Insight Magazine - Spring 2014

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1 APR=Annual Percentage Rate. Subject to approval. Rates, terms and conditions vary based on creditworthiness and qualifications and are subject to change. Refer to the Visa credit card disclosure at www.alliantcreditunion.org for details. Introductory rate and incentive offers, including bonus points, are not available to those members who in the previous six months have had (i) an open Alliant Visa credit card account, or (ii) an outstanding balance on a closed Alliant Visa account. We may not extend credit to you if you do not meet Alliant criteria. The cash advance fee is 2% of the amount of the advance, but not less than $10. We will begin charging interest on cash advances on the transaction date. The foreign transaction fee is 1% of each transactionwhere the merchant country differs from the country of the card issuer. The minimum payment required is 3% of your balance or $25, whichever is greater, plus the amount of any prior minimum payments that you have not made. 2 Balance transfers must be transferred from any financial institution other than Alliant Credit Union. Balance transfers and cash advances may not be used to pay any Alliant accounts. Amounts transferred are subject to your available credit limit. We are not required to honor a balance transfer request that will cause you to exceed your available credit limit. We will not be responsible for late payment or non-payment to other card issuers. We are not responsible for fees that may be charged for cash advances performed at other financial institutions and ATM owners. It may take up to three weeks to set up the new Visa account and/or to post the balance transfer transaction. You should continue to make all required payments until you confirm that the balance transfer was made. We will not close your other accounts even if you transfer the entire balance.

If you wish to close another account, you should contact the issuer directly. 3 Visa’s Zero Liability policy covers U.S.-issued cards only and does not apply to ATM transactions, PIN transactions not processed by Visa or certain commercial card transactions. Cardholder must notify issuer promptly of any unauthorized use. For more information, visit http://usa.visa.com/personal/security/visa_security_program/zero_ liability.html. 4 Cash Back option is

i n d e x

34 Five Trends Transforming Tomorrow’s CPA

Every day CPAs face rapid change, whether it’s across the regulatory landscape or within the diverse populace they serve and work with. Which is why it's critical for CPAs to keep their eyes cast firmly to the future

38 10 Worst Business Decisions Ever Made

As far as cautionary tales go, the last 150 years have offered up a boatload From barefaced ego -tripping to muddleheaded inertia, companies that ride high on the wave of fame and fortune crash pretty hard now and then

You Know Making connections, and making them matter

Companies are going all out to keep their Gen X and Y workers happy

What’s all the hoopla about? Virtual currency, that’s what. 26

If any of these describe you, then start bulking up your core leadership strengths pronto

EB -5 offers an unexpected source of financing for U S businesses Here’s how

Liability Can’t Say Something Nice?

Then maybe you shouldn’t say anything at all at least if what you ’ re saying is defamatory

4 Meet the Chair Daniel F.

FORMERLY JACKSON WABASH

FORMERLY GARELLI WONG

Dan is partner-in- charge, Tax Services for Bannockburn-based FGMK , LLC, Chicago’s 9th largest accounting firm He holds a JD and LL M (Taxation) from DePaul Law School, and a BBA (Accounting) from the University of Notre Dame In addition to his service with the Illinois CPA Society, Dan is a member of the AICPA, the American Bar Association, the Chicago Bar Association, the Economic Club of Chicago (where he serves on the Membership Committee), and the Executives Club of Chicago He also serves on the Advisory Boards of the University of Notre Dame Department of Accountancy and the University of Illinois MST Program

Daniel F. Rahill, CPA,

JD, LL.M.

THIS

MAY SOUND FUNNY

coming from the Illinois CPA Society's incoming board chair, but I wasn’t always in tune with the Society's benefits and initiatives Like many young people starting their careers, I joined a public accounting firm where a Society membership was “just something you do ” I accepted it blindly and never thought much about it Then, several years later, I was told quite frankly by my managing partner that I needed to get involved in this great organization and its committees if I wanted to emerge as a leader From entry-level auditor to partner-in-charge, I am where I am today thanks to that senior partner’s advice. In like form, now it’s my turn to encourage you to take advantage of all the Society offers

You get out what you put in If you’re content with only attending an annual conference, that’s fine But if you’re someone who wants more out of life, and wants more relationships, challenges, opportunities and knowledge, the Society offers you that You’ll get a lot more bang for your buck by joining a committee, networking group or task force, participating in the CPA Day of Service and other charitable and advocacy efforts, and attending events like the Young Professional Leadership Conference and the Midwest Accounting & Finance Showcase

Getting involved is a matter of personal choice, but there’s more at stake than the brand of the Society; it’s about building the brand of the CPA it’s about building the brand of you.

In helping you build your brand, we’re adapting ours The Society’s top priority is to become a premier provider of education and training. We know the days of being able to toss a master tax guide in your briefcase and answer all sorts of questions are long gone That’s why we’re developing new live and web-based education and training that’s topical, relevant, convenient and selectable by you The 100 live courses, 40 conferences and 120 online onDemand programs we currently offer are just the beginning The future of learning is online and just-in-time, and I’m very excited to be a part of building this future for our members

We face fast-paced change in a profession tasked with serving increasingly diverse clients, customers, colleagues and professionals across every industry We are CPAs That’s a powerful thought and a powerful feeling As a partner-in-charge, I always remind my staff members that they’re surrounded by the best and brightest; they’re dealing with people who will challenge them intellectually, and who will challenge them to work harder, persevere and to inspire every generation that follows.

I hope to spend the next year inspiring all of you to live up to all the CPA designation represents, and to help in advancing the Society’s strategic initiatives We are the fifth largest state CPA society, and we’re a premier society in many areas, from education and information to advocacy and networking That’s something to be proud of and something worth being a part of.

I look forward to talking with you

INSIGHT MAGAZINE

Publisher/President & CEO Todd Shapiro

Editor-in-Chief Judy Giannetto

Art Design Judy Giannetto

Production Design Rosa Garcia

Assistant Editor Derrick Lilly

Photography Jay Rubinic, Derrick Lilly, Thinkstock

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

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

ICPAS OFFICERS

Chairperson, Daniel F Rahill, CPA, JD, LL M FGMK, LLC

Vice Chairperson, Edward J Hannon, CPA, JD Freeborn & Peters LLP

Secretary, Scott D Steffens, CPA Grant Thornton LLP

Treasurer, Mary Lou Pier, CPA Pier & Associates, Ltd

Immediate Past Chairperson, William P Graf, CPA Deloitte & Touche LLP

ICPAS BOARD OF DIRECTORS

Linda S Abernethy, CPA, McGladrey LLP

Jared J Bourgeois, CPA, Mesirow Financial Consulting, LLC

Rosaria Cammarata, CPA, CME Group, Inc

Rose G Doherty, CPA, Legacy Professionals LLP

Eileen M Felson, CPA, PricewaterhouseCoopers LLP

Gary S Hart, CPA, Gary Hart & Associates, Ltd

Lisa A Hartkopf, CPA, Ernst & Young

Margaret M Hunn, CPA, CFE, CFF, CITP, Rozovics Group, P C

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

Thomas B Murtagh, CPA, Wolf & Company LLP

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

Floyd D. Perkins, CPA, Ungaretti & Harris

Kelly Richmond Pope, Ph D , CPA, DePaul University

Mark F Schultz, CPA, Dugan & Lopatka CPAs, P C

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 © 2014 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

Your Illinois CPA Society membership provides you with convenient and customized education, timely and relevant information, tireless advocacy, and countless opportunities to make powerful professional connections.

Whether you work in public accounting, corporate finance, not-for-profit, consulting, government or education, the Society connects you with an extraordinary community of more than 23,000 accounting and finance professionals.

RENEW AT: www.icpas.org

QUESTIONS: Please contact Member Services at 800.993.0407, option 4.

The Shape of Things to Come

TODD SHAPIRO, ICPAS PRESIDENT & CEO

If you look at great organizations throughout history, you’ll likely see a common theme: They all have a clear and consistent direction that guides their every action Well, the Society has taken a page out of the same book.

Last November the Society’s Board of Directors, senior staff and young professional leaders met with the goal of answering the question, “Based on what members are facing, is the Society’s current mission on track?”

Any conversation about the future needs to start with a frank discussion of upcoming changes and ongoing challenges, and ours was no different

Here's what we concluded:

n C PA s w i l l b e c h a l l e n g e d t o p r o v i d e a higher level of strategic business advice to clients and companies.

n While compliance work will continue t o b e i m p o r t a n t , c o n s u l t i n g w o r k w i l l provide the greatest growth opportunity

n Demand for specialization will increase

n Technology will remain a double-edged sword: Overwhelming to keep up with, b u t a b s o l u t e l y e s s e n t i a l i n m o v i n g u s forward

n Competition will be fierce, from CPAs and non-CPAs alike

n Successful organizations will embrace diversity thinking styles, ethnicity, age, national origins, and more

Our next question was, "How can the Illinois CPA Society help the CPA of today trans i t i o n t o t h e C PA o f t o m o r r o w ? " w h i c h went a long way in reaffirming our current mission of “Enhancing the value of the CPA profession ” (Incidentally, the "CPA of tomorrow" is the subject of our cover story, which was inspired by our November meeting )

As you know, our aim is to deliver relevant services and information through the four strategic pillars that I've been talking to you

about over the past year Education, Advocacy, Information and Connections

I n t h e y e a r a h e a d y o u ’ l l e x p e r i e n c e ICPAS as a premier provider of education and learning with enhanced OnDemand programming, access to the Knowledgeh u b L e a r n i n g M a n a g e m e n t S y s t e m , a n d i n - p e r s o n e v e n t s f e a t u r i n g t h e l a t e s t i n learning innovations all things you, our m e m b e r s , h a v e a s k e d f o r i n a n i n c r e a singly custom-fit world

You’ll also see the Society working to advance the professional interests of our members through legislative monitoring, regulatory intervention, CPA image initiatives, and attracting and engaging the next generation of professionals

Yo u ’ l l h a v e d i r e c t a c c e s s t o r e l e v a n t i n f o r m a t i o n t h r o u g h a n e w l y d e s i g n e d w e b s i t e , d i g i t a l a n d p r i n t p u b l i c a t i o n s , and our various highly anticipated events, i n c l u d i n g t h e u p c o m i n g Yo u n g P r o f e ss i o n a l L e a d e r s h i p C o n f e r e n c e ( w e h a v e details on page 48 and a feature inspired by our keynote, Jason Lauritsen, on page 34) and the annual Midwest Accounting & Finance Showcase in August.

And you’ll expand your opportunities to connect with other professionals, whether via LinkedIn, Twitter, Facebook, chapters, c o m m i t t e e s , e d u c a t i o n a l e v e n t s , p u b l i c service....and so many more venues.

"Enhancing the value of the CPA profession through education, advocacy, information, and connections " That simple but strong statement is our guidepost. It is the c l e a r a n d c o n s i s t e n t d i r e c t i o n t h a t w i l l guide our every action.

I’d love to hear your thoughts on how all of us members, leadership and staff can move the mission of our Society forward Send me an email or connect with me on Twitter anytime.

SEEN HEARD

the year by which renewable technologies will account for 50% of new power generation capacity installed around the world Source: Bloomberg New Energy Finance

WHO HIRED IN 2013?

Here’s the good news from Jeffry Bartash of MarketWatch: The United States added more than 2 1 million jobs in 2013 for the third straight year

The bad news? We still need another 1 18 million to match our 2008 peak of 138.1 million.

Nevertheless, hiring highlights include:

n The finance industry gained 84,000 jobs

n Manufacturers hired nearly 80,000 workers

n The leisure and hospitality industry added almost 400,000 jobs

n Temporary administrative work was in demand, with approximately 247,000 positions filled

n Healthcare added at least 200,000 jobs

n The construction trades added 122,000 jobs

n 100,000 executives or managers were hired, and demand was high for architects, engineers and computer designers

n And the retail industry added the most workers in 14 years, nearing an all-time high

TRENDSPOTTER

VENTURE CAPITAL SEES MORE MONEY FLOW

Venture Capitalists invested $29.4 billion (+7 percent) in 3,995 deals (+4 percent) in 2013, according to the MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA) Investments in the software industry reached the highest level since 2000, accounting for 37 percent of all venture capital invested Internet- specific companies followed suit by capturing $7 1 billion in 2013, marking its highest level of investment since 2001.

The life sciences sector (biotechnology and medical devices combined) also saw strong money flows, accounting for 23 percent of all venture capital dollars invested in 2013 Biotechnology investments rose 8 percent to $4 5 billion across 470 deals, making it the second largest investment sector for the year; the medical device industry brought in $2 1 billion across 308 deals

Banks Not Up to Stress Test

Crowe Horwath LLP has a word of warning: According to its recent survey of 54 financial institutions, only one in five banks (20 percent) are ready to meet mandatory stress -testing requirements Banks with more than $10 billion in assets now have to submit stress test results or hypothetical analyses to federal regulators annually These stress tests measure how banks would perform under a variety of economic scenarios to determine whether they have sufficient capital to withstand issues, events and crises.

“A mediocre person tells. A good person explains. A superior person demonstrates. A great person inspires others to see for themselves ”

Harvey Mackay

62%

CEOs who expect to hire more people in 2014. Source: PricewaterhouseCoopers

KEEP YOUR CLIENTS HAPPY

The first year of a new client relationship is easy, says Stay or Stray Putting Some Numbers Behind Client Retention, a recent report by Toronto-based practice management software and data services company PriceMetrix The report quotes a retention rate of approximately 95 percent during this honeymoon phase But that number falls quickly in the two - to four-year period to just 74 percent Five factors are all important when strategizing for client retention during more trying years:

HOW TO Cutting Costs in the Cloud

1. Client Size: Households with $100,000 in assets had a retention probability of 87 percent versus 94 percent for households with $500,000 in assets Managing many smaller clients actually led to lower retention rates

2 Fees: The optimal price range lies between 1 and 1 5 percent of revenue on assets

3 Account Types: Fee -based accounts (91 percent) edge out commission-based accounts (89 percent) only slightly in retention, but clients with both types of accounts under management are more likely to stay (95 percent)

4 Connections: Advisors who manage multiple accounts within a household are much more likely to maintain the relationship than if they manage only one (94 percent versus 85 percent)

5. Age: Older clients are far more likely to stay with their advisors. A 30-year- old client has a retention probability of 82 percent versus 87 percent for a 40-year- old client and 90 percent for a 50-year- old client

We all know that cloud computing can be a powerful tool, but have you figured out how it might benefit your organization, specifically? If not, you’d better Gartner predicts that cloud computing will grow by 41 3 percent through 2016, providing instant, secure access to hosted IT infrastructures from absolutely anywhere

According to a survey by Rackspace Hosting, the ability to cut costs is driving the move The survey of 1,300 businesses in the United States and United Kingdom reveals that 88 percent of respondents feel they have achieved cost savings, while 56 percent agree that cloud services have helped to boost profits What’s more, 60 percent say cloud computing has reduced the need for IT teams to maintain infrastructures, and 62 percent say they are reinvesting savings back into the business to increase headcount, boost wages and drive product innovation

3%

Average 2014 salary increase expected in the united states.

Source: Buck Consultants

Are you a job -hopper?

Nobody is saying that leaving one job for a better one isn’t a smart move, but you should know that doing it too often in too little time gives HR managers cause for concern In a recent Robert Half survey of more than 300 HR managers, participants were asked, "Over a 10-year span, how many job changes, in your opinion, would it take for a professional to be viewed as a job hopper?" The answer? Five job changes and you might be viewed as trouble

You probably already have life insurance. But do you have enough?

Over the years, your living expenses may have increased. Could your current life insurance benefits:

• Help your family maintain their lifestyle?

• Pay for your kids’ college education?

• Allow your spouse to retire comfortably?

It’s always a struggle to lose someone you love. But your family’s emotional struggles don’t need to be compounded by financial problems.

That’s why ICPAS the Group 10-Year Level Term Life Insurance Plan — exclusively for ICPAS members.* This valuable insurance program offers:

• Your choice of benefit amounts up to $250,000

• Rates that are locked in for 10 full years

• Benefit amounts remain steady for the 10-year coverage period. There are no age reductions.

Ta x i n g t h e C l o u d , P a r t 2

More on making sense of cloud computing’s complicated tax implications

By Keith Staats, JD

* keith.staats@us.gt.com

Keith Staats is a director in Grant Thornton’s State and Local Tax (SALT) practice in Chicago, and has been involved in tax planning, consulting and dispute resolution in all areas of state and local tax. He has served as General Counsel of the Illinois Department of Revenue (IDOR), was involved in the development of Illinois tax policy, reviewed and evaluated all tax-related legislation proposed by the Illinois General Assembly, contributed to the drafting of all tax legislation proposed by the Governor and was a member of the IDOR Informal Conference Board He has represented taxpayers before both the Informal Conference Board and the Board of Appeals Keith is a professional affiliate member of the Illinois CPA Society, and is a member of the American Bar Association, the Illinois State Bar Association, the Chicago Bar Association and the Board of Directors of the Civic Federation of Chicago

To recap on Part 1 of my column in the Winter 2013/2014 issue, cloud computing refers to the remote access of computing applications, platforms and infrastructures from a central, third-party service provider, and includes Software as a Service (SaaS), Platform as a Service (PaaS), Infrastructure as a Service (IaaS), Business Process as a Service (BSaaS), Database as a Service (DaaS), Data Storage as a Service (STaaS), Security as a Service (SECaaS) and Application Programming Interfaces as a Service (APlaaS)

The first factor in determining whether there may be potential tax liability in relation to cloud computing in a particular state is to determine whether there is nexus; in other words, whether the provider has enough of a connection with a state to be subject to taxation Nexus can be established by the presence of employees or property, including leased property, within the state. For the purposes of this column, let’s assume the seller has nexus

The next step is to consider the characterization of the transaction what are you buying, tangible personal property, services or intangible property? Are you buying software versus data processing as part of an overall IT service? States that tax services view SaaS as a service Some states that don’t tax services may shoehorn SaaS as taxable prewritten software

Since a lot of purchases consist of a combination of software and cons

sider the impact of bundled charges

States tend to treat a bundled transaction containing both taxable and nont a x a b l e e l e m e n t s a s t a x a b l e i n t h e absence of evidence to the contrary. I t e m i z i n g t h e v a r i o u s e l e m e n t s o f a bundled transaction often can avoid taxes being overpaid.

A numbe r of s ta te s ha v e prov ide d guidance on SaaS and sales tax, mostly in the form of rulings and in some cases through litigation Here are just a few

I n d i a n a Web-based software accessed via the Internet constitutes taxable personal property and is taxable if prewritten. (See Revenue Ruling No. 2 0 09 - 03 , a n d L e t t e r o f F inding s No 09-0418 and No 09-0656 )

New York A license to use software accessed via the Internet results in a constructive transfer of possession, even when the software is never installed on a customer’s computer (See TSB-A09(15), S, April 15, 2009 )

Ohio Web-based software is taxed as an automatic data-processing servi c e . ( S e e O h i o R e v. C o d e A n n . S e c . 5739 01(B)(3)(e) )

Pennsylvania Canned software hosted on a server and accessed remotely is taxable if the user is located in Pennsylvania, but apportionment of in/out-of-state use is permitted. In the case of a Pennsylvania billing address, there’s a rebuttable presumption that users are located in the state. The software location is irrelevant and an explicit software license is not requir-

ed Access implies a license to use, control or exert power over the software, and applies to new and renewed contracts dated on or after May 31, 2012 (See Legal Letter Ruling No SUT 12-001 (May 31, 2012) )

Minnesota Charges for access are not subject to tax if the software is hosted on a s e r v i c e p r o v i d e r ’ s s e r v e r ; t h e c u s t o m e r only has remote access; the customer has use for processing only; and the customer has no title, possession or authority over the software Such access is considered to be more like an information service The application service provider owes sales or use tax on any hardware, canned software or other taxable inputs used to provide the nontaxable service, as long as the inputs are in Minnesota.

Tennessee Fees charged to access online software are not taxable where there is no transfer of title, possession or control of the software to the taxpayer, and where the server is located outside the state. (See Letter Ruling No 11-58 and Letter Ruling 11-21 )

New Jersey The Division of Taxation has issued technical guidance addressing the New Jersey sales and use tax treatment of cloud computing transactions, includ-

ing SaaS, PaaS and IaaS Receipts derived f

subject to New Jersey sales and use tax, since they aren’t seen as constituting the sale of tangible personal property and are not specifically enumerated services

Kansas When cloud computing is used to route electronic, voice, data, audio, video or any other information or signals, the charges to the customer are taxable as telecommunications or ancillary services

Michigan The Department of Treasury issued a Technical Advice Letter on SaaS taxability on September 7, 2012, in which it affirmed that the Department is evolving as the cloud computing market evolves Taxability “depends on the facts and circumstances of each transaction ”

If the transaction “involves a fee (license) for the use of prewritten software” or “is predominantly the lease/license of prewritten software,” it will be subject to Michigan sales/use tax, assuming that the transaction is sourced to Michigan Michigan currently takes the position that accessing software via the Internet constitutes the use of prewritten software and therefore is taxable

Michigan also has pending litigation, Thompson Reuters v Department of Treasury, Ct of Claims docket 11-91-MT, which questions whether a subscription-based database search tool requires a software license. Does access to vendor data via a vendor software tool have more of a service character than a SaaS transaction involving access to software and potential storage of customer data? The taxpayer has appealed to the Michigan Court of Appeals

Another case, Great Lakes Home Health Services, Inc v Department of Treasury, MTT Docket No. 410962 (August 30, 2012), is also on appeal to the Michigan Court of Appeals (COA No. 315835). The Tribunal has held that the taxpayer had a taxable use and purchased a license of software even though the software did not reside on the taxpayer’s computers or servers.

These cases demonstrate that there are more questions than answers when it comes to cloud computing and sales tax Making things even more complicated is the fact that the questions and answers vary from state to state

This will continue to be a rapidly evolving area as states develop more familiarity with the issues, and more business applications migrate to the cloud

FGMK specializes in serving privately and publicly held companies in a wide range of industries. We understand the challenges and opportunities of today’s constantly evolving business market and can offer you comprehensive tax, assurance and consulting expertise and responsive, proactive service.

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Politics and Taxes

The lowdown on the terrible twins we can’t do without

By Marty Green, Esq

Marty Green is the Illinois CPA Society’s Vice President of Government Relations, working with the CEO and Board of Directors to oversee and implement the Society’s legislative and regulatory activities He is also a practicing lawyer, member of the Illinois Bar and a Lieutenant Colonel in the National Guard Marty 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 He holds a number of professional certifications and is admitted to practice before the state and federal courts Marty is the past president of the Western Illinois University Alumni Council and is an adjunct professor for the Department of Health Sciences

Just as the Illinois General Assembly overcame one hurdle with the passage of comprehensive public pension reform legislation, it now has to deal with the sunset of the 2011 income tax increase when the rates slope from 5 to 3 75 percent for individual and from 9 5 to 7 75 percent for corporate These rate reductions are estimated to cost states $5 billion in tax revenues

Added to that, Speaker of the House Mike Madigan has introduced House Bill 4479, which would reduce the Illinois Corporate Income Tax Rate to 3.5 percent, costing Illinois an estimated additional $1 5 billion in revenue

A continued focus on the state’s tax code is central to the General Assembly’s Spring Legislative Session Legislators are forced to grapple with revenue losses and are focusing on just how effective business tax credits and incentives really are

The House Joint Committee on State

Ta x R e f o r m h a s b e e n l o o k i n g a t t h e state’s use of EDGE (Economic Development for a Growing Economy) Tax Credits, which have been highlighted by requests from Archer Daniels Midl a n d , Z u r i c h I n s u r a n c e a n d O f f i c e Depot, to name a few This focus on EDGE, along with Speaker Madigan’s corporate tax rate reduction proposal, m a y b e r e c o g n i t i o n o f I l l i n o i s ’ b u s iness climate or a possible screen to tee u p a C o n s t i t u t i o n a l A m e n d m e n t t o shift Illinois from a flat-rate income tax to a progressive tax rate state

Currently, there are Constitutional Joint Resolutions (HJRCA 33 & SJRCA 17, ilga gov) pending in the Illinois House and Senate that would amend the Revenue Article of the State Constitution (ILCON Art IX, Sec 3), essentially changing the current flat rate to a graduated rate The Senate version would keep the corporate tax rate flat, while the House version would impose a graduated rate on both individual and corporate. I predict that this Constitutional Resolution is being sought as the remedy to the state’s precarious financial situation

The Illinois income tax flat rate dates back to 1969 the infancy of state income taxes Delegates of the 1970 Constitutional Convention were given the opportunity to recommend a graduated income tax rate; however, they chose to maintain the status quo with a flat rate Political commentators surmised that the delegates understood the political reality that voters wouldn’t accept a proposed state Constitution with a graduated income tax rate at that time

Procedurally, Constitutional Amendment Resolutions require action by both chambers, with a vote of threefifths of the members elected to that chamber in order to appear on the General Election ballot A proposed amendment is approved and becomes part of the Constitution if it gets the favorable votes of either three-fifths of the persons who vote on that proposal at the election or a majority of all persons who vote in the election.

I n a d d i t i o n t o a g r e a t e r f o c u s o n t h e C o n s t i t u t i o n a l A m e n d m e n t R e s o l u t i o n s , there also will be an increase in voter educ a tion c a mpa ig ns a mong inte re s t g roups attempting to educate and persuade voters for the November ballot

It’s no secret that 2014 is also an election year, in which Illinois voters will be casting their ballot for our US senator, members of Congress, governor, constitutional officers, one-third of the Illinois Senate and all 118 members of the Illinois House. In this politi c a l y e a r, w e ’ l l a l s o s e e i n c u m b e n t s a n d c a n d i d a t e s o p i n e o n t h e c o n s t i t u t i o n a l question being presented to Illinois voters, a n d o n w h i c h o p t i o n i s i n t h e b e s t a n d long-term interest of Illinoisans.

The ICPAS Government Relations Office w i l l c o n t i n u e t o m o n i t o r t h e s e C o n s t i t ut i o n a l A m e n d m e n t R e s o l u t i o n s a n d w i l l k e e p y o u u p - t o - d a t e t h r o u g h t h e I C PA S me mbe rs -only C a p i t o l D i s p a t ch monthly e N e w s l e t t e r [ w w w. i c p a s . o rg / C a p i t o l D i sp a t c h . h t m ] a n d o u r L e g i s l a t i v e U p d a t e s emails We’re closely monitoring a number of bills impacting the CPA profession Keep the lines of communication open and as always please contact us if you have questions or if an issue catches your eye.

2014 Conferences

Providing timely, relevant updates from leading experts.

April 28 | Oakbrook Terrace

April 29 | Springfield Government

May 20 | Chicago

Estate & Gift Tax

May 22 | Chicago

Business Valuation Symposium

May 29 | Chicago

Employee Benefits

June 3 | Chicago

Not-for-Profit Advanced and Emerging Accounting and A-133 Issues

June 4 | Chicago Taxation on Real Estate

June 25 | Chicago

CCFL Going Global –

What You Need to Know to Ensure and Insure Your Success

July 17 | Des Plaines

July 24 | Springfield

Tax Practice & Procedures

August 27-28 | Rosemont Midwest Accounting & Finance Showcase

September 18 | Oakbrook Terrace Financial Institutions

September 23 | Rosemont Midwest Financial Reporting Symposium

Register at www.icpas.org/education.htm

Women to Watch Awards

CALL FOR NOMINATIONS

The Illinois CPA Society, together with the AICPA, is once again looking for outstanding women who have made significant contributions to the accounting profession, their organizations, and to the development of women as leaders. Awards will be given in the following two categories:

experienced leaders

• mentoring other professionals

• community service

• major or unique contributions to the profession

• leadership in workplace improvements

• authorship of professional articles

emerging leaders

• demonstration of leadership

• contributions to the profession

• creation and implementation of unique initiatives in the workplace

• community service

• involvement with her alma mater

Candidates must be members of the Illinois CPA Society (ICPAS) and the American Institute of Certified Public Accountants (AICPA). Not a member? Visit www.icpas.org and/or www.aicpa.org.

To nominate, visit www.icpas.org/womentowatch.htm. Questions? Please contact Gayle Floresca at 800.993.0407, x254 or florescag@icpas.org.

Deadline for submissions is 6.30.14

FORENSICS INSIDER D e a t h b y O n e T h o u s a n d C u t s

Fraud perpetrated slowly, in tiny increments, over years and years, is still unethical

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

* bsargent@scgforensics.com

Brad Sargent 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, and serves on the American Bar Association, Section of Litigation, Expert Witness Committee and Criminal Justice Section, White Collar Crime Committee

He is a member of the Association of Certified Fraud Examiners, the Association of Certified Fraud Specialists and the Association of Insolvency and Restructuring Advisors A member of the Illinois CPA Society since 2002, Brad began his ICPAS Board service in 2010, and was a member of the Committee

Structure & Volunteerism Task Force, the Fraud Conference Task Force (which he chaired from 2009-2010 and 2012-2013) and the Strategic Planning Committee (which he chaired from 2011-2013)

One of my favorite phrases has to be “death by one thousand cuts.” To me, this means a major negative event that happens slowly, almost imperceptibly, over time.

I decided to look into the origins of t h i s p h r a s e a n d f o u n d t h a t i t c o m e s from the Chinese practice of executing p a r t i c u l a r l y h e i n o u s c r i m i n a l s , t y p ic a l l y i n a p u b l i c f o r u m f o r a d d e d drama, in a slow and painful fashion Gruesome stuff.

Applied to a situation where an accountant is aware of potentially unethical behavior but chooses to do nothing about it, we can see that an “ethical death” can indeed happen over time in small increments, so much so that the accountant doesn’t fully realize just how far he or she has gone

In recent months I’ve been hired to conduct several internal investigations

T h e s e a s s i g n m e n t s t y p i c a l l y i n v o l v e w o r k i n g f o r a n e n t i t y t o i n v e s t i g a t e activities from within the organization

E a c h t i m e , I ’ v e o b s e r v e d i n s t a n c e s where the accountants, many of them CPAs, sat quietly by and watched year a f t e r y e a r o f u n e t h i c a l b e h a v i o r O n numerous occasions, the accountants were involved in the unethical behavi o r a n d u n w i t t i n g l y f a c i l i t a t e d t h e f t , fraud and abuse.

Christina M Egan, Esq is a former deputy chief U S attorney and partner at McGuireWoods LLP. An experienced trial lawyer, she focuses her practice on representing companies and indiv idua ls with ma tte rs inv olv ing both

criminal and civil investigations by the g ov e rnme nt, a s we ll a s fe de ra l a nd state regulators She states that, “People don’t usually wake up one morning and say ‘I’m going to help commit a fraud today.’ Rather, it can start with the ra tiona liz a tion of a n a c tion tha t seems maybe not quite right but not blatantly unethical, and continues on that path until that person finds himself way over the line and may not even realize how he got there.”

I know what you’re thinking: “I would never do that!” So how does an ordinarily ethical person reach the point of no return? It comes down to the “Fraud Triangle,” a well-known concept first introduced by criminologist Donald R Cressey, who stated that three factors had to be present for an ordinary person to commit fraud: Pressure, opportunity and rationalization

A s a c c o u n t a n t s , w e f a c e p r e s s u r e from clients and colleagues on a daily basis Consider, for instance, the business owner who takes “draws” out of the business and directs you to run it a s a n e x p e n s e W h o h a s n ’ t e n c o u ntered this itty-bitty ethical slip? What about the VP of sales who books an order just a few weeks early so that it counts toward a specific performance criteria and results in a higher bonus? T h e s e e v e n t s h a p p e n e v e r y d a y a n d have become virtually run of the mill

The accountant who has access to accounting records (Cressey’s second factor, opportunity) and is pressured by the client or a supervisor to make

bogus entries, tells him or herself that this happens all the time and that it’s no big deal Which brings us to Cressey’s third factor, rationalization The accountant lives with his or her unethical act by rationalizing that everyone does it Could this be someone you know and/or someone with whom you work?

As a society, we’ve developed a culture of rationalization For example, I attended an insurance fraud program years ago and left utterly depressed. The morning session focused on all areas of insurance, but I particularly recall an adjuster who detailed his career in automotive claims The overwhelming evidence he presented of claim fraud in cases involving car damage was stunning Schemes that ranged from kickbacks at body shops to luxury items added to the contents of stolen cars were simply rationalized away

I left that program empathizing with insurers, knowing they’re perceived as nameless, faceless, massive organizations that won’t be damaged by just a little extra on the claim.

Accountants often seek reassurance and guidance from one another Conferences and chapter meetings are great venues in which to network and get support I’ve attended many of these events and have often heard one CPA detail to another how

they faced some “aggressive” accounting issues and weren’t sure how to handle them More than once, the other CPA, being a true beacon of virtue, not only assured the troubled accountant that what they were contemplating was in the client’s best interests, but also suggested a few tips on how to further bury the transaction details We, the ones who claim that we would never get involved in unethical behavior, gather together and share best practices!

Are you a person who would add a $1,500 laptop to the contents of your stolen car (and the $2,000 set of golf clubs in the trunk, of course)? Would you consider having a nurse prescribe for you if you knew that person wasn’t legally authorized to do so? Would you ever cheat on the CPA Exam? Would you steal money or other assets from your employer or client? The answer to all these questions, I trust, is a resounding “No!”

Internal investigations create some tense moments for me because confronting people with facts and using terms like “fraud,” “steal” and “theft” is a tough job Almost all accountants have the same reaction: Poor at first, but then reluctant acceptance that one simple transaction compounded over time may lead to 20 years of activity that adds up to millions of dollars Death by one thousand cuts is gruesome, indeed

We are pleased to announce the publication of . . .

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Questions? Please contact Caitlin Kepple at kepplec@icpas.org or 800.993.0407, ext. 250.

Willamette Management Associates www.willamette.com

C o m p l e x C o d e

A simple guide to the anything-but- simple 1042 exchange

By Mark J Gilbert, CPA/PFS

* mgilbert@reasonfinancial com

Mark J Gilbert is a principal in the financial planning and investment management firm of Reason Financial Advisors, Inc , with offices in Northbrook and Naperville, Ill He has been a CPA and member of the Illinois CPA Society since 1982, and was awarded the AICPA’s PFS designation in personal financial planning in 1999. He currently serves on the ICPAS Finance & Treasury Management Committee and the Committee Structure & Volunteerism Task Force Mark is frequently called upon as a media contact, and has appeared on WBBM (Channel 2), WLS (Channel 7), WGN (Channel 9) and WDCB (90 9 FM), speaking on financial planning topics He also has been quoted nationally in notable publications such as the Chicago Tribune, Wall Street Journal, Money and US News

I’d like to think there aren’t very many financial topics with which I’m not at least somewhat familiar So imagine my surprise when one of my clients told me he was selling highly appreciated lowbasis stock in his privately held employer’s firm, and that because of Code Section 1042 he could avoid paying taxes on the profits

He asked me if he should do it And thus began my journey into the obscure, arcane and procedure-laden world of Section 1042 exchanges. I’m hoping my column means you don’t have half as challenging a time as I did

First off, understand that the applicability of 1042 provisions is limited. This code section relates to the sale of corp o r a t e s t o c k t o a n e x i s t i n g o r n e w l y f o r m e d E m p l o y e e S t o c k O w n e r s h i p Plan (ESOP), and represents one way f o r a s h a r e h o l d e r i n a p r i v a t e l y h e l d firm to monetize his ownership interest.

O f c o u r s e , w h e n s t o c k i s p r i v a t e l y held, the market is much more limited and much less liquid than when stock is listed and traded on an exchange or o v e r- t h e - c o u n t e r. S o t h e s h a r e h o l d e r frequently has few alternatives for turning stock investment into cash except to sell according to the terms of a shareholder agreement or as corporate management dictates.

There are many reasons why corporate management or a controlling shareholder might want to establish an ESOP, and they’re far too numerous for me to cover here For our purposes, we’ll take

it that the ESOP will purchase some or all of the corporation’s shares presently held by shareholders

The capital gains from this type of sale will be subject to as much as 25percent tax (U S and Illinois) However, according to Section 1042, the tax liability can be deferred if:

n Sale proceeds are reinvested in the securities of other corporations (i e as replacement securities).

n The shareholder held the stock for at least 3 years

n The stock was originally acquired in a manner other than through a qualified retirement plan, a qualified or nonqualified stock option, or through an employee stock purchase program

n Purchase of the replacement securities occurs no earlier than 3 months and no later than 12 months after the sale of the stock to the ESOP

n A f t e r t h e s a l e t o t h e E S O P, t h e ESOP must own at least 30 percent of the common stock of the company that sponsors the ESOP.

R e p l a c e m e n t s e c u r i t i e s m u s t c o nsist of the securities of U S operating companies whose passive investment i n c o m e r e p r e s e n t s l e s s t h a n 2 5 p e rcent of gross receipts These securities m a y c o m p r i s e c o m m o n s t o c k , p r eferred stock, bonds, notes, convertible bonds and floating rate notes

However, replacement securities do not include U S government or municipal securities, mutual fund shares, ETFs, master limited partnership interests, foreign stocks and bonds, REITS,

or the securities of the corporation or its affiliates for which the ESOP transaction occurs It’s possible to set up a brokerage account in which the selling shareholder essentially borrows against the value of replacement securities, and may invest sales proceeds in an alternative way

Finally, there are three documents that the selling shareholder must file as part of his or her federal income tax returns:

1. A l e t t e r p r e p a r e d b y t h e c o m p a n y signifying its agreement with the selling shareholder’s decision to defer capital gain recognition under 1042.

2 A Statement of Election filed in the year of sale, summarizing the taxpayer’s intent to defer current capital gains taxation

3. A S t a t e m e n t ( s ) o f P u rc h a s e , w h i c h identifies the qualified replacement securities.

When all these conditions are met, the selling shareholder may defer taxable capital gains and therefore tax payment This deferral will remain in place for as long as the replacement securities are held. If the replacement securities are sold, then the taxpayer must recognize a pro-rata share of the taxes

The tax deferral benefit of using a Section 1042 is undoubtedly attractive. But like so

many other financial decisions, taxes are only part of the story

For example, replacement securities exclude diversified investment vehicles like mutual funds and ETFs, so a selling shareholder has to ensure that the sale proceeds are large enough to build a diversified portfolio of U S stocks and corporate bonds, or at least to add to an existing well-diversified portfolio U S government and foreign corporate securities don’t qualify as replacement securities either, so a taxpayer may decide to allocate funds to these investment asset classes elsewhere in the portfolio.

What’s more, replacement securities are intended to be held for a very long time, because once the securities are sold or otherwise disposed of, the tax deferral attributed to those securities must be recognized and taxes paid So the common stocks and long-dated bonds of high-quality U.S. companies expected to continue to operate for many, many years typically are the investment of choice

In my client’s case, the sales proceeds received represented a relatively small portion of his overall investment portfolio, so broad diversification among investment asset classes wasn’t critical He was very comfortable with investing in individual corporate equity and fixed-income securi-

ties, and it wasn’t important to invest the sales proceeds in U S government, mutual fund and/or ETF securities We decided to plan for a 20-year time horizon and selected securities as if they would be the absolute last securities the client would ever liquidate, and would perhaps form part of his estate

O r d i n a r i l y, t h i s m i g h t m e a n u s i n g t h e common stocks of megacap U S companies. However, the reality is that even the best companies may go out of business or reorganize within a 20-year timeframe

Instead, we opted to use a portfolio of 1 8 - t o 2 2 - y e a r m a t u r i t y U S c o r p o r a t e bonds rated AAA and AA. Since the client likely wouldn’t need these assets to maintain his lifestyle, the risk of rising interest rates and lower prices on these holdings p r i o r t o m a t u r i t y w a s a c c e p t a b l e w h e n compared to the tax savings offered.

If the assets do in fact become part of his estate, his heirs will be able to either liquidate or hold the securities

Code Section 1042 exchange provisions offer the opportunity for meaningful tax deferral despite their complexity That said, they’re certainly not for everyone. Unless your client’s financial and investment situation is just right, a 1042 exchange is just another code section.

possibilities await those who practice in business valuation, forensic accounting, information management and technology assurance, and personal

Ou t r a g e o u s I n c e n t i v e s

Companies are going all out to keep their Gen X and Y workers happy

By Christine Bockleman

Would you feel happier at work if you had access to free onsite laundry, cheap onsite childcare or unlimited vacation days? What about if you could bring your dog to work or take leisurely bike rides around the corporate campus?

A lot of companies, across a lot of industries, are banking on the idea that perks like these will n o t o n l y k e e p t h e i r e m p l o y e e s h a p p y, b u t a l s o convince them to stick around for the long haul.

“Companies are facing very big retention issues right now, especially with younger workers,” says Joyce Gioia, president and CEO of The Herman Group, strategic futurists who focus on the workforce and workplace issues

These younger workers namely Generation X a nd e s pe c ia lly Ge ne ra tion Y (a k a the M ille nnials) are known for their short attention spans for jobs Where it was common for Baby Boomers to stay at one company for an entire career, younger workers flit from company to company, resting in one spot for an average of only 3 to 5 years

“There are talent wars going on,” Gioia explains. “Moving forward, we are going to have increasing issues with recruiting because there are fewer and fewer good people in certain professions and employers will have to up the ante to attract them.”

Tech companies like Google have long subscribed to this more is more philosophy. The company makes just about every “Best Places to Work” list for offerings such as free on-campus haircuts and laundry services Employees also benefit from onsite gyms and medical services, free rental cars and massages, and lots and lots of free food (the company provides all employees with breakfast, lunch and dinner, prepared by a gourmet chef)

Google isn’t the only company offering great perks Have a long list of errands and not enough free time? At Racine, Wisconsin-based SC Johnson an onsite concierge will mail packages, send flowers and even stand in line for concert tickets The company also looks after former employees, who get lifetime use of the onsite fitness center

New moms love California biotech company Amgen, which makes it easier to return to work p o s t - c h i l d b i r t h w i t h o n s i t e L a m a z e a n d b r e a s tf e e d i n g c l a s s e s , a c c e s s t o l a c t a t i o n r o o m s a n d one-on-one nutritional counseling.

A nd a t S e a ttle -ba s e d pe t ins ura nc e c ompa ny Trupanion, more than 80 dogs and cats are in the office each day The company offers a free petwalking service, so pets can get all the exercise they need

Trust is key at movie delivery company Netflix, where no one keeps track of vacation or sick days There’s also no company dress code. CEO Reed Hastings told Bloomberg Business Week that the company has a “freedom and responsibility culture,” where the “focus is on what people get done not how many days they worked.”

While the types of perks these companies offer a r e p r e t t y v a r i e d , t h e r e ’ s o n e c o m m o n t h r e a d : T h e y ’ r e d o i n g w h a t e v e r i t t a k e s t o k e e p t h e i r employees happy.

“I think that if people generally enjoy going to w o r k , t h e y a r e g o i n g t o s a y a n d t h i n k p o s i t i v e t h i n g s a b o u t t h e c o m p a n y a n d a r e g o i n g t o b e l o y a l a n d s t r i v e t o d o t h e i r b e s t w o r k , ” s a y s N a t a s h a H u b b a r d , g e n e r a l m a n a g e r o f h u m a n

Whether it’s a dash or full measure you are seeking, our professionals bring the missing ingredient to your business. Every organization needs a little punch every now and then. You know, something different that brings new perspective to the project or helps round out a team. That something is Salo. Our exceptional resources talent step in to help your company achieve business outcomes.

resources at Xero, which specializes in online accounting software and has U S offices based in San Francisco

Xero places a heavy emphasis on its workplace culture, and has a slew of organized social activities for employees, ranging from monthly drinks outside of work to a coffee club that walks to different cafes around the city “A lot of really great ideas are formed when people can relax and talk,” says Hubbard.

A l o n g t h i s s a m e l i n e , t h

c o m p a n y ’ s o f f i c e s h a v e l o t s o f c o m f y couches, big kitchens that encourage lingering, a pool table and a large rooftop deck “Culture plays a big part in making somewhere a good place to work,” she explains

Even accounting and finance firms with a more traditional bent are thinking outside the box At Deloitte, for example, employees can take sabbaticals to explore interests beyond finance “We want our employees to always be growing and developing,” says Byron Spruell, vice chairman, Central Region managing principal and Chicago managing principal “If you need time off to do a world service project or travel abroad or just focus on yourself we will support you ”

D

B r e a k p r o g r a m , w h i c h encourages employees to participate in a weeklong service project with college students “We are very focused on making an impact on the c o m m u n i t y, a n d s o w e e n c o u r a g e o u r e m p l o y e e s t o d o t h e s a m e , ” Spruell explains.

In the past, the company has also run a popular online film festival, where about 2,000 of the firm’s U S employees made videos that were uploaded to YouTube and incorporated into the firm’s recruitment efforts

Some may ask, why not leave the war for perks to all those hip tech companies? Because, with a well-documented dearth of young talent coming through the ranks, accounting and finance firms need to lure future hires from not only other firms, but also other professions.

Ernst & Young LLP (EY) has a set retirement age for partners, so having a strong pipeline of professionals is especially important, explains Sandra Turner, director of EY Assist, the firm’s work-life and employee assistance program In fact, the firm estimates that by 2015 in the Americas, Generation Y will make up 68 percent of its workforce, with Generation X comprising 25 percent and Boomers only 7 percent

“Competitive compensation and flexibility compete as top priorities for our younger employees,” says Turner. Which means that in addition to the common work-from-home options, the firm also helps parents with childcare, offering 12 days of backup emergency care to every employee each year EY also allows its employees to take their children with them when they need to travel for client meetings Backup childcare is provided in the city where those meetings are taking place And for parents of adolescent children, a college coach is offered through Bright Horizons, while parents of high school juniors get help selecting schools, filling out applications and applying for financial aid.

Another benefit the firm offers is considerably less cheery. “Our bereavement benefit is significant,” says Turner “If an employee dies, his or her family is immediately given either $50,000 or four months salary, whichever is greater The money can be used for anything There are no strings attached ”

No matter the perks, all these organizations are thinking creatively to keep employees motivated and engaged. The goal of every one of these perks, whether a free latte or unlimited vacation days, is to let employees know they matter.

“Companies are trying to create an environment where everyone, including Gen X and Y, wants to come to work every day,” Gioia explains “You want your employees to be engaged, maybe have some fun and feel like the time they are spending doing work is valuable ”

CURRENCY B i t c o i n M a n i a

What’s all the hoopla about? Virtual currency, that’s what

By Carolyn Tang Kmet

money to Bitcoins on an online exchange Second, a user can exchange goods or services for Bitcoins Third, users can mine for Bitcoins by using computers to solve complex math problems The probability of discovering Bitcoins through this approach is proportional to the amount of computer processing power that can be applied

In January 2009, a computer programmer using the pseudonym Satoshi Nakamoto released an open-source digital currency that was intended to provide individuals with the means to financially transact without a third-party intermediary Dubbed “Bitcoin” or BTC, the system eliminated the middleman, namely traditional financial institutions such as banks, credit card companies and exchanges. What’s more, the system enabled pseudonymous transactions, since the identities of buyers and sellers are encrypted and no personal information is exchanged However, unlike an anonymous transaction, every exchange conducted via Bitcoin is recorded on a public ledger

N a k a m o t o ’ s o b j e c t i v e w a s t o m a k e e C o mm e rc e d e p e n d e n t o n f i a t d o l l a r s , o r c u r r e n c y that’s not backed by a commodity. Nakamoto outlined the Bitcoin system design in a paper published at Bitcoin org In it, he states that, “The root p r o b l e m w i t h c o n v e n t i o n a l c u r r e n c y i s a l l t h e trust that’s required to make it work The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

Nakamoto continues to outline how a currency could be decentralized by tying it to the principles of cryptography to validate transactions and govern the production of the currency itself.

There are three ways Bitcoins can be obtained First, a user can pay a fee to convert conventional

According to a report issued by the Congressional Research Service, in mid-November 2013 there were approximately 12 million Bitcoins in global circulation, up about 2 million from a year prior. “However, the total number of Bitcoins that can be generated is arbitrarily capped at 21 million coins, which is predicted to be reached in 2140. Also, because a Bitcoin is divisible to eight decimal places, the maximum amount of spendable units is more than 2 quadrillion (i e 2,000 trillion),” the report explains.

In early February 2014, a single Bitcoin was worth approximately $836 Then, on February 28, Japan-based Mt. Gox, the once dominant exchange for Bitcoin trading, filed for bankruptcy after more than $470 million worth of the virtual currency vanished. According to The Wall Street Journal, Mt. Gox lost almost 750,000 of its customers’ Bitcoins, as well as roughly 100,000 of its own Within a week of the news the value of a single Bitcoin dropped 23 percent to $640

This type of fluctuation isn’t unusual for Bitcoin investors. From October 2013 to January 2014, prices ranged from $134 to over $1,000 In July 2013, the exchange rate for Bitcoins was at $65, with a market capitalization below $800 million.

For users, Bitcoin’s benefits include lower transaction costs, increased privacy and long-term protection against the loss of purchasing power thanks to a mathematically capped supply Disadvantages include sizable price volatility, uncertain security from theft and fraud, and a deflationary bias due to the capped supply that could encourage hoarding There are also numerous legal and regulatory concerns, such as the system’s potential for money laundering, its treatment under federal securities l

A

The Illinois CPA Society

IN 2013.

Jehan Abbedelal

Mark John Abbott

Michelle Lee Abbs

Danielle N. Abendroth

Nina F. Abraham

Joshua E. Abrego

Jacalyn Kaye Ackerman

Mary Beth Adducci

Zayna Afifa

Haley Kristen Africano

Shilpa N. Aggarwal

Elizabeth Agnes

Leticia Aguilar

Andrew J. Ahern

Amir A. Ahmed

Siraj Ahmed

Jessica Marku Ahoni

Shruthi Ajjampur

Benjamin Sitze Akers

Nabil Alam

Jaime Alban

Zachary Albert

Becky Marie Albin

Jason Alice

John R. Allegretti

Kaitlin Allen

Joanne Almond

Lisa Marie Alter

Madeline I. Alviar

Synda S. Amoral

Daniel Ampon

Soo C. An

Jason Frederick Ananias

Jessica R. Andersen

Arden J. Anderson

Daniel K. Anderson

Jacob Lee Anderson

David Michael Anderson

Michelle Anderson

Samuel Anderson

Grant Anderson

Justin Mark Andrews

Vladimir Andreychuk

Raherivelo Andriamiharisoa

Christopher L. Andrus

Joshua Kory Anker

Mary Grace Tiburcio

Aquino

Joanna B. Arellano

Lauren Aristorenas

Rhonda D. Armstrong

Laura Armstrong

Christopher Arvanitis

Jason D. Askin

Elizabeth Atchison

Nicolas Richard Atkinson

Joshua Cartier Aubey

Erin A. Austin

Anna Avalos

Sergio Mauricio Avalos

Perez

B

Kevin Bernhard

Michael Berry

Robert O. Baban

Robin Baby

Kathryn Michelle Bacon

Leah Baer

Lin Bai

Joshua M. Bailey

Jake Bailey

Damandeep Bajwa

Andrew Baker

Timothy D. Balcerzak

David Bambuch

Stephanie Banach

Christopher Bandemier

Preeti Baniya

Maamonai Bareach

Devin Barnas

Elizabeth P. Barnett

Abigail Barra

Diane Barrett

Melissa E. Barringer

David M. Barson

Benet Bartell

Melanie Barthel

Ellen Elizabeth

Bartindale

Emily Ann Bartlett

Kara Christine Bartolone

Andrew Paul Bartolotta

Brett Barton

Adam M. Bassett

Donald Matthew Basta

Kamaljit Kaur Battu

Laura Bauch

Steven Bauer

Marguerite Beach

Meagan Bebchuk

Jenna Bechard

Bridget Marie Bechtel

Brian M. Beck

Harvey Becker

Lillian Beckerleg

Kymberly Catherine Beebe

Michael Beesley

Brian R. Begalke

Mark Charles Behncke

Michael A. Behnke

Brian Andrew Behnke

Bailey Behrens

Andrew Armstead

Beimford

William Beirne

Jennifer Azaria Bekker

Muhittin Bekler

John Thomas Bellaire

Kristen J. Bellendir

Dominick Bellino

Tatiana Belova

Efren Beltran

Alyssa Beltran

Matthew R. Benjamin

Alexandru Bercean

Ella Patricia Bergmann

Elizabeth Anne Bergstrom

Andrew Bernardi

Natalie J. Betscher

Colin Beveridge

Evgenia Beyrak

Rupan Kaur Bhandari

Anjali Bhatia

Bhavika Bhatt

Maciej Bien

Catherine Bigoness

Robert T. Birkett

Grace Emily Biss

Naomi Marie Bjerk

Joshua Louis Blaine

Hillary Fay Blake

William Blaszak

Patrick Christopher

Bleyer

Ryan R. Bloom

Derek Bloomquist

Joseph Blum

Amy Elizabeth Blume

Layne Bodily

Cody Boender

Sebastian Bohorquez

James A. Boles

Michael Bolzan

Antonino Bondi

Kristin P. Bonnett

Jeffrey John Bonoma

Emily Sue Bonvallet

Jacqueline

Boomershine

Henri T. Boone

Rita Bootsma

Amy K. Borbely

Erik Borg

Rebecca Borgeson

Malgorzata A. Borla

George Boumitri

Lucas Bowden

Anna Boyarko

William Boyd

Christina Boykin

Don Bradley

Megan Bradshaw

Erik Bramman

Kevin Brand

Sharon Brandys

Christopher Brannan

Teilla L. Bransford

Ian H. Braverman

Kyle Eric Brazeal

Courtney Brickner

Jonathan Britva

Jorden Joelle Brooks

Kathleen Greene

Brower

Rebecca Anne Brown

Daniel Cary Brown

Kevan D. Brown

Natalee H. Brown

Erin M. Brown

Michael Patrick Brown

Nathan Tyler Brown

David Browne

Daniel Bruins

Peter John Bryniarski

James Buehne

Bogdan P. Bujanowicz

Mehreen Bukhari

Brian Bukowski

Michael Bukowski

Mary Bull

Clifford Bumgarner

Kimberly Lynn

Buonadonna

Lauren Joanne Buoscio

Benjamin David Burge

Erin Elizabeth Burke

Luke Murphy Burket

Aaron Burnett

Alex S. Burt

Xavier Michael Burton

John Edward Bussa

John Christopher Butler

Catherine Ferrel Butts

Mae M. Bys

C

Michael Ryan Cailteux

Kristin Callero

Joseph Callero

Alyssa Calzaretta

Margaret Campbell

Katherine Canning

Ruizhe Cao

James Capel

Maria Daniela

Capotescu

Peter Joseph Cappetta

Seneiya Carew

Melissa Ann Carlson

Jack C. Carpenter

Jose Miguel Carrera

Rachel Cassara

Scott William Castell

Michael A. Castillo

Patrisha Castrataro

Elizabeth Ashley Catena

Blasko Cekorov

Daniel A. Cesario

Mrinal Chag

Eric Tristan Challenger

Maureen Elizabeth

Champa

Ta-Chih Chang

Alexander Peter Chapman

Janelle Chapman

Eric Chapman

Tianqi Chen

Si Chen

Yilin Chen

Jingxi Chen

Tingyi Chen

Xi Chen

Shu Chen

Chun Chen

Sijia Chen

Yu-Tung Chen

Can Chen

Ruoqi Chen

Xinyi Chen

Xin Chen

Yanmei Chen

Jinchun Chen

Christine M. Cheng

JuYun Cheng

Jacqueline Cherkas

Matthew Chiappetta

Emeka Chike-Obi

Samuel Chmell

Alice Cho

Keunyoung Cho

Samuel Choi

Jessica Lynn

Christensen

Daniel Christensen

Scott W. Christie

Kevin William Christman

Patrick Cieslinski

Brian Cihlar

Jonathan Ciminieri

Johnathan Clancy

Kathleen Erin Clapper

Benjamin Allen Clark

Michael O'Neil Claussen

Kristin J. Clay

Estienne Coetzee

Alexandra L. Cohen

Akelo Colbert

Natalie Cole

Ahdieh Khosh Coleman

Lindsay Mae Coleman

Lindsey M. Collins

Traci Collins

Shelby Colyer

Ross Conner

Matthew Christopher

Connor

Daniel Bruce Connors

Stacy Hronopoulos

Constan

Najiba Contractor

Julie Contreras

Heather Lynn Cook

Timothy Scott Copeland

Cameron Copple

Patrick Corcoran

Moira Corcoran

Adam Cornelius

Melissa Cortez

Troy A. Costlow

Nathaniel S. Cottrell

Ashley Council

Cory Scott Cowan

Zachary Cox

Ioan M. Cozuc

Cosmin Mihnea

Craciunescu

Kayla Crandall

Rhodora Rodrigo Credo

Brent Crews

Nancy Veronica Criollo

Zachary Crolius

Tracy Xue Jie Cron

Morgan Crosier

Elena Alexandra Crowe

GuanXiong Cui

Luke Culley

Eileen Cumming

Robert Curley

David Joseph Curosh

Kevin Curran

Bridget Curran

Nicholas Currier

Monika Cwikla

D

Victoria Elizabeth Dalton

Matthew Dalton

Shaunna Dangremond

Cody D. Daniels

Kimberly Dardi

Sarah R. Darnall

Seth Anthony Davis

Edward Davis

Christopher R. Day

Viviana De La Paz

Ervin E. DeCastro

Daniel Patrick Degnan

Mallory DeHaven

Anna Catherine

del Castillo

Jason dela Cruz

Timothy J. Delany

Erika DelBrocco

Megan DeMarco

Kathryn Eloise DeMeritt

Minyu Deng

Yichao Deng

Yue Deng

Urszula Depczyk

Sarah Derges

Vladimir Deronja

Michael DeRusso

Kush Desai

Darshan Desai

Kevin Dettloff

Joseph Deutsch

Maire Caitlin Devlin

Benjamin Karl DeVries

Peter DeVries

Marc DeWalt

Lynne DeYoung

Michael Joseph

DeZenzo

Peter Didier

Shelby S. Dietsch

Laura DiLuia

Robert Dion

Tiffany Dixon

Arsen Djatej

Sheila Doheny

Julie Ann Doherty

Jenna Michelle

Donahue

Yijie Dong

Douglas L. Donoghue

Mark Doroba

Evan Dosch

Dobrila Dosen

Kelly Driscoll

Fei Du Jing Du

Angelika Dubas-Zacher

Thomas Alexander

Duderstadt

Jeffrey Duncan

Matthew Dunn

Megan Dunne

Volha Dziadyk

James F. Dziubla E

David Earhart-Price

Sarah Earnhart

Benjamin Mark Eder

Keith Devon Edgerton

Michael Christian Eggert

Jeffrey James Eickhoff

Weiwei Eiden

Michael James Eifel

Isabel Elizalde

Antonio Tomas Elizondo

Essam A. Elshafie

Mark Embree

Derrick Emmendorfer

Brett Engdahl

Eric Anthony Erspamer

Deliana Andrea

Escobari

Cristina Escobedo

Daniel Ettleson

Michael Eulitz

Katelyn Evans

Suzanne Everett

Nicholas Patrick

Everson

F

Scott Michael Faherty

Samuel Failla

Meng Fan

Sadaf Fatani

Kristin Fedor

Lee Feinerer

Max Wisper Feldman

Sha Feng

Yanan Feng

Jing Feng

Lin Feng

Kyle Ferguson

Pei Yee Fermoyle

Joseph John Ferrari

Jason Field

Daniel Finkel

Klayton Michael Finley

Michael Fiorella

Kevin Fishbein

Marjorie Claire Fisher

Bryant Fitz

Tim Flanagan

Adam Fleishman

Kaitlin Fleming

Nicholas Flemming

Albert Flores

Stephanie Florey

Megan Celine Foley

Paul Foley

Matthew Foltz

Brian Forsberg

Jonathan Frantz

Daren Freebing

Kevin Ladell Freeman

Stacie Ann Freisleben

Mark Freking

Russ Friedewald

THE FOLLOWING INDIVIDUALS WHO EARNED THEIR CPA CERTIFICATE

CERTIFICATE RECIPIENTS

Henrik Turk

Michael Tuttle

Michael Tverdek

Daniel Richard Twait

Brandon Twite

Jennifer Mallory Tyler

Plamena Tzoneva

U

Benjamin Ulman

Michael Upham

Matthieu Raymond

Urbain

V

Michelle VadeBoncouer

Allison Marie Vajda

Armon Vakili

Veronica M. Valdez

Roshmi Valiyapurayil

Jordan Tyler Valle

Thomas Van Derpluym

Lauren Alan Van Dyke

Andrew Vanausdoll

Joanna Agata

VanDerVant

Scott Vanderzee

Georgi Ivanov Vankov

Audrey VanSolkema

Benjamin Louis VanStraten

Arti Srivastava Varma

Lindsey A. Vaught

Smitha P. Vayalil

Eric Veale

Karina Vega

Boris Veksler

Rene Velazco

Catherine L. Venta

Elena G. Verizova

Manjary Verma

Carolyn Vermeulen

Michael Vian

Sameer Mukund

Vijayakar

Janelle Vik

Rogelio Alfredo Villageliu

Jimena A. Villamor

Norell Viray

Christina Marie

Visintainer

Joseph James Vlahovic

Susan Teresa

Vogler-Wesp

Jodi Lynn Vogt

Ninette Lewis Voiles

Kyle Vrabac

William Vydra

W

Kelly Waclawik

Diana Walker

Lloyd Walker

Austin Walker

Michael Wall

Lawrence Holden Wan

Jingjing Wan

Xi Wang

Zhao Wang

Mingyuan Wang

Xiyan Wang

Liwei Wang

Mo Wang

Anlin Wang

Long Wang

Ye Wang

Xiaowen Wang

Yimiao Wang

Zhe Wang

Christopher Ward

David A. Wargo

Nathaniel Warman

Chad W. Warner

Marek J. Warzecha

Brien Michael Wasserman

Emily Anne Watkins

Joseph Paul Wattenbarger

Miroslaw Wcislo

Jacob Wear

Stephanie R. Webb-Powell

Jeffrey Weberg

David Weidenaar

Philip Weil

Lucas Weiss

Joseph Welch

Amanda J. Wells

Andrew Joseph Welp

Joshua Welsh

Zhe Wen

Olga Wendling

John Wentz

Michael D. Wenz

Carissa Dawn Werlinger

Steven Werner

Nicholas Edward Westerhof

Jeremy Wetter

Anthony Whalen

Micah L. Wheat

Brian John Wheeling

Ryan Daniel Whetsel

Aaron Whetstone

Sarah Eileen Whisson

David J. P. White

David Matthew White

Steven Phillip White

Dennis Joseph Whitlow

Molly Katherine Whitmore

Brigid Eileen Wholey

Mark Wicherek

Laura Christine Wichmann

Neal Wicks

Ursula Widawska

Adam Widener

Christine M. Wiegel

Jennifer Wiercioch

Paulina Paula Wieslaw

Caroline Wild

Matthew Willems

Katherine Elizabeth Williams

Lauren Irene Williams

Jennifer Lori Williams

David Vincent Williams

Elisabeth Ashley Winbigler

Aaron Winer

Keevin Wise

Dagmara J. Wisnicki

Benjamin Isaac Wohlleber

Joanna Wojnar

Peter James Woldman

Jacqueline Wolff

Joseph Wondolowski

Pui Man Wong

Ching Annie Wong

Travis Charles Wood

Patrick Woulfe

Blake David Wroan

Yali Wu

Xian Wu

Ying Wu

Yinghui Wu

Yanli Wu

Jingxia Wu

Tzu-Ying Wu

Chaonan Wu

Wenjuan Wu

Mengyi Wu

Jingjie Wu

Kuan-Jou Wu

Yiwen Wut

X

Yu Xia

Lu Xu

Xiaohua Xu

Minyinjie Xue

Y

Trevor Michael Yamada

Qiwei Yan

Ruipeng Yan

Yuntong Yan

Yunya Yang

Huijuan Yang

Jeffrey Yeager

Yang Yi

Daniel Yin

Jiexi Ying

Jennifer Yong

Peter Yoon

Caleb T. Young

Kristy Young

Erin Young

Mabel Young

Michael Yovkovich

Nancy Yu

Dawei Yu

Yue Yu

Renfei Yuan

Quan Yuan

Lisha Yuan

Jun Yuan

Jena Kim Yuen

Z

Ramin Zacharia

Motasem Zaitouni

Daniel H. Zajac

Pawel S. Zajac

ILLINOIS CPA SOCIETY 2013 EXCEL AWARD RECIPIENTS

Adrian Zalewski

Peter McKeown Zarob

Brian Anthony Zasada

Laura A. Zautcke

Corey Thomas Zavilla

Martyna Zawilinska

Douglas Joseph Zbikowski

Christine Zeh

Brett Zehr

Karen Zelby

Stacey Elizabeth Zeller

Blake Zemaitis

Ying Zeng

Caitlin Zerr

Jessica R. Zhang

Anqi Zhang

Lujie Zhang

Su Zhang

Huichao Zhang

Xiaojinxuan Zhang

Lin Zhang

Shujie Zhang

Zhuoxi Zhang

Xiao Zhang

Han Zhang

Zhenjuan Zhang

Jian Zhao

Qianlin Zhao

Shan Zheng

Simon Z. Zhou

Jun Zhou

Zequn Zhou

Jiacheng Zhu

Andrew Michael Zone

Jingxia Zou

Tatjana Zovnere

Samir Zulic

Amy E. Zumbahlen

David Zurad

The Excel Award is granted to Illinois CPAs who achieved a total average score of 90 or more and completed all four parts of the exam within two consecutive testing windows and were in the top five percent of the scores of those who completed all the requirements in 2013 in Illinois.

ICPAS GOLD MEDAL RECIPIENT

Ryan C. Kania

American University

Plante Moran PLLC

Abigail Barra

Illinois State University

Heinold-Banwart, Ltd.

Eric Chapman

ICPAS SILVER MEDAL RECIPIENT

Daniel A. Ettleson

University of Illinois at Urbana-Champaign

PricewaterhouseCoopers LLP

EXCEL AWARD RECIPIENTS

University of Illinois at Urbana-Champaign

Ernst & Young LLP

Nicholas Patrick Everson

University of Notre Dame

Deloitte & Touche LLP

Timothy R. Hegwood

Illinois Wesleyan University

PricewaterhouseCoopers LLP

Connor Hund

University of Illinois

Ernst & Young LLP

ICPAS BRONZE MEDAL RECIPIENT

Robert J. Pekovitch

Loyola University Chicago

Deloitte & Touche LLP

Annie C. Jao

University of Illinois Urbana-Champaign

Plante Moran PLLC

Robert T. Rickert

Indiana University

PricewaterhouseCoopers LLP

Everett Sommer

University of Illinois at Chicago, Liautaud

Graduate School of Business

Corbett, Duncan & Hubly, P.C.

Michael Tuttle

University of Illinois at Urbana-Champaign

PricewaterhouseCoopers LLP

Kuan-Jou Wu

University of Illinois Urbana-Champaign

Michelle Mei Ling Waldorf is the founder of Plainfield-based eSeller Street, which develops product discovery websites that connect shoppers with online sellers. She purchased a single Bitcoin in December 2013 at a price of $850, after a friend told her about his experience investing in the digital currency

“ I ’ m f a s c i n a t e d b y d i s r u p t i v e t e c h n o logy,” she explains, “particularly peer-top e e r n e t w o r k s N o w t h a t I h a d a c l e a r understanding of the price volatility, risk of f r a u d a n d b u y i n g p r o c e s s , I b o u g h t o n e BTC to be involved in the peer-to-peer currency movement and maybe make a little m o n e y. ” Wa l d o r f b e l i e v e s “ v i r t u a l c u rr e n c y h a s l o n g - t e r m v i a b i l i t y H o w c a n peer-to-peer currency be stopped as long as people want to participate and it’s not deemed illegal?”

According to the Congressional Research Service report, in 2013 Bitcoin daily transaction volume fluctuated between $20 million and $40 million, representing about 40,000 daily transactions By comparison, Visa estimated an average number of daily individual transactions near 24 million on its network alone.

However, many analysts expect Bitcoin volume to increase as more and more entities accept the digital currency On January 9, 2014, for example, Overstock com announced that it was accepting Bitcoin as a form of payment. The online retailer teame d up with Coinba se for the inte g ra tion, and according to a Business Insider interv i e w w i t h O v e r s t o c k c o m C E O P a t r i c k Byrne, the launch was a success Within two hours of the announcement, approxim a t e l y $ 1 0 , 0 0 0 w o r t h o f B i t c o i n f r o m about 100 purchasers was processed. By the end of the day, that number had risen to $126,000

What’s more, on January 16, 2014, the Sacramento Kings announced that they would become the first professional sports franchise to accept Bitcoin. According to a press release from BitPay, a payment processor specializing in virtual currencies, the basketball team offers fans the ability to use Bitcoin to pay online for team merchandise and tickets

“With BitPay we are able to implement a technology that allows our fans to make K i n g s - r e l a t e d p u rc h a s e s w i t h o u t p h y s ic a l l y r e a c h i n g i n t o t h e i r w a l l e t s , ” s a i d S a c r a m e n t o K i n g s m a j o r i t y t e a m o w n e r

Vivek Ranadivé

Like any other currency, Bitcoin is not limited to product purchases Other entit i e s t h a t a c c e p t B i t c o i n f o r p a y m e n t i nclude WordPress com, a web publishing service, Reddit, a social news and entert a i n m e n t s i t e , a n d T h e I n t e r n e t A rc h i v e , t h e n o n p r o f i t o rg a n i z a t i o n b e h i n d T h e Wayback Machine, which archives older v e r s i o n s o f w e b s i t e s . T h e l a t t e r s t a r t e d a c c e p t i n g B i t c o i n d o n a t i o n s a n d e v e n began paying some of its employees in Bitcoin in February 2013

E v e n s o , t h e r e a r e m a n y f a c t o r s t h a t could impact Bitcoin’s widespread adopt i o n P e r h a p s t h e l a rg e s t i m p e d i m e n t i s that Bitcoin is not legal tender and doesn’t h a v e g o v e r n m e n t e n d o r s e m e n t . Wi t h o u t the credibility of a larger controlling entity, many people may not view Bitcoin as an attractive vehicle for holding wealth And without widespread acceptance and a critical mass of vendors who accept Bitcoin as a form of payment, continued use could be discouraged and growth limited

B i t c o i n ’ s w i d e - r a n g i n g p r i c e v o l a t i l i t y m e n t i o n e d e a r l i e r i s a n o t h e r f a c t o r t h a t may be driving away traditional merchants and consumers. For example, from March to A pril 2013, Bitc oin’s dolla r e x c ha ng e r a t e w e n t f r o m a r o u n d $ 5 0 u p t o $ 3 5 0 , and then back down to near $70 Fluctuations were even more extreme in the fall of 2013, when the exchange rate went from near $50 in September to above $1,200 by early December, and then down to near $800 by mid-December

According to the Congressional Research Service report, “this is a price pattern more typical of a commodity than a currency to be used as a medium of exchange, and suggests the market for Bitcoin is currently being driven by speculative investors, not a growing demand for Bitcoin due to increased transactions by traditional merchants and consumers ”

Bitcoin’s longevity also could be affected by its restricted supply. Prior to the dollar, the United States operated under a gold standard, and due to a limited supply of gold, the economy experienced deflation, which brought about elevated real interest rates, banking panics and general economic instability In 1913 the Federal Reserve was created to move the economy to an elastic currency, namely the dollar The supply of the dollar is intentionally managed by the Federal Reserve to meet the changing needs of the domestic economy. However, it’s important to remember that

the Bitcoin was arbitrarily capped at 21 million units, so perhaps there is room for some elasticity

And of course there’s uncertainty concerning Bitcoin’s tax status Earnings in Bitcoins are not reported to the IRS, and users are provided some level of anonymity, both of which are characteristics of traditional tax havens However, unlike traditional tax havens, Bitcoins aren’t regulated by any financial institution As such, Bitcoins, along with other forms of digital currency, reside in a gray area.

Furthermore, the IRS provides only limited guidance on the tax consequences of a c t i v i t i e s i n v o l v i n g t h e v i r t u a l w o r l d : “ I f you receive more income from the virtual world than you spend, you may be required to report the gain as taxable income. IRS guidance also applies when you spend more in a virtual world than you receive, you generally cannot claim a loss on an income tax return ”

Obviously, the IRS’ language doesn’t necessarily target a digital currency that’s used as a medium of exchange for goods and services in the real world, and so the tax treatment of Bitcoins remains in question

Finally, as with any currency, security is a concern While counterfeiting is supposedly not possible, there are still potential security issues relating to exchanges and wallet services Several breaches on the Bitcoin network have already occurred, which certainly threaten consumer confidence

In April 2013 Instawallet was hacked A web-based wallet provider allowing users to store their Bitcoins, Instawallet’s secur i t y b r e a c h r e s u l t e d i n t h e t h e f t o f o v e r 35,000 Bitcoins At the time, Bitcoins were valued at $129 90, so the damages were nearly $4 6 million As a result Instawallet s us pe nde d ope ra tions The n, in Oc tobe r 2013, a Bitcoin bank operated from Australia but stored on U.S.-based servers was hacked, resulting in the theft of 4,100 Bitcoins, at the time worth over $1 million And of course there’s the recent Mt Gox debacle mentioned earlier

While hacks and thefts occur no matter what the currency, such large thefts on a young system have significant impact on t h e p l a t f o r m ’ s c r e d i b i l i t y a n d l o n g - t e r m consumer acceptance

Nevertheless, Bitcoin is an exciting advancement in the realm of virtual currency, and is obviously something of a sign of the times to come.

5

Signs You’re a Weak Leader

If any of these describe you, then start bulking up your core leadership strengths pronto

By Sheryl Nance Nash

We can pretty much agree on the key qualities of a great leader: The ability to communicate effectively, astute strategic and critical thinking, laser-like focus on the needs of customers, employees and the markets, and the ability to leverage every technological advance and nuance, to name a few But much as you think you're a leader extraordinaire, perhaps it's time for a reality check

H e r e a r e f i v e r e d f l a g s t h a t t e l l y o u you’re not all you’re cracked up to be.

1. I’m not a talker...or a listener

You can have groundbreaking opinions on how an organization can be led to greatness, but if you can't communicate them in a way that inspires the troops, then you’re doomed to fail.

“ C o m m u n i c a t i o n i s t h e m o s t i m p o rtant skill for any leader to have Without it, there is no leader,” says David Elrod, d e a n o f t h e I n s t i t u t e o f M a n a g e m e n t Accountants (IMA) Leadership Academy and finance director of Microsoft in Redmond, Wash.

In a perfect world, a leader will strive for a culture of uncensored communication, where employees feel comfortable asking questions and sharing their ideas. This creates a healthy dialog and can lead to greater innovation and creativity all ultimately good for the business.

“Great leaders are equipped to handle both the blessing and burden of responsibility and execute effectively on behalf of their stakeholde rs , ” s a y s Nina Av e rs a no, a s s is ta nt profe s s or of management and organizational behavior at the College of Mount Saint Vincent in Riverdale, New York. “Great leadership only occurs if there’s 'followship,' and that can only happen when certain conditions exist ”

Communication isn't only about talking though. Listening is just as important “It's critical to listen t o e v e r y o n e , n o t j u s t t h e l o u d e s t v o i c e o r y o u r most trusted lieutenants Sometimes, it's the quiet ones who can have the most to say, even if it rep-

resents an opposing view,” says Peter Diamond, o f D i a m o n d E x e c u t i v e C o a c h i n g + L e a d e r s h i p Development

Employees who feel their voices are heard are more likely to stay with the organization “If leaders believe only their ideas have value and fail to tap the talent around them, they risk losing key talent and rising talent who opt to work for other organizations where they can more fully contribute Turnover among the rising stars leaves a gap in the talent pool and limits the succession pipeline, harming a firm's future,” says Marcia Mueller, practice leader, talent development for IMPACT Group, a career development firm in St Louis

2. There’s an “I” in “team”

You may be the big man or woman on campus, but dressing down someone on your team in a public setting is a fast track to reputational failure, says Diamond. Weak leaders routinely demean others as a way to make themselves look or feel better Even if someone deserves the criticism, it should be done privately.

“ C r e a t i n g a s p e c t a c l e i n a m e e t i n g i n w h i c h you make everyone feel uncomfortable doesn't put you in a power position Quite the contrary, good people will not tolerate such actions and you'll be left with a weak team that will deliver mediocre results because they are afraid of you,” says Diamond.

A h i g h - f u n c t i o n i n g t e a m i s o n e t h a t c o l l a b orates, shares camaraderie, fosters career development and deals directly with conflict

If you aren't a master of the art of relationship building and collaboration, take a long, hard look at yourself “Leaders that can develop trust in relationships and partnerships are game changers and sought after,” says Judith Glaser, author of Convers a t i o n a l I n t e l l i g e n c e : H ow G r e a t L e a d e r s B u i l d Trust and Get Extraordinary Results.

3. Can’t someone else decide?

I n d e c i s i v e n e s s c a t a p u l t s y o u t o t h e t o p o f t h e weak leader list It's one thing to seek input and consensus, but at some point you have to realize you’re being paid to make the tough decisions.

“Leaders who can’t make decisions effe c t i v e l y l e a d a n o rg a n i z a t i o n a s t r a y a n d eventually have to be replaced Nothing z a p s t h e e n e rg y a n d e n t h u s i a s m o f a n organization more than lying in wait too long,” says Elrod T h e r o o t o f a l e a d e r ’ s i n d e c i s i v e n e s s m a y b e a l a c k o f s t r a t e g y o r a f a i l u r e t o grasp the big picture “They have to know how all the pieces of their organization fit together and how one event impacts multiple areas of the company, and how that decision could potentially play out in the future,” says Elrod.

In a complicated, global economy, this decisiveness is paramount. Simply put, says Elrod, “Nothing kills a leader's credibility like being unable to commit to a direction Indecisiveness drives your employees crazy and undermines your leadership ”

4. It’s just me and my ego

When someone in a position of leadership lays claim to the success of the business, bypassing the hard work of subordinates, then clearly they’re on a major ego trip one that will lead to an eventual fall.

“ O f t e n w e a k l e a d e r s m a s q u e r a d e a s strong leaders by making more noise than everyone else When they have a position of power, they have both the opportunity and title to support their bad behavior and e x c u s e t h e i r t a n t r u m s , ” s a y s L i n d a H e nm a n , p r e s i d e n t o f t h e H e n m a n P e r f o r mance

Group

Don’t know the difference between confidence and overconfidence? Ask yourself honestly, “’Do I let my mood dictate my b e h a v i o r s ? ’ ‘ D o I i n t e r r u p t p e o p l e w h e n they are talking to me?’ ‘Am I a source of rumors?’” advises Andy Opila, consultant and leadership team member for On the Same Page, a business consultancy in La Grange Park, Ill. If your objective answer to those questions is yes, then your laser focus is yourself and not your team, customers and markets

Heed this warning: Your vanity is going to cost you sooner or later

5. Risk scares me...like, a lot

Re a l le a de rs e mbra c e c ha ng e , s ta y ing a t least one step ahead of the trends and markets “If you're protecting the status quo, d e f e n d i n g o l d w a y s o f d o i n g b u s i n e s s , while blocking out innovative ideas, the company may see you as ripe for replacement,” warns Mueller.

Strong leaders take risks, but not uneducated ones “They have a sixth sense about the future and an ability to see the patterns of where things are going before others see them,” says Glaser “They have a comfort level for taking risks ”

In today's fast-moving global economy, every decision is fraught with uncertainty. True leaders do their homework and have the courage to act

“Courage is necessary whether it involves moving the company in a new direct i o n , o r r e m o v i n g a n u n d e r p e r f o r m i n g employee,” says Elrod. “ It also takes great courage to always act in an ethical manner As we've learned in the past decade, e t h i c s r e m a i n a c r i t i c a l e l e m e n t f o r s u ccessful leaders.”

There are many leaders, but few great ones Leadership is a gift, not a given

Wo r l d o f O p p o r t u n i t y

EB -5 offers an unexpected source of financing for U S businesses Here’s how

By Daniel F Rahill

Globalization, widespread political instability and the search for better places to invest, live, and raise and educate their children, are leading wealthy foreign individuals to seek residency outside of their native countries at a record-setting, seemingly ever-growing rate For U S businesses, this migration may offer an unexpected opportunity for funding

visa category (commonly known as EB-5) with the g

dence. Since the return on each foreign investor’s capital is partially in the form of an immigration benefit, EB-5 represents a particularly inexpensive financing option

into the nation. Plainly stated, foreign investors are given the opportunity to invest in U

busi-

Although a narrow niche in our financing and capital markets today, interest in EB-5 is growing at an unprecedented rate This is how it works: The program requires investment of at least $1 million in a new commercial enterprise To qualify, the new enterprise must generate or preserve at least 10 full-time qualified jobs within a two-year period. Congress has lowered the investment threshold to $500,000 for investments made in a Targeted Employment Area (TEA) or designated regional center TEAs are areas where economic

hardship and high unemployment exist Regional centers are designated as U S Citizenship and Immigration Services (USCIS) private entities, which are designed to promote economic growth in geographical areas that lack domestic investment interest

As of October 2013, 325 approved EB-5 regional centers exist in 40 states and two territories, having grown from only 25 EB-5 regional centers in 2006, as reported by the U S Citizenship and Immigration Service [www uscis gov] Advantages of a TEA or regional center investment include less restrictive job generation requirements (“indirect” jobs can be produced) and the fact that foreign investors aren’t required to participate in the enterprise on a daily basis.

Ty p i c a l E B - 5 i n v e s t m e n t s a r e i n r e a l e s t a t e ( o f f i c e b u i l d i n g s , shopping centers, hotels, etc ), franchises (such as fast food restaurants or retail stores) and operating businesses The key is to find a thoroughly vetted, qualifying venture that is ready to produce due diligence reports and demographic studies

While offering obvious benefits, the EB-5 visa application process is extremely complex and time-consuming, taking upwards of 6 months for approval Generally, nine steps are required to achieve residency status:

1 Find a qualifying investment

2. Review and sign documents.

3. Deposit venture funds ($500,000 or $1 million) with an escrow a g e n t . ( N o t e : T h e v e n t u r e c a p i t a l c a n b e b o r r o w e d b u t t h e funds can’t be secured by the investment stake. The foreign investor must provide evidence that the funds were lawfully acquired )

4 Send an administrative fee (generally $50,000) to the EB-5 company The EB-5 company may invest the funds (via debt, equity or both) into an operating company or project

5 Submit Form I-526 Petition to the USCIS If approved, further documents (police records, medical, birth and marriage certificates) should be submitted

6 Attend an interview at the U S Consulate If approved, a visa is issued If not approved, funds are returned to the investor

7. Enter the United States and receive a “conditional” Green Card.

8. After two years, file Form I-829 with the USCIS to remove conditional status, and present evidence of investment and job creation. If approved, permanent resident status will be granted.

9 After five years, application for U S citizenship can be made Dual residency and dual citizenship are definitely on the rise, as are EB-5 applications in the United States The Homeland Security Citizenship and Immigration Services Ombudsman Stakeholder’s Meeting held in March 2013 reported that, in FY2012, the United States issued more than 7,400 EB-5 visas Over 25 countries have immigrant investor programs similar to the EB-5 program, and as such, countries are competing for qualifying foreign investors

For those investors seeking a national residency change, the EB5 program can be a fast track into the United States and onto the road to U.S. citizenship. For U.S. businesses, especially developers in the real estate and hotel industries, EB-5 offers a wonderful opportunity to attract foreign investors and obtain low-cost equity infusions. When interest rates rise, the value of EB-5 as a capital source will become even more valuable

About the author: Dan Rahill is the chair of the Illinois CPA Society and is the partner-in-charge, tax at FGMK, LLC, one of the 10 largest accounting and advisory firms in the city of Chicago You can contact Dan at drahill@fgmk com

Keynote presentation:

When you effectively connect with others, extraordinary things will happen.

Friday, May 30, 2014

Mid-America Club, AON Center, Chicago, IL

SOCIAL GRAVITY

Relationships matter, in both our personal and professional lives. But how do you get to know the right people? In this high-impact keynote, renowned author and presenter Jason Lauritsen will reveal how to take unexpected opportunities to connect with others and turn them into meaningful (and often profitable) relationships.

Jason Lauritsen

Author and Consultant, Talent Anarchy

PLUS, OTHER ENGAGING PRESENTATIONS.

REGISTER TODAY! Last year’s conference SOLD OUT! Register at www.icpas.org/connecteffect.htm or 800.993.0407, #4.

Cost: $60 M / $80 NM (Early Bird Rate) Register by May 12

$75 M / $95 NM - if registered after May 12 (breakfast included)

CPE: 4 hours, including 1 hour of Ethics credit

Time: 7:15AM Registration | 8:00AM - 12:15PM Program | Code: C41617

Where: Mid-America Club, 200 E. Randolph, Chicago, IL

Special thanks to our 2014 conference sponsors:

C a n ’ t S a y S o m e t h i n g N i c e ?

Then maybe you shouldn’t say anything at all at least if what you ’ re saying is defamatory

By Brian J Hunt, JD

The First Amendment protects free speech, but even that bedrock freedom has its limitations.

Defamation is a case in point. The law recogn i z e s t h a t c e r t a i n t y p e s o f d e f a m a t i o n t h o s e re la ting to a n indiv idua l’s wa nt of c ha ra c te r or i n a b i l i t y t o p e r f o r m a s a p r o f e s s i o n a l a c t u a l l y m a y b e c a u s e f o r l e g a l a c t i o n a g a i n s t w h o e v e r makes the claim

Of course, to ensure that speech is actually protected, the law requires that a strict burden of proof be met, and recognizes a host of protections for the speaker. Coghlan v Beck is a perfect example.

Angelika Coghlan was managing partner of IT services company Catwalk Consulting and, from 2008-2010, president of the Chicago chapter of t h e N a t i o n a l A s s o c i a t i o n o f Wo m e n B u s i n e s s Owners (NAWBO) In January 2010, Rebecca Busch, CEO of Medical Business Associates (MBA),

submitted a post to NAWBO-Chicago’s listserv, seeking IT services. Before publically posting the inquiry, Coghlan contacted Busch and solicited M B A ’ s b u s i n e s s C a t w a l k a n d M B A e v e n t u a l l y entered into a contract, which detailed a maximum price, the services to be performed and the deliverables to be provided

The contract between Catwalk and MBA soured when MBA paid the maximum contract price but failed to receive the deliverables agreed upon, although Catwalk continued to issue invoices for its work In March 2011, Busch notified Catwalk of MBA’s intention to terminate the contract.

In April 2011, in advance of a NAWBO-Chicago board meeting, Valerie Beck, who had replaced Coghlan as NAWBO president in 2010, prepared a written statement claiming that Coghlan, (1) was a “corrupt director [who] must go,” (2). “intercepted a listserv posting for her own benefit, which is indeed a classic conflict of interest,” (3) “induced [Busch] to contract with her and to take out a loan for $100,000,” (4). “pocketed the money,” (5) “failed to give the deliverable that was contracted for,” (6) “used bully tactics to try to gain yet more money,” (7). was “using NAWBO to operate a fraud machine,” (8) used “smokescreen tactics to conceal this wrongdoing,” and (9). was an “offending director.”

A document was attached to the letter, detailing the standards by which NAWBO board members are to abide, including the need to avoid conflicts of interest by placing the interests of the general membership and the board over their own professional and political interests as directors. As part of that standard, the document explained that board members should refuse to secure special services, favors, honoraria or exemptions that aren’t available to the general membership.

Subsequently, Busch sent a letter to IBM, one of Catwalk’s business partners from which MBA had secured the $100,000 loan for the work, complaining that, although Catwalk had been paid in full, it had failed to provide the contracted deliverables Coghlan and Catwalk then filed suit against MBA, NAWBO-Chicago and Beck, alleging defamation per se.

ing, whether the statement is verifiable, and whether the statement’s literary or social context signals that it has factual content However, even statements that fall into one of these categories aren’t actionable if they’re innocently constructed or substantially true

I n a f f i r m i n g t h e t r i a l c o u r t ’ s d i s m i s s a l o f t h e a l l e g

n s o f defamation per se, the Appellate Court began by noting that the plaintiff must present sufficient facts to show that the defendant made a false statement, the defendant made an unprivileged publ i c a t i o n o f t h a t s t a t e m e n t t o a t h i r d p a r t y a n d t h i s p u b l i c a t i o n caused damages A defamatory statement is one that harms the plaintiff’s reputation to the extent that it lowers the person’s standing in the eyes of the community or deters the community from associating with her A statement is defamatory per se if the harm is obvious and apparent on its face

The Illinois Supreme Court has recognized several statement c a t e g o r i e s c o n s i d e r e d d e f a m a t o r y p e r s e , i n c l u d i n g w o r d s t h a t accuse a person of committing a crime, claim a person is unable to perform or lacks integrity in performing her employment duties, and impute a person lacks ability or otherwise prejudices that person in her profession However, a claim of defamation per se must be pled with heightened precision and particularity

The Court also noted that only statements that can be proved true or false are actionable, while mere opinions are not. The Court therefore has to determine whether a statement can be interpreted as fact in the eyes of an ordinary reader, applying criteria such as whether the statement has a precise and readily understood mean-

The Court went on to state that a defamatory statement isn’t actionable where it is subject to a qualified privilege To determine whether a qualified privilege exists, a Court looks only to the occasion itself and determines as a matter of law and general policy whether the occasion created a situation where a privilege is warranted For instance, a corporation has an unquestionable interest in investigating and correcting a situation where one of its employees may be engaged in suspicious conduct within the company Once a defendant has established a qualified privilege, the plaintiff must prove that the defendant either intentionally published the materials while knowing the matter was false, or displayed a reckl e s s d i s r e g a r d o f t h e m a t t e r ’ s f a l s e n e s s . R e c k l e s s d i s r e g a r d i s defined as publishing the defamatory matter despite a high awareness that it is likely false, or having serious doubts that it is true. The burden of proof requires the plaintiff to present facts that actually infer malice.

With respect to the statement that Coghlan intercepted Busch’s submission and contacted Busch prior to making that submission available to the entire membership, the Court concluded that it was substantially true and therefore nonactionable However, the Court did note that an allegation of engaging in a criminal conflict of interest would impute the commission of a specific crime and therefore would be actionable as defamatory per se That said, those circumstances didn’t exist here Rather, the Court concluded that Beck’s allegation was nonactionable because it was mere opinion

When it came to the statements that Coghlan pocketed the money, was a corrupt director, used bully tactics in an attempt to gain yet more money, failed to give the deliverable that was contracted for and was operating a fraud machine, the Court noted that these terms didn’t have precise and readily understood meanings It further noted that Coghlan substantially admitted in her pleadings that she had committed all of the acts at issue, and that Beck’s characterizations, while arguably harsh, merely amounted to loose figurative language that no reasonable person would believe presented facts What’s more, Beck’s statements couldn’t be shown to be true or false and, therefore, amounted to mere opinion

L a s t l y, B e c k ’ s s t a t e m e n t t h a t C o g h l a n f a i l e d t o p r o v i d e t h e d e l i v e r a b l e s c o n t r a c t e d m e r e l y a m o u n t e d t o a n a l l e g a t i o n o f breach of contract. As a result, the Court concluded that none of Beck’s statements were actionable.

The law doesn’t provide a remedy for every wrong. While Beck, as the president of NAWBO, may have needed to address Coghlan’s conduct, objectively speaking it could have been done with a bit more discretion. At the same time, you have to question the wisdom of Coghlan’s suit, which in effect publicized the comments she found so offensive in the first place.

About the Author: Brian J Hunt is the founder and managing princ i p a l o f Th e H u n t L aw G r o u p , L L C i n C h i c a g o H e wa s a g a i n selected as an Illinois Super Lawyer in Business Litigation in 2014 His practice focuses on the counseling and representation of CPAs and other business professionals, and the resolution of business disputes Brian can be reached at 312 384 2301 or bhunt@huntlawgroup com

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Every day CPAs face rapid change, whether it’s across the regulatory landscape or within the diverse populace they serve and work with Which is why it's critical for CPAs to keep their eyes cast firmly to the future

In trying to keep pace with the rapidly changing business world, Illinois CPA Society leadership hosted a strategic planning meeting last November, bringing together leaders from across the profession to identify and discuss the near-term trends and challenges they foresee changing CPAs forever Here are their top five

By Derrick Lilly

ONE: The Browning of America

Our economy banks on continuous population growth, and that growth is being driven by minority populations of African, Asian, Latin and Middle-Eastern descent U S Census data reveals that 92 percent of population growth spanning 2000-2010 was driven by non-whites, and that the combination of all minority groups will exceed half of the U S population within 30 years Couple this with the fact that around 8,000 Baby Boomers are turning 65 each day, and we’re destined for a very different workforce in the future

Now, for a profession historically known as being predominantly white and male, its greatest challenge may be diversification.

“It’s going to be very difficult to win work if we don’t have a d i v e r s e t e a m t o o f f e r T h e b u y e r s o f o u r s e r v i c e s c o n t i n u e t o become more diligent and intentional in bringing diversity to their boards, committees and leadership teams, and they expect the s a m e f r o m u s , ” e x p l a i n s S c o t t S t e f f e n s , C PA , p a r t n e r a t G r a n t Thornton LLP and ICPAS board secretary “But diversity in the profession isn’t going to happen on its own the profession has to make itself attractive to diverse professionals ”

To d a y ’ s c o n s u m e r s a r e f a r m o r e l i b e r a l i n d e f i n i n g d i v e r s i t y, meaning the profession must embrace differences of gender and ra c e , a s we ll a s e thnic ity, re lig ion, s e x ua l orie nta tion, phy s ic a l abilities and more. This has become such a critical business issue that The Wall Street Journal reports 60 percent of Fortune 500 companies now employ Chief Diversity Officers.

“ S ure , the re ’s a pre ponde ra nc e of white ma le s in the hig he r echelons of accounting, but diverse professionals can and do succ e e d he re , ” s a y s Bill Gra f, C PA , pa rtne r a t De loitte a nd IC PA S board immediate past chair “The leadership in our Chicago headq u a r t e r s , f o r e x a m p l e , i s f a i r l y d i v e r s e . B u t i t ’ s i m p o s s i b l e t o c h a n g e t h e v i e w a t t h e t o p o v e r n i g h t ; t h e t a l e n t h a s t o b e attracted, developed, retained and inspired, and we walk a fine line in balancing all of that ”

“This will remain a challenge every industry is in constant battle for the best and brightest talent. A stronger, more diverse talent pipeline would help, but that starts with becoming a profession of choice,” says Steffens. “We have to focus on making accounting attractive to diverse candidates early on in the education process ”

Highlighting the issue, the AICPA’s 2013 Trends Report reveals that only 30 percent of all accounting Bachelor’s and Master’s degree graduates between 2000 and 2012 were ethnic minorities, and current career trajectories indicate very few of them will ever make it to the partner level

“There’s this notion among diverse students that they have less likelihood of success because there isn’t a lot of diversity in the profession now,” says Graf “We have to change that Diversity ultimately makes us all better; it gives us different perspectives, it helps us think differently and it gives us greater knowledge ”

TWO: Demand for Knowledge

Call it knowledge-sharing, call it teamwork, call it whatever you want; organizations embracing diversity of thought and the sharing of ideas across teams have a leg up when it comes to meeting the demand for CPAs to know more.

“The profession needs to widely subscribe to the theory that diverse teams bring better solutions,” says Steffens “If you put up a homogeneous team of alumni from a single university against a team of professionals from six different business schools and backgrounds

sharing ideas, you’re going to get more creative solutions to your problems from the more diverse team it’s as simple as that ”

“In a profession valued for its information, guidance and strategies, sharing knowledge across teams is becoming increasingly important because truly understanding the broader business and industry in which you work is more critical than ever,” says Graf. And there’s more to it than just being able to provide better answers to clients or colleagues; the teamwork that knowledges h a r i n g d e m a n d s e n h a n c e s p r o f e s s i o n a l d e v e l o p m e n t , e n g a g ement and camaraderie, and it may even help to ease the seemingly ever-lingering retention issue

“For young professionals to be committed to the profession they need to be shown the long-term value of staying and they need to feel like the people around them are committed to helping them succeed,” says Steffens “They’re already book smart and techsavvy; they can fill out all the checklists, run the programs and get their work done efficiently. But the people side of the business the ability to interact, be social, grow relationships, sell our servi c e s a n d e f f e c t i v e l y c o m m u n i c a t e o u r v a l u e t o c u s t o m e r s a n d clients doesn’t always get much emphasis. This is an important piece of the profession that experienced CPAs can ensure isn’t lost on the next generations ”

THREE: Big Data

“More and more companies are looking to harness business intelligence and Big Data for strategic planning They want to analyze their data to gain an in-depth understanding of their customers, products and other business areas in order to identify the best opportunities for profitability,” says Jay Thompson, a Proviti managing director, in a company press release In fact, Proviti’s 2014 Finance Priorities Survey reports that “harnessing data for strategic planning” is a top priority for CFOs and their finance teams But guess what their leading concern is? “Dealing with data-driven processes ”

“Big Data analysis is a different kind of animal It’s so systemsdriven that the question is whether or not it can truly be mastered. But everyone believes that if you can get through the data you can gain a competitive edge,” says Todd Shapiro, Illinois CPA Society president and CEO

The challenge is that the amount of data collected about everything and everybody is so great that nobody really knows what to do with it If you ask, 87 percent of finance professionals will tell you that the rise of the data-driven business environment has the potential to change the way business is done But, according to CGMA’s report, From Insight to Impact: The role of finance in a datacentric world, 86 percent also say the learning curve is steep and organizations are struggling to use data to their benefit.

Certified Big Data Analyst? “It could happen If you’re going to analyze Big Data you need the analytical skills to go along with the systems skills, because somebody has to be able to interpret what the systems are saying,” says Shapiro “I think CPAs uniquely have the training, background and multitude of analytical skills that give them a leg up on making sense of Big Data.”

Eighty-five percent of CGMA respondents seem to agree, saying that increasing their ability to work with Big Data enhances their employability; over 90 percent believe that finance professionals can help organizations benefit from data projects.

“This requires thinking about the future, planning your strategies and growing professionally,” writes L. Gary Boomer, CPA, president of Boomer Consulting, in Accounting Today “As CPAs, we

should take our role as the most trusted business advisor seriously We owe it to our clients, our firms and ourselves to play the game at the highest level ”

FOUR: The Need to Be More

In other words, the CPA of tomorrow has to be more than just the numbers pro; he or she must evolve and be armed with the knowledge and skills necessary to deliver invaluable business insights and financial and technical savvy all specialized, of course

“Because of the speed at which things are moving there’s just not enough time to be trained in everything, so specializations are becoming a must instead of a maybe,” says Rod Mebane, partner at the St Charles Consulting Group

The good news is that specialized training is more accessible than ever. “The classroom of tomorrow is a 24/7/365 environment delivered to you, on your time, in your format of choice,” says Shapiro “Technology is enabling and demanding change, and CPAs need to be ready to learn in ways that they have never done before ”

The typical “sage on the stage” instruction in which an expert lectures to the audience for hours at a time, for instance, is becoming a thing of the past Instead, technology driven web-based training is being embraced

“The ‘I need this expertise and I need it now’ mentality has put a premium on instant access to knowledge and information,” says Mebane Accompanying this is a demand for shorter units of traini n g , o r w h a t ’ s b e i n g c a l l e d “ l e a r n i n g n u g g e t s ” o r “ n a n o - l e a r ning” onDemand education in segments of 15 minutes or less “ T h e i d e a , ” h e e x p l a i n s , “ i s t h a t p r o f e s s i o n a l s w i l l a c c e s s t h e nuggets they need and then take a quick quiz to demonstrate mastery, and CPE credits will be earned once they accumulate enough nuggets in their virtual ‘learning bank.’”

But there’s more on the horizon; virtual education is increasingly turning to gamification and social learning the use of game and social media designs and elements in other applications to boost engagement

“How often do you go for training and zone out because the content isn’t relevant or engaging? Gamification and social learning is bound to change that,” says Mebane

Evolving from modern gaming, Mebane suggests that virtual learning systems will become smart enough to recognize which content is critical to the user and will mold the interactive lessons and simulations to address their skills gaps and test their competencies. In typical gaming fashion, it’s likely that we’ll also see new “mini certifications” or “badges” that can be earned in order to keep professional development fun, rewarding and competitive while giving professionals a new way to showcase their areas of mastery

FIVE: Evolving Technology

There’s no denying that technological advances have accelerated the adoption of automation and outsourcing in many forms across nearly every industry And the CPA profession is no exception

“Businesses are heavily investing in information systems that connect suppliers, vendors and customers with one another electronically and limit human intervention,” says Mebane “CPAs will have to become more tech-savvy to be effective in the workplace because employers will be looking for people savvy in the ways of how systems connect and how to take advantage of opportunities to improve productivity and transactions through them.”

“There’s no working around these systems anymore,” says Graf, who sees the rapid changes technology allows as both a gift and a curse “At the push of a button our integrated systems let us flip our work over to our India office. The ability to instantly offshore our work allows us to perform our audit and tax work around the clock, and we’re able to hit deadlines much more efficiently and effectively,” he says “On the other hand, I can’t outsource everything to a computer or IT guy and just hope it goes well; IT experts who don’t necessarily have finance or accounting credentials are becoming critical parts of our teams, and that requires me to be proficient in their areas of expertise as well IT is going to have to become a core competency of CPAs ”

“The world is moving this way whether we like it or not,” adds Shapiro “Instead of being scared of it, we should be preparing for it ”After all, each day more professionals and consumers gain easy and affordable access to a growing number of tools and resources that put real-time business and financial management information in their back pockets, literally, given apps that run on smartphones, smartwatches, tablets and other mobile devices

A f e w o f t h e t e c h n o l o g i c a l a d v a n c e s j u s t a r o u n d t h e c o r n e r include Google Glass a wearable computer and futuristic business device that allows users to take pictures and record video of whatever it is they’re looking at You can text from these Star Treklooking glasses, search the Web, see maps and navigation, check if your flight is on time, and much more It’s possible that sometime in the future, instead of a company laptop and smartphone, you’ll get a pair of these for field use instead In fact, the World Economic Forum’s Global Agenda Council on Emerging Technolog i e s s a y s m i n i a t u r e w e a r a b l e d e v i c e s l i k e G o o g l e G l a s s w i l l shape and reshape our lives over the next couple of years

A n d j u s t l i k e w e s a w p o r t r a y e d i n S t a r Wa r s d e c a d e s a g o , researchers are working on bringing holographic video and projectable full-sized 3D images to life that will be interactive without the need of a screen With research pouring into things like virtual reality headsets and bionic contact lenses, the World Economic Forum says screenless display technology “appears set for imminent breakthroughs ”

And then there are those advances already in circulation Companies adopting zero-email policies and deploying Facebook-like business portals to connect and communicate with employees are estimating up to a 25-percent growth in productivity

“People can access information faster than ever before, and that is leading to a higher level of collaboration and real-time connect i o n s i n t h e w o r k p l a c e , ” s a y s M e b a n e “ We t o u c h e d o n h o w important knowledge-sharing is to the profession, and technology is taking that to a new level Accountants need to immerse themselves in this social and technological matrix in order to connect with each other, share the knowledge they need to execute effectively, and connect with their customers and clients This is just the way people will be working and communicating in the future ”

“No matter what you do, inertia and society are going to move the CPA profession forward Some people may say this isn’t the profession they want to be in anymore because of the ways we’ll have to learn, connect, share information and complete our work And some people will say that if the profession doesn’t do X, Y and Z to stay relevant that we’ll all be replaced by someone or something else Maybe it’s possible, but I don’t think that’s probable,” says Shapiro “CPAs today and into the future are still going to be trusted business advisors who will do attest work, tax work, consulting work, and provide strategic guidance to their clients and coworkers they just have to remember to keep an eye on the future ”

Worst Business Decisions Ever Made

AS FAR AS CAUTIONARY BUSINESS TALES GO

the last 150 years have offered up a boatload From barefaced ego-tripping to muddleheaded inertia, companies that ride high on the wave of fame and fortune crash pretty hard now and then

T

i

r y '

s t examples of the price you pay for brand unawareness and opportunity unanswered and in most cases, opportunity was knocking very, very loudly

Remember, these are just the tip of the iceberg When it comes to bad business decisions, history has a habit of repeating itself (fair warning).

By Judy Giannetto

1876: Dial M for Mistake

The telegraph was the cat’s pajamas for William Orton, president of Western Union Happy with his long-established reign over the communications industry, he scoffed at the offer to buy the patent f o r a n o t h e r w i r e - b a s e d e l e c t r i c a l m o d e o f c o m m u n i c a t i o n , t h e telephone, for the sum of $100,000. In fact, he went so far as to write Alexander Graham Bell a needling letter, in which he called the invention an “electrical toy” and “interesting novelty” with “no commercial possibilities ”

It took only two years for Orton to realize he had made a monumental (and just a tad embarrassing) mistake He then tried to muscle in on Bell’s act, employing Thomas Edison to come up with something even more spectacular After unsuccessfully challenging Bell’s patents, Orton finally withdrew from the competition in 1879

What was Orton’s fatal flaw? Well, his ego for one. Talk about a sore loser

1975: A Kodak Moment Best Forgotten

Imagine being the first to develop the digital camera. Feels pretty great, right? Now imagine you don’t tell anyone about it and someone else develops it and gets all the glory (Sony anyone?). Not feeling so great just now, are you?

Here, in a nutshell, is the lamentable tale of Kodak, which at its peak held a whopping 90 percent share of the U S film market, and was synonymous with storytelling in America Which, funnily enough, is the root of the problem Myopic, self-involved Kodak was a victim of its own success, deciding to keep its stellar invention under wraps rather than mess with its perfect monopoly

Unfortunately, Kodak’s lack of vision resurfaced a decade later when it opted not to become the official film of the 1984 Los Angeles Olympics Instead, that honor went to new kid on the block and competitively priced Fuji, which got the foothold in the U.S. market it had been looking for

Although a much-loved brand for decades, Kodak faltered and never truly recovered, ultimately filing for bankruptcy in 2012 That said, the company continues its march onwards, reporting continued financial improvement as of the third quarter of 2013

Kodak’s mistake? A triple whammy of myopia, stubbornness and visionless decision-making

1977: In a Galaxy Far, Far Away

Now we venture to the entertainment industry for a grit-your-teeth, s l a p - y o u r s e l f - o n - t h e - f o r e h e a d , T h r e e S t o o g e s - w o r t h y b u s i n e s s decision.

You’d think George Lucas had used a Jedi mind trick on senior executives at 20th Century Fox when, in a bad decision of galactic proportions, they agreed to be paid the paltry sum of $20,000 (a cut of Lucas’ paycheck) in exchange for all (yes, ALL) the merchandising rights for any and all (yes, ALL) Star Wars movies ever to be made

Mr Lucas, the stars definitely shine on you Not only did a major studio agree to finance your movie and give you gross-profit participation, but it handed over all the rights to, well, everything, which in this case adds up to tens of billions of dollars. Ta

business decisions of all time

1979: How Much For Microsoft?

"I consider it one of the biggest business mistakes I've ever made," s a i d R o s s P e r o t i n a 1 9 9 2 i n t e r v i e w w i t h P a u l A n d r e w s a n d Stephen Manes for The Seattle Times So true, Mr Perot, so true

An asking price in the multi-millions for a $2 million tech company might seem just a bit uppity when a 23 year old is doing the asking. That is, of course, unless the tech company is Microsoft and the 23 year old is Bill Gates

Unfortunately for Perot and his then $1 billion company Electronic Data Systems (EDS), the price tag seemed just too steep. And while Gates might have been tempted by the opportunity to grab his pot of gold and enter the big bucks corporate marketplace, he instead kept his self-composure and refused to undersell Pretty astute for a twentysomething But then again, he’s always been ahead of the curve.

Although a whopping business opportunity utterly wasted, you have to give Perot his dues. He’s proved himself the very best of losers "My satisfaction wouldn't be in all the money I'd made,” he explained to his Seattle Times interviewers “It'd be in the day-today contact with Bill and the people at Microsoft in watching them do it That would have been a hell of a seat, right?"

5

1980: MS DOS? Sure, Keep It

It was the start of a software revolution. Unfortunately, IBM didn’t know it

The company’s position as a technology super power was pretty much secure in 1980, when it pegged Bill Gates (yes, him again) as the person to develop a PC-DOS operating system. IBM’s cost for the project was $80,000 and an agreement to allow Gates to keep the platform’s copyright

And so MS-DOS was born and Microsoft’s pre-eminence as king of the PC software world along with it

You might well wonder how such a thing happened; how did Gates get so very, very lucky? But really, all that anyone can agree on is that he obviously saw the right opportunity at the right time. By all accounts, Gates did the unexpected and rather than asking for more money up front or a per-copy royalty, he instead asked for the platform’s selling rights. And in that context, you can kind of, sort of see how, at first blush, IBM may have thought it was getting a bit of a deal

blushes. There lies the lesson.

(For all you techies out there, visit Michael J Miller’s August 10, 2011 article, “The Rise of DOS: How Microsoft Got the IBM PC OS Contract,” on PCmag.com for a blow-by-blow description of how the deal was struck )

Aliens and candy The two go together like apple and pie Pity the Mars Company didn’t foresee it that way

The candy giant learnt its merchandising lesson the hard way when Amblin Productions offered to feature M&Ms in its upcoming movie, ET, as the treat that lured the adorable alien out of the shadows and into the hearts and minds of moviegoers around the world In exchange, Mars was asked to promote the movie on M&Ms packaging But, alas, they said no (and no one seems to agree why)

One man’s folly is another’s fortune, however Hershey’s lesserknown Reeses Pieces saw the possibilities, weighed the risks and grabbed the offer with both hands A whole lot of skipping and humming of a happy tune followed when, in the months after the movie’s release, Reeses reported an impressive 65-percent spike in sales

Seriously, ET can phone Hershey’s any time

The Coca-Cola Company wanted to teach the world to sing And that’s exactly what it did For the 122 years of its existence, Coke fans have sung the praises of their favorite of all sodas. That nostalgia really isn’t anything to mess with, as Coca-Cola now knows all too well.

In 1985 the company made the bold move of reformulating its i c o n i c b e v e r a g e N o w k n o w n a s N e w C o k e , t h e f o r m u l a h a d tested well, but its launch was met with a firestorm of anguished c o m p l a i n t s f r o m d i e h a r d C o k e f a n s Wi t h i n a f e w m o n t h s , t h e company had said its I’m sorries and put the fizz back into its public image by reintroducing the old formula as Coca-Cola Classic

Although New Coke was a terrible decision, there were two things that actually worked in Coca-Cola’s favor: The company l e a r n e d t h a t i t s c u s t o m e r s a r e p a s s i o n a t e l y p r o t e c t i v e o f t h e i r favorite brand, and the public learned that there’s really nothing Coca-Cola won’t do to give them what they want

Not one to shy from its blunders, The Coca-Cola Company has a webpage devoted to New Coke It opens with, “To hear some tell it, April 23, 1985, was a day that will live in marketing infamy ” Bravo Coca-Cola; not only did you do whatever it took to make y o u r c u s t o m e r s h a p p y, b u t y o u t u r n e d a m a j o r f a u x p a s i n t o a proud part of your personal history one that your fans recall with a wink and a smile

only a few years, David and Goliath had traded places, with Excite stocks plummeting and an eventual acquisition by AskJeeves

This is pretty much the perfect example of you win some, you lose some And in this case, you lost big, Mr Bell

2000: When Mergers Go Really Wrong

It was supposed to be the dawning of a new media age But fortune had a different plan.

Time Warner chairman Gerald Levin took bravado to a whole new level when, during contract negotiations for a $350 billion merger with America Online (AOL), he opted to forego rudimentary measures to protect against stock volatility risk The ink on the contract was barely dry when the dotcom bubble burst and AOL shares took a nosedive

As Bloomberg BusinessWeek reported at the time, “The decline in AOL shares might sting less if a ‘collar’ had been in place, but no such clause exists A collar is a safety measure written into deals to automatically readjust terms if the two companies' stocks trade outside a designated range before the deal closes Since AOL is a tech stock and dealmakers anticipated big ups and downs, Time Warner didn't insist on a collar, showing a commitment to get the deal done. And the breakup fees the cost of walking away from the deal are hefty: $5 4 billion for AOL, about $4 billion for Time Warner ”

This monumental merger ended up costing countless jobs, devastating countless retirement accounts, and causing close SEC and J u s t i c e D

A n y o n e r e m e m b e r E x c i t e ? A t o n e t i m e i t w a s a l e a d i n g s e a rc h engine at the head of the dotcom revolution. In 1996, it even gobbled up a couple of its search engine competitors, WebCrawler and Magellan.

Seeing just how great Excite was, Google founders Larry Page and Sergey Brin approached the company with the chance to purchase their search engine for $1 million. They even sweetened the deal by dropping the price to $750,000 a definite steal for a company with a market capitalization of almost $395 billion today.

Well, you don’t have to be a genius a la Page or Brin to know that Excite CEO George Bell turned the offer down. And within

m

r

y, w h i c h l e d t o f i n e s a n d e a r n i n g s restatements Suffice it to say, AOL Time Warner reported a quarterly loss of $54 billion in April 2002, Levin resigned from his position as CEO in May 2002, and in January 2003 AOL’s former CEO Steve Case announced his resignation as chairman

The lesson here is that, when you’re dealing with billions of dollars and the lives and livelihoods of your people, cavalier is the very last approach to take

2007:

Remember how cool the super slender Razr cellphone was? No? That may be because its cool factor evaporated faster than Tiberius cologne at a Star Trek convention (yes, that really is a thing)

A t t h e h e i g h t o f i t s s u c c e s s i n 2 0 0 6 , R a z r g a v e $ 4 3 b i l l i o n Motorola a sharp 22-percent share of the mobile phone market Within a year, however, the hype and hoopla had all but died M o t o r o l a f a i l e d t o e v o l v e i t s p o p u l a r b r a n d i n t o a s m a r t p h o n e leader and instead was selling off the traditional models at a discount. Slow to market doesn’t quite sum it up.

It wasn’t until 2010 that a new line of Razrs was launched, but by that time the ship had sailed, with iPhones and BlackBerrys proudly standing at the helm

In four short years, Motorola’s revenues were slashed to $22 billion, and its shares fell more than 90 percent Unable to make its way back to the top, Motorola Mobility was eventually acquired by Google Inc

Motorola illustrates the fatal marriage of lack of vision and slowness to act, obviously taking a page out of Kodak’s book.

As I warned you right at the beginning, history does have a tendency to repeat itself

1985: Please Don’t Touch My Soda

A Slip Off the Razr Edge

1999: We’re Bigger Than Google

1981: ET Phone Mars; No One Home

IT’S WHO YOU KNOW

Making connections, and making them matter.

By Derrick Lilly

The title says it and we’ve all heard it it’s not what you know, it’s who you know Landing your first job, winning that Board seat, finding a good plumber even getting a great deal on your next car can come down to who you know and how you leverage that relationship

Ask anyone if they think relationships are an important component of their success and you’ll likely hear a resounding “Yes ” Ask the same person if they enjoy networking and you’ll likely hear something along the lines of, “Ugh, networking events are so awkward and impersonal ”

And therein lies the issue: How do you meet and know the “right” people without that yucky, blind date-like feeling?

“Weget really hung up with that word (networking),” says Jason Lauritsen of Talent Anarchy, a consultant, speaker and coauthor of Social Gravity: Harnessing the Natural Laws of Relationships (he’ll also be the keynote speaker at the Illinois CPA Society’s upcoming Young Professionals Leadership Conference in May) “Networking isn’t about gimmicks or tactics for working a room It’s about building authentic, meaningful relationships that yield social capital over time.”

If you’re wondering what social capital is and if you have it, Wayne Baker neatly defines it in Achieving Success Through Social Capital as “The resources available in and through personal and business relationships ” Think business leads, job referrals, dinner dates and help, friendship and guidance in all forms and fashions

It’s kind of like this: Each person in your network is like a Blue Chip stock. Each stock pays a dividend in the form of social capital. So just like your 401(K), the more you diversify and the earlier you start investing in and compounding those dividends, the more social capital you’ll have. Of course, not all stocks are created equal; some pay high, stable dividends over decades while others are only worthwhile for a short-term trade when the conditions are right

Meaning, “There’s tremendous power in being more intentional about how you find, build and maintain relationships in your life and where you invest the time and energy to reap the rewards of those relationships,” says Lauritsen

For starters, Lauritsen is quick to point out that the most powerf u l a n d l o n g e s t - l a s t i n g r e l a t i o n s h i p s y o u f o r m g e n e r a l l y a r e n ’ t found when you’re trying to network “I’d rather see somebody volunteer for a committee doing some kind of activity that they’re passionate about over going to a series of networking events,” he says “It’s not that networking events are bad, but you’re more likely to form some substantial, meaningful and diverse relationships through the volunteer experience where you’re surrounded by people with a common interest or passion ”

Just ask Elizabeth Pittelkow, CPA, CITP, CGMA, senior accounting manager at ArrowStream, whose involvement with the Illinois C PA S o c i e t y ’ s E t h i c s C o m m i t t e e , To a s t m a s t e r s I n t e r n a t i o n a l , United Way, Junior Achievement, American Heart Association and the American Cancer Society has compounded her social capital several times over. Her service on the Society’s Ethics Committee, for example, has led her to be an educator and author on a topic that has further connected her with people equally as passionate about the CPA profession and its ethical standards across the country and around the globe.

“Serving on the Ethics Committee has probably been the best networking activity I’ve done without it ever feeling like a networking activity. But I think it’s also important to keep in mind that it doesn’t always have to be a professional topic that you connect and network with someone over,” she says “Fantasy football or a cooking class can be a great networking event, because it’s some-

t h i n g e x p e r i e n t i a l y o u ’ r e s h a r i n g a c o m m o n e x p e r i e n c e w i t h others that creates an automatic talking point ”

“There are so many ways to connect with people today: Alumni associations, business expos, speaking engagements, neighborhood councils, politics, even Pilates,” says Debbie Lessin, CPA, owner of D J Lessin & Associates, Inc “You may not always think it, but everything you do is a potential networking opportunity ”

For those thinking strategically about growing their social capital reserves, Lauritsen encourages being intentional about who you connect with and how you connect with them “When you k now who y ou wa nt to c onne c t with a nd why, y ou c a n ma k e smarter decisions about how you put yourself in situations to get to know that person,” he says “For example, if you want to conn e c t w i t h o n e o f t h e e x e c u t i v e s i n y o u r o rg a n i z a t i o n a n d y o u know that one of their pet projects is an internal committee, it would be wise to get on that committee if it’s something meaningful to you It’ll put you in closer proximity to that executive, and you’ll likely have opportunities to meet and interact with them.”

Of course, the meeting and interacting part is where many of us freeze up, fall short or simply go wrong “You can’t just network for your own personal benefit,” warns Pittelkow “It’s disingenuo u s t o b e f r i e n d s o m e o n e s i m p l y b e c a u s e y o u n e e d s o m e t h i n g from them, and it’s impossible to know who’s going to be really valuable to you in the future You have to look for relationships that are mutually beneficial and will better the both of you.”

“A lot of my clients are my friends, and a lot of my friends are m y c l i e n t s , a n d I c a n ’ t r e m e m b e r w h i c h c a m e f i r s t , a n d t h a t ’ s r e a l l y b e a u t i f u l , ” s a y s L e s s i n Wi t h m o r e t h a n 3 5 y e a r s i n t h e accounting industry, Lessin has successfully built and downsized her tax practice by choice three times, she’s been a prominent and awarded figure in the women’s business community, pursued her creative calling as an author and artist, and has found worklife balance simply by being herself

“I never went out thinking to myself, ‘I’m doing this to get business ’ I got business because I was involved, I was authentic, and people do business with people they like,” she says.

And while you can’t make people like you, you can give them a reason to be drawn to you In Lessin’s case, she has a business card with a tagline that reads, “Brains of an accountant, soul of an artist ” “People take notice of those things,” she says “That’s just who I am More than anything else, the thing to remember is that you have to be yourself ”

“The sooner you learn how to do that, the more likely it is that your connections and career are going to take you to places that embrace you for that,” adds Lauritsen. “If you start out early in

you’re not, somewhere down the line you’ll find yourself trapped in this creation of your own making where you’re miserable and wondering what the hell you’re doing. In the long run, social cap-

“There’s tremendous power in being more intentional about how you find, build and maintain relationships in your life and where you invest the time and energy to reap the rewards of those relationships.”

Jason Lauritsen

Social Gravity

Social Gravity: Harnessing the Natural Laws of Relationships is a clever and easy-to -navigate “work book” that will have you taking your networking initiatives to new heights Free from the typical “how to work a room ” gimmicks, the social gravity concept is all about investing in connections that yield ridiculous amounts of social capital knowledge, connections, ideas, influence, power, opportunities and more It is who you know that matters, and Gerstandt and Lauritsen show you how to launch into new relationships that practically guarantee success in all aspects of your life

Putting their “Six Laws of Social Gravity” into practice is easy, and the tools, exercises and theories outlined in this book are all highly adaptable

This is a must-read operations manual for anyone who’s ready to harness the true power of their connections, launch their careers to the next level, and pioneer personal and professional relationships that have real meaning

Get Your Free Copy!

The first 10 Illinois CPA Society members to email us at yp@icpas org will receive their very own copy of Social Gravity Simply reference “It’s Who You Know” in your subject line, and include your name, address and member ID in the email body We’ll mail your copy right to you

Those of you who plan to attend the ICPAS 2014 Young Professional Leadership Conference on May 30 will receive a copy of Social Gravity as your conference takeaway Turn to Sarah Haight’s Hype it column on page 48 for all you need to know about the conference

ital is built on lasting relationships that are rooted in authentic connections, shared interests and knowledge about each other.”

But as Social Gravity aptly points out, “A connection requires more than mere knowledge of each other; instead, there must be s o m e s c a f f o l d i n g i n p l a c e f o r f u r t h e r i n t e r a c t i o n , s u c h a s t h e exchange of contact information or plans to interact further ”

In today’s digital world we’re often more than satisfied to signin to LinkedIn, Facebook, Twitter, or any other social networking s i t e t o a d d , f r i e n d o r f o l l o w e v e r y p e r s o n w e m e e t E v e r y t i c k higher in the number of “connections” and “friends” is a small reward Sure, these platforms are great tools for keeping in touch and watching from the outside, but how many of those people are you actively communicating with? And, more importantly, how many are actually yielding valuable social capital?

Social Gravity tells us, “To build social capital, it’s important to focus not only on the number of connections we make, but also on the actions we take to create overlap with those connections and convert them into relationships In building a vibrant and valuable network of relationships, it is important not to lose sight of the difference between quantity of connections and quality of connections ”

“The goal is to amass a quantity of quality relationships,” Lauritsen quips “Making connections on social media sites is not the same as building a relationship that yields social capital Relations h i p s a r e b u i l t o n e - o n - o n e t h r o u g h c o n v e r s a t i o n s a n d s h a r e d activity, so you have to get out from behind your computer ”

“Maybe it’s true that the more people you network with and the more people you can speak candidly with, the more often your name is going to come up for different things, but the focus should be on quality over quantity, and that goes for the time that you invest in your network, too,” says Pittelkow “If you meet someone

by Joe Gerstandt and Jason Lauritsen

that you feel no connection to and share no common interests with, don’t spend time there; focus on the people that are going to be meaningful to you ”

“It’s ok to start building your social capital by investing in one or two people at a time,” Lauritsen adds “There are no shortcuts in building authentic relationships ”

Few will doubt that maintaining a connection is harder than making a connection, but there are some easy ways to keep the relationship moving forward Everyone eats, right? Lauritsen spent time sharing breakfasts, lunches and happy hours with the connections he was most interested in during the early stages of his career As an active young professional, Pittelkow invests time outside of her professional life to grab coffee or a show to grow those genuine connections And busy business owner Lessin maintains her very solid relationships by making plans to go to dinners outside of the business environment. Of course, there’s nothing wrong w i t h b r i n g i n g t h e d i f f e r e n t g r o u p s i n y o u r n e t w o r k t o g e t h e r b y hosting your own happy hour either And there’s no doubt social me dia c ome s in ha ndy for k e e ping in touc h, a s k ing que s tions , sending birthday and congratulatory notes, and setting dates for that all-important face-to-face get together

The bottom line is this: “Building networks and relationships is never urgent It’s one of those things that people talk and think about, but they’re too busy today so they’ll work on it tomorrow T h e n , s u d d e n l y, w h e n y o u l o s e y o u r j o b o r n e e d t o m a k e a n important change in your life there’s no one to turn to,” says Lauritsen “If you don’t have a network, or the one you have isn’t yielding meaningful social capital, then start building or expanding your relationships to raise your social capital today. It’s like a college degree, once you have it, if you tend to it, it will always be there to help you along the way ”

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hype.it

Feel the Power of the ‘CONNECT EFFECT’

If you’re only able to attend one Young Professionals event this year (heaven forbid!) the Young Professional Leadership Conference is it.

This signature event was a huge hit last year, attracting over 200 young professionals and delivering an exciting program on “Fearless Leadership ” This year we turn our attention to something that’s important to all of us making connections

It’s been said time and again that it’s who you know, not what you know While I understand that accounting professionals clearly need to know a lot, the connections you make are invaluable

This year ’ s theme, “Connect Effect,” will focus on leveraging your network to maximize the success of not only you personally, but also the firms and companies you represent.

Networking expert Jason Lauritsen’s keynote is based on his highly acclaimed book Social Gravity, which focuses on harnessing the natural laws of relationships (You can read our book review on page 44 ) Social Gravity will be our conference takeaway yet another big reason not to miss this event

Jason’s fellow presenters will tackle topics such as destructive business cultures, building power teams

Break- out sessions give you the opportunity to select your own content, learn from experienced pros and meet fellow young professionals with similar interests and career goals

A few tips to make the most of the conference:

1 Develop a pre-conference list of all your burning questions to ask the speakers

2 Practice the skills outlined at the conference and make a meaningful connection with an attendee

3 Make sure you bring plenty of business cards to distribute among your fellow conference-goers

4 Take detailed notes and create a plan to put all that expert advice into action

5 Read the book and go crazy with your highlighter

6 Take a few minutes to look out of the window The views from the AON Center’s 80th floor are absolutely amazing!

I’m sure you ’ ve picked up on my excitement for this awesome event The planning committee has been hard at work to make this a great experience I hope to see you there

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Cost: Early Bird $60 members; $80 non-members through May 12. $75 members/$95 non-members after May 12 (Includes breakfast)

CPE: 4 hours

Space is limited. Register online at www icpas org or call 312-993-0407, option 4 and reference course code C41617

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Duane Suits

Myra Swick

Richard Thompson

Connie Watkins

Mary Ann Webb

Ray Whittington

Cheryl Wilson

Nancy and Lawrence Wojcik

Donna and Phillip Zarcone

$500-$999

Rose Cammarata

Kath Carter

Lisa Hartkopf

Margaret Hunn

Eileen Iles

ICPAS Young Professionals

Group Fundraiser Proceeds

Anne Kohler

Krista McMasters

Erwin Ortiz

Katie Peltier

Gilda Priebe

Kim Rice

John Rogers

Marites Sy

Richard Ziegler

$250-$499

Linda Abernethy

Maria Balita

BP America, Inc.

Cameron, Smith, & Company PC

Covenant United Church of Christ

Amy Egelston

Eileen Felson

Gary Fish

Mary Fuller

Robert Giblichman

Geoffrey Harlow

Gary Hart

Russell Holmgren

James Johnston

Trudie Kanter

Wendy Kelly

Gary Kemnitz

Jeffrey Krol

Sara Leone

Jill Loftus

Ilaria Mocciaro

Elizabeth Murphy

Annette O’Connor

Michael David Pakter

Bhaveshri Patel

Pier & Associates Ltd.

Kenneth Posner

Daniel Rahill

Elizabeth Roghair

Rozovics & Wojcicki, PC

James Schlesser

Mark Schultz

Chris Sokolowski

Gerard Swick

Up to $249

Anonymous (14)

Annabelle Abueg

AJE Associates, PC

Angela Allen

Vickie Austin

Brent Baccus

Helen Barrick

Nancy and Craig Bennis

Brian Berg

Leanne Berry

Rona Bezman

Joseph Bigane, III

Cheryl Bitoy

Patrice Bledsoe

Gerald Brighton

Kymberly Buchanan

Genevieve Burns

Benjamin Burstyn

Toni Burt

Nicholas Caccamo

M. David Cain

Martrice Caldwell

Sara Carlson

Margaret Cartier

CME Group, Inc.

Susan Coats

Corbett, Duncan, & Hubly, PC

Harvey and Arlene Coustan

Michael Dallmann

Laura Del Prato

Carla Denison-Bickett

Barbara Dennison

Rose Doherty

Kimi Ellen

Nicole Elliott

Eric Ephraim

Sarah Ference

Sharon Ferrin

Shari Fitzgerald

Kathy Ford

Zachary Fortsch

Judith Freeman

Sharon Frydman

Paula Galbraith

Judy Garber

Kathryn Garlow

Sandra Gentry

Robert Gibson

Margaret Glynn

Carolyn Gomez

Robert Grecco

Robert Grottke

Torrence Hammond

Edward Hannon

Christine Hanover

Norris Harstad

William Hassett

Melinda Henbest

Susan Henry

John Hepp

Julie Herwitt

Angela Hickey

Frank Hladik

Kathy Horton

Michael Huesing

Melanie Hummer

Cynthia Hunt

Intermatic Incorporated

John Kaiser

David Kalet

Kase Orion CFO, Inc.

Barry Katz

Jennifer Keen

Jason Klein

Alicja Kolendo

Annie Kolman

Jeffrey Korman

Harry Kramer

Deborah Kurtzke

Laurence La Boda

Norma Lagamon

Paul Lau

Douglas LeFevre

Debra Lessin

John Logerquist

Kelley Long

Robert Maas

Daniel Maloney

Karla Mansfield

Maurice Marcus

Louis Margner

Randy Markowitz

Linda Martin

Betsy Matthews

Rita McConville

Mike McGeever

Terry Michaels

Anne Mieleszuk

Charlotte Montgomery

G. William Moore

Kenneth Naatz

Edward Nadler

Kari Natale

Rebecca Newton

Ijeoma Nwabara

Edward Odmark

William O'Malley

Stephen Panfil

James Perkins

Robert Pernini

Eileen Phelan

Dana Phillips

Ernest Potter

Maria Prado

Kathryn Preston

Denise Price

Prigge, Simon, & Hedrick, LLC

Jim Quaid

Roy Raemer

Melody Ragan

Charlene Rhinehart

Neal Richardson

Joseph Rieber

Deborah Ringer

Joseph Rivkin

Jennifer Roan

Starr Robinson

Joan Rockey

Linda Rossi

Stella Marie Santos

Laura Schimek

Deborah Schodrof

Richard Shapiro

John Simon

Barbara Sloan

Christine Smith

Laurence Sophian

Carrie Stanton

Reva Steinberg

George Stewart

John Stuckey

Abby Sullivan

Kim Szalkus

Abigail Szymonik

Michael Tadla

Andrea Urban

Maria Divina Valera

Ma Ceres Sharon Victorino

Kimberly Waite

Monica Walker

Chan-Yu Wang

Allen Wegener

Michael Wenzel

Sandra White

Jay Wilensky

Laura Wilhelm

Joseph Wisniewski

Theresia Wolf-McKenzie

Doyoung Yong

Jane Zahora

Thomas Zeller

Anthony Zordan

Christiana Zouzias

Victor Frescas - Scholarship Recipient, DePaul University

CPA Endowment Fund of Illinois