AZ
CPA FEBRUARY 2013
The Arizona Society of Certified Public Accountants
Highlights of the American Taxpayer Relief Act of 2012 The Case for Mandatory Partner Retirement Firm Leadership — The Next Generation • Dumbing Down Your Smart Phone •
Encouraging Innovation www.ascpa.com
2 AZ CPA y FEBRUARY 2013
connect
Communicate • Collaborate • Contribute The new, interactive online community only for ASCPA members
If you were on Connect — you were one of the first people to know about the changes in the American Taxpayer Relief Act of 2012 from experts like Ed Zollars. “As a member of the ASCPA, Connect has become my go-to tool. As the chair of the Not-forProfit Conference Committee, Connect provided a central location to easily communicate our progress without all of those pesky, in-box filling group e-mails. We planned our conference in record time and calendars and agendas are accessible to all Committee members. Connect has placed all of the resources I need in one convenient location. In just a few minutes a morning, I am able to scan the home page for new blogs, relevant discussions, or upcoming CPE and networking events. I may dash off a note to one of my colleagues or just
Over the past month, Connect Discussion groups had 67 new discussion questions posted, as well as lots of great answers. Find out what you’ve been missing — get your questions answered and get Connected today!
check to see if I’m still the most active user. I invite you to join me on the active list and see how beneficial Connect can be
Join the discussion at: http://connect.ascpa.com
to you.” —Sarah Zelhart, Controller, Tostitos Fiesta Bowl and Buffalo Wild Wings Bowl
FEBRUARY 2013 y AZ CPA
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AZ
CPA FEBRUARY 2013
Volume 29 Number 2
The Next Generation of Leadership
17
As current leadership in firms gets closer to retirement age, a transition plan needs to be in place to bring up the next generation of leaders. by Jim Boomer
Dumbing Down Your Smart Phone
19
Are You Talking Your Way Out of Innovation?
21
Are Apps running your life? Take control of your free time and your life by evaluating the way you use your phone. by Roy Keely
Features Highlights of the American Taxpayer Relief Act of 2012
9
Congress passed this Act on Jan. 1 to avert going off the “fiscal cliff.” Find out how this impacts the Internal Revenue Code. by Ed Zollars, CPA
The Case for Mandatory Partner Retirement
13
One of the biggest topics in firms today is whether a firm should set a mandatory retiremement age in its partnership agreement. by Gary Adamson
People in your organization may be killing innovation without even knowing it. Find out how and what you can do about it. by Holly Green
Columns & Departments 6
Chair’s Message by Armando Roman, CPA
7
Focus on Members
8
In the Black ... Adventures in Accounting
23 Classifieds Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, Arizona 85034-2021 www.ascpa.com www.ascpa.com
4 AZ CPA y FEBRUARY 2013
AZ
CPA
PROPERTY TAX APPEALS DONE RIGHT
The Arizona Society of Certified Public Accountants
President & CEO
Cindie Hubiak
Editor
Patricia Gannon
Countless petitions, millions in taxes recovered, many happy clients
“We do the work, you get the refund”
Copy & Advertising Deadline The first of the month one month prior to publication date. Board of Directors Chair Chair-Elect Secretary/Treasurer Directors
Armando Roman Karen Abraham Anita Baker Rob Dubberly Debra Johnson Jimmy Lovelace CW Payne George Raysik Phil Reckers Craig Robb Andy Spillum Leslie Stackpole Elva Vivas Corrine Wilson Kevin Yeanoplos
Immediate Past Chair Mark Anderson AICPA Council Members Jim Buhr Rick Goldenson Chapter Presidents Southern Chapter Northern Chapter Southwest Chapter North-Central Chapter
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refund@asmrconsulting.com www.asmrconsulting.com
AXIOM
Financial Advisory Group, LLC
Flo Zenblu Jennifer Nordstrom Jayne Wright Richard Joliet
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
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Armando G. Roman, CPA/PFS MBA Managing Principal Neither AXIOM nor Armando G. Roman provide tax compliance services
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: 12636 High Bluff Dr., Ste. 100, San Diego, CA 92130.
FEBRUARY 2013 y AZ CPA
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Chair’s Message
by Armando G. Roman, CPA
Financial Literacy Financial literacy affects so much of what we do, which is why we are viewed as “financial experts” by Sarbanes-Oxley and others. Do you remember when you first learned anything about money? Or maybe the first time you remember buying something you really wanted? For me, this was buying a 35mm camera as a teenager using money earned at a summer job. It took months to earn the money, took weeks to shop for the right camera and took only a few minutes to actually spend the dollars … a good learning exercise for me. When you look at our consumer-driven society, spending creates movement in our economic engine. Spending puts fuel on the fire; it’s good for our economy. On the flip side, spending run rampant puts families in financial ruin and puts companies out of business. When outflow overshadows income, it must be government. Nowhere else can deficit spending continue as a sustainable model. Actually, it doesn’t work in government either without artificial support. To those not blessed with degrees in accounting and the breadth of financial experience we gain over time, a lot of what we understand is gravely mysterious. The AICPA allocates many resources to financial literacy, resources available to us and to the public at no cost. If so inclined, you may want to browse the AICPA’s website to order some of their no-cost materials and see what is available. Last year, my son’s 8th grade algebra teacher invited parents to come speak to her class about how we use math in our jobs. She wanted students to see practical application of math concepts used as tools in professional careers. My use of math is often limited to calculating return on investment and compounding interest over time. Simple math, yet powerful, impactful math having profound effects on a family’s financial well-being. Some students seemed more interested to know what kind of car a multimillionaire client drove rather than the size of his bankroll, although that was impressive too. By providing this opportunity to her students, this teacher may have helped ignite a spark in an adolescent’s eye. It is apparent many people need help
6 AZ CPA y FEBRUARY 2013
understanding financial matters. They need our help. Financial illiteracy is nothing new, but the problems created by it have become enormous, catastrophic, nearly crippling our economy. Basic financial training should begin in grade school. There are financial basics that we all use, regardless of occupation. Maybe not everyone needs to know how to manage a checkbook or how to safely manage a credit card as long as a smattering of a cash economy continues to exist although some level of basic financial education is absolutely necessary for everyone. In the Study Regarding Financial Literacy Among Investors (Aug 2012) as required by Section 917 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, studies reviewed by the Library of Congress indicate that “U.S. retail investors lack basic financial literacy. The studies demonstrate that investors have a weak grasp of elementary financial concepts and lack critical knowledge
of ways to avoid investment fraud.” The study went on to say “surveys also demonstrate that certain subgroups, including women, African-Americans, Hispanics, the oldest segment of the elderly population, and those who are poorly educated, have an even greater lack of investment knowledge than the average general population.” The Study pertained specifically to retail investors yet clearly states that investors “lack basic financial literacy” and have a “weak grasp of elementary financial concepts.” The ASCPA also provides volunteer opportunities to get involved in being part of the financial literacy solution. I particularly enjoy talking with kids, and getting in front of them in their classrooms. There are many resources and opportunities for you to share your financial expertise and experience with those who could use some help. If you have an interest, please contact the ASCPA and/or browse the AICPA website under the “For the Public” tab AZ CPA at www.aicpa.org.
Download your 2013 Salary Guide today at RobertHalf.com/SalaryCenter or call 1.800.803.8367.
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Collaboration
To attract the financial talent you want,
Compliance
Elizabeth M. “Liz” Johnson
Audits
In Memoriam
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Mayer Hoffman McCann promoted Jeff Hair, CPA, to audit manager.
XBRLAccounting Leadership Adviser GAAP
Focus on Members Phoenix-based CPA firm, Taylor, Duffy & Associates, PC and BeachFleischman PC, have merged. Effective January 1, the combined firms will practice as BeachFleischman PC, and Taylor Duffy’s employees, including four principals and seven staff, will join the firm’s Phoenix practice.
Heinfeld, Meech & Co., P.C. announced the promotions of Casey R. Good, CPA, and Kristen M. Conway, CPA, to senior associate.
Lohman Company hired Lisa Marie Otis and Nicole E. Lane as staff accountants and promoted Kristen L. Czarnecki, CPA, to senior and Jill Durst, CPA, to manager.
Some CPAs Do Get Their Hands Dirty
CPA Jeff Tolonen at Rugged Maniac Phoenix —”Do one of these events and you’ll be hooked. When you just run a 5K, you have time to think about the project you are working on or how to implement some change in tax law. But if you throw in a few dozen life threatening obstacles in the middle of your run, all you can think about is pushing through and staying alive. It’s kind of like tax season, but with mud and barbed wire.”
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Focus on Members Thanks to Members Who Have Contributed More Than $100 to ASCPA’s Political Efforts From Sept. 6 to Dec. 31, 2012 Sandra Akmon Bruce Beach Brenda Brandt Richard Bratt Jay Buck Deloitte Federal PAC a Multicandidate Committee Michael Drexler Jackie Eckman Farrow Revocable Trust Marc Fleischman Robert Harbour George Henderson Herb Hoffman David Hopkins Janis Isaacson Thomas G. Johnson Chad Kunze
Jimmy Lovelace Christopher Lutes Karen McCloskey Phillip McCollum, Jr. Jon Mitchell Bryan Mogensen Allen Nahrwold Dennis Osuch Dave Phillips John Prenzno Andy Ray Cynthia Schroeder Layne Simmons Joseph Tameron Cherie Wright James Wright
Legends and Leaders
Rufus Glasper, CPA, Ph.D., was the featured speaker at the third Legends & Leaders program. Cindie Hubiak and Rufus Glasper
In the Black ... Adventures in Accounting
Concept: Heidi Frei Illust.: Jack Gannon
8 AZ CPA y FEBRUARY 2013
Highlights of the American Taxpayer Relief Act of 2012 by Ed Zollars, CPA In a last minute deal to avert going off the “fiscal cliff,” the Congress passed the American Taxpayer Relief Act of 2012 on January 1, 2013, extending and modifying various provisions in the Internal Revenue Code. On January 2, the President signed the bill into law. While the law provided for numerous changes, the following are some of the changes likely to have an impact on the largest number of clients.
Income Tax Rate Changes For taxpayers with taxable incomes below $400,000 the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) rates are made permanent—or at least as permanent as anything in the tax law ever can be.
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However, the bill restores the old 39.6% marginal rate for certain taxpayers with income above what is referred to as the “applicable threshold” [IRC §1(i)(3)]. That threshold is set at:
Filing Status Applicable Threshold Married Couple Filing a Joint Return
$450,000
Unmarried Head of Household
$425,000
Single $400,000 Married Filing Separately
$225,000
These amounts will be adjusted for inflation beginning in 2014.
Lower Rates for Long-Term Capital Gains and Dividends For those who don’t remember, the Jobs and Growth Tax Relief Reconciliation Act of 2003 provided us with lowered capital gain rates and taxation of qualified dividends at those lowered rates. The capital gain rates provided by that law were set at a maximum of 15% (down from 20%) but also provided (after 2007) for a 0% rate on such income for levels of taxable income that, had the income been ordinary income, would have been taxed at a rate below 25%. The law was scheduled to revert to the pre-2003 amounts effective January 1, 2013. That would have had the following impact: • The 0% capital gain bracket would have been replaced by a 10% bracket • The 15% capital gain bracket would have been replaced by a 20% bracket • Qualified dividends would have been taxed at ordinary income rates, resulting in a maximum bracket of 39.6% for such income. The new law restores the 2003 law provisions, dodging the above problems, but institutes a new capital gains bracket at a higher income level. If a taxpayer’s income rises to the level where, had it been ordinary income it would have been taxed at 39.6%, then the maximum capital gains rate rises to 20%. Conforming changes are also made to the provisions applicable to calculating the alternative minimum tax. [IRC §55(b)(3)(C)]
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Alternative Minimum Tax Patches Made Permanent The bill does finally made a permanent change in the AMT exemption, eliminating the bi-annual AMT patch legislation we’ve seen in recent years. Unlike the prior items discussed, this change affects 2012 individual income tax returns. The exemptions for 2012 are now set to be as follows [IRC §55(d)(1)]:
Filing Status
AMT Exemption
Married Filing a Joint Return/ Surviving Spouse $78,750 Single or head of household
$50,600
Married filing separately
$39,375
These amounts will be adjusted for inflation beginning in 2013. [IRC §55(d)(4)] As well, the bill contains relief provisions allowing the minimum tax to be offset by nonrefundable credits, another bi-annual patch issue. [IRC §26(a)]
Phase Out of Itemized Deductions (“Pease” Limitation) The “Pease Limitation” on itemized deductions returns the law with this bill, though with revised limits for the beginning of the phase out of itemized deductions. Under the pre-EGTRRA law, taxpayers began to lose the ability to deduct itemized deductions when their income exceeded $100,000 (defined as the “applicable amount”). The deductions were phased out in an amount equal to the lesser of: • Three % of the taxpayer’s adjusted gross income over the applicable amount or • 80% of the amount of itemized deductions otherwise allowable for the year [IRC §68(a)] However, certain deductions are exempted from the phase-out. Those included: • Medical expenses deducted under IRC §213 • Any deduction for investment interest under IRC §163(d) • Deductions for casualty or theft losses or • Wagering losses [IRC §68(c)] As well, this provisions does not apply when computing the alternative minimum tax. Originally this provision was scheduled to return to the law in the above form for 2013 and later years. However, the new law revises upwards the applicable amount at which the phase out begins. The revised applicable amounts are:
Filing Status
Applicable Amount
Married Couple Filing a Joint Return $300,000 Unmarried Head of Household
$275,000
Single $250,000 Married Filing Separately
$150,000
The applicable amounts will be indexed for inflation beginning in 2014. [IRC §68(b)(2)] Otherwise the law will apply as it did before—that is, the three % phase-out amount and the 80% caps will still be used to compute the amount of the lost itemized deductions.
Phase Out of Deduction for Personal Exemptions Another phase-out that had temporarily left the tax law was the loss of a deduction for personal exemptions for certain high income taxpayers. [IRC §151(d)(3)]. Taxpayers had to reduce the amount of claimed personal exemptions by two % for each $2,500 (or fraction thereof) that their adjusted gross income exceeded the “threshold amount” except for married filing separate individuals who had to reduce their exemptions by two % for each $1,250. The phase-out returns to the law in 2013, but the bill revises upward the threshold amount at which the phase-out begins. Under the new law, the threshold amount will be linked to the “applicable amount” for phasing out itemized deductions. [IRC §151(d)(3)] The table below shows the old and new threshold amounts:
Filing Status Old Law ATRA Threshold 2012 Amount Threshold Amount Married filing joint $150,000
$300,000
Head of household $125,000
$275,000
Single $100,000 $250,000 Married filing Separately
$75,000
$150,000
As this amount is linked to the applicable amount under §68 for phasing out itemized deductions, the threshold amount will also end up being indexed for inflation beginning in 2014.
Estate and Gift Taxes The 2010 tax bill introduced a number of new estate tax provisions, all of which were set to expire at the end of 2012 under Section 304 of that Act. With the repeal of the sunset clause, those provisions added in 2010 now become permanent additions to the tax law. That includes: • $5,000,000 (adjusted for inflation) lifetime exemption • The “portability” provisions of IRC §2010(c) The fact that these provisions have now been made permanent will allow taxpayers to again return to estate planning without having to constantly worry about the scheduled obsolescence of the law. However, the new law did modify the rate schedule applicable to taxable estates. Under the 2010 Act, the rate maxed out at a 35% rate imposed on estates of over $500,000. The new rate schedule increases the rates for estates of over $500,000, imposing a marginal rate of 37% up through $750,000, a marginal rate of 39% through $1,000,000 and a marginal rate of 40% for values in excess of $5,000,000. [IRC §2001(c)] With the $5,000,000 exclusion that generally means the first dollar of tax actually paid in most cases will be paid at a 40% rate.
§179 Expensing Restored to $500,000 Congress acted to extend the enhanced Section 179 expensing amount of $500,000 through 2013, with the expensing amount set to fall back to $25,000 for tax years beginning after 2013. [IRC §179(b)(1)] Similarly, the beginning of the phase out of the Section 179 deduction is reset to $2,000,000 for years beginning in 2012 and 2013. [IRC §179(b)(2)] The treatment of computer software as property eligible for Section 179 treatment is extended through tax years beginning in 2013.
Extension of Bonus Depreciation The bill extends the 50% bonus depreciation provisions for assets placed in service generally before January 1, 2014. [IRC §168(k)(2)] As well, the provision allowing taxpayers to elect to accelerate AMT credits in lieu of claiming bonus depreciation is extended through 2013.
Other Changes Numerous other changes were made in the law that impact individuals and businesses. A few of those changes include: • Extension through the end of 2013 of the exclusion from income of cancellation of debt related to qualified residence interest • Extension of five-year test for S corporation built in gain through 2013 • Extension of the deduction for tuition/ fees through 2013 • Extension of the option for direct transfers from IRAs AZ CPA to charities through 2013 Ed Zollars, CPA, is a partner at Thomas, Zollars & Lynch, Ltd. and can be reached at ed@tzlcpas.com.
FEBRUARY 2013 y AZ CPA
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The Case for Mandatory Partner Retirement by Gary Adamson Baby boomers are retiring at an accelerating rate and firms are coping (or not) with the transition issues surrounding those exits. One of the biggest topics of conversation in firms today is whether the firm has a mandatory retirement age in its partner agreements. And if they do, how does the process work, what is the definition of retirement, what is the right age, what about employment after retirement, etc.? It is almost counter-intuitive that firms would want mandatory retirement ages in their agreements, when they are struggling with how to replace their partner ranks. But, the right
FEBRUARY 2013 y AZ CPA
13
The firm can always extend the date for a high energy, high output partner, but it is very difficult to reduce it for a partner for whom it is time to go.
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answer is that you need to do both in a healthy firm – both control and manage retirements and at the same time have the right people in place to succeed those retiring partners. Protect the Firm Why is it critical that your firm have a stipulated mandatory retirement age? And how do you make it work to the advantage of both the individual partners and the firm? First and foremost, you must protect the firm first, and this is more important than the interests of any individual partner. Set the Date The firm needs to control the retirement dates of the partners. In other words there should be a required age in the partner agreements when the partner will retire. There is no mystery or uncertainty. Everyone knows the date. You know when you need to begin dealing with client transition and planning for the event. You can build in a process and a schedule to make sure that it is done right. (Contrast that with letting each partner tell the firm when, or if, they feel like wanting to leave, and you can see the necessity for the control.) Be clear and define what you mean by “retirement.” Retirement is the date when the partner’s ownership interest is redeemed and the partner has transitioned his or her partner responsibilities and no longer functions in the firm as a partner with partner responsibilities and relationships.
What is the right age for a required retirement? The age itself is not as important as having the date. There are a lot of firms that use age 65 but there has been quite a bit of movement in the profession in recent years to extend that. In the ‘80s and ‘90s, the required age was trending downward to, in some cases, the low 60s or even 50s. But today, most firms are back to retirement ages of 65 and beyond to in some cases age 70. Remember that it is the fact that you stipulate an age that is important, not the age itself. Also, remember that the firm can always extend the date for a high energy, high output partner, but it is very difficult to reduce it for a partner for whom it is time to go. Client Transition If you have the required date nailed down, how do you plan as the date approaches? Assuming that, as in most firms, you have an unfunded retirement benefit that the firm will be paying to the retired partner, the asset that you will use to pay that is the partner’s client base. If you don’t retain those clients, how will you pay that retirement benefit? You won’t! The transition and retention of those clients must be part of the plan and progressive firms are requiring that a transition plan be completed by the retiring partner to receive full retirement benefits. This transition process is a difficult thing for most partners to do as it means giving up relationships that are, in many cases, very personal. But, done well and in a timely fashion, it is
the best insurance a retiring partner has that they will receive those unfunded retirement payments down the road. A two- to three-year client transition period is preferred with two cycles (client year ends) for business clients being the minimum. The point here is that there needs to be a written client transition plan with the retiring partner. If he or she completes that, then there should be no penalty or reduction of retirement benefits if a client subsequently leaves the firm. Post Retirement Employment As the retirement date approaches, the retiring partner should have less and less to do as other partners and staff in the firm assume the client responsibilities. When the retirement date arrives, the retiring partner should be able to truly retire from the firm and leave. But that rarely happens. Most firms and most retired partners will continue some form of employment, post retirement. Here is the key: the continued employment should be for specific defined duties such as review work, bringing in new clients, special projects, etc. The work is generally on a part time schedule and it is at the option of the firm. It is not continuing to do what they were doing and serving clients in a partner capacity. The retirement of our partners in a fashion that protects the firm is a critical part of succession planning. If your partner agreements do not provide guidance and requirements surrounding the age of retirement, pull them out of the drawer, dust them off and make the revisions to address this major issue. Again, remembering that it is most important to protect the firm. AZ CPA
Expanding the Role and Influence of CPAs in Organizations
Feb. 26
ASCPA Learning Center
Gary Adamson is the president of Adamson Advisory, specializing in practice management consulting for CPA firms. He is an Indiana University graduate and has extensive hands on experience as the recent managing partner of a top 200 CPA firm. He can be reached at (765) 488.0691 or gadamson@adamsonadvisory.com. For more about Adamson Advisory, visit www. adamsonadvisory.com.
FEBRUARY 2013 y AZ CPA
15
For Members Only — Reach Out to Your Fellow Members As an ASCPA member, you will receive 15% off advertising or have your ad designed at no charge.
Arizona Society of CPAs
2013 Media Kit Our Members and Their Clients Make Great Customers! ASCPA members include top financial decision-makers who are advisers to both large and small businesses. A vast majority of our members recommend products and services to their clients. Reaching out to our members is an investment in your company. There are numerous ways to reach our members.
Get noticed by announcing your promotion, a new hire, your company’s new location or maybe even an award you or your firm received in AZ CPA. (See the sample below of an actual announcement placed in AZ CPA.)
For more information contact: José M. Herrera (602)324-4741 • advertise@ascpa.com
Take advantage of the following ways to increase your business: advertising in AZ CPA magazine and the CPE Resource Catalog; event and conference sponsorships; website banner advertising; and electronic communications—such as eNews and CPE eNews.
The CPE Resource Catalog Sponsorships
AZ CPA Magazine
Website/Online Advertising Electronic Communications
For more information, call José Herrera at (602) 324-4741 or advertise@ascpa.com the differe
Delivering Solu t nce is
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Introducing Norman M Eide Bailly’s Newest endoza, G ar y Smith, Phoenix Partners: Brenda Blun At Eide Ba illy, growth t and Sean is intentiona embracin Hales
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Left to righ t seated: And y Spillum, Sean Hales, LeAnn Rud Brenda Blun olph, t Left to righ t standing: Joshua Ha Victor Puchi, yes, Rob Lesl Norman Me ie, ndoza, Ga ry Smith
The Next Generation of Leadership by Jim Boomer
We are headed toward a massive transition in leadership at firms across the country as the current leadership gets closer to retirement. Some firms have already successfully transitioned, others are preparing, and then, there are those that don’t yet have any plans in place. The transition discussion is abuzz at the conferences I’ve recently attended – both among attendees and speakers. And, tensions are high between the very generations whose roles are about to shift, which is extremely concerning.
The State of the State Current leadership often complains they can’t find quality candidates to fill the pipeline, pointing to a generation that doesn’t want to put in the hours or work for it. They use words like lazy
FEBRUARY 2013 y AZ CPA
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and entitled to describe them and say they waste time using technologies like mobile and social media. The younger generation uses terms like out-of-touch and archaic to describe the people they will succeed. They point to a need to do things differently to succeed in the future and some suggest throwing out the old model completely. So who’s right? The correct answer lies somewhere in the middle.
Listen Up Emerging Leaders I’ve been hearing an increasing number of people from my generation (the emerging partner group) spreading a message that the old model is antiquated and needs to be replaced by completely new thinking. We need to do things differently but a complete reboot isn’t necessary. Emerging leaders need to step back and understand a few things about those that have come before us. • First, they have years of wisdom and professional experience that we can and should tap into if we are smart business people. • We also need to appreciate everything they’ve done to set up the opportunity that is currently ahead. It would not exist if not for the hard work they put in throughout their careers. • We need to realize it’s hard to let go of something you’ve been doing
your whole life. We may have to temper our expectations of how quickly we are going to ascend in the firm. • We also need to present our new ideas with respect and ask how they fit in with current leadership’s view of the environment. • Finally, don’t push too hard. This is an emotional transition that takes time. They need to work through it personally before they can work share the plan or roadmap with anyone else.
Tips for Current Leaders Seasoned professionals must think back to earlier in their own careers so they can better empathize with what the emerging professionals are thinking, feeling and doing. A few years ago, I listened to Bill Reeb speak on generations – he read an article to the audience that listed all the gripes current management had with the next generation. Only after the audience (made up mostly of seasoned professionals) had finished their wave of head nods in agreement did he reveal that the article was from many years ago and was actually written about the Baby Boomer generation. Truth be told, you’ve been in their shoes and, likely, someone judged your perceived intentions (or lack thereof) at some point in your career.
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So let’s look for the positives that we can leverage to move forward toward a successful transition. • First and foremost, emerging leaders bring a fresh perspective that is important to the future of the firm. They also bring new ideas and skills to the table as well; especially in the area of technology. Leverage these to the firm’s advantage. • Open your mind to new ways of thinking and doing things. Consider how these ideas might fit into how you’ve traditionally done things. • Coach & mentor young professionals but also challenge them. This involves stepping back, which can be emotional and difficult to do but is necessary to the transition.
Finding a Middle Ground… Together Although Thoreau wasn’t referring to the accounting industry when he said, "things don’t change, we change,” I think his quote is a great way to approach the coming of ages. The sooner we stop throwing daggers at each other based on what the other perceives to be wrong and start focusing on the positive aspects we all bring to the table, the quicker we can start blending our perspectives and planning the transition – together. This building tension and division must stop. It will derail, delay and even destruct the impending and important shift in leadership, and we must all come together now to ensure a successful transition. Put an action plan in writing that spells out the transition timeline, what activities will be transitioned and when, and how approaches can be melded. This will probably require many emerging leaders to “tap the brakes” and current leaders to “hit the gas,” but working together you can AZ CPA figure it out. Jim Boomer is a shareholder and the CIO for Boomer Consulting, Inc. Boomer is ranked by Accounting Today as one of the 100 Most Influential People in Accounting. He can be reached at jim.boomer@ boomer.com.
Dumbing Down Your Smart Phone by Roy Keely
Why would you do such a thing? Modern man has achieved much in recent history. One of man’s major achievements as of late, for the lack of better terms, is creating the cure for boredom. That’s right – boredom. Thanks to our smart phones (along with tablets, other hand helds, etc.) the modern man no longer has to fret with nothing to do. There is always an app close by, another email to read, a bill to pay, an Angry Bird to save, and the list goes on and on with what’s at your fingertips.
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While there is much to be thankful for about the “productivity” in our hands, there is also something to worry about – the demise of boredom. Boredom, as I see it, is free space to think, wonder and roam the world between your ears. I do not define boredom as having nothing to do, but rather having everything to do. I believe the individual needs this time for overall health, sanity, and clarity. Humans have always had a component of boredom in their lives, but only recently have we had an option to opt out of being bored. I would argue that our minds are not able to handle the current degree of stimulation that we face day in and day out, thus depleting our overall ability to be creative, strategic, thoughtful, engaged, and so on. If our brains were likened to a city’s infrastructure, I’d say there is too much traffic – thus smog, wrecks, and the general annoyance that comes from traffic is pervasive in our brains. So getting back to the title of this article, dumbing down our smart phones (I could say “smart devices” but it doesn’t have the same punch) is our ability to know when to say “when” and limit our ability to rid our lives of boredom. We need to recognize boredom as a central tenet that allows other mental ascents to bloom. What are some ideas on how to do this?
This, of course, depends on your personality, so below is what I have found suits me best. My guess is you won’t like it. Neither did I … at first.
Friends, Flick Home Run, all of them are dulling you as an individual.
Limit yourself to two pages/ screens of applications
When was the last time you read the news? Did you go about your day any differently because of what you read? The information is largely un-actionable, thus to keep checking the news on your phone/device is meaningless to your day’s productivity. Yes, news has an aspect of value, but I am sure you will be fine without it on your phone.
You and I both know that you pretty much use the same apps over and over. Some of these get you out of a jam and some of the others you have are on there just because they came on the phone or for novelty’s sake. Get rid of the apps you don’t use or that are simply a novelty.
Turn off YouTube Yes, I said it. It’s like having America’s Funniest Home Videos in your pocket – and while this may make you laugh, it doesn’t make you a better human being and/or more productive. For some reason, I always find myself watching soccer highlights – not ones from last night, but amazing plays. I don’t play soccer, I don’t care about soccer, and if you have seen me try to play, it’s a joke. Simply put, it’s a waste of time.
Games, really? Grow up! Games are the ultimate enemy of boredom. It’s all novelty…if you argue with me on this, it’s going to be laughable logically so just save your breath. There is no point besides “vegging” and escapism. Angry birds, Words With
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News no more (on your phone/ device, that is)
Last but not least…shut down your BROWSER! Gasp. Breath. Breath. You mean to tell me after you sit on your computer for roughly 8+ hours a day you “need” a browser on your device? If you live in B.R.I.C. (Brazil, Russia, India, China) this does not apply to you. However in the states, aren’t you tired of being on the web? I know it can seem that being at your five-yearold kid’s soccer game or stuck at your spouse’s 3rd cousin’s house for a once a decade dinner is not as fun as checking your neighbor’s Facebook page from your phone, but take a break. Chill.
So how do I dumb down my Smart Phone? Use Restrictions. Have a friend/spouse/co-worker lock the parts of your phone that you deem a waste of your time. This just makes sense due to the present bias we have toward immediate pleasure, which, in this case, means curing our boredom. Have them use a code (that they won’t forget) to unlock the phone when you need to run updates, download a new business app, etc. Immediately have them lock it back and thank them for AZ CPA doing so. Roy Keely is the vice president of Market Strategy at Xcentric, which specializes in Cloud Computing and IT consulting for CPA firms. He has a broad range of experience in marketing, sales and consulting and is passionate about technology, productivity and market strategy. He can be reached at info@xcentric.com.
Are You Talking Your Way Out of Innovation? by Holly Green
How often do you hear these kinds of phrases in your company? Or worse, how often do you say them? • We already tried that; it’ll never work. • Nothing’s wrong with the way we’re doing it now, so why rock the boat? • If it ain’t broke, don’t fix it! • This looks risky; why should we spend money on something new that might not work out? • We considered that idea several times in the past but it never penciled out. • If there were a better way to do this, we would already have thought of it. • I’m all for new products, but I don’t think the market is ready for this one yet. • If something goes wrong, our jobs could be on the line. • Remember what happened the last time we tried something new that didn’t work? For the most part, these are well-meaning phrases from well-intentioned people. But they stem from innate brain patterns that do not always serve us well in today’s hyper-paced business world. And they slam the door on innovation by discarding good ideas before they can be fully evaluated. When you constantly slam the door in the face of new ideas, it isn’t long before they stop knocking altogether. At the root of the problem is the natural (and powerful) human tendency to want to protect the status quo – even when we logically know we have to change to keep up or lead. Because they have so much to lose, large successful organizations are especially prone to asset protection, spending much more energy and resources protecting what is versus constantly creating or exploring what could be next. Opening the door to new ideas and innovation requires taking deliberate steps to overcome the built-in brain patterns that lead us to automatically reject anything new. Here’s how. Get Brain Savvy Educate employees about how to become more aware of their thinking processes and illogical “thought bubbles” regarding innovation. Thought bubbles are those voices in our heads that instantly crop up when we consider something new (as in the list above). Thought bubbles typically involve strong emotions because they come from the old part of the brain. If you feel threatened, defensive, challenged, or “positively, absolutely sure” that it’s a dumb idea, chances are you’ve got a thought bubble coursing through your head. Any time you experience an instantaneous, powerful emotional reaction to a new idea, take a moment to consider why you’re reacting so strongly. Look at your underlying assumptions or beliefs being challenged and ask: is my assumption still true? Is it time for me to update by bubble? What do I stand to lose by having this assumption or belief challenged?
Expose Yourself (and others) Teach all managers and leaders to expose themselves (in a legally appropriate manner of course!) by sharing their thinking process. For example, “Here’s the data I have, this is what I believe it means, and therefore I have made these assumptions and recommend these actions…” Then ask for feedback, especially from people with different points of view. Expose the thinking of others by asking, “What data do you have and what do you believe it indicates or means? Walk me through how you got to that conclusion. Help me understand what led you to believe that…” Laying out your thinking process for all to see gives you a powerful tool for improving communication and gaining understanding and alignment among teams. It helps you see your own thinking process from a different perspective. Although it may feel like it is slowing you down to do this, you will get to where you want to go faster since you won’t have to do it over when you find out someone else processed or thought about the decision a little differently! Regularly Visit the Land of “What if…?” Most new ideas live in the land of “What if…?,” a magical place where almost anything is possible until someone comes along and quashes the idea. Get in the habit of visiting this land by asking questions like: What if we considered this from our customer’s or competitor’s perspective? What if an investor were going to buy us? Does what we’re currently doing add to our value? What if we had to cut the time and resources on our current product in half? To create more “what if” thinking in your organization, develop the habit of using neuroprompts in meetings and discussions. These are questions, statements, or visuals that trigger our brains to pause and think about what they’re working on and why. Embed your neuroprompts in core operating processes, such as business
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Upcoming 2013-14 ASCPA Conferences Be sure to save the dates:
2013 May 24 - Industry June 14 – Financial Planning June 26 – Not-for-Profit October 30 – Construction Industry November 15 – Emerging Leaders November 7-8 – Arizona Federal Tax Institute December 6 – Forensic and Litigation Services December 10 & 11 – Technology
2014 January 10 – Accounting and Reporting Standards February 7 – Governmental Accounting
For more information or to register, go online to www. ascpa.com.
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and talent reviews, by asking, “What new ideas were introduced this past month/quarter? What did we invest in exploring them? What did we learn from that process, and what can be applied to the next time? How much did we fail?” (If you aren’t failing some of the time, you’re not trying hard enough!) Flex your “Innovation Muscles” Strive to develop the habits that lead to successful innovation. For example, constantly seek out new and diverse sources of data. That way, the next time someone says, “We already tried that and it doesn’t work,” you can respond with, “I have some data that suggests otherwise; let’s explore this some more, or I came across some great examples from other industries that could apply to us now…” Identify a specific innovation target and focus on it every day. Change your perspective, by frequently scanning the horizon for new and emerging trends, both inside and outside your industry. Actively seek out data that disagrees with your point of view. Stage your field of vision by keeping your goals in front of you visually. Challenge assumptions by visiting them on a regular basis to see whether they’re still valid. Question the right answer. In fact, stop looking for it in the first place. As a leader, your job isn’t to find the right answer. It’s to identify many possible alternatives and choose the one (or more than one) that best supports reaching the desired destination. The next time a good idea comes calling, instead of slamming the door, invite it in for some conversation. Consider what could be instead of what already is or what won’t. You may be surprised AZ CPA at what you come up with!
Holly Green is CEO of The Human Factor, Inc. She is the author of the book, More Than a Minute: How to be an Effective Leader & Manager in Today’s Changing World. Download complimentary tools and resources at MoreThanaMinute.com.
Classifieds Business Opportunities/ Practices for Sale WE BUY CLIENTS— Our CPA firm would like to offer a smooth transition in the purchase of your clients. We will purchase anywhere from one client, up to an entire practice in the Phoenix/Scottsdale metro area. If you are thinking of retiring or downsizing your practice and need to transition your clients to a professional CPA firm, please give us a call. Our staff has been practicing in the valley for over 30 years with an emphasis in business taxes and accounting. Our office is located near Thunderbird and Scottsdale Rd. Please contact us today for more information and ask for Craig (480)990-2727 orcraig@awcpas.com. Tucson CPA Firm looking to acquire Southern Arizona CPA Firms—Tucson CPA Firm looking to acquire Southern Arizona CPA Firms. Contact: Jeff Quick at jeff.quick@ qmmcpas.com or (520) 751-2729.
Employment Opportunities AUDIT POSITIONS—Keegan, Linscott & Kenon, P. C. We are currently seeking Audit Managers and Seniors in the Phoenix and Tucson areas. Our professionals work in a very autonomous manner on challenging projects with staff and clients.Enjoy a flexible work schedule, business development bonuses, paid CPE, competitive compensation and a generous benefits package. KLK is a full service, nationally affiliated public accounting firm located in sunny Tucson, Arizona. We are part of the McGladrey Alliance which represents the fifth largest public accounting firm in the U.S. Make a move and achieve your dreams, visit www.klkcpa.com to apply in strict confidence today! Controller—The Samuel Roberts Noble Foundation, Inc. Seeking a Controller to oversee all accounting and financial reporting activities, including
supervision of staff. Bachelor’s degree in accounting, 10 years of progressively responsible accounting experience and CPA required. Apply online at www. noble.org/recruiting.EEO/AA/ADA. Tax Preparer / Advisor—Cobb CPA P.C. —Rapidly growing innovative Tempe CPA firm working with small to medium sized businesses is searching for a dynamic Tax Advisor to join our team of professionals. 5+ Years of public accounting experience & CPA license desired. http://phoenix.craigslist.org/ evl/acc/3477650764.html. PART-TIME TAX PREPARER / ADMIN ASSISTANT—Established Tempe CPA Tax Practice hiring for year round part-time Tax Preparer (Lacerte experience preferred) with other front office and back office responsibilities. Salary is competitive and depends on experience and performance. Email resume to: tempeazcpa@gmail.com.
Office Space FURNISHED OFFICE SPACE SUBLEASE—Tatum/Shea—Perfect setting for a CPA not wanting to work from home! Contemporary furnishings, highspeed internet, free parking, security system, water service, client reception area, conference room, kitchen and more. Pictures available. Asking $500/ mo. Contact Steve: 602.316.3246 or steve.bast@nucleusmarketinglab.com. Furnished Office—Beautiful office space at Hayden/Cactus. Conference room, Internet, all amenities needed. Office with seasoned/successful Financial advisor. Cross referral opportunity. Call Bruce 480-922-7044 ext. 102
To place a classified ad, go to www.ascpa.com and go to marketplace.
Not-for-Profit Conference Moves to June 26 After years with a fall conference, you let us know that June would be a better month for the Not-for-Profit Conference. The 2013 conference has been moved to June 26—please be sure to mark your calendars. Thanks for providing your feedback and continuing to support ASCPA conferences.
Watch an ASCPA Webcast with Co-Workers and Save 33% Get your team together to watch a webcast and save on registration fees. Contact Jena Ford at jford@ ascpa.com
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Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, AZ 85034
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Health Care Reform—You have questions, we have answers! Did you know that employers are limited in their contributions to their employees’ Flexible Spending Accounts (also known as “Cafeteria Plans”) to $2500 per year beginning with Calendar year 2013? With the average employee health insurance premium topping $300 per month, this limitation may impede your business clients’ ability to cover as much of their employees’ health insurance as they would like. However, there are some strategic steps they can take to maintain maximum tax benefits and keep their employee benefits plan competitive, while saving them money at the same time. Give us a call so we can tell you all about the best ideas to present to your clients before someone else does! Don’t forget, there is a discount available to all members of the ASCPA and their employees, as well as their dependents, from Blue Cross Blue Shield of AZ. This discount is available for all under age 65 Individual plans that required an application for coverage. Call us to see if you’re getting your discount!
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