Insight Magazine - Fall 2013

Are We Still World leAderS?

Where does the USA stand on the global stage?

34 Is the USA Still a World Leader?

Our competitive position in the global economy continues to be debated But the national conversation is now being led by some very high-profile thinkers, which is usually how progress begins in a democracy The question is, can America take its place at the head of the global marketplace?

Same-Sex Marriage & Tax

With DOMA struck down, lots of questions are being asked about how tax equality for LGBT couples will

In these competitive times, no accounting firm can survive without a turbo - charged A-game. Here are five ways to boost your firm’s power

Top

How can public accounting firms keep their women professionals for the long haul?

Boost your professional development plans with these three approaches

The old way of saving for retirement just won’t hack it for Generation X

Office Space Hoteling Checks In

Want to save a ton of money while gaining employee flexibility? “Hoteling” could be the answer

Today’s CPA People Are Number One

Insights from ICPAS President & CEO Todd Shapiro

In this issue: Education is the key to making the most of your most valuable asset your people

tips.

Expert tax updates from Keith Staats,

The inside scoop from forensic accounting specialist Brad Sargent, CPA/CFF, CFE , CFS, Cr FA, FABFA In this issue: The real scoop on financial fraud in higher education

Personal financial planning tips from Mark J Gilbert, CPA/PFS In this issue: TDFs have exploded in popularity as a key investment choice But are they

Must-read-must-know news for young accounting pros

INSIGHT MAGAZINE

Publisher/President & CEO Todd Shapiro

Editor-in-Chief Judy Giannetto

Art Design Judy Giannetto & Rosa Garcia

Production Design Rosa Garcia

Assistant Editor Derrick Lilly

National Sales & Advertising Natalie DeSoto YGS Group, 3650 West Market Street, York, PA 17404

P: 800 501 9571 x127 F: 717 825 2171

E: natalie desoto@theygsgroup com

Circulation Carl Siska

Editorial Offices: 550 W Jackson Boulevard, Suite 900,Chicago, IL 60661

ICPAS OFFICERS

Chairperson, William P. Graf, CPA Deloitte & Touche LLP

Vice Chairperson, Daniel F Rahill, CPA, JD FGMK, LLC

Secretary, Edward J Hannon, CPA, JD Freeborn & Peters LLP

Treasurer, Mary Lou Pier Pier & Associates, Ltd

Immediate Past Chairperson, James P Jones, CPA Edward Don & Company

ICPAS BOARD OF DIRECTORS

Linda S Abernethy, CPA, McGladrey LLP

Rosaria Cammarata, CPA, CME Group Inc

Rose G Doherty, CPA, Legacy Professionals LLP

Gary S Hart, CPA , Gary Hart & Associates Ltd

Margaret M Hunn, CPA, CFE, CFF, CITP, Rozovics Group PC

Paul V Inserra, CPA, McClure, Inserra & Co , Chtd

David V Kalet, CPA, MBA, BP Products North America

Michael J Maffei, CPA, GATX Corporation

Marcus D Odom, PhD, CFE, CPA (inactive), Southern Illinois University

Floyd D Perkins, CPA, Ungaretti & Harris

J. Bradley Sargent, CPA/CFF, CFE, CFS, Cr.FA, Sargent Consulting Group LLC

Mark F Schultz, CPA, Dugan & Lopatka CPAs PC

Scott D Steffens, CPA, Grant Thornton LLP

Thomas L Zeller, PhD, CPA, Loyola University Chicago

INSIGHT is the official magazine of the Illinois CPA Society, 550 W Jackson, Suite 900, Chicago, IL 60661, USA Its purpose is to serve as the primary news and information vehicle for some 24,000 CPA members and professional affiliates Statements or articles of opinion appearing in INSIGHT are not necessarily the views of the Illinois CPA Society The materials and information contained within INSIGHT are offered as information only and not as practice, financial, accounting, legal or other professional advice Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication It is INSIGHT’s policy not to knowingly accept advertising that discriminates on the basis of race, religion, sex, age or origin The Illinois CPA Society reserves the right to reject paid advertising that does not meet INSIGHT’s qualifications or that may detract from its professional and ethical standards The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within INSIGHT, and makes no representation or warranties about the products or services they may provide or their accuracy or claims The Illinois CPA Society does not guarantee delivery dates for INSIGHT The Society disclaims all warranties, express or implied, and assumes no responsibility whatsoever for damages incurred as a result of delays in delivering INSIGHT INSIGHT (ISSN-1053-8542) is published four times a year, in Spring, Summer, Fall, Winter, by the Illinois CPA Society, 550 W Jackson, Suite 900, Chicago, IL 60661, USA , 312 993 0407 or 800 993 0407, fax: 312 993 7713 Copyright © 2013 No part of the contents may be reproduced by any means without the written consent of INSIGHT Permission requests may be sent to: Publications Specialist, at the address above Periodicals postage paid at Chicago, IL and at additional mailing offices POSTMASTER: Send address changes to: INSIGHT, Illinois CPA Society, 550 W Jackson, Suite 900, Chicago, IL 60661, USA

Congratulations to the Award Recipients

The Illinois CPA Society’s Women’s Executive Committee and the American Institute of CPAs Women’s Initiatives Executive Committee are pleased to honor these women who have made significant contributions to the accounting profession, their organizations, and to the development of women as leaders.

These deserving women will be presented with their awards at the Illinois CPA Society “Women’s Leadership Breakfast” on Friday, November 15, 2013 at the Standard Club in Chicago.

The mission of the Women's Executive Committee is to enhance the recruitment, volunteerism, retention and leadership of women CPAs in the Illinois CPA Society and the profession through various programs and networking events. This program is one in an ongoing series designed to help women CPAs learn more about important professional issues, expand business networks and foster career advancement.

To register, please call 800.993.0407 and refer to Event Code C41260 or visit www.icpas.org.

Dawn Eber, CPA Managing Director, PricewaterhouseCoopers LLP

Experienced Leader

Charlotte Montgomery, CPA Director of Resource Allocation, Illinois State Museum

Experienced Leader

Melissa Bennis, CPA Principal, Davis & Hosfield Consulting LLC

Emerging Leader

Meredith Vogel, CPA Audit Managing Director, Grant Thornton LLP

Emerging Leader

Fall is a great time to think about education. Millions of kids are heading back to school and my wife, a teacher, once again will be leaving the house early Education is something very personal to me; it’s always been a big part of my life Not only is my wife a teacher, but my mother also was in education I’ve served as a school board member of a high school district for 16 years, and my father and brother have also served on school boards

I know that education is significant to you too, whether it’s because your kids are going back to school, or because you need to get training or credits under your belt, or because you’re committed to developing the skills of your staffs I don’t think anyone can deny that it’s vital to invest not only in yourself, but in your people as well I for one am a very

strong believer that people are an organ i z a t i o n ’ s m o s t v a l u a b l e a s s e t . O u r staff members are the most visible and impactful part of any firm or company, and it’s critical that they are fully prepared to give the kinds of service, insight and knowledge that clients and colleagues expect.

H o w e v e r, e d u c a t i o n i s n ’ t t h e s a m e animal it was even just a decade ago It used to be pretty simple: You’d sign up, show up, listen and learn

Te c h n o l o g y h a s c h a n g e d a l l t h a t , offering a dizzying range of options to learn, 24/7 Not only that, but the very m e a n i n g o f e d u c a t i o n h a s c h a n g e d Today, education means ongoing learni n g a n d d e v e l o p m e n t , n o t j u s t 1 2 0 hours of CPE every three years

The Illinois CPA Society is a progress i v e o rg a n i z a t i o n , w h i c h m e a n s t h a t adding new ways to deliver education to you to keep pace with this ever-more complex world has been a top priority In fact, we’re so serious about education that we developed a mission for our education business: “To be a preeminent provider of learning and development to accounting and finance professionals ”

Yo u , a s t o d a y ’ s c u t t i n g - e d g e C PA , h a v e t o k n o w m o r e t h a n e v e r b e f o r e ; t h i n g s a r e c o m i n g a t y o u s o f a s t , a n d y o u a r e h a v i n g t o k e e p p a c e w i t h changes in regulation, technology, areas of specialization and more

A n d s o , w h i l e w e w i l l c o n t i n u e t o offer all the live education you expect f r o m u s , i n t h e c o m i n g m o n t h s w e ’ l l expand our content in the areas of both core and soft skills. We’ll also dramati-

cally increase our onDemand library to o v e r 1 5 0 p r o g r a m s b y t h e e n d o f t a x season onDemand programs are sure t o p l a y a n i m p o r t a n t p a r t i n f u t u r e learning, giving you the ability to learn w h a t y o u n e e d t o k n o w, w h e n y o u n e e d t o k n o w i t n o t w h e n s o m e o n e else tells you to learn it.

Watch our onDemand library grow over the upcoming months Beginning this year, members have access to a free quarterly webcast or onDemand program If you missed the summer onDemand program discussing the Illinois business climate, then I encourage you to take it at any time; it’s available to you as a member, free of charge.

To g e t a n e v e n c l e a r e r p i c t u r e o f where we’re headed on the education front, I also encourage you to check out knowledgehub [www icpas org/knowledgehub htm], our state-of-the-art training and development solution. Knowledgehub was developed specifically for a c c o u n t i n g a n d f i n a n c e p r o f e s s i o n a l s and provides you with a flexible online tool to proactively manage the development of you and your staff.

As a last note, I want to thank you all f o r y o u r w a r m r e c e p t i o n , k i n d w o r d s a n d s u g g e s t i o n s f o r t h e f u t u r e . Yo u r thoughts and feedback help us meet our mission of “Enhancing the Value of the CPA Profession.” It’s a mission we all take very seriously here at the Society

We have a full season of conferences and courses in the upcoming months, and I plan to attend as many as possible I hope to see you there connecting is what it’s all about.

“onDemand programs are sure to play an important part in future learning, giving you the ability to learn what you need to know, when you need to know it.”

24/7 Access

Choose from a full catalog of 1-2 hour online courses that allow you to learn on your schedule.

Engaging Content

Participate in a learning experience unlike any other – complete with video lectures and interactive quizzes and final exams.

Incredible Value

Here is the best part – the PRICE!

1-hour courses are $25 members/$45 non-members 2-hour courses are $50 members/$90 non-members.

Check it out today at www.icpas.org/ondemand.htm

SEEN HEARD

$5 million

The amount of investable assets to be amassed before Affluent investors feel they are truly wealthy Source: UBS

TOP 10 TIPS

SUCCESSFUL NETWORKING

Networking is tough For some it’s downright terrifying Unfortunately though, it’s an absolute business necessity And so, to help quell your fears, we bring you 10 tips for successful networking from professional resume writer Sandy Leary and Elephants at Work:

1 Start before you need it

2 Give more than you expect to receive

3 Be genuinely interested

4 Always follow up

5. Know people in different worlds.

6. Learn to listen.

7. Always say thanks.

8. Talk up your purpose more than yourself.

9. Join associations.

10. Leverage the networks of others.

Retirement Woes for Women

INSIGHT Magazine Wins Award (Again!)

INSIGHT Magazine was recently awarded a Communications Concepts 2013 Award of Excellence for Magazines & Journals for its fall 2012 Corporate Financial Leadership issue The 25th Annual APEX Awards for Publication Excellence is an annual competition where writers, editors, publications staff and business, nonprofit, agency and freelance communicators share their best work Visit www icpas org/insight htm for a list of all INSIGHT awards and accolades as well as to view the winning issue

A recent report by Aon Hewitt [aon com] shows that women ’ s savings and investing habits coupled with longer life expectancies mean they’re less likely than men to be able to meet their financial needs in retirement. Despite participating in employers’ defined contribution plans at the same rates as men, Aon Hewitt’s analysis of more than 140 defined contribution plans representing 3 5 million employees shows that women save an average of 6 9 percent of pay, compared to 7 6 percent for men, and that 31 percent contribute below the company match threshold, compared to just 25 percent for men As a result, women across all salary ranges have average plan balances ($59,300) significantly below that of their male counterparts ($100,000) According to Aon Hewitt, many women are woefully underprepared for retirement. Full- career contributing women should have 11 2 times their final pay to meet their retirement needs, but they’re on track to accumulate only 8 6 times final pay a shortfall of 2 6 times pay compared to 1 9 times pay for men

“A good leader takes a little more than his share of the blame, a little less than his share of the credit.”

Ar nold H Glasgo w

JACKSON WABASHFORMERLY GARELLI WONG

44% number of working Americans who hire an accountant to perform tax preparation services

Source: Accounting Principals

Technology & Your Job Hunt

What do 300 job seekers and 100 hiring managers have in common? LinkedIn, smartphones and video interviews. These tech tools are becoming keys to job searching according to an annual survey by Right Management [right com] Ninety-four percent of job candidates reported LinkedIn was their top social media site for job hunting, while 66 percent of hiring managers chose it as their top social media site for sourcing candidates In addition to LinkedIn, job searchers and hiring managers are finding success on Google+, Facebook and even Twitter Possibly to some surprise, 74 percent of hiring managers and recruiters cited social media sites as their top method for sourcing candidates Video resumes are also gaining traction While only 18 percent of respondents have experienced a video interview, that’s double last year ’ s finding What’s more, 45 percent of recruiters are expecting video interviews to become more popular over the next few years

$649 billion

Total state & local taxes businesses paid in FY2012 a 3.9% increase over FY2011. Source: Ernst & Young

how to:

Use Instagram for Business

Instagram is a free app that allows you to take, edit and share photos and videos in unique and creative ways on your mobile devices It’s easy to use and integrates with other popular social media outlets like Facebook, Twitter, Foursquare, Tumblr and Flickr At first glance, it may not seem like a business tool, but look again; it’s actually an excellent marketing and branding supplement

Socialnomics net cleverly points out how businesses can use Instagram:

1 Get Behind the Scenes – Use photos and videos to show your audience a different side of your organization Whether it’s setting up an event, showing how a product is made, or just how your team interacts within the office walls, it’s fun to see the inner workings.

2. How -To Videos – Instagram’s video option is great for quick snapshots o f h o w t o m a k e o r d o s o m e t h i n g J u s t k e e p i t s i m

l ; remember it’s supposed to be a quick tutorial

3. Live Events – A product demo, keynote address, conference or any other live event is a perfect subject to document and share on Instagram, keeping your audience in the know and aware of all you ’ re doing

CPA Day of Service

On September 20, more than 1,000 Illinois CPAs came together as volunteers for ICPAS’ fourth annual CPA Day of Service They assisted over 100 organizations across Illinois, dog-walking for the Hinsdale Humane Society; preparing food packages at Feed My Starving Children in Schaumburg; assisting Habitat for Humanity; shopping for groceries and delivering food with St Damien Food Pantry, participating in the National Alliance for Mental Illness Run/Walk for the Mind race; providing office and tax assistance for the Little Giraffe Foundation in Mount Prospect, and so much more. To see how each o

www.icp a s .or g /CPA D a yof S er v ice. For information about next year ’ s CPA Day of Service, contact Rose Kelly, marketing & communications coordinator, at 312-993-0407 ext. 251 or kellyr@icpas org

P u s h i n g t h e E n v e l o p e

Across the nation, states are seeking revenue through aggressive sales and use tax nexus laws

By Keith Staats, JD

Familiar with this scenario? Your client sells items over the Internet. Your client also has a physical location in Illinois and fills customer orders with inventory from its Illinois warehouse or by direct shipment from manufacturers or wholesalers What’s more, your client pays commissions to other webbased companies for sales generated through links to your client’s website Naturally, your client charges Illinois sales tax on sales delivered to Illinois customers, but collects no taxes on sales to other states. Now, if it was 2007, they’d be handling their sales tax obligations properly. Alas, it’s 2013 and state sales and use tax laws have changed.

Keith is a senior manager of Grant Thornton’s State & Local Tax practice, based in Chicago Previously, he held the position of general counsel of the Illinois Department of Revenue, where he developed tax policy, evaluated and reviewed tax-related legislation, and oversaw tax-related litigation

* keith staats@us gt com

In fact, states across the nation are aggressively attempting to impose state sales and use taxes on Internet and mail order purchases Over the past year, state lawmakers have continued the trend of enacting legislation that pushes the envelope with respect to the limits on a state’s taxing authority, as outlined by the U.S. Supreme Court’s 1992 ruling in Quill Corp v North Dakota.

In Quill, the Court reaffirmed that a seller must have physical presence in a state in order for it to require the seller to collect that state’s sales taxes It also clarified that the physical presence requirement was grounded in the U S Constitution’s Commerce Clause, and that Congress has the authority to eliminate the physical presence requirement through federal legislation.

While Congress hasn’t passed legislation since the Quill decision, there have been a number of proposals to eliminate the physical presence requirement The latest, the Marketplace Fairness Act, passed the Senate on May 6, 2013 and will next be cons i d e r e d b y t h e H o u s e o f R e p r e s e n t a t i v e s where passage seems less certain

In the absence of federal legislation removing the physical presence requirement, the states have been aggressive in

determining what constitutes the requisite level of physical presence to trigger tax collection obligations Two recent manifestations are state laws involving “click-through” nexus and “affiliate” nexus

In taxing parlance, “nexus” is a connection with a state that is sufficient to authorize another state to assert its tax laws over a t a x p a y e r. I n t h e c a s e o f s a l e s a n d u s e taxes, Q u i l l requires physical presence to e s t a b l i s h n e x u s . I n t h e c a s e o f “ c l i c kthrough” nexus, 12 states assert that nexus applies if,

n An out-of state company has a link on the website of a company with a physical presence in State A (the “in-state” company)

n The out-of state company is not physically present in State A.

n T h e c o m p a n i e s m a y o r m a y n o t b e related.

n The in-state company receives a commission for sales resulting from clicks from its website to the out-of-state company’s website, and annual gross sales received by the out-of-state company from click-throughs are over a certain amount $10,000 in many instances

T h e s t a t e s c o n t e n d t h a t t h i s s c e n a r i o gives rise to sufficient nexus under the Quill p h y s i c a l p r e s e n c e s t a n d a r d . I n f a c t , i n a M a rc h 2 0 1 3 r e s p o n s e t o c h a l l e n g e s b y Overstock com and Amazon com, the New Yo r k C o u r t o f A p p e a l s h e l d t h a t t h e N e w York statute didn’t violate the U S Constitution on its face, and that it satisfied the Quill s u b s t a n t i a l n e x u s r e q u i r e m e n t s i n c e t h e out-of-state taxpayer established an in-state sales force through its click-through agreement. The Court explained that solicitation in a state that produces a significant amount o f r e v e n u e q u a l i f i e s a s m o r e t h a n t h e “ s l i g h t e s t p r e s e n c e ” f o r p u r p o s e s o f t h e physical presence requirement

In contrast, an Illinois Circuit Court ruled in May 2012 that Illinois’ click-through nexus statute failed the substantial nexus requirement The Illinois case is on appeal i n t h e a p p e l l a t e c o u r t , b u t t h e I l l i n o i s click-through nexus law currently remains in effect

A number of states also have amended their sales and use tax laws to enact what is commonly called “affiliate nexus” laws d e e m i n g t h a t a n o u t - o f - s t a t e s e l l e r w i l l have nexus with a state if it, n S e l l s t h e s a m e o r a s i m i l a r l i n e o f p r o d u c t s a s a n i n - s t a t e s e l l e r, w h i l e u s i n g a n i d e n t i c a l o r s i m i l a r n a m e , t r a d e n a m e o r t r a d e m a r k , o r m a i nt a i n s a n o f f i c e , d i s t r i b u t i o n f a c i l i t y, warehouse or storage place in-state to fa c ilita te the de liv e ry of prope rty or services sold by the out-of-state seller.

n D e l i v e r s , i n s t a l l s , a s s e m b l e s o r p e rf o r m s m a i n t e n a n c e s e r v i c e s f o r t h e seller’s customers in the state

n Facilitates the sellers’ delivery of property to customers in-state by allowi n g t h o s e c u s t o m e r s t o p i c k u p t h e property at a location maintained by the in-state seller.

n Conducts any activities in the state associated with the out-of-state seller’s ability to establish and maintain a market in-state

W h a t ’ s m o r e , s o m e s t a t e s h a v e d o l l a r t h r e s h o l d s s i m i l a r t o t h e c l i c k - t h r o u g h nexus thresholds

There are currently 14 states with affiliate nexus statutes, and one state, Pennsylvania, has taken on an affiliate nexus position through administrative pronouncement

Unless the federal Marketplace Fairness Act or a similar piece of legislation eliminating the Quill physical presence requirement passes Congress, or the Supreme Court rules against a state in a case involving click-through nexus or affiliate nexus, the states are likely to continue to push the envelope by enacting these types of statutes Kansas, Maine, Minnesota and Missouri have enacted new click-through nexus statutes, and Iowa, Kansas, Maine, Missouri and West Virginia have enacted new affiliate nexus laws in 2013 alone.

Check back with my future columns to see how all this plays out

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A SPECIAL THANK YOU... to the following advertiders who exhibited at this year’s Showcase.

Guns, Marijuana & Accounting

New legislation promises to impact your people, your practice and society at large

By Marty Green, Esq

Go v e r n o r Q u i n n s p e n t h i s s u m m e r months acting upon more than 400 pieces of legislation passed during the Spring Legislation Session Considering the volume of bills that dominated the Session, it’s no surprise that a number of the ones signed into law may directly impact you, your people, practice, workplace and community.

The following are some legislative highlights for your information and should not b e c o n s t r u e d a s p o s i t i o n s o f t h e I l l i n o i s CPA Society, specifically

Accounting Act Update

Marty is the ICPAS VP of Government Relations, a practicing lawyer and member of the Illinois Bar and a Lieutenant Colonel in the National Guard

He previously served as executive assistant attorney general for Illinois Attorneys General Lisa Madigan and Jim Ryan, and as director of the Governor’s Office of Citizens Assistance and assistant to the Governor for Public Affairs, both under Governor James Edgar

* greenm@icpas org @icpasgovt

Governor Quinn signed House Bill 2726 the top legislative priority of the Illinois CPA Society into law on August 9 The legislation updates the Illinois Public Accounting Act and extends the Regulatory Act sunset date to January 1, 2024

While its basis continues to be the need for licensure or registration to use the CPA title, significant changes have been made throughout the Act For starters, “Accountancy Activities,” which are services performed for a client or employer, replaces the practice of “Public Accounting ” The title “CPA (inactive)” also has been added to allow licensed or registered CPAs who don’t perform any accountancy activities to use the CPA title and be exempted from the 120-hour CPE requirement; that is, as long as “inactive” is placed adjacent to “CPA.”

With the bill signed, these changes are e f f e c t i v e i m m e d i a t e l y a s P u b l i c A c t 9 80254. Naturally, many questions are being r a i s e d b y o u r m e m b e r s , a n d s o w e h a v e posted FAQs on the Illinois CPA Society’s website [www icpas org]

Medical Cannabis Pilot Program

House Bill 1 creates a four-year pilot program allowing sick or dying patients to use up to 2.5 ounces of medical cannabis every t w o w e e k s , a f t e r r e c e i v i n g c e r t i f i c a t i o n

from an Illinois physician that confirms the patient suffers from a “debilitating medication condition ”

The legislation, effective January 1, 2014 as Public Act 98-0122, provides for 22 cannabis-growing operations and 60 licensed retail outlets across the state that will be regulated by the Illinois Department of Financial & Professional Regulation (IDFPR). Growers and dispensaries will pay a 7-percent privilege tax, which will be used for enforcement purposes, and patients will pay a 1-percent tax for purchases

The General Assembly did recognize and p r o v i d e d f o r e m p l o y e r s ’ d r u g - f r e e w o r kplace policies; Section 50 specifically states t h a t n o t h i n g i n t h e A c t p r e e m p t s a n e mployer’s drug-free workplace or drug testing policies.

CPAs should also recognize that, with the p a s s a g e a n d s i g n i n g o f H o u s e B i l l 1 i n t o s t a t e l a w, t h e r e i s a c o n f l i c t w i t h f e d e r a l law. Cannabis remains a schedule 1 drug a n d s u b j e c t t o f e d e r a l p r o s e c u t i o n , a n d CPAs should consult legal counsel if contemplating providing accountancy services to a dispensary or grower A f e d e r a l c o nv i c t i o n o f t h i s n a t u r e c o u l d r e s u l t i n l i c e ns u r e d i s c i p l i n e o r s u s p e n s i o n o r r e v o c at i o n b y t h e I D F P R o r o t h e r s t a t e l i c e n s u r e a u t h o r i t i e s M o r e o v e r, s u c h a c o n v i c t i o n a n d l i c e n s u r e s a n c t i o n c o u l d r e s u l t i n a d d i t i o n a l s a n c t i o n s b y t h e I l l i n o i s C PA S o c i e t y a n d t h e A I C PA

Firearm Concealed Carry

House Bill 183 allows residents and nonresidents who meet specified qualifications to apply for a license to carry a concealed firearm in Illinois. Illinois is the final state to enact concealed carry, and did so under a mandate from the Seventh Circuit Court of Appeals

Applicants must complete an application separate and apart from the Firearm Owner’s

Identification Card (FOID), and must complete 16 hours of training. The Illinois State Police is in the process of completing regulatory guidelines for training providers, and will have concealed carry applications available on or around January 1, 2014

As an employer and business owner, you s h o u l d c o n s i d e r w h e t h e r y o u w a n t y o u r employees and customers to possess a concealed firearm in your place of business If you decide to regulate the carry of firearms in your place of business, employee policies and handbooks should be updated to reflect the prohibition and to ensure strict compliance with the law

Unfortunately, the General Assembly was not clear on prohibiting concealed carry in y o u r p l a c e o f b u s i n e s s i f y o u l e a s e o f f i c e s p a c e S e c t i o n ( a - 1 0 ) p r o v i d e s a c a t c h a l l provision that allows the owner of private real property to prohibit concealed firearms on the property under his or her control At this point, we really don’t know with cert a i n t y h o w t h e c o u r t s w i l l i n t e r p r e t t h e s e terms If you lease your office space, you may want to come to a contractual agreement with your landlord regarding who has the right to decide the policy on this issue.

If you also decide to prohibit concealed carry among customers in your office, you will be required to post signage of uniform d e s i g n a s e s t a b l i s h e d b y t h e I l l i n o i s S t a t e Police Even with this prohibition, the law d o e s p r o v i d e f o r a p a r k i n g l o t e x c e p t i o n w h e r e i n a f i r e a r m m a y b e p o s s e s s e d a n d the firearm or ammunition may be stored out of sight in a locked vehicle With the development of the application a n d v e t t i n g p r o c e s s t h a t e a c h a p p l i c a n t must undergo still pending, there’s plenty of t i m e t o d e v e l o p i n t e r n a l p o l i c i e s a n d t o h a v e d i s c u s s i o n s w i t h y o u r l a n d l o r d o r attorney if necessary

House Bill 183 is Public Act 98-0063 and is effective immediately

State Vendor Job Posting & Unemployment Insurance

House Bill 3125 requires individuals and entities with contracts other than certain construction contracts with state agencies under the executive branch and community colleges to post job vacancies on the Illinois Department of Employment Securities’ (IDES) IllinoisJobLink.com.

The bill also authorizes IDES to mandate electronic payment of unemployment insurance taxes and to assess a penalty to payments made by check; eliminates the requirement that employers estimate monthly wages on new hire reports; clarifies that IDES may accept electronic mailing receipts as proof of service where service or certified mail is required; and provides that filing a fraudulent unemployment insurance return is classified as a Class 4 felony.

HB 3126 is Public A c t 98-107 a nd became effective on July 23, 2013

The legislation detailed here is only a sample of the bills that may have significance to you and your professional environment We’ll continue to keep you posted on items of interest through our monthly Capitol Dispatch e N e w s l e t t e r [ w w w. i c p a s . o r g / c a p i t o l d i s p a t c h h t m ] and through my Twitter account [@icpasgovt]

As always, I appreciate your feedback, insight and suggestions, so keep the lines of communication open and let me know if there’s a particular piece of legislation or regulation that you’re interested in

CPA Endowment Fund of Illinois

make success possible

I have always believed in myself, but it’s a great feeling to see that someone else does too.

Sharnay Bradford - McKendree College

The Fund provided Sharnay with increased financial security, professional networking tools, and the opportunity to intern at one of the world’s largest accounting firms.Support from people like you changes the lives of hundreds of future CPAs every year.

c h o o l e d i n F r a u d

The real scoop on financial fraud in higher education

By Brad Sargent, CPA/CFF, CFE , CFS, Cr FA , FABFA

Brad is the managing member of The Sargent Consulting Group, LLC, which specializes in forensic accounting and financial investigation He is a frequent lecturer and chair emeritus of the American Board of Forensic Accounting A member of the Illinois CPA Society since 2002, Brad also serves on the Society’s Board of Directors

* bsargent@scgforensics

The thought of school, particularly at this time of year, conjures up many different images We all have our own unique experiences and memories from our school days Whatever your first association is, though, I bet it’s not “fraud ”

Unfortunately, frauds ranging from revenue recognition to credit card abuse run r a m p a n t a n d t h e y ’ r e r a r e l y r e p o r t e d i n the media Pause for a moment and cons i d e r t h e c o n t r o l e n v i r o n m e n t i n h i g h e r e d u c a t i o n ( i e h i g h s c h o o l , c o l l e g e a n d beyond) It’s the perfect scenario for frauds t e r s t o p l y t h e i r t r a d e : A g r e a t d e a l o f a u t h o r i t y a t t h e i n s t i t u t i o n a l l e a d e r s h i p l e v e l , l o w - c o m p e n s a t i o n p e r s o n n e l w i t h a u t o n o m y o v e r h i g h - d o l l a r c o n t r a c t s , boards with possibly little or no financial sophistication, and a dash of higher-cause altruism spread across the culture.

S i m p l y s t a t e d , s o m e o f t h e m o s t e g r egious and devious frauds I’ve investigated occurred in the higher education sector.

Like most other industries, higher educat i o n h a s b e e n i n c o s t - c o n t a i n m e n t m o d e s i n c e 2 0 0 7 . S t a f f h a s b e e n c u t i n e v e r y department, compliance and internal audit functions have been severely curtailed, and a d m i n i s t r a t o r s h a v e b e e n g i v e n c a r t e b l a n c h e t o i m p l e m e n t a w i d e v a r i e t y o f fraud schemes

While we examine a few scenarios, keep in mind that fraud always has an incentive attached to it

Most schools enjoy three primary sources o f r e v e n u e t u i t i o n , p r i v a t e f u n d - r a i s i n g (aka “advancement”) and public funding

Let’s start with the case of the admissions officer with a bonus incentive for increasing s t u d e n t h e a d c o u n t , t h e r e b y i n c r e a s i n g tuition revenues This creative admissions officer is incented to find new and inventive ways for more students to qualify for more

s c h o l a r s h i p s , w h i c h w i l l t r a n s l a t e i n t o a l a rg e r s t u d e n t b o d y, p o s i t i v e l y i m p a c t i n g institutional growth and miraculously more

r e m u n e r a t i o n f o r t h e a d m i s s i o n s o f f i c e r Win-win-win, right? That’s until the scholarships provided by the school equate to nothing more than a dramatic discount on the cost of tuition The revenue per student suddenly plunges, while the cost per student r e m a i n s s t a t i c O v e r t h e c o u r s e o f a f e w y e a r s , t h i s c a n h a v e a p o w e r f u l e f f e c t o n income statements.

Advancement, or fundraising, is an area r i f e w i t h p a r t i c u l a r l y p e c u l i a r p r a c t i c e s Representatives from the school are tasked with seeking out committed donations large and small from alumni and organizations Due to circumstances known and unknown, total actual funding never truly equates with total commitments, which results in a classic case of recognized revenue not equaling realized revenue

Advancement personnel often have incentives for reaching certain commitment thresholds; this is paying a bonus for recognized revenue, not realized revenue Talk about a recipe for disaster!

In one instance I encountered an advancement officer who calculated the net worth of an older, prominent donor/alumnus and r e c o g n i z e d 8 0 p e rc e n t o f t h i s f i g u r e a s a commitment to the school simply because t h e d o n o r d i d n ’ t g e t a l o n g w i t h h i s a d u l t children and was nearing death. The school officer was careful to instruct his colleagues not to mention this to the donor himself, as it would upset him and possibly jeopardize the “gift ” The advancement officer’s bonus was paid, and his fictitious fundraising campaign was trumpeted as a huge success.

Public funding for higher education, however, does come with strict guidelines and regulations, and schools must qualify for funds by adhering to clearly documented metrics Sadly, there still have been many highly publicized cases of school administrators “fudging the numbers” to keep the public dollars rolling in I once interviewed a school employee who completed compli-

ance documents with false data that resulted in hundreds of thousands of public dollars coming to a school district This is a typical case of a mid-level manager doing what he/she was instructed to do and suspending any notion of ethics under the perceived threat of losing their job

Individuals with control over revenues aren’t the only fraudsters in education. Individuals who have access to the cost side of the income statement may also engage in nefarious activities A senior e m p l o y e e w i t h o v e r s i g h t o f t h e g r o u n d s a n d m a i n t e n a n c e a t a large high school, college or university can control the vendor relationships and millions of dollars for all facets of building repair, construction, landscaping and furnishings. Consider the vice president of facilities who rented university dorm rooms to non-students and pocketed the proceeds. The same individual stocked th e i r pe r s o n a l r e s id e n c e w i th a ppl i a n c e s e a r m a rk e d f o r f a c ul t y housing. A careful review of the school-provided credit cards at this person’s disposal re-vealed years of unauthorized spending adding up to hundreds of thousands of dollars. The charges, which ranged from gasoline for personal vehicle use to buying a new truck, were all systematically approv-ed by finance department personnel who lacked the underlying knowledge to question any of these expenses Even the “exotic dance club” charges on the credit cards were approved as “meal and entertainment.”

The government, however, is getting more aggressive in investigating education fraud Preston Pugh is a former federal prosecutor, former head of compliance investigations at GE Healthcare a n d c u r r e n t p a r t n e r a t P u g h , J o n e s & J o h n s o n w i t h o f f i c e s i n Chicago and New York He handles many large-scale investigations and serves as a compliance monitor in Illinois and New York. He and his firm also advise many clients in higher education

Pugh states that, “With the increasing indicators of fraud that are arising in higher education, it’s important that colleges and universities improve their internal compliance monitoring systems and take the required steps to prevent small problems from becoming much, much larger In-house counsel in higher education can take l e s s o n s f r o m t h e i r p e e r s a t h o s p i t a l s a n d p h a r m a c e u t i c a l s w h o know all too well the prevalence and scale of government investigations in that sector Change happens quickly; 20 years ago the scrutiny in healthcare fraud and enforcement was certainly not what it is today ”

A s I ’ v e s a i d , t h e v a r i o u s s c h e m e s I ’ v e e n c o u n t e r e d o v e r t h e years in the education sector would make most felons blush After all, how do people get away with such unethical abuse in a culture e s t a b l i s h e d t o s e r v e a h i g h e r p u r p o s e ? F r a u d s t e r s i n a c a d e m i c institutions exploit this culture to their maximum advantage. One of the most unfortunate byproducts of education fraud is the fact that most schools are loathe to publicize the fact, fearing a major drop in donations Instead, the wrong-doers are often quietly sent packing and typically find gainful employment at another school.

Fraud in education is as systemic and pervasive as insurance fraud Sadly, most victims accept it as part of the process

I encourage everyone to do as my fav-orite bumper sticker says: “Think globally, act locally ” Don’t hesitate to ask questions about the leadership and finances of your local school districts, colleges or universities Often, a small bit of due diligence can save the school from bringing the proverbial fox into the henhouse.

PFP ADVISOR Ta r g e t D a t e

TDFs have exploded in popularity as a key investment choice But are they worthy of all the press?

By Mark J Gilbert, CPA/PFS

v i s o r s ,

, Mark’s 25-plus years of finance

c c o u n t i n g e x p e r i e n c e i n c l u d e s

1 3 yea r s in p er s ona l f ina ncia l p la nning An ICPAS member since 1982, M a r k c u r r e n t l y s e r v e s i n t h e I A / P F P

M e m b e r Fo r u m G r o u p a n d o n t h e Structure & Volunteerism Committee.

* mgilbert@reasonfinancial com

Target Date Fund (TDF) defined contribution plan assets totaled nearly $97 billion in September 30, 2012, and consulting firm

C a s e y Q u i r k & A s s o c i a t e s p r o j e c t s t h a t they’ll swell to $3 7 trillion by 2020 That’s approximately 48 percent of all plan assets

As a personal financial planner, I appreciate the investment concepts behind TDFs But I fear they’re not the pot of gold at the end of the (investment) rainbow that some plan sponsors and plan participants think they are.

Whether you’re a retirement plan sponsor fiduciary, you advise business owners on setting up and maintaining these types of plans, or you invest in them yourself, it’s important to be aware of TDF pros and cons.

But first, what exactly is a TDF? It’s a bala n c e d m u t u a l f u n d c o m p r i s e d o f s t o c k s , bonds, alternative investments and cash, or funds that invest in these vehicles, whereby the asset allocation changes over time. The t y p i c a l T D F i d e n t i f i e s a r e t i r e m e n t d a t e , with the asset allocation becoming decidedly more conservative as the target year draws near

The use of TDFs in retirement plans really took off in 2007 as a result of the 2006 Pension Protection Act, which identified them as retirement plan Qualified Default Investment Alternatives (QDIA) In other words, plan sponsors were absolved of a good deal o f f i d u c i a r y l i a b i l i t y w h e n u t i l i z i n g t h e s e funds as investment options.

B u t t h i s Q D I A s t a t u s m a y b e s e n d i n g investors the wrong signal A 2012 LIMRA Retirement Research survey of more than 3,500 consumers revealed that 10 percent believe TDFs include guaranteed returns, become risk-free at retirement, or require

income to be withdrawn during the target y e a r U n f o r t u n a t e l y, n o n e o f t h e s e p r o v isions are true. What’s more, a 2012 SEC survey indicated that only 64 percent of those s urv e y pa rtic ipa nts k ne w tha t TDF s don’t provide guaranteed income after retirement.

O b v i o u s l y, e m p l o y e r s n e e d t o p r o v i d e communication and education about TDFs r a t h e r t h a n s i m p l y r e l y i n g o n t h e i r Q D I A s t a t u s t o a v o i d p o t e n t i a l l e g a l p r o b l e m s down the road.

There are at least two fund management issues that plan sponsors need to consider when selecting from competing TDFs. First is the fund’s “glidepath” or change in asset a l l o c a t i o n o v e r t i m e . T h e g l i d e p a t h c a n v a r y s i g n i f i c a n t l y f r o m f u n d t o f u n d F o r example, earlier this year Morningstar reported that year 2055 TDFs had almost a 2 0 - p e rc e n t a g e p o i n t d i f f e r e n c e b e t w e e n their most conservative and least conservative asset allocations

The other issue is whether the fund changes its asset allocation in the years prior to the target date (after which it stops making changes) or through the target date until a later time Consequently, “to” funds gene r a l l y h a v e l o w e r e q u i t y w e i g h t i n g s t h a n “through” funds at the target date, which goes to show that TDFs aren’t interchangeable and instead need careful consideration

b e f o r e b e i n g a d d e d t o a r e t i r e m e n t p l a n investment menu.

Since TDFs invest largely in a combination of stocks and bonds, their investment returns generally reflect some sort of blende d a v e ra g e of dome s tic a nd inte rna tiona l stock and bond indexes, performing better than stock averages in falling stock markets b u t t r a i l i n g i n r i s i n g s t o c k m a r k e t s T h i s

“I appreciate the investment concepts behind TDFs. But I fear they’re not the pot of gold at the end of the (investment) rainbow that some plan sponsors and plan participants think they are ”

makes TDFs a good choice for plan participants who need to reduce stock investing risk, while willingly sacrificing the potential for otherwise higher returns But TDFs certainly carry some risk. In 2008, for exa m p l e , w h i l e T D F s s u f f e r e d s i g n i f i c a n t losses alongside the stock and bond markets, the average loss for a 2010 TDF was still 24 percent compared to 37 percent for t h e S & P 5 0 0 i n d e x . S i n c e t h e n , t h e S E C actively has worked to compel plan mana g e r s a n d i n v e s t o r s t o b e t t e r u n d e r s t a n d TDF risks

The most important aspect of fund performance and analysis, however, is identif y i n g w h i c h o n e s w i l l d e l i v e r s u f f i c i e n t returns to meet investors’ expected needs over the long term Morningstar concluded in one study that investors in any investment product providers’ TDFs have similar probabilities of having sufficient savings to last through age 85, but beyond that, TDFs w i t h l o w e r e q u i t y e x p o s u r e p r o v i d e a greater likelihood that assets will run out before age 95. As I sometimes find in worki n g w i t h i n d i v i d u a l s , t h i s o u t c o m e o f t e n means that investors need to invest more a g g r e s s i v e l y t h a n t h e y w o u l d o t h e r w i s e like to in order to reduce the risk of depleting their retirement assets

Furthermore, Morningstar’s survey results are only moderately encouraging given that the majority of investors sell their TDFs within three years of retiring from an employer. With that in mind, a TDF with a glidepath designed to preserve principal at age 65 or 70, rather than through life expectancy, is probably more suitable for the average investor who holds his or her TDF for only a short time

N e v e r t h e l e s s , i n t e r e s t i n T D F s a m o n g retirement plan participants is almost cert a i n l y g o i n g t o g r o w P a r t i c i p a n t s l i k e t h e s e f u n d s b e c a u s e t h e y ’ r e i n t u i t i v e l y a t t r a c t i v e a n d e a s y t o u s e . T h a t d o e s n ’ t mean, however, that investors should “set it and forget it.”

What’s more, plan managers should ignore the inherent simplicity of these funds and educate and communicate with participants about their risks Also, sponsors and advisors should understand the behavior of participants who typically invest in TDFs in order to offer investment choices that best support that behavior. In a c c o m p l i s h i n g that, plan sponsors will not only fulfill their r e g u l a t o r y d u t i e s , b u t a l s o d o t h e r i g h t thing for their employees

Join

Bill Graf, Chair of the ICPAS Board of Directors, along with Todd Shapiro, ICPAS President and CEO, look forward to talking with you to better understand your needs and challenges.

We’ll also touch base on a variety of subjects including:

This is a great opportunity to connect with YOUR Society… and each other. We hope you will join us!

or visit www.icpas.org

Financial App-titude

Top mobile apps for corporate finance pros

By Derrick Lilly

In today’s untethered business world, corporate finance gurus need to be smart-device-wielding, cloud-surfing pros. But, with each day bringing more business apps to market, it’s more confusing than ever to decide which ones will actually help or hinder your productivity And so, here we give you some simple, easy-to-use apps that will help to keep you on the business edge whether you’re in the confines of the office or roaming free with your mobile devices.

Passwords Protected

If you’re anything like ICPAS’ o w n a c c o u n t i n g a n d f i n a n c e m a n a g e r s , y o u h a v e a l o t o f w o r k t o g e t d o n e o n a d a i l y b a s i s , a n d a w h o l e m e s s o f usernames, passwords and authentication codes to remember to get to it.

If you’re having trouble keep i n g t a b s o n t h e s e d a s t a r d l y things (which you likely have to change frequently), writing them on yellow sticky notes or s a v i n g t h e m a s t e x t s i n y o u r s m a r t p h o n e i s n ’ t going to cut it (unless you’re trying to leak sensitive company information)

Instead, password management apps like Ascendo DataVault [ascendo-inc.com] and Keeper [keepersecurity com] will temper security concerns and memory lapses by storing and organizing all of your usernames, passwords, PIN numbers, credit card numbers, and any other sensitive information in one location, with only one password required to access them What’s best, both work across your mobile and desktop devices, so you can access information anytime, anywhere

Documents Everywhere

Speaking of important information, how often do you find yourself needing or wanting a copy of a document or receipt when you’re nowhere near a photocopier or scanner? Well, CamScanner [cam scanner net] has the solution for you: Turn your mobile device (which we know you’re never without) into a scanner Just snap a picture of your realworld document with your Android, iPhone or iPad camera, and CamScanner will convert it into an editable PDF that you can save to your device or in their “cloud” so all your mobile and desktop devices can access and share it

And how likely is it that some, if not many, of the business-critical documents and contracts coming your way each day need your signature? If you’re always on the move, getting those signed and sent may be a chore for you and your staff That’s where Adobe’s EchoSign [echosign.adobe.com] eSignature solution comes in EchoSign allows users to send, sign, track, manage and access documents across the web, including from their iPad, iPhone and iPod Touch devices. What’s really great is the fact that documents can be signed in person right on your touch-screen-enabled smartphone or tablet with your finger, plus it’s a secure signing process with key authentication, privacy and fraud protection What’s more, EchoSign seamlessly integrates with many leading business solutions from Citrix, Microsoft Dynamics CRM, NetSuite, Oracle, Salesforce, SAP and more to further streamline business processes.

If your main objective is simply synching and sharing files of all types with multiple devices and u s e r s , D r o p b o x ’ s p e r s o n a l a n d b u s i n e s s c l o u d solutions have you covered You can say goodbye t o w o r r i e s a b o u t y o u r s e n s i t i v e e m a i l a t t a c hments, file-size limitations, cumbersome FTP serv e r s , a n d p e o p l e m o d i f y i n g d o c u m e n t s t h e y ’ r e not supposed to Dropbox gives you all the storage space and administrative controls you need t o s e a m l e s s l y s t o r e a n d s h a r e f i l e s f o r u s e a n d c o l l a b o r a t i o n w i t h y o u r t e a m , o r a n y o n e y o u

want for that matter Dropbox for Business [drop b o x . c o m / b u s i n e s s ] s p e c i f i c a l l y o f f e r s enhanced document management and tracking, and secu-

r i t y a n d a c c e s s c o n t r o l s , s o n o m a t t e r where you and your staff are located, each u s e r c a n s e c u r e l y a c c e s s a n d w o r k w i t h t h e f i l e s a n d b a c k u p s s y n c h e d t o D r o pb o x ’ s c l o u d f r o m M a c s , P C s , m o b i l e phones and tablets.

HR Anywhere

So, you have your documents, they’re signed and shared securely, and your team is seamlessly collaborating on all their projects. But what about your HR needs?

SurePayroll and ADP might be able to help since both companies offer free apps t h a t e x t e n d t h e i r p r o d u c t c a p a b i l i t i e s t o their customers’ mobile devices.

With SurePayroll’s mobile app [surepayroll com], you can accurately run your company’s payroll anywhere, anytime from your Android or Apple device The app allows users to pay salaried, hourly, and 1099 employees; enter earnings, deductions, hours worked and benefits like accrued personal time; change check dates and direct deposits; pay and file payroll taxes; and much more Plus, their Mobile Paycheck for Employees app allows employees to view their paychecks on their mobile devices just as easily.

If running payroll from your mobile device isn’t quite as important, but empowering your employees with greater access to a host of information typically controlled by the HR department is, ADP Mobile Solutions offers businesses running ADP an excellent app specifically for Apple and Android devices Designed with the mobile workforce in mind, ADP Mobile [adp.com/mobilesolutions] allows users to securely review pay statements, earnings, deductions and deposits; punch in/out and submit timesheets; review retirement account balances, contributions, rates of return and loan balances; access detailed FSA account information; review company benefits plans and elections; receive company news updates; access a detailed employee directory to call, email or locate colleagues; and more It basically puts your HR department at your employees’ fingertips 24/7 without the hassle.

Work Wherever

Last but not least, a good remote desktop application always comes in handy After a l l , y o u r w o r k s t a t i o n i s u s u a l l y t h e m o s t powerful and efficient machine you have, so you shouldn’t have to be without it.

Splashtop [splashtop com] offers remote desktop apps for Android, Apple and Win-

dows smartphones and tablets, specifically g e a r e d t o w a r d s b u s i n e s s a n d e n t e r p r i s e users who need high-speed, high-quality, mobile access to all of their business-critical programs, applications, files and multimedia content Splashtop uses high-speed streaming optimized to be fast and respons iv e on 3G/4G a nd Wi-F i ne twork s , a nd uses 256-bit AES/SSL encryption to ensure

your remote connection is absolutely secure It even ensures that complex ERP and graphics-heavy programs will operate seamlessly. How’s that for a productivity booster?

Have a business app that you can’t live without? Let us know about it and we might just highlight it in an upcoming issue of INSIGHT; email me at lillyd@icpas org

We can help you before you reach your breaking point. We start a conversation and you will have help, guidance and resources at your fingertips. We become your trusted advisor.

Jim Wong, CEO & Founder

The Female Factor

How can public accounting firms keep their women professionals for the long haul?

By Selena Chavis

High-Five Your Employees

It’s quick and easy for employers to put these best practices into place, and they go a long way in boosting employee morale, loyalty and longevity, and ultimately recruiting and retention efforts These practices appeal equally to men and women, and simply make great management sense.

1 Maintain an open- door policy

2 Promote from within

3 Offer fair compensation

4 Recognize outstanding work

5 Provide professional development opportunities

As a n i n d u s t r y h i s t o r i c a l l y d o m i n a t e d b y men, accounting is witnessing something of a gender shift The AICPA’s 2013 Trends in the Supply of Accounting Graduates and the Dem a n d f o r P u b l i c A c c o u n t i n g R e c r u i t s r e v e a l s that 48 percent of accounting graduates Bache l o r ’ s a n d M a s t e r ’ s c o m b i n e d a r e w o m e n , a n d t h e r e c e n t l y r e l e a s e d 2 0 1 3 A c c o u n t i n g MOVE Project Report found that 51 percent of accounting firm managers are women

U n f o r t u n a t e l y f o r m a n y, m o v e m e n t u p t h e firm ladder often stops there; in fact, only 19 percent of partners are women Subsequently, i t ’ s n o s u r p r i s e t h a t T h e M O V E P r o j e c t ’ s r esearch found that 44 percent of women most of them senior staff have been strongly tempted to leave at least once, and more than half of them are still considering defecting

Somewhere along the way, women exit the talent succession pipeline, says Louise Single, Ph.D., accounting department chair at St. Edwards University and a member of the AICPA Women’s Initiatives Executive Committee. “If firms want to have the best talent stick with them, they have to have women hang in there for the long term,” she says. “Public accounting firms stand to lose their ROI if they can’t leverage the skills of these professionals in the C-suite.”

Even more research points to a challenging retention environment ahead Nearly 75 percent of employees interviewed in a 2013 Accountemps survey noted that they would be comfortable seeking new employment before leaving their current firm, and 48 percent said they would likely conduct job searches while at work.

What’s a firm to do? A thorough assessment and refinement of retention strategies targeted to women sounds in line, but as Dow Scott, a prof e s s o r o f h u m a n r e s o u rc e s i n t h e G r a d u a t e S c h o o l o f B u s i n e s s a t L o y o l a U n i v e r s i t y i n Chicago, points out, “'Context’ is an important consideration when trying to identify retention

s t r a t e g i e s t h a t w i l l a p p e a l t o m e n a n d women. It’s never a ‘one-size-fits-all’ situation Most people are complex ”

“ E m p l o y e e s e v a l u a t e t h e i r e m p l o y e r s and their positions based on a multitude of factors with varying degrees of importance to them,” explains Marilyn Bird, vice presi d e n t o f R o b e r t H a l f I n t e r n a t i o n a l i n Chicago “Compensation, benefits, flexibility, paid vacation and commute, along with professional development and career aspirations, are all factors that contribute to job s a t i s f a c t i o n . ” F o r e x a m p l e , a n e m p l o y e e m a y f o c u s o n c o m p e n s a t i o n d u r i n g o n e stage of life, and on work-life balance later

In addition, there are studies out there that point to different motivations depending on gender. For example, WorldatWork’s 2010 study, Beyond Compensation: How Employees Prioritize Total Rewards at Various Life Stages, reveals that men favor compensation most while women and parents of young children favor work-life balance

The 440 women surveyed as part of the most recent Accounting MOVE Project Report confirmed this assertion, while also providing deeper insight into other factors that contribute to successful retention strategies

For women managers, for example, the report found that the top four retention fact o r s i n c l u d e w o r k - l i f e b a l a n c e , r e l a t i o nship with co-workers, firm culture and a variety of career options Somewhat different from managers, the top four priorities f o r s e n i o r w o m e n s t a f f a r e f i r m c u l t u r e , relationships with co-workers, relationship with clients and technical challenge

Plante Moran is as ideal a role model as you can get when you’re talking about retaining women accountants The Accounting MOVE Project recently named the firm the “Best Public Accounting Firm for Women in 2013,” largely because of internal policies designed specifically to attract, retain and move women up the ranks

I n a d d i t i o n t o e s t a b l i s h i n g p r o g r a m s e n c o u r a g i n g f l e x i b l e w o r k a r r a n g e m e n t s a n d w o r k - l i f e b a l a n c e , i n 2 0 1 3 t h e f i r m l a u n c h e d a n e w Wo m e n i n L e a d e r s h i p (WIL) program intended to bridge the gap between men and women reaching the top ranks. Mentoring and advocacy are key, a f a c t t h a t i s p a r t i c u l a r l y s i g n i f i c a n t g i v e n that data from both the Accounting Move P r o j e c t a n d t h e A I C PA ’ s w h i t e p a p e r, Advocacy and Advancement: A Study by the Women’s Initiatives Committee of the AICPA, co-authored by Single, reveal that

female accounting professionals exposed to mentoring and advocacy reported the highest levels of advancement

At the same time, however, key findings of the Accounting MOVE Project indicate t h a t m a n y m i d - l e v e l w o m e n a r e q u i e t l y d i s c o n n e c t i n g f r o m t h e i r a m b i t i o n s t o o e a r l y, a n d a r e o f t e n

“Sometimes we assume that people know how ambitious we are and what our career aspirations are,” says Single, “It’s important for women in senior leadership roles to be more vocal about the benefits of climbing up the ranks Women who are in leadership roles sometimes don’t let the people coming up know how good they have it ”

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Your Route to the Top

Boost your professional development plans with these three approaches

By Derrick Lilly

Whether you’re just finding y o u r f o o t i n g i n y o u r r e s p e c t i v e profession, or you’re already trav e l i n g d ow n a c a r e e r p a t h t h a t demands a stronger skill set, taki n g o w n e r s h i p o f y o u r p r o f e ssional development is crucial to your journey’s success

Here are three routes to take along the way

1. Mentors Wanted

How do I get to where I need to go? What opportunities are there? What doors will open? How do I become a better manager?

If these kinds of questions keep you up at night, then you may be in need of a mentor Sometimes all you have to do is ask

“Everybody loves to give advice, and that’s a good way to open the door to forming a mentor/mentee relationship,” says Paula A. Galbraith, Esq., CPA. A leader of her own consultancy and legal practices, and chair of the Illinois CPA Society’s Women’s Initiatives Task Force, Galbraith openly admits that she would not have had the same opportunities to succeed without the guidance of strong mentors throughout her academic and professional careers. “A mentor is going to give you advice, support and encouragement; they are going to help you find opportunities and maybe even use their network to open up some doors for you,” she explains. What’s more, they’re going to expose you to new and different experiences

“What’s important is being able to gain different perspectives If we get locked into our own worlds we miss opportunities. I learned a lot about how to handle responsibilities and issues, communicate with clients, and provide

them with superior service thanks to mentors not only in my early career, but also during my mid-management years,” says Mark Stutman, c h i e f l e a r n i n g o f f i c e r a t G r a n t T h o r n t o n L L P. “We know that the vast majority of learning is experiential; mentors and coaches will without a doubt have a positive impact on your career and development ”

To n o s u r p r i s e , e m p l o y e r s i n c r e a s i n g l y a r e trying to capitalize on the benefits mentoring and coaching programs bring to their professional development plans Grant Thornton, for instance, is focused on providing greater experiential learning opportunities to its staff through f o r m a l d e v e l o p m e n t p l a n n i n g . “ We a c t u a l l y have a formal coaching program that assigns appropriate coaches to all of our people to help facilitate their growth and development through counseling, feedback, encouragement, direction and everything else that goes along with it,” Stutman explains “The benefits are a greater focus on our peoples’ abilities to grow, take on more responsibilities, advance roles and succeed through career continuance.”

Exposure to mentors and coaches shouldn’t b e l i m i t e d t o p r o f e s s i o n a l s a s s i g n e d t h r o u g h e m p l o y e r p r o g r a m s , h o w e v e r M a n y p r o f e ssional groups and associations are jumping into organizing mentoring circles because of their unique twis t the y g roup profe s s iona ls of a ll ages and skill levels into intimate “circles” and e n c o u r a g e o p e n d i s c u s s i o n s o n a l l k i n d s o f issues. Not only do junior members learn from the experienced, but mid- and senior-level professionals also gain insight into the minds of the younger generations These circles are proving to be invaluable, building lasting relationships and developing referral networks in a comfortable, unintimidating atmosphere

“The thought behind mentoring circles is that the relationships these professionals form with each other will continue for several years and provide guidance regardless of your experience level,” explains Kim Rice, CPA, MST, partner at R&M Consulting and chair of the Illinois CPA

Society’s Women’s Executive Committee mentoring program

The Illinois CPA Society has created its own Women’s Executive Committee Mentoring Circles, which benefit women of all ages and in all stages of professional development. Each Circle is comprised of 8 to 10 women of varying levels of experience from a wide range of practice areas and industries, and meets at least four times a year. The Circles are organized to encourage members to speak freely about the issues that working women struggle with on a daily basis, such as professional development, networking and work-life balance (For information contact Gayle Floresca, assistant director, Professional Standards and staff representative, Women's Executive Committee at florescag@icpas org or 312 993 0407 ext 220 )

2. Boardroom Calling

Although it’s not always first to mind, volunteering is actually a great way to expand your professional network and skill set Not only that, but it stands out to employers

“Volunteering often calls for organization, people, management and even persuasion and sales skills Between the peop l e y o u m e e t a n d t h e o p p o r t u n i t i e s y o u have, it’s a great testing ground,” says Galb r a i t h “ W h a t I w a n t a s a n e m p l o y e r i s somebody who’s going to take that extra step; I want to know they have initiative ”

Volunteerism is increasingly being ingrained in the cultures of today’s firms. It builds camaraderie, keeps people engaged, and supports their altruistic missions At Grant Thornton, for example, Stutman explains that their view as a firm is that the more they connect with the community, build relationships and contribute through their actions, the better off the firm and their people will be.

“It’s important for our people to understand that there is something greater than just doing accounting. We are in a people business,” Stutman stresses “The better we understand the world around us, the better we can relate to our clients. Our mission is to have our people make a difference ”

“It’s especially important for young professionals to understand the value of being involved instead of just going to work and going home,” Rice adds “Get involved with professional organizations and their respective committees or serve on a nonprofit’s board It gives you purpose, and it’s great for developing your professional skills You may be tasked with leading committees and meetings, organizing events, fundraising, and using your professional

expertise to guide these organizations in decision-making It’s also a great networking tool ”

3. Knowledge Search

“At the end of the day, you’re responsible for your career progression and getting to where you want to be Part of that comes from mentors and being involved with professional organizations and volunteering, and part is getting the education that you think you need to take your career to the next level,” says Rice.

Whether it’s a podcast, webinar, tutorial, or even an eBook, onDemand education has you covered with skills-building when you want it, where you want it And education providers are expanding their offeri n g s t o c o v e r m o r e t h a n j u s t t r a d i t i o n a l technical know-how and CPE needs

“True professional development is about deep learning and education,” says Ralph Gaillard, M Ed , ICPAS chief learning director. “Here at the Society we are diversifying and building programs that speak to multiple levels of competencies; we want to focus on the skills that people need to succeed throughout their careers ”

The Society’s learning management system, knowledgehub [www.icpas.org/knowledgehub htm], combines content from four d i f f e r e n t e d u c a t i o n p r o v i d e r s , c o v e r i n g technical and soft skills topics for a wide array of accounting and finance professiona l s , w h i l e t h e s e p a r a t e C P E O n D e m a n d [ w w w. i c p a s . o rg / o n d e m a n d . h t m ] s e r v i c e offers a growing selection of quick one-off webcasts and webinars.

“ O n D e m a n d c o u r s e s c o v e r a b r o a d range of topics and reside in different platforms and technologies, but more import a n t l y, g e t t i n g w h a t y o u n e e d w h e n y o u need it is extremely important to getting the job done,” says Stutman. “If you’re not always learning, if you’re not always growi n g , i f y o u ’ r e n o t a l w a y s g e t t i n g b e t t e r, you’re getting worse. You need to have the ‘and’ not the ‘or’ mentality This isn’t about d o i n g o n e t h i n g a n d n o t t h e o t h e r ; t h e b r o a d e r t h e e x p o s u r e y o u c a n g e t , t h e m o r e o w n e r s h i p y o u t a k e i n y o u r o w n d e v e l o p m e n t , t h e m o r e t h i n g s y o u g e t involved in that will grow you personally and professionally, the better off you will be,” he emphasizes, adding that, “To me it’s sort of like taking the formal training, t h e m e n t o r i n g a n d c o a c h i n g , t h e v o l u nteerism, the onDemand courses, webcasts, books, research, and all of the other things you do, and you put it all into a mixing bowl and hopefully what comes out is a better you ”

Recognize Your Peers!

Nominate a colleague for one of the Illinois CPA Society’s prestigious awards:

Lifetime Achievement Award

Presented each year to an individual who has provided distinguished service to the profession in Illinois and/or nationally.

Outstanding Educator Award

Presented each year to an educator(s) at a community college, college or university who has made continuous and outstanding contributions to the education of accounting students.

Outstanding Leadership in Advancing Diversity Award

Presented each year to an individual who is an exceptional leader committed to increasing diversity in the accounting profession.

Emerging Leader in Advancing Diversity Award

Presented each year to a young professional who possesses the qualities of the Outstanding Leadership in Advancing Diversity Award but typically has four plus years of full-time work experience.

Young Professionals Leadership Award

Presented to a young professional CPA who demonstrates leadership skills in their career, community service and through their involvement with the Illinois CPA Society and/or other professional organizations.

For specific award criteria and nominating instructions, visit

www.icpas.org/awards.htm

The Gen X Plan

The old way of saving for retirement just won’t hack it for Generation X

By Christine Bockelman

As m o s t f i n a n c e p r o s k n o w, slow and steady wins the retirement s a v i n g s r a c e . S o m e o n e w h o s t a r t s saving a small amount each month at the age of 20 will be far better off a t 6 5 t h a n s o m e o n e w h o s a v e s much more each month starting at 4 0 , t h a n k s t o c o m p o u n d i n t e r e s t and dividends

U n f o r t u n a t e l y f o r m a n y A m e r icans born between 1966 and 1975 (aka Generation X), it’s a financial truth that really stings

A recent report by Pew Charitable Trusts found that, in 2010, members of Gen X had debts that outweighed their assets by nearly double Also, while everyone’s savings were blunted in the recession, Gen X was the hardest hit Gen Xers lost 45 percent of their wealth, an average of about $33,000, between 2007 and 2010 Worsening the blow is the fact that, according to replacement rate analysis in the report, Gen Xers will only be able to replace about half of their preretirement income not nearly enough to secure a comfortable old age

A l t h o u g h t h e e c o n o m i c d o w nt u r n h i g h l i g h t e d G e n X ’ s s a v i n g s s h o r t c o m i n g s , i t i s n ’ t e n t i r e l y t h e c a u s e o f t h i s g e n e r a t i o n ’ s l a c k o f financial stability. Experts put some b l a m e o n e v e r y t h i n g f r o m h a v i n g children later in life and the costs of taking care of aging parents, to the elimination of pension programs and Social Security limitations

“ I n a s e n s e , G e n X e r s j u s t h a d b a d t i m i n g , being born when they were,” says Mark Gilbert, CPA/PFS, MBA, principal at Reason Financial Advisors, Inc in Northbrook and Naperville, Ill and INSIGHT’s PFP Advisor columnist. “When they were in college, it was very easy to get big student loans and then after college, when they were supposed to be paying down debt, 9/11 happened and the economy slowed down ”

B e f o r e t h e m o s t r e c e n t r e c e s s i o n b r o u g h t years of layoffs and job losses, Gen Xers were also hit with the 2007 housing bubble Anyone looking to buy a first home or upgrade from a starter around that time paid a lot for a house that quickly lost its value.

“They have the misfortune of coming of age and hitting these life events at bad times in the economy,” says Gilbert

And even though the economy went south, lifestyle costs didn’t necessarily follow suit There are many factors competing for Gen X’s dollars and against their savings. Thirty years ago, when Baby Boomers were roughly the age their Gen X children are now, there weren’t monthly smartphone bills, uncertain healthcare costs, high gas prices, or private college education that cost nearly $60,000 a year, to name just a few.

“This isn’t a slacker generation,” says Mark Ritter, a managing director at Grant Thornton LLP and the Atlanta Compensation and Benefits practice leader “There is a lot of complex stuff going on and some of it is rational economic behavior about buying a first house and a new car. Maybe there is some filigree around the edge, but people have to worry about the cost of health insurance before they worry about retiring in 30 years There are immediate, expensive demands on their finances ”

Another problem for Gen Xers is their parents. Baby Boomers make up a huge number of people in this country and garner most of the attention “U S domestic economic policy has coincided with the needs of the Boomers since Wo r l d Wa r I I , ” e x p l a i n s G i l b e r t “ G e n X e r s h a v e b e e n l e f t b y t h e s i d e o f t h e r o a d j u s t because there aren’t as many of them.”

C a r e e r p a t h s a n d t h e w o r k p l a c e h a v e a l s o changed in the past 30 years, further impacting savings rates

“

O u r g e n e r a t i o n h a s a n e n t i r e l y d i f f e r e n t experience than our parents and grandparents,” says Jeff Rose, an independent certified financial planner in Carbondale, Ill and author of Soldier of Finance “They went to a company, worked for 30 or 40 years, and got big fat pen-

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sions They didn’t have to think about their retirement as much. It was covered.”

With the safety net of pensions largely gone, Gen Xers are left to self-direct their retirement savings One way to do this is t h r o u g h a 4 0 1 ( k ) , b u t t o o o f t e n p e o p l e make the mistake of not actively managing their savings vehicles

“Odds are someone who is at one job for a long time will have more money at retirement than someone who jumps from job to job and has to make several different e l e c t i o n s f o r s e v e r a l d i f f e r e n t e m p l o y e r plans,” says Gilbert

Changing companies also can result in multiple stray 401(k) accounts one at company A, one at company B and one from company C, for instance all of which need to be managed Another financial difficulty associated with job jumping is that some companies have eligibility requirements and waiting periods before a new employee can join their 401(k) plan In some cases, this means people don’t save as much, or at all, while waiting to enroll

“You don’t have to stay at the same job f o r e v e r i n o r d e r t o h a v e a c o m f o r t a b l e retirement, but you do have to plan for all of this,” says Gilbert

First, think about what your 401(k) plan is doing or not doing for you

“I meet a lot of people who are investing through their 401(k)s, but don’t have any c l u e w h y t h e y a r e s a v i n g w h a t t h e y a r e saving,” says Rose. “Many think contributing enough to meet the employer’s match is good It’s not Not even close At that rate, there will never be enough savings for a comfortable retirement. I know someone who has a lifetime pension of over $3,100 per month that started at his retirement at age 55. That’s a pension, remember. Do

y o u k n

w m u c h m o n e y s o m e o n e would need to save on their own to have that kind of money monthly for the rest of their lives? Somewhere between three and four million dollars,” he states

It’s a lot to consider and a lot to save but there are a few shiny, happy points in the middle of it all.

For one, members of Gen X have always known they would have to work for their retirement savings “A big advantage they have over previous generations is that they d i d n ’ t h a v e t o g e t r i d o f t h e n o t i o n t h a t s o m e o n e i s g o i n g t o g i v e t h e m a c h e c k w h e n t h e y r e t i r e . T h a t ’ s p r o b a b l y n o t going to happen, and they know it They don’t have to get used to the idea that they are not going to be taken care of in retirement,” Ritter explains

They’re also very aware that they’re not saving enough. In a recent PricewaterhouseCoopers study, fewer than 40 percent of Gen Xers surveyed said they were confident about their retirement savings It’s a scary admission, but even if their savings aren’t on track now, many Gen Xers are still at least 20 years away from retirement. “That’s time to think about and plan for retirement,” says Gilbert encouragingly

In other words, the ship can be righted but it will take some work

The very simple solution: Start saving more. Start with increasing your 401(k) contributions, even if it’s just an extra percent a month, Ritter suggests, and up that a percent or two little by little “You can always dial it back if it’s too much, but if you don’t have the money in your bank account you won’t be spending it,” he says.

What’s more, there’s a world of investment vehicles beyond 401(k)s, and Gen

Xers need to educate themselves about them “I don’t think the rules of good investing have changed,” says Gilbert. “You want to be broadly diversified in stocks, bonds and mutual funds, keep expenses low and invest to achieve reasonable long-term rates of return.”

Some things, however, have gotten more complicated All savers and investors need to understand basic tax rules, as well as fees and penalties associated with their investments. Avoid financial surprises by reading blogs, books and newspapers, and consider meeting with a professional advisor “There are lots of avenues for advice if you are willing to roll up your sleeves and do some work,” says Gilbert

Fee-only advisors can be located through the National Association of Personal Financial Advisors [Napfa org] “They charge by the hour or as a percentage of what they manage for you,” says Rose “Really, do yourself a favor and spend a few hundred dollars and get a professional’s advice on your financial situation.”

Another good piece of advice is to keep your investments simple “Don’t try to come up with some brilliant solution to your financial issues,” says Ritter “Know when it’s time to stop before you get yourself in trouble.”

Finally, pay it forward Even if your own financial situation is somewhat bleak, don’t let history repeat itself. “Do your kids a favor and sit them down early and go over all of this,” advises Rose “Remind them that the earlier they start saving, even if it takes years to see the results, there will be results It’s much better than them waking up in their mid-50s and realizing they haven’t saved enough for retirement.”

Hoteling Checks In

Want to save a ton of money while gaining employee flexibility? “Hoteling” could be the answer

By Sheryl Nance Nash

If you think hoteling is all about renting rooms at the Hilton or Marriott then you’re way off the mark Hoteling is a growing trend among big accounting firms where unassigned office space is shared by reserving and utilizing it on an asneeded basis. The concept is particularly interesting for firms with a growing remote/mobile workforce

“ M o s t o f o u r s t a f f h a s b e e n d e s i g n a t e d a workspace, but our system is designed so that you 'check in' to your workspace on a daily basis, while simultaneously reserving it for the n e x t d a y y o u r e q u i r e i t , ” e x p l a i n s Te r r i M cClements, U S human capital leader for PricewaterhouseCoopers in New York

For those who may be visiting another office, a cell phone app or in-office kiosk informs them of the workspaces currently not in use “A good h o t e l i n g s y s t e m w i l l a l l o w f o r s p a c e t o b e booked in advance and in another office, while also allowing you to check out from your current workspace,” explains McClements “Our hoteling system is just one way we provide a flexible environment for our people As business and personal demands fluctuate, we want our partners and staff to work from wherever is most appropriate and convenient, and as best fits their schedule ”

In addition to being flexible, hoteling makes good fiscal sense. Many accounting firms are direct client servers, and as a result often work at client sites “Hoteling helps firms control costs by decreasing the need for office space that might go largely unused The ultimate goal is to provide options that help our employees best serve our clients,” says Katie Lamkin, HR leader for McGladrey LLP headquartered in Chicago

“Gone is the day when a person personalizes a cubicle In this age of telecommuting, cloud computing and smartphones, hoteling is here to stay,” says Kelly Richmond Pope, PhD , CPA, associate professor, School of Accountancy and MIS at DePaul University in Chicago “When I was hoteling in a KPMG New York office, I really enjoyed the fact that I could meet people in the firm from across the world. It really

helped me expand my network and allowed me to be exposed to more aspects of accounting.”

Count the savings

For a large accounting firm, real estate is typically the second largest expense behind payroll, says Bryan Peck, vice president of sales at Dean Evans & Associates, a developer of software systems for meeting and event scheduling, shared workspace management and other tasks “They have a workforce with a large number of people that are out of the office a lot of the time They know they can realize large savings by not assigning permanent workspace to the majority of their workers ”

How does saving $85 million a year sound? Peck says one large accounting firm is doing just that. The firm had branches in more than 100 countries and a 725,000 square foot office in New York that housed nearly 4,500 people on more than 30 floors Peck's company was brought in to determine real-world workspace utilization rates. What they found was that only 49 percent of assigned offices and 67 percent of short-term reservations were being used. That left more than 1,600 offices vacant on a daily basis at a cost of $17 8 million annually With the use of tracking technologies, the accounting firm was able to more accurately forecast real estate needs and to vacate and sublet six floors for an annual savings of $85 million

There's no place like home

While hoteling has promise, it's not without its problems “Hoteling can have a major impact on team building because people are so mobile and schedules fluctuate frequently It can negatively impact office relationships because nothing really replaces face-to-face contact,” says Pope “ Yo u l o s e t h e s y n e rg i s t i c a c t i v i t y t h a t ' s r equired to create a culture of connectivity and creativity,” says Jay Nisberg, PhD., president of c o n s u l t i n g f i r m J a y N i s b e rg & A s s o c i a t e s i n Ridgefield, Conn. “Firms are far better served by better planning for growth and capturing all the e x c i t e m e n t a n d c r e a t i v i t y o f h a v i n g a l l f i r m members working in the same space as much as

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possible. All in all, hoteling is a bad idea and should be left to the folks at Marriott ”

Then there's the matter of egos to consider “You may have to combat the sense of entitlement to space. The office space that one occupies is typically associated with rank in an organization, and h

Higher-ranking staff may be in the office even less and therefore should be reserving their space like everyone else in order to maximize savings, but this is often not popular with the higher-ranking staff,” says Peck.

Workspace is workspace, but that's not to say professional and personal don't blend “You have to think about where people will keep their stuff. By this I mean the things they usually have in their offices pictures, awards, books, for example. Some organizations provide a higher-touch service by offering to store these items when the employee is not in the office and then delivering them to their workspace when they are,” says Peck.

Steve Lickus, director of client solutions for Robert Half in the Chicago metropolitan area, says although hoteling is a popular trend and a smart short-term business move, “People essentially live out of their work bag, have no personal effects, a bare-essentials work environment, and they don't have a sense of a home Time will tell what the long-term effects on morale are.”

Small firms benefit

While some big firms may have the most savings to gain, small accounting firms can reduce real estate usage in much the same way “They may not need to go as far as the larger firms do by making people reserve space before they arrive. Instead, they could set aside a specific inventory of space that is used on demand,” says Peck This concept is often called ’hot deskin,’ as well as ’touchdown space.’”

Businesses should be taking advantage of technology and listening to their people, adds McClements “Small accounting firms can see benefits from providing their people with the technology and flexibility to work wherever and whenever they want in the form of improved employee satisfaction, lower turnover and lower costs ”

Omni Hotel Washington, DC

Hoteling on the rise

Peck says his company has also seen the rise of hoteling in external space that is not owned by a company For instance, if a number of employees will be working in a location where the firm doesn’t have a presence, they’ll contract with a local provider for workspace

“Hoteling is definitely a growing trend throughout our profession, and one being taken by some of the forward-thinking firms in the country,” explains James Bourke, a partner with the accounting f i r m o f Wi t h u m S m i t h + B r o w n i n R e d B a n k , N J “ I t ' s n o t o n l y accounting firms that have taken a fancy to hoteling, but professional service firms of all types ”

Lickus points to one of his consulting firm clients that recently moved into new offices in Chicago. “Less than 5 percent of the 200 employees have their own desks You go into the lobby and there is an electronic console that shows you where you can sit for the day based on the hours you will work.”

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A s h o t e l i n g o p t i o n s c o n t i n u e t o r i s e , t h e a r r a n g e m e n t s f o r businesses of all shapes and sizes will certainly expand But before checking out of your permanent space and checking into a hoteling arrangement, definitely weigh the pros and cons The truth is, “Workspace hoteling is not the end-all answer,” says McClements “Employers need to provide the right balance of technology, flexibility and a highly collaborative workspace to achieve the most benefits ”

“ “ A very e ective way for my sta and I to keep current with accounting, tax and general management regulations

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iS the USA Still A

World leAder?

Our competitive position in the global economy continues to be debated. But the national conversation is now being led by some very high-profile thinkers, which is usually how progress begins in a democracy. The question is, can America take its place at the head of the global marketplace?

By Kristine Blenkhorn Rodriguez

Wh e n t h e g r a n d d a d d y o f h i g h e r e d u c a t i o n i n t h e U n i t e d

S ta te s puts a g ood portion of its mone y a s we ll a s its be s t a nd brightest behind a research effort, it probably behooves the rest of us to sit up and take notice, especially when the research involves the health and prosperity of our country at a time when global economics feels more like a crapshoot than hard science.

Cue Harvard University and Michael Porter.

Porter has long been revered as the most influential business t h i n k e r o f t h e p a s t c e n t u r y Wo r l d l e a d e r s u s e h i s " D i a m o n d Model" to frame their nations’ plans for becoming more competitive Policymakers apply the Porter hypothesis Healthcare reformers study his work on transforming a broken industry

So, when we set out to write an article on the U.S.’ competitiveness, all roads led to Porter and the U.S. Competitiveness Project, the Harvard initiative he co-chairs The project is a research-led effort to understand and improve the ability of firms operating in the United States to compete successfully in the global economy, while supporting a high and rising living standard for the average American. The project focuses on the roles that business leaders play in promoting U.S. competitiveness, and it approaches current challenges as a matter of global concern, not just as an American issue

Harvard Business School (HBS) faculty, along with colleagues from other leading institutions, are researching areas such as innovation, manufacturing, entrepreneurship, company locations, firm governance, local business ecosystems, human capital, K-12 education, fiscal policy, tax policy, capital markets, environmental sustainability, democracy and international trade The research is being developed in close collaboration with leaders from business, labor, policy, the sciences and academia in order to pinpoint concrete actions and recommendations that leaders can employ to strengthen America’s competitiveness and its economy

The role of government

The refreshing angle is that the research doesn’t just point the finger at federal government and say, “Shame on you ” Instead, it pinpoints roles for government, business leaders, educators, environmentalists and a host of other players, alike. Consensus among thousands of surveyed HBS alumni is that government should put the federal budget on a sustainable path by increasing revenue and controlling spending; reform the corporate tax code, reducing statutory rates and eliminating loopholes; enact a multi-year program to improve infrastructure; address distortions of the international trading system that disadvantage the United States; and craft a responsible framework for developing newly accessible gas and oil reserves.

In an interview with Harvard Magazine, Jan Rivkin, Porter’s Harvard colleague and partner on The U S Competitiveness Project, cautions against putting the onus on government alone “Just as it’s an error to think government is the only solution,” she states, “it’s also an error to think government is exclusively the problem You can trace some of the weaknesses in the U.S. business environment right back to things that businesses have done in their narrow self-interest How did we get such an incoherent, complex corporate tax code? Because the IRS wanted loopholes? No Because businesses pleaded for loopholes that benefited them ”

Porter cites a key sign of America’s declining economic health: Virtually all the new jobs created over the last decade were in local businesses not subject to international competition It’s no coincidence then that U.S. wages began stagnating over the same period.

Rivkin mentions another warning sign “An important notion is what we call the ‘business commons’ from which companies draw: A skilled workforce, an educated populace, vibrant local suppliers, b a s i c r u l e o f l a w, a n d s o o n H i s t o r i c a l l y, A m e r i c a n b u s i n e s s e s invested in these resources deeply, and that helped to build many of America’s strengths. Then, in a world of increasing geographic mobility, many businesses took the commons for granted in Ameri

r

because they realized its importance. But in the process, over a number of decades, the commons got run down in America The good news is, we see a large number of business leaders who recognize the importance of reinvesting at this point ”

Myriad areas are ripe for reinvestment, but Porter has been particularly vocal about two: Skilled workers and infrastructure In an interview with Harvard Magazine last fall, Porter said, “It used to be that the wages of U.S. workers rose in line with domestic productivity, but the two became decoupled. Some attribute that to declining unionization. That may be part of it, but much has to do with the fact that employers can hire an equally skilled person in a

u n t r i e s h a v e b e e n improving their game with good skills compared to us and have better infrastructure in some cases than we do ”

But the skills race is a tricky one, says Rivkin “Investments in improving K-12 education have an impact a decade or two from now That means you need to make sets of choices that are holistic and farsighted and I think you can argue that in both public policy and on the business side, we have moved toward fragmentation and near-term thinking.”

The need for that long-term outlook is why key business leaders such as Mark Zuckerberg formed FWD us, a nonprofit advocacy group focusing on comprehensive immigration reform, increasing the number of math, tech and science graduates each year, and ensuring children get the best education by advocating for higher standards and accountability in schools “In a knowledge economy, the important resources are the talented people we educate and attract to our country,” says Zuckerberg “A knowledge economy can scale further, create better jobs and provide a high quality of living for everyone in our nation."

The role of business

W h i l e b u s i n e s s l e a d e r s i n c r e a s i n g l y a r e t a k i n g a c t i o n , t h e l o whanging fruit seems to be their first priority. Internal training initiatives, regional programs and research collaboratives were listed as the most common activities, whereas reshoring, supplier mentori n g , a n d c o m m u n i t y c o l l e g e p a r t n e r s h i p s t h r e e a r e a s o f h i g h impact had the lowest activity rates

Survey findings by Rivkin and colleague Rosabeth Moss Kanter further point out that firms apparently take steps towards advancing competitiveness in sets rather than in isolation Companies that emphasized local sourcing, for instance, were likely to mentor suppliers. Startup incubators often accompanied research collaboratives. Apprenticeships were commonly employed alongside partnerships with community colleges and other schools.

The survey also revealed “competitiveness leaders” were, on average, twice or more likely than the typical firm to undertake each of the competitiveness-enhancing actions. “Bystanders” were firms with limited or no engagement, and were less likely to adopt competitiveness-enhancing actions than the typical firm in the sample Pointing to important differences across sectors, most of the analy-

among competitiveness leaders, and financial firms were overrepresented among bystanders In fact, respondents from manufacturing firms reported the largest number of actions that boost U.S. competitiveness: 86 percent engaged in internal training; 59 percent in regional initiatives; 40 percent offered apprenticeships; 47 p e rc e n t r e p o r t e d c o m m u n i t y c o l l e g e o r o t h e r e x t e r n a l t r a i n i n g partnerships; 54 percent sourced locally; and 45 percent engaged in supplier mentoring the highest proportion for each action

Manufacturing firms were also near the top in terms of participation in research collaboratives (63 percent) and showed the highest interest in reshoring (29 percent). Not surprisingly, manufacturers were also the least likely to feel that business actions to improve competitiveness didn’t apply to their firms In other words, manufacturers tend to take actions that benefit the wider commons.

The education and healthcare sectors, while close behind manufacturing in actions that improve competitiveness, had a different focus, with most of them likely to participate in research collaboratives (71 percent and 69 percent, respectively) and startup investments/incubation (51 percent and 52 percent, respectively) They were as engaged or more active in regional and cluster initiatives than their manufacturing counterparts. Educational organizations w e r e e s p e c i a l l y l i k e l y t o e n g a g e i n s u p p l i e r m e n t o r i n g , w h i l e healthcare firms were more likely to offer apprenticeships These two sectors play a direct role in competitiveness, since, with deep local roots, they contribute to skills improvement and are engines

more products will be made in Mexico And when that happens, those manufactured goods tend to have about four times as much U.S. content on average. It ends up being good for our economy.”

David Chavern, executive VP and COO of the U S Chamber of Commerce, would prefer manufacturing to stay on U.S. soil. “One of the great engineers and entrepreneurs of our time, Andy Grove, cofounded Intel and is considered a leading pioneer in the semiconductor industry. Based on lessons he learned at Intel, he warns companies that if they undervalue the role of production in technological evolution, they will find themselves locked out of tomorrow's emerging industries ”

“The good news is that it's never too late to turn things around,” he adds. The U.S. semiconductor industry is poised for a rebound and it's happening on U S soil Intel is leading the way this year with $3 5 billion in investments in new chip fabrication facilities in Arizona and Oregon Samsung, Texas Instruments and Micron Technology also are expected to make robust investments in equipment and material for U.S. operations.”

GE is another company investing in U S production, says Chavern Just look at its Appliance Park manufacturing complex in Kent u c k y. A t i t s p e a k i n t h e 1 9 6 0 s t h e c o m p l e x e m p l o y e d 2 3 , 0 0 0 workers, but much of the work eventually wound up overseas due to lower labor costs. The number of workers at the complex fell to an all-time low of just over 1,800 in 2011 Thanks to some $800 million in investments, however, Appliance Park recently opened up its first new assembly line in 55 years. Coming down the line

brains.”

of knowledge creation and business startup enterprises. Though o f t e n n o n p r o f i t s o r p u b l i c - s e c t o r o rg a n i z a t i o n s , t h e y p r o v i d e important

spillover benefits to private companies

Manufacturing vs. innovation

Many experts cite America’s lead in business innovation as the factor that has saved us from more dire recessions Harold L Sirkin, a senior partner and managing director in the Boston Consulting Group’s Chicago office, feels that innovation is often spurred by the increased global competition many U S businesses decry

“One of the best things to happen to the U S manufacturing sect o r w a s t h e c h a l l e n g e f r o m A s i a n t i g e r s p r i m a r i l y C h i n a a n d Japan,” he explains “As a result, the United States has gotten far more competitive. Since 1972, this country’s manufacturing value added has grown two-and-a-half times, with 30-percent less labor We ’ v e d o n e t h i s t h r o u g h a u t o m a t i o n a n d p r o d u c t i v i t y g a i n s I t m e a n s f e w e r j o b s , b u t t h e m o v e s h a v e f o rc e d c o m p a n i e s t o become competitive or get out of the business ”

S i r k i n , a p r o p o n e n t o f a f r e e m a r k e t , a d d s t h a t , “ We ’ r e n o t designed to work in a protected market The challenges U S manufacturers have faced have only forced us to become better We’ve moved from brawn to brains.”

What’s more, he sees the “Asian tigers” facing similar challenges as their countries develop. “What we’ll probably see is China, with higher wages each year, being less competitive as a manufacturing base of certain products for export,” he hypothesizes “As a result,

are cutting-edge Geospring hybrid hot water heaters that used to be made in China Another assembly line for high-tech refrigerators used to be made in Mexico. And another line for front-loading washing machines is being made in the United States for the first time. GE projects that its revved up U.S.-based appliance business will add 1,300 jobs by 2014

“Today, it makes the most business sense to reshore some operations in the United States. Why?” Chavern asks. “There are several reasons, not the least of which are rising labor costs in China and falling natural gas prices in the United States. But business leaders also recognize that reshoring allows U S manufacturers to explore greater efficiencies on the assembly line, preserve the skills of workers, reclaim the design process, and prevent core competencies from being copied or stolen by competitors ”

Measured progress

The Harvard study does cite some abysmal areas such as our tax code, K-12 education and legal framework All are categorized as weaknesses that continue to deteriorate. And the study cites previously strong areas that are fast becoming weaknesses communications infrastructure and skilled labor included

While the U S ’ picture is far from perfect, our universities, entrepreneurship, innovation and capital markets are all strengths we continue to improve upon. Measured progress is what the Harvard study and our experts report

“the challenges U.S. manufacturers have faced have only forced us to become better. We’ve moved from brawn to

Same-Sex Marriage & Tax

By Carolyn Kmet

The U S Supreme Court made a landmark decision in June 2 0 1 3 , p a v i n g t h e w a y f o r lo n g - d e b a t e d t a x b e n e f i t e q u a l i t y f o r same-sex couples. The Court ruled that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional based on the principles of equal protection

To give you some background, the ruling came by way of United S t a t e s v Wi n d s o r , broug ht by pla intiff E dith Winds or, who wa s seeking a tax refund for the $363,000 she paid in estate taxes after her wife passed away in 2009. A federal statute says that a surviving spouse does not have to pay these estate taxes, but until the Court’s recent decision, “spouse” was defined only as a married partner of the opposite sex. Meaning, if Windsor had been married to a man, she wouldn’t have had to pay the sizeable $363,000 figure

Wi t h D O M A s t r u c k d o w n , t h e t e r m “ s p o u s e ” n o w e q u a l l y applies to partners of the same sex, giving same-sex married couples access to more than 1,100 federal benefits to which heterosexual married couples have always been entitled

Impact on Federal Income Taxes

Wi t h t h e C o u r t ’ s r u l i n g , m a r r i e d c o u p l e s l i v i n g i n s t a t e s w h e r e same-sex marriage is legal will be treated the same as other married couples when filing their tax returns. In September 2013, the IRS provided guidance that beginning with the 2014 tax filing season, it will use a “state of celebration” standard for recognizing samesex marriages This announcement ties in with the Court’s ruling, and confirms that any same-sex couple residing in a state that recognizes same-sex marriage, and that possesses a marriage license from any U S state that allows same-sex marriage, may jointly file a federal tax return.

Pamela Lucina, a Chicago-based wealth advisor for J P Morgan P r i v a t e B a n k , s a y s s a m e - s e x c

u

e s w i l l n o w n e e d t o c h o o s e between “married filing jointly” or “married filing separately ” “Single or head of household are no longer options,” she says

While the approach is now defined, the impact undoubtedly will vary. “This can create a marriage penalty or reward depending on

the couple’s income and deductions,” Lucina explains “If both spouses are highly paid individuals, it’s likely that joint filing will produce a higher tax than if they both filed as single This is known as the ‘marriage penalty ’”

Sandy Van Keuren is the tax director for Marcum LLP, an independent public accounting and advisory services firm that has a dedicated national lesbian, gay, bisexual, transgender (LGBT) tax practice. Van Keuren explains that in situations where one spouse earns more than the other, the couple could benefit from a lower marginal tax bracket. However, she agrees that many couples may be subject to the marriage penalty if both spouses are relatively high wage-earners

“Our firm provides tax services for many same-sex couples,” Van Keuren explains “I analyzed each of our same-sex couples’ prior period tax filings, and in all cases the marriage penalty negatively impacted their overall federal tax liability ”

In light of this, taxpayers will need to assess the impact of filing a joint return for 2013, and they also should review whether it would benefit them to file amended returns for prior tax years for which they were married and for which the statute of limitations remains open Many taxpayers can refile for tax years 2010, 2011 and 2012

Another potential negative for same-sex married couples is the rate at which investment income is taxed According to guidance issued by Marcum LLP, starting in 2013 an additional 3 8 percent

o n n e t i n v e s t m e n t i n c o m e w i l l b e a s s e s s e d o n i n d i v i d u a l s whose adjusted gross income is above $200,000 for a single taxpayer and $250,000 for married couples. This same type of catch occurs with itemized deductions. Once a married couple reaches $250,000 in income, itemized deductions and personal exemptions begin to be eliminated If they were single, this wouldn’t start happening until their combined total incomes were $400,000

Even so, there are a variety of tax issues that should go away for s a m e - s e x c o u p l e s i n s t a t e s t h a t r e c o g n i z e t h e i r m a r r i a g e “ F o r e x a m p l e , t a x a t i o n o f s p o u s a l h e a l t h b e n e f i t s , g i f t t a x a t i o n o n divorce settlements, and even potential taxability of rental payment made from one spouse to the other,” says David Rae, vice president of client services with Trilogy Financial Services, which specializes in the needs of the LGBT community.

Impact on Wealth Management

“Under DOMA, if a same-sex spouse put his/her spouse on the title of a home, this action would have created a taxable gift,” explains Va n Ke ure n. “ Upon the de a th of the firs t s a me -s e x s pous e , the opportunity now exists for the estate to transfer to the surviving spouse with no estate tax consequences, entitling them to the same treatment as a heterosexual couple ”

Sure enough, many tax professionals believe that the Court’s decision to strike down DOMA brings lasting benefits to same-sex

married couples in terms of wealth management “It helps to eliminate some of the expensive hoops LGBT couples have had to jump through to pass assets to their heirs,” Rae explains He adds that same-sex married couples will be allowed to inherit their spouse’s retirement accounts and use the “stretch IRA” provision to avoid having to pull out the entire amount

H e g o e s o n t o e x p l a i n t h a t a n o t h e r p o t e n t i a l b e n e f i t o f t h e Court’s decision is that more LGBT couples will develop a financial plan and work together to maximize the benefits of various deductions and retirement plans available, regardless of the status of their union

Van Keuren adds that these benefits may outweigh the potential tax disadvantages that some same-sex married couples may incur. “Despite the possibility of triggering the marriage penalty, many of our clients are planning to get legally married this year,” she explains “The opportunity to freely transfer wealth between samesex spouses greatly outshadows any potentially negative income tax consequences ”

Ongoing Uncertainties

Even though the Court’s ruling has clarified the definition of samesex marriage, it has simultaneously unleashed a barrage of uncertainties. According to a February 2013 report by the Williams Institute, there are 650,000 same-sex couples in the United States, of which 114,100 are legally married and over 108,600 are in civil unions or registered domestic partnerships. For now, the Supreme C o u r t r u l i n g h a s c e r t a i n i m p a c t s o n s a m e - s e x c o u p l e s t h a t a r e legally married and residing in states that recognize the marriage But the effect on civil unions, domestic partnerships and legally married same-sex couples residing in states that don’t recognize their marriage is still uncertain

“Roughly two-thirds of states don’t recognize gay marriage, so these couples are presumed to not be married in the eyes of the federal government,” Rae explains

A c c o r d i n g t o g u i d a n c e t h e I R S h a s p r o v i d e d , s a m e - s e x c o uples with or without a marriage license residing in states that don’t recognize same-sex marriages will be able to file a joint federal income tax return, but likely will need guidance on how to prepare their return. According to the Tax Foundation, a nonpartisan research organization that monitors fiscal policy, there are several viable options for tax treatment, assuming the state doesn’t opt-in to recognize same-sex marriage by the 2014 filing period:

n Permitting taxpayers to reference a “dummy” federal return, reflecting single filing status for their state return, or

n Permitting taxpayers to “split” a joint federal return down the middle, using one-half for each single state return, or

n Creating a new filing status permitting any taxpayer who files a joint federal return to file a joint state return, especially if the

“In Illinois...same-sex couples have been able to enter into civil unions since 2011, but civil unions typically don’t receive any of the federal rights, protections and obligations granted to married couples.”

state presently recognizes civil unions or domestic partnerships.

In Illinois, for example, same-sex coup l e s h a v e b e e n a b l e t o e n t e r i n t o c i v i l unions since 2011, but civil unions typic a l l y d o n ’ t r e c e i v e a n y o f t h e f e d e r a l rights, protections and obligations granted to married couples. A 2011 letter from the office of the IRS’ chief counsel, however, states that an opposite-sex couple in a civil union in Illinois should be treated as married for federal tax purposes According to the letter, “Section 20 of the Illinois Religious Freedom Protection and Civil Union Act provides that ‘[a] party to a civil union i s e n t i t l e d t o t h e s a m e l e g a l o b l i g a t i o n s , responsibilities, protections and benefits as are afforded or recognized by the law of Illinois to spouses.’”

W h i l e t h e l e t t e r s p e c i f i c a l l y a d d r e s s e s parties to an Illinois civil union who are of t h e o p p o s i t e s e x , i t ’ s p o s s i b l e t h a t t h e D O M A d e v e l o p m e n t w i l l e x p a n d t h i s treatment to include parties to an Illinois civil union who are of the same sex.

Michael Raanan, a former IRS officer and current owner of Landmark Tax Group, points out that there are many tax issues that arise if a same-sex married partner is transferred from a state that recognizes same-sex marriage to a state that doesn’t.

“If an individual is married to a same-sex partner in a state like New York that recognizes such marriages, the fair market value of employee benefits received as a result of such a marriage is excludible from the nonemployee spouse’s income. But it’s unclear what happens if the employee is transferred to a state that doesn’t recognize same-sex marriages For example, could previously tax-free spousal benefits be converted to taxable non-spouse benefits?”

Raanan also points out that it’s unclear what happens in a situation where a sames e x c o u p l e h a s a c h i l d , a n d o n e s p o u s e filed as “head of household” in prior years and received child tax credits and earned income credits. Raanan asks, “Is the couple now required to amend as ‘married fil-

APRIL 15, 2014

could the spouse who took the credits be forced to return the credits?”

W

a x p a y e r s c a n e x p e c t a l o t o f future guidance on these and other issues, these uncertainties shouldn’t be allowed to halt forward momentum.

“ W h i l e t h e f u l l i m p a c t o f t h e S u p r e m e C o u r t ’ s d e c i s i o n w i l l n o t b e k n o w n f o r a

while,” Raanan emphasizes, “there are important and time-sensitive planning opportunities available now with respect to taxes for same-sex couples.”

Forward-thinking practices should get up to speed on this exciting issue ASAP

P l e a s e n o t e : I n f o r m a t i o n o n t h i s ra p i d l y developing issue is accurate as of the date of printing

5 Ways to PoWer your Practice

In these competitive times, no accounting firm can survive without a turbo - charged A-game. Here are five ways to boost your firm’s power.

By Sheryl Nance Nash

1 . B y o D ( B r i n g y o u r o w n D e v i c e )

In this 24/7 global economy, employees have access to technology's latest bells and whistles not only in the workplace, but also at home. It's not surprising, then, that they prefer to bring their own devices to the office

There are some distinct advantages to this, according to PricewaterhouseCoopers’ report, Bring Your Own Device: Agility Through C o n s i s t e n t D e l ive r y O rg a n i z a t i o n s t h a t h a v e a d o p t e d a B Y O D strategy cite employee satisfaction and business productivity as k e y b e n e f i t s , a s w e l l a s e n h a n c e d c o l l a b o r a t i o n a n d m o b i l i t y, expanded mobile access to resources, reduced spending on sourci n g a n d d e v i c e s u p p o r t , l e s s r e s p o n s i b i l i t y f o r d e v i c e l i f e c y c l e management, and consolidation of infrastructure and tools across many IT disciplines What’s more, BYOD makes telecommuting more feasible and available to a broader set of employees, which in turn enables operations to take advantage of cost-saving options, such as the hoteling of office floor space In short, BYOD seems to be a win-win for employees and employers alike

“ B y e m b r a c i n g B Y O D , o rg a n i z a t i o n s c a n i m p r o v e e m p l o y e e productivity It can also improve morale as workers have more a u t o n o m y o v e r t h e i r w o r k , ” s a y s D a n i e l L o c k , c o n s u l t a n t a n d author of Team Problem Solving for Continuous Improvement.

Then, too, there’s the fact that, “Clients expect you to respond quickly BYOD keeps people highly efficient,” says Kim Gottschalk, regional vice president in the Chicago office of Accounting Principals, a staffing and recruiting firm “For those that travel frequently, it's nearly impossible to be without your own devices ”

While BYOD offers convenience for employees and cost savings for companies, it is far from trouble-free. How fast can you say security?

“Someone left a device in an airport Although it was retrieved in three days, not only were they without the ability to work as planned, but there also were potential security risks,” says Gottschalk

It's not just the possibility that a careless employee might lose a device; there’s also the risk of outright theft, or the possibility that a disgruntled employee will leave the organization and misuse the confidential information they have been privy to

“ C o m p a n i e s n e e d p o l i c i e s a n d p l a n s a r o u n d B Y O D H o w should the information on employees’ devices be handled? Many people have company email on their own device What is the procedure, the policies for this?” asks Gottschalk.

PricewaterhouseCoopers’ report recommends that employees participating in a BYOD program sign binding agreements before accessing resources from a personal device They may have to relinquish some control over the device, such as being required to install a management client, email encryption or password protocols A clear understanding of these stipulations, according to the report, should be articulated to employees without fail.

A t a m i n i m u m , t h e r e p o r t c o n t i n u e s , B Y O D p o l i c i e s s h o u l d require installation of the organization’s security profiles, assert the right to wipe the device if it is lost or stolen, and spell out support and repair policies Employees also should be required to back up personal information stored on the devices since the organization can’t be responsible for lost personal files should a hardware data wipe be required

Privacy and data protection are among the top concerns that keep accounting firms on the fence when it comes to BYOD How-

ever, it’s an inevitable and unavoidable trend, with efficiencies and boosts to productivity and client satisfaction that can’t be ignored

Social media may have started out as a way for teens and college kids to spend countless hours connecting and sharing their personal lives, but it has evolved into a powerhouse of a business tool. The SocialCPAs 2012 Social Media Survey explores the way in which CPAs, CAs and accounting professionals use social media What has it found? That LinkedIn has been the top social media site among those surveyed for the past three years, and that just over 30 percent of respondents said their company has a written social media policy in place. What’s more, about 15 percent said their company restricts access to Facebook, and less than 10 percent said that, on an annual basis, their company provided more than 5 hours of social media training.

Obviously, social media isn’t being used to its optimal capacity at the majority of accounting firms

Of those that are on the social media bandwagon, more than 70 percent of participants use social media to connect with business associates, roughly 60 percent use it to identify and attract new clients, some 40 percent use it to develop their personal brands, and 20 percent use it to attract new employees

Despite all of social media’s potential, there are, of course, concerns According to the survey, 60 percent of respondents take issue with the amount of time it consumes More than 40 percent said they were worried that confidential information will leak out. Thirty percent voiced concern that productivity will suffer And nearly 20 percent said they don't really see the ROI

In response, Gottchalk points out that social media is used by the most successful firms for the vital purpose of increasing brand recognition “You want more than a company home page Your pages should tell a story, have good facts. Make it excellent,” she says.

E m b r a c e a c o n t e n t c u l t u r e , L o c k a d d s “ T h e t a x a c c o u n t i n g department might seem dull, but to people interested in tax efficiency what they have to say might be of significant interest. Crea t i n g a c o n t e n t c u l t u r e w i l l b r i n g o u t t h e d a t a a n d i n t e l l e c t u a l property that's sitting idle in the hallways. Instead, it can become a marketing or even a profit center,” he explains

Social media, like everything else, has to be monitored Policies and procedures have to address what's appropriate and what's not. “It must be understood that when someone Googles your name, what pops up is a personal reflection not only of them, but also of the organization they work for,” says Gottschalk.

3 . P a r t n e r s

Tr u t h f u l l y, i t ’ s p r e t t y m u c h i m p o s s i b l e f o r o n e f i r m t o e x c e l i n absolutely all things accounting To fill in the gaps, more and more leading firms are looking for strategic partnerships.

Being successful at partnering, however, isn’t as easy as it sounds For starters, “Each partner has to have the same level of commitment to high-quality customer service Their behaviors should follow accordingly, and this should be reflected in strong reputations,” says Jason Henham, managing director of Slate Consulting.

The level of trust must be strong, he says Consequently, firms should either partner with someone they already have a trusting relationship with or be prepared to wait until that trust is developed.

Be clear about goals, objectives and responsibilities, he adds The general arrangements should be agreed upon up front There a r e a r a n g e o f w a y s i n w h i c h p a r t n e r i n g a r r a n g e m e n t s c a n b e

,

t i - f i r m service delivery), says Henham. “The expectations around what each party should receive in a given situation should be clear ”

The rewards of partnering are huge “Building relationships and connections are paramount to success. We try to partner as often as possible, as it brings a greater depth and added value to our c l i e n t s , ” s a y s G l e n n F r i e d m a n , c o - m a n a g i n g p a r t n e r o f P r a g e r Metis CPAs in New York.

Because accounting is key to everything, adds Gottschalk, there are many partnering opportunities “You can connect with many professions. Partnering is powerful because you learn from each other.”

4 . B l e n d e d G e n e r a t i o n s

Today, there are Millennials, Gen Xers, Baby Boomers and Traditionalists in the office, and they all have different views, lifestyles and goals. Getting them to get along is critical to a firm’s success. After all, it’s not unusual for a 20-something to supervise a Boomer

The multi-generational workforce is a fact of life Creating a culture where age is just a number is a competitive advantage Better still, a successful, multi-generational accounting firm will attract multigenerational clients

“Each generation has its own strengths When you get all generations working together you have an unstoppable team,” says Gottschalk “For example, when a young, tech-savvy employee and an older employee who has mastered the art of problem-solving and has years of valuable experience work well together, that's a powerful combination.”

“We create a positive multi-generational environment We utilize teamwork and a strong mentoring program to bridge the generational gaps We also have many partner emeritus who have spent a majority of their time mentoring the next generation,” says Friedman.

While it's popular to categorize people within an age group as having certain defined characteristics in the workplace, leave room for individuality, too. “The general characteristics of a group aren't nearly as powerful as the unique ones each individual staff member has, and managing Gen Y, Gen X or Baby Boomer staff as if they are all the same is a guaranteed recipe for making sure you don't get the best out of any of them,” cautions Henham. “You need to speak to an individual's motivations, strengths and interests ”

What's important, says Lock, is to embrace the diversity of ideas “ P a r t n e r y o u n g w i t h o l d e r. F o l l o w u p a n d a s k t h e m w h a t t h e y learned from each other. What actionable ideas came out that can improve the firm?”

Boston College Center for Work & Family’s report, The MultiGenerational Workforce: Management Implications and Strategies for Collaboration, states that impending worker shortages make retaining each generation of talent a significant issue Strategies might include offering “snow bird” work options, phased retirement, “rehearsal retirement,” or post-retirement consulting opportunities to encourage older workers to stay involved and contribute to the firm beyond the traditional retirement age Flexible work arrangements can be important for Boomers who are caring for aging parents, as well as young parents who need flexibility.

Furthermore, notes the Boston College report, managers need information on how to effectively supervise and motivate a multigenerational workforce, and they may need assistance in developing the strong interpersonal skills required for the task. Managers need to be hip to what works and what doesn't for each genera-

tion Employees need training on the value of diversity and how to work together effectively.

When it comes to multi-generational clients, be prepared to see t h e w o r l d f r o m t h e i r v i e w p o i n t a n d m a k e a d j u s t m e n t s M a y

e you’re used to emailing and texting, but if a client is older, they may prefer snail mail and a good old-fashioned phone call or faceto-face meetings Or perhaps you’re a Boomer and you're dealing w

speed on the latest technology and use it to connect with your younger clients Realize that they may equate tech savviness with intelligence or competence.

“ T h e M i l l e n n i a l s a r e g o i n g t o b e a r o u n d a w h i l e , ” s a y s Gottschalk “Build that relationship early and they could become lifelong clients.”

5 . N i c h e e x p e r t i s e

“Jack of all trades, master of none” is a competitive disadvantage in today’s economy For the most part being a generalist is a thing of the distant, distant past Specialization is a smart strategy, which means firms need a niche

“Niche marketing is becoming increasingly vital to a firm. It's an extremely competitive market and a good way to stand out is to become a thought leader within a specific niche,” says Friedman.

Henham agrees “Defining a niche is absolutely critical, as it creates clarity of purpose that is reflected in how you show clients the value you offer It also allows for efficient marketing efforts ”

However, he says, that niche has to be service or industry-based rather than geographic if it’s going to be a success “A CPA practice used to be able to say its niche was in being a full-service accounting firm in a given location. Technology means many of the services CPAs provide can now be done from anywhere, anytime, so this is no longer a strong enough way to define your niche,” Henham explains

Quite simply, “Having a niche establishes you as an expert, the go-to firm for that particular area,” says Gottschalk

It's not about limiting scope, but rather bringing in focus Instead of trying to reach the masses, which can be costly, narrow the target A niche can be an industry sector, practice area, size or type of business, or any number of things. A niche, though, doesn't have to be an area in which your firm already has clients; instead think about where new opportunities lie and consider pursuing that path

O n c e a f i r m d e c i d e s w h i c h c o r n e r o f t h e m a r k e t i t w a n t s , i t should develop a strategy and put it in writing Think about who might make the best clients for this area and develop a roadmap for reaching them Put together a team that can make the niche a reality They will need to research the industry, determine who the players are, and study up on trade publications and any social media groups that are targeted to the industry

One more thing: There's no point in having a niche if no one k n o w s a b o u t i t T h e f i r m ' s e x p e r t i s e s h o u l d b e t o u t e d e v e r ywhere in marketing materials, newsletters, clearly stated on the f i r m ' s s o c i a l m e d i a p a g e s l i k e L i n k e d I n a n d F a c e b o o k , a n d i n blogs To push your self-promotion even further, consider writing w h i t e p a p e r s a n d a r t i c l e s , h o l d i n g s e m i n a r s a n d w e b i n a r s , a n d

booking speaking engagements on the firm's behalf

In these competitive times, adopting strategies that separate the great from the just OK is a top priority for accounting firms Making your organization more progressive takes only a healthy dose of logic, commitment and business savvy

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IRS/Tax Practitioners Symposium

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November 7 | Rosemont

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November 12 | Rosemont

Healthcare Compliance and Fraud Half-Day

November 21 | Rosemont

Not-for-Profit

December 3 | Rosemont

Employee Benefits

December 4 | Chicago

Advanced Topics in Flow-Through Taxation

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December 11 | Springfield

The Illinois CPA Society offers an outstanding curriculum of over 100 high-quality courses in Tax, A&A, Government and Not-for-Profit presented by industry-leading experts such as Albert Grasso, Bob Gilwee, and Tom Snell.

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Accounting & Auditing

January 16, 2014 | Chicago State & Local Tax Register at www.icpas.org/education.htm

hype.it

hoW to be An expert connector

Knowing

and a shaker she is, I recently spoke with icpas member martrice caldwell about what it takes for young professionals like herself to become master networkers and expert connectors.

When Martrice Caldwell walks into a room, more often than not, she knows just about everyone in it Why? Because she has mastered the art of networking Martrice is recognized by both Illinois CPA Society board members and student members alike, her calendar is always full, and she is an avid and committed volunteer

In other words, Martrice is a textbook “connector,” a term coined by Malcolm Caldwell (no relation) in his book, The Tipping Point The author describes someone with a connector personality as knowing and keeping in touch with many people, having a vast network of friends and acquaintances, and being skilled at making introductions That’s pretty much Martrice in a nutshell.

So, how does she do it?

“I love to talk to and learn about people,” she remarks “When meeting someone for the first time, my initial approach is to find a common ground This helps me connect with them quickly and remember them in the future ”

It’s little surprise that Martrice was the recipient of this year ’ s ICPAS Outstanding Leadership in Advancing Diversity Emerging Leader Award As she pointed out in her acceptance speech, what’s key is that every time she meets someone, she asks herself how she can help them

As Martrice puts it, “I’m looking out for you because later down the line, you will be able to help me. ”

Martrice’s Top 3 Networking Tips

1 Be Prepared Always carry a stack of business cards If you ’ re attending an event, make sure to watch the news that day and come up with a few conversation starters.

2. Be Genuine. Ask meaningful questions and be yourself Take notes on a business card and include the way you met and details from the conversation to jog your memory Include an interesting personal tidbit to build rapport

3 Follow Up Most importantly, make your follow up relevant and professional.

HAVE I GOT NEWS FOR YOU!

Young Professionals Leadership Award

Do you know about this new award, specifically for young professionals? It’s presented at our annual Leadership Conference and goes to an individual under the age of 35 who stands out in their demonstration of leadership attributes, contributions to the profession, public or community service, and involvement with the Illinois CPA Society or other professional organization To find out how to be nominated or how to nominate someone you know, visit us at www icpas org/yp htm today!

New Professional Orientation

Are you a new young professional member of the Illinois CPA Society? Attend our orientation and enjoy wine and appetizers, meet ICPAS President & CEO Todd Shapiro and learn how to maximize your membership RSVP at www icpas org/yp htm for either Nov 6, 6:00-7:00 p m at the Illinois CPA Society Office, 550 W Jackson Blvd. Suite 900, or Nov 14, 6:00-7:00 p m at the DuPage Club, 1901 S Meyers Rd in Oakbrook Terrace

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Give a little, gain a lot!

Serve on an Illinois CPA Society Appointed Committee or Task Force

Use your expertise and leadership skills to help govern and guide the work of your Illinois CPA Society.

From developing new member services, to upholding quality assurance standards, to responding to technical issues, your service helps to enhance the value of the CPA profession.

In return, you’ll broaden your knowledge base, receive first-hand information on emerging issues, and develop powerful professional connections.

Committee & Task Force service is open to all Illinois CPA Society regular and affiliate members. Positions are limited and all requests may not be able to be accommodated.

Visit www.icpas.org/volunteer.htm for full descriptions and to apply. For the committee service year April 1, 2014 - March 31, 2015.

APPLICATIONS DUE DECEMBER 10, 2013.

Questions:

Please contact Elida Gonzalez at 800-993-0407, ext. 218

Professional Practice Committees

Not-For-Profit Organizations

Taxation - Business

Taxation - Estate, Gift & Trusts

Taxation - Flow-Through Entities

Taxation - Individual

Taxation - International

Taxation - Practice & Procedures

Taxation - State & Local

Quality Assurance & Public Protection Committees

Accounting Principles *

Audit & Assurance Services *

Employee Benefits

Ethics*

Governmental Accounting Executive*

Governmental Report Review

Programs/Special Issues

CPA Exam Award Task Force

Outstanding Educator Award Task Force

Outstanding Leadership In Advancing

Diversity Award Task Force

Women’s Executive Committee

Women’s Initiatives Task Force

Young Professionals Group

Young Professionals Leader

Award Task Force

Education Conference Planning Task Forces

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