AZ CPA Jan. 2015 by ASCPA

CPA January 2015

The Arizona Society of Certified Public Accountants

Foreign Bank Account Reporting Client Assessment Checklist Why Delegation Fails www.ascpa.com

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CPA JANUARY 2015

Volume 31 Number 1

Examination into Foreign Bank Account Reporting and Compliance

Reporting of foreign accounts can be difficult, but failure to do so carries an even greater risk. by Michael R. Criddle, CPA When Delegation Fails – It’s Time to Change Your Ways 19 When work is delegated effectively, the benefits that come about are huge – ineffectively, the costs are obvious. by Cindy Gordon, CPA, CA (Canada license only)

Features The Client Assessment Checklist

Are you up to speed on your client engagement screening process? by Randy R. Werner, J.D.

Columns & Departments 6

Chair’s Message by Anita Baker, CPA

Focus on Members

A Dash of SALT by James Busby, Jr., CPA

22 Classifieds 23 Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 225-B Phoenix, Arizona 85034-2021 www.ascpa.com

4 AZ CPA y JANUARY 2015

In the Black ... Adventures in Accounting

CPA

The Arizona Society of Certified Public Accountants

President & CEO

Cindie Hubiak

Editor

Patricia Gannon

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

Anita Baker Rob Dubberly Greg Nelson Gary Fleming Randy Fletchall Diane Groover Sandra Torre Mike Holt Bill Judge Adam Miller Molly Montgomery Jennifer Nordstrom Vanesa Romero Jared W. Van Arsdale Craig Van Slyke

Immediate Past Chair Karen Abraham AICPA Council Members Karen Abraham Armando Roman Chapter Presidents Southern Chapter Northern Chapter Southwest Chapter North-Central Chapter

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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.

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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 JANUARY 2015 y AZ CPA

Chair’s Message

by Anita Baker, CPA

The Value of Certification Today is my son Nick’s 22nd birthday. It was so easy to buy birthday presents when he was younger, since the list was very extensive but not too expensive (i.e. legos). As a teenager, there was a much shorter but more expensive list (i.e. laptop computer). Now that my son is a senior at ASU, the only request for a gift was money for his upcoming trip to Las Vegas. I really don’t like to give money as a gift since you cannot “unwrap” it, so I decided to buy him a website domain related to his passion in producing music (which he pursues when he is not working or studying). Thanks to an ASCPA board member who told me how to buy a website domain, Nick is now the owner of www.djnickryan.com and has a key chain with the site engraved on it. Nick is an intelligent young man and understands that this is a hobby and it will be important to find a job after graduation that will provide a reliable source of income. Therefore, he is exploring his options with his future degree in Environmental Science/Sustainability and may consider going to graduate school to further his education and improve his job prospects. Hopefully, my former ASCPA board members that work in the Sustainability industry can assist with this as well! What motivates a person to continue to pursue further education? I believe that we all have a need to learn throughout our lifetime and appreciate the recognition that comes with our efforts. In addition to getting bachelor and graduate degrees, certification programs have grown in popularity as a reaction to the changing employment market. Certifications are portable, since they do not depend on one company’s definition of a certain job. Certification stands out on the resume as a professional reference of an impartial, third-party endorsement of an individual’s professional knowledge and experience. The most general type of certification is profession-wide. In order to apply professional standards, increase the level of practice, and protect the public, a professional organization might es-

6 AZ CPA y JANUARY 2015

tablish a certification. This is intended to be portable to all places a certified professional might work. Of course, this generalization increases the cost of such a program; the process to establish a legally defensible assessment of an entire profession is very extensive. An example of this is a CPA who would not be certified for just one corporation or one piece of accountancy software, but for general work in the profession. That is why we obtained the designation of CPA after we graduated from college and why many of us continue to pursue related designations in accounting and finance. Did you know that Wikipedia lists 12 certifications under accountancy, auditing and finance? There are an additional five certifications listed under internal audit and fraud combat. Surprisingly, the Certified Global Management Accountant (CGMA) is not yet listed as a designation under these categories, although there is a Certified Management Accountant and a Chartered Cost Controller. The AICPA, with the Chartered Institute of Management Accountants, is building a foundation of quality and excellence in management accounting. The CGMA designation continues to grow with more than 130,000 designation holders worldwide, making it the largest designation of its kind in the

Anita Baker with her son Nick. world. The new CGMA competency framework delineates the skills, abilities and competencies finance professionals need to take on various roles and drive the success of their organization. The Global Management Accounting Principles constitute a framework that CFOs, senior finance and other professionals can use to benchmark their practices to drive better quality decisions. There will be a exam implemented in January 2015 that will feature a comprehensive strategic case study assessing management accounting skills and competencies. The exam will be required to earn the CGMA designation and will further enhance the rigor and recognition of this designation. I encourage each of you to find your passion and pursue additional education or certifications that help you become more marketable and successful, while providing additional value to your business or organization. AZ CPA

Focus on Members Klecka, Wilkins & Klecka merged with Johnson Goff & Company. Charles Marx, CPA, was promoted to aerospace and defense leader, overseeing clients in that industry for PwC US. Robert Hockensmith, CPA, was appointed to the Advisory Board of BBVA Compass Bank. Chuck Goodmiller, CPA, co-managing partner of Henry & Horne, LLP, has been named a 2015 AZ Business Leader by AZ Big Media. Leslie Stackpole, CPA, was elected as the new president of the NAU Accounting Advisory Council. J. Phillip Glasscock joins the law firm of Smith Paknejad PLC as senior counsel.

(L to R) AICPA Vice Chair Tim Christen, ASCPA Chair Elect Rob Dubberly, ASCPA President & CEO Cindie Hubiak and AICPA President & CEO Barry Melancon at the 2014 AICPA/CPA-SEA Leadership Conference.

Grant Gikling, CPA, was promoted to senior audit associate at CBIZ MHM. Joshua Blom, CPA, joined Wallace, Plese +Dreher, Chandler as audit supervisor. Layne Simmons, CPA, of Jaffa Simmons, PLLC, was appointed to the NASBA’s Legislative Support Committee for 2014-2015.He served on the Global Strategies Committee last year.

Newsworthy CPAs… James G. Busby, Jr., CPA, of the Cavanagh Law Firm was quoted in an article on tax planning in the Arizona Republic. Monica Stern, CPA; Cynthia Hays, CPA; Steven Schwartz, CPA and Jason Washo, CPA, CFP were featured in an article in the Arizona Republic “Financial experts take questions on debts, taxes, more.”

Henry & Horne, LLP team members traded the office for the outdoors at their annual firmwide community service event held this year at the Phoenix Zoo. Henry & Horne closed its offices and 86 team members headed to the Zoo to help the Horticulture Department rake leaves, pull weeds, and pick up sticks and other debris. The firm also donated a dozen rakes to the Zoo for use on future beautification projects. The firm has been named as one of the 2014 Accounting Today’s “Best Accounting Firms to Work for”and also received the Leading Edge Alliance’s “Edge Award for Outstanding Community Service.”

JANUARY 2015 y AZ CPA

Enjoy the Convenience of Webcasts Earn CPE from the comfort of your home or office with the ASCPA’s live interactive webcasts. Webcasts allow you to see the speaker live on your computer screen and follow along with the presentation, as if you were in the classroom. You can type in your questions or comments, and they will be relayed to the speaker throughout the program, to allow interaction.

Some of the Benefits of Webcasts: •

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The ASCPA also has a partnership with the California Society of CPAs to offer programs in specialized areas. Search for courses at www.ascpa.com by choosing webcast as the location.

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Some Upcoming January Webcasts through CalCPA include: • Preparing Complex 1040s • Top 10 Things Financial Planners Need to Know About Estate Planning • Audits of 401(k) Plans • Working With Your Quick Books Clients • Advanced Auditing of HUD-Assisted Projects • Introduction to International Taxation • Construction Contractors: Special Tax and Accounting Considerations

A Dash of SALT

Fundamentals of Nexus in Arizona: Sales Tax Nexus This month’s state and local tax (SALT) column introduces the U.S. Constitutional limitations on states’ power to impose taxes on proceeds from interstate commerce, and some guidelines the Arizona Department of Revenue (ADOR) issued concerning nexus for transaction privilege (sales) tax. The U.S. Constitution imposes two important limitations on states’ ability to impose taxes on proceeds from interstate and foreign commerce. The “Due Process” clause, part of the Fourteenth Amendment to the U.S. Constitution, provides in relevant part, that no state shall deprive any person of property without “due process” of law. And, Article I, Section 8, Clause 3 of the U.S. Constitution, commonly known as the “Commerce Clause,” grants Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

The Due Process Clause Compared to the hurdles that states must overcome to impose taxes on proceeds from interstate and foreign commerce without violating the Commerce Clause, the Due Process clause is more akin to a speed bump. As the U.S. Supreme Court determined in the Miller Brothers case, the Due Process clause simply requires “some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.” But, before a state may lawfully impose taxes on proceeds from interstate and foreign commerce, it must also overcome the Commerce Clause hurdles.

The Commerce Clause In the Complete Auto case, the U.S. Supreme Court determined that states must overcome four Commerce Clause hurdles before they can impose sales tax on a remote merchant. The tax will be upheld if it is: “[1] applied to an activity with a substantial nexus with the taxing State, [2] is fairly apportioned, [3] does not discriminate against interstate commerce, and [4] is fairly related to the services provided by the state.” While all of the Commerce Clause hurdles are important, this article focuses on the “substantial nexus” requirement. In the Quill case, the U.S. Supreme Court affirmed the bright-line test it announced in the Bellas Hess case, that physical presence by a taxpayer or the taxpayer’s agent is required to establish nexus with a state for sales tax purposes (but not for other types of taxes). Thus, for example, if a taxpayer’s only connection with a state is to deliver products into the state using a common carrier or the U.S. Post Office, the state cannot require the taxpayer to remit sales tax. But, if the taxpayer delivers products into the state using vehicles it owns or leases, the state may require the taxpayer to remit sales tax, unless the activity in any given year was de minimis.

ADOR’s Guidelines Regarding Nexus for Sales Tax In Publication 623, ADOR provided the following examples of activities that may establish nexus for sales tax purposes in Arizona: • Employee present in the state for more than two days per year. • Ownership or lease of real or personal property in Arizona. • Maintenance of an office or place of business in Arizona. • Delivery of merchandise into Arizona using vehicles owned or leased by the taxpayer. • Independent contractors or other non-employee representatives present in Arizona for more than two days per year for the purpose of establishing and maintaining a market for the taxpayer. Examples of establishing and maintaining a market include: soliciting sales; making repairs; collecting delinquent accounts; delivering property sold to customers; installing products; conducting training for employees or representatives of the company or customers; resolving customers complaints; providing consulting services; soliciting, negotiation, or entering into franchising agreements.

JANUARY 2015 y AZ CPA

Governmental Accounting Conference Feb. 13, 2015 Arizona Biltmore

General Sessions include: 2014: The Year That the News Coverage of Government Ethical Issues Exceeded the Coverage of Business Ethical Issues— Marianne Jennings, emeritus professor W.P. Carey School of Business at ASU GASB Update—David Bean, Governmental Accounting Standards Board GASB’s Revised Pension Standards: Effect on Arizona Governments in 2015—Donna Miller, Arizona Office of the Auditor General Carlo Ponzi or Bernard Madoff—Who Was the Bigger Villain?—David Cotton, Cotton & Company, LLP Breakout Sessions include: • GASB below the Surface • Preparing for the Audit – Auditor and Auditee Insights • Is it Fraud? If so, Who Did It? • The Psychology of Fraud • What Governmental Employers Participating in Arizona’s Pension Plans Need for 2015 • Single Audit Improvements and Efficiencies Learn more and register by going to www.ascpa.com, select CPE and then conferences.

Practice Tip! – Although it is debatable whether some of ADOR’s guidelines above are too strict (in particular, Arizona state and federal courts may determine that a mere two-day presence in the state is de minimis and would not, by itself, create nexus), savvy CPAs help their clients understand the types of activities that may create nexus and recognize the additional tax collection and/or filing obligations that result from establishing nexus in additional taxing AZ CPA jurisdictions. James G. Busby, Jr. is a state and local tax attorney and CPA at The Cavanagh 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 educational and informational purposes only and does not constitute legal counseling or other professional services. Busby is a member of the ASCPA. He can be reached at (602) 322-4146 or JBusby@CavanaghLaw.com.

Make Tax Season Easier with ASCPA Resources Phoenix Tax Workshop

Keep yourself current on the latest happenings in tax law, IRS rulings and legal decisions . Attend monthly meetings that are held on a Saturday morning at the ASCPA office or participate via webinar. Tax Community on Connect

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You can expect lively conversations and information sharing by joining the community and discussions. It is a great way to get advice and talk about tax issues with other CPAs. ASCPA Referral Service

During tax season last year, more than 500 people searched for CPAs through the ASCPA referral service. Join Now! Tax Luncheons

Speakers from the Arizona Department of Revenue and IRS give updates for an hour of education at the ASCPA tax luncheons.

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The Client Assessment Checklist by Randy R. Werner, J.D.

Any client, whether new or established, can become problematic for a variety of reasons. For example, a problem client may: • be unhappy with the results of an engagement, even though there was nothing wrong with the services performed. • believe that the CPA rendered substandard services (especially when the client is unhappy with the results). • manage financial affairs poorly, subjecting the client to problems for which the CPA is held responsible.

JANUARY 2015 y AZ CPA

• be financially irresponsible and more inclined to blame the CPA when finances take a downturn. • owe so much money to the CPA that the client believes a malpractice claim will eliminate or reduce the amount owed. CPA firms should evaluate all potential new clients and re-evaluate all current clients on a regular basis, at least annually. This enables the firm to better monitor clients, consider any changes that might affect the professional relationship, and avoid situations that could escalate into crises. Firms can also stipulate in their engagement letters that the engagement is not binding until client acceptance procedures have been completed. The following checklist is designed to help CPAs conduct the due diligence needed to make sure that the client is a good fit for the firm, and that the firm is comfortable with the client. Three main considerations in the client acceptance process are:

Proficiency in any type of engagement includes the ability to identify risk stress points in the engagement. CPAs are expected to possess a thorough understanding of the client’s business and industry in order to identify those stress points. Establish a policy for what types of engagements the firm will avoid because of a lack of technical expertise.

1) Is the engagement a good fit for the firm’s expertise? If the firm accepts an engagement for which it is not professionally staffed or qualified, it runs the risk of disappointing the client, or a third party, and exposing itself to litigation and ethics violations. Due care demands that firms: a) are capable of performing the services required by the engagements they accept; and, b) are performing the services often enough to become proficient at them. CAMICO claims experience shows that firms “dabbling” in services outside of their areas of expertise are not practicing them often enough to become proficient. Services that represent less than 15 percent of a firm’s service concentration produce disproportionately high loss ratios. (See chart, “Risk is High for Beginners and Dabblers.”)

2) Is the client the kind of client the firm would like to have? A variety of factors need to be considered in answering this question, ranging from the client’s reputation and integrity, to its commitment to appropriate accounting practices and internal controls. CPAs should communicate with predecessor accountants and third parties to obtain as much information as possible about the client. Are the client’s expectations of CPAs reasonable? Does the client appropriately value CPAs’ services and advice? Once the firm has the information it needs, it can explore ways to cultivate the kind of business it wants. Other important considerations will depend on the type of client or engagement in question. For some engagements, CPAs will need to consider potential or actual conflicts of interest,

12 AZ CPA y JANUARY 2015

as well as whether the CPAs’ independence and objectivity are impaired in appearance or in fact, especially when considering services for attestation clients. 3) Is the client financially viable? The answer to this question is critical, especially in avoiding fee collection problems and disputes. Much of the information needed can be obtained by: • interviewing the client and the client’s key personnel, banker, attorney, predecessor accountants and auditors • running a credit check • examining the past three years of financial statements • examining the past three years of tax returns • examining the prior CPA’s management letters

Background Checks Background checks should be considered for all significant engagements. Credit checks and public record checks are critical, but background checks are about more than the financial condition

of the client. The questions the CPA firm should ask are: • Why was the firm selected for this engagement? • What was the source of the referral? • What business is the client in? • Is the engagement within the firm’s areas of expertise? Is it risky? • Are the rewards of the engagement worth the risk? • Will the engagement create any conflicts of interest (actual or potential) for the firm? • Are the business and accounting records adequate and in order, or disorganized? • Are the financial statements and tax returns for the past three years consistent? • What is the client’s financial track record? Have there been bankruptcies or business failures? • What is the client’s level of financial sophistication? (espe-

• • •

•

Regardless of the services the CPA is being asked to perform, client screening should be done during the period between the client’s first contact with the CPA and the signing of the engagement letter (the “pre-engagement” period). Much of the information needed can be obtained at the client interview and verified later through other interviews. The more information obtained, the better the assessment of risk. In a CPA partnership or professional corporation, it is a common practice for another partner or a client committee to review the client-screening information and to pass judgment on

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cially the accounting staff’s) Is there a high staff turnover? Is a key partner or employee leaving? Is the client of a litigious nature, judging from conversations with prior accountants and/or attorneys? Is the financial knowledge of the client acute?

the acceptability of a new client. There are high-risk clients and highrisk engagements. Some CPAs rank their clients according to how cooperative, knowledgeable, reasonable, difficult, or time-consuming they are. Engagements can be ranked as well by the complexity of the work. Generally, difficult clients with complex work pose the highest risk to the firm, and risk management then becomes all the more essential. AZ CPA Randy Werner is a loss prevention executive with CAMICO (www.camico. com). She answers CAMICO loss prevention hotline inquiries and speaks to CPA groups on various topics. Werner has Big Four public accounting experience in federal and state tax as well as regional accounting firm experience. She has practiced as a sole practitioner in estate planning since 1984.

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Examination into Foreign Bank Account Reporting and Compliance by Michael R. Criddle, CPA

Reporting of foreign accounts can be difficult, but failure to do so carries an even greater risk given the efforts by the IRS and U.S. government to track down and bring into compliance the owners of undisclosed foreign

U.S. taxpayers are expanding their businesses and revenue sources globally to keep up with competitive markets. And as they do so, ownership of financial accounts in foreign countries by U.S. persons have also expanded significantly. The U.S. government has a direct interest in foreign accounts held by U.S. taxpayers as they want to ensure taxpayers are not avoiding their U.S. tax obligations on the income from these accounts. In 1970, Congress passed legislation resulting in a new reporting requirement commonly referred to as â&#x20AC;&#x153;FBARâ&#x20AC;? or Foreign Bank Account Report, which requires certain U.S. taxpayers to report their foreign accounts annually. The IRS has assessed both criminal and civil penalties for taxpayers who have failed to comply with this law. Currently, the U.S. government is more active in enforcing the criminal and civil penalties and has gone to great lengths to make U.S. taxpayers aware of these annual filing obligations.

financial accounts. JANUARY 2015 y AZ CPA

Due to this increased awareness and enforcement of FBAR filings, it’s important to understand the rules and laws around this filing obligation. Keep in mind the following valuable information:

A voluntary disclosure provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues

Who Must File

The general FBAR filing requirement is defined as any U.S. person having a financial interest in or signature or other authority over any financial accounts in a foreign country that in aggregate exceed $10,000 at any point during the preceding calendar year. A U.S. person includes U.S. citizens, greencard holders and resident aliens. A U.S. person also includes any entity created, organized or formed under the laws of the U.S. How and When to File

This filing was once completed by printing and mailing a Form TD F 90-22.1 to the Treasury Department. However, the IRS has since changed the process. These reports are now being filed electronically through the Treasury Department’s FinCENs BSA E-Filing System using Form 114 (FBAR report). The FBAR filing is a separate filing from the annual tax return, as the IRS has a separate form (Form 8938) that is used to reporting foreign bank account information. The FBAR report is filed on a calendar year basis and is required to be received electronically by June 30th of each year for the prior calendar year. The FBAR filing is an informational reporting obligation and does not result in any additional tax due for the year. Information Required

The FBAR filing requires the following information to be reported for each foreign financial account. 1. Taxpayer ID Number 2. Date of birth (if an individual) 3. Taxpayer’s Name 4. Taxpayer’s Address 5. Maximum Account Value (per account) 6. Name of the Financial Institution 7. Account number

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with the IRS.

8. A d d re s s o f t h e F i n a n c i a l Institution 9. Joint Owner Information (if applicable) Other Considerations

Foreign Account Tax Compliance Act (FATCA) is one of the many ways the U.S. government is increasing enforcement of foreign bank account reporting. FATCA enforces the reporting by U.S. persons of certain foreign financial accounts and other offshore assets by requiring foreign financial institutions and in some cases foreign governments to release information related to the ownership of foreign accounts by such U.S. persons. With this information, the IRS will be in a position to pursue and penalize U.S. citizens that are not compliant with their FBAR filing obligations. Since 2011, the U.S. government requires U.S. taxpayers to report specified foreign financial assets on their individual US returns on Form 8398 based on meeting certain thresholds in value. The information required for these forms is substantially similar to the information reported on Form 114 to the U.S. Treasury. The threshold for filing this form is: • If not married, assets valued at more than $50,000 on the last day of the tax year or $75,000 at any time during the tax year. • If married and file a joint return, the threshold values increase to more than $100,000 on the last day of the year or $150,000 at any time during the year. • There are additional increases to

the filing thresholds if the taxpayer is living outside the U.S. The new form 8938 filing requirement does not replace the taxpayer’s obligation to file FinCEN Form 114. Individuals should file both forms if they meet each relevant filing threshold. Penalties for Not Filing

As mentioned earlier, the IRS is actively enforcing penalties for noncompliance of FBAR and Form 8938 filings. Compliance is very important as penalties can be substantial and willful violations of FBAR filings can be subject to criminal prosecution. FBAR Penalties A person who is required to file an FBAR and non-willfully fails to properly file may be subject to a civil penalty not to exceed $10,000 per violation (per account per year). A person who willfully fails to report an account or account identifying information may be subject to: • Civil monetary penalty equal to the greater of $100,000 or • 50 percent of the balance in the account at the time of the violation. If there is a reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed. Willful violations may also be subject to criminal penalties and/or prosecution. Form 8938 Penalties Failure to file — Up to a $10,000 penalty.

Continued failure to file — If a notice is issued and the taxpayer fails to comply with the request for filing, the penalty is $10,000 for each 30-day period. The maximum penalty is $50,000. Non-Compliant Taxpayers

The IRS has created a mechanism for U.S. taxpayers with undisclosed foreign accounts to become compliant.Taxpayers with such undisclosed foreign accounts or entities should consider making a voluntary disclosure to enable them to become compliant, avoid substantial civil penalties, and generally eliminate the risk of criminal prosecution. A voluntary disclosure provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues with the IRS. If the taxpayer meets certain qualifications, the taxpayers can enter either the Offshore Voluntary Disclosure Program (OVDP) or Streamlined Voluntary Disclosure Program (SVDP) in order to disclose any offshore delinquent reporting issues to the IRS. U.S. taxpayers need to be aware of required foreign financial account reporting. Failure to comply with the reporting requirements for foreign financial accounts carries a significant risk. Tax professionals should seek to assist their clients in complying with these reporting requirements, and if it is determined that a U.S. person has delinquent foreign account reporting, consideration should be given in participating in an offshore voluntary disclosure program offered by the IRS. Reporting of foreign accounts can be difficult, but failure to do so carries an even greater risk given the efforts by the IRS and US government to track down and bring into compliance the owners of undisclosed foreign financial AZ CPA accounts. Michael R. Criddle is a CPA in Utah with Eide Bailly LLP. You may contact him at mcriddle@eidebailly.com. The article was first published in the Utah Association of CPAs, The Journal Entry, October 2014.

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Accounting & Reporting Standards Conference Jan. 16, 2015 Black Canyon Conference Center, Phoenix Topics include: • Accounting Update • Auditing Standards Board Update • Arizona State Board of Accountancy Update • Fraud Risk Assessment & Prevention – Opportunities to Better Serve the Public Interest • The 10 Things You Need to do Before Moving an Application (Or Your Entire Business) into The Cloud • Perspectives of Financial Statement Users – Panel Discussion To learn more and register, go to www.ascpa.com, click on CPE and select conferences.

JANUARY 2015 y AZ CPA

NUMBERS DON’T GROW A BUSINESS, BUT THE RIGHT PEOPLE DO. 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.

Are you the right person? Current career opportunities available now at redw.com/careers

Albuquerque | Phoenix

602.730.3600 | redw.com

Committed to a

strong and healthy ArizonA

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For 75 years, we have been helping take care of Arizonans. We focus on the health of our members and the well-being of the communities in which they live. That’s why we’re proud to support Arizona Society of CPAs and the work they do to foster a strong and thriving business climate now and far into the future.

When Delegation Fails – It’s Time to Change Your Ways by Cindy Gordon CPA CA (Canada license only) CPCC

Are your days so overwhelmed with phone calls, meetings and emails that you hardly have time to accomplish any work? Do you find yourself working long hours and weekends just to keep up? Balancing all the responsibilities of the manager or partner level can be challenging. Even though some work could be passed down to other staff members, you hesitate to do so because it often doesn’t get done properly, or it requires an investment of time to train when you’re already stretched to the limit. It seems easier and faster to do it yourself! However, employees need to learn, grow and take on new responsibilities to keep them motivated and challenged in their work. Delegating responsibilities sends a loud message to your employee that you believe in him or her, you know he or she is capable and you want him or her to advance and grow within the firm. When work is delegated effectively, the benefits that come about are huge – ineffectively, the costs are obvious. Delegation can play an important part in helping to retain and motivate Millennials. Millennials (people born between 1980 and 2000) are entering the workforce in droves. They have been called selfish and lazy. Research is finding that they are leaving their jobs within two to three years. This type of turnover can be very costly to a business. However, surveys are showing that they are leaving their jobs because they are not challenged; they don’t feel appreciated. Millennials want to work in an environment where they can contribute and take on responsibilities. Through the proper delegation of work, Millennials can learn, grow and thrive in your firm.

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Seven Things to Keep in Mind when Delegating

To be a more effective delegator, here are some simple steps to follow: 1. Consider the task that you want to delegate and think about who the best person to assign it to would be. Don’t just consider technical skills. Areas such as employee strengths, client personality fit and growth potential, and learning gaps are important to assess when choosing who to delegate to. It’s easy to turn to your most talented people, but they will quickly become overworked and stressed, leaving others feeling under utilized and unappreciated. 2. Provide a detailed explanation of what’s involved and eliminate any ambiguities.“Reconcile the account,” for example, doesn’t clearly explain what is needed. Do you just want a check mark implying that the bank balances agree with the statement, or do you want a detailed schedule with back-up information? Make sure your explanation clearly describes what the outcome should look like. The explanation should also include: due date, estimates of how much time it should take and who to turn to for assistance. If another person will be used for guidance, ensure he or she is included in the delegation conversation. It’s always advisable to have the employee you’re delegating to reiterate the directions back to ensure you’re both on the same page. 3. Set accountability. It is one thing for the delegator to set a due date for the completion of a task, but it’s another thing for the employee to buy into the responsibility for getting it done. This means that the employee needs to understand how doing this new work will benefit him both on a logical and emotional level. If you’re the only one with grand aspirations for this employee’s future, it’s likely the effort required to get the job done well won’t be there. 4. Identify whether any training is needed. The last thing you want is for the employee to either struggle with the task or hesitate to ask questions as needed. An employee can easily get caught in this trap because either he believes that he’ll look stupid if he asks too many ques-

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Outcomes of Effective Delegation • New skill set is developed • Growth opportunity is provided • Relationship between delegator and employee grows • Employee feels acknowledged for their abilities • Idle time is eliminated and chargeable time is created • Reduces partner / manager workload

Outcomes of Ineffective Delegation • Work is put off or avoided • Excessive inaccuracies or errors are made • Questions are posed to an inappropriate person • Partner or manager shows stress when asked for help • Employee is judged on the steps they took to get the work done, not on the final outcome. An excessive amount of time is written off

tions or he’ll be disturbing you. Their learning and understanding should be a top priority. Many people aren’t good at training or don’t enjoy it. That’s OK, there is likely someone within your company who does. Identify that someone and include him or her in the delegation process. They can then be the “go-to” person for questions and help. This gives them the opportunity to do something that they enjoy, while building relationships with the employee and taking the burden off your shoulders. Partners or owners of small businesses and firms may not have the luxury of having someone to help with the supervision. It helps to keep in mind the payoff of this investment is ultimately getting work off your plate and providing a growth opportunity to someone else. 5. Delegate responsibility not method. We all have our own way of working, and sometimes there’s no one right way of getting things done. Your method may be great, but it’s based on how your brain works. Requiring another person to do something the exact same way you do may leave them frustrated, feeling inadequate or confused and take more time than required. Give them the leeway to create their process or method. The next time they have to do the same type of work, they’ll be in a better place to create efficiencies.

6. Provide timely feedback. Whether it’s reviewing the work at set stages or at the completion of the task, the employee needs to know where they stand. Accountants are great at creating review notes highlighting what needs to be corrected. This is an important part of learning. Also provide feedback of the outcome based on the discussion of the task assignment. Have the employee take out their original task notes and assess their accomplishments based on what was set out. Did they achieve the task as discussed, or maybe the task wasn’t as clearly explained as you thought? 7. Provide acknowledgements and recognition. Whether the task was completed perfectly or not, find areas to provide some positive comments. People thrive from positive feedback. This will keep your employee excited and motivated to help you in the future. The benefits of delegation are so vast, and as partners and managers we should keep these benefits in mind to motivate us to do more of it! AZ CPA Cindy Gordon CPA CA (Canada license only) CPCC is the owner of Culture Shock Coaching, LLC. She works with accounting firms and small business owners to improve profitability creating ways to enhance efficiencies and employee productivity. Reach her at cgordon@cultureshockcoaching.com.

2015 Arizona Tax Guide Order the only comprehensive guide on Arizona taxes Authors: Ira Feldman, Pat Derdenger, Steve Rodis and Ed Zollars New in the 2015 Arizona Tax Guide:

• Arizona sales tax simplification changes coming January 1, 2015 • Discussion of the revision of ADOR’s position on calculation of net operating loss carryforwards for taxpayers that move into Arizona

The Arizona Tax Guide includes the following guides: • The Arizona Income Tax Guide is a comprehensive and easy reference guide that highlights the differences between Arizona and Federal income tax law and provides references to the Arizona Revised Statutes for a more in-depth analysis. It contains individual, corporate, partnership and trust tax differences, including tax tables, and is arranged in a manner that facilitates research on any topic. • The Arizona Sales and Use Tax Guide is a resource for anyone preparing or filing Arizona and city sales and use tax returns. The guide details the various sales and use tax rates that apply to each type of sale or product as well as the many exceptions, administrative provisions and Model Cities Tax Code provisions. • The Arizona Personal Property Tax Guide outlines the nature of the tax, reporting requirements, analysis of forms, audit and appeal procedures and small business exemptions. • The Arizona Unclaimed Property Guide covers Arizona rules that apply to unclaimed property, how to report and pay, and how to file your claim.

Spiral-Bound Book:

❒ 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) 252-4144, ext. 200 for special pricing on orders of five or more.

Guides will be available for delivery mid-January 2015.

Order and learn more about the guides at www.ascpa.com Name ___________________________________________ Company ________________________________________ Address ________________________________________ City ___________________State _____ Zip ___________ Phone __________________ Fax ____________________ Email ____________________________________________

Method of Payment: ❒ Check ❒ VISA ❒ MasterCard ❒ American Express Name on Card ___________________________________ Card Number ____________________________________ Exp. Date ____________ Amount $ ________________ ❒ CPA ❒ Attorney ❒ EA ❒ 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.

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Classifieds Business Opportunities/ Practices for Sale CPA FIRM SEEKING TO BUY CLIENTS —Established over 30 years, we are experienced in smooth transitions and maintaining high client retention. We specialize in servicing small to medium businesses. If you are planning on retiring, we can customize a transition for you. If you want to downsize or change careers, we will buy part of, or your entire client base. We service the entire metropolitan Phoenix area and offer complete accounting and tax services. Call Joy today at (480) 990-2727 or email joy@awcpas.com. CPA Firm Looking To Buy Clients—Seeking small firm or clients to acquire. Tax, bookkeeping and attest clients. Central or East Valley preferred. Sole proprietors seeking to retire, move or downsize are excellent candidates. Inquire at cpaaeastvalley@gmail.com. FIRM MERGER — TUCSON— Eastside CPA firm would like to share office space with possible future merger to allow for retirement of partner(s). Realize efficiencies of space and administration with excellent opportunity to expand your practice. If interested, please respond to: tucsoncpa789@gmail.com.

Employment CAPTIVE INSURANCE ACCOUNTANT — Strategic Risk Solutions is looking for an accounting professional with 3-6 years’ experience to join its Scottsdale, AZ servicing team. The successful candidate will manage the financial and regulatory affairs of a portfolio of captive insurance companies. http:// www.strategicrisks.com. CPA - Tax Accountant — Hunter Hagan & Company, Ltd. —Our CPA firm, located in downtown Scottsdale, specializes in tax preparation and business consulting. This employment opportunity offers great potential and advancement for your career. We are looking for 1-3 years of recent public

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accounting and tax experience. The position offers direct contact with our firms’ experienced managers for an optimal learning experience and direct contact with clients, attorneys and bankers. The candidate must possess excellent communication skills and the desire to progress into a supervisory position that includes all levels of client and staff management. We have a flexible work environment and provide full benefits. http://www.hunterhagan.com. Senior Accountant/Tax— North Scottsdale CPA firm is seeking a CPA or an individual actively pursuing this designation. Ideal candidates will have 4-8 years experience in public accounting. The person in this position will assist in preparing and reviewing individual, business and trust tax returns. Knowledge of Ultra Tax and Creative Solutions products a plus but not required. This is a permanent part-time position. This is an excellent opportunity to work in a friendly environment with flexible hours. Please email resumes to info@koivistocpa.com. SENIOR AUDIT MANAGER — CPA firm (Las Vegas, NV) - FAIR, ANDERSON & LANGERMAN (FAL) a mid-size CPA firm in Las Vegas seeking a Senior Audit Manager -- Education: BS with concentration in Accounting. Minimum 15 yrs. in public accounting - 10 most recent in audit. Plan, supervise, review and control accounting service engagements of all sizes and complexities for compliance with professional & firm standards. Demonstrate thorough knowledge of GAAP, auditing standards, review and compilations standards and their application to client situations. Send resumes to carol@falcpa.com; visit our website at www.falcpa.com. SENIOR TAX MANAGER — CPA required. Prepare and review complex business tax returns. Part time position. Dynamic firm. Paperless environment. Highly technical. Qbooks, Lacerte, RIA and Practice CS are utilized. Flexible hours are available. Attach resume in pdf to lams12@aol.com SENIOR AND STAFF — AUDIT & ACCOUNTING (CPA firm, Las Vegas,

NV) - FAIR, ANDERSON & LANGERMAN a mid-size CPA firm in Las Vegas is seeking a Senior with a minimum of 4 years of recent audit and accounting experience with a public accounting firm and a Staff Accountant with a minimum of 2 years of recent audit & accounting experience with a public accounting firm; Bachelor’s Degree; CPA or CPA candidate; experience with federal and state taxes a plus. We offer a regular schedule in a rewarding, challenging environment with plenty of opportunity for advancement. Experience in ProSystems fx is a plus! Resume to Carol@falcpa.com, visit our website at www.falcpa.com. SENIOR TAX MANAGER — CPA firm (Las Vegas, NV) - FAIR, ANDERSON & LANGERMAN (FAL) a mid-size CPA firm in Las Vegas seeking a SENIOR TAX MANAGER with 12–15 years of recent public accounting experience. Our firm is a very unique, diverse organization with a non-traditional approach to serving clients and staff. Role requires heavy tax experience, tax planning abilities are crucial, must be a strategic, tactical thinker who can work in a collaborative, proactive manner as PART of a team. Our firm culture is rewarding, our clients are diverse and challenging. Experience in ProSystems fx Tax, and Engagement a plus! Send resume to Carol@falcpa.com, visit our website @ www.falcpa.com. TAX ACCOUNTANT— Epstein Schneider, PLC - 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@epsteinschneider.com. TAX PROFESSIONAL — Roediger Hoff, PLC - Progressive Tucson CPA firm expanding team of tax professionals. Motivated, experienced tax preparers are invited to contact us to discuss opportunities with our friendly firm. Part-time or full-time. Please contact us at jobs@ roedigerhoff.com or call (520) 323-3060.

TAX PROFESSIONAL — Full-time employment available for a highly motivated CPA who has untapped potential and wants to quickly grow into a leadership/management role. Our team wants an energetic, people-person to join our sociable environment. You will focus on accounting, tax preparation, client relations, and enjoy flexible off-season hours. You will be working with other CPA’s and be actively involved in day-today business development. CPA with an existing practice may also inquire. Two positions are available in our Arcadia & Sun Lakes offices. Salary D.O.E. If you want to love your job and be the boss, contact: ruger@fontestax.com. TAX PREPARERS — CPA firm (Las Vegas, NV) - FAIR, ANDERSON & LANGERMAN is a mid-size CPA firm in Las Vegas seeking SENIOR LEVEL TAX PREPARER with a minimum of 4-5 years’ experience AND a STAFF LEVEL TAX PREPARER with a minimum of 2-3 years’ experience. These are full-time,

year round positions with benefits and a balanced work life. Looking for individuals who are seeking a non-traditional environment where they are treated like independent professionals. Our firm culture is rewarding, challenging with plenty of opportunity for upward mobility. Experience in ProSystem fx Tax, and Engagement a plus! Visit our website at www.falcpa.com for more information. Forward resume to carol@ falcpa.com. TAX AND AUDIT PROFESSIONALS – REDW — As one of the largest, fullservice CPA and business consulting firms in the Phoenix metropolitan area, REDW provides a broad range of services to a diverse client base. Our rapid growth and increasing demands for our services has created a need for highly motivated tax and audit professionals to join our Phoenix team. Successful candidates will have the opportunity to enhance their technical and professional skills, build and expand client relationships, and learn from industry

In the Black ... Adventures in Accounting I think I forgot my charitable contribution receipts and may have some of last year’s receipts in these boxes!

leaders. If you are looking for a career instead of job and have what it takes, apply at: redw.com/careers or contact Jessica Taylor at jtaylor@redw.com. TAX STAFF — Henderson Willis Jorgensen, PLC- Rapidly expanding East Valley CPA firm is seeking experienced Tax Staff to prepare business and individual returns. QuickBooks knowledge and experience required. This is an excellent “ground floor” opportunity. Please send resume to gerry@hendersonwillis.com.

Office Space DOWNTOWN PHOENIX CPA ANNEX-DESIGNED BY A CPA FOR A CPA—9 were available, ONLY 3 left. Free Rent and Free Parking. Office Space $500 per month. Ideal for sole proprietor. Walk to Ball Park, Basketball Arena and great restaurants. Dynamic environment. Collaborate. Share resources. Class A Office. Call Lance at (602) 741-7876. www.office4cpa.com.

Concept: Heidi Frei; Illust.: Jack Gannon

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Help potential “dream” clients find you by joining the ASCPA’s referral service. Go to www.ascpa.com, select My ASCPA and choose Join CPA Referral. JANUARY 2015 y AZ CPA

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

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

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.

The Argus Group 602 863-0080, ext. 105 or ext. 106

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