Insight Magazine - Summer 2011

What do you see?

A partner who works as hard as you do.

You want to make your client’s vision a reality. So we make that our goal as well. Whether we provide treasury management, financing or simply act as a sounding board, we’ll help you be part of a success story. Because when your client succeeds, you succeed.

PROUD DIAMOND SPONSOR OF THE ILLINOIS CPA SOCIETY.®

i n d e x

34 Strategizing in a Down Economy

B y C a r o l yn Ta n g K m et

There are many paths that lead to future growth, but choosing the right one takes some strategizing

38 M&A Movers & Shakers

B y C l a r e Fi t zg er a l d

Accounting firms are taking advantage of opportunities to drive growth, attract talent and plan for succession

42 Fraud Hit List

B y K r i st i n e B l en k h o r n Ro d r i g u ez

Today ’ s fraud danger zones and how to avoid them

12 Tax Insight When ‘Tax Exempt’ Isn’t

B y Kei t h St a a t s, JD

Being a charitable organization doesn’t always get you off the hook

14 Fraud Insight It’s a Family Affair

B y Brad Sargent, CPA/CFF, CFE, CFS, Cr FA , FABFA

What happens when a spouse, sister, uncle or parent steals from you?

16 Legislation Insight Spring to Action

B y Ma r t y Gr een , E sq

Momentum builds for state and federal CPA- supported legislation

18 Retirement Insight Golden Rules for Golden Years

B y Ma r k J Gi l b er t , C PA /PF S

How not to run out of assets when you need them most

20 Hiring Interview Revamp

B y C l a r e Fi t zg er a l d

Non-traditional interview techniques help firms assess potential hires

22 Client Retention Think Global

B y B r i d g et Mc C r ea

Your most important client is expanding overseas Now what?

24 Social Media Crowd Control

B y Sel en a C h a vi s

How to manage negative feedback in the social media age

26 Sustainability Top Barriers to Greening

B y Sh er yl N a n c e - N a sh

What ’ s holding companies back from embracing the sustainability dream?

30 Marketing Website Reconstruction

B y D er r i c k Li l l y

Haven’t touched your site since 1998? It ’ s high time for a redesign.

32 Young Money Five Ways to Save

B y D er r i c k Li l l y

regulars

You work hard for your money Now make it work hard for you

4 First Word

A message from the Illinois CPA Society ’ s President & CEO 6

FIRST W O R D

I N S I G H T S TA F F

Publisher/ICPAS President & CEO Elaine Weiss

Editor-in-Chief/Director of Publications Judy Giannetto

Creative Services Director Gene Levitan

Creative Services Manager Rosa Garcia

Publications Specialist Derrick Lilly

National Sales & Advertising Angie VanGorder

YGS Group, 3650 West Market Street, York, PA 17404

P: 800 501 9571 x176 F: 717 825 2171

E: angie vangorder@theygsgroup com

Circulation/Member Services Director Ron Jankowski

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

I C P A S O F F I C E R S

Chairperson, Robert E Cameron, CPA Cameron, Smith & Company PC

Vice Chairperson, James P Jones, CPA

Edward Don & Company

Secretary, William P Graf, CPA Deloitte & Touche LLP

Treasurer, Daniel F Rahill, CPA, JD KPMG LLP

Immediate Past Chairperson, Sara J Mikuta, CPA Leaders Bank

I C PA S B O A R D O F D I R E C T O R S

Ann M Bourne, CPA, Ernst & Young LLP

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

John A Hepp, PhD, CPA, Grant Thornton LLP

Geralyn R Hurd, CPA, Crowe Horwath LLP

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

Leif J Jensen, CPA, Leif Jensen & Associates Ltd

Kathleen M Kedrowski, CPA, Navigant Consulting

Michael J Maffei, CPA, GATX Corp

Elizabeth A Murphy, PhD, CPA, DePaul University

Michael J Pierce, CPA, RSM McGladrey Inc

J Bradley Sargent, CPA, Sargent Consulting Group LLC

Edward H Stassen, CPA, Golden County Food Holdings Inc

Reva B Steinberg, CPA, BDO USA LLP – Retired Consultant

Thomas L. Zeller, PhD, CPA, Loyola University of Chicago

Even if you no longer have a connection to a school year calendar, chances are you still feel the mental shift that takes place in the late summer Our relaxed attitude is shaken up a bit as we start thinking about what the remainder of the year holds, and just like returning students, we’re curious about what lies ahead. If it’s learning and networking opportunities you’re looking for, ICPAS has a full line-up

First up is our year ’s biggest event our 31st Midwest Accounting & Finance Showcase scheduled on August 23 and 24 in Rosemont. Offering attendees the chance to earn up to 16 hours of CPE in two days for just $280, the Showcase remains an incredible value and time saver And, with free access to over 80 exhibitors, it doesn’t get any easier to learn about the new trends and technologies shaping our profession

This year ’s Showcase offers a blend of offerings from favorites like Dana “Rick” Richardson’s 18th Annual Tomorrow’s Technol ogi es and Albert Grasso’s Indi vi dual Tax Update, to new sessions covering cutting-edge topics like Ethi cs i n Troubl ed Ti mes and Consumi ng Content on Tabl ets, Smartphones and Netbooks If you’re looking to improve your s

Showcase is time well spent

Next is the CPA Day of Service. Last year, our first ever CPA Day of Service was hugely successful More than 900 participants from every segment of our membership generously volunteered their time to help others The CPA Day of Service is a great opportunity to show what we already know that CPAs give back Best of all, this event is extremely flexible, statewide, and offers volunteers the opportunity to give back in a way that is tailored to their needs, schedules and interests This year ’s CPA Day of Service will take place on Friday, September 23 For more information about registration, free t-shirts and volunteer ideas, visit www.icpas.org/CPADayofService.htm, or turn to page 48 of this issue.

Last, but certainly not least, keep an eye out for a Member Town Hall Forum near you This fall I, along with our new Chairperson Robert E Cameron, will host these statewide forums to connect with members and discuss the trends and challenges affecting the profession

All in all, the ICPAS is kind of like your alma mater; it connects you to something bigger than yourself No matter what you’ve been through personally, professionally or financially, the Society is a place to learn, network and grow Here, you’re part of something And as you change, so do we So if it’s been awhile, do join us again, or come for the first time to one of our many upcoming events

Hope to see you soon.

ICPAS Presi dent & CEO

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 23,000 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

for non-members: $30 US, $40 Canada and international addresses, $42 Mexico Copyright

CHAIR’S MESSAGE

From the age of five, I knew that I wanted to follow in my father ’s footsteps to one day become a respected member of my local business community to one day be a CPA Today, I feel lucky and proud to be a member of this profession, and I love being able to use my talents to help others accomplish their goals As the newly appointed chair of the Illinois CPA Society, I hope to use those same talents to serve Society members and enhance our profession

As rewarding as being a CPA is, we all know it also has its challenges. Two years ago, the Society surveyed its members to get a reading on the “Pulse of the Profession,” and to reveal those issues that kept our members up at night Last year, we began to dig deeper by holding a series of small group discussions for small-practice owners. These discussions provided valuable insights into the needs of this particular member segment

Current Position

Principal, Cameron Smith & Company PC

CPA Certified

1986

ICPAS Service Society member since 1986

ICPAS Board Service

Vice Chairperson (2010-11); Treasurer (200910) and Director (2007-08)

Current Committee Service

Executive Committee (2010-11), Information Services Task Force (2010-11), Lifetime Achievement Award Task Force (2010-11), Nominating Committee (2010-11), Peer Review Report Acceptance (1995-2011), Small Practice Management Advisory (2008-10), Small Practice Advisory Task Force (2010-11) and Strategic Planning (2007-11)

Former Committee Service

Agribusiness (2007-09), Audit (2009-10), Finance Committee (2008-10), Finance and Treasury Committee (2009-10), Government Report Review (2007-08), Peer Review Rules Implementation (2008-09), and MAP Small Practice (2000-03)

Education BS – Illinois State University, 1984

Professional & Community Service

Current treasurer, New Berlin Community Unit School District (14 years) Member of the Springfield YMCA Recreation Committee (6 years) Member of the Springfield YMCA Referee Committee (2 years) Former board member of the New Berlin Community Unit School District (8 years) Former president of the New Berlin Community Club Former youth soccer coach (15+ years) Former Boy Scout leader (5 years)

Areas of Expertise Accounting, auditing and peer review

Why are we doing this? Because the Society is committed to enhancing its relevance and value to its members, and, during my term, I would like to see us continue to make progress in this area This may mean better communicating what we already do for our members, offering new products or services, or revamping existing products and services to meet the changing needs of our various member segments

Hopefully, you have begun to note these changes, but know that we’re not yet done This year we plan to extend our small group discussions across other key member segments, including industry & business and young professionals. There are other ways to give us feedback, however. As we move forward, I would like to see higher response rates and participation in our member surveys, CPE evaluations, member forum meetings, Member Town Hall Forums, chapters, committees and ICPAS LinkedIn so that we can better hear our members’ suggestions and concerns Nothing initiates change better than honest and constructive feedback

In addition, two regulatory issues will be top-of-mind for me during my tenure as chair: M a n d a t o r y

m e n t a t i o n o f a s i n g l e - t i e r l i c e n s i n g s y s t e m i n t h e State of Illinois. I fully expect some bumps along the road and a number of questions from our members as the year progresses Still, I would like to see us well on our way to successful implementation by the end of my term

Finally, I would like to see the number of members we have involved in volunteer Society service continue to grow. It’s no secret that our profession is changing; today, it’s more important than ever for each of us to have a voice Personally, I didn’t begin to learn of the Society’s benefits and didn’t have a voice in the workings of our Society and profession until I began to volunteer for Society service. As such, I encourage others to follow in my footsteps, to volunteer and begin enjoying those same rewards There are times when it’s not easy Heck, there are even times when it’s not enjoyable However, there is never a time when I don’t appreciate the benefits volunteer service gives to the profession.

Robert E Cameron, CPA ICPAS Chai r

About Robert E Cameron, CPA

1 Alliant vehicle loan rates as of 06/01/2011. 2 Illinois bank average vehicle loan rates of 5.21% APR (new, 72 month term) and 5.26% APR (used, 60 month term) sourced from the National Association of Federal Credit Unions in cooperation with Datatrac Corp. as of 06/01/2011. 3 Alliant vehicle loan rates as of 06/01/2011. Loan approval, APR and downpayment required based on payment method, creditworthiness, collateral and ability to repay. Rates include automatic payment option. Rates are 0.4% higher without automatic payment. Rates, terms and conditions are subject to change and can vary based on age of vehicle. APR = Annual Percentage Rate. Add 1% for over 72 month term. Rates are offered on vehicle loans new to Alliant and are not applicable to current Alliant vehicle loans. Payment Example: For a loan period of 72 months and an APR of 2.95% (New), your monthly payment per $1,000 would be $15.18. For a loan period of 60 months and an APR of 3.25% (Used), your monthly payment per $1,000 would be $15.31. 4 Comparison of Alliant’s new and used vehicle loan rates as of 06/01/2011, of 2.95% APR (new) and 3.25% APR (used) vs. the Illinois bank average vehicle loan rates of 5.21% APR (new, 72 month term) and 5.26% APR (used,

SEEN H E A R D

41%

Are You a Great Leader?

ManpowerGroup has identified three crucial “R”s of great leadership

How do you stack up?

Reliable: Employees want trusted leaders who can be counted on for consistency

Responsible: Great leaders avoid excuses and demonstrate backbone

Resourceful: Strong leaders are creative in numerous aspects of the job new products or services, communications, problem- solving, budgeting, etc

For more on the three Rs, visit manpower com

CFO Views on US Deficit & Inflation

Sixty-four percent of the nation’s CFOs and senior comptrollers say the best way to reduce the US federal deficit is to reduce spending, while 35 percent say there should be equal measures of reduced spending and increased taxes, according to a national biannual survey conducted by Grant Thornton LLP [GT com] The newly enacted national health care law is one primary concern, with 49 percent of respondents saying it will increase the pricing of their goods, 40 percent saying it will decrease their company ’ s growth and 37 percent saying it will decrease their hiring. Other areas of concern in terms of pricing pressure are employee benefits (75 percent), raw materials (47 percent) and energy (45 percent)

LinkedIn Errors to Avoid

LinkedIn can take your networking to the next level with little effort, says CBS’s Moneywatch com, but most people aren’t using the site to its full potential Here are four common mistakes

A Vague Headline: Many people naturally leave their current title as their headline, but this doesn’t describe what you actually do Instead, develop a headline that describes your expertise and professional focus

FEATURED APP: Expensify

For all the road warriors out there, forget the days of trying to keep track of your paper receipts Thanks to the Expensify app, which is available for iPhone, iPad, Android, BlackBerry and Palm devices, you can import expense data straight from your credit card, email receipts, track all business-critical expenses, create spreadsheets and PDF expense reports, and even export data to QuickBooks

This app has everything you need to take the expense out of expense reporting Expensify is free to individuals and consultants, and has a scalable subscription plan for companies Visit Expensify com for more information

Maintaining a Passive Profile: Filling out your profile is just the beginning Professionals need to regularly identify and reach out to potential contacts and use status updates to stay visible

Not Trying the Tools: LinkedIn has a variety of tools to expand your network Try joining a LinkedIn Group to make new connections, and don’t forget to upload your mobile contacts list to see if people you already know are on LinkedIn

Networking Only When in Need: Network on LinkedIn like you would in real life Try to give more than you receive, especially when it comes to recommendations It ’ s always polite to give one before requesting one 8

employers who have used more independent contractors than full-time employees in the past two years Source: Right Management

$17.5 trillion

Total retirement assets held by Americans in Q4 2010, up 9 1 percent for the year.

Source: Investment Company institute

Recession Generation’s College Regrets

Seventy-one percent of recent college grads would have done something differently while in college to better prepare for the job market, according to a survey from Adecco Staffing US [adeccousa com] Generation R grads (young professionals who graduated between 2006 and 2010) indicated a desire to have started their job search earlier (26 percent), spent more time networking (29 percent), and/or applied for more jobs (26 percent) prior to graduation. The survey further found that 43 percent of Generation R grads are currently working at a job that does not require a four-year degree

Innovation

in the Spotlight

Developing new products and services is as important to CEOs as growing existing market share, says PricewaterhouseCoopers’ [PwC] 2011 Global CEO Survey Specifically, the survey found that innovation and increasing existing business outstrips all other means of expansion, including moving into new markets, mergers and acquisitions, joint ventures and other alliances

Overall, 78 percent of the CEOs surveyed believe innovation will generate “significant ” new revenue and cost-reduction opportunities over the next three years What ’ s more, CEOs rethinking their approach to innovation are increasingly seeking to collaborate with outside partners and markets

According to PwC, CEOs and other executives can drive innovation by creating a culture that is open to new ideas and systematic in the development of those ideas PwC has identified four phases of innovation, namely:

Discovery: Identify and source ideas and problems from employees, customers, suppliers, partners and others as the basis for future innovation

Incubation: Refine, develop and test ideas to see if they make business sense

Acceleration: Establish pilot programs to test commercial feasibility

Scale: Integrate the innovation into the company, commercialization and mass marketing

Visit pwc com for more

INSIGHT Wins Industry Awards

The Illinois CPA Society ’ s INSIGHT Magazine has won two prestigious media industry awards: The 2011 Magnum Opus Bronze Award for Best Association Publication and Graphic Design USA’s American Inhouse Design Awards Certificate of Excellence for Publication Design

The highly regarded Magnum Opus Awards recognize exemplary work in the area of custom media Year after year, the awards garner entries from big name, big budget organizations, including the Sara Lee Corporation, The Walt Disney Company, Wells Fargo and United Airlines, to name a few Graphic Design USA’s American Inhouse Design Awards is a premier showcase for outstanding work by inhouse designers in the United States; only 15 percent of more than 4,000 entries are recognized with a Certificate of Excellence

Visit www.icpas.org/insight.htm and click on the “About INSIGHT” link for a complete list of INSIGHT awards

CPA Society’s Young Professionals Group invites you to...

CPAs… Work hard. Network harder. It’s summer! Time to step away from your cubicle and indulge in a memorable wine and chocolate tasting experience. Have some fun and give back at the same time. Help make the dream of becoming a CPA come true for deserving students hoping to follow in your footsteps. Get a group together, bring a friend, or come solo and toast to a good cause with other young accounting professionals.

Thursday, August 11, 2011 | 6:30PM - 8:30PM

Deloitte*

111 S. Wacker Drive, 15th Flr., Chicago, IL 60606

*The event location was generously provided by Deloitte LLP.

Event Price: $45 per person

To register, please call 312.993.0407, option 4, event code: S571

Proceeds of the event will benefit the CPA Endowment Fund of Illinois. The mission of the Fund is to Pave the Way for Tomorrow’s CPAs through scholarships and other programs. For more information or to make a donation, please visit www.icpas.org/Endowment.htm.

The Illinois

When ‘Tax Exempt’ Isn’t

Being a charitable organization doesn’t always get you off the hook

Keith Staats, JD is a senior manager of Grant Thornton’s State and Local Tax practice, based in Chicago Keith previously served as general counsel of the Illinois Department of Revenue, where he was involved in the development of tax policy, the evaluation and review of tax-related legislation and the overview of tax-related litigation.

Section 501(a) of the Internal Revenue Code (the “IRC”), generally exempts charitable organizations from federal income taxation. Charitable organizations exempted pursuant to IRC Section 501(c)(3) are the most common type of federal income tax exempt organization Because most states, including Illinois, use federal taxable income as the starting point to determine income subject to state income taxation, IRC Section 501(c)(3) organizations are also generally exempt from state income taxes

It’s a common misconception, however, that organizations exempted from federal income taxation are automatically exempt from all state and federal taxes In fact, IRC 501(c)(3) organizations and other organizations exempted under IRC Section 501(a) may be exempted from some state and local taxes, but must comply with various application and reporting requirements in order to obtain and maintain eligible tax exempt status under state and local law

What’s more, such organizations are not even exempt from all federal income taxes; unrelated business income (income from a trade or business that isn’t substantially related to the exempt purposes of the organization) remains taxable Most states require reporting of such income, and the federally taxed income of these organizations is subject to state income tax in most states

Sales & Use Taxes

Some states grant IRC Section 501(c)(3) organizations automatic exemption from paying sales and use taxes, but many states, like Illinois, have additional, stricter requirements for exemption, and require a separate application for state sales and use tax exemption

What’s more, with certain exceptions, Illinois does not exempt a charitable organization from charging and collecting sales tax on its retail sales In order to be exempt from Illinois state and local sales taxes on purchases, an organization must file an application for exemption with the Illinois Department of Revenue (the “Department”), and must fall within one of the exempt categories under Illinois law Exclusively charitable, religious, governmental bodies and schools are the major exemption categories.

Also, the organization must demonstrate that it is “exclusively charitable” as defined by regulations and the courts. Religious organizations, governmental bodies and schools must demonstrate compliance with the statutory definitions of those categories

Once exempt status is granted, the organization receives a sales tax exemption identification number (an “E number”) that is effective for five years from the date of approval The E number must be presented when an organization makes purchases, and may not be used to retroactively exempt purchases made prior to the approval.

In addition, an exempt entity may not make purchases tax free for the use of a related, but non-exempt organization, and with certain limited exceptions, it is not proper to purchase items for resale with an E number

As a general rule, an organization’s sale of tangible personal property remains subject to tax However, there are three exceptions under Section 130 2005(a)(1) of the Department’s rules: First, some of the sales an organization makes to its members are exempt, such as sales of uniforms by a scout organization to its members or sales of Bibles by a church to its members However, a school’s sale of books and supplies to its students is taxable Second, sales by charitable organizations that are non-competitive with normal business establishments are exempt, including “infrequent” sales of cookies, doughnuts, candy or calendars Again, however, the sales of items such as hats and greeting cards, etc , are taxable, since these sales are deemed to compete with normal businesses Third, “occasional dinners and similar activities” are exempt from sales taxes This exemption includes occasional dinners, ice cream socials, carnivals, and rummage sales, no matter whether the items sold are purchased by the organization or donated to it The Department’s rules state that the “occasional dinners” exemption is limited to twice a year.

Property Taxes

In order for Illinois-based IRC Section 501(c)(3) organizations to be exempt from property taxes, they must apply for an exemption with the local taxing authorities and obtain an exemption issued by the Department Under the Illinois Property Tax Code, the applicant must show that the property is held in exempt ownership and is used for an exempt purpose.

The application must be obtained from, and filed with, the Board of Review in the county in which the property is located. The local Board then evaluates the application and makes a recommendation to the Department, which makes a final determination. In the event the application is denied, the applicant may protest the Department’s determination and seek an administrative hearing and judicial review.

Like sales tax exemption requests, an applicant’s IRC Section 501(c)(3) status does not guarantee a property tax exemption. A charitable organization must demonstrate that it is “exclusively charitable” as defined by the Illinois Constitution and Property Tax Code

The definition of the term has been further refined by the courts, most recently by the Illinois Supreme Court in Provena Covenant Medi cal Center v The Department of Revenue, 236 Il l 2d 925 (2010) The standards for establishing that an organization is “exclusively charitable” are much stricter than the federal standards for granting IRC Section 501(c)(3) status

Withholding & Employment Taxes

Generally, federal tax exempt organizations that have employees remain subject to state requirements for the filing of returns and payment of unemployment taxes, although state laws may provide IRC Section 501(c)(3) organizations with alternative methods of calculating the amount of unemployment taxes In Illinois, the Department of Employment Security is the agency responsible for administering these taxes

What’s more, qualifying organizations are required to withhold Illinois income taxes from employee wages, and are responsible for filing the appropriate returns and making payments to the Illinois Department of Revenue

In a nutshell, tax-exempt charitable organizations are not necessarily exempt from all taxes, which means that a solid grasp on business taxes and federal, state and local registration and filing requirements is mission-critical

It’s a Family Affair

What happens when a spouse, sister, uncle or parent steals from you?

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

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

Fraud is defined as the knowing, intentional misrepresentation of a material fact, justifiably relied upon and resulting in damage. For forensic accountants, the materiality of both the misrepresentation and the resulting damages is critical. Our job is to evaluate and quantify the economic impact of fraudulent actions But good forensic accounting goes beyond the numbers to look for patterns and circumstances that help identify intent

M o t i v a t i o n a n d r a t i o n a l e a r e k e y components in any forensic investigat i o n . W h y w o u l d s o m e o n e i n t e n t i o na l l y d e c e i v e o t h e r s ? F i n a n c i a l g a i n , economic duress, ego gratification and self-righteousness are common themes we see in business situations. However, w h a t i f t h e b u s i n e s s i n v o l v e s f a m i l y members? Do the same rules apply?

W h e n o u r w o r k c r o s s e s i n t o t h e unique area of family law, thick forensic skin is a prerequisite

F a m i l y t h e w o r d c o n j u r e s u p a wide variety of thoughts for us all We live in an era when “non-traditional” is t h e n o r m f o r m o s t t h i n g s , i n c l u d i n g family Regardless of the circumstances, our deepest emotions are tied to the ones who brought us into this world, the ones we grew up with and the ones we fell in love with, married and started families with

Blood being thicker than water, we trust our family members more than any others Many people enter into business relations with family predicated on this trust. A family owned and operated business is still a part of the American Dream

For purposes of this column, I’ll focus on two distinct family law practice areas: Divorce and trusts and estates

Divorce now impacts more than 50 percent of American families. When marriages dissolve and substantial assets need to be divided, people can rationalize actions that they would never consider under normal circumstances

Thomas T Field, Esq , partner at the law firm of Beermann Swerdlove LLP, focuses on matrimonial issues. Field, who was just named a “Top 40 Illinois Attorney under 40,” offers this scenario on a recent case: A spouse employed alleged mental illness as a front for a sudden loss of employment, which was preceded and followed by covert extramarital affairs with

multiple people The spouse misappropriated hundreds of thousands of dollars from family accounts and fled the United States. The individual in question left a seven-figure salary, and the non-wage earning spouse and three minor children behind to fend for themselves Having returned to the country after a judgment was rendered, the spouse is now working several states away. We will be tracking this individual down to start wage garnishment.

Think about this story; possibly faking a mental illness to avoid working and supporting a spouse and children Then withdrawing hundreds of thousands of dollars from accounts and fleeing the country. How do you reconcile these actions with an album of wedding photos showing the happy couple? These breaches of trust result in damage that goes far beyond matters of economics

Estate and trust disputes can contain acts and allegations that are just as sensational. When a parent passes away and control of their assets is designated to one family member, the others rightfully presume trustworthiness Certainly the decedent made that presumption. But, what if the controlling party diverts assets from the intended beneficiaries for their own gain? This is fraud of biblical proportions Anecdotally, I worked a case involving the eldest offspring acting as trustee, funneling millions of dollars away from

their siblings to set up a business that competed directly with the family business.

Ray J Koenig III, Esq , a member of Clark Hill’s Litigation Pract

s t a t e L i t i g a t i o n Koenig explains that, “The commitment of fraud by one family member against others has both immediate and long-term effects

M o r e i m m e d i a t e l y, e x p e n s i v e a n d t i m e - c o n s u m i n g l i t i g a t i o n e n s u e s L o n g - t e r m , t h e t r u s t i m p l i c i t a m o n g f a m i l y m e m b e r s i s destroyed, resulting in a shattered family.”

Human behavior can be outrageous when our deepest emotions (love, in particular) factor in. I have witnessed successful, sophisticated business people throw common sense out of the window d u r i n g f a m i l y d i s p u t e s . T h e s e n s e o f b e t r a y a l a n d t h e e n s u i n g d e s i r e f o r r e v e n g e c a n l e a v e t h e m o s t s e a s o n e d a t t o r n e y s a n d forensic accountants shaking their heads in dismay

However, as an accountant first and foremost, I take solace (and refuge) in the black-and-white world of financial records The data (at least third-party independent data) doesn’t lie, cheat or swindle and my job is to provide the facts As accountants, we can serve our clients at their moments of greatest need.

“Blood being thicker than water, we trust our family members more than any others. Many people enter into business relations with family predicated on this trust.

A family owned and operated business is still a part of the American Dream.”

Spring to Action

Momentum builds for state and federal CPA- supported legislation

Marty Green, Esq is the Illinois CPA Society ’ s VP of Government Relations He previously served as executive assistant attorney general for Illinois Attorneys General Lisa Madigan and Jim Ryan, and as director of the Governor's Office of Citizens Assistance and assistant to the Governor for Public Affairs, both under Governor James Edgar A graduate of Western Illinois University and Saint Louis University Law School, Marty is a practicing lawyer and member of the Illinois Bar

I’m happy to report that CPAs scored several victories during the Spring Session of the Illinois Gene r a l A s s e m b l y a n d C o n g r e s s . B o t h t h e I l l i n o i s House and Senate overwhelmingly passed legislation (House Bill 1277) initiated by the Illinois CPA Society to amend the Illinois Open Meetings Act House Bill 1277 provides an exception to the Act that permits narrow discussions to take place in a closed-meeting setting between auditors and gove r n m e n t a l a u d i t a n d f i n a n c e c o m m i t t e e s i n t h e areas of internal control weaknesses, identification of potential fraud risk areas, known or suspected frauds and fraud interviews

The Society worked closely with the Illinois Press Association and the Illinois Attorney General, as well as other supportive stakeholders such as the Illinois County Auditors Association and the State Internal Audit Advisory Board, to alleviate opposition to an additional exception to the Act This legislation adheres to the tenants of government transparency and fidelity to audit principles, and it is anticipated that Governor Quinn will sign it into law

While the potential for taxing accounting, financial and other services is always tempting in order to gather additional revenues, legislators showed little appetite for this. Illinois currently taxes 17 diff e r e n t s e r v i c e a r e a s c o m p a r e d t o a m u c h h i g h e r ratio of service taxes in neighboring states

Additionally, throughout the Spring Session the Society’s Government Relations Office informally responded to technical inquiries from legislators and their staffs concerning pending legislation The fact that legislators turned to the Society for objective technical responses to help to formulate their positions exemplifies the excellence and integrity of both the Society and the CPA profession.

On the federal level, CPAs scored another success with the repeal of the onerous 1099 MISC reporting requirements The S o c i e t y w o r k

sional Delegation in collaboration with the AICPA to illustrate the tremendous burdens the requirements put on small businesses

We have also seen initial success in undoing the patenting of tax s

(S.23) and the House Judiciary Committee’s passage of the Com-

p r e h e n s i v e P a t e n t R e f o r m B i l l ( H R 1 2 4 5 ) , w h i c h i n c l u d e s a p r o v i s i o n t h a t p r o h i b i t s patents on tax planning methods.

As part of the AICPA Spring Council Meeting in Washington, D C , senior leaders of the Society met with members of the Illinois Congressional Delegation to discuss patenting of tax planning methods and other federal issues of interest to the profession

Overall, CPAs have some significant wins in the legislative arena due in large part to the reputation and high regard of the profession. There are of course potential challenges ahead, but we are well-positioned to address those challenges We will continue working to keep the momentum moving in the right direction.

On another note, by now you should have received information titled Pathway to CPA L i censure from the Society This document outlines the framework that the Board of Directors has adopted for the future of CPA licensure as part of the anticipated legislative updates to the Illinois Public Accounting Act

This framework will continue Illinois’ transition to a one-tiered, license-only state consistent with the Uniform Accountancy Act and 45 other states After July 1, 2012, the Licensed CPA title will be the only option for newly certified CPAs.

What was traditionally known as licensed services will be expanded to accountancy activities for CPAs to encompass tax, financial, and management consulting services, and accounting services provided to clients or an employer, or the teaching of any of these areas at the college or university level by CPAs

B r o a d e r r e c o g n i t i o n o f c o n t i n u i n g p r o f e ssional education will be sought for both formal and informal credit hours that contribute t o t h e p r o f e s s i o n a l c o m p e t e n c i e s o f t h e licensee A CPA (inactive) option will be availa b l e f o r l i c e n s e e s w h o a r e n o t e n g a g e d i n accountancy activities.

As of June 30, 2011, the Registered CPA title will no longer be available for new applications However, all active Registered CPAs as of June 30, 2011 can continue to renew this title for life.

Member input on this framework is an important part of the Board’s processes in updating the Public Accounting Act I encourage you to visit the Government Relations section of www icpas org for additional background information and to submit your comments on improvements to the Act or overlooked areas in the framework outlined above.

upcoming events

corporate finance professionals

executive education

Astute Cash Flow Management

August 10, 2011 | Chicago, IL

technical workshop

Fair Value Accounting: A Critical New Skill for CPAs

August 11, 2011 | Chicago, IL technical workshop

International vs. US Accounting: What in the World is the Difference?

August 12, 2011 | Chicago, IL

special event

Midwest Accounting and Finance Showcase

August 23-24, 2011 | Rosemont, IL

technical workshop

Critical Skills for Creating Great Budgets: Maximizing Profits, People and Power

September 2, 2011 | Chicago, IL

technical workshop

FASB Review for Industry: Targeting Recent GAAP Issues

September 8, 2011 | Chicago, IL

executive education

Capital Investments

September 14, 2011 | Chicago, IL

technical workshop

Forensic Accounting: Fraudulent Reporting and Concealed Assets

September 19, 2011 | Chicago, IL

technical workshop

Surviving and Growing

Your Company in Difficult

Times: Essential Skills for the Finance Team

September 20, 2011 | Chicago, IL

conference

Midwest Financial Reporting Symposium

September 30, 2011 | Rosemont, IL

making your life easier | www.CCFLinfo.org

Golden Rules for Golden Years

How not to run out of assets when you need them most.

Mark J Gilbert, CPA/PFS is a principal in the financial advisory firm of Reason Financial Advisors, Inc His 25-plus years of finance and accounting experience includes 13 years in personal financial planning. An ICPAS member since 1982, Mark currently serves in the Society ’ s IA/PFP Member Forum Group and on its Committee on Structure and Volunteerism

In my last column, I suggested how to advise retirement fund accumulators in their 30s to 50s In this issue, I’ll cover the intricacies of advising clients who are only 3 to 10 years away from retirement clients I’ll call “serious retirement thinkers.”

First and foremost, knowledge is power To understand your clients’ financial readiness for retirement, a retirement plan that includes cash-flow projections is a must You, or a competent personal financial planner, can develop this plan. You can then assess whether your client’s present financial resources (including anticipated future savings and investments) are likely to meet their anticipated future needs.

The retirement plan should account for a number of client

means of this planning process, your clients will get a much clearer picture of whether their Plan A is on track, or whether a Plan B is needed

This customized retirement plan also should account for existing assets, income sources, any unique aspects of your client’s financial situation, and projected investment returns and inflation rates. With this information in hand, you can help your client understand the pros and cons of accelerating payouts or delaying benefits as their retirement date nears

Having a retirement plan is one thing; putting it into action is quite another. These six steps give you a guideline for how to make the most of retirement plan findings

1. Commit to changes

Sometimes, actually making any recommended changes is the hardest part of the financial planning process since inertia is always the easiest course The reality is, however, that your serious retirement thinkers don’t have the luxury of time to mull things over

2.

Make retirement a priority

Some serious retirement thinkers are still supporting their adult children financially In order to meet retirement goals, however, they may need to rethink this especially if their plan reveals the need to accelerate retirement savings and investing

3. Understand the deals

Age comes with its privileges. Workers 50 years and older can make annual catch-up 401(k) and IRA contributions, which raise annual contribution limits from $16,000 to $22,000 and from $5,000 to $6,000, respectively Encourage your clients to utilize these favorable tax provisions.

4. Get the right coverage

Insurance needs change with age Term life to protect the primary breadwinner ’s income while children are young may no longer be needed Permanent products may provide lifetime income benefits, and long-term care insurance may become more important. Make sure your clients evaluate their insurance needs and have the appropriate policies in place

5. Enhance asset value

P e r h a p s y o u r s e r i o u s r e t i r e m e n t t h i n k e r i s a b u s i n e s s o w n e r N o w ’s t h e t i m e t o s e r i o u s l y consider alternatives for the business, such as a n i n t r a - f a m i l y s a l e o r g i f t t o c h i l d r e n , a n inside sale to the management team, an outs i d e s a l e t o a t h i r d p a r t y, o r a s i m p l e w i n d down of operations If value is to be improved, an owner may need time to develop and market new products and services, make a strategic acquisition, or put into place an effective c o m p e n s a t i o n p r o g r a m t h a t a l l o w s t h e k e y employees to purchase the business.

O r, m a y b e y o u r c l i e n t w a n t s t o d o w n s i z e their living arrangement and sell their home It’s just as important to plan the repairs and maintenance needed to bring top dollar for the property Encourage your client to take the necessary time to plan for these types of transitions

6. Invest appropriately

Part of the knowledge gained from the retirement planning process involves how the client s h o u l d m o d i f y i n v e s t m e n t s t r a t e g i e s A t t h i s stage of life, clients should be thinking about r e d u c i n g v o l a t i l i t y b y i n v e s t i n g l e s s a g g r e ss i v e l y W h y ? B e c a u s e s u b s t a n t i a l p o r t f o l i o l o s s e s a r e d i f f i c u l t e n o u g h t o r e c o v e r a t a n y time, and it becomes all the more difficult in retirement when funds are being counted on to support one’s quality of life

Of course, a conservatively invested portf o l i o c a n b e e x p e c t e d t o p r o d u c e l o w e r returns Even if those lower returns are insuff i c i e n t , I ’ v e f o u n d t h a t m o s t o f t h e t i m e t h e answer is not to take on more investment risk, but ra the r to c ut ba c k on life sty le e x pe nse s, delay retirement, save more or a combination of all three

September

23, 2011 A

icpas org / insight htm | SUMMER 2011 19

Inter view Revamp

Non-traditional interview techniques help firms assess potential hires.

By Clare Fitzgerald

The tried-and-true traditional interview process may be adequate to find and secure a warm body to fill that vacant spot in your office, but companies hunting for a true cultural fit are increasingly turning to creative strategies often within informal settings.

events, scouring social networks, opening their office doors and implementing a wide range of programs to find and evaluate the most promising potential hires

“Technology has given companies the opportunity to reach so many more people today,” says Genevieve Roberts, partner at the Titan Group human resources consultancy “Now companies can use specialty job sites and social networking tools like Twitter and Facebook to get their opening in front of many more people.”

David Ryan, a human resources executive and officer in the Illinois State Council of the Society for Human Resource Management, notes that companies are going beyond postings on traditional job boards like CareerBuilder or Monster, and are

“You can often see even more about a person’s background on LinkedIn than in a resume,” he explains A

grams Set up like speed dating, large numbers of interviews can be conducted over short time spans, with candidates getting only a few minutes to explain why they should be hired.

For firms seeking a more targeted approach, Roberts suggests implementing strong employee referral programs. “Your people can be your best advocates,” she says “Top performers tend to know other strong candidates and can identify people who are a strong personality and cultural fit as well ”

Chicago-based accounting and consulting firm Grant Thornton LLP offers rewards for employees who refer a successful hire

“We really encourage people to know their networks,” says Nina G u t h r i e , t h e f i r m ’s n a t i o n a l d i r e c t o r o f u n i v e r s i t y r e c r u i t i n g .

When searching for an experienced hire, Guthrie says the firm taps into employee networks, often asking senior staff to name the top five people with whom they would want to work “We’ll then target those prospects to try to bring them onboard,” she explains.

Whatever sourcing channel you use, the selection process is all important Testing grounds, however, need not be so formal or costly. Creative strategies to test potential new hires include:

Online assessment tools

If administered correctly, these tools can help companies get to grips with the inner workings of the people on their candidate short list. “Assessment tools can really help you get an idea of a person’s strengths and weaknesses and identify areas where you’ll need to dig deeper in the actual interview,” says Roberts.

“You can gain a greater sense of candidates’ tendencies, like whether they are introverted or extroverted, or what gives them a sense of fulfillment, and then evaluate if their profile matches your company culture,” Ryan adds

Assessment tools alone won’t give you the whole picture, however. “Use them only to gain more data about a person,” says Roberts “The more data you have, the better your chances of making a good hiring decision ”

Informal social events

“Whether it’s a lunch or dinner or opportunity for the team to sit down with candidates, informal gatherings help companies evaluate the intangibles like how they engage in conversations and how they would represent the firm in social settings,” says Roberts

Chicago-based accounting firm McGladrey hosts dinners and networking programs the night before campus interviews to get t o k n o w a n d e v a l u a t e s t u d e n t s o n a m o r e i n f o r m a l l e v e l “We’re looking at communication and interpersonal skills,” says Paul Nickel, recruiting manager “For example, we’re looking to see how they might interact with a client ”

“We’re courting students from the time they are sophomores in college, so we’re working to develop a relationship very early on,” explains Guthrie, noting that Grant Thornton builds relationships in a variety of ways, such as speaking in accounting classes, holding informational sessions on campus and pairing students with partners who can encourage their interest in accounting and share “day-in-the-life” stories from the frontlines

Some firms go so far as to organize full-on excursions such as a trip to a baseball game or skiing both to promote the image of “this is a fun and fulfilling place to work,” and to evaluate candidates’ social skills.

“That’s what really separates the good from the great,” says Guthrie “You can really see the levels of conversation, evaluate their interest in the types of clients we serve and get a sense of their true aspirations “We’re looking for students who have that X factor,” she adds, “candidates who not only have outstanding business acumen but also want very challenging work ”

Community and volunteer activities

“Whether it’s building a house or planting a tree, there’s so much you can learn about a person when you’re in jeans and a t-shirt and working on a project like that,” says Guthrie. “People can really open up and relax ”

Community and volunteer activities offer the opportunity for a meeting of minds. The fact that, say, a candidate is a member of H a b i t a t f o r H u m a n i t y, a n d y o u r f i r m a l r e a d y c h a m p i o n s t h a t charity, gives you a clear indication that this candidate will be a good cultural fit. Shared values are a must.

From the candidate’s point of view, the fact that your firm takes the time to volunteer for a cause or for the betterment of the community gives you automatic cool points More and more, professionals want to feel that the work they do matters And they want to work for organizations that put social responsibility at the forefront of their goals

As Guthrie explains, “We want to get to know the person and give the person the opportunity to really know our firm It’s much more effective to spend time and money on the front end to do that than to hire the wrong fit.”

Case Studies

When it comes to higher-level positions, Roberts suggests case studies as a great testing tool. “Whether you ask them to give a presentation, react to a client scenario, or solve a customer problem, case studies provide an opportunity to see how candidates would respond in a real-life situation,” she says “If you need to ascertain how well a person can think on his feet or critically analyze a situation, case studies can be helpful.”

These dynamic, interactive and often informal testing grounds take some of the guesswork out of recruiting, and help to present a much more rounded picture of hiring hopefuls

Succession Planning Services

for Illinois CPA Society members

The Illinois CPA Society, in conjunction with Accounting Transition Advisors, is here to help with Project MATS (Merger, Acquisition, Transition and Succession).

Project MATS is an on-demand service providing content, advice, consultation, information, case studies and succession services at no cost for members.

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Learn more and get advice from the experts at Accounting Transition Advisors today.

Visit www.icpas.org/practicemanagement or call Michele Haryasz at 800.993.0407, ext. 287.

Merger, acquisition, transition and succession – big issues that keep practitioners up at night.

Think Global

Your most important client is expanding overseas. Now what?

By Bridget McCrea

International business is on the rise, and many of your clients are leading the charge. Global trade grew by 13.5 percent in 2010, according to the World Trade Organization, marking the fastest ever expansion in global commerce. That’s great news f o r a c c o u n t i n g a n d f i n a n c e p r o s w i t h i n t e r n a t i o n a l b u s i n e s s experience, and serves as a warning for those without it

“Chicago’s high number of manufacturing companies has led to a lot of international expansion in the past 25 or so years,” says Antony Nettleton, audit practice leader and International Business Center director for Grant Thornton LLP, in Chicago Nettleton states that, “We’ve seen a lot of local manufacturing firms move production into countries like Mexico and China, where the cost of labor drove lower production costs.”

In addition, as the US economy and market demand have matured, there has been an increasing focus on international

Six Steps to Global Client Success

One: R e a c h o u t t o f i r m s / c o l l e a g u e s i n t h o s e countries into which your clients are seeking to expand

Two: Work with the local investment resources m o s t c o u n t r i e s h a v e h e r e i n t h e U S A . T h e i r j o b i s t o h e l p y o u r c l i e n t s s e t u p o p e r a t i o n s i n t h e i r c o u n t r y a n d t h e i r services are free

Three: Visit the countries with your clients Travel extensively and maintain an enquiring, open mind

Four: Join a network of international firms The statutory rules in each country differ widely, and in order to help domestic clients expand, you need to be able to help your client connect with the right advisors overseas.

Five: Learn the US tax rules related to foreign c o r p o r a t i o n s s o t h a t y o u c a n a d v i s e clients on how to set up the foreign entity related to the domestic filings

Six: M a n y c o u n t r i e s a r e m i g r a t i n g t o I F R S, which means you need to understand this b a s i s o f a c c o u n t i n g a n d t h e s i g n i f i c a n t differences between IFRS and US GAAP.

In response, Chicago-based firms like Grant Thornton have established international networks that can step up to the plate and help the client make the best possible accounting decisions when dealing with the complexities of international expansion.

“If one of our clients goes into Vietnam to do business, we have someone there on the ground ready to help set up operations, and to deal with taxes, systems and controls,” says Nettleton. “The more companies venture overseas, the more complex things become ”

An obvious area of concern is foreign forms of accounting such as International Financial Reporting Standards (IFRS) Accustomed to Generally Accepted Accounting Standards, domestic companies expanding overseas are relying on their CPAs to help them decipher IFRS and to manage value-added taxes, social taxes and other nuances that they don’t necessarily have to deal with domestically

C u l t u r a l d i f f e r e n c e s a l s o c o m e i n t o p l a y, N e t t l e t o n p o i n t s o u t , a s d o b a s i c accounting considerations such as how quickly invoices are paid. In Italy, for example, it’s not uncommon for a vendor to be paid within 120 days, versus the 30 to 60 days that American firms are used to.

“These nuances can really surprise your clients, so it’s up to you to be able to educate them on these issues,” says Nettleton “And while the CPA doesn’t necessarily have to know everything about every country, it’s important that he or she understands that going into a foreign country is significantly different than building a new plant in Arkansas ”

L o c a l l a w s a n d c u s t o m s c a n s i g n i f i c a n t l y a f f e c t U S a c c o u n t i n g f i r m s a s t h e y spread their wings overseas, explains Kevin Wydra, CPA, audit partner with Crowe Horwath LLP in Oakbrook, Ill. and chairman of the Illinois CPA Society’s Audit and Assurance Services Committee. Having extensive experience working with US companies with overseas presences, Wydra says organizational structure is an important first consideration for clients who have to balance their US operations with the

local laws and customs prevalent in the target country. Many of those countries require statutory audits and compliance with other local accounting requirements, both of which are typically handled by local firms and require special attention to detail.

From the audit perspective, Wydra says he focuses closely on w h e t h e r t h e s e r v i c e s r e n d e r e d b y h i s c o m p a n y a n d i t s f o r e i g n a f f i l i a t e n e t w o r k a r e c o m p l i a n t w i t h U S i n d e p e n d e n t r e q u i r ements. Recently, for example, a client wanting to set up shop in Singapore ran into issues when the local affiliate was willing to p r o v i d e b o t h b o o k k e e p i n g a n d a u d i t s e r v i c e s . W h i l e t h i s w a s a l l o w e d u n d e r t h e l o c a l s t a n d a r d s , t h i s i s n ’ t c o m p l i a n t w i t h AICPA independence standards.

That scenario alone proves the importance of a CPA’s ability to understand the accounting services being rendered, and to ensure c l i e n t s a r e i n c o m p l i a n c e w i t h d o m e s t i c a n d / o r i n t e r n a t i o n a l requirements, says Wydra

But by mastering the ropes of international business, accounti n g f i r m s o f a l l s i z e s c a n e s t a b l i s h t h e m s e l v e s a s a “ g o - t o ” r e s o u rc e f o r c l i e n t s t h a t c a n ’t p o s s i b l y h a n d l e t h e i r e x p a n s i o n overseas on their own

“When you can position yourself to be able to handle large, m u l t i n a t i o n a l c o r p o r a t i o n s w o r l d w i d e , y o u m a k e y o u r s e l f t h a t much more valuable in today’s increasingly global business envir o n m e n t , ” s a y s Wy d r a “ I t a l l o w s y o u t o c o n t i n u e t h a t t r u s t e d advisor relationship that you established domestically, and build on it globally ”

“To truly become global in knowledge and experience and to be able to address clients’ needs as they arise accountants will h a v e t o e d u c a t e t h e m s e l v e s o n t h e p r o c e s s e s , s t a n d a r d s a n d requirements that are being used in the target countries,” says Dan Rahill, CPA, Illinois CPA Society treasurer and a tax partner with KPMG LLP in Chicago Rahill suggests accountants do the necessary self-study and research to get up to speed on how business, audits and taxation are handled in the most popular regions their clients are exploring

Of course, nothing beats early preparation and hands-on exper i e n c e “ S h o r t - o r l o n g - t e r m f o r e i g n a s s i g n m e n t s e a r l y i n a n accountant’s career provide great experience and clearly gives them an advantage among their peers,” says Rahill. “Requesting assignment to a foreign-owned multinational client will provide a professional with some great technical experience, including possible exposure to IFRS.”

F o r m a n y d o m e s t i c f i r m s , h o w e v e r, p a r t n e r i n g w i t h f o r e i g n firms that know their local turf best is the most effective option.

“To most effectively deal in the middle market and with largec a p i t a l c o m p a n i e s , d o m e s t i c a c c o u n t i n g f i r m s w i l l h a v e t o develop a global network of service providers that they can tap into,” says Rahill. As he explains, these resources will be invaluable when it comes down to dealing with “audits to cash management to business structure, and everything in between ”

Racking up some frequent flyer miles will also take your quality of service to new heights “Don’t assume that everything is just like it is here, in the United States,” says Nettleton “If your clients are doing business in other countries, you really need to visit those places in person to get a feel for how business is conducted there Too many accountants do their work from their offices in Illinois, with no appreciation whatsoever of what it’s like in the countries where their clients are operating ”

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Crowd Control

How to manage negative feedback in the social media age

By Selena Chavis

Do you know what customers are saying about you and where they’re saying it? In the age of social media, many companies have learned the hard way that bad press can spread like wildfire.

And whether or not the negative feedback is deserved, experts caution that you have to be prepared to respond quickly and appropriately to turn a potentially volatile situation into an opportunity

“They may or may not be right,” says Mana Ionescu, president at LightspanDigital.com, a Chicago-based digital marketing firm specializing in social media and email marketing “You may have to look at it as an opportunity to educate the public It could be a great branding opportunity in that it may show you a side of your brand that needs attention.”

Negative responses tend to fall within three categories: 1) those that are blatantly malicious in nature; 2) those that may be misguided; and 3) those that have been earned or warranted.

In the case of “blatantly malicious” comments, the most appropriate response may be no response at all “Sometimes the person venting looks so bad that it makes sense not to respond,” says Ellen Hattenbach, a business development executive at Frost, Ruttenberg & Rothblatt, P C , a large CPA and business advisory firm based in Deerfield, Ill. “Sometimes, no matter what you do, it’s not going to make a big differe n c e , ” I o n e s c u a d d s , p o i n t i n g o u t t h a t i f y o u d o c h o o s e t o r e s p o n d , o p t f o r n e u t r a l i t y s o t h a t y o u don’t feed the fire

In the second instance, experts suggest that companies evaluate the opportunity the misguided negativity presents “Negative feedback is a gift it’s an opportunity to make a change,” says Sima Dahl, a Chicago-based consultant in the marketing, branding and social media space to B2B owners. It’s an opportunity for one-to-one interaction that can potentially earn you a new customer She suggests empathizing expressing regret that a customer is feeling mist r e a t e d o r f a c i n g d i f f i c u l t y a n d t h e n m o v i n g t h e conversation to a more private channel where the feedback “can include more than 140 characters” per response.

In the third instance, where the negative feedback is valid, Ionescu suggests that companies “acknowle d g e t h e m i s t a k e ” a n d “ d o n ’t g e t i n t o t h e b l a m e game ” A company that comes across as humble and willing to rectify a situation will be perceived in a much more positive light than a defensive one

She references a recent social media disaster at Nestle that many claim as a textbook case of how not to handle negative attention. In a nutshell, the company came under fire across many social media networks when it responded defensively to a Greenpeace campaign against the company’s use of palm oil Greenpeace members populated the Nestle Facebook fan page with wall posts, while also changing their profile pictures to altered versions of the Nestle logo. The perceived caustic tone of the Nestle Facebook page moderator only added fuel to the fire

“That could have been so easily avoided if they had just killed them with kindness,” Ionescu suggests, adding that while most accounting and finance firms won’t face attacks on this scale, it’s important to understand the nuances of social media interaction And even more importantly, firms need to have a solid crisis plan of action in place

Dahl feels that many accounting firms are treading cautiously for fear of making costly mistakes. “This concept of trying to think through every scenario before we try social media is a fallacy Social media success is reserved for brands that ‘do’,” she explains.

Frost, Ruttenberg & Rothblatt, P C for one h a s e s t a b l i s h e d a s o c i a l m e d i a p r e s e n c e through its Facebook page, using video and other tools to introduce the public to its staff “If you were looking for an accounting firm, and you went to our site, you would get a flav o r f o r o u r s t a f f a s p e o p l e , ” n o t e s A l a n Dordek, director of marketing and business development at the firm

O n e o f t h e u n i q u e o p p o r t u n i t i e s t h a t social media provides professional services e n t i t i e s i s t h e m e a n s t o c o n n e c t w i t h t h e public on a much more personal level “So m u c h o f t h e w a y f i n a n c i a l s e r v i c e s a n d a c c o u n t i n g f i r m s g o t o m a r k e t i s t h r o u g h referrals,” says Dahl, adding that the public is much more likely to connect with individuals than with a firm “That’s a really unique opportunity for social marketing ”

However, there are risks, particularly if your social media initiatives aren’t monitored From free tools to complex enterprise systems, business entities should make room in business operations for tools that will enable them to monitor and immediately respond to negative feedback “If a complaint comes through Twitter, we have to respond within an hour,” says Ionescu, pointing out that the larger the brand, the shorter the timeframe for response strategies “Our stats suggest that if it gets beyond an hour, you tend to lose the customer or control of the message.”

Negative messages or comments on blogs don’t require quite as immediate a response, but marketing experts still suggest at least a 24-hour turnaround

G o o g l e A l e r t s , a f r e e t o o l r e c o m m e n d e d by Ionescu for individuals and small companies, provides notifications when your name is mentioned on the Internet “There’s a tiny d e l a y w i t h G o o g l e A l e r t s . T h e y d o n ’t p i c k up everything, but it’s a good no-cost tool,” she explains

Frost, Ruttenberg & Rothblatt, P.C. currently uses this tool, in addition to having established a committee of partners that meet on a

regular basis to discuss opportunities and issues related to social m e d i a . “ O u r p a r t n e r s h a v e r e a l l y e m b r a c e d m e d i a a n d s o c i a l media,” says Hattenbach. While they believe the opportunities outweigh the risk, they have still established internal policies that cover areas such as how to handle negative feedback. “Our partners are really leading this effort,” she says.

T h i n k o f f e e d b a c k o n s o c i a l m e d i a a s w o r d o f m o u t h g o n e viral. One bad word and potentially billions will hear of it. You have to be able to put out the fire at its onset and to turn negativity into opportunity

Top Barriers to Greening

What ’ s holding companies back from embracing the sustainability dream?

By Sheryl Nance -Nash

Despite global economic and political factors that might have predicted otherwise, MIT Sl oan Management Revi ew and The Boston Consulting Group 2011 global study, Sustai nabi l i ty: The “Embracers” Sei ze Advantage, reveals that corporate commitments to sustainability driven management are strengthening. Almost 60 percent of the 3,000 executives interv i e w e d a r o u n d t h e w o r l d r e p o r t e d t h a t t h e i r c o m p a n i e s ’ s u s t a i n a b i l i t y spending had increased in 2010. The study found that a growing number of companies believe sustainability will become a source of market advantage, should be incorporated strategically in all aspects of business operations and eventually will require a sea change in competitive behavior Respondents also recognized the brand-building, resource-efficiency and waste-management benefits of sustainability strategies

“The only way to continue growing and continue being a successful business is to treat sustainability as a key business lever in the same way that you treat marketing, finance, culture, HR or supply chain,” said Santiago Gowland, vice president of brand and global corporate responsibility at Unilever, in an interview for the study. “So really, it’s core to the ability of the business to grow.”

However, for many, the approach to sustainability is at best lukewarm Barriers to greening persist Here, we take a look at the top four

1. Money, Money & Money

“The desire to be green is often there, as is the understanding of what’s to be gained from making this type of commitment, but resources to make it happen aren’t always available or aligned,” says Chad Tragakis, director of corporate responsibility for Hill & Knowlton in Washington, D.C.

Finance Gone Green

Ajilon Professional Staffing [ajilon.com] has identified five areas where finance teams can contribute to environmental sustainability initiatives:

One: Risk assessment Just as you monitor exposure to current risks, the finance department can evaluate the environmental impact of current policies and procedures and make recommendations for improvement

Two: Supply chain auditing. Utilizing the wrong suppliers can expose you to consumer backlash or government penalties Ensure you align with proven partners

Three: Metrics reporting Determine how to capture sustainability data and its financial impact to convey the information to internal and external stakeholders

Four: Operational initiatives Explore eco-friendly measures that benefit your budget Consider electronic document and record filing, etc

Five: Budgeting Allocate R&D funds for green products and services.

N a t u r a l l y, c o m p a n i e s n e e d f r e e c a s h f l o w t o s u p p o r t a n y c h a n g e i n t h e w a y t h e y d o b u s i n e s s , s a y s C r a i g D e e r i n g , a Chicago architect with LEED project specialists RTKL Associates “The most basic business activity is predicting the future The future of green technology and business models are both emerging and evolving, posing a challenge,” he explains

And then, of course, companies are unsure of the ROI of green initiatives. Statistics are helping to pave the way to greater confidence, however. Take, for example Newsweek’s “2010 Global Green Rankings.” IBM (which ranked in first place) saved more than $370 million through its annual energy conservation actions between 1990 and 2009 GlaxoSmithKline (which ranked number five on the list) has reduced its carbon footprint by 4 percent over the last three years, according to Energy Effi ci ency News, and saved more than $6 million

“Going green doesn’t have to be either difficult or costly You just need to break it down into small steps,” says William Doyle, CEO of Vystar, a maker of eco-friendly latex material “Bit by bit, the company can move toward a more sustainable path. Start small, but keep adding activities, and before you know it the company will see

2011 | C37507

11:30AM - Networking and Lunch

12:00PM - 1:00PM - Program and Q&A

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8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

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Rockford | Oct. 25, 2011 | C37509

11:30AM - Networking and Lunch

12:00PM - 1:00PM - Program and Q&A

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Chicago | Jan. 23, 2012 | C37510

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8:30AM - 9:30AM - Program and Q&A

The Crowne Plaza Chicago Metro 733 West Madison, Chicago, IL

Oak Brook | Jan. 24, 2012 | C37511

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

The DoubleTree Hotel 1909 Spring Road, Oak Brook, IL

Glenview | Jan. 25, 2012 | C37512

8:00AM - Networking and Breakfast

8:30AM - 9:30AM - Program and Q&A

Wyndham Glenview Suites 1400 N. Milwaukee Avenue, Glenview, IL

improvements and employees will become engaged. In some cases, there may be a slight increase in cost, but often this will be offset by improved efficiencies in other areas.”

2. Cynicism & Tales of Woe

Some still equate going green with going broke, says Roger Saillant, PhD, executive director of the Fowler Center for Sustainable Value at Case Western Reserve University in Cleveland. “Managers believe that to go green is to increase costs which will not be recovered in the marketplace,” he explains. “If businesses only ‘green wash’ this will be true They will have added some personnel costs, spent money on advertising, and increased in-company cynicism, which will reduce productivity without adding value to the business They are better off donating money to some philanthropic cause than just adding costs to pretend to be green.”

Others believe that green is a fad and all you have to do is wait long enough and it will simply go away. “People are conveniently confused by so-called contradictory information about global climate change and easily and eagerly, in some cases, transfer those poorly informed impressions to other areas of sustainability,” says Saillant

N e g a t i v e b r a n d i n g a l s o c o m e s i n t o p l a y. “ To m a n y, t h e t e r m ‘going green’ conjures up a liberal-left-wing-tree-hugger attitude that has hurt business in the past To be associated with the term ‘green’ in some companies may mean that you are impractical and likely to be lumped in with borderline eco-terrorist groups,” he explains. “If you were a manager committed to climbing up the ladder, you would want to consider carefully the possibility of the negative impact of being too closely allied with the green movement.”

3. Failure to Make a Financial Link

What often gets missed in all the discussions about going green is the link between sustainability and financial performance Unfortunately, there is no globally accepted framework for reporting on sustainability at least not yet, says Brad Monterio, managing director of Colcomgroup, Inc., an XBRL, ESG and accountancy consulting firm in New York “We already have market evidence that this

important non-financial information, when coupled with financials, provides a more comprehensive view of the organization’s performance. All one needs to do is look at the growing number of venture capital, private equity and hedge funds dedicated to sustainable companies,” he points out.

Large institutional investors such as CalPERS are paying increasing attention to it, and allocating larger chunks of their assets to companies that exhibit strong financial and sustainability practices, Monterio adds The newly formed International Integrated Reporting Committee (IIRC) is collaborating with standard setters, a c c o u n t a n c y b o d i e s , c o r p o r a t i o n s , a n a l y s t s a n d r e g u l a t o r s t o define a globally accepted framework for integrated reporting.

“ T h e m a r k e t i s c a l l i n g f o r s t r o n g e r s u s t a i n a b i l i t y p r a c t i c e s t o d a y, ” s a y s M o n t e r i o . “ T h i s m e a n s t h a t o rg a n i z a t i o n s n e e d t o begin to integrate strong sustainability practices into their businesses and report on those practices, in one, integrated report ”

Materiality is a major challenge. From a financial perspective, materiality is a concept well understood However, from a sustainability perspective, says Monterio, things are not so clear. “The potential breadth of sustainability related domains and metrics to track, measure and report on dwarfs the financial measures This necessitates a serious consideration of defining what is material to the stakeholders and narrowing the great expanse down to something that is manageable and digestible by the public, regulators, analysts, investors and other key stakeholders ”

S u s ta i n a bi l i ty : T h e E m br a c e r s S e i z e A dv a n ta g e o f f e r s s o m e advice: “Balance broad, long-term vision with projects offering concrete, near-term ‘wins’; drive sustainability top-down and bottom-up; aggressively de-silo sustainability integrating it throughout company operations; measure everything (and if ways of measuring something don’t exist, start inventing them); value intangible benefits seriously and try to be authentic and transparent, internally and externally ”

4 A Lack of Buy-in From the Top

When it comes to greening a company, says John Shegerian, chairman and CEO of Electronic Recyclers International in Fresno, Calif., “There is no finish line It is a process that never ends But the multitude of benefits that come with the greening of a company will eventually win management employees and the clients of that company over All that is needed is one or two ‘champions’ of the cause inside the company and much can be accomplished.”

For any organization, “inertia, confusion and fear” are typical barriers, says Deering Change is necessary; change in how the organization views the importance of its stakeholders; change in the practices of the organization; change in corporate culture and philosophy and in what a company reports internally and externally.

“Organizations must not only convince their stakeholders, but also convince themselves that they are in fact capable of being sustainable and profitable,” says Monterio

“Companies need to shift from green for the sake of green to a mindset of green as an integral part of competitive advantage,” adds Saillant “Under some conditions, environmental performance can help a company to better meet its customers’ expectations, improve its supply chain security, and improve profitability Framed as a shift in market context, green becomes less of a barrier in business,” he explains

Ready or not, like it or not, Tragakis adds, “The sustainable century is here to stay. The most successful companies in America, and around the world, will be those that rise to meet it ”

How long would

your

savings last

if your paychecks stopped tomorrow? ?

Your income means more than the numbers written on your paycheck. That’s because your financial future is generally based on your ability to earn an income. But what if a serious car accident led to back injuries? Or your doctor diagnoses cancer and prescribes an aggressive course of radiation and chemotherapy? Or the sudden headache is really a stroke that leaves you unable to work as a financial professional?

They’re all real-life scenarios. And they could easily mean the end of your ability to earn a paycheck as a financial professional.

Without a steady income, how long would your family be able to pay rent or take care of the mortgage? What about car payments? Credit card bills? Utilities like electricity and the phone? What happens to your children’s college education?

Those everyday expenses don’t disappear just because your paycheck stops.

That’s why ICPAS sponsors the Group Disability Income Insurance Plan. Unlike disability coverage offered through an employer or counted as a “business expense” if you own your own firm, benefits through this special program for ICPAS members are generally paid tax-free 1

Plus, the plan can deliver up to $10,000.00 in benefits every month if you can’t work as a financial professional.(Many other disability plans only pay benefits if you can’t work in ANY job.) Think of it as ICPAS’s way of helping you protect your earning power as a specially trained financial professional.

5 Real-Life Illnesses & Injuries That Can Stop Your Income

You’re not immune from the nancial impacts of a disability just because you have a “desk job.”

Take a look at ve common medical conditions that are already preventing other professionals from earning an income2:

1.Cancer

2.Back injuries

3.Diabetes

4.Heart attacks, heart disease and stroke

5.Joint, muscle and connective tissue diseases

Your income is too important to leave unprotected. Take a closer look at the ICPAS-sponsored Disability Income Plan today.

Website Reconstruction

Haven’t touched your site since 1998? It ’ s high time for a redesign.

By Derrick Lilly

How to Pick a Provider

Needs: Detail exactly what you want out of your website Some basic areas to consider are page limits, security, client portals, and email and marketing tools

Features: Match website features with user needs and abilities Take note of functionality and user-friendliness

Value: Define a budget and compare each provider ’ s services and costs to see who offers the most bang for your buck

Quality: Up-time, tools, support, and user interface make or break websites Be sure to test the offerings of each provider

Support: Consider who provides the client and customer technical support, whether there’s live assistance 24/7 year round, and costs for additional support or training

Security: Take special note of available security features such as firewalls, password protection and data encryption

Scalability: Ask the website service provider if there are options according to business size, and how easy it is to add, change or upgrade features

“

Let’s face it, most professionals out there have a website to promote their business and attract new clients,” s a y s C a m e r o n H e n d r i c k , v i c e p r e s id e n t o f b u s i n e s s d e v e l o p m e n t a t E m o c h i l a , I n c [ e m o c h i l a c o m ] , s p ecialists in CPA website marketing and d e s i g n B u t t h a t d o e s n ’t m e a n i t ’s working Having a website and having a successful website are two entirely different things

A s H e n d r i c k e x p l a i n s , “ B u i l d i n g a successful website comes down to creating a high-quality environment with relevant content and useful features ”

It sounds easy enough, yet so many just don’t get it right

“Many CPAs underestimate the impact websites have on their image,” says Hendrick “They need to realize that people are looking at them and making decisions based on what they see ”

“Around 75 percent of people looking for a local service professional will l o o k o n l i n e f i r s t , ” s t r e s s e s S u s a n n a h Noel, marketing and communications manager at CPA Site Solutions [cpasitesolutions.com]. “A website is definitely your greatest marketing tool today.”

Wi t h t h o u s a n d s o f c o m p e t i t o r s a m e r e m o u s eclick away, you may get only one shot at landing that new client. That said, you need a website that separates your firm from the pack. Here’s a hint: The website you launched in 1998 and haven’t touched since isn’t going to get the job done

“An old looking website built around an outdated design is almost worse than not having one at all,” says Hendrick “Think about your website from the p o i n t o f v i e w o f s o m e o n e w h o h a s n e v e r s e e n i t before You have to step outside of your box and really think about the image that you want to convey and impress upon your viewers ”

“Your website should brand your firm; it should communicate what is unique about the firm and what the firm stands for,” adds Hugh Duffy, chief marketing officer with accounting firm marketing specialists,

Build Your Firm, Inc [buildyourfirm com]

“Maintaining your website is like the paint on your house; at a certain point in time you have to update it ”

Tip 1: Revamp ‘About Us’

“Think of your website as a replacement f o r o l d - f a s h i o n e d b r o c h u r e s , ” s u g g e s t s Duffy “You should clearly inform prospect i v e c l i e n t s a b o u t t h e f i r m , a l l s e r v i c e s offered, and the qualifications of the staff and leaders.”

This starts on the ever important “About Us” page Here you’ll want your prospect i v e c l i e n t s t o q u i c k l y l e a r n e v e r y t h i n g they should know about the people who will handle their financial matters.

“ C PA s a n d t h e i r f i r m s a r e u n i q u e , s o y o u r A b o u t U s p a g e n e e d s a p e r s o n a l touch. The last thing you want is a cookiecutter website full of generic information,” says Hendrick. “A background statement on your firm and biographies with headshots of your leaders and staff are musthaves. Prospective clients want to see who they will be meeting and working with ”

Duffy urges professionals to avoid resume-like biographies, however Instead, opt for background statements in the form of brief stories that casually cover each individual’s education and expertise, and that reflect their personalities

Tip 2: Make Contact Easy

N o w t h a t y o u r p r o s p e c t i v e c l i e n t s f e e l comfortable requesting more information, make it easy for them to contact you. One common but critical mistake is a hardt o - f i n d p h o n e n u m b e r. H i n t : P u t a n attended contact number on every page

Your “Contact Us” page has to be easy to locate, and should include all pertinent sales and support phone numbers and email addresses, a physical mailing address and a map with directions to your location

A n i f t y a d d - o n t o i n t e g r a t e i n t o y o u r website is email capture. Creating a simp l e b o x w h e r e v i s i t o r s c a n o p t t o e n t e r t h e i r e m a i l a d d r e s s e s t o r e q u e s t m o r e information, sign up for your eNewsletter, subscribe to your blog, or whatever else y o u m a y u s e t o m a r k e t a n d b r a n d y o u r firm, can provide an instant boost to your hot prospects list

A n d d o n ’t i g n o r e t h e p o w e r o f s o c i a l m e d i a “ F a c e b o o k , L i n k e d I n a n d Tw i t t e r are the other big tools accountants should know,” says Noel “There’s a lot of tie-in y o u c a n d o b y u s i n g t h e c o n t e n t f r o m y o u r w e b s i t e f o r p o s t s o n y o u r s o c i a l media outlets ”

Now it’s time to focus on the features t h a t w i l l t u r n y o u r h o t p r o s p e c t s i n t o b o o k e d c l i e n t s a n d o f f e r y o u r e x i s t i n g clients better service

Tip 3: Send Out an eNewsletter

K e e p i n g c o n s t a n t c o n t a c t w i t h c l i e n t s e s p e c i a l l y t h e c y c l i c a l o n e s i s a c h a llenge. Thankfully, if you’re not up to writing your own monthly eNewsletter for that vital client interface, then a variety of webs i t e s e r v i c e p r o v i d e r s w i l l p r o d u c e a n d deliver one for you

“Our clients love this capability They d o n ’t h a v e t h e t i m e t o s i t a r o u n d a n d write a newsletter, but they want to communicate with their clients in this way,” s a y s H e n d r i c k “ A u t o m a t i c e N e w s l e t t e r s a r e a n e a s y w a y t o k e e p i n t o u c h a n d keep clients happy ”

W h e t h e r y o u w a n t t o s i m p l y s e n d a n i n f o r m a t i o n a l e N e w s l e t t e r o r d i v e i n t o m o r e a d v a n c e d f e a t u r e s l i k e i n t e r a c t i v e financial calculators, QuickBooks hosting, o n l i n e b i l l p a y i n g , p a y r o l l m a n a g e m e n t solutions or all of the above they’re all embeddable on your website “Your website should be the hub for all of your services, allowing you and your clients to do everything in one place,” says Hendrick.

Tip 4: Provide a Client Portal

“Twenty-four hours a day, 7 days a week, 365 days a year, the efficiency of working with clients virtually through the Internet saves time, improves profit margins, and enables professionals and clients to collaborate and share files from anywhere,” says Duffy

In other words, you need a client portal “ I t ’s o n e o f t h e m o s t i m p o r t a n t f e a t u r e s y o u c a n i n c o rp o ra t e i n t o y o u r w e b s i t e , ” says Hendrick

Forget the days of having clients ship sensitive files and data to you With a secure portal, your clients can upload documents to you instantly Once uploaded, the files are accessible anytime, anywhere, encouraging collaboration and streamlining your workflow.

What’s more, “Client portals should be v i r t u a l l y b a c k e d u p i n m u

locations If there’s any kind of catastrophe i n y o u r o f f i

computer crash, all of your sensitive documents are secure and accessible,” Noel explains. “Plus, a paperless office is a lot cheaper and safer. With the tools websites o f f e r t o d a y, i t ’s f a r e a s i e r t o m a i n t a i n a fully mobile office ”

Five Ways to Save

You work hard for your money. Now make it work hard for you.

By Derrick Lilly

The economic turmoil that has become part and parcel of your everyday existence should have taught you something: You need to plan ahead The following steps can get you on the fast track to a bigger paycheck and firmer financial footing

1 Get the Most Out of Your Employer

“When people think of salary they often don’t include their total compensation package Not only should you look at the paycheck, you also need to look at retirement and insurance offerings,” says Jeff Rozovics, CPA/MST/CFP®/CVA/AEP®, partner at certified public accounting and consulting firm Rozovics & Wojcicki P C in Park Ridge, Ill “The point is that you have access to potentially very affordable coverage for you and possibly your family through your employer rather than paying for it out-of-pocket ”

Perks like retirement accounts and pre-tax payroll deductions also can trim out-of-pocket expenses and save more of your salary “You want to maximize all the benefits an employer gives,” says Sid Blum, CFP/CPA/ChFC/PFS, founder of GreatLight Fee Only Advisors LLC in Evanston, Ill “A 401(k) is one of the best because you get a tax deduction and you get to keep the match money. You can’t get much better than that.”

Aside from the up-front tax benefits of utilizing a 401(k), it’s also one of the easiest ways to save for retirement And if you’re lucky enough to receive a company match, it’s free money “I think a 401(k), regardless of the type of investing you’re doing, is really a no-brainer The more you can knock down your taxable income, the better it is for you Deferring your taxes or lowering your tax-bracket right now is how you’ll get the most benefit when it comes to take-home pay,” Rozovics explains

It may be years before you can use your 401(k) funds without penalty, but other pre-tax payroll deductions will put money in your pocket now “If you want to stretch your paycheck, you want to take advantage of as many of the pre-tax deductions you can actually use,” says Rozovics For example, having a portion of your salary deducted before payroll taxes for the purchase of transit fares or for funding a health savings account immediately reduces your taxable income

“The point is to know the array of benefits so you can take advantage of them As your career develops and you start looking more into your financial plan, employer benefit offerings do come into play in helping you achieve your objectives,” says Rozovics.

2. Tap into IRAs

Utilizing employer retirement savings plans can stretch your salary, but most employers put limits on 401(k) contributions, what their match (if any) will be, and how long it takes for the funds to be vested

This is where Roth IRAs come in. “A lot of financial

cles,” Rozovics explains

While your 401(k) offers an upfront tax deduction, you’ll be taxed at redemption Since your paycheck is already taxed, you need to be tax-conscious when investing what’s left of it By utilizing a Roth IRA, your contribu-

tions and earnings grow tax-free Although not necessarily an upfront salary-saver, a Roth IRA diversifies your tax liabilities and spares you from future tax-induced depreciation

3. Plan for the Near Term

“We see a lot of clients that want to buy a house or do something where they are absolutely going to need the money within three to five years. That money should be invested where it will actually be there in the end and earn something over that time,” says Blum

Consider building a ladder of safe, FDIC-insured Certificates of Deposit (CD) with this money With a CD, you can lockup funds over variable timeframes to guarantee income for your future needs. CD interest rates are commonly higher than standard savings accounts because you are securing it for an extended period of time. BankRate com is a great resource for locating the most competitive interest rates on a variety of CDs and other accounts.

Also, set aside a portion of your paycheck for emergency reserves

“Normally we say six months of emergency money is ok, but in this crazy environment where someone may be laid off, a little more should be saved,” says Blum.

Stash your emergency money somewhere where you won’t be tempted to spend it, but where it’s still easily accessible perhaps a money market, checking or savings account If your employer qualifies you, try looking into a credit union “Historically credit unions have paid higher interest rates on their accounts compared to what you could get at a local bank,” Blum explains

Regardless of the account type, shop around for an insured account that pays a decent yield so your money works while it waits

4 Break Free of Debt

“Right now cash is king, but you can’t accumulate cash when you’re incurring fees and finance charges on the side,” Rozovics stresses. “If you want to dig yourself out of a hole, you can’t just make the minimum payment.”

“In today’s environment, paying down the highest interest rate debts first will provide a fairly significant savings benefit,” says Blum, adding that “Mortgages should be refinanced if your loan is at a high interest rate.”

Keep a watch on payment dates too, since late payment fees quickly add up. If at any point you can pay off the entire balance of a bill or loan, do it Being free of debt or maintaining a manageable amount of it can work wonders for your financial and emotional well-being And, not having your paycheck constantly dedicated to bills will make reaching your financial goals a whole lot easier

5 Build an Honest Budget

“You need to understand what your budget is,” says Rozovics

“Being honest with yourself is a hurdle that becomes an issue for many when designing a budget ” Establishing a budget and putting measures in place to keep you living within your means will help you avoid future strains and build a foundation for future wealth

“People should buy what they need,” adds Blum. “But I’m always a firm believer in spending less than you make so there is something available for savings.” With a budget in place, you will have a better chance of achieving your financial goals and controlling your discretionary spending.

“If you get a raise at work, instead of getting used to the bigger paycheck and spending more, try taking part of it and depositing it into your 401(k) or other savings or paying down a bill,” adds Rozovics “Having a structured plan in place is one of the most effective ways of accomplishing your goals If you can do that early in your career, it will pay dividends down the road ”

Strategy One: Assess Change from All Angles

“When market fundamentals, such as credit availability, intere s t r a t e s , c o n s u m e r c o n f i d e n c e a n d u n e m p l o y m e n t a r e i n a state of flux, changes could materially alter the way the company operates,” says Patti D. Hill, founder and managing principal of Penman PR, Inc It’s therefore imperative that company leaders actively engage in the daily operations and strategy of the business.

“They need to assess their revenue streams and competition, and how the changes in their market or customers will affect their business,” explains Lori Stortz, an audit partner with McGladrey & Pullen LLP “It is equally important that they take a hard look at their cost structure and determine if they need to eliminate or reduce costs. Proactive and decisive, timely actions are crucial.”

Remember that declines in one industry can be expected to ripple into others “In order for an executive team to maintain its financial position, it’s important to understand how changes in the business environment will impact the company’s business model and strategic direction,” Hill advises.

Strategy Two: Go on the Marketing Of fensive

Chris Arndt, president of Chicago-based RedGranite Consulting, says a down market makes it easier to wrestle market share away from competitors “The very meaning of a challenging economy is that the market is shrinking,” he explains. “When the size of the pie, i e market size, is stagnant, the most beneficial strategy is to gain market share, or a bigger piece of the pie ”

B y r a t c h e t i n g u p s a l e s a n d m a r k e t i n g

d o wn tu rn , a c o mp a n y c a n e le v a te its e lf a b o v e th e fra y, a n d position itself well for the inevitable economic turnaround

“The old adage ‘If you’re not different, you’d better be cheap’ rings most true in an economic downturn,” says Hill “Differentiation is key By learning what revenue-generating audiences want and need, executives can deliver products or services that become the only logical choice regardless of the economy ”

Strategy Three: Focus on Client Retention

“Get out and call on customers or clients, potential customers and people who know people As business picks up, there you will be,” says Peter Lucash, founder and CEO of Digital CPE, LLC, a consulting firm based in Charleston, S C

“In a challenging economy, focusing on excellent customer service is critical. It costs a lot to get a customer or client in the door Once they’re in, do everything you can to keep them,” urges Deborah Sweeney, CEO with MyCorporation com “Treat them right to keep them coming back, and encourage them to refer your services to others ”

Sweeney explains that people look for two factors when evaluating service providers, namely a great deal and a great experience “Focus on what the company does right Doing that well is the way to keep customers happy and coming back,” she says

And make sure revenue isn’t over-dependent on a single client. “You want to have several sources of customers and some diversity of revenue streams so that a problem in one area is not a company killer,” Lucash explains. “If your company health is dependent on one client, you are now an employee of that client ”

h i p s w i t h c u stomers is to anticipate future needs. In a challenging market

i r o n m e n t , m a n y c o m p a n i e s w i l l c o n t r a c t H o w e v e r, a s t h e economy recovers, companies will expand, and as they do, service providers that are positioned to serve those future needs will have an obvious advantage over competitors

“Where are your customers going? What will their needs be in the coming years? Your job is to solve their needs, and if you can’t do it, refer them to someone who can That will help to build your network,” Lucash advises

Strategy Four: Evaluate Your Focus

Whether to focus on the core business or to diversify will depend on the individual business. According to Ryan Kubacki, president of Chicago-based Holden International, it’s often difficult to pre-determine which path is best “If, say, a new entrant emerges that threatens your core business model,” he muses, “then it would probably be wise to diversify your offering in order to both retain your current customer base while also maintaining that level of structural attractiveness that built your core customers in the first place.”

He illustrates his point by referencing Netflix and Blockbuster. When Netflix expanded its services beyond the physical DVD and toward digital streaming media, Blockbuster was slow to respond This delay contributed to Blockbuster ’s eventual downfall

“As a business, you need to adapt and keep to your core business by ensuring that you keep it relevant,” he contends. “This can be achieved in a variety of ways, including lowering costs associated with your products and services, or offering value-added services that you otherwise would have charged separately for ”

Strategy Five: Stay in Tune With Your Employees

In an economic downturn more than at any other time, “Maintain a personal connection with your employees. They are your company,” Lucash urges.

It’s also especially important to be transparent, to let employees know how the company is doing and to explain what plans are in place to ensure longevity

The State of the Illinois Economy

According to a report issued by the State of Illinois Economic Recovery Commission in June 2010, the state has lost more than 425,000 jobs over the past 10 years The Commission itself was formed to develop and evaluate ways to respond to the current economic downturn and to promote long-term economic stability and expansion The findings, while not revolutionary, would seem to be as applicable to the business sector as they are to the state.

“We must make sure Illinois is at the forefront of venture capital, global marketing and sustainability, leading the world in best practices for infrastructure planning, smart grid technologies, workforce education and overall economic development,” the report urges

And then, a salvo of words that could apply to any seasoned company: “Illinois cannot afford to rely on decades - old strateg i e s , c o n c e p t s a n d b u s i n e s s m o d e l s a s w e c o n f r o n t t h e n e w global economic landscape of the 21st century ”

More specifically, the report suggests that the state’s business culture is more focused on promoting the incremental growth of large companies than on realizing the potential of small businesses that are new and expanding

“This is also the time to show appreciation for your staff These don’t need to be big things. If people are committed and they’re working hard, show appreciation. Walk around and listen. Really, really listen,” Lucash advises

The best thing that leaders can do is to frequently reaffirm the long-term focus of the company “It can be beneficial for leaders t

s t a l c l e a r t o t h e i r e m p l o y e e s . When employees are made aware of the problems, they will realize that management isn’t running away This will inspire good employees to help take on the challenge,” says Arndt

“Compassion, tenacity, honesty, inspiration and intelligence are all high on the list of leadership qualities doubly so when times are tough Powerful leaders will provide profound, yet straightforw a r d g u i d a n c e t o e m p l o y e e s w h e n m o r a l e i s l o w, ” s a y s H i l l , adding that, by acknowledging negative facts and feelings and taking a shared stance, management can channel energies into an a c t i o n p l a n t h a t p u t s e v e r y o n e o n t h e s a m e p a g e a n d w o r k i n g towards a common goal

Kubacki states it simply: “There are three leadership qualities that should standout in any situation where company morale is low due to the economy: Decisiveness, communication and grit.”

Strategy Six: Find Alternatives to Downsizing

In the quest to cut costs during an extended period of slow economic recovery, many companies downsize However, this is not always the most strategic approach to long-term success

“You cannot shrink your company to greatness,” says Stortz. “The most successful companies see an economic slowdown, new competition or technology changes as an opportunity They invest in innovation to develop new products, seek to enter new geog r a p h i c m a r k e t s a n d l o o k t o a c q u i r e w e a k c o m p e t i t o r s t o g a i n economies of scale and more pricing power.”

“Your focus should be on selling more stuff,” Lucash states simply. “That’s how you make money Chasing the holy grail of efficiency is an exercise that often results in being cheap, not efficient ”

“Illinois relies on a big- company strategy for growth instead of f o s t e r i n g a n e n t r e p r e n e u r i a l c u l t u r e , e v e n t h o u g h e x p e r i e n c e shows that new, innovative companies serve as the most efficient engines for economic growth,” the report contends

The Commission suggests that innovation may be a key to solving our current economic crisis However, due to a lackluster record of government support, the state is missing out on a grand harvest of ideas The report references a biochemistry professor at the University of Chicago, who discovered an effective new drug in the 1970s “Unable to raise venture capital in Illin o i s , h e o b t a i n e d f u n d i n g f r o m C a l i f o r n i a s o u r c e s a n d l a t e r moved his new company there ” Today, that company is better k n o w n a s A m g e n , a n d i t i s t h e w o r l d ’ s l a r g e s t i n d e p e n d e n t biotech company, employing over 17,000 people.

However, not all is lost The report also found that Illinois poss e s s e s e x t r a o r d i n a r y a n d s t i l l u n t a p p e d r e s o u r c e s “ We h a v e great financial, intellectual and technological resources; we now must work together to combine those resources to build a bright and successful future for Illinois ”

Wise words indeed

M&A Movers & Shakers

By Clare Fit zgerald

As the economic recovery limps along, growth areas have been few and far between in many sectors But in the accounting industry, mergers and acquisitions have become an increasingly popular path for firms with the need to gain market share. From sole proprietors and middle-market firms to major accounting giants, various trends and dynamics have created a big M&A appetite in the industry

In 2007, Barry Melancon, president and CEO of the American Institute of Certified Public Accountants (AICPA), predicted that more mergers and acquisitions would take place in the 10-year period from 2007 to 2017 than in the entire history of the accounting profession in the United States And according to Lon Goforth, the Illinois and Michigan managing director for New York-based consulting firm Accounting Transition Advisors, the feverish pace of consolidation in the accounting industry in just the past few years has already surpassed Melancon’s prediction

“M&A is unbelievably active in the accounting industry,” says Goforth, who notes several factors that are putting pressure on firms and driving the consolidation trend, including:

I n d u s t r y d e m o g r a p h i c s : M o r e B a b y B o o m e r s a r e r e t i r i n g a n d fewer young professionals are entering the industry, leaving a large talent gap for firms that need to transition their practices and meet succession goals What’s more, demand for talented recruits has intensified and competition is fierce, creating challenges for sole practitioners and smaller firms that may have a harder time attracting talent in the first place

Rules and regulations changes: Firms of all sizes, but especially smaller firms with fewer resources, are struggling to absorb heightened industry regulations and stay current with changing rules.

Competition for clients: Accounting firms have suffered losses to their client bases as companies have been forced to cut back on services Smaller firms without large marketing budgets struggle with developing new business And large firms are now competing for clients typically served in the past by second-tier firms Public perception of CPAs: Goforth suggests that the value of the CPA designation isn’t fully understood by the public, to the detriment of the industry. “People underestimate the importance of the d e s i g n a t i o n , ” h e s a y s . “ T h e y t h i n k t h e y c a n s i m p l y p u l l t a x o r accounting software off the shelf and replace the professional.” Limited in-house skills: In many cases, mid-sized firms have hit a ceiling in terms of in-house capabilities, and are seeking a merger to expand their skill sets “Without growth through merger, many of them can’t compete,” says Goforth “They may be able to compete on price, but not on capability ”

These and other factors are contributing to strong M&A activity on both the vertical side, where smaller firms merge upstream into larger firms, and on the horizontal side, where same-size firms combine to create large, mega firms. Regardless of firm size and motivation (gaining market share, adding services, attracting talent or developing transition strategies), mergers and acquisitions need to be executed with an eye to the finer details

“One of the biggest fears in M&As is losing control or autonomy, but if a merger agreement is properly structured and the blending of firms is done well, that shouldn’t happen,” says Goforth

Most important to success is finding a good match, he adds “The first thing you should look at is the personality and culture of a firm. A good cultural fit is the single most important component of a successful merger.”

Being comfortable with the firm’s business and service philosophy also is vital. For example, an extremely formal firm likely wouldn’t mesh with one with a more casual approach “

C l i e n t s w i l l b e a c c u s t o m e d t o h o w t h e i r f i r m p r o v i d e s a t t e n t i o n , ” s a y s Goforth However, “Targeting a firm that’s exactly like yours in terms of portfolio of services might build mass, but it doesn’t necessarily build opportunity, and it doesn’t allow you to cross sell It can be useful to study and analyze differences, because sometimes they can end up creating synergy ”

In succession scenarios, Goforth says firms need to not only find the right buyer, but also take the steps necessary to develop a true, valid succession plan “CPAs spend dozens of hours every year taking CPE classes, but few spend more than an hour protecting the asset they worked so hard to build,” he notes

He advises clients to think about their futures and prepare for the realities. “You owe it to your clients, family and staff to plan for practice continuation,” he says, noting that all too often when a sole practitioner or key partner passes away, there’s no opportunity for staff or family to salvage client relationships or practice value because a plan for this eventuality wasn’t put in place

As more aging Baby Boomers operating smaller firms come forward looking for buyers, and more mid-sized and large firms work to expand their geographic footprints and pursue international opportunities, the M&A marketplace is expected to maintain its healthy, active pace

But the trend doesn’t necessarily mean that the industry will see fewer firms overall down the road, according to Mark Koziel, director of specialized communities and firm practice management at the AICPA. “Two firms may merge to become one, but not everyone will stay, and some will leave to create their own practices,” he explains. Nor does he expect consolidation to have any negative repercussions on the strength of the accounting industry “This is such a strong profession and one that is constantly changing with the times and the economy The industry is always evolving to meet the changing needs of its clients ”

Where to Begin

It might be a hot market for mergers and acquisitions right now, but for many practitioners looking to buy, sell or plan for succession, the hardest part of the process is knowing where to start In fact, the Illinois CPA Society (ICPAS) recently noticed an uptick in members interested in buying or selling a practice And to meet that need, the Society teamed up with Accounting Transition Advisors to create Project MATS (Merger, Acquisition, Transition and Succession), an on-demand service that provides content, advice, consultation, information, case studies and succession services for members at no cost

“ We’ve developed a really unique program and practical resource to help educate members about mergers and acquisitions, transit i o n i n g a n d s u c c e s s i o n p l a n n i n g, ” e x p l a i n s M i c h e l e H a r y a s z , I C PA S d i r e c t o r o f k n o w ledge management.

This is the first program of its kind, in fact “The Illinois CPA Society was the first state CPA society in the country to recognize this trend a n d p r o v i d e s e r v i c e s t h a t w o u l d e m p o w e r members with knowledge,” says Goforth, who explains that the program ’ s modular format i s des i gn ed to h el p m em ber s better u n derstand the who, what, why and how of mergers and acquisitions

Project MATS provides guidance on everything from M&A due diligence to choosing a successor firm The program even offers free practice valuations. One of the biggest benefits, however, is the “Ask the Advisors” feature, which allows ICPAS members to confidentially submit questions and receive comp e t e n t , t h o u g h t f u l a n s w e r s f r o m e x p e r t s a t Accounting Transition Advisors.

To learn more about Project MATS visit www icpas org/practicemanagement

FRAUD H

HIT LIS T

Today’s fraud danger zones...and how to avoid them.

By Kris tine Blenkhorn Rodriguez

The typical or ganization loses 5 per cent of its annual r evenue t o fraud Compar e t his agains t t he es timat ed 2010 Gr oss World Pr oduct and you ’ r e looking at mor e t han $3 1 trillion in global losses. The median loss for businesses is $160,000, accor ding t o t he Association of Cer tif ied Fraud Examiner s (ACFE) If t hat isn’t bad enough, add in t he cos ts of fraud suf fer ed by consumer s in ar eas such as insurance, mor tgages and identity t hef t and you have a number t hat r equir es a s tr ong ant acid for even t he mos t jaded f inancial pr ofessional

Whet her dealing wit h clients, famil y member s or your own f inances, t he four fraud ho tspo ts highlight ed her e deser ve your devout att ention

Insur ance Fr aud: In Tampa, Fla on December 1, 2010, James Connally, William Broughton, Richard Peterson and William Clancy were sentenced in connection with a massive international insurance fraud and money laundering scheme. According to court documents, the defendants utilized a series of sham offshore companies, rented assets and falsely inflated financial statements to issue worthless insurance policies, reinsurance and financial guarantee bonds across the globe, including in the Middle District of Florida, through promissory note programs known as Premier Holidays International, Inc and World Vision Entertainment, Inc. Victims who invested in the promissory notes were told that they were backed by financial guarantee bonds In reality, these victims ended up losing more than $50 million.

Occurrences of life insurance fraud have increased over the past several years But that’s nothing compared to the skyrocketing rate of health insurance fraud. A rash of occurrences across the nation

higher” than any other category

“People are so anxious for affordable and decent coverage that they’re more susceptible to this type of fraud,” says James Quiggle of the Coalition Against Insurance Fraud. “These are well-marketed operations Some even pay smaller claims initially just to dupe people into thinking they are legitimate so they continue paying premiums.”

The rapidity with which shell companies can set up operations, pull them down when they fear detection and then re-establish them under a different name is frightening. “A week, easily,” says Quiggle, who advises buyers to do their due diligence before making a purchase. “Call your state insurance department. If the company you or your client wants to buy from is not listed with them, it probably isn’t legitimate It’s that simple ”

2I d e n t i t y T h e f t : First, the good news: According to t h e J a v e l i n S t r a t e g y & R e s e a rc h 2 0 1 1 F r a u d S u r v e y Report, the number of identity theft incidents decreased by 28 percent in the United States in 2010 (down to $37 billion versus $56 billion in costs the year before) Now the bad news: Mean consumer out-of-pocket costs due to ID fraud increased 63 percent from $387 per incident in 2009 to $631 per incident in 2010, thanks to spikes in “new account” and "friendly fraud ” Accounting for $17 billion in damages in 2010, new account f r a u d a n a c c o u n t o p e n e d w i t h o u t t h e v i c t i m ' s k n o w l e d g e i s among the hardest to detect and the most likely to severely impact v i c t i m s I n t e r m s o f f r i e n d l y f r a u d , r e s e a rc h e r s a t C h i c a g o ’s S t Xavier University Center for the Study of Fraud and Corruption, led by Director Bill Kresse, sifted through police files on ID theft incidents to reveal that the leading culprit was, surprisingly, a friend o r r e l a t i v e T h i s f a c t h e l d t r u e r e g a r d l e s s o f r a c e , e t h n i c i t y o r socioeconomic status.

Kresse recalls one incident in which a man with gambling debts called his sister and asked for his nephew’s Social Security number, supposedly to buy him a bond as a graduation gift The bond was never purchased Instead, the man used his nephew’s identity to take out a loan to pay off his debts. The loan was never repaid.

Beyond new account and friendly fraud, pickpockets and pursesnatchers are the most common cause of identity theft, followed by online theft.

J a v e l i n ’s P h i l B l a n k , a s e c u r i t y r i s k a n d f r a u d s e n i o r a n a l y s t , warns consumers to expect an uptick in ID theft in 2011 due to recent high-profile security breaches at Epsilon and Sony He says

that, “Phishing attacks are now pretty traditional, so many more sophisticated consumers are wise to them. But security breaches like those at Epsilon and Sony allow spear phishing It gives the fraud perpetrator just enough info to make an email look legitimate because it contains some accurate personal information about you or your account. It will even come from an email address that appears to be associated with the company they reference Don’t fall for it ”

Blank adds that if you receive a letter notifying you that your personal information may have been compromised as the result of a security breach, you are six times more likely to be the victim of i d e n t i t y f r a u d T h e i n f o r m a t i o n t h e c r o o k s r e c e i v e , e v e n i f n o t complete, puts them that much closer to success.

ID Thef t Runs Wild

In Illinois, Att orney General Lisa Madigan’s of f ice r eceived 4,376 ID t hef t-r elat ed complaints in 2009

A signif icant number of t he complaints invol ved:

Cr edit car d complaints (1,279), including r epor ts of a t hief’s t akeover of an exis ting cr edit car d account, as well as ins t ances of a t hief opening a new cr edit car d account in t he victim’s name

Utility co. complaints (464), concerning fraudulent wireless or landline phone, Internet, gas, electric and water accounts opened in the victim’s name Bank fraud complaints (437), including r epor ts of s t olen checks, new bank accounts opened in t he victim’s name, and fraudulent wit hdrawals fr om victims’ bank accounts

3M o r t ga g e Fr a u d : “We see mortgage fraud across every demographic,” says Robb Hagberg, associate director of mortgage fraud investigation for Freddie Mac “Where you start to see common demographics is with affinity fraud multiple members of a church congregation, groups of executives who were former peers at a company, fraternity brothers.”

Va r i a t i o n s o n s h o r t s a l e s a r e t h e l a t e s t i t e r a t i o n o f m o r t g a g e fraud, says Hagberg. “Historically, our industry has focused on origination fraud the origination of a new mortgage Over the last couple of years our attention has switched to the servicing side, especially relative to short sales A short sale occurs when a homeowner has fallen on hard times and has to sell the property to get rid of the mortgage debt Many don’t have the equity they need to have; they owe more than what the property is worth We find a fair amount of fraud in the short-sale space.”

Hagberg explains that a broker ’s price opinion (BPO) is often accepted in a short sale, much as it is during appraisals for new loan origination Freddie Mac uses the BPO to assess if it is getting a fair deal. Fraudsters reselling short-sale properties manipulate the BPO to ensure the broker comes in at a point where a profit can be made For example, a BPO of $90k and a selling price of $110k might net them $20,000 The party flipping the property coordinates the flip so that the end buyer and the short sale close on the same day

“ T h e e n d b u y e r ’s l o a n h a s t o c l o s e f i r s t i n o r d e r f o r t h i s t o work,” says Hagberg Even with controls in place to ensure wet funds at closing, fraudsters have found a way to work the system.

“Transactional funders are hard money lenders that loan money for a 24-hour period so the buyer can step in with his or her ‘wet fund.’ The loan is paid back the very next day,” s a y s H a g b e rg . “Transactional funding websites often coach the person borrowing money on how to circumvent the system how to manipulate the BPO It compromises the integrity of the whole short-sale system, the one set up to help a struggling homeowner avoid foreclosure. Short sales have been part of Freddie Mac’s loss mitigation strategy for decades, but now we are dealing with this type of fraud much more frequently It’s the fraud du jour for the mortgage area ”

The Chicagoland area has been on Freddie Mac’s top five list for state rates of mortgage fraud for at least the past five years. In 2009, nearly 4,000 homeowners filed residential mortgage complaints with the state Attorney General’s office, a 65-percent increase over the previous year

Commercial real estate fraud isn’t faring much better. Incidents o f s u s p i c i o u s a c t i v i t y i n c o m m e rc i a l r e a l e s t a t e f i n a n c i n g a s r e p o r t e d b y d e p o s i t o r y i n s t i t u t i o n s f i l i n g S u s p i c i o u s A c t i v i t y Reports (SARs) almost tripled between 2007 and 2010, according to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

4Fi n a n c i a l Re p o r t i n g Fr a u d : This is a doubleedged sword: A company not only has to absorb the fines and punishments meted out, but also typically takes a requisite beating in the markets A study from the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, which examined financial statement fraud allegations investigated by the US Securities and Exchange Commission (SEC) over a 10-year period, found that news of an alleged fraud resulted in an average 16.7 percent abnormal stock price decline in the two days surrounding the announcement. Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or asset sale

What’s more, in 90 percent of cases, the SEC named the CEO and/or CFO for alleged involvement Interestingly, 26 percent of t h e f i r m s e n g a g e d i n f r a u d c h a n g e d a u d i t o r s d u r i n g t h e p e r i o d examined Only 12 percent of no-fraud firms did so

The Deloitte Forensic Center study of the SEC’s Accounting and Auditing Enforcement Releases (AAERs) reveals that while CEOs represented 24 percent of executives cited, “Nearly one-third of the individuals named in the SEC’s enforcement releases alleging financial statement fraud in 2008 were not CEOs or financial executives,” said Toby Bishop, director of the Deloitte Forensic Center “They were directors, general counsel or members of management involved in functions such as sales, operations and planning.”

Another key finding of the study is the declining prevalence of revenue recognition fraud While it was the most common financial statement fraud scheme alleged by the SEC’s AAERs from 2000 to 2008 (representing 38 percent), the number of such schemes has declined in all but one year since 2003. In 2008, revenue recognition fraud represented 30 percent of schemes, down from 33 percent in 2007 Improper disclosures (18 percent) and manipulation o f e x p e n s e s ( 1 6 p e rc e n t ) w e r e t h e o t h e r t o p s c h e m e s , w h i c h increased in prevalence from 2007 to 2008. In 2008, technology, media and telecommunications (30 percent) and consumer business (29 percent) had the greatest proportion of financial statement fraud schemes alleged by the SEC, followed by financial services (18 percent), and life sciences and healthcare (12 percent).

The Best Advice . . .

John S Burke of Higgins & Burke in St Charles, Ill , has helped a multitude of clients r eclaim funds af t er fraud He of fer s t he following advice for identifying fraud r ed f lags:

If it sounds t oo good t o be tr ue, t hen it is “It’s human natur e t o want t hat one-in-a-million deal A ‘safe r eturn’ t hat is 5 0 0 b a s i s p o i n t s a b o v e m a r k e t r a t e i s p r o b a b l y n o t a r e a l inves tment, or at leas t a risky one ”

Bewar e of the in-laws. “I hat e t o sound cynical, but in many of t he fr aud cases I’ve seen, people t end t o s t eal fr om t heir spouse ’ s par ents and o t her r elatives Think twice befor e inves ting in business dealings wit h famil y member s, or at leas t use t he same caution you would wit h s tranger s ”

Get second opinions. “Jus t because you have f inancial knowledge does no t mean you ar e above a second opinion As a former s t ock-br oker and now f inancial fr aud att or ney, I’ve seen plenty of sophis ticat ed f inancial inves t or s get burned because t he y did no t r el y on t he same r ules f or t hemsel v es as t he y would for t heir o t her business oppor tunities ”

Exper tise does no t transf er “Insur ance agents selling you ‘ i n v e s t m e n t ’ p r o d u c t s ? No t u s u a l l y a g o o d i d e a S t i c k w i t h p r a c t i t i o n e r s w h o a r e p r o p e r l y l i c e n s e d ( c h e c k a t B r o k e r Check , FINRA or g) and inves t wit h t hose who have t he pr oper secur ities license ”

B e w a r e o f p a r e n t s a n d g r a n d p a r e n t s g o i n g s i l e n t . “[E]lderl y people of t en become embarrassed when t hey r ealize a scam has been perpetrat ed on t hem They may no t say anyt hing until it is t oo lat e and t heir savings ar e gone Their childr en learn of t he pr oblem onl y when t he house is about t o be t aken fr om t hem ”

Google it “If someone is selling you a f inancial ins trument t hat you don’t know much about, Google it No matt er how well document ed it may seem t o be, you have t o verify and fact check

At leas t under s t and what you ar e inves ting in and how it meets your own f inancial objectives and risk t olerance Don’t let a busy schedule lead you t o foolish mis t akes ”

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Wehaveopeningsinouraudit andtaxdepartmentsforthe rightprofessionalswithtwo ormoreyearsofexperience.

Contact: AlKutchins,CPA

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akutchins@krdcpas.com

KUTCHINS,ROBBINS &DIAMOND,LTD.

SuccessfulSchaumburg CPAfirmwantstoexplore opportunitieswithsmaller CPAfirmsandindividual practitioners,retiringor thriving,tohelpthem continuetheirlegacy andinsuretherealization offinancialsuccess.

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Contact:

AllenI.Kutchins,CPA

akutchins@krdcpas.com www.krdcpas.com

847-240-1040x135

VALUATION OF YOUR CLIENT’S BUSINESS OR PRACTICE

By: Crandall & Brackett, Ltd 630 653 7922 email: robert@crandall-brackett.com Web: www.crandall-brackett.com

Our only service is performed on your behalf in a mutual engagement setting. From basic research to a full valuation, we tailor our services to your needs We author, teach and participate on policy setting committees and boards within the valuation profession

Thinking About Selling

ACCOUNTING OPPORTUNITY

Small CPA firm with many high earning clients located in Buffalo Grove looking to bring in a Junior CPA for future partnership My goal is to possibly retire in approximately 10 years. Please respond only if you have an established client base bonnie@fischmancpa.com

BUY OR SELL AN ACCOUNTING OR TAX PRACTICE PRACTICES FOR SALE: Mendota CPA Practice gross $402K; Ogle County CPA Practice gross $211K; Joliet CPA Practice gross $360K; Rochelle CPA Practice gross $96K; Lombard CPA Practice gross $300K; Beloit Accounting & Tax Practice $185K For practice details, call 1-800-397-0249 Or, visit us at www.accountingpracticesales.com to inquire about available opportunities and register for free email updates

THINKING OF SELLING YOUR PRACTICE?

Accounting Practice Sales is the leading marketer of accounting and tax practices in North America We have a large pool of buyers, both individuals and firms, looking for practices now We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and get the deal done To learn about our risk-free and confidential services, call Trent Holmes at 1-800-397-0249 or email trent@accountingpracticesales.com

“Helpingour clientsachieve financialsuccess through soundadvice.”

Leadership We Salute You

2011-2012 Board of Directors

CHAIRPERSON

Robert E. Cameron, CPA Cameron, Smith & Company P.C.

VICE CHAIRPERSON

James P. Jones, CPA Edward Don & Company

SECRETARY

William P. Graf, CPA Deloitte LLP

TREASURER

Daniel F. Rahill, CPA, JD KPMG LLP

IMMEDIATE PAST CHAIRPERSON

Sara J. Mikuta, CPA Leaders Bank

DIRECTORS

Anna Bourne, CPA Ernst & Young LLP

Edward J. Hannon, CPA, JD

Freeborn & Peters LLP

John A. Hepp, CPA, PhD Grant Thornton LLP

Geralyn R. Hurd, CPA

Crowe Horwath LLP

Paul V. Inserra, CPA

Inserra & Co. Chtd.

Leif J. Jensen, CPA

Leif Jensen & Associates Ltd.

Kathleen M. Kedrowski, CPA Navigant Counsulting

Michael J. Maffei, CPA GATX Corporation

Elizabeth A. Murphy, PhD, CPA DePaul University

Michael J. Pierce, CPA

RSM McGladrey Inc.

J. Bradley Sargent, CPA

Sargent Consulting Group LLC

Edward H. Stassen, CPA

Golden County Food Holdings, Inc.

Reva B. Steinberg, CPA

Retired, BDO USA, LLP

Thomas L. Zeller, PhD, CPA

Loyola University Chicago Committee Chairs

ACCOUNTING PRINCIPLES

Jeffery P. Watson, CPA Blackman Kallick LLP

Scott G. Lehman, CPA* Crowe Horwath LLP

AUDIT & ASSURANCE SERVICES

Kevin V. Wydra, CPA Crowe Horwath LLP

James J. Gerace, CPA* BDO USA, LLP

EMPLOYEE BENEFITS

Janice L. Forgue, CPA McGladrey & Pullen LLP

ETHICS

Richard M. Franklin, CPA Warady & Davis LLP

George A. Heyman, CPA*

Retired

FINANCE & TREASURY

MANAGEMENT

Daniel F. Rahill, CPA KPMG LLP

GOVERNMENT EXECUTIVE

Bert Nuehring, CPA

Crowe Horwath LLP

GOVERNMENTAL REPORT REVIEW

Brian D. LeFevre, CPA Sikich LLP

ILLINOIS CPAS FOR POLITICAL ACTION

Sheldon P. Holzman, CPA, CFE, CFF Baker Tilly Virchow Krause LLP

NOMINATING

Sara J. Mikuta, CPA Leaders Bank

NOT-FOR-PROFIT ORGANIZATIONS

Charlotte A. Montgomery, CPA Illinois State Museum Society

PEER REVIEW REPORT

ACCEPTANCE

Gregory J. Pierce, CPA Pierce Riesbeck & Associates

Catherine L. Allen, CPA* Guthoff Mehall Allen & Company PC

REGULATION & LEGISLATION

Lawrence A. Wojcik, CPA, JD DLA Piper LLP (US)

TAX ADVISORY GROUP

Gary S. Hart, CPA Gary Hart & Associates LLC

TAXATION BUSINESS

Christina Immelman, CPA Ryan & Company

TAXATION ESTATE, GIFT & TRUSTS

Gregory M. Ciokajlo, CPA Ciokajlo, Hein & Associates, Inc.

TAXATION EXECUTIVE

Mary Lou Pier, CPA Pier & Associates

The Illinois CPA Society applauds its outstanding volunteer leaders. Their tireless dedication and contributions help elevate the Society as the premier organization for CPAs and finance professionals.

Steven R. Goluch, CPA* Wolowicki & Associates, LLC

TAXATION FLOW-THROUGH

ENTITIES

Jeffrey A. Rozovics, CPA Rozovics & Wojcicki

TAXATION INDIVIDUAL

David V. Kalet, CPA Free Davey LLC

TAXATION PRACTICE & PROCEDURES

Larry J. Wolfe, CPA

Larry J. Wolfe CPAs, Ltd.

TAXATION STATE & LOCAL

David A. Hughes, CPA, JD Horwood, Marcus & Berk

WOMEN’S EXECUTIVE

Margaret M. Hunn, CPA Rozovics & Wojcicki

Task Force Chairs

ACCOUNTING ACT SUNSET

Lee A. Gould, CPA/ABV, JD, CFE, CFF Gould & Pakter Associates LLC

Lawrence A. Wojcik, CPA, JD DLA Piper LLP (US)

COMMITTEE STRUCTURE & VOLUNTEERISM

Elizabeth A. Murphy, PhD, CPA DePaul University

CPA EXAM AWARD PROGRAM

Annette M. O’Connor, CPA RR Donnelley & Sons Company

DIVERSITY INITIATIVES

Scott D. Steffens, CPA Grant Thornton, LLP

LIFETIME ACHIEVEMENT AWARD

Sara J. Mikuta, CPA Leaders Bank

OUTSTANDING EDUCATOR AWARD

Kenton J. Klaus, CPA Deloitte LLP

OUTSTANDING LEADERSHIP IN ADVANCING DIVERSITY AWARD

Anthony Fuller, CPA Grant Thornton

SMALL PRACTICE ADVISORY

Lawrence H. Shanker, CPA Shanker Valleau Accountants, Inc.

WOMEN’S INITIATIVES

Angela S. Goyke, CPA Golub Capital

YOUNG PROFESSIONALS GROUP

Jason Parish, CPA Blackman Kallick LLP

Sobia Farid, CPA CME Group Inc.

Member Forum Chairs

AGRIBUSINESS

Jason S. Bartell, CPA Bartell & Barickman

FUTURES, SECURITIES & DERIVATIVES

Todd S. Briggs, CPA McGladrey & Pullen LLP

INVESTMENT ADVISORY

SERVICES/PFP

Kevin W. Costello, CPA

Kevin W. Costello, CPA

NOT–FOR-PROFIT

Rose G. Doherty, CPA

Legacy Professionals LLP

TAXATION NW SUBURBAN

Samuel Pass, CPA

Samuel Pass, CPA, Ltd.

Chapter Presidents

CENTRAL CHAPTER

Michelle M. Scheffki, CPA, CISA, CITP Clifton Gunderson LLP

CHICAGO METRO

Anna Harris, CPA

Healthcare Information & Management Systems Society

CHICAGO SOUTH

Kymberly Buchanan, CPA

Ragland & Associates, LLC

FOX RIVER TRAIL

Marianne Phelan, CPA

FOX VALLEY

Daniel P. Vargo, CPA

Daniel P. Vargo & Associates, P.C.

NORTH SHORE

Lisa M. Malina, CPA

Malina & Company

NORTHERN

Kurt Schneider, CPA Lamping & Associates

O’HARE

Susan Mairo, CPA

WESTERN

John T. Kustes, CPA American Bank & Trust Company

Conference Task

Force Chairs

ACCOUNTING & AUDITING

(CHICAGO & SPRINGFIELD)

Scott Lehman, CPA Crowe Horwath LLP

BUSINESS VALUATION

Fred Jahns, CPA Brookwood Vance LLC

CONSTRUCTION

James D. Rowe, CPA

The Private Bank

EMPLOYEE BENEFITS

Janice Forgue, CPA McGladrey & Pullen LLP

ESTATE AND GIFT TAX

Paul Saharack, CPA Robbins, Salomon & Patt, Ltd.

FINANCIAL INSTITUTIONS

Todd Sprang, CPA Clifton Gunderson LLP

Sara Mikuta, CPA Leaders Bank

FORENSIC ACCOUNTING

Michael D. Pakter, CPA

Gould & Pakter Associates LLC

FRAUD

J. Bradley Sargent, CPA Sargent Consulting Group, LLC

GOVERNMENT

Linda S. Abernethy, CPA

McGladrey & Pullen LLP

John Eyth, CPA Zumbahlen Eyth Surratt Foote Flynn Ltd

HEALTHCARE COMPLIANCE & FRAUD

Howard L. Stone, Esq., CPA Stone, McGuire & Siegel

IRS COLLECTIONS

Larry J. Wolfe, CPA

Larry J. Wolfe CPAs, Ltd.

IRS EXAMS & APPEALS

Larry J. Wolfe, CPA

Larry J. Wolfe CPAs, Ltd.

MIDWEST FINANCIAL REPORTING SYMPOSIUM

David Landsittel, CPA

NOT FOR PROFIT

Arthur Gunn, CPA (Chicago)

Arthur S. Gunn, Ltd.

Richard L. Grafton, CPA (Springfield)

Estes, Bridgewater & Ogden

STATE AND LOCAL TAX UPDATE

David A. Hughes, CPA, JD Horwood, Marcus & Berk

TAXATION ON REAL ESTATE

Douglas Hart, CPA (Retired)

*Vice Chair

TIME TA L E N T &

The Illinois CPA Society invites all its members to volunteer for the second annual CPA Day of Service on Friday, September 23. Last year ’ s inaugural CPA Day of Service drew more than 900 volunteers from communities across Illinois, making it the largest event of its kind among CPA societies in the United States This statewide event is a great way for CPAs to unite and make a difference in their communities, offering the opportunity to choose any organization and service activity they like volunteer at an animal shelter, plant flowers at a retirement center, clean up your local park, sort food at a local pantry you name it! What ’ s more, whether you can volunteer for the whole day or just a few hours, the CPA Day of Service will accommodate your schedule

As an added bonus, members who register their volunteer plans with the Society receive a free CPA Day of Service t- shirt

Make September 23 “A Good Day for Doing Good!” by visiting www.icpas.org/CPADayofService.htm and registering your volunteer plans today

Fall JA Volunteer Opportunities Are Here

As students across the state get ready to head back to school, the ICPAS and Junior Achievement are gearing up for another great school year of “JA in a Day ” events in Illinois Volunteers for JA help elementary school students learn about money management and economics, and serve as professional role models to encourage children to value education Last year, more than 50 ICPAS members volunteered for one of ICPAS’ “JA in a Day ” events at schools throughout Illinois For photos and more information about the Society ’ s JA partnership, visit the ICPAS Volunteer Chronicles blog at www icpasvolunteerchronicles typepad com

‘A Good Day for Doing Good!’

CPA Society award winners

Lifetime Achievement Award

Lawrence A. Wojcik, CPA, JD Partner, DLA Piper LLP (US)

Outstanding Leadership in Advancing Diversity Award

Ronald S. Sonenthal, CPA Chicago Office Managing Partner, Deloitte Tax LLP

Emerging Leader in Advancing Diversity Award

Muhammad A. Gigani, CPA Senior Manager, Deloitte Tax LLP

Outstanding Educator Awards

Mary K. Tarling, CPA, MBA Director of the Servant Leadership Initiative, Interim Chair of the Accounting and Finance programs, and Assistant Professor of Accounting, Aurora University

Dr. Simon P. Petravick, CPA, CIA Professor of Accounting, Bradley University

Time and Talent Public Service Volunteerism Awards

Scott Davis, CFP

Clifton Gunderson LLP

Mark Gilbert, CPA/PFS, MBA

Reason Financial Advisors, Inc.

Michelle Scheffki, CPA, CISA, CITP Clifton Gunderson LLP

Muthuswamy Sunder, CPA

Retired

Jared M. K. Woiwode, CPA, MSA Clifton Gunderson LLP

Distinguished Service Awards

Linda S. Abernethy, CPA McGladrey & Pullen LLP

Governmental Executive Committee

Margaret L. Al-Qassas, CPA

Michael Silver & Co

Taxation Estate, Gift and Trusts Committee

John J. Belletete, CPA

Striegel Knobloch & Company LLC

Peer Review Report Acceptance Committee

Anna M. Bourne, CPA Ernst & Young LLP

Women's Executive Committee

Jeffrey D. Butler, CPA, MST Kessler Orlean Silver & Company, P.C.

Taxation Flow-Through Entities Committee

Martrice Caldwell, CPA

YMCA of Metropolitan Chicago Young Professionals Group

Robert E. Cameron, CPA Cameron, Smith & Company P.C.

Peer Review Report Acceptance Committee

Harvey L. Coustan, CPA

Harvey Coustan, LLC (Retired)

Tax Advisory Group Committee

Barbara Dennison, CPA

Selden Fox, LTD

Accounting Principles Committee

Leo Dohogne III, CPA

U.S. Dept. of Agriculture FNS (Retired)

Governmental Executive Committee

Jeremy A. Dubow, CPA

NDH Group, Ltd.

Taxation Flow-Through Entities Committee

James L. Fuehrmeyer Jr., CPA

University of Notre Dame

Accounting Principles Committee

Richard F. Gaul, CPA

Mathieson, Moyski, Celer & Co., LLP

Governmental Report Review Committee

James J. Gerace, CPA

BDO USA, LLP

Audit & Assurance Committee

Mark Gilbert, CPA/PFS, MBA

Reason Financial Advisors, Inc.

Investment Advisory Services/PFP Member Forum Group

Paul Goldberg, CPA

McGladrey & Pullen LLP (Retired) Ethics Committee

Stan Green, CPA

Larry J. Wolfe CPA's, Ltd.

Taxation Practice & Procedures Committee

Michael W. Grove, CPA

GNC Consulting, Inc. Chicago South Chapter

Norris C. Harstad, CPA

Benchmark Aspen & Associates, LTD.

Taxation Practice & Procedures

Committee and O’Hare Chapter

John A. Hepp, CPA, PhD

Grant Thornton, LLP

Accounting Principles Committee

Margaret M. Hunn, CPA, CFE, CFF, CITP

Rozovics & Wojcicki, P.C.

Women's Executive Committee

Wendy A. Kelly, CPA

Corbett, Duncan & Hubly PC

Women's Executive Committee

Jamie Klosterman, CPA, MST

RSM McGladrey, Inc.

Taxation Estate, Gift and Trusts Committee

Rodney J. Lawrence, CA KPMG LLP

Taxation Business Committee

Mary Lou Pier, CPA Pier & Associates

Taxation Executive Committee

Gregory J. Pierce, CPA

Pierce, Riesbeck & Associates, LLP

Peer Review Report Acceptance Committee

James G. Quaid, CPA

Ostrow Reisin Berk & Abrams LTD.

Not-for-Profit Organizations Committee

Michael N. Radencich, CPA, MST

Trimarco, Radencich, Schwartz & Mrazek, LLC

Taxation Flow-Through Entities Committee

Deborah K. Rood, CPA, MST

Blackman Kallick LLP

Taxation State & Local Committee

James W. Sansone, CPA

RSM McGladrey Inc.

Tax Advisory Group Committee

Michelle Scheffki, CPA, CISA, CITP

Clifton Gunderson LLP

Central Chapter

Andrea K. Selley, CPA , MSA

Plante & Moran, PLLC

Taxation Flow-Through Entities

Committee

Michael J. Singer, CPA

Michael J. Singer & Co., P.C.

Taxation Practice & Procedures

Committee

Leonard C. Soffer, CPA

University Of Chicago

Accounting Principles Committee

Reva B. Steinberg, CPA

BDO USA, LLP (Retired)

Accounting Principles Committee

Madhuri Thaker, CPA , MST Blackman Kallick LLP

Taxation Estate, Gift and Trusts

Committee

Paul R. Todoric, CPA

Michael J. Singer & Co., P.C.

Taxation Individual Committee

Jeffery P. Watson, CPA

Blackman Kallick LLP

Accounting Principles Committee

Kevin V. Wydra, CPA Crowe Horwarth LLP

Audit & Assurance Committee

Distinguished Media Service Awards

Scot A. Dobbs CPA

WIPFLi CPAs and Consultants

Mark Gilbert, CPA/PFS, MBA

Reason Financial Advisors, Inc.

Linda Forman, CPA

Linda Forman, CPA, PC

Geoffrey J. Harlow, CPA, MST, MBA

Kessler Orlean Silver & Company, P.C.

The Illinois CPA Society is proud to recognize the following award winners and congratulate them on their accomplishments. Illinois