AZ CPA June 2016 by ASCPA

AZ CPA June 2016

Five Tips for Serving Your Synagogue, Church or Temple Clients Procrastinate on Purpose — A New Look at Time Management

Six Tips for Using Big Data

Habitat for Humanity’s Debra Bradley, CPA

The Arizona Society of Certified Public Accountants y www.ascpa.com

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JUNE 2016 AZ CPA

AZ CPA The Arizona Society of Certified Public Accountants President & CEO

Cindie Hubiak

Editor

Patricia Gannon

Advertising

Heidi Frei

Board of Directors Chair Chair-Elect Secretary/Treasurer Directors

Greg Nelson Molly Montgomery Mike Allen Jared Van Arsdale Brenda Blunt Michael Chesin Virginia DeSanto Marcus Feder Teresa Finley Julia Miessner Mark Patton Jeffrey Quick Curtiss Smith Nancy Thomas Char Woodall

Immediate Past Chair Rob Dubberly AICPA Council Members

Karen Abraham Armando Roman

Chapter Presidents Southern Chapter Northern Chapter

Cathy Poore Bethany de Alva Southwest Chapter Jennifer Sullivan North-Central Chapter 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 articles or advertisements within this publication. Opinions expressed by 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 www.ascpa.com

AZ CPA JUNE 2016

AZ CPA Volume 32 Number 5

June 2016

Features In Good Company 11

Habitat for Humanity’s COO/CFO Debra Bradley makes serving others a lifetime career. by Patty Gannon

Five Tips for Serving Your Synagogue, Church or Temple Clients

Faith-based nonprofits must be approached differently than other 501(c)(3) charities.

Columns & Departments Chair’s Message by Greg Nelson, CPA

Member News

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

ASCPA Board Highlights Quick Quiz

by Monica Stern, CPA, and Robert Erven Brown, Esq.

20 21

Classifieds 22

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

on Purpose — A New 16 Procrastinate Look at Time Management

Become a time “multiplier” and increase your future productivity.

by Jason McKeever

Six Tips for Using Data More Wisely

Big Data can change the way we do business. Make sure you are using the data you collect in the right way. by Brett Knowles

JUNE 2016 AZ CPA

ASCPA Chair’s Message

Arizona’s Profitable Nonprofits

by Greg Nelson, CPA

There are more than 21,000 nonprofits in Arizona generating $28 billion in annual revenue, with 72% of this revenue “earned” from programs and services.

AZ CPA JUNE 2016

On Saturday mornings, I’ve developed a routine. After groggily turning off the alarm, I “suit up” for a quick run through my neighborhood. I’m generally thinking about many random things as I slowly pass the dog walkers while watching out for the bicyclists. But last Saturday, I thought I’d see how many nonprofit organizations were represented on my route. After exiting my neighborhood, I passed a couple of SRP utility boxes, a church where the Boy Scouts meet on Saturday mornings, the Montessori School at the bottom of the hill, the park where the Little League Team was practicing, the YMCA and the lot where the new fire station will be built. Finally, I turned back toward home through my homeowners association-controlled (HOA) neighborhood. Nonprofit organizations are so woven into the fabric of our daily lives that we often fail to consider how ubiquitous they have become. It’s much easier to think of the nonprofit status of cancer research, Haitian relief efforts and puppy rescue organizations. But nonprofits, in their many forms, surround and enrich us much more than we think. They are comprised of our museums, hospitals, churches, schools, professional associations, foundations, zoos and even the Green Bay Packers. According to a recent report, “Arizona Nonprofits: Economic Power, Positive Impact,” in 2014, Arizona nonprofits were responsible for 325,000 jobs and 7.7% of Arizona’s non-government employment. And one in 16 Arizonans is employed by a nonprofit organization. There are more than 21,000 nonprofits in Arizona generating $28 billion in annual revenue, with 72% of this revenue “earned” from programs and services. For the past 13 years, I have served as the CFO for a large nonprofit association with offices in Scottsdale and Washington, D.C. During this time, I have had the opportunity to meet many nonprofit executives and staff. Without exception, I have been most impressed by those who are passionate and focused on their mission, which invariably involves making a difference in the lives of those they serve. The world is indeed a better place because of the passion they bring to their workplace. In fulfilling their mission, the most effective nonprofits have excellent governance and management practices in place. Over the past 20 years, many more business resources and advocates for the nonprofit sector have become available. In 1999, the Arizona Board of Regents established the Nonprofit Management Institute, which in 2008 became the Arizona State University Lodestar Center for Philanthropy and Nonprofit Innovation. In 1996, our Arizona Society of CPAs formed a committee to develop a conference for CPAs who are service providers or leaders in nonprofit organizations. Now in its 21st year, the ASCPA Not-for-Profit Conference is scheduled for June 22. If you are a CPA who is employed by, or who volunteers or provides services to, an Arizona nonprofit, this is a great opportunity to learn and network with some of the many outstanding nonprofit business leaders in Arizona. Each day we are all positively affected by Arizona’s many nonprofit organizations. I hope you will consider attending this informative and well-attended conference. n

Member News New ASCPA Board Member Appointed

Marcus Feder, CPA, joins the ASCPA Board of Directors for a one-year term (2016-2017). This one-year term became available when board member Mike Allen accepted the secretary/treasurer position for the 20162017 year, leaving the second year of his director term open. The ASCPA Board of Directors approved Marcus Feder’s nomination at their April meeting. Feder is an audit manager with Salt River Project. Arizona Accountant Receives Elijah Watt Sells Award

Congratulations to accountant Bei Ye who was the sole Arizona individual to receive the American Institute of CPAs’ 2015 Elijah Watt Sells Award. The award is given to CPA candidates who have obtained a cumulative average score above 95.50 across all four sections of the Uniform CPA Examination, passed all four sections of the Examination on their first attempt and completed testing in 2015. A total of 93,742 individuals sat for the Examination in 2015, with 75 candidates meeting the criteria to receive the Elijah Watt Sells Award. Bei Ye is a graduate of the University of South Florida with a B.S. in Accounting and the University of Tampa with an M.S. in Accounting. Ye is employed with PricewaterhouseCoopers LLP in Phoenix, AZ. Accountant Gives Back to Big Brothers Big Sisters

Dane Baxter, an accountant at Henry & Horne, LLP, is an active volunteer with Big Brothers Big Sisters of Central Arizona (BBBS), spending several hours a month mentoring his little brother. Baxter and his little brother Damien get together at

Dane Baxter (right) with Larry Fitzgerald and his “little brother” Damien. least once a week and recently had the chance to meet Arizona Cardinals wide receiver Larry Fitzgerald at BBBS’s event. Baxter has been involved with BBBS for four years. It’s an organization that played an important role in his life. “I got involved because I was a part of the program when I was a child. I did not have many positive male role models in my life and BBBS provided me with a big brother, who ended up being a great mentor to me. Because of this, I wanted to pay the program back the best way I knew how and that was to become a big brother,” said Baxter.

JUNE 2016 AZ CPA

A Spectrum of Opportunities ASCPA Annual Meeting and Awards Luncheon May 19, 2016 Arizona Biltmore Resort Thanks to the members who helped us honor our Life Member Steve Harris, CPA, and Excellence in Teaching Award recipient Dr. Larry Watkins (NAU), and remember Dr. William Huizingh at the Annual Meeting. Our gold sponsors raffled off some great prizes: Southwest Risk Management — Apple Watch, CPACharge — GoPro, and Headfarmer — iPad Mini. AICPA Immediate Past Chair Tommye Barie was the keynote speaker and she and President & CEO Cindie Hubiak updated the attendees on what is happening with the profession and the ASCPA. Tommye Barie

Virginia DeSanto and Brenda Blunt

Greg Nelson, Molly Montgomery & Tommye Barie

AZ CPA JUNE 2016

Steve Harris

Cindie Hubiak

Life members and past chairs

A Dash of SALT

Common Ways to Limit the Impact of Arizona’s Speculative Builder Tax This month’s state and local tax (SALT) column addresses common ways to limit the impact of Arizona’s speculative builder tax through the use of exclusions, exemptions, deductions, and more. Arizona cities and towns impose a privilege (sales) tax on speculative builders that operates much like a real estate transfer tax in some situations. However, as is often the case with other sales taxes, there are opportunities that limit the impact of Arizona’s speculative builder tax. Many of those opportunities require planning ahead, as well as obtaining and maintaining copies of appropriate documentation — often including exemption certificates.

by James G. Busby, Jr., CPA

Definitional Limitations This local speculative builder tax only applies to sales of “improved real property” by “speculative builders.” As I explained in my column last month, sometimes legally planning around this tax simply involves postponing sales of certain types of property for a short time in order to avoid falling within the scope of those key terms.

Tax Credits and Cost Shifting When the tax does apply, it applies to 65 percent of the total selling price from the sale of the subject property after taking into account all available exclusions, deductions, exemptions, and credits. The dollar-for-dollar tax credits identified in my column last month often are the most direct way to limit the amount of tax due. And, speculative builders who are aware of the tax can try to pass the cost of tax along to the party who purchases the property from them.

Exclusions While the definitional limitations, tax credits, and the idea of passing the cost of the tax along to one’s buyer, if possible, apply in all Arizona cities and towns that impose speculative builder tax; exclusions from the tax vary from jurisdiction to jurisdiction. For example, five cities or towns allow speculative builders to exclude the cost of land from their tax base, and 17 cities or towns allow speculative builders to exclude the fair market value of land from their tax base. However, most cities and towns that impose speculative builder tax do not allow speculative builders either of these exclusions. One common exclusion available in all jurisdictions allows speculative builders that obtain the appropriate exemption certificate to shift the tax liability on residential lots or partially completed residential properties until substantial completion of the home. Other common exclusions that are available in all jurisdictions allow speculative builders to exclude the “direct costs” of providing architectural or engineering services and to exclude the “prior value” of a property in cases of “reconstruction.”

James G. Busby, Jr., CPA, is a state and local tax attorney 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. If you have any questions, please contact the author. He can be reached at (602) 322-4146 or JBusby@CavanaghLaw.com.

JUNE 2016 AZ CPA

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The most commonly used exemptions are for: (1) the cost of “income producing capital equipment” and tangible personal property used at a qualifying nonprofit hospital, community health center, or health care organization that is exempt or deductible from the municipal sales tax base for retailers; and (2) amounts attributable to “development fees” that are incurred in relation to the construction, development, or improvement of real property. Exemptions also are available for contracts related to: (1) the construction of environmentally controlled facilities to raise poultry for the production of eggs; (2) the installation, assembly, repair, or maintenance of cleanrooms that are deducted from the municipal sales tax base for retailers; and (3) certain activities for persons engaged in activities regarding livestock, livestock products, crops, or crop products if the project is directly and primarily used to prevent, monitor, control, or reduce air, water or land pollution.

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Arizona cities and towns allow just three deductions from the speculative builder tax. Namely, there are deductions for: (1) 35 percent of all amounts subject to tax (hence, the 65 percent tax base); (2) proceeds from installing, assembling, repairing, or maintaining “income producing capital equipment” that is deducted from the municipal sales tax base for retailers so long as the equipment does not become “permanently attached” to realty or a manufactured building; and (3) proceeds from a contract to provide and install a qualified solar energy device.

Practice Tip! — Speculative builders that enter into a contract to sell a property with one or more tenants in place may be able to reduce their tax base further by taking into account the portion of the sales price attributable to one or more leases that are in effect. n

In Good Company

Building a Career in Public Service Habitat for Humanity’s COO/CFO Makes Serving Others a Lifetime Career When Debra Bradley, CPA, first started her career in public accounting, she thought she might have made one of the biggest mistakes of her life. “I had a knack for it, but after working in public accounting, I did not enjoy it. It was through one of my mentors, Tom Avery, CPA, who opened my eyes to all the opportunities there are out there for a CPA.” She got involved in the nonprofit community and has never looked back. Currently COO and CFO for Habitat for Humanity Central Arizona, Bradley’s background includes more than 28 years in the nonprofit financial industry. “My advice to new CPAs is to find your passion, and then truly you won’t have to work a day in your life,” says Bradley. “Even after 22 years here at Habitat, I still look forward to coming to work each day. If I have a rough day, all I need to do is go to one of the job sites or visit with a family. Then I can see that we are doing good things; we are making a difference in the world one little piece at a time. And

I have a small role in that.” Habitat for Humanity Central Arizona (HFHCAZ), an affiliate of Habitat for Humanity International, is an independent, locally run, nonprofit 501(c)(3) organization. They work in partnership with low-income families, volunteers and sponsors to build, renovate and repair homes. HFHCAZ is one of the most active of the Habitat affiliates in the U.S. Since 1985, they have built or renovated more than 1,000 homes throughout Maricopa County and parts of Pinal County. “When I started at Habitat, we had a small office in the back of a church,” says Bradley. “I was the fourth employee hired, and on my first day, I didn’t even have a chair to sit in. We had only one computer. We are now a staff of 80 with five retail outlets and two administrative offices, and we cover the majority of Maricopa County and Pinal County.” Bradley gives credit to another mentor, Dennis Mitchem, CPA, who was the president of HFHCAZ when she started. “He was so inspirational. I learned something from that man every single day,” says Bradley. Her role at Habitat has changed over the years. “I was the CFO for 15 years, and then I became the COO, and for a number of years I focused on the financial aspect of the organization that was the ‘look forward’ piece. I looked at the budgets and the strategic planning and cash projections,” says Bradley. “Then I started to oversee the volunteer services departments. We work with 10,000 volunteers a year in our organization. It is a huge component of our operation here and completely different than any accounting role I previously had. Now I’m both the COO and CFO. And I’m looking at the financial planning aspect of the business again. “Our goal is to continue to grow and make a bigger impact on our families. Not only do we build houses, but a few years ago, we started a home repair program and we recently started a neighborhood revitalization program with our partner Grand Canyon University. We are in the Grand Canyon corridor; repairing homes and elevating

JUNE 2016 AZ CPA

that entire community surrounding the university. It is a very exciting program for us this year. “Our biggest challenge in working in a nonprofit environment is limited resources. Since 2008, we have been able to grow our organization and repair and build more homes than we have ever done because of government grants. And while volunteers are the life blood of our organization — we deal with volunteers from every aspect of the community — with that comes some challenges. “Last year we completed 38 new and renovated homes, and we served almost 300 families, between our home repair programs and our emergency repair programs.” Bradley says the secret to her longevity at Habitat is the perfect mix of her passion for the mission of Habitat for Humanity and her financial skill set. “It is critical that the business of the nonprofit is run efficiently and that we are good stewards of the donors’ dollars,” states Bradley. “I was an ‘Air Force brat’ growing up and we moved around a lot, so I have a sense in my core that everyone needs

AZ CPA JUNE 2016

Volunteers leave messages for new homeowners when building Habitat homes.

a simple, decent place to live – a place to call home. Our mission resonates with me.” After living all over the world and attending several different colleges before obtaining her B.S. in Accountancy at Arizona State University, she has definitely settled down. “Since 1994, I have been married to the same man, worked at the same job and lived in the same home!” says Bradley. Bradley says the best part of her job is working with the volunteers and the staff at Habitat. “I am out on-site on Saturdays working with the staff, volunteers and families who have managed to qualify for our program. I love witnessing the change that our program can bring to

a family’s life. The incredible staff at Habitat is committed to the mission, and we have a great time. Our donors are the most generous and fine people out there. The whole environment is inspiring, and at the end of the day, you walk away and there is a whole house standing, or repaired, and the results are tangible. You can see it. You can touch it!” Her workweek is very busy, often working nights and weekends. But when building slows down in summer months, she loves to escape to the outdoors by camping in the Arizona mountains, or by going deep-sea fishing. Bradley and her husband have two grown daughters and live in Tempe. n — Patty Gannon

Five Tips

for Serving Your Synagogue, Church or Temple Clients by Monica Stern, CPA, and Robert Erven Brown, Esq. Faith-based nonprofits must be approached differently than your run-of-the-mill 501(c)(3) charities. There are special IRS and legal privileges and challenges involved in serving religious nonprofit organizations. In this article we examine some common pitfalls for the CPAs and attorneys whose practice area may be expanding to include faith-based charitable organizations, such as churches and other religious organizations: • Taxing the Strip Mall Church • Pitfalls of Church Payrolls • Forms 1023 & 990: When and Why to File • Nonprofits Wrestling With Cultural Issues • Abandoning Tax Exempt Status — Really?

“Church” Definition Because churches are entitled to certain special privileges and face other specific requirements under Internal Revenue Code (IRC), it’s important to understand the difference between a “church” and a “religious organization.” It is also important to understand the differences between those two faith-based organizations as contrasted with most other 501(c)(3) organizations due to the special tax treatment of churches. Although the word “church” is not defined in the IRC, American Guidance Foundation, Inc. vs. United States recognized the Internal Revenue Service’s 14-part test in determining whether a

JUNE 2016 AZ CPA

religious organization was a church. A church has: 1. a distinct legal existence; 2. a recognized creed and form of worship; 3. a d e f i n i t e a n d d i s t i n c t ecclesiastical government; 4. a formal code of doctrine and discipline; 5. a distinct religious history; 6. a membership not associated with any other church or denomination; 7. an organization of ordained ministers; 8. ordained ministers selected after completing prescribed studies; 9. a literature of its own; 10. established places of worship; 11. regular congregations; 12. regular religious services; 13. Sunday schools for religious instruction of the young; 14. schools for the preparation of its ministers. Churches include conventions and associations of churches, as well as integrated auxiliaries of churches. Integrated auxiliaries must have a charitable function, be affiliated with the church and receive financial support primarily from internal church sources. A religious organization is not necessarily a church and the distinction is important.

Tax-Exempt Status One of these distinctions is that churches are not required to file form 1023 to obtain a Determination Letter since they are automatically exempt under 501(c)(3). A mere “religious

organization” which does not rise to the level of a church, however, generally must obtain a Determination Letter by filing Form 1023 or the new 1023EZ, if eligible. A church may obtain a “No Record Church Letter” from the IRS by calling the Tax Exempt Division at (877) 8295500 and providing the church name and EIN. The letter states that churches are exempt under 501(c)(3).

Church Payroll Churches also have special requirements related to payroll, both for clergy and non-clergy staff. Clergy are considered “dual status employees,” meaning that they are employees for income tax purposes, but self-employed for Social Security purposes. Non-clergy compensation is: • Subject to Social Security and Medicare taxes at employee/ employer level, unless the church has filed Form 8724 to exempt the church from employer taxes. Employees will then pay self-employment tax on their individual tax returns. • Exempt from FUTA, like other exempt organizations. • Exempt from SUTA, regardless of number of employees – employees are not eligible to file for unemployment benefits. Clergy compensation is: • E x e m p t f r o m e m p l o y e r / employee Social Security and Medicare taxes. • Exempt from federal and state income tax withholding, but clergy may opt to have taxes

Not-for-Profit Conference – June 22 Stern and Brown will address the following topics in much more detail in their session at the Not-for-Profit Conference: • • • • •

Taxing the Strip Mall Church Pitfalls of Church Payrolls Forms 1023 & 990: When and Why to File Nonprofits Wrestling With Cultural Issues Abandoning Tax Exempt Status

AZ CPA JUNE 2016

withheld on a voluntary basis. Reported on a W-2 Form, if an employee. Most clergy are employees under the employee/ independent contractor rules. • Ta x e d f o r s o c i a l s e c u r i t y purposes as self-employment tax on the individual’s tax return unless he or she has opted out before the due date of his tax return for the end of the second calendar year of receiving at least $400 in clergy income – must do so for religious (NOT financial) reasons. • Paid partially or fully as an income tax-free housing allowance from the employer. This allowance is subject to self-employment tax, however. Thus, you can see that the tax treatment of clergy, for example, requires special care and understanding. •

Legal Considerations If you wind back the clock 30 years, virtually all of the churches in America were located in special areas zoned and designated for churches, mostly in residential neighborhoods. With the rise of the “mega church” and the attempts to become more friendly to the unchurched, churches have evolved into locations that are more akin to commercial retail space than to the traditional church location. This development is creating some tension between the taxing authorities and the churches as spaces that previously generated commercial property taxes are now being converted into nontaxable houses of worship. Although churches are not presently required to file form 990, some commentators feel that the 990 or an alternate filing requirement may affect churches in the future. Understanding what the form is, and generally how it works, can be important background for those dealing with churches. For those dealing with a parachurch or other religious organizations, it is a present reality and must be mastered. Since the United States Supreme Court legalized same-sex marriage in

the Obergefell decision, some religious organizations are concerned with hiring practices and services to the public at large where the religious tenets of the faith may clash with current culture. In the oral arguments before the United States Supreme Court in the Obergefell decision, this Solicitor General of the United States (the president’s lawyer) indicated that he thought it would “definitely be an issue” in the future if conservative Christian colleges refused to grant equal housing opportunities to samesex couples, for example. Finally, some commentators have been predicting that the increasing tendency of the government to regulate tax-exempt organizations will result in some conservative churches deciding to forgo tax-deductible contributions. The thought is that these churches could be not-for-profit, but not qualify as a “charitable organization.” This would, in effect, remove the government subsidy that accrues when a donor takes a tax deduction for a contribution made to a church. n Monica J. Stern, CPA, PLLC has been a CPA since 1985. Her practice focuses on the specialized needs of nonprofit organizations, with an emphasis on churches and religious organizations. She has extensive nonprofit tax, accounting and property tax experience with a wide variety of nonprofit organizations. She is an ASCPA member who speaks regularly at nonprofit events and actively participates in the ASCPA Connect Community. You can contact her at MonicaS@mjsterncpa.com. Robert Erven Brown is a shareholder at the law firm of Gallagher & Kennedy. During his 40-year career, Brown’s practice focused on real estate, commercial transactions and charitable organizations. Through his nonprofit work, he represents secular and faith-based nonprofit entities, including churches, synagogues, temples, denominations, Christian schools, rescue missions, a seminary, an adoption agency, prison transition ministries, human services organizations, health-related charities and other faith-based entities. He can be reached at bob.brown@gknet.com.

Not-for-Profit Conference June 22 Black Canyon Conference Center Keynote Session:

Changes in Not-for-Profit Accounting & Financial Reporting Jeffrey Mechanick, Assistant Director of Nonpublic Entities for the Financial Accounting Standards Board (FASB) will give a guided tour of GAAP developments of interest to the sector. He’ll make three major stops: • New Revenue Recognition standard (Topic 606) and some key implementation issues for NFPs • Recently issued final standard on Leases (ASU 2016-02, Topic 842) • FASB’s generational project on NFP Financial Statements (final ASU on Phase I soon to be issued). The breakout sessions this year have four tracks: Risk Management, Revenue, Compliance, and Human Resources.

Special thanks to Platinum Sponsor: Eide Bailly LLP See details for all conference sessions at www.ascpa.com, click on CPE, then Conferences.

JUNE 2016 AZ CPA

Procrastinate on Purpose — A New Look at Time Management by Jason McKeever

Time keeps on ticking. We are each granted 24 hours each day, seven days a week, 365 days a year, according to the clock and calendar. There is no more, no less and no saving hours for the future. Time is not something that we have the capability to “manage.” It ticks on and, regardless of our efforts at the end of the day, it is gone. We need a new measure! Take a step back and look at your efforts to maximize your effectiveness each day. We have the choice in how we spend each hour. We can use it wisely, or we can waste it. Realistically, we are not capable of managing the clock, but instead, we need to take a new view of how we manage ourselves. What is the highest and best use of our limited time? Where will we have the biggest impact on ourselves, our organizations and those things that are most important to us? Our paradigm of time needs to change. No longer are we victims of time; instead we are empowered by our own mindset, our needs, expectations and emotions to multiply our effectiveness in our daily lives. Procrastinate on Purpose, by Rory Vaden, introduces a perspective on the notion of time management. Instead of the easily defeated checklist/to-do list or the personal planner, he points out that what we really need to understand is many of the emotional reasons we fail to maximize our time. It is often our emotional response to work, life and the whirlwind around us that skews our perception of how we are using our time. Most current paradigms surrounding time management boil down to the basics of doing work faster or continually reprioritizing projects. Procrastinate on Purpose provides thought provoking options to allow us to become a time “multiplier.” Adding an additional consideration into our thought process regarding time, tasks

Jason McKeever is director of training and development with Eide Bailly LLP. Learn more about this topic at the Not-for-Profit Conference on June 22.

AZ CPA JUNE 2016

“Too many times we soothe ourselves with the false sense of satisfaction from all of the thought and time we put into something when it didn’t produce any significant result. So you see, as it turns out: Being busy is not a virtue. Balance is bogus. Leisure is not the ultimate finish line. And effectiveness isn’t what really matters …” Rory Vaden, Procrastinate on Purpose

and projects changes our perspective of success. Thinking of both the importance and the urgency of a project advances us only so far in our thinking, When we add the consideration of significance of the project, we start to look at our time differently. Multiplying time is really asking ourselves, “How will this benefit the future?” Once we are able to embrace the mindset of the Multiplier, we are ready to take control of our own results. We have choices that will allow us to build our own success and not be limited to the hands on the clock face. We have choices beyond simply focusing on urgent and important. As we start to look at the long-term effects of our use of time today and

“You multiply your time by spending time on things today that will give your more time tomorrow.” Rory Vaden, Procrastinate on Purpose

how that will affect our future success, we are then allowed to enact the “Five Permissions.” These Permissions (Eliminate, Automate, Delegate, Procrastinate, Concentrate) provide us with better results and allow us to focus on our own priorities and goals. The Permissions provide you with realistic, effective and implementable options to maximize our current and future state. We have can ask ourselves and examine: Eliminate — Can we ignore the item or task? Automate — Are there opportunities to invest in technology to solve the task? Delegate — Can we give this to someone else and accept imperfection? Procrastinate — Can we put this off to a later date/time? Concentrate — Is this something that moves us forward to our ultimate success? Then we can hold on to it. When we take the time to effectively evaluate the highest and best use of our time, we may find that we are being managed by other’s definitions of urgent and important and often not effectively taking significance into account when creating our own success. The Five Permissions provide us a road map to make those decisions. Time management is not a new concept. Thousands of people struggle with it each day. The thought process of findng purpose is a game-changer that will have you reimagining how you spend each moment. We are in charge and capable of managing ourselves, we are not victims of time. n

“Your highest obligation to other people is to be your highest self.” Rory Vaden, Procrastinate on Purpose

JUNE 2016 AZ CPA

Six Tips for Using Data More Wisely by Brett Knowles Organizations are collecting more data than ever before and processing it in new ways in an effort to improve their businesses. But often they are not using the data in the right way — if they are using them at all. More than 85 percent of finance professionals said Big Data holds the potential to change the way business is done, according to the CGMA report, “From Insight to Impact: Unlocking Opportunities in Big Data.” But 86 percent of those surveyed said their businesses struggle to get valuable information from the data they have. Hurdles to maximizing data’s value include organizational silos, challenges related to data quality and an inability to work with unfamiliar, non-financial data. Here are six ways to make sure you are collecting the right data and making the most of the information you already possess: 1. Consider the broad indicator over the precise measurement. There are many indicators that show us general trends happening in our organizations. But often, organizations spend lots of time and money drilling down too deep into

AZ CPA JUNE 2016

a problem. Ask yourself: Do you really need to measure it down to the fifth decimal? Or will a more general indicator suffice? Take employee satisfaction, for example. Does your company need detailed measurements of pay and benefits compared with those of the competition? Does it need to deeply analyze promotion opportunities offered, or the culture inside the organization, or how good the boss is at motivating and inspiring people — or even the office and business environment itself? You can measure and analyze each of those things, but that could be very expensive. Instead, you could use a broad indicator such as absenteeism. Generally, if a company sees abnormal spikes in absenteeism, it’s a sign of dissatisfaction. From there, you can dig deeper. It may not be because of any one of the factors listed above; it may, in fact, be something as small as a lack of parking. The benefit of that indicator is that it doesn’t try to explain what’s wrong in your organization. In this case, absenteeism is like the “check engine” warning light in many automobiles. It doesn’t tell you exactly what’s wrong, but it tells you that you should have it checked out. The best part: absenteeism data are free. 2. The data that you gather often need to be received more quickly than the impacts and the stresses facing your organization. Data are often more valuable to you if they are received faster than if they are precisely accurate. Consider the fast-food drive-through. The cycle time through the drivethrough is about three minutes, which means data have to be replenished faster than once every three minutes to be useful to the operations people in that part of the business. On the other hand, the supply chain might work on, say, a oneweek cycle. Therefore, the data doesn’t have to be as fast. Supply-chain managers don’t need to know what’s happening every minute, but they certainly need to know what’s happening every day or every couple of days, whereas

setting up a new store location might take a year. The data those managers need have a less frequent drumbeat. So, even inside the same organization, you may have different needs for how fast the data must be. But the point is that data need to be arriving ahead of the stresses and the risks that your organization faces. 3. Make sure leadership is aligned with strategic priorities and sees the same activities the same way. We need a way to establish the most important things we should be looking for and score our performance accordingly. Imagine, for example, your strategy is focused on growth by entering new markets. When you take a look at performance of activities — such as sales into new market areas or the number of new customers you’ve been able to attract outside of your existing areas — those data should have more value than measures that would be important under a different strategy. Determine your focus based on your organization’s strategy; this will determine whether you look at measures such as the number of customers buying multiple products or the number of repeat customers. In a multi-location business, however, this can be a challenge because you might have one newly established business unit that is growing into the market and another unit that has been there for a long time, and in that business unit, they’re looking for share of wallet. So, you can even have different strategies inside the same corporate entity. You should have visual triggers when leadership is looking at the data, so they know when they’re stepping over the line from one to another. 4. Once you’ve determined what the right measures are, be prepared for them to change as your organization does. Measures can’t remain the same over time. Think of something like a new product development cycle. In the early part of that cycle — the product idea creation — you might be looking at things like the number of product ideas. During the next phase, you’ll

look for product development indicators such as the time from idea to first prototype. The next phase might be product testing, where the measure needs to change to, say, an approval rating from a beta test audience. Finally, during product launch, you might look at sales per month. 5. In most cases, the organization is already collecting the data you need; you just need to know how to use it. You should always be able to find data within your organization that indicate how a process is running, whether you’re looking at the inputs, the transformation activities or the outputs. The main benefit of using available data is that it doesn’t add costs to your organization. You don’t need more people to gather the information because you’re already gathering it. You don’t need more people to process the information because you’re already processing it. Secondly, it allows you to get your scorecard and dashboard set up very quickly. You’re not held ransom for data. In some cases, the signal strength of those data might not be as strong as you would like. The quality of data you need depends on the type of decision at issue. You do not need Six Sigma accuracy for all decisions. For instance, the data you need to extend a marketing program for a month can be less accurate than the data required to terminate an employee or close an office. Using information that already exists creates higher ownership faster. You’ll gain much more acceptance when you begin using indicators that people in the organization already know and respect rather than those you have imposed on them. And because you’re using existing data, your net training cost is significantly lower. So, it’s often faster, cheaper and better to start with broad indicators. From there, you can determine whether to investigate further, and, if so, where — and how deeply — to probe next. 6. Present the right data in the right way to the right people. Think of an

organization as an airplane that needs to see the business world around it at various heights — from 30,000 feet to ground level. Each altitude level needs its own form of information presentation. Senior management wants to cruise along at that 30,000-foot information altitude, mostly just seeing Big Data landscape features: the information equivalent of a mountain range, an ocean or a city. However, the data should be comprehensive enough for management to spot any digital puffs of smoke coming from fires that need to be put out. Once a problem is identified, data presenters and their software must be nimble enough to zoom in to provide a closer look for the appropriate managers. When a problem is spotted, management will want to drop down to 20,000 feet. At this point, the data presenters need to narrow the scope of information and begin providing some operational tools to gain an understanding of what’s happening. Next, descend to 10,000 feet and provide diagnostic tools so managers can become more directional in their behavior. This should be a detailed, data-intensive dashboard that provides comprehensive information designed to help managers at a tactical level. Finally, at ground level, organizations need analytic tools so management can become prescriptive. These are the spreadsheets and grids that display all forms of detailed data used to assess how the organization is performing individual tasks. There’s a parallel between the levels of the organization. In a good organization, the leadership team should be able to easily share this information with each level. n Brett Knowles (brett@pm2.ca) is the executive partner of pm2, a performance management consulting company based in Canada. He has assisted more than 3,000 organizations around the world. This article first appeared in CGMA Magazine. For more articles, sign up for the weekly email update from CGMA Magazine at http://bit.ly/UZ07NC.

JUNE 2016 AZ CPA

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Highlights of April ASCPA Board of Directors Meeting Among other actions at the April 27, 2016 ASCPA board of directors meeting, the board reviewed the following:

Consent Agenda The consent agenda, which included the board minutes, financial statements, 2016-2017 Society budget, Foundation contribution memo and one-year term for a director, was approved.

Proposed Personal and Financial Services Tax Opposition Strategy Cindie Hubiak engaged board members in a discussion on HB 2693 (TPT Classes; Income Tax Reduction).

Board of Accountancy and State Bar updates Alan Augenstein, president, and Monica Petersen, executive director, Arizona State Board of Accountancy, and John Phelps, CEO/executive director of the State Bar of Arizona, dialogued with the Society board.

Strategic measurement update Cindie noted that all measurements are achieved for the fiscal year ending April 30, 2016!

Year-end Wrap-up

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Outgoing board members Anita Baker, Gary Fleming, Randy Fletchall, Mike Holt and Jennifer Nordstrom shared thoughts about their time on the board and the future of the Society. Rob Dubberly thanked each member for their contributions during the year.

A Day in the Life Curtiss Smith and Teresa Finley shared a view of the challenges and joys they experience in their life and job.

Other Business Board members thanked outgoing chair, Rob Dubberly, for his leadership. If you have questions or would like additional information, please contact Cindie Hubiak at (602) 324-2888; AZ toll free at (888) 237-0700, ext. 203; or chubiak@ ascpa.com.

2016-17 Dates

Phoenix Tax Workshop Live or by webcast Sign up online at

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AZ CPA JUNE 2016

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May 21, 2016 Jun 18, 2016 Sept 24, 2016 Oct 22, 2016 Nov 19, 2016 Jan 21, 2017 Feb 18, 2017 Apr 22, 2017

AZ CPA Quick Quiz You’ve Read It, Now Get Credit Take this quiz online or submit this hard copy on AZ CPA content. Receive a score of 70% or more and earn one hour of CPE credit in specialized knowledge. It’s that easy! Fees Members $25 Non-members $40 Online Access Login to www.ascpa.com and go to CPE/OnDemand CPE Quick Quiz to access links to all active quizzes. Purchase quiz and the quiz link and password will be emailed to you. Your results will be sent immediately after completing, and certificates are emailed within two business days. Hard Copy Please select one answer for each question. Fill out registration/payment information below and mail or fax to the Society office. Quiz results and certificates will be emailed to the address provided on the registration form. *This quiz will be available until June, 2017. Please note that users have three attempts to pass the quiz with at least a 70% score.

June 2016 Issue of AZ CPA* 1. In the Chair’s message, Greg Nelson mentions that there are how many nonprofits in Arizona? m 30,000 m 21,000 m 216,000 2. The Speculative Builder Tax applies to what percentage of the total selling price of the property? m 65 percent m 12 percent m 26.5 percent

5. Churches are not presently required to file Form 990: m True m False 6. According to the author of “Procrastination on Purpose,” the Five Permissions are: m Eliminate, Automate, Stall, Wonder and Change m Evaluate, Negotiate, Eliminate, Advise and Extend

m Eliminate, Automate, Delegate, Procrastinate and Concentrate 7. A “multiplier” allows you to: m Spend time on things today that give you more time tomorrow m Do more than two things at once m Accomplish tasks in half the time previously allotted 8. According to a CGMA report, what percentage of companies struggle with Big Data? m 90 percent m 86 percent m 42 percent 9. The main benefit of using available data is that it: m Doesn’t add costs m Is more accurate m Is easier to gather 10. At the April ASCPA Board of Directors meeting, the board: m Added a new staff position m Eliminated a staff position m Discussed HB 2693 (TPT Classes; Income Tax Reduction).

Quick Quiz Registration 3. Habitat for Humanity is a nonprofit dedicated to: m Building homes for lowincome families m Saving the environment m Early Childhood Education 4. A church may obtain a “No Record Church Letter” from the IRS by: m Calling the Tax Exempt Division and providing the name and EIN m Filing a 1099 m Filling out the Church Letter Identification form

Name: ____________________________________________________ Email:_____________________________________________________ Telephone: _________________________________________________

Payment m Member: $25 m Non-member $40 Checks: Please make payable to: The Arizona Society of CPAs Credit Card:

m Visa m MasterCard m American Express

Credit card #: _______________________________________________ Expiration Date: _____________________________________________ Name on Card. _____________________________________________ Mail to: ASCPA, 4801 E. Washington St. Suite 225-B, Phoenix, AZ 85034-2021; fax to (602) 324-6043; scan and send to ASCPACPE@ascpa.com.

JUNE 2016 AZ CPA

Classifieds Business Opportunities/ Practices for Sale 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, corporate, partnership, fiduciary and individual income tax services. The firm has a 25+ year history with annual revenues of $450K+. The partners wish to explore merger/buyout possibilities. Principals only, please respond to: cpa85020@gmail.com. SELL YOUR PRACTICE FOR CASH — Let our 33 years of experience work for you. Confidential, prompt, professional. No upfront fees. Cancel anytime. We finance buyers so you can cash out at closing! Contact Professional Accounting Sales at (800) 729-9031. http://www.cpasales.com.

Employment TAX MANAGER — Cambridge Tax Advisory LLC — Individual with significant recent tax experience focusing on individual tax needed to support investment firm. Interested party will enjoy seeking tax avoidance strategies for high income taxpayers, coordinating with financial and investment planning, and some business tax as well. Medium term equity position possible. Successful candidate will enjoy client contact with high income clients from various backgrounds and industries. Charitable gift planning will also be a growing part of practice. Our firm is a close-knit boutique firm of six. Send resume and cover letter to ginger@takechargecoaching.com. EXPERIENCED BOOKKEEPER/ ACCOUNTANT — Sandhaus and Johnson CPAs — Our five-person firm continues to grow and seeks a full-time staff member with an accounting degree who desires to grow with us. The position requires experience dealing with

• Being Powerfully Productive: Enhancing Your Effectiveness – Margo Brown, Wave Productivity

ASCP. Upcoming Conferences

• Value of a Professional Employer Organization (PEO) – Dana Noone, ADP

Corporate Finance Conference Aug. 24 Desert Willow Conference Center • Gaining and Sustaining Competitive Advantage in a Time of Change – Dr. Amy Hillman, Dean, W. P. Carey School of Business • Don’t Wait Too Late to Build Relationships for Professional Advancement – Michael Seaver, Executive Coach

• Negotiation Skills: Building Relationships and Importance of Concessions – Tracy Bullock, Bullock Training & Development • Cybercrime Targeted Toward Financial Departments – Rodney Joffe, Senior VP, Senior Technologist, and Fellow, Neustar, Inc. Special Thanks to Platinum Sponsor:

Quickbooks, sales, payroll and income tax returns.The ideal candidate has the ability to make the correct decisions with regard to ‘cleaning-up’ general ledgers, forensic accounting, attorney trust accounting, and tax form preparation. Salary D.O.E. We are centrally located at Hwy 51 and Indian School. No phone calls please. bjohnson@sandhauscpa.com. TAX SUPERVISOR — LOCAL 10 PERSON TUCSON CPA FIRM — A minimum of five+ years of recent tax experience in public accounting and a CPA license are required. Strong technical, communication, customer service and practice development skills are highly desirable. You will review and prepare individual, partnership, trust and corporate tax returns, research tax issues and provide tax consulting services for small- to medium-sized businesses and wealthy individuals. We offer a competitive salary, flexible work schedule and comprehensive benefits package with partnership potential. Please apply by sending your resume and cover letter to cpafirm3@gmail.com.

Forensic & Litigation Services Conference Sept. 8 8 a.m. to 4:30 p.m. ASCPA Learning Center, Phoenix Also offered as a webcast • Litigation Rules for CPA Expert Witnesses • How to Bulletproof Your Expert Report Against Opposing Counsel Attack • Treasonable Compensation? The Continuing Misapplication of the Excess Earnings Method • Some Rules Should Not Be Broken. Experts, You Better Know Which Ones! •

Avoiding Accounting Malpractice

Go to www.ascpa.com, click on CPE, then Conferences for more information and to register. 22

AZ CPA JUNE 2016

Trending at Your Society... Misc. GREAT LOCATION — SHARED OFFICE SPACE AVAILABLE — Large executive space located near 16th & Glendale is available immediately. A professional suite with access to all of the typical amenities (Lg. conference room, file room copy room) and possible shared services if needed. Suite is perfect for business professional, CPA, attorney, tax, etc. A staff cubicle is also available. Call or e-mail Ira Feldman for more information. (602) 850-5101 or ira@felco.biz. Residential lot for sale— Attractive wooded residential lot for sale in Pinetop. On cul-de-sac, easy access main road, near two country clubs. Architect’s prelim schematics for two car garage, 3-5 bdrm, 2,495-2,567 SF available. 0.31AC, price reduced. Jan Mullins, Spill Realty (928) 369-4300.

For information about classified ads, visit www.ascpa.com and go to marketplace. •

Exposing Fraudsters Using Profiling and Forensic Data

Business Valuation Conference Sept. 9 12:15-4:00 p.m. ASCPA Learning Center, Phoenix Also offered as a webcast •

It’s in There: What’s Baked Into the Conventional Cost of Capital Data?

•

Panel: Fast Five Valuation Headaches

•

Pratt Stats: What You Need to Know

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Arizona’s Top Ten CPA exam scorers celebrated their achievement at a luncheon in their honor held at the Arizona Society of CPAs. When asked what the best part of taking the CPA exam was, they said it was receiving their final score! Pictured left to right: Neal Farrell, Audrey Berglund, Erica Grommes, Patrick Archer, Sydney Gray, Jared Young, Bei Ye (AICPA’s Elijah Watt Sells Award recipient) and Alexander Reff. Not pictured: Nicholas Wolsfeld and Lindsay Wilhite.

Trending on Connect Subject: Air BnB Guidelines Duane Eckelberg President, Eckelberg & Wienshienk, PC Does anyone have an AirBnB tax guide? My client rented their whole house for a couple of months plus two bedrooms with use of whole house for a couple of months. Gregg Goodsell Owner, Gregg G. Goodsell, EA, Inc. I don’t have a specific guide for you regarding AirBnB, but the two major factors to consider are these: The vacation home rental rules may apply, where your expenses are capped at the amount of income generated. IRS Pub. 527 actually does a pretty decent job of explaining the basics, and it includes a few helpful worksheets. If the average period of customer use for the property is seven days or less, then you don’t even have a rental activity. Reg. 1469-1T(e)(3)(ii). Rather, you have a Schedule C activity. (Gee, that sounds fun.)

Renew your ASCPA membership today at www.ascpa.com JUNE 2016 AZ CPA

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For more than 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.

AZ CPA JUNE 2016