MACPA Statement // July 2013

MACPA’S

STATEMENT July 2013 | Maryland Association of Certified Public Accountants, Inc.

CPAs’ frustrations boil over after

TAX SEASON FROM HELL PAGE 28

“GIVE AND YOU SHALL RECEIVE”

New MACPA Chair Byron Patrick gets more than he gives from his volunteerism. He wants all members to feel that as well.

PAGE 6

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CONTENTS July 2013 | Maryland Association of Certified Public Accountants, Inc.

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

FEATURES

4

New MACPA Chair Byron Patrick: Give and you shall receive . . . . . . . . . . . . . . . . . . . . . 6 MACPA’s 2013-14 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 CPAs’ frustrations boil over after Tax Season from hell . . . . . . . . . . . . . . . . . . . . . . . . 28

DEPARTMENTS News & Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Business & Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 High Tech Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Tax Corner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Financial Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Member Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

MEMBER NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 NYPN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 CLASSIFIEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 ADMINISTRATION

PRODUCT DEVELOPMENT

Amy Stumme amy@macpa.org

Akesha Brown akesha@macpa.org

Becky Conley becky@macpa.org

Debbie Zizwarek debbie@macpa.org

TECHNOLOGY

TECHNICAL SERVICES

Doug Shaner doug@macpa.org

MaryBeth Halpern marybeth@macpa.org

COMMUNICATIONS

Cora Edwards cora@macpa.org

Amy Moran amym@macpa.org Bill Sheridan bill@macpa.org FINANCE Margaret DeRoose margaret@macpa.org Laura Swann, CPA lauras@macpa.org

PROFESSIONAL DEVELOPMENT Dee Sullivan dee@macpa.org Pamela C. Devine pam@macpa.org Chris Dougherty chrisd@macpa.org

Rebekah Brown rebekah@macpa.org Donna Lewis donna@macpa.org

DIRECTORS Samantha Bowling, CPA Lisa Cines, CPA

Ryan Wey ryan@macpa.org

Shane Grady, CPA

Amy Puente amyp@macpa.org

Michael Manspeaker, CPA

Paige Sawicki paige@macpa.org

Amy Myers, CPA

Kara King Bess, CPA Joselin R. Martin, CPA

Meredith Senio meredith@macpa.org

Robert Tarola, CPA

Laura Dorsey-Shaner laura@macpa.org

SENIOR STAFF

Andrew Hood andrew@macpa.org

2012-2013 BOARD OF DIRECTORS

See below to submit content Bill Sheridan MACPA Dulaney Center II 901 Dulaney Valley Road Suite 710 Towson, MD 21204 For content submission: bill@macpa.org 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

OFFICERS

MEMBER SERVICES

MaryBeth Drusano marybethd@macpa.org

Anoop N. Mehta, CPA, Chair

Julianne Part julianne@macpa.org

Jared Feinstein jared@macpa.org

Jacqueline E. G. Brown jackie@macpa.org

Byron K. Patrick, CPA.CITP, MCSE, Incoming Chair

Jeannie Richardson jeannie@macpa.org

Megan Gratz megan@macpa.org

DIRECTOR OF FINANCE AND ADMINISTRATION

Marianela del Pino-Rivera, CPA, Secretary/Treasurer

Ashlee Stem ashlee@macpa.org

Emily Trott emily@macpa.org

Skip Falatko, CPA skip@macpa.org

Allen P. DeLeon, CPA, PFS, Immediate Past Chair

JULY 2013

WE WANT TO HEAR FROM YOU!

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 Amy Moran, Advertising Sales

3

CHAIR’S COLUMN MEMBERSHIP MEANS MORE THAN PAYING DUES. IT’S ABOUT GETTING ACTIVE.

BY BYRON PATRICK, CPA.CITP, CGMA, MCSE CEO AND CO-FOUNDER, SIMPLIFIED INNOVATIONS

When does one become an MACPA member?

the 495 national businesses and groups

and tag their financial data in machine-

that are backing the Mobile Workforce

readable formats for easy analysis,

State Income Tax Simplification Act of

presentation and transparency. Testimony

That’s an interesting question, and one

2013, which will be a huge help to not

by MACPA members has helped move this

I’ve been asking myself a lot lately.

only CPAs but all businesses that send

legislation through Congress, and we will

employees to work across state lines.

support it again this year.

• TAX DUE-DATE REFORM BILL:

And that was less than a week’s worth of

The MACPA joined other state CPA

work. Now tie in all the important stuff

Most people would say paying their dues makes them members. They’d be wrong.

Paying your dues earns you membership in the association, sure. In my opinion, though, it doesn’t really make you a member. That doesn’t happen until you roll up your sleeves and get your hands dirty on behalf of the profession.

Only one in five MACPA members plays an active role in the association through volunteerism. Twenty percent. That’s it. And yet we accomplish some pretty amazing things in spite of that.

Case in point: our recent meetings with federal lawmakers as part of the AICPA Council’s spring meetings in Washington D.C. In just a few days’ time, MACPA members gave Congress a CPA’s perspective on some awfully important

societies in urging lawmakers to co-sponsor a plan to create a logical set of due dates focused on allowing a more timely flow of information from passthrough entities to their owners. It also would promote the early filing of more business and personal returns and relieve some of the workload compression surrounding the Sept. 15 business return deadline.

• OTHER TAX SIMPLIFICATIONS AND REFORMS: The complexity of our tax system leads to unbearable tax compliance costs for CPAs and taxpayers. Changes need to be made, and MACPA members have been instrumental in presenting the profession’s

issues, including:

side of this story to Congress.

• TAX SEASON FRUSTRATIONS:

• FINANCIAL LITERACY REGARDING

After one of the most onerous tax seasons in memory, the MACPA gathered feedback from members of its federal and state tax committees, its MACPA Tax Group and listserv, and nearly 1,000 town hall participants. Our goal was to compile suggested solutions to the problems that arose when “fiscal cliff” negotiations delayed the start of tax season. We presented those suggestions to lawmakers during our D.C. visits.

THE U.S. DEBT AND DEFICIT:

that volunteers do during CPA Day in Annapolis and via the MACPA’s varied committees and task forces. When you do that, one inescapable truth becomes clear: If we can do all of this with just 20 percent of our members helping out, imagine what we could do if the other 80 percent stepped up as well.

That’s my challenge to you: Raise your hand. Get involved. Be active. The profession you save might be your own.

You do more than serve the profession when you volunteer, though. You also serve yourself.

You learn invaluable leadership and innovation skills that will help you grow personally and professionally. Without getting too schmaltzy on you, let me just say this: Working with the MACPA has

MACPA members have joined a

changed my life. I want it to change yours

renowned AICPA initiative to explain the

as well.

U.S. financial situation in plain English to anyone who will listen. Our recent visit to

I’ll be chair of the MACPA’s Board of

Capitol Hill is just part of that initiative.

Directors for the next year, and I know

That’s what CPAs do, after all, isn’t it? We

we’ll do great things during that time, but

make sense of a changing and complex

we need you to help us get there. Help us

world.

out.

• SUPPORTING THE DATA ACT:

We’ll be a better association -- and you’ll be a better CPA -- as a result.

The Digital Accountability and • MOBILE WORKFORCE BILL:

Transparency Act would require all

The MACPA and the AICPA are among

recipients of federal money to standardize

4

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E-9002-0113 MD

“Give and you shall receive”

BY BILL SHERIDAN

New MACPA Chair Byron Patrick is proof that doing good is good for you. He wants all members to get greedy for the benefits of volunteerism.

THERE’S MORE TO BEING AN MACPA MEMBER THAN PAYING YOUR DUES. A LOT MORE.

Directors. He takes the helm on July 1.

“We did some really cool stuff that made

His volunteerism dates back to his first

you want to keep coming back,” he said.

job out of college. Shortly after joining Heim and Associates (now HeimLantz), he was accosted by his boss, Carter Heim, a former MACPA Board chair in his own

such a strong, influential and impactful organization is due to its volunteers,” said Patrick, CEO of Simplified Innovations in

wasn’t one individual – it was the MACPA. “I do this out of pure selfishness. I get

right.

so much more out of it than I could ever

“He grabbed me in the hallway and

have those same opportunities.”

said, ‘I want you to be involved in the MACPA,’” Patrick said. “I went to one meeting and was hooked.”

Since then, he has played a role in some pretty significant MACPA initiatives.

Just ask Byron Patrick.

“A large part of what makes the MACPA

“The MACPA became my mentor. It

He was an original member of the MACPA’s Under 35 Governance and Structure Task Force, which helped shape the very future of the association.

contribute. I give because I want others to

And those opportunities are almost endless, particularly when it comes to advances in technology.

“It’s the ultimate enabler,” he said. “We can share knowledge easier then ever.

There are innovative tools available that we have never seen before to service our companies and clients. And technology is shrinking the world. Things that were difficult to accomplish before are now available to CPAs on so many levels due

Cockeysville. “Despite our great success as a strong state association, most of

He was one of the first members of the

the faces I see are the same, over and

MACPA’s now influential New / Young

over. I feel very passionately that not only

Professionals Network.

would increasing member involvement

to technology.”

Those things include the cloud, the continuing push for a robust learning

strengthen the MACPA even more, it

management system that will help

would increase the value to all of our

He helped design the MACPA’s inaugural

members track their continuing education,

members. The more people who are

Leadership Academy, then started

and the newly launched MACPA Groups,

actively involved, the more knowledge,

moving up the ladder as a member of the

a collaboration and social networking tool

experience and ideas there are.”

association’s Board of Directors.

for MACPA members.

Patrick has lived that creed since he

Each step was a revelation, and he wants

Beyond that, Patrick hopes to cast a light

passed the CPA exam. He brings that

all members to experience what that feels

on other initiatives that, while not as high-

same enthusiasm to his newest position

like.

profile as shiny new tech offerings, offer

– chair of the MACPA’s 2013-14 Board of

6

equal bang for your membership buck.

STATEMENT

Byron Patrick, CPA.CITP, CGMA, MCSE New MACPA Chairman of the Board of Directors

They include the MACPA’s legislative

• Experience and knowledge that will help

“I’m pretty passionate about what the

agenda, women’s issues, diversity in the

them professionally and personally.

MACPA does and what CPAs do,” Patrick

profession, and the ever-present potential

• Mentorships.

said. “CPAs are bad-ass. It’s pretty

of XBRL and Big Data.

• Leadership training.

Mostly, he just wants members to realize

• Cutting-edge CPE.

what they’re getting when they write their

• Exposure and opportunities to

dues checks. Things like:

volunteers at the national level.

incredible to be one.”

Bill Sheridan is the MACPA’s chief communications officer.

• Relationships with brilliant CPA leaders.

JULY 2013

7

Because you are trusted.

YOU CL

IEN

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STATEMENT

NEWS & VIEWS MACPA’S 2013-14

BOARD OF DIRECTORS

The MACPA’s 2013-14 slate of officers and directors was voted into place at the association’s Annual Meeting, held May 17 in Baltimore. Here’s a closer look at this year’s Board of Directors.

OFFICERS

BYRON PATRICK

MARIANELA DEL PINO-RIVERA

MICHAEL MANSPEAKER

ANOOP MEHTA

CPA, CITP, MCSE Chair

CPA Vice chair

CPA Secretary / treasurer

CPA, CGMA Immediate Past Chair

Employer: Simplified Innovations Inc.

Employer: Sole practitioner

Employer: Smith Elliott Kearns & Company, LLC

Employer: Science Systems and Applications, Inc.

Title: Member, director of accounting, audit and quality control

Title: Vice president and chief financial officer

Notable: An MACPA member since 1984. Also a member of the Notable: An MACPA member AICPA. Winner of the MACPA’s 2005 Public Service Award. since 1999. A member of Founder of Learning Power, the MACPA’s Under 35 Inc., a 501(c)(3) corporation that Structure and Governance operated a tutoring center for Task Force in 2000. A disadvantaged youth in Bowie. founding member and past Named Woman of the Year in chair of the MACPA’s New / Young Professionals Network 2000 by the Bowie-Crofton chapter of the Business and (NYPN). Remains active as Professional Women’s Association. a NYPN advisor. Current Served as vice chair on the member of the MACPA’s Governor’s Commission on Technology Committee. Has Hispanic Affairs from January participated in a number of additional MACPA task forces, 2004 to January 2008. President committees and is a frequent of Bowie-Crofton Soroptimists Chapter and serves on the Finance presenter on technology Council of St. Camillus Church. topics. Previously a member of the AICPA’s IT Executive Committee and Practice Monitoring of the Future task force. Co-founded Simplified Innovations after five years as IT director at KAWG&F, where he helped the firm become the first to have virtual offices in Second Life.

Title: Co-founder / CEO

JULY 2013

Notable: An MACPA member since 1979. A former member of the Auditing Standards Board of the AICPA and several ASB task forces. Former chairman of the PKF North America Accounting and Auditing Committee.

Former member of the MACPA’s Accounting Reform and Standards Convergence Task Force. Current chairman of the MACPA Peer Review Committee. Current member of the MACPA Board of Directors. Active member of the Hagerstown Kiwanis Club and several other community organizations.

Notable: An MACPA member since 1992. Serves on the MACPA’s Board of Directors and on the Government Contractors Committee (chair from 2001-03).

Serves as President and member of the Board of Directors for the Maryland Space Business Roundtable. Also serves on the National Advisory Board of the Diversified Investment Advisors.

Chaired Maryland’s Governor’s Workforce Investment Board (GWIB) Aerospace Industry Implementation Leadership Team (2006-09). Graduate of Leadership Howard County, class of 2010.

A member of the AICPA, the National Contract Management Association and many other civic organizations. Has taught classes on various topics affecting government contractors. A seventh-degree black belt and master instructor in Tae Kwon Do.

CONTINUED ON PAGE 10

9

DIRECTORS

LISA CINES

MICHAEL DRANKIEWICZ

SHANE GRADY

CARL KAMPEL

CPA

CPA

CPA, CFP

CPA

Employer: Dixon Hughes Goodman

Employer: HPG Windows and Doors

Employer: Boal and Associates, CPAs

Employer: Ellin & Tucker, Chartered

Title: Managing partner, Rockville office

Title: Controller

Title: Principal

Notable: An MACPA member since 1985. A member of the MACPA’s Business and Industry Committee since 2004. A member of the MACPA’s State Budget Advisory Task Force, which examined Maryland’s budget and financial affairs. An active participant in the MACPA’s annual CPA Day in Annapolis.

Notable: An MACPA member since 1999. Experienced in accounting, financial planning, estate planning, taxation, technology and business consulting. A member of the AICPA, the Garrett County Chamber of Commerce, the Community Trust Foundation Board of Trustees. Chair of the Garrett County Chamber of Commerce Legislative Affairs Committee. Former member of the Maryland Chamber of Commerce Board of Directors and the Greater Oakland Business Association Board of Directors.

Has previously serviced the MACPA as a member of the Nominations Committee and the Western Maryland Chapter Executive Committee.

Title: Director of Professional Standards

Notable: An MACPA member since 1983. Before joining Dixon Hughes Goodman, served as managing officer, chairman of the board, and partner in charge of business and corporate development for a nationally ranked regional accounting firm. Her work has been recognized by several media and industry outlets, and in 2005, she was named one of the Washington Business Journal’s “25 Women Who Mean Business.” A member of the AICPA Board of Examiners, the Junior Achievement Board of Directors, the Montgomery County Chamber of Commerce Board of Directors, the University of Maryland Accounting Department Advisory Board, Rockville Economic Development Board, the Montgomery County Chamber of Commerce Foundation Board, and the AICPA Board Task Force on FASAB Rule 203 Review. A former member of the AICPA Board of Directors.

10

Notable: An MACPA member since 1998. Current member of the Emerging Issues Task Force of the Financial Accounting Standards Board. Former vice chair of the AICPA’s Accounting Standards Executive Committee (AcSEC) and former member of the Executive Committee of the AICPA Employee Benefit Plan Audit Quality Center, the Technical Issues Committee, and the Health Care Audit and Accounting Guide Overhaul Task Force. He is a board member and past president of the Baltimore chapter of Financial Executives International (FEI).

CONTINUED ON PAGE 12

STATEMENT

Baltimore Community Foundation Announces 2013 Inductees to the

PROFESSIONAL ADVISOR RECOGNITION SOCIETY

Robert G. Blue Royston, Mueller, McLean & Reid, LLP

Eddie C. Brown Brown Capital Management, Inc.

Sandra P. Gohn DLA Piper

Jeffrey K. Gonya Venable LLP

Martin P. Brunk McGladrey, LLP

Mr. Brunk and Ms. Sassin join the ranks of professional advisors who demonstrate a commitment to the community by working to encourage charitable giving across Baltimore. We thank them for their dedication to advancing philanthropy.

Charles B. Jones Thomas & Libowitz, PA

Frederick S. Koontz Whiteford, Taylor & Preston, LLP

Cristin C. Lambros Cristin C. Lambros, LLC

Natalie B. Sherman

Lynn B. Sassin

Gallagher Evelius & Jones LLP

DLA Piper

H. James Smith III RBC Wealth Management

Frederick Steinmann Attorney at Law

Shale D. Stiller DLA Piper

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Robert Louis Waldman Venable LLP

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DIRECTORS

JOSELIN MARTIN

AMY MYERS

GENE RANSOM III

SEAN RODDY

CPA, CGMA

CPA

Esq.

CPA, CMA, CGMA, MBA

Employer: Hayles and Howe, Inc.

Employer: University of Maryland Medical System

Employer: MedChi, The Maryland State Medical Society

Employer: Watkins Meegan

Title: Financial Manager

Title: Senior director of finance

Title: Chief executive officer

Notable: An MACPA member since 2000. Vice chair of the Institute of Certified Construction Industry Financial Professionals. First became an active MACPA volunteer with the Business and Industry Committee as a result of attending the MACPA’s Business and Industry Conference; now serves on the conference committee.

Attended her first CPA Day as an industry member in 2008. Former member of the MACPA’s Accounting Reform and Standards Convergence Task Force. Member of the Accounting and Reporting Committee of Construction Financial Management Association since 2006.

Notable: An MACPA member since 2005. Responsible for consolidated financial reporting and treasury operations (including cash, investment, and debt management) for UMMS, a multi-hospital, not-for-profit healthcare system. Formerly an auditor and a state / local tax analyst at KPMG LLP. A graduate of Loyola University of Maryland.

A member of the Healthcare Financial Management Association (HFMA) and a participant on the Membership, Sponsorship, and Community Service Committees of the Maryland Chapter of HFMA.

Notable: At-large member of the MACPA’s Board of Directors. As MedChi executive, implements MedChi’s mission as an advocate for physicians, patients, and the public health of Maryland.

Elected to the Queen Anne’s County Commission in November 2002. The only incumbent county commissioner re-elected in 2006. Has served in numerous leadership positions with the Commission, including president, vice President, and voting member. Also served the public as an elected member of the Democratic Central Committee (1996-2000), a member of the 2008 Electoral College, a former member of the Maryland Nursing Home Administrators Board, and through numerous local and state appointments to Boards and Commissions.

Notable: An MACPA member since 1995. Former member of the MACPA’s Business and Industry Committee and the Capital Area Chapter Executive Committee.

During his tenure as COO, Watkins Meegan has become the 60th largest CPA firm in the U.S. Prior to joining the firm, was CFO of a pre-IPO technology company that was the 16th fastest growing company in the U.S. Has served as chair of the Howard Technology Council Board of Directors, and as a member of the Boards of Directors of Junior Achievement of Greater Washington, D.C., and the Greater Bethesda Chevy Chase Chamber of Commerce.

Also has served as an Advisory Board member of greeNewIt, LLC in Columbia and Moonrider, Inc., in Ontario, Canada. An adjunct professor of finance with Johns Hopkins University from 2009-12.

Also a member of the AICPA and Financial Executives International.

12

Title: Chief operating officer

STATEMENT

NEWS & VIEWS NEWS & VIEWS Professional liability risks related to cloud computing EDITOR’S NOTE: THE FOLLOWING ARTICLE IS AVAILABLE FOR ACCESS AT WWW.CPAI.COM. COPYRIGHT 2012

1 2 3

CONTINENTAL CASUALTY COMPANY. ALL RIGHTS RESERVED. REPRINTED WITH PERMISSION. The concept of going paperless has been

equipment and lease their use to CPAs

1. Reduced cost / reduced capital

around for a long time, but CPA firms of

for a fee, which is generally based upon

expenditures: Using a cloud model

all sizes are increasingly adopting a more

the number of users accessing the

can help reduce or eliminate the need

virtual operating environment and taking

applications.

for in-house technology infrastructure.

advantages of the benefits allowed by

Accounting firms that fully utilize a cloud

Internet- (or “cloud-”) based computing

Accountants utilize various providers of

model no longer need computers with

service providers.

cloud-based applications to help them

large memories, external hard drives,

manage their practices and deliver

or servers to store all of their data.

While much has been written about the

services to their clients. Cloud computing

In addition, computer software and

benefits of cloud computing, CPA firms

services targeted to CPA firms include

hardware maintenance, administration,

should be aware of the hidden risks of

those related to practice management /

and upgrades can be performed by the

allowing a third-party vendor to manage

internal administration such as document

cloud vendor rather than an in-house

and maintain the firm’s and their clients’

management, workflow, or customer

IT department. To deploy cloud-based

data, and the associated professional

relationship management; service

services, firms only need a robust Internet

liability implications.

delivery such as tax return preparation,

connection and a browser.

bookkeeping, payroll, billing and invoice This article provides an overview of

management, and financial statement

2. Scalability / flexibility: Another benefit

cloud computing, highlights the common

preparation; and information sharing via

of cloud computing is that CPA firms

benefits of utilizing cloud computing

Internet-based portals, which offer an

pay only for their actual service usage.

services, provides sample practice aids,

alternative to e-mail for communicating

Cloud services are generally billed on a

and raises awareness of the professional

and collaborating with clients and provide

subscription basis based on the number

responsibilities and liability implications

real-time access to client accounting

of users. If needs change based on

CPAs must consider.

records.

fluctuations in personnel, users can be easily added or deleted. In addition, the

OVERVIEW OF CLOUD COMPUTING Cloud computing is a model for on-demand network access to a shared pool of configurable computing resources.1 Essentially, this technologydriven model allows a user to store, access, and edit data in a remote and virtual environment rather than via a physical information technology (IT) server

A comprehensive overview of cloud

firm has access to additional data storage

computing, including differing service

when needed during peak periods and

models and practical considerations in

does not pay for unused storage during

employing such service models can be

non-peak periods.

found in Cloud Computing Synopsis and Recommendations, Special Publication

3. Accessibility of data: One of the

800-146, issued by the National Institute

greatest benefits for CPA firms with

of Standards and Technology (NIST), U.S.

a highly mobile work force is the

Department of Commerce.

accessibility of data. Data stored in the cloud is accessible from any computer,

located in the firm’s office.

BENEFITS OF CLOUD COMPUTING

Cloud computing offers centralized access

There are numerous benefits of utilizing

to shared software applications and other

cloud computing services to help CPAs

computing resources that are managed

deliver services to clients and share

by third-party vendors. The vendors own

information.

the programs, applications, and computer

JULY 2013

tablet, or other device with access to the Internet and eliminates the need to create multiple versions of the same document on different devices. If a document is stored in the cloud, it can be updated from any device with access to the Internet. Additionally, data stored in the

CONTINUED ON PAGE 16

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STATEMENT

cloud is readily available in the event of

Cloud computing involves the uploading

third-party service providers to its clients,

a natural disaster or other catastrophe at

of client data to the Internet outside of

preferably in writing, before disclosing

the CPA’s physical location as the data is

the control of the CPA firm, an inherently

confidential information to the third party

not stored on the CPA’s servers.

perilous environment if not safeguarded

(see Ethics Ruling No. 112 of ET §191 and

4. Sharing / collaboration: The most

appropriately. ET section (§) 301 of the

Ethics Ruling No. 1 of ET §391).

4

compelling feature of utilizing cloud services is the ability to share and collaborate remotely. Cloud-based portals provide a convenient method for CPAs and clients to share information in a secure environment and facilitate the exchange of files that are too large for e-mail. Cloud computing also helps CPA firms, especially those with multiple offices, balance workloads and resources during busier times by removing the geographical barriers associated with the location of resources and clients.

PROFESSIONAL LIABILITY IMPLICATIONS While cloud computing offers a number of compelling benefits associated with CPA firm practice management and service delivery, one critical risk with both legal and ethical implications arises – protecting the privacy and security of confidential client information.

The risks of unauthorized disclosure of sensitive client and firm data by cloud vendors can be significant. Recent, high-profile data breaches at companies such as Expedia Inc.’s Trip Advisor, e-mail marketing provider Epsilon Data Management LLC, Sony Corporation of America’s online entertainment services,

AICPA Code of Professional Conduct states that a CPA shall not disclose any

The obligations noted in IRC §7216 differ

confidential client information without the

slightly from the Code of Professional

specific consent of the client.

Conduct. IRC §7216 provides an exemption from the law for tax return

In addition, Internal Revenue Code (IRC)

preparers who disclose taxpayer

§7216 prohibits anyone involved in the

information to a third party for the

preparation of U.S. income tax returns

purpose of having that third party process

from knowingly or recklessly disclosing or

the return.

using the tax-related information provided other than in connection with the

However, members should make third-

preparation of such returns. Practitioners

party providers to which they have

who violate this provision may be subject

supplied protected client information

to fines or imprisonment.

aware of the requirements of IRC §7216.

While there is no requirement in §7216

Consequently, CPAs must fully understand

or its regulations for a member to inform

the professional obligations related to

the client that a third-party provider is

information privacy and security, as well as being used to process the return, best the risks associated with leveraging cloud

practice and the sections of the Code

computing technology before venturing

of Professional Conduct noted above

into this area.

indicate notification should be made.

PROFESSIONAL RESPONSIBILITIES AND RISK CONTROL CONSIDERATIONS

Laws and regulations: CPAs must

Professional obligations:2 While ET

requirements. Currently, 46 states, the

§301 and IRC §7216 are not intended to prohibit a CPA from utilizing third-party cloud computing service providers to deliver professional services to clients, the Code of Professional Conduct identifies relevant obligations of the CPA:

Google, and Apple’s iCloud call into question how secure information is within

• The CPA should enter into a written

a cloud-computing infrastructure. While

agreement with the third party regarding

there has not yet been a high-profile

the maintenance of confidentiality of

data breach within the professional

client information (see Ethics Ruling No. 1

services industry, client data utilized by

of ET §391).

professional services firms presents an

• The CPA should take steps to

attractive option for hackers. Therefore,

reasonably assure him / herself that the

professional services firms that utilize this

third party has appropriate procedures

technology should not be complacent

in place to maintain confidentiality (see

about the exposure.

Ethics Ruling No. 1 of ET §391).

• The CPA should disclose the use of

JULY 2013

comply with relevant state privacy laws and related breach notification District of Columbia, and Puerto Rico have breach notification statutes applying to disclosures of sensitive information and impose data security requirements on entities operating in the state or who hold data about state residents. If data stored by a cloud vendor is compromised, under state privacy and security laws, the cloud vendor is responsible only for notification to the data owner (the CPA firm), not to the CPA’s individual clients. Once the CPA becomes aware of a potential privacy breach, he / she is ultimately responsible for responding to the breach on behalf of their clients, as well as compliance with state breach notification statutes.

In addition, CPA firms that provide services to health care providers or health

15

care plans are subject to the privacy and

service provider’s use of encryption and

CPA to do? There are several practical

security rules contained in the Health

encryption keys that comply with the

actions CPAs can take to help ensure

Insurance Portability and Accountability

HIPAA Security Rule.3 If private, non-

compliance with professional standards

Act of 1996 (HIPAA) and the Health

encrypted protected health information is

and laws, and to help safeguard client

Information Technology for Economic

breached, CPA firms may be held liable

information.

and Clinical Health (HITECH). Firms with

for the breach.4

access to protected health information,

Costs of compliance with state statutes

such as patient billing records, are business associates as defined in HIPAA, and, based on the passage of HITECH, are subject to the same privacy and privacy breach notification requirements as their health care clients. Consequently, CPA firms are subject to potential civil and criminal penalties and prosecution for violation of the federal health care privacy laws.

to respond to a data breach can be significant. Costs can include notification to clients, the provision of credit monitoring services for a period of time, and more. Insurance coverage for data breaches varies and may involve a practitioner’s professional liability or another specialized policy. Such coverage is typically not provided in a general liability policy. Practitioners should confer

By extension, CPA firms that utilize third-party service providers to store protected health information may be held responsible for the violations of their thirdparty service providers. To help mitigate this risk, CPA firms should confirm the

1

1. Conduct due diligence before selecting a vendor: CPAs should investigate vendors thoroughly before making a selection.

Information should be obtained related to the financial stability of the vendor, the processes and controls the vendor utilizes to protect data, and how and where data will be stored and backed up. The CPA should review these competencies prior to entering into any contract with the vendor.

with their professional liability insurance

The location of data storage is also

agent or broker regarding the application

important. For example, if the vendor’s

of insurance coverage to data breaches.

data storage resides outside the U.S.,

Additional coverage may be necessary to

the CPA may be subject to liability in

fill any gaps.

the country in which the data is stored.

In addition, the ability to produce data

Risk control considerations: So what’s a

CONTINUED ON PAGE 18

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16

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2

in a timely manner may be affected, and

2. Put it in writing: Key commercial terms

data security controls and questions about

the laws of the relevant country may not

with the vendor should be agreed to in

the use of client data in the cloud.

provide adequate protection.

writing via a service level agreement or other contract that outlines the terms,

The use of strong encryption

services provided by the vendor, metrics

technology is essential to protecting the

by which that service is measured,

confidentiality of data stored with a cloud

and remedies or penalties, if any, if

vendor. CPAs should understand what

the agreed-upon service terms are not

encryption technology is used by the

achieved.

cloud vendor.

While vendor terms are not always Service Organization Control (SOC)

negotiable, vendors will sometimes

reports issued under the guidance of

entertain reasonable negotiations.

Statement on Standards for Attestation

The CPA should not blindly accept the

Engagements No. 16 provide information

vendor’s terms and conditions without

on internal controls at a service

reviewing them in detail to verify the

organization. CPAs should obtain and

inclusion of key contract terms in the

review the SOC report for the prospective

service level agreement. A competent

cloud vendor as it provides valuable

attorney should be retained to assist

information that CPAs may utilize to

with this review. If the agreement does

assess and address the risks associated

not provide the CPA and its clients with

with an outsourced services.

the necessary protections for privacy and security, other available vendors

Diligence procedures performed, results

or technology resources should be

obtained and the CPA’s evaluation

pursued. CPAs should not engage any

of the vendor should be thoroughly

vendor whose terms would be viewed

documented. Initial and subsequent

as “unreasonable” or who attempt

periodic evaluations to confirm the

to disclaim liability for its own errors,

initial assessment are recommended.

omissions, or neglect.

Documenting investigations undertaken

3

helps demonstrate compliance with the

3. Tell your client: CPAs should inform

Code of Professional Conduct and helps

clients of its use of cloud service providers

protect the CPA if questions arise.

and obtain written consent from the client before providing client files and

The AICPA Code of Professional Conduct

documents to the provider. A separate

states that a CPA should take steps to

agreement between the CPA and the

reasonably assure him / herself that the

client specifically related to the use

third party has appropriate procedures

of portals or the inclusion of specific

in place to maintain confidentiality.

language in the engagement letter are

However, there is no clear definition

ideal ways of obtaining client consent.

or determination of what is considered

While professional standards do not

reasonable. The CPA should utilize

require CPAs to obtain written consent

professional judgment and exercise due

from the client, this is a recommended

diligence. The greater the sensitivity

practice.

of client information, degree of data

To help avoid misunderstandings with

complexity, volume of data, or reliance on

clients, the CPA should be responsive

the cloud vendor, the more thorough the

to client inquiries regarding the vendor’s

CONCLUSION While cloud computing can be attractive for many reasons, CPAs should not access this functionality to simply adopt the latest technology. The benefits of cloud computing should be weighed against the needs of the practice and the ability of the CPA to control the associated professional liability risk. If the CPA would benefit from the advantages offered, then appropriate steps must be taken to ensure that the CPA fulfills its legal, ethical and business obligations to its clients.

FOOTNOTES 1. See The NIST Definition of Cloud Computing, Special Publication 800-145, issued by the National Institute of Standards and Technology, U.S. Department of Commerce for additional information on cloud computing characteristics.

2. See also Ethics Ruling No. 12 of ET §291 regarding the CPA’s professional responsibilities when utilizing a third-party service providers to assist the CPA in providing professional services to clients.

3. See An Introductory Resource Guide for Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule, NIST Special Publication 800-66 Revision 1, issued by the National Institute of Standards and Technology, U.S. Department of Commerce.

4. or additional information related to the requirements of business associates under HIPPA/HITECH, see The Health Information Technology for Economic and Clinical Health Act and Business Associates, by Laurie Cohen and Christine Hayes at www.cpai.com.

5. Federal Information Processing Standard Publication 140-2, Security Requirements for Cryptographic Modules, published by NIST, establishes a security accreditation program for encryption. Its use is mandatory for U.S. government departments that handle unclassified data and is accepted as a best practice within the technology industry.

CPA’s diligence efforts should be.

JULY 2013

19

BUSINESS & INDUSTRY CGMA at work: Employer voices B Y B A R RY PAY N E Since the AICPA launched the Chartered

needs that can help us better serve CPA,

the CGMA presented a new incentive to

Global Management Accountant

CGMAs. I have found the interaction

pursue the CPA over other degrees and

designation early last year, our goal has

rewarding and thought provoking.

credentials, especially as he pursues his

been to elevate management accounting.

career in management accounting.

Take, for example, the case of American

To me, that means raising the profile and

Express. AMEX has a significant finance

• Senior-level finance professionals who

value of management accountants in the

organization, including many CPAs.

were not CPAs visited our booth as well

eyes of their current and future employers.

Additionally, AMEX employs several

and asked us how the CGMA designation

By recognizing and highlighting the

CIMA-qualified CGMAs. In March, we

might apply to them or their teams. We

strategic contributions that CPAs working

were invited to participate in two AMEX

explained how the CGMA designation

in business and industry make every day,

career development expos, one in

signals expertise and provides resources

we can make their value known – and

Phoenix, one in New York. Specifically

to keep designation holders at the top

understood – in the marketplace.

for AMEX’s employees in finance roles,

of their profession. As hiring managers,

the events were designed to provide

they saw the benefit of the designation in

That’s why we are reaching out to

attendees with useful information to

helping them identify capable candidates.

some of the leading global employers

encourage them to pursue learning and

As mentors and leaders, they saw the

of finance professionals and talking to

development opportunities. We set up

CGMA designation as a potential career

them about the CGMA designation.

a booth stacked with CGMA reports and

enhancement for their existing staff.

Over the past three years, I have been

information packets, and over the course

working with a number of Fortune 100

of the two days, spoke with hundreds of

We continue to work with organizations

companies in both my former role as

employees and hiring managers at various

like American Express and as our

director of global corporate relations for

stages of their careers.

relationships deepen, we expect more

the Chartered Institute of Management Accountants (CIMA), and more recently

opportunities to connect with finance I’d like to share some of their feedback:

as director for business development for

professionals and leaders. But we’re just getting started. The CGMA designation is

the AICPA. I’ve spent much of this time

• The CGMA Innovation Agenda materials

new to the market and we’re in the early

learning what leaders of finance teams

resonated, especially the Fast Track to

stages of adoption among companies

and departments around the world need

Leadership report (http://cpa.tc/2n6),

and organizations both here in the US

to drive success. Now I speak with those

which appeals to finance professionals as

and abroad. Organizations like American

same leaders and their U.S. counterparts

they develop their careers.

Express, with CPA, CGMAs and FCMA,

about the CGMA designation, how it can

CGMAs in key strategic roles, are

help them develop their finance teams,

• While several CPA CGMAs stopped

leading the way. Our task is to help them

and how CGMA designation holders are

by, CPAs who hadn’t heard of CGMA

along their journey and drive broader

well-positioned to be strategic advisors to

were interested in learning more. They

acceptance of the designation.

organizational leadership.

appreciated the fact that the CGMA designation recognizes their expertise and

Barry Payne is director for business

Our message seems to resonate.

were encouraged that we were engaging

development for the AICPA.

Employers understand the key role that

their employer.

management accountants play, or should play, in guiding critical decisions and

• Younger employees at the start of their

driving business performance. They also

careers were interested in CGMA and

have shared some insights into their

understood that they’d need to get their CPA first. One employee pointed out that

20

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21

Attention CPAs:

Whether A Decision Maker Looking To Upgrade Your Talent, Or A CPA Looking to Upgrade Yourself/Your Skills, Ask Yourself: Who really chose who in joining your company?

Are you/your professional staff really at the right level where you should be/you need them to be?

Are you/your staff in a position that truly suits your/their personality, values, and professional and personal needs?

Why leave your future to chance?

If you’re seriously interested in making the “right” move for your next hire, I can help you.

I am an actively licensed CPA in Maryland and Virginia with over 20 years of experience including public accounting (E&Y) and consulting (KPMG), financial accounting (American Cancer Society), internal audit (Moneyline Telerate), and recruiting (Acsys, formerly Don Richards). As a networker who truly enjoys helping others and sharing my career experiences to guide fellow professionals, here is how I can help you: Decision Makers:  Ask you questions, and most likely ask many more questions than other recruiters about your company, duties involved, skills required, corporate culture and more  Work with you on finding the “right” professional that is the “right fit”  Provide you with valuable information about the professionals I work with, the marketplace, what your competitors pay, and more Career Seekers:  Guide you on career paths available in public accounting and industry  Enable you to capitalize on your strengths  Coach you on how to put your best foot forward to find the “right fit”  Advise you when to stay in your current position if that is the right move If you’re interested in working with a recruiter who understands your background, skills, and is genuinely interested in helping you find the “right fit”, then I welcome meeting you!

BETH A. BERK, CPA, CGMA

Independent Recruiter

Phone: 301-767-0670 Email: BethABerk@msn.com

Specializing in CPA Firm, Accounting & Finance Positions in Metropolitan DC & Nearby Suburbs/Baltimore/Richmond/Tidewater

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BUSINESS & INDUSTRY Protecting innovation and staying competitive in a new patent landscape B Y K R I S TI N M AZ A N Y N E V IN S, E SQ. In the past year, new patent laws have

instances, the post-grant review process

In a post-AIA world, where the first

drastically changed the U.S. patent

can be utilized as a cost-effective

person to file gets the rights to patent,

system. Understanding these changes and

alternative to patent litigation.

interactions with third parties should

how they affect your business is crucial for staying competitive.

be closely evaluated, and confidential The alignment of business interests with

information should be carefully guarded. If

procedures promoting innovation will

possible, inventions should be protected

The changes to the patent system provide

require the retooling of business practices

before they are disclosed. Provisional

an ideal opportunity for re-evaluating

that support a business’s IP culture.

patent applications can be a cost-effective

business practices around identifying,

Discussed below are some best business

way to protect an invention and obtain a

cultivating, and protecting vital intellectual

practices to help align a company’s IP

“holding place” with the Patent Office,

property (IP) and updating or establishing

strategy in a post-AIA world.

without incurring the full expense of a non-provisional patent application.

new procedures where necessary. Under the new patent system, proactive, agile companies will have a competitive advantage in the evolving IP landscape.

The new patent law, known as the America Invents Act (AIA), was enacted in September 2011 and brings sweeping changes ranging from how a patent is obtained (pre-grant changes) to how patents can be evaluated and challenged after issue (post-grant changes).

The most significant changes took effect on March 16, 2013, when the longstanding “first-to-invent” system, the cornerstone of the U.S. patent system, was replaced by a “first-inventor-tofile” system. The new system brings U.S. patent practice in line with the rest of the world, an essential update in an increasingly global marketplace.

The AIA also establishes new procedures for challenging issued patents via postgrant review proceedings, affording opportunities for third parties to challenge patents and for patent owners to strengthen their portfolios. In some

JULY 2013

PRE-GRANT BEST BUSINESS PRACTICES The first-inventor-to-file patent system essentially establishes (with rare exceptions) a race to the patent office.

Companies owe it to themselves – and to the investors or shareholders supporting them – to proactively formulate a strategy for protecting the company’s inventions.

Mechanisms need to be in place to identify and document inventions, and a patent attorney should be enlisted early on to help navigate the patent process.

For example, employees should be well educated on the concept of invention

Potential risks arise, however, if your company is involved in joint development with third parties. It is important to know when a provisional application will help secure rights, or when it may be the precursor of a potential fight over joint rights. Partnering with IP counsel allows you to save time and money by guiding your business toward intelligent choices designed to protect your valuable IP and reduce the risk of third-party conflict over IP rights.

POST-GRANT BEST BUSINESS PRACTICES

and how to record inventions. If your

The AIA affords companies new

company is actively engaged in research

mechanisms for challenging issued

and development, allocate resources to

patents. Even if your company is not

review R&D progress more frequently.

actively involved in establishing a patent

Moreover, internal personnel should be

portfolio, others in your space are

tasked with monitoring developments so

likely invested as such. To this end, it is

that any inventions are identified at the

prudent to monitor the patent landscape

earliest stage of the product development

for any patents that issue in a closely

cycle, and especially before disclosures

related technology to address possible

are made to third parties.

infringement issues. Should a closely related patent issue be a key product or process of your business, post-grant

CONTINUED ON PAGE 24

23

review may help prevent a costly patent

percent discount on most fees under

infringement lawsuit.

small-entity status. Post-AIA, start-up companies will benefit from a newly

It is difficult to estimate the cost of post-

created category, the “micro-entity,�

grant review proceedings. However, they

which qualifies for a 75 percent discount

will certainly cost less than the several

on patent fees.

Kristen M. Nevins, Esq., is a registered patent attorney who focuses her practice on patent prosecution, enforcement, agreements, and due diligence surrounding patent business transactions as well as other intellectual property (IP) work, including trademark matters.

Contact her at knevins@offitkurman.com.

million dollars of the average infringement lawsuit. From a business standpoint, this

The AIA seeks to modernize the U.S.

may entail assigning individuals within

patent system and ultimately spur

your organization to routinely assess

innovation. With this in mind, it is

the actions of competitors, as well as

important to make IP a vital component

partnering with IP counsel to monitor the

of your overall business strategy for 2013,

patent applications and issued patents of

possibly necessitating adjustments to

your competitors.

budgets, reallocation of resources, and an overall increase in investment around

Also, make every effort to know your

IP. Within a company it is important to

entity. The United States Patent and

identify any obstacles, whether monetary

Trademark Office establishes fees based

or structural, to executing a cohesive,

on the size of the entity. Large entities

cost-effective IP strategy. Because a single

(those having more than 500 employees)

idea can make all the difference to a

pay the highest fees, but companies with

company, IP should be a key part of the

fewer than 500 employees receive a 50

bottom line.

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HIGH-TECH SOLUTIONS Why network monitoring is a must for every computer network B Y K I E L W. M OORE Everyone knows the phrase, “If it ain’t

appropriate people as needed and on

and help to accommodate for support

broke, don’t fix it.” When it comes

time.

response times.

to your computer network, there

Proactive monitoring offers three major

couldn’t be worse advice. Proactive network monitoring is simply a must for maintaining a healthy computer network.

If you want a reliable IT infrastructure, it’s wise to be aware of small problems before they develop into major obstacles.

One of the best ways to accomplish this is through network alerts that are automatically sent to you or your IT staff by a proactive network monitoring system.

Network monitoring systems alert your IT staff to issues such as hard drive failures, running out of server space, and toohigh operating temperatures. When left untouched, these issues can wreak havoc

benefits.

3. Save costs It is always more cost effective to prevent

1. Reduce risk of network failure

a disaster before it happens, rather than

Perhaps one of the greatest mistakes

dealing with the aftermath.

made by small business owners is ignoring their IT infrastructure until it fails.

When systems are down, business

There are usually multiple warnings

and reliability are affected, and most

or indicators that take place prior to a system failure. Network monitoring can detect and relay these warnings to people who can take the appropriate actions to

operations grind to a halt, your reputation importantly, you are losing money.

Recovering from a system failure can often take more than a day, and brings with it

prevent a major problem.

the costs of IT personnel, overnight parts

Many servers have systems designed

of proactive monitoring is a fraction of the

to accommodate a single failure for

shipping, and leased equipment. The cost cost of recovering from a disaster.

on your network.

hard drives, power, etc. However, if the

BENEFITS OF PROACTIVE MONITORING

complete system failure can result.

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Most businesses don’t have a dedicated IT person to monitor their network. Even the ones that do can still benefit from a network monitoring system.

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26

problem is never addressed or realized, a

Proactive monitoring systems are

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automated and monitor systems every minute of every day. If there is an issue that occurs outside of normal business hours, proactive monitoring systems can send you a notification about the issue before arriving at the office the next day.

Since many businesses have employees accessing their systems around the clock, being alerted to an issue as soon as it happens can save time and money,

STATEMENT

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TAX CORNER MA C PA j oins profession’s c a ll f o r refo r ms , s t a nd a rd iza ti o n B Y B I L L S H E R IDA N

CPAs’ frustrations boil over after

TAX SEASON FROM HELL

Busy Season earned a new moniker this year.

Call it “the Tax Season from hell.”

“Practitioners have told me that they’re getting out of the business because of how bad it was,” MACPA Executive Director Tom Hood said. “It’s definitely the worst I’ve seen. In every town hall meeting we hold, everyone says it’s been the worst they’ve ever experienced.”

Hood isn’t the only CPA leader who’s heard that type of feedback. Speaking at the Oregon Society of CPAs’ Strategic Leadership Forum in April, AICPA President and

“The late start to filing returns ... was

The end results: Massive headaches and

the most frustrating part,” said Jerry

stress for tax preparers, who were left to

Beard, a supervisor with Ellin & Tucker,

deal with a significantly compressed tax

Chartered, and a member of the MACPA’s

season; and greater numbers of clients

State Taxation and Federal Taxation

having to get extensions – “and most of

committees.

them don’t like it,” said sole practitioner Marianela del Pino-Rivera.

That late start was only the beginning.

The concerns of CPAs went further than • Multiple revisions of Form 1099 created

that.

bottlenecks on the practitioners’ end.

The initial forms went out by Feb. 15, but

“Every state seems to have different rules

the revisions weren’t received until early

and layouts for calculating tax; calculating

April, which meant clients provided CPAs

depreciation; allowing all, some or none

with their tax information later. “Folks

of the Domestic Production Deduction;

who used to have all of their information

imposing sales tax; adding use tax; and

to us in mid-February now don’t get

other additions and subtractions for their forms,” Beard

CEO Barry Melancon said that based on what he has heard, there’s a “90 percent chance” CPAs just completed the worst tax season of their lives.

That frustration started on Jan. 1, when federal lawmakers

“We really do hope we can get Congress and the president to understand that the inability to reach consensus has far-reaching and unintended impacts on CPAs and the taxpayer community at large,” said Hood. “We’ve got to get them to pay attention.”

/ or extended provisions surrounding individual income tax rates, payroll taxes, dividends and capital gains, estate taxes, personal and business tax credits, and a slew of other issues that directly impacted the work that tax practitioners do.

That work couldn’t start until the IRS

regarding federal taxes and state differences aren’t becoming any less complicated.”

“It wasn’t too long ago that I could answer questions on the radio and spout off the particular tax form to be

passed “fiscal cliff” legislation that introduced and

said. “The rules

used. Now I have it to us until mid-March,” said Jeffrey

to look up almost everything before I

Lawson, a shareholder with Stoy, Malone

answer even a fairly simple tax question

& Company.

about depreciation,” added Carol Katz, deputy tax director at Leonard J. Miller

• Publicly traded partnership investments

& Associates. “The rules on almost every

continued to grow in complexity,

aspect of individual taxation seem to have

especially for state issues, and brought

changed every year with phase-ins and

delays in the release of some Schedule

phase-outs and extensions. That makes it

K-1 forms.

extremely difficult, if not

updated its forms to include the new provisions. The filing season for 1040

• New provisions mean that tax forms

returns didn’t start until Jan. 30, returns

in general have become more complex,

claiming education credits weren’t

which means they take longer to

accepted until mid-February, and it wasn’t

complete.

until March 4 that the IRS announced it

• Identity theft is on the rise, leading to

was accepting all individual and business tax returns.

JULY 2013

further complexities in dealing with the IRS.

29

impossible, for an average person to

• The association has used Google

No one is particularly optimistic that any

prepare their own return. And, of course,

Documents to crowdsource a letter

of that will get done.

the identity theft issue of having one’s

among MACPA members that will be used

tax return “stolen” with fake information

to testify before the House Ways and

“Congress needs to get its act together,”

filed has impacted many taxpayers and

Means Committee.

said Katz. “Am I optimistic? No. I believe

complicated their “lives.”

• Members of the MACPA’s online tax

everything is still too partisan and

CPAs say the solutions to these problems all point in one direction – to Washington D.C. The AICPA has testified before Congress on numerous occasions this year on the need for tax reform and fraud prevention, and the MACPA has joined that effort in a number of unique ways: • Hood and other MACPA officials have been in contact with the AICPA’s Tax Division and advocated for Maryland CPAs’ concerns issues.

community have written letters describing their frustrations. MACPA officials plan to schedule a meeting with Maryland’s

Congress is too concerned with its own members’ re-election needs to focus on the needs of the country.”

lawmakers in Washington to deliver those letters and discuss CPAs’ frustrations.

Still, said Hood, that doesn’t mean we shouldn’t try.

The goals, say CPAs, are fairly straightforward: Standardized forms,

“We really do hope we can get Congress

standardized information across state

and the president to understand that

lines, fewer last-minute revisions, and

the inability to reach consensus has far-

a commitment to have any tax-related

reaching and unintended impacts on CPAs

legislation finalized by Oct. 31. That will

and the taxpayer community at large,”

give the IRS time to revise its forms and

said Hood. “We’ve got to get them to

CPAs time to work with clients so that tax

pay attention.”

season can start smoothly and on time.

The CPA profession is built on ethics. It’s ethics that provide a CPA’s clout and professional purpose.

MACPA.ORG/ETHICS

What you need to know: Maryland CPAs are required to take 4 hours of ethics as part of the minimum 80 hours to qualify for license renewal. This is the only subject requirement for CPE. No carryover is allowed. The ethics CPE requirement does not apply to inactive licenses. The requirement for new licensees begins in the first two-year license term after initial renewal.

FINANCIAL PLANNING Budgets: They’re a lot like diets B Y M E L I SSA K HA M M E L, CFP, LP C/MHS P LOSING WEIGHT AND SAVING MORE MONEY OFTEN RANK HIGH ON PEOPLE’S LIST OF NEW YEAR’S RESOLUTIONS – AND LIKE SO MANY RESOLUTIONS, THEY OFTEN ARE SOON BROKEN. Why is that? Why do so many folks struggle with changes in their eating / exercise habits and spending / saving behaviors?

My hunch is that these issues are surface issues and many times are masking an underlying problem.

I speak from my own experience – in both

long term. They are not sustainable.

noticing. Do not judge whether this is Folks have to live life while they are

good or bad, just that you notice.

working on their debts and paying them off. They have to live life while they

Finding a quick fix usually does not

are saving toward retirement and enjoy

address the underlying issue. Developing

some of the fruits of their labor. Based

an overly strict budget will not “fix” a

on information I have gathered from the

person’s spending behavior – it is only a

12-step program “Debtors Anonymous,”

guide. The real issue is an underlying one,

folks must pay off their debts slowly

not readily visible to the average person.

and have money in their saving plan for vacations and daily enjoyments. Why? It

In therapy, one of the things we generally

helps keep people committed because

uncover around compulsive spending is

it is livable, doable, and long-term. And

that the person is seeking to cope with

with savings and budgeting, we are

feelings that stem from an unresolved

seeking to help our clients develop long-

trauma. For example, if a person

term, sustainable behaviors.

experienced an unstable home life as a

areas. I will focus on the spending/saving behaviors as it will probably be more

** A key way to phrase this is just

child, he or she may grow up seeking Now, as advisors, just how do you

escape from difficult feelings in shopping

help clients with this issue? One of our

or spending. On the other extreme, we

first tasks is to know our clients. Take

may see folks who seek to find comfort

Many years ago, after going through a

some time to gather information on the

in amassing large amounts of money and

divorce, I had borrowed some money

activities and interests of your client.

rarely spending anything. (It is rare to see

from my father. I was young and needed

Then, in working with the client on

those folks in a financial planning office,

some help to get started on my own. My

establishing a budget, review where those

though. They do not want to spend the

father loaned me the money with one

activities and interests are accounted for

money.)

condition – that I create a budget to

in the budget. If they are missing, talk

show how I would pay him back. So I did.

about what you notice. Here are some

Your role is not necessarily to solve the

key phrases that may help you gain better

underlying issue. Most of us are not

I did not like owing him money. I did not

understanding and more information from

equipped in our training to handle those

like owing anyone money. So I put in a

your client:

types of issues. Your role is to know that

helpful for readers and their clients.

very aggressive rate of payback so I could

underlying issues tend to fuel spending

pay him back very quickly. He rejected my

• Tell what you believe is the most

patterns and behavior with money. As you

initial stab at my payback plan. He gently

important part of this budget to you.

begin to recognize some of these patterns

• Describe the way this spending plan /

in clients, you may assist your client in

and clearly explained to me that it would not work. He pointed out that I was so focused on getting him paid back quickly

budget helps you achieve this goal.

developing their own awareness as to why they may spend as they do. Ultimately, it

that I had left out key components that

• I would like to hear about your interests

would make my plan succeed. I had not

and hobbies in life, in detail.

put money into my budget for repairs,

• One of the things I notice is that your

counselor to help facilitate this type of

entertainment, eating out, or unexpected

interest / hobby in XYZ is missing. **

work with your client.

expenses.

He taught me such an important lesson here: Just like with extreme diets, extreme budgets will not generally work in the

• Tell me about how you have funded your interest / hobby in the past.

may be helpful to engage the assistance of a financial coach, therapist, or

Melissa K Hammel, CFP, LPC/MHSP, is managing member and principal financial planner with Hammel Financial Advisory Group, LLC.

FINANCIAL PLANNING Why smart people do dumb things Les s ons at t h e c ro s s ro a d o f c ritic al th in kin g an d e th ic s, v ia th e M A C PA’s 27th A d v a n c e d P e r so n al F in an c ial Plan n in g B Y S E T H H A MM E R, CPA , P H . D. The MACPA’s 27th Advance Personal

Similarly, he presents high school

Other critical errors that may be of

Financial Planning Conference’s keynote

students’ justification for cheating, a

particular concern for busy professionals

speaker, Patrick Kuhse, chronicled

foundation combining their belief that

include mental laziness, discontinuity, and

his extraordinary true-life story of the

they are entitled to get admitted into

mollification. A characteristic of mental

“slippery steps” taken in unethical

good schools with a rationalization that it

laziness is taking unwarranted shortcuts

behavior that led to his fall from successful

is acceptable to cheat because “everyone

that lead to failure. Discontinuity may be

stockbroker to life on the lam and

does it.” Some students, he noted, even

related to mental laziness in that it refers

incarceration as a felon.

take the rationalization a step further,

to a failure to maintain focus, being too

taking the position that not doing so

easily influenced by current events and

Kuhse, who was convicted of

would be unfair because it would place

situations. Mollification, which refers

embezzlement against the state of

them at a competitive disadvantage.

to making excuses for or downplaying

Oklahoma, explained how someone

Comparable situations, Kuhse pointed

unethical behavior, may also be related to

who previously considered himself to

out, may apply in a variety of business

these two aforementioned errors in that at

be a smart and ethical person could,

and organizational settings.

its core, there is a failure to focus on and directly address the issue in question.

nonetheless, do such dumb things and succumb to ethical lapses that, in

The second critical thinking error – the

retrospect, would not have seemed

one that he determined may most

The remaining two critical thinking errors

remotely possible to him. Specifically,

commonly lead to a person’s downfall

– “cutoff” and “power orientation” –

Kuhse identified eight critical thinking

– encompasses most of their unethical

respectively refer to (a) the process of

errors – gleaned from his own personal

actions. The slippery slope builds as an

eliminating, through a phrase (e.g. “forget

experience and interviews with thousands

individual, finding that his or her modest

it”) or other means, feelings that might

of convicted criminals – that he found to

ethical transgressions go unchecked, takes

deter unethical behavior; and (b) the

be common to all unethical behavior.

increasingly bolder and more damaging

attempt to exert control over others.

unethical actions.

The first and foremost of the critical

In conclusion, Kuhse urged conference

thinking errors that he encountered – the

An interesting characteristic (identified as

participants to be vigilant and wary of

one that he believes most frequently

the error of “sentimentality”) that Kuhse

the subtle lapses in critical thinking that

leads to the initial slide on the so-called

commonly found in his own experience

can lead to serious ethical lapses and

slippery slope of ethical behavior – is the

and that of the thousands of criminals

their potentially severe consequences.

development of a sense of entitlement,

he interviewed was a desire to cultivate

Simply recognizing, for example, that

the feeling that one is deserving of some

an image of oneself as being a “nice

one is developing a wrongful sense of

type of reward and / or is above the law.

person.” In his own situation, Kuhse found

entitlement or is becoming cavalier about

In Kuhse’s case, his sense of entitlement

that even after succumbing to temptation

taking minor, but wrongful, shortcuts

was combined with a rationalization that

– becoming a willing participant in the

may be the crucial step that halts smart

not abiding by the law was, in fact, a

embezzlement of large sums of money

people from the beginning the trek on

common occurrence (e.g., “everyone

from the state of Oklahoma – he was,

the potentially precipitous “slippery slide”

does it”) and, therefore, acceptable

nonetheless, able to foster a “nice

to unethical behavior and its attendant

behavior.

person” image of himself.

consequences.

32

STATEMENT

Financial

NOTES FROM THE PERSONAL FINANCIAL PLANNING CONFERENCE In addition to addressing relevant practical ethics issues, the annual conference also addressed a variety of current concerns, including elder care, asset protection planning, tactical asset

allocation, investments, and pre-fiscal cliff

local issues such as Maryland non-farm

planning.

employment and county-by-county housing inventories, participants were

Highly regarded economist Aniban Basu

provided with relevant localized economic

of the Sage Policy Group presented

data that may prove valuable in working

an economic update that afforded

with clients in targeted regional markets.

participants not only national and international insights but statewide analysis and forecasts as well. Addressing

Seth Hammer, CPA, Ph.D., is an accounting professor at Towson University.

Because even

WHIPPERSNAPPERS need to plan their future.

28TH ANNUAL

ADVANCED PERSONAL FINANCIAL PLANNING CONFERENCE October 25, 2013

Martin’s West, Baltimore

http://www.macpa.org/PFP

Event ID: 121007

FINANCIAL PLANNING Why cancelling an existing whole life or universal life policy may be a bad idea B Y M I C H A E L K ITCE S, M SFS, M TAX, C F P, C LU, C HF C The fundamental purpose of insurance is

the death benefit – but even consider

allow this universal life policy to sustain for

to protect against and manage risks that

making ongoing premiums, paying

Barbara’s lifetime.

can’t otherwise be borne by an individual,

down loan balances, or even increasing

from homeowner’s insurance to protect

contributions to maintain the policy in

Unfortunately, though, interest rates have

against the risk of a disaster to the home,

force for life.

declined significantly since the policy’s

to permanent life insurance to protect

original issue date. As a result, the

against the financial impact of an untimely

Of course, if the client really needs the

insurance now credits Barbara with only

death. While term insurance can and

cash value or cannot afford premiums, this

the policy-stated minimum (4 percent

does fulfill the latter function for most,

strategy is not viable, but the policy can

per year), and because of her significant

in many cases clients currently maintain

still be sold as a life settlement instead to

cost of insurance charges – due both

an existing permanent insurance policy,

harvest most of the underlying value.

to the fact that she’s now age 70 and

in anticipation of an insurance need that

the aforementioned Table F rating –

will last for the rest of his / her life. Often

The bottom line, though, is that given the

that need really does continue for life, but

internal rate of return on life insurance

sometimes it does not.

held until death, for those who don’t need the policy but don’t need the cash value

In situations where permanent insurance

either, the best decision for unnecessary

is no longer needed – whether because

life insurance might actually be to keep it.

the individual accumulated enough wealth that the death benefit protection is simply no longer necessary, or perhaps because the insurance was intended to provide liquidity for estate tax exposure that is simply no longer relevant at the newly permanent and portable,

EVALUATING EXISTING LIFE INSURANCE: A REAL-WORLD EXAMPLE A real-world example may help to illustrate.

inflation-adjusting $5.25 million estate

Barbara is a widower client who came

tax exemption (http://cpa.tc/2n7) – the

in a few years ago to review an existing

default decision is often to cancel the

universal life policy that was issued

coverage. After all, what’s the point of

back in 2000. The policy, which has a

paying for life insurance that’s no longer

$500,000 death benefit, is owned inside

needed?

an irrevocable life insurance trust (ILIT) for the benefit of her three children, and was

The caveat, however, is that in today’s low-yield environment, many permanent life insurance policies indirectly provide another potential value: a remarkably favorable internal rate of return if simply held until death. Given this potentially appealing “bond alternative,” many clients should not only keep an existing permanent policy – despite no need for

34

purchased as a strategy to replace the impact of potential estate taxes on the family back when Barbara’s net worth was $1.4 million but the estate tax exemption was only $675,000. Barbara was able to

and the fact that she cut back on the

get coverage, despite being 59 and in

flexible premiums for a few years in the

relatively poor health, although it was

middle while markets were turbulent,

issued with a Table F rating. Given interest

the insurance charges have already

rates at the time, it was estimated that

overwhelmed any potential growth in the

a premium of $13,500 per year would

policy. After 11 years, her cash value is STATEMENT

only up to $69,627, and even if she makes

the policy is scheduled to lapse when

Barbara still passes away in 10 years –

the $13,500 premium deposit this year

she turns 89, the life expectancy of

which will bring her the same $500,000

and it all grows at 4 percent, the cash

even a health 70-year-old woman is only

death benefit regardless of whether she

value is projected to be only $74,064 next

about 16 years, and Barbara’s life

year.

expectancy is even shorter, due to her health conditions.

In other words, the insurance charges are so high that $69,627 (cash value) plus

If Barbara were to live only 10 more

$13,500 (premium) equals $83,127 plus

years – paying in $13,500 times

4 percent growth, which brings the cash

10, or $135,000 more premiums,

value up to $86,452 – and that will still be

on top of her current $69,627 of

depleted by a whopping $12,388 from

cash value – she’d turn a little

the insurance charges.

over $200,000 of cash value and premiums into a $500,000 death

KITCES ON AGENDA FOR ADVANCED PFP CONFERENCE Michael Kitces will be a featured speaker at the MACPA’s 28th annual Advanced Personal Financial Planning Conference, scheduled for Oct. 25 at Martin’s West in Baltimore. Get details and register at http://cpa.tc/2n8.

Of course, the charges continue to grow

benefit. Over a 10-year timeframe,

higher under the universal life policy

that’s a whopping 11.8 percent internal

pays $13,500 per year or $17,000 per year

as Barbara ages. Within six years, the

rate of return. Even if Barbara lives to

– then her rate of return will be reduced

charges will be greater than the total of

an average life expectancy, the internal

from 11.8 percent to 10.1 percent, and

premiums plus growth, and the net cash

rate of return is still 5.1 percent over

over 16 years her expected return with the

value will start to decline every year. The

the next 16 years. Short of a default

higher premium contributions would fall

policy is projected to lapse in 19 years,

of the insurance company itself, those

from 5.1 percent to 3.6 percent.

when Barbara is 89.

are fixed, guaranteed rates of return (at

Given the fact that the policy is projected to lapse and that there is no net growth under the policy as the insurance charges and other policy costs (about $12,388) far exceed any growth potential (even at 4 percent on $83,127 of cash value with another premium payment, it’s only $3,325 of growth), Barbara’s inclination was to simply cancel the policy (or to suggest to the trustee to allow it to lapse, as technically it’s the trustee’s decision in the case of an ILIT), avoid the insurance charges, and reinvest the cash value.

After all, the insurance death benefit isn’t needed now that the estate tax exemption has jumped from $675,000 (when the policy was purchased) to $5.25 million (far in excess of Barbara’s net worth), and Barbara would rather try to invest the money elsewhere where it has a chance to grow – not to mention stopping annual sales from her investment portfolio to plow into an insurance policy where

least, guaranteed if Barbara dies in that year and the cash value hasn’t been fully depleted yet). Given that 10- to 20-year Treasuries barely yield 2 percent and even high-quality corporate bonds only yield about 4 percent, these represent remarkably favorable fixed income returns.

However, there is a notable risk to the strategy: If Barbara has unexpected longevity, the policy is projected to deplete just a few years past her life expectancy. In other words, if she lives a bit “too long,” she runs the risk of turning her 11.8 percent or 5.1 percent return into a negative 100 percent return as the policy lapse would result in no cash value (as it would be fully depleted) and no death benefit, either.

The solution to this is that Barbara can choose to contribute more to her policy – a flexibility allowed to universal life

costs exceed any growth potential.

policies – to ensure that the policy will last

EVALUATING THE INTERNAL RATE OF RETURN ON LIFE INSURANCE

For instance, if Barbara increases her

The caveat to Barbara’s strategy, though, is that she remains in poor health. While

longer.

premium payments to $17,000 per year, the policy is projected to last until it matures at her age 100. Of course, if

On the other hand, she substantively reduces the risk of turning the premium payments into a total loss from a potential policy lapse, which may still be an appealing trade-off. Conversely, Barbara could reduce her premium payments, which will increase the rate of return, especially if she passes away sooner rather than later, but also increases the risk that the policy will lapse if she survives “too long” instead.

Nonetheless, the bottom line remains: If Barbara doesn’t need the cash value (in this case she doesn’t, as it’s inside an ILIT anyway) and can afford to continue paying the premiums, maintaining the life insurance death benefit as a “fixed income substitute” actually turns out to be a remarkably appealing fixed-income investment to maintain for the rest of her life, even if the reality is that the return will only accrue to her beneficiaries and not herself!

Michael Kitces, MSFS, MTAX, CFP, CLU, ChFC, is director of research for Pinnacle Advisory Group and publisher of the financial planning industry blog Nerd’s Eye View. Follow him on Twitter at @MichaelKitces or connect with him on Google+.

MEMBER NOTES NEWS & VIEWS R. Frank Abel, CPA/CFF, CFE recently returned

Philip Smith, a CPA Candidate member, has been hired as a staff

from a training assignment at the Connecticut State

accountant at Stegman & Company.

Police Academy. He served as an instructor for the weeklong Financial Records Examination and

Mark A. Steinberg, CPA, CVA, director of

Analysis course administered by the National White

assurance at Hertzbach & Company, P.A., has

Collar Crime Center.

become a stockholder. Mark is a CPA in Maryland and a Certified Valuation Analyst with more than

Kate Drachova, CPA, a senior accountant at Berman Goldman & Ribakow LLP, has earned her CPA designation.

18 years of experience in providing assurance services, business valuation, litigation support and third party reimbursement consulting across a wide range of industries, including health care, non-profits, continuing care retirement communities, nursing homes , residential treatment centers,

Aileen Eskildsen, CPA, director and professional

organizations supporting the developmentally disabled,

development coordinator at Ellin & Tucker,

construction and real estate entities.

Chartered, was a presenter at the recent Women in Leadership Conference, held in Towson University’s Chesapeake Room. The program, which featured local businesswomen, focused on increasing the leadership capacity of female students and preparing them for success in the workplace. Her presentation topic was “Creating Financial Stability After Graduation.”

Ana Welborn, CPA, a Senior Accountant with Stegman & Company, has obtained her license as Certified Public Accountant.

Kimberly J. Wines, SPHR, firm administrator / human resources director at Smith Elliott Kearns & Company, has been appointed to the Human

Scott E. Murray, CPA, has been hired as a senior accountant in the Tax Department at Stegman & Company.

Yelena Sandler, CPA, has joined Squire, Lemkin + Company. She graduated from the University of Maryland and is pursuing her master’s degree in taxation from American University. She joins

Resources Committee, a PFK North America national committee. Kim specializes in providing human resource consulting for the firm and its clients throughout MD, PA and WV. As a recognized professional in the field of human resources, Kim has earned the designation of Senior Professional in Human Resources (SPHR).

the firm as a tax manager with 13 years of experience in public accounting.

Save the Date 11/4/13

Innovation Through Technology Conference Martin’s West Event ID: 121009

FIRM NOTES DeLeon & Stang has been named one of the top accounting

will continue to provide workers’ compensation insurance

firms by the Washington Business Journal. The list is comprised

to Maryland employers. IWIF is Maryland’s largest writer of

of 50 firms from the Washington, D.C. metropolitan area and is

workers’ compensation insurance.

ranked according to the number of professional employees at each firm. DeLeon & Stang was ranked 46th on the list with 32

Santos, Postal & Company, P.C. (“Santos, Postal”), a leading

professionals.

certified public accounting and business consulting firm,

Accounting Today has recognized Gross, Mendelsohn &

Certified Public Accountants, will merge into Santos, Postal

Associates as one of the leading CPA firms in the capital region,

effective August 1, 2013. The merged firm will continue to

encompassing Maryland, Delaware, Virginia, Washington, D.C.,

guide businesses and individuals with traditional tax, auditing,

and West Virginia.

and accounting services, as well as wealth management and

Hertzbach & Company, P.A. has raised more than $2,600 for

announced that Thompson & Associates, P.C. (“Thompson”),

advisory services.

charity through a silent auction, a new event added to the

Smith Elliott Kearns & Company, LLC, launched its redesigned

firm’s tax season morale program. The 21 auction items were

website in January 2013. The new site is designed with an

generously donated by the firm and the partners, and included

emphasis on regularly updated content, useful information,

items such as an iPad, a Kindle Fire, gift cards to various

and user-friendly navigation. SEK&Co is using the look of the

restaurants and stores, a golf outing, and tickets to Ravens and

site as new branding tool for collateral marketing materials.

Orioles games. The money raised will be going to the charity of

The graphic used as the website header will be on one-page

each winner’s choice, which includes John’s Hopkins Children’s

informational sheets for all services and industries as well as

Hospital, Good Shepherd Center, BARCS, Habitat for Humanity,

profiles for members and managers. These changes are a part

and the Wounded Warrior Project.

of the firm’s 50th anniversary celebration in 2013.

Maryland’s General Assembly has passed and Gov. Martin

IN MEMORIAM

O’Malley has signed into law legislation that will convert IWIF, the Injured Workers’ Insurance Fund, to Chesapeake Employers’ Insurance Company effective Oct. 1, 2013.

Chesapeake will be a non-profit Maryland corporation and

Sol R. Shipley, CPA, passed away on February 6, 2013. Mr. Shipley joined the MACPA in 1963 and was a Life Member with the association. He was a sole practitioner in Baltimore.

MACPA WEBCASTS

Our best training... right to your PC. To see a full listing of MACPA webcasts, visit

macpa.org/webcasts

NYPN NEWS The MACPA NYPN Committee hit the ground running this spring

On June 25, NYPN hosted a Generational Symposium at Turf

with a variety of events after Tax Season. NYPNs met to network

Valley in Ellicott City. During this four-hour CPE event, MACPA

and have fun at three happy hours – April 25 in Bethesda at Rock

CEO Tom Hood led an all-ages interactive conversation

Bottom Brewery and Restaurant, May 16 in Frederick at Brewer’s

and panel discussion on topics ranging from differences in

Alley Restaurant and Brewery, and May 30 in Baltimore at Nick’s

communication and learning styles to flex time, social media,

Fish House. Thank you to all who came out!

and earbuds in the office.

MACPA and NYPN members volunteered on May 11 at the Baltimore Cash Campaign’s 2013 Money Power Day at Poly High School in Baltimore. Money Power Day is a free, annual event providing Baltimore-area families with quality financial services, including free credit reports, credit counseling, customized financial planning, housing counseling, screening for public benefits, and financial programs for youth.

MACPA and NYPN members also volunteered on May 14 at Junior Achievement’s BizTown in Owings Mills. BizTown specializes in educating fourth- and fifth-grade students on financial literacy through a series of business, economics, and life-skills programs. Students learn first-hand what it takes to create and operate a business, and to earn and manage money.

Thank you to all of our generous and hard-working volunteers at

NYPN is in the planning stages of a fun networking opportunity to be held this summer in Baltimore. Stay tuned for an update and official invite to our NYPN Summer Mixer. We will also post details soon regarding a summer volunteer opportunity.

We are looking for presenters to join the NYPN Roadshow team. The NYPN Roadshow presentation details the benefits of joining a professional association and helps educate young CPA professionals, CPA candidates, and firm leadership about NYPN and MACPA. If your company would like to request a Roadshow presentation, contact nypn@macpa.org.

VISIT THE NYPN WEBPAGE AT MACPA.ORG/NYPN. You can also follow NYPN on Facebook, Twitter, and LinkedIn

both events. We appreciate your service and are proud to see our members making a difference in the community.

The MACPA held its 2013 Spring Leadership Academy from

this profession has been throughout history, adjusting and

May 6-8. The two-and-a-half day workshop trained participants

growing only after major events. Our collective group of

on how to be leaders in their profession. Attendees learned

young leaders at the Leadership Academy discussed the

about the importance of teamwork, strategic thinking, strength-

need to change this and become a proactive, innovative

based leadership, and network leadership. Here is what some

profession.”

attendees said: • “Most thoughts we have are biased based on personal

• “I learned that recognizing and understanding one’s own

experience and preference. When you bring that thought to

strengths and weaknesses will more successfully guide a

a group, the idea can change entirely.”

team to keep making sense of rapid environment changes.”

• “An interesting part of the Leadership Academy was the

• “I want to take back what I’ve learned to my firm and

history segment of the i2a (Insights to Action) process.

We did an activity where we mapped the history of the CPA profession. From this, we were able to identify a clear understanding of where CPAs are coming from and where improvement is needed. We saw how reactionary

change our meetings to become more meaningful and effective.” .

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 150-hour 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 2. Insight

3. Professionalism 4. Development 5. Growth

6. Commitment 7. Charity 8. Community 9. Responsibility 10. FUN!

get involved GET TO KNOW OUR NYPN ADVISORY BOARD AND FIND OUT FIRST-HAND WHAT WE’RE ALL ABOUT: Chair: Jeff Klima, SC&H: jkilma@scandh.com Vice chair / chair-elect: Nick Hollander, L&H Business Consulting: nhollander@lhbusinessconsulting.com Secretary / treasurer: Debra Hale, Stoy, Malone & Company: Dhale@stoycpa.com Past chair: Diana Scatliffe, CohnReznick Group: Diana.Scatliffe@cohnreznick.com

LEADERSHIP BOARD Activities / Professional development chair: Stephen Hohne, Hertzbach & Company: shohne@hertzbach.com Public relations / outreach chair: Jennie Hammett, Gorfine, Schiller & Gardyn: jhammett@gsg-cpa.com At-large member: Barrett Young, The Green Abacus: barrett@thegreenabacus.com

JULY 2013

39

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

NOAH F. LEIDEN, CPA

CGMA

PUI C. NG-HUI, CPA

BONNIE J. HINES, CPA

SAMANTHA L. DEREMIGIS, CPA

DAVID J. LEMUS, CPA

GRIFFIN DETRICK, CPA

REMI OMISORE, CPA

STEPHEN J. LYNCH, CPA

PAUL A. LEPEONKA, CPA

ERICA A. DIPAULA, CPA

LOUIS R. PARKER, CPA

VICTORIA L. RAABE, CPA

KATSIARYNA DRACHOVA, CPA

FENG LIN, CPA

JENNA S. DURST, CPA

STEPHANIE A. PARKER, CPA

RENEE C. WHALEN, CPA

LOUIS W. LITZ III, CPA

BARBARA L. ENSOR, CPA

LINDSEY PATTERSON, CPA

ROBERT T. ZISA, CPA

SARAH M. MCGARITY, CPA CONNIE L. MITCHELL, CPA

CHARLES T. FAGAN, CPA, MBA, CFE, CGMA

CHRISTOPHER J. RHOADES, CPA

SOUTHERN MARYLAND

DAVID T. PALANK, CPA

AMANDA FOEHRKOLB, CPA

LAUREN A. RICKTOR, CPA

LEAH E. MCCONNELL, CPA

UNA LEE PENNINGER, CPA

ALEXANDER D. FRANKS, CPA

DENISE M. SHLEGLE, CPA

CAPITAL AREA CHAPTER

MATTHEW H. PETERSON, CPA

ALBERT W. GERMANN, CPA

SYLVESTER B. SAVOY JR., CPA

MARK A. ANCHOR, CPA

MARK D. POLVANI, CPA

PETER D. GILROY-SCOTT, CPA

LISA ARONOFF, CPA

MATTHEW J. RADFORD, CPA

KATHLEEN M. GLENN, CPA

CHRISTOPHER D. SEMESKY, CPA

MUHAMED-BURIHAN A. AYODEJI, CPA, MBA

COREY J. REINKE, CPA

DAVID GONANO JR., CPA

SHARON STEWART, CPA

NICOLE A. ROSENTHAL, CPA

RICHARD G. GREENE, CPA

MELISSA A. TARKETT, CPA

ORIN T. SCHEPPS, CPA

LAKSHMI GURUBHAGAVATULA, CPA

ROBIN L. TAYLOR, CPA

ALLISON HARTLOVE, CPA

ANA C. WELBORN, CPA

KATHERINE L. CRAWFORD, CPA

MICHAEL L. HICHEW, CPA

ELIZABETH A. WRIGHT, CPA

TAYLOR S. DEAN, CPA

ROBERT F. WRIGHT, CPA

SAM HABIB, CPA

KEVIN S. BURKHOLDER, CPA

ROBERT M. STORZ, CPA, MBA

PAIGE K. HOFFEN, CPA RANDY M. HOFFMAN, CPA

GUI ZHANG, CPA

JAMES S. CLARK, CPA

GAIL A. SUIT, CPA

VALERIE S. HOFFMAN, CPA

PAMELA J. HARBOURT, CPA, MST, CGMA

BRITTANY E. CRAFT, CPA

DOUGLAS E. WHITESCARVER, CPA

ANGELA M. IANNETTA, CPA

EASTERN SHORE

JOSEPH A. DESALVIO, CPA

ALISON M. JAMES, CPA

KAREN M. BURD, CPA

PAUL A. KLIER, CPA, CAPTAIN, ARMY

JOHN T. DEVINE, CPA, PFS

DENISE WU, CPA, CGFM

ERIC A. KRAYOWSKI, CPA

MEGAN COLLINS, CPA

TAKESHI KOBAYASHI, CPA

ERIC H. FIG, CPA

HECTOR J. WUOR, CPA, MSC

RYAN M. LEVY, CPA

MATTHEW P. CRISWELL, CPA

ADAM M. LUECK, CPA

ALEX J. CUGA, CPA

COLETTE KOLANKO, CPA, PFS, CFP

NICKI MANN, CPA

ELIZABETH J. EICHER, CPA

ANGELA A. BARONE, CPA

MICHAEL E. MARSICO, CPA, CISA

PATRICIA M. HARVEY, CPA

JARED S. BECKER, CPA

GEORGIA B. MARTIN, CPA

RICHARD L. BROHAWN, CPA

JAMES K. HULL, CPA, MBA

DIANE B. MASON, CPA, MBA

LI CAI, CPA

MISTY L. MCGLONE, CPA

MAURICE CHEESE, CPA

MID-MARYLAND CHAPTER

KIMBERLY R. MILLER, CPA

HUGH M. ROSENBLUM, CPA

AIRES R. COLEMAN, CPA

RYAN G. CRABBS, CPA

KENNETH W. MORRIS, CPA

LOREN L. TROTTA, CPA, MBA

BRAD H. COPPEL, CPA

MYRON L. DRAPER JR., CPA

AMY L. MOWREY, CPA

JOSEPH P. DETORIE, CPA,

PATSY R. GUTIERREZ, CPA

HALEY J. MYERS, CPA

JOHN R. GOWER, CPA MYTRANG NGUYEN, CPA PAUL J. PARKER, CPA ERIC D. WARD, CPA

MICHELLE BARNABY, CPA DONALD BEARDSLEY, CPA JOHN S. BENNETT, CPA JANET M. BORJESON, CPA SLADE W. BRENNEMAN, CPA

JACKIE J. FLESHER, CPA IRA S. GLIKMAN, CPA RYAN P. HAM, CPA MARIAH J. HEWITT, CPA TRICIA HUFF, CPA JORDY C. KANE, CPA STEVEN J. KURINSKY, CPA MELISSA J. LACEY, CPA ALAN J. LANGELLI, CPA BRANDON S. LAYO, CPA

STACY A. SEPPY, CPA ADRIAN G. SIMMONS, CPA, MBA

CENTRAL MARYLAND CHAPTER

JOSEPH SCLAFANI, CPA

DAVID WALTON, CPA

BETH A. HORNER, CPA

OUT OF STATE RYAN C. BARNOSKI, CPA DANA L. BOYD, CPA, MBA, MST MARC D. CARRIE, CPA DEBRA L. COOPER, CPA

VICTOR LEO, CPA AMELIA S. LESWING, CPA PAUL W. LOKER, CPA CLIFF PARDO, CPA ALENA V. PAULIUCHKOVA, CPA

WELCOME, NEW CPA CANDIDATE MEMBERS! ANNE ARUNDEL COUNTY

NICHOLE A. DAVIS

MARTA B. CHAPLINE

PATRICK NELSON

LOUIS D. HAMMOND

RANDALL J. BRUNK

MEYROODJY DELVA

MICHELLE CHOPPER

MELISSA A. SHUTLOCK

JUSTIN L. HEWETT

CHARLES J. COLLINS III, MBA

MATTHEW O. ENEKWE

JOYCE DANZIG

PHILIP P. SMITH

OPHAIR SILVER

FAHAD HASHMI

JENNIFER DIETRICK

PATRICK W. ST. CLAIR

MATTHEW C. SMITH

KIMBERLY GILLIAM

BIJAY B. KARKI

KAREN FORSTER

AMBER L. STONE

ASHLEY R. MILLSAPS

DAVID P. GECKLE

KRISTIN M. O’CONNOR

CHRISTOPHER HESTON

EASTERN SHORE

KOSSI AGIDI

TIMOTHY A. WALKER

JOHN A. IRVIN III

SYED N. SHAH

KOKOU J. ASSIGBE

SHANSHAN YANG

JARED MAHAR

CAPITAL AREA CHAPTER

JOSHUA E. BARNABY CHRISTOPHER D. BARRETT JAIDEEP CHAKRAVORTY

CENTRAL MARYLAND CHAPTER

WILFREDO CORPS

MERCEDES BELL

SOUTHERN MARYLAND COREY A. BECKETT OUT OF STATE

VICTORIA A. MCNAIR, BS

MID-MARYLAND

ELIZABETH G. MILLIGAN

BENSON A. ADEGBITE

PHILIP NAM

ASHLEY CONLEY

RAIZY COOK

CLASSIFIEDS mergers & acquisitions

office space

QUALITY CPA FIRM WISHES TO ACQUIRE PRACTICE OR ACCOUNTS in Baltimore/Washington/

EXECUTIVE OFFICE SPACE AVAILABLE

Annapolis area, or possible association with retirement-minded

center provides a professional environment, features well-

practitioner. “Top Dollar Paid.� Reply in strictest confidence to

appointed reception areas, offices and conference facilities.

410.539.7100, or File No. 63-87.

Enhanced communication and administrative support services

THINKING OF SELLING YOUR PRACTICE? Accounting Practice Sales is the leading marketer of tax and

with multiple amenities and free parking. Our business

are also available. For terms and availability, please call us at 301.263.8519 or e-mail Steeley.Associates@gmail.com.

Location zip is 20817.

accounting practices in North America. We have a large pool of buyers, both individuals and firms, looking for practices to purchase. We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and

job openings

get the deal done. We welcome the opportunity to talk to

TAX PROFESSIONAL FOR BUSY SEASON

you about our risk-free and confidential services. For more

Kenneally & Company, a progressive, medium-size, Towson

information please call Bradley Holmes with the APS Holmes

CPA firm of highly motivated professionals, seeks like-minded

Group at 1-800-397-0249 or email Bradley@apsleader.com.

individuals capable of individual and/or business tax return preparation. Familiarity with ProSystem fx is a plus. Flexible

STEELEY & ASSOCIATES is a diversified service provider operating in the Maryland and DC areas. We seek to offer succession and continuity solutions by partnering with retirement-minded CPAs. Transitions of 1-5 years are preferred,

hours, incentive compensation and a pleasant working environment are just a few of our benefits. Forward your resume via e-mail to mlindemon@jlkcpas.com or via fax, (410) 321-9809.

though immediate or longer time frames will be considered. If you are a CPA considering retirement, or simply transitioning to other lines of work, please call (301) 263-8519, or email info@steeley.com. All conversations will be kept confidential.

MARYLAND PRACTICES FOR SALE: Salisbury Bookkeeping Practice - annual gross $330K; Salisbury Franchise Tax Practice - annual gross $135K. For more information about these opportunities or others in your area, please call 1-800-3970249. Also, view listings, inquire for details and register for free email updates at www.AccountingPracticeSales.com.

peer review Do you need an Engagement, System, or Pre/Post Issuance Peer Review? We are experienced and up-to-date on the latest

WANT TO SUBMIT A CLASSIFIED AD? To submit a classified ad, please visit http://www. macpa.org/classifieds/public/search.aspx, or contact Amy Moran at 443.632.2319, or by email 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.

regulations. Call us today to perform your review professionally and efficiently. Charles Coker, CPA. 703.931.3290 x 108 or email Charles.coker@cpa-coker.com.

JULY 2013

41

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

SMOG-FREE CPE 2013 MACPA Mountain Retreat Brought to you by the Western Maryland Chapter of MACPA

Save the Date: September 23-24, 2013 | Wisp Ski Resort

HIKING, BIKING, BOATING, GOLFING, DINING, & LEARNING