July/August 2015

Magazine of the

New Jersey Society of Certified Public Accountants

The Client Turning Client Service Outside In, p. 6 Use Content Management to Effectively Communicate with Clients, p. 10 The Importance of Client Feedback, p. 12 Covering All the Bases When Disengaging a Client, p. 14

July • August 2015

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For up-to-date benefit information, visit njcpa.org/marketplace.

July • August 2015

Ralph Albert Thomas, CGMA Chief Executive Officer & Executive Director rthomas@njcpa.org

Ellen C. McSherry, CGMA

Chief Operating Officer emcsherry@njcpa.org

features 6

Don Meyer

Chief Marketing Officer dmeyer@njcpa.org

David Plaskow

Managing Editor dplaskow@njcpa.org

Jeanette L. Miller Editorial Assistant jmiller@njcpa.org

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Editorial Advisory Board Daniel R. Arcuri, CPA Neil B. Becourtney, CPA Timothy A. Burley, CPA Salvatore A. Collemi, CPA Rebecca B. Fitzhugh, CPA Catherine Z. Horn, CPA Ryan J. Lapinski, CPA David A. Lopez, CPA Anthony F. Marone, CPA Marc D. Mintz, CPA Margaret Van Brunt, CPA

The New Jersey Society of Certified Public Accountants 425 Eagle Rock Avenue Roseland, NJ 07068-1723 973-226-4494 njcpa.org #njcpamag Read New Jersey CPA digital at njcpa.org/newjerseycpa.

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Turning Client Service Outside In Learn how the key to becoming a truly client-centric service provider is changing from an insideout approach to an outside-in approach.

Use Content Management to Effectively Communicate with Clients Sending the right type of information to clients can help them improve their businesses and establish your company as a thought leader.

The Importance of Client Feedback By using a top-down approach to obtaining and implementing honest client feedback, you can help position your clients and your company for growth.

Covering All the Bases When Disengaging a Client By conducting a periodic client assessment, you can determine if a parting of the ways is needed, as well as the best way to make that transition.

2 Close Up Diversity Tops New Society President’s Agenda

22 Tax Talk Why You Need to Offer Clients a Nexus Study

4 News Briefs

24 Tech Center Is Your Firm Mobile Ready?

16 A&A Buzz Three Key Steps to Take When an Audit Goes Bad 17 Best Practices Seven Tips for Planning Your Next Client Event 18 Business & Industry Insights Eight Key Metrics for CFOs 19 Financial Planning Try Decanting for a Tasteful Trust 20 Forensic File Don’t Let Your Valuation Report Get Thrown Out 21 Small/Sole Practitioner The Three “BEs” of Billing Success

34 Young Professionals You’ll Never Forget Your First Time 35 Legislative Views NJCPA Joins Coalition Opposing Paid Sick Leave Mandates 36 Member Profile All Hands on Deck Society Pages 2015/16 Chapter Presidents, 26 CPE Offerings and Events, 28 Member Benefits, 29 Get Involved, 30 NJ State Board of Accountancy Report, 32 Classifieds, 33

New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue-Suite 100, Roseland, NJ 07068. Issue No. 52 Copyright © 2015 New Jersey Society of Certified Public Accountants. Annual membership dues includes $8 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues.

Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723.

The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.

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Diversity Tops New Society President’s Agenda B Y DON MEYER, NJCPA C HI E F M ARK E TI NG O F F I C E R

T

here’s an old adage about volunteering that says: “What you get out is much more than what you put in.” That’s the philosophy recently inaugurated New Jersey Society of CPAs President Frank Boutillette, CPA, has followed throughout his career. “Through my NJCPA involvement, I’ve fostered relationships, received referrals and built my book of business,” says Boutillette, who resides in Toms River. I recently sat down with Boutillette to talk about his goals for 2015/16 and the importance of member engagement.

How did you become involved with the NJCPA? I’ve volunteered much of my time to the NJCPA through speaking engagements, committee chair roles and board membership. The presidency is kind of a natural progression for me. Now, I’m just in a more prominent role with more responsibilities.

It started with the Middlesex/ Somerset Chapter in 1991. I was recruited to find hotels for our seminars and handle onsite registration. Some people don’t like checking-in attendees, but I was able to meet a lot of NJCPA members. Later, I served as a director and treasurer, but I had to step away from chapter leadership when I started a new position, a job that I found thanks to my NJCPA contacts. When I returned to volunteering, I focused on the A&A Interest Group and Peer Review Executive Committee. I’ll never forget when NJCPA Chief Learning Officer James Hardenberg, CPA, asked me to serve on the Peer Review Committee. He said the term was three years (that was 15 years ago). Most recently, I served as treasurer on the NJCPA Board of Trustees.

What are your presidential goals?

I’m concerned that our profession needs to do a better job of instilling the value of the license in our accounting graduates and young staff. Research has shown that firm and company leaders place a premium on the CPA license, but that message isn’t trickling down to younger staff who need to know that the time and effort they put into getting their licenses will be well worth it.

One of the ways that we can make the profession more attractive to accounting graduates is by ensuring it becomes more diverse. The best and brightest are going to be attracted to firms that value and embrace race and gender diversity. To keep pace with population demographics and employer needs, the profession is acting now.

The American Institute of CPAs and state society leaders, like NJCPA CEO Ralph Thomas, are exploring the most effective and innovative tools to address the challenges associated with minority hiring and retention.

Today’s business environment is increasingly complex and fast paced.

We need to ensure that those new CPAs will work in a business-friendly environment free of burdensome regulations on the profession and their licenses. I’ll assist the NJCPA to enhance its profile in the NJ State Capitol with the administration and lawmakers. Together, we’ll continue to explore opportunities to work with state and national lawmakers as well as partner with the AICPA to protect our members and their businesses.

Any final thoughts?

Accounting is a profession at which I’ve made a good living. I believe we all should give back to our communities and our profession. My firm, WithumSmith+Brown, encourages N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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everyone to follow their desires and give back to their local communities and those in need, whether it’s volunteer work, sitting on not-for-profit boards or some other form of activism. That’s been a huge part of our culture. I want to make the profession a better place for accountants to practice. We all want to appreciate where we came from, and NJCPA involvement is my way of giving back and saying thanks.

To see Boutillette discuss more about his term as NJCPA president, visit njcpa.org/ newjerseycpa/julaug15.

2015/16 Board of Trustees EXECUTIVE COMMITTEE President – Frank R. Boutillette, CPA President-Elect – Walter J. Brasch, CPA Secretary – Edward I. Guttenplan, CPA Treasurer – Lynn L. Albala, CPA Immediate Past President – Brad E. Muniz, CPA CEO & Executive Director – Ralph Albert Thomas,

CGMA TRUSTEES Jean I. Abbott, CPA Sharon J. Bishop, CPA Leonard N. Brooks, CPA Joseph C. DiFalco, CPA Carol Donatiello Iocca, CPA Sarah Krom, CPA Roy H. Kvalo, CPA Edward G. O’Connell, CPA Stephen O. Richard, CPA William J. Ryan III, CPA Audrey J. Sherrick, CPA Lorenzo T. Vanore, CPA

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NEWS PCAOB Approves Auditing Standard Reorganization The Public Company Accounting Oversight Board (PCAOB) approved the reorganization of its auditing standards to help users navigate the standards more easily. The board adopted amendments to its rules and standards to implement a topical system that integrates the existing interim and PCAOB-issued auditing standards.

Under the reorganization, the individual standards will be grouped into these topical categories: (1) General Auditing Standards; (2) Audit Procedures; (3) Auditor Reporting; (4) Matters Relating to Filings Under Federal Securities Laws; and (5) Other Matters Associated with Audits.

These amendments also remove references to superseded standards and inoperative language and references. They do not impose new requirements on auditors or change the substance of the requirements for performing and reporting on audits under PCAOB standards.

The amendments will be effective, subject to Securities and Exchange Commission (SEC) approval, as of December 31, 2016. Visit pcaobus.org.

AICPA Recommends Estate Tax Portability Relief

The American Institute of CPAs submitted a letter to the Internal Revenue Service (IRS) and the Department of the Treasury recommending relief for surviving spouses who would like to elect portability of their deceased spouse’s unused estate tax exemption.

The portability election must be made by a decedent’s executor on a timely filed Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. However, executors of estates for decedents who died on January 1, 2014, or later may be unaware that a Form 706 is required to be filed (even for estates below the filing threshold) within nine months of the date of death in order for the surviving spouse to make the portability election.

The AICPA requested that the Treasury and IRS (1) permanently allow estates below the filing threshold 15 months after the death to file Form 706 in order to elect portability;

briefs (2) provide a short Form 706-EZ to make the portability election; and (3) allow the surviving spouse to file Form 706 for portability if the executor chooses not to file the form because the estate is not otherwise required to do so.

SEC Adopts Rules to Facilitate Smaller Companies’ Access to Capital

The SEC adopted final rules to facilitate smaller companies’ access to capital and provide investors with more investment choices. The new rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities. The rules are mandated by Title IV of the Jumpstart Our Business Startups (JOBS) Act. The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements. Visit sec.gov.

NJ’s Financial Literacy Profile: WalletHub

WalletHub released its report on 2015’s Most & Least Financially Literate States, which analyzes financial education programs and consumer habits in each of the 50 states and the District of Columbia. Highlights of New Jersey’s financial literacy scores (1=best, 25=average) include: • 5 – Percentage of people with a rainy day fund.

• 1 – Percentage of people borrowing from nonbank lenders.

• 8 – Percentage of people paying only the minimum on credit card.

• 23 – Percentage of people comparing credit cards before applying.

• 19 – Percentage of people who spend more than they make.

For the full report, visit wallethub.com.

Auto Insurance Claims in NJ Costly

According to InsuranceQuotes.com, New Jersey ranks third for states whose auto insurance rates rise the most after filing N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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an accident claim. A New Jersey driver who is deemed at fault in a car accident and submits a claim can expect his or her premium to increase an average of 62 percent.

Massachusetts was the highest at 76 percent, while Maryland was the lowest at 22 percent.

Visit insurancequotes.com to learn more.

Security Is Top Tech Priority for CPAs

Professional accountants in the U.S. say preventing security threats tops their list of technology-related priorities, according to the 25th Anniversary North American Top Technology Initiatives Survey. Their top 10 tech concerns are: 1. Securing the IT Environment 2. Managing and Retaining Data 3. Ensuring Privacy 4. Managing IT Risks and Compliance 5. Preventing and Responding to Computer Fraud 6. Enabling Decision Support and Analytics 7. Managing System Implementation 8. Governing and Managing Our IT Investment 9. Managing Vendors and Service Providers 10. Leveraging Emerging Technologies Some 3,061 senior accounting professionals participated in this survey, which was conducted electronically in October and November 2014. Some 39 percent of U.S. respondents work in public accounting, 36 percent in business and industry, with the balance coming from the nonprofit, consulting, education, government and other sectors. The complete survey is available at aicpa.org.

FASB Proposes Not-forProfit Financial Statement Improvements

The Financial Accounting Standards Board (FASB) issued a proposed Accounting Standards Update (ASU) intended to improve the information provided in not-for-profit financial statements. Stakeholders can review and comment on this proposed ASU, Presentation of Financial Statements of Not-for-Profit Entities, by August 20, 2015.

The document sets forth the FASB’s proposed improvements to current net asset classification

requirements and information presented in financial statements and notes to financial statements about a not-for-profit organization’s liquidity, financial performance and cash flows.

Specifically, they are intended to: • Better reflect financial performance in the statement of activities by showing available amounts that have been generated by or directed at carrying out the mission of a not-for-profit in the current period, both before and after any governing board actions affecting that availability.

• Simplify the existing net asset classification scheme along with enhanced note disclosures.

• Enhance notes information to help financial statement users better assess a not-for-profit’s liquidity and management.

• Make information about expenses more comparable and useful by requiring that all operating expenses be reported by both function and nature, and investment return be reported net of related expenses.

• Make the statement of cash flows more understandable by presenting cash flows provided by operating activities using the direct method of reporting, rather than the indirect (reconciliation) method; and classifying cash flows in ways more consistent with classifications in the statement of activities.

Visit fasb.org.

TIGTA Reports on IRS Partnership Audit Process

certain types of adjustments and calculations to avoid inaccurate assessments; and (5) coordinate with the Department of the Treasury to assess the impact that proposed changes to the tax laws would have on the IRS’ partnership audit process.

AICPA Urges IRS to Increase Small Business Safe Harbor Threshold

The AICPA recommended to the IRS that the de minimis safe harbor threshold amount under the tangible property regulations for small business taxpayers without an applicable financial statement (AFS) be increased from $500 to $2,500.

The AICPA recommended that the Treasury Department expand the definition of an approved AFS to include a reviewed set of financial statements, which are in accordance with Statements on Standards for Accounting and Review Services and provide reasonable assurance that there are no material modifications that have been made or should be made for them to be in conformity with the applicable financial reporting framework.

Outside third parties, such as banks and creditors, often rely on reviewed financial statements to provide them comfort in the financial statements of a company. Visit aicpa.org.

njcpa.org Spotlight

Customized Content at Your Fingertips Are you tired of combing through multiple emails and websites to find the information and guidance that is applicable to you? Let the New Jersey Society of CPAs do the work for you. By providing us with your Areas of Interest, we will deliver customized content to you in the following ways: • NJCPA Pulse – Delivered via email every other Thursday, Pulse contains news, articles, events and resources that match your Areas of Interest.

Improvements are needed to measure the success and productivity of the IRS’ partnership audit process, according to a report by the Treasury Inspector General for Tax Administration (TIGTA).

The TIGTA found that the IRS does not have a process to adequately measure the performance of the function responsible for assessing tax to certain partners. Improvements are needed to ensure that taxable partners are assessed the correct tax.

The TIGTA recommended that the IRS (1) develop a strategy to measure the success and productivity of all partnership audits; (2) develop a system that will determine the amount of taxes assessed as a result of all partnership audits; (3) ensure that audit closing and assessment efforts are included in productivity measurements; (4) update audit report writing software to accommodate N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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• njcpa.org – Visit your customized content dashboard to see all of the articles, videos and events that are of interest to you (njcpa.org/mycontent).

• Event notifications – We will only email and mail you information about CPE programs and events that match your Areas of Interest.

Update your Areas of Interest at njcpa.org/profile.

Turning Client Service Outside In A client-centric accounting firm ensures that clients are at the center of their business’ philosophy and strategy. A firm such as this believes that clients are the primary reason why the firm is in business. It’s not good enough that clients are merely satisfied—a client-centric firm wants them to be delighted and become cheerleaders for the firm.

By Joseph A. Tarasco, CPA Accountants Advisory Group, LLP

Client-centric service has long been a commoditized expression in firms, along with the phrase “quality service.”

However, are most accounting firms truly client centric? The answer is often no. Most successful firms are client focused, but not necessarily client centric. In fact, many accounting firms have been providing the same services to the same clients for years— resulting in very little growth for the firms and no additional value for the clients. As competition intensifies, traditional compliance services are quickly commoditizing, causing firms to primarily compete on fees during a cycle of rising professional labor costs.

Inside-Out Approach

Client-focused firms offer quality work and responsive customer service.

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based on the services they offer and the technical expertise that staff possesses.

This type of client-focused service model is an inside-out approach. An inside-out strategy relies upon selling existing internal talent and resources, even if it’s only a portion of what a client truly needs for long-term success.

While this inside-out approach may have previously been a growth strategy, it’s a primary reason why so many firms have seen a flat top-line over the last five years.

Outside-In Approach

Conversely, an outside-in approach to service starts with the clients’ true needs and addresses their problems by seeking creative, integrated solutions via in-house capabilities combined with those they need to acquire. CPA firms can be more client centric by offering solutions-oriented specialty services such as: Cybersecurity Advisory Services – This includes security advisory services for vulnerability, penetration and breach-response testing.

Comprehensive Workforce Management Services – These services include employee assessments, human resources management, benefits and insurance.

Divorce Advisory Services – This entails having a certified divorce financial

analyst on staff to assist in pre-divorce planning, needs analysis and goal-setting planning and implementation. According to Dr. Jennifer Baker of the Forest Institute of Professional Psychology, 50 percent of first marriages, 67 percent of second marriages and 74 percent of third marriages end in divorce. Divorce attorneys can be a significant referral source for these clients.

Economic Claims and Disaster Recovery Services – Here, you’ll target individuals and businesses, including monitoring and oversight services to governmental entities and agencies that are required to show accountability for relief or compensation funds provided

by the federal government or the private sector.

Growth Services – Provide clients with marketing, public relations and social media strategies by acquiring a marketing consulting practice. There is no better way to support a client than by helping it grow the top-line.

LGBT Services – These services are for same-sex couples in areas such as tax compliance or financial and estate planning and are customized to deal with complex state-by-state laws. Many states allow same-sex couples to file a joint state income tax return, and this number is growing. This is an excellent example of bundling new services with N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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a firm’s existing technical expertise while addressing the needs of a new and growing marketplace.

Outsourced Corporate Development Services – These range from researching and identifying merger and acquisition transactions for clients to closing the acquisition.

Risk Advisory Services – These services offer information technology assurance and compliance in such areas as Statement on Standards for Attestation Engagements (SSAE) No. 16, Reporting on Controls and a Service Organization; Service Organization Control (SOC) audits; and HIPPA/ HITECH compliance.

Idea Sources

Where do client-centric services come from? They start with ideas from partners, staff, clients or referral sources (e.g., attorneys, bankers, insurance professionals).

Taking these ideas from planning to implementation requires several steps, including research, design, marketing and service delivery. Suggested ways to gather innovative client-centric service ideas include: • Reviewing competitors’ brochures.

• Discussing with bankers and attorneys which special services they believe are needed by businesses in your area.

• Reviewing newsletters, trade periodicals and chamber of commerce publications for industry trends and issues.

• Soliciting ideas from clients and non-clients through surveys or meetings.

• Engaging an outside consultant to perform a market research study.

Idea Examples

Some examples of New Jersey accounting firms’ client-centric services: Citrin Cooperman – Provides financial crisis solutions and corporate governance services.

In a survey conducted with 250 buyers of professional services, it was found that the following elements were important to have on a provider’s website to help a buyer make an informed decision.

Service Descriptions

83%

Industries Served

79%

Case Studies

78%

Professional Website Design

72%

Online Educational Content

70%

Staff Biographies

59%

Client List

55%

News

29%

0

10

20

30

40

Source: Ryan Caligiuri International & ClearPicture Corporation N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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50

60

70

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“To be truly client centric, firms must listen to both their clients and the marketplace and not only sell what the partners know but what they need to know.”

necessary to sustain their clientcentric services and maintain a competitive edge in their marketplace.

For example, CohnReznick acquired real estate consulting boutique NOI Strategies; and Friedman LLP integrated Executive Sounding Board Associates to provide turnaround management, restructuring and crisis management services.

To be truly client centric, firms must listen to both their clients and the marketplace and not only sell what the partners know but what they need to know. Take what you know, add complementary services, and acquire the

FGP – Provides transaction advisory services for merger and acquisition transactions.

O’Connor Davies – Provides benchmarking analysis and compensation studies services.

Geltrude & Company – Provides a full suite of divorce and LGBT services.

Untracht Early – Provides outsourced accounting and business support services, along with family office services.

Using M&A to Become Client Centric

When firms offer client-centric services, they increase their exposure to a broader base of prospective clients and referrals, which can expand their network, thus leading to additional growth in traditional service areas. One way for a firm to expand its services is to merge with or acquire a company to combine or replace products to answer the needs in the marketplace.

Many firms are acquiring consulting companies to provide the integrated solution-type services

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expertise necessary to satisfy the true needs of the marketplace—then your firm will be truly client centric.

Joseph A. Tarasco, CPA, is the chief executive officer, senior consultant and founder of Accountants Advisory Group, LLP. Tarasco is a member of the New Jersey Society of CPAs. Contact him at joe@accountantsadvisory.com.

Use Content Management to Effectively Communicate with Clients

Regardless of what business you are in, clients not only need to hear from you, they want to. They rely on your information and solutions in order to overcome challenges and grow their businesses. This is why resources should be invested in marketing and content creation—to communicate the value a client will realize from working with your firm.

Customize

By Eileen P. Monesson PRCounts, LLC

Most accounting firms do not differentiate between client and prospect communications. Instead, they take a one-size-fits-all approach and send the same newsletter or update to everyone on their mailing lists. Effective client communications requires a customized approach. Prospects need to know what you will do for them.

Clients need to know that you are thinking of them and have their best interests in mind.

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“Most firms do a good job of keeping their clients appraised of changes to tax laws, accounting pronouncements and new regulations that could impact their businesses,” explains Larry Feld, marketing director for Hunter Group CPA LLC. “Developing content that is client or niche specific is more valuable, as long as the intention is to educate and not sell.”

A Hinge Research Institute study, The Visible Expert, found that accountants with a high level of niche expertise provide more value to their clients because of their ability to solve complicated problems faster (32 percent), introduce new ideas that their clients have not considered (27 percent), increase client brand recognition leading to business opportunities (25 percent), and reduce risk while providing a higher ROI (15 percent).

In addition to audience needs, you also have to know their communication preferences. Small businesses have different information needs than corporations. Millennials probably prefer electronic communications. Baby

Boomers may like a more personal touch. The point is that the subject and methods used to communicate with your clients should be customized for their specific needs and preferred method of communication. “It’s a generational thing,” says Sarah Cirelli, marketing manager at WithumSmith+Brown. “I might FaceTime or Skype someone where another person is more comfortable picking up the phone.”

Declutter and Differentiate

Focus on what your clients need to know and when. People receive far too many emails, newsletters, research reports, whitepapers, invitations to educational events and other messages to pay attention to information that is not timely, valuable and important to them. Every company is actively developing and disseminating content.

To be effective, you have to be different.

Withum is very engaged in social media and produces videos to showcase the firm’s culture. “We receive a lot of good feedback on our videos,” explains Cirelli. “People like getting a glimpse of our firm’s personality.”

Jessica Levin, president and chief connector at Seven Degrees Communications, recommends taking an integrative approach: “Communicate electronically, but also call, send a handwritten note or mail printed collateral materials. Direct mail often cuts through the online clutter because so few people are using this method today.”

Content Sourcing

Larger firms generally have the resources to write customized content.

“Our accountants write all of our content,” notes Rhonda Maraziti, director of marketing and practice growth at WithumSmith+Brown.

Sobel & Co., P.A., takes a hybrid approach. “Our practitioners talk to clients to find out what is important,” comments Sally Glick, principal of the firm and chief growth strategist.

“We write two articles internally and

purchase the other two. This makes producing content for our client newsletter manageable.”

Smaller firms may not have the in-house resources to generate content and, instead, purchase it. Buying content can be a viable and cost-effective solution. Even so, understand that some content providers might be selling the same articles to many companies, including your competitors. In this case, your goal of providing customized content to clients may backfire.

Content Packaging

Savvy accountants and marketers make it a point to peruse various sources to find timely information for their clients’ benefit. They subscribe to and read daily news feeds from credible sources. For instance, your construction niche might receive information from the National Association of Home Builders, New Jersey Builders Association, Utility Transportation Contractors Association, New Jersey Apartment Association and the Construction Financial Management Association in order to keep abreast of developments in residential, multi-family, mixed-use and heavy construction, as well as the accounting and tax issues that impact this industry.

By getting permission to reprint and repurpose the information from the content provider, you can become an effective clearinghouse for clients.

Once properly obtained, information should be disseminated to clients via various communications platforms, including print, web and social media.

This tactic positions your firm as an industry expert or thought leader, keeps clients informed and gives you the opportunity to provide guidance on how particular issues could affect their businesses.

Face-to-Face Never Goes Out of Style

Schedule regular client meetings and conference calls to ensure that you are informed about what is happening in your client’s business. “Regular N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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face-to-face meetings are critical to developing trusted relationships,” adds Glick. Send an agenda beforehand so that the conversation is focused on relevant topics, and then follow-up with a synopsis of discussion points and action plans. This will demonstrate that you have a clear understanding of client deliverables, as well as who is responsible for completing specific tasks by when.

Keep your clients close and engaged by communicating with them frequently and providing useful and timely content that will help take their businesses to the next level.

Ten Engaging Ways to Communicate with Clients

1. Welcome package consisting of a letter, e-brochure or video from the managing partner; and information on the firm’s culture, mission, values, engagement team, what to expect, who to call.

2. Monthly managing partner video updates.

3. Video on firm news, team members, community outreach and testimonials.

4. Video follow-up email.

5. Google Hangout.

6. Niche-specific LinkedIn client group.

7. Engagement status updates on Skype.

8. Short webinars on industry trends and research, benchmarking data, trending news.

9. Text reminder.

10. Infographics.

Eileen P. Monesson, CPC, is a principal with PRCounts, LLC, a brand engagement company and New Jersey Society of CPAs member benefit provider. Contact her at 848-459-3130 or emonesson@prcounts.com.

The Importance of Client Feedback My firm’s ability to successfully solicit, obtain and measure client satisfaction information and use that information in a meaningful way is one of the, if not the, most important items to ensure future success.

By Seth L. Moskowitz, CPA Baker Tilly Virchow Krause, LLP

According to the Corporate Executive Board, 95 percent of companies collect feedback about their level of service and expertise, but less than half use it to improve the way they do business, and just five percent actually talk with their clients and take action to make things better. We have implemented tools to assist us with being among the five percent where talk triggers action.

Nothing is more important to us than the voice of our clients. It is the fabric of our firm—the foundation upon which we build our client service model. We ask, we listen, and we use the feedback to continually improve the client experience.

Firm Approach

How does our firm assess the qualitative and quantitative aspects of client satisfaction? Our client services director conducts satisfaction assessments through a mix of direct telephone calls, client visits and webbased client satisfaction surveys. Firm leaders, including our chair and CEO, also get involved by meeting with a sampling of clients each year.

During these assessments, we verify that we are meeting our clients’ expectations as defined during the planning phase of the engagement.

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follow-up by firm leaders, is a critical element of our approach to addressing concerns that may exist.

Satisfaction Factors

Because our services go beyond basic auditing, tax and advisory services, our view of client satisfaction is tied to several factors. One of these areas is our commitment to communication.

It is important to get feedback from clients on how we are communicating with them. Certain clients prefer a specific type of communication, be it email, phone, text or in person.

Another satisfaction metric is determining if we have the proper type and amount of presence in the field. This needs to be mutually agreed upon to not cause disruption, so that a client can contact us for a periodic update or look a firm representative in the eye and ask a question in order to get immediate clarification. In today’s business world, you have to be aware of your clients’ sensitivities.

Honesty

One interesting aspect of gauging client satisfaction is the challenge of encouraging honesty from clients.

In order to draw honest feedback, we utilize several strategies. First, and while it may sound overly simplistic, we ask them to provide honest feedback. How many times have businesses failed by thoroughly covering all of their strengths and accomplishments, yet they didn’t take the time to ask clients a couple of simple questions: What are we doing right? What are we doing wrong?

We explain that honesty— especially in a profession such as accounting—is the only way to get accurate results, and that we want to hear their genuine thoughts on our service. Conversely, we make sure to be honest, open and direct with clients throughout the engagement. If clients see how honest we are—and particularly if we are honest when it comes to areas where we could improve—then it creates a more trustworthy atmosphere. A mutual comfort level is undeniably one of the keys to having satisfied clients.

Firm Numbers

Our most recent survey results indicate that on a scale of 1 to 10, 79 percent of our clients rate their satisfaction with us as a 9 or 10. And 97 percent of clients indicate a high level of satisfaction after transitioning to our firm.

Our commitment to improving the client experience is further evidenced by the fact that, on average, clients who gave us a score of less than or equal to 7 on our client satisfaction survey gave us nearly 2 points higher the next time they were surveyed, due to specific

actions taken by our team to improve the client service experience.

While it’s a lofty and admirable goal, no firm or practitioner can reasonably expect to get a 100-percent satisfaction rating from every client. My firm and I have had engagements that did not always meet our high standards of excellence. In these cases, it is just as important, if not more so, to gather client feedback and satisfaction rates.

Personal Approach

Obtaining client feedback should be both an organizational and personal initiative. I always try to hold a wrap-up meeting at the end of each engagement to discuss with my clients where things went well and where there is room for improvement. One myth in accounting, as in many industries, is that communication is only really critical before and during the service process. However, the post-engagement communication is often the most critical, as it leads to more efficient processes in the future and, in turn, more satisfied clients across the firm.

The newer the client, the more frequent my communications. Once a N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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client’s expectations have been met and (hopefully) exceeded, and a mutual trust has been developed, I am able to spread out the communications somewhat.

However, it’s imperative to always make sure that my clients know what to expect.

Practitioners must develop a no-surprises mindset, which is universally appreciated among clients, both new and old.

We rely on our clients’ definition of satisfaction, not our own, because their opinions matter most. We survey clients regularly, make changes based on their feedback and hold each member of our team accountable for client satisfaction. Being a client’s most trusted business advisor means responding immediately to their questions and feedback, communicating frequently and openly, and proactively bringing new ideas to the table. And it means making their top priorities our top priorities.

Seth L. Moskowitz, CPA, is a senior manager at Baker Tilly Virchow Krause, LLP. He is a member of the New Jersey Society of CPAs. Contact him at seth.moskowitz@bakertilly.com.

Covering All the Bases When Disengaging a Client All client relationships have a life cycle. When a firm first obtains a new client, there is a discovery period and a time of growth. This ramp-up period is when the firm and client first learn how to work together.

Then comes a maturity period, where a relationship of mutual trust has been formed. Unfortunately, there sometimes comes a point when the CPA-client relationship must end for one reason or another. An important part of practice management is recognizing when you’ve arrived at this point.

Client Evaluation

By Stephanie L. Holston, CPA Wilkin & Guttenplan, PC

Evaluating your existing clients to determine their particular stage of the life cycle is a critical process that should be done at least annually. Ideally, a firm’s resources should be concentrated on growing the early-stage clients and maintaining the mature clients, while simultaneously pursuing new opportunities that fit within the firm’s strategic vision.

Making the decision to terminate a relationship with a client at the end of its life cycle can sometimes be a difficult N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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decision, but holding onto these clients could be holding your firm back on many levels. These clients consume resources, which could prevent your firm from obtaining the kinds of clients that you desire. It could also negatively affect employee morale.

The end of busy season is an ideal time to reevaluate your client relationships and determine their impact on your firm, as well as their impact on your firm’s future goals.

Positive Reasons to Disengage

If your firm is growing and evolving, you may discover that your client base must evolve along with it. Simple growth in your firm’s size could be reason enough; you may not be able to give a small client sufficient attention as your firm grows. Fee pressures also could make servicing that small client no longer cost effective. You may decide to shift your firm’s focus toward a different strategic direction, and your existing client base may no longer fit with your firm’s new vision. For example, if your firm has decided to focus on its real estate practice group, the small

manufacturing client may be utilizing resources that could be best used on growing your new strategic focus.

The opposite could also be true.

A client may evolve and move in a direction that would make it no longer a fit with your firm. Perhaps your client has moved to a different business line in which you do not have expertise, so you may choose to refer them elsewhere. They could also be growing in size and decide to go public, in which case you may find yourself unable to service their growing needs. In this case, disengagement may be the best path for both.

It is also important to evaluate your client relationships for potential conflicts of interest. In a divorce situation, for example, you will likely find yourself unable to fairly represent both spouses. The sale of a business or dissolution of a partnership could also pose potential conflicts. You will need to evaluate the situation from multiple points of view and decide if you are able to fairly represent the interest of each of your clients involved.

Negative Reasons to Disengage

Ideally, all clients would be perfect, but reality does not work this way. Having trust in the client’s management is key to a productive relationship. It is obvious that a

client who asks you to do something unethical should be disengaged immediately. There are, however, other bad behaviors that could be a reason to disengage. The reasons are many: a slow-paying client, a client who is slow to provide information or withholds information, or simply a client who is difficult to get along with, makes unreasonable demands and causes unnecessary stress on the staff with whom they interact. Evaluate the effects the client has on your firm and staff as a whole, and decide whether the relationship is having an overall positive or negative effect.

How to Disengage

We’ve covered the why, now let’s address the how. It is generally advised to disengage a client in writing so there can be no misunderstanding as to when your responsibilities end from a reporting and compliance standpoint.

Some firms choose to send this communication via certified mail to be certain that it has been received.

Other firms feel a phone call is a more personal method, especially for a client with whom they have had a longstanding relationship. Still other firms feel a combination of both is best so that the client feels it has been treated in a personal manner, while still offering the CPA some comfort N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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(and cover) that they have been clear in their communications.

Make It a Smooth Transition

No matter the method, disengagement should be done in the most professional manner possible. To make the process easier, do what you can to facilitate the client’s transition to a new CPA firm.

When you inform the client of your decision to terminate the relationship, come prepared with a list of CPAs whom you trust and believe can handle the account in the best manner possible.

You can work together with that CPA to help make the process seamless for your client by forwarding financial statements, documents and tax returns filed in prior years.

They say that breaking up is hard to do, but it’s part of life. If done properly, disengaging from a client can have a positive effect on both the firm and the client. If the matter is handled professionally, a client will leave with the same feeling it had while you were servicing it—that you have its best interest in mind.

Stephanie L. Holston, CPA, is a manager with Wilkin & Guttenplan, PC. She is a member of the New Jersey Society of CPAs. Contact her at sholston@wgcpas.com.

A&A

buzz

Three Key Steps to Take When an Audit Goes Bad B Y DAVID A. L OPEZ, C PA, DAVI D A. LO PE Z AND C O M PA N Y, L L C

W

hen performing audit planning procedures, our firm’s auditors consider and discuss the various engagement aspects. We review client fit, our skills and, most importantly, our audit risks. As engagement managers, we focus on assessing the risk of material misstatement, fraud and even potential reader reactions from the audit report. But we, as audit professionals, rarely consider and discuss the risk of the audit going badly. Unfortunately, it will eventually happen. Fortunately, an audit engagement going badly is a rare occasion at our practice, but as the firm leader, I need to clearly educate the staff on the processes and procedures should a serious audit issue arise.

An audit can go bad for numerous reasons: lack of documentation, detection of fraud and/or a disagreement with the client. Whatever the reason, the engagement team has to make quick, definitive decisions on whether to continue the engagement or bring it to an immediate conclusion.

Whenever our team senses significant audit issues, it follows this protocol:

1. Document the Issue Clearly and Completely

If an audit engagement goes bad, it is critical that the relevant engagement team members document the circumstances that have lead to the current situation. Documentation may include client-prepared analyses, engagement team memos and auditor workpapers. The substantive documents should provide a clear and complete description of what situations have led to this point.

The firm’s engagement status memo should include the team’s consideration of the relevant audit

issues and the firm’s response.

Documentation should also include any authoritative literature and standards that support the position of the audit firm. Similar to your audit workpapers, this documentation should be supported by factual statements and substantive paperwork.

2. Communicate with the Client in a Timely Manner After thoroughly documenting the situation, the engagement partner should immediately schedule a faceto-face meeting with his or her counterpart at the client. This should be the highest level of management that is involved in the audit and financial reporting process. This may be the CEO, CFO, board president, audit committee chair or some combination of them. During the meeting, the audit partner should clearly define the situation and the firm’s recommendation on how to properly address the issue. If the partner believes the situation can be rectified, the audit firm will provide the steps to overcome the issue(s) and continue to move forward with the engagement. If, however, the partner believes the seriousness of the audit issues requires the firm to disengage from the client, the audit firm needs to communicate the reason for that decision and then discuss steps for an orderly transition.

3. Properly Disengage from the Client

Firms often underestimate the seriousness of ending an audit and leaving a client. The process of ending a client relationship involves the issuance of a formal disengagement N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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letter. A disengagement letter can include a significant amount of information, but you want to keep it as concise as possible.

The letter should clearly and completely communicate the reason for the disengagement, without being accusatory, as the correspondence is a tool in minimizing the risk of legal liability.

The disengagement letter should include (1) the reason and effective date of the disengagement; (2) a clear description of the audit status, documenting and explaining what audit procedures have been done and what tasks still need to be completed; and (3) reiterate any deadlines, both statutory and internal, that are related to the audit report.

Abruptly ending an audit is not a pleasant situation. Deciding to walk away from an audit prior to issuing a report generally causes stress for the client and may delay its plans or goals. Properly documenting your decision is critical in order to minimize the risk of being sued by a disappointed client. Clarity, completeness and timeliness of your communication will ensure that whatever decision is made, the firm has covered all of its bases when an audit goes bad.

David A. Lopez, CPA, is the managing member at David A. Lopez and Company, LLC. He is a member of the New Jersey Society of CPAs and an editorial board member of New Jersey CPA magazine. Contact him at dlopez@ davidlopezcpa.com and follow him on Twitter at @davidlopezcpa.

BEST

practices

Seven Tips for Planning Your Next Client Event B Y VICKI L . G OETTER, FLAC K M AN GO O D M AN & POT T E R , L L P

P

lanning a client event can be one of the most stressful parts of a marketing professional’s job, because there’s so much riding on it. Here are several tips on how to make your event a success.

1. Start with the Basics

Start your planning by getting the basics right: Pick Your Objective/Topic – Define the purpose and ultimate goal of your topic selection.

Select the Date – Make sure that your date is at least four to six months out, allowing you time to organize and market the event.

Schedule the Time – There’s no hard-and-fast rule. Only you will know what your clients prefer. If applicable, offer multiple times to increase overall attendance.

Choose a Venue – Location, location, location is not just important in real estate, but also in event planning. Don’t forget to visit the venue and preview the space. No one wants any unexpected surprises the day of the event.

2. Set a Budget

If the event is designed to generate revenue, you need to establish a budget in order to determine your return on investment. See Figure 1 for a sample budget.

3. Secure the Right Master of Ceremonies and Speaker(s)

The right speaker(s) is important, and depending on the size and potential success of your event, having a master of ceremonies can keep the program moving smoothly and on time. Look for someone who is authoritative, charismatic, animated, relatable and can tell a good story.

4. Promote Your Event

Success comes from a well-thought-out marketing plan. Each event is unique; however, this guideline is a good rule of thumb: Four to Six Months – Announce the event with a “save the date.”

Three to Five Months – Send two reminder emails highlighting event details.

Two-and-a-Half Months Prior – Send electronic and/or paper invitations.

One month Before – Review RSVPs. One Week Before – Send confirmation of attendance and event reminder.

One Day Before – Send reminder.

One Day After Event – Send an email thank you to attendees as well as an event survey to increase the value for future events; include an option to be contacted.

5. Design Your Room

Design the room so that it meets the objective, keeping in mind table arrangements, and make sure there are no bad seats. Consider room temperature, bathroom distances and ample refreshments to keep your attendees focused on the presentation and not on their growling stomachs.

6. Remember LastMinute Items

Don’t forget to incorporate these lastminute items: Greeter(s) – Assign greeters to direct attendees.

Name Tags – Include a fact about their business or industry, which can be a good conversation starter.

Technology – Make sure all of your technology is working properly.

Music – Have upbeat music playing at the beginning and end to build a feeling of excitement in the room.

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Figure 1 EXPENSES Venue Rental

$

Speaker Fees

$

Food and Beverage

$

Speaker Travel

$

Marketing

General Supplies

• Printing Costs

$

• Decorations

$

• Advertising

$

• Name Badges $

• Public Relations

$

• Promotional Items

$

• Photographer

$

Technology

$

Security

$

Permits

$

Registration Fees $

Co-Sponsoring

$

Fundraising

ROI Goal

$

Prizes/Giveaways $ POTENTIAL INCOME $

7. Network Before, During and After

Don’t forget networking basics: Before – Devise a clear plan on who everyone should be talking to and why.

During – Encourage mingling.

After – Follow-up.

Planning any event, whether it’s for 20 people or 10,000, can be stressful. But don’t lose sight of the goals of having attendees walk away with new knowledge and positioning your company to become a valuable service provider.

You can achieve success through planning, informative topics, dynamic speakers and ardent follow-up. Before any event, walk through the space from parking lot to departure and make sure you haven’t missed any of the small details that can make a big impact.

Vicki L. Goetter, AAAPM, is the firm administrator at Flackman Goodman & Potter, LLP. Contact her at vlg@ fgpcpa.com or 201-639-5741.

BUSINESS & INDUSTRY

insights

Eight Key Metrics for CFOs B Y PAUL C . URS ICH, CPA, W I SS & C OM PANY, LLP

F

inance executives primarily focus on measuring and optimizing the flow of money. Revenue and net income should go up, and expenses should go down. Far from being a dark art, the process is fairly uniform across most types of businesses. The oft-repeated businesses school mantra, “you can’t change what you don’t measure,” has received some backlash lately in creative circles, yet is still very appropriate for financials.

Before approaching the measures and key performance indicators themselves, it’s critical to pay heed to the processes surrounding their generation. Borrowing a computer science term: garbage in equals garbage out. The correctness and accuracy of your financial data collection has a huge impact on your ability to make consistent sense of cash flows and attribute it properly.

Proper stewardship of a data quality program is a key buttress to effective financial reporting and forecasting.

Automated processes for standardizing, verifying and correcting data are necessary to realize overall accuracy improvements. Consistent references to client names and locations, for example, are an early quick win in this area.

Close cooperation with the internal information technology department and potential supporting vendors is necessary. More extended and formal data quality programs of this nature enter the realm of “Master Data Management” and can also encompass business leads, hierarchies, suppliers, geographies and others.

In addition to quality, timeliness can have a huge impact on financial agility.

If it takes nine months to evaluate all of your numbers and see your current standing to reassess direction, that’s a significant disadvantage compared to more nimble competitors. Create a plan

for who needs to see what data and when, and what actionable outcomes can result. Reports and dashboards that are updated daily—or more often— and accessible from desktop or mobile can increase the speed of decision making. However, while technology and automation play a part, so does setting of expectations and training for various people involved.

Accurate and relevant metrics are like a great set of golf clubs.

Everybody covets them, but unless they are in the hands of a proactive CFO who can translate them into insights and action, they are useless.

When selecting your metrics, make sure your team understands the definition and impact of each one.

Just like our ever-changing economy, we must adapt and embrace any amendments needed for the metrics.

Make a consistent effort to regularly revisit the reason and goals for your company’s metrics. More importantly, if you are changing parameters, take the time to document the deviations.

Document the logic and new goals to avoid miscommunication, while tying it back to any shifts in strategy.

Strategy in a business usually translates to exposing new trends and opportunities. One of the most often overlooked areas of this is looking within operations. Having strong and timely internal metrics can reveal numerous indicators of inefficiencies and also scalability. Once more, the purpose circles back to the bottom line. Here are eight important metrics that CFOs should have on their daily dashboards: 1. Working Capital – Gauges the condition and competence of a company.

2. Current Ratio – Indicates the overall liquidity situation.

3. Inventory Days – Shows how much inventory is readily available.

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4. Accounts Receivable Days – Measures approximately how quickly a company receives payment after invoicing for services.

5. Gross Profit Margin – Shows the proportion of money remaining from revenues after determining the cost of goods sold.

6. Net Profit Margin – Tells you what percentage of the total money made by a company increases the value of the company or its owners, rather than being spent on costs.

7. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) – Measures a company’s profitability in selling its products or services.

8. Interest Coverage Ratio – Looks at income on financial reports to determine if the company is bringing in enough profits to pay its interest obligations.

Paul C. Ursich, CPA, is the director of CFO Advisory at Wiss & Company, LLP. He is a member of the New Jersey Society of CPAs. Contact him at pursich@wiss.com or 973-994-9400.

FINANCIAL

planning

Try Decanting for a Tasteful Trust B Y GUY MCPHAIL , CPA , THE GM GROU P

Y

ou may have a client who has created an irrevocable trust for tax benefits for both the grantor and the beneficiary. Putting your assets in an irrevocable trust allows you to avoid possible future tax rate increases if and when your estate increases in value. Unfortunately, irrevocable trusts offer less flexibility than revocable trusts and are much more difficult to change.

However, it is getting easier to modify irrevocable trusts through a process known as “trust decanting.”

These trusts used to be very difficult and costly to alter, even when a trustee was in alignment with the change being in the beneficiary’s best interest. Decanting is done outside of court, thus making it less expensive and more private.

you would like to make sure they are not touched because of an impending event that could significantly increase the value. An example would be if someone put private stock in a trust and then there is a pending initial public offering.

Another example is when you might want to alter the spendthrift provision in the trust, which would give the trustee authority to act on the beneficiary’s behalf and prevent creditors from attacking the interest of the beneficiary until after the assets are distributed.

Difficulty Level

Trust decanting is transferring assets from an existing trust, often referred to as the first trust, to another trust, often referred to as the second trust. When you decant the assets, you are basically placing them into a new trust. This new trust would be more favorable to your current desired circumstances.

The trustee does not have to get approval from the beneficiaries to decant, and it often does not require court approval. The trustee may be authorized to create a new trust (decant) from the specific language in the trust agreement, statutory authority or common law principles.

Getting cooperation from all parties is usually recommended by most trust attorneys. Also, there are limits on what decanting can accomplish, such as trustees cannot change a beneficiary’s vested interest in a trust.

When to Decant

NJ’s Position

Decanting in a Nutshell

What are some circumstances where you might consider trust decanting?

I have seen a few occasions where clients have established a trust several years prior for their children. The trust grows much larger than originally anticipated because of a huge increase in the stock they originally put into the trust. The clients now want to avoid giving the children too much money at an early age.

You could have a situation where the trust assets are appreciating, and

A total of 22 states have decanting statues, including New York and Florida. The state statues differ as to the discretionary standard needed in the trust agreement to decant and whether the beneficiary is entitled to notice. New Jersey, Pennsylvania and Connecticut do not have statues that specifically allow trust decanting.

Without a specific statute, trustees in New Jersey usually rely on a provision placed in the majority of trusts that allows the trustee to distribute assets “to N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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or for the benefit of” the beneficiary.

New Jersey courts have stated that this and similar provisions allow a trustee to distribute assets in a trust into a substitute trust as long as the substitute trust is for the benefit of the beneficiary.

The courts have not specifically stated whether the authority of the trustee to act in the beneficiary’s interest must be unlimited, or if a trust creator can limit the trustee’s actions to a certain standard, but it is presumed that the trustee’s powers must be unlimited. In New Jersey, a trustee should consider getting court approval before doing this, which obviously adds to the cost.

Decanting can breathe new life into a trust for your client, but the decanting process involves many specifics and complicated language and varies from state to state. Seek an experienced trust attorney when you are ready to decant a trust.

Guy McPhail, CPA, PFS, CFP, is president of The GM Group. He is a member of the New Jersey Society of CPAs. Contact him at gmcphail@ njbizcpa.com or 609-737-6600.

FORENSIC

file

Don’t Let Your Valuation Report Get Thrown Out B Y ROBERT B . CH ARLTON, C PA, NI SI VO C C I A LLP

L

itigants sometimes attempt to minimize litigation costs by engaging accountants to perform limited procedures as part of an initial investigation or to assist in settlement negotiations. Such services are permitted under American Institute of CPAs standards. Limited scope engagements by nature do not contemplate all procedures and information required to render an opinion of value.

When unsettled matters escalate into litigation, limited procedure reports may find their way into court. Accountants may have difficulty defending these engagement findings, and courts often look with skepticism at such reports. The consequences can be dire.

methods he or she deems appropriate in the circumstances. The valuation analyst expresses the results of the valuation as a conclusion of value …”

Calculation Engagement – This is conducted when “a valuation analyst performs a calculation engagement when (1) the valuation analyst and the client agree on the valuation approaches and methods the valuation analyst will use and the extent of procedures the valuation analyst will perform in the process of calculating the value of a subject interest—these procedures will be more limited than those of a valuation engagement; and (2) the valuation analyst calculated the value in compliance with the agreement. The valuation analyst expresses the results of these procedures as a calculated value … A calculation engagement does not include all of the procedures required for a valuation engagement.”

A valuation engagement results in an opinion of value. Figure 1 summarizes the differences between these engagements.

Valuation Standards

The AICPA issued Statement of Standards for Valuation Services 1 in 2007, addressing the types of valuation services. It identifies two types of valuation engagements: Valuation Engagement – “A valuation analyst performs a valuation engagement when (1) the engagement calls for the valuation analyst to estimate the value of a subject interest; and (2) the valuation analyst estimates the value and is free to apply the valuation approaches and

Dismissal of Defendant’s Expert Testimony In Surgem, LLC v. Seitz, 2013 NJ Super. Unpub. Lexus 2491, the appellate court agreed with the trial

Figure 1

Best Used

Differences

Valuation Engagement

Calculation Engagement

When presented to a trier of fact.

For planning purposes, preliminary investigation and settlement purposes.

Opinion based upon unrestricted accountant’s choice of approaches and methods.

Accepted in court.

Does not include all the procedures required for a valuation engagement. May not rise to the level of an opinion of value. The client influences the choice of approaches and methods. May not be accepted in court.

Type of Report Issued Valuation

Calculation N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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judge and found the defendant’s expert’s opinion unreliable and his calculation of value report insufficient in establishing the fair value of Surgem.

The trial court stated “Seitz’s appraisal expert … did not appraise the fair value of Surgem or of Seitz’s interest; rather, he testified that he had been engaged to prepare only a ‘calculation of value,’ an agreement between appraiser and client as to the manner in which the appraiser’s work is to be done …” The expert testified that inaccessibility to sufficient information and restricted procedures agreed upon with the defendant limited his report.

He stated more work should have been done to develop an opinion. The court found his procedures insufficient for its purposes and accepted the opinion of the plaintiff’s expert.

Accountants should prevent calculation reports used in planning, investigating and preliminary settlement negotiations from winding up in New Jersey courtrooms. Detailed conclusion of value reports should be used for disputes going to deposition, court and other formal venues.

Accountants should inform users of limited-scope engagement reports of procedure restrictions and any known information constraints. The report should disclose that additional procedures and new information may change findings. A calculation report should state its specific use (e.g., settlement negotiations) and that additional information and procedures may be required for the findings to rise to the level of an opinion suitable for a trier of fact.

Robert B. Charlton, CPA, ABV, CFF, CVA, is a partner at Nisivoccia LLP. He is a member of the New Jersey Society of CPAs Business Valuation Forensic Litigation Services and Federal Taxation interest groups. Contact him at rcharlton@nisivoccia.com.

SMALL/SOLE

practitioner

The Three “BEs” of Billing Success B Y B RID GET M. DAY, C PA, W E I SE RM AZAR S LLP

A

s service professionals, we wear many hats: technicians, teachers, mentors, advocates, arbitrators, counselors, speakers, writers, salespeople and, let us not forget, bill collectors. For many of us, this can be one of our most dreaded roles. While we believe in the value of the services we provide, we often find it difficult to bill and collect what we’ve earned. To help make billing clients less onerous, I offer the “Three BEs of Billing Success:” BE transparent, BE accurate and BE timely.

1. BE Transparent

From the day the engagement letter is signed, if not earlier, make sure the client knows how the amounts to be billed will be determined: whether it’s a fixed or hourly fee, whether the fee is inclusive or exclusive of out-of-pocket costs and other allocated expenses, and how much these expenses generally run (i.e., 4 percent of the fee).

Make sure the client knows what circumstances would trigger an additional billing, such as data not provided as agreed, scope changes and/or limitations imposed, errors found requiring additional work to be performed and so on. When possible, establish a billing schedule with the client, taking the time at the onset to plan not only when time will be incurred on the engagement, but when client invoices will be generated, so as to match the time incurred with the billings generated.

If extra-billing circumstances arise, communicate with the client as soon as possible. Obtain any necessary preapprovals, and make sure the approvals provided are given by the person or persons with the requisite authority.

2. BE Accurate

Make sure you can support your work with specifics as to hours and

procedures performed. Maintain appropriate time records so that you can provide a roadmap to the cumulative invoiced amounts. Some clients will demand a breakdown of fees to the level of staff and task, while others may not. My experience has shown that the more communicative you are with the client about the time being incurred on the engagement, the easier it is to bill for time incurred.

Create sufficiently detailed billing dashboards. These tools are a necessary component to running a successful business. Information about profitability by client (e.g., realization), business line and industry are key. So, too, are details about how long it takes to bill and collect work-in-process, such as days sales outstanding. As “numbers people,” accountants can find it motivational to establish and track billing-related metrics, but it can also increase the effectiveness and efficiency by which we run our businesses. By using metrics properly, we can see which clients pay the quickest, pay without challenge and pay for value or not—enabling us to direct our best resources to those clients who most value the services provided.

3. BE Timely

This is essential, not only for the client but for our own ongoing professional success. Further, never put an unexpected N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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invoice in the mail, and make sure that invoices are sent as soon as possible.

Carrying uninvoiced work-in-process delays the turnaround to collection and negatively impacts cash flow, making accurate projections as to financial performance and management of day-today cash flow needs next to impossible.

When feasible, bill continuously throughout the engagement, reviewing your billing dashboard periodically throughout the month. Never wait until the engagement is long past to send the invoice. The value in our services is most apparent while we are on site or shortly thereafter.

To the extent possible, gain an understanding of how your clients pay their bills so you know the ideal time to send invoices and get them paid in a timely manner. Some clients may only cut checks once a month, and if you miss the deadline you might unnecessarily wait an extra 30 days to get paid.

Donning the bill-collector hat may not be easy or comfortable, but it is a necessity and a role we should wear proudly given the value of the services the accounting profession provides.

Bridget M. Day, CPA, is a partner at WeiserMazars LLP. She is a member of the New Jersey Society of CPAs. Contact her at bridget.day@weisermazars.com.

TAX

talk

Why You Need to Offer Clients a Nexus Study B Y A LAN H. ACKERMAN N, C PA, UNTR AC HT E AR LY LLC

A

s CPAs, we have a responsibility to keep an open eye to opportunities that could reduce clients’ overall tax exposure. Conducting a comprehensive state and local nexus study qualifies as one of those opportunities.

Clients should first be educated that the term “nexus” refers to a jurisdiction’s right to impose a tax, whether it is an income or franchise tax on out-of-state entities, sales taxes where a sufficient connection exists between the client activity and the locale, or the withholding of payroll taxes on employees performing services within a state’s borders. The owning or leasing of property, use of capital, employing of personnel or deriving income from activities within the state can create sufficient nexus for these various taxes. A nexus study will clearly indicate where a client has nexus and what state and local tax (SALT) filings and payments are necessary.

Compliance Exposure

Unsuspecting clients may maintain nexus in jurisdictions never previously considered. Should nexus be present for previous years, the client most likely has had exposure to delinquent return filings that may require payment of tax, interest and penalties.

Should a nexus study establish this delinquent status, the client has a couple of options.

A client can close his or her eyes and hope nothing will come of the deficient filings. Cleary, this has multiple downsides. Without the filing of returns, the statute of limitations has not begun. For non-filers, the state may initiate an examination covering a series of tax periods or conduct an audit for all years since inception, depending upon the jurisdiction.

An analysis conducted as part of the nexus study should quantify the exposure—including applicable tax, interest and penalties—to determine significance. Should the exposure be deemed minimal, a client can chose to begin compliance in the current tax period and for subsequent ones.

However, the exposure is often significant. When dealing with sales tax or payroll tax trust fund deficiencies, various responsible parties within the entity may also be personally subject to a 100-percent penalty. The let’s-wait-and-see option N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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is not really an option at all and is not recommended.

Secondly, a client can voluntarily file delinquent returns with the applicable past-due payments. A major benefit to clients for coming forward voluntarily is the utilization of Voluntary Disclosure Agreements (VDAs) offered by most, if not all, states. In exchange for coming forward before an audit notice is issued, the state will often offer a limited look-back period, the abatement of penalties and a reduced interest rate on the deficiency.

When it comes to the “pay me now” or “pay me later” choices, there is a huge advantage in utilizing the VDA programs. By writing a check for a fraction of what you would otherwise have had to pay had no action been taken and with a state subsequently initiating an audit, you can realize that advantage.

Tax Planning

A nexus study can also have a positive tax planning impact for minimizing a client’s state and local tax burden. Every business that has connections with more than one state, or one that is planning an expansion, should have their existing or

planned operations reviewed in a nexus study with an eye toward reducing its total state and local tax liability.

An astute tax planner can minimize the SALT burden by tailoring current business or expanded business models to take advantage of the apportionment methodologies used by the various taxing states. For example, taxes may be reduced by either creating or eliminating nexus in jurisdictions and shifting part of the business to more beneficial locations. A nexus study can also highlight various tax incentives to encourage a new or expanding business to locate or relocate within differing jurisdictional borders. Instead

of maintaining the status quo, a nexus study can help bolster a business’ aftertax profitability.

Whether it’s resolving compliance issues or developing proactive tax planning techniques, offering clients a nexus study can lead to increased firm revenue and goodwill. Chances are, if you don’t offer a nexus study to a client, another company will.

Alan H. Ackermann, CPA, is a principal at Untracht Early LLC. He is a member of the New Jersey Society of CPAs. Contact him at aackermann@ untracht.com.

in growing your practice.

Be invested

We offer a full range of commercial deposit, cash management and lending solutions to keep your practice moving forward.

John W. Celmer VP, Professional Services 973.738.7859 • jcelmer@myinvestorsbank.com Daniel Murphy AVP, Professional Services 732.246.3592 • dmurphy@myinvestorsbank.com

Investors Bank name and weave logo are registered trademarks. ® 2014 Investors Bank, All rights reserved.

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Member FDIC

Equal Opportunity Lender

TECH

center

Is Your Firm Mobile Ready?

B Y JEF FREY A. L EV Y, CPA, W I LK I N & GUT T E NPLAN, PC

I

n today’s accounting profession, processes that used to rely on reams of paper and shoeboxes full of receipts now rely on client portals and electronic workflow tools. Many firms cite efficiency as the primary reason for going paperless, but it’s important not to forget that our clients were another major driver. As they started using their computers and the Internet to accomplish more and more of their daily tasks, they demanded they be able to work with

their accountants the same way.

However, our clients’ tool of choice is changing. According to a December 2014 Pew Research Center study, 64 percent of American adults now own a smartphone. The number is even higher (79 percent) for the age 30 to 49 demographic, which represents many of our emerging client decision makers. Gartner predicts that in 2015, sales of tablets will overtake PC sales for the first time. Furthermore, these devices are now so powerful and N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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capable that many households are finding they don’t need a computer, or if they have one they rarely need to turn it on.

Smartphones and tablets are the devices that our clients have by their sides and will be the first thing they reach for when they need to conduct business with their accountants. Will your firm make it easy for them to work the way they want? Consider the following to make sure your firm is mobile ready:

Firm Website

The website is a core part of the marketing strategy for most firms.

Publishing unique and helpful content helps ensure your site is at the top of prospects’ search results. But if your site looks scrambled and the dropdown menus don’t work on their smartphones, current and potential clients will look elsewhere. Test your site on various models of smartphones and tablets. If it doesn’t look great or isn’t easy to use, consult your web designer to discuss building a mobile version of the site.

It’s worth noting that Google now gives priority in mobile search results to websites that are mobile friendly.

Secure File Transfer

Since email is not a secure method of transferring files, many firms have adopted a tool to send and receive files securely from clients. Whether you use a client portal, a file-sharing tool, encrypted email or simply passwordprotected PDFs, make sure your clients can send and receive documents easily from their devices of choice.

Accounting Systems

Firms that provide client accounting services have started to embrace cloud-based tools to collaborate more closely with clients. Examples include electronic approval workflows for accounts payable and real-time reporting from cloud-based general ledgers. Giving your clients the ability to collaborate with you from a computer is great, but giving them the ability to approve invoices for payment from their phones while standing in line at the grocery store is what they really want. Check with the vendors of these tools to see what type of mobile access they support, and then make sure your clients know what is available.

Invoicing and Payment

Making it easier for clients to pay you is rarely a bad idea. Some firms send invoices via email and provide electronic payment options, such as credit cards or ACH transactions; however, many solutions require clients to phone in their credit card numbers or manually enter payment information each time.

That may be information your client doesn’t have on hand while reading your invoice in the TSA screening line. Users of sites like Amazon or Uber expect to be able to enter payment information once and then authorize each transaction by tapping a few buttons or entering a password. Firms should consider payment options offering the same level of convenience.

Part of providing exceptional client service is understanding each client’s preferences and work style. Clients are increasingly trying to work with us from their mobile devices and are having varying degrees of success. Those who get frustrated will seek out leading firms who strive to remove the friction and provide the best possible experience to their mobile-connected clients.

Jeffrey A. Levy, CPA, is a senior consultant at Wilkin & Guttenplan, PC, and a member of the New Jersey Society of CPAs Technology Interest Group.

Contact him at jlevy@wgcpas.com.

When it is time to transition out of your practice you want to do it right. Accounting Practice Sales is the largest facilitator in North America for selling accounting and tax practices. We provide a free estimate of your firm’s value, market extensively, assist in negotiations and find you the right situation. We understand your concerns and respect your confidentiality.

Contact us today so your last decision will be your best.

Bradley K. Holmes, CPA Toll Free: 800.397.0249 www.AccountingPracticeSales.com bradley@apsleader.com

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2015/16 Chapter Presidents Atlantic/Cape May

Chandra D. Anaya, CPA, Assistant Business Administrator, Egg Harbor Township Board of Education, Egg Harbor Township, joined the New Jersey Society of CPAs in 2008. In the Atlantic/Cape May Chapter, she has served as vice president, secretary and director.

Anaya is a member of the American Institute of CPAs, the Social Professional Networking of Atlantic City and the New Jersey Association of School Business Officials.

Anaya earned her B.S. in technical management from Devry University, M.B.A. from Stockton University and A.S. in business administration from Atlantic Cape Community College. She and her husband, Jose, reside in Mays Landing and have a son and a daughter.

Bergen

Marc M. Radin, CPA, President, Marc M. Radin, P.C., Glen Rock, joined the New Jersey Society of CPAs in 1996. In the Bergen Chapter, he has served as vice president, director and treasurer.

He has also served as a member of the NJCPA Cooperation with Bankers Committee, State Taxation and Federal Taxation interest groups and the Cooperation with IRS Work Group.

Radin is a Certified College Planning Specialist.

In his community, Radin is a board member of the Glen Rock Jewish Center.

Radin earned his B.S. in accounting from the State University of New York. He and his wife, Michelle, reside in Glen Rock and have two sons and a daughter.

Essex

Robin H. Klein, CPA, Tax Manager, Rayfield & Licata CPAs, P.C., Livingston, joined the New Jersey Society of CPAs in 1984. In the Essex Chapter, she has served as vice president and secretary. She has also served as a member of the NJCPA Tax Resource Group and the E-File Interest Group.

Klein is a member of the American Institute of CPAs. Klein earned her B.S. in accounting from the University of Delaware and M.S. in taxation from Seton Hall University. She and her husband, David, reside in Florham Park and have a daughter and a son.

Hudson

Tracy A. Nobile, CPA, Mortgage Unlimited LLC, Garfield, joined the New Jersey Society of CPAs in 1995. In the Hudson Chapter, she has served as vice president, secretary and director.

Nobile is a member of the American Institute of CPAs. Nobile earned her B.S.A. in accounting from St. Peter’s University. She and her husband, Robert, reside in Lyndhurst and have a son.

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Mercer

Deborah L. Finaldi, CPA, Regional Controller, Essential Power, LLC, Princeton, joined the New Jersey Society of CPAs in 2002. In the Mercer Chapter, she has served as vice president and director.

Finaldi is a member of the American Institute of CPAs. Finaldi earned her B.S. in accounting from Monmouth University and is a member of Beta Gamma Sigma, the international honor society recognizing business excellence. She is a resident of Brick.

Middlesex/Somerset

Scott J. Fitzgerald, CPA, Senior Accountant, EisnerAmper LLP, Iselin, joined the New Jersey Society of CPAs in 2011. In the Middlesex/Somerset Chapter, he has served as vice president, secretary and director.

Fitzgerald is a member of the American Institute of CPAs. In his community, Fitzgerald is the financial secretary of his local Knights of Columbus Council.

Fitzgerald earned his B.S. from Seton Hall University and M.B.A. in finance from Fairleigh Dickinson University. He and his wife, Janet, reside in Basking Ridge and have three daughters.

Monmouth/Ocean

Michael A. Stillitano, CPA, Treasurer/Director of Finance, Hapag-Lloyd (America) Inc., Piscataway, joined the New Jersey Society of CPAs in 2006. In the Monmouth/Ocean chapter, he has served as vice president, secretary, treasurer, director and chair of the chapter’s Members in Industry and Golf committees. He has also served as a member of the NJCPA Tax Resource Group; International Taxation, State Taxation and Federal Taxation interest groups; and Educators Committee.

Stillitano is a member of the American Institute of CPAs and the Association of Certified Fraud Examiners. He is also a Chartered Global Management Accountant (CGMA).

In his community, Stillitano is an adjunct professor of accounting at the College of Staten Island, School of Business.

Stillitano earned his B.S. in accounting from the City University of NY, College of Staten Island, and M.S. in taxation from Pace University. He and his wife, Charlene, reside in Middletown and have three daughters and a son.

Morris/Sussex

Michael Gilchrist, CPA, Senior Manager, Rotenberg Meril Solomon Bertiger & Guttilla, P.C., Saddle Brook, joined the New Jersey Society of CPAs in 2005. In the Morris/ Sussex Chapter, he has served as president and vice president. He has also served as a member of the NJCPA Accounting & Auditing Standards Interest Group. This is Gilchrist’s second term as chapter president.

In his community, Gilchrist serves on the Resurrection Parish Finance Committee.

Gilchrist earned his B.S. in accounting from Seton Hall University. He and his wife, Lisa, reside in Randolph and have a son.

Passaic County

Brian G. Nafash, CPA, Manager, Massood & Company, P.A., Totowa, joined the New Jersey Society of CPAs in 1994. In the Passaic County Chapter, he has served as vice president, treasurer,

secretary and director.

Nafash is a member of the American Institute of CPAs. Nafash earned his B.S. in accounting from Rutgers University – Newark. He and his wife, Cristina, reside in Wayne and have three daughters.

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Southwest Jersey

Joseph R. Solimeo, CPA, Cost Accounting Manager, Chelten House Products Inc., Bridgeport, joined the New Jersey Society of CPAs in 1999. In the Southwest Jersey Chapter, he has served as vice president, secretary, treasurer and director.

Solimeo is a member of the American Institute of CPAs and the Pennsylvania Institute of CPAs. Solimeo earned his M.B.A. and B.S. in accounting from La Salle University. He and his wife, Kathleen, reside in Delran and have a daughter.

Union County

Angelo Ciullo, CPA, Partner, Raich Ende Malter & Co. LLP, Florham Park, joined the New Jersey Society of CPAs in 1981. In the Union County Chapter, he has served as vice president, treasurer, secretary and director. He has also served as a member of the NJCPA Federal Taxation, State Taxation, Quality Control, Cooperation with Bankers, Accounting & Auditing Standards, Management of an Accounting Practice and Small & Medium-Sized Firms committees.

Ciullo is a member of the American Institute of CPAs and has served on its A&A Committee.

Ciullo earned his B.S. in accounting from Seton Hall University. He and his wife, Claudine, reside in Scotch Plains and have two daughters. Ciullo also has two daughters and a son from a previous marriage.

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CPE Offerings and Events Upcoming Education Foundation Events Date

Event/Code

Location

CPE Credit

7/22

Navigating Divorce: Tax and Litigation Issues (E1507373)

Roseland

8/TX

7/23

Partnership and LLC Taxation: Advanced Issues (E1507191)

Mount Laurel

8/TX

7/23

Advanced Tax Update for Experienced Practitioners (E1507381)

Roseland

8/TX

7/28

Compilation and Review Practice Guide (E1507061)

Roseland

8/AA

7/28

IFRS Standards: Financial Reporting in a Global Environment (E1507123)

Voorhees

8/MT

7/29

CPA Succession Planning (E1507181)

Roseland

8/TX

7/29

Annual Update for Accountants and Auditors (E1507131)

Voorhees

8/AA

7/30

Form 990: A Comprehensive Approach to Accurate Preparation (E1507141)

Roseland

8/TX

7/30

Analyzing Financial Statements, Including Techniques for Cash Flow Analysis (E1507053)

Iselin

8/AA

7/31

Shortcuts to Tax Cuts: Business Tax Planning Strategies for S Corporations and LLCs (E1507411)

Roseland

8/TX

8/5

Forensic Accounting Investigative Practices (E1508183)

Roseland

8/AA

8/6

Identity Theft: Preventing, Detecting and Investigating Identity Theft (E1508193)

Roseland

8/AA

8/10

Construction Contractors: Accounting, Auditing and Tax (E1508201)

Iselin

8/AA

8/11

Common Frauds and Internal Controls for Revenue, Purchasing and Cash Receipts (E1508213)

Iselin

8/AA

8/12

Fair Value Accounting (E1508263)

Roseland

8/AA

8/12

New Jersey Law and Ethics Webinar (E1508274)

N/A

4/PE

8/17

Excel Financial Reporting and Analysis (E1508103)

Atlantic City

4/AA, 4/CS

8/17

Annual Update for Controllers (E1508123)

Atlantic City

8/MT

8/17

Yellow Book: Government Auditing Standards (E1508151)

Atlantic City

8/AA

8/17

The Best Federal Tax Update Course by Surgent (E1508021)

Atlantic City

8/TX

8/17

2015 FASB and AICPA Update (E1508071)

Atlantic City

8/AA

8/18

Surgent’s Handbook for Mastering Basis, Distributions and Loss-Limitation Issues for S Corporations, LLCs and Partnerships (E1508031)

Atlantic City

8/TX

8/18

Governmental and Not-for-Profit Annual Update (E1508161)

Atlantic City

8/AA

8/18

Toolkit of Best Practices for Today’s Controller and Financial Manager (E1508133)

Atlantic City

8/MT

8/18

Budgeting and Forecasting Tools and Techniques (E1508113)

Atlantic City

4/AA, 4/MT

8/18

Accounting for New Revenue Standard Workshop (E1508083)

Atlantic City

8/AA

8/19

Financial Forecasting and Decision Making (E1508143)

Atlantic City

8/MT

8/19

Recognizing and Responding to Fraud Risk in Governmental and Not-for-Profit Organizations (E1508173)

Atlantic City

8/MT

8/19

Social Security, Medicare and Prescription Drug Retirement Benefits: What Every Baby Boomer Needs to Know Now (E1508041)

Atlantic City

8/TX

8/19

Compilation and Review Practice Guide (E1508091)

Atlantic City

8/AA

8/20

GASB Statement No. 68: In-Depth Government Pension Accounting and Auditing Seminar (E1508253)

Voorhees

8/MT

8/20

Affordable Care Act Update Webinar (E1508284)

N/A

1/SK

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8/21

Surgent’s Comprehensive Guide to Tax Depreciation, Amortization and Property Transactions from Acquisition to Exchange or Disposition (E1508053)

Iselin

8/TX

8/27

IT: Risks and Controls in Current and Emerging Environments (E1508223)

Jamesburg

8/AA

8/28

Internal Control and COSO Essentials for Financial Managers, Accountants and Auditors (E1508233)

Jamesburg

8/AA

9/3

Alternatives to GAAP – Using Special Purpose Frameworks (E1509261)

Iselin

8/AA

9/4

Annual Update for Preparation, Compilation and Review Engagements (E1509271)

Iselin

8/AA

9/9-10

Audit Staff Essentials – Level 2 – Experienced Staff (E1509281)

Roseland

16/AA

9/10

Advanced Auditing of HUD-Assisted Projects (E1509291)

Roseland

8/AA

9/11

Applying the Uniform Guidance for Federal Awards in Your Single Audits (E1509301)

Roseland

8/AA

Upcoming Chapter Events Date

Chapter

Events/Code

Location

CPE Credit

7/22

Monmouth/Ocean

New Jersey Law and Ethics (E1507019)

Neptune

4/PE

9/19

Mercer

Broadway Theatre and Dinner Trip (E1509459)

New York

N/A

9/25

Mercer

New Jersey Law and Ethics (E1509449)

West Windsor

4/PE

KEY AA – Accounting & Auditing MT – Management

CS – Consulting Services PD – Personal Development SK – Specialized Knowledge

EC – Economics PE – Professional Ethics TX – Taxation

MC – Multiple Categories PM – Practice Management

Please note: Events are subject to change. For a full listing of all NJCPA events, visit njcpa.org/catalog.

Dental – Choose from two plan options. Dental PPO offers the flexibility for members to receive care from any licensed dentist; however, members who utilize a participating dentist receive the greatest plan value. Dental HMO includes no claim forms, no deductibles and no annual maximums.

Group Legal and Identity Theft – Get free access to a nationwide network of attorneys plus discounted legal assistance in person and via phone.

Vision – Receive benefits annually from the last date of service for vision exams, frames and lenses. An allowance is also available for contact lenses in lieu of glasses and laser vision correction.

Achieve Peace of Mind Through NJCPA Member Insurance Benefits

New Jersey Society of CPAs members have access to a variety of money-saving insurance products including:

Accountants’ Malpractice Insurance

Disability Income Protection, Life Insurance, Accidental Death and Dismemberment, Hospital Indemnity, Business Overhead Expense Coverage and Long-Term Care

CAMICO Mutual Insurance Company and Gallagher Bollinger Professional Liability are the preferred carrier and agent for accountants’ malpractice insurance. The program offers members the most competitive rates available, broadest coverage in the market and opportunity to receive dividends.

USI Affinity, the Society’s new insurance administrator, provides NJCPA members with members-only rates on disability income protection, life insurance, accidental death and dismemberment, long-term care, hospital indemnity and business overhead expense coverage.

Car Insurance

Plymouth Rock Assurance offers members a 15-percent discount on auto insurance.

Dental, Vision and Group Legal

Visit the Member Benefits Marketplace at njcpa.org/ marketplace to learn more about these insurance programs and other discounts available to NJCPA members.

Gallagher Bollinger provides dental insurance, vision insurance, group legal and identity theft coverage.

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Get Involved Applying The Energy Bus Rules to Life as a Young CPA

continue to prosper. As young professionals, we must see our future taking shape. We must constantly strive to achieve our goals and move our bus down that path. Spend 10 minutes focusing on your vision, writing down your goals and then picturing them coming to fruition. See yourself creating your vision. The more you think about something, the more realistic it becomes.

3. Invite People on Your Bus, and Share Your Vision for the Road Ahead

By Julia L. Van Saun, CPA, WithumSmith+Brown

You must communicate your vision and your goals to others, whether they are others on a particular audit engagement, your mentor, a partner or your supervisor. Ask them to support your vision; ask them to get on your bus! The worst that can happen is they say no. Adds Gordon: “You haven’t failed until you stop trying.”

This could be the most critical step toward your success. You must let those around you know of your goals since they cannot help without knowing your vision. Maybe your goal is to focus your time in a particular niche, such as health care or technology. You may eventually end up in that niche, but it can happen much sooner if you are proactive. Tell your mentor that you are looking to dabble in that niche. He or she can introduce you to the niche leader or recommend you fill a need on an upcoming job.

The Energy Bus by Jon Gordon is a brilliant, quick read that helps get one’s motivation flowing. It tells a story that everyone can relate to, whether you are a manager at a large accounting firm or a new staffer at a small company. Certainly, it can be difficult to be optimistic in negative situations. But The Energy Bus drives us to discover the positives and learning experiences that can be found even in negative situations—if only we would choose to see them. “This one choice,” says Gordon, “will determine if your life is a success story or one big soap opera.” Through its “10 Rules That Will Change Your Life,” The Energy Bus takes you on a ride where you can overcome adversity and create success. Here are five rules to get you started:

4. Enthusiasm Attracts More Passengers and Energizes Them During the Ride

Energy is contagious and it is your most important asset. Being enthusiastic is not only helpful to your life and your career, but also to those around you. Let that enthusiasm radiate from you when you’re in the office or at the client. It’s not a bad thing to be known as the person who is always happy. It fosters open communication and improves morale.

1. You’re the Driver of Your Bus

You are the one who has to take responsibility for your life and move your bus in the right direction. If you sit idle, you’ll always be a passenger on everyone else’s bus. As a manager, supervisor or staff accountant, you must control your career. It’s easy to be overwhelmed early on, and you may not know exactly where you want to focus your time (audit, tax, forensics, future controller or CEO). You won’t know all the answers right now, but as long as you keep moving in the direction that makes you happy, you’ll be in control of your future and your bus will move forward.

5. Have Fun and Enjoy the Ride

Be sure the entire team you are working with has a shared goal and that everyone is working together to reach it. “The goal in life is to live young, have fun and arrive at your final destination as late as possible with a smile on your face,” notes Gordon. Although accounting can sometimes be a routine profession, learn from each challenge, find the joy in each moment and have fun while achieving your goals.

2. Desire, Vision and Focus Move Your Bus in the Right Direction

Julia Van Saun, CPA, is a manager at WithumSmith+Brown. She is the New Jersey Society of CPAs Young CPAs Council Chair and a Pay It Forward volunteer. Contact her at jvansaun@withum.com; follow her on Twitter at @jules_vs.

In order for your bus to be moving, you must have a destination in mind.

The areas that we tend to put our energy into will be successful and

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Advance Your Career with Volunteer Groups and Communities

In addition to interest group and committee communities, which are accessible only to group members, the NJCPA hosts online communities that any member can join. These communities provide a forum for discussion as well as a resource library. These communities do not have formal leadership and may or may not hold meetings:

When you join an NJCPA interest group or online community, you’ll take a step to advance your career by: • Exchanging ideas with the top people in your field or area of practice.

• Getting an edge on the latest developments important to you.

• Developing technical, management and presentation skills.

• Immersing yourself in regulatory and legislative advocacy for your profession.

• Networking with experts and potential leads.

Interest groups and committees typically hold six to eight in-person meetings per year and communicate virtually throughout the year. Interest groups provide attendees with one or more CPE credits at each meeting.

Each interest group and committee is helmed by leaders and vice leaders who are excited about connecting with members in their technical areas. Here is the 2015/16 slate of leaders for NJCPA volunteer interest groups and committees: Group/Committee Name

2015/16 Leader and Vice Leader

Accounting & Auditing Standards

Peggy F. Gallagher, CPA

Business Valuation Forensic Litigation Services

Megan A. Cicchetti, CPA

226

Cooperation with Bankers

JoAnne Geylin, CPA

132

Paul Schuldiner, CPA Governmental Accounting & Auditing

David J. Gannon, CPA

130

Nonprofit

Amy Y. Both, CPA

Accounting educators (high school or college), deans, department heads

109

Bergen Practitioners

Public practice CPAs in Bergen County

86

Firm Members and nonmembers Administrators involved with firm administration

38

Monmouth/ Ocean CPAs

156

Members in Monmouth and Ocean counties

Carol A. McAllister, CPA 175

Catherine Syslo, CPA State Taxation

Mark J. Philips, CPA

501

Student Programs & Scholarships

Henrietta G. Fuchs, CPA

62

Technology

Victoria Kosuda, CPA

190

Community Members

Volunteer opportunities are available throughout the year. Let us know how you’d like to be involved at njcpa.org/getinvolved. Here is how you can get involved now: NJCPA Student Ambassador – Student members are needed to reach out on their college campuses and encourage students to consider a CPA career as well as publicize NJCPA programs and membership to their fellow students. Student Ambassadors can earn monthly rewards plus win a trip to the NJCPA Annual Convention & Expo. Contact Lauren Matullo at lmatullo@njcpa.org or 973-226-4494 x241.

Elizabeth Harper, CPA

624

Accounting Educators

Get Involved Now

287

Shaune Scutellaro, CPA

Community Composition

Access or join interest groups, committees and open communities at njcpa.org/groups.

Community Members

Federal Taxation

Community Name

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NJ State Board of Accountancy Report Education Regulation Adoption Date Extended to 2017

Newark (April 16) Regulatory

The board’s regulatory analyst presented a revised draft of the education regulation changes. The effective adoption date was changed from July 1, 2016, to July 1, 2017, to give colleges and universities in the state more time to transition. The board voted to accept this and the other changes to the regulations.

Committees

CPA Examination – The committee has begun analyzing statistics from the 2014 CPA Exam.

Peer Review Oversight – The committee and subsequently the board voted to exempt preparation services from peer review. The committee also needs to review new guidance from the National Association of State Boards of Accountancy on failed peer review reports and reports with deficiencies.

Nominating – The board’s new officers will be Daniel J. Geltrude, CPA, President; Jorge A. Caballero, CPA, Vice President; Sara DeSmith, CPA, Secretary; and Harold Model, CPA, Treasurer.

Monitoring – The committee suggested the board monitor the International Pathway Project, which will review international licensees coming into the U.S.

Public

New Jersey Society of CPAs CEO and Executive Director Ralph Albert Thomas, CGMA, disagreed with the board’s position of allowing unlimited self-study CPE due to the cost and flexibility it offers. He stated that unlimited self-study significantly increases the risk exposure to the CPA credential’s reputation. He also questioned the lack of empirical evidence to support the board’s claim that 41 jurisdictions do not limit self-study CPE.

Thomas also discussed a successful educators meeting held in March. Topics discussed included proposals to extend the CPA Exam and include more simulations in order to become more relevant to today’s accounting graduates. There was also a discussion on the need to get candidates to take the CPA Exam before they begin working.

Newark (May 21)

Monitoring Profession – NASBA and the AICPA released an exposure draft on the proposed CPE changes. The board will review and may decide to comment. Also, NASBA has offered the use of its CPE tracking system to the states at no cost. However, there is a limited capacity. The state board will discuss potential issues, such as chain of custody and data security.

Public

President’s Remarks

Daniel J. Geltrude, CPA, began his term as board president and thanked John F. Dailey, CPA, for his leadership and commitment during his term as president.

NASBA

The National Association of State Boards of Accountancy (NASBA) inquired about the waiver requirements for candidates sitting for the CPA Exam. The board indicated that nothing has changed and all rules are currently still in place.

Miscellaneous

The board is scheduled to undergo its periodic ethics training.

Committees

CPA Examination – The committee reviewed the NASBA report concerning CPA Exam test scores from 2014. For New Jersey, the average age of a test taker was 28 years old. The average score was 69 percent and the pass rate was 42 percent. Of the 53 jurisdictions offering the CPA Exam, NJ ranked 45th in pass rate.

Statutes/Rules/Regulations – The American Institute of CPAs held a webcast on the sun-setting laws. The committee needs to review the current NJ regulations.

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New Jersey Society of CPAs CEO and Executive Director Ralph Albert Thomas, CGMA, also thanked Dailey for his service and dedication to the profession.

Thomas expressed concerns about the CPA Exam data for New Jersey relative to the other states. He questioned if students are being taught the right material and if schools are effectively managing changes in curriculum.

NJCPA educators learned at a recent conference that there may be AICPA proposals to (1) lengthen the exam; (2) change the time period to retake parts of the exam people have failed; and (3) decrease the blackout period so there are more available times to take the exam.

Finally, Thomas mentioned attendance at the AICPA Council in Washington, D.C. Society leaders met with 13 of the 14 members of the NJ delegation and discussed issues such as the cash basis of accounting, Internal Revenue Service customer service, mobile workforce and the Department of Labor report on employee benefit plan audits.

CLASSIFIEDS Mergers/Acquisitions Brick, NJ, two-partner CPA firm, grossing $350K, seeks self-sustaining CPA to take over older partner’s accounts. Partner will remain for one-plus years to aid in transition. Reply to ngmeyer@verizon.net.

Expanding Union County CPA practice is seeking small firms or sole practitioners for potential acquisition or merger. Please reply in confidence to unioncountycpa2015@gmail.com.

Established 1983, Fairfield CPA, retirement-minded sole practitioner with staff seeks CPA with small practice for ultimate buyout. Small business tax and nonprofit audit experience. Reply to rmcpa@verizon.net.

Seize a merger/acquisition opportunity with benefits for you. Tired of dealing with issues of running a firm? We are looking for firms ranging from $300,000 to $5,000,000 eager to combine forces as we continue to grow across northern NJ, Westchester and the Hudson Valley region. Goldstein Lieberman & Company is ideally situated to service all types of industries. Visit glcpas.com; email me, Phillip Goldstein, CPA, managing partner, philg@glcpas.com; or call 800-839-5767 to have a confidential conversation.

Parsippany, NJ. Three-partner CPA firm seeks retirement-minded practitioner to merge/acquire practice ranging from $100K and up. Please contact Carl Gutt, 973-451-0800 x22 or cgutt@ dglcpa.com.

Thinking of selling your practice? Accounting Practice Sales is the leading marketer of accounting and tax practices in North America.

We have qualified buyers waiting and the experience to help you find the right fit for your firm and negotiate the best deal possible. For information about our risk-free and confidential services, call Bradley Holmes at 800-397-0249 or email bradley@apsleader.com. Buyers see listings and register for free email notifications at accountingpracticesales.com.

Mountain Lakes, two-partner CPA firm is seeking to merge with or acquire retirement-minded sole practitioners and small firms looking for succession planning. Looking for a firm with tax and write-up practice, no audits.

Firm’s gross billings should be $100K or more.

Please reply in confidence to Murray Leipzig, CPA, at 973-394-8920 x11 or northjerseycpas@ earthlink.net.

Established and successful CPA practice for sale in southern Monmouth County, NJ. Seller is ready for semi-retirement and wants to assist buyer on a part-time basis. Business is comprised primarily of tax and write-up services. Gross billings in excess of $100K. Please email me at shorenjcpa@optimum.net.

Classified Advertising Replies to ads with file numbers should be sent to: File______________________ New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723

Professional Services Cost segregation services – Seeking firms that want to increase their revenues by adding cost segregation to their portfolio of services. Contact Joe DeSantis at 800-785-1018 or joed@carraraservices.com.

To see additional classified listings or to place an ad, visit njcpa.org/classifieds.

ADVERTISERS INDEX

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Shared overhead and future association is a possibility. Please email bergencountycpa@ gmail.com for further information.

Hackensack: 4,800+/- square-foot professional office building for sale/lease.

Currently lawyer’s office. Perfect for lawyers, accountants, etc. Two roof-mounted HVAC units, eight parking spots, adjacent to municipal lot. Plenty of basement storage space. Call 201-488-5800. Ask for Anthony Cassano x146 or Pablo Castro x161, or email acassano@naihanson.com or pcastro@ naihanson.com. NAI James E. Hanson, broker, naihanson.com.

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September • October 2015

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YOUNG

professionals

You’ll Never Forget Your First Time B Y DAVID G . C AL OTTA, C PA, AD P

M

y first time leading a client audit happened during my third year of public accounting, right after I became a newly minted senior accountant.

I was performing an audit for a medium-sized company, and while it wasn’t a new client for the firm, it was a completely new client for me.

Assisting me was a brand new staff accountant—a position I was in a mere 36 months earlier.

Our first day at the client was relatively straightforward. We began the audit accompanied by the firm’s job manager who had serviced this client for years. Along the way, she fostered strong relationships with the company’s personnel. The manager made some introductions and we were off and running.

Being the face of our firm to this client, I felt pretty confident in my ability to perform a successful audit.

How hard could this be? I have experience; I’m eager to prove myself; I have the CPA credential; and I’m wearing a tie. What could go wrong?

Trouble in Paradise

By the next day, I was starting to think that perhaps this wasn’t as easy as it looked. Without the safety net of the manager, everything seemed a little scarier for some reason. Questions took on epic proportions. Am I sure this is the right thing to request from the client? What if they have questions I can’t answer? What if they ask me the dreaded question: Why do I need this piece of information?

I reviewed the prior year’s audit file prior to starting this year’s audit, which I assumed would help prepare me. How much is going to change from last year?

Well, it turns out that this client had made a couple of material changes to its pension plan, which it had “forgotten” to

mention when the manager was on site.

However, the client was very excited to discuss the changes with me. Needless to say, I was ill prepared and inexperienced for this conversation and it showed. I stumbled my way through and made sure to get copies of the relevant documents.

I can’t be sure, but I think the client’s CFO sensed my discomfort, perhaps even taking a little delight in it. Nevertheless, I tucked my tail between my legs and sent an email to the manager for help.

So, as you can now imagine, there’s a little more to being the senior person on site than having a credential and a tie.

While it gets easier and becomes routine with experience, that’s not particularly helpful on your first solo flight.

In Hindsight

If I had to do it all over again, I might do some things differently. First, I’d make sure to ask the major questions right away, when the manager is available. (You also can’t take for granted that the manager is asking those questions when you’re not around.)

This would have been a big help as I wouldn’t have had to struggle through a conversation that was clearly beyond me.

Simply observing someone else conduct N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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that conversation would have been invaluable. Next, on the engagement’s second day I should have performed routine work so that I could ease into the responsibility and develop a rhythm with the staff accountant. Finally, I should have been more willing to ask for help. The manager’s expectations did not include me understanding complicated and technical pension plan amendments and their impacts on the financial statements. So, asking the client if we could discuss these issues when I was able to get the manager on the phone probably would have been a better idea. Being confident is good, being unjustifiably overconfident is not.

There’s no better feeling than “running the show.” Sure, you’ll stumble and make mistakes; who hasn’t. But it’s what you learn from those mistakes that counts. It’s all part of the learning process, one that will make you a better accountant.

David G. Calotta, CPA, is an internal audit manager at ADP. He is a member of the New Jersey Society of CPAs Student Programs & Scholarships Committee. Contact him at dave.calotta@adp.com.

LEGISLATIVE

views

NJCPA Joins Coalition Opposing Paid Sick Leave Mandates B Y JEF FREY T. KAS ZERM AN, NJ C PA GOVE R NM E NT R E LAT I O N S D I R E C TO R

T

he New Jersey Society of CPAs joined a coalition of business groups fighting state and municipal efforts to require employers to provide paid sick leave to employees. The Keep NJ Competitive coalition is comprised of 35 business groups, including the NJ Business & Industry Association (NJBIA) and the NJ State Chamber of Commerce.

The coalition opposes state legislation (A2354) that would require all employers with 10 or more employees to provide nine paid sick days per year and employers with fewer than 10 employees to provide five days.

Currently, only three states require paid sick time.

In addition to fighting A2354, the coalition has been contending with numerous municipalities that have passed local paid sick leave ordinances. Nine cities have already passed such ordinances.

“Many New Jersey employers already provide their employees with paid sick leave,” says NJBIA President Michele Siekerka, who is spearheading the coalition. “We shouldn’t punish the vast majority of those who already have a paid sick leave policy because of the few bad actors who don’t. NJ already has a difficult regulatory and state government climate.”

Many employers who already offer paid sick leave incorrectly believe that A2354 would not affect them.

In fact, it would because of these requirements: • Employees could carry over unused leave from one year to the next: 40 hours for small companies (less than 10 employees), and 72 hours for larger companies (10 or more employees). The only alternative would be employers paying the time out each year.

• Employers would be required to keep confidential records of any leave time used by every employee for five years. Information on the health of an employee or family members would need to be treated as confidential and not disclosed— even to a supervisor—without the employee’s written permission.

• Although employers could ask for documentation on the need for leave, they’d also have to pay for any costs to obtain it.

• Employers could be sued if they discipline employees for using paid sick leave, take “adverse action” against them or give them an “unfavorable reassignment.”

• It would be illegal for employers to require employees to find their replacements, even if the employees knew in advance that they’d be taking leave.

• Employers offering general paid time off would still have to provide an additional number of sick days to comply with the legislation. The legislation prohibits employers from reducing existing benefits that are more favorable to employees.

For more information on the coalition and joining its efforts, visit keepnjcompetitive.com.

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Help Your Community; Join a State or Local Commission

New Jersey has hundreds of boards, authorities and commissions that address just about every public policy issue imaginable. Local and county governments also offer dozens of opportunities to join boards, task forces and commissions that seek the expertise of citizens like you.

The governor’s website has a section for residents interested in joining a state board or commission. Visit state.nj.us/ governor/admin/bca.html to see a listing of hundreds of these boards and commissions. If you see something you like, simply upload your résumé.

If you’re more interested in local issues, inquire with your local government officials to find out what types of voluntary citizens boards they have available. Most communities have a number of volunteer boards that work on a broad range of issues, such as redevelopment projects and local history. Contact your mayor’s office, town council members or local school board representatives for more information. You can also contact your county government officials to see what is open on a county level.

The NJCPA encourages its members to become active with these boards. Serving on a board is a rewarding way for you to contribute to your community and for the community to recognize the vast expertise that CPAs have to offer.

MEMBER

profile

All Hands on Deck B Y DAVID PL AS KOW, N JC PA COMMUNIC ATI O NS M ANAGE R

B

ulkhead, draft, waypoint. These are the type of terms that Chris Zirrith, CPA, had to learn as a novice boater.

But it’s no different than learning words like accrual, general ledger and net present value when starting out as a young accountant.

“I had to take an elective in college, and I took an accounting class because my roommate had the book and I didn’t have to buy it,” laughs Zirrith.

“It came easy to me, and at the end of the semester I changed my engineering major to accounting.”

After graduating in 1986, Zirrith worked for a couple of mid-sized public firms in New Jersey, focusing on the real estate sector. “I was an auditor at Ironstate Development’s predecessor,” he says. “Ironstate develops large complex urban apartment and hotel developments. I transitioned to fulltime in 1995 and currently serve as the company CFO.” Zirrith mentions his affinity for accounting: “I like the fact that it’s logical; there’s an order as to what needs to be done.” Part of that order was getting the CPA designation. “It was always a primary goal,” he adds.

“Being a CPA gave me a feeling of accomplishment and respect from other professionals. In fact, this year I’m celebrating my 25th anniversary of becoming a CPA.” A year after obtaining the CPA credential, Zirrith joined the New Jersey Society of CPAs. “I really enjoy and continue to learn from like-minded people,” notes Zirrith. “And attending the annual NJCPA Convention allows me to network with my public accounting colleagues.”

We’ve heard a lot about the postrecession commercial landscape in New

Jersey. “Ironstate is well-positioned to benefit from renewed demand for urban housing,” notes Zirrith.

“Millennials and empty nesters are drawn to the convenience and lifestyle that city living provides.”

Does Zirrith have any words of wisdom for students interested in private accounting? “Just go in with an open mind. Public accounting is great, but it’s not for everyone; and not everyone will become a partner,” he says.

“Boating has been great for our family; it really keeps us connected.”

—Chris Zirrith

The Zirriths seem to have made accounting a family affair. Chris’ wife, Janine, is the firm administrator for Wilkin & Guttenplan, PC. Speaking of family, Zirrith traded in his golf clubs for a boat—a hobby that the whole family could enjoy.

“My wife and daughters took to it immediately,” comments Zirrith. “As the girls grew up they became more N E W J E R S E Y C P A • J U LY • A U G U S T 2 0 1 5

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involved and learned to appreciate the nuances of boating.”

The Manalapan residents would cruise near Red Bank on the Navesink and Shrewsbury rivers. “In time, we took overnight trips to Atlantic City and Long Beach Island,” he adds.

The last run of a previous boating season, Zirrith met someone at his local dock with the same exact boat. “It turned out to be a pivotal encounter,” recalls Zirrith. “He suggested we take our boats down to Florida together for the upcoming winter.” This thousandmile run took Zirrith’s hobby to a whole new level. He and his family have since expanded their boating destinations to include ports such as Nantucket and The Bahamas. “I’d like to make it to Maine one day,” says Zirrith. “And navigating to Cuba would also be interesting.”

Zirrith’s favorite port of call is Montauk. “The boating’s fantastic; it’s a jumping-off point to many other great places.”

Soon-to-be empty nesters, the Zirriths are looking forward to new destinations. “Boating has been great for our family; it really keeps us connected,” says Zirrith. “I wouldn’t be surprised if my daughters captain their own boats one day.”

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