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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“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
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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
2 East Read Street, 9th Floor, Baltimore, Maryland 21202 | 410-332-4171 | www.bcf.org
Robert Louis Waldman Venable LLP
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Merrick School of Business
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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YOUR STRATEGY. OUR LEARNING EXPERTS. ORGANIZATIONAL SUCCESS. STATEMENT
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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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
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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.
Gross Mendelsohn’s Technology Solutions
2. Monitor your network 24 hours a day, seven days a week
computer network problems. Contact Kiel
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. Network monitoring systems can work (monitor) more efficiently (and cheaper) than a person, having the ability to monitor thousands of event logs and operations simultaneously across an entire network. They can also generate full, detailed, graphical network reports within minutes, by request or through scheduling, which can be e-mailed to the
26
problem is never addressed or realized, a
Proactive monitoring systems are
Kiel W. Moore, MCSA, is a member of Group. He helps businesses solve at (410) 685-5512 or kmoore@gma-cpa. com.
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
We couldn’t do everything that we do for our members without our
Preferred Providers & Premier Sponsors MACPA PREFERRED PROVIDERS
MACPA PREMIER SPONSORS
For information about sponsoring MACPA programs or to learn more about advertising with the MACPA please contact Andrew Hood at 443.632.2323 or andrew@macpa.org
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