AZ CPA Feb 2011 by ASCPA

CPA FEBRUARY 2011

The Arizona Society of Certified Public Accountants

Bankruptcy 101 for CPAs Advice for Companies Drowning in Debt

Interview with Mike Daggett • CPA Couples • Compilation Follies

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CPA FEBRUARY 2011

Volume 27 Number 2

CPAs in Love!

Just in time for Valentine’s Day, we have profiled some of our members who are both married and CPAs. by Patty Gannon

Features

Compilation Follies

ASCPA Member Michael Daggett, CPA, Enjoys His Term as Chair of the NASBA

Bankruptcy 101 for CPAs

Know the advantages and disadvantages of filing for bankruptcy.

by Joseph Velez, Esq.

Columns & Departments 6

Chair’s Message by Julie Klewer, CPA

Focus on Members

Board Highlights

22 Classifieds Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, Arizona 85034-2021 www.ascpa.com

4 AZ CPA y FEBRUARY 2011

True tales of educational enhancement reviews compiled by a member of the Peer Review Oversight Advisory Committee of the Arizona State Board of Accountancy. by Timothy R. Coffey, CPA

CPA

The Arizona Society of Certified Public Accountants

President & CEO

Cindie Hubiak

Editor

Patricia Gannon

Copy & Advertising Deadline The first of the month one month prior to publication date. Board of Directors Chair Chair-Elect and Secretary/Treasurer Directors

Julie Klewer Mark Anderson Karen Abraham Anita Baker Megan Faust Rob Gardiner Julie Norton Greg Padilla David Richardson Armando Roman Melissa Spangler Brian Swartz David Walser Neal Young

Immediate Past Chair Jim Buhr AICPA Council Members George Cohen Layne Simmons Chapter Presidents Southern Chapter Northern Chapter Southwest Chapter North-Central Chapter

VA LU E D B Y T H E C O M PA N I E S W E VA LU E

Flo Zenblu Kevin West Jayne Wright Monique Stecklein

AZ CPA is published by the Arizona Society of Certified Public

Accountants (ASCPA) to provide information, news and trends in the profession of accounting. It is distributed 10 times a year as a regular service to members of the Society. The ASCPA, its members, board of directors and administrative staff assume no responsibility for advertisements herein. The ASCPA and the above people also assume no liability for business decisions made by readers in reference to statements and/or claims in advertisements within this publication. Opinions expressed by correspondents and contributors are not necessarily those of the ASCPA.

Arizona Society of CPAs 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034-2021 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 Fax (602) 252-1511

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Provided valuation consulting services in accordance with ASC Topic 718 and Internal Revenue Code 409A

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Provided purchase price allocation services in accordance with ASC Topic 805

Provided valuation consulting services

Provided purchase price allocation services in accordance with ASC Topic 805

FEBRUARY 2011 y AZ CPA

Chair’s Message

by Julie Klewer, CPA

Preparing for the Peer Review Once every three years, when our firm has its peer review, I have the opportunity to see the audit process through the eyes of our clients. As we begin preparing for our peer review, that feeling of vulnerability, exposure and trepidation returns. And each time we complete a successful peer review (and thankfully, they’ve all been successful), I remind myself not to forget how it feels to have someone from the outside come in to scrutinize our processes and technical capabilities; for this is what our audit clients pay us to do for them on an annual basis. It’s amazing how confident we are in our quality control processes and the technical execution of our financial statement engagements ... until just about a week before our peer reviewer is scheduled to arrive. It seems like no matter how solid our procedures, we all start losing sleep as the date for our review approaches. Chris, one of my partners, put it best: “It’s what you don’t know that you don’t know that can get you in trouble.” I can imagine that some of our clients fear our arrival in a similar way. Like most firms that do assurance services work, we have clients whose accounting expertise and internal control systems are excellent and we have others who don’t have the required expertise and have almost no internal controls. One interesting dichotomy I’ve noticed over the years is that the apprehension around our arrival seems more evident in our clients whose controls are good and the accounting personnel are technically strong. Our clients whose systems are weak or non-existent and accounting skills are lacking don’t seem to be as concerned with our arrival. I think this might be confirmation that Chris’ perspective is correct,

6 AZ CPA y FEBRUARY 2011

and that those businesses with the solid systems and strong accounting teams are more aware that there are “unknown unknowns.” As I mentioned, we passed our recent peer review and are mostly none the worse for wear. I should also mention that we intentionally choose a peer reviewer who is tough, holds us accountable and knows the standards better than anyone I’ve ever met in this profession. We choose her because we know that working with her will make us a better firm. As we do every three years when the process is complete, we are hyper-focused now on what we can do to make our firm and its systems even better and more effective. We are also looking at what we can do to ensure that we don’t head into our next peer review sleep deprived from worrying about how we’ll fare. I think the following strategies apply to any business undergoing an audit or regular review of systems. First, be prepared; make sure that everything your auditor has asked you to prepare is complete and ready BEFORE your auditor arrives. If your plan is to finish up those last few items on the list while the auditor is onsite, you’ll likely

fall short. Auditors are pesky, intrusive, and high-maintenance—particularly on the first day of fieldwork. You won’t have time for lunch, let alone time to work on remaining audit schedules. Second, invest in your system of internal and quality control, and put mechanisms in place to ensure that the system is followed. Your internal control or quality control document should not just be something produced merely to comply with some rule or standard. It should be utilized throughout the year to ensure your work product is reliable. Third, be proactive; make it a point to reach out to your auditor/reviewer throughout the year and ask about changes in the regulatory environment that may impact the audit and your business. We plan to meet with our peer reviewer at least annually. We’ll pick her brain about not only changes that are happening within the standards, but also about common compliance issues that she’s encountering during her other peer reviews. All of us subject to audit and regular review can ensure a smoother process by adopting these three practices. Until next month…… AZ CPA

Focus on Members Bruce Nordstrom, CPA, president and managing partner of Nordstrom and Associates, was awarded with an honorary Ph.D. from Northern Arizona University during their December graduation ceremonies for his contributions to the university, the community and the profession. Nordstrom is past director of the Greater Flagstaff Economic Council and the Flagstaff Chamber of Commerce, and a director and past chair of the University Medical Center in Tucson and past chair of the Flagstaff Forty. Currently he serves as director of the board of directors for Pinnacle West Capital Corp. and Arizona Public Service. Nordstrom is a past recipient of the ASCPA’s Public Service Award and is a Life Member.

of Arizona, was been named chairman of the board of the Arizona Hispanic Chamber of Commerce.

John Gordon, CPA, consulting manager at Keegan, Linscott & Kenon, PC, has successfully earned his designation of Certified Insolvency & Restructuring Advisor.

Carolyn J. Brown, CEO, of The Accountant’s Office announced that her first book, Biz-Tips: 30 Quick Tips to Make You More Effective in Your Business, was released in November 2010. Copies are available at www.TheBookPatch. com in the Business and Money section.

The Greater Phoenix Chamber of Commerce elected Brian Swartz, CPA, to its board of directors. Jonas McCormick recently replaced Michelle Kerrick, CPA, as managing principal of the Phoenix office of Deloitte LLP. Kerrick transferred to the Los Angeles office as managing partner. Rufus Glasper, CPA, received the Dr. Lincoln J. Ragsdale Sr. Outstanding Director Award from the Black Board of Directors Project. Dominic Celico, CPA, joined R.C. Acosta & Associates as director of assurance services. Tony M. Astorga, CPA, senior vice president and chief business-development officer of Blue Cross Blue Shield

BeachFleischman made Accounting Today’s list of The 2010 Best Accounting Firms to Work for in the mid-sized firm category. Kerry White, CPA, is now director of finance and administration for Chrysalis, Phoenix. Brandt Palmer, CPA, is real property tax manager for Pivotal Tax Solutions.

Lynn Beck, CPA, joined The Accountant’s Office, LLC, as an accounting associate.

Newsworthy Members… “My grandfather told me to become a CPA because I would always have a job. He was right. Although I don’t practice, I still use my CPA education and experience every day.” Robyn Barrett, CPA, featured in an article in The Phoenix Business Journal. Joshua Hayes, CPA, of Eide Bailly and Elizabeth Kane, CPA, tax manager at LarsonAllen were quoted in an article on small business jobs in the December issue of In Business magazine.

AICPA President & CEO Barry Melancon at the Arizona Biltmore Resort

FEBRUARY 2011 y AZ CPA

2011 Arizona Tax Guides Arizona Tax Guides have been produced by Phoenix Tax Workshop for more than 20 years. Order the only comprehensive guides on Arizona taxes from the leaders in tax education.

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The 2011 Arizona Sales and Use Tax Guide is a resource for anyone preparing or filing Arizona and city sales and use tax returns. The guide details the various sales use tax rates that apply to each type of sale or product as well as the many exceptions, administrative provisions and Model Cities Tax Code provisions.

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Standard shipping and handling prices are included. *The ASCPA will be processing checks submitted in payment as an Electronic Funds Transfer (EFT) transaction. Funds may be withdrawn from your account as soon as the same day we receive your payment.

ASCPA Member Michael Daggett, CPA, Enjoys His Term as Chair of the National Association of State Boards of Accountancy ASCPA: How did you get involved in the NASBA and what does being chair entail? Daggett: NASBA was a natural attraction for me as a new Arizona state board member, one who wanted to know how the Arizona board compared with other state boards. Having served seven years on the ASCPA board and four on the AICPA Council, I was proud to represent Arizona. We were a state that was growing in status and significance, largely due to the Society presidents and other AICPA volunteers who preceded me. Also, the other state board members and the executive director, Ruth Lee, encouraged me to participate. At my second NASBA conference, I was asked if I would accept the nomination as the pacific regional director on the board of directors, a position being vacated by a California board member. I assured them that I would; only I didn’t get elected! I continued to participate and voice my opinions and suggestions at conferences and on committees. The next year, I was elected as a director-at-large. As chair, I am responsible for leading and assisting the 19 other board members and 22 committee chairs through a responsive, productive and eventful year. I am also responsible for representing NASBA at numerous professional conferences, meetings and summits. This includes both national and international professionals. Twice a year, we meet with the AICPA leadership where we discuss regulatory and professional issues. These opportunities accord me the development of not only a professional relationship with the current chair of the AICPA, but a personal one as well. I also represent the NASBA leadership with regard to the 250+ NASBA staff members.

Michael T. Daggett, CPA, was elected as chair of the NASBA board of directors for 2010-2011. His contributions to NASBA include, serving as NASBA’s vice chair for the 20092010 term, and serving as chair of NASBA’s Litigation Response, Ethics, and Regulatory Structures Committees. He is a former NASBA directorat-large and former member of NASBA’s UAA Committee, Nominating Committee and Global Strategies Committee. Daggett is a past chair and life member of the ASCPA. He is a retired partner of the firm of Daggett McConachie & Moore, CPAs, LLP. Daggett is also a former member of the AICPA’s Board of Examiners, Professional Ethics Executive Committee, Quality Review Committee and its Governing Council. He has served as president of the Arizona State Board of Accountancy.

FEBRUARY 2011 y AZ CPA

Incidentally, the members of NASBA are the 55 accounting regulatory boards, the 50 states, plus D.C., Puerto Rico, the Virgin Islands, Guam and the Commonwealth of the Northern Mariana Islands. ASCPA: What are the top concerns and priorities for your term this year? Daggett: I mentioned representing NASBA before international professional groups. One of my priorities is to ensure that we continue our efforts and successes with regard to informing and educating the international community about what NASBA is and the role we play in licensing and regulating the United States CPA and PA. Most of the international licensed accountants are regulated by their professional organization, similar to our AICPA. Thus, they assume that they need only to communicate with the AICPA regarding the establishment of accounting and conduct standards. With the advent of international standards and the likelihood of the convergence of professional standards, we have realized that we, as regulators, would be remiss if we were to acquiesce to the efforts of our professional organization to represent the 55 boards, whose primary responsibility is to protect the public. Another of my priorities, and perhaps a greater concern, is our efforts to succeed at accomplishing our mission as an organization of state boards of accountancy, which is to enhance the effectiveness of our members. With the budgets of state governments being squeezed tightly in our current economic state, many states have or are considering the consolidation of state agencies. Having an executive director and board, who are as knowledgeable about our profession as they are about the hair dressers and manicurists, does not serve the public well, nor the CPA, nor the hair dressers and manicurists. Through the efforts of our committees, we are providing support and information, such as the publication of a legislative template describing the rationale and benefit of a self-directed, semi-independent board of accountancy.

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Mike Daggett and his wife, Sharon, in the Petronas Towers in Kuala Lumpur, Malaysia, where he attended a reception at the World Congress of Accountants sponsored by the Institute of Chartered Accountants of England and Wales. ASCPA: You will be doing quite a bit of traveling this year, including a trip to China and Malaysia. What are the types of questions and concerns that you are hearing from other countries? Daggett: So far, I have attended conferences in Toronto, Madrid and Kuala Lumpur, as well as a private meeting of nine Chinese Provincial Finance Ministers and their staff in New York City. The representatives generally have two interests in NASBA; first, how do we regulate the CPA, and, second, when will we support the convergence of the International Financial Reporting Standards. ASCPA: This is a major time (personal and professional) commitment, for you, how are you balancing everything in your life right now? Daggett: Yes, it does involve a lot of time—1,200 to 1,500 hours of traveling, meeting and preparing for the first two meetings. Fortunately, my partners and I sold our firm two years ago, and I am providing only transitional and supplemental assistance with my clients. As for the personal side, my wife accompanies me on almost all of my trips. She, too, has taken an early retirement. ASCPA: What has been your favorite experience regarding this position so far?

Daggett: I am only into my third month, so it is a bit early to point at a favorite. Attending the World Congress of Accountants in Kuala Lumpur, Malaysia and NASBA’s Forum for International Accounting Regulators in Madrid, Spain are certainly highlights. I have always enjoyed meeting professionals across the U.S., as a member of national CPA firms and in my role with NASBA and the AICPA. It is also exciting and challenging to interact with the Chinese, Japanese, Spaniards, Africans, Australians, Brits, Canadians, Mexicans, etc. It is a tough call. ASCPA: What message do you have for others who may be thinking of getting involved in the profession? Daggett: It is difficult to find a profession that provides more opportunity or challenge that can satisfy the desire to assist clients and associates to be successful in their endeavors—business or personal. This is also true with my CPA associates. When I was the state board president, I would welcome the few hundred CPA candidates who were nervously waiting to begin the paper CPA Exam, stating, “I stand before you as a perfect example that, yes, even you can pass this exam.” I never envisioned that I would have such a great opportunity to assist bright, creative and successful CPAs accomplish their desire to serve their profession and AZ CPA community.

Bankruptcy 101 for CPAs

The 10 Most Important Things to Know When Advising Clients Who are Drowning in Debt by Joseph Velez, Esq. For many of our clients, the mere thought of bankruptcy sends chills up their spine. Many of us have probably struggled with debt at some point in our lives. Watching an already large pile of debt grow bigger by the day is an alarming and highly stressful experience. Perhaps the credit card spending got out of hand or maybe your client’s family has been struck by financial hardship because someone has lost a job or a family member is sick and accruing costly medical bills. If your clients finds themselves consumed by debt, bankruptcy is one option that they may want to consider. However, there are advantages and disadvantages of filing for bankruptcy. In order to weigh the advantages and disadvantages, it is important to understand exactly what debts bankruptcy wipes out and which debts will remain with your clients. Individuals may file for bankruptcy pursuant to Chapter 7 or Chapter 13 of the United States Bankruptcy Code. Chapter 7 bankruptcy requires the sale of the debtor’s nonexempt property and the distribution of the proceeds to the debtor’s creditors. Chapter 13 bankruptcy allows debtors with a regular income to keep their property and to come up with a debt repayment plan to satisfy debts over the course of five years. What I have highlighted here are some of the key points to consider when discussing the possibility of a bankruptcy with a client.

FEBRUARY 2011 y AZ CPA

1) Some Debts You Cannot Discharge While most debts are discharged in a Chapter 7 or Chapter 13 bankruptcy, there are several types of debts that are not dischargeable (or are highly unlikely to be discharged), such as following: alimony and child support debt for past amounts that have not been paid; recent unpaid taxes usually remain (however, this depends on how long you have owed them), student loans are not discharged (this is why we strongly advise parents not to co-sign student loans for their children); debts associated with a criminal sentence: debtors who are ordered to pay restitution in certain criminal cases must still pay those debts after bankruptcy; and debts incurred in some DUI lawsuits: a debtor who injured or killed someone while driving under the influence of alcohol.

2) Saving a Home through Bankruptcy & Lien Stripping First, let’s debunk a myth: You can keep your home even if you file a Chapter 7 bankruptcy. However, you must continue to pay all the mortgage(s) on that home. But what if there are two mortgages (for example, a first mortgage and a home equity credit line)? Well, if you are filing a Chapter 7 bankruptcy and you want to keep the home, then you must agree to continue paying both mortgages. An alternative tactic to being obligated on both mortgages when you file a bankruptcy is by scraping the second mortgage (such as a HELOC) off of the home. This practice, called “lien stripping,” is now very popular. It can be used to help homeowners get out from under double mortgage payments so that they can pay their original mortgage loans and save their homes. Very simply, this is the process of scraping or stripping a second mortgage from a home. However, here’s the downside: the homeowner must file Chapter 13 bankruptcy (not the Chapter 7). Here’s an example of how it would work. Assume the home is worth $200k, and there are two mortgages on the property. The first mortgage is for $300k and

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Creditors are becoming much more aggressive in their collection efforts against borrowers and the number of these suits filed nationwide by debt collectors is staggering. the second mortgage (say for example, a HELOC) is for $100k. In a Chapter 13 bankruptcy, a homeowner would “strip” the HELOC of $100k off of the property, and homeowner would only then be obligated to continue paying on first mortgage of $300k. This of course begs another question, namely, is it wise to continue to be obligated to pay $300k on home worth only $200k?

3) Rushing Into a Bankruptcy Could be an Expensive Mistake Once the reality of the need to file bankruptcy takes hold, most people are anxious to start the process right away. Although a bankruptcy may ultimately be the optimal solution for a client drowning in debt, selecting the appropriate time to file is also important. There are numerous situations where delaying the filing is actually the preferred strategy. Your client should file at just the right time in order to ensure that his assets are not unnecessarily taken away and also so that he gives himself the best chance for getting up on his feet again. Here’s what I mean: Given that the New Year is upon us, a debtor may feel that a “fresh start” (both figuratively and literally) is the best way to commence 2011. However, the debtor, like most wage earners will probably be due a tax refund. If the debtor files before he receives his tax refund, he will almost certainly have to surrender that refund

over to the bankruptcy court. However, if the debtor receives his refund before he files bankruptcy, there’s a good chance he’ll be able to utilize that money for his own needs.

4) Extinguishing Judgments and Stopping Wage Garnishments Creditors are becoming much more aggressive in their collection efforts against borrowers and the number of these suits filed nationwide by debt collectors is staggering. If your client owes a creditor, credit card company, vendor, etc., sooner or later, the matter will probably escalate to a lawsuit and then a judgment. For the most part, these judgments (as well as wage garnishments) can be extinguished through a bankruptcy.

5) Affect of Personal Bankruptcy on LLC’s, Businesses and Corporations This is one of the toughest issues of all to answer. Arizona law doesn’t exempt business interests like LLC’s (meaning, the bankruptcy court may take the debtor’s business or business interest). However, if the business has no value or assets, or is a service business which generates income when the owner himself actually does the work, then bankruptcy court is unlikely to want to confiscate it.

6) Issues when Debtors are Divorcing

Debt, the gift that keeps on giving— sometimes our clients are not only candidates for a bankruptcy, but are in the process of a divorce. One of the most important questions that comes up is which action to file first, the divorce or the bankruptcy? A second important question is, can a bankruptcy reduce the debt incurred by the spouses so that they are saddled with less debt after their divorce is finalized? Here are a couple of considerations. Consideration One: The filing of the petition for divorce (or legal separation) terminates the marital community and possibly the responsibility for the debts incurred by the other spouse, so long as the petition for divorce ends in divorce (or legal separation). It may be in a party’s best interest to terminate the marital community prior to filing bankruptcy to prevent additional community debt being incurred after the bankruptcy filing. Consideration Two: A Chapter 7 bankruptcy does not discharge certain obligations of a divorce decree, separation agreement or other orders of the family court (such as spousal maintenance, child support, etc.), but it will discharge the community debts incurred by the spouses. So, by filing bankruptcy before the divorce is finalized, it would limit the amount of debt that needs to be divided. It also takes a very contentious issue off of the negotiation table. (Note: Some of these debts, such as back child support and back spousal maintenance may be dischargeable in a Chapter 13 filing.)

7) Using Retirement Funds to Pay Debts

Using retirement funds to pay a mortgage or credit card debt can be an expensive mistake. We all hate seeing the situation where our clients use scarce and valuable resources, like their retirement (which incidentally, is out of the reach of creditors), to pay credit cards that could have been discharged in bankruptcy (and they still find themselves unable to get out of debt, without funds to live on, and no retirement for their future either).

8) The Power of the Automatic Stay

When you file for bankruptcy, an Automatic Stay goes into effect that legally forbids creditors from contacting you or pursuing debt collections further until your bankruptcy is finalized. With an Automatic Stay in place, creditors cannot file a foreclosure lawsuit and cannot send repossession agents after your property. They can’t even legally call you to ask about your bills. Instead, a bankruptcy attorney can deal with creditors directly on your behalf.

Master of Accountancy and Master of Taxation

9) Affect on Credit

Clients often worry about the lasting effects on their credit history and their ability to borrow money in the future. While it’s true that a bankruptcy can stay on their credit report for as long as 10 years, it need not affect them for this long. Soon after they have filed for bankruptcy they need to start rebuilding their credit again. This can be easily done by applying the simple credit improvement techniques described in nearly all credit improvement books. Indeed, my office’s recommendation is simply to purchase a book on this subject (there are numerous ones) and study it.

10) A Bankruptcy Attorney Can Help a Debtor Achieve a Fresh Start

I always recommend that your client work with an experienced attorney who will review all of their individual debts (and circumstances) before filing a bankruptcy in order to advise the client properly regarding which debts are likely to be discharged and which debts will remain the responsibility of the debtor after bankruptcy. Additionally, a good attorney may be able to renegotiate debts that would ordinarily not be discharged or help a debtor set up feasible repayment plans so that the remaining debt is not overwhelming. AZ CPA Joseph Velez is an attorney in Scottsdale, Arizona. He is also a member of the ASCPA and serves on the CPAs in Industry and Financial Planning Committees. He may be reached via e-mail at jvelezesq@ me.com or (480) 710-5079.

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CPAs in Love

Austin & Rebecca Billingslea “There are both benefits and downfalls to being in the same profession,” says Austin Billingslea. “The best thing is that the other person understands what you are going through at work, and the worst thing is that the other person understands what you are going through at work. Other benefits include knowing your family budget is being handled appropriately and being able to calculate the tip quickly! In all seriousness, being in the same profession is helpful because the advice received is on point and the support received is amazing because you have another person with similar experiences and goals, but with a different point of view.” Austin and Rebecca Billingslea met at PricewaterhouseCoopers when Becca was an associate and Austin was an intern. “We never worked on the same jobs, but would always run into each other at either social work events or at mutual friends’ gatherings,” says Austin. “When I returned to graduate school, I finally talked Becca into going on a date with me. From there I won her over with my knowledge of accounting!” The couple enjoys traveling and running together, as well as watching movies and enjoying time with friends and family. They also spend time apart, Austin golfing and working around the house and Becca involved in community service. “Being married to a CPA is pretty great,” says Austin. “Most decisions are analytical in Austin and Rebecca nature, your spouse has focus on short-term Billingslea in Hawaii stimulus, as well as long-term growth and they don’t fall asleep after they ask you how work is going!”

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CPAs in Love

Just in time for Valentine’s

Day, we decided to profile some of our members who were lucky enough to find each other and share both the joys of marriage and the accounting profession!

Mel & Benna Tiensvold The Tiensvolds met while in college at Bozeman, Montana and Mel became a CPA right after college. Benna took a longer route to the CPA, after obtaining a degree in Home Economics and teaching school for seven years, she went back to school and got her CPA and started working at the firm they both purchased in Montana. “We worked at the firm in Montana until 1989, then sold it and traveled the entire U.S. for six months, before moving to Prescott in 1991,” says Mel. “Benna worked for the same firm in Prescott that went through several ownership changes until we purchased the firm in 2005 with Maureen Shaffer.” The benefits of being a CPA couple, according to Mel and Benna Tiensvold, are that they always have something in common to talk about, they can attend CPE classes together, they work the same hours and have the same time off, and they often have some of the same worries. They say the pitfalls of both being CPAs is that they maybe spend too much time together, but they enjoy traveling and are trying to visit all the continents of the world. They also enjoy hiking together. “We have hiked the Grand Canyon five times, including going rim to rim twice,” says Mel. We have also hiked other national parks in the U.S. We generally hike about 15 miles a week.” Even though they do a lot together, they both have their separate hobbies as well. Benna is an avid reader and enjoys cooking and gardening. Mel has been a pilot for more than 40 years and has owned three airplanes during that time. “One of the most interesting airplanes that I fly is a World War II B-17, four-engine bomber,” says Mel. “I fly as Pilot in Command of this airplane for a museum in Mesa. The aircraft tours throughout the U.S. and Canada, and I spend about 30 days a summer touring the aircraft.” After being married for 37 years, if they could give any other CPA couple advice, it would be “to be sure to pick the right partner.”

Mel & Benna Tiensvold on one of their hikes to Phantom Ranch in the Grand Canyon.

FEBRUARY 2011 y AZ CPA

CPAs in Love Diane & Alex Tkatchov

Diane & Alex Tkatchov during a bike trip in Ireland.

The CPA couple that plays together, stays together. Alex and Diane Tkatchov met going over month-end adjustments for one of Alex’s clients – he was a CPA and she was finishing schooling. And not only do they share an accounting practice, they enjoy many fun activities, including being members of a Polka Band – Big Willie and the Polka Meisters! “With both of us being CPAs, we can synchronize our vacations,” says Diane. “We like to do a bicycle tour out of the country as our main vacation. In addition to many short and long rides around the state on bicycle, we like to hike, boat, water ski, downhill ski, hunt, and kayak. Anyway to get outdoors— that’s why we live in Arizona.” They give each other professional advice all the time and recommend that if you work together that you have offices in separate ends of the office to allow for individualistic “space.”

Diane & Alex Tkatchov (center) with their band, Big Willie and the Polka Meisters.

Ram & Renu Shembekar

Ram & Renu Shembekar hiking in Page, Arizona.

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Working together as CPAs can have its advantages, according to Ram and Renu Shembekar, who met in India as Chartered Accountants and immigrated to the U.S. and supported and encouraged each other to obtain their CPA license here. “We can understand each other’s professional issues better,” says Ram. “And it helps when coping with stress and dealing with the deadlines. We definitely have a better understanding for each other’s professional life.” When asked if they give each other professional advice, Ram responds, “ Sure we do. We try to give suggestions and we benefit from different professional points of view sometime. It’s a balancing act.” “It’s fun to be part of the same profession and it can be enjoyable working together,” says Ram. “ It surprises many, but that’s how we feel.” When they are not working, the couple likes to hike and take walks together.

Roger Shlonsky and Renée Azrieli in France

Renée N. Azrieli & Roger B. Shlonsky Renée Azrieli has offices in Sedona, Palm Springs and Los Angeles, and was an Associate Chief of Appeals in Los Angeles for the IRS. Her husband, Roger Shlonsky, is a retired KPMG partner who currently specializes in litigation support and forensic accounting services in Los Angeles and Palm Springs. They were introduced by a mutual friend who was, coincidently, also a CPA. “Our friends and associates expect us to have the answers to any and all financial questions, including the state of the economy,” says Renée. “People also think I have some kind of direct line to the tax ‘gods’ and should be able to solve any tax problem or explain any tax law, no matter how large or small.” Since Renée continues to take large tax litigation cases, Roger says he gets to “carry the briefcase” for his wife. “Roger, being the consummate accountant’s accountant, and an expert in GAAP and GAAS, continually helps me with complex accounting questions,” says Renée. “In turn, I help Roger with complex tax questions. He speaks GAAP and I speak TAX.” “We love to travel. We are both avid readers—in fact Roger is a trustee of the library in Sedona, which is a large private foundation,” says Renée. Roger enjoys shooting “trap” for sport. Renée is an amateur oil painter. While their union may be professionally beneficial, “It’s not just numbers, numbers, numbers; the fun part is all the rest of the time,” says Renée. “After all, you know, 2+2 = 5. Accountants just like to AZ CPA have fun.”

FEBRUARY 2011 y AZ CPA

Compilation Follies True Tales from Educational Enhancement Reviews by Timothy R. Coffey, CPA The most basic financial statement that an accountant can report on is a compilation that omits substantially all disclosures. However, in reviewing CPA submitted non-disclosure compilations, our Peer Review Oversight Advisory Committee (PROAC) of the Arizona State Board of Accountancy continually observes material errors and omissions. The PROAC is responsible for reviewing and accepting peer review reports submitted as part of an accounting firmâ&#x20AC;&#x2122;s biannual registration. However, firms that only issue compilation reports that omit substantially all disclosures, and do not voluntarily submit to having a Peer Review performed, can be randomly selected for an Educational Enhancement Review (EER). A firm selected for an EER will receive a letter from the State Board of Accountancy requesting that the firm complete an engagement questionnaire and send two samples of non-disclosure compilation reports to the PROAC for review.

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Utilizing check lists from the AICPA Peer Review Program, two members of the PROAC separately review and evaluate the submitted compilation reports. The reviewers will then prepare a list of questions and items for further consideration and will meet to discuss their findings. If significant issues are raised as a result of the EER, they will be presented to the PROAC who may vote to recommend the Board issue a “Letter of Concern” to the accounting firm or possibly require the firm to complete a peer review prior to its next registration. The Letter of Concern will list the findings noted during the EER and often will recommend that the firm obtain CPE in certain areas (SSARS, financial reporting, etc.).

The Top Ten List Based on numerous EER’s conducted throughout the years, members of the PROAC have developed a list of common findings noted in compiled non-disclosure financial statements. So, with acknowledgement to the David Letterman Show, listed below are the PROAC’s Top Ten List of common deficiencies noted in non-disclosure compiled financial statements: 1. The financial statement titles in the accountant’s compilation report did not agree with those used on the face of the financial statements. 2. The accountant’s compilation report did not make reference to all periods presented in the income statement/ statement of revenue and expenses. 3. The accountant’s compilation report did not disclose the omission of substantially all disclosures as required by SSARS No. 1. 4. The accountant’s compilation report makes an incorrect reference to the “statement of cash flows.” This statement is not required for income tax basis/cash basis financial statements and should not be included in the omission paragraph of the accountant’s compilation report. 5. Supplementary information presented in the financial statements was not referenced in the accountant’s compilation report.

Members of the PROAC are continually surprised by what CPAs submit as representatives of their “best” compilation reports.

6. Each page of the financial statements does not include a reference to the accountant’s compilation report. 7. There is no indication, either on the face of the financial statements or in the accountant’s compilation report, that the financial statements were prepared on an other comprehensive basis of accounting (OCBOA). 8. The financial statements were prepared using an other comprehensive basis of accounting. However the terminology used in the third paragraph of the accountant’s compilation report, which describes the omission of substantially all disclosures, uses terminology such as financial position and results of operations. These terms are only applicable to generally accepted accounting principles (GAAP) presentations. 9. It is unclear what period is covered by the income statement/statement of revenue and expenses because it is dated “as of …” instead of “for the month/year ended …” 10. The balance sheet includes notes payable classified as long-term debt with no corresponding current portion of long-term debt listed under current liabilities. The above is only a summarized list of the most common compilation report deficiencies noted by members of

the PROAC and should not be considered to be all inclusive. The complete listing of the PROAC’s matters for further consideration is available at www. azaccountancy.gov/documents/MFC.pdf Members of the PROAC are continually surprised by what CPAs submit as representatives of their “best” compilation reports. So, if you do not want to be the recipient of a “Letter of Concern,” you should consider updating your internal quality controls over these most basic financial statements. Finally, it is important to note that the guidance for compilation (and review) engagements is changing. SSARS 19, which is effective for periods ending after Dec.15, 2010 (calendar year ends) has been called the most significant change to compilation and review engagements in 30 years. Among the changes are revisions to the standard reports, and engagement letters are now required for all compilation AZ CPA engagements. Timothy R. Coffey, CPA, is an officer and shareholder in the Phoenix accounting firm of Grass Coffey and Scharlau, CPAs ,and a member of the Peer Review Oversight Advisory Committee. He would like to thank the members of his committee who assisted with this article.

FEBRUARY 2011 y AZ CPA

Highlights of Board of Directors’ November Meeting

One- and Two-Hour Seminars Quick Programs at a Minimal Cost to You

Below is a list of our upcoming one- and two-hour programs recommended by your fellow CPAs. These programs are meant to provide valuable information and insight, as well as give you an opportunity to network with other business professionals while earning CPE. It’s fast and easy, so register today at http://bit.ly/1-2seminars Determining Inaccurate Information and How it Affects Valuations February 10—ASCPA, Phoenix 11:30 a.m.—1:30 p.m.

Client Deliverables February 15—ASCPA, Phoenix 7:30—9:30 a.m.

Among other actions at its November 3, 2010 meeting, the ASCPA Board of Directors reviewed the following:

Consent Agenda The consent agenda, which included the minutes and financial statements, was approved.

Strategic Plan Update The Society has expanded its presence at the State Board by attending the tax & accounting committee meetings to better understand the issues that affect CPAs. As part of the innovative moment, the Board heard about the Road to the CPA programs held at several educational institutions and the new ASCPA student blog. They also received updates on the NASBA meeting and the continued focus on following initiatives in states that propose taxing professional services.

Foundation Update c e r t if ie D P u b Li c a c c o u n ta n t s + c o n su Lta n t s

people. growth. results.

Melinda Xanthos provided the report with recommendations to the Board on the new organizational structure of the Foundation. The Board approved the proposal with one amendment.

Our personalized and positive approach has helped us become one of the most respected accounting and advisory firms in the Southwest. It’s how we go beyond the numbers.

AICPA Fall Council Update

Learn more about Wallace Plese + Dreher, LLP at wpd-cpa.com or call 480.345.0500.

We can continue to be relevant to our members by ensuring that each seminar includes a local component that shows how it impacts Arizona businesses and residents.

The Council addressed the new rules on private company reporting, the IRS PTIN requirements for tax preparers and the future of the CPA community.

Value Proposition Discussion

A Day in the Life Board members appreciated hearing from fellow board members, Melissa Spangler, Armando Roman and Dave Richardson on the challenges and joys they experience in their day jobs. If you have questions or would like additional information, please contact Cindie Hubiak at (602) 324-2888; AZ toll free at (888) 237-0700, ext. 203; or chubiak@ ascpa.com.

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SPRING TRAINING Knock out your CPE with the following line-up ASCPA Spring 2011 Cluster This AICPA Cluster is set up in an easy-to-arrange 4-hour format—you choose the courses that fit you best. These programs are held at the Black Canyon Conference Center.

Monday, March 21 8:00 – 11:30 a.m. Controller’s Update: Latest Trends for Today’s Financial Manager (CL4SKSB) – 4 hrs. MG or Forensic Accounting: Uncovering Schemes and Scams (CL4FAFR) – 4 hrs. A&A 12:30 – 4:00 p.m. Doing More With Less: Lean Accounting and Management (CL4LAMA) – 4 hrs. MG or Purchasing, Inventory and Cash Disbursements: Common Frauds and Internal Controls (CL4PCD) – 4 hrs. A&A

Tuesday, March 22 8:00 – 11:30 a.m. Analyzing Costs, Productivity and Efficiency: Three Ways to Boost Your Bottom Line (CL4PYPL) – 4 hrs. MG or Introduction to IFRS: Grasping the Big Picture (CL4IUSA) – 4 hrs. A&A 12:30 – 4:00 p.m. Cash Flow Statements: Preparation and Presentation Options (CL4FCFS2) – 4 hrs. A&A or Decision-Making Tips, Tools and Techniques for Today’s Financial Environment (CL4TTMD) – 4 hrs. MG

Find more information on these programs and register today at

www.ascpa.com.

FEBRUARY 2011 y AZ CPA

Classifieds Business Opportunities BUYING OR SELLING A PRACTICE? Let me make it happen for you. • Integrity • Confidentiality • 44 years selling Arizona businesses. Call Allan Jeffryes, the Jeffryes Company at (602) 279-4988. OWN YOUR OWN TAX PRACTICE —New to Arizona. Looking for professionals interested in owning their own Tax Preparation and Financial Services practice? Easy and affordable to get started, with training and great support. You choose your location, we provide the system to attract premier clientele. Confidential. Reply to Box 100, Arizona Society of CPAs, 4801 E. Washington St., Suite 225-B, Phoenix, AZ 85034. OUR CPA FIRM IS SEEKING TO BUY CLIENTS in the Scottsdale and Phoenix Metropolitan area. Our staff has been practicing in public accounting for more than 30 years and specializes in the small to medium size business needs. We emphasize on business accounting and tax. We are located in North Scottsdale with a satellite office in Northwest Phoenix. If you are downsizing or retiring and want an easy transition, please callus today. Ask for Kara at (480) 990-2727.

Employment Opportunities WESTERN ALLIANCE BANCORPORATION—Senior Accountant (multiple positions): Responsible for accounting and financial reporting of the Holding Company and Affiliate Banks. Will perform operational accounting (A/P, F/A, OREO, Loan, Deposit), journal entries, reconciliations, accruals, amortizations, transaction analysis, securities accounting, intercompany accounting, research and ad hoc projects. Incumbent will assist in implementation of accounting standards and SEC and regulatory financial reporting. Position works closely with external/ internal auditors and examiners, ensures compliance with SOX, Bank policies/ procedures, and applicable state/fed-

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eral banking regulations. Position may have supervisory duties. To apply send resumes attn: Susan Thompson, One E. Washington St., #1400, Phoenix AZ 85004. WESTERN ALLIANCE BANCORPORATION—Accounting Manager: Position has supervisory responsibilities for Accounts Payable processors and reconciliation specialists. Incumbent will lead automation projects to streamline AP and expense account reimbursement processes. Prior AP experience in a fast paced, multi-company environment required. Duties include intercompany and operational accounting support and ad hoc projects. Position works closely with external/ internal auditors and examiners, ensures compliance with SOX, Bank policies/procedures, and applicable state/federal banking regulations. To apply send resumes attn: Susan Thompson, One E. Washington St., #1400, Phoenix AZ 85004. TEMPE FIRM SEEKING CPA WITH 2+ YEARS EXPERIENCE in audit, review & compilation work. Flexible working environment and great benefits including paid Fridays off during the summer months. Please send resume to: willits@mpmcpa.com. TAX ACCOUNTANT/CPA—Established CPA firm seeks full-time or per diem CPA or CPA candidate with accounting/GAAP/tax experience to join practice specializing in small to mid-size business clients. Family-friendly, flexible work schedule, competitive salary, benefits, and opportunity to grow professionally. CCH Pro fx, Engagement and QuickBooks experience a plus. Salary DOE. Send resume to Abalos & Associates, PLLC, 7150 N. 16th Street, Phoenix, AZ 85020, fax (602) 9434669, or e-mail to rita@abaloscpa.com. GOVERNMENTAL/NPO SPECIALISTS—Heinfeld, Meech & Co., P.C., recognized leaders in governmental and non-profit accounting and auditing, seeks ambitious and motivated individuals with at least 8 years expe-

rience specializing in governmental or nonprofit accounting and/or auditing for our offices in Phoenix, Tucson and Flagstaff. Nationally recognized on the “25 Best Small Companies to Work for in America” list for the past four years, our firm is committed to providing a superior work environment and career opportunities for our staff. Competitive salaries and benefits offered. BS in accounting and at least 8 years accounting or auditing experience specializing in governments/nonprofits required. CPA or CPA candidate preferred. Travel required Email resume and salary requirements to info@heinfeldmeech.com. MIDWESTERN UNIVERSITY SEEKS A DIRECTOR OF ACCOUNTING To oversee the day-to-day, month end and annual accounting/financial operations of the Glendale, AZ campus. Responsibilities include the supervision of 6 staff members, assisting with the annual budget process, accounting and reporting for the University Clinics, oversight of the AP process and assistance with the annual external audit process. Bachelor’s degree, CPA and 7-10 years of Accounting in an academic or healthcare environment are required. Public Accounting experience will be considered. Visit www.midwestern.edu (jump to employment at MWU) to apply. Send questions to: Christina Taylor, Recruitment Manager: ctaylor@midwestern.edu. 5+ YEARS EXPERIENCED TAX CPA TO JOIN MULTI-DISCIPLINE PRACTICE (tax, legal and financial services) for wealthy families and businesses. Integrity competence, attention to detail with strong tax planning experience. E-mail resume and salary requirements: sarah@lofygrouptax.com. AUDITORS—TIRED OF 60-70 HOUR WEEKS? LUMBARD & ASSOCIATES, P.L.L.C. ESTABLISHED, GROWING NORTH CENTRAL PHOENIX CPA FIRM specializing in serving Not-for-profit, Governmental and small businesses has opportunities for audit managers and seniors. Must be licensed or about to be licensed CPA.

Minimum 5 years public auditing experience. MBA and CGFM a plus. Must have strong communication skills and proficiency in US GAAP, GAAS, GAGAS and Single Audit. Bilingual in Spanish and English a plus. Future partnership opportunity for qualified persons. Insurance and 401 (K) Plan. Minimal overtime and maximum 25% travel. Compensation D.O.E. E.O.E. E-mail resume to Jessica@llumbard.com. CPA, AUDIT MANAGER—part-time, assist with compilations and reviews in Phoenix. Email: auditmanager2@ yahoo.com. TEMPE FIRM SEEKING CPA WITH 2+ YEARS EXPERIENCE in audit, review & compilation work. Flexible working environment and great benefits including paid Fridays off during the summer months. Please send resume to: willits@mpmcpa.com. TEMPE FIRM SEEKING PARTTIME TAX PREPARER & ACCOUNTANT—Tax preparation and compilation experience sought. Knowledge of Proseries a plus. Please send resumes to Julie@clandcompany.com. PERMANENT PART-TIME TAX MANAGER—We have a GREAT JOB in a GREAT PLACE to work! The six employee firm OFFERS telecommuting, flex-time, four-day work weeks during the summer and closes between Christmas and New Years. We are seeking a CPA technician and producer of tax returns. Please email resume & cover letter with salary requirements and a brief description of your “ideal” job to: kfinch@lowyyourtaxes.com. WESTERN ALLIANCE BANCORPORATION—Compliance Officer III: responsible for overseeing operational and lending regulatory compliance for the Bank. Senior Internal Auditor: will assist in organizing, planning, and managing internal audits and Sarbanes-Oxley (SOX) Section 404/302 testing. Senior Regulatory Auditor: will conduct regulatory compliance audits to ensure compli-

ance with all consumer compliance laws and regulations that impact banking and the related affiliated bank policies and procedures. To apply send resumes attn: Patricia Taylor, One E. Washington St., #1400, Phoenix AZ 85004.

Miscellaneous ENTREPRENEURIAL CPA NETWORK (eCPAn)—Wednesday, April 27th, Speaker: Beth Cohn, of Jaburg & Wilk, Topic: Estate/ Gift Tax Planning and Asset Protection. Regular luncheon meetings are 11:30 to 1:30; all meetings located at DoubleTree Suites, 320 N. 44th St. For information call (602) 4680281 or e-mail us at meeting@ecpan.org.

ESTABLISHED CPA—33 years in Phoenix with extra office space and administrative services seeks CPA with a practice to share expenses, help diversify client services and ultimately define and implement an acceptable succession plan. Please contact John Crosby at (480) 421-9789.

Advertising For display or classified ad information, contact

Office Space CUT $$$$$$—Move into the “ACCOUNTING ANNEX”— Tenant sought. Office space to rent. Suitable for a dynamic CPA or CPA firm. Share phenomenal resources. On light rail and next to a station. Two conference rooms, included. 150 ft. to 9,000 ft. Unique property next to the heart of downtown, walk to baseball and basketball stadium. Short term lease is welcome. Call Lance at (602) 741-7876 cell.

Michelle McBay at (480) 216-9559 or advertise@ascpa.com

2010 National MAP Survey Results Now Available Do you want to know how much growth firms are experiencing nationwide? What practice areas are they adding to their service mix? Given the ongoing scramble to find qualified professionals, what kinds of benefits and perks are being offered by firms in your market segment? What’s the average compensation for various career levels? You can learn all of that and more in the results from the 2010 PCPS/TSCPA National MAP Survey. To learn more about PCPS, please visit www.aicpa.org/pcps, or call (800) 272-3476. The Arizona-specific report was completed by more than 90 members of the Society and is available at no-charge as a member benefit to ASCPA members only at www.ascpa.com. Take advantage of the wealth of information contained in the most comprehensive data reports on firm management available today. With responses from almost 3,000 firms across the country and more than 90 in the Arizonaspecific report, this valuable resource enables firms to benchmark management policies and financial results against other firms while gaining strategic guidance to build a more profitable and rewarding practice.

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