AZ CPA Dec. 2013

AZ

CPA DECEMber 2013

The Arizona Society of Certified Public Accountants

Volunteering as a Vacation Preventing Employer Liability Successful Hiring • New IRS Repair Regs

www.ascpa.com

As the health care

Taking care of Arizona since 1939

landscape changes, Blue Cross Blue Shield of Arizona is committed to empowering members and delivering the service that continues to earn your confidence for years to come.

Trust

2 AZ CPA y DECEMBER 2013

Experience Innovation

Value

WORK WHERE IT FEELS LESS LIKE A JOB AND MORE LIKE YOUR FUTURE. If you’re on the fast track for success, opportunity lives in choosing a firm that values talent and understands the desire to grow. Combining the strengths of two well-established, respected CPA firms in Phoenix—Miller, Allen & Co. and Abalos & Associates—under the REDW brand, adds up to both opportunity and growth to energetic and experienced professionals.

Find your future.

Current career opportunities available now at redw.com/careers

Albuquerque | Phoenix Phoenix Office 5353 N 16th St. Suite 200 Phoenix, AZ 85016 602.730.3600 | redw.com

DECEMBER 2013 y AZ CPA

3

AZ

CPA DECEMBER 2013

Volume 29 Number 10

Successful Hiring

15

Finding that perfect new employee can be a challenge.

Take these steps to make the right choice.

by Thomas Maricle, CPA

The New IRS Repair Regulations

17

New regulations apply after Jan. 1, focusing on the tax treatment of non-inventory tangible property.

by Daniel Johnson

Looking for an Intern

20

Reasons why you may want to consider hiring an intern from your local community college.

by Barbara Gonzalez, CPA

Features Volunteering as a Vacation

9

Information Security: It’s Not Just for Large Companies Anymore

22

ASCPA member Sarah Zelhart decided to spend her vacation giving back to a women’s health organization in Cambodia— sharing her accounting skills and good will.

by Sarah Zelhart, CPA

Even small businesses need to guard against data breaches.

by Rebecca S. Pearson

Preventing Employer Liability

Developing a comprehensive IT disaster recovery plan can help your business survive any kind of crises, from flood to fire.

by Michael Nyman, CPA

11

The Equal Employment Opportunity Commission has outlined new enforcement priorities. Learn how you can keep your business out of trouble.

by Ed Fleming and David Villadolid

Inside or Out: Options for IT Disaster Recovery Planning

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

4 AZ CPA y DECEMBER 2013

6

Chair’s Message by Karen Abraham, CPA

7

Focus on Members

8

A Dash of SALT by James Busby, CPA

25

Board of Director’s Meeting Highlights

26 Classifieds

24

AZ

CPA

AXIOM

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 Secretary/Treasurer Directors

Karen Abraham Anita Baker Rob Dubberly Diane Groover Sandra Hieb Debra Johnson Jimmy Lovelace Adam Miller Molly Montgomery CW Payne George Raysik Andy Spillum Leslie Stackpole Jared W. Van Arsdale Craig Van Slyke

Financial Advisory Group, LLC

Wealth management for high income, high net worth individuals and highly profitable business owners.

Armando G. Roman, CPA/PFS MBA Managing Principal

Gainey Ranch Financial Center 7373 E. Doubletree Ranch Rd., Ste. 170, Scottsdale, AZ 85258 (480) 367-9000 • www.axiomcorp.com Registered Representatives offering securities and advisory services through Independent Financial Group LLC, a registered broker-dealer and investment advisor. Member FINRA/SIPC. Independent Financial Group, LLC and AXIOM Financial Advisory Group, LLC are not affiliated. Office of supervisory jurisdiction: 12671 High Bluff Dr., Ste. 200, San Diego, CA 92130.

Immediate Past Chair Armando Roman AICPA Council Members Jim Buhr Rick Goldenson Chapter Presidents Southern Chapter Northern Chapter Southwest Chapter North-Central Chapter

Flo Zenblu Jennifer Nordstrom Jayne Wright Richard Joliet

ESTATE PLANNING • TAX CONTROVERSIES • QDRO’S

YOUR TRUSTED ADVOCATE IN ALL IRS DISPUTES

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

www.ascpa.com

• IRS Audit Support • Offers in Compromise • Wage Garnishment, Liens & Levies • Civil & Criminal Tax Litigation

Shad M. Brown, JD, LLM

Matthew S. Dana,

Former IRS Attorney

JD, LLM, CPA, CLU, ChFC

Call Today for a FREE CONSULTATION 480.515.3716

Scottsdale (Bell & 101) • Phoenix (44th St. & 202) • Mesa (Power & Southern)

www.DanaFirm.com

DECEMBER 2013 y AZ CPA

5

Chair’s Message

by Karen Abraham, CPA

A Look into Our Future The American Institute of Certified Public Accountants (AICPA) held its Fall Council meeting recently in Los Angeles, Oct. 20 – 22. At this meeting, there were many updates presented on issues affecting our industry. In addition, there were two guest speakers who I found very captivating.

Dr. James Johnson Jr., the William R. Kenan Jr. Distinguished Professor of strategy and entrepreneurship and director of the Urban Investment Strategies Center at The University of North Carolina at Chapel Hill, spoke on diversity and inclusion. This by far is the best presentation I’ve ever experienced regarding generation and ethnic populations and their impact on the workforce. Johnson built a very compelling case for strategically thinking about how diversity and inclusion are imperative to the ongoing operations of a business. He provided several proof points: The South Rises Again—The South has had half of the national population growth since the 1970s. Texas, Florida, Georgia and North Carolina were the states with the largest increases.

Further, there has been a progressive redistribution of the population from the Southeast to the Southwest.

Changes in Our Ethnic Population— Annual immigration to the U.S. is about one million people per year. Today an estimated 11.5 million persons residing in the U.S. are unauthorized. In addition, non-Hispanic whites are not replacing themselves through births and numbers are diminishing. Meanwhile, blacks are replacing themselves through births and Hispanics are more than replacing themselves. Thus by 2050, non-Hispanic whites will be less than 50% of the U.S. population.

Marrying Out is “In”— More marriages are occurring between mixed races. Hispanics and whites are more likely to marry and be more educated.

6 AZ CPA y DECEMBER 2013

The census’ biggest increase noted in race results was in the category of “2 or more races.”

Silver Tsunami—8,000 to 10,000 baby boomers are turning 65 years old every day. New medicine, including regenerative medicine will help make living to 100 years old the norm. Some who have already been born, may live 130 Years. There is a sustainability issue here. There are four generations currently in the workforce: newly unretired, not leaving workforce, Gen X and Gen Y. Today you organize your life around work. Tomorrow, life will organize the future. Elder care and child care will interfere with the workforce and cause a shift in the need for flexibility.

The End of Men? —More than 50 percent of the paid workforce is female; 63 percent of women are now co-bread winners or full bread-winners and 80 percent of the job losses in the recession were held by men.

Cooling Water from Grandma’s Well and Grandpa’s Too—More and more children are being raised by their grandparents and the grandparents are between 30 and 50 years old. There has been a profound change in living arrangements in the U.S. Minorities Must be Educated — Minorities will be educated in the future.We need to teach analytical reasoning, entrepreneurial acumen, contextual intelligence, soft skills, cultural elasticity, agility and flexibility.

We must be able to work with all races and ages to keep a successful workforce.

The second speaker was Sal Khan,

founder of Khan Academy. The mission of the Khan Academy is to change education for the better by providing a free world-class education for anyone anywhere. Nine million unique users sign in and use the academy each month.

Khan’s story is fascinating. It seems he began teaching his cousin, Nadia, mathematics over the internet. Soon he was teaching Nadia’s brothers and then had a following of 10 students. A friend suggested that he start recording his sessions and put them on YouTube. Sal agreed and soon began receiving letters of praise and thanks from students and parents. Inspired, he quit his job as an investment banker and started the Khan Academy, a 501(c(3) organization. After almost exhausting his personal savings, he was discovered by a benefactor who supported him financially until he could secure additional funding. Now, MicroSoft, Google and others have recognized Sal’s work and have made generous contributions.

I don’t doubt the Khan Academy will be teaching CPAs sometime in the future! You can find Khan’s work at www. khanacademy.org to brush up on your calculus!

AZ CPA

Focus on Members Rachael R. Piergallini, CPA, vice president of finance and operation for Derma Health Institute and ASCPA Chief Operating Officer & CFO, Adela E. Jimenez, CPA, CGMA, MBA, were named to the Esperanca Board of Directors.

Carey Chambers, CPA, was promoted to audit managing director at KPMG, Tempe.

The ASCPA and others partnered with the Phoenix Business Journal to present the Outstanding CFOs 2013 Awards. Society members honored include: Karen Abraham, CPA, Kevin Burnett, CPA, Phil Giltner, CPA, Tom Harris, CPA and Mary Jane Rynd, CPA.

The DriveTime tax, accounting and treasury departments participated in a 5K neon run in September 2013.Â

You could spend hours searching for financial salary information. Or just seconds.

[ roberthalf.com/salary-center ] +

For hiring news, industry trends and salary information, download your free Salary Guide today at roberthalf.com/salary-center.

1.800.803.8367 Š 2013 Robert Half International Inc. An Equal Opportunity Employer. 0913-9013

DECEMBER 2013 y AZ CPA

7

A Dash of SALT

For 2013, Arizona Allows a Bigger Instant Deduction, a Larger Subtraction, and More Income Tax Credits than Ever Before This month’s state and local tax (SALT) column highlights a few changes in Arizona’s state income tax laws that may allow taxpayers to reduce their Arizona income tax burden more than they were previously allowed to, if they act before the end of tax year 2013.

CPAs always counsel their clients to plan ahead in order to reduce their income tax bills. For example, all other things being equal, generally taxpayers are encouraged to postpone taxable income into future tax years and to accelerate deductible expenses into the current tax year. Likewise, savvy Arizona taxpayers claim each state income tax credit that they are entitled to for everything from contributions to public schools and private school tuition organizations to credits for donations to the military family relief fund, and everything in between.

In addition to long-standing tax savings opportunities, thanks to Governor Brewer and the Arizona Legislature, 2013 presents some additional opportunities for Arizona taxpayers to trim their tax liabilities. In particular: Arizona Deductions Under § 179 are No Longer Capped at $25,000.

For business equipment acquired on or after January 1, 2013, individuals and corporations that claim deductions under I.R.C. § 179 are no longer required to add back amounts in excess of $25,000 when calculating their Arizona tax deduction for such property. Thus, subject to existing limitations, individuals and corporations may purchase and instantly deduct up to $500,000 worth of qualifying equipment on both their federal and Arizona income tax returns for tax year 2013.

However, now that Arizona is tied

8 AZ CPA y DECEMBER 2013

to federal law on § 179 deductions again, Arizona’s $500,000 limit will decrease for tax year 2014, and for future tax years, unless Congress and President Obama agree to renew the $500,000 limit. So, to be safe, taxpayers may want to purchase qualifying equipment in 2013 rather than risk lower § 179 limits in the future.

Maximum Subtractions for Contributions to § 529 Plans More Than Doubled. Individuals may subtract more from Arizona gross income than ever before for contributions to college savings plans established pursuant to § 529 of the I.R.C., as long as the contributions were not deducted when computing federal adjusted gross income.

For single individuals and heads of households, the maximum subtraction increased from $750 to $2,000.

For married couples filing jointly, the maximum increased from $1,500 to $4,000.

Taxpayers Who Do Not Itemize their Deductions May Now Claim the Credit for Contributions to Charitable Organizations that Provide Assistance to the Working Poor. For the first time, individuals may claim the credit for contributions to qualifying charitable organizations that provide assistance to the working poor, even if they do not itemize their deductions. For single individuals and heads of households, the maximum credit is $200. For married couples

filing jointly, the maximum credit is $400.

The Maximum Credit for Contributions to Charitable Organizations that Provide Assistance to the Working Poor Doubles When the Donation is to a Qualifying Foster Care Organization. In addition to making this credit available to those who do not itemize their deductions, beginning with tax year 2013, if one’s donation is to a qualifying foster care charitable organization, the maximum amount of the credit increases from $200 for single individuals and heads of households and $400 for married couples filing jointly to $400 for single individuals and heads of households and $800 for married couples filing jointly.

Qualifying foster care organizations are available on the Arizona Department AZ CPA of Revenue’s website.

James G. Busby, Jr., CPA, is a state and local tax attorney at Gallagher & Kennedy, a Phoenix-based law firm. Busby previously worked in the SALT departments at Arthur Andersen and Deloitte & Touche. Before entering private practice, Busby was in charge of all transaction privilege (sales) tax audits at the Arizona Department of Revenue. A Dash of SALT ™ is provided for informational purposes only and does not constitute legal counseling or other professional services. If you have any questions, Busby can be reached at (602) 530-8277 or jgb@gknet.com.

Volunteering as a Vacation

by Sarah Zelhart, CPA

When you tell people that you spent your vacation setting up the accounting system for a women’s holistic health organization in Cambodia, they look confused. But that’s exactly what I did.

Several years ago, I read an article in The New York Times about the transition in the Sudan. When a country goes from a dictatorship to a democracy, the problems include a lack of accounting skills. When the assets are owned by a dictator, they are not tracked. Asset tracking, building a simple spreadsheet, and basic accounting are all skills that do not exist typically in a dictatorship.

When I read the article, a light bulb went off for me. Using my skills as a CPA could make a difference. I decided that I wanted to volunteer my skills as an accountant.

My search led me to an organization called Accounting for International Development (AFID) based in London. In simple terms, AFID takes applications from individuals and small non-governmental organizations around the world.

They then match the needs of the organizations with the skills of the accountant.

Volunteer assignments can last anywhere from two weeks to 12 months.

DECEMBER 2013 y AZ CPA

9

Finding the right time to be away from work was one of my biggest challenges. It is never convenient to be away for an extended period of time, but I had the benefit of a work cycle that lulled in late August and an amazingly supportive staff.

AFID offered me three choices of assignments including Guyana, Zambia and Cambodia. Although all three were worthy organizations, my final choice was Our Strength, a women’s holistic health organization in Battambang, Cambodia.

Our Strength coaches women about reproduction and childbirth. They have four team leads that go to a different local village each day of the work week and provide an education session to the women in the village. Formerly an offshoot of the Catholic church, the organization had fully developed programs, but no back office. As I had just finished reading “Half the Sky,” I knew that providing women access to health care and information could have long-term impacts on physical and financial health. Other considerations were the quality of lodging nearby, the overall cost of flight and lodging, the languages spoken and the attractions nearby. Cambodia uses the U.S. dollar, many people speak English and the hotel was inexpensive and a short walk (less than five minutes) from the office.

Volunteering overseas can be expensive. In addition to the flights, hotel, and placement fees, there are hidden costs as well. Shots and, in my case, malaria medication, sunscreen, and bug spray all add up. It is important when volunteering that you understand all the costs you may incur.

In mid-August, I boarded a plane, and headed off to Cambodia. It took a full 24 hours of flying (Phoenix to San Francisco to Seoul to Siem Reap) to arrive in Cambodia. The next morning, I had a hired car that took me from Siem Reap to Battambang, about a three-hour drive. The traffic rules of Cambodia appeared to be nonexistent. Cars, bicycles and light motorcycles, known locally as motos, were everywhere. Motos are light, inexpensive and take only a small

10 AZ CPA y DECEMBER 2013

For three weeks, I lived, worked, ate and breathed something different.

amount of fuel. Motos carry everything in Cambodia: live pigs to market, families of three to five, harvested rice and even live turkeys.

On Monday, I arrived at the offices of Our Strength. Our Strength is run by the charming Theary Ros and her four Village Health Leaders: Sochenda, Channa, Sokha and Vanna. They also had a part-time accountant, Visal.

The work day was very different from a U.S. work day. Each morning, we would arrive and sit on the mat in the center of the office. We spent time just talking. All of the staff was learning English. They would ask questions about American idioms they had heard but did not understand. One of my favorite discussions was trying to explain names like “honey” and “sweetie” and when they are used.

The Cambodians arrive early but take a long lunch and close at 4 p.m. I do not want to give the impression they do not work hard. All of the staff members at Our Strength worked during the day and attended school all day Saturday and Sunday. Several also had second jobs to support their families from 4 to 8 p.m. each evening. I had nothing but admiration for these women.

Although they had stated they had an accounting system, what they had was a spreadsheet —a broken spreadsheet. It took me about two days to understand the operations and realize the problem.

Cambodia operates in two currencies, the U.S. dollar and the Cambodian Riel. Dollars are used for large charges including rent. The riel is used for small charges like gasoline and copying.

Technically, the fix was some of the easiest work I have ever done. I added

a column and allowed them to record transactions in both currencies. What was harder was not doing the work.

CPAs by definition are typically Type– A personalities. We want to ensure we have accomplished the goal. Before I left, I received some sage advice: if you take over, they will let you. Instead, I took a step back.

After discussions with Theary, I suggested we train both Visal and one of the team leads to use the spreadsheet. We went backwards through the year and created financial statements for each month going back to January. I spent a great deal of time sitting and waiting for the staff to have a question.

I am pleased to say that at the end of the trip, we had completed eight months’ worth of financial statements, a user’s manual for the template and sample forms to use for internal controls. More than those deliverables, I made friends. The women of Our Strength, and the other people I met in Cambodia, will always be a part of my life.

For three weeks, I lived, worked, ate and breathed something different. I did not just work; I ate at local restaurants, took a cooking class, visited local temples and took countless photographs.

Those experiences are now a part of me.

Many people will say I did not need to go around the world to make a difference. They are right. I can make a difference, and so can you, right here.

Skilled volunteers are needed here and around the world. But I know that there are women in Cambodia that are better for my efforts and so am I. For the entire story, please see my blog at www.girltriing.com.

AZ CPA

Preventing Employer Liability Navigating the Equal Employment Opportunity Commission’s Strategic Enforcement Compliance Policies

by Ed Fleming and David Villadolid The Equal Employment Opportunity Commission (“EEOC”) has been more than willing to aggressively pursue anti-discrimination laws. As part of its new found appetite for litigation, the EEOC has developed a strategic plan for the years 2012-2016 which outlines six (6) major areas the agency will target in its enforcement policies. The enforcement priorities include: • Protecting workers who are generally unaware of their rights, including immigrant and migrant workers; • Targeting class-based recruitment and hiring practices; • Pay systems which discriminate based on gender; • Strenuous enforcement of the Americans with Disabilities Act relating to reasonable accommodations and undue hardship; • Preventing retaliation against complaining employees; • Preventing harassment in the workplace.

DECEMBER 2013 y AZ CPA

11

The EEOC has pursued these various strategic goals in a very aggressive manner. For example, settlements obtained by the EEOC increased from $8.6 million in 2011 up to $36.2 million in 2012. (Statistics for 2013 are not yet available.) In addition, there has been a greater emphasis on litigating cases within the EEOC’s new strategic enforcement plan. Several cases have discussed this new aggressive posture and have in fact excoriated the EEOC for pursuing cases with questionable evidence and for what appears to be political as opposed to legal or protective purposes. See EEOC v. Freeman, Case No. RWT 09cv2573 (D. Md., Aug. 9, 2013) (mem. Decision), where Judge Roger Titus found that the EEOC made a “mockery of procedural standards” and presented “laughable” evidence.

With the EEOC’s new strategic enforcement priorities in mind, care should be taken to follow a plan for avoiding and addressing possible employment claims. Unfortunately, ADP adp128816a Proof 4 - ASCPA regardless of the care taken to follow

guidelines in evaluating, monitoring, tracking and documenting employee issues, claims will undoubtedly be brought. The following suggestions should help reduce the number of complaints filed and help mount a successful defense to any claims brought by either the EEOC in its regulatory mission or by individual employees seeking compensation for alleged improper employment practices.

First, Document the File — Proper documentation is difficult to accomplish on a consistent basis. It is rare to find a personnel file which is honestly and regularly documented. Often there is simply nothing in the file, or instead, there are meaningless annual reviews where everyone generally “exceeds expectations.” The lack of proper attention to documentation in annual reviews may be the easy way out for a manager, but it may also make it much more difficult to defend a claim filed by a terminated employee.

Be proactive, and create a system where information is automatically

and simply documented. Don’t rely upon memory. The old saying, “The shortest pencil is better than the longest memory” is apt. Use that pencil and write it down. Contemporaneous notes do not have to be long and can be as simple as “October 14 – Joe is late again.” Keeping all of this information contemporaneously makes your document much more credible.

One problem which generally leads to inaction is that managers do not know where to keep the information once it is written down. Does it go in the personnel file? Do I put it somewhere else? These questions can be solved with one simple rule – everything goes in the same place. A spiral notebook is sufficient, or you can create an encrypted document on your computer. More importantly, when you are thinking of terminating or disciplining Joe for repeated tardiness, there is one resource to review. Most supervisors are extremely surprised to see how many times they simply let Joe off with a warning, and the decision to discipline or terminate

With ADP , new revenue opportunities are right under your nose. ®

Refer Your Clients ■ Run Your Own Payroll ■ Sell Your Payroll Base Looking for ways to grow your business? ADP can help with end-to-end payroll and integrated HR resources. Refer your clients to our payroll services, offer our payroll solutions directly to your clients or sell us your payroll base. Count on our 60+ years as the payroll leader to help you drive growth and profitability.

Learn more with the free strategy brief, “Growing Your Business with HR.” Go to accountant.adp.com/grow

HR. Payroll. Benefits.

ADP is a recommended provider for the ASCPA. For more information on our benefits programs, call 408.477.8992 today.

ADP®, the ADP logo and RUN powered by ADP are registered trademarks of ADP, Inc. Copyright © 2013 ADP, Inc.

12 AZ CPA y DECEMBER 2013

is often accompanied by the thought, “I should have done this long ago.”

Another internal struggle which often leads to inaction is “Should I write this down, or not?” In other words, when do I know that something is important enough to document? In truth, you will never really know, so a simple rule to follow is, “When in doubt, write it down.” If you think you should write it down, simply do it.

S e c o n d , L o o k f o r Tr a i n i n g Opportunities — Remember that training about policies on equal employment, non-discrimination and sexual harassment are essential elements to an employer’s defense. The seminal United States Supreme Court cases of Burlington Indus., Inc v. Ellerth, 524 U.S. 742 (1998) and Faragher v. City of Boca Raton, 524 U.S. 775 (1998) established that an employer has an affirmative obligation to adopt and distribute policies of equal employment and also provide training to employees. If either of these two elements are missing, then the employer may not be able to raise a defense to claims of discrimination or retaliation.

Training is essential and can take many forms. There are online training videos and programs available, which may be the simplest to implement. At the other end of the spectrum are mandatory training sessions of executives and managers conducted by professionals or outside counsel. Generally small training sessions with twenty (20) or fewer people result in better responses and interaction. Larger groups (or online training videos) may be efficient, but it is easier for managers to not pay attention or think “this doesn’t apply to me.” In smaller groups discussion often occurs, examples (sometimes hypothetical, sometimes real) are raised, and all employees receive reinforcement about the importance of equal employment and freedom from harassment.

Finally, Report and Investigate Complaints — If a situation arises, it is important to take action. For example some incidents trigger mandatory reporting requirements, and all managers should be trained in and be aware of

Any incident of discrimination or harassment must be reported to a specified company representative.

these. Any incident of discrimination or harassment must be reported to a specified company representative. Another example of mandatory reporting is when any act or threat of violence occurs in the workplace. A less obvious example may be the duty to report an employee who lacks authorization to work within the state of Arizona.

Because the knowledge of managers is imputed to the employer, allowing an employee to continue to work without proper work authorization can lead to penalties, including the potential loss of a business license. Finally, managers should be advised that in Arizona a failure to report and investigate may lead to a claim of personal liability against the manager individually.

Once the report has been made, then an investigation can either be conducted internally or through outside sources, but be aware that any person (including an attorney) involved in an investigation becomes a potential witness in future litigation. All persons involved should be interviewed, and the content of the interviews should be documented and recorded. Employees can be told

that the interviews and information will be kept confidential to the extent possible, but absolute confidentiality cannot and should not be promised.

If the investigation results in a finding of responsibility and culpability, then proper discipline should follow, which should also be documented.

The EEOC’s new strategic enforcement plan provides employers with information about the issues and topics which will be aggressively investigated (and litigated) in the next few years.

Employers can use this information to assess and reduce their risk for potential claims and litigation. While no business is “bullet proof” from claims, taking the practical and proactive steps of documentation, training and investigation can reduce and possibly prevent AZ CPA employer liability.

Co-authors Ed Fleming and David Villadolid are partners at Burch & Cracchiolo law firm. They can be reached at efleming@bcattorneys.com and dvilladolid@bcattorneys.com.

DECEMBER 2013 y AZ CPA

13

LOOKING FOR TECHNICAL ACCOUNTING EXPERIENCE IN AN AGILE WORK ENVIRONMENT?

www.drivetime.com/careers

Work with “Big 4” Professionals while gaining industry experience.

DriveTime is the nation’s leading used vehicle retail and finance company focused on the subprime market. We’re based in Phoenix, AZ and we’re looking for accounting and tax professionals who are ready to take their career to the next level and grow with our team as we take on new challenges and maximize oppourtunities.

WHO ARE WE LOOKING FOR?

SEC REPORTING SENIOR ACCOUNTANT Up to $100K / plus bonus CPA Required / 3 - 5 years or more experience / Public Accounting experience preferred

TREASURY ANALYST

Up to $65K / plus bonus CPA preferred / 2 - 3 years or more experience / Public Accounting experience preferred

TAX ACCOUNTANT

Up to $85K / plus bonus CPA preferred / 2 - 5 years or more experience / Public Accounting & SQL experience preferred

Apply Today!

EXPERIENCED STAFF ACCOUNTANT (x3)

(602) 667-2528

14 AZ CPA y DECEMBER 2013

SENIOR SALES TAX ANALYST Up to $75K / plus bonus CPA / IPT designation preferred 3 - 7 years or more experience

SENIOR AUDITOR

Up to $55K / plus bonus

Up to $75K / plus bonus

CPA preferred / 1 - 2 years or more experience / Public Accounting experience preferred

CPA preferred / 3 - 5 years or more experience

joseph.terracciano@drivetime.com

Corporate Office Located in Phoenix, AZ / Relocation cost paid upon qualification

Successful Hiring

by Thomas Maricle, CPA

Finding that perfect new employee is one of the most difficult but rewarding responsibilities that you can undertake. The rewards of finding that perfect fit can catapult your department forward and likewise the punishment for letting the wrong candidate slip through can devastate your company. The right hiring process is determined by several factors such as the position requirements, industry, company makeup, etc. For the purposes of this article, I will focus on an organization trying to fill a professional accounting or finance position.

Step 1- Define the position you are trying to fill Sounds simple but this is unfortunately one of the most commonly skipped steps in the hiring process. Managers often simply consider replacing the person who left with someone similar, or hopefully similar, but stronger in areas where the previous employee was underperforming.

It is important to look at a hiring project as a clean-slate opportunity to review what your specific needs are and find someone who not only meets your “must have” checklist but also gets a check on a few items on your “wish list.” If you have a job description, update it to fit your current wants and needs. If you don’t have a job description, make one (and don’t be afraid to seek out feedback from others in your department in doing so).

DECEMBER 2013 y AZ CPA

15

Step 2 — Decide on your advertising medium The question to ask yourself is, “Where would I look if I wanted this job?” Below are a few options and my personal opinion of each.

Newspapers —This avenue is typically fairly expensive and not very focused on business professionals.

Careerbuilder — Fairly expensive but you can buy in bulk and save huge.

It is an excellent resource for your target market and you are able to instantly change your advertisement as much as you want (because we all have that kind of time). There are also tools like ensuring that prospective candidates verify that they meet certain attributes (educations, experience etc.) before being able to apply.

Careerbuilder Resume Database— Very expensive but an excellent search mechanism to help find the right candidate vs waiting for him/her to apply.

Craigslist—Cheap and sometimes free but not very focused on professional positions. Also, your listing becomes buried pretty quickly. It’s worth a try if your other endeavors haven’t produced.

Referral Plans—Developing and internally advertising a referral plan is awesome. We’ve offered as much as $500 for a successful referral that stays on for six months or longer and have had great success. Employees who come into an organization via referral have immediate buy-in and a mentor already in place.

Periodicals—Industry magazines are sometimes expensive but are extremely focused on your target market and may save you a good deal of time reading unqualified resumes.

Step 3 — Prescreening The first part of this is the resume review. Are they a job hopper? Do they have the experience you are looking for? Is there something in their resume on top of education and work? If you are looking for an outgoing employee who will work well with clients and bring some business, you may want someone with more to his resume

16 AZ CPA y DECEMBER 2013

than his 8 to 5 obligations. Read how they describe their roles within the organizations they’ve worked with in the past.

If they’ve worked at an organization that you or someone you know has worked with, see if they can come up with some inside information on the candidate without exposing them to their current employer. Inside information is typically the most valuable you’ll find.

If you are serious about investing in the best possible candidates, then you’ll definitely want to further screen them using mechanisms like personality profiles (DISC) and/or more cognitive testing like the Wonderlic tests (www.wonderlic.com). Tests like this are not typically free but can give you a world of insights in to how (and how well) a prospective candidate thinks.

The DISC test site that our candidates complete prior to a final interview provides us with about 30 pages of information on not only the candidate’s personality type but how best to manage them and in what situations they’ll do either better or worse. This is invaluable information if you wish to find that perfect candidate.

Step 4 — Interview process When it comes to interviewing, I would recommend having the candidate interview with more than one person or group. This allows you to get additional feedback and discovery from the candidate but to also expose the candidate more to your organization.

You should have a prepared list of questions designed to ensure the candidate is the right fit for your group. Ask questions designed to bring out their character and values, as well as their capabilities and thought process. Make sure your most important questions are open-ended questions that can’t be validly answered with a “yes” or “no.”

Don’t be afraid to give the candidate a story problem or riddle just to see how they think through their answer (you can find some great ones by googling “mensa test”). Note: it’s more important to review the thought process vs

whether the candidate got the correct answer.

The most effective means in determining if the candidate’s past performance matches your current needs is to dig into their answers. For example, if they say they managed a group of five people, ask what that means? Did they do the reviews? Hire & fire? Review work? Exactly what did “managed” mean? Or, if they led a large project, ask them what specific leadership actions did they perform on the project?

If the candidate states they are great at Excel, ask them about specific skills such as charting, pivot tables, data cubes and macros. See what they know and ask for examples of their expertise on those tools.

Also imperative is to ask for questions from the candidate. The main purpose of this is to determine the candidate’s preparation and interest.

If they only ask about benefits, that will let you know they didn’t do any homework on your organization and are just looking for a job.

Step 5— Final analysis Once you get to the final candidate(s) it’s time to check references and do some soul searching. Pull the group of interviewers together and see what their impressions were and what they learned. Combine their feedback with what you saw, the results of the personality/cognitive tests, and any references and then ask yourself the following question: “Who is the best candidate and does that candidate match my hopes for the available position?”

It’s easy to take the lazy way out and convince yourself that a marginal candidate is good enough, but trust me, that kind of thinking typically backfires and costs you much more work and frustration in the future. If no candidate matches your expectations, it’s time to go back to Step One and try again. It’s AZ CPA the right thing to do.

Thomas Maricle, CPA, is director of information at CCS Presentation Systems.

He can be reached at tmaricle@ccsprojects. com.

The New IRS Repair Regulations — Something for Everybody

by Daniel Johnson

On Sept. 13, the Internal Revenue Service published new regulations on what have become known as the repair regulations. These regulations are focused on the tax treatment of non-inventory tangible property including expenditures made to repair, improve and rehabilitate tangible property (i.e. buildings, equipment, and material and supplies). These new regulations apply to tax years beginning on or after January 1, 2014. Businesses have the option of early adoption if they so choose.

These regulations will alter the way businesses view materials and supplies as well as what constitutes a capitalizable improvement beginning in 2014.

Materials and Supplies The connotative definition of materials and supplies envisions items similar to screws, paper clips, and other small bulk items. Under the regulations, we now have a dollar threshold that determines what constitutes a material and supply instead of simply small items.

The definition of materials and supplies now includes tangible property that does not exceed $200 nor has a useful life of 12 months or less. For items that meet the new definition of materials and supplies, they must be treated as

materials and supplies and are generally deductible when used or consumed and cannot be capitalized. Tangible property that does not meet this definition and is not used to repair or improve other property must be capitalized for federal income tax purposes and depreciated over the appropriate number of years.

There is however an election to substitute your business’s financial statement capitalization threshold (items expensed if under a certain dollar amount) in certain circumstances for the $200 limit under the de minimis rules. In order to take advantage of the de minimis rules, your business needs to have a written capitalization policy in place at the beginning of the tax year and have that policy followed on your

financial statements. If your business has a capitalization policy, then you may substitute the amount used in your financial statements not to exceed $500 per invoice (or per item as substantiated by the invoice). However, if your business has an audited financial statement and a written capitalization policy in effect at the beginning of the year, then the business may increase that amount up to $5,000 from $500.

For those businesses who elect to take advantage of the de minimis rules, they will now have to scrutinize invoices to calculate a per item amount to see which items are subject to the de minimis rules and which items must be capitalized. If they elect the de minimis rules, they must treat all tangible property that qualifies under the de minimis as a deductible expense on their financial statements and tax returns. The de minimis rule also requires businesses to deduct items when paid or incurred.

Placing property in service has no bearing on the timing of the deduction under the de minimis rules.

Normally businesses have not drilled down to specific items on an invoice in determining whether an item must be capitalized or can be expensed. For example, in the past, if you had received an invoice for $20,000 for equipment purchases you may have simply capitalized the expenditure because it was a large dollar amount. With the new regulations, you want to look at each item on the invoice and not the gross invoice for purposes of capitalization.

Capitalization Policy The repair regulations do not specify what must be contained in the capitalization policy aside from it must be in place at the beginning of the tax year and the business must treat the amount as an expense on its financial statements. While there are no specific requirements, an IRS agent should be able to understand what the business is doing by reviewing the capitalization policy. As long as your capitalization policy does not exceed the threshold in the repair regulations, you can follow the treatment of tangible property

DECEMBER 2013 y AZ CPA

17

Jacqueline Beardsley Becker Alum

You’re taking the CPA Exam because you know what passing will mean not just to your career but your life.

Becker Professional Education knows too. Everything we do is done to prepare you, to equip you, and to empower you – which is why Becker students pass at double the rate of non-Becker candidates.* In the past 50 years, over 400,000 candidates have prepared for the CPA Exam using Becker’s CPA Exam Review. We’re confident we can do the same for you.. So go with the leader. Go with Becker. Then go conquer that world out there – like you know you can.

Arizona Society of CPAs members receive $300 off** the full course tuition.

To learn more, contact Lori Reed at lreed@becker.com. ®

*Becker Professional Education students pass at twice the rate of all CPA Exam candidates who did not take a review course from Becker, based on averages of AICPA-published pass rates. Data verified by an independent third-party research firm. **This offer valid only on complete, four part course tuition price and cannot be combined with any other offers. ©2013 DeVry/Becker Educational Development Corp. All rights reserved.

18 AZ CPA y DECEMBER 2013

becker.com

If you have a preexisting written capitalization policy, perhaps now is a good time to review it and make sure it is meeting your needs.

on your financial statements for your tax return.

Your business’s capitalization policy should make sense given your particular facts and circumstances. A capitalization policy can be customized and have different thresholds for different types of assets. For example, if you have an audited financial statement, your policy could capitalize any computer over $2,500 but expense any small machinery costing less than $5,000.

You can also have a per item threshold that is overruled if the total purchase exceeds a specific dollar amount (i.e., you deduct all computers costing up to $2,500 unless your total purchase exceeds $10,000). Your capitalization policy limits can also exceed those in the repair regulations. If that is the case, you will need a mechanism to capture all the items that cost more than $5,000 (or $500 if you do not have an audited financial statement) and less than your current capitalization threshold.

While there may be some opportunities to simplify the differences between treatment of tangible property on the financial statement and treatment on the tax return, you must carefully consider the impact any change in your capitalization policy may have on your financial statements. Some of the nontax considerations could include debt covenants, distributions to owners based on financial statement income, and sophistication of the person entering the expenditures in your financial system.

If you have an unwritten capitalization policy, you will need to memorialize that policy before the beginning of

the taxable year. If you have a preexisting written capitalization policy, perhaps now is a good time to review it and make sure it is meeting your needs. If you do not have a capitalization policy, put one in writing at the beginning of the taxable year, otherwise you may have to capitalize all tangible property costing more than $200 and lasting more than 12 months.

Improvements A taxpayer must generally capitalize an amount that improves tangible property if the amount results in a betterment, adapts the tangible property to a new or different use, or restores the tangible property. These tests focus on what the expenditure does and often when the expenditure occurred. Prior to these rules, the deciding factor of whether to capitalize an expenditure, especially as they relate to buildings, was often the dollar amount. For example, you may have capitalized a $50,000 expenditure to replace the

rubber membrane on a commercial roof because it was a large dollar amount.

Under the regulations, replacing a rubber membrane with a comparable rubber membrane is a deductible expense regardless of the dollar amount. That $50,000 expenditure mentioned above is now a deductible expenditure which will require businesses to think differently about capitalizable improvements.

In conclusion, the new regulations have many “taxpayer” friendly provisions and provide clarity to capitalization requirements. In addition, the rules are probably more liberal in allowing a repair and maintenance deduction.

However, to be able to take advantage of these rules going forward, more detail will be needed to accurately determine whether an expenditure is a deductible repair or maintenance expense or capitalized as an improvement. Gone are the days of judging an expenditure simply by the dollar amount.

Whether you are in industry or are a tax or audit professional working with clients who have capital assets, it is important that you either learn about the new rules or have an advisor helping you. There are great opportunities here for tax planning and tax savings, but hurry … certain steps need to happen before Dec. 31, 2013 to take full AZ CPA advantage.

Daniel Johnson is a senior tax associate at Eide Bailly LLP. He can be reached at dljohnson@eidebailly.com.

Arizona’s best resource since 2000 for

Cost Segregation Studies (480) 963-2872

costseg@costsegstudy.com www.costsegstudy.com

DECEMBER 2013 y AZ CPA

19

Looking for an Intern?

Top five reasons to hire a community college student as an intern — by Barbara Gonzalez, CPA How would you like to have extra help during tax season to organize paperwork, file returns, enter data into tax software, or make appointments?

Would you like to have someone with basic accounting knowledge assist you with write-up work, payroll taxes, reconciliations or sales taxes? Does your company need more help with accounts receivable and accounts payable? Have you ever considered hiring a community college student as an intern? Many community colleges have internship programs to assist you in finding the perfect intern for your company. So why hire a community college student as an accounting intern?

Reason #5: It will lower your costs Save time and money by letting the community college help you find the perfect intern. Your internship can be advertised at the school. The faculty will then choose the most qualified students after reviewing their resumes. And then the resumes will be given to you for interviews. You can also save on payroll costs because interns are looking for experiential learning, thus they are less expensive than a full-time employee. Another option is an unpaid internship. Students can earn college credit working as an intern. This is a great way to assist you with your accounting needs, while providing students with an excellent real life experience in the field of accounting.

Reason #4: These students have skills Community college students are already applying cost-benefit analysis. They are getting an excellent education at a much lower price than they would receive at other educational institutions. Students can take that understanding and apply it to your business. They have also learned time management because many community college students work full-time and go to school full-time and still earn good grades. These students have learned to set priorities — skills needed in the accounting profession as you try to juggle multiple clients and meet deadlines.

Reason #3: You need employees with an Associate’s degree Maybe you think that you are only interested in students that are working on a Bachelor’s Degree in Accounting and can one day work as an accountant in your firm or company. Did you know that a large percentage of community college students transfer to four-year universities to earn their Bachelor’s degree? You are getting these students as interns before other companies have a chance to hire them from the university. Your company may not only need accountants with four-year degrees. You may also need bookkeepers, accounting clerks, and payroll professionals. These are perfect jobs for students who are seeking an Associate’s Degree in Accounting. This is also the perfect time to “test drive” these future accounting professionals before you get into a full-time employment commitment. If you hire them as an intern now, and they are a perfect match for your company, you can transition them to full-time once they graduate. Or when the intern graduates, you could refer them to one of your clients. Your client has now received a trained bookkeeper, and they will love you for it.

20 AZ CPA y DECEMBER 2013

Reason #2: They are receiving an excellent accounting education Instructors at community colleges are dedicated professionals with both academic and real world knowledge.

Many of these professors are currently working in the accounting profession and provide their students with real life examples. This is used to compliment the accounting theory learned in the traditional classroom.

Community College students take the same first three core accounting courses that are taken at a university; this includes both financial and managerial accounting. Some students may choose to concentrate in accounting or earn an accounting certificate. If so, they may also complete courses in computerized accounting, individual income tax or payroll/sales/property taxes.

Reason #1: You want to pay-itforward Remember when someone helped you along the road in becoming an accountant? I was an intern in a CPA firm and am forever grateful to those partners for taking a chance on a college student. By hiring an intern, you are mentoring a future professional accountant. You are passing on your knowledge in tax, audit, compilation, valuation, and much more. You are teaching these students how accounting is supposed to be done. You are training future employees early, the way you want things done. You are not only teaching them accounting, but also professionalism, ethics and networking skills. You are contributing to the future of the accounting profession and fostering the next generation of accounting professionals.

You can always use more help.

There is always too much to do and not enough time. Call the accounting department at your local community college, so that they can help you find the perfect intern and you can be a mentor to the next generation. AZ CPA Barbara Gonzalez, CPA, is accounting faculty at South Mountain Community College. She can be reached at barbara. gonzalez@southmountaincc.edu.

2014 Arizona Tax Guide

Order the only comprehensive guide on Arizona taxes Authors: Ira Feldman, Pat Derdenger and Ed Zollars New legislation this year: The Arizona Income Tax Guide will provide updated information on significant changes in Arizona law first effective for 2013 returns including:

•Arizona’s new subtraction for certain long-term capital gains

•Arizona’s partial bonus depreciation rules

•Arizona’s §179 conformity The Sales and Use Tax Guide includes new information on:

•House Bill 2111 – Significant sales tax simplification changes and reporting, including new contractor rules

•House Bill 2535 – Elimination of the “permanent attachment” test The Arizona Tax Guide includes the following guides: Arizona Income Tax Guide Arizona Sales and Use Tax Guide Arizona Personal Property Tax Guide Arizona Unclaimed Property Guide

Pre-order by Dec. 16, 2013 and save Order and learn more about the guides at www.ascpa.com

Spiral-Bound Book: Pre-Order by Dec. 16, 2013 ❒ Members of ASCPA, Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $79

❒ Nonmembers: $99 After Dec. 16, 2013 ❒ Members of ASCPA, Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $89

❒ Nonmembers: $109 Electronic PDF:

❒ Members of ASCPA, Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $79

❒ Nonmembers: $99 *Call (602) 324-4743 for special pricing on orders of five or more.

Name ___________________________________________ Company ________________________________________ Address ________________________________________ City ___________________State _____ Zip ___________ Phone __________________ Fax ____________________ Email ____________________________________________

❒ CPA ❒ Attorney ❒ EA ❒

Method of Payment: ❒ Check ❒ VISA ❒ MasterCard ❒ American Express Name on Card ___________________________________ Card Number ____________________________________ Exp. Date ____________ Amount $ ________________ Other: ___________________ Signature of Cardholder__________________________

Please return this form and payment to:

Arizona Society of CPAs 4801 E. Washington St., Ste. 225-B Phoenix, AZ 85034 Fax credit card orders to: (602) 252-1511

Sales tax, 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.

DECEMBER 2013 y AZ CPA

21

Information Security: It’s Not Just for Large Companies Anymore

by Rebecca S. Pearson

Despite the constant barrage of news media reports on data breaches and network attacks, it is easy to believe that only the TJX’s and Sony’s of the world are at risk for a breach of sensitive customer information. The reality, however, is that small organizations experience just as many if not more incidents than their large counterparts. For example, a recent survey, which included 47,000 reported security incidents, found that less than half of the data breaches impacted larger organizations. 1 Although one would expect that outside attackers would target large, data-rich companies, the majority of network attacks are opportunistic.2 Smaller and sometimes cash-strapped companies typically don’t have a dedicated IT team or sufficient resources to implement state-of–the-art security, unlike a multi-billion dollar corporation. Outsiders are looking to grab valuable data quickly with minimal effort and thus are more likely to exploit an easy target.

An additional distraction from the issue is the focus on hackers as the common threat. Data breaches, however, are equally the result of insiders, whether intentional or not. A recent study of paid cyber claims found that the most frequent cause of loss was a lost or stolen laptop or mobile device.3 Rogue employees also made the top five.4 Employees are already inside the firewall and clearly have the potential to access the information at risk. Regardless of whether an employee intentionally steals data or inadvertently discloses it, the consequences of an internal breach can be just as significant as an outside attack. Although computer software is constantly evolving, it still does not have the ability to identify a malicious or inattentive employee as part of the security program.

But what impact does a data breach really have on a company? Putting aside the obvious reputational harm to

22 AZ CPA y DECEMBER 2013

a company, there are hard dollar costs associated with a data breach. While the actual amount varies among the surveys currently published, a company will incur, at a minimum, expenses to conduct a forensic investigation to determine the source and scope of a breach, legal costs to determine a company’s obligation related to disclosed data, costs to notify impacted individuals if required by a state, federal or international statute or regulation, costs to offer credit monitoring to impacted individuals as needed, and public relations expenses to guide an organization through any negative publicity. These are the immediate costs after a breach and do not take into account any liability that may arise after the incident, whether it be a regulatory investigation of the circumstances surrounding the breach or litigation from a customer alleging harm.

The picture is clear – a data breach poses a risk of significant expense and

possible liability. Information security has to be a priority for an organization of any size. The best way to prevent, or at the very least postpone, a breach is to take proactive steps to protect your organization. Even without a dedicated IT or risk management team, here are some steps smaller organizations can take to help protect their data: Map your data. The only way you can protect data is to know whether you have data that needs protection, and if so, where it is kept. The goal is to produce a high level description of the sources of information, where this data resides, what existing security measures have been applied, who is using this information and why, and in what format it is retained. Once you know the information that is coming into your organization, you can appropriately classify its sensitivity and apply proper security measures.

Have an incident response plan.

The impact and cost of a breach can be reduced if an organization has a plan in place to address it. There’s no question that a company will pay more for outside help if they start engaging vendors after the breach has already occurred.

Conversely, an organization can save money by establishing a core incident response team that is assigned specific roles, vetting and engaging vendors prior to an incident, and conducting a pre-breach assessment to determine security shortcomings and addressing them. Most importantly, though, is to practice the response plan. The strategy may look great on paper, but it is only valuable if it can be effectively executed.

As with any new skill, continued practice is the only way to ensure success.

Train your employees. An organization can only function through its employees. Implementing information security policies and procedures without taking into account these employees is the fastest way for those initiatives to fail. By engaging your employees to actively play a part in information security – and understand why information security is important – it is far more likely that the policies and procedures will be followed. Providing training on

a regular basis can ensure that your employees are part of the solution rather than the cause of a breach.

The risk of a breach can be reduced through a proactive approach to risk management and information security.

In conjunction with this approach, transferring the risk of litigation or significant breach-related expenses is also possible. Although there are a myriad of names, a network security and privacy liability insurance policy, often referred to as “cyber” liability, can provide coverage for these types of incidents.

This policy combines third party liability with first-party reimbursement for breach related expenses. As the product offering has matured, premiums are far more reasonable than they were even a few years ago and the underwriting process has been streamlined. It’s easier than ever for organizations to consider the coverage; however, companies need to be vigilant as the product offerings vary greatly. It is important to understand what you are really buying and how the policy will respond to your specific exposures.

Additionally, some companies or professionals that purchase errors and omissions policies believe those policies will respond to these types of incidents.

While there could potentially be some coverage for a liability claim if a breach occurred in the course of providing professional services, those policies typically do not provide coverage for regulatory actions and related fines and penalties or reimbursement for breach expenses. Further, professional liability policies may have a higher retention than a network security and privacy liability policy, and the professional liability limits could be diluted by responding to a breach incident. Thus, comprehensive coverage is primarily only available with this specialized product.

Regardless of the approach that your company takes, information security is an issue that cannot be ignored. There are more resources available than ever before and any number of vendors and service providers can help smaller organizations identify and achieve their

information security goals. And if risk transfer is part of that goal, a knowledgeable insurance broker can guide you through the sea of network security and privacy liability policies currently available to pin-point one that addresses AZ CPA your needs.

Rebecca S. Pearson is national practice leader at the Professional Risk Group of Wells Fargo Insurance USA, Inc.

Endnotes 1. Verizon RISK Team, 2013 Data Breach Investigations Report (www.verizonenterprise.com/ DBIR/2013, 2013), 5 (From a ample size of 47,000 reported incidents and 621 confirmed data breaches, 38% of breaches impacted larger organizations).

2. Ibid. at pg. 6.

3. Mark Greisiger, “Cyber Risk Claims: A Review of Industry Losses Paid Out” (NetDiligence, 2013).

4. Ibid. at pg. 7.

28th Annual Governmental Accounting Conference Feb. 21 at the Arizona Biltmore Hear from two officials from the Governmental Accounting Standards Board at this year’s conference: David Vaudt, the new GASB Board chair, and David Bean, director of research and technical activities.

Get the latest Arizona government news with a general session on the impact of new healthcare requirements and AHCCCS, and ASU President Michael Crow will discuss attracting businesses to Arizona in his luncheon keynote.

The conference also offers you the ability to customize your experience with choices of three different sessions for each afternoon breakout. Some of the topics include:

• Ethics

• IT & Cloud Computing Security

• New Pension Reporting Requirements

• Panel on Alternate Funding Sources Special Thanks to Signature Sponsor: Heinfeld, Meech & Co., P.C.

Learn more at www.ascpa.com, click on CPE, then Conferences.

DECEMBER 2013 y AZ CPA

23

Inside or Out: Options for IT Disaster Recovery Planning

by Michael Nyman, CPA

Disasters, both natural and manmade, can seriously disrupt routine business operations. Regarding information technology, the common belief is not if you will experience a disaster, but when. By developing a comprehensive IT disaster recovery plan, a business can survive the challenges that accompany practically any kind of crisis, from a flood to a fire.

Perhaps the most important decision to make about disaster recovery planning is whether to use in-house or external expertise to develop and execute a strategy.

Several important considerations are involved in this decision.

In-House IT Disaster Recovery Larger organizations often use internal resources for disaster recovery, as this can be economical. Capitalizing on existing infrastructure and IT staff members’ familiarity with the organization’s priorities, hardware, and software can provide the foundation for an effective and affordable plan.

Committing to building an in-house recovery plan means a long-term commitment to operating one or more disaster recovery sites. It requires capital investment for equipment, trained personnel, and a reliable IT team.

Critical considerations include: • Staff familiarity with hardware and software • Risk assessment • System and storage capacity • Staff training and retention • IT maintenance agreements.

Typically, in-house advantages rely on staff sophistication, a true understanding of data, and how data can be recovered.

Among the benefits of an in-house plan are: • Control of disaster recovery management • 24/7 on-site access to information • Proven return on investment.

It’s important to know that an in-house disaster recovery plan can take more than 90 days to prepare before launching. It takes time to design and deploy the computing platform, evaluate and procure hardware and software, install and test features, and train staff. Investments in IT infrastructure and personnel also may be needed.

Despite the challenges of launching a disaster recovery plan, organizations may find that an in-house model is preferable. For example, as a result of tighter rules and regulations including HIPPA privacy requirements, some businesses may prefer to deploy in-house disaster recovery solutions.

Outsourcing as a Solution Outsourcing can be an attractive disaster-recovery approach for small and

24 AZ CPA y DECEMBER 2013

medium-sized businesses that lack internal resources. For certain organizations, the benefits and advantages of outsourcing can be summarized in three words: quick, simple, and affordable.

Perhaps the most challenging task regarding outsourcing is the selection of a service provider. When selecting an external IT disaster recovery partner, it is important to consider: • Integrity and experience • Vendor proximity • End-to-end solution capabilities • Skill levels • Resource capabilities • Technology flexibilities • Customization • Data Security In contracting for IT disaster recovery, all possible scenarios need to be addressed. For example, who will operate the recovery site and execute the plan? Will the service provider or the organization be in charge? The leader must be fully trained to respond to a disaster. Who will make up the support team? What is the protocol? What is the optimal recovery time?

Following are facts related to outsourcing disaster planning: • The time to prepare an outsourced disaster recovery plan for deployment is 30 days or less, including application design and preliminary training of end users.

• Restoration of services is typically completed in 48 hours or less.

• Because data transfer is accomplished via the Internet, networking solutions can be affordable – sometimes totaling only a few thousand dollars a year.

• Internal tape backup solutions take longer and may not capture all of the data needed compared with more sophisticated outsourced capabilities.

A Hybrid Approach Recent trends have resulted in a hybrid approach, utilizing a mix of outsourced resources with an in-house plan. A popular approach is the implementation of cloud-based backups.

Data necessary for the recovery phases

of the plan is stored at Internet accessible points. Once a company has reestablished their connectivity to the Internet, data can be restored or directly utilized from the cloud location. This combines the control of the in-house plan, with the accessibility and affordability of outsourced providers.

Regardless of whether an IT disaster recovery plan is based in-house or is outsourced, it needs to be inclusive. Infrastructure, leadership, staff, policies,

and procedures must be included in a detailed, continually updated written plan— and most importantly, communicated to everyone involved on a semiannual basis.

AZ CPA Mike Nyman, CPA, CISA, CISSP, CITP, CRISC is an IT security senior manager in the Phoenix office of CliftonLarsonAllen LLP. He can be reached at michael.nyman@claconnect. com or (602) 604-3524.

Highlights of Board of Directors’ October Meeting Among other actions at its October 23, 2013 meeting, the ASCPA Board of Directors reviewed the following: Consent Agenda The consent agenda, which included the board minutes and financial statements, was approved.

Dialogue with AICPA’s G-400 Relationship Manager Ed Dupke shared the demographics of the G-400 firm group (five AZ firms) and various trends in the profession.

Put us to work

for you You can rely on SCF Arizona to help

Engaging CPAs: Political Contributions Cindie Hubiak led a discussion on the board’s approach to raising contributions to the Society’s PAC and ways to raise awareness of our advocacy efforts with the membership.

you meet your workers’

Mesnard Income Tax Simplification Task Force Update Peggy Ullmann gave an update on the approach and process the task force is taking in analyzing Arizona’s individual income tax structure.

for injured workers while

AICPA Council Meeting AICPA Council members and Cindie Hubiak updated the board on the AICPA’s Council meeting. Arizona’s Behind the Scenes programming and Life Member Linda Blessing were highlighted in the program.

Approval of Life Member Rick Goldenson was approved as a life member of the ASCPA. He will be honored at the ASCPA Annual Meeting on May 14, 2014.

comp insurance needs.

At SCF we offer coverage protecting your bottom line. It’s a simple idea: Safe businesses save money.

Let SCF show you how.

Visit scfaz.com to learn more or to get a Quick Quote.

A Day in The Life Craig Van Slyke, Leslie Stackpole and Jim Buhr shared a view of the challenges and joys they experience in their lives and jobs on a day-to-day basis.

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.

Get a Quote 1.888.706.4070 En español 602.631.2302 scfaz.com

DECEMBER 2013 y AZ CPA

25

Classifieds Business Opportunities/ Practices for Sale OUR CPA FIRM IS LOOKING TO BUY BUSINESS CLIENTS — With 30 years in the valley, we are a well-established and growing practice who seeks business clients of every level. While our main firm is in Scottsdale, we have satellite offices in Phoenix and Glendale. Our firm is experienced at transitioning new clients after a sale and welcome CPAs looking to retire.

Contact craig@awcpas.com or call 480990-2727 with any questions about how we can help you.

WANTED —ACCOUNTING FIRM OR PARTNERSHIP—Are you looking to sell your Accounting Practice or Partnership in your firm? I’m a CPA looking into buying an Accounting practice or partnership in an existing firm. E-mail me at biashara365@ gmail.com.

SMALL PRACTICE IN TUCSON?—If you have a small practice in Tucson and would like to sell, we are interested in talking to you. Please send an email to tom@lavoiecpa. com with your name and phon.

Employment GOVERNMENTAL AND NONPROFIT STAFF I OR II AUDITOR —William Dobridge, CPA, PC, a Governmental and nonprofit audit firm based in Mesa, Arizona, is looking for a motivated, customer service orientated individual to grow with our firm.

Experience in Governmental and Non-profit accounting is preferred. Competitive salaries and excellent benefits are provided. In-state travel is required. Contact Dallas Siler at dallas@dobridgecpa.com.

RETIRED OR PART-TIME CPA—Scottsdale Valley ENT, PC—Ear, Nose and Throat practice (controller and 2 accounting staff) seeks to affiliate with retired or part-

In the Black ... Adventures in Accounting

time CPA for reviews, analysis of workflow and internal controls, and personal development. Eight to 10 hours monthly; extremely flexible with scheduling. ttucker@azvent.com.

SENIOR TAX ACCOUNTANT—Continue your career with a market-leader firm in beautiful Western Colorado! Dalby, Wendland & Co., P.C. is seeking a Senior Tax Accountant to join our Glenwood Springs office. Qualified candidates will have solid skills in income taxation and a strong accounting background; 2-5 years experience in public accounting desired. CPA or EA preferred, but not required. DWC’s strong team culture and quality-focused work environment provides challenging opportunities and growth throughout your career.

Our firm provides a good work/life balance, competitive compensation, a comprehensive benefits package, and opportunities for advancement. To apply, email your resume to HR@DalbyCPA.com.

Concept: Heidi Frei Illust.: Jack Gannon

Give back to the profession - donate to the AZ CPA Foundation 26 AZ CPA y DECEMBER 2013

SENIOR TAX ACCOUNTANT — Mesa, AZ CPA firm seeking a senior tax accountant to prepare individual, partnership, trust and corporate returns. Strong income tax, accounting, analytical and communication skills required. Minimum of five years recent income tax experience with a CPA firm desired. A working knowledge of Lacerte, Quickbooks and Excel preferred. CPA license required.Full-time preferred, but will consider part-time (four days a week). Flexible work hours, competitive salary, health and retirement benefits, paid vacation and CPE. E-mail resume to craig@satzcpa.com or fax to (480) 464-1465.

Tax Accountant —Growing CPA firm in Scottsdale seeks a Tax Accountant with 2-5+ years of recent CPA firm experience to join our team for preparation of business and individual income tax returns. We offer a paperless work environment, opportunity for growth and advancement, and competitive salary and benefits. Experience with ProSystems fx and QuickBooks a plus. Interested candidates may submit a resume to mark. schneider@epsteinreynolds.com.

TAX MANAGER—Local Tucson, CPA firm

is seeking a tax manager. The position requires seven+years of recent tax experience in public accounting and a CPA license.

Strong technical, communication, customer service, sales and marketing skills are highly desirable. You will review and prepare individual, partnership, trust and corporate tax returns; research tax issues and provide tax consulting services for small to medium sized businesses and wealthy individuals.

We offer a competitive salary, flexible work schedule and comprehensive benefits package. Please apply by sending your resume to tim@flowersrieger.com.

TAX MANAGER OR SENIOR MANAGER: A PATHWAY TO EMPOWERMENT AT REDW—As a Tax Manager or Senior Manager you will work under the direction of the Tax Principals, performing related duties while increasing efficiency and elevating our client experience. You will influence organizational development through review of systems and processes, identifying refinements to establish best practices. Become a trusted advisor by demonstrating the ability to complete returns with limited direction. Your leadership skills will promote a successful environment that

encourages personal growth, teamwork and accountability. Firm growth will be directly impacted by your ability to expand the business by establishing new client relationships and building client trust. Learn more at www. redw.com/careers.

Tax Professional—Hanagan CPA, PLLC — Growing Scottsdale CPA firm is seeking experienced tax professionals to add to our team for the upcoming 2013 filing season. Good potential to move into a full-time permanent position. Recent preparation or review experience in a paperless environment required. CCH ProFx experience preferred. Submit resumes to contactus@hanagancpa.com. Compensation DOE. Principals only, no recruiters.

Office Space Tucson CPA Firm (North/Central)has an office share/income tax per diem work arrangement available for an experienced (5+) years CPA or EA. We use Quickbooks and Lacerte tax software. Partnership potential for the right person. Please email your responses to tucsoncpa1@aol.com.

Show clients

how to save with new tax incentives.

Report to them that for 2013 there are Increased Tax Deductions for Arizona taxpayers contributing to a 529 plan. Up to $4,000 for married filers and up to $2,000 for single filers.

A 529 plan is designed to provide a parent, grandparent, family friend or other caregiver an opportunity to save for a child’s education within a tax-deferred savings vehicle. Learn more at AZ529.org

Smart. Easy. Affordable

DECEMBER 2013 y AZ CPA

27

Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034

PRSRT STD U.S. Postage PAID Phoenix, Arizona Permit No. 952 ADDRESS SERVICE REQUESTED

Health Care Reform—You have questions, we have answers!

Along with guaranteed acceptance for health insurance under the Affordable Care Act, there are multiple ways to purchase coverage.

For those who qualify for a tax subsidy because they earn less than 400% of the Federal Poverty Line, the “Marketplace” is the mandatory enrollment vehicle. But how does someone know which plan to buy?

How can they know if they qualify for a subsidy? How much will it be? Are there any other benefits to qualifying for the subsidy? Which insurance company is the right choice? How do they access the Marketplace (previously known as the Exchange)?

The Argus Group is committed to the insurance business, and we have answers to all of these questions and more. If you and/or your clients are looking for guidance in this new world of health insurance, we would love to be the company that helps you navigate the storm.

Please feel free to give us a call at (602) 863-0080. We are here to help.

28 AZ CPA y DECEMBER 2013