MACPA Statement // April 2012

STATEMENT MACPA’S

April 2012 | Maryland Association of Certified Public Accountants, Inc.

CHANCE of RAIN? Cloud computing offers undisputed, unprecedented opportunities – and a few worrisome challenges. Here’s how to protect yourself – and your clients

SEIZING THE FUTURE: WHAT CPA HORIZONS 2025 SAYS ABOUT THE PROFESSION PAGE 10

PAGE 6

LEARNING AND CHANGE: CREATING TRANSFORMATIONAL DEVELOPMENT EXPERIENCES PAGE 18

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CONTENTS April 2012 | Maryland Association of Certified Public Accountants, Inc.

CHAIR’S COLUMN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FEATURES

Chance of rain? Beware the risks of ‘the cloud’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Seizing the future: What CPA Horizons 2025 says about the profession . . . . . . . . . . . . 10 Learning and change: Creating transformational development experiences . . . . . . . . . 18

DEPARTMENTS News & Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Professional Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Personal Financial Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Practice Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 High Tech Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

MEMBER NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CLASSIFIEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36 41

WE WANT TO HEAR FROM YOU!

ADMINISTRATION

PRODUCT DEVELOPMENT

Amy Stumme amy@macpa.org

Akesha Brown akesha@macpa.org

Emily Groncki emily@macpa.org

TECHNOLOGY

Megan Gratz megan@macpa.org

Donna Lewis donna@macpa.org

Marsha Draa marsha@macpa.org

Amy Puente amyp@macpa.org

Marianela Del Pino-Rivera, CPA

Debbie Zizwarek debbie@macpa.org

Paige Sawicki paige@macpa.org

Kara King-Bess, CPA

TECHNICAL SERVICES

Laura Dorsey-Shaner laura@macpa.org

Dr. James McKinney, CPA, Ph.D.

Doug Shaner doug@macpa.org Michael Tobias mike@macpa.org COMMUNICATIONS Amy Moran amym@macpa.org Bill Sheridan bill@macpa.org FINANCE Margaret DeRoose margaret@macpa.org Laura Swann, CPA lauras@macpa.org

MaryBeth Halpern marybeth@macpa.org Cora Edwards cora@macpa.org PROFESSIONAL DEVELOPMENT Dee Day dee@macpa.org

MEMBER SERVICES

Pamela C. Devine pam@macpa.org

Julianne Part julianne@macpa.org

Chris Dougherty chrisd@macpa.org

Jeannie Richardson jeannie@macpa.org

MaryBeth Drusano marybethd@macpa.org

Ashlee Stem ashlee@macpa.org

Joann Francavilla joann@macpa.org

APRIL 2012

See below to submit content

DIRECTORS Samantha Bowling, CPA Mark Edward, CPA, FCA Michael Manspeaker, CPA

Katoria Tinsley katoria@macpa.org

Robert Tarola, CPA

2011-2012 BOARD OF DIRECTORS

SENIOR STAFF

OFFICERS Allen DeLeon, CPA, PFS, Chair Anoop Natwar Mehta, CPA, Vice Chair Byron Patrick, CPA.CITP, MCSE, Secretary / Treasurer Kimberly Ellison-Taylor, CPA, Immediate Past Chair

Renee Winsky

Bill Sheridan MACPA Dulaney Center II 901 Dulaney Valley Road Suite 710 Towson, MD 21204 For content submission: bill@macpa.org www.macpa.org/submit feedback@macpa.org P: 410.296.6250 F: 410.296.8713 Toll free: 800.782.2036

MACPA EXECUTIVE DIRECTOR J. Thomas Hood III, CPA tom@macpa.org MACPA DEPUTY EXECUTIVE DIRECTOR Jacqueline E. G. Brown jackie@macpa.org DIRECTOR OF FINANCE AND ADMINISTRATION Skip Falatko, CPA skip@macpa.org

The MACPA reserves the right to edit all submissions for grammatical style and / or length. Statement of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of MACPA. The Statement is published four times a year by the Maryland Association of Certified Public Accountants, Inc. Bill Sheridan, Editor Ashley Stearns, Graphic Designer Amy Moran, Advertising Sales

INNOVATION SUMMIT

The most important talks from the most important voices in the CPA industry. June 27th at Martinâ&#x20AC;&#x2122;s West

THE CPA EVENT OF THE YEAR.

CHAIR’S COLUMN MARYLAND CPAS RAISE THEIR VOICES TO FIGHT ONEROUS TAX LEGISLATION BY ALLEN P. DELEON, CPA, PFS, PARTNER AND FOUNDER, DELEON AND STANG, CPAS

Shortly after turning out in record numbers to fight for the Maryland Association of CPAs’ legislative agenda at CPA Day in Annapolis, the state’s CPAs were at it again, raising their voices and packing an important political punch as lawmakers tried to legislate their way to economic recovery. Maryland CPAs mobilized in force this year to fight a series of onerous legislative measures that would have raised taxes on businesses and individuals alike, increased complexity, and put the state’s businesses at a competitive disadvantage. The bills in question include the following:

HOUSE BILL 1051, ‘SALES AND USE TAX – SERVICES’ The measure would impose a sales tax on professional services, including many of those provided by CPAs. The MACPA and its members oppose the measure for a number of reasons: • Taxing professional services like tax preparation and management consulting would hurt small businesses and individuals in the midst of a very fragile economy. • Enforcing the measure would be nearly impossible. Taxes on professional services are difficult to determine, calculate and enforce. Three states – Florida, Michigan and Iowa – have tried this and had to repeal because of this complexity. • It would put Maryland CPAs and service providers at a competitive disadvantage, since neighboring states do not impose such taxes. • It’s an unfair tax policy. If you have to tax services, then why not all services? “Federal and state governments

mandate the filing of various tax returns that are so complicated, most small businesses and individuals seek out the services of CPAs to help file their returns,” MACPA Executive Director Tom Hood explained. “It seems unfair to then tax the services they need to stay in compliance.”

SENATE BILL 152 / HOUSE BILL 87, THE ‘BUDGET RECONCILIATION AND FINANCING ACT OF 2012’ These bills originally included a provision that would have extended the state’s sales tax to include any product that is electronically downloaded. The so-called “digital download tax” was so vague that it could have encompassed online payroll services, accounting software with service, payment processing and research services, all of which could directly impact Maryland CPAs. The biggest risk we saw is that this could have been construed to include e-filing of tax returns, but Maryland CPAs opposed the bill for other reasons as well: • It amounts to a tax on taxes. The bill’s language is so broadly written that it could be extended to lots of other “digital” things, like CPAs who need to download standards and regulations updates (mostly required from the government) and keep their software updated. Marylanders would be forced to bear a tax on top of the CPAs services they need to file taxes. • Non-profit organizations might be forced to tax educational programs like webcasts and other “digital products,” putting themselves at an unfair business disadvantage with out-of-state and forprofit organizations. The state Senate’s Budget and Taxation Committee apparently listened and voted to reject the “digital download” provision.

POWER IN NUMBERS In each case, CPAs made their voices heard through live testimony and an extensive grassroots e-mail and telephone campaign that targeted Maryland lawmakers who have key voices in the issues that impact the profession. “CPAs have enormous credibility, and what you’re doing is absolutely crucial,” Maryland Comptroller Peter Franchot told MACPA members at CPA Day. “There’s an old saying in politics: If you’re not at the table, you can often end up on the menu. Maryland CPAs should have a place at the table.” Here’s how “Going Concern” blogger Adrienne Gonzalez put it after attending CPA Day: “I left with the sense that MACPA had been given a new mission by both Delegate (Brian) Feldman and Comptroller Franchot: They’ve done a lot up until this point but maybe it’s time to do more. Delegate (Sam) Arora expressed that he would love to get state CPAs’ thoughts on the new budget, specifically line items that could be eliminated, and was sure that many of his fellow delegates would feel the same. The great part about CPAs doing this is that they are trustworthy, impartial and knowledgeable. Of course, MACPA initiatives protect the interests of CPAs in the state, but CPAs’ interests are almost always directly in line with those of their clients and the communities they serve.” When it’s crunch time, CPAs are proving that we take our mission seriously: We’re committed to making sense of a changing and complex world. We do that for their clients. Equally important, we’re doing that for lawmakers.

STATEMENT

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Chance of rain? Beware the risks of ‘the cloud’

Cloud computing offers undisputed, unprecedented opportunities – and a few worrisome challenges. Here’s how to protect yourself – and your clients. B Y S U Z A N N E H O L L , C PA As CPAs move their data management to the cloud, prudence dictates that the risks be considered along with the benefits. Certainly, one of the main benefits of cloud computing services is their low-cost availability via the Internet to large numbers of users, enabling providers to utilize economies of scale and charge lower fees to users. At the same time, having large numbers of users sharing the same physical servers has heightened concerns about the security and controls over the users’ confidential and private information. The regulatory response to data breaches, whether cloud-related or not, will most likely continue to be a major issue for providers and users. Organizations often must be compliant with regulations in the state where the data resides as well as the state where the data is received and sent. Some regulations, which vary by state, become stricter or even prohibitive when data is sent to providers outside the United States.

• clarifies the nature of the services being provided; • corrects any false expectations clients may have about their personal information remaining inside their CPA’s offices; • helps forestall negative client reactions in the event something goes wrong with the outsourced services; and • helps protect against liability should there be damages relating to the firm’s use of a third-party provider. Client consent to disclose or use tax return information by tax return preparers is covered under Internal Revenue Code §7216. Absent a specific exception (as provided in Treas. Reg. §301.7216-2), prior written consent by a taxpayer is generally required to disclose or use tax return information. In particular: • Form 1040 series filers must comply with the form and content required in Revenue Procedure 200835.

As a form of outsourcing, cloud computing services also call on CPAs to be responsible for processes such as client disclosure and consent, due diligence, and steps to ensure that client information is protected.

• Non-Form 1040 filers may include client disclosure and consent in any format, though there are content requirements. Disclosure and consent can be included as an addendum to the engagement letter.

CLIENT DISCLOSURE / CONSENT

CPAs should include a disclosure for outsourcing to non-tax third-party service providers in an addendum to their client engagement letters. A sample disclosure, “Outsourcing:

CPAs should disclose to clients the use of any third-party service providers. Such a proactive approach:

Recommendations for Client Disclosure,” is available in the ninth edition of CPA’s Guide to Effective Engagement Letters, published by CCH. (An order form with a 10-percent discount for the book can be found at www.camico.com under “Risk Management Services” and “Risk Management Tools.”) AICPA ethics rules require CPAs to inform clients that the firm may use a third-party service provider before providing the third party with confidential client information. Sample client disclosure language* can be found in AICPA guidance to Ethics Ruling No. 112, Use of a Third-Party Service Provider to Assist a Member in Providing Professional Services: Sample client disclosure language for outsourcing rules can be found at www.macpa.org/cloud. CPAs should also check with their state boards of accountancy, which may have additional regulations requiring written disclosure and written client consent, especially when outsourcing confidential client information outside the United States.

DUE DILIGENCE CPAs are responsible for the security, availability and integrity of the systems used by third parties to process personal and proprietary information. Cloud computing services present some extra challenges in this regard. The inherent lack of transparency in public cloud computing prevents STATEMENT

users from seeing what is happening within the provider’s internal processes. This makes provider transparency and disclosure all the more important to the user. Some critical questions to ask include the following: • Is the provider willing to undergo the scrutiny of third-party security certifications and audits? For example, AICPA Service Organization Control reports (SOC 1, 2 and 3 reports, which supplement SSAE No. 16). • How detailed are the disclosures and information provided on security programs, policies, procedures, personnel (managers and administrators), subcontractors and business partners? • What do the providers’ references say about the provider? What do they not say? Are the references using the providers for the same services you are seeking? • Do your interactions with the provider indicate a trust relationship between the provider and your firm? Use a U.S.-based provider, which is preferable to a foreign-based offshore provider with a U.S. branch. The more contacts an offshore provider has in the U.S., the more legal recourse the client and CPA have in the event of an unauthorized client data disclosure. The financial viability of the provider over the long term is also a major consideration. If the provider becomes bankrupt or is acquired by another company, what assurances are there that your client and firm data will remain available in a format you can use after such an event?

CONTRACTUAL AGREEMENTS CPAs who use third-party service providers must enter into a contractual agreement with the provider to ensure the confidentiality

APRIL 2012

of client records. Agreements with third-party service providers should contain language requiring that: • the third-party provider will treat any client data it receives as confidential and will not make any unauthorized disclosures or use of the information; and • the provider will be financially responsible for any unauthorized disclosures or use of confidential information that it commits. Find out whether the provider has insurance in place to cover the damages resulting from a data breach. Service level agreements should require a high level of security and service. When negotiating other contracts for services, keep in mind that technology costs tend to go down as further advances in technology are made over a period of time, so it might not be cost-effective to lock in certain services, such as bandwidth, for too long of a period. One of the benefits of cloud computing is the ability to back up records at multiple sites to avoid total losses. If disaster strikes at one location, the data may be available from another location. Proper and adequate disaster planning by the provider then becomes another issue to be addressed. Also, just as the CPA firm should have a response plan in place for potential data breaches, cloud service providers should also have a proper data breach response plan. Cloud computing services will likely expand over the next few years, and CPAs who take appropriate steps to protect their clients and themselves will be in a better position to enjoy the benefits of such services while avoiding or minimizing any problems that may occur. *“The firm may from time to time, and depending on the circumstances, use third-party service providers in serving your account. We may share confidential information about you

with these service providers, but remain committed to maintaining the confidentiality and security of your information. Accordingly, we maintain internal policies, procedures and safeguards to protect the confidentiality of your personal information. In addition, we will secure confidentiality agreements with all service providers to maintain the confidentiality of your information and we will take reasonable precautions to determine that they have appropriate procedures in place to prevent the unauthorized release of your confidential information to others. In the event that we are unable to secure an appropriate confidentiality agreement, you will be asked to provide your consent prior to the sharing of your confidential information with the third-party service provider. Furthermore, the firm will remain responsible for the work provided by any such third-party service providers.” Suzanne M. Holl, CPA, is vice president of loss prevention services for CAMICO (www.camico.com). She provides CAMICO’s policyholders with information on a wide variety of loss prevention and accounting issues.

LEARN MORE WITH ‘CLOUD COMPUTING UNRAVELED: ISSUES AND TRENDS UPDATE’ Cloud computing is here, widely MORE ABOUT THE CGMA

available and already in use by most business professionals. This Business Learning Institute course offers an overview of current trends in cloud computing, including collaboration, software-as-aservice, application and enterprise hosting, elastic computing, and

also unravel considerations from data storage security to choosing cloud-based applications and services. Get further details at www.macpa.org/BLIcloud

20 1 2

Annual Summer Beach Retreat Ocean City, MD July 3, 5, & 6 Clarion Resort Fontainebleau Hotel

Vacation with your family and earn CPE over the 4th of July!

http://cpa.tc/beachretreat

The Lineup for the 2012 MACPA Beach Retreat:

Frank Ryan, CPA & Tom Hood, CPA, CITP, CGMA Enough said? You bring the vacation vibe. These guys bring the wisdom.

Jody Padar, CPA & Jason Blumer, CPA (from the THRIVEal Group) This tag-team is outrageously funny. Is this CPE or a comedy show? You’ll have to decide.

Peter Towle, CPA and Dan Bradley, CPA (from AICPA) The leaders of our Tax Track and A&A Track know how to equip you to become a better CPA.

Course List July 3rd 7:30am – 11am •Economic Value Added - Maximizing Shareholder Value •Accounting and Auditing Update Auditing Update •Economic Value Added - Maximizing Shareholder Value •Hottest Tax Planning Developments for 2011 July 3rd 12:30pm – 3:30pm •Advanced Issues in Mergers, Acquisitions and Sales of Closely Held Businesses •Have the Idea and Have the Guts •TBA- Frank Ryan •The 2011 Revised Yellow Book for Financial Audits July 5th 7:30am – 11am •It Cost What! A practical approach to implementing Activity Based Costing •Becoming a Strategic Firm •Annual Update for State & Local Governments and Not-For-Profits •2010 Health Care Reform Act: Critical Tax and Insurance Ramifications For You, Your Business and Your Clients July 5th 12:30pm – 3:30pm •Compilation, Review, and Accounting Service Update •Innovative Tax Tips for Individuals for Individuals •Key Financial and Economic Issues Facing the Financial Executive •You Thought it was the Future. It’s Now! July 6th 7:30am – 11am •Ethics, Leadership and the Role of the Financial Professional •TBA - Tom Hood, CPA

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NEWS & VIEWS

Seizing the future: What CPA Horizons 2025 says about the profession WHAT DOES THE FUTURE HAVE IN STORE FOR YOUR FIRM? WHAT ABOUT THE ACCOUNTING AND FINANCE FUNCTIONS AT YOUR BUSINESS? WHAT ROLES WILL CPAS PLAY IN THE WORLD OF TOMORROW? These are the questions the CPA Horizons 2025 project sought to answer. Through CPA Horizons 2025, a grass-roots initiative, conducted in collaboration with state societies, the AICPA gathered the insights of thousands of CPAs to examine the local and global trends that will have an effect on CPAs on a day-to-day basis and over the long term. An interactive survey, 16 in-person forums, and online discussion and focus groups enabled nearly 6,000 CPAs to voice their opinions and generate more than 75,000 comments about the current state and future of the profession. “The future success of our profession continues to be aligned to a great extent on public perceptions of CPAs’ abilities and roles,” said CPA Paul V. Stahlin, immediate past AICPA chair, who was deeply involved in the project. “What we have learned through the CPA Horizons 2025 process will help us maintain our relevance and value well into the future.” Whether you’re planning for the future of your firm, your

employer’s company or your own career, the CPA Horizons 2025 report (www.CPAHorizons2025. org) will be an invaluable resource in helping you chart a course through uncertain times. CPA Horizons 2025 built on the knowledge gained in the CPA Vision Project, a similar effort conducted in the late 1990s. CPA Horizons participants concluded that the core purpose for CPAs identified back in the 1990s — “CPAs: Making sense of a changing and complex world” — remains relevant now and for the future. The participants also felt that the core values and competencies identified in the CPA Vision Project are still valid, but could use some updating to reflect changing circumstances. While the CPA Vision Project also identified some core services, CPA Horizons 2025 determined that the knowledge, skill and competencies CPAs offer have become so varied and diverse that the concept of core services is no longer valid.

TEN KEY INSIGHTS CPA Horizons 2025 also used the feedback gathered from project participants to formulate ten key insights into how the profession will conduct business, serve clients and employers, attract and retain employees and new business, and remain competitive in the marketplace throughout the next 15 years. CPAs can use these

insights to inform and inspire their own strategic planning efforts. • Technology. This was seen as a major force for CPAs, affecting the services they offer, how they offer them and how they do business. While it allows CPAs to expand their services and the people and businesses they can serve, it may also increasingly replace traditional services. • Education. Although this will remain a cornerstone of the profession, what CPAs learn and how they learn it will change. To retain their roles as trusted advisers, CPAs will have to broaden their understanding in a variety of areas, including economic, political and technology trends here and abroad. • Worldwide profession. To seize the unprecedented opportunities that globalization offers, the profession must position the U.S. CPA as the preeminent designation of the accounting and finance profession throughout the world. • Pride in the profession. Because CPAs remain among the most respected and trusted financial professionals, it is important to maintain the high standards and integrity that reinforce this perception. Continued advocacy on the profession’s behalf will be a key element in doing so. • Demographic shifts. The STATEMENT

profession can expand its appeal by recognizing U.S. and global demographic shifts. This includes working to attract and retain younger people, women and minorities while also tapping into the knowledge and experience of CPAs in or near retirement. • Trusted adviser. If they are to maintain and expand their roles as strategic advisers, CPAs must be prepared to solve complex and multifaceted business problems that will go beyond traditional services. • Market permission. As their clients or companies demand more from them, CPAs should be positioned to take on new specializations and adapt to the needs of clients, employers and business. • Marketplace. The profession

will have to adjust to rapidly changing demands for services that address developments in the marketplace, economy, businesses and regulations. An emphasis on lifelong learning will help prepare CPAs to adapt to these changes. • Value proposition. It’s important to promote CPAs as the trusted advisers who provide recognized core services but who are also agile enough to develop new solutions to complex business problems as they occur. While CPAs’ integrity, objectivity and commitment to excellence will not change, their services may. • Trusted attester. The profession must preserve its unique role as the trusted attester of financial and other information, even as the audit and attest functions evolve to meet changing needs.

A COMMON PURPOSE AND COMMITMENT That’s just a taste of some of the many insights and ideas that CPA Horizons 2025 generated. As CPAs wrestle with new developments, the project’s findings will help them frame the best next steps. To learn more, turn to a special website (www.macpa.org/ Horizons2025) that contains the project report as well as other resources. Practitioners who want help in putting the project’s results to work should check out the AICPA Private Companies Practice Section’s CPA Horizons 2025 Toolkit (www.macpa.org/ HorizonsToolkit), which helps users conduct their own “Future Forums” using a facilitator’s guide, worksheets and other resources.

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NEWS & VIEWS

Start preparing now to implement the AICPA’s clarified SASs for year-end 2012 audits Do you know how the newly issued Statements on Auditing Standards released under the AICPA’s Clarity Project will affect your firm’s 2012 year-end audits of non-public companies? Changes to the former SASs revolved around organization, formatting and language, so the substance of the standards largely remains intact. However, audit methodologies will have to be modified and staff training will be necessary. It’s time to get ready for those audits. The AICPA Auditing Standards Board achieved a major milestone in October 2011 when it issued SAS Nos. 122-124, which include more than 40 finalized, clarified SASs. SAS 125 was issued in December (two standards are still in process; one on going concern will be issued by fall 2012 and one on internal audit will be issued in fall 2013). The goal of this landmark, multiyear project was to make the standards easier to read, understand and implement and to converge them with the International Standards on Auditing issued by the International Auditing and Assurance Standards Board. (The clarified SAS on going concern is not being converged with the corresponding ISA at this time.) “CPAs should now begin to revisit their audit methodologies to see what changes are needed before the clarified standards

become effective,” said Tom Hood, CPA, chief executive officer of the Maryland Association of CPAs. “It’s also a good point to start planning your training to ensure all firm members have time to familiarize themselves with the new standards.”

FOLLOWING THE NEW FORMAT The new clarity format organizes guidance into these sections: • Introduction, which covers the purpose and scope of the standard. • Objective, which clarifies the standard setters’ intentions. • Definitions, which explain key terms. • Requirements, which define what the auditor must do to achieve the standard’s objective. Requirements are expressed using the words “must” and “should.” • Application and other explanatory materials, which provide additional elaboration and guidance necessary to understand and implement the standard. In addition, within the standards, particular efforts have been made to address special considerations for either smaller, less complex organizations or for governmental entities. Another important element of the Clarity Project is the modification of all existing AU sections. Practitioners should

be aware that topics formerly associated with some AU numbers may be retitled and reassigned. The ASB has also changed the existing AU section number order that was established in SAS No. 1. All clarified AU sections that have comparable ISAs now follow the ISA number order. The clarified SASs generally will be effective for audits of financial statements for periods ending on or after Dec. 15, 2012. To prevent confusion between old and new formats, early adoption is not permitted and auditors should continue to comply with current standards until the effective date.

CHANGES TO THE AUDIT PROCESS While many changes mainly address organization, auditors should be aware of a few significant revisions to some parts of the audit process. For example, the auditor’s report must now include headings before every paragraph to clearly distinguish different report sections. Two new sections have been added to the report: “Management’s Responsibility for the Financial Statements” and “Auditor’s Responsibility.” Elsewhere, the clarified SAS, Special Considerations: Audits of Group Financial Statements (including the Work of Component Auditors), provides guidance that makes it easier for auditors to understand and apply generally accepted auditing standards in STATEMENT

audits involving consolidated financial statements or the work of other auditors.

START PLANNING NOW The AICPA has developed several resources to help CPAs implement the clarified SASs, including some to educate firm staff. Visit aicpa.org/SASClarity to access these materials, many of which are free. The clarified SASs are available in the online version of AICPA Professional Standards, the first place you can receive the codification of these standards. Early in 2012, the AICPA’s new Clarity Audit Risk Alert will become available and will be followed by a number of publications and training courses to assist CPAs with this transition.

COUNCILOR, BUCHANAN & MITCHELL CELEBRATES 90TH ANNIVERSARY Councilor, Buchanan & Mitchell, CPAs, is celebrating 90 years of serving clients and the community. A celebration to commemorate the anniversary of the firm’s success and future was held on Nov. 3 at the Columbia Country Club. Pictured from the left are CBM’s Richard Morris, John Comunale, Vince Crescenzi, Anthony A. Cuozzo Jr., Pete Reilly, Dan Weaver and Jim Tortorella. James Allan Councilor Sr. founded the firm on Jan. 21, 1921. It has consistently been listed as one of the largest and oldest local CPA firms in the Washington, D.C. area. “We are proud of the accomplishments and dedication of the generations of partners who led the firm and the wonderful employees who supported us over its 90 years and recognize that CBM would not be the firm it is today if not for them,” said CBM President and Managing Partner S. Vincent Crescenzi. “There is value in tradition and it is with great honor and pride that we celebrate the firm’s 90th anniversary.”

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NEWS & VIEWS

IT employers: Pay heed to Lady Gaga and listen to the NLRB B Y A R I K A R E N, E SQ , What do the National Labor Relations Board and Lady Gaga have to do with your support services and sales staff?

THE ANSWER IS, “OVERTIME.” A December overtime lawsuit against Lady Gaga by a single employee seeking $400,000 and the NLRB’s decision to prohibit class action waivers in employment agreements (for all non-union employers) highlight the value and simplify the initiation of such claims. This is not welcome news to IT employers who are already facing an onslaught of lawsuits and governmental audits seeking millions in unpaid overtime due to misclassified contractors and salaried and commissioned employees. Workers historically and uniformly considered contractors and / or exempt from timekeeping and overtime requirements are now frequently obtaining multimillion-dollar recoveries from IT companies unaware that such classifications are now considered inaccurate. Indeed, any review of large plaintiff class action websites quickly reveals their specific targeting of large and small IT companies. Class action lawyers’ ability to initiate such claims just got easier with the publicity associated with the Lady Gaga case, that thousands of

unsuspecting workers are likely misclassified and with the NLRB striking down agreements many employers rely on to protect themselves from class actions. Employers – especially in targeted industries like IT – all too frequently learn about overtime rules only after it’s too late. Once a case is initiated, it is impossible to undo the fact that the employer failed to track hours worked in accordance with the law. This failure allows plaintiffs the ability to dictate to a fact-finder a selfserving recollection of hours worked. In addition, federal overtime laws allow for class actions by a single employee, who can simply point to (an undeniable) policy of not paying overtime. Moreover, since industry practice is not a defense, liability for both actual and double damages is fully retroactive. Worse, specific provisions of overtime laws provide direct individual liability against owners and officers. Additionally, defendants, including individuals and officers, must pay all of the plaintiffs’ legal fees. Hence, it is easy to see why so many overtime cases result in significant payments by unsuspecting employers who, in many cases innocently, failed to pay overtime to workers they thought were considered contractors, or commissioned or salaried workers.

The silver lining to this news is that it calls attention to the importance of proper classification of contractors and employees before a case is initiated. Indeed, the form-over-substance focus of overtime laws often allows an employer to maintain compliant practices without material changes to the way it does business or pays employees. Moreover, the cost of such copliance is usually a few thousand dollars if the right consultants and / or consultants are employed. The key is to fully understanding the highly technical overtime laws and applying creative and practical solutions that fit to the business model. Employers who have not instituted wage-hour compliance initiatives should do so immediately – before it’s too late. Ari Karen is an aggressive and experienced litigator, with a primary focus on disputes involving claims of discrimination, unfair competition, fiduciary breach, partnership disputes, worker misclassification, and minimum wage and overtime litigation in all state and federal trial and appellate courts. He can be reached at akaren@offitkurman. com. You can also visit him on the web at www.offitkurman.com/attorneys/arikaren/. This article is provided to inform its readers of labor and employment issues that may affect them or their business. This article does not constitute legal advice or opinion.

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NEWS & VIEWS

On the air for St. Jude Several partners and managers from Squire, Lemkin + Company took calls at WMZQ for donations to St. Jude on Dec. 16, 2011. Bob Kopera, CPA, Jan Sealover, CPA, Dan Dellon, CPA, and firm administrator Kim Fitzgerald (not pictured) took part in the WMZQ St. Jude Radiothon event.

Manna Food Drive

Pam Zeger, a CPA candidate member and staff accountant at Squire, Lempkin + Company, organized a food drive at the firm and delivered 600 pounds of food to the Manna Food Center in December. The Manna Food Center feeds approximately 3,300 households each month and is located in Gaithersburg.

Dreams for kids

Sara Heller, a CPA candidate member and staff accountant at Squire, Lemkin + Company, organized a toy drive at the firm to deliver toys to the Holiday for Hope event. The event provides Christmas toys for less fortunate children in Washington, DC.

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PROFESSIONAL DEVELOPMENT

Learning and change: Creating transformational development experiences B Y R I C H A R D FLA N A GA N , P H . D. , AND BO B DEAN, C PA Globalization, emerging markets, new technologies, sweeping innovations, and severe economic downturns are prompting many companies to rethink their traditional business models and engage in radical business transformations.

report success rates in the 15 to 20 percent range in terms of delivering personal and business results.

Unfortunately, the success rates for such transformations are incredibly low. John Kotter, Ken Blanchard, Peter Senge, and a 2008 IBM study of more than 1,500 change management executives from 15 countries report that 50 to 70 percent of corporate change efforts fail “despite substantial resources committed to the change effort … talented and committed people driving the change, and high stakes.” (Senge, 1999).

IF LEARNING DOESN’T REALLY CHANGE ANYTHING, WHY NOT?

Successful and sustainable organizational transformation requires exceptional business insight and experience and a welldeveloped change strategy and process. Critical to this effort (and most often shortchanged) is a learning and organizational development strategy to communicate, drive, and support the behavior changes required to achieve the desired business results. While the learning component is critical for a successful change process, it is frequently undervalued, underfunded, and only marginally effective. In fact, learning and development leaders typically

Clearly, learning does not ensure that anything or anyone will really change.

In Our Iceberg is Melting (St. Martin’s Press, 2005), John Kotter states, “People are less likely to change themselves and others based on data and analysis than on compelling experiences.” The key word to reflect on is experiences – making the paradigm shift from workshops, programs, modules, classes, and events, to designing and delivering learning experiences that blend formal and informal learning processes in order to drive sustainable change and business results. This paradigm shift does not come easily for most companies. We have been taught all our lives in classroom settings, from kindergarten through high school, to college, to the workplace. These experiences have shaped our traditional construct of what constitutes training and education. The reality is that when we are talking about transformational development, learning must take on a new definition – a new orientation – in order to succeed.

Learning must lead to and support change. Deep-rooted company cultures and basic assumptions regarding training and learning must move from events to processes, from courses to experiences, from a learning focus to a business application and results focus.

A NEW WAY OF UNDERSTANDING AND OPTIMIZING LEARNING VALUE In their book, The Experience Economy (Harvard Business School Press, 1999), Joe Pine and Jim Gilmore introduce the Progression of Economic Value (POEV), the increasing levels of economic value associated with increasing levels of customization provided for a customer. As can be seen in Figure 1, this involves moving from extracting commodities to making products to delivering services to staging experiences and then to guiding transformations.

The POEV framework is easily illustrated with the example of coffee, as it moves from raw STATEMENT

beans, to ground coffee, to prepared and poured coffee, to the Starbucks experience. Just over 25 years ago, Starbucks created a customized experience around coffee, establishing a now significant new industry sector – the coffeehouse experience.

delivering transformation learning experiences.

Building on this foundation, we have developed a Progression of Learning Value (POLV), presented in Figure 2.

There are four important “axis” to consider as learning moves toward achieving greater levels of impact and value:

• The bottom axis addresses level of investment. Transformation is rarely inexpensive in terms of money spent and time involved. While greater investment in learning may seem prohibitive to some, the most costly learning and development initiatives with the lowest benefit to an organization are those that have only 10 to 20 percent of participants applying what they learn on the job. Underinvesting in the learning and development components of an important change process, in planning, talent, or money, portend less than acceptable results.

• The right axis indicates the level of business and talent impact that can be achieved, ranging from the lowest level provided by information through behavior change resulting in personal and business transformation. For any organizational change process to be successful, the learning effort must certainly seek to be reach a transformational level of experience.

Within the axes we move with increasing levels of customization from the commodities of basic learning resources, to the products of off-the-shelf courseware, to the services offered by custom programs, to the experiences provided by so-called blended / continuous learning programs, and finally to the potential for truly transformational development experiences.

• On the left is readiness for change. Change is a process that people go through in predictable stages, from denial to resistance to exploration and finally to commitment. Understanding where each learner falls is essential in designing and

SO HOW DO WE CREATE TRANSFORMATIONAL DEVELOPMENT EXPERIENCES?

APRIL 2012

• Increasing the level of learner engagement is critical to achieving greater value. When have we ever seen behavior change occur while people are unengaged or “leaning back” in the learning process?

In our work, we build from a foundation of The Six Disciplines of Breakthrough Learning (Pfeiffer, 2006), of which Richard

Flanagan is a co-author, and then layer on the thinking, models, and frameworks from The Experience Economy. We also incorporate several change models for assessing individual and organizational readiness for change. This comprehensive model has proved to be highly effective for creating development experiences that yield transformational personal and business results. In this article, we will examine one aspect of our approach that addresses the staging of a transformational learning experience. The principles from theater management and performance so well described in The Experience Economy serve as a model for what also needs to occur when planning and staging a learning experience. Pine and Gilmore credit Doblin, a member of Monitor Group, with describing the Five Stages of an Experience: attracting, entering, engaging, exiting and extending. Try thinking of learning and development as theater and every learning platform as a stage, whether it is a classroom, a virtual classroom, a highly interactive group process, action learning, or even a coaching session. This notion of the stage brings a theater mindset into the design and delivery process, requiring choreography of the experience. To achieve this, the learning team engages in the planning process by becoming “experience stagers” and introducing creative signature moments into the learning experience. 1. Attracting phase: The first stage draws people to the

PROFESSIONAL DEVELOPMENT learning experience and getting them excited and onboard. It is at this stage that having developed a coherent theme for the initiative is essential. What are the elements that both entice and prepare the learner for the coming experience? 2. Entering phase: This occurs in the moments and hours before an individual actually enters the formal learning experience. One need only think of the opening ceremonies of the Olympics to appreciate the value of this phase for preparing participants for the events to follow. 3. Engaging phase: Pine and Gilmore introduce four “experiential realms” that should all come into play – entertainment, education, esthetics, and escape. Although education is the focused intent, the most effective learning processes are also entertaining and enjoyable. Esthetically appealing venues and learning materials can have considerable impact on learner engagement. Also essential is an environment where learners can escape from the daily challenges and pressures of work so they fully engage in the learning and development experience. 4. Exiting phase: A well-planned and well-executed exiting phase has a significant impact on the overall learning experience. How well prepared are learners to begin applying what they are learning? Have well developed objectives and action plans been established? Have communication plans for coworkers and colleagues been developed? When people return to work, they typically quickly forget much of what they “learned” and have little time to think through

what they need to do differently and better, or whom they need to incorporate into their new ways of thinking and doing. 5. Extending phase: The intent of this phase is to create feedback loops and support mechanisms that extend the learning experience and build in accountability for change. Within days or weeks after completing a learning experience, most participants return to their jobs and lose touch with the material or do not apply what they have learned. A well conceived and designed extending phase is essential for building support systems, ensuring the application of new learning, and accomplishing and practicing the desired behavior changes. We have found that group collaboration tools offer a highly effective way to provide the virtual follow though and support necessary to extend learning experiences. These five stages of an experience need to be carefully planned and exercised. Suboptimizing any stage or discipline leads to decreased impact and results. As the data all too often show, personal and organizational change is challenging and far less successful than we should accept. Creating compelling experiences offers one hopeful avenue for improving these results.

TRANSFORMATIONAL LEARNING IS A KEY ELEMENT OF SUCCESSFUL CHANGE A commitment to transformational learning and development experiences can be a bold differentiator for

change-challenged organizations in the 21st century. Such a mindset serves as a catalyst for creating an innovative and agile learning culture able to accomplish needed personal and organizational changes. Learning and organizational development professionals can not only build capabilities, competencies, and knowledge, but they can also be key drivers in any change management process. An organization’s long-term commitment to transformational development experiences will be a key factor, not only in surviving turbulent change but also in creating a high-performance culture that attracts, recruits, retains, and develops the highly talented people required for ongoing success. Bob Dean, CPA, is a senior executive in learning, leadership development, and talent management, and is founder of Dean Learning and Talent Advisors, LLC in Chicago. In 2006, he became one of the first 10 people in the world to be certified in the models and frameworks of the book, The Experience Economy. He can be reached at roberthdean@comcast.net. Richard Flanagan, Ph.D., is a business consultant whose practice focuses on helping people, companies, and organizations change and improve in ways that deliver measurable business and personal results. He is a co-author of The Six Disciplines of Breakthrough Learning: How to Turn Training and Development into Business Results (Pfeiffer, 2006) and an accomplished speaker and facilitator. Richard co-founded the Chicagoland Chief Learning Officer Group (CCG), a think tank of corporate learning and talent development leaders which meets quarterly in Chicago. He is also an adjunct professor at the Alfred Lerner College of Business and Economics at the University of Delaware and teaches Strategic Thinking for Executive Leaders. He can be reached at rdf3131@verizon.net. STATEMENT

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PROFESSIONAL DEVELOPMENT

The cycle of building ownership: The key to your success B Y D R . J E FFRE Y M A GE E , P DM , CS P, CMC

EXECUTIVE SUMMARY: Understanding how to gain buyin and ownership from individuals from within strategic business units is fundamental to any true success in your future. Conduct reverse analysis to determine what three things really matter.

Creating climates in which individuals assume ownership of their actions, tasks, and the reputation of an organization comes down to a simple sequence of inter-linked actions. In working with profit and non-for-profit sector organizations over the past decade, I have seen a clear model rise that differentiates the winners from the losers. Winning organizations and individuals assume ownership and do not engage in the excuse game for not attaining performance expectations. How you go about assuming ownership and creating a climate in which others assume ownership of their jobs, responsibilities, selves, and the organization overall can be achieved by understanding how four factors are inter-linked, and thus where your first energies must be directed. The burning question in most leaders’ mind is, “How do we go about getting others to assume a higher level of ownership?” With this I began my homework assignment. Here is what I have learned:

1. When you know the depth of your abilities (formal and informal education, technical and nontechnical training, certification and work accolade experiences) and you draw upon those abilities and apply them appropriately, you experience success in accomplishment, or a self victory. When one experiences a victory, one’s self esteem goes up. 2. When one is victorious, one becomes significantly more motivated about applying themselves and assuming more responsibility. As a result, they become more excited about participating. At this point, the necessity to establish incentive and motivation programs and initiatives becomes less necessary. 3. When one becomes motivated about seeing their victories and successes, one becomes significantly more passionate about life and the endeavors in which they apply themselves. 4. We take ownership of the things and people we are passionate about. 5. Getting people to take more ownership sets them up for victory. Imagine a circular diagram, like a clock on the wall. At the top (12 o’clock) is the word Ownership.

At 3 o’clock is the word Victory with a line under that word, and the words Increased Self-Esteem under the line. Here, one can draw an arrow outward pointing inward to these words, and on that arrowed line write “ID skill abilities.” At 6 o’clock is the word Motivation. At 9 o’clock is the word Passion. Starting with the word Victory on the semicircular lines, connect the last three words, with arrows. Now place a large No. 1 on the word Victory, since that is the first step in working toward getting individuals to assume ownership. When we experience a victory, our self-esteem goes up and one becomes more motivated. When one is excited and motivated, one becomes more passionate, and that drives them to take more ownership. The question isn’t how to get people to accept and embrace greater levels of ownership. The real question is, what do people want to take ownership of? I realized this model by doing reverse analysis of some of the most successful businesses and organizations: Southwest Airlines, Harley-Davidson, Army National Guard, OfficeDEPOT, Wal-Mart, Anheuser Busch, Clear Channel Communications, Taco Cabana, and so on. My goal was to imagine having a front-row seat at an American institution that STATEMENT

went from being a benchmark of success through the stages of a hemorrhage and significant market implosion. People who assume ownership seem to be among the most passionate for what they do. Those who have high passion for what they do are continuously motivated by what they do. This only happens when people are set up for victories by doing the things for which they are best mentally and physically equipped. All of this feeds one’s self-esteem, and when one operates from a level of high self-esteem, it is exciting to see what one can accomplish. It also reveals the things for which one wants to assume ownership.

Jeff Magee, Ph.D., PDM, CSP, CMC, is a highly sought after, content-rich platform speaker, author and consultant who works with individuals and business that wish to increase their productivity and profitability through business and leadership training without limits. He can be reached at Jeffrey@JeffreyMagee. com, or (877) 906-2433. Visit www. JeffreyMagee.com for more information. For more power skills and ideas, check out any one of the 20 bestselling books and audios at www.JeffreyMagee.com/ library.asp. PDM is the highest certification accreditation for Professional Direct Marketers. CSP is the highest certification accreditation for Certified Speaking Professionals; fewer than 8 percent of all professional speakers in the world hold this certification. CMC is the highest certification accreditation for Certified Management Consultants; fewer than 1 percent of all organizational management consultants in the world hold this certification.

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PERSONAL FINANCIAL PLANNING

Reverse mortgages as a financial planning tool: Yes or no?

B Y R A NDA L L C. RIFFE , CPA Until recently, seniors 62 years of age and older have not had the best of choices when it came to getting cash from their homes. Traditional home loans offered only the option of either selling one’s house or borrowing against its equity. Obviously, this meant moving into a new home or taking on monthly repayments, choices not exactly the most appealing for many seniors.

WHAT IS THE MAXIMUM LOAN AMOUNT FOR A REVERSE MORTGAGE? The maximum $625,500 loan limit has been extended until Dec. 31, 2012.

QUALIFICATIONS FOR A REVERSE MORTGAGE • You and your spouse must be at least 62 years old. • Your home must have enough equity to consolidate all existing mortgages. • The type of home must be FHA-approved, such as a singlefamily home. • Once the borrower has secured his / her reverse mortgage, they must maintain the home to meet FHA standards, including keeping insurance and property taxes current. • Borrower(s) are required to take pre-mortgage counseling. • The reverse mortgage is only allowed on your primary residence.

ADVANTAGES OF A REVERSE MORTGAGE • No debt is transferred to heirs or family members. • It can be used for any purpose. The funds are available to the borrower for whatever purpose chosen. • Protection. The most the bank can collect is the value of the home when it is sold. • The biggest advantage of a reverse mortgage home loan, of course, is the extra money you can receive when your loan is closed. • You retain the title of your home. However, if you stop paying your real estate taxes, insurance, and utilities, your loan will come due. • You can’t outlive your loan. • You do not have to pay taxes on reverse mortgage loan advances.

DISADVANTAGES OF A REVERSE MORTGAGE • You will pay fees to cover the loan origination, document preparation and other closing costs. • If you move or sell your home, the reverse mortgage will need to be paid off. • You will leave fewer assets for your heirs.

• Interest on your reverse mortgage is not deductible on your IRS tax return.

• You must maintain your home meeting FHA standards along with paying your insurance and property taxes.

HOW WOULD YOU LIKE YOUR MONEY? The amount of money you receive from a reverse mortgage will depend on several things, including the plan you select, your age, the value of your home, and the present interest rate. • Lump sum: Single payment. • Tenure: Equal monthly payments as long as at least one borrower is living and continues to occupy the property as a principal residence. • Term: Equal monthly payments for the fixed period of months you have selected. • Line of credit: This would be used in the same way as a credit card or checkbook. You would receive unscheduled payments or installments at the times and amounts you have selected. This will continue until the line of credit is exhausted. • Modified tenure: A combination of a line of credit and monthly payments for as long as you continue to live in the home. • Modified term: This combination of a credit line and monthly payments differs from the plan above in that it is based upon a fixed period of months that you have chosen. STATEMENT

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PERSONAL FINANCIAL PLANNING TAX-FREE LOAN PROCEEDS A reverse mortgage gives the borrower(s) some appealing cashflow alternatives that they didn’t have before. These loan plans will allow the individual or couple to convert their home equity into tax-free loan proceeds without having to sell their current home or take on new monthly mortgage payments.

WHAT DOES A REVERSE MORTGAGE COST? Reverse mortgage closing costs break down into three sets of costs, all of which are transparent using a good-faith estimate given to the borrower at the time of the application: • Origination fees: Paid to the lender to originate the loan. • MIP collected by HUD: Guarantees loan proceeds and debt limit. ** • Other closing costs associated with title insurance, state and intangible taxes, and recording fees. The loan fees and costs incurred in obtaining a reverse mortgage are typically no more than any other type of loan overall. These costs will be added to the balance of the loan. There are several out-of-pocket costs to the borrower that may include: • Counseling with a HUD approved counselor. • Appraisal. • Condo questionnaire (when applicable).

MYTHS AND MISCONCEPTIONS Myth No. 1: The reverse mortgage requires that I make monthly payments. False: There are never monthly mortgage payments with a reverse mortgage. The borrower is responsible for payment of property taxes, insurance, and general upkeep of the home and nothing more. Myth No. 2: My children will be held responsible for repayment of a reverse mortgage. False. The reverse mortgage is a non-recourse loan. Myth No. 3: You need a certain level of income, credit, or health to qualify. False. A reverse mortgage has no income, credit, or health requirements. Myth No. 4: If I get a reverse mortgage, I cannot sell my home. False: If you decide to sell your home, the reverse mortgage is like any other loan that must be paid off at closing. There are no restrictions on prepayment of the loan or penalties for paying off your loan or selling your home. Myth No. 5: My lender can change my loan terms. False: Once executed, the terms are defined and cannot be changed as long as the deeds of trust remain in force.

Myth No. 6: My Social Security, Medicare / Medicaid benefits will decrease. Not True. Generally the money from a reverse mortgage is considered borrowed money and not income. For some programs, monthly draws must be spent and not accumulated, but for most, the money is not considered disqualifying. ** ** We strongly recommend consulting your tax advisor when choosing a reverse mortgage plan. Sites referenced for this article include AARP.com, LoanToolbox. com, HUD.gov and IRS.gov. Randall C. Riffe, CPA, is chair of special projects for the MACPA Financial Planning Committee and a mortgage / real estate benefits specialist with Louviers Mortgage.

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PRACTICE MANAGEMENT

Quality control standards: Implementation for NOTE: The following article originally appeared sole proprietors EDITOR’S in NEPR News, a publication of New England Peer Review. B Y A B B Y T. DAW SON , CPA Quality control standards require that a firm have a quality control document, perform “engagement quality control reviews,” and perform and document monitoring. Most sample quality control documents contain lengthy wording, much of which isn’t applicable to sole proprietors without staff. Can a practitioner perform “engagement quality control reviews” of his own work? Can they / should they perform inspections of their own engagements? What’s a small firm to do?

QUALITY CONTROL DOCUMENTATION A firm must document its quality control policies and procedures in a manner that complies with the requirements detailed in SQCS 7, effective Jan. 1, 2009, regardless of the size of the firm or whether a firm has an engagement review or a system review under the peer review standards. The AICPA has prepared sample documents, which can be tailored by the firm. They are available on the AICPA website for a fee. Search AICPA.org for “Establishing and Maintaining a System of Quality Control for a CPA Firm’s Accounting and Auditing: Practice Aid.” As an alternative, if a firm

undergoes a system review, it can use the quality control questionnaire it prepares as part of its preparation for the peer review to meet this requirement. Firms having an engagement review can also obtain a copy of that questionnaire and complete it to use as its quality control document. However, it must be periodically updated, and yes and no answers are not sufficient. The firm must explain its answers in enough detail to convey what its quality control policies and procedures are. This questionnaire is titled “PRP Section 4300: Quality Control Policies and Procedures Documentation Questionnaire for a Sole Practitioner with No Personnel” and is available for no charge on the AICPA website at www.MACPA.org/quality. Another source to utilize in complying with the documentation requirement is third-party vendors. For example, PPC (yes, more PPC) sells a reference guide, PPC’s Guide to Quality Control. It provides sample documents and written policies and procedures as well as practical guidance on complying with this requirement. If you have access to a larger firm’s library, you might want to check it out to see if you would find it useful.

ENGAGEMENT QUALITY CONTROL REVIEWS

The firm’s quality control document must address its provision for “Engagement Quality Control Reviews” (EQCR). These are high-level reviews performed on the firm’s identified high-risk engagements, such as ERISA, or A-133, engagements and / or engagements at levels of service or industries in which the practitioner does not have recent experience. The firm must establish criteria for identifying engagements that require this type of review. It is not mandatory that any engagements undergo this review if, in fact, none meet the criteria. If any engagements do require such a review, arrangements must be made with an external individual or firm to perform this review. This is a recent requirement, effective Jan. 1, 2009.

MONITORING Firms are required to perform and document monitoring procedures, as anyone who has gone through peer reviews knows. This is often an issue for sole proprietors, particularly those without experienced professional staff. This goes beyond the review of engagements. A firm must document its compliance with all six elements of quality control, namely leadership responsibilities, relevant ethical requirements, acceptance and continuance STATEMENT

of clients and engagements, human resources, engagement performance, and monitoring. Some elements (such as human resources) may not be applicable to small firms with no staff. The AICPA peer review manual, available at no cost on the AICPA website, contains a comprehensive chapter on monitoring, including checklists and sample reports, some of which are specifically tailored to small firms. In most cases, firms are monitoring these elements by performing such tasks as assessing the adequacy of their libraries (which these days may consist solely of online subscriptions). Where they may fall short is failing to document the process. Such documentation can be as simple as maintaining a list of current subscriptions and annually noting whether additional resources are needed due to changes in the practice. In doing so, a firm may discover that it is paying for subscriptions that are no longer needed. The issue which often causes the most confusion is the requirement to review engagements. The literature addresses three options: engagement quality control reviews (which replaces pre-issuance reviews), postissuance reviews, and inspection. A sole proprietor cannot use engagement quality control reviews as part of their monitoring process, since it is part of the engagement process. However, they can perform post-issuance reviews, which is an objective review of the engagement at some point after the engagement has been concluded. A convenient time to perform such a task is in preparation for the next APRIL 2012

year’s engagement. The review should be conducted using a comprehensive checklist. Peer review engagement checklists used by a peer reviewer are useful tools for performing post-issuance reviews and are available at no charge on the AICPA website. Look for the peer review section, then find “Team captain checklists.” You will have access to all the checklists your peer reviewer uses to review your engagements. The documentation should be maintained, and issues summarized and any identified deficiencies in the firm’s quality control system should be addressed. An inspection is similar to postissuance reviews, except a sample of engagements are selected and performed over a narrow period of time. A practitioner can inspect his own work and still comply with the standards. While a sole proprietor with no experienced professional staff is not required to hire an outside party to perform monitoring, it should be seriously considered. The knowledge and guidance that can be obtained through such a process can prevent serious errors and reduce research time. They can also impart a comfortable feeling that you are keeping with standards, which is a huge challenge for a solitary practitioner. There are CPAs, many of whom currently perform peer reviews, that have knowledge of the industries you perform engagements in who are willing and able to help you comply with the monitoring standards. You may want to work with someone in your geographical area or not.

Your present peer reviewer may be a good choice, but keep in mind they cannot perform your peer review the year after they perform your inspection. A list of peer reviewers who may be interested in working with you can be found at www.nepr.org/ firms/findareviewer. Following this guidance will assist you in complying with the quality control standards. Abby T. Dawson, CPA, a partner in the firm of F.G. Briggs Jr., CPA, PA, is a peer reviewer and has been a New England Peer Review technical reviewer since 1993.

RELATED SELF-STUDY COURSE Learn to create a firm environment that focuses on quality control with “Upcoming Peer Review: Is Your Firm Ready?” This self-study program will help you prepare for a peer review and learn what can be done on a daily basis to create a strong qualitycontrol environment. Get details at www.macpa.org/selfstudy.

MORE FOR FIRMS You’ll find more practice management resources by visiting www.MACPA.org/firms.

MORE ON PEER REVIEW You’ll find a ton of related resources in our peer review resource center. Visit

http://peerreview. aicpaservices.org/resume/ ResumeDetail.aspx

PRACTICE MANAGEMENT

‘Pet’ project drives Gross, Mendelsohn & Associates

Employees with Gross, Mendelsohn & Associates, P.A., continued their community service outreach throughout the holiday season and into 2012 by sponsoring a drive for the Maryland SPCA’s Kibble Connection, a program that works with Meals on Wheels to deliver pet food and kitty litter to community members; and the Presents for Pets program, which collects pet toys and accessories of all types to disburse to the community.

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LEARN TO LEAD IN YOUR ORGANIZATION

LEADERSHIP ACADEMY 2012 May 7-9, 2012 Please call 800.782.2036 to apply. *space is limited

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HIGH-TECH SOLUTIONS

What the shift to consumer IT means for firm culture B Y: E R I C B E N S ON There are many issues that should be addressed regarding personal devices on a firm network.

Many firms consider these to be only security related: What happens if an employee leaves the firm with e-mail on their personal device, for example? In talking with firms who have moved to accepting personal devices for work purposes, however, the security objections often mask a larger firm culture objection. This objection also comes up in other areas of change but is most apparent in technology, where the ramifications of change can be mysterious. A characteristic of this reaction to technology change is the discomfort level and the number of objections that bring up current practices (personal, preferred or in place and working). Another characteristic is that the change often comes through unconventional channels – like young workers, pressure from media, or partners on the quest for new ideas. Personal devices, moving applications or entire server rooms to the “cloud” and more fit in this category right now; they are in the painful process of acceptance in most firms. Understanding how firm culture relates to technology change can help you become more effective as an employee, team member

and leader in your firm. This article looks at four different mindsets that people have when defining “work”. Each has a very valid function when used to assess how technology change is viewed in the firm.

MINDSET 1: OFFICE MINDSET The office mindset revolves around the notion that you have to go to work to do work. This model has a good reason for existence; in the past, you couldn’t work from home because the option just wasn’t available. The office mindset values visual accountability very highly. After all, if your supervisor can’t see you working away, how is he / she supposed to know you are doing your job? In addition, an office mindset can drive a one-office mentality, which is a good thing. Everyone has the same experience in the morning – they come to the same place, use the same restrooms, sit in similarly decked offices or cubicles. There is bonding that comes from uniformity. Accountability and a one-office mentality are both extremely important in business. However, withholding access to work for those who are not in the office may reduce the potential of your firm to do work effectively.

MINDSET 2: DEPARTMENTAL / POSITION MINDSET The departmental / position mindset is grounded in the fact that your position determines your privileges. This is not necessarily a seniority status (which is covered in the next section); rather, it’s based on what department you work in. Accounting firms have very specific internal verticals in technical production. Audit teams routinely go off site for jobs, but tax doesn’t. When you get to the middle of the firm, there are also differences based on position. Administrative staff needs to be in the office to answer the phone or be available for projects. IT may be required to have access after-hours, especially during tax season. Who you are or who you manage (or think you manage) can drastically alter where work can take place. Would you consider an office receptionist a position that can work from home? How about a tax professional? There are obvious choices in terms of who can work where with a departmental / position mindset, and with good reason. However, this may lump together individuals (or teams within a department) who are not like others and

STATEMENT

can have more flexible work arrangements. Often you may lose out on productive time by treating everyone by position instead of by responsibility.

MINDSET 3: SENIORITY MINDSET Seniority is something that is being challenged in the workplace. Actually, has it ever not been challenged? New employees often have drive, ideas and enthusiasm that can bring out the “iron hand” of seniority and reduce privileges for those who haven’t been around as long. Of course, it is also a very valid and useful tool; those who’ve worked at a location the longest have knowledge and invested effort in the firm. Experience does have immense value, and in an accounting firm experience often drives an ownership stake. Having a solid understanding of the balance between privilege (seniority mindset) and work style (technology mindset) can drive the value even higher by introducing mentoring and teams where that experience is a resource and not a constraint.

MINDSET 4: LOCATIONAWARE MINDSET With technology comes change, and this particular mindset has evolved rapidly over the past 20 years. A location-aware mindset asks the question “What can I do here?” instead of waiting to get to the office. In many ways, the consumer technology trends have changed this mindset from one of convenience to necessity. New employees are used to being productive wherever they are. If restrictions are placed on work

APRIL 2012

style and location, a young new employee might actually feel like a right has been revoked. This might bring a locationaware mindset into a young generation discussion, much like a seniority mindset might also be generational. This is not so. In many instances, the technology to perform a task is utilized by everyone in the firm to enable a location-aware mindset. The key impediments are issues with mindset – why can’t it work instead of how can it work. Again, there is a balance here. Having a full three-monitor tax workflow on a tablet is possible, but not very efficient. However, viewing key work papers on a tablet is possible and can be very effective in client interactions.

BRINGING THE MODELS TO PERSONAL DEVICES Did any of the models above ring true for your firm? I imagine so. Understanding your work culture is a key component to adapting to technology change, because at the moment much of that change is pulling the control of the hardware away from the firm and placing it in the hands of others. Personal devices run right against both the idea of the people / data having to be in the office to work (the office mindset) as well as having the right to access their work from anywhere (the position and seniority mindsets). The location-aware mindset also runs into issues with firm culture because even though someone may ask for a personal device to have access to work information, there may be legal and HR issues with granting

access.

SUMMARY The key takeaway from these mindsets is that all can provide value if used to enable productivity and improve efficiency in the workplace. If any one of them is used to prevent either, it should be challenged, and the resulting issue evaluated against all four mindsets. The past few years have been blazing advertisements for all of the gadgets that promote work anywhere, but this can only happen in contexts that work with a firm’s culture. Understanding more of your firm’s culture regarding work and access to work can help see where there are next steps that don’t have high friction for change, or places where the need is outweighing the risk. One constant with technology is that it does continually change, and when it does, it challenges the status quo. Evaluating your culture to adapt will help improve adoption and use of technology in your firm. Look at these as opportunities for positive change, and if the fit isn’t correct, figure out what mindset fits. It’s an exercise that can bring new life, productivity and innovation to your firm. Eric Benson is director of technology for Boomer Consulting.

MORE ON TECHNOLOGY Tech-related news, articles and resources are available on our Web site: www.macpa.org/Technology

EDUCATION

The need for accounting articulation agreements in Maryland B Y J O S E P H P. CU N N IN G H A M , CPA, MBA During the 2012 Maryland Accounting Educator’s Conference in Columbia, sponsored by the MACPA, a panel of former community college students shared their experiences transitioning into four-year accounting programs as part of the 2012 MACPA Accounting Educator’s Conference.

If the community college is awarding an associate’s degree to the student who earns 60 credit hours, that leaves approximately 90 credit hours for the college or university to educate the student. Surely 90 credit hours (60 percent of the student’s education) represents the “bulk” of a student’s education.

The five panelists had one thing in common: Each had lost significant credits transferring to the four-year school. They minimized their credit-hour loss by identifying their four-year school early in their academic career to maximize their credit transfer.

This was not enough to satisfy my colleague’s sense of “fairness.”

Wouldn’t allowing students to complete an associate’s degree in accounting and a bachelor’s degree without having to repeat classes allow the two- and fouryear institutions to highlight the degrees awarded and say, “See what our students have accomplished!”

COLLEGE COMPLETION AGENDA

ARTICULATION AGREEMENTS

The U.S. Department of Education and the current administration is stressing college degree completion. In March 2011, the department published The College Completion Tool Kit. The publication stresses that our economy cannot rely on individuals with high school diplomas alone to provide stability and growth. The document lists strategies and suggestions to increase the number of degrees and certificates granted at the college level.

Maryland community colleges have transfer or articulation agreements with both state and private four-year institutions in many disciplines, but not for accounting. At Harford Community College, we have an articulation agreement for business administration to some four-year schools. With no accounting articulation agreement, we advise our students to major in business administration. This is done to maximize credit transfer. Students declare an accounting major upon arrival at the four-year school.

Many students transfer before obtaining the associate’s degree in order to avoid credit loss, but incur higher costs at the four-year school. My question to the accounting educators in attendance was this: Why is there no articulation agreement between Maryland community colleges and state institutions? One college professor kindly volunteered his professional opinion. He believed it was not fair to potential employers to present candidates for employment who did not receive the “bulk” of their education at his four-year institution. The Maryland Board of Accountancy requires students to earn 150 credit hours for a bachelor’s degree in Accountancy.

The state of Maryland has joined in this initiative as well. In 2011, Gov. Martin O’Malley and College Board President Gaston Caperton hosted an event for The College Completion Agenda: State Capitals Campaign. The purpose was to improve college completion rates when colleges and students face rising costs and budget constraints. In tough economic times, colleges are also facing expanding enrollment.

The event drew approximately 150 policymakers, educators, business and community leaders.

Maryland schools obtain accreditation from The Middle States Commission on Higher Education. Also, the Maryland Board of Accountancy approves accounting, business and ethics courses from the two- and fouryear schools. Students take these courses to satisfy degree requirements and sit for the Uniform CPA exam. STATEMENT

If we share accreditation from the same body and courses are approved by the same regulatory agency, why not create an articulation agreement in which students seamlessly transfer without loss of credit hours or monies into a bachelor’s degree program?

FUNDING State funding is reaching a critical level for higher education. In 2007, Maryland instituted a tuition increase cap of 3 percent per year after a school’s tuition had increased by 40 percent. The state subsidizes both the community college and state college student. If students are asked to repeat courses at the state institution level, didn’t the state subsidize the student at the community college level? Once the student transfers, the state is asked to subsidize the student a second time for courses the student is compelled to repeat. This is a drain, in my opinion, at the taxpayer’s expense. Is this an effective use of local funding at the community college level if the courses subsidized by the state are repeated? The New Jersey state

government addressed this issue a few years ago. A student can transfer academic credit earned at the community college level at any four-year New Jersey public institution without loss of credit. One can obtain an associate’s degree from a community college and transfer seamlessly to a fouryear public school, like Rutgers School of Business. Tennessee enacted similar legislation in 2010. This is admirable. It eliminates frustration from the student; it reduces a waste of state funding. Is legislation is required in Maryland? Not unless we create articulation agreements.

CONCLUSION An accounting articulation agreement between community colleges and state intuitions is an excellent proposal. It assists students and two- and four-year institutions; it reduces costs for the student and taxpayer; and it satisfies the degree completion goals set by government agencies. To summarize, an accounting articulation agreement between two- and four-year institutions: • Creates a seamless transition from an associate’s program to a bachelor’s program. Students do

not lose valuable academic time or economic resources repeating classes. Some of the panelists had to re-take an entire semester of classes. • Enables students to complete an associate’s degree at the community college level and reduces their costs at the fouryear school while obtaining their bachelor’s degree. • Provides savings to the state by not paying for classes a second time at the four-year school. This reduces the waste of subsidies for the taxpayer. • Enhances the four-year schools. This allows the school to market accounting, tax, business administration programs at the post-graduate level. Four-year schools expand their alumni pool and increase the potential for donations. • Satisfies the goal of degree completion for the US Department of Education and the state of Maryland. Joseph P. Cunningham, CPA, MBA, is an assistant professor of accounting at Harford Community College.

SALISBURY SENIOR EARNS FIRST AWSCPA SCHOLARSHIP The Metro DC Affiliate of the American Woman’s Society of Certified Public Accountants’ (AWSCPA) awarded its first scholarship in 2011 to Aislinn Sweeney, a senior at Salisbury University. “I’m so grateful for this scholarship, as it has helped me continue to pursue my education and build future career opportunities,” Aislinn said. “I’m starting at KPMG this fall, and greatly appreciate the contribution that the AWSCPA has made toward my academics.” Aislinn anticipates being awarded dual degrees in May 2012 – a bachelor of science in accounting and a bachelor of science in information systems with a minor in finance. “Our affiliate was thrilled to receive applications from such accomplished ladies that met the criteria,” said Beth A. Berk, CPA, the affiliate’s vice president. “We look forward to awarding the scholarship again this summer to another accomplished student and hopefully a future fellow CPA and member of the MACPA.” JANUARY 2012

To find out more, visit at www.awscpa.org/metrodc and join the affiliate’s mailing list to receive information about future events.

MEMBER NOTES / FIRM NOTES

Member Notes Gross, Mendelsohn & Associates, P.A., has announced that two of the firm’s partners, Stephen K. Ball, CPA, CVA, CCIFP, and Christina P. Haiss, CPA, MCP, CITP, published an article in “Construction Accounting & Taxation,” a national construction industry trade journal. The article, “Contractors, how is your accounting software working for you?” offers tips for a successful accounting software implementation, issues to consider before a software upgrade, and keys to successful integration with estimating, central job screen and financial reports. Ellin & Tucker, Chartered, has announced that Rivka Bier, CPA, has been promoted to manager in the Tax Department, and Rachelle Bell, CPA, has been promoted to supervisor in the Audit, Accounting, and Consulting Department of the firm.

Ellin & Tucker, Chartered, has announced that Thomas A. Byers, CPA, has been promoted to director in the Tax Department; Michael A. Strauss, CPA, has been promoted to director; and Jared A. Rosen, CPA, MBA, has been promoted to principal in the Audit, Accounting, and Consulting Department of the firm. Gross, Mendelsohn & Associates, P.A. has announced that Diana Boyd DeWitt, CPA, a manager with the firm, earned the Certified Construction Industry Financial Professional (CCIFP) designation. The designation, issued by the Institute of Certified Construction Financial Professionals, is earned by professionals who have a very high level of expertise in the construction industry. Kenneth M. Eyler, CPA, MBA, CFO, of Arthur Bell, was recently named a member of the firm. He is responsible for the financial and operational oversight of the Firm, and he is now also member-incharge of Family Office Services.

David M. Gaither, CPA, a principal at Hertzbach & Company, and Eric R. Lee, CPA, a manager at Hertzbach & Company, have obtained their Certified Construction Industry Financial Professional (CCIFP) designation by the Certified Construction Industry Financial Professionals. Gross, Mendelsohn & Associates, P.A. has announced that Emily Girch, CPA, has earned the CPA designation. She is a senior accountant in the firm’s tax department. David A. Goldner, CPA, CFP, CVA, managing partner at Gross, Mendelsohn & Associates, presented “Top Tax Strategies for 2011 (There’s Still Time) and 2012” on Wednesday, Jan. 25, 2012 at Baltimore Network Partners’ inaugural meeting. Mr. Goldner also gave valuable accounting and finance advice in a CPA roundtable discussion that was published in the February 2012 edition of SmartCEO Magazine.

Program.

Jason F. Grove, CPA, a manager in the Audit, Accounting, and Consulting Department at Ellin & Tucker, has been named treasurer of the Dyslexia Tutoring

Arthur Bell congratulates Margaret Gruhn, CPA, for recently becoming a licensed CPA in Maryland. She is an audit senior in the firm’s audit and assurance group. Gross, Mendelsohn & Associates, P.A. is pleased to announce that Christina P. Haiss, CPA, CITP, MCTS, a partner in the firm’s Technology Solutions Group, passed two Sage exams and is now a MAS 90 and MAS 200 Application Consultant (financials / distribution) and a Sage Timberline Office Implementation Specialist for Construction Accounting. The Korean Business Enterprise Organization (KoBE) has announced that John P. “Jack” Hollerbach, CPA, founder and president of Hollerbach & Associates, LLC, and a past MACPA board member, has been named to its Advisory Board. KoBE President Matthew S. Lee also announced that Hollerbach will function as director STATEMENT

of business development for the industry group.

Jennifer Huffman, CPA, an audit manager at Reznick’s Baltimore office, has been named to the Board of Directors of Special Olympics Maryland and their Finance Committee. Huffman will work with the organization on its ongoing fundraising efforts and was involved in a major fundraising campaign, the MSP Polar Bear Plunge, which took place at the end of January. Arthur Bell congratulates Andrea Imhoff, CPA, for recently becoming a licensed CPA in Maryland. She is a staff accountant in the firm’s audit and assurance group. Gross, Mendelsohn & Associates, P.A. has announced that Jared Imhoff, CPA, has earned the CPA designation. He is a supervisor in the firm’s tax department. Arthur Bell congratulates Daniel Katibian, CPA, for recently becoming a licensed CPA in Maryland. He is a staff accountant in the firm’s audit and assurance group. Steven Manekin, CPA, director in the Audit, Accounting, and Consulting Department at Ellin & Tucker, Chartered, was named one of Baltimore’s 2012 FIVE STAR Wealth Managers in the Tax Advisor category by Five Star Professional in a special section of Baltimore Magazine’s February 2012 issue. Peter O. McDonald, CPA, was promoted from supervisor to manager at Smith Elliott Kearns & Company, LLC. Peter is based in the Hagerstown location, but as a member of the firm’s Accounting Services Committee, he is an active resource for staff members in all four office locations. Kevin P. Needham, a CPA candidate member, has been promoted to senior accountant at Stoy, Malone & Company, P.C. He provides auditing and assurance services, as well as tax preparation for a wide range of individual and corporate clients. Mark White, CPA, has been promoted to manager at Ryan & Wetmore’s Silver Spring office. He recently received his certification in public accounting and has been a member of the firm for 6 ½ years.

APRIL 2012

Thomas P. O’Neill, CPA, has joined Hertzbach & Company as a principal. Mr. O’Neill has over 35 years of public accounting experience and serves on the Board of Directors for several public companies and private organizations. Michelle Outerbridge, CPA, CFP, is now a partner at Berman Goldman & Ribakow, LLP, a regional accounting and consulting firm. Lisa Lucchesi Rice, CPA, has joined Jones Hall Advisors as a manager. Jonathan L. Shannon, a CPA candidate member, joined Ryan & Wetmore as a staff accountant in the early part of this year. Arthur Bell congratulates Meira Simanowitz, CPA, for recently becoming a licensed CPA in Maryland. She is a staff accountant in the firm’s tax group for alternative investment funds. Yi M Shrestha, CPA, a supervisor at Stoy, Malone & Company, P.C., earned an MBA in Finance from Loyola University Maryland. Arthur Bell congratulates Ayala Tajerstein, CPA, for recently becoming a licensed CPA in Maryland. She is a senior tax accountant in the firm’s tax group for alternative investment funds. Ellin & Tucker, Chartered, has announced that Daniel J. Thrailkill, CPA, has been promoted to manager, and Elisabeth J. Dempster, CPA, have been promoted to supervisor in the Tax Department of the firm. Gross, Mendelsohn & Associates, P.A. has announced that Nick Wieroniey, CPA, has joined the firm’s audit and accounting team as a senior accountant. Arthur Bell congratulates Alex Wong, CPA, for recently becoming a licensed CPA in Washington, D.C. He is a staff accountant in the firm’s audit and assurance group.

MEMBER NOTES / FIRM NOTES

FIRM NOTES Dembo, Jones, Healy, Pennington & Marshall, P.C. and Garrison, Mathieson, Andrews & Falk, Chartered have merged. The succeeding firm will continue to practice under the name of Dembo, Jones, Healy, Pennington & Marshall, P.C. Hertzbach & Company, P.A. has been named one of 2011 Top Workplaces in the inaugural ranking of “Baltimore’s Top Workplaces” by The Baltimore Sun and Workplace Dynamics. Companies from across the Baltimore region were surveyed and contest results were based on employee satisfaction. Hertzbach was honored to be a top workplace in the “Small Employers” category. For the second year in a row, Hertzbach & Company employees joined Business Volunteers Unlimited and the Salvation Army to help make sure all donated gifts got to the right boxes for disadvantaged children. Thanks to the efforts of this year’s “Elves,” The Salvation Army was able to deliver gifts to more than 4,500 children from over 1,800 local families this past December. Hertzbach & Company’s 2011 food drive held through November 2011 brought in more than 550 cans and boxes of food for the Maryland Food Bank, courtesy of donations from the firm’s employees. Reznick Group announced that its Baltimore

office has been recognized by The Baltimore Sun and Workplace Dynamics as one of the 2011 Top Workplaces in the Baltimore metro area. Reznick Group earned this distinction based upon a survey completed by the firm’s employees. Reznick Group has been recognized by Baltimore magazine as one of the top 25 “Best Places to Work” in the Baltimore area for 2012. The magazine cited the firm’s commitment to community service and generous benefits as two of the key reasons Reznick Group earned this distinction. Reznick Group announced that its Baltimore office participated in Adopt a Family 2011, where employees donated gifts and holiday supplies to six needy area families – one from INNTerim Housing and five from St. Ambrose Housing Aid Center. For the fourth year in a row, employees donated items such as toys, clothes and electronics to ensure that area families can have a nice holiday season. Additionally, participants made monetary donations and the “Reznick Elves” took care of the shopping.

IN MEMORIAM Sylvan Offit, CPA, a life member who joined the MACPA in 1952, has died. He was 86. Thomas Lee Woods, executive director of the MACPA from 1971-90, has passed away, leaving his wife Julie, three children and six grandchildren.

Sharpen up. 2012 EMPLOYEE BENEFIT PLAN CONFERENCE Tuesday, May 8, 2012 | Sheraton Columbia For more information & to register visit http://cpa.tc/empbenconf or call the Member Service Center at 1.800.782.2036 and reference Event ID: 121012. Sponsors:

MEMBER SERVICES WELCOME, NEW & REINSTATED MACPA MEMBERS! ANNE ARUNDEL COUNTY

LAUREN L. HERSCHMAN, CPA

JENNIFER J. BENWARD, CPA

STEVEN M. COOK, CPA

TRINA O. LARSON, CPA

JESSE A. BLUMBERG, CPA

IVY LIN, CPA

BRETT M. BOWEN, CPA

PATRICIA A. FRENCH, CPA RUSSELL K. HENRY, CPA

ERNEST D. MILLER, CPA

SEAN MCELWANEY, CPA

VERONICA C. NDUM, CPA

JAY S. MILLER, CPA CALVIN RICE, CPA

NADEZHDA RABINOVICH, CPA

JULIA M. VAN HORN, CPA

LOGAN E. RAUM, CPA JOHN J. RIZAS II, CPA

CAPITAL AREA CHAPTER

CLAUDIA W. SAGREDO, CPA

BERNARD BETHKE, CPA

ANTONY R. SMITH, CPA

CATHERINE A. BOSS, CPA

KENNETH M. SMITH, CPA

JORGE A. CHRISTIAN, CPA

KEVIN M. STAFFORD, CPA

SHARON P. COLLINS, CPA

CHRISTOPHER G. WRAY, CPA

JOHN V. CUFF, CPA

MEI T. WU, CPA

MOHAMMED DOKA, CPA

EDWARD T. WUENSCHELL JR., CPA

SHAWN ESKOW, CPA

BETHANY ZHENG, CPA

DEBRA R. FOSTER, CPA

CENTRAL MARYLAND CHAPTER

RAMAKRISHNAN GANESAN, CPA

LEAH N. ABRAMS, CPA

JAMES P. GERAGHTY, CPA

SANDRA M. ALVAREZ, CPA

MELISSA K. HALL, CPA

KATHERINE L. BAXTER, CPA

MARIA LYN F. BOWERS, CPA KENNETH E. CALLOW, CPA TINA L. CARRINGTON, CPA JULIE N. CAVANAUGH, CPA JEFF W. CHADWICK, CPA CHARALAMBOS L. CHARALAMBOUS, CPA ZACHARY A. COLEMAN, CPA ALEXANDRA M. DECKERT, CPA HENRY D. DELLUOMO, CPA NATALLIA M. DZIVAKOVA, CPA ANDREW F. EBY, CPA BRETT L. ENDLER, CPA LAURA FREITAG, CPA AMY GARLITZ, CPA NANCY J. GERATY, CPA MOLLY B. GOLDMAN, CPA CHARLES E. HARVEY,

CPA

TODD A. SMITH, CPA

PROF. KATHLEEN M. HOUSE-GANDY, CPA

NICHOLAS V. REGESTER, CPA

MID-MARYLAND CHAPTER

ANDREA N. IMHOFF, CPA

JAY S. RIDDER, CPA

AMANDA E. HENCK, CPA

DANIEL S. KATIBIAN, CPA MATTHEW J. KROPP, CPA SHIRLEY A. LINDSEY, CPA SHELLAE D. LOUDEN, CPA DEBRA N. MAZZULLO, CPA ELIZABETH A. MCPHERSON, CPA STEPHEN F. MORGAN, CPA BRANDON D. MUELLER, CPA TONIKA N. MYERS, CPA CYRUS L. NELSON, CPA DANIEL A. NEMEC, CPA JONATHAN NEUMAN, CPA ERIC M. NISLOW, CPA ROBERT A. PARRACK, CPA TINA M. PEACHER, CPA NAOMI A. PINSON,

GREGORY S. RITTLER, CPA ABBY R. ROWE, CPA RONIT A. RUBIN, CPA KELLY SAVOCA, CPA HOWARD S. SCHERR, CPA PATRICK D. SHERMAN, CPA MEIRA SIMANOWITZ, CPA JUSTIN T. SNYDER, CPA JUSTIN STAPPLER, CPA JENNIFER L. VITELKITES, CPA RICHARD J. WALLACE, CPA JENINE K. WARNKE, CPA LYNDA B. WELLEN, CPA SUSAN V. WELLENER, CPA

MELISSA D. HILL, CPA MICHAEL T. MCINTYRE, CPA CHARLES G. PALMER, CPA KAREN D. SEYMOUR, CPA SOUTHERN MARYLAND JENNIFER L. POPESCU, CPA OUT OF STATE BELEM BOUREIMA, CPA PAMELA J. BROWN, CPA LISA GAINSBORG, CPA JEFFREY A. ROGERS, CPA PHYLYP WAGNER, CPA HAROLD ZASSENHAUS, CPA

LINDSEY WELSH, CPA KA LUN WONG, CPA LEONARD J. YERMAL JR., CPA EASTERN SHORE

WELCOME, NEW CPA CANDIDATE MEMBERS! ANNE ARUNDEL COUNTY EMMANUEL Z. CHELLEH

RICHARD DISTAD NINOSHKA L. JUSTAMANTE NICOLE MILLER

CAPITAL AREA CHAPTER

ALVIN A. FINDLAY SHANELLE Y. HOPKINS ALIREZA MOTAMENI SERGE NTALU-MIAKUKILA

MARYLAND CHAPTER

DEVIN L. RHOAD

LIBAN M. JAMA

SOUTHERN MARYLAND

LOUIS G. HUTT III JAMES G. RING II

DEVIN T. WILLIAMS

OLUKOLE B. MALOMO

EASTERN SHORE

OUT-OF-STATE

KAREN M. BURD

ANGUEL A. NAKOV

DANIEL P. DALVANO

DANIEL A. RILEY

ANTHONY J. PELURA KEVIN S. POE RACHEL M. RILEY NATALIYA A. TODOROVA APRIL 2012

CENTRAL

MID-MARYLAND CHAPTER

nypn news // The MACPA’s New / Young Professionals Network can’t wait for the end of tax season. Everyone gets to take a deep breath, relax and enjoy themselves again, but for NYPN we have plenty of other reasons to be excited. May is going to be a busy month. We kick off May with the first-ever Town Hall designed specifically for NYPN. Join us on May 1 at Turf Valley Resort in Ellicott City for FREE CPE as Tom Hood delivers his professional issues update for young leaders in the profession. Following the Town Hall, NYPN will host a networking cocktail hour. NYPN is also helping to promote the 2012 MACPA Leadership Academy, scheduled for May

you’re invited // UPCOMING EVENTS NYPN/LEADERSHIP TOWN HALL & HAPPY HOUR When: Tuesday, May 1 CPE 1-4 p.m. Happy Hour to follow Where: Turf Valley Resort & Conference Center 2700 Turf Valley Road, Ellicott City 2012 MACPA LEADERSHIP ACADEMY When: May 7-9 Where: Crowne Plaza, Timonium Applications now being accepted until April 23rd NYPN VOLUNTEER DAY WITH JA BIZTOWN When: Tuesday, May 15 Where: JA Biztown, Owings Mills If interested, contact Julianne Part at Julianne@macpa.org or 443-632-2332.

7-9. Applications are currently being accepted to this nationally recognized and highly regarded program; go to www.macpa.com/nypn for more details and to apply. Looking for an opportunity to volunteer, give back to the community, and help elementary school students learn? NYPN members are teaming up for a day at Junior Achievements’ (JA) Biztown on Tuesday, May 15. Those interested in volunteering should contact Julianne Part at Julianne@macpa.org or visit www.macpa.org/NYPN for more details. NYPN is on Facebook, Twitter, and LinkedIn.

what is NYPN? // NYPN is an organization committed to connecting new / young professionals to the MACPA, protecting the integrity of the profession, and helping new CPAs and CPA candidates achieve their goals. NYPN is a place where new CPA professionals can make contacts in the profession, get involved in the community and get the support they need to be successful. The requirements to be a part of NYPN are CPA candidates (working on or having achieved the 150hour threshold) or current CPAs under the age of 40 and/or licensed for fewer than five years.

TOP 10 REASONS TO GET INVOLVED: 1. Camaraderie

6. Commitment

2. Insight

7. Charity

3. Professionalism

8. Community

4. Development

9. Responsibility

5. Growth 10. FUN!

get involved // Get to know our NYPN advisory board and find out first-hand what we’re all about: Chair: Diana Scatliffe, Reznick Group: Diana.Scatliffe@reznickgroup.com Vice chair / chair-elect: Jeff Klima, SC&H: jklima@scandh.com Secretary / treasurer: Eric Nigro, PricewaterhouseCoopers: eric.nigro@us.pwc.com Past chair: William Kinney, Deloitte & Touche LLP:wkinney@deloitte.com

LEADERSHIP BOARD Activities chair: Debra Hale, Stoy, Malone & Company: Dhale@stoycpa.com Public relations / outreach chair: Nick Hollander, L&H Business Consulting: nhollander@lhbusinessconsulting.com Professional development chair: Stephen Hohne, Hertzbach & Company: Stephen.Hohne@gmail.com At-large member: Jennie Hammett, Gorfine, Schiller & Gardyn: jhammett@gsg-cpa.com

CLASSIFIEDS mergers & acquisitions SALISBURY, MD ACCOUNTING PRACTICE FOR SALE

Well-established, quality practice with gross revenues of $420K. The client base is composed of 1,000 individual returns and 125 businesses, including tax, bookkeeping and some payroll. The revenues yield year round income and good cash flow to owner. For more information call 1-800-397-0249 or visit www.accountingpracticesales.com to see listing descriptions, inquire for details and register for free email updates.

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

WANT TO SUBMIT A CLASSIFIED AD? To submit a classified ad, please visit our Web site under advertising, www.macpa.org/content/20909. aspx, or contact Amy Moran at 443632-2319, amym@macpa.org.

CONFIDENTIAL ADS: Replies to confidential ads will be addressed to the file number in care of: Amy Moran MACPA 901 Dulaney Valley Road, Suite 710 Towson, MD 21204 Properly addressed replies will be forwarded to the advertiser unopened. Replies that are not properly addressed will be opened only to determine contents and then forwarded to the advertiser.

office space TOWSON: 2,087 SQUARE FEET OF SECOND FLOOR OFFICE SPACE AVAILABLE FOR LEASE at 660 Kenilworth Drive (directly across from Towson BMW). Landlord will build out to suit tenantâ&#x20AC;&#x2122;s needs. Lease rate includes full utility and janitorial service. Attractive two-story professional building with convenient and ample free parking. On-site ownership by progressive mid-sized CPA firm offering possible collaboration with the right firm. Excellent access to I-695, I-83, Timonium and downtown Baltimore. To discuss or see, call David Miller at 410-321-9558.

APRIL 2012

MARYLAND ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTS Dulaney Center II 901 Dulaney Valley Road, Suite 710 Towson, MD 21204 | www.macpa.org 410. 296.6250 | Fax: 410.296.8713