The Journal Entry - July 2013 by UACPA

July

2013

Innovation

and

Technology

A Fresh Outlook on Adopting New Technology Kevin Johnson and Tory Norman, CPA

CPAs and the IT Infrastructure Kandice Lambert, CPA and Whitney Baum

www.uacpa.org the journal entry | July 2013

Mission,Vision,Values

ExecutiveBoard

Mission

president.............................................. Kent L. Thomas president-elect...................................... Paul O. Skeen vice president........................................ Jonyce Bullock secretary................................................... Mark Palmer treasurer................................................. Kyle J. Pexton member-at-large................................. Hollie S. Andrus immediate past president..................... Roger Beynon ex-officio............................................. Susan A. Speirs Interim 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 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.

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

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 or log on to www.uacpa.org 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 The UACPA supports and encourages continuing education and leadership development.

Cover photo - Kristan Jacobsen, kristanjacobsen.com

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 | July 2013

in this issue | July 2013

feature story

Challenges with Adopting New Technology

127 New Members.......................................................................................4 Movers & Shakers.................................................................................5 By the Numbers: Top 10 Technology Initiatives for CPAs .............6 President's Message.............................................................................. 7

Technology Accelerates Niche Growth 16

Cover: Tackling Technology Adoption..............................................8 Utah's CGMAs.................................................................................... 13 Technology Accelerates Niche Growth........................................... 15 How CPAs Can Add Value................................................................ 18 Technology for Fraud Prevention....................................................22 Non-Profit: The Million Dollar Gift.................................................27

The Million Dollar Gift 27

The Creation of Data.......................................................................... 31 Meet a Member: Mike Blackburn....................................................33 Event Photos ......................................................................................35 Tribute: Remembering Professor Kenneth Hanni.........................37 UACPA Staff Profile: Amy Spencer..................................................39 Education............................................................................................. 41

Meet a Member: Mike Blackburn 33 the journal entry | July 2013

JOIN US FOR

UACPA Week AUG. 20 - 23

The UACPA celebrates the CPA profession and the members of the association with a week of events that begin Tuesday, August 20.

Tuesday, August 20 Open house at the new UACPA offices. Meet the UACPA board and staff while visiting our new office space at the Redman Building, 1240 E. 2100 South, Suite 500, 3 - 7 p.m.

Wednesday, August 21 The Annual UACPA Golf Tournament will be held at Soldier Hollow in Midway with an 8 a.m. shotgun start. Search "golf" on the UACPA website and register as a team or as an individual.

Friday, August 23 Annual Member Summit and Awards Banquet. Get an update on important topics for CPAs and learn more about what is happening at the UACPA at this annual event held at Little America, 500 S. Main St. The meeting begins at 8 a.m. and is followed by the awards lunch. Sign up to attend by visiting uacpa.org, search "awards."

NewMembers Congratulations to the following individuals/CPAs who were approved for membership or affiliate status in the UACPA as of May 16, 2013.

Fellows

Todd Allen HJ & Associates LLC Marcus Arbuckle Keddington & Christensen Robert Biles Utah Transit Authority Mike Bruner HintonBurdick CPAs & Advisors Ian Christensen Nathaneal Davis Haynie & Company Bruce Egbert Hawkins Cloward & Simister, LC Andrew Evans CBIZ MHM, LLC Derek Giles Larson & Company Jennifer Harrison Westminster College Michael Higley State of Utah – Div. of Finance Ivan Ketterman Larson & Company

To sponsor, please contact Amy Spencer, as@uacpa.org or call 801.834.6633

the journal entry | July 2013

Emily Mallory Larson & Company

Landon Moller PricewaterhouseCoopers LLP Edward Norton HJ & Associates LLC Bradley Pratt Adam Roundy Hawkins Cloward & Simister, LC Lacee Wilkey Davis & Bott Roger Worth PricewaterhouseCoopers LLP

Non-CPA Professional Affiliate Heather Coyle C.R. England Inc

Spencer Hintze Gilbert & Stewart Paula Lewis James & Co., Business Advisors CPAs Bradley Wyatt Ulrich & Associates

Student Affiliates

Brigham Young University – 2 Southern New Hampshire Univ. -1 Southern Utah University – 5 University of Utah – 5 Utah State University – 1 Utah Valley University – 4 Western Governors - 1 Westminster – 4

Movers & Shakers

Movers&Shakers Mantyla McReynolds, LLC has recently promoted four CPAs. Jason Hunter, CPA has been promoted as Tax Manager. Since 2007, Hunter has been a growing part of the organization where he specializes in tax planning and strategy for small and mediumJason Hunter size companies and their owners as well as high net worth individuals. Hunter is a certified QuickBooks Proadvisor and works with the firm's non-profit entities. He received his bachelor's degree from Utah Valley University and a Masters of Accountancy from the University of Utah in 2010. Steve Clegg, CPA has been promoted Steve Clegg to Assurance Manager. With 10 years experience at the firm, he services publicly traded issuers and privately held companies throughout the U.S. as well as companies with international operations. The 2012 UACPA Leadership Academy member received his bachelor's in accounting from Garrett Behling University of Utah and received his MBA from Thunderbird School of Global Management. Garrett Behling, CPA has been promoted to Assurance Manager. Behling has a range of experience working with public and private companies and excels with both technical accounting issues and Dave Mantyla providing outstanding client service. With a bachelor's in accounting from the University of Utah and a Master's of Science in Accountancy from the University of Notre Dame, Behling has been with Mantyla McReynolds since January 2013. Dave Mantyla, CPA has been promoted as Tax Manager at Mantyla McReynolds, LLC. After graduating from the Marriott School of Management at BYU in 2004, Mantyla began

his career working in the private sector for a local medical device manufacturer. In 2005, he joined Mantyla McReynolds where he began working with clients on a personal level, specializing in helping small businesses and individuals through the many stages of tax work.

Dan Griffiths

Dan Griffiths, CPA founding partner of Proficio Services Group, has joined Tanner LLC as Director of Strategic Planning for the firm’s Leadership Solutions Practice. Prior to this position at Tanner, Griffiths was a founding partner of Proficio Services Group.

David R. York, a prominent attorney in Utah and member of the UACPA, has partnered with Andrew L. Howell to form York Howell Law Firm in Cottonwood Heights. The boutique law firm will focus on tax and estate planning, asset protection, business David York structuring and succession development. Previously working for Callister Nebeker & McCullough, York has represented clients in estate planning, tax, business planning and non-profit entities. Larry H. Miller Group of Companies has promoted Clark Whitworth, CPA to the positions of Chief Financial Officer and president of Larry H. Miller Management Corporation. Whitworth has been with the organization for more than 25 years and most Clark Whitworth recently served as CFO for Miller Automotive Operations and Miller Family Real Estate. CEO Greg Miller says Clark “continues to help set the vision for our future and implement plans to achieve our short and long-term goals.”

the journal entry | July 2013

Numbers

by the

These numbers reflect the current state of technology among accountants in the United States

The 2013 North America Top Technology Initiatives Survey, conducted by the AICPA and the Chartered Professional Accountants of Canada, asked accounting professionals about their top 10 technology initiatives in 2013.

Top 10 Technology Initiatives for CPAs in 2013

1 the IT 2 Securing environment Managing and retaining data

6 decision 7 Enabling support and analytics and 8 Governing managing IT Preventing and responding to computer fraud

IT risks 3 Managing and compliance investment and spending 4 Ensuring privacy 9 Leveraging emerging technologies Managing system 5 implementation 10Managing vendors and service providers source: aicpa.org/InterestAreas/InformationTechnology/Resources/TopTechnologyInitiatives/Pages/2013TTI.aspx 6

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president’s message

President's Message Growting with Technology gives us an opportunity to Stay Relevant

hat a great time to be alive and to be a CPA! I am ever fascinated and surprised by the number of incredible business ideas and new technologies that are announced every day. I used to think that Moore’s law (the number of transistors on integrated circuits doubles approximately every two years) was unbelievable, but the latest studies now show that human knowledge is doubling approximately every 12 to 13 months and, according to IBM, “the build out of the Internet of things” will lead to the doubling of knowledge every 12 hours!” That is more than just mind boggling, it is mind numbing — but it is the world that we live in, and it can be exciting or terrifying — depending on whether we view it as an opportunity or an overwhelming challenge. According to the 2013 North America Top Technology Initiatives Survey, the top priority for CPAs is now the increased risk from managing and retaining data in the face of the explosive growth in the volume and complexity of information. Understanding and utilizing technology effectively and having functional and sound policies and procedures will be critical for mitigating those risks. Because technology allows CPAs — whether the internal CFO or external advisor — to use the data effectively in advising clients as they make critical business decisions, keeping current on technology alternatives, how to use it effectively and how to mitigate the inherent risks in managing and retaining the data are necessary skills for CPA’s, not in the future, but now!

I’ve said many times that if we, as CPAs, want to remain relevant, we have to remain competent and this is one of the areas of competency that is expected and necessary. I hope each of you has a Continuing Professional Education (CPE) strategic plan and that technology competency is an important part of that plan. My observations indicate that many of the services that we have provided to clients historically are fast becoming commoditized and will not result in client or revenue growth for the future. Our knowledge, judgment and experience, however, will never become a commodity and when we use these “intellectual assets” in combination with real-time information about our client’s business and surround that with analyses and sound recommendations, the results will have high value to clients and will provide high return to us and our firms. The “enabling factor” here is technology because it allows us to have access to and analyze more information than we have ever been able to in the past. I hope you are excited about and considering carefully how you can capitalize on the opportunities presented by the rapid pace of change and advancement going on around us every day. It is going to be a fun ride — get in, hold on and enjoy the journey. Thank you, Kent L Thomas, CPA President

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President's Message

the journal entry | July 2013

Breaking Barriers of Technology strengthen your business by overcoming challenges that come with adopting new technology By Kevin Johnson and Tory Norman

Feature story

nly a few years ago, managers were meeting in difficult meetings to determine if there was any future for emailing in the corporate world. Today it seems like an obvious answer. The Radicati Group, a technology market research firm, estimates that in 2012, there were more than 850 million corporate email accounts collectively sending and receiving more than 89 billion emails every day. There is no question now that email is an essential part of our work day. A transcript from a technology conference reminded us about the time when email wasnâ&#x20AC;&#x2122;t crucial to business. The article was based on a seminar in Stockholm, Sweden where a group of Swedish engineers were invited to discuss their role in the creation and adoption of a new and innovative technology. Like many new technologies, this one was created primarily outside of the work environment. There were isolated groups of passionate users, but no wide acceptance at the time. Because its use was primarily recreational, the companies that these engineers worked with struggled to understand the business purpose of the technology. The technology was so different from what was currently in place that managers also found it difficult to calculate a return on investments. In the end, many were left uncertain of the potential that this new technology had in improving productivity in the business world. Do these issues sound familiar? Perhaps you or a client has shared these same concerns as you have looked at possible technological enhancements. With so many new technologies being developed, we often become skeptic of their potential benefit for our companies' futures. This article could have easily discussed any one of these modern trends in advancements today, but these engineers were actually invited to speak about their efforts in early development and adoption of electronic mail. Thinking back to the reluctance we had to incorporate email into the workplace, what do we have questions about now? What technology is out there today that perhaps we are lacking foresight in and are struggling to see the potential worth in our businesses and our future? What is the "email" of today? The answer to that question might be different from business to business, but the point is that most of us could probably identify at least one â&#x20AC;&#x153;email" in our businesses. Like the management teams from this example, we have certain the journal entry | July 2013

Breaking Barriers in Technology technologies that we are hesitant to adopt. Even with a substantial number of books, media and classes available to educate us, we remain resistant to change. There are a few main factors that may be preventing us from moving forward.

Barriers to Technology Adoption Although companies differ in many ways, often times there are consistent barriers that make adopting new technology difficult and delay companies from even beginning the process of adopting a new technology. Let’s explore what some of the most consistent barriers are and why so many companies struggle when it comes to adopting new technology. Paradigm Shift: Perhaps the largest factor we have seen in technology resistance is simply a change of understanding. It is natural for us, as human beings, to feel a sense of security in our current environment and processes. We subscribe to the old adage that “if it isn’t broke, don’t fix it”. These attitudes are driven by fear — a fear of the unknown. When new technology is adopted, it not only changes how we do things, but also what we are doing and, more importantly, why we do it. For someone who has been running their business the same way for many years, this might be scary. These changes usually involve unproven track records, uncertain processes and large doses of creativity and discovery. Most importantly, it requires us to remove ourselves from our comfortable bubbles and be open to new ideas and concepts. As we start to see these new ideas, we will catch that paradigm shift.

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Technology adoption, like many other forwardthinking goals, is an investment in future success more than immediate profits. Learning Curve: When new technologies are first implemented, studies have shown that there is a spike in initial performance, followed by several months of lower productivity and finally performance ends higher than it was prior to the new technology implementation. In our experience in helping clients adopt new accounting software, we have seen how employees and owners need time to learn the software and modify their processes and procedures to leverage its strengths. Thechallenge is that management is not always prepared for this slump. When performance drops, they judge that as a reflection of inferior software and will sometimes scrap the new technology prematurely and return to their old system right before the real productivity growth can be seen. To overcome this

post-adoption slump, it's important for decision makers to have patience, to be committed to the project, and be prepared to work through it. Initial Inferiority: If you look historically at disruptive technologies, many were often initially rejected by the majority of their markets because of their seeming inferiority. As these new technologies are created and compared side-by-side with current processes and procedures, it may seem difficult to imagine how such software would replace what is currently being used. For example, when the telephone was first created and introduced to Western Union, the device had a very limited range and Western Union determined that "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." With our phones attached to us like a permanent part of our anatomy, it's safe to say that Western Union's myopic vision was a gross understatement of the capabilities of Bell's invention. Unless we want to be blindsided by growing technological advancements like Western Union did, we need to look at new technology not for what it is currently. Instead, use a little creativity and imagine what its potential

Can be months

Go-Live

Stablization

Performance Cycle of Technology Adoption

Feature Story technology, let’s look at the keys to successfully transition in our workplaces. Have a specific purpose for adopting the new technology: As new tools becomes available, there is pressure because others are using it, we feel as though we need to be a part of it. However, jumping on the bandwagon is a recipe for wasted resources and frustration. A specific purpose and goal should determine how and why this technology would be important for an organization. The questions “how is this going to benefit our organization?” and “how does using this assist us in meeting our goals?” need to be answered and should be the driving factor behind any new technology adoption process.

could be. How could it be used and how could that potentially change the way business is done? Focusing on immediate results: Let's face it, in today's crazy world we are all busy, especially as an entrepreneur. It seems there are too many hats and no time to wear them all. When this happens, it is easy for business owners to get stuck worrying only about those tasks that seem urgent and important in the moment. Although a business owner may understand the importance of adopting a new technology, and may even have the desire, immediate client demands take precedence and time is never made for the adoption. This is particularly prevalent with small busi-

ness owners, but can happen in almost any size company. While technology adoption is not an urgent day-to-day task bearing immediate results, it is still important. Decision makers should consider new technology as part of an overall plan and make time to implement that plan. Technology adoption, like many other forward-thinking goals, is an investment in future success more than immediate profits.

Keys to Successful Adoption Now that we have identified some of the barriers to why businesses are hesitant or unsuccessful in bringing in new

One current example of companies adopting technology without specific goals can be witnessed through social media. We see a growing number of companies with Facebook pages and Twitter feeds inviting their customers, vendors, and anyone else to “like” them and “follow” them, yet, there is no real plan behind their endeavors. A Facebook page is easy to setup, but what information will people find there? What will be tweeted and how often? Planning and implementing with a strategy of why and how the new technology will be used is vital to the success of any new process. Commitment and Buy-In: Two key factors for overcoming the barriers to technology adoption are being committed to the implementation and having entity wide buy-in. Having been involved with many accounting system implementations over the years, we have seen firsthand the difference when everyone is committed to the sucthe journal entry | July 2013

Breaking Barriers in Technology cess of a project. When this happens, people are supportive and understand that it will take time, patience, and work to make these projects successful. On the flip side, we have seen where buy-in comes from only a few individuals. As a result, the implementation process becomes a burden and tends to be more expensive, resulting in frustration and stronger resistance. A strong commitment is important so that when the learning curve happens, we avoid the temptation to scrap the project and “cut our losses.” If companies are patient and willing to grow through the learning curve, then they begin to reap the benefits of new technology. Research: With any new technology, there will always be things to learn and understand before an adoption can take place. It would not be reasonable, for example, to wake up one day and just decide to move everything “into the cloud.” Research must be done into what is involved with moving into the cloud. We must learn what has and hasn’t been successful for similar companies to ours. We should ask, “What are the benefits and drawbacks of going to the cloud?” Research must also be done into whether the technology is far enough along and makes sense for the company at this point in time. It might be discovered that now is not the right time, but a year from now, if the technology has proven successful for others, then it would make sense for us. Other factors might need to be considered as well. For example, it might be determined that going to the cloud only makes sense if we also implement a mobile strategy. Identifying and researching through these issues will lead to a much greater success rate than learning these things part way through the implementation process. Education of Expectations: Often a management team will be responsible for deciding yes or no on the implementation and adoption of new technologies, but in many cases, they will not be the main users of it. For the successful adoption of any new technology all users and those affected by the changes will need to be educated into what the expectations will be for them. It might be the need for them to attend additional training opportunities or to change their processes to conform to the change. Processes and tasks that they have become accustomed to, comfortable with and understand could be changed drastically. If these expectations and changes are understood prior to them being implemented, the likelihood that the project will succeed greatly increases and leads to the full buy in from all users mentioned earlier.

the journal entry | July 2013

So now what? Now that we have identified the reasons why companies might be hesitant to adopt a new technology, as well as some of the keys to successfully adopting new technology, the question then becomes, “now what?” We live in a world where technology is constantly changing and growing. New tools are introduced constantly and today’s technology is quickly out of date. With our fast-paced world, we need to carefully determine when and what we should invest our time, money, and other resources into implementing. Every organization needs to analyze what is important to them, what is going to help them now and what will help them in the future. We should all take time to consider what new technology is available today will be the email or telephone of tomorrow. As trusted business advisors we are uniquely positioned to help our clients make the paradigm shift and take an approach to adopting new technology that will result in both achieving optimal results and in staying ahead of the curve. ■

Tory Norman, CPA is a small business technology advisor for Squire where he specializes in helping small-business client adopt new accounting software and leverage technology. Tory is also active in the community training and coaching small businesses in best practices for accounting and accounting technology. Reach him at toryn@squire.com

Kevin Johnson is a Technology and Advisory manager at Squire & Company, PC. He is a Brigham Young University Graduate and enjoys helping clients implement new systems and adopt new technology. He can be reached at kevinj@squire. com

CGMA

Blauer, Jared Bott, Alan L. Brewer, Simon John Brewster, Douglas L. Brickey, Jacob Binkerhoff, Mark Broadhead, Bryce Brown, Glen Bunker, Roger G. Butler, David M. Carr, Hayes Chamberlain, Robert D. Chandler, James Harris Christensen, James W. Christensen, Kent R. Christensen, Mark K. Clark, Amanda Haun Clawson, Spencer Hyde Clay, Stephen O. Clegg, Richard G. Colton, Perry Cook, Brent Marvin

Congratulations to Utah's CPAs who have earned the CGMA designation Acker, Kenneth A. Adams, Lance D. Allen, Kurt Allen, Paul L. Allen, Randy J. Andersen, Curtis C. Andersen, Dalan Hogan Anderson, James Bradley Anderson, Derek J.L. Anderson, Michelle L. Anderson, Robert Andrews, Keith E. Anjewierden, Marcus Andrew

Arnold, Darren L. Ash, Allen W. Atkinson, Terry M. Aune, Ray O. Baker, William J. Barfuss, Sheldon K. Baugh, Kevin J. Bean, James S. Beck, Byron Robbins Beutler, Brent Charles Brigham, Wesley Dean Binks, Joshua R. Bitcher, Jess Brent

Cooper, James Reed Daily, Joseph Edward Daines, Carl J. Davis, W. Brent Dawson, Dale T. Dennis, Edwin A. Deppe, Brian L. Dickert, Steven Scott Dimond, Robert Barker Dryer, Cory L. Dustin, Colby John Eichers, Preston M. Eldredge, Paula H. England, James D. Fankhauser, Richard E. Fausett, Jeffrey Ray Forbush, Jeramiah Forsgren, Kent B. Fullerton, Rosemary R. Gardner, Michael R. Gilbert, James Alvin Goates, Kent Wayne

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Officially, it’s Chartered Global Management Accountant . Established by AICPA and CIMA, two of the world’s most prestigious accounting bodies, the CGMA designation represents accomplished professionals who drive and deliver business success, worldwide. ®

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Congratulations to Utah's CGMAs Golightly, Ken Larsen, Kenneth Tim Goodfellow, Cory S. Larson, Gregory D. Green, Travis Leifson, Bret J. Greenhalgh, Michael Wayne Leonard, Darin Paul Greer, Daniel K. Lewis, James M. Griffiths, Daniel Lewis, Troy K. Gurney, Brian Howard Lifferth, Richard Hales, Brent Harley Linschoten, Clinton R. Hampton, Steven R. Lloyd, Radel A. Hanni, Scott J. Lodder, William Michael Hansen, Steven J. Lowry, David Harris, David L. Lundquist, Richard N. Harris, Randy Jay Maki, Corinne A. Harrison, Nathan D. Mann, Roger H. Hatch, Warren Louis Martin, John K. Hatfield, LeAnn Mieko Maughan, Alan B. Heaps, Mark B. Maughan, Heber Clark Herde, Gary F. Maxfield, W. Brent Hettinger, H. Ryan Mayfield, Scott A. Hill, Judith McBride, Mark C. Hinckley, Stuart W. Mccormick, Amy J. Hinerman, Scott McFarland, Paula A. Hokanson, Rory E. Miller, Nathan M. Hoopes, Mark D. Miller, Polly B. Hori, Lance Montgomery, Mark R. Houmand, Craig D. Morgan, Ramon B. Howard, Brandon S. Nate, Kent O. Howell, Gregory K. Neal, Christoffer D. Humphreys, Gregory M. Nelson, Clarke B. Ipsen, Jeffrey A. Nemrow, Joseph Todd Jackson, Kim T. Nielsen, Kenneth R. Jensen, H. Clayne Nielson, Christopher E. Johnson, Terry Lynn Nilson, Troy F. Jones, Faith Norton, Amy Bogenschutz Jones Gayland R. Novakovish, Mark S. Jones, Lindsay Clark Olsen, Lola R. Jurges, Steven Scott Olson, Robert Brian Kartchner, J Brent Orton, Robert K. Kingston, Jesse O. Otteson, Robert L. kosheleva, Tatyana Oveson, W. Val Kot, Linda L. Pack, Steven J. Kunz, Travis M. Packer, Clay R. Lambert, Shawn M. Palmer, Mark W. Larsen, Kenneth B. Park Katherine

the journal entry | July 2013

Passey, Steven K. Paul, Elizabeth Anne Paul, Elizabeth Anne Pearson, Gregory S. Pedersen, Jeffrey W. Peterson, Brent H. Pexton, W. Leon Pierce, Jason L. Pitt, Angie Plant, Randall Allen Pollard, Mel R. Poulson, Shane Clark Powell, Sandra J. Power, Owen Bradley Pyper, William E. Rappleye, Reggie Rasmussen, Mitchell J. Reid, Richard Parker Rip, David M. Roberts, Curtis J. Robinson, Michael T. Rokich, Theodore M. Romrell, Justin L. Rosbach, Philip J. Rowe, Shon J. Ruesch, Chortney Burdell Rupp, Todd W. Salisbery, Eric F. Saunders, Andrew C. Schenk, Raymond M. Schill, Jamie Lyn Hillier Schwanke, David S. Sharp, Steven L. Sheets, Brian Paul Shipley, Eric L. Shurtliff, David A. Sill, Stephen McEntire Slagle, Brian J. Smith, James Robert Smith, Matthew Smith, Ryan H. Spackman, Dennis Paul Speirs, Susan A. Spjute, Kurt

Spjute, Mark E. Squire, Glen J. Standifird, Kyle D. Stenberg, Scott W. Stephenson, Earl Earl Stone, Rochelle Strong, Menah C. Summers, Carter E. Swain, Jason Swenson, David S. Syme, Richard R. Tate, Curtis James Taylor, Cortney L. Thackeray, Milton Howard Thomas, Jeffrey Duana Thomason, Allen Floyde Thunell, William F. Todd, Michael Brian Tollison, Robert T. Topham, Heidi Trettin, Todd D. Turner, James Warren Van Os, Jerry A. Varoz, Julie Wang, Yan Liu Warnick, Clark Andrew Waters, Jyll Watkins, Wade K. Watson, Brian P. West, H John John Westra, Scott Edward Whitehead, James B. Whiting, Charles R. Whitney, Duane D. Wilde Meadow Worthen, Jeffrey A. Wright, Randall Brent Youngberg, Ross L.

Technology

Technology Accelerates Niche Growth By Gary Boomer

rowth typically requires both entrepreneurial and managerial skills. The majority of CPAs are more skilled in the management area than entrepreneurship. With both skills firms can reduce risk and grow through innovation and learning. The end result is a new kind of collaborative accounting where technology plays an important role — the accelerator. How well do you know your clients and prospects? Do you use the data to market and differentiate your firm? Marketing trumps facts when it comes to sales. Great companies and firms are using data mining and business intelligence to increase their market share. You are the trusted business advisor with relationships and have access to important and accurate data. Are you leveraging these relationships and market intelligence for the benefit of your clients and to your firm’s advantage? Or are you simply too busy charging hours to notice the less commoditized opportunities?

There are five significant traps that firm’s often fall into when trying to enter a new or expanded niche with new innovation. The traps and how to avoid them are as follows:

1. Lack of Focused Leadership Firm leaders are often distracted with existing responsibilities and try to develop the new services on a parttime basis. If the niche is a priority, and part of the firm’s strategic plan, then adequate resources including firm leadership should be allocated accordingly.

2. The Allure of a Plan versus a Business Model and Platform Conventional wisdom typically includes a business plan and projections. Too often these are little more than a

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Technology Accelerates Niche Growth spreadsheet estimating hourly rates and the number of hours utilized. More important is a business model and platform focusing on client dangers, opportunities and strengths. The pricing strategy should be value based rather than hourly and the business model should be collaborative. In order to be collaborative, the platform will be typically cloud or Software as a Service based rather than traditional client server architecture.

rather than owning is appropriate for firms and their clients. The rugged individual approach typically results in less than optimal results for the client in the areas of strategic planning, budgeting, cash flow, human resources, technology and talent development. Properly naming, packaging and pricing these services can result in extreme client savings and satisfaction while increasing firm revenue and margins.

3. Lack of Knowledge

5. Traditional Accounting Firm Management Methods

Firms too often lack knowledge or ignore important data regarding client needs other than from an accounting and tax perspective. While tax and accounting are important, they are only part of the client’s requirements. The CPA is the most trusted business advisor and must think like a quarterback rather than a defensive lineman or safety. There are many higher value added opportunities beyond the transactional services that firms can offer. This requires a process of communication to identify and package services beyond tax and accounting. Some professionals are comfortable with change while others resist. Is your firm missing viable opportunities because you haven’t named, packaged and priced services to meet client needs? These opportunities may also require different skills and delivery personnel.

The day of the rugged individualist is over and today's client services require a team approach to meet the expanding requirements. Broader scope often requires additional internal or sourced resources.

4. "Just Do It" Attitude The day of the rugged individualist is over and today’s client services require a team approach to meet the expanding requirements. Broader scope often requires additional internal or sourced resources. Lisa Gansky, the author of "The Mesh," coined the term "mesh” and it is appropriate for the accounting market where leasing

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Most firms have focused on independence rather than advocacy. Both values are important depending upon the type of service being offered. Continual commoditization in the audit and tax compliance areas is forcing firms to look at margins and rethink service offerings. The charge hour mentality also challenges good business thinking. With the right business model and platform, firms can increase both revenues and margins. Unique processes and a hosted platform make the services scalable and address client requirements. The most profitable firms focus on selling consulting services, even to assurance service clients. There are of course some limitations based upon independence requirements.

The Current Environment and Opportunities The tools and climate are right to change industries, professions and the world. Technology can be disruptive. The trusted business advisor status requires collaboration, creates value, requires scope and pricing in advance, and typically is based upon a fixed monthly fee with change order clauses to protect the client and the firm. The Value Creation Agreement improves cash flow and addresses workload compression, if properly managed. You must think more like a lean startup than a traditional CPA firm. The service life-cycle has multiple phases and you should start with the vision of your market, experiment and learn as you progress. Most successful firms admit they got their start from a client that requested the additional services in a particular niche. They learned, adjusted, packaged, priced and grew

Technology the service. To remain competitive they focus on innovation.

Required Resources In practice we see four primary resources that dictate success:

1. A champion with passion 2. Existing clients who need the services 3. A unique ability team to service the clients 4. A technology platform that supports collaboration

10 Ways to Make the Most of your UACPA membership 1

Let us help you promote your events. Tell us what you have going on and we’ll share it on our social media networks.

2 Take advantage of member benefits, including

With a focus on the traits of the champion who reduces risk and develops a profitable service, the characteristics are as follows:

discounts on technology, office supplies and insurance.

Meet Utah’s finest in the profession at UACPA conferences and events.

• Level 5 leader with a purpose and vision beyond personal gain • Team builder who is a multiplier leader • Access to internal and external resources • Politically connected • Proven track record • Passionate

Words of Wisdom Those with passion do, while those without passion try. Charles Kettering’s law on committees: If you want to grow an idea, keep it away from committees. Success requires leadership and a unique ability team. ■

3 4

Post job listings or find jobs on our website.

Stay current on hot topics through Facebook and Twitter. Join in relevant conversation through the UACPA LinkedIn group.

Receive email alerts with information and news about upcoming events.

7 8

Receive discounts on CPE.

Contribute to Utah’s CPA PAC and be involved in promoting the UACPA's legislative agenda.

Be visible to potential clients. The public can search for CPAs in their area at uacpa.org L. Gary Boomer is CEO of Boomer Consulting, Inc., an organization that provides consulting services to leading accountg firms in Leadership and Management, Client Development, Talent Development, Technology and Compensation. He consults and speaks around the globe on management and technology related topics. He received his BS and MS degrees in accounting from Kansas State University.

Volunteer for committees and task forces, such as the financial literacy task force, non-profit committee or help plan the Winter Conference.

the journal entry | July 2013

How Can CPAs Add Value?

eliminating weaknesses and developing Protective processes By Kandice Lambert, CPA and Whitney Baum

s CPAs we have many different touch points with businesses. Although we may only be engaged in taxpreparation, auditing, or managing financial duties, there is more value we can add to the companies we come in contact with. We have been entrusted to have the knowledge and know-how to point out areas of improvement and bring attention to areas of risk; so why wouldn’t we seize every opportunity to make the companies we work for better? It is especially valuable to draw attention to areas for growth in information technology (IT) and internal controls. Tom Eldredge, Associate Professor at the University of Utah, David Eccles School of Business and Partner at Grant Thornton, said many businesses feel compelled to focus on these controls because they are either regulated to do so, or have been stung with errors and fraud in the past. However, Eldredge emphasized using controls as a preemptive measure. “I think the right approach is to be proactive, be forward thinking and have the right attitude to do it because it’s the right thing to do,” Eldredge said. “It costs money, but in the long run it’s something that is beneficial to any organization.”

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This article contains some of the top areas of improvement within companies as seen by CPAs around Utah. There are a number of ways CPAs can help these companies eliminate IT and internal control weaknesses and develop preemptive processes to guard against errors and fraud.

Areas of Opportunity for Improvementt 1. Passwords and Users Every CPA should be aware of the importance of protecting accounting systems by implementing passwords and granting each user an appropriate level of permissions. This is an excellent source of internal and IT control; but it’s an area where many businesses are lacking. Jonyce Bullock, an Advisory Partner for Squire, said having strong passwords and separate users with varied permissions can be one of the greatest controls utilized by businesses, but because of the lack of convenience the security of those controls can slip. “I have a client where everyone has a user but they all know the administrator password,” Bullock said. Sometimes it seems easier to share the administrator password so that

Technology everyone ccomplete their jobs in a timely manner; but this can cause a lot of confusion and possibly lead to fraud, because there is no way to tell who did what within the system. Bullock also said not changing passwords and failing to test what permissions an employee has within an accounting system can be a detriment to a company. However, remembering passwords, especially strong ones, can be tricky. It can be tempting to make the mistake of tracking passwords in a spreadsheet, or even worse, on physical documents, like sticky notes. Fortunately, there is a web-based utility called 1Password (www.agilebits.com/onepassword)that saves usernames and passwords and effortlessly creates strong and unique passwords for each site. It automatically and securely logs you in, enters credit card information, and fills registration forms, all while encrypting the sensitive information with the master password established with 1Password. Clearly, this is a better alternative to just hoping passwords and other sensitive information don’t end up in the wrong hands.

2. Audit Trail Reports Many accounting programs provide an audit trail report. However, Bullock says most companies make the mistake of not examining or running it.

Best Worst AND

Best:

• Keeping passwords secure and protected • Segregating duties and granting applicable permissions in accounting system • Running audit trail reports • Buying blank check stock and check printing software • Utilizing cloud storage for sensitive data • Encrypting mobile devices • Developing, testing, and inquiring about IT

infrastructure

INFORMATION TECHNOLOGY AND INTERNAL CONTROL PRACTICES

Worst:

• Sharing administrator passwords, or granting permissions to all users • Leaving passwords out, or on an unsecured document • Storing financial documents like pre-printed check stock in risky places • Using company’s networks and email on an unsecured mobile device • Giving all permissions to IT personnel and not asking for specifics on the IT infrastructure

“I always recommend that management use the audit trails, and review them periodically,” she said. “Basically, companies should examine the changes that are being made, question the purpose and whether they are properly approved, essentially do an audit of the audit trail.” She said businesses should pay attention to items like the same vendor being paid twice in a month, round numbers, and new vendors. Bullock suggested AuditMyBooks as a third-party audit trail software. It double checks accounting records and flags potentially erroneous and fraudulent entries. Bullock said she recommends examining the audit trail report at least once a month, or quarter.

3. Storage of Financial Data Amanda Twede Crawford, CPA, said one of the major areas of improvement in internal controls is the storage of financial documents. Often businesses keep pre-printed check stock out in the open, because it is inconvenient to put away time and time again. Although storing financial documents, such as pre-printed check stock under lock and key can be a hassle, it is more convenient than the inconvenience of fraud. “I recommend keeping it somewhere in a secure place, or forgoing it altogether and purchasing check printing software that prints on blank check stock,” she said. Crawford said using blank check stock can reduce the risk of fraud immensely, because in most check printing software, checks can only be printed and approved by select users. A useful tool for check printing is Create-A-Check, an application that integrates seamlessly with most, if not all, accounting software systems. It allows selected users to approve and print checks on blank check stock.

4. Cloud Computing and Mobile Devices Michael Beach, Controller for Southern Utah University, said cloud computing has opened many companies up to new opportunities, as well as potential risks. Businesses should use the cloud because it minimizes the the journal entry | July 2013

How Can CPAs Add Value? risks of sensitive data having to be stored on on-site servers. In spite of this, cloud computing can also be problematic since the data is accessible anywhere through any device. Beach said many times companies don’t consider the exposure to risk that smart phones pose. If an employee accesses their network and email via the cloud through a mobile device, and that device is stolen, the business is exposed to incomprehensible risk. “A company’s network, servers and data are no more secure than the portable devices they allow their employees to use,” he cautioned. Beach said sometimes companies don’t realize employees are accessing the network from personal mobile devices. “Many companies don’t think about that,” Beach said. “They don’t think about what could happen if that smart phone were to fall into the wrong hands. It’s downright scary. Mobile devices are so wide open, the company can have the best security in the world on site … but if they allow access from remote locations and mobile devices they’re just as vulnerable as if they allowed someone to walk into their business and gain physical access to a computer or server.” The best policy is to expect that a mobile device will be stolen or lost so the proper measures are in place to prevent the sensitive information from being accessed. Use the password features built into the mobile device and if possible, encrypt it. There are many mobile encryption software options which help protect against the most basic hacking, intrusion and threats online. They can perform regular backups and set restore points so the device can be wiped if it is stolen or misplaced.

ness that had critical data stored in a customized database without sound access and data integrity controls … The result was a series of operational shutdowns due to frequent crashes, missing and duplicate data, and a lot of frustration from users.” Reuben Cook and Tom Eldredge advise companies to use formalized frameworks such as COBIT, developed by ISACA, that directly address these issues. Eldredge encouraged asking IT personnel how security is setup and functioning, to ensure there are no holes in the system. Eldredge also said although the IT department would like to have access to all of the controls in a system, there is no way to safely do that. “A lot of times the executives don’t like to approach the IT people, because they don’t understand what they’re doing,” he said. “You can never turn over the controls; otherwise we won’t know what real security is.” In short, the appropriate IT infrastructure may not be convenient but it is worth the investment. ■

Kandice Lambert, CPA is the Controller for Piracle, a cutting edge software company. The University of Utah graduate received the UACPA Emerging Women: Rising Star Award in 2010. She currently serves as the University of Utah Liaison for the ProNet Council Campus Ambassador Program.

5. Suitable IT Infrastructure Developing information technology and software that meets the needs of the organization is costly and time consuming. However, this is where businesses seem to think cutting costs is better than using controls. Reuben Cook, Advisory Partner for Squire, said doing what seems easy in the IT world can be detrimental to a company later on. “Don’t let your IT needs become your latest DIY project,” Cook said. “I once worked with a rapidly growing busi20

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Whitney Baum is a PR and Marketing Intern at Piracle. She received her Bachelor's in Communication, Public Relations in 2012 and is currently working on her Master’s in Professional Communication. While at school, Whitney works as the Editor-in-Chief of the University Journal, the school newspaper, as a graduate assistant, and teaches COMM 3050, the newspaper class.

Technology

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Technology for Fraud Prevention - An Overview By alice Tsai, CPA

n the 2012 survey, the AICPA ranks “securing the information technology environment (information security)” and “managing risk and compliance” as two of the top technology initiatives for CPAs. One aspect of information security is using specialized application software dedicated to prevent and detect fraud. The accounting-auditing environment is evolving due to several concurrent developments, which impact fraud prevention, awareness, and/or management: (1) The potential adoption of the International Financial Reporting Standards (IFRS) and the convergence of the IFRS with U.S. GAAP, (2) the Securities and Exchange Commission (SEC) requirement for electronic or digital financial statements “tagged” with XBRL (Extensible Business Reporting Language) to promote uniform and comparable financial reports, (3) the passage of the Sarbanes-Oxley (SOX) Act of 2002 to require management to implement antifraud program and controls, (4) the issuance of the Statement on Auditing Standards No. 99 on consideration of fraud in audits of financial statements, and (5) the trend toward computer monitoring of operations, internal controls, and automated risk management.

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Fraud Prevention In this article, fraud prevention is seen as a proactive measure to deter fraud. However, fraud prevention cannot eliminate all wrongdoings from happening. In the Venn diagram below, we describe how fraud risks increase under the three conditions of the “fraud Three Conditions of the “Fraud Triangle” Interrelating and Interacting

Opportunity

2 3

Need or Pressure

Rationalization or Attitude

Note: The numbers “2” and “3” and show how many conditions are interrelating and interacting to increase risks of fraud

Technology triangle”: (1) opportunity, (2) need-pressure, and (3) rationalization-attitude. These three conditions can act individually by itself or interact collectively (as two or three conditions) to increase fraud risks. Thus to optimize/maximize fraud prevention, management needs to not only remove the opportunity but also minimize the need-pressure and/or the rationalizationattitude in the workplace in order to help employees’ personal effort. Another goal of fraud prevention is to break or remove the linkages among the three interrelating and interacting conditions of the fraud triangle.

Conventional auditing is conducted online in batch mode, for example, on a non-integrated (or “legacy”) computer system that includes databases for financial

Accounts Receivable (AR)

Continuous Auditing System [4] Online in Real-time

Enterprise Resource Planning (ERP) System Accounts Payable

Payroll (PR)

Human Resource

Company System (Non-Integrated or “Legacy”) Sales

For descriptive purposes, we present the following conceptual framework first. Then, based on this conceptual framework, we discuss some current and emerging technologies and methods used to prevent/minimize fraud in conventional auditing (online in batch mode) and/or continuous auditing system (online in real-time).

Versus

Conventional Auditing Online in Batch Mode

Production Management

Fraud Prevention – Using a Conceptual Framework

Investigate and act upon by: • Management • Internal auditors and/or • External auditor

Database for Financial data

Data warehouse for Transaction data (or raw/source data)

Automatic alerts or alarms (when needed) to: • Management • Internal auditors and/or • External auditors

To determine: • Potential or likelihood of control problems

Perform: 1) Tests of controls (and assess control risks) 2) Substantive tests of transactions (i.e., a statistical sample of major transactions)

1) Automated verification of all (100% of) individual transactions

To find and filter exceptions, e.g.: • Obvious errors for human resolution • Abnormal transactions that violate user-specified rules and require further automated analyses

• To assess overall reasonableness of transactions and balances • To test for monetary misstatements • To identify exceptions or problem areas for corrective actions

Conduct: 3) Analytical procedures 4) Test of details of account balances (i.e., a statistical sample of significant balances) 4a) Techniques to establish account relationships, e.g.: • Ratio analysis • Trend Analysis

2) Automated analytical proceduress (AAP) or (predictive) analytics process filtered stream of transaction data by using, e.g.: • Linear regression • Simultaneous equations • Data Mining • expert system • Neural network

• To measure current financial data (metrics) against “standards” (benchmarks) for significant deviations • To identify or detect unforseen or potential anomalies • To alert humans to investigate and/or resolve above deviations and anomalies.

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Technology for Fraud Prevention data. In conventional auditing, auditors: 1) perform tests of internal controls for effectiveness, assess control risks, and determine potential or likelihood of internal control problems; 2) conduct substantive tests of a statistical sample of major transactions; 3) apply analytical procedures to assess the overall reasonableness of transactions and balances; and 4) perform tests of details of a statistical sample of significant account balances to test for monetary misstatements in the financial statements. Techniques such as ratio and trend analysis help to establish account relationships, and identify exceptions or problem areas for corrective actions. Continuous auditing system is online in real-time and, for example, overlays on top of an existing integrated enterprise resource planning (ERP) system that includes data warehouse for transaction data (raw/source data). In a continuous auditing system, the computer software is programmed to do:

1) Automated verification of all (100% of) individual transactions — to detect and filter two types of exceptions: • Obvious data errors - are filtered out for human investigation and resolution. Human resolution may involve cleansing these data errors, and the cleansed data may or may not be uploaded into the continuous auditing system for further automated analyses. Examples of these obvious errors include transposition errors, uncommon word structure, incompatible spreadsheet format, and inconsistent data fields. • Abnormal (red-flagged) transactions - violate user-defined rules (such as internal controls and regulatory requirements) and require further analyses using automated analytical procedures. 2) Automated analytical procedures – are programmed, for instance, to measure financial performance data

Case 1: Unauthorized Transactions • Made entries of numerous “0” dollar amounts to accounts payable (A/P) data system. (1) Automated Verification of All Transactions: • Entries of zeros exceed pre-defined number limit • Entries of zeros exceed pre-established length of time limit Red Flags for Exceptions: • Rule out correction of errors by an inexperienced employee • Alert auditors re: Abnormal transactions violate the user-defined rules for testing of controls and/or A/P system. (2) Automated Analytical Procedures (AAP): • Process and analyze this case further using AAP • Examine business behaviors of the involved employee - such as via online reviews of job performance • Look for signs of luxurious lifestyle of the involved employee - such as via social media • Search for and review other unauthorized transactions and records in the accounting system – that is in A/P (accounts payable), A/R (accounts receivable), and P/R (payroll). • Use data mining to search for hidden patterns and/or subtle relationships that may also indicate suspicious behaviors. Red Flags for Anomalies: • Predict unforeseen anomalous behavior patterns and/or relationships based on evidences from AAP, such as from data mining. • Alert management re: Suspicious activities in unauthorized testing of controls in A/P and unauthorized tampering in A/R data and records. NOTE 1: “Smoking gun” – Some time later, the perpetrator faked and mailed personal letters with false collection agency address to divert company’s customer payments from A/R. NOTE 2: If used, both continuous auditing system/software and ERP system need to be “smarter” and updated such as for: 1) User-defined internal controls - in automated verification of all transactions. 2) Modification of predictive models for creating benchmarks - in automated analytical procedures.

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Technology Case 2: Report Fraud to Audit Committee WorldCom’s dramatic and fraudulent accounting practices: • Acquired over 65 companies for $60 billion in six years and accumulated huge debt of $41 billion dollars. • Misrepresented $9 billion of profits – that is inflated false income of $7 billion with additional questionable $2 billion. (1) Automated Verification of All Transactions – A sample of numerous questionable accounting practices: • Capitalized $4 billion of line costs (operating expenses) for 5 quarters • Underestimated $2 billion for allowance for doubtful accounts (ADA) and corresponding bad debt expense • Reduced arbitrarily about $1 billion of other line costs (expenses) and maintained fake accounts in accounts receivable (A/R). Red Flags for Exceptions: • Alert to Financial-related persons – such as Audit Committee, VP of Internal Audit, and Chief Financial Officer re: “Accounting discrepancies” violate several pre-defined standards for generally accepted accounting principles (GAAP); internal controls appear to be overridden. (2) Automated Analytical Procedures (AAP): • Search and analyze all questionable accounting practices and activities that impacted the financial performance data (metrics) and ultimately the financial statements, including for example: • Compare WorldCom’s metrics such as: Operating expenses to revenue (E/R) ratio for post-acquisition year – against benchmarks, such as: (a) industry averages and (b) E/R ratios for pre-acquisition years. • Compare WorldCom’s metrics such as: capital expenditures (CE) and operating expenses (OE) for post-acquisition year against benchmarks such as: (a) industry averages and (b) WorldCom’s CE and OE respectively for pre-acquisition years. • Compare ratio of ADA to A/R for current period against: a) industry averages and b) ratios for previous periods Red Flags for Anomalies: • Alert to Audit Committee, VP of Internal Audit and external auditors re: Financial fraud – For example: Significant accounting discrepancies exist between WorldCom E/R ratio to industry averages; both increases in CE and deceases in OE exceed industry averages; ratio of ADA to A/R for current period deviates significantly from ratios for previous periods, etc. NOTE 1: A 2006 study concluded that a continuous auditing system would help both external and internal auditors to uncover WorldCom’s financial fraud earlier and perhaps minimize this fraud.

(metrics) against standards (benchmarks based on predictive models) to search for significant deviations, and to predict and/or uncover unforeseen or potential anomalies for human investigation and/or resolution. Automated analytical procedures - range from statistical analyses to advanced analytical technologies: • Statistical analyses - use, for example, linear regression, and simultaneous equations. • Advanced analytical technologies or analytics (“predictive” analytics) - require sophisticated software using algorithms and

computations to design predictive models, for instance, from data mining, expert system, and/ or neural network – which can differentiate “real” anomalies from those due to statistical fluctuations. (Kogan, et al. 2010).

Companies in Analytics Software

Extending the aforementioned conceptual framework, some established companies are offering various analytics software. These companies include: ACL Services; IBM; MicroFor descriptive purposes, the folsoft; Oracle; Statistical Analysis lowing two actual cases are partial System (SAS); and System Analysis examples to illustrate hypothetical and Program Development (SAP). applications of the continuous For instance in March 2012, IBM auditing system using: (1) Automated introduced a series of new predicVerifications of All Transactions and tive/prescriptive analytics software (2) Automated Analytical Procedures: and services for financial management and fraud reduction. These two types of software are described here:

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Technology for Fraud Prevention • Predictive analytics uses predictive models (such as from data mining, expert system, and/or neural network) to analyze relationships and patterns in data. Predictive analytics, for example, can compare current/transactional data (metrics) against historical and industry data (benchmarks) to assess risks and identify opportunities and predict the probable outcome of an event (or “forecast what might happen in the future.”) • Prescriptive analytics automatically synthesizes “big data” in real-time using stochastic (probabilistic) optimization and business rules to improve prediction accuracy and provide better decision options to act on how to mitigate a future risk or take advantage of a future opportunity (or determine/prescribe the “best solution or outcome among various choices.”)

Conclusions In the ever-changing technological, business, and regulatory environment, both opportunities to commit fraud and challenges to fight fraud have multiplied. The auditors need to exercise professional judgment to determine which combinations of audit methods, analytical procedures, and information technology are cost-effective to prevent and/or detect different types of frauds in various situations. In this article, we used a conceptual framework to discuss some current and emerging technologies for continuous auditing online in real-time to prevent or minimize fraud. The use of advanced technology for auditing presents dramatic implications for the accounting profession. Advanced software, such as analytics, can transform data into information, and information into knowledge. With this knowledge, we CPAs can add value to our skills and enhance our profession for the future. ■ Alice Tsai, CPA, MBA (DePaul University, Chicago) is a member of the Utah Association of CPAs since 1997 and a frequent contributor to the UACPA publication, The Journal Entry. She audited for the U.S. government (SEC and GAO), for-profit and non-profit companies and taught as an adjunct faculty in accounting and auditing.

the journal entry | July 2013

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

Non-Profit

The Million Dollar Gift By Stacy K. Weight, CPA and Eric Andersen, CISA, CRISC

our non-profit has just received an unrestricted donation of $1,000,000! And if your organization is anything like mine, this is the time for making resourceallocation decisions. Decisions made now could have a huge impact on your ability to drive the mission of the organization. So, where is the first place that funds will likely be invested? They will go to your Program Services, of course. Accounting is one of the few places that is usually granted funds when there is an excess. Ignoring the opportunity to invest in efficiencies could have huge longterm costs to the mission of the organization. Investment in accounting, and specifically technology could change how you operate — just like it did for me and my team. In the last five years, my team has spent an incredible amount of time turning every process, procedure, and function on its head to find a better way to reach objectives. The end result has allowed us to double the volume of transactions and add new tasks with the same number of personnel. Here are two of the most transformational investments that allowed us to fundamentally change the way we do business.

Paperless Technology If I stacked our paper records from a 12-month period five

years ago, the pile would be more than 30-feet high. This year, that stack will be a manageable 10-feet high. Not only have we reduced our fire hazard, but we’ve also significantly reduced paper cuts! We’ve created a paperless system that extends from accounts payables and receivables to general ledger transactions and everything in between. We no longer pay late fees because an invoice got “lost” on a manager’s desk, awaiting approval. Our managers can approve invoices to be paid from on the road, and double check the GL account coding to ensure it hit the appropriate budget. Audit considerations: With increasing reliance on technology, assurance that internal control is adequate will require more sophisticated measures. Auditors cannot simply audit “around the box” anymore. The paperless world contains many of the same risks that existed previously, and appropriate controls need to be designed and implemented to mitigate these relevant risks, as well as the new risks that technology brings. Incompatible duties need to be appropriately segregated, not only functionally (staff A does this, staff B does that), but also logically (the system only allows staff A to do this and staff B to do that). System access controls should the journal entry | July 2013

The Million Dollar Gift ensure that personnel do not have the ability to process a transaction from beginning to end (initiation, authorization, recording, and processing). Controls should ensure that all transactions are properly authorized and that they are recorded completely, accurately, and, timely. Technology also provides the opportunity to replace or enhance some manual controls with system-level controls (application or IT-dependent manual (ITDM) controls). These controls need to be properly understood and evaluated. In addition, consideration should be given to IT general controls (ITGCs). ITGCs support the continued functioning of application and ITDM controls. Typically, management implements procedures to: • determine that all changes to applications, interfaces, databases, and operating systems are properly authorized, tested, and approved before they are implemented to ensure quality and intended functionality; • determine that only authorized persons and applications have access to data, transactions, and master files, and then only to perform specifically authorized functions; • perform back-up and recovery, schedule programs and monitor processing deviations, and perform problem and incident reporting monitoring. Oh, and don’t forget to implement appropriate data retention policies. You don’t want to come up empty on auditor, legal, or other requests. This is obviously not a comprehensive list of all audit considerations. Management, internal auditors, and external auditors should perform appropriate risk assessments and plan accordingly.

Electronic Banking: Stacks and stacks of checks every day that were 10-keyed multiple times and driven to the bank; that’s the process we used to go through to deposit funds from our generous donors. Hundreds of hours per week were spent ensuring that the check total that we processed was accurate. With advances in banking technology, we can now run these checks through a remote deposit capture (RDC) device

the journal entry | July 2013

that reads all of the information (including an amount) and prepares deposits within minutes. In addition to deposit technology, we are utilizing the capabilities of EFT (e.g., ACH) payment processing instead of processing a paper check, putting it in an envelope, and sticking a stamp on it.

Hundreds of hours per week were spent ensuring that the check total that we processed was accurate. With advances in banking technology, we can now run these checks through a remote deposit capture (RDC) device that reads all of the information (including an amount) and prepares deposits within minutes Audit considerations: Regardless of whether or not funds are deposited or remitted electronically or via hard-copy checks, measures should be taken to ensure appropriate segregation of incompatible duties. No one individual should have responsibilities over and/or system-level access in all aspects of the cash receipt or cash disbursement processes. Access to RDC devices, EFT/ACH systems, and banking systems should be secured, including the use of usernames and passwords, and restricted to authorized personnel. For deposits, hard-copy checks should also be secured prior to, during, and post scanning and transmission, and should be shredded (dual control recommended) after a reasonable period of time. Controls should ensure that RDC-scanned items are processed only once (i.e. they cannot be subsequently scanned or deposited at a branch). Control totals (physical counts and amounts) should be used in a reconciliation to ensure that the checks received are recorded in the GL and scanned into a batch in the RDC device completely and accurately. Bank reconciliations should also be performed to ensure that the bank’s deposit records agree to the checks submitted. For EFT transactions, controls should be implemented to ensure that the amounts submitted for payment are

Non-Profit appropriately authorized, and are complete and accurate. It’s worth it to research how you can utilize technology to impact efficiencies. Try to find one of the most inefficient, time-consuming processes and see if you can find a technology solution that can change the way you do business. Try and find the right software to perform the right task. Research all of the costs involved — both initial and ongoing costs. Then look at the time and long-term cost savings. You now have a compelling case to present to the organization’s decision makers.

CPE where you want it, when you want it! The UACPA and our partners deliver fast & 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.”

Making changes to the way you process transactions can free up significant time, allowing staff to engage in more value-added endeavors. For example, instead of spending hours entering bills, your AP clerk can research vendors to identify costs savings. Investments in technology in the long run will help you expend more resources to fulfill your charitable mission – since that is why you exist! ■

Stacy Weight, CPA leads the accounting team as Controller of Children's Miracle Network Hospitals. She has more than 10 years of experience as a controller, both in the technology start-up andf not-for-profit industries, specializing in process improvement and efficiency. She currently serves as secretary of the UACPA's Non-profit Committee. Reach her at sweight@cmnhospitals.org.

Eric Andersen leads Tanner LLC's IT Assurance and Advisory practice. He has more than 10 years of experience, including more than seven years with a Big 4 accounting firm in Arizona. He has an extensive background in SOX 404, SOC reporting (fka SAS 70), information systems controls, application controls, and business process controls. Reach him at eandersen@tannerco.com.

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the journal entry | July 2013

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The Creation of Data

Bringing Security, Storage, and Collaboration out of the Dark Ages By Jeff Jessop

he way we work and interact through technology is currently going through a renaissance. The market is saturated with products that make our lives easier, our relationships more manageable, our jobs more efficient. This abundance of innovation continues to focus on our needs, desires, and abilities in ways that are increasingly intuitive and personal, while cross-pollinating from our personal lives to our professional lives. This movement has introduced fantastic possibilities, but also some equally frightening pitfalls, especially when it comes to security and privacy. Information is one of our most valuable assets, and it is increasingly exposed as we continue to migrate and share our information in the digital world. Past and current offerings put collaboration and security at odds. Either you opt for low-cost, easy to-use products that lack security and/or privacy, or you spend exorbitant amounts of money on reactionary and complicated security products that squander time and resources in an attempt to meet regulatory compliance. To narrow the gap we must first understand how we

arrived here. Perimeter based security is the prevailing method used today. By implementing tools like firewalls, files have a degree of protection as long as they stay within the perimeter. This method made more sense in the past as data was centralized and much more isolated. Moving forward, there are several inherent flaws that make perimeter based security insufficient. First, business happens outside and files must travel to fulfill collaborative functions. Second, when walls are breached, everything within is exposed indiscriminately. Third, when a file is created and shared, copies are made. They reside in email caches, remote folders, on ISP servers, backup tapes, thumb drives, etc. Each one behind varying levels of security, with only those local to you under control. All of these factors directly correlate to inefficiency in collaboration because the standard practice is to build stronger walls, more complex gateways, email filters or password protection. None of these address security in the prevailing shift to decentralized data. Zebra Digital Assetsâ&#x20AC;&#x2122; (ZDA) solution is to attach security, administrative and collaborative abilities directly to a file. By doing this, security and convenience are no longer mutually exclusive, but share a symbiotic relationship,

the journal entry | July 2013

The Creation of Data each a platform for the other to improve their respective roles. Advancing security to this degree opens the doors to equally significant advancements in collaboration. How is this accomplished? The short answer is encryption. The long answer is PKI encryption (Public Key Infrastructure). The extra long answer is even more complicated, considering the importance of simplicity and usability. PKI Encryption is military grade encryption facilitated by an application (ZPS Explorer) at the source, before ever being uploaded. This ensures that the files are visible only to the originator or owner (more on that later) and those with authorized access. This allows files to travel and exist safely in the form of a workspace or Zebra Portable Safe (ZPS), which is opaque to everyone else, including ZDA’s servers. The very nature of the encryption demands accountability. To access a file, identification must be authenticated, which requires synchronization with the server through the application. Beyond synchronizing keys to deduce participants and access privileges, the ZPS Explorer also synchronizes and updates all contents within the ZPS. If a file is edited by one user, changes automatically reflect across all instances. In this way it shares some functionality with less secure cloud solutions. The similarities stop there.

The ZPS and ZPS Explorer are designed to seamlessly cross the entire spectrum, from individual, to business, to enterprise. Ownership of data can be shared or transferred, security and managerial roles scale from an individual managing personal files to IT departments managing groups of documents and people. In appearance and functionality, the ZPS Explorer is a sort of aggregate of concepts. Any given collaborative project is more than a file. It’s a group of people in different roles, a collection of diverse files, tasks and correspondence. Viewing projects in the context of a workspace dramatically increases efficiency. ZDA’s purpose is to provide an intuitive safe environment that enables you to finally embrace the benefits of cloud technology without worrying about the safety of your information. Security is just the beginning. ■ Jeff Jessop is Creative Director at Zebra Digital Assets. With an extensive background in design, branding and communication, Jeff is responsible for marketing and user interface design. He can be reached at Jeff.jessop@zebrada.com.

Healthcare Symposium

Healthcare Reform Simplified August 6, 2013

Morning and afternoon sessions available Time: 8 – 11:30 a.m. and 12:30 – 4 p.m. Location: UACPA, 1240 E. 2100 South, Suite 500 CPE Credit: 4 hours Fees: $75 for Members; $100 for Nonmembers Register: Online at uacpa.org or call 801.466.8022 Bring your clients to this informative event.

the journal entry | July 2013

Member profile

MEet a uacpa member

Five Minutes with Mike Blackburn Mike Blackburn, a CPA and attorney, was raised in Ogden, and graduated from Ogden High School. He went on to receive a Bachelor's Degree in accounting from the University of Utah in 1973 and a Juris Doctorate from Stanford University in 1978. Blackburn, along with his wife Celia, finished their bachelor's degrees before getting married and moving to San Francisco. Together they have five children (four girls and one boy) and six grandchildren (three girls and three boys). He adds, "my favorite thing in the world is to play with my grandchildren." Blackburn is recognized as an Outstanding AICPA Instructor for the 2012-2013 CPE Year. What led you to become a CPA and an attorney? Everybody that knew me in high school was certain that I would become an attorney. I was extremely slow to come to the same realization. I became a CPA because I found the study of taxes to be absolutely fascinating. I became an attorney to add to that training. As you have recently been recognized for the third time by the AICPA as an outstanding instructor, what have been

highlights in your teaching career? One highlight occurred near the end of 2011. I taught my 1000 class at the UACPA offices. My long-term goal is to teach a course in each of the 50 states. Unfortunately, I still have 3 states to go and haven’t made any progress on Maine, Vermont or New Hampshire for several years. What do you enjoy when you are not working/teaching? I have found that the older I get, the more I enjoy sleeping. I also love playing with my grandchildren and playing board games (not on a computer) with my children. Tell us about your current professional and civic activities. I never seem to be very far away from getting volunteered to serve on a committee at the UACPA. I am currently the chairman for the Utah Board of Accountancy, and the Utah Chairman of the American College of Trust and Estate Council. I serve on Senator Orrin Hatch’s Task Force on Federal Tax Reform and am a former member of Governor Leavitt’s Transition Committee.

Tell us about your involvement with the U.S. Soccer Federation and U.S. Youth Soccer Association. It was my intent to coach my sons in the sport I loved best; baseball. But my first three children were all daughters who showed little or no interest in baseball and a strong preference for soccer. In an attempt to keep up with my children, I got heavily involved in the youth soccer movement. I currently serve as chairman of the appeals committee of the United States Soccer Federation and as legal counsel for the Utah Youth Soccer Association. In 2009, I received the Kirk Hoecherl Service Award for a lifetime of service to soccer. Prior to that, I coached recreation and competitive soccer teams for 14 years and served as a member of the national rules committee, national risk management committee, and national disciplinary committee. What advice do you live by? Study like its fun, play like it’s important, and never turn down an opportunity to try something new. ■ Mike Blackburn can be reached at 801.578.3501 the journal entry | July 2013

Please Join us for The Annual UACPA

GoLF TOURNAMENT Format: Four person scramble Participation: 36 Teams Fees: $400 per team; $100 per

individual before July 31. Price increases to $425 per team and $110 per person after July 31. Proceeds benefit the Utah CPA Foundation supporting Financial Literacy in Utah Range balls will be available, plus there will be a raffle with prizes. Prizes Awarded to • • • • •

1st, 2nd and 3rd place teams Closest to hole (men and women) Longest drive (men and women) Longest putt made Hole in one

Sponsorship Opportunities • • • •

Hole sponsors: $150 per hole Breakfast sponsor: $250 Lunch sponsor: $500 Mulligans: $10 each or 3/$25

To sponsor, contact Tisha Smith, ts@uacpa.org

wednesday, aug. 21, 8 a.m. | soldier hollow, midway Register at uacpa.org or call 801.466.8022 34

the journal entry | July 2013

Event Photos 1

1) Financial Ready Utah Bill Signing with Gov. Herbert, members of the UACPA board and members of Financial Ready Utah. 2) Pierpont Place hosts the Summit for Women in the CPA Profession in Utah 3) Groups discuss retaining women in the profession at the Summit for Women in the CPA Profession in Utah 4) Adam Taggart (left) and Chris Martenson from PeakProsperity.com talk about preparing for financial crisis at the Financial Ready Utah Spring Seminar. 5) Panel addresses preparing the community for a Financial Earthquake. Dan Griffiths moderates a panel discussion about financial preparedness with community leaders (l-r) Rick Davis, Howard Headlee, Ken Crowdy, Pamela Atkinson and John Dougall.

the journal entry | July 2013

A Fond Farewell to a Teacher, Mentor and Friend Remembering Professor Kenneth J. Hanni by Mike Blackburn, CPA, J.D.

ike many young people beginning a college education, I enrolled at the University of Utah with high aspirations, a wide range of goals, and no idea of what I wanted to do for a career. At the end of my second year of college, I had finished my general education and spent at least one quarter in three different majors. But, none of those majors had captured my imagination. Kenneth J. Hanni At the beginning of my third year of college, I decided to take a look at the business school. The classes were interesting. But, two quarters later, I still had no idea what I wanted to do with my life. In the spring quarter of my third year of college, I registered for a class that sounded like it might be fun. The class was simply called "Income Taxation." It had a reputation on campus of being an exceptionally difficult course. On the first day of class, I quietly slipped into the room and took a front row seat. Before the first class period was over, I learned that I would be assigned that seat for the remainder of the quarter, in order to correspond with the pictorial 36

the journal entry | July 2013

roster the professor used to identify each of us by name. The class was taught by a tall, broad shouldered man, with a booming voice, named Kenneth J. Hanni. By the end of the first class, he had captured my attention and interest. I can recall the many occasions when he would walk to a spot just a few feet in front of my desk, towering over me from his standing position, and demand “Mr. Blackburn what is the correct answer to question number x ” Although I was a little intimidated, I would give him the answer I had written down on my paper the night before. I was fortunate to have the right answer the first few times that he called on me. One day I failed miserably. I had read the chapter, and I had done the homework. When Professor Hanni’s deep voice called out “Mr. Blackburn what is the answer to question number one?” I gave him my answer. He promptly informed me that my response was wrong and called on someone else in the class to give the correct answer. He then turned back to me and said “Mr. Blackburn perhaps you would like to redeem yourself by giving us the correct answer to question number two.” My answer to question number two was also wrong and someone saved me with a correct answer. Professor Hanni didn’t ask for my answer to question number three. He simply looked at me and said “Mr. Blackburn do you have any explanation for this poor performance?” I responded that I could not explain it, but

Obituary I definitely intended to correct it, by rereading the chapter and redoing the homework that evening. When he smiled, I knew I was one- for- three that day. I did reread the chapter and redo the homework that evening, and I put in a substantially increased effort on future assignments to make sure that I did not disappoint Professor Hanni again. By the end of the quarter, I knew what I wanted to do with my life. Congress was responsible for making income taxes difficult. Kenneth J. Hanni was responsible for making taxes fun. During my fourth year at the University, I had the opportunity to take one more class from Professor Hanni, to serve on a committee seeking to have him granted tenured professor status, and to sit around with my friends telling and listening to our favorite Professor Hanni stories. There were some students on campus who did not like him. There were other students who absolutely adored him. I found almost nobody who didn’t have strong feelings one way or the other. In May of my fourth year, a group of University students had the opportunity to sit for the CPA exam. Because we were still enrolled in classes, there was no opportunity to take a preparation course. Professor Hanni assured us that the grades that we had achieved in his class “proved” that we were well prepared. Following the third full day of the exam, I returned to campus around 6 p.m., and was surprised to run into Professor Hanni, who immediately asked me how I had done. I explained to him that I had found the exam to be incredibly difficult and was not sure that I had passed. He smiled and told me that because I had found the exam to be difficult, he was convinced I had seen most of the issues. He assured me that I would pass. A few months later, my scores arrived and I learned that I had passed the entire exam. My score on the tax portion of the exam was noticeably higher than my scores on all other portions of the exam. The basic income tax class that I took from Hanni was the single hardest class I ever had in four years of education at the University of Utah. It was also the most interesting class. It was taught by the man that I unhesitatingly rank as the best university professor I ever studied with. Following graduation, I joined a CPA firm, in the tax department, of course. After a couple of years at the CPA firm, I came to the conclusion that I would like to further my education by going to law school. I needed a letter of recommendation. Who better to ask for the recommendation than my favorite professor, who also happened to have a license

to practice law. So, I returned to campus and knocked on the door of Professor Hanni’s office. It was good to see him again. When he got around to asking me why I was there, I told him that I was interested in going to law school and would appreciate it if he would write me a letter of recommendation. He responded instantly by grabbing a pen and a yellow pad sitting on his desk, and quickly scribbling a note that read “Don’t go to law school.” He then handed it to me and said “there is your letter of recommendation.” When I looked a little puzzled, he assured me his second attempt would be a little better. I didn’t see or talk to Professor Hanni again for nearly a decade. Then one day my phone rang and when I answered it the voice on the other end said “Mike, this is Professor Hanni, and there is something I would like you to consider doing for me.” He then explained that he had been asked to teach an 8 hour continuing education program for the Utah Association of Certified Public Accountants. He had other commitments that day and wondered if I would be willing to teach the class for him. I was honored and a little frightened. I taught the class Professor Hanni referred to me and a few additional courses over the next 25 years. All because instead of saying “No, I’m busy,” Professor Hanni remembered a student he hadn’t seen in 10 years and said, “I believe I have a former student who might be interested.” My teacher had now become my mentor. One day as I was in the classroom preparing to teach, I looked up to find sitting on the front row of my class, none other than Professor Hanni. He smiled and said he was looking forward to a great class. And, I came face to face with the reality that he was far more intimidating sitting in a chair in my classroom than he ever had been towering over me in his classroom. Somehow I managed to get through the day. At the end,Professor Hanni shook my hand and, with a big smile on his face, told me that I had done a good job. That is exactly what it took to put a big smile on my face. Over the next ten years, Professor Hanni attended a dozen or more of my classes. He never attended a single class without coming forward after class to thank me for what he had learned. My teacher was a very good mentor. Years later I received a call from the Chair of the Accounting Department at the University of Utah, who indicated that they were looking for someone to teach an Income Tax Class — the same class I had taken years earlier from the journal entry | July 2013

Remembering Professor Ken Hanni Professor Hanni. I gladly accepted! Before the week was over Ken Hanni called me to remind me of all the important details I might forget and to provide hints on how to make the class more enjoyable to the students. Over the course of the next ten years, Professor Hanni attended a dozen or more of my classes. One day, his daughter introduced herself to me during a class in Colorado. And a second daughter attended several of my classes in Utah. Both followed their dad into the CPA profession. Professor Hanni never attended a single class without coming forward after class to thank me for what he had learned. My teacher was a very good mentor. As he neared retirement, Hanni began referring many of his long-time clients to me but not until he made me promise that I would take great care of each of them. My teacher and mentor had now become a good friend. On March 17, 2013, my teacher, mentor, and friend, Kenneth J. Hanni, passed away. The legacy he leaves is incredible. Forty years after I left his classroom, I still share and listen to others tell stories of their days in Professor Hanni’s classroom. He taught income taxes or otherwise influenced the lives of somewhere close to 5,000 students, many of whom are still preparing tax returns in Utah today. In all of his work at the University of Utah, he demanded only one thing... “Put the students first.” And when working with the students who attended his class, he demanded only one thing... “Give me every minute of attention you have and every ounce of effort you can muster, and I promise I will make you happy you made the investment.” ■ Michael D. Blackburn, Class of 1973

IN MEMORIAM John Sterling Hiatt July 14, 1957 - Aug. 8 2012 UACPA Member since 1991

the journal entry | July 2013

Ken Hanni's Students Reminisce From Barbi Anderson: He was very proud of his five daughters and had high expectations for the women in his class. I loved his "final exams" which were held live and one-on-one in his office. That was about the scariest thing I ever had to do. Dr. Hanni had a conflict one class and, heaven forbid we miss out. He was kind enough to reschedule our class for the next Saturday morning. We honored him that Saturday with a home cooked breakfast (including his favorite quiche) prepared right in the classroom. From Scott Pickett: Good teachers impart knowledge, great teachers change lives. Kenn Hanni, without a doubt, fits in the latter category. His profound love of the tax law, encyclopedic knowledge of such law combined with practical experiences cultivated over years of consulting created a classroom ienvironment that was inspiring, entertaininand life changing. I am but one of hundreds, even thousands, whose lives were changed for having crossed paths with Professor Hanni. From Paul Christensen: I think it is very appropriate that Prof Hanni's obituary said "Influential Teacher" under his name. In an era of educators dumbing down their content to keep students happy, Prof Hanni went sharply against the grain.

UACPA Staff Profile

MEet The UACPA Staff

Five Minutes with Amy Spencer Amy Spencer is the Communications Manager for the UACPA. Prior to joining the UACPA more than a year ago, Spencer worked as the editor of an entertainment publication for The Salt Lake Tribune. With more than 15 years in marketing, writing and design, Spencer resides in the Marmalade/Capitol Hill neighborhood where she and her husband live with their four cats and retired greyhound. She also has an 18-year-old stepson. What do you do for the UACPA? As the Communications Manager, I coordinate the editorial and design features of The Journal Entry, brochures, e-blasts, social media and the UACPA website. One of my favorite projects has been putting together the UACPA ad campaign this year with radio spots on KSL Radio and print and web ads with Utah Business. What do you like about working for the UACPA? I love the enthusiasm that CPAs have for the profession. I’m

inspired by the passion our members have to be a part of committees and work outside of their regular jobs to be a part of this organization. As a marketing professional, it’s encouraging to get feedback – whether it’s a member signing up for a conference or a comment on an article or even a “like” on a Facebook post – on the pieces I put together. What do you do in your free time? Living downtown in Salt Lake, I have fallen in love with the city and the arts and events put on by the community. I love being active and recently completed 300 classes at Xtend Barre (a balletPilates inspired workout). I’ve been working on cleaning up my kitchen train wreck act and have picked up a vegan cooking hobby along the way. Spending time with my husband tops the list of what I enjoy doing in my free time. What are your goals? Professionally, I hope to continue to grow and expand

my expertise in the communications field. I would like to get involved with more non-profits, especially groups that help animals or that support arts. Now that my husband and I are empty nesters, I’m eager to do some traveling. What is something that would surprise people to know about you? I did 4-H growing up and won the state prize in fashion design. I got to go on a trip to Chicago where I modeled and represented Utah. What advice do you live by? There are so many empowering phrases that I think of often, but I cherish the advice my grandfather lived by: “You can catch more flies with honey than with vinegar.” To me that means it’s important to be honest, genuine and compassionate and live your life as a positive example for others. ■ Amy Spencer can be reached at 801.834.6633 or as@uacpa.org the journal entry | July 2013

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the journal entry | July 2013

Education

CPAs in Business & Management Conference Date:

September 29, 2013

Location:

South Towne Exposition Center 9575 S. State St., Sandy UT

Cost:

$243 UACPA Members Registered by 9/6/12 $270 UACPA Members Registered after 9/6/12 $330 Nonmembers $10 Printed Syllabus Free Electronic Material

CPE:

8 Hours

Chapter Meetings Mountain Chapter Date:

Wednesday, September. 4, 2013

Time:

Noon - 1 p.m.

Location: Grub Steak Restaurant, 2200 Sidewinder Dr., Park City, UT Instructor: Kent Thomas, CPA Topic: UACPA President's Update Cost: $15 for Members; $20 for Non-members Pay at the Door CPE:

1 Hour

Save The Date! September 19

CPAs in Business & Management Conference South Towne Exposition Center

October 30-31 Tax Symposium

December 12 - 13 Winter Conference Salt Palace Convention Center

December 19 - 20 Technology Conference Salt Palace Convention Center

November

Business Valuation Conference

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 at 801-834-6633 or as@uacpa.org.

the journal entry | July 2013

CPECourseSchedule

FIELD OF STUDY

CREDIT HOURS COURSE TITLE

INSTRUCTOR

VENDOR

EARLY MEMBER REGISTRATION

MEMBER FEE

NON MEMBER FEE

Sept 9/4/13

Auditing Employee Benefits Plans - Mastering the Fundamentals

Bruce Shepard

AICPA

$248*

$275**

$330**

9/5/13

Tackling Real Estate Complexities

Bruce Shepard

AICPA

$248*

$275**

$330**

9/6/13

Improving Listening and Writing Skills

Marty Vanwagoner

AICPA

N/A

$155

$185

9/6/13

Introduction to Strategic Planning

Marty Vanwagoner

AICPA

N/A

$155

$185

9/9/13

Fraud and Abuse in Not-for-Profit Entities and Governments: Stealing from Everyone

Jeffrey Lieman

Surgent McCoy

$248*

$275

$330

9/10/13

Latest Developments in Government and Nonprofit Accounting & Auditing 2013

Jeffrey Lieman

Surgent McCoy

$248*

$275

$330

9/11/13

Financial Reporting Framework for Small and Medium Sized Entities

Jeffrey Lieman

Surgent McCoy

$248*

$275

$330

9/12/13

Accounting and Reporting for Not-for-Profits: Issues and Answers

Brian Sheets

Surgent McCoy

$248*

$275

$330

9/16/13

Guide to Business Combinations

Marty Vanwagoner

AICPA

$248*

$275**

$330**

9/17/13

FASB Annual Update and Review: Critical Developments for all CPAs

Marty Vanwagoner

Surgent McCoy

$248*

$275

$330

9/18/13

A Complete Guide to the Yellow Book

MacRay Curtis

Surgent McCoy

$248*

$275

$330

9/19/13

CPAs in Business & Management Conference

Various

UACPA

$243*

$270

$330

9/23/13

Occupational Fraud: The Top 50 Tips on How to Prevent Executives, Managers, and Employees from Stealing and Not Getting Caught

Glenn Helms

Surgent McCoy

$248*

$275

$330

9/24/13

Forensic Accounting: A Comprehensive Guide to Conducting Financial Fraud Investigations

Glenn Helms

Surgent McCoy

$248*

$275

$330

9/26/13

What You Need to do Now in Estate Planning Under the New Tax Law

Arthur Auerbach

Surgent McCoy

$248*

$275

$330

9/27/13

Estate and Life Planning Issues for the Middle-Income Client

Arthur Auerbach

Surgent McCoy

$248*

$275

$330

10/2/13

Preparing OCBOA Financial Statements: Cash, Modified Cash and Tax Basis

Joann Cross

Surgent McCoy

N/A

$155

$185

10/2/13

Financial Statement Disclosures: Guide to Current Requirements and Developing Issues

Joann Cross

Surgent McCoy

N/A

$155

$185

10/3/13

I See It! Bringing into Focus the New Clarified Auditing Standards

Joann Cross

Surgent McCoy

$248*

$275

$330

OCt

10/4/13

Accounting for Deferred Income Taxes

Marty Vanwagoner

AICPA

$248*

$275**

$330**

10/8-9/13

Tax Staff Training Level 1 - Individual

Mark Patrick

Nichols Patrick, CPE, Inc

$405*

$450

$535

10/11/13

PCAOB's Risk Assesment Standards

Marty Vanwagoner

AICPA

$248*

$275**

$330**

10/15/13

Statement of Cash Flows

Marty Vanwagoner

AICPA

$248*

$275**

$330**

10/16/13

Annual Accounting & Auditing Update

Marty Vanwagoner

Surgent McCoy

N/A

$180

$330**

10/17/13

Advanced Excel

Karl Egnatoff

K2 Enterprises

$248*

$275

$330

10/17/13

Top Accounting Solutions: Cloud and On-Premise

Karl Egnatoff

K2 Enterprises

$248*

$275

$330

10/18/13

Not-for-Profits Treated as Business

Brian Sheets

AICPA

$248*

$275**

$330**

the journal entry | July 2013

Education

CPECourseSchedule

FIELD OF STUDY

CREDIT HOURS COURSE TITLE

INSTRUCTOR

VENDOR

EARLY MEMBER REGISTRATION

MEMBER FEE

NON MEMBER FEE

OCt - Continued 10/21/13

Construction Contractors: Critical Accounting, Auditing, and Tax Issues in Today's Environment

Thomas Sheets

Surgent McCoy

$248*

$275

$330

10/22/13

Revenue Recognition: A New Day is Dawning

Thomas Sheets

Surgent McCoy

$248*

$275

$330

10/23/13

The Complete Trust Workshop

Michael Blackburn

Surgent McCoy

$248*

$275

$330

10/24/13

OMB A-133 from A to Z

Mac Curtis

Surgent McCoy

$248*

$275

$330

10/25/13

Advanced Auditing of HUD Assisted Projects

Peter Bell

AICPA

$248*

$275**

$330**

10/28/13

Chief Financial Officer

Dan Chenoweth

Executive Education

$248*

$275

$330

10/29/13

Corporate Finance Checkup - Renovate Your Analytical Toolbox

Dan Chenoweth

Executive Education

$248*

$275

$330

10/30-31/13

Tax Symposium

Various

UACPA

$338*

$375

$450

11/1/13

Social Security, Medicare, and Prescription Drug Retirement Benefits: What Every Baby Boomer Needs to Know

Michael Blackburn

Surgent McCoy

$248*

$275

$330

11/4/13

Excel Best Practices

Steven Phelan

K2 Enterprises

$248*

$275

$330

11/5/13

The Mobile Office

Steven Phelan

K2 Enterprises

$248*

$275

$330

11/6/13

New Medicine: Key Issues CPAs Need to Know About the Patient Protection and Affordable Care Act

Edward Harter

Surgent McCoy

N/A

$155

$185

11/6/13

Should Client Expenditures be Capitalized or Expensed? A Guide to the New IRS Regulations

Edward Harter

Surgent McCoy

N/A

$155

$185

11/7/13

Auditing Not-For-Profit Entities: Superior Skills for an Effective and Efficient Audit

William Wagner

Surgent McCoy

$248*

$275

$330

11/8/13

Latest Developments in Nonprofit Accounting & Auditing 2013

William Wagner

Surgent McCoy

$248*

$275

$330

11/11/13

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

Marty Vanwagoner

Surgent McCoy

$248*

$275

$330

11/12/13

Reading Understanding and STructuring LLC and Partnership Agreements from a CPA's Perspective

Norman Solomon

Surgent McCoy

$248*

$275

$330

11/13/13

Surgent McCoy's 2013 Annual Tax-Planning Guide for S Corporations, Partnerships, and LLCs

Norman Solomon

Surgent McCoy

$248*

$275

$330

11/14/13

Getting Ready for Busy Season: A Guide to New Forms, Filing Issues, and Other Critical Developments

Pamela DavisVaughn

Surgent McCoy

$248*

$275

$330

11/15/13

Surgent McCoy's Multistate Tax Update

Pamela DavisVaughn

Surgent McCoy

$248*

$275

$330

11/18/13

Fair Value Accounting: Making the Complex Issues Understandable

Marty Vanwagoner

Surgent McCoy

$248*

$275

$330

11/19/13

CFO/Controller's Roadmap to Organization Success With Integrated Planning, Forecasting, and Budgeting

Arthur Pulis

Surgent McCoy

$248*

$275

$330

11/20/13

Current Developments and Best Practices for Today's CFOs and Controllers

Arthur Pulis

Surgent McCoy

$248*

$275

$330

NOV

* 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 | July 2013

CPECourseSchedule

FIELD OF STUDY

CREDIT HOURS COURSE TITLE

INSTRUCTOR

VENDOR

EARLY MEMBER REGISTRATION

MEMBER FEE

NON MEMBER FEE

Nov - Continued 11/21/13

Make Money for you and your Clients: Surgent McCoy's Top Business Tax Planning Strategies

Edward Harter

Surgent McCoy

$248*

$275

$330

11/22/13

The Complete Guide to Payroll Taxes and 1099 Issues

Edward Harter

Surgent McCoy

$248*

$275

$330

11/25/13

The Best S Corporation, Limited Liability, and Partnership Update Course by Surgent McCoy

Michael Blackburn

Surgent McCoy

$248*

$275

$330

11/26/13

The Best Individual Income Tax Update Course by Surgent McCoy

Michael Blackburng

Surgent McCoy

$248*

$275

$330

12/2/13

Nonprofit Organization Analytical Procedures: How to Measure Success

Brian Sheets

AICPA

$248*

$275**

$330**

12/3/13

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

William Taylor

Surgent McCoy

$248*

$275

$330

12/4/13

From Hiring to Firing and Everything in Between: Legal, Tax and Health Care Issues

William Taylor

Surgent McCoy

$248*

$275

$330

12/5/13

Annual Update for Controllers

Ron Rael

AICPA

$248*

$275**

$330**

12/6/13

Redefining the Closing Process

Ron Rael

AICPA

$248*

$275**

$330**

12/9/13

Advanced Technical Tax Forms Training - Form 1040 Issues

Susan Smith

Surgent McCoy

$248*

$275

$330

12/10/13

Advanced Technical Tax Forms Training - LLCs, S Corporations, and Partnerships

Susan Smith

Surgent McCoy

$248*

$275

$330

12/11/13

The Best Income Tax, Estate Tax, and Financial Planning Ideas of 2013

Susan Smith

Surgent McCoy

$248*

$275

$330

12/12-13/13

Winter Conference

12/16-17/13

Tax Staff Training Level 2 - Business

12/18/13

Effectively & Efficiently Reviewing Audit Work Papers: The Line of Defense Against Deficient Audits

12/19-20/13

Technology Conference

12/23/13

Surgent McCoy's Handbook for Mastering Basis, Distributions, and Loss Limitation Issues for S Corporations, LLCs and Partnerships

12/30/13

The Best Federal Tax Update Course by Surgent McCoy

Michael Blackburn

DEC

Various

UACPA

$338*

$375

$450

Mark Patrick

Nichols Patrick CPE, Inc

$405*

$450

$535

Marty Vanwagoner

Surgent McCoy

$248*

$275

$330

Various

K2 Enterprises

$414*

$460

$540

Michael Blackburn

Surgent McCoy

$248*

$275

$330

Surgent McCoy

N/A

$180

$330

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Education

Th e C P A P r o f e s s i o n i n U t a h

FRIDAY AUGUST 23, 2013

8 a.m. - 2 p.m. | Little America Hotel Join colleagues and accounting professionals at the Annual Member Summit & Awards Banquet at Little America Hotel, 500 S. Main St. Salt Lake City. $75 for UACPA Members, $125 for non-members. Four (4) hours CPE. Register online at uacpa.org, Education & Events.

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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. July

August

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

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

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

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 9:00 a.m. to 5:00 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.

Visit the UACPA Career Center Whether you’re looking for a job or trying to hire a qualified CPA, the UACPA Career Center is your one stop shop. UACPA members have access to employers looking to hire a CPA and employers can post free job listings and gain access to resumes of qualified CPAs. Visit the website at www.uacpa.org, Professional Resources, Career Center.

CPE Approval – Does This Qualify?

When UACPA members have questions regarding CPE Approval and whether or not 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.

CPE Where You Want It, When You Want It!

July - September 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

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The UACPA and our online learning partners deliver fast & 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.”

8,316 Firms 53,051 CPAs 95% Retention 27 Years of Service 15 State Society Endorsements One CAMICO

Numbers Speak for Themselves. When choosing professional liability insurance for your firm, trust the one company that was founded by CPAs and has serviced the accounting profession for over 27 years. With a full suite of coverage options and industry-leading risk management resources, there is no wonder that over 50,000 CPAs trust CAMICO each year. Download complimentary 2013 Engagement Letter templates. Scan the QR code below, or visit cpa.camico.com/EngagementLetters/.

www.camico.com Accountants Professional Liability coverage is underwritten by CAMICO Mutual Insurance Company and/or Liberty Insurance Underwriters, Inc. Liberty Insurance Underwriters, Inc. currently carries an A.M. Best rating of “A (Excellent).” Actual coverage may vary and is subject to policy language as issued. ©2013 CAMICO Services, Inc. License #0C09618.

INSURANCE Professional Liability Employment Practices Liability Business Owners Package Workers’ Compensation Personal Umbrella

CAMICO is endorsed by

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Utah Association of CPAs 1240 E. 2100 South, Suite 500 Salt Lake City, UT 84106

Nonprofit Org. U.S. Postage

PAID Salt Lake City, UT Permit No. 1996

Address Service Requested

the journal entry | July 2013