AZ CPA June 2015

AZ

CPA June 2015

The Arizona Society of Certified Public Accountants

Financial Planning Issue IRA Rollovers Energy Markets Long-Term Care Planning

www.ascpa.com

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AZ

CPA JUNE 2015

Volume 31 Number 5

Long-Term Care — A Key Component of Client Engagement

15

The government projects that, by the time we reach age 65, 70 percent of us will experience a long-term care event in our remaining years.

by Nicole Gurley

Features

Techniques to Improve Learning

17

Getting the most out of training continues to be one of the top challenges for firms.

Energy Markets: Still a Safe Haven for Retirees?

Oil, energy and utilities are common places for retirees to invest, but does the volatility translate into future investment problems?

by Michael Carlin, AIF, WMS

One-Rollover-Per-Year Rules

by Randy Johnston

11

13

IRA owners have a new pothole to avoid on the already bumpy road to retirement bliss.

by Jason E. Washo, CPA, PFS, CFP®

Columns & Departments 6

Chair’s Message by Robert E. Dubberly, CPA

7

Focus on Members

9

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

21 ASCPA Board Highlights 22 Classifieds

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

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In the Black ... Adventures in Accounting

AZ

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

Rob Dubberly Greg Nelson Molly Montgomery Mike Allen Brenda Blunt Teresa Finley Gary Fleming Randy Fletchall Mike Holt Bill Judge Jennifer Nordstrom Mark Patton Vanesa Romero Curtiss Smith Nancy Thomas

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

Cathy Poore TBA Jennifer Sullivan Ellen Carpenter

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

Jim Ryan1

Chick Arnold

Scott Erickson1

T.J. Ryan

Chuck Whetstine1

Liana Cocanower

Mike Harsch

Cathy Knapp

Susan Ward Harris

Lisa Reilly

Josh Mozell

Kevin Wright

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Chair’s Message

by Robert E. Dubberly, CPA

The Role of Leadership in Our Lives Recently, I’ve been thinking a lot about financial planning. I know that when mentioned, those two words can elicit panic amongst some, just as they can, in other instances, trigger feelings of joy and anticipation for others. The phrase itself may have a different meaning as a result of our given age and stage in our career.

I cannot help but think of my own childhood and what my parents taught me since a very early age regarding financial planning. Lesson number one was: save your money. It all began with my piggy bank. It was a gift that I received before I could even speak. As I grew, all gifts of money ranging from the tooth fairy, to holidays, and birthdays, was put into my piggy bank. I was also given special commemorative coins by my grandparents and other family members, which also found their way into the belly of my piggy bank. My financial planning had begun.

As I got older, and better with math (imagine that, a future accountant good with math), I longed to know how much money I really had. Could I afford to buy a new bike or a new pair of ice skates on my own? Could the piggy bank hold enough money so that I could buy a car someday?

When I was about 10, my parents decided it was time for lesson two on financial planning. This lesson required a trip to their bank. They decided it was time for me to have a savings account and hopefully earn some interest on the money that I saved. I received my ledger and was ecstatic as I learned exactly how much money I saved. There was no more guessing involved, like when

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I would hold my piggy bank and try to speculate how much money was in it by the weight. Of course, this second lesson was painful since my piggy bank was now defunct as a result.

As my childhood and early adulthood continued, I continued to learn the importance of financial planning from purchasing that first car, to buying our first home. To this day, that seed planted in me so long ago, continues to germinate, and now, I feel compelled to pass it on to my children. My wife and I have continued the tradition of the piggy banks with our boys, and they all have one. We have also made the trip to the bank to open up their individual savings accounts. They too, deposit their tooth fairy, holiday, and birthday money habitually. As a father, I feel compelled to teach them the importance of planning for the future, even before they begin working. I have to say, that due to technology my boys know a lot more about financial planning than I did when I was their age.

However, one thing remains constant, and that is the need for planning.

In today’s world, there are many tools that are available to assist us in planning for our financial future. Our computers and mobile devices allow us to trade stocks while we drink coffee and sit on

our couches, all in the comfort of our own home. In addition, we can manage our retirement accounts and other financial information, all with a few key strokes. More importantly, we can seek professionals who can design a road map for us, as we maneuver through our working years and into retirement.

Employers of choice understand financial planning is imperative to their work force and most offer a variety of options.

In closing, I would like to leave you with one final thought. No matter what stage you find yourself in, whether the piggy bank stage, the savings account stage or beyond, never stop planning AZ CPA for your financial future.

Join us for the Financial Planning Conference June 10

Focus on Members Rodney Wacker, CPA, was appointed to the More Foundation Board of Trustees.

Erika M. Yoshimura was approved for a five-year term on ASBA certification committee.

Newsworthy CPAs… Tom Wheelwright, CPA, was quoted in an article on this year’s tax season in Accounting Today.

Nancy Roach, CPA, was honored by the Phoenix Business Journal as one of their Outstanding Women in Business 2015.

In Memorium

Ron Butler, CPA, (center) was honored as Arizona Hispanic Chamber of Commerce’s 2015 Man of the Year. Butler was also elected chair of the Arizona Community Foundation.

Norman E. Hill, CPA Robert Houghman, CPA Jim Strassels, CPA

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John Dallmus ASCPA Past Chairs and Leaders Meeting

Anita Baker and Rob Dubberly

Greg Nelson, Molly Montgomery and Ryan DeMenna

Arizona Society of CPAs

Annual Meeting

& Awards Luncheon May 14, 2015 Carolyn Sechler

Rick Goldenson, Greg Nelson, Rob and Gary Fleming 8 Dubberly AZ CPA y JUNE 2015

Bill Balhoff, Cindie Hubiak & Randy Fletchall

Armando Roman, Steve Rodis and Sandy Abalos

A Dash of SALT

Arizona is Increasing the Limits on Fee Awards in Tax Cases This month’s state and local tax (SALT) column addresses the increased limits on fee awards for tax cases that go into effect on July 3, 2015.

The Arizona Department of Revenue (Department) permits CPAs to represent taxpayers at administrative proceedings involving tax disputes, and CPAs are permitted to represent taxpayers in small claims actions before the Arizona Tax Court. Small claims actions involve disputes less than $5,000 in tax, penalties and interest as of the time of the assessment and property tax appeals involving residential properties or properties with an assessed full cash value of less than $2 million.

Arizona Governor Doug Ducey recently signed HB 2131, which increases the amount of fees taxpayers may recover when they prevail in tax disputes with state, county, or municipal taxing authorities. The bill increases both the cap on hourly rates and the cap on overall recoveries of costs and fees in each proceeding.

Beginning in 2016, HB 2131 also requires Arizona’s Attorney General to adjust such limits based on the annual change in the metropolitan Phoenix consumer price index.

The New Few Award Limits for Administrative Proceedings Involving the Arizona Department of Revenue For administrative proceedings involving tax cases brought by or against the Department, taxpayers may recover “reasonable fees and other costs,” which are defined as “fees and other costs that are based on prevailing market rates for the kind and quality of the furnished services, but not exceeding the amounts actually spent for expert witnesses, the cost of any study, analysis, report, test or project that is found to be necessary

to prepare the party’s case and necessary fees for attorneys or other representatives.”

Once the changes go into effect on July 3, 2015, Arizona’s hourly cap on such fees will increase from $100 per hour to $350 per hour and the overall cap on fees in such administrative proceedings will increase from $20,000 to $75,000.

Significant Obstacles Remain to Recovering Fees Expended in Administrative Proceedings In order to recover such fees and costs, taxpayers must apply to the Department’s Problem Resolution Officer (PRO) within 30 days after the conclusion of the administrative proceeding and the PRO must determine that: (1) the Department’s position was not substantially justified; and (2) the taxpayer prevailed as to the most significant issue or set of issues.

The PRO may deny a fee award if the taxpayer unduly and unreasonably protracted the final resolution of the matter, or if the taxpayer prevailed only because of an intervening change in the law.

Unsatisfied taxpayers may appeal the PRO’s determination to the State Board of Tax Appeals.

The New Fee Award Limits for Tax Cases that Go to Court Arizona law permits courts to award “fees and other expenses” to taxpayers who prevail in tax disputes with state, county, or municipal taxing authorities.

“Fees and other expenses” are defined as “the reasonable expenses of expert witnesses, the reasonable cost of any study, analysis, engineering report, test

or project which the court finds to be directly related to and necessary for the presentation of the party’s case and reasonable and necessary attorney fees.”

When the changes go into effect on July 3, 2015, Arizona’s hourly cap on such fees will increase from $175 per hour to $350 per hour and the overall cap on fees in each court level will increase from $30,000 to $75,000.

Courts may deny or reduce such awards if the taxpayer unduly and unreasonably protracted the final resolution of the matter, if the taxpayer prevailed only because of an intervening change in the law, or if the taxpayer refused an offer of settlement that was at least as favorable as the relief ultimately granted.

Practice Tip! – Savvy CPAs help their clients determine whether it is prudent to appeal tax assessments, denials of refund claims, and property tax valuations and classifications. When doing so, they should take into consideration the upcoming increases in potential fee awards. Given these changes, taxpayers may not feel compelled to give in to or accept unreasonable settlement offers from taxing authorities quite as often AZ CPA as they did in the past.

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. If you have any questions, please contact the author. He can be reached at (602) 322-4146 or JBusby@ CavanaghLaw.com.

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Energy Markets: Still a Safe Haven for Retirees?

by Michael Carlin, AIF, WMS

Recent volatility in the oil and energy markets may have shaken the confidence of retirees and those who are about to retire. Oil, energy and utilities are common places for retirees to invest, but the question weighing on their minds is does the volatility translate into future investment problems? Do I pull my money out of these sectors now, or do I wait for a rebound? Is a rebound coming?

Ultimately, you need to work closely with your trusted advisers to determine what’s going to be most appropriate for your needs, but the background information provided in this article can help educate you on the situation to help you make informed decisions.

What’s all the commotion?

Oil. The price of oil has changed significantly in the last year. Between April 2014 and April 2015, oil was down more than 50 percent for a variety of reasons. These seem to be the most likely: Global demand for oil has softened – Everyone in the oil and energy markets expects more energy to be used year after year as global economies grow. There are more people on the planet and more areas becoming modernized. The fear is that global growth has slowed down. In fact, global growth has slowed quite a bit. The European economy grew only .9 percent in 2014. China’s growth

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slowed from the traditional seven percent+ growth rates to 6.3 percent last year, and fast growing markets like Latin America stalled to a paltry one percent GDP growth for 2014.

Oil is priced in U.S. dollars – Everywhere in the world, the only currency you can buy oil in is U.S. dollars, and the dollar has gotten stronger compared to every other global currency. As the dollar becomes more expensive, oil prices fall. This year alone, the dollar has been up at least 14.4 percent. In April, the dollar versus the euro was up more than 28 percent.

Energy. As the price of oil fell, energy stocks went with it. Toward the end of last year, they dropped about 25 percent. Normally, as energy prices go up over time, companies can churn out a steady profit. Of the energy stocks that went down, many of the ones hurt the worst were the exploration companies.

With oil prices dropping, it becomes less likely that companies will rush to extract oil and natural gas out of the ground. Thus, the companies that provide the goods and services to explore and distribute oil went down quite a bit in a short period of time.

Utilities. Many thought, with energy stocks dropping, that utility stocks would do the same. On the contrary, utility stocks were up on average more than 15 percent. Why? Mainly because interest rates in the United States fell last year and utility stocks tend to move with interest rates as well as energy prices. The 10-Year Treasury started 2014 around 3 percent and ended the year at less than 2 percent. As interest rates go down, investors are still looking to earn dividends, so they turn to utilities.

Fast forward to the beginning of 2015 – interest rates started to fall again, then started rising around the end of January, which brought utility stocks down eight percent in a matter of six weeks!

Is this cause for panic?

Retirees may be thinking get me out of these markets, but don’t panic. Take oil, for example. Institutions and investors have started to run away because of the

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exceptional price volatility; however, as astounding as a 54 percent drop seems, it’s not entirely unique. We saw the same movement in 2008 and 2009 during the financial crisis. Everything we know about energy is not wrong. Everyone is not going to start driving an electric car. And, more fuel efficient cars are not going to wipe out our need for energy.

Plus, let’s keep in mind we use oil for everything – asphalt, fertilizer, plastics, and military needs. Oil is truly a measure of economic activity rather than a statement about our need for oil to fuel cars! It’s the same with utilities. Are they broken? No. In the United States, our need for power hasn’t changed. As we continue to become more technologically dependent, our need for energy grows.

With clients, we use the opportunity where the market pushes stocks down to invest in a meaningful trend. We encourage investing in favorable longterm market trends that trade down for an explainable reason. When you can be disciplined with your investment approach, there’s very little difference between this and buying something you really like that is on sale. Oftentimes, with retirement money and life savings, people lose that perception.

What do retirees need to know?

First, ask yourself: how much growth do I need to have in my portfolio? In other words, how much risk are you willing to take? If you feel like you can handle the volatility in the market, then certainly energy stocks may make sense, but you should keep in mind a few factors that are going to continue to make the market volatile: Yemen – How far this civil war and unrest will spread in the Middle East is going to dictate a lot of the risk premium that goes on with the oil markets.

Again, we look at these factors, issues, and concerns as opportunities to invest.

Iranian nuclear deal – There seems to be an agreement, but a lot of details have yet to be worked out. If an agreement is not reached, that’s likely very good for the oil markets, which means oil prices should rise quite a bit.

The strong dollar – The U.S. dollar is strong right now. If the dollar was back to where it was six months ago, according to some energy experts, oil would be at least $10 per barrel higher than it is right now. You’ll also want to keep an eye on the fact that oil is priced in U.S. dollars, but there’s an ongoing effort to have it priced in a basket of currencies.

If that happens, watch out!

Knowing these factors, take a look at energy as a viable part of your growth portfolio. Have faith and confidence that the fundamentals of the world haven’t changed. People are still powering their buildings and cars, businesses are still making goods and services, and we need oil for many aspects of making our economy run well. In summary, don’t give up on energy. There’s a lot of opportunity out there when using a disciplined approach to step into something rather than step away.

Times have changed and so have the rules about being a successful investor.

In fact, these days, to be a successful investor, you have to be not only an economist, but also an expert in politics. Try to gain a long-term perspective with the market volatility. Even though the risks appear greater when a certain area of the market falls by large quantity, take solace in knowing that the more things change, the more they stay the same. Energy and utilities may not be ideal for everyone, but take a look at your portfolio and see if this downtrodden area is an ideal place to invest your funds with the help of your trusted advisers.

AZ CPA Michael Carlin, AIF, WMS, is the managing member and principal of Wealth Management, LLC. He works with a wide variety of clientele and is highly involved in all aspects of financial planning with a focus on the “big picture.”

Securities and advisory services offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Wealth Management, LLC and IFG are unaffiliated entities. OSJ Branch: 12671 High Bluff Dr. Suite 200, San Diego, CA 92130.

One-RolloverPer-Year Rules

by Jason E. Washo, CPA, PFS, CFP®

The adage goes “you can’t teach an old dog a new trick,” but how do you get Fido to forget something like Rollover? Of course I am talking about IRA Rollovers, and particularly, the indirect 60-day kind so many folks have done for years. Some do it as a short-term interest-free loan to themselves, in order to get through a tight spot.

Others just like running around town looking for the best CD rates at their local bank. Retirees doing the new toaster shuffle often get a check payable to them, walk it over to a new bank, then buy a new CD for their IRA (often done within minutes, let alone 60 days). The new once-per-year-rules make it clear: IRA owners have a new pothole to avoid on the already bumpy road to retirement bliss.

In IRS Announcements 2014-15 and 2014-32, they clarify their new interpretation of the one-rollover-per-year limitation of § 408(d)(3)(B) of the Internal Revenue Code. IRA owners cannot rely on § 408(d)(3)(A)(i) as a singular statement about not including distributions subsequently rolled over to another IRA in their gross income. An owner of IRAs

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must now aggregate all of their IRAs (including Traditional, Roth, SIMPLE IRAs, and SEP IRAs) and may only do one indirect rollover of funds once per 365 days. The Tax Court opinion of the January 2014 Bobrow v. Commissioner (T.C. Memo 2014-21) case was used by the IRS as justification for this new treatment for all IRA owners. The details of the Bobrow case included multiple indirect rollovers from various IRAs owned by both spouses. Until the Bobrow case, the treatment of IRAs individually for purposes of rollovers was common practice. Even IRS Publication 590 previously showed examples of indirect rollovers being allowed from different IRAs in less than 12 months.

The multiple indirect rollovers in the Bobrow case was viewed by the IRS as an abuse of the long-standing rule; the defendants argued they did exactly what Publication 590 said they could do. No need to go through the details of the case here, we now know the IRS is going to use this case to change the way indirect rollovers are viewed, and, more importantly, taxed, if your clients get it wrong.

What lead to the IRS deciding to take this opinion and apply its ruling to the entire nation is beyond my limits of reason. Wait a minute; Cogent Reports™ indicates approximately $280 Billion was headed for rollover IRAs in 2014 alone.

That is a lot of potentially taxable income. Maybe it is not so mysterious why the IRS wants to apply this rule after all!

This new approach to IRA rollovers has eliminated a very old friend, IRS Publication 590. From here forward, you will need to look for guidance in Publication’s 590-A and 590-B. For purposes of this particular topic, look to Publication 590-A Rollovers for guidance.

In practice, we rarely find ourselves handling indirect rollovers or 60-day rollovers. The best ways to avoid problems with this new rule is to handle rollovers as Direct Transfers. The IRS reinforced this point in Ann. 2014-15 and, additionally, in the new Publication 590-A. Direct transfers or trusteeto-trustee transfers are unlimited and do not allow the IRA owner to take

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In practice, we rarely find ourselves handling indirect rollovers or 60-day rollovers. possession of the funds. Conversions from Traditional IRAs to Roth IRAs also do not count towards the one-rolloverper-year rules. Rollovers from qualified plans to other qualified plans or IRAs are also not included in the one-peryear limitation.

Often, IRA owners will become concerned when a check is sent to them, even when it is still payable to the new IRA custodian. For example, a check may be payable to “XYZ CUSTODIAN TRADITIONAL IRA FBO Benjamin Bankes”. These are not counted in the once-per-year-rule, as the check is made payable to the custodian and the IRA owner does not have direct use of the funds. The key here is the IRA owner should not be able to deposit the funds into their own checking account, then, subsequently, redeposit the funds (indirectly) to their IRA. As of the date of this publication, we are only 6 months into the first 365 days of this new rule being applied to rollovers. The IRS clarified it would not apply this rule to any IRA rollovers that were completed prior to January 1, 2015. This does not mean the normal treatment of rollovers can be disregarded. An IRA where a rollover distribution was performed in 2014 cannot have another rollover from the same IRA within 365 days. For example, the owner takes a distribution from IRA 1 on June 1 and makes a timely rollover to IRA 2 on June 15, 2014. They cannot do another rollover from IRA 1 until after June 1, 2015.

Due to the timing of 1099-R reporting and 5498s, it may be sometime after January 31, 2016 or May 31, 2016 that clients will begin getting notices about ordinary income taxes and potential penalties being assessed for failure to avoid this new retirement road hazard.

Unfortunately, any unintentional IRA rollover errors found by that time will likely not be able to be fixed. The IRS has no authority to grant exceptions to

the once-per-year-rule. A disallowed rollover for a tax payer could potentially include ordinary income taxes, an early withdrawal penalty for those under 59 ½, and possibly an extra six percent penalty on funds thought to be rolled over as an excess IRA contribution (and any related earnings) not caught soon enough to be removed by year end.

On the bright side, IRAs still enjoy more indirect rollovers than Inherited IRAs. Beneficiary IRAs are forbidden to do any indirect rollovers. If you are the surviving spouse of an IRA holder that had multiple custodians, it is unclear how the IRS would treat an indirect rollover to your own IRA. It is likely, given how aggressive this new interpretation is, that they would treat rollovers from two different IRAs to a spouse’s own IRA as a violation of the rule.

The value of working with one advisor who oversees all of the client’s financial affairs is clear and more important than ever. All of us who hold the CPA, Personal Financial Specialist credential have the competence and confidence to integrate all of our clients’ financial needs and resources placing them in better positions to successfully navigate the road through retirement. While steam rollers often help smooth out the bumpy roads, blindly steam rolling IRAs could reveal deep potholes of costly tax liabilities in the future.

AZ CPA Jason E. Washo, CPA, PFS, CFP® is the owner of Washo Financial in Scottsdale, AZ. He is a member of the ASCPA. This article is not intended to provide individual tax or legal advice.Securities and Financial Planning offered through LPL Financial. A Registered Investment Adviser. Member FINRA/SIPC. Washo Financial is not an affiliate company of LPL Financial.Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and the federally registered CFP (with flame logo) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Long-Term Care — A Key Component of Client Engagement Nicole Gurley

The US FY 2015 debt is projected to be $18.6 trillion ($18,600,000,000,000).

You’re probably comfortable with all the zeros. It’s easier for me to relate in time: a million seconds equals about 12 days, a billion equals 31 years and a trillion equals 31,699 years. A conservative estimate for the cost of long-term care for baby boomers is $4,000,000,000,000. Converted to time that’s 126,186,946 years!

The government projects that, by the time we reach age 65, 70 percent of us will experience a long-term care event in our remaining years. If just 20 percent of 77 million boomers need five years of care at $50,000 per year (a combination of home care, assisted living and nursing home services), it would be about $3.85 trillion. Another 50 percent of us will need some care of lesser or greater duration and cost. So, figure about $4 trillion, give or take a billion or two.

The looming cost of long-term care for aging baby boomers will be huge for our families, our state, and our country. Certified public accountants are licensed and regulated by state boards of accountancy and top the list of all professions for honesty and trustworthiness. You have powerful influence with your clients.

Is long-term care expense part of the risk management and insurance planning services you provide?

Most of us have implemented a number of asset protection strategies.

For example, we wouldn’t drive our cars without auto insurance or own a home without homeowner’s insurance.

Consider the claim-to-policy ratio for auto insurance is roughly 1/300. With homeowner’s insurance the ratio is about 1/1,300.

With long-term care, it’s greater than one-half, with seven in 10 Americans expected to need care. It is this insurance that most all older Americans will need. And, it is this insurance that is an effective risk management strategy to safeguard retirement assets and income.

Why is planning for long-term care expense important?

A pretty common concern today is outliving money planned for retirement.

Longevity is relatively new to humankind. It’s only two or three generations old. When Social Security was introduced in 1935, life expectancy was 61.

Today, the combined life expectancy for men and women is 79.2 years.

Longevity brings with it new requirements, like retirement financial planning and long-term care expense plan-

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ning. The elderly have always required assistance as they aged. We’re living longer but not necessarily healthier or with better quality. Do you think you will live a long life? Check out this life expectancy calculator at www. livingto100.com. (I did!*) Then, think about whether or not you might need some assistance as you age.

Traditionally, in our country, longterm care has been provided at home by family members – wives, daughters, and daughters-in law. But, our society has changed significantly over the past two or three generations. Today, more women are in the workforce. We have high divorce rates. We’re having smaller families and families are spread geographically all over the country. Relying on family members to provide care is not the option it once was and that makes being able to pay for care more important than ever before.

A 2011 study conducted by MetLife’s Mature Market Institute focused on the cost of caregiving by baby boomers.

It reported a quarter of working and non-working adult children, primarily baby boomers, provide personal care or financial assistance to a parent. The estimated total of lost wages, pension and Social Security benefits of these caregivers is nearly $3 trillion. The cost impact of caregiving on the individual female caregiver equals $324,044. For men it’s $283,716.

Are you even talking about it?

A national survey conducted in 2010 among U.S. adult consumers by Age Wave/Harris Interactive and sponsored

by Genworth Financial reported that the vast majority of Americans acknowledge the importance of planning for long-term care expense, but only nine percent said their financial advisor had discussed the issue with them.

Although long-term care is top of mind and long-term care insurance is a risk management strategy that can safeguard assets and income planned for retirement, many Americans have not even discussed long-term care with family members. Ninety-two percent of spouses/partners had not discussed the

following three questions: 1) preferred care options and associated costs, 2) roles and responsibilities of family members overseeing the care, and 3) how the care will be funded. And, 95 percent of parents had not had this key discussion with their adult children, who are likely to be the decision-makers when parents need care.

The industry has changed in the last decade. Fewer insurance carriers remain dedicated to this market. Premiums are now gender-based on many products.

That means that women pay higher premiums on some products. Issue ages are coming down. And, consumers buy differently than a decade ago. The new norm is some coverage is better than none. But, consumers still set their premium budget and determine the level of risk they want to offset.

Also, new to the market are products specifically designed for people who ignored the issue for too long and now are either too old to buy long-term care insurance or too ill to qualify. There are impaired risk options, membership services, and FDIC-insured and bankadministered Long-Term Care Benefit Accounts.

FYI, we tend to think of long-term care as an end of life issue for the elderly.

But, today, in our country, 44 percent of those receiving long-term care are working age adults between the ages of 18 and 64. The primary reason for their care is motor vehicle accidents.

This not so surprising, given cell phones and texting. * I could live to be 106 —a scary thought! I’m very glad that I have longterm care insurance. At 106, I know I’ll AZ CPA need help!

Nicole Gurley, president of Gurley LTCI, holds the CLTC designation (Certified in Long-Term Care). Long-term care expense planning is the exclusive focus of her general agency. She can be reached at Nicole@GurleyLTCI.com. She will be a speaker at the Financial Planning Conference on June 9.

Techniques to Improve Learning

by Randy Johnston

This year’s recently completed 2015 Accounting Firm Operations and Technology Survey by Network Management Group, Inc. and Insight Research continued to highlight the need for training for accountants. A number of our state Society members participated in this national survey. Survey question 15 asked about the amount of time spent on training staff, and 63.2 percent of all firms spent zero time! The amount of training at the firm level in 2015 dropped to 3.2 percent from six percent in 2014. Notably, firms of 11 people and more spent around five percent of their time in training, where smaller organizations spent four percent. In question 19 of the survey, training was the top technology challenge in 5.6 percent of all firms responding. As a possible explanation of this top challenge, 17 percent of all respondents named training as their most annoying technology challenge. So how can we train effectively without getting annoyed about training? Understanding that people learn in different ways is a great place to start.

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What Are The Main Learning Models?

There are currently many models on the types of learning styles, but two similar models are the most popular.

First, a learning modality model from Barbe, Swassing, and Milone (1979) claims there are three main types of learning styles: auditory, visual, and kinesthetic. Most people learn best through a combination of the three types of learning styles, but everybody is different. Although most people use a combination of the three learning styles, they usually have a clear preference for one. Knowing and understanding the types of learning styles is important for learners of any age. The three types of learning styles include: • Auditory Learners: Hear • Visual Learners: See • Kinesthetic Learners: Touch Auditory learners would rather listen to things being explained than read about them. Reciting information out

loud and having music in the background is common. Other noises may become a distraction resulting in a need for a relatively quiet place. Visual learners learn best by looking at graphics, watching a demonstration, or reading.

For them, it’s easy to look at charts and graphs, but they may have difficulty focusing while listening to an explanation. Kinesthetic learners process information best through a “hands-on” experience. Actually doing an activity can be the easiest way for them to learn.

Sitting still while learning may be difficult, but writing things down makes it easier to understand. By the way, most accountants are kinesthetic learners.

A second popular model says we learn through different techniques according to the model of multiple intelligences from Howard Gardner of Harvard (1991). When content is provided to your team members, you should recognize that accountants have different learning styles according to the multiple intelligence model. Your

methodology should include one or more of the learning styles to achieve maximum effectiveness. This includes: • Visual (spatial): You prefer using pictures, images, and spatial understanding.

• Aural (auditory-musical): You prefer using sound and music.

• Verbal (linguistic): You prefer using words, both in speech and writing.

• Physical (kinesthetic): You prefer using your body, hands and sense of touch.

• Logical (mathematical): You prefer using logic, reasoning and systems.

• Social (interpersonal): You prefer to learn in groups or with other people.

• Solitary (intrapersonal): You prefer to work alone and use self-study.

Gardner says that these differences “challenge an educational system that

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Special pricing may be available for society members.** To learn more, visit becker.com or call 877.CPA.EXAM. *Becker Professional Education students pass at twice the rate of all CPA Exam candidates who did not take a review course from Becker, based on averages of AICPA-published pass rates. Data verified by an independent third-party research firm. **This offer valid only on complete, four part course tuition price and cannot be combined with any other offers.rved. ©2013 DeVry/Becker Educational Development Corp. All rights reserved.

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assumes that everyone can learn the same materials in the same way and that a uniform, universal measure suffices to test student learning. Indeed, as currently constituted, our educational system is heavily biased toward linguistic modes of instruction and assessment and, to a somewhat lesser degree, toward logical-quantitative modes as well.” How can you provide the learning content needed in an interesting way that satisfies the multiple intelligences model? One statistic of note about the most preferred ways to learn from Question 85 of the 2nd Annual Accounting Firm Operations and Technology Survey is that the top sources of learning include: educational webinars (36.1 percent), from my peers (31.3 percent), and industry events I attend in person (29.8 percent). There are assessment tools that measure learning styles as well as one from K2 Enterprises and this state society that measures technical competencies in tools like Microsoft Excel.

So What Do We Do About Learning?

Choose content that is relative to the tasks that need completed and a delivery method that fits the learning style.

Consider the needs of the organization and the individual and make a learning plan that includes a career ladder.

Provide the course work during a time that the individual is most effective at learning. Consider one on one coaching for the busiest of your team members, particularly for tactical “how-to” tasks.

Ask them to simply keep a list of questions and structure the learning on how to resolve these specific problems.

Always have orientation learning for any new product such as Windows or Microsoft Office, or an upgrade to your core application. Ask your team questions about where time is wasted, which processes are time consuming, about areas of confusion or topics that need clarity. Put yourself and your team in the habit of asking how can you do something the best and what is the most effective way to do it? When you gain the habit of using the Kipling questions of asking: • Who is it about?

• What happened?

• When did it take place?

• Where did it take place?

• Why did it happen?

• How did it happen?

You will have a much stronger view of what is needed to improve your learnAZ CPA ing process.

Randy Johnston is a shareholder in K2 Enterprises. Contact him at randy@ k2e.com.

Behind the Scenes: Press Coffee Roastery July 23 — 10 a.m.-Noon Please join us as we go behind the scenes to (see, smell and taste!) Press Coffee. This locally owned coffee roaster has two locations in the Valley in addition to the roastery. Come get a unique perspective on how your morning cup of java came to be. We will learn about the margins in brewing a cup of coffee, the process of purchasing beans and commodity futures with the fluctuating coffee market, and managing inventory.

We will also go through the process of cupping as we tour the roastery.

www.ascpa.com

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ASCPA Conferences Not-for-Profit Conference

June 24 Black Canyon Conference Center Keynote Speaker: CFO of GuideStar Customize your experience at the conference with a variety of breakout sessions using three tracks: audit, tax and soft skills. Round out your day with Nonprofit Ideas on Speed Dial, where each expert will provide five minutes of their best ideas.

Two Conferences in One Day – Attend One or Both, Attend in Person or via Webcast September 11 ASCPA Learning Center, Phoenix Discount when you register for both. Lunch included for all in-person conference attendees.

Business Valuation Conference 8 a.m. to Noon

This conference includes national and local speakers who will deliver informative, progressive and dynamic sessions on business valuation.

Platinum Sponsor:

Topics Include:

2015 Business & Industry Conference August 19 National Bank of Arizona Conference Center As a CPA working in business and industry, you probably wear many hats.

Hear from experts on a variety of issues who will cover trends and give you tips to approach your challenges.

Topics Include: •

Engagement – The Key to Employee Retention and High Performance

•

Building a High Performance Team

•

Two Perspectives on Paperless Office

•

Economic Outlook

• •

•

How to Use Small Transaction Statistics

•

Business Valuations in Family Law

•

Valuing the Small Business: It is Harder Than It Seems!

Forensic & Litigation Services Conference 12:30 to 4:30 p.m.

This conference is designed to educate attendees as to the rewards and challenges of forensic accounting. Receive knowledge and training to stay on top of this changing field.

Topics Include: •

Forensic Technology Tools for Forensic Accounting

•

Determining Self-Employed Income in a Divorce

Healthcare Reform

•

Avoiding a Successful Daubert Challenge

Detecting and Preventing a Cyberattack in Your Organization

•

Forensic Accounting in Criminal Case

Learn more and register by going to www.ascpa.com, click on CPE and then conferences.

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Highlights of Board of Directors’ April Meeting

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

Among other actions at its April 29, 2015 meeting, the ASCPA Board of Directors reviewed the following:

Provided valuation consulting services in accordance with ASC Topic 718

Provided valuation consulting services in accordance with ASC Topics 718 and 805

Provided valuation consulting services in accordance with ASC Topic 805

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

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

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

Consent Agenda

The consent agenda, which included the board minutes, financial statements, 2015-2016 Society budget, Foundation contribution memo and board vacancy memo, was approved.

The Future of CPA Associations

The board engaged in a robust brainstorming discussion on the challenges and opportunities associations have to remain relevant to CPAs and how to engage prospective CPAs. Board of Accountancy/State Bar updates

John Sizer and Monica Petersen, Arizona State Board of Accountancy, and John Phelps, CEO/executive director of the State Bar of Arizona, dialogued with the board.

Strategic measurement update

Cindie noted that all measurements were achieved for the fiscal year ended April 30, 2015!

Year-end Wrap-up Outgoing board members Diane Groover, Craig Van Slyke, Jared Van Arsdale and Sandra Torre shared thoughts about their time on the board and the future of the Society. Anita Baker, chair of the board, thanked each member for their contributions during the year.

2800 N. Central Ave. Phoenix, AZ 85004 602-544-3550 33 S. Fifth Ave. Tucson, AZ 85701 520-344-3859 383 Corona St. Denver, CO 80218 720-504-0990

www.kotzinvaluation.com

Increase your clients’ cash flow by unlocking the additional depreciation deductions buried in their real estate.

Cost Segregation Studies For a complimentary feasibility analysis of their property call Brizel & Associates costseg@costsegstudy.com (480) 963-2872 www.costsegstudy.com

A Day in the Life

Randy Fletchall and Jared Van Arsdale shared a view of the challenges and joys they experience in their life and job.

Other Business

Anita gave an update on the Department of Labor’s Employee Benefit Plan Audit Quality Study.

If you would like additional information, please contact Cindie Hubiak at (602) 324-2888; AZ toll free at (888) 237-0700, Ext. 203; or chubiak@ascpa.com.

ADOR Transaction Privilege Tax Changes Update June 23 (9 a.m. — Noon)

This seminar will focus on the new changes from the Arizona Department of Revenue (ADOR) on the Transaction Privilege Tax (TPT) and the most recent updates.

Go to www.ascpa.com to register.

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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) 9902727 or email joy@awcpas.com.

TUCSON CPA TAX PRACTICE AVAILABLE FOR MERGER/BUYOUT OR NEW PARTNER — Two retirement-minded partners of a $1 million, primarily tax practice in Tucson seek a firm that wants to merge or buyout the partners over an agreed upon time frame. The practice is well established over the last thirty years and highly profitable with a strong concentration in business and individual tax preparation and consulting. Firm would also consider a strong candidate to buy into the practice. Firm has a no cost 90-day notice to landlord, if firm merges and cancels lease. Please send inquiries and desired goals to yazzr33@gmail.com or CPA, 6590 North Regal Manor, Tucson, Az 85750.

TWO PARTNER CPA FIRM SEEKS SUCCESSION PLAN — Located in north central Phoenix the firm serves a wide variety of clients with writeup, compilation, review, audit and consulting in addition to trust, estate,

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corporate, partnership, fiduciary and individual income tax services.The firm has a 25+ years history with annual revenues of $450K+. The partners wish to investigate merger/buyout possibilities. Principals only, please respond to: cpa85020@gmail.com.

Employment Audit Senior Accountant— Frost, PLLC — We are searching for an experienced assurance professional to work from our Phoenix office. The ideal candidate will possess two to four years of public accounting experience demonstrating a progression in complexity of auditing and accounting tasks. Lead client audit engagements, which include planning, executing, directing, and completing financial audits. Requirements & Qualifications: • Excellent project management, analytical, interpersonal, oral and written communication skills. • Strong leadership, training, and mentoring skills.• Professionalism, dependability, integrity and trustworthiness combined with a cooperative attitude.• Highly motivated self – starter with the ability to multitask and complete assignments within time constraints.• Bachelors’ or Master’s degree in Accounting, CPA eligible, prefer CPA • Apply www.frostpllc.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.

Tax Manager — Tiffany White CPA, PLC — East Valley CPA firm seeking a Tax Manager to consult with clients and review individual, partnership, trust and corporate tax returns.

Other duties are involved as client needs dictate. Strong income tax, accounting, analytical and communication skills required. Minimum of 8 years recent income tax experience with a CPA firm desired. A working knowledge of Lacerte, Drake, Quickbooks, and Excel are necessary. CPA license required and Master’s degree helpful.

Salary commensurate with experience. http://www.tiffanywhitecpa.com Please phone (480) 294-8900.

Tax Accountant — Abbott Privee, PLLC — Tax Accountant needed for CPA office in Central Phoenix. Minimum 2-5 years experience in preparing business and individual tax returns.

Experience in a paperless environment a plus. Please e-mail resume and salary requirements to alyce@abbottprivee.com.

Audit Manager/Senior — We are seeking a professional, hard-working and self-motivated Audit Manager for our office. A successful candidate will be responsible for all phases of the audit, including: planning, directing, and completion of audit projects.

This is a great opportunity for someone who is seeking more responsibility and career growth. Responsibilities: • Present and communicate at an executive level• Review financial statements• Preparation of informational tax returns• Responsible for managing audit projects• Resolve audit related problems and make recommendations for improvements• Travel, when necessary.Qualifications and Skills:• 5+ years of experience in public accounting• Audit experience with Nonprofits• Must have a Bachelor’s Degree in Accounting • CPA license or candidate.

Please email resumes to resume@cpatucson.com.

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Join communities on Connect for your field of interest.

3 More on Comfort Letters 3 Non-profit Audits 3 The Latest on Identity Theft and IRS Scams

In the Black ... Adventures in Accounting You’re a CPA? Would you be interested in joining our charity’s board? We need a treasurer.

Umm, sure.

Concept: Heidi Frei; Illust.: Jack Gannon

Non-cash donations

We could use a CPA as treasurer of our board.

Are you interested?

990s

Why Not?

Board Governance

As a CPA, you may have been asked to join a nonprofit board.

Make sure you are up-to-date on nonprofit accounting and trends by attending the ASCPA’s Not-for-Profit Conference - June 24.

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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

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

24 AZ CPA y JUNE 2015

602.730.3600 | redw.com