Insight Magazine - Winter 2018

EXPLORING THE ISSUES THAT SHAPE TODAY’S BUSINESS WORLD

Why we need it. How to get it.

How Blockchain, AI, and IoT Are Reshaping Finance

Illinois’ Outmigration Problem

Is Your CPA Firm Best-in-Class?

And Much More!

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ILLINOIS CPA SOCIET Y

550 W Jackson Boulevard, Suite 900, Chicago, IL 60661 www.icpas.org

Publisher/President & CEO

Todd Shapiro

Editor Derrick Lilly

Creative Director

Gene Levitan

Photography

Jay Rubinic + Derrick Lilly

Circulation

John McQuillan

ICPAS OFFICERS

Chairperson

Rosaria Cammarata, CPA, CGMA | Mattersight Corporation

Vice Chairperson

Geoffrey J Harlow, CPA | Wipfli LLP

Secretar y

Dorri C McWhorter, CPA, CGMA, CITP | YWCA Metropolitan Chicago

Treasurer

Kevin V Wydra, CPA | Crowe LLP

Immediate Past Chairperson

Lisa Hartkopf, CPA | Ernst & Young LLP

ICPAS BOARD OF DIRECTORS

Christopher F Beaulieu, CPA, MST | Blue Money Strategy Inc

John C Bird, CPA | RSM US LLP

Brian J Blaha, CPA | Wipfli LLP

Jon S Davis, CPA | University of Illinois

Stephen R Ferrara, CPA | BDO USA LLP

Jonathan W Hauser, CPA | KPMG LLP

Scott E Hurwitz, CPA | Deloitte & Touche LLP

Anne M Kohler, CPA, CGMA | The Mpower Group

Thomas B Murtagh, CPA, JD | BKD LLP

Elizabeth S Pittelkow Kittner, CPA, CGMA, CITP | Litera Microsystems

Maria de J Prado, CPA | Prado & Renteria CPAs

Seun Salami, CPA | TIAA

Stella Marie Santos, CPA | Adelfia LLC

Andrea K Urban, CPA | ThoughtWorks Inc

BACK ISSUES + REPRINTS

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Please send requests to lillyd@icpas org

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INSIGHT is the magazine of the Illinois CPA Society 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, and Winter, by the Illinois CPA Society, 550 W Jackson, Suite 900, Chicago, IL 60661, USA, 312 993 0407 Copyright © 2018 No part of the contents may be reproduced by any means without the written consent of INSIGHT Send requests to the address above Periodicals postage paid at Chicago, IL and at additional mailing offices

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today’sCPA

FROM TODD SHAPIRO, ICPAS PRESIDENT & CEO

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Are You Looking Back or Moving Forward?

We’re getting into that time of the year when many of us start looking back on the could haves, would haves, and should haves of the past year But I’d like to stress, more importantly, that it’s time to take stock of 2018’s highlights and victories and look forward to more in 2019.

For me personally, a 2018 highlight was watching ICPAS member Lester H. McKeever, Jr. receive the AICPA’s Gold Medal of Distinction Award, the highest award in our profession. Lester established himself as a leader in the business community, mentored countless CPAs, and has been a driver in advancing diversity in our profession throughout his career. He himself was a mentee of Mary T. Washington Wylie, whose 75th anniversary of becoming our nation’s first African-American female CPA we recently celebrated Adorning light poles with banners honoring her throughout Chicago’s financial district, and having Sept 30 formally designated as Mary T Washington Wylie Day in Chicago, are victories for advancing diversity in our profession

The Society also tallied up several highlights in its ongoing effort to enhance the value of the CPA profession and the professional education and connections it provides We launched ICPAS Connect, an online community where members virtually connect to share insights, advice, and form stronger professional networks

We revamped our major annual accounting event into the ICPAS Summit, bringing you a new look and new content We’ve committed resources to our Academy of Learning to bring you more hands-on, data- and technology-focused education to help you succeed in an increasingly digital workplace And our annual CPA Day of Service had a record turnout nearly 1,500 CPAs across the state took a day to come together and give back to the communities they serve.

We’re also in the midst of piloting a new Corporate Access Program that extends our resources to a much broader group of accounting and finance professionals and focuses on improving the

competencies of corporate finance teams in an easy-to-administer, cost-effective program

Of course, we also had a busy year on the advocacy front in Springfield We continue to diligently watch for any attempt to tax professional services; we moved legislation forward to allow government entities to continue using cash-basis accounting; we launched Voter Voice, an easy-to-use, web-based system for contacting your legislators when we need our collective professional voice to be heard; and we continue our efforts to form bi-partisan relationships with legislators to help move the state and our profession forward.

I share all of this with you because I want to highlight that you are part of something significant, and what we accomplished in 2018 is just the start of what we hope to accomplish in 2019.

The AICPA predicts three trends will significantly impact our profession moving forward: technology, changes in hiring practices, and new client demands Over the next year, we’ll be exploring each of these areas in greater detail to reveal how accounting and finance professionals can innovate to capitalize on them I hope you’ll join us, because every CPA in every business needs to embrace innovation I’m sure you’re familiar with the phrase “don’t change for change’s sake ” Maybe you even live by those words But we can no longer wait to change To be successful in the future, we need to start saying “the best reason to change is because we haven’t ”

I recently heard a speaker say that we’ll never experience a pace of change slower than it is right now I know for many of us it feels like change is occurring at light speed We have to keep up, we have to stay relevant, and we have to keep looking forward now and in the years ahead

2018 was a heck of a year for the Society and the profession. Let ’ s keep the momentum going in 2019.

INSIGHTS

Advocating on behalf of the profession is a central pillar of the Illinois CPA Society. Each day, we work to help create an environment that is favorable and suppor tive of the accounting profession. But, we can’ t do it alone.

Your voice is cr itical

State legislators want to hear from YOU on impor tant issues, not only as a constituent but also as a CPA – the most trusted business advisor

Your exper tise brings clarity and credibility to issues

Being heard is easy

We have brought grassroots advocacy literally to your finger tips

When there is an issue we need you to contact your legislator on, we will send a LEGISL ATIVE ALERT email

By clicking on the TAKE ACTION button in the email, you will automatically connect directly with your respective legislator where you can then CALL, send an EMAIL, or post a T WEET.

Why Every Accountant Needs to Be a Skeptic

A healthy dose of skepticism is key to an accountant ’ s success. Do you have it?

BY GEORGE A HEYMAN, CPA, CGMA

Whether doing audit, tax, consulting, or industr y work , due professional care is needed for maintaining your accounting independence, that state of mind where you can per form your ser vices without being impacted by influences that compromise your professional judgement A healthy dose of skepticism and sound professional judgement are keystones in ever y successful accountant’s career

Skepticism is to doubt the truth It’s a safeguard that helps us ensure due professional care when deciding which auditing procedures, accounting principles, tax positions, or consulting advice would be best in any given situation This all star ts with knowledge As accountants, we have earned the respected title of the “most trusted business advisor,” which means we have a responsibility to maintain the greatest amounts of knowledge in our respective fields as we can In turn, when we look at information, the first question should be, “Does it make sense given what we know?” The idea is to always look for anomalies and anything that doesn’t fit the situation

That said, maintaining professional skepticism does not mean implying nobody can be trusted, questioning others in ways that says you do not believe them, or getting in someone’s face about a situation Skepticism is about asking the right questions in an open-ended way to get the right answers Here are six principles that can help you develop and maintain your professional skepticism

1 Ask the right questions Voltaire said that we should judge a man by his questions rather than by his answers In that spirit, avoid being confrontational by asking open-ended questions Once asked, give the person time to think before answering Remember to truly listen and, if needed, ask follow-up questions

2 Encourag e discussions of dif fering opinions This is impor tant anytime there’s more than one possible answer or

outcome For example, the question may be which tax position to take or which auditing procedure would be most ef fective and ef ficient You could also face a situation in which your client wants to account for something one way when there’s a better alternative

3. Question the status quo. We are accountable to status quos set by organizations like the IRS, FASB, and GASB, etc. But many changes in guidelines from these organizations have come from accountants rightly questioning and challenging them on cer tain issues

4. Maintain a veil of ignorance. In the essence of John Rawls, for us this means rendering our personal considerations obsolete So, even if you know or like a person, for example, you must focus on the facts of the situation to make your decision and maintain your independence There are cases where CFOs didn’t question cer tain journal entries made by their CEOs because they blindl y trusted them Guess who also went to jail when the CEO’s journal entries amounted to fraud? The CFO

5. Make sure you have ever ything. People can influence you by omission as well as commission By leaving out a detail, your decision can be changed Always ask yourself if you’ ve received enough information and if anything else needs to be addressed

6. N otice surroundings and behavior s. Always follow up inquir y with obser vation Watch for body language that could give clues to the truth or a misrepresentation

Despite the negative connotations surrounding skepticism, there’s nothing bad about being a good skeptic in fact, your career depends on it Putting the steps above into practice will help you be a successful skeptic and, in turn, a successful accountant

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Is Blockchain a Key Technology for the Future?

That’s the question Big Four firms Deloitte and PwC are answering in new research The truth is, blockchain is already getting much use today far more, in fact, than just what you hear about around cr yptocurrencies

According to a PwC sur vey of 600 executives in 15 countries, 8 4 percent have active blockchain initiatives under way Digging a little fur ther into that number, 15 percent have a fully live blockchain project; 10 percent have a blockchain implementation pilot in progress; 32 percent have a blockchain project in development; and, while many other respondents are researching or evaluating projects, just 14 percent have no activity in place

“Blockchain is getting closer to its breakout moment with ever y passing day,” says Deloitte’s repor t on the findings of its 20 1 8 global blockchain sur vey In its global sur vey of “ more than 1,000 blockchain-savvy executives from seven countries and nine industries,” 74 percent of all respondents see a “compelling business case” for the use of blockchain many of which are already being acted on

Deloitte found 3 4 percent of its respondents already have blockchain systems in production, and another 41 percent say they expect their organizations to deploy a blockchain application within the next 12 months

There’s also plenty of capital flowing into blockchain R&D nearl y 40 percent of Deloitte’s respondents said their organizations will spend $5 million or more on blockchain technology in the coming year

“As more organizations put their resources behind this emerging technology, we expect blockchain to gain significant traction as its potential for greater ef ficiency, suppor t for new business models and revenue sources, and enhanced security are demonstrated in real-world situations,” Deloitte repor ts

“A well–designed blockchain doesn’t just cut out intermediaries, it reduces costs, increases speed, reach, transparency, and traceability for many business processes The business case can be compelling, if organizations understand what their end game is,” says PwC Blockchain Leader Steve Davies

Therein lies the challenge In repor ting on the matter, Ken Tysiac, FM magazine editorial director, explains: “Blockchain is a

distributed ledger technology that enables an internet-based peer-to-peer network to facilitate exchanges in value Computers on the network simultaneousl y verify and record transactions, which are able to be completed without a traditional intermediar y such as a bank or credit card network

“ The technology, which provides the underpinning for cr yptocurrencies such as bitcoin, has numerous potential uses in many industries The technology has an obvious immediate impact on financial ser vices, which was identified by 46 percent of the PwC sur vey respondents as the leading sector in blockchain development Manufacturers also are finding blockchain to be helpful in supply chain management ”

The point is that developing blockchain platforms must be thought out in great detail to succeed in any given industr y

In “4 Tips for Developing Blockchain Platforms,” Tysiac calls out the following key areas of focus from PwC’s repor t:

1 Making t he business case The purpose of the initiative needs to be clear and well-conceived so it can move for ward without confusion

2 Building an ecosystem Dif ferent companies in an industr y (and perhaps even competitors) may need to work together to develop a common set of standards to govern blockchains N earl y all (88 percent) of the sur vey respondents with live blockchain applications in the PwC sur vey were leaders or members of a blockchain consor tium

3 Designing deliberately around what users can see and do Legal, compliance, and cybersecurity exper ts can help blockchain users develop rules and standards for access permissions that will engender trust in the technology

4 N avigating regulator y uncer t ainty Although regulator y requirements will evolve on blockchain, companies may fall behind their competitors if they avoid the technology while waiting for rules to be developed Engaging regulators as they develop standards can help blockchain users anticipate their next moves

Is your organization developing a blockchain platform? If so, tell us about it Email editor Derrick Lilly at lillyd@icpas org

The Dos and Don’ts of Communicating Company Financials

As the keepers of financial data, accounting and finance pros have a significant impact on corporate health and people’s perceptions. Here’s how to hone the dollars and cents of your delivery.

BY BRIDGET MCCREA

Whether you’re in public accounting, the CFO of a nonprofit, or a controller in a midsized company, your job is to present financial information to the people who need it,” says Paul Preziotti, CPA, principal at Johnson Lambert LLP in Vienna, Va. Indeed, no matter what your job title is or what your job duties are, as an accounting and finance professional you’re going to be called upon to share your organization’s financial data with shareholders, board members, company executives, employees, the press, and other stakeholders. And that information not only has to be accurate, but it also has to be delivered in a way that’s interesting, relevant, and targeted to your audience. Achieving this balance isn’t always easy; flub it up and you can see your share price tumble, but deliver a report that’s clear, concise, and enthusiastic and you’re likely to gain the attention and respect of everyone listening

So, here are some dos and don’ts of financial public speaking to help ensure that your next presentation or quarterly earnings call is a success:

Do understand your audience. In other words, don’t assume everyone is an accountant “When presenting financials, the most critical thing accounting and finance professionals forget is that most of the people they’re presenting to aren’t accountants,” Preziotti points out.

You need to know what and whom you’re dealing with before you step into the meeting or conference room. If you’re communicating the company’s financials to its board of directors, you can be reasonably sure they’re up to speed on terminology and what’s been going on over the last three months. However, if you’re speaking on an earnings call, your audience will be much wider with varying levels of experience And, if you’re working for a nonprofit, then you may be asked to talk to completely different non-financial types of committees and groups altogether

“You really have to gauge the financial comprehension of the audience,” says Jeramy Kaiman, vice president at Parker Lynch in

Chicago. “You may need to do more ‘educating’ or boiling down of key concepts in certain cases ”

Even a common acronym to you, like EBITDA, may not be immediately familiar to your audience “Keep this in mind and tailor your presentation to that particular audience,” Preziotti says. “The point is to make the information relevant and useful ”

Don’t overwhelm users with materials. “Send me a 30-page packet ahead of your presentation and the chances of me opening it are slim to none,” Preziotti says Instead, send out a concise, tightlywritten email or press release to capture your audience’s attention and get them interested in what’s to come “Hit on everything you need to cover, but put it in a quick, digestible format,” he advises.

Do use “dashboards” to convey what your audience cares about “We have 10 months of operating reserves.” “Here’s how the membership has grown quarter-over-quarter ” Whatever the hotbutton items may be, “using a dashboard in conjunction with the financial statements can go a long way,” Preziotti says, suggesting you always using appropriately colored charts and symbols to illustrate the numbers behind hot-button issues for your audience

Don’t start out on a negative note. Financial information can’t always be rosy, but it’s important to find and focus on the positives in the beginning of your presentation

“You don’t want to start the meeting out on a somber note,” Preziotti says, stressing the first few sentences that come out of your mouth set the tone for the entire production. “It could be as simple as pointing out where the organization is with its reserves and how far it’s come, or how that new line of business is becoming profitable These early points can really help you set the right tone and engage your audience ”

Do tell an interesting story. You’ll only put your audience to sleep if you start reciting numbers and projections without making that information useful for the people you’re talking to. Instead, come up with an interesting storyline that will engage the audience and give them some context (and not put them to sleep). Develop opening remarks that are relatable in some way, speak in a conversational tone (versus dictating to your audience), and weave interesting anecdotes into your verbal presentation

Don’t avoid the tough questions. Ideally, you want to inspire confidence in your delivery and create a collaborative atmosphere where audience members aren’t afraid to ask questions Unfortunately, it can be hard to prepare for every single question that might come your way

Kaiman suggests focusing on the core issues at hand, then brainstorming a laundry list of potential queries in advance If, for example, sales are down for the quarter, you’ll want to be able to explain why and what’s being done to offset the losses In some cases, there may be a very logical explanation for the setback.

“The whole purpose of a board meeting or earnings call is for people to be able to ask the tough questions,” Kaiman says “So, be ready for them ”

Do understand this is an important part of your job. Whether you’re a CFO or a staff accountant, articulating financials to the people who need them is part of your job Some of this may take place via written word (corporate reports, press releases, emails, etc ), but you’ll also have to do some public speaking You can set yourself up for success by preparing in advance, practicing your delivery, and coming up with a way to parlay the information in an interesting way.

Don’t make final conclusions for them (stick to the facts) In many cases, a CFO or controller will go into a presentation ready to sway his or her audience to see things a certain way “Too many times, accounting and finance leaders go into events with too much of a final conclusion in mind when in reality they should just be conveying the facts and then letting attendees come to their own conclusions,” Kaiman says “You can certainly make a recommendation to the board, for instance, but ultimately it is that board’s job to come to its own conclusions ”

Do operate with a high level of transparency. Last, but certainly not least, use this time to be as transparent as possible about the organization and its financial health “When you’re upfront and transparent, things go well,” Kaiman says “When you aren’t, they don’t ”

For example, ignoring or deflecting questions from the audience basically says, “We have something to hide ” This could put your organization (and your role) in a negative light, knowing that the uninformed audience will quickly lose faith in the presentation and possibly the organization itself

“Focus on delivering very accurate, concise information,” Kaiman says, “and then answering questions as openly and honestly as possible ”

While public speaking may not be the forte of most accounting and finance professionals, how a company’s financials are communicated can have a lasting impact on the organization Practicing these dos and don’ts of communicating financials will ensure your audience is getting all the dollars and cents of your delivery

10 Tips for Reading a Room the Right Way

You’re going to meet a lot of people this holiday season at parties, work outings, and more. Here’s how to turn all those new names and faces into powerful business connections.

BY LISA WILDER

Whether he said it or not, a famous quote attributed to D-Day planner and former President Dwight D Eisenhower may help you shape your networking strategy: “Plans are worthless, but planning is everything ”

Here’s the point In the accounting and finance profession, the end of the calendar year presents unique opportunities for making connections and building business Potential clients may be getting restless with their current advisors and may be open to new ideas. And, in fairness, your clients might be doing the same And, there’s you there’s something about a fast-approaching new year that makes us consider where we are in our careers and whether better opportunities lie elsewhere

So, how do you successfully blend good business with good fun as you accept invitations to late-year conferences, holiday mixers, and gatherings with clients, peers, or prospects? A little planning from thinking about the people you want to meet to the way you present yourself can go a long way in making meaningful connections

From the invitations you consider to the way you work the room, consider these top networking tips from our trusted business consultants Alison Henderson of Moving Image Consulting LLC and Jon Lokhorst, CPA of Lokhorst Consulting:

1. Know why you’re going. If you want your networking time to be more valuable than a free drink and hors d'oeuvres, really think about the event, the logistics, the vibe, and who’s likely to be there. While there’s potential in most professional

gatherings no matter your goal, Henderson and Lokhorst suggest it makes sense to study the names of the hosts, presenters, officers, and any other faces involved in the event ahead of time to fully formulate what you can gain from the event

2. Reconnaissance is essential and easy. Even if you only have the names from the invitation, make sure you look them up on their employer websites or review their public profiles on Google, LinkedIn, and other professional groups But don’t “connect” just yet This is research for when you walk into a room full of strangers “Knowing” these people at least gives you a chance to seek them out to thank them for their work, and then you’re off and running appreciation is always a good conversation starter

3. Arriving on time is always better. From the grade school lunchroom to the corporate ballroom, some things in life always stay the same: “It’s better to be the person already active with others in a busy room than the last person walking in and wondering where to fit in,” Henderson says On-time arrival gives you a clear path to mingle, and Henderson points out that people are most open to meeting others as they arrive together rather than when they’re settled into established conversations or groups

4. Body language is important. Henderson works with professionals who run meetings both big and small and says similar physical cues and stances can work in networking events Being “open,” as she says, always means an upright posture and eyes up and engaged, but in a networking setting, she’d add one other

important detail correctly judging physical space. Events can get crowded, and as you’re greeting someone you’ve never met with a handshake, “it’s important to extend your hand the whole way” to respect their space.

5. Make it about the other person. “If you’re going into any room cold where you don’t know the people, be open and neutral in your speech and stance and work on eye contact without being too creepy about it,” Henderson notes It’s not about being a “party” persona but your authenticity and approachability give people an idea of what it’s like working with you

6. It’s a party, not a pitch (Part 1). “Pressing a card into someone’s hand isn’t where you start I think today it’s much more important to be interested than interesting,” Lokhorst says Lokhorst’s tip is to listen carefully as you walk the room to find “one or two people who are really interesting to listen to ” Going along with tip number five, “being curious and interested in someone else can be much better self-promotion than talking strictly about yourself,” he says.

7. It’s a party, not a pitch (Part 2). Part of the benefit of knowing at least a few attendees ahead of time is having the opportunity to develop a few open-ended questions that will let them talk about themselves or their business outlooks “It’s also good to have a few good stories about yourself,” Henderson says. Have at the ready a quick and relaxed storyline that tells the other person who you are and what you and your team can do

8 Business cards still have a place Lokhorst warned above that leading into a conversation with a business card exchange is passé, but short of a photographic memory, it’s still the most important tool to have at one’s disposal when the conversation

needs to continue another time. That said, women should strategize where to stash their business cards “You need a specific pocket for business cards where you can smoothly offer one if there’s an opportunity Women’s apparel doesn’t always have enough pockets, so that’s worth thinking about when you dress for an event,” Henderson says

9. Know when to go. Knowing when to leave a party is important but so is knowing when to cut the mingling short The purpose of a networking event is to have meaningful conversations with more than one or two people Henderson and Lokhorst suggest developing a tactic for comfortably ending or exiting a conversation without making others feel abandoned, whether it be “seeing” an imaginary person across the room that you just have to say hello to or a simple “excuse me.”

10 Have a speedy follow-up plan Whether you walk away with one good contact or several, Lokhorst says that reconnecting within 24-48 hours is key to keeping the conversation going His tactic almost always involves a real thank-you note (yes, a mailed one) that contains an invitation to continue a specific aspect of the conversation so there’s an uninterrupted train of thought if the other party agrees to speaking or getting together again

A final point; don’t forget your friends While a big part of networking is about making connections that benefit you, it’s also important to connect your contacts with each other Henderson stresses you should never underestimate the power of doing someone a favor If you have a trusted friend or colleague who might be a better fit for anything your new contact is looking for or needs help with, be generous and offer their name or service If both sides of that connection benefit, that means two people owe you a solid And therein lies the power of networking

Why a Volunteer Culture Matters

There’s much to gain for businesses that decide to be upstanding corporate citizens

BY ERIC SCOTT

In the same way Hollywood “feel-good” movies cheer us up, and how supporting socially conscious companies makes us feel like we’re making a difference, more accounting firms and corporations are stepping up their “good neighbor” efforts to perk up the people they employ and communities they serve. Don’t believe it? Consider the Illinois CPA Society’s annual CPA Day of Service, which was held on Sept 28, saw a record number of nearly 1,500 accounting and financial professionals across the state step away from their keyboards for a day to give back in some way

Indeed, there’s no shortage of positive vibes when businesses support work-related volunteerism and encourage their employees to contribute time and maybe a little elbow grease to give back to the communities they serve. But is there more of a bottom-line focused component when considering company-backed volunteer programs? Are more businesses realizing they stand to gain more in terms of staff morale and reputation enhancement, and maybe even a competitive edge, by being upstanding corporate citizens?

“It has brought us together,” says Amanda Ehret, marketer and volunteer coordinator at CPA firm Mowery & Schoenfeld LLC (M&S) in Lincolnshire, Ill , noting the firm’s launch of a formal volunteer program has produced a noticeable change among staff.

“Those in our tax and audit departments sit in their cubbies and don’t always get a great chance to talk; we saw people who usually don’t work together get together on projects, talk in hallways, go to lunch. It brought us together as a group and it’s been bringing the firm together,” Ehret says encouragingly

Marcy Steindler, CPA, principal at Mann Weitz & Associates (MW&A), a mid-sized firm of about 30 staffers in Deerfield, Ill , echoes Ehret, noting that her firm’s volunteerism efforts not only bring

staff together to support good causes but also goes a step further in encouraging shy-types to become more engaged.

“It brings out people who are usually quiet but have a passion for this,” Steindler says “It’s nice to see a different group of people come up to the plate It also makes all our departments act as one firm ”

For the Illinois CPA Society’s CPA Day of Service, MW&A’s office manager and volunteer activity coordinator Heather O’Brien led a team of colleagues at Habitat for Humanity’s Lake County ReStore in organizing tiles and other building materials which will be used for home building and improvement projects

WHAT’S RIGHT FOR RECRUITMENT

Organizations that have fully embraced staff volunteerism are finding that giving back isn’t only appealing to current employees it’s also attractive to potential recruits who, in a robust labor market, are increasingly critical of the companies they go to work for.

“We use photos from our volunteer efforts at our campus recruitment events it’s one of the first things that we get asked by recruits and students on campus,” Ehret says. “You can tell it’s really important to them.”

M&S goes a step further in linking volunteerism with its recruitment efforts: “Anyone who has accepted an offer gets invited to our volunteer events before they officially start at the firm It’s awesome because they know their colleagues before they even walk in for their first day,” Ehret says

And while an organization’s volunteerism efforts might be attractive to prospective employees, it turns out they’re also attractive to prospective clients “We often go on proposals to get business

and make sure potential clients know what we do,” Steindler explains, pointing out that MW&A has many not-for-profits in its client portfolio, so making it known the firm values volunteering in surrounding communities is an important step during new business meetings.

WHAT’S RIGHT FOR BUSINESS

Some questions are bound to come up when businesses decide to adopt a culture of volunteerism: Which organizations should we support? How much time should we devote to volunteering? Who decides what we do? At many organizations, those questions fall on a volunteer committee

“It does take time to schedule and sign up for events, track down sponsorships, organize drives, and budget for everything. Having our M&S Cares committee really helps One person plans drives, one person plans sponsorships, and one person handles scheduling We meet once a month and make sure our efforts are on track,” Ehret explains

As will need to be the case for most accounting firms, M&S balances time devoted to volunteering with busy season and filing deadline demands.

“We’re aggressive in the summer. We go in groups of four, twice a week, every week in the summer,” Ehret says of the volunteer schedule at M&S. “We really experimented with spreading out activities with an overall staff goal of 400 volunteer hours ” For this year ’s CPA Day of Service, Ehret coordinated a volunteer team at Twice as Nice Mother and Child, an organization in Lake County that serves as a diaper bank and provides other basic children’s needs to families in crisis “We pick a theme, so we won’t be spread too thin,” Ehret explains

In similar fashion, MW&A also schedules volunteer efforts in advance and gets ideas on organizations to support from its staff “We poll our partners about which of our clients need a personal touch who we could support by showing some love and giving our time. Then I start contacting them to see what we can do to help in our window of time,” O’Brien says

WHAT’S RIGHT FOR EVERYONE

The noble aspects of volunteerism haven’t changed The fulfillment of knowing that a few hours of volunteer service really make a positive impact on the future of an individual, a family, a community, or the planet, is a huge reward. What has changed or at least what has become more obvious is that the positive aspects volunteerism brings to individuals and communities can be realized by businesses as well. Improved morale among staff, an enhanced reputation among customers and clients, a meaningful tool for recruiting and onboarding talent and clients. These are just a few of the business benefits that stem from embracing a culture of giving back With all those positive factors in play, more businesses should be climbing on the volunteer bandwagon to do more in their communities

It doesn’t matter if a large company has hundreds of willing volunteers or if a small firm has just a few dedicated staffers the numbers of people and hours involved don’t equate to the thoughts and efforts being any more or less meaningful Business leaders who don’t take volunteering seriously or believe staff time should only be spent on things that matter directly to the bottom line should take a deep look at the cultures they’re fostering, the sustainability of their organizations, and the legacies they want to leave behind There’s no doubt that embracing a volunteer culture can be profitable in more ways than one Just ask the 1,500 Illinois CPA Society members who took the time to give back during the CPA Day of Service

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Why Employers Need to Care About Employees’ Financial Health

If your employees are financially stressed, they could be hurting your business Here’s how to help

BY MARK J GILBERT, CPA/PFS, MBA

We regularly hear how low levels of retirement and emergency savings, and the trillions of dollars in student, credit card, and other personal debts held by Americans are threats to our economy the next shoe to drop, some say So, it should be no surprise that more than half of employees are financially stressed, according to PwC’s 2018 Employee Financial Wellness Survey, and it’s taking a toll on their productivity and happiness in and out of the workplace That’s not good news if you’re an employer But as an employer, or an advisor to one, you’re in the unique position to help employees tackle these issues Employer-sponsored defined contribution plans can do a lot in securing the financial success of employees and employers if they’re

implemented right

Business owners want to see the best ROI out of every dollar invested in employee-related costs. One area often overlooked is defined contribution plans, like 401(k) and profit-sharing plans. For both employers and employees to get the most out of these benefits, they must be designed, managed, and promoted with care. So, here are some best practices for plan design, management, investment selection, employee participation, and participant education to help set businesses and their employees on a more sustainable financial track.

DESIGN

An effective plan starts with the right design The first and most important step in establishing a defined contribution plan is for employers “to consult their accountant or tax advisor to determine plan goals and the tax implications different types of plans can have on their company and an owner ’s personal taxes,” says Jeffrey Hommel, AIF®, vice president of Retirement Plan Solutions at TD Ameritrade Institutional.

For example, if maximizing growth of the business owner ’s defined contribution plan is the goal, it might be appropriate to establish an age-weighted and/or cross-tested plan that allocates greater employer contributions to the oldest, most highly compensated employees However, doing so will likely come at a cost Younger employees may be deterred from participating due to their smaller contributions, and higher administrative costs can negatively impact participation and discrimination testing

That said, there are ways to mitigate these impacts. For instance, a profit sharing and 401(k) survey released in 2016 by the Plan Sponsor Council of America (PSCA) indicated that 57 percent of plans employ a beneficial tactic: automatic enrollment Automatically enrolling employees in defined contribution plans increases participation,

especially among lower-compensated employees, thus helping business owners with discrimination testing and contribution limits

The takeaway here is that it’s critical to think of all the minutiae when trying to offer and implement a successful defined contribution plan.

MANAGEMENT

“It’s critical that employers understand the fiduciary obligations associated with offering a retirement plan Most plan sponsors don’t realize they are personally liable for the plan and that the ‘corporate veil’ does not exist,” Hommel says.

The role of the employer plan sponsor as fiduciary is described in ERISA, but a good way to help meet fiduciary responsibilities is to create and manage defined contribution plans through the following documents:

• Summary Plan Description (SPD), which is written primarily for plan participants and describes the main provisions of the plan, including eligibility, vesting, contribution rules and limits, distributions and other withdrawals, and procedural rules.

• Committee Charter (CC), which describes the purpose, membership, and operational rules of the employer-related entity overseeing the operation of the plan.

• Investment Policy Statement (IPS), which addresses the processes for selecting and maintaining the investment choices available to plan participants.

INVESTMENT SELECTION

Over the years, employers have collectively gone from offering too few investment vehicles in their defined contribution plans (sometimes as little as two funds), to far too many investment choices (literally, more than 100 funds)

Today, it is a best practice to focus less on the number of investment choices and more on the nature of the plan’s participants Employees will fall into different categories as far as comfort, interest, and skill in picking investments. Here’s what I recommend depending on employee interest and sentiment towards managing their investment choices:

• Little or no interest: Offer several actively managed target-date funds, each corresponding to varying retirement dates in approximately five-year intervals.

• Some interest: Provide a mix of quality, low-cost actively and passively managed funds in broad asset class categories. Think stable value, fixed income, U.S. large-, mid-, and small-cap equities, international equities, and some alternative investments

• Maximum interest: Consider providing a self-directed investment option through a linked brokerage account, which would grant participants the greatest freedom in investment choices and strategies

EMPLOYEE PARTICIPATION

A strong employee participation rate (the percent of eligible employees who actively contribute to a defined contribution plan) is important for a number of reasons: it helps business owners and other highly compensated employees with discrimination testing because it improves participation among the non-highly compensated employee workforce; it means that a meaningful number of employees are meeting the challenge of preparing for their own financial security; and it can drive down administrative costs, among other reasons Unfortunately, many employees with access to employer-sponsored defined contribution plans never participate or never maximize the true benefits. Some of the best practices to increase employee participation are:

• Automatic enrollment: Employees automatically participate in the plan unless they opt out. According to a recent Vanguard report,

automatic enrollment inspires higher participation rates across all demographic variables (83 percent versus 58 percent for plans with voluntary enrollment). However, automatic enrollment requires the employer to select a default contribution rate (typically 3 percent of pay) and investment choice (generally a relevant target-date fund)

• Matching contributions: The PSCA survey demonstrated that plans offering employer-matched contributions have better participation rates. The most common match was $0.50 for each $1.00 in employee contribution up to 6 percent of employee compensation.

• Online plan resources: Plan vendors who provide easy, intuitive app and/or web-based options for changing contribution rates, moving balances between investments, researching investment options, and requesting withdrawals report stronger participation rates than in plans where online functionality is unavailable or difficult to use.

PARTICIPANT EDUCATION

Financial literacy is empowering. Anytime an employer offers a defined contribution plan, it’s a good idea to invest in participant education tools First, there’s a legal and fiduciary responsibility to educate participants about any investment choices available to them But, there’s also a disconnect between worker perceptions and reality

A 2018 study by the Employee Benefits Research Institute indicated about 80 percent of workers surveyed expect their retirement plan to be a source of retirement income, and 50 percent say it will be a major source Unfortunately, U S News & World Report recently reported the median retirement plan account balance for working age participants is just $3,000 and $12,000 for participants approaching retirement clear shortfalls in the amounts needed for a secure retirement by any definition Taken together, these statistics indicate that employees expect their retirement plans to produce at least reasonably large account balances but are failing to take the steps to make that happen

Simply put, many employees lack the education to fully take advantage of employer-sponsored defined contribution plans So, to all of you employers out there, I’ll leave you with some homework to help ensure you’re offering real financial benefits to your employees and that they’re fully taking part in securing their financial futures:

1 Define each objective of any participant education program you intend to offer: Pass discrimination testing? Increase employee participation or contribution rates? Improve employee satisfaction? Assist participants in planning for long-term financial security?

2. Review and evaluate current participant education materials considering all stated objectives: Are the education tools addressing the objectives?

3 Design or redesign your participant education program: Identify the topics to cover, and determine the methods of communication (group meetings, in-person sessions, online, video, print, a part of other company communication tools, etc.).

4 Incorporate education, to the extent possible, on broader issues regarding overall financial wellness to make the information more meaningful to a greater number of employees

5 Implement the program

6 Evaluate the program

7 Update and periodically repeat these steps in the future

As an employer, or an advisor to one, you have a responsibility to ensure the financial success and sustainability of an organization that impacts the livelihoods of many. Your employer-sponsored defined contribution plan is a key part of that effort, so invest the time in a proper implementation. It’ll pay greater dividends to all.

Learning the Leases

What FASB’s new lease accounting standard means for businesses and their advisors

BY JEFF STIMPSON

The Financial Accounting Standards Board (FASB) has done it again If the new revenue recognition standard wasn’t exciting enough, FASB’s new accounting standards update (ASU), “Leases” (Topic 842), should get your blood pumping or mind numbing. All organizations that lease assets aka “lessees” will be required to recognize these assets and liabilities on their balance sheets Without a doubt, this will introduce profound accounting changes (And if you’re up to the task, it might also create some great consulting opportunities with clients looking to comply with the new standard )

“The most significant change impacts lessee accounting, as all leases in excess of one year will be included on the balance sheet, regardless if they are a financing or operating lease,” explains Jeffery Watson, CPA, a principal of quality assurance at Miller Cooper & Co , Ltd in Deerfield, Ill , a current member of the Illinois CPA Society’s Accounting Principles Committee and a former AICPA PCPS Technical Issues Committee member.

Consistent with current U S generally accepted accounting principles (GAAP), the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee

primarily will depend on its classification as a finance or operating lease. But unlike current U.S. GAAP, the new ASU requires both types of leases to be capitalized on the balance sheet, resulting in a liability and a corresponding right-of-use asset being recognized The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty

of cash flows arising from leases

For public companies, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec 15, 2018 For a calendar year company, that means it would be effective Jan. 1, 2019.

Who’s ready? Not many, according to a recent Deloitte poll of more than 2,170 C-suite and other executives. In fact, Deloitte found only 42 percent of public companies and 33 percent of private companies are on schedule to implement their respective new standards by their effective dates

“The clearest part about this standard is that there will be a significant change,” says Nancy Miller, CPA, senior director of technical accounting at Reynolds Group Holdings Limited in Lake Forest, Ill.

“A significant amount of work needs to go into assessment and adoption of the standard it should not be underestimated ”

THE SIMILARITIES

Both international financial reporting standards (IFRS) and U S GAAP require operating leases to be recognized on a reporting entity’s balance sheet, with the capitalized asset and lease liability are initially measured with reference to the fixed portion of lease payments.

Under IFRS, the capitalized asset is amortized, and the lease liability unwinds by way of interest and principal, “consistent with today’s accounting for finance leases,” Miller explains. “Under U.S. GAAP, capitalized leases continue to be classified as either capitalized operating leases or capitalized finance leases. The P&L expense associated with capitalized operating leases will be the same as today’s expense and will continue to be reported in EBITDA ”

“Although both operating and finance leases will be recorded on the balance sheet, the expense recognition pattern will differ for each,” Miller adds Under an operating lease, a lessee would recognize a lease expense on a straight-line basis over the lease term; under a finance lease, the lessee would recognize both interest expense (by using the effective interest method) and amortization expense “The lessee would generally recognize greater expense earlier in the life of the lease for a finance lease than for an operating lease,” she says.

Miller also points out that under both IFRS and U S GAAP, most variable lease payments are excluded from the measurement of the capitalized asset and lease liability “The expense associated with these amounts will continue to be reported within EBITDA,” she says. “The new rules also call for extensive quantitative and qualitative disclosures to increase transparency related to revenues and expenses recognized, and expected to be recognized, from existing contracts Companies will want to consider how to gather the necessary information and how to appropriately communicate with relevant stakeholders ”

THE IMPACT

Under U.S. GAAP today, operating leases are not capitalized on the balance sheet but will be in the future (assuming the lease term is more than a year). “The impact on income taxes should not be different than what’s done today for federal income taxes,” Watson says “Although, if lease terms and conditions or accounting policies change as a result of adopting the ASU, they could lead to timing differences between book and tax that would lead entities to assess deferred taxes ”

Other tax areas impacted include state taxes, international taxes, and transfer pricing State taxes will be impacted where certain states levy franchise taxes, which are generally based on net worth, Watson notes Entities will need to consider how they record the right-of-use asset that is, recorded in the same balance sheet account, or line item as other company owned property?

“For entities with international operations and intercompany transactions, financial and profitability ratios utilized to assess transfer pricing may no longer be comparable to periods presented prior to the ASU’s effective date, raising questions on the validity of the transfer pricing arrangements,” Watson cautions.

THE HELP

Considering the amount of change the new standard creates, there’s significant opportunity for advisory firms to step up to help their clients According to PwC, businesses are likely to feel the financial impact of the new standard in several ways:

• Losing the benefit of off-balance sheet financing for operating leases could merit reassessing lease-buy decisions and trigger the need to reconsider debt covenant compliance.

• Pre-existing leases won’t be grandfathered, so most outstanding leases will come onto the balance sheet Companies may need new processes, systems, and controls to account for current and future agreements

• Any new lease accounting system must address taxes. The new assets recognized for operating leases will change companies’ book/tax difference computations and could affect certain state and local tax apportionment calculations and transfer pricing.

• For regulated companies, such as banks, broker/dealers, and insurers, new assets and liabilities on the balance sheet may affect regulatory calculations, in some cases requiring more regulatory capital

Consulting and accounting firms will want to help clients get IT, tax, operations, treasury, and accounting together to ensure transition and compliance, create an inventory of lease contracts, and look at service contracts to identify potential embedded leases.

Watson thinks the latter is a potentially troublesome area “Entities will be able to identify and catalog their more traditional lease arrangements but could forget about the balance sheet impact of embedded leases contained in service contracts,” he warns “Even though embedded leases exist in U S GAAP today, often these arrangements are not bifurcated between an operating lease and service contract but instead are just recorded as a line item, such as a service contract expense, on the statement of operations Under the new lease guidance, not bifurcating a material embedded lease from a service contract will result in the balance sheet being misstated ”

To start preparing for the new standard, Miller recommends companies identify stakeholders as soon as possible. A standard this far-reaching means many different functions, like IT, legal, accounting, procurement, real estate, operations, and so on, will need to be involved

PwC recommends that advisory firms help clients discover if they know everything they lease by doing the following:

• Prepare an inventory of lease contracts and gather data on lease terms, renewal options, and payments.

• In a multi-asset lease, identify and account for each component as a separate lease Gather data on lease elements and non-lease elements

• Estimate future balance sheet amounts for operating leases. Consider whether debt covenants are affected by the addition of lease liabilities and assets to the balance sheet.

• Evaluate the leasing strategy for changes (e g , lease-buy, shorter vs longer terms, variable payments, or asset substitution clauses)

In other words, companies and their advisors have their work cut out for them; we’re talking about a whole new level of learning leases. “Almost everyone I know is finding out much more than they originally anticipated,” Miller says.

How Blockchain, AI, and IoT Are Reshaping Finance

By Carolyn Tang KmeT

The integration of emerging technologies with the finance function is driving rapid evolution and disruption within the industry mundane and manual processes like ledger entries and reconciliations are being completely reengineered for a digital world, rendering the status quo obsolete By now you’ve probably heard of blockchain, a decentralized, digitally distributed ledger that enables completely verified and secure transactions between multiple entities as all parties in a transaction validate activity, the transaction is written to the blockchain, creating an immutable entry, and a single source of truth Sounds promising, right? now, if only we can get past the fact that while blockchain technology was originally developed to facilitate the exchange of bitcoin enabling cryptocurrency holders to trace a bitcoin all the way back to its origin its application has so much more potential for the business and finance world than all the fear, uncertainty, and doubt would lead us to believe

Our New Building Blocks

“When some people hear blockchain, they think ‘shady, get-richquick schemes’ and bitcoin The reality is there are a ton of useful applications for blockchain, like its ability to protect consumer and client information from hacking and fraud, but change happens slowly,” says Karrie Sullivan, Ceo and principal of Chicago-based Culminate Strategy group

“at its very core, blockchain technology is a protocol an agreed upon medium of communication,” explains Phil gomes, director of communications for the Chicago Blockchain Center

For example, blockchains can be developed for a limited number of partners to manage in-network transactions and commerce rich de moll, a specialist executive and Finance Blockchain leader at Deloitte Consulting llP, refers to this application as “business blockchain” and says it has the potential to reshape core finance transaction processes to deliver cost and control benefits

“Blockchains can be used to improve many finance processes, including those related to procure-to-pay, order-to-cash, and intercompany transactions,” de moll explains “even more interesting, though, is the impact blockchain can have on broader business processes that intersect with finance, such as supply chain management.”

Business blockchains integrated as a private network provide permissioned partners with visibility into point-of-origination data. all the blockchain partners are known, and their digital identities are validated and recorded with each transaction once these transactions are recorded to the blockchain, they become permanent, unalterable, and always accessible by all parties involved Such transparency has the potential to eliminate downstream reconciliations, deliver a high degree of accuracy and control, and enable straight-through processing.

“Blockchain can record financial transactions It can record documents, purchase orders, advance shipping notices, digital goods receipts, proof of delivery, all sorts of events,” de moll explains Blockchain’s recordkeeping function also can be extended to automatically implement terms of multiparty agreements through smart contracts Smart contracts are not contracts in the legal sense, they are functions executed by the blockchain that are dependent on consensus protocols established by the contract’s code

“Take a purchase order, for example,” de moll says “What happens today is that I keep sending amendments, and I’m not sure whether or not your order system is caught up with all the amendments. If the amendments get recorded on the blockchain, then there is a single source of agreement.”

How this works is the blockchain records the sequence of events, along with related transaction elements such as the purchase order, the invoice, and the goods receipt note at the conclusion of the transaction, the smart contract checks the data to verify that the transaction adhered to all terms once confirmed, the smart contract can issue payment The result is a method by which involved parties can agree upon terms and trust that they will be executed automatically with reduced risk of error or manipulation

“Trading partners are able to confirm their agreement to the transaction at the start, so the data is correct at origination,

eliminating the need for downstream reconciliations accounts payable doesn’t have to touch anything and neither does accounts receivable,” de moll says

Clients that automate purchase order terms and requirements via smart contracts are seeing their costs drop from $4-$5 per invoice to less than $2 per invoice, de moll says “early adopters will be able to significantly reduce the size of their accounts payable and accounts receivable departments and be better able to optimize cash flow and working capital,” he notes

regarding payments, blockchain brings to finance the ability to facilitate near-immediate value transfers directly between partners, eliminating the need for an intermediary along with any associated costs or delays This could revolutionize cross-border payments, for instance, as money would not have to pass through multiple banks and conversions

However, Sullivan war ns that applications that fundamentally change financial transactions with the intent of eliminating the need for banks will face major hurdles “The change is bigger, the trust factor is a hurdle, it would require regulatory change, and there will be lots of resources dedicated to maintaining the status quo,” Sullivan says all that said, the finance function is positioned to take the lead on blockchain strategy and integration “over the next five years, blockchain technology could upend how businesses and marketplaces operate Sooner or later, CFos must come to grips with that,” de moll says.

Putting it in perspective, gartner reports blockchain’s business value-add will grow to $176 billion by 2025 even now, few disagree that blockchain has the potential to bring about significant cost and operational efficiency. according to gomes, blockchain technology represents a once-in-a-generation shift in how we think about network computing and commerce. “That by itself warrants some level of examination,” he says “Within a few years, we’ll start seeing networks where both digital and physical goods have a blockchain representation That’s where the real excitement happens ”

Let’s Automate Everything

So, how does that work? Consider the growing Internet of Things (IoT), where everyday objects are networked together to collect, transmit, and respond to data. maybe you already have an IoT device, like a smart thermostat that lets you remotely control your home’s temperature, or that automatically adjusts to optimize your utility bills?

now, what if instead of you or your home’s climate data managing your thermostat, your bank account did? What if your bank account could automatically dial-down your thermostat if your savings threshold got too low? What if such an option already exists? It does. Developed by london-based tech company ieDigital, the Interact IoT platform enables banks and credit card companies to connect consumer accounts to their smart devices These devices can then respond to changes in account balances

now take IoT technology, layer it on top of business blockchain, and indeed, that’s where the real excitement happens

“let’s say we’re a tech company that manufactures PCs, and we have purchase orders that specify that the PCs can’t be shaken

because they’re highly sensitive So, we put an IoT chip in the bundle We’ll know if someone dropped the pallet We’ll know if our PCs have been shaken We’ll know the chain of custody from point to point,” de moll explains

and since the transaction is tied to the blockchain, the purchase order could be tied to a smart contract, and payment could be tied to whether the PCs were delivered on time, unshaken, and in accordance with any other terms of the agreement think customs, import rules, financing, and more

“With blockchain, you can connect all of that,” de moll says

Are You Minding the Machines?

of course, IoT wouldn’t be what it is without another continuously advancing technology: artificial intelligence (aI) and its less decisive sibling, robotic process automation (rPa) rPa can automate repetitive processes by emulating human interaction and tasks; aI is much broader, being able to make decisions or predictions based not only on pre-established rules but also on accumulated and interpreted data

For example, consider the insurance industry, where fraud is rife mads Hennelund, an advisor with Danish consultancy nextwork a/S, observes that the number of fraudulent claims seems to increase as digitalization of interactions and reporting grows. Thus, counter-fraud and detection become even more important

“Consequently, aI is being deployed broadly in the industry to increase companies’ abilities to detect suspicious patterns among vast amounts of data,” Hennelund explains as data scientists work with the people handling reported claims, they’re essentially feeding their machines new learnings that increase fraud detection abilities. In similar fashion, KPmg has deployed IBm’s Watson in its audit practice to analyze data for anomalies, and H&r Block has been using it to assist its tax preparers to navigate and implement the tax code In all these instances, the aI learns processes, mistakes, anomalies, functions, and more, thus enabling it to transform every industry it touches

Hennelund anticipates aI will ultimately handle the bulk of fraud detection work, while humans will focus their efforts on doing more in-depth investigations of the anomalies detected by aI as well as exploring and implementing different fraud prevention mechanisms and incentives.

now imagine layering aI and rPa on top of blockchain “When we add analytics and artificial intelligence to blockchain’s end-to-end transparency across the extended process and real-time data flow, unusual transactions can be flagged and intercepted in real time,” de moll explains

Such activity would ultimately disrupt the auditing process Per research issued by the mcKinsey global Institute, 42 percent of finance activities could be fully automated by aI These activities include general accounting operations, cash disbursement, and revenue management an additional 19 percent of finance activities, like financial controls and exter nal reporting, could be mostly automated

“The tools that fuel aI and rPa are getting better and easier to implement every day,” Sullivan says “When I do rPa projects with clients, we analyze and organize tasks from the simplest, most repetitive to the most complex From there, we design our automation and estimate the impact. What we’ve seen so far is more of an unshackling of overworked and under-resourced people, so they can focus on higher value work ”

That said, all these emerging and converging technologies are changing the skillset and knowledgebase demands of accounting and finance professionals

“I see aI augmenting finance staff by providing them with additional tools and reducing a lot of the drudgery,” de moll says, which means accounting and finance professionals must embrace a technical and process skillset to maximize the assistance aI will give them.

It also means companies must get started with these emerging technologies Start dreaming about what the future could look like Stop viewing emerging technologies as a hurdle and start looking at them as a way for finance to take a strategic role in driving the organization forward and changing the way business is done

Finding Direction on Di versity

BY ANNIE MUELLER

First, the good news: The accounting and finance industry, as a whole, is serious about the need for diversity and inclusion. “An entire industry is getting focused and ready for change,” says Gloria Castillo, president and CEO of Chicago United, a corporate membership organization that advances multiracial leadership in business There’s an ongoing transition from national directives, such as the AICPA’s decades-old Minority Initiatives Committee, to region-specific, focused initiatives, such as the Financial Services Pipeline Initiative out of Chicago.

This transition from national to regional, from theoretical to practical signals a change from discussion to action “Real strategies are the focus,” says Kari Natale, director of Planning & Gover nance for the Illinois CPA Society, whose endowment fund supports a variety of diversity and inclusion programs and initiatives. Natale recently led the Society’s third-annual Diversity Forum. “The profession understands the business case for diversity,” she says “It's how to take action and how to personally take ownership where work still needs to be done What we ’ re striving to do is share more practical things that people can do to create a diverse and inclusive workplace ”

The accounting and finance profession must find a new path forward if it’s ever to achieve lasting diversity and inclusion across organizational levels.

cohesive, practical approach to driving diversity is a desperately needed step forward: Despite ongoing efforts, diversity lags in the accounting and finance world

A 2017 data analysis from the Financial Services Pipeline Initiative shows diversity trending in the wrong direction: Promotion rates for African-American and Latino talent became consistently lower from 2014 to 2017 In fact, the Financial Accounting Foundation will tell you that 75 percent of professional accounting positions, and a staggering 90 percent of partner positions, are still held by non-minorities and the numbers are nearly as bleak for women when looking at gender disparities alone

Exiting Employees

“Even in large accounting fir ms, which promote diversity and have higher numbers, there’s still a gap, ” Natale affir ms “I get feedback all the time from inter ns that completed our Mary T Washington Wylie Inter nship Preparation Program that they’re the only person of color on their team It’s hard for them not to feel different, which often means feeling out of place.”

The frustration that diverse professionals feel at being a very small minority in a large profession, and at facing evident limitations for advancement negates the benefits they could bring Frustrated employees become former employees; without diverse employee retention, no one benefits from diversity efforts The lost benefits are significant, and so are the lost dollars in half-hearted initiatives

“It's becoming almost indisputable that well-run organizations that have diversity in their senior leadership and in their practices are outperfor ming other companies,” Castillo states. “It's really about the sustainability of your business; if you want your business to grow and be profitable and be sustainable, then diversity and inclusion is a business imperative ”

An important linear relationship exists between diversity and inclusion and better financial performance, as proven by McKinsey’s ongoing research: “In the original research [‘Why Diversity Matters’], using 2014 diversity data, we found that companies in the top quartile for gender diversity on their executive teams were 15 percent more likely to experience above-average profitability than companies in the fourth quartile In our expanded 2017 data set [‘Delivering Through Diversity’] this number rose to 21 percent and continued to be statistically significant For ethnic and cultural diversity, the 2014 finding was a 35 percent likelihood of outperformance, comparable to the 2017 finding of a 33 percent likelihood of outperformance on EBIT margin; both were also statistically significant ”

Pointless Paths

Lack of diversity is an obvious dead-end road But not every path toward diversity leads somewhere Incomplete, ineffective efforts create endless loops, using resources without bringing real change

A historical focus on diversity, and diversity alone, without a concurrent understanding of the need for inclusion is one of these pointless paths

“We know that diversity is being invited to the dance, but inclusion is being asked to dance,” says Suri Surinder, CEO of CTR Factor, an advisory services fir m specializing in leadership, diversity, and inclusion.

To waste time on diversity initiatives, do this: focus solely on diverse hiring, and ignore the need for inclusion in company culture. It won’t take long for diverse candidates to get fed up and move on “We talk a lot about attracting people into the profession We talk about how to recruit But once we have more diverse employees, we ' re not doing our best to keep them,” Natale stresses Up goes the tur nover rate, down goes the diversity It’s an industry-wide seesaw, and it prevents diversity from expanding beyond minimum requirements and entry-level positions. To fix this problematic pivoting, most fingers point at organizational leadership; partners and senior members are tasked with understanding and initiating the change needed

“Those in leadership generally understand the business imperative for a diverse and inclusive business culture; and the younger ranks, which are generally more diverse, are cheering on the efforts, “but somewhere in that middle it gets stuck,” Castillo explains. “Most mid-level managers haven't been given the training to be inclusive managers They don't know how to do it, even if their heart is in the right place And they're not generally rewarded for building inclusion competency ”

Corporate Congestion

Corporate traditions, still strong in the more conservative accounting and finance industry, add to the issue Many nor ms of corporate culture steer people away from inclusion “The way that many corporations operate and promote and raise their employees creates a highly insecure professional who can’t be away from the mainstream,” says Illinois CPA Society member Tim Jipping, CPA, CGMA, founder of Jour ney Advisors and CPAs and a CPA Practice Advisor 2018 40 Under 40 honoree “Promoting diversity and actually demonstrating inclusion in the workplace is extremely uncomfortable at first, particularly when the culture and environment is not used to it ”

It’s a paralyzing combination traditional corporate culture begets workers who feel insecure if they move out of prescribed boundaries and ingrained behaviors To embrace diversity and inclusion at every level of an organization, however, everyone must stretch out of comfort zones and familiar traditions “It’s important to realize that people don’t fear change; they fear loss,” shares Jude Rake, founder and CEO of consulting firm JDR Growth Partners and author of “The Bridge to Growth ” “Many change initiatives threaten their competence, relationships, territory, security, sense

of direction and control, and in some cases, their livelihood They need rational and compelling context ”

Meaning, it’s imperative to provide clear, practical training and tie real rewards to inclusion competencies For instance, an organization’s competency model can demonstrate a clear path toward promotion based on each competency “If people are not being rewarded for their inclusion competencies, they're simply not going to focus there But companies are really successful in diversity and inclusion when they ensure that inclusion practices are in their competency models,” Castillo confir ms

Significant S hifts

The need for change in the middle levels of accounting and finance organizations does not give higher levels of leadership a free pass Ultimately, driving diversity and inclusivity in any organization depends on those who make the rules and hand out the rewards “The bottom line is that the culture of the organization, the responsibility for that culture, never leaves the CEO's desk,” Castillo says

“Leaders need to help the other leaders at all levels of their organization paint a compelling picture of future success that is meaningful, and they must communicate it long after they think the workforce embraces it,” Rake adds

Leaders must also be willing to shift in mindset and leadership style “Preserving active diversity requires a different leadership mindset,” Surinder teaches Leadership that promotes awareness and empathy as a social nicety, rather than as genuine connection and respect, is not enough.

“Every manager should be thinking, ‘I’m not just your boss, I'm also your mentor,’” Natale urges “That’s the missing piece ” “Authentic leaders with a strong sense of self-awareness and a commitment to the long view will fight through any initial discomfort of a mentor-focused approach,” Jipping says “They will realize and promote the fact that it creates intentional effort to create a diverse and inclusive culture that stays.” To change corporate culture, the accounting and finance industry needs authentic leaders who act as mentors and lead by example, forging human connections and demonstrating practical inclusion.

Long Term Leadership

The long-ter m view is key. “Most leaders want the change they d e s i re f o r t h e i r o rg a n i z a t i o n t o h a p p e n l i k e a l i g h t s w i t c h Unfortunately, workforce reality is more like a jour ney than a light switch,” Rake says The accounting and finance profession excels at being results oriented and focused on the long-ter m success of i t s

i n t e r n a l o r e x t e r n a l ; n o w i t a l s o n e e d s t o f o c u s o n t h e l o n g - t e r m s u c c e s s o f i t s p e o p l e A d i v e r s e a n d

i n c l u s i v e w o r k f o rc e m a y n o t a t t r a c t m o re c l i e n t s o r s k y ro c k e t profitability tomorrow, or even next year, but it will have a lasting impact on an organization’s viability Incorporating diversity and inclusion into business strategies and measurable competencies will help foster the cognitive diversity future-minded organizations n e e d M c K i n s e y ’ s re s e a rc h p o s i t s t h a t m o re d i v e r s e c o m p a n i e s a re s i g n i f i c a n t l y b e t t e r a t k e y b u s i n e s s o p e r a t i o n s , s u c h a s w i n n i n g t a l e n t , re l a t i n g t o c u s t o m e r s , a n d m a k i n g b e t t e r s t r a t e g i c d e c i s i o n s ; a l l o f w h i c h c a n l e a d t o a “ v i r t u o u s c y c l e o f increasing retur ns ”

“There has to be some understanding of where people are coming from,” Natale says “You can't just hire diverse people, then require that everybody confor m ” When minorities and women feel that confor mity is the only way to succeed in the workplace, individuals and organizations lose

To achieve cognitive diversity, leaders must assess their own adherence to diversity values, and take that mentor-focused approach to leading their team That means setting an example, and it also means drawing hard lines when needed “The best leaders don't avoid the brutal facts,” says Rake “They embrace tough discussions If coaching with candor fails to yield improved results, they have the courage and compassion to guide poor perfor mers out of their organization with dignity and support ”

The R ight Road

Perhaps the greatest need is for those entrenched in current culture to understand and acknowledge where the current standards fail, and how their individual choices and behaviors might contribute to that failure “Self-awareness is critical,” Jipping stresses Individuals who take personal responsibility for their own attitudes and actions, and whether they help or hinder cultural inclusion, are the ones who will lead their organizations down the right path

Of course, leaders are not the only ones who can make inter nal changes and subsequent shifts in outward behavior: Anyone who takes personal responsibility becomes a leader, in whatever position they fill. In the end, the entire accounting and finance profession the entire business world is a collection of individuals, all with unique ways of seeing, experiencing, and contributing “You can be a connector,” Castillo says “You can look for the skills that your diverse colleagues have and promote them You can demonstrate how to be supportive of other people ” That’s a road everyone can walk.

Outmigration It’s the technical term for what the mainstream media refers to as an exodus Although, when it comes right down to it, exodus, defined as a mass depar ture of people, is pretty f itting for what’s happening in Illinois people, and their businesses, are fleeing the state

According to the Illinois Policy Institute, Illinois has lost near ly 6 43,000 residents on net since 2010. From July 2016 to July 2017, the state saw a net loss of nearly 115,000 people to other states on net. That’s one person taking flight ever y 4.6 minutes.

“People say net migration in Illinois has been negative for the last 100 years and that this is no big deal. But over the last four years, the population has star ted declining Fewer people are coming here, and more are leaving,” says Orphe Divounguy, Ph D , chief economist at the Illinois Policy Institute “Net migration just got worse ”

Just how intolerable is Illinois? A look at what ’s behind the Land of Lincoln ’s outmigration problem — and what it means for the rest of us.

BY NATALIE ROONEY

ensus data reveals the stark truth: So many individuals have lef t Illinois over the past four years that it has fallen out of its spot as the fif th most populous state, slipping to sixth behind Pennsylvania Only West Virginia has seen more consecutive years (five) of population decline The kicker: None of Illinois’ neighboring states have experienced population declines since 2011

Lindsey Piegza, chief economist at Stifel, Nicolaus & Company, lists Illinois’ cost of living, state and local government fiscal woes, and the continued shif ting of the tax burden to taxpayers as the main drivers of outmigration “Families may not be able to leave right now because they have kids in school, but there’s an incentive to get out as soon as they can,” she says

It’s no dif ferent for businesses “Why not move across state lines and enjoy a more favorable tax environment?” Piegza asks “Why tether yourself to a seemingly destructive path?”

While the criticism is harsh considering several states are facing rapidly rising deficits, a problem in Illinois is the lack of an honest recognition of the problems

“ We’re not hearing solutions, and there’s a willingness to make a problem bigger before addressing it,” Piegza stresses

THE ELEPHANT IN THE ROOM

In almost any conversation about Illinois’ economic health, you’re likely to hear what one growing problem is: pension liability

“We have the worst pension costs and funding Costs are rising, and our politicians have resor ted to tax increases If economic growth slows, you don’t get more revenue and pensions take up more of the budget, you can’t have the discretionar y funding to pay for education, police and fire investments any of the things Illinoisans care about,” Divounguy says.

Piegza hits the pension point hard as well “We have this outstanding pension liability we know we can’t suppor t It’s an antiquated program Why aren’t we addressing it?” she asks. “There are no honest conversations about stopping the bleeding, let alone moving the patient into surger y.”

“Pensions are the biggest issue facing Illinois, but it didn’t even come up on the campaign trail this year,” Divounguy points out. “Lawmakers can’t wait any longer to address rising healthcare and pension costs with meaningful reforms For Illinoisans to see a future in this state, pension reform must become a public and legislative priority ”

THE SHIFTING TAX BURDEN

Ranked number 36 in the Tax Foundation’s 20 19 S tate Business Tax Climate Index, “honest conversations” about how to turn the tax

tide also need to happen “The concern is that the state’s tax structure will go from bad to worse if a proposal to change from a single rate structure to a graduated rate structure is enacted,” says Katherine Loughead, policy analyst at the Tax Foundation “Currently, the flat rate structure is the one redeeming quality in an other wise uncompetitive tax code ”

A permanent fear of a pending tax increase has Illinois businesses weighing their options “When a state can’t balance a budget because pensions take up a larger share of state spending, then investors have a constant fear of tax increases Well, that is suf ficient to deter investment in the state,” Divounguy says.

He points to the fact that approximately a third of individuals leaving Illinois are moving to Wisconsin and Indiana. “The weather is the same, so that’s not the reason Wisconsin is outpacing Illinois in terms of employment growth and new businesses People are going where there are better paying jobs and better oppor tunities ”

But it’s not just individuals taking flight; business star ts and net business are down in Illinois, while data from the Bureau of Labor Statistics shows net new businesses are rising in other states seven times faster than in Illinois.

Since 20 10, as the state has been slowly recovering from the recession, Illinoisans have been hit with a 46 percent increase in corporate income tax and a 32 percent increase in personal income tax, a state record

“‘Dire’ is the word a lot of people are using,” Loughead says, adding that when Illinois raised its income tax rate from 3 percent to 5 percent in 20 11, it raised an additional $30 billion, but the backlog of bills remained higher than before the increase took ef fect “Generally speaking, when Illinois raises taxes, it’s not productive Tax increases alone aren’t going to solve a state’s fiscal problems ” The tax increases Loughead refers to par tially expired in 20 15, but the legislature overrode Gov Bruce Rauner’s veto and the rate increased again in 2017 to its current rate of 4 95 percent

FEELING THE STING

Real world stories from Illinois CPAs and their clients suppor t the outmigration statistics Brian Bradbur y, CPA, a par tner in Kemper CPA Group’s Robinson, Ill. of fice, says his clients mostly individuals, small businesses, S corps, and par tnerships are feeling the sting

The city of Robinson sits just five miles from the Indiana border. While many of his clients who farm or work in oil extraction, construction, or trucking can’t just pick up and move, they have had serious discussions about pursuing work in Indiana rather than Illinois

“The tax burden is a big concern for them,” Bradbur y says “They’ve asked why they can’t just operate out of Indiana because, in their minds, the business environment is better and tax rates and workers’ compensation rates are lower.”

“Illinois isn’t as competitive as neighboring states when you look at the manufacturing and construction industries,” Divounguy confirms. “Prevailing wage rates in Illinois mandate that whoever is working on a government project pays a wage rate above market Those regulations make it dif ficult to do business here So, again, Illinois isn’t seeing the kind of business creation that neighboring states and the rest of the countr y are seeing ”

Bradbur y has also obser ved a local manufacturer shif t production to other facilities and a large refinery struggle to attract and retain individuals at its Illinois facility. “Proper ty taxes are one reason. People choose to live in Indiana and commute because they can find comparable housing and pay less in taxes ” It puts his clients in a tough spot “This is a small community These people have been here for generations, and it’s where they want to be, but it’s challenging,” he says

Nor thbrook , Ill -based CPA Dana B Davidson has also watched business clients leave Illinois “She picked up and pulled all of her equipment out of Illinois,” Davidson says of a client who operates an answering ser vice for doctors. “The business environment was her push to go ”

But Davidson says it’s not all bad in Illinois. One positive change for

businesses came in 2017 when Senate Bill 867 reduced the cost of star ting a limited liability company in Illinois from $500 to $39 Prior to the change, Illinois had the highest LLC star t-up fee in the countr y

Still, Chuck Taylor, CPA, principal of Clif ton Larson Allen’s Oak Brook, Ill of fice, isn’t shy about saying his clients, closely held businesses of all sizes, are “negative about Illinois right now” and “would love to move ”

The challenge for most business owners remains the same though; it’s hard to uproot an established business But when the time comes for business owners to sell, they exit Illinois quickly “High net wor th individuals don’t stick around,” Taylor says “They stay, raise their kids, and then sell, transition, and move out of state ”

The most negative sentiments, Taylor says, are toward Illinois’ proper ty tax system “ When looking at physical locations, new facilities are driven away from Illinois because of proper ty taxes and the way the system works Other states are more aggressive ”

For example, in the healthcare industr y, Indiana caps insurance differently for physicians who practice across state lines In construction, non-union work is easier to get in other states And while Taylor says he hasn’t crunched the numbers, that nagging distrust about what’s going to happen with pensions keeps rearing its head “The general thought is that it’s going to get worse, not better,” he says

WHAT CAN BE DONE?

It would be nice if the state would tap into the accounting and finance talent it has here to get to a better place But the hard truth is there’s no easy solution to clearing of f years of massive and costly debt

“ We have to stop the programs we know are unsustainable, inef fective, and extremely expensive,” Piegza says “We need updated policies that reflect today’s economy and labor market ” She points out that pension benefits for government workers used to be necessar y because they were paid so much less than private sector workers, but that’s no longer the case

Any solution will be painful she predicts a combination of tax increases, spending cuts, and an increase in payment receipts How much of each? “It will depend on the appetite of taxpayers,” Piegza says “The higher and faster you raise taxes, the faster you’ll lose your tax base and exacerbate the divide between expenditures and receipts. It’s a delicate balance.”

Loughead cautions that a change from a flat rate individual income tax or another increase “could make a lot of people throw in the towel on Illinois ”

“We need pension reform and a spending cap so our budget process doesn’t leave us with tax hikes ever y other year,” Divounguy says “We need well-informed organizations and individuals to go to their lawmakers and advocate for policy changes The more people reach out to lawmakers and push them to do the right thing, the more hope we have that we’ll be in good shape for the future.”

capitolreport

LEGISLATIVE INSIGHTS FROM MARTY GREEN, ESQ , ICPAS VP OF GOVERNMENT RELATIONS

{Read

Illinois in Transition

What will one -party rule bring to Illinois?

Illinois state government is in transition after Illinoisans voted in a Democratic trifecta, electing Chicago Democrat J.B. Pritzker as governor and solidifying the Democratic Party’s hold on the Illinois House and Senate Will one-party rule bring needed change to Illinois government?

The Illinois Constitution provides that the governor-elect will be inaugurated on Jan 14, 2019 Following the inauguration, Pritzker will assume the reins of state government and deliver his State of the State Address to a joint session of the Illinois General Assembly, which also sets the stage for a future budget address It is through these addresses that Pritzker will introduce his immediate legislative priorities. The enormity of all of this for a newly elected governor is further compounded by the fact that it all occurs within a few short weeks.

Recognizing the complexities of turning over state control to a new governor, chapter 15 of the Illinois Compiled Statues provides for “the orderly transition in the Office of the Governor.” Even before the end of a gubernatorial campaign, campaign policy staff begin establishing a transition plan in the event of a victory During the short time between the election and inauguration, the governor-elect then must select a cabinet and staff and establish plans to execute campaign platforms, govern, and lead the day-to-day functions of state government

As someone who has experienced the transitioning of governors firsthand I was a part of a small team involved with transitioning Jim Edgar into office in 1991 I can attest to the challenges ahead.

Pritzker appears to have hit the ground running at least. The day after the election he announced the formation of his transition team, chaired by Julianna Stratton, his lieutenant governor, which includes a diverse, bi-partisan group of respected political veterans like former Governor Jim Edgar, former Comptroller Dan Hynes, Rep Christian Mitchell, and former Senate Minority Leader Christine Radogno

While much comes with the changing of the guard at the governor ’s office, the Illinois General Assembly is set to undergo its own change Over 40 new legislators will be sworn in for the first time when Illinois’ 101st General Assembly is seated on Jan 9

and further solidified their veto-proof super majority in the Senate. With this influx of new legislators, I foresee an increase in legislation introductions, which could potentially have far reaching impacts on you, your business, and your clients

Another part of the legislative transformation comes with the selection of new majority leaders in both the House and Senate. These important leadership positions were vacated due to retirements, creating an even greater leadership vacuum. Veteran legislators who currently hold key leadership positions as committee chairs will most likely vie to move up to the majority leader positions, while new rank-and-file legislators will be assigned to committees and other legislators with seniority will angle for assignments on key committees.

So, what does all this mean for the CPA profession? It’s difficult to predict just yet. What I can tell you is that we’re reaching out to the transition teams of Pritzker and Attorney General-elect Kwame Raoul, and all new members of the General Assembly, to familiarize them with the Illinois CPA Society and the CPA profession. We’ve provided them with transition briefing sheets on the regulations and issues important to the CPA profession. More importantly for now, we continue to communicate and work with legislators and their teams to position the Society and its members as trusted resources. This is a crucial and important time in state government as our newly elected government leaders prepare to assume their constitutional duties and serve the people of Illinois.

We will continue to monitor cabinet announcements and staff choices, we will continue to keep you updated on the reformation of our state’s government, and we will continue to make ourselves available as indispensable professional resources to our state’s leaders

We thank Gov Rauner and Mrs Rauner, and all those who are exiting positions in Illinois government, for their service and wish them the best And we welcome soon-to-be Gov Pritzker and Mrs Pritzker and their team, and all those new to Illinois government, and the possibilities they bring as they begin their new duties Now, let’s see what kind of change occurs

CPA PAC

The Illinois CPAs for Political Action (CPA PAC) serves as a strong collective voice for CPAs and CPA firms and provides a foundation for successful legislative advocacy. Good citizenship is promoted through the personal and financial participation of Illinois CPA Society members and others in the elective process at the state level of government.

CPA PAC is a respected nonpartisan political action committee that contributes and supports candidates for state offices who support the legislative goals of the profession.

Illinois CPAs for Political Action recognizes the following firms for their support of the CPA PAC.

Thank you to Illinois CPA Society members and their organizations for continued support of the CPA PAC through financial contributions.

SUPPORT CPA PAC

Your support makes these legislative achievements possible. We encourage you to donate to CPA PAC and contribute to future successes.

CPA PAC accepts individual and corporate donations. Contributions may be sent

Author’s Note: This column includes my personal observations of the evolution of the legislative environment and are not necessarily the views of the Illinois CPA Society

Keith Staats, JD executive Director Illinois Chamber Tax Institute

Decoding the Democrats’ Sweep

What’s in store for Illinois tax policy after Democrats sweep November ’s election?

I’m writing this column on Nov 7, the day after Democrats swept Illinois’ election By time you read this, the state’s newly elected governor, Chicago Democrat J.B. Pritzker, and a host of Democrat legislators will, hopefully, be deep in preparation for their debut in Springfield Let’s decode what a Democrat-controlled Illinois General Assembly might mean for Illinois tax policy.

With an unpaid bill backlog of nearly $7.5 billion and an underfunded pension system, our new state leaders will immediately face a set of significant fiscal challenges for the current fiscal year and the years ahead

While Pritzker never released a comprehensive tax plan during the campaign, piecing together what he has said about taxes over the course of his campaign could be telling in how he intends to approach his budgetary inheritance

Unlike in prior years, the General Assembly and soon-to-be former Gov Rauner passed a budget for fiscal year 2019 However, whether the budget was truly balanced has been an issue of debate. According to some reports, the budget as passed had a structural deficit of approximately $1 2 billion, and the state’s budget picture has not improved since July 1

In fact, the state has been ordered by courts to pay approximately $400 million in back pay to state employees in response to a lawsuit filed against Rauner over his failure to pay “step raises” (longevity raises) to union employees after expiration of the collective bargaining agreement with the state’s largest employee union No money was appropriated for these raises in the current state budget Worse even, the budget was “balanced” by underfunding the cost of employee and retiree healthcare.

Recently, the Teachers’ Retirement System announced that the required payment to the pension system will increase for fiscal year 2020 by about $400 million because of changes to investment return calculations made by their actuaries

Additionally, the education funding reform legislation enacted into law a couple of years ago envisions the state increasing funding for local schools by a few hundred million dollars each year

Added to all this, Pritzker will also face pressures to make good on his campaign promises for additional funding for existing and new state programs when crafting his first budget There are two obvious ways to address what appears to be a growing structural deficit and pay for new and expanded programs cut expenses or raise additional revenue (taxes).

Pritzker’s campaign promises included repealing the Invest in Kids tax credit/scholarship program He’ll need support from the General Assembly do so, and even then, the repeal would save only about $75 million per year a significant amount of money in absolute terms but a small amount in the context of a $36 billion state general funds budget. And while the state’s pension debt is a huge portion of state spending, the Supreme Court has made clear that the state has few, if any, options available for cutting benefits to current employees and retirees as a method of reducing existing pension obligations.

So, with limited options for cutting expenses, both for political and legal reasons, well… we know what that means the more likely route for Pritzker is to increase existing taxes and reduce or eliminate existing tax exemptions, credits, and deductions

Raising Revenues?

Raising tax rates is a difficult vote politically for most members of the General Assembly, and it appears that Pritzker has ruled out an immediate tax increase Further, the issue with reducing or eliminating existing tax exemptions, credits, and deductions is that they don’t account for nearly enough revenue to even come close to balancing the existing structural deficit unless exemptions, credits, and deductions provided to individuals are reduced. Given Pritzker’s campaign statements, that appears highly unlikely

Pritzker strongly favors amending the Illinois Constitution to authorize a graduated income tax. The challenge here is the earliest that can happen is calendar year 2020, and even then, the graduated tax wouldn’t be effective until calendar year 2021 Of course, that’s assuming the General Assembly can pass a proposed amendment by a three-fifths majority at least six months before the November 2020 election at which the proposed amendment would be presented to Illinois voters For the proposed amendment to be enacted, it must be approved by 60 percent of those voting on the amendment or the majority of voters in the election.

Pritzker has proposed a “graduated-like” tax in the interim As I understand this idea, the flat tax rate would be increased in combination with increases in deductions and credits provided to individuals who are not “rich ” This implies the increased rate

would only result in higher taxes on the rich However, Pritzker has backed off this idea in interviews since winning the election.

Legalizing and taxing recreational marijuana is another potential source of new state tax revenue proponents suggest hundreds of millions of dollars could be raised However, legalization would take time to pass and implement For example, if legalization is passed by the end of the 2019 spring session (May), time would be needed to place the required regulatory and tax infrastructure in place, license vendors, and more So, we’re more realistically looking at legalization in January 2020 and a realized revenue impact in the following year

Pritzker is also on record as favoring gambling expansion, including legalized sports betting, as a means of generating additional state tax revenue. Previous gambling expansion proposals have included expanding the number of casinos, including a Chicago casino, as well as allowing various sorts of gaming at horse racing tracks. These proposals have met opposition from not only those opposed to gambling but also existing casino owners who fear cannibalization of their customer base, fights over who would own a Chicago casino, and how the proceeds from a Chicago casino would be distributed Plenty of unanswered questions surround sports betting as well In other words, expanded gambling won’t be a quick source of additional state revenues either. As with legalization of recreational marijuana, I suspect the state wouldn’t see increased revenues from gambling expansion before January 2020

What this boils down to is 2019 will be another challenging budget year any solution is painful to someone

4 T ips for Translating Tax Jargon Into Business Success

The art of communicating technical topics to your corporate colleagues takes practice and tact

Have you ever been in a meeting where a technically savvy accounting or finance pro throws around technical jargon as easily as promises on a campaign trail? That person is likely respected in their field, but unfortunately, the intended audience has probably either tuned out or been left out. Time and again I’ve seen enthusiastic business professionals both in accounting and finance and other organizational areas who are eager to learn and grow and dive into analysis and discussion become discouraged and frustrated because they’re unable to follow the conversation

It’s incredibly important for us accounting and finance professionals to speak in understandable business terms, especially in a post-Tax Cuts and Jobs Act climate where tax is a hot topic in all aspects of the corporate world So, here are some tips for communicating technical topics I have learned along the way (and sometimes the hard way)

Tip #1 – Cash is King

When it comes to talking shop, cash is king! During my days in public accounting, we would often start a conversation with our clients in terms of cash impact Ultimately, that is why they agreed to the meeting and why they are in business So, if you are talking about the impact of the new revenue recognition standards or depreciation methods, for instance, be sure to understand how each decision will impact cash flow and know ahead of time how to illustrate it to your audience

Tip #2 – avoid TeChniCal JaRgon

We’ve all been in classrooms, conferences, and meetings where everyone’s eyes have glazed over and nothing useful has been absorbed by anyone Don’t let this happen to you It’s incredibly important to translate technical jargon, especially from the tax world, into everyday language your peers will understand Decision makers particularly need to be able to follow the issues and proposed solutions you’re presenting

A couple of years ago, I started working on compliance in the U.S. International Tax space at Caterpillar. At that time, I found myself focusing on the words and code sections so closely that I couldn’t participate in the discussion as effectively as I would have liked. I often liken that experience to being dropped off in a foreign country where I can’t speak the language.

amanda l gavin, CPa, mBa manager, global Tax, Caterpillar Inc

When advising on the tax consequences of certain business transactions, I find it most effective to drop all references to code sections and stick to terms everyone can follow For instance, if you’re trying to explain the new provision for the limitation on interest deduction, don’t start out by saying, “The IRS and Treasury released Notice 2018-28 announcing their intent to issue proposed regulations under Section 163(j) as amended by the TCJA.” Instead, simply inform your client that you are waiting on proposed regulations which might impact what they can deduct on their tax return. Give them an example: “For instance, every $10,000 of expense over the limit could increase your liability by more than $2,000.”

Tip #3 – TalK abouT RisKs

When you talk about the potential impact of a proposed change or strategy, be sure to discuss the potential risks and costs State why the proposal makes sense for the business For instance, if you’re on the tax side talking about how a cost segregation study would improve cash flow by accelerating depreciation deductions, the business side is going to want to know how that would impact the financial statements It is very impactful, and it boosts your credibility, when you can articulate the risks and costs and do so before needing to be asked

Tip #4 – beCome a TRusTed advisoR

Developing good relationships between tax, finance, and other business segments is critical for the enterprise’s success as well as your own. Being cordial and collaborative is only a fraction of the equation Key to becoming a trusted advisor is being open, honest, and willing to have the difficult conversations.

I have known several great tax advisors who openly acknowledge when management or other stakeholders will not like the tax answer but then they simultaneously promise to work together to find the best outcome for the enterprise This approach automatically pulls everyone into the conversation and encourages engagement in seeking solutions it inspires trust and confidence

To successfully translate tax jargon into business success, you need to know your audience, be able to talk about the enterprise impact, and learn to simplify your verbiage so you can spend more time on the analysis and less time translating the issue.

Is Your CPA Firm Best-in-Class?

Embracing and implementing these traits could catapult your CPA firm into the top 5 percent.

I recently spoke at a conference where the theme was identifying traits of high performing firms and their leaders One speaker presented a bell curve describing best-in-class firms The vast majority of firms fell in the middle or “bell” part of the curve, leaving just small percentages of firms to the left or right of the bell. However, I would suggest that the percentage of typical local firms (revenue up to $15 million) that fall to the right side of the bell curve the best-in-class firms is 5 percent or less Wouldn’t you like to be one of them?

WhaT is a besT-in-Class fiRm?

Sam Allred and Allan Koltin are two superstars of CPA firm practice management Both have been consulting to CPA firms for more than 20 years and are known for their keen insight gained from working with the best and the brightest. The essence of their presentations, together with my own experiences and observations, suggest that the following traits make a best-in-class firm:

• Strong partner unity. Best-in-class firms are run by partners that really like each other, live and breathe the firm’s core values, and leave little conflict unresolved (there’s always going to be conflict, even at firms with strong partner unity) Simply put, performance is going to be better when you like the people you work with, trust their judgment, seek their counsel, and look forward to coming to work every day. This applies to CPA firms in spades, many of which struggle with the “herding cats” mentality

• A focus on collaboration. Best-in-class firms employ members that embrace collaboration and helping each other out When a partner ’s help is needed, for example, they never think “what’s in it for me?”

• Culture is everything. Culture is one of those hard-to-define words, but you know it when you see it. Partners at best-in-class firms have a shared belief that culture trumps strategy and production

• Staff engagement matters Best-in-class firms foster environments where staff are highly engaged every day and feel excited about the work they do

• Clients count. Too many firms fall into the trap of becoming mass-production machines; get the work in, get the work out, and move on. At best-in-class firms, the goal of every engagement is to make clients better while getting the work done How can you truly think creatively and proactively about making your clients better if you’re mired in production overload?

marc rosenberg, CPa President, The rosenberg associates

• There’s no status quo Best-in-class firms are highly successful because it’s their common belief that they must continually change and evolve and regularly challenge the status quo even when successful and profitable In working with firms on important changes, I can’t tell you how many times I’ve heard “That’s the way we’ve always done it and it’s worked well for us all these years Why fix it if it ain’t broken?”

• Leadership is valued over business This belief is quite a stretch for most production-oriented firms who value the almighty billable hour as if it’s the Holy Grail But best-in-class firms compensate and value leadership not just by the managing partners or board but by all partners higher than origination, billable hours, and book of business In similar fashion, partner compensation at best-in-class firms is often linked with client satisfaction Client satisfaction is the performance trait beyond all others that partners at best-in-class firms want to score “A’s” on

• Client needs are always considered. Going together with seeking client satisfaction, best-in-class firms understand that the majority of clients need consulting help, not just accounting and tax compliance services, and work hard to diversify their services to meet clients’ needs

• Development is key Shattering the fictional image that CPAs lack personality, high performing partners are rarely seen alone in or out of the office This is especially true when they’re on sales calls; they almost always take somebody with Partners who are better business developers and/or have the biggest client bases are committed to delegating clients to others to both develop staff and replenish revenue They don’t worry about their compensation going down because of transferring clients to others because they know their firms’ income allocation system would never do something so foolish.

• Succession is top of mind. All the traits above play into having a great succession plan in writing Best-in-class firms understand that the best succession plan equals solid practice management, characterized by terrific leadership, growth, and great staff

Now, what’s the obvious thing missing from the traits above?

Observation number one should be that there are no metrics stated, especially income per partner You’ve all heard the iconic refrain from the great baseball movie “Field of Dreams”: “If you build it, they will come ” In other words, implement a great idea and success will follow Embrace and adopt these traits and your firm is likely to become a best-in-class firm, which typically leads to enviable profitability

Observation number two, I hope, is that there isn’t one firm in the country that would disagree that these traits are important But if less than 5 percent of all typical local firms are best-in-class, what holds back the other 95 percent?

First, most CPA firms adopt a flawed organizational model Firm leadership usually plays second fiddle to client service and production and isn’t valued highly when it comes to compensation Partners are compensated primarily for short-term accomplishments usually production metrics with little else mattering So, partners are too busy working in the business instead of working on the business; they’re focusing on client activities at the expense of leadership, staff mentoring, and strategic plan execution As a result, partners develop an “I’m too busy for that other stuff” mentality, perhaps without realizing it They work on one client project after another without stepping back to work on the things that will make the firm best-in-class.

Second, a degree of complacency sets in for many firms, subconsciously preventing them from really trying to become bestin-class Admittedly, it’s hard to blame them Their income per partner is $400,000 to $500,000 The average partner will pocket $15 million to $20 million in compensation and retirement benefits during their ownership tenure Partners love their jobs and their clients, who (hopefully) love them back With little partner accountability (not a good thing), life is good

In fact, partners reading the list of best-in-class traits above will see that becoming a best-in-class firm will require significant changes in the ways they think, the ways they work, and the ways their firms operate Simply, many partners aren’t willing to make these changes To be frank, many firms lack the high degree of partner cohesion, unity, and leadership necessary to focus on and commit to being best-in-class.

With this being my final INSIGHT column to you, I’ll leave you with this challenge: Review the traits of best-in-class firms at your next partner retreat and brainstorm what your firm needs to do to embrace and fully implement them Start by taking a step back and asking yourselves if you even want to become a best-in-class firm I’m so pumped up writing this article that I’m almost willing to facilitate your firm retreats for free!

Perennially cited by Inside Public Accounting as one of the 10 most recommended consultants in the country, Marc Rosenberg, CPA is a nationally renowned consultant, author and speaker on CPA firm management, strategy, mergers, and partner issues His 14 practice management books are available at https://rosenbergassoc com/shop/ Marc can be reached at 847 251 7100 or marc@rosenbergassoc com

7 Steps for Negotiating Ethically

Does negotiating stress you out? These tips can help you negotiate with confidence and integrity.

Bidding on a new property, haggling for a new car, or securing a new starting salary are probably the situations that come to mind when you think about negotiating However, we negotiate all the time; for example, we negotiate for tasks at work, how to proceed when we encounter a problem, and even what activities to do with our friends. We negotiate so much that I am certain that a negotiation class has been one of the most useful ongoing education sessions I have taken since starting my career.

But what happens when we let our ethics lapse in the course of, say, negotiating a bigger salary? If you say you have a higher alternative job offer when you do not, does the end justify the means? I encourage you to be careful when justifying your behavior Once you start telling small lies, it becomes much easier to tell big lies. As your integrity line moves, you should consider the short-term gains against the long-term impacts on your reputation and conscience You want to be known as someone who acts with integrity in both your professional life and personal life.

Let’s break down negotiations and see how we can become better ethical negotiators defining negoTiaTions

The popular book, “Getting to Yes,” by William Ury and Roger Fisher defines negotiation as “back-and-forth communication designed to reach an agreement when you and the other side have some interests that are shared and others that are opposed ” This definition is only part of the understanding you need to successfully negotiate; knowing three other terms is key in being a successful and ethical negotiator:

• Best Alternative to a Negotiated Agreement (BATNA) – This term means knowing what your best outcome is if the negotiation does not happen or is not successfully completed

• Walk Away Price (WAP) – When you understand your BATNA, you can then set your WAP to ensure you are not worse off than before

• Zone of Possible Agreement (ZOPA) – ZOPA is the bargaining range; it is where the negotiation needs to land for an agreement to be made where all parties involved feel successful.

Equipped with the understanding of these terms, you can now focus on negotiating ethically. Here are some tips to help you succeed:

elizabeth Pittelkow Kittner

CPa, Cgma, CITP, DTm Controller, litera microsystems

1 Know your BATNA and WAP It is crucial to keep your interests and your stakeholders’ interests in mind when negotiating For example, if you are negotiating pricing for your company, consider what price will yield a profit and what price range will yield a loss. There may be reasons to accept a price that will produce a loss or lower profits but ensure you have buy-in from key stakeholders at your company for what the WAP is.

2. Be truthful without being misleading. If you do not have other pricing offers, do not say you have other offers Research by Ann E Tenbrunsel, a business ethics professor in the Mendoza College of Business at University of Notre Dame, demonstrated that whether negotiators lie depends in part on how lucrative the reward could be higher rewards provided a significant temptation to lie She also observed that when people were less certain of the information they were presenting, the more likely they were to be aggressive and deceitful to compensate for the uncertainty and to mask weakness.

3. Limit counterproductive emotions. While you may have strong feelings about the outcome, it is always best to negotiate with facts In fact, anxious negotiators make deals that are 12 percent less financially advantageous, according to a 2011 study by Harvard Business School assistant professor Alison Wood Brooks Planning for negotiations leads to confidence, which produces more effective negotiations In his book, “Thinking, Fast and Slow,” Daniel Kahneman points out that being pressured to make a quick decision can fuel unproductive emotions like anxiety Slowing down the process and the timeline will give you a less stressful environment for analyzing and negotiating your position with confidence

4 Avoid group pressures Research by Charles Naquin, an associate professor of management at DePaul University’s Driehaus College of Business, determined that people tend to lie more when negotiating with a group instead of an individual In one study, participants who negotiated with an individual lied approximately 36 percent of the time, while participants who negotiated with a group of people lied 73 percent of the time

5. Honor your promises. Whatever you decide to commit to in a negotiation, ensure you do what you say you will. Your reputation and your organization’s reputation are at stake.

6. Respect relationships. Negotiating with customers you want to keep likely looks different than negotiating with customers you are okay with losing However, treating people respectfully in a negotiation is always the right thing to do If the relationship you have with the other party is more important than the outcome of the negotiation, then negotiating may not be the best option Consider your goals for a negotiation and determine where the ZOPA is to see if a negotiation will even work

7. Seek counsel. If you believe your emotions may be detrimental to the negotiation, consider asking an independent third party to negotiate for you (or for both sides) Additionally, you can seek counsel to help you understand if you are thinking through a situation rationally before entering a negotiation

Negotiations do not have to be stressful Knowing your goals, planning your strategy, and putting these tips into practice will help you be a successful and ethical negotiator

How Volunteer ism Shapes Your Future

Our 20 18 Young Professional Leadership Award recipient shares the insights gained from leading a nonprofit.

BY MICHAEL RODRIGUEZ, CPA WITH DERRICK LILLY

Michael Rodriguez’s stor y is “amazing” as many who know him at the Illinois CPA Society and elsewhere would say The eldest of six siblings, he’s the first in his family to graduate from college, holding both bachelor’s and master’s degrees in accounting from the University of Illinois at Chicago He’s also a CPA in the state of Illinois

Since June 20 16, he’s ser ved as the vice president of Universities and Student Relations for ALPFA Chicago (Association of Latino Professionals for America), transforming its student programming and presence across the state In Januar y 20 18, he was named to Negocios Now’s Latinos 40 Under 40 list for his leadership of Chicago’s young Latinos

Today, Rodriguez is a senior Risk and Controls consultant for WEC Energy Group, making the jump to the corporate world following a more than four-year career with PwC where he last ser ved as a senior auditor But what’s shaping his successes, and the next generation of business leaders he’s influencing, is his continued commitment to the community Rodriguez co-founded Sprouting Leaders in 20 12, a nonprofit organization dedicated to promoting continuous academic growth and personal development among youth in some of Chicago’s most disadvantaged neighborhoods In his own words, here’s what he has learned since then

What star ted as volunteering af ter school for leisure evolved into a life-changing experience both personally and professionally As a senior in college, a group of friends and I volunteered at Chicago Public Schools to help students with homework We were most interested in mentoring students with gang affiliations or that participated in similar activities Soon we realized that many students in these schools lacked role models who looked like them but had college degrees Their environment shaped how they viewed the world With ver y few considering college or any type of vocation, their views of the future were bleak This is when we decided to act and create an organization dedicated to changing their minds At Sprouting Leaders, we promote academic growth and personal development through mentorship, education, and ser vice programs Since 20 12, Sprouting Leaders has graduated 202 students from its program and has invested more than 8,700 mentorship hours in Chicago’s at-risk and disadvantaged youth I didn’t expect to personally benefit from this experience, but I did Through co-founding a nonprofit, volunteer-led organization, I’ve gained invaluable experience that has grown my career Volunteer leadership has of fered me the oppor tunity to test and develop my leadership skills in a safe environment I can tr y new things, fail with caution, and learn firsthand from the process without worr ying about risking my job

One of the first skills I learned was how to implement collaborative decision-making I’ve put this into practice while working to reach consensus among various boards and committees Ever yone has an opinion and gaining consensus can be a challenge So, it takes practice, patience, and compromise to achieve results I admit this is difficult at first, especially if you’re passionate about your work But knowing when to compromise and how to ar ticulate your opinions are valuable skills to have as you advance into management they’re prerequisites to getting things done This experience has also given me great insight into navigating politics and leading teams in the corporate world where getting buy -in from those around you is increasingly impor tant

Another great thing about volunteerism is that it diversifies your experience After working for the same company for a few years, you’ll notice that the company’s culture star ts to influence your leadership approach Leadership experience gained outside of your company and job helps you develop unique perspectives and insights into new best practices Ever y different challenge you face and environment you work in helps you become a better leader

If you haven’t already, I encourage you to get involved in a professional or volunteer organization that touches on something you’re passionate about There’s an abundance of organizations in need of the skills talented accounting and finance professionals like us can bring Take advantage of these oppor tunities because you never know where they will lead you Most impor tantly, it feels great to help others!

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We author, teach and par ticipate on policy setting committees and boards within the valuation profession

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S e a n K r u s ko l

Senior Manager, Cornerstone Research

By Sarah Herrmann

From Chicago to Europe and back again, Sean Kruskol’s CPA , CGMA , and CFE credentials have led him along what he calls an “unconventional” career path With stints in the Big Four, star t-ups, and various consulting firms, he’s moved between audit, data analytics, and forensic roles As a member of the Illinois CPA Society’s Audit & Assurance Ser vices Committee, he’s also at the forefront of shaping guidance for an ever-evolving profession Add in his volunteer ef for ts and it’s no wonder that 33-year-old Kruskol is already a rising influencer in the profession

Q: Tell us a little about your career path and current role

Like many accounting grads, I star ted my career at KPMG in Chicago in the firm’s audit practice af ter graduating from Ohio’s Miami University But af ter a rotation with KPMG Forensic, I was hooked on data analytics and became a Computer Assisted Audit Technique exper t In this role, I assisted my teams with audits and was also able to travel throughout Europe per forming detailed, accelerated analyses

After stops at a Chicago star t-up and another consulting firm, I now work at Cornerstone Research, an international economics and financial consulting firm, where I focus on analysis and research in complex litigation, or simply put, forensic accounting Ever y day is different I might be analyzing large datasets for a damages case and presenting findings to attorneys I could be examining documents in an auditor malpractice case Or, I might be inter viewing witnesses in a fraud examination

Q: What inspired you to par t from traditional public accounting roles?

During an accounting class I took in college, a CFO, an audit par tner, and a forensic accountant each gave a short job talk The CFO added value, she said, by acquiring other companies and driving her company’s strategy The audit par tner did so by allowing his clients access to capital markets and bolstering investors’ confidence in a company’s financial statements The forensic accountant said that he traveled around the world investigating allegedly illegal activities The idea of using my accounting degree to solve challenging problems associated with investigations appealed to me right away, and I’ve been for tunate to be able to do just that

Q: You’ve landed on the Illinois CPA Society’s Audit & Assurance Ser vices Committee. How has that impacted your career?

Two points come to mind First, I work with CPAs whose perspectives differ vastly from my own, yet we share common goals The level of respectful dissonance during our committee and sub-committee meetings allows me to learn from people with whom I might not other wise interact professionally Second, through the committee, I am close to the forefront of guidance in an ever-evolving profession I can remain current on new guidance and assess possible litigation risks that might result

Q: You even find time for volunteerism with other organizations Can you tell us about that?

I’ve been for tunate to apply my technical and financial exper tise in a variety of volunteer capacities Of these, two examples stand out First, I am currently treasurer of Illinois Legal Aid Online (IL AO), a legal nonprofit in Chicago IL AO is an online platform that connects people in Illinois regardless of their location, income, or education to resources they need to resolve their legal problems when they can't afford a lawyer

Second, I ser ve on the advisor y board of the Chicago Bar Foundation’s Justice Entrepreneurs Project, a legal incubator for solo and small practitioners Previously, I was part of the Project’s initial budget committee, which sought to identify and assess expenses associated with a legal incubator and fundraising target thresholds

Q: What advice do you have for others hoping to make an impact with their careers or get into forensic accounting?

If you want to make a difference, and if you want to pursue a fulfilling career path, my top three pieces of advice would be:

1 Think about your “why ” You can be taught the “how” of being a forensic accountant, for example, but your why will be the reason you wake up and go into the office

2. Expand your mind. Forensic accounting is a capstone course, for which you need a strong foundation in accounting, finance, marketing, and operations And a diverse skillset will ser ve you well in any career path you choose to follow

3 Develop your data skills The business world is increasingly digital and data-driven Become comfor table with a variety of platforms and software packages Being good with data means that you not only understand how and why data were created but also the relations that exist within datasets and what may be missing or anomalous

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