On Balance Magazine - September/October 2017

September | October 2017 | Vol. 13 No. 5 A publication of the Wisconsin Institute of CPAs | wicpa.org

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blossoming career

Shannon L. Morris | 6 Accounting and finance major, Marian University

Plus: Are you ready for tomorrow’s technology? | 14 Tax planning strategies for retirees | 28 Transform your company with dashboards | 34

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A publication of Wisconsin Institute of CPAs | wicpa.org

September/October 2017 Vol. 13 No. 5

6 Features

Columns

6 A blossoming career

28 TAX

WICPA member and Marian University accounting major Shannon Morris reflects on her path from college student to future CPA.

10 Building a strong foundation

By Cynthia M. Hodnett

By Thomas G. Stephens Jr., CPA, CITP, CGMA 20 HIPAA risk assessment: Getting it right

Covered entities and their business associates must develop a long-term, cost-effective approach to protect electronic protected health information.

30 INDUSTRY

Upcoming legal considerations related to school district audits

Auditors must be aware of several vital legal considerations and their potential effect on district finances.

24 How Gen Z will make us rethink how to appeal to the next generation of accountants

By Tom Rogowski, CPA wicpa.org

By Michael J. Julka and Brian P. Goodman

34 TECHNOLOGY

By Janice S. Ahlstrom, FHIMSS, CPHIMS, CCSFP, RN, BSN

The CPA profession must focus on priming the next generation of accountants to pursue licensure.

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By Kevin M. Reardon, CFP®

14 Tech 2020: A look ahead Prepare for the technologies that will influence business professionals in 2020 and beyond.

Tax planning for retirees Develop key strategies to limit the lifetime tax liability of your clients who have retired or are approaching retirement.

By Cynthia M. Hodnett

Discover how WICPA members’ contributions to the Educational Foundation help shape local accounting educators and students.

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Dashboards: The most impactful way to transform your company (from the CEO down)

Departments 2 Odds & Ends | news briefs 3 Outlook | chair’s letter 5

Membership Matters | member benefits

19 In Touch | president & CEO’s message 26 Kudos | members in the news

Dashboards can be used to turn otherwise static spreadsheets into real-time interactive charts, graphs and tables that a company can use to enhance its performance.

By Jon Thompson

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Odds & Ends 2013 Apex Award for Publication Excellence 2017–2018 WICPA OFFICERS/BOARD MEMBERS Chair William L. Komisar, CPA, J.D. Chair-elect Michael D. Akers, CPA, CBM, CFE, CGMA, CIA, CMA, Ph.D. Past-chair Steven G. Handrick, CPA, CGMA Secretary-treasurer Katherine L. Hauser, CPA, CGMA Directors Jon C. Gaines, CPA, CGMA, MBA Ryan J. Hanson, CPA, CGMA Patrick G. Hoffert, CPA Debra L. Lenz, CPA, CGMA, CIA, CRMA Terri M. Lillesand, CPA Matthew A. Los, CPA Steven A. Pullara, CPA Matthew J. Schaefer, CPA, CGMA Angela C. Thomas, CPA AICPA Council Rick E. Dreher, CPA, CGMA Neil R. Keller, CPA, ABV, CVA

Hawkins Ash CPAs acquires Green Bay practice Hawkins Ash CPAs, based in La Crosse, has acquired the Green Bay tax and accounting practice of Brian R. Mudd, CPA and Michael D. Willis, CPA. The acquisition was effective July 1. The acquisition follows Mudd's retirement.

Willis will continue to serve clients as an independent contractor of Hawkins Ash CPAs. Mudd and Willis were formerly members of the law firm Nelson & Schmeling of Green Bay.

RitzHolman CPAs inaugural scholarship recipients honored RitzHolman CPAs in Milwaukee recently awarded its memorial scholarships: the RitzHolman Scholarship in Memory of Clenton, Katey and Kim and the Clenton Hall and Katey Pasqualini Memorial Scholarship. Vincent Dombrowski, a student at the University of Wisconsin-La Crosse, received the RitzHolman Scholarship in Memory of Clenton, Katey and Kim, and Joshua Hintz, a student at the University of Wisconsin-Whitewater, received the Clenton Hall and Katey Pasqualini Memorial Scholarship. The scholarships were established to honor the memory of three RitzHolman employees whose lives were taken by a drunk driver on Nov. 2, 2016. The legacy of the memorial scholarships is passed on to students who are inspiring others to be passionate about life and accounting.

Sikich LLP named one of the top places to work in SE Wisconsin

Chief Financial & Operating Officer Tammy J. Hofstede

Sikich LLP was recently named one of the top places to work in southeastern Wisconsin by the Milwaukee Journal Sentinel. To develop the list, the Milwaukee Journal Sentinel partnered with Workplace Dynamics, which collected employee feedback about their workplaces. The firm was recognized for empowering employees professionally and personally.

Vice President of Communications Amy E. Gaeth

Wipfli earns RMA Authorized Audit Provider designation

President & CEO Dennis F. Tomorsky, CPA, J.D., CGMA

Editor Cynthia M. Hodnett Design & Layout Brett Stallman Advertising Tony Hofstede Copy Editor Joan Bahr Printing Delzer

Wipfli LLP has been approved by Receivables Management Association International (RMA) as an authorized audit provider. This designation, held by only 10 organizations worldwide, allows Wipfli to perform limited and full compliance audits of debt buying companies, collection agencies and law firms.

Through RMA’s Receivables Management Certification Program (RMCP), organizations that comply with uniform and rigorous industry standards and pass a company background check can earn a Certified Professional Receivables Company (CPRC) designation. This global standard certification program was designed to promote uniform, consumer-oriented, best practice standards for the receivables industry.

Join us online!

On Balance is published six times a year by the Wisconsin Institute of Certified Public Accountants (WICPA). Change of address should be sent to: Membership, W233N2080 Ridgeview Pkwy, Suite 201, Waukesha WI 53188; Phone: 262-785-0445 or 800-772-6939 (WI/MN); Fax: 262-785-0838; email: jessica@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2017 On Balance.

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September | October 2017

WANT YOUR BUSINESS MENTIONED IN ODDS & ENDS? Email your announcement to cynthia@wicpa.org.

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OUTLOOK | CHAIR’S LETTER “I have learned a lot about the need for advocacy, and I welcome all of you to join us. Whether it be financial support for the WICPA and AICPA CPACs, volunteering as a legislative contact, or being on our Public Policy Committee, I urge you to be active and get involved!”

Advocacy by CPAs for CPAs

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dvocacy is important to our organization. There are different definitions of advocacy, but most focus on the act or process of supporting a cause or proposal. While I am not a politically active person, I have learned during my time with WICPA how important it is to present issues affecting our profession to our state and federal government.

In the last six months, I have met with state and federal senators and representatives. I soon realized that our leaders need to understand various issues and how they affect WICPA members and Wisconsin residents. For example, in Washington, D.C. as part of the spring AICPA council meeting, we presented the following information and positions: 1. Tax reform — We submitted examples of the complexity of the Internal Revenue Code. Members of Congress were surprised by the size of the IRC, regulations, and related materials, and by the overabundance of duplication. We believe we made a positive impact on pushing them toward simplification.

2. IRS taxpayer services — We explained how difficult it is to actually talk with IRS employees and reach resolution on issues.

3. Mobile workforce — We emphasized legislation that would limit the ability of states to tax an individual if he or she annually works fewer than 30 days in a state. This would reduce regulatory burdens on multi-state employers and taxing authorities; streamline and create more income tax efficiency; and provide uniform national standards, all of which would help employees and their companies.

4. Fiscal state of the nation — We asked that both legislative houses meet to obtain a direct report on the nation’s finances from the comptroller general based on audited financial statements. This would provide increased fiscal transparency and give Congress an important fiscal perspective on the nation’s financial health.

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All four of these initiatives would provide a better-run government, and a more efficient and fairer tax system. At the state level we have advocated for no sales tax on professional services; for the passage of reasonable, fair, and consistent continuing education requirements for CPA license renewal; and to clarify educational requirements for the Uniform CPA Examination and license eligibility.

Our advocacy relating to this last issue benefitted greatly from input provided by a WICPA committee of university and college professors. In addition, WICPA staff, volunteer members, educators and the Accounting Examining Board collaborated to establish emergency rules that helped CPA candidates qualify for examination and licensing during a transitional change in regulatory requirements.

I have learned a lot about the need for advocacy, and I welcome all of you to join us. Whether it be financial support for the WICPA and AICPA CPACs, volunteering as a legislative contact, or being on our Public Policy Committee, I urge you to be active and get involved! We need each other to help move the WICPA forward.

William L. Komisar, CPA, J.D. is a principal at CliftonLarsonAllen LLP in Milwaukee. Contact him Balance September | October 2017 at 414-238-6800 On or bill.komisar@CLAconnect.com.

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WICPA members qualify for exclusive savings from Roger CPA Review! Receive discounts on all courses and products, from full-service course packages, study tools such as flashcards, audio lectures, and more! Simple, no-fee financing options available.

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We function as a Fiduciary, always putting your client’s interest first.

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Visit wicpa.org/marketplace for discounted pricing, codes and links to take advantage of the buying power WICPA members have.

September | October 2017

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MEMBERSHIP MATTERS “Whether it's $10, $100 or $1,000, your contribution sends a clear message that you believe in the future of the accounting profession.”

Tomorrow’s CPAs need YOU today

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t has been widely reported that the largest population, baby boomers, are beginning to retire. Nearly every profession will experience the impact of that population leaving the workforce. What does that mean for the accounting profession, and what we can do about it?

Ensuring that there are enough CPAs to meet tomorrow’s demand requires us to encourage students about the rewards of becoming a CPA. The WICPA Educational Foundation is dedicated to helping students find their passion for the accounting profession.

Shutterstock.com

For more than 50 years, the WICPA Educational Foundation has done amazing work to help promote a healthy and vigorous CPA profession by supporting elementary, high school and college programs that encourage future generations of accountants. Some of the many initiatives of the Foundation this past year included the following: •

Reached over 30 colleges across the state.

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Awarded $47,500 in scholarships to 19 college students pursuing the 150-hour requirement toward becoming a CPA.

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Published a student publication, CPA2b, written exclusively for students interested in pursuing accounting careers.

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Reached tens of thousands of students by supporting and attending several programs including Reading Makes Cents, DECA, Wisconsin Educators of Business & Information Technology, Future Business Leaders of America and Junior Achievement.

Hosted an annual conference for high school teachers to network with educators, CPAs and their peers and receive information to incorporate into their current accounting curriculum.

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Co-sponsored the Accounting Pilot and Bridge Project with the AICPA and the Wisconsin Department of Public Instruction to provide training on higher-order accounting curriculum to over 30 high school teachers.

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Developed marketing materials to promote the profession within Wisconsin high schools.

How YOU can help Your contribution to the Foundation is vital in helping to attract future CPAs. Whether it's $10, $100 or $1,000, your contribution sends a clear message that you believe in the future of the accounting profession. To make a tax deductible contribution, visit wicpa.org/efdonate. Or, to learn more about volunteer opportunities to reach students, please contact me!

UPCOMING EVENTS: SEPT 19

Networking at Appleton Beer Factory, Appleton

SEPT 22

Golf Outing at Ironwood Golf Course, Sussex

SEPT 26

Networking at Backstage at the Meyer, Green Bay

OCT 10

Networking at Milwaukee Public Market, Milwaukee

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Gave over $52,000 in grants to high school educators for accounting awareness activities with their classes.

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Supported the Young Entrepreneurial Scholars (YES) Program, a one-of-a-kind program that introduces minority students to the accounting profession.

OCT 12

Volunteer at Hunger Task Force, Milwaukee

OCT 17

Networking at Cambridge Winery, Cambridge

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Encouraged accounting as a career at the National Association of Black Accountants’ regional conference.

OCT 23

CPAs in Industry Fall Conference, Wisconsin Dells

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Networked with and presented information about the CPA profession at the University of Wisconsin-Whitewater’s Explore Accounting Day to over 800 high school students.

OCT 24

Networking at Two Beagles Brewpub, Onalaska

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Collaborated with The Student and Leaders Network to provide live web conferencing and interactive video discussion on topics about accounting careers to multiple classrooms across the state, reaching over 3,200 high school students.

Go to wicpa.org/register for all your CPE and networking events!

Tammy J. Hofstede is chief financial and operating officer at the WICPA. Contact her at 262-785-0445 ext. 4518 or tammy@wicpa.org.

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September | October 2017

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Photography by Adam Ryan Morris

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Shannon L. Morris enjoys a recent afternoon at a Fond du Lac farmers market.

blossoming career

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Shannon L. Morris reflects on her path from college student to future CPA

By Cynthia M. Hodnett

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hannon L. Morris has enjoyed 10-plus years of working as a certified bookkeeper (C.B). Now she’s aiming for something more: the CPA credential.

Morris, who is majoring in accounting and finance at Marian University in Fond du Lac, will begin studying for the Uniform Certified Public Accounting Examination shortly after graduating in May 2018. She also plans to begin an internship at a local CPA firm next spring.

“Getting the CPA will open up a lot of doors,” she said.

“I will be working in public accounting in my career, working with individual tax returns, as well as corporate tax, also to include government agencies and nonprofits.”

When opportunities knock On campus, Morris serves as Marian University’s 2017–2018 WICPA/Becker Campus Ambassador for Becker Professional Education. She has tutored students in accounting and finance and helped students and low-income residents prepare their income taxes.

Morris earned an associate degree with an emphasis in business administration several years ago. But family responsibilities prevented her from furthering her education.

In 2015, she decided to enroll at Marian University to begin work toward her goal of becoming a CPA. “I’m a returning adult student, I think you can get to a certain age where you may feel like there’s too many obligations and responsibilities to be able to do something new,” she said. “Going back to school while balancing a family and work has shown me what I’m capable of doing and that I can step out of my comfort zone and take on new challenges.

Anyone at any age can go out and accomplish new goals

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if they work hard enough. Doors open and opportunities present themselves just by networking with others. I’ve met a lot of great professionals, and it all plays a role in keeping my priorities and goals in line.”

Networking is how Morris landed a previous internship at a local company.

“In my previous internship, I learned a great deal but my biggest takeaway was that I had the opportunity to head off changing the company’s accounting system to run mostly paperless,” she said.

A WICPA member since April 2017, Morris serves on the WICPA Public Policy Committee and Federal Taxation Committee. She decided to join the organization after receiving a student membership as one of 17 students selected to receive the 2017 LeRoy C. Schmidt 150-Hour Accounting Scholarship in the amount of $2,500. The scholarship is offered to fund the 150-hour education requirement to obtain a CPA license.

“I started researching the WICPA and what type of involvement there was, and I immediately fell in love with it,” she said. “I joined the Public Policy Committee because I’m really interested in the policy issues that protect the profession, how those policies are created and how those policies affect the public. I’m new to both committees, but I’m excited to learn from the senior members of those committees and to become a contributing member myself.”

Achieving balance Off campus, Morris works part time as an accountant for a local law firm and is a single mother to a college-aged son and a 7-year-old son.

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“My family knows how busy I am and how hard I work, and they are proud of what I’m doing,” she said. “I want to give my children that foundation of setting lofty goals and being a part of positive things. I have an internal sense of accountability that I need to make an impact during my time here when it comes to my family and raising my son, in what I do in the CPA profession and what I do for others. If possible, I want to leave my corner of the world in a little better place than how I found it.”

Susan H. Schleisner, an attorney and owner of Pro Se Divorce & Mediation Services S.C., said Morris has been a great asset at her firm since she was hired as an intern accountant there in June of 2016. She stayed on with the firm after her internship ended.

“I had someone else working on my books, and it became a real mess,” Schleisner said. “I needed a lot of help. Things were in the wrong categories, and she just came in and cleaned everything up. She got everything that needed to be done to my CPA. She helped me file my taxes that were on extension from 2016 and also helped me clean up everything from 2015. She knows what questions to ask and relates to me everything that my CPAs need.

I think she will be a great CPA because she gets things done fast, on time and right.”

Faith, family, school and work are priorities to Morris.

She enjoys shopping at farmers markets, planning and preparing vegan meals with her family, as well as hiking, boating and observing nature.

“Having a solid foundation of my priorities, taking care of myself and my health are so important,” she said. “Doing that

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Spending time outdoors with nature is one of Morris' favorite hobbies.

“I started researching the WICPA and what type of involvement there was, and I immediately fell in love with it,” — Shannon L. Morris allows me to do so much more for others and be the best person I can be. For me, it’s investing time in my church family, my own family and staying healthy that allows me to do and enjoy all of the things I do every day.”

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WHY BECOME A CPA? “I think CPAs have a vital role that serves the public, and I also enjoy the challenges of accounting work.”

HOW I OVERCAME MY BIGGEST CHALLENGE “For me it’s a daily choice to step out of my comfort zone to face the challenges the day presents. I consistently accept whatever comes before me and face it head on. I learn daily from taking that attitude. Rising to the challenge every day, for me, that's the key.”

MY INSPIRATION “Faith and my family are my foundations of inspiration.

I've been blessed in my life, and it’s important to me to give back in some form, wherever I am.”

SHANNON L. MORRIS

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Cynthia M. Hodnett is editor of On Balance magazine.

Contact her at 262-785-0445 ext. 4516 or cynthia@wicpa.org.

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N I G D L I AH U B

STRONG FOUNDATION

WICPA Educational Foundation donations shape accounting educators, students 10

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By Cynthia M. Hodnett

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ylie A. Bennett, an accounting and finance major at the University of Wisconsin-Oshkosh, will move closer to accomplishing her goal of becoming a CPA when she graduates in December. Bennett said achieving that goal has been easier, thanks in part to a $2,500 LeRoy Schmidt 150-hour Accounting Scholarship from the WICPA Educational Foundation.

The Foundation provides the scholarships to accounting students in their last year of academic work to achieve 150 credits to obtain a CPA license.

“It’s nice to be able to focus on finishing our classes and spending time networking or studying for the CPA Exam instead of having to work extra hours to pay for school,” said Bennett, a New London resident who commutes to campus. “It definitely takes a lot of the stress off of worrying about how I’m going to pay for school.”

This year, the Foundation awarded $47,500 in scholarships to Bennett and 18 other students. The students were chosen by the Foundation's Scholarship Selection Committee based on their demonstration of commitment to a career as a CPA, academic achievement, community service, personal statement and letters of recommendation.

Every dollar counts In addition to scholarships, the Foundation provides other initiatives for accounting educators and professionals. One such initiative is the annual High School Educators Accounting Symposium, which offers teachers the only accounting-specific CPE in Wisconsin. Last year’s symposium had a nonprofit theme and was attended by nearly 80 high school educators from around the state.

This year’s symposium, which will focus on technology, will occur on Nov. 10 at the Sheraton Madison Hotel.

All teachers who attend the November symposium are eligible to apply for a grant from the WICPA Educational Foundation. In 2017, the Foundation awarded 40 Accounting Career Awareness Grants totaling $52,290. Grants were awarded to teachers for local projects that promote accounting as a career and involve interaction with Wisconsin CPAs. Sara Sturm, a business and info tech teacher at Hartford Union High School, has attended the symposium for the last four years and plans to attend again in the fall. Attending the symposium provides Sturm an opportunity to network with industry representatives and accounting professors and share curriculum best practices with other accounting high school educators.

Educators and speakers network at the 2016 High School Educators Accounting Symposium.

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“It is important to secure an educational foundation for the next generation of accounting professionals, and Deloitte’s donation is helping to make an impact that matters by shaping the future of the profession.”

— Scott A. Wrobbel, CPA, managing partner, Deloitte LLP

Sturm received a 2017 grant that she used to pay for a field trip to Habitat for Humanity of Washington and Dodge Counties. There, her students learned about the organization’s accounting practices and how to develop a business model.

She also used the grant to register her students for Lakeland University’s Forensics Accounting Competition, where they participated in a case study and attended workshops on various accounting-related topics, including cybersecurity.

“The teachers who get involved with the Foundation appreciate what the Foundation does and how it benefits their students,” she said. “My students really learn so much from these experiences and that accounting isn’t all about sitting behind a desk. They learn about the different accounting career options. They learn about the client interaction, and they get the big picture perspective. With the grant, I’m able to do for my students what I couldn’t do if it wasn’t for the Foundation.

We really appreciate that we have the opportunity to show our students what a career in the accounting is and what it can be.”

The Foundation also supports projects to promote the accounting profession at schools throughout Wisconsin. Each year, the WICPA recruits members to participate in the high school speaking program. The WICPA provides a PowerPoint, brochures, materials, Robert Half salary guides and maze pens for the presentations.

Students attending elementary schools throughout the state are also exposed to the accounting profession through the Foundation-supported Reading Makes Cents program.

In conjunction with National Financial Capability Month, the WICPA hosted its ninth Reading Makes Cents program in April. WICPA members read money‐themed books to

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WICPA member Susan M. Peck, CPA reads to Fernwood Montessori School students.

more than 1,400 students throughout April. Members were encouraged to visit the elementary schools of their sons, daughters, nieces, nephews or neighbors to read and talk to students about the basics of money.

Another Foundation-supported effort for colleges and young professionals includes CPA2b, a biannual student publication on accounting-related topics, including accounting careers and the CPA Exam. And, the Foundation also funds college campus outreach visits and a college student ambassador program.

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Giving back Many WICPA members and firms who donate to the Foundation see their contributions as an opportunity to give back to the profession. Recently, Deloitte in Milwaukee donated $10,000 to the Foundation.

“It is important to secure an educational foundation for the next generation of accounting professionals, and Deloitte’s donation is helping to make an impact that matters by shaping the future of the profession," said Scott A. Wrobbel, CPA, managing partner at Deloitte LLP in Milwaukee.

Michael E. Friedman, CPA, J.D., director at Scribner Cohen & Company S.C. in Milwaukee, encourages other members to contribute.

“As the new president of the WICPA Educational Foundation, my term could not have started on any better

note,” Friedman said. “I would like to personally thank Deloitte for its very generous contribution. This will certainly help the Foundation in promoting the CPA profession."

“During the past year, the larger CPA firms grew at a rate of 7 to 10 percent,” Friedman said. “Tens of thousands of new jobs await accounting graduates. The opportunities have never been greater. With the help of WICPA member and firm contributions, we at the Foundation look forward to expanding initiatives and increasing the pool of qualified students seeking to enter our profession.”

Cynthia M. Hodnett is editor of On Balance magazine.

Contact her at 262-785-0445 ext. 4516 or cynthia@wicpa.org.

YOU have the opportunity to impact thousands of students and educators in Wisconsin.

Through your contribution to the WICPA Educational Foundation, Inc., you can help us reach students and educators in high school and college to create awareness about the accounting profession.

As the end of 2017 draws near and you are thinking about tax planning, consider donating to the WICPA Educational Foundation.

Visit wicpa.org/EF to contribute online. Thank you to our past contributors. Find a list at wicpa.org/EFContributors.

Questions? Contact Tammy J. Hofstede, WICPA Chief Financial and Operating Officer at tammy@wicpa.org.

To contribute, visit wicpa.org/EF.

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By Thomas G. Stephens Jr., CPA, CITP, CGMA

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On Balance

he year 2020 seems so far away, yet in reality, it's just around the corner.

Accordingly, strategic professionals are already making plans for how they can operate most effectively in the upcoming new decade. As you begin making your plans, one of the key drivers and influencers will be the technologies available to you and your team members to improve individual and team efficiency. In this article, let's examine the technologies that will impact business professionals in 2020 and beyond.

September | October 2017

Connectivity will escalate in importance To say that the internet has been the most important technology to go mainstream over the past 20 years is likely the understatement of the century.

Likewise, to say that the internet will continue to increase in importance in 2020 and beyond is likely an understatement of similar magnitude, as connectivity will become even more important in the years ahead.

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However, the connectivity will take a different form moving forward compared with the past. In the coming decade, connectivity between people will be almost a given and taken for granted. After all, that level of connectivity is relatively saturated now. Rather, connectivity in 2020 and beyond will increase as the Internet of Things (IoT) becomes mainstream.

In the most simplistic terms, IoT refers to devices connected to each other through the internet.

These devices can be simple home automation devices, such as thermostats and irrigation controllers connected to and controlled from homeowners’ computers, smartphones and other devices. In business settings, IoT could be sensors to continually monitor factory machinery and alert maintenance crews when a breakdown appears imminent, instruments to let farmers know when livestock may be falling ill, or mobile devices as alternatives to traditional point-of-sale terminals to facilitate purchases in retail stores. Regardless of the types of devices that will represent IoT, know that there will be an extremely large number of them; as confirmation, Gartner indicates that the number of IoT devices connected to the internet will grow from 6.4 billion in 2016 to 20.8 billion in 2020. Clearly, the importance of connectivity — with the internet as its backbone — will escalate in the coming years.

Business intelligence efforts will dominate reporting Though Business Intelligence (BI) has been discussed for a number of years, only in the past few years have tools supporting BI activities emerged that facilitate true BI efforts without overwhelming end users and breaking their budgets.

Microsoft, Qlik and Tableau are among the companies leading the way with BI tools that end users with average technical skills can use to create powerful interactive dashboards that provide real-time insights into organizational and team performance. For example, using the free Microsoft Power BI Desktop tool, you can create and distribute BI dashboards that allow team members to focus on the areas for which they are responsible and measure performance against established norms.

In the near future, expect to see BI tools continue to get easier to use while simultaneously providing even more

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robust reporting capabilities. For example, it's plausible that a publisher of BI software could begin accumulating industry-specific benchmarking data and provide that data through the BI application.

Of course, end users of dashboards would then be able to measure performance not only against their own prior results and internallyestablished targets, but they also could judge performance relative to others in the industry in which they operate. Further, BI tools could also help with predictions, forecasts and even routine budgets by incorporating artificial intelligence to analyze very large historical data sets to uncover hidden relationships in the data. Although traditional financial and operational reports still will be generated in the upcoming decade, look for their relevance to decrease while BI dashboards begin to dominate business reporting routines.

You likely will use a single device to conduct business The days of using multiple devices to conduct business — desktop computer, laptop computer, tablet and smartphone — are coming to a close. In the upcoming decade, many business professionals will ditch all but one device and conduct all business activities from that single device, simplifying the work environment while simultaneously saving money on capital expenditures, software and maintenance. In fact, this is possible for many professionals today, although few are yet willing to venture into this brave new world.

Nearly all smartphones today allow connections to external keyboards and monitors. Many (with the iPhone being the most visible exception) also allow you to connect to a mouse. With a keyboard, monitor and mouse connected, simply download any necessary apps and you’re ready for business.

This scenario becomes potentially troublesome when you might need to run a line of business application such as your accounting/ ERP software, a tax application, or CRM tool. Because these fullfeatured, robust applications do not readily lend themselves to being re-written as apps, it is not likely that you will be able to run them from a smartphone or other device that might replace a traditional computer. However, if you ran these applications from the Cloud as software as a service, as in the case of QuickBooks Online or CCH Axcess, or as a hosted application such as Sage 300, or if you accessed them from a virtual desktop such as those provided by Cetrom, you would be able to use the browser on a smartphone to access them on that device.

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Security needs at the mobile level intensify Of course, if we carry all of our data and applications with us on a single mobile device, then the importance of end-point security intensifies. Accordingly, we will need to secure these devices better than ever before and treat them with the same level of “security respect” as we currently treat our traditional desktop and laptop computers. Fortunately, new technologies now arriving should make that easier for end users. For example, the new Windows Hello feature can be used to log-in to mobile devices using facial recognition, instead of entering a password.

A feature such as this should not only improve security, but simultaneously make it easier for end users to comply with organizational security policies.

To ensure compliance with all policies, organizations will place even greater reliance on Mobile Device Management (MDM) software. Using MDM software, managers remotely monitor and enforce compliance with policies relating to passwords, encryptions, backups, downloaded apps, etc.

Just because the need for mobile security will increase, don't be lulled into thinking that the need for more traditional security measures will decrease. Far from it! Hackers will continue to innovate in their attempts to gain access to sensitive and critical data and we likely will need to re-think our entire security plan in an effort to ward off attacks. Look for technologies such as “whitelisting” software titles and device and network monitoring tools to grow as means of not only attempting to prevent attacks, but also to alert us in real-time that something appears to be amiss in our computers and networks.

Software deployments and upgrades will be incremental in nature The days of major software upgrades may be over or soon drawing to a close. To illustrate, Microsoft has already announced Windows 10 will be the last version of Windows — there are no plans for Windows 11. Expect more software publishers to follow suit. Does this mean that no new features are on the way or that development will cease? Of course not! Rather it confirms that the very nature of software, including operating systems, is changing as more publishers are moving to or encouraging subscription

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licensing instead of traditional, perpetual use licenses.

In these subscription models, you pay a monthly or annual fee for the right to use the software for a specified period of time.

During that period of time, as your software publisher releases new features to the software, you will receive them through periodic updates, presumably downloaded from the internet.

Of course, if you stop paying for the license, you should expect the software publisher to cease sending the updates to you.

In this business model, software evolves into a service instead of a technology. Compare that to the traditional licensing model where the publishers create and innovate new features, but store them until they decide to make a major release of the application, such as when upgrading from one version of Windows to the next or one version of Office to the next.

Revamping and monitoring workflows will produce extraordinary dividends Over the past 30 years, businesses of all sizes have invested heavily in technology. But in large number of cases, they haven't modified internal workflows at the same pace they have deployed new technology. Accordingly, their business practices are stale and inefficient. Further, because they have not modified their workflows to take advantage of much of the technology in which they have invested, they aren't receiving the return on investment that they expected when they acquired the new technology.

Consider accounts payable practices, for example. In many organizations, accounts payable continues to consume significant amounts of labor as team members manually process vouchers for payment. Tools provided by companies such as Bill.com utilize technology to automate and streamline accounts payable processes, up to the point of cutting processing time by as much as 50 percent. Similarly, tools such as SurePrep allow CPA firms to automate much of their tax processing workflows by automatically organizing and bookmarking working papers for individual tax returns and, if desired, populating returns with data scanned from W-2s, 1099s, K-1s and other forms. Similarly, businesses of all types could use a workflow solution such as XCM to revamp workflows and ensure that all team members process transactions and complete projects in a prescribed fashion. Workflow tools will only increase in importance and provide bigger paybacks as organizations seek to enhance their ROI on technology.

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Training will prove to be a never-ending strategic mission The pace of change shows no signs of declining; in fact, it likely will continue to accelerate. Smart managers will recognize this and look at training team members as a strategic decision, not a tactical one. Failing to train team members on new technologies or new features added to existing technology guarantees that the organization will not receive the promised ROI on technology. Yet, many managers will adopt a shortsighted approach and attempt to cut expenses by reducing their investment in training and then wonder why team members struggle with technology. Those who see training as a key corporate strategy will double-down on their investment and their organizations will reap the rewards.

Summary

The year 2020 will be here before we know it. And with the arrival of a new decade, we will all face technology challenges and technology issues. Failing to plan for the continuing revolution in technology almost guarantees that an organization will be ill-equipped to take advantage of the tools and trends that will materialize, forcing the organization into what sometimes seems to be a never-ending cycle of playing “catch-up.” Carefully consider the trends and technologies discussed above and how you can capitalize on them in your business to increase efficiency, security, and profitability. Best of luck in the coming decade.

Thomas G. Stephens Jr., CPA, CITP, CGMA is a shareholder in K2 Enterprises in Hammond, La. Contact him at tommy@k2e.com.

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WICPA

A

W

A

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NOMINATE SOMEONE YOU KNOW FOR AN EXCELLENCE AWARD! H H H H

Accounting Educator Accounting Student Business & Management CPA in Public Practice

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H H H H

Community Service Distinguished Career Diversity & Inclusion Women to Watch

Young Professional

Submit your nomination at wicpa.org/awards by Nov. 10, 2017.

Recipients will be announced in January and honored at the Member Recognition Banquet & Annual Business Meeting on May 10, 2018.

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IN TOUCH | PRESIDENT & CEO's MESSAGE “As technology continues to increase efficiency with data analytics that accelerate and improve decisions with reduced risk, CPAs who work in business, nonprofit and government organizations will have even greater opportunities to contribute to their employer’s success.”

CPAs in business, nonprofit and government maximize organizational success

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ur individual careers as CPAs represent every segment of the economy, as well as multiple levels within many organizations we serve. While CPAs in the C-Suite provide extraordinarily valuable strategic and visionary contributions far beyond recording and distributing historical transactional information, early-career CPAs contribute to organizational success by ensuring accurate information and transaction processing that shape decisions and minimize risk. The CPA career path from early career to senior executive involves navigating many winding turns and a variety of personal decisions that impact both the employer’s success and the CPA’s career.

CPAs who serve their employers in executive roles ascended to their positions by continuously identifying and learning the new skills required for their next career level. They also demonstrated the courage to accept and request projects outside their comfort zones of technical expertise to maximize organizational success, as well as the resilience to overcome unanticipated challenges.

The most successful CPAs welcome the opportunity to teach and delegate, both of which reinforce their own skills, while transferring valuable knowledge to others. This transfer of knowledge benefits their organizations with succession planning and provides career growth opportunities that attract and retain talent. The resulting cross-training also reduces organizational risk from unanticipated talent loss. Delegating also frees up time for CPAs to take on more advanced projects that accelerate their career growth while contributing to organizational success.

As technology continues to increase efficiency with data analytics that accelerate and improve decisions with reduced risk, CPAs who work in business, nonprofit and government organizations will have even greater opportunities to contribute

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to their employer’s success. CPAs will leverage the Internet of Things (IoT) to further automate their organization’s processes with communication among devices to reduce processing time and error correction costs. CPAs will also increasingly apply blockchain technology to expedite transaction processing with reduced risk, as well as deploy artificial intelligence to glean information from vast amounts of transactional and device data to improve decisions regarding supply chains, business models, buyer behavior, and strategic direction for organizations of all types.

CPAs have long enjoyed tremendous respect as leaders in their business, nonprofit and government positions as a result of their education, experience, ethical standards, and passing the rigorous Uniform CPA Examination. These valuable attributes, along with continuously increasing skills in emerging technologies, will continue to make CPAs critical leaders in every organization.

Dennis F. Tomorsky, CPA, J.D., CGMA is president & CEO of the WICPA. Contact him at 262-785-0445 ext.

4519 or dennis@wicpa.org.

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By Janice S. Ahlstrom, FHIMSS, CPHIMS, CCSFP, RN, BSN

overed entities and their business associates face an ever-evolving risk environment in which they must protect electronic protected health information (ePHI). Although health care security budgets may increase this year, the cost of adequate security controls to protect ePHI often exceeds what is budgeted. As a result, some ePHI may be underprotected and vulnerable to data breach. A long-term, consistent and cost-conscious approach to HIPAA compliance is needed.

Risk analysis: The foundation of an effective HIPAA compliance plan Risk analysis is a required HIPAA implementation specification.

The HHS Office for Civil Rights (OCR) released guidance on the risk analysis requirement in July 2010. The Security Rule states that an organization must conduct an accurate and thorough assessment of the potential risks and vulnerabilities to the confidentiality, integrity and availability of ePHI. Additionally, security risk analysis must be performed to comply and attest to Meaningful Use of electronic health records as required by the Health Information Technology for Economic and Clinical Health (HITECH) Act. With the OCR increasing enforcement efforts with random audits for both covered entities and their business associates, risk analysis plays a critical role. Organizations need to comply with the HIPAA risk analysis requirement if they are to avoid returning Meaningful Use Medicare and Medicaid payments, avoid OCR fines and avert the cost of breach notification efforts.

Risk analysis: Getting it right Today, we find HIPAA risk assessment reports that don't meet the guidance defined by OCR or support complete review of the security rule controls. Checklists of policies and procedures, penetration test results and IT assessments barely scratch the surface of the security safeguards. The wide variance in HIPAA risk analysis scope and reporting suggests that many organizations may not truly understand the HIPAA Security Rule and how to conduct an accurate and thorough assessment.

The steps below should put you on the right track to be compliant with OCR guidelines.

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1. Evaluate your current HIPAA risk assessment.

The following components should be included in your current risk assessment efforts: • Identification of assets that create, store, process or transmit ePHI and the criticality of the data • Identification of threats and vulnerabilities to ePHI assets, the likelihood of occurrence and the impact to the organization along with a risk rating • Evaluation and documentation of the administrative, physical and technical safeguards for the organization, by department where applicable, and for each application with ePHI • Evaluation and documentation of the security measures currently used to safeguard ePHI. Are the controls configured and used properly? What are the vulnerabilities?

• Evaluation of HIPAA policies and procedures. Are the documents dated, signed, reviewed periodically and available?

If all of the above items are not included in the scope of your risk assessment, the assessment may not be acceptable with an OCR audit.

2. Select the right HIPAA risk assessment tool.

The OCR highlights two tools in its 2010 guidance that provide a framework for risk assessment: Security Risk Assessment Tool (SRA) – developed by the Office of the National Coordinator (ONC) for Healthcare Information Technology. The ONC’s SRA user guide walks users through 156 questions with resources to help understand the context of each question. It can be downloaded from HealthIT.gov. The tool is geared toward smaller practices and while a good starting point, it doesn't take into consideration many of the complexities of larger organizations.

Risk Assessment Toolkit – developed by Health Information Management Systems Society (HIMSS) professionals. The HIMSS Risk Assessment guide and data collection matrix contains a PDF user guide, Excel workbooks with NIST risk analysis references, application and hardware inventory workbooks, HIPAA Security Rule standards, implementation specifications and a defined safeguards workbook. The safeguards are numbered 1-92 and correspond to the Security Scorecard workbook.

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The scorecard differentiates numbered safeguard components to be assessed for the organization, by department and within applications that contain ePHI. The HIMSS Risk Assessment toolkit is available at: http:// www.himss.org/himss-security-riskassessment-guidedata-collection-matrix.

The tool includes NIST Special Publication 800-30 Revision 1 guidance for completing a risk assessment.

3. Determine the risk analysis frequency.

One of the most prevalent challenges in complying with the HIPAA Security Rule’s risk analysis requirement is determining the frequency or triggering conditions for performing a risk analysis.

The HIPAA Security Rule and 2010 OCR risk analysis guidance state that risk analysis should be “ongoing” to document and update security measures as needed. The security rule states that continuous risk analysis should be completed to identify when updates are needed. OCR guidance notes that the frequency of performance will vary among covered entities.

Some covered entities may perform these processes annually or as needed (e.g., biannual or every three years) depending on circumstances of their environment. Typically, covered entities that are attesting to Meaningful Use and complying with the spirit of the security rule will conduct an annual HIPAA risk assessment.

4. Perform the risk assessment: insource or outsource.

HIPAA doesn't specify who should perform the risk assessment. Some organizations insource, some outsource

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and some do both, alternating between insourcing and outsourcing. For example, an organization may hire external resources to conduct the HIPAA risk assessment every other year, and on the off year the organization may choose to conduct it internally. Where practical, a separation of duties should exist between the HIPAA risk assessment team and the systems implementers and operations staff. Hiring an outside professional to conduct the risk analysis reduces risk by providing an impartial assessment from someone who wasn't involved in the implementation of your systems or the development of your policies, procedures and security controls.

Final analysis Health care organizations must implement strong data security safeguards, doing so supports compliance with the HIPAA Security Rule. Conducting internal risk analysis along with annual risk assessments that leverage a professional services provider every other year also reduces risk and maximizes the value of the resources engaged. Finally, leveraging an industry standard toolkit will help your organization be comfortable with conducting self-assessments on alternating years while saving time and money.

Janice S. Ahlstrom, FHIMSS, CPHIMS, CCSFP, RN, BSN is director of Risk, Internal Audit and Cybersecurity at Baker Tilly Virchow Krause, LLP in St. Paul, Minn. Contact her at janice.ahlstrom@bakertilly.com.

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RESOLVING TAX CHALLENGES The Tax Section of von Briesen & Roper, s.c. has the knowledge and experience to resolve federal, state and local tax controversies. Whether providing tax assistance to businesses, business owners or individuals, we are your resource. Our experience allows us to handle all aspects of tax challenges including complex audits and audit support, administrative appeals, the courts and tax collection. The bottom line?

We get results.

To learn more about our Tax Section, please contact Robert Mathers at rmathers@vonbriesen.com.

vonbriesen.com/tax Milwaukee • Madison • Waukesha Oshkosh • Green Bay • Appleton

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CPA

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How Gen Z will make us rethink how to appeal to the next generation of accountants

O By Tom Rogowski, CPA

ne critical issue facing the accounting profession refers to the CPA pipeline, which is the correlation between the number of recent college graduates with accounting degrees and the volume of new candidates sitting for the Uniform CPA Examination. And as statistics in recent years from the AICPA show, there is a large gap between the two. While enrollment in accounting programs and accounting graduates being hired by public accounting firms is high, the amount of new exam candidates and exam sections taken is flat. At the end of the day, only one in three accounting graduates actually go on to study for, take, and pass the CPA Exam.

Combine this with the fact that the AICPA predicts 75 percent of currently active CPAs will be retiring within the next 15 years, and we can easily see how this is troubling to the future of the profession.

Which is why now, more than ever, we need to focus

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on priming the next generation of accountants to pursue licensure and breathe some life back into the flat CPA pipeline.

Enter Generation Z. Born in the mid-1990s, this technologically-minded and entrepreneurial generation is beginning to enter the workforce in significant numbers. Here’s what we can do to drive Generation Zers to really understand the value the CPA license provides and get them to become CPAs.

Academia We already know that schools are adopting initiatives to push the accounting profession.

However, to successfully reach Gen Zers, we need to tailor these efforts to their values, such as: • Recognizing their strong academic and professional drive earlier. Gen Z members are exploring and planning their careers in high school. And whether or not accounting is on

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their radar is up to us. Profession leaders, organizations, and firms should make a concerted effort to focus on creating a pro-CPA culture by making accounting career resources, scholarships, and programs ample and available not only for college, but high school students as well.

• Provide early exposure to the CPA Exam. Many accounting students are intimidated by the financial and personal investment needed to pass the CPA Exam. They also don’t always understand the connection between the courses they’re taking and licensure.

• Instilling a sense of competition. Gen Z members are extremely competitive. Therefore, campus organizations can get Gen Z more excited to pursue licensure by showing the competitive edge they will have in their careers. CPAs are high in demand, have job security, and are the most coveted among all companies and firms. Gen Zers will appreciate how far the license will take them, such as the ability to travel, work in different industries, better compensation, and respect/prestige.

• Technology and globalization. The most prominent attribute of Gen Z is their technological savviness, which they’ll utilize to navigate their social, personal, and professional lives. As a result, Gen Zers are considered to be the most global generation in their thinking, relatability, and interactions. Diversity in all walks of life isn’t only expected, but demanded by this generation. So it will be important to show accounting students the depth and breadth of the profession on a global scale. This includes expansion into international markets, working with artificial intelligence, data analysis and information systems.

Firms

• Work-life blend. Gen Zers are looking for a work-life blend lifestyle where they’re able to work and live their personal lives simultaneously rather than have distinct lines that separate one from the other. Gen Zers don’t want to be confined to standard office hours, punching in at “x am” and punching out at “y pm.” Always recognizing that client services comes first, firms should consider broadening their policies to allow more freedom with respect to work schedules. They can implement flexibility by fostering an environment where getting work done is more important than where and when it is accomplished.

• Customized career paths. Gen Z is extremely independent and ambitious. This group’s work ethic shows they want to inhabit multiple roles and industries simultaneously.

They’re looking to gain well-rounded experience and want an element of say as to what those experiences are. Firms can offer rotation programs that allow individuals to see quick hitting snippets of different roles (audit and tax) and industries (manufacturing and real estate and financial services, etc.). However, with respect to learning, be cautious of the one size fits all approach. Analyze an individual’s strengths and areas for improvement by working with the individual to develop a customized learning program designed to exploit strengths and mitigate “weaknesses.”

Conclusion We all have to work together to improve the flat CPA pipeline.

Universities, firms, professional associations, (yes, even CPA Review providers) can and should use what we know about this next generation of CPAs to address and implement initiatives to push the profession so they’re more likely to choose the CPA career path.

The following are a few key things firms can implement to retain this different generational personality.

• Salary/Compensation. According to the survey “GenZ@ Work” conducted by generational expert David Stillman, “Gen Z members said salary (compensation) is the most important factor in choosing an employer.” Recognizing that one firm’s strategy to pay a higher salary is a slippery slope and one that has consequences to the broader profession, individual firms should review their “total compensation” structure and ask themselves if they are truly optimizing their financial resources. Put simply, are they genuinely differentiating total compensation based on performance.

The profession should use their competitive nature to their advantage when determining who to reward and how much. The entire accounting community (public and private sectors) should also be referencing the “financial reward” for obtaining their CPA license.

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WICPA Affinity Partner Roger CPA Review offers its new Accounting Classroom Trainer (ACT). This platform allows accounting educators to integrate high-quality CPA Exam materials into their existing curriculum, getting students familiar with the exam early on and preparing them for exam success soon after they graduate.

Tom Rogowski, CPA is the senior business development director at Roger CPA Review in Chicago, Ill. Contact him at 312-802-6601 or trogowski@rogercpareview.com.

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kudos Mark P. DeBroux, CPA

Christina L. Gerharz

Alyssa M. Kubishak

Mark P. DeBroux, CPA, a shareholder at Schenck SC in Appleton, was selected as Member of the Year by the National CPA Health Care Advisors Association at its SuperConference in June 2017.

Christina L. Gerharz was hired as an audit staff accountant at Vrakas CPAs + Advisors in Brookfield.

April M. Kouba, CPA was hired as a tax Global Enterprise Tax Solution manager at PricewaterhouseCoopers LLP in Milwaukee.

Want your

Jason R. Krentz, CPA was promoted to tax partner at PricewaterhouseCoopers LLP in Milwaukee.

Alyssa M. Kubishak was promoted to senior staff accountant at SVA Certified Public Accountants in Madison.

Jessica A. Nylen, CPA

Morgan Melka was promoted to senior assurance associate at PricewaterhouseCoopers LLP in Milwaukee.

Randy S. Nelson, J.D., CPA, a shareholder at von Briesen & Roper, s.c. in Milwaukee, was certified as an Randy S. Nelson, Accredited Estate J.D., CPA Planner® designee by the National Association of Estate Planners & Councils.

Timothy M. Steffen, CPA/PFS, CFP®, CPWA®

Jessica A. Nylen, CPA was promoted to assurance manager at PricewaterhouseCoopers LLP in Milwaukee.

Jill Schultz, CPA was hired as a tax Global Enterprise Tax Solution director at PricewaterhouseCoopers LLP in Milwaukee.

Timothy M. Steffen, CPA/PFS, CFP®, CPWA® was promoted to director of Advanced Planning for Private Wealth Management business at Baird in Milwaukee.

new job, promotion, speaking engagement or award mentioned in Kudos?

Email your announcement and photo in JPG format to cynthia@wicpa.org.

memorials John R. Austin, CPA (1951–2017)

John R. Austin, CPA died July 13, according to his obituary. He was 65. Austin served in the U.S. Army where he played in the Army Band throughout Europe. After returning from the military, Austin earned a Bachelor of Business Administration degree in accounting from the University of Wisconsin–Whitewater. While pursuing his degree, he held a variety of jobs, including a dispatcher for a trucking company and adjusting car doors at a GM plant. He continued his education and earned his certified public accountant certification in 1980. During that time, he worked as an auditor at the Wisconsin Department of Revenue. After being promoted to the role of district audit supervisor in Milwaukee, Austin attended law school part time at the University of Wisconsin– Madison. His next position was as a tax manager for the former Arthur Andersen & Co. He later began a 27-year legal career with Reinhart Boerner Van Deuren s.c., where he was instrumental in building a state and local tax practice. During his legal career, he was consistently featured in Best Lawyers in America® and as a top rated lawyer. He joined the WICPA in 1980.

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Join the WICPA Board of Directors!

The WICPA is seeking members to serve on its board of directors.

Some of the opportunities include: • Staying up-to-date on professional issues

• Providing strategic governance in accordance with the WICPA strategic plan, mission and vision

• Attending Board of Directors meetings and membership events

To apply, visit wicpa.org/BoardApplication through Nov. 15, 2017.

All applicants must be a WICPA Fellow member in good standing. A Fellow member is defined as a person who has obtained a valid certificate as a CPA from the Accounting Examining Board of the State of Wisconsin, or from a similar legally constituted authority in any other state, possession or territory of the United States or the District of Columbia.

Questions?

Contact jessica@wicpa.org.

Financial statements now available online The Finance Committee of the WICPA Board has reviewed and approved the WICPA audited financial statements for the fiscal year ended April 30, 2017. The WICPA Educational Foundation Board has reviewed and approved the audited WICPA Educational Foundation financial statements for the fiscal year ended April 30, 2017.

The complete audited financial statements are available for all members to view at wicpa.org/financialstatements. Your username and password is required to access the statements online.

Members may also request a printed copy of the audited financial statements by contacting WICPA Chief Financial & Operating Officer, Tammy Hofstede, at 262-785-0445 or W233N2080 Ridgeview Parkway, Suite 201, Waukesha, WI 53188.

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{ Tax | Retirement planning }

TAX PLANNING FOR RETIREES

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ave you ever taken a phone call from a client contemplating retirement? They may want to know the tax issues they may face in the years ahead and ways to limit their tax liability. Tax planning for clients at or near retirement can be difficult.

By Kevin M. Reardon, CFP®

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Retiree income A key challenge in planning for retirees is identifying future incomes. Unlike most working individuals who have a relatively consistent income range, the first several years of a retiree’s income may be both unknown and highly variable. Anticipating these income streams is critical to avoiding several tax triggers. These triggers include the taxability of Social Security benefits, the movement into higher tax brackets, exposure to the 3.8 percent Net Investment Income Tax (NII), an increase in Medicare Part B Premiums, a reduction in itemized deductions, and more. Some of these

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incomes, and the issues surrounding them, include: Social Security: Clients have multiple options in deciding when to start their benefits, with additional options for married clients. Deciding when to start the benefit will significantly impact their tax liability. Key questions to ask in learning about the client’s situation: • What are the projected benefits for each spouse at various ages, 62 to 70?

• What is the client’s life expectancy?

• Is the File and Suspend strategy available to them?

• Will one or both spouses have wages in retirement?

• Is there a significant difference in age between the spouses?

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{ Tax | Retirement planning }

Pension Income: It’s not uncommon for clients to have pension plans from current or past employers. The client usually has several distribution options to consider, including taking a lump sum rollover to an IRA or taking several different income payouts (annuitization). In addition, there are typically different dates from which the client can start the income payouts, thus impacting the eventual payout.

Deferred Compensation Plans: It’s important to determine if clients have deferred compensation plans and what distribution schedule was elected. It’s not uncommon for clients to have large deferred compensation payouts that can negatively impact previous tax planning.

“A key challenge in planning for retirees is identifying future incomes. Unlike most working individuals who have a relatively consistent income range, the first several years of

RMDs: Required Minimum Distributions (RMDs) at age 70 ½, when coupled with other income streams, can frequently push clients into higher tax brackets. This ‘stealth income’ can be anticipated by collecting net-worth or financial statements from retiree clients.

a retiree’s income may be both

Encore Income: How often do your retired clients end up with wages from a new job? Although these ‘hobby jobs’ and consulting assignments can frequently pay less than their previous career, they can still have a large impact on their tax liability, especially when stacked with other income streams described above.

Asset Selection: Exchange Traded Funds (ETFs) avoid year-end capital gain distributions inherent with most mutual funds and provide great tax control. In structuring portfolios, clients have a tax incentive in owning ETFs vs mutual funds.

Other: There are other income sources that can unexpectedly show up on a client’s 1040, including an increase in investment income from inherited assets, RMDs from Inherited IRAs, gambling winnings, royalties, and more.

Tax solutions for retirees: There are a multitude of solutions that can limit the lifetime tax liability of someone approaching and in retirement. Some of these strategies include: Bracket Maximization: Coordinating all of the above income streams is essential to maximizing tax brackets and reducing current and future tax liabilities. Many high net-worth clients who retire before beginning Social Security or Pension Income may find themselves in the 15 percent bracket and able to leverage the zero percent capital gains rate by selling appreciated securities.

Structuring partial Roth Conversions prior to RMDs (70 ½) as part of a lifetime bracket maximization strategy can help reduce future tax liability.

Donor Advised Funds: Larger charitable contributions can be made via a Donor Advised Fund (DAF), during high tax years to leverage the benefit of charitable deductions.

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unknown and highly variable.”

Householding: Owning tax efficient assets (equity investments) inside taxable accounts and tax inefficient assets (bonds and other interest bearing investments) inside IRAs provide the client greater tax control and lowers lifetime taxes. Especially for clients impacted by the NII and Medicare Surtax, householding is a valuable tool in controlling these tax triggers.

Loss Carryforwards: Consistently harvesting losses inside taxable investment accounts provides greater flexibility in current or future years when dealing with appreciated assets. Market declines are a great time to search for these opportunities.

Other: The above list is simply a beginning point in identifying the most common tax saving strategies.

Implementation: Although each of the tax strategies described above may not be new, implementing them in unison requires a more holistic approach in dealing with clients. Now is a great time to review your service delivery and workflows to begin catering to the growing needs of retired clients.

Kevin M. Reardon, CFP® is owner and president of Shakespeare Wealth Management, Inc.® in Pewaukee. Contact him at 262-814-1600 or kevin@shakespearewm.com.

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{ Industry | School district audit }

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{ Industry | School district audit }

Upcoming legal considerations related to school district audits

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By Michael J. Julka and

Brian P. Goodman

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nnually, school boards must have an independent auditor perform a school district audit. The audit process can begin any time after the close of the school fiscal year on June 30, and most audits commence in early fall. In September, auditors must file the districts’ state aid certifications and audited fund balances with the Department of Public Instruction (DPI) as a condition precedent to DPI providing districts with general state aid.

By Dec. 1, auditors must file with DPI: audited financial statements, management letters, audit reports, and data collection forms to complete the annual audit process.

auditors. The formal rulemaking process has not yet begun, but DPI has indicated that it is open to outside suggestions during its internal review.

Overtime wages Last year, school districts were preparing for a change in the federal wage and hour regulations that would have required districts to pay some employees a higher salary in order for them to be exempt from overtime pay requirements (provided the employees met all additional requirements for exempt status). Many districts enacted changes in anticipation of these regulations taking effect.

Every year there are additional legal considerations that affect school district finances. Auditors should be aware of these legal considerations and their potential effect on district finances. Hopefully, the state budget will be finalized and signed by Gov. Scott Walker in time for auditors to evaluate any impact that it may have upon the pending audit process.

However, a federal court in Texas enjoined the regulations, preventing them from taking effect. An appeal was filed, but the appeals process has been delayed at the request of the federal Department of Labor (DOL). DOL has submitted a request for information on the overtime rules, the first step in the formal rulemaking process that could result in the creation of new overtime rules.

DPI Reviewing PI 14

Community programs

DPI is currently undertaking an internal review of Wisconsin Administrative Code ch. PI 14.

These regulations establish the basic framework for the school district audit. Any change would have a significant effect on both school districts and

School districts may levy taxes and collect fees to fund community programs and services.

These programs and services are accounted for in Fund 80. In the 2014–2015 and 2015–2016 school years, Fund 80 had a levy limit. Beginning

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“Auditors should be aware of the legal considerations that potentially affect school district budgeting, expenditures and revenues.

When appropriate, auditors should make recommendations regarding financial practices to school boards through management letters, including recommendations related to the legal aspects of school finance.” with the 2016–2017 school year, there is no longer a Fund 80 levy limit. However, districts are limited in how they may expend money from Fund 80. Ineligible costs include: costs for programs limited only to district pupils, costs for programs whose schedule presents a significant barrier for age-appropriate district residents to participate, costs that are not actual operating costs for the program, and costs that would be incurred without the community programs.

Special needs scholarship program

Student fees School boards have limited authority to assess student fees for certain purposes such as textbooks, nonresident tuition, summer school, school meals, driver education, individual use items, and certain transportation. Under the Wisconsin Uniform Financial Accounting Requirements (WUFAR), districts must categorize the revenue received from student fees based on the type of good or service paid for with the fee. This fee must relate to the actual cost of the good or service the student receives. With the growing

In the 2016–2017 school year, scholarships were available for certain children with disabilities to attend private schools.

The state paid the private school $12,000 for each child attending a private school under the program and reduced the resident school district’s state aid by that same amount. The resident district could not increase the district’s levy to compensate for the decreased state aid. However, these children were still included in the district’s student membership for purposes of revenue limits and general state aid. There is a statutory formula for increasing the per pupil amount of this scholarship in future school years.

Beginning in the 2017-2018 school year, a child attending a private school through this program is not counted as an enrolled pupil in the school district when calculating the district’s revenue limit, but the revenue limit will be increased by the amount equal to any reduction in state aid caused by the scholarship program.

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use of technology in the classroom, districts often wonder if they can charge student fees for laptops and tablets. DPI takes the position that districts may not charge student fees for these devices if student use of these devices is mandatory, even if the school has a fee waiver policy for low-income students.

Revenues generated from fundraising and student activities often involve cash handling, sometimes in large amounts. Auditors could provide a great service to school districts by providing proper cash-handling procedures in management letters, when appropriate.

Districts that utilize student fees often establish fee waiver policies for low-income students. It has become a common practice for districts to use a student’s eligibility for free or reduced price meals under the National Student Lunch Program as the criteria for fee waiver policies. Districts must receive written parental consent prior to using such eligibility information for fee waivers.

Conclusion

Student organizations and activities Fund 60 is used to hold revenue that is generated specifically for student extracurricular organizations. This money is held by the district for the exclusive use of the student organization. The student organization controls how the money will be spent, rather than the district. For example, if the class of 2018 organizes a citrus sale to raise funds for the class gift, this money would be placed in Fund 60 for the exclusive use of the class of 2018. The class of 2018’s student leadership would decide how to spend this money.

By contrast, money that is raised by student activities not for the exclusive use of a student extracurricular organization can be spent at the district’s discretion. For example, if a district decides to charge admission to the school musical, this revenue would be placed in a district-controlled activity account and not a Fund 60 account. The district would decide how to spend this money.

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The school district audit process is an important aspect of school districts’ overall financial welfare. Auditors should be aware of the legal considerations that potentially affect school district budgeting, expenditures and revenues. When appropriate, auditors should make recommendations regarding financial practices to school boards through management letters, including recommendations related to the legal aspects of school finance. Understanding these legal considerations will also help auditors understand school districts’ financial policy decisions.

Michael J. Julka practices school law and public sector labor/ employment law with Boardman & Clark, LLP in Madison.

Contact him at 608-286-7238 or mjulka@boardmanclark.com.

Brian P. Goodman is an associate with a general law practice and is a member of the School Law and Labor & Employment practice groups at Boardman & Clark, LLP in Madison. Contact him at 608-283-1722 or bgoodman@boardmanclark.com.

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DASHBOARDS: The most impactful way to transform your company (from the CEO down)

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By Jon Thompson

erhaps you’ve heard the adage, “You don’t fatten a pig by weighing it.” While this holds true on a farm, if you’re in business, you know that “what gets measured, gets managed.”

You also know that if your M.O. is to manage by reaction, putting out fires only when they’ve reached critical levels, you won’t likely surge ahead of the competition anytime soon.

Similarly, if you’re a leader in your niche, you’ve probably learned the secret shared by the world’s most successful companies: Keeping your key performance metrics front and center throughout an organization, will fatten the pig, almost as if by magic.

Having started and managed several businesses over the past few decades, we’re convinced that data analytics and dashboards are the most effective way to measure and manage any business.

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By “dashboards,” we mean displaying businesscritical information graphically and numerically in story-board form. The right dashboards will inform decision-making and motivate everyone at every level in a business to focus on the activities that most impact growth and profitability.

In other words, dashboards don't just spotlight the critical issues, they change the very behaviors

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that best address those issues. This twofold effect creates a virtuous cycle that accelerates growth more quickly and at lower costs than any other tactic we’ve seen in our business tenure.

We call it The Dashboard Effect, and until recently, it has been the all-but-exclusive domain of LARGE companies.

Today, thanks to a rapid evolution in tools that more affordably deploy “business intelligence” (or “BI”, which is VC-speak for visual-analytics), dashboards are quickly becoming a business prerequisite for employee engagement and operational efficiency.

Financial executives are ideally positioned to put The Dashboard Effect into operation. You already work with Excel, arguably the most user-friendly and ubiquitous analytics tools ever created. And you already author many of the reports your company depends on.

What you may not realize is dashboards are not simply a more visually appealing way to present data. They turn otherwise static spreadsheets into real-time interactive charts, graphs, and tables that make exploring data more compelling (dare we say “fun”?), and much more impactful.

The versatility of today's new breed of business intelligence tools (e.g., Tableau, Qlik, Domo, and Microsoft’s Power BI, to name a few) makes for easy blending of accounting and non-accounting data. This functionality helps dissolve the walls that keep parts of a business isolated in data “silos.”

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And before you get nervous about the risks of sharing data, know that current BI technologies are specifically designed to create a layer of separation and security between your transactional systems and those consuming the data, with role-based authentication to show only the data each user is authorized to see.

By putting The Dashboard Effect into play, financial professionals can trigger the strategic conversations and insight that tap into employees' greater potential. That said, when companies consider creating dashboards, they typically focus on providing visibility to the leaders. In other words, the only purpose for business intelligence in the minds of most executives is the executives, for good reason.

Using data to hack your business, just like Billy Beane of “Moneyball” lore did to achieve the Oakland Athletics’ unprecedented baseball success, is the process of getting under the hood of your business and zeroing in on the precise levers that most impact performance. Executive dashboards connect high-level strategy to real-time operations. They keep your carefully developed plans (those that were made in the rare moments when you had time) at top of mind, rather than gathering dust in a static document somewhere.

Providing an instrument panel, a single pane of glass to show real-time progress against strategic priorities, helps executives keep a firm hand on the wheel. It gives them the power to remain proactive rather than reactive, capitalizing on opportunities and mitigating issues when they’re most easily addressed. And that’s essential to progress.

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While there is no doubt executive dashboards are a good place to start, once executives have the insights they need, the potential to transform a business by sharing insights across the organization is exponentially greater. In other words, by cloistering your dashboards in the proverbial boardroom you’ll fail to create The Dashboard Effect, leaving the lion’s share of value from your data untapped.

In our experience, the simplest, lowest cost way to become a data-driven company, not just at the executive level but throughout an organization, is to share dashboards that show performance against goals, at every level of the business.

Charles Coonradt of “Game of Work” fame asserts that the single most effective means of improving performance in any area is to provide frequent feedback. While you might argue that people dislike being measured, without question, people love keeping score (as evidenced by our collective obsession with sports). By Coonradt’s way of thinking, “People like playing games because they know the rules and the score … when we don’t know the rules or the score … we tend not to want to play or we play safe.”

Consider a recent study conducted by researchers at the University of Chicago and the London School of Economics that used data-driven feedback to reduce Virgin Atlantic’s fuel costs. Some pilots were given a set of personal goals and provided with immediate feedback on how efficiently they used fuel. Another group was not given personal goals, and was only given feedback on fuel consumption at the end of each

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month. The group of pilots given personal goals and immediate feedback outperformed their peers by as much as 20 percent.

More importantly, not only did these pilots lower the airline’s fuel costs, they also reported higher job satisfaction.

Dashboards help a business operationalize measurable goals, providing a firm grounding for employees. The result at our company, and at the companies we’ve worked with across several industries, is a stronger sense of ownership, greater job satisfaction, and better outcomes. Employees predictably become more engaged when they know the rules and can focus on winning the game. To be sure, every company has goals, but precious few do a good job measuring performance against those goals. In our experience, those that do measure spend more time celebrating those goals and less time revising them.

Without a scoreboard, working can feel like running a race blindfolded; you might put forth the effort, but if you can't see the other runners or the finish line, it’s difficult to muster the X-factor needed to win. The Dashboard Effect changes that.

Dashboards make it possible to monitor the heartbeat of the organization, and, in our experience, do more to encourage the transformation of executive and employee behavior than any other technique or tool we’ve seen.

Jon Thompson is a public speaker, author and co-founder of Blue Margin Inc. in Fort Collins, Colo. Contact him at 970-214-1652 or jon.thompson@bluemargin.com.

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