prevent unauthorized access, so you may want to consider a wired connection from homes mandatory. For your mobile devices, make sure that every device is encrypted. Further, for tablets and smartphones, make sure your IT team has required PIN codes or swipe codes required through Microsoft Active Directory. You do not want any user on a portable device without at least a PIN code. For portable computers, require user IDs and strong passwords. A more recent innovation is mobile management software to control and secure mobile devices. Example products in this category include AirWatch, MobileIron, Good, MaaS and Level Platforms. These software products control the software that can be installed, remotely update the devices and can wipe the device clean if it is lost or stolen. This ability 28

the journal entry | April 2014

to wipe a device is important for controlling risk for breach reporting law compliance or when someone leaves the firm. Another risk element to the firm is any portable USB hard drives or thumb drives that are not encrypted. Consider purchasing drives that are encrypted full-time like those made by IronKey, or simply enforce a policy for using Microsoft Bitlocker on all removable USB drives. For client and team member convenience, you may want to leave a small section of the USB drive that is not encrypted for temporary transfer of files. Alternatively, use your portal for transferring files, and continue to eliminate the use of USB drives everywhere.

Other Considerations In this article, we have tried to cover the big risk items on telecommuting: firewalls, spam, anti-virus, risk of using wireless, remote access, PIN codes, remote device control, management software as well as encryption. These items are the highest risk items, and there are many other fine points in a comprehensive telecommuting plan and risk mitigation. For example, note that we did not talk about having a formal telecommuter policy, secure email, physical security of the computers including security locks, two factor authentication, phone/voice quality, video conferencing, web conferencing, intellectual property theft, password managers, VPNs, Direct Access, intrusion detection tests or the need to keep all of this technology updated on a regular, almost daily basis. When telecommuting is done right, team members can work as effectively at home or at a client site as they do at the office. Speed and the use of multiple monitors should be comparable, too. The main things you give up are wasted time spent around the water cooler and on commuting. It is also more difficult to keep engaged, personal relationships. You’ll have to have a plan to keep team members engaged with others in the organization to keep them from being susceptible to predatory hiring by other companies who use telecommuters. n

Randy Johnston and his K2 Team provide CPE courses through the State Society offices, in-house at your firm or via webinars. If you have questions on any hardware, software procedures or IT strategies for your firm, contact Randy@K2e.com with your questions.

Social Media and CPAs: Curse or Bonanza By Richard D. Wagner, CPA

ommunication through social media is here to stay. Anyone with a teenager will agree that you never see them without some type of communication device. At one time we might have thought this was a fad and only the young would need to participate. However, today the majority of young, old and professionals of all types use social media as a communication tool to reach family, friends, colleagues, prospects and other community connections. Some of the more popular sites include LinkedIn, Facebook, Twitter, and Pinterest. You have a choice, see this as an opportunity to participate, engage and communicate instaneously or stay in the past and only communicate and network face to face. I wonder what the horse and buggy shop was thinking when the automobile was invented, just a passing fad? I am not suggesting you never communicate in person, in fact, we need to continue to do this, but with our busy schedules, social media allows us to conveniently stay connected and engage with a diverse audience. LinkedIn is part of your professional practice and everyday life. For the most part, LinkedIn offers a space to communicate and network with other professionals about business related topics. This is not an article with a lot of technical detail on the proper set up and use of Linked In but rather

I want to address the question many have asked “Why do I need to get involved with LinkedIn?" If you want to stay connected with your clients, referral sources, potential clients and colleagues with a limited amount of time investment, read on. First, create a profile on LinkedIn including your normal biographical information (name, rank, school, employer) but also an enhanced description and summary of the work you do. When you write your summary or what some would call the “about you section,” make sure it is written in way that allows someone to read and actually understand what you do. Because LinkedIn is a networking site, think about what you would say to someone that you met, in person, at a networking reception about what you do and why. Show passion about your work, how long you have been doing it, why you do it, how you help your clients and what they say about working with you. Some professionals have really creative titles rather than just the normal CPA. Try and reflect within your title what you do in your everyday work, such as, “Business Advisor and CPA” or “Advisor to Start-ups and high growth companies”. Remember to consider what the reader is looking for and not just your formal title. Try and complete as much of the profile as possible and by all means include a recent picture. My experience when helping others with their profiles the journal entry | April 2014

is we tend to find out how much or how little they have done to network or make themselves famous. This gets back to an old marketing saying I use all the time, “You might be the best CPA in the world, but if you don’t tell someone, you could be the poorest”. If your profile lacks information, use this as a wake-up call to get involved.

In today's world it is all about communication and more importantly, timely communication. It has become an expectation that you will stay in contact with your clients, referral souces, potential clients, etc. on a consistent basis. Now that your profile is updated, it’s time to network. Think about walking into a networking reception with thousands of possible contacts, what do you do? Stand there and wait for all of them to rush up to you and want to be in your network? Might work for some folks, but I was never that popular; you will need to invite others to join your LinkedIn network. I don’t subscribe to the theory that more is better and invite the world in hopes of creating lots and lots of contacts. Think about what your purpose is in networking. For me, I want to stay in contact with clients, potential clients, referral sources and individuals I work with in the business community. When I create a post, either of my own writing or share a post of possible interest to my network, I always think about the audience and my network. If you have increased your connection numbers just by including co-workers and your competitors, you are not sharing information with the people who need it, clients, referral sources, etc. What is the right number of connections? Everyone’s will be different based on what you do and the area you cover. Maybe you work in a niche with only a few others in the whole country or maybe you are still a generalist and want everyone to know what you do and how you can help. The number doesn’t matter as much as the quality of the connection. Now you have the basics, a good profile and a network of the right people. There are books and classes you can attend that will give you all the technical how to's and tips to 30

the journal entry | April 2014

make your page better. You can now begin to communicate on a daily, weekly or monthly basis based on what fits your schedule. LinkedIn should not be viewed as a curse where you MUST use it daily, but rather a bonanza of a tool to communicate with clients, referral sources, etc. with a limited amount of time away from work. Personally, I take a few minutes a week and never have to leave my desk to find out who has changed jobs, written new articles, passed on information I might be interested in and I can communicate out to my connections as well. In today’s fast-paced world, we need a way to maintain our charge time but still stay in contact with everyone outside the office; your competitors will if you don’t. LinkedIn also offers a great opportunity to view other connections and see who might be in your six degrees of influence. If you are going to talk with a potential client or referral source who else in your network knows them that might be able to give you a good reference? In the old days we would call others and try and see who might know them, but with LinkedIn, all you need to do is type in their name and up pops who in your network also knows that same person. This one tool has assisted me in winning proposals just by having a good network that is tied into my own work area. Let’s face it, in today’s world it is all about communication and more importantly timely communication. It has become an expectation that you will stay in contact with your clients, referral sources, potential clients, etc. on a consistent basis. Using social media allows us a way to supplement in-person meetings to create more contact. I will never let social media take the place of in-person communication, but it certainly allows me to keep in closer contact with those I need to be in front of every month. Get involved, participate in the bonanza and don’t allow yourself to travel by way of horse and buggy. n

Richard D. Wagner, CPA is the firm wide director of marketing/business development at Eide Bailly in Colorado. His client service work includes more than 30 years of experience in the healthcare industry. He can be reached at rwagner@eidebailly.com

Congratulations Elijah Watt Sells Award Winners

Douglas R. Woodbury and

Tyson P. Irwin

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The UACPA is proud of Utah's newly licensed CPAs who were among the 55 candidates who scored a cumulative average score above 95.50% on their first attempt on the CPA exam. More than 94,000 individuals took the exam.

Connect with the UACPA. Follow us for the latest in the profession and with your membership

the journal entry | April 2014

SMEs Driving & Adopting Sustainable Business Strategies By CGMA

ave you wondered why accounting has become so entwined with sustainability? They actually have a lot in common. With rising energy prices and growing consumer demand, there are increasing reasons for small and medium-sized enterprises (SMEs) to adopt sustainability strategies.

US and Canada. The report provides a real-life picture of how sustainability impacts the bottom line and shows how finance can harness sustainability strategy to achieve commercial benefits.

Emphasizing Sustainability Improves Profitability & Much More

Top Ten Key Elements

Reasons for adopting sustainability may vary from company to company, but all have found that emphasizing sustainability improves their profitability, generates greater loyalty and commitment from employees, and cements relationships with customers and suppliers. In fact, a recent Lloyds TSB survey found that 70% of SMEs are adopting a sustainable approach in order to secure new business, while 54% are becoming sustainable to save money. The AICPA and CIMA, under the Chartered Global Management AccountantÂŽ (CGMAÂŽ) designation have released Top Ten Key Elements to Sustainable Business Practices in SMEs, which draws together case studies and key lessons from small businesses across the UK,

Below is a snapshot of the major points in the report:

1. Take a broad view of sustainability. Engage outside expertise to ensure that your company considers every aspect of sustainability, not just environmental issues. You can achieve this by having open discussions with all stakeholders, including customers and suppliers, and being willing to share information to come up with innovative solutions to reduce emissions and increase efficiency. 2. Define in detail what sustainability means to your company. Embrace industry-wide initiatives by engaging with peer organizations to achieve sustainable goals and sharing best practices with organizations that face the same challenges. However, donâ&#x20AC;&#x2122;t limit it to peers; consider engaging all stakeholders in your drive to improve sustainability, including suppliers and customers, to get everyone on board.

3. Engage all stakeholders. Give employees ownership in the company and a direct role in defining sustainable activities like charitable giving. Keep a long-term perspective on the balance between sustainability and profitability, and trust that sustainable business practices are bringing benefit to the company — even if those benefits are intangible and hard to measure.

8. Tie sustainability to profit. Identify how everything you use or create in your business, even waste, might be turned into a value-added product. Consider how sustainable business practices can increase efficiency and differentiate your company from competitors, then network with local organizations that share sustainable goals so that you can pool that knowledge and coordinate efforts.

4. Remember that you are not alone. While that’s often difficult, getting involved in community or industry initiatives to kick-start a sustainability drive can help. Consider codifying practical measures for sustainability in a document that everyone in the organization can access and understand. Creating metrics to measure the performance of employees and the organization as a whole on sustainability can do the trick.

9. Measure, monitor and review. Keep in step with ecological initiatives your customers and/or suppliers may undertake. Look at innovative interpretations of the term ‘recycling,’ including the use of material as a source of biomass fuel. Consider calling in external consultants to give an objective view on how your company can adopt more sustainable practices.

5. Establish responsibility and communicate widely. Look at industry-wide initiatives that build on the knowledge of other companies and industry associations. You can achieve this by mapping official accreditation for environmental management and sustainable process quality to your own business processes. However, you can go even further by considering sustainability not only within your own company, but across your network of suppliers as well. 6. Take it step by step. Identify and build on the elements of your existing business model that promote sustainable activities and practices. Make clear links between sustainability and efficiency and efficiency and cost savings. You can achieve this by keeping up with the latest research on how to improve sustainability in key areas of business, such as fuel efficiency and the reduction of packaging materials — and then apply those lessons in practical ways in your own organization. 7. Walk the talk. Assess the benefits of sustainability projects from a long-term perspective and then engage senior management in defining a sustainability strategy that looks beyond the next quarter’s financial results. Walking the talk means leading by example and engaging customers, partners and suppliers in your journey towards becoming a more sustainable business.

10. Invest in the future. Embrace industry-wide initiatives and engage with peer organizations to achieve sustainable goals. Share best practices with organizations that face the same challenges in regard to sustainability and engage all stakeholders in your drive to improve sustainability.

Case Studies Download the full report to read about real life case studies from the following organizations on how they have been able to successfully integrate many, if not all, of the above elements into their operations, the challenges they faced and how they were able to overcome them: • Atropex • Aéroports de Montréal (ADM) • Cirtronics • UKOS plc • Billington Structures • Rainbow Nightfreight • Zions Bancorporation • Rocky Mountain Flatbread • Ecological Fibers, Inc. The CGMA designation recognizes the most talented and committed management accountants with the discipline and skill to drive strong business performance. CGMAs can download the full report, Top Ten Key Elements to Sustainable Business Practices in SMEs, at CGMA.org. n

the journal entry | April 2014

Recognize Success Nominate a UACPA Member to be honored at the annual awards luncheon

The UACPA Awards Task Force is gearing up to select members who deserve recognition at our Membership Summit in September. While many CPAs are overly modest and prefer to remain unrecognized, it's important for us to recognize our best professionals and pay tribute to them as role models for those who are early in their careers. It also serves to promote the vital roll CPAs play in the community. The UACPA wants your help in identifying candidates worthy of recognition. Please nominate the UACPA members who consistently go above and beyond what is necessary to serve their clients, employers, employees and communities. Any UACPA member that has contributed to the profession and/or community can be nominated. Nominations should be submitted by letter and provide relevant information in support of the nominee. Please send nominations to the UACPA Awards Task Force, 1240 E. 2100 South, Suite 500, Salt Lake City, UT 84106 or email them to Tisha Smith, ts@uacpa.org. All nominations should be received in the UACPA office by July 10, 2014. Please take time today to nominate your employee, boss or colleague for their accomplishments.

Award Categories

Distinguished Service

expected. • Achieved a broad based recognition and respect for the contribution.

Outstanding CPA in Business & Management • A member of the UACPA in industry or business and management who has made a significant contribution to the growth and success of his/her employer’s company • Demonstrated superior professional competence • Provided exemplary leadership through prominent UACPA positions • Made significant contributions to the growth and enhancement of the profession. Their achievement shall have created important positive changes in the business environment. The contribution must have been made at considerable personal sacrifice beyond that normally expected. • Achieved a broad based recognition and respect for the contribution.

Outstanding Educator • Teaching: course development, teaching load, research, supervision, student motivation, and perception • Research and Publication: number, type, and quality • Academic Assignments: administrative, committee, special appointments • Professional Development: professional association offices held, services rendered, seminar, or conference participation • Professional experience and public or civic service

• Demonstrated superior professional competence • Served in a key leadership role providing a significant and meaningful

Women to Watch: Emerging Leader*

service • The service provided is beyond that normally expected in any Association or career position • The nominee must have achieved a broad based recognition for the service or contribution • May also be used to give recognition for outstanding public service • The nominee shall be from the general UACPA membership

sion and her community, but who has not yet reached the highest levels of advancement • Demonstrated leadership, public/community service, contribution to the profession, creation and implementation of unique initiatives, involvement with alma mater or other local colleges and universities

Outstanding CPA in Public Practice • A member of the UACPA in public practice who has made a significant contribution to the growth and success of his/her employer’s firm • Demonstrated superior professional competence • Provided exemplary leadership through prominent UACPA positions • Made significant contributions to the growth and enhancement of the profession. Their achievement shall have created important positive changes in the public accounting environment. The contribution must have been made at considerable personal sacrifice beyond that normally 34

the journal entry | April 2014

• A professional who has made significant contributions to the profes-

Women to Watch: Experienced Leader* • One who has advanced to a higher level or leadership position – including partners, owners, executives, elected officials • Authorship of articles, major or unique contribution to the profession, public and/or community service, mentoring other professionals, improvement to the workplace, involvement with alma mater or other local colleges and universities *Presented by the AICPA. Nominees must be AICPA members to be considered.

Succeed

with ProNet Leadership Academy

To keep pace in your profession, let alone excel as a leader, requires your rate of learning to be greater than, or equal to, the rate of change. And given the rate of change today, this means that you must have future-minded flexible thinking skills, the tools to rapidly adapt to new circumstances, the ability to make your ideas clear to other people in a way they can easily grasp and the personal influence to inspire others throughout your network. Learn to Leverage Your Unique Leadership Strengths Insights to Actions from the Business Learning Institute (BLI) is the next evolution in strategic planning and leadership skills and represents the intersection of solid strategic planning processes, powerful visual tools and evidence-based practices in motivating people. You will identify and learn to leverage your unique leadership strengths and to conquer your leadership challenges.

Understand the Strengths of Others

Create a Network of Professionals

“Know thy self” is an important first step in becoming an exceptional leader, but understanding the strengths of your organization and your team members is equally important. As you learn to identify areas of strength in others, it will allow your team to achieve maximum results and will inspire people to follow you as you work to build consensus. The Insights to Action curriculum teaches you critical and creative thinking skills that facilitate collaboration and a shared vision.

The benefits of the ProNet Leadership Academy don’t stop when the training ends. Academy alumni will leave with a network of other top professionals and future business leaders that will help accelerate your opportunities and career. Through formal and informal networking, your academy network of alumni will serve you well into the future.

Nominate a Young CPA or Apply to Attend The ProNet Leadership Academy accepts just 30 new professionals each year to participate in this exclusive opportunity.

Visit www.uacpa.org and and apply online Search “Leadership Academy” to learn more

UACPA Members Celebrate 25 Years Denise J. Achelis Kenneth A. Acker Standard Optical David S. Ahlstrom Davis & Bott, CPAs, L.C. Russell V. Baird Baird, Blackburn & Associates, PC Bruce J. Barker J. Bruce Barker, CPA, P.C. Stephen M. Bunker Donald E. Cannon Dixie REgional Medical Center Gordon F. Carmen Church of Jesus Christ of Latter Day Saints Robbie S. Chidester CFO Advantage Consulting, LC Brent E. Christensen John T. Cook PacifiCorp Gordon L. Crabtree Sarah Dansie RJ Masonry, Inc. Geri A. Douglas Larson & Company, PC Jerilyn, Evans

Steven K. Flint Steve Flint Custom Homes

Craig S. McQuarrie CBIZ MHM, LLC

Russell Florence

Stephen R. Morgan

Matthew C. Gardiner

Mark Shawn Morley

Rhonda H. Gardner

Gary J. Myers Eide Bailly, LLP

Cathlreen C. Gilbert David R. Grow Western Governors University Brent Halliday Halliday & Co. Daniel J. Harps Michael S. Hartle Hartle & Rees LLC

Jeff L. Nilsson Steven C. Penrose Finance & Records Dept Michelle L. Phinney Kolin M. Porter Gary L. Prince Prince Hansen Gray & Associates PLLC

Robert H. Hunter Robert H. Hunter & Associates

William E. Pyper

Russell L. Jenson

Gina M. Reel Indiana University Foundation

K B. Keller Dan Landvatter Eddie Lee E-Corp. Scott B. Livingston Lawrence M. Mauck Jay H. McNamara DHI Computing Service, Inc.

Roger E. Farnsworth 36

Congratulations to the following individuals who have been with the UACPA for 25 years

the journal entry | April 2014

Mitchell J. Rasmussen

John C. Reidhead State of Utah - Div. of Finance

Gary L. Robinson Robinson, Burnett & Associates, Inc. Clair A. Rood CBIZ MHM, LLC Steven M. Serdar Ricky L. Smith Deseret Power Susan A. Speirs David M. Sperry Tanner LLC Patricia H. Stewart Haynie & Company Stan J. Vincent Brian V. Vinchur Clark A. Warnick Nu Skin Enterprises, Inc. H. John West Robert M. Whatcott Whatcott & Associates, PC Bob H. Wiser LDS Business College

David S. Ricks Ricks & Company, LLC

Kristy S. Woodward City Creek Reserve, Inc

David W. Roberts Crowe Horwath LLP

Jeffrey A. Worthen Church of Jesus Christ of Latter Day Saints

Top Supporters/In Memoriam

TopUACPASupporters The UACPA extends our thanks to the top supporters of the Association. Through membership applications and renewals, support of our continuing education program, volunteer services, and monetary contributions to the Utah CPA PAC and Utah CPA Foundation, these firms and organizations provide great value to the work of the Association and to the CPA profession in Utah.

IN MEMORIAM William Edward Bowen, Jr. Sept. 10, 1939 — March 3, 2014 UACPA Member since 1971

Number of Members 1 Church of Jesus Christ of LDS 2 Tanner LLC 3 Ernst & Young 4 Wisan, Smith, Racker & Prescott 5 Squire 6 Deloitte & Touche LLP 7 Eide Bailly 8 PricewaterhouseCoopers LLP 9 Hawkins Cloward & Simster, LLC 10 Jones Simkins LLC

63 49 41 36 34 32 31 29 28 27

Harold Smith Dec. 28, 1917 — Feb. 25, 2014 UACPA Member since 1947 UACPA President, 1966-67

Number of Leadership/Council/Committee Volunteers 1 Eide Bailly 2 PricewaterhouseCoopers LLP 3 Ernst & Young LLP 4 Squire 5 Tanner LLC 6 KPMG LLP 7 State of Utah 8 Wisan, Smith, Racker & Prescott, LLP 9 CBIZ MHM, LLC 10 Grant Thornton LLP 11 Mantyla McReynolds LLC

12 8 5 5 5 4 4 4 3 3 3

Amount of Personal/Organization Contributions to the Utah CPA PAC and Utah CPA Foundation 1 2 3 4 5 6

Ray O. Westergard F. Lynn DeBry W. Val Oveson Weslee A. Klein Gordon L. Haycock Mark W. Stevens

$550 $500 $260 $200 $140 $100

Evan Ray Terry March 15, 1918 — Aug. 18, 2013 UACPA Member since 1952

Arnold James "Jim" Larson July 21, 1944 — Oct. 5, 2013 UACPA Member since 1974

the journal entry | April 2014

Photos, UACPA Activities 1

1 ) UACPA CEO Susan Speirs talks with Amanda Dickson on KSL NewsRadio for "A Women's View." 2 ) Sen. Pat Jones speaks at the rally for Financial Literacy Day on the Hill. 3) The UACPA has been delivering Tax Snacks to various firms throughout the state. 4 ) The audience hears about the importance of Financial Literacy during Financial Literacy Day on the Hill on Feb. 12. View more photos on our Facebook Page: www.facebook.com/UtahAssociationofCPAs

the journal entry | April 2014

MEet a uacpa member

Five Minutes with Jared Mair Jared Mair is the Corporate Controller for School Improvement Network. The Brigham Young University graduate spent four years in public accounting before joining School Improvement Network in 2012. Mair became certified in 2010 and is an alumnus of the 2012 Leadership Academy. Mair and his wife Christine have two children — William and Ellie — and will welcome a third addition this spring. As Co-chair of ProNet, what can you tell us about the activities and events for this year? The ProNet Council will be working closely with the chapters to plan activities to support the development of young professionals. The ProNet Council is excited about the upcoming CPA Inauguration and Leadership Academy events and look forward to events that allow networking between young professionals and CPAs across the state. What led you to become a CPA? Throughout my childhood, I spent many hours working side by side with my

grandfather, learning the values of hard work and modesty. The long hours were often rewarded with lunch or dinner and lead to discussions about business and money. These discussions were often mapped onto the back of napkins and fueled my future interest in business. I loved these discussions about how businesses strategized, planned and operated. Finance and accounting provided the perfect avenue to understand and participate in the future growth of business. What have been your proudest moments as a CPA? My career to date has been filled with moments of pure satisfaction and joy. I have found happiness in being able to shape the business world and having the ability to influence business processes and practices. However, the greatest joy of all is the hour in which I learned I passed all four parts of the CPA exam. Significant effort was put forth to pass the exam, and significant satisfaction was achieved in knowing the goal had been accomplished.

What do you like to do outside of the profession? Without a doubt, I have a passion to compete and love to participate in all competitive activities including sports. I closely follow the Denver Broncos and continue to this day to feel the bitterness of a stunning Super Bowl loss earlier this year. I also love spending time with my family, traveling, and watching movies. What advice do you live by? Invest in yourself and others. Learn to grow through education and life experience. Learn to listen to advice and feedback that will stretch and grow you personally and professionally. Value feedback and don’t fear the need to change and improve. Surround yourself with mentors, friends and family that demand you stretch and grow and don’t accept anything less. Finally, learn to give back to others by providing the same meaningful advice and friendship requested by you of them. n

the journal entry | April 2014

Meet the Executive Board

Q: How do you survive busy season? Paul Skeen, CPA President

Hollie Andrus, CPA Vice President

Work hard and play hard. Although time to play is limited, playing hard during those brief periods makes it so I can focus and work even harder during those not so brief times. I also live by the mantra that I can always make time to do the things that are most important to me.

Giving your mind a break from numbers helps you refocus and have energy when you get back to the job.

Jonyce Bullock, CPA President-Elect

Mark Palmer, CPA Secretary

The key for me is planning. First, I always try to plan something at the end of busy season that I will have to look forward to. I also plan a few nights a week that I will be home, focused on family. This helps the whole family feel more balanced during busy times. Finally, I make sure to plan a few strategic breaks during the day to refocus.

Everything has a give and a take. Keeping those in balance requires scheduling. Sometimes I need to take from the family and give to the company to ensure a budget is completed on time, or closing deadlines are met. However, it is just as important to give to the family on important events and take a moment from the company.

Dan Griffiths, CPA AICPA Council Representative

Kent Thomas, CPA Immediate Past President

It’s all about psychological resilience. I have to gear up for the stress by identifying bitesized, high impact activities that quickly refill those reservoirs of resilience. For me, that includes things like morning exercise, 5-minute breaks at regular intervals, and setting aside 30 minutes to spend with my family at the end of a long day.

I have to maintain balance when I have a stressful schedule. I exercise every morning and I like to plan my day early, prioritizing the most important tasks. I try to make the day “top heavy” (i.e. weighty items first). I drink plenty of water, take periodic breaks to reenergize and plan some time to deal with the unexpected.

Larry Deppe, CPA Member at Large

Susan Speirs, CPA CEO

When feeling exhausted, exasperated, frustrated, disgusted, or disheartened, remember the role that your knowledge and services play in our economy, client businesses, and personal lives of those who own or manage client entities. Where would your clients be without you? If none of these ideas help, consider going to night school to become a plumber and make some real money!

When I was in public practice one of my best stress relievers was to schedule time to go to the gym a or go for a jog, strategically, so that I wouldn’t have appointments afterwards which helped clear my mind and re-focus. In my new capacity as your CEO, I’m still trying to figure that out — any ideas?

(Not Pictured) Kyle Pexton, CPA - Treasurer 40

the journal entry | April 2014

UACPA staff

Board Bullets

News from the UACPA Board The UACPA Board of Directors has been active in the final quarter of the UACPA's fiscal year. Here is a glance at what has been happening: • Fiscal year March 31, 2015 budget was approved • Monies have been provided in budget to enable CPE to be broadcast across the state. Additionally, conferences can be accessed online as they are currently happening in the UACPA Education Center. • The UACPA will sponsor a conference in St. George • Students will continue to have free membership • Financial Ready Utah will have its first initial board meeting and run separately from the Association • There will be a vacancy in the State Board of Accountancy with the expiration of Gordy Haycock’s term in June. The UACPA will submit three names, preferably from industry for approval from the State Board. • Legislative update – SB40S1 regarding financial literacy in the education system has passed and is awaiting funding. SB19 requesting that one of the members of the Utah State Tax Commission be a CPA has met no resistance. HB283 regarding non-profits and perjury statements has undergone revisions with the help of our NonProfit Committee. A big thanks to our committee members for understanding the implications and limits to future board members if the original language was left unchanged. • A vote was taken to create an ethics committee to be chaired by Kent Thomas allowing the UACPA to address issues the Division of Professional Licensing via our State Board of Accountancy.

Meet the UACPA Staff

Q: What are you currently working on at the UACPA? Tisha Smith Membership Coordinator We have been doing campus outreach by visiting all of the college campuses in Utah. Campus ambassadors work with the UACPA to put on events for their peers and the staff visits with professors and answers questions about becoming a CPA.

Kathy Romero Finances and Admin Manager We all know how exciting the financial department is! We are upgrading the equipment and financial programs and implementing a semi paperless system for the accounting reporting processes to become more efficient. Plus, I'm going through the budgeting process, forecasting cash flow for the next two years.

April Deneault CPE Manager I’m working on building the chapters and committees so that each has succession planning in place. I am also working on two new conferences for 2014. The Tax Symposium will be changed to the Practitioners Conference and we are also going to hold a conference in St. George this November.

Amy Spencer Marketing & Communications Manager My focus is on improving the UACPA website to strengthen the communication between members. Changes you can expect this year include a blog, a private social network and an easy-to-use class schedule. Plus, the website is getting a new look that will make it easier to navigate. the journal entry | April 2014

CPECourseSchedule

FIELD OF STUDY

CREDIT HOURS COURSE TITLE

INSTRUCTOR

VENDOR

EARLY MEMBER REGISTRATION

MEMBER FEE

NON MEMBER FEE

JUNE 6/16/14

Advanced Excel

TBD

K2 Enterprises

$248*

$275

$330

6/17/14

Technology for CPAs - Don't Get Left Behind

TBD

K2 Enterprises

$248*

$275

$330

9/4/14

Excel Based Dashboards

TBD

K2 Enterprises

$248*

$275

$330

9/12/14

Revenue Recognition

Marty Van Wagoner

AICPA

$248*

$275**

$330**

9/15/14

AICPA Peer Review Program Advanced Course

Thomas Newell

AICPA

$248*

$275**

$330**

9/16/14

Annual Update for Compilation and Review Engagements

Thomas Newell

AICPA

$248*

$275**

$330**

9/22/14

Advanced Quick Books Tips and Techniques AM

TBD

K2 Enterprises

N/A

$155

$185

9/22/14

iPad - An Effective Business Tool PM

TBD

K2 Enterprises

N/A

$155

$185

9/23/14

Budgeting, Forecasting and Business analytics

TBD

K2 Enterprises

$248*

$275

$330

9/24/14

FASB Review for Business & Industry

Marty Van Wagoner

AICPA

$248*

$275**

$330**

9/25/14

Forensic Accounting: Fraudulent Reporting and Concealed Assets

Robert Walter

AICPA

$248*

$275**

$330**

9/26/14

Advanced Business Law for CPAs

Robert Walter

AICPA

$248*

$275**

$330**

9/29/14

Word, Outlook and PowerPoint - Tips and Tricks for Enhancing Productivity PM

TBD

K2 Enterprises

N/A

$155

$185

9/29/14

Microsoft Office 365 - Your Office, Your Way AM

TBD

K2 Enterprises

N/A

$155

$185

9/30/14

Excel PivotTables for Accountants

TBD

K2 Enterprises

$248*

$275**

$330**

10/2/14

Governmental and Not-for-Profit Update

Michael Morgan

AICPA

$248*

$275**

$330**

10/3/14

Studies on Single Audit and Yellow Book Deficiencies

Michael Morgan

AICPA

$248*

$275**

$330**

10/8/14

Group Audits Clarifying the Complexities

Marty Van Wagoner

AICPA

$248*

$275**

$330**

10/9/14

Gaining and Sustaining a Competitive Advantage: Keys to Boost the Bottom Line

John Cox

AICPA

$248*

$275**

$330**

10/10/14

Annual Update for Controllers

John Cox

AICPA

$248*

$275**

$330**

10/16/14

Slashing Taxes for Your Small Business Clients: Corporations, Partnerships & LLCs

Norman Soloman

AICPA

$248*

$275**

10/17/14

Advanced Tax Strategies for LLCs an Partnerships

Norman Soloman

AICPA

$248*

$275**

10/20/14

Health Care Reform Act: Critical Tax and Insurance Ramifications

Michael Blackburn

AICPA

N/A

$155

$185

10/20/14

Social Security and Medicare: Maximizing Retirement Benefits

Michael Blackburn

AICPA

N/A

$155

$185

10/21/14

Form 1041: Income Taxation of Estates and Trusts

Michael Blackburn

AICPA

$248*

$275**

$330**

10/22/14

Capitalized Costs and Depreciation: Key Issues and Answers

Dennis Riley

AICPA

N/A

$155

$185

10/22/14

Cancellation of Debt for Individuals and Businesses

Dennis Riley

AICPA

N/A

$155

$185

10/23/14

Cut Your Client's Tax Bill: Individual Planning Tips and Strategies

Dennis Riley

AICPA

$248*

$275**

$330*

10/27/14

Advanced Tax Strategies for S Corporations

Peter Towle

AICPA

$248*

$275**

$330**

10/28/14

AICPA's Annual Federal Tax Update

Peter Towle

AICPA

N/A

$180

$330**

10/31/14

Public Company Update: SEC, PCAOB and Other Developments

Marty Van Wagoner

AICPA

$248*

$275**

$330**

Sept

OCT

* UACPA Members receive a 10% early registration discount on these courses when registering at least TWO WEEKS before the date of the course. ** AICPA Members receive an additional $30 off the price of each 8 hour course, $50 for 16 hour courses.

the journal entry | April 2014

CPECourseSchedule

Audits of 401(k) Plans

Melissa Critcher

AICPA

$248*

$275**

$330**

11/4/13

Common Frauds and Internal Controls for Revenue, Purchasing and Cash Receipts

Melissa Critcher

AICPA

$248*

$275**

$330**

11/5/14

Advanced Controller and CFO Skills

Anthony LaRusso

AICPA

$248*

$275**

$330**

11/6/14

Financial Statement Analysis: Basis for Management Advice

Anthony LaRusso

AICPA

$248*

$275**

$330**

11/7/14

Toolkit of Best Practices for Today's Controller and Financial Manager

Anthony LaRusso

AICPA

$248*

$275**

$330**

11/10/14

Annual Tax Update: Corporations and Pass-Through Entities

Michael Blackburn

AICPA

$248*

$275**

$330**

11/11/14

Basis/Distributions for Pass-Through Entities: Simplifying the Complexities

Michael Blackburn

AICPA

$248*

$275**

$330**

11/17/14

Annual Accounting and Auditing Workshop

Marty Van Wagoner

AICPA

$405*

$450**

$540**

11/19/14

Financial Reporting Framework for SMEs

Marty Van Wagoner

AICPA

$248*

$275**

$330**

11/20/14

Tips and Tricks for Handling IRS Disputes

Michael Blackburn

AICPA

$248*

$275**

$330**

11/21/14

Annual Tax Update: Individuals and Sole Proprietors

Michael Blackburn

AICPA

$248*

$275**

$330**

11/24/14

Advanced Excel

TBD

K2 Enterprises

$248*

$275

$330

12/1/14

Annual Update for Accountants & Auditors

Marty Van Wagoner

AICPA

N/A

$180

$330**

12/2/14

Smart Strategies to Slash Taxes for Closely Held Businesses

Michael Frost

AICPA

$248*

$275**

$330**

12/3/14

Taxation for Individuals Living Abroad

Michael Frost

AICPA

$248*

$275**

$330**

12/4/14

Accounting and Reporting for Not-for-Profit Organizations

Brian Sheets

AICPA

$248*

$275**

$330**

12/8/14

Applying OMB Circular A-133 to Not-for-Profit and Governmental Organizations

John Georger, Jr.

AICPA

$248*

$275**

$330**

12/9/14

Governmental Accounting and Reporting

John Georger, Jr.

AICPA

$248*

$275**

$330**

12/15/14

Construction Contractors Advanced Issues

Bruce Shepard

AICPA

$248*

$275**

$330**

12/16/14

Audits of Banks and Other Financial Institutions

Bruce Shepard

AICPA

$248*

$275**

$330**

DEC

2014 UACPA Conference Lineup May 23, 2014 State & Local Government Conference Little America Hotel June 6, 2014 Accounting & Auditing Conference September 18, 2014 CPAs in Business & Management Conference South Towne Exposition Center September 26, 2014 Annual Member Summit

November 6, 2014 Southern Utah Conference November 13-14, 2014 Tax Symposium November 2014 Business Valuation Conference December 11 - 12 Winter Conference Salt Palace Convention Center December 18-19, 2014 Technology Conference South Towne Expo Center

Exhibitor and Sponsorship Opportunities Do you have products or services that need exposure to CPAs and other accounting professionals? Become an exhibitor or sponsor for any of these conferences! For more information contact Amy Spencer as@uacpa.org

the journal entry | April 2014

CPE Where You Want It, When You Want It! The UACPA and our partners deliver fast and convenient CPE to your home or office. With just a click you can earn 2 to 8 hours of CPE credit from the most experienced CPAs across the country from wherever you have a computer and Internet connection. To view a list of upcoming Webcasts log on to uacpa.org, Education & Events and click on “Webcasts,” keyword search “Webinar.”

State & Local Government Conference Date:

May 23, 2014

Location:

Little America Hotel & Towers 500 S Main Street Salt Lake City, UT

Cost: $243 UACPA Members Registered by 5/9/14; $270 for UACPA Members Registered after 5/9/14; $330 for Nonmembers CPE:

8 Hours

Session Topics

Presenters

GASB Update Scott Reeser, CPA - GASB Affordable Care Act Susan Grassli – GBS Benefits Deferred Inflows/Outflows (GASB 63/65) Scott Reeser, CPA - GASB Pensions - URS Kim Kellersberger – Utah Retirement Systems Sampling 1 Hollie Andrus, CPA – Utah State Auditor’s Office Ethics Paul Skeen, CPA – Eide Bailly Governance Responsibility Compliance Issues David Church – Blaisdell & Church, PC Pensions - Audit Van Christensen – Utah State Auditor’s Office Sampling 2 Hollie Andrus, CPA – Utah State Auditor’s Office Tooele County Case Study Jeremy Walker – Tooele County Treasurer Economic Update Vincent Mikolay – Utah Governor’s Office of Economic Development

R e g i s t e r by vi s i t i n g uac pa . o rg o r by c a l l i n g 8 0 1 . 4 6 6 . 8 0 2 2

ContactList Accounting Issues

When UACPA members have questions about accounting issues, help is available from the UACPA Accounting Issues Committee. Each month, a member of the committee is assigned to answer accounting questions and help you interpret the rules as they apply to your particular situation. The following members may be contacted during the months listed. April

May

Ted Rokich 801-263-3090 trokich@fdic.gov

Larry Deppe 801-626-7838 ldeppe1@weber.edu

AICPA Ethics Hotline

The AICPA Ethics Hotline provides non-authoritative guidance to members on questions related to ethics including independence. Each year it responds to more than 4,000 inquiries. The Ethics Hotline is open from 9 a.m. to 5 p.m. ET on weekdays and a staff members may be reached by dialing either (888) 777-7077, menu option #5, followed by menu option #2, or by e-mail at ethics@aicpa.org.

CPE Where You Want It, When You Want It!

July Mark Anderson 801-532-2200 manderson@hbmcpas.com

CPE Approval – Does This Qualify?

When UACPA members have questions regarding CPE Approval and whether something may or may not qualify, they can turn to the UACPA CPE Approval Committee for answers. Each month, committee members are assigned to answer member questions related to CPE approval, and below are those members’ names that may be contacted with your questions. April - June Steve Avis 801-532-2200 savis@hbmcpas.com

Scott L. Robinson 801-990-5918 srobinson@tannerco.com

Tax Issues

The Tax Issues Committee focuses on legislative and regulatory issues and does not answer technical questions. For assistance with a technical matter, please refer to the UACPA referral tool at uacpa.org. Direct questions related to legislative or regulatory issues to taxissues@uacpa.org

the journal entry | January 2014

To view a list of upcoming webcasts log on to uacpa.org, Education & Events and click on “Webcasts,” keyword search “webinar.”

Classified Ads To place your classified advertisement and reach Utah CPAs, contact the UACPA at mail@uapca.org, THINKING OF SELLING YOUR PRACTICE? Accounting Practice Sales is the leading marketer of accounting and tax practices in North America. We have a large pool of buyers, both individuals and firms, looking for practices now. We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and get the deal done. To learn more about our risk-free and confidential services, call Ryan Pannell with The Holmes Group at 1-800397-0249 or email ryan@accountingpracticesales.com. Interested in Buying a Practice? See local and nationwide listings at www.AccountingPracticeSales.com and register for free email updates. Or call us at 800-397-0249.

UACPA Committee/Task Force Volunteer Form Volunteer online at uacpa.org — keyword search "committee" ❑

I would like to volunteer to serve on a UACPA committe or task force

Committee/Task Force descriptions can be found online at uacpa.org, under Member Connection, Committee & Task Force where you can also volunteer. Identify the committee or task forces below. Check all that you would like to serve on (maximum 3). We will make every effort to assign you to the committee(s) of your choice. Send completed form to: UACPA, 1240 E. 2100 South, Suite 500, Salt Lake City, UT 84106; email: volunteer@uacpa.org. ❑ Accounting Issues/Conference Task Force ❑ Business Valuation Conference Task Force ❑ CPAs in Business & Management (BAM) Conference Task Force ❑ CPE Approval ❑ Editorial Committee ❑ Event Planning Committee ❑ Federal Key Person

❑ Financial Literacy Task Force ❑ Financial Ready Utah ❑ Golf Tournament Task Force ❑ Non-Profit ❑ ProNet Council Sub-committees ❑ K-12 Committee ❑ K-12 Volunteers ❑ ProNet Campus Ambassadors (Collegiate)

❑ ProNet Communications ❑ ProNet CPA Inauguration ❑ ProNet Leadership Development ❑ ProNet New Professionals

❑ State & Local Government Task Force ❑ Tax Issues ❑ Tax Symposium ❑ Winter Conference Task Force

Name: ___________________________________________________________ UACPA#:_________________________________________________ Firm/Company: __________________________________________________ Phone:__________________________________________________ Address:________________________________________________________________________________________________________________ City/State/Zip: ___________________________________________________ Email:_____________________________________________________

Utah Association of CPAs

Nonprofit Org.

1240 E. 2100 South, Suite 500

U.S. Postage

PAID

Salt Lake City, UT 84106

Salt Lake City, UT Permit No. 1996 Address Service Requested

Do you have clients looking for a health plan AND a tax break?

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