New Jersey CPA - March/April 2014 by New Jersey Society of CPAs

Magazine of the

New Jersey Society of Certified Public Accountants

Diversity David Lopez Emily Vu Marcy LoCastro Ralph Thomas

March â&#x20AC;˘ April 2014

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March • April 2014

features

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

Ellen C. McSherry, CGMA

Chief Operating Officer emcsherry@njscpa.org

Don Meyer Director, Communications & Marketing dmeyer@njscpa.org

David Plaskow Managing Editor dplaskow@njscpa.org

Jeanette L. Miller Editorial Assistant jmiller@njscpa.org

Janice M. Celeste Multimedia Specialist jceleste@njscpa.org

Editorial Advisory Board Neil B. Becourtney, CPA Timothy A. Burley, CPA Salvatore A. Collemi, CPA Rebecca B. Fitzhugh, CPA Catherine Z. Horn, CPA Bernard M. Kiely, CPA Gregory Levine, CPA Marcella LoCastro, 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 njscpa.org #njcpamag ReadNew NewJersey Jersey Read CPAdigital digitalatat CPA njscpa.org/newjerseycpa. njscpa.org/newjerseycpa.

Design/Production/Advertising Lionheart Publishing Inc. 506 Roswell Street, Suite 220 Marietta, GA 30060 President – John Llewellyn 770-431-0867 x209 llewellyn@lionhrtpub.com

David Lopez Learn this CPA’s approach to success and how he helps up-and-coming minority accounting practitioners. Emily Vu See how this refugee from Vietnam overcame cultural and language barriers to open her own CPA firm.

10 12

Marcy LoCastro Hear about the challenges female practitioners faced in the not-too-distant past, and the lessons she shares with young female CPAs just starting out. Ralph Thomas Discover the steps one can take to combat the feeling of isolation that minorities often feel at school or in the workplace.

2 Close Up Society Publishes NJ-Specific Compensation Study

27 Small/Sole Practitioner Three Myths and Realities of Client Newsletters

4 News Briefs 20 A&A Buzz What’s Up with the New Lease Accounting Rules?

28 Tax Talk Helping Clients Enjoy the Fruits of Their Labor 29 Tech Center Tech Integration Comes First During an M&A

21 Best Practices NJ’s Certification Programs for Women and Minorities

37 Student Outlook Spanning the Continents for an Accounting Education

22 Business & Industry 38 Legislative Views Insights Major Bills Affecting CPAs The Commercial Real Estate Reach Critical Juncture Market Post-Great Recession 24 Financial Planning The Ins and Outs of Endowments 26 Forensic File Anti-Corruption Compliance Requires Big-Data Thinking

40 Member Profile Lifting as We Climb Society Pages CPE Offerings and Events, 30 Member Benefits, 31 Get Involved, 32 NJ State Board of Accountancy Report, 34 Classifieds, 36

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. 44 Copyright © 2014 New Jersey Society of Certified Public Accountants. Annual membership dues includes $9 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.

Society Publishes NJ-Specific Compensation Study B y David Plaskow, N J SC PA C ommu nications M anager

ou sometimes get the best ideas at the unlikeliest times and at the darndest places. While conducting editorial focus groups at CPA firms, I heard a recurring theme of the need for articles covering compensation. This gave me the idea of pursuing a comprehensive compensation study for CPAs in New Jersey. I figured this could be valuable information, especially in an economy and job market that continues to be unpredictable.

The Process The New Jersey Society of CPAs engaged the Merces Consulting Group – which specializes in compensation and benefit studies for nonprofits – to create the survey, tabulate the results and prepare a report. The knee-jerk reaction might be to use an electronic survey (which everyone seems to be using these days). But the consultant suggested a traditional hardcopy survey through the mail that included a postage-paid return envelope. While this was more costly, and thus more risky, the consultant felt strongly about this approach. We deferred to his judgment because we felt you hire consultants for a reason – the knowledge and experience they bring to the table in a certain area. In September 2013, we sent a packet to 830 key people at firms (managing partners, firm administrators

and human resource directors), and we received responses from nearly 80 firms, or a respectable 9 percent. The consultant suggested we do this as a firmbased study rather than an individually based one. See Figure 1. “To have an internally equitable and externally competitive compensation strategy, firms must consider both employee performance and external pay and benefits practices. Third-party compensation and benefits surveys are valuable tools for benchmarking the competitiveness of their compensation practices,” says Hayes MacArthur, principal and director of human resources for EisnerAmper LLP. “The NJSCPA survey is both valuable and unique because it focuses on the local market.”

more. And, the results include all levels of accountants, as well as support personnel such as IT and administrative staff. But what really sets this study apart is that it focuses entirely on New Jersey. More importantly, it drills down even further, by regions within

The Results

2013/14 Board of Trustees

The next phase of the project began on December 9 when the survey closed. It was now time to tally the results and produce a report: the 2013/14 NJSCPA Compensation & Benefits Study of Public Accounting Firms in New Jersey. Not limited to strictly salary, the study covers incentive plans, health insurance, training/development and

EXECUTIVE COMMITTEE President – Gerard Abbattista, CPA President-Elect – Brad E. Muniz, CPA Secretary – Walter J. Brasch, CPA Treasurer – John M. Szczomak, CPA Immediate Past President – Thomas F. Roche III, CPA CEO & Executive Director – Ralph Albert Thomas, CGMA

Figure 1 – Firm Revenues

NEW JERSEY CPA • March • April 2014

TRUSTEES Sharon J. Bishop, CPA Leonard N. Brooks, CPA William A. Cadmus, CPA Joseph C. DiFalco, CPA Edward I. Guttenplan, CPA Michael W. Gutwetter, CPA Karl A. Halteman, CPA Robert P. Herman, CPA Edward G. O’Connell, CPA Jody Rorick, CPA Mary E. Zago, CPA Joseph A. Zielinski, CPA

Figure 2 – Firm Geographic Location

New Jersey: northern (plus New York City), central and southern (plus Philadelphia). See Figure 2. “It’s very helpful to have a comprehensive salary survey that is specifically dedicated to public accountants in the state of New Jersey. New Jersey may be small geographically, but we have many accounting firms of all different sizes located throughout the state. The NJSCPA’s compensation and benefits study did a nice job of capturing not only the differences in benefits and compensation based on firm size,

for CPA Exam fees. • Northern New Jersey firms with a Savings/401(k) plan is 81 percent.

but also on geographical location,” says Joan Kampo, director of human resources for WithumSmith+Brown. Here’s the type of information you’ll find in this report: • An A&A senior manager in central New Jersey has a median salary of $137,608. • 67 percent of accounting firms in southern NJ provide reimbursement

At more than 80 pages, this detailed study is not only a valuable information source for the accounting profession, but a worthwhile member benefit, which is something that membership groups are always looking for. It also can provide some welcome public relations exposure for the NJSCPA. To purchase a copy of the report, visit njscpa. org/compensationstudy. Questions? Contact David Plaskow at dplaskow@njscpa.org.

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NEWS PCAOB Approves DoddFrank Amendments The Public Company Accounting Oversight Board (PCAOB) approved amendments, as well as certain updates and clarifications, to tailor certain of its rules to the audits and auditors of brokers and dealers registered with the Securities and Exchange Commission (SEC), as authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The amendments insert references to audits and auditors of broker-dealers in relevant board rules and call for broker-dealer audit client information on the board’s registration, withdrawal and reporting forms (PCAOB Forms 1, 1-WD, 2, 3 and 4). The amendments also require that registered firms that audit broker-dealers comply with certain of the board’s professional practice standards, update a number of board rules and forms based on the board’s experience administering and enforcing PCAOB rules, and make certain updates to the board’s ethics and independence requirements. If approved by the SEC, the amendments to the PCAOB’s rules, ethics code and membership requirements of the American Institute of CPAs SEC Practice Section will take effect on June 1, 2014. The amendments to Forms 1, 1-WD, 3 and 4 will take effect on July 1, 2014. The amendments to Form 2 will take effect April 1, 2015. Learn more at pcaobus.org.

FASB Responds to Statement 109 Review The Financial Accounting Standards Board (FASB) responded to the post-implementation review (PIR) of its standard on accounting for income taxes. The review, conducted by the Financial Accounting Foundation (FAF), examined FASB Statement No. 109, Accounting for Income Taxes. The standard requires

briefs organizations that prepare U.S. GAAP financial statements to recognize the amount of (1) taxes payable or refundable for the current year; and (2) deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the organization’s financial statements or tax returns. The FASB acknowledged the PIR findings that Statement 109 adequately resolved the issues underlying its stated need, but that Statement 109 may not have reduced complexity associated with accounting for income taxes. Specifically, the FASB noted that preparers and auditors find certain aspects of Statement 109 to be operationally challenging, including intra-period tax allocation, intercompany transfer of assets and situations in which a deferred tax liability is not recognized for temporary differences related to earnings determined to be indefinitely reinvested in foreign subsidiaries. The FASB also acknowledged that, while information resulting from the application of Statement 109 provides investors with decision-useful information, the information may not be detailed enough for users to analyze the cash flows associated with income taxes and to analyze earnings determined to be indefinitely reinvested in foreign subsidiaries. The FASB said it would continue to analyze the findings in the PIR report. Learn more at fasb.org.

Treasury, IRS Guidance for Tax-Exempt Social Welfare Organizations The U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under Section 501(c)(4) of the Internal Revenue Code. This proposed guidance defines the term “candidate-related political activity” and would amend current

NJ Diversity by the Numbers 8,864,590

New Jersey population

18.5

Percent of New Jerseyans who are Latin-American

14.7

Percent of New Jerseyans who are African-American

9.0

Percent of New Jerseyans who are Asian-American

NEW JERSEY CPA • March • April 2014

regulations by indicating that the promotion of social welfare does not include this type of activity. The proposed guidance also seeks initial comments on other aspects of the qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare. Visit irs.gov.

A Pair of Rate Notices The IRS issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. As of January 1, 2014, the standard mileage rates for the use of cars, vans, pickups or panel trucks will be (1) 56 cents per mile for business miles driven; (2) 23.5 cents per mile driven for medical or moving purposes; and (3) 14 cents per mile driven in service of charitable organizations. Visit irs.gov. The New Jersey Division of Taxation announced that the assessed interest rate for the period January 1 to December 31, 2014, is 6.25 percent. Learn more at state.nj.us/treasury/ taxation.

AICPA Redefines Affiliate Criteria for Audit and Attest Clients The AICPA Code of Professional Conduct has a new ethics interpretation: ET 101-18 – “Application of the independence rules to affiliates” that redefines which entities are considered affiliates of our audit, review and compilation financial statement clients (collectively “financial statement attest clients”). This new interpretation is effective for periods beginning on or after January 1, 2014. Visit aicpa.org/research/standards/ codeofconduct.

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Small business owners will learn the types of information that should be secured, as well as how to protect themselves from intentional attacks or unintentional damage, guard themselves from decreased productivity caused by security breaches and evaluate the needed security tools and techniques. Visit sba.gov.

IRPAC Issues Annual Report The Information Reporting Program Advisory Committee (IRPAC) released its annual report for 2013 which recommends that the IRS (1) extend truncation of taxpayer identification numbers (TINs) to employer identification numbers; (2) expand the TIN matching program to permit matching on a greater number of return types; (3) improve instructions to reduce errors on Form 1099-MISC; and (4) provide additional guidance with regard to merchant card reporting on Form 1099-K. The committee also commented on cost basis reporting for debt instruments, specifically addressing requirements, practices and capabilities for reporting market premium and discount. There are also extensive discussions of reporting requirements under the Foreign Account Tax Compliance Act and the Affordable

Thomas A. Bracken (upper right), NJ State Chamber of Commerce president and CEO, gives a presentation to the NJSCPA Board of Trustees. Care Act. See the full report at irs.gov.

PCAOB Issues Report on Implementation of Auditing Standard No. 7 The PCAOB released a report regarding registered audit firms’ implementation and compliance with Auditing Standard No. 7, Engagement Quality Review. According to the report, while firms’ methodologies generally were consistent with the requirements of Auditing Standard No. 7, they did not

always result in an appropriately executed engagement quality review. The report notes that in many engagements in which the PCAOB inspection staff identified audit deficiencies, they concluded that the audit deficiency should have been identified by the engagement quality reviewer. Observations from the board’s 2012 inspections indicated that audit deficiencies and the related deficiencies in engagement quality reviews continued to be high. Visit pcaobus.org.

njscpa.org Spotlight

Have a Technical Question? Ask Your Fellow NJSCPA Members Receiving Responses

If you’re a New Jersey Society of CPAs member with a technical question on tax, accounting or another topic, your fellow Society members can help. All members are subscribed to the NJSCPA Member Open Forum on Connect (njscpa.org/connect), the Society’s online community. Questions can be posted to the Open Forum so that one or more members can answer them. Here’s how:

• If a member replies directly to you, you will receive the response via email immediately. • If a member replies to the group, the timing of your receipt of that response will depend upon how you are subscribed to the Open Forum. Check your subscription preferences by selecting My Settings from the My Profile menu. If your Open Forum subscription is set to Real Time, you will receive the response via email immediately. If it is set to Daily Digest, you will receive the response in the next morning’s Open Forum Daily Digest. However, you can also view the responses on Connect at any time.

Posting a Message • Go to njscpa.org/connect and login using the link in the upper right corner (your username is your email address and your password is your member ID, unless you’ve changed it). • Go to the Open Forum menu and select Post a Message. • Complete the Subject field, and type your message in the Message field above your signature line. • Click the Send button.

To learn more about how to use Connect, register at njscpa.org/ catalog for our free webinar on Tuesday, April 22, 1:00-2:15pm, or view the Training & User Guides in the Resources section of Connect. Questions? Contact Rachael Bell at rbell@njscpa.org or 973-226-4494 x220.

Your message will be sent to more than 13,000 NJSCPA members who can reply directly to you or to the entire group.

NEW JERSEY CPA • March • April 2014

David Lopez This issue’s theme of diversity has been a hot topic over the last several years. It seems every major industry in this country has made an attempt to address the issue, primarily from the perspective of race. The CPA profession is no different. It has formed state and national committees to address and increase diversity within our discipline. Recent studies have shown that less than 3 percent of CPAs in the U.S. are minorities. Personally, the more alarming number is less than 1 percent are Latin- or African-American.

By David A. Lopez, CPA David A. Lopez and Company, LLC

As a minority, I feel these firstperson perspectives on race, the lack of diversity in our profession and the unique challenges each of us have faced throughout our personal and professional lives provide valuable insights for our colleagues for whom race may have never been an issue. Thankfully, I’ve experienced a certain level of success in the profession, so this piece is not meant to be a complaintfilled tirade. Instead, it’s designed to provide some insight on situations I’ve experienced and barriers I’ve overcome to achieve that success. Lack of diversity isn’t new to me. The majority of my educational career lacked diversity. Growing up in a somewhat poor, single-parent household, my Panamanian mother NEW JERSEY CPA • March • April 2014

stressed the importance of education. She worked multiple jobs to send my sister and me to Catholic schools because she believed this was the best education available to us. From first through ninth grades, I was one of two or three minority students in my class. The experience was great. And with the popularity of social media, I still communicate with many of those classmates. But, even though I attended a parochial school, I was not completely shielded from racism. Unfortunately, on a few occasions, I had to fight some classmates after they chose to call me racial slurs. These negative experiences didn’t make me angry, but simply reinforced my mother’s teachings that I was different, but not inferior, and had to work harder to get to the top. Even in my professional life, my mother’s teachings still ring true. My professional experience as it relates to diversity hasn’t changed significantly. As a member of the CPA version of the “1 percenters,” I still operate under the premise that I have to work harder to achieve the same success as my white counterparts. After graduating from the University of Pittsburgh, I worked at three highly respected, regional firms where minority professionals at each numbered no more than two. Even though the experiences at these firms were primarily positive, I still found myself having to deal with questions or comments that most likely were not posed to my non-minority colleagues. “Did you go to such a good school

on an athletic scholarship?” and “You’re always on time, I thought the brothers were always late” confirmed that some people still have preconceived notions and stereotypes about individuals from other races. Beliefs that black or brown males can only go to major universities to play sports or that we don’t understand the importance of timeliness didn’t burden me with a chip on my shoulder. Instead, those comments motivated me to move forward. And after eight years of working in majority-owned firms, that was the motivation I used to establish my own audit and tax practice more than 10 years ago. Diversity was the primary factor in my decision to start my own practice. One of my goals was to create a place where minority CPAs could grow in a nurturing environment. Creating a minority-owned firm may have addressed diversity internally, but externally the lack of minorities in the accounting profession continues to make success for a firm like mine harder to achieve. Most people are scared to admit it, but it is much easier to hire financial professionals who they can identify with on a race-based level; it’s not wrong, it’s just human nature. When we respond to a request for proposal (RFP), we know that, most likely, the decision maker doesn’t look like me, so we strive to ensure our proposals and presentations are top-

committee posed questions about prospective auditors during the proposal review stage. But when our proposal came across the table, board members asked questions that they didn’t pose for the other finalists, and many of them were questions that he thought were unfair and race-based. Even with the hurdles my firm faces, I’ve never regretted my decision to become a CPA. The lack of diversity within the profession isn’t a white problem, it's a minority problem. It is imperative for people like me to build organizations that provide a home for minority accounting professionals. Through our internship program, I challenge myself to reach out to minority students to teach them about the profession and the career opportunities that do exist. Honestly, I don’t need a chief diversity officer or some government business certification to create opportunities for me. I simply need people to look at minority professionals on a level plane and recognize that we bring the same skills and knowledge to the table.

“Lack of diversity isn’t new to me. The majority of my educational career lacked diversity.” notch. Some people think I’m crazy when I say one of the best compliments I ever received was from the CFO of a prospective audit client. After reading our RFP submission, the potential client said, “When I looked at your proposal, website, business card and letterhead, I thought you were a white firm.” I also understand that my firm’s experience and credentials will be scrutinized more closely. My staff is a virtual alphabet soup of accounting: CPAs, MSTs, CVAs, CFEs and CFPs, so questions posed regarding our skills should be the same as any other firm; unfortunately, they aren’t. This was recently confirmed by a board member of a new audit client. He explained that during the selection process, the finance NEW JERSEY CPA • March • April 2014

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

Emily VU As someone who was born into oppression in Vietnam only two years after the South was absorbed by the Communist North, I welcomed this opportunity to discuss some of the ways that race has affected my life and career. I am very proud of my Vietnamese heritage, which has been a major reason for my achievements in the accounting profession, but sometimes I felt that I had one foot in America and the other foot in Vietnam. Our customs, language and even our cuisine set us apart.

By Emily K. Vu, CPA TTK & Associates, LLC

I was highly motivated to perform well in school to gain the respect of my teachers and fellow students. No child wants to be classified as different, so I worked hard to absorb the language of my new country, set goals for myself, get good grades and bring honor to my community. However, little things reminded me that I was different from my peers. Nevertheless, I learned to adapt to my new country. When teachers and friends stumbled over the pronunciation or spelling of my first name, I changed it from Khanh to Emily. I am Khanh to close friends and family and Emily to others, but I never had second thoughts about my decision because I knew who I was and what I wanted to be. NEW JERSEY CPA • March • April 2014

My ethnicity clearly played a role in my career as an accountant. My earliest goal was to become a teacher, but my future profession in accounting was encouraged by my parents who did not believe my language skills would lead to success as a teacher in America. They preferred that I choose a career rooted in mathematics, based largely on the perception (often misplaced) of Asian mathematical prowess. Overcoming the traditions of filial responsibility and obedience to achieve my goals required me to be resourceful. I honored my parents’ wishes; thankfully, I connected with accounting and understand its importance. Accountants are always needed, in good times and in bad. Eventually, I also found a way to fulfill my dream of being a teacher – first as a college adjunct professor and later as a university accounting professor. Because of my accent, I was sensitive about being understood by English speakers. This was reinforced early in my accounting career when some colleagues neglected to provide the information I had requested for an audit. Rather than admit that they had not followed through, they claimed that they were unable to understand me. I found their excuses hard to believe and unprofessional; if they had truly misunderstood my request they should have asked for a better explanation then and there. Afterward, I made sure that I was as clear as possible

when giving instructions, even has higher fees, but they don’t resorting to spelling out a word understand why and they may when I saw a puzzled look on a go to a cheaper, less-qualified listener’s face. I also became a alternative. So, there’s still some member of Toastmasters where work and educating to be done I became more confident about on my part. public speaking. Since then, I When given the opportunity have taught hundreds of college to counsel minority accounting and university students who students, I advise them to understood and appreciated learn their lessons well, my lessons, who proved that because confidence comes from America is a melting pot of knowledge, and they must be cultures where, in most cases, I confident to believe in their am accepted for my abilities. potential. I tell them to avoid The reality is that most firstthe “worker bee” syndrome, “The reality is that most firstgeneration Asian-Americans set their goals high, work struggle with the spoken and generation Asian-Americans struggle hard and aim to be leaders written word which causes us because leadership is based on to get stuck in a corner at our with the spoken and written word intelligence, it has no color. workplaces. We are considered They must learn not to be to be “worker bees,” valued for which causes us to get stuck in a easily offended; instead, they our intelligence and work ethic, should find a way to turn each but deprived of opportunities challenge into an opportunity corner at our workplaces.” because of weak language to improve themselves. If they skills. I believe we must develop can do these things, they will patience. Making the extra effort has support structures that will help be comfortable in their own skin, no worked for me, and I realize now that us get out of the corner and into matter what color it is. speaking two languages is actually a management roles. I maintain a strong bonus. interest in my community through Emily K. Vu, CPA, CFF, CGMA, When I started my own practice the Vietnamese Community Center CFE, M.B.A., is president of TTK in 2006, you would think that it which myself and other community & Associates, LLC. She is a member would be easy to cultivate an Asian activists formed to help Vietnamese of the New Jersey Society of CPAs clientele, as they might feel more immigrants find their way in America; Educators and Student Programs comfortable with me. Interestingly, however, more organizations like this & Scholarships committees and the it has been more difficult and the are needed. Federal Taxation and Technology reason goes back to culture and the I have learned to assimilate in interest groups. She is also a member language barrier. Many potential America and communicate in English of the American Institute of CPAs Asian-American clients simply do not thanks to help from a B.S. from and the Association of Certified Fraud know the difference between a CPA Stockton College, an M.B.A. from Examiners. Contact her at ekvu@ and a non-CPA. They see that a CPA Monmouth University and a lot of ttkassociates.com. NEW JERSEY CPA • March • April 2014

Marcy LoCastro I graduated from Montclair State College in 1974. I promised my father before he passed away that I would get a job earning $200/week, a great salary for that time, and I wanted to keep that promise. While I was able to reach that goal, little did I know what the next 35 years would bring. I began with no plan, no personal goals, just my instincts. I had no idea what I was getting into; I only had the desire to achieve.

By Marcella LoCastro, CPA MLoCastro Consulting LLC

I was a math major with a minor in accounting and had teacher certifications in math and business. While I was trained to be a teacher, many men took these jobs to stay out of the Vietnam War. Since there were few teaching jobs available, I interviewed for accounting positions. I had a college professor who encouraged me to interview with a Big Eight firm, as they were hiring women. An aunt who was a teacher also encouraged me to go into public accounting, since it would provide me with better opportunities. Unfortunately, these firms would not consider me for employment because I did not have enough college credits to take the CPA Exam. I worked at a payroll service bureau part-time while I was in college and became computer savvy. I was hired by a local accounting firm as a staff accountant and computer consultant at an annual salary of $10,400. NEW JERSEY CPA • March • April 2014

The staff consisted of myself and 50 men. (They had one woman before hiring me who had left.) I noticed blatant differences early on, even though the Equal Employment Opportunity Commission had been in existence for a decade. I was told it would take me longer to make senior, since clients would not accept a female on their accounts. I could not go out of town on business because I was single, and the wives of my male colleagues would not allow them to go with me. Secretaries would not type my assignments because I was a woman and they felt I should do my own work. Fortunately, with the support of a partner and his assistant and my computer acumen, I made senior in two years. In 1977, I graduated with an M.B.A. in accounting and taxation from Fairleigh Dickinson University and went to work for a Big Eight firm. Three years later, I became the first female manager in its NJ office. However, in 1980 I had a baby. At that time, I couldn’t find one female partner at the firm with school-age children, leaving me with no role models. After returning full-time, I was told at my annual review that I was no longer perceived as a “businesswoman.” I left that firm in 1983 and went to a series of large firms, each time becoming the first female partner in NJ, while at the same time having more children. In 1996, I joined a Big Four accounting firm where I was not the first female partner and actually worked for a female partner. Each time I made a change, I was able to increase my salary and work locally, since entrepreneurial clients were

serviced by local offices. The last accounting firm I was with noticed my salary was lower than many male counterparts with similar credentials and attributed it to me being on the “mommy track.” During my career, I was often told that I didn’t deserve to make as much money as my male partners since my spouse worked and theirs didn’t, and they had children in college and I didn’t. We had a partner outing at one country club which did not permit women on the golf course that day. Instead of allowing us to socialize, we had to go back to the office to work, while our male colleagues enjoyed a round of golf. Today, semi-retired, I coach female professionals and do women’s leadership training, sharing the lessons I’ve learned. I have also served on corporate and nonprofit boards. The amount of women serving on public company boards is still approximately only 15 percent. Women

“Women are often hesitant to ask for a promotion, raise or assignment or to attend an event.”

Salaries for female accountants averaged 78 percent of men’s salaries in 2012, according to an Institute of Management Accountants survey.

in my training courses tell me that more subtle differences still exist for females. According to the American Institute of CPAs, females compose 50 percent of the profession; however, only 19 percent are in leadership positions. Here are some lessons I’ve learned over the years to help female professionals succeed: • Be passionate about what you do. • Specialize in an area to differentiate yourself. • Be dependable. People buy from those they like and trust. Even though I was in consulting, I was able to avoid long-term out-of-town assignments by selling work locally and specializing in working with entrepreneurs and high-growth companies. • Treat your team with respect in order to be a good leader. NEW JERSEY CPA • March • April 2014

• Take control of your own destiny by having short- and long-term goals. • Ask for what you want. Women are often hesitant to ask for a promotion, raise or assignment or to attend an event. Remember: Your male colleagues do this routinely. • Take advantage of personal coaches and professional training in sales/business development. • Have a mentor at your company who you trust and who can advocate for you to help you meet your goals. • Join external groups, such as the New Jersey Society of CPAs, and become active to get your name out there.

I – and many other females – faced numerous obstacles. But by developing a plan, being determined and thinking strategically, I enjoyed a long, fulfilling career while balancing family and personal needs. Women today are becoming managing partners, C-suite executives and board members – positions that many women of my generation only dreamed about. Marcella LoCastro, CPA, CITP, M.B.A., is CEO of MLoCastro Consulting LLC. She is a member of the New Jersey Society of CPAs Technology Interest Group and the Editorial Advisory Board of New Jersey CPA magazine. Contact her at marcy@ mlocastro.com or 973-722-0056.

Ralph Thomas It was quite a culture shock leaving Washington, D.C., as a young man to attend college at Lehigh University in Bethlehem, Pennsylvania. The town was small, industrial and not particularly diverse. With an undergraduate population of 4,400 students, approximately 50, myself included, were minorities. What were probably mundane decisions for most students – where to get a haircut and where to go to church – became challenges for me. It was probably for those types of reasons that I made it a point to graduate in three-and-a-half years so that I could get into the “real world” that much quicker.

By Ralph Albert Thomas New Jersey Society of CPAs

I could have lived with a feeling of isolation for my duration at Lehigh, but I did a few of things to overcome that. First, I became active. I took my love of sports and became part of the staff of the football and wrestling teams. (I had tried out for the golf team, and had I made it there was some discussion as to whether the local country club would honor my team membership.) I joined the Organization for the Enhancement of Afro-Humanity, and I pledged a fraternity that had minority members. Because pledges had to clean the fraternity house, I was devastated one day when a member called me the n-word and indicated that cleaning is what black people did. That was NEW JERSEY CPA • March • April 2014

brotherhood? The episode brought tears to my eyes and refocused my efforts to graduate early. The second thing I did was befriend a couple of (Caucasian) professors and an African-American administrator. Call them mentors, sponsors, advocates or what have you, but they became surrogate father figures. They helped me think about the roadmap of my career as well as invited me and other minority students to their homes for dinner, which helped us feel accepted. Perhaps the most important contribution they made was to convey that leaving Lehigh was certainly an option, but it was the easy way out; when you get in the workforce you may often be in some sort of minority, but you can’t always just pick up and leave. After graduation, I went to work for a Big Eight firm in Washington, D.C. There were about 100 professionals in the office, but only six or seven were minorities. I felt, as a minority, that it was incumbent on me to come in earlier, work harder and stay later than my colleagues. I recall on one of my first big assignments, I had performed well. My senior on the project was pleased yet seemed surprised that I was able to do such a good job, almost as if the bar was not set very high for a minority auditor. Later on, I was saddened to see in the client file: “The client does not want Ralph back next year; nothing wrong with his technical skills.” Around this time, I joined the National Association of Black

Accountants (NABA). I was so happy to be amongst accounting professionals of color. I later served on the board and became national president. I recall one of the local NABA chapter presidents took a liking to me. She was the city treasurer for Washington, D.C., who helped me hone my leadership skills. To this day, I won’t hesitate to seek her valuable guidance and counsel. I went on to work at Potomac Electric Power Company, AT&T, Citibank and my current home at the NJSCPA. In fact, when the Society first put out feelers to me for the position, I had asked, “Do you think the NJSCPA is ready for an African-American executive director?” It was important to me that the organization felt it was, in fact, ready. I mentioned this opportunity to current American Institute of CPAs CEO Barry Melancon, CPA, and he told me that it would be a great chance to be a role model for aspiring minority CPAs. With Barry’s advice and the support and encouragement of Society members such as Don Richards, CPA, and Paul Stahlin, CPA, I became the first AfricanAmerican executive director of not only the NJSCPA, but of any state society CPA organization. I’m often asked if things are better now for minority CPAs versus when I

more minority representation. To managing partners, I would say continue to cultivate a welcoming environment. Encourage seasoned staff to be sponsors who can help minorities navigate the waters and cultural nuances of the organization. More than mentors, sponsors are those who can change the course of someone’s professional trajectory by actively working to get them to the next level. Convey to potential sponsors that at some point, someone used his or her political and professional capital to help them; now it’s their turn. And to those aspiring CPAs, I would say you may run into obstacles due to your race, sex, religion, sexual preference or some other reason. Don’t be deterred; life will always have its ups and downs. Seek out those who can help you along the way. Become involved, and don’t be afraid to be a leader. Remember, having no reputation is almost as bad as having a bad reputation. And when all is said and done, there’s no substitute for hard work and dedication.

“I’m often asked if things are better now for minority CPAs versus when I started some 37 years ago. The short answer is absolutely, but there’s still work to do.” started some 37 years ago. The short answer is absolutely, but there’s still work to do. We have to do more to (1) bring minorities into the profession; (2) keep them in the profession; and (3) provide partner and executive opportunities for those professionals. Efforts must be made on several fronts. While minority CPAs make up less than 3 percent of the total profession, the NJSCPA has never had an AfricanAmerican or Latin-American president and has had only two female presidents in its 116-year history; state boards of accountancy could also benefit from NEW JERSEY CPA • March • April 2014

Ralph Albert Thomas, CGMA, M.B.A., is the CEO and Executive Director of the NJSCPA. He is a member of the AICPA National Commission on Diversity and Inclusion. Contact him at rthomas@njscpa.org.

SPECIAL ADVERTISING SECTION

CONTINUING EDUCATION PROFILE Rutgers Brings Its Professional Master of Accountancy to Mercer!

eginning in August 2014, the Rutgers School of Business– Camden will bring its Professional Master of Accounting (PMAc) program to the Conference Center at Mercer County Community College located in West Windsor. Structured as a 16-month accelerated degree program, the Rutgers PMAc is designed with the working professional in mind. Participants thrive with a curriculum that conveys analytical tools, the latest business techniques, and enhanced skills needed to succeed in today’s competitive marketplace, all of which can be instantly applied in the workplace. In addition to satisfying the 150hour eligibility requirement to sit for the CPA Exam in New Jersey, New York, and Pennsylvania, the curriculum incorporates the CPA three-part exam methodology. Through coursework, team projects, case studies, and simulations, students receive a

broad background in accounting and business, and develop their careers in public, corporate, government, nonprofit accounting, and education. Guided by highly experienced and accomplished faculty, students develop their knowledge, critical thinking and decision-making skills, and teamwork savvy. With Saturday classes and no classes during peak tax season, it is the ideal solution for those who wish to earn their master of accounting degree from an AACSB International-accredited institution without disrupting their full-time career. The program’s cohort format brings together groups of diverse professionals from a variety of organizations and industries throughout the region. Students collaborate to stimulate their intellect, heighten their potential, and broaden their perspectives, all while expanding their professional network.

Rutgers University School of Business – Camden 227 Penn Street Camden, New Jersey 08102-1656 Main Line (856) 225-6800 http://business.camden.rutgers.edu/

Upcoming Information Sessions The Conference Center at Mercer 1200 Old Trenton Road West Windsor, NJ 08550 Thursday, March 20, 2014 6:30 to 8 p.m. Wednesday, April 23, 2014 6:30 to 8 p.m.

PROGRAM HIGHLIGHTS •1 6-month accelerated degree program • Saturday classes •N o classes during peak tax season (March and April) • Flat tuition for all students

•M eets at the Conference Center at Mercer County Community College •C PA 3-part exam methodology built into curriculum that meets the 150-hour eligibility requirement N E W J E R S E Y C P A • ma r c h • ap r i l 2 0 1 4

• I mmediate applications for the workplace •E xceptional cohort group of professionals •W orld-class Rutgers faculty

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Join us at an information session: Thursday, March 20 from 6:30 p.m. to 8 p.m. Wednesday, April 23 from 6:30 p.m. to 8 p.m. Location: Conference Center at Mercer County Community College 1200 Old Trenton Road West Windsor, NJ 08550 To register visit

pmac.rutgers.edu/infosessions or call 856-225-2700

SPECIAL ADVERTISING SECTION

CONTINUING EDUCATION PROFILE Master of Accountancy in Financial Accounting

his innovative and convenient 30-credit program is designed for graduating accounting majors and accounting professionals who want to earn a graduate degree while meeting the 150-hour education requirement to be licensed as a CPA. The program offers students the flexibility to start or continue their employment while pursuing the additional college credits to meet the 150-hour requirement. Two consecutive five-week summer sessions need to be taken on campus. All other classes are taken online. The program focuses on enhancing the accounting professional’s knowledge of current issues facing the world of accounting. Graduates are prepared to pursue careers in public accounting, private industry, government, education, not-forprofit corporations, and consulting. Rutgers Business School (RBS) thrives within Rutgers University, the nation’s eighth oldest institute of higher education. With more than 270 degree programs with which to partner, RBS is uniquely capable of delivering cuttingedge multidisciplinary curricula that combine a mix of business, science, and technology skills required by today’s leading corporations. The Master of Accountancy in Financial Accounting program goes beyond the basics of accounting to develop professionals with comprehensive insight into the world of business through a curriculum strongly focused on emerging technologies, analytical and communications skills, and a wide range of practice areas from forensic accounting, to business valuation, to litigation support, and more. More than 130 partners and principals in the Big Four firms are Rutgers alumni—representing one of the single greatest concentrations from major business schools. Graduates of Rutgers accounting programs are highly sought

by all major accounting firms and corporations. Today’s global business environment requires accounting professionals who understand the impact of accounting on other business disciplines, the stewardship of corporate financial resources, and the current movement toward international accounting standards. Students in the Master of Accountancy in Financial Accounting program may elect to take courses in other business disciplines such as finance, management, and international business to broaden their knowledge of these disciplines. Innovation is essential for corporations to maintain growth and stay ahead of the competition. These successful companies recognize diversity is a key ingredient to meeting their innovation goals. RBS is an integral part of a campus that has been ranked #1 in diversity since 1997 by U.S. News & World Report when the magazine began ranking diversity. Students in the Master of Accountancy in Financial Accounting program benefit from a curriculum developed with the input of industry leaders, taught by experts in the subject areas. One example is the online business valuation course developed and taught by the former executive vice president in charge of the corporate valuation consulting practice at Standard & Poor’s. Other real-world learning opportunities include: • Decoding of Corporate Financial Communications; • Utilizing Technology in Auditing; • Analyzing Governance Issues; • Exploring Ethical Considerations in Today’s Global Business Environment. Completion of the program requires 30 credit hours of course work. Students entering the program in the summer take five core courses during two consecutive five-week sessions. Remaining classes are taken online. N E W J E R S E Y C P A • M A R C H • A P RIL 2 0 1 4

Rutgers Business School 1 Washington Park Newark, NJ 07102 973-353-1234 Geographically situated at the center of global business, RBS has access to the top executives leading the world’s largest corporations. Our partnerships with these companies are central to the RBS experience and offer our students distinct career advantages, evidenced by the success of 30,000-plus RBS alumni. The Master of Accountancy in Financial Accounting program partners with leading representatives from the Big Four and regional accounting firms to ensure students receive broad exposure to the multifaceted aspects of today’s world of business and finance, along with developing the leadership and team-building skills that lead to success.

A STUDENT PERSPECTIVE The Master of Accountancy in Financial Accounting program’s structure allowed me to obtain my graduate degree within a year, and to earn the 150 credits that I needed to sit for the CPA Exam. The dedication and knowledge of the professors, the teamwork and camaraderie with a diverse range of fellow students, and the access to career resources specifically targeted to the accounting profession, made my Master of Accountancy in Financial Accounting experience extremely beneficial. — Derkyl Paton (’12)

business.rutgers.edu/finmaccy

Rutgers Master of Accountancy in Financial Accounting On-campus & Online Program

Earn your Masters in Financial Accounting in less than 12 months for less than $25K.* The program requires 30 credits, 15 are earned during the summer session, when students are enrolled on campus on a full-time basis. The balance of 15 credits are electives taken on a part-time basis on-line in the Fall and Spring semesters.

Flexibility for students and firms Accounting graduates admitted into the program in the summer can complete 70% of the degree requirement prior to joining a firm. The remaining courses are taken on a part-time online basis. Visit: business.rutgers.edu/finmaccy Email: admit@business.rutgers.edu Telephone: 973-353-1029 *The Board of Governors reviews the tuition and fees on an annual basis and sets new tuition and fee rates at its July Board meeting.

“The Financial Accounting program is structured in a way that allows students to obtain a master’s degree without a significant delay to the start of their careers and related earning capabilities. Along with providing a solid knowledge base in accounting, the Financial Accounting program provides students with a broad perspective. They graduate with the knowledge and skills they need to get started and succeed in the accounting profession. It’s a program I highly recommend.” Paul Krieger, Audit Partner, Deloitte & Touche Rutgers, The State University of New Jersey – founded 1766

SPECIAL ADVERTISING SECTION

CONTINUING EDUCATION PROFILE Seton Hall University: Flexible Degree Programs, Great Opportunities "Not only did my professors provide me the technical accounting skills I needed to succeed at a Big 4 firm, they provided guidance and coaching as well." — Erin Carrigg, CPA, PwC Seton Hall’s Accounting programs have distinguished themselves for their high academic standards, flexibility, small class sizes, and innovative teaching. These qualities – in addition to unique recruiting opportunities – have made Seton Hall the school of choice for students looking to become professional accountants. High Academic Standards The quality of our programs has been affirmed by AACSB International, the top accreditor of business schools, which has made Seton Hall the only accounting-accredited program in Northern New Jersey. This external accreditation requires us to hire and cultivate top faculty talent, and to ensure that students’ classroom experiences are of a consistently high quality. Furthermore, it requires that we continue to collaborate with accounting faculty and administrators at other schools to continue to meet the high standards set by AACSB International. Flexible Degree Programs In addition to our renowned bachelor’s degree in accounting, students may choose to complete a Master of Science in Professional Accounting to meet the 150 credit requirement for certification. Many students with bachelors’ degrees

in other fields choose to join our Master of Science in Accounting program, which helps them to shift career tracks towards certification as a CPA. Others choose to earn their M.B.A. with a concentration in Accounting. Seton Hall also offers a Certificate in Taxation for our graduate students, which can be taken on its own, or in conjunction with one of our master’s degrees. In addition to meeting our degree requirements, most of our students also complete one or more professional internships. Our Students are In Demand In any typical year, about half of our new graduates join the Big Four accounting firms: Deloitte, E&Y, KPMG, and PwC. Graduates also typically interview with and accept offers from Johnson and Johnson, Prudential, Verizon, and other corporate employers. Many more graduates join national accounting firms such as CohnReznick, Grant Thornton, and WithumSmith+Brown. Our students are in high demand – usually more than 90% of our graduates are hired within three months of graduation. Small Class Sizes and the Personal Touch Seton Hall classes in business typically have a maximum of 30 students. This means that students have the opportunity to ask questions in class and meet individually with their professors to learn more and prepare for their careers. All students receive one-on-one advising every semester, to help them plan their course programs and also to ensure that they are on track to meet their immediate career goals. Furthermore, a personal recruiting coach is available to guide students toward a professional position. N E W J E R S E Y C P A • ma r c h • ap r i l 2 0 1 4

400 South Orange Avenue South Orange, NJ 07079 (973) 275-2961 Students can also participate in a wide variety of business-oriented clubs and activities. For accounting students, Beta Alpha Psi provides weekly opportunities to meet with recruiters and network with Seton Hall alumni who can help them build their careers. Innovative Teaching All Seton Hall, accounting courses are taught by full-time faculty or by professional accountants who have many years of experience as leaders in the profession. Our full-time faculty have attended top Ph.D. programs, such as New York University, The University of Texas at Austin, and Baruch College. Our courses use a variety of classroom formats, including online, hybrid, and in-class learning. This mixture of formats provides students with flexible scheduling, and encourages students to get to know their classmates while studying together on our campus.

“Seton Hall’s program was the perfect mix of focused curriculum, supportive faculty, flexible coursework and overall affordability.” — Tony Di Meo, Becton, Dickinson & Company

Let the Stillman Advantage

FURTHER YOUR CAREER

The only Accounting Program in Northern NJ with

AACSB ACCOUNTING ACCREDITATION. Master of Science in Professional Accounting (M.S.P.A.) Master of Business Administration (M.B.A.) Master of Science in Accounting (M.S.A.C.) • Connections to top recruiters and CPA firms • One-on-one career counseling • Convenient Northern NJ location

Master of Science (973) 275-2961 david.mest@shu.edu

M.B.A. (973) 761-9262 catherine.bianchi@shu.edu

• Evening classes For information on recruiting our outstanding students, contact Donna Jackson-Robertson, associate director, The Career Center at (973) 761-9355 or donna.jackson-robertson@shu.edu.

A&A

buzz

What’s Up with the New Lease Accounting Rules? By Joseph C . DiFalco, CPA, EisnerAmper LLP

hether we like it or not, changes to lease accounting rules are imminent … or are they? One thing’s for sure, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have proposed change since 2010, when they first introduced their proposal that would require organizations to recognize assets and liabilities arising from all leases. Predictably, the initial proposal was met with many comments and concerns, which the boards reviewed before issuing a revised proposal in May 2013. Here are the current and proposed treatments.

Current Treatment Current accounting standards identify two types of leases: capital and operating. If a lease meets the criteria of a capital lease, assets and liabilities are recorded on the balance sheet and the asset is depreciated, while the lease obligation is amortized over the lease period, similar to long-term debt. Conversely, operating leases are not recorded on the balance sheet, and lease payments are recognized as expenses on a straight-line basis. Future commitments under operating-type leases are currently only required as disclosures.

Proposed Treatment The proposed standard requires all lessees to recognize a liability for the lease payments and corresponding asset representing the lessee’s right to use the leased asset. Two types of leases are identified, and the corresponding recognition and measurement of expense is different. The main distinguishing factor between the two types is the nature of the underlying leased asset:

Type A – This lease covers most leases of assets other than property (e.g., equipment, cars). Type A lessees recognize a right-of-use asset and a lease liability, initially measured at the present value of future lease payments. A lessee would recognize the portion of the lease liability representing interest cost separately from the amortization of the right-of-use asset in the statement of operations. Type B – This lease covers property leases, including land and/or a building or part of a building. Balance sheet recognition and measurement are the same as the Type A lease. The nuance deals with the cost recognition. Type B leases would recognize a singlelease cost on a straight-line basis, representing both the interest on the lease liability and the amortization of the right-of-use asset.

Proposal Revisions After considering the hundreds of comment letters received on the 2010 proposal, the boards introduced key revisions to the 2013 version: • An election for organizations to exclude the treatment for qualifying short-term leases (leases with a maximum term of 12 months). • Exclusion of variable lease payments not based on an index or rate (i.e., lease payments based on percentage of sales) from the liability. • An increased threshold for including optional renewal periods in the liability. • The ability for private companies and nonpublic not-for-profit organizations to elect to use a risk-free rate to discount the lease liability, along with reduced disclosure requirements.

Proposal Impact By adding significant liabilities to an organization’s balance sheet, its ability NEW JERSEY CPA • March • April 2014

to meet loan covenants – including debt service coverage, financial leverage ratios and tangible net worth – might be greatly impacted. Organizations can take measures now and negotiate debt agreements with a “frozen generally accepted accounting principles (GAAP)” clause, which means that covenants are based on GAAP at the time of the agreement. This will ensure that the adoption of this or any other proposed changes do not impact covenant calculations. Let’s not forget the impact on earnings before interest, taxes, depreciation and amortization (EBITDA). If a lease is considered an operating lease under current GAAP, lease costs are a deduction to arrive at EBITDA. The proposed rules will categorize these costs as either interest or amortization and increase EBITDA. Organizations should assess the impact the proposal has on existing shareholder or buysell agreements that include valuation provisions using EBITDA as a basis. Also consider any compensation incentives that are based on targeted EBITDA.

What’s Next? The board continues to consider the feedback received on the 2013 revision and will deliberate all significant issues in early 2014. It’s still uncertain if this proposal will go final in 2014, so effective dates are a moving target. Joseph C. DiFalco, CPA, is a senior audit manager with EisnerAmper LLP. He is a member of the New Jersey Society of CPAs Board of Trustees. Contact him at joseph.difalco@ eisneramper.com.

BEST

practices

NJ’s Certification Programs for Women and Minorities By Lawrence Feld, Hunter Group CPA LLC

o help encourage women and minority-owned businesses to participate in the substantial commerce transacted each year by the state government, New Jersey created setaside requirements in its request for proposal vendor-qualification process.

MBE/WBE Certification Program The state of New Jersey Minority Business Enterprise/Women Business Enterprise (MBE/WBE) certification program offers a gateway to opportunities that typically are awarded to larger firms with substantial resources. This program also gives the state detailed information about the participating small business, ensuring that bidders are both qualified and capable of delivering on their commitments. Approximately 25 percent of all the dollars allocated to state contracts were reportedly awarded to small businesses and certified MBE/WBE participants last year. While a wide range of products and services are available for bid, the majority of opportunities are found in architecture, engineering and construction, as well as housing, education and health care. And yes, several accounting firms also participated. An MBE or WBE must be “authenticated as being at least 51-percent independently owned and managerially controlled by either minorities or females.” NJ Minority-Owned Businesses

Woman Owned.......................... 213,284 Latin-American Owned.............. 68,377 Asian-American Owned............. 67,840 African-American Owned.......... 60,366

Once certified, businesses may bid on work published in a state-run database known as the New Jersey Selective Assistance Vendor Information database (NJSAVI). NJSAVI identifies businesses eligible for mandated state programs, such as the NJ Small Business SetAside program. NJSAVI also assists by matching buyers and vendors for private contracting opportunities that may exist.

Application Process Applying for certification costs $100 and is valid for three years, with an annual verification form required after year one and year two to remain active. The application form is a mere two pages and is accompanied by a single page initial verification form; be advised, this form will require a notary. Applicants should not enter into this program with a light heart; severe criminal penalties exist to those who falsely or inaccurately complete their certification information. The application asks for company officers, ownership percentages, and basic contact and financial information. It also requires the applicant to select industry codes; there are links to the proper commodity codes on the website imbedded in the form to pinpoint where the company should be referenced in the state database. Your clients should be prepared to provide three years of tax return information and certificates that apply to their formation (incorporation, partnership agreement) as proof of the entity’s origination and legal status. Proof of gender and officer résumés may also be required, as well as substantiation of any major and real personal property that is owned by the company, including deeds, mortgages and/or lease agreements. Forms are available at state.nj.us or by calling 609-292-2146. Those interested in applying for certification should note that NEW JERSEY CPA • March • April 2014

approvals can take eight weeks or more to complete.

The PANYNJ Program In addition to the state government, the Port Authority of New York and New Jersey (PANYNJ) also operates a women- and minority-owned business set-aside certification program for small business enterprises. Much like the New Jersey state certification, there are similar forms required to register prior to bidding on current requests for proposal, both of which are found at panynj.gov/businessopportunities/sd-become-certified.html. The PANYNJ program is operated by the Office of Business Diversity and Civil Rights. Unlike the state program, the PANYNJ program is a five-year certification for women- and minority-owned businesses, while the small business program is a three-year certification.

Municipal Programs Several New Jersey cities, including Camden and Montclair, have established their own minority business set-aside programs. Learn more at the NJ Business Portal (nj.gov/njbusiness), which offers links to a variety of resources. One of those links is the Small Business Development Center (njsbdc.com), a network dedicated to helping small businesses. Minority- and women-owned enterprises are missing significant business opportunities if they ignore these programs. As trusted business advisors, CPAs should make qualifying clients aware of these opportunities. Lawrence Feld is the marketing director for Hunter Group CPA LLC. Contact him at lxf@thehuntergroup.com.

BUSINESS & INDUSTRY

insights

The Commercial Real Estate Market Post-Great Recession B y Richard T. Veltre , C PA, Harbou r Rock C ons u lting L L C

s the Great Recession over? While the consensus is that it ended in mid2009, the real answer depends on your perspective. If you are unemployed and still frustrated looking for a job, you probably say we are still in a recession. If you are a small business owner with limited access to cash or financing, you might also say we are still in a recession. If you own, build or work on commercial properties, you may eagerly affirm the recession argument.

Elephant or Mouse? September 2008 was really not the start of the recession, or even the start of the financial crisis, but it was when we witnessed the largest commercial bankruptcy in our history and when the general public became privy to the enormity of the situation. Residential foreclosures took center stage and were soon followed by the tracking of unemployment statistics. Shortly thereafter, commercial real estate was dragged into the crisis as

the next “ticking time bomb.” It was predicted (even presented to Congress) that the commercial real estate crisis had the potential to cripple our nation’s largest banks, topple our economy and impact everyone in the U.S. Reports predicted that at least half of the commercial real estate loans due by 2013, and two-thirds of those packaged and resold as securities, would not qualify for refinancing as loan-to-value ratios dropped to 60 percent and new banking regulations took effect. Although there currently remains concern over commercial real estate loans, the expected crashing wave of underwater commercial loans thus far appears to have been little more than a ripple.

Legislative Activity Ripple or not, commercial real estate loans are still a hot topic. For 2013, it was projected that property owners and equity investors would NEW JERSEY CPA • March • April 2014

need approximately $240 billion in credit for refinancing maturing mortgages. However, only $162 billion was projected to be available from traditional sources. Similar shortfalls are projected by various sources through 2018. With an estimated $1.7 trillion of commercial real estate loans due to mature from now through 2018, several U.S. lawmakers are pursuing legislation to ease restrictions on foreign investors in U.S. commercial property. A partial repeal of the withholding restrictions established in the decades-old Foreign Investment in Real Property Tax Act would allow eager foreign investors to bring needed capital to the U.S. markets, stimulating demand and driving new construction. The results of these proposals remain to be seen and need to be monitored in 2014.

National Outlook Nationally, some of the commercial real estate industry’s top research and

management firms are releasing yearend 2013 reports and 2014 forecasts indicating that many national markets continue to recover and could be poised to accelerate. Jobs are the key driver for commercial real estate, and the positive job growth reports are encouraging. Many firms’ findings are consistent in mentioning investors’ growing confidence in the economic recovery as well as the expectation that more capital will become available from foreign investment, institutional investors and private equity funds. Even more interesting is the consistent expectation that investors have reached the point where they will begin to seek opportunities in secondary markets and outside their traditional, largely established primary markets.

Leading NJ Commercial Real Estate Developers

1. Hartz Mountain Industries Inc. 2. Mack-Cali Realty Corp. 3. Prologis 4. Heller Industrial Parks Inc.

New Jersey Outlook In New Jersey, there are positive signs for continued recovery. Again, commercial real estate is driven by job growth and, unfortunately, New Jersey’s unemployment rate remains above the national average. However, many of the state’s designated metropolitan areas are adding jobs at a rate that outpaces the rest of the country. Overall, though, New Jersey’s

Department of Labor statistics indicate only 1.45-percent growth from 2012 to 2013. Since 2010, New Jersey has only recovered slightly more than 50 percent of the jobs lost compared to the more than 80 percent recovered nationally. That, coupled with a 24.6-percent overall vacancy rate as of the end of third quarter 2013, makes it difficult to confirm the sustainability of New Jersey’s commercial real estate recovery. So, if you are in the New Jersey commercial real estate market, is the Great Recession truly over? Richard T. Veltre, CPA, CGMA, M.B.A., is a managing member with Harbour Rock Consulting LLC. He is a member of the New Jersey Society of CPAs. Contact him at rveltre@ harbour-rock.com.

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NEW JERSEY CPA • March • April 2014

FINANCIAL

planning

The Ins and Outs of Endowments B y Lee T. S ullivan, CPA, PB M ares , LLP

or nearly 35 years, the Uniform Management of Institutional Fund Act (UMIFA) outlined the laws regarding the management and investment of institutional funds and permanent endowments in 47 states. In 2006, the Uniform Prudent Management of Institutional Funds Act (UPMIFA) was created. It has slowly been adopted by most states to provide guidance regarding endowments. Although the UPMIFA has been around for several years, understanding and implementing its provisions have often proved challenging. If your clients already have endowments or are thinking about establishing them, take the following factors into consideration:

What Is an Endowment? An endowment comprises gifts that the donor requires to be invested in perpetuity or for a specific time period. An endowment can also represent amounts segregated or designated by the governing board for a length of time to provide income for maintaining the nonprofit organization. Since board designations are voluntary and may be reversed at any time, an endowment established by a board is not considered restricted and is sometimes referred to as a quasi-endowment.

Who Is Affected by the UPMIFA? The UPMIFA applies to nonprofit charitable entities and all institutional funds, whether created before or after the enactment of the statute. The UPMIFA sets standards for endowment spending and preservation of the original gift in accordance with donor intent. Whether or not your clients are affected by the UPMIFA, they will be affected by Financial Accounting Standards Board (FASB) Codification (ASC) 958-205 (formerly FSP FAS 117-1).

What the UPMIFA Does Building on UMIFA guidelines, the UPMIFA: • Provides consistent investment and spending standards to all forms of charitable funds, excluding all trusts. • Strengthens the concept of prudent investing by creating more exact rules for investing prudently. • Abandons the use of historic dollar value (HDV) as a floor for spending and provides organizations with more flexibility in deciding whether NEW JERSEY CPA • March • April 2014

to expend any portion of an endowment fund. • Provides a process for releasing or modifying restrictions on a gift.

Accounting and Reporting Requirements The elimination of the HDV concept increases an organization’s ability to apply a total-return spending rate to its donor-restricted endowment funds. This new standard of prudence places responsibility on the organization’s governing board when it comes to investing and spending policies. Eliminating the HDV concept also helps alleviate short-term barriers to spending, such as poor market performance, in favor of a more longterm approach toward preserving the endowment. Spending policies affect endowment duration and performance and also the ability to fulfill gift intent. The UPMIFA contains guidelines for governing boards to consider in establishing safe harbors for spending and investing.

The UPMIFA mandates that earnings, unless otherwise instructed, be classified as donor restricted for legal purposes until they are appropriated for expenditure. Under the UPMIFA, donor intent extends not just to the original gift, but also to earnings on related investments. Therefore, earnings are donor restricted until the governing board provides approval to use the funds. The FASB decided to improve on the accounting and disclosures related to endowments. This subsequent guidance changes the accounting requirements to conform to the UPMIFA with regard to the preservation of purchasing power and classification of earnings. Additionally, this guidance requires

that certain disclosures be included for all donor-restricted and boarddesignated endowments, regardless of whether or not the UPMIFA affects them. A nonprofit is also required to disclose a description of its governing board’s interpretation of applicable law governing net asset classification for donor-restricted endowments, endowment spending policies and investment policies. The ultimate purpose of the enhanced disclosure requirements is to improve transparency, making underwater endowments – ones whose fair market value is less than its historic dollar value – more evident. Investment losses associated with underwater endowments are to be recorded as

temporary or unrestricted activity and not as a decrease in the permanently restricted endowment. Managing endowments correctly involves carefully examining gift documentation, analyzing donor intent for each fund and understanding current laws that apply to those funds in order to develop policies to preserve endowments. Thus, when establishing or planning for an endowment or quasi-endowment, the governing board, management and financial advisors must consider a variety of factors. Lee T. Sullivan, CPA, CGMA, is a manager at PBMares, LLP, and leads the firm’s not-for-profit team. Contact him at lsullivan@pbmares.com.

Stop in one of our convenient locations today, connect to tdbank.com or call 1-888-751-9000.

TD Bank, N.A. | Open longer compared to top metropolitan competitors. NEW JERSEY CPA • March • April 2014

Forensic

file

Anti-Corruption Compliance Requires Big-Data Thinking B y K ip Ebel and V incent Walden , C PA, E rnst & Yo u ng

.S. companies doing business globally are under increasing pressure to improve their anti-bribery and corruption compliance programs that are designed to prevent and detect potentially improper payments that expose the company to violations of the Foreign Corrupt Practices Act (FCPA) and local anti-bribery/anti-corruption laws. Having an anti-corruption compliance program alone is insufficient. The keys to compliance are effective governance, controls and monitoring activities, among other components. However, the monitoring designed to detect bribery and corruption is fundamentally different from the traditional SarbanesOxley financial type of monitoring. Anti-bribery and corruption analytics test of controls incorporate big-data concepts that integrate multiple data sources: third-party watch lists, transactional data, text mining, social media and email to prioritize and isolate risk areas or rogue activity. Integrating bribery and corruption analytic techniques as part of a robust anti-corruption program enables chief compliance officers, general counsels and chief audit executives to be more proactive during queries. They can use advanced tools and detection methods to ask more specific questions of their data to identify patterns, outliers and concerns and to flush out underlying issues in a more comprehensive and timely way. Executives can now investigate regions or business units where increased risks are surfacing based on multiple attributes in the data – not just from one source or an isolated test. This focused analysis yields significantly higher-quality results than traditional rules-based tests that may generate large amounts of false-positive results or miss important

information. Executives can also reduce overall internal audit or compliance fieldwork costs by leveraging these anti-corruption analytics as a component of the company’s risk assessment process to determine which locations should be tested by internal audit, rather than running after-the-fact analytics. Beyond a simple duplicative payment or currency analysis, overlaying vendor activity across multiple data sources helps analysts apply a “risk score” to voluminous data in order to focus on those vendors that meet multiple risk criteria. When combined with new innovations in text mining, data visualization and statistical analysis, internal auditors and compliance professionals can better leverage their knowledge of the business and industry to spot irregular patterns or trends, rather than simply looking at a spreadsheet’s rows and columns. For example, internal audit and compliance teams can now utilize big data to identify possible concern areas by making these inquiries: • Show high-risk vendors with multiple fraud-risk indicators in accounts payable. • Match identified vendors to international sanctions databases and adverse media databases. • Show local office employee travel and entertainment expenses. • Search email communications that mention sensitive words. As anti-corruption compliance continues to gain focus, it will be more common for the audit committee to ask the chief audit executive or chief compliance officer, “What are we doing regarding the FCPA and global corruption?” It may not be enough to hear that the company has conducted NEW JERSEY CPA • March • April 2014

selected training, repeated last year’s tests and reviewed anti-fraud policies – especially when the company is in a highly regulated industry (e.g., pharmaceutical, financial services) or expanding in emerging markets (e.g., China, Eastern Europe, Brazil, India). A better answer might be: “The organization has initiated a more comprehensive anti-corruption program that addresses not only tone-at-the-top topics, but also incorporates analytics around corruption risk areas and targeted tests of transactions that look for potentially improper payments or other illegal acts. We are presenting these new analytics and reporting metrics to the board regularly.” Questions for the audit committee to consider: • Is the company conducting business in emerging markets or high-growth economies? If so, what tactics are being used to oversee anti-corruption compliance in these markets? • Beyond compliance policies, training and education, what is the internal audit or compliance department doing to test the effectiveness of current controls? Does the board receive periodic updates on test results from internal audit or the compliance department? • Has management communicated to the board if monitoring activities are relying on simple rules-based tests derived from traditional internal audit procedures, or do they incorporate multiple data sources, data visualization, text mining and targeted anti-corruption/FCPAspecific tests? Kip Ebel, M.B.A., is a principal and Vincent Walden, CPA, CFE, CITP, is a partner at Ernst & Young. Contact the authors at kip.ebel@ey.com or vincent. walden@ey.com.

Small/Sole

practitioner

Three Myths and Realities of Client Newsletters B y Gordon G. Andre w, Highlander C ons u lting I nc .

client newsletter – electronic or print – is one of the most widely used, often abused and hotly debated marketing tactics for CPA firms of any size. Here are three highly subjective myths and realities to help you determine whether it’s a worthwhile tool or, if you currently have one, how to improve it.

Myth: Every CPA Firm Needs a Client Newsletter Marketers want you to believe that your firm needs a newsletter. But traditional newsletters – containing commentary on tax legislation, personal finance or who’s recently joined the firm – are not a marketing necessity. At many firms, the client newsletter is actually a marketing albatross. Each issue involves a frustrating hunt for timely, relevant information. Some firms avoid this pain by slapping their logo on boilerplate content purchased from a third party, but those firms can pay a bigger price in terms of brand damage. It says to target audiences, “We value our relationship, but we don’t really care enough (or know enough) to produce our own newsletter.”

Reality: Your Firm Needs to Drive Top-of-Mind Awareness The intrinsic purpose of tactics that communicate with clients, prospects and referral sources is to reinforce the perception that your firm is smart, trustworthy and prepared to help. Beyond keeping and growing existing clients, your primary marketing goal is to drive top-of-mind awareness with target audiences. That way, when a prospect is seeking assistance, there’s a greater likelihood it will select your firm or at least put you on a short list of candidates. If that’s the

goal, then contact consistency and quality are critical; however, neither of these needs to be accomplished via newsletter.

Myth: People Want to Learn About Their CPA Firms

Myth: A Newsletter Is a Cost-Effective Marketing Tactic

It’s nice to think that clients and prospects really care about your firm’s growth and accomplishments. The sad truth is that your success is more important to your competitors and current and prospective employees than it is to those who generate firm revenue. Blowing your own horn can also backfire. When your firm touts that a senior partner has just published a book and was a guest on CNBC, your target audiences may wonder why that partner isn’t focused on client matters or whether the cost of a book tour will result in higher hourly rates.

The old saying “cheap is expensive” rings true when it comes to newsletters. If it’s created in-house, few firms actually track the hours required to write, edit, approve, publish and distribute their newsletters. If it consists of cut-and-paste content, few firms consider the cost of producing a newsletter that very few people may read. Regardless of content, only a small number of CPA firms proactively work to expand their newsletters’ reach, maintain an adequate customer relationship marketing capability or properly leverage readership analytics from open and click-thru rates (if their newsletters are delivered online).

Reality: Your Clients, Prospects and Referral Sources Care About Themselves

Reality: Your Marketing Requires More Than a One-Way Conversation

Understanding that people are selfinterested can make you a better marketer. Rather than creating newsletter content based on what you know, what you’ve done or what you can do, focus instead on the ideas, talents and accomplishments of your target audiences, regardless of whether your firm played any role in their successes. This is a tough concept for many CPA firms to understand and embrace: that the most powerful form of thought leadership does not involve pushing out your own ideas. Instead, it involves deciding what ideas merit the attention of your target audiences, as well as what voices are worth listening to. True thought leaders seek to manage the conversation, not control it.

Newsletters are one-way conversations. A fundamental marketing objective is to engage clients and prospects in a conversation regarding their specific needs and opportunities. Despite the buzz regarding social media, this channel also falls short in terms of engagement. If your firm’s traditional and social media marketing tactics do not serve as catalysts to drive face-to-face discussions and word-of-mouth referrals, then their cost-effectiveness can never be measured on a meaningful basis.

NEW JERSEY CPA • March • April 2014

Gordon G. Andrew is managing partner of Highlander Consulting Inc. (highlanderconsulting.com), a firm that helps companies gain and retain customers. Contact him at 609-987-0200 or gordon@highlanderconsulting.com.

TAX

talk

Helping Clients Enjoy the Fruits of Their Labor B y M arcia A. Geltman , C PA, Nisivoccia LLP

arming is an essential part of the U.S. economy and, as such, has enjoyed special tax benefits. Farming operations include cultivating, operating or managing a farm for gain, either as an owner or a tenant. The income can be derived from the sale of livestock, dairy, poultry, fish or fruit and can come from operating a plantation, ranch, range, orchard or nursery, including tree farms. Livestock held for draft, breeding or sport are also considered to be farm activities. Because of the diversity of farming operations and the related tax benefits, for our purposes, let’s focus on the benefits for crop farmers.

Accounting Methods and Inventory Most farmers use the cash method to account for income and expenses because of its ease. Farmers are not required to use the accrual method of accounting, even when inventories exist. (Large corporations, corporate partnerships and tax shelters don’t qualify for this exception.) Except for pre-production costs, which must be capitalized, the cost of growing crops can be expensed. However, there is an option, with Internal Revenue Service (IRS) approval, to use the crop method which allows for deducting costs in the year income is realized in order to better equate income with expenses. If accounting for inventory is used, the farmer may use the farm-price method which values inventory at market price, rather than at cost.

Reporting Income Renting out land to someone else for farming is considered rental income. However, if the landowner materially participates in the operation, the income is subject to self-employment

tax. Landowners sometimes receive crop shares in lieu of rent. The crop shares only become income when converted to cash, traded, consumed or used to feed livestock. Various agricultural program payments are generally included in income, though special treatment may apply in certain cases. Crop insurance payments are also included in income. However, an election can be made to postpone the inclusion in income of the insurance proceeds until the following year if a cash-basis farmer received the payments in one year, but would normally have reported the sales income in the following year. The election procedures are in Internal Revenue Code (IRC) Section 451. Cost-sharing improvement benefits may be excluded from income. These are payments received under federal or state costsharing conservation and reclamation or restoration programs. See IRS publication 225 for additional guidance. Loans are usually not taxable. However, if crops are pledged as part of the loan, the proceeds can be considered as income from the sale of the crop. Cancellation of debt is generally

NJ Cash Crops in 2012 i( n millions of dollars) Nursery/greenhouse .............. $453.6 Fruits and vegetables ............ $428.8 Field crops ............................ $112.2 Equine ..................................... $46.0 Poultry and eggs ...................... $30.7 Dairy industry .......................... $27.5

NEW JERSEY CPA • March • April 2014

included in income, although one exception is qualified farm debt. The debt had to be incurred directly in operating a farming business and at least 50 percent of total gross receipts for the three tax years preceding were from farming. The debt cannot have been owed to a related person, the person from whom the property was acquired or an investment advisor. As with other debt cancellation rules, the tax attributes must be reduced. However, there are modifications specifically intended for farmers. See IRC Section 108 for further guidance.

Special Income Averaging for Farmers Income averaging works well if currentyear income is higher than the income in the three previous years. See Form 1040, Schedule J.

Special Treatment Regarding Expenses Prepaid expenses may be deductible. For example: Fertilizer purchased in year one can be expensed, though it will be used in year two as well. Penalties are generally not deductible for tax purposes, but market quota penalties paid for exceeding crop quotas are deductible. Forestation and reforestation costs can be deducted up to $10,000. Remaining costs must be amortized. Because farming has been and will continue to be an important sector, Congress has recognized this importance in structuring many tax benefits for farmers. Marcia A. Geltman, CPA, is a partner at Nisivoccia LLP. She is a member of the New Jersey Society of CPAs. Contact her at mgeltman@nisivoccia.com or 973-328-1825.

TECH

center

Tech Integration Comes First During an M&A B y Ronald F. Kennedy, C PA, Presidio

ompanies are increasingly seeking mergers and acquisitions to gain efficiencies, grow market share and eliminate competition. Yet, fumbling the integration process of the two companies can result in an alienated customer base, disgruntled vendors and a talent base that quickly migrates to competitors. That’s why a well-conceived integration plan, penned long before the ink dries on the contract, is critical. And savvy companies know that the first step in that plan is to address technology.

Assemble the Right Team Both companies in a merger presumably have their own technology departments. It’s up to the integration manager to identify the key tech employees from each company who hold the greatest institutional knowledge and expertise about each business segment and consolidate them. Going forward, this new team will comprise the stakeholders in the combined technology. The stakeholders will be responsible for ensuring that necessary resources are dedicated to the project. They must be able to work well together and plan for the challenges inherent in a sometimes painful integration process, reacting efficiently to unexpected situations. And a wise integration manager knows better than to neglect the role or importance of the acquired employees. With the right team at the technology table, it is now time to address redundant and incompatible systems and migrate the data.

Streamline the Technology During the initial integration meetings, it is important for the stakeholders to fully understand the technological differences between the two companies. While the businesses may be similar, details may be

addressed very differently. Although it is important to understand the layout of the physical components, it is even more vital to understand the characteristics of the workflow that could bottleneck processing upon system merger. The stakeholders should review the business processes from “quote to cash.” They should walk through transactions together, starting with simple examples, and move into more complicated ones. It is crucial to bring the employees who process the transactions into the room during each phase to be sure that the details are being covered. They can learn about the communications and networking systems that work effectively for the acquired company and where pain points exist. The goal is to make sure that the systems can handle the unique aspects of the new business and identify areas where the acquired company will realize improvements in efficiency. This phase should yield a list of processes that can be prioritized for integration. Give priority to implementing those with the highest impact, but the least amount of effort to implement. Build an integration plan with realistic timelines, but resist changing a complicated process just because it differs from the acquiring company’s processes. How much data should be migrated? It is very costly to migrate data. Even if the two companies are running the same software, typically there are differences that must be addressed. Version numbers and patches need to sync. Master files, such as vendors, customers and inventory, need to be uniformly identified if activity will be merged. Accounting chart of accounts typically are coded differently, so develop a plan to translate from one coding scheme to the other. NEW JERSEY CPA • March • April 2014

The most efficient method for merging the two companies is typically to close-migrate open transactions and keep legacy systems running for a period of time so that history can be retrieved as needed. Spend time scrubbing the open transactions by applying credits, writing-off old accounts and paying accounts payable where possible.

The Integration Team Should Evaluate: l

Software at both companies.

C ommunications such as email and instant messaging.

Phone and video systems.

H ardware used to link applications.

lK ey

employees managing systems.

Communication Breeds Commitment With any integration, there will be uncertainty and questions as the integration plan is executed. Spend extra time with those people impacted, and demonstrate the strengths and efficiencies resulting from the new approach. With a strong project team, a solid plan, open lines of communication and dedication to the approach, the two companies will integrate in no time. Ronald F. Kennedy, CPA, CITP, is vice president of business intelligence for Presidio. He is a member of the New Jersey Society of CPAs Technology Interest Group. Contact him at cpa@kennedy6.com or follow him on Twitter at @RonKennedyCPA.

SOCIETY

pages

CPE Offerings and Events Upcoming Education Foundation Events Date

Event/Code

Location

CPE Credit

4/23

International Versus U.S. Accounting: What in the World Is the Difference? (E1404183)

Voorhees

8/AA

4/24

The Eight-Hour M.B.A. (E1404023)

Iselin

8/MT

4/25

Women’s Breakfast Club (E1404160)

Springfield

N/A

4/25

Successful Project Approval Using a Business Case (E1404013)

Iselin

8/MT

4/29

From Controller to CFO: How to Acquire the Skills Needed to Make the Leap (E1404133)

Roseland

8/MT

4/29

Internal Controls (E1403103)

Roseland

8/AA

4/30

Managing Strategic Business Partners (E1404143)

Roseland

8/MT

4/30

Identifying Fraudulent Financial Transactions (E1404203)

Roseland

8/AA

4/30

New Jersey Law and Ethics Webinar (E1404154)

N/A

4/PE

5/9

LinkedIn for Business Webinar (E1405284)

N/A

1.5/CS

5/14-15

2014 New Jersey Accounting, Business and Technology Show (E1405160)

Secaucus

12/MC

Upcoming Chapter Events Date

Chapter

Event/Code

Location

CPE Credit

4/23

Middlesex/Somerset

CPA Succession Planning/Presentation Skills (E1404119)

Somerset

4/TX

4/24

Mercer

Controllership Update (E1404079)

West Windsor

4/CS

4/24

Passaic County

Elder Law (E1404069)

Paterson

2/TX

4/25

Southwest Jersey

Business Valuations/Mergers and Acquisitions (E1404059)

Berlin

4/CS

4/25

Essex

Estate Tax Update (E1404039)

East Hanover

4/TX

4/29

Union County

Malpractice (E1404109)

Kenilworth

2.5/AA

4/30

Atlantic/Cape May

Accounting and Auditing Update (E1404049)

Northfield

4/AA

5/1

Bergen

Professional Development (E1405109)

Paramus

4/PD

5/1

Southwest Jersey

New Jersey Law and Ethics (E1405039)

Voorhees

4/PE

5/2

Bergen

Practitioners’ Forum (E1405019)

Hackensack

N/A

5/8

Bergen

Accounting and Auditing Seminar (E1405119)

Paramus

4/AA

5/8

Middlesex/Somerset

New Jersey Law and Ethics (E1405219)

Somerset

4/PE

5/8

Passaic County

State Tax Update (E1405099)

Paterson

2/TX

5/9

Hudson

New Jersey Law and Ethics (E1405069)

Secaucus

4/PE

5/9

Essex

New Jersey Law and Ethics (E1405049)

East Hanover

4/PE

5/13

Monmouth/Ocean

Personal Financial Planning (E1405179)

Neptune

3/CS

5/14

Middlesex/Somerset

Research Tax Credit and the Domestic Production Deduction (E1405229)

Somerset

4/TX

5/15

Morris/Sussex

Accounting and Auditing Update (E1405169)

Randolph

8/AA

5/15

Bergen

Chapter Awards Night (E1405129)

Washington Township

1/CS

KEY CS – Consulting Services EC – Economics MC – Multiple Categories PD – Personal Development PE – Professional Ethics PM – Practice Management SK – Specialized Knowledge TX – Taxation Please note: Events are subject to change. For a full listing of all NJSCPA events, visit njscpa.org/catalog.

AA – Accounting & Auditing MT – Management

NEW JERSEY CPA • March • April 2014

CPE Tracker Offers Members a Secure Tool to Manage CPE In this the third year of the triennial, it becomes increasingly critical to take inventory of your CPE credits so that by December 31, 2014, you’ll have met all of your NJ license renewal requirements. The New Jersey Society of CPAs CPE Tracker is an easy-to-use tool for members to manage CPE credits taken through the Society, as well as credits taken through other providers.

their firms. Firm administrators can also add credits a staff person has taken through another provider. If you’re not already set up with firm administrator privileges on njscpa.org, simply complete the enrollment form at njscpa.org/firmadmin. On that web page, you can also view a video tutorial of the CPE Tracker’s functionality.

Members

Resources

Members can login at njscpa.org/cpetracker to view a report of CPE credits taken through the NJSCPA and access credit letters for those events. Members can also enter credits earned through other providers. A new feature allows members to download an Excel file of all credits they’ve earned through the NJSCPA and other providers. If you have questions regarding your credits, contact the NJSCPA Education Department at 973-226-4494.

• To learn more about CPE requirements, visit njscpa.org/education/ cpe-requirements. • To register for an NJSCPA CPE course, visit njscpa.org/catalog. • To contact a state board of accountancy: – New Jersey, 973-504-6380 – New York, 518-474-3817 – Pennsylvania, 717-783-1404 – Connecticut, 860-509-6179

Firm Administrators Authorized firm administrators can login at njscpa.org/cpetracker to view and download the CPE credits earned by each staff person at

To find contact information for other state boards of accountancy, visit nasba.org/stateboards.

NEW JERSEY CPA • March • April 2014

SOCIETY

pages

Get Involved Add Your NJSCPA Involvement to Your LinkedIn Profile LinkedIn recently added a volunteer section to member profiles because an overwhelming number of hiring managers consider volunteer work to be legitimate work experience. In fact, 41 percent of hiring authorities surveyed by LinkedIn rated volunteer experience equally as important as paid experience. They say including volunteer work is “essential” and it presents someone as a “multi-faceted professional” who stands apart from the competition. Whatever your New Jersey Society of CPAs involvement, be sure to add it to your LinkedIn profile (right) by selecting “Edit Profile.” Under “Recommended for you” on the right, click “Volunteer Experience & Causes.” Type in your interest group memberships, articles and blogs you’ve written, any mentorships, Pay It Forward presentations, chapter board leadership positions and so on, and click “Save.” The section will then be added to the “Background” box on your profile.

Winning Strategies for Work, Home and Health B y M aryann T. Reyes , C PA, WeiserM azars LLP

Feel like you’re in a rut? Could your life use some tweaking? Life is so short, and you can change a losing game. Always Change a Losing Game: Winning Strategies for Work, Home and Health by 2014 NJSCPA Convention speaker David Posen, M.D., will guide you step-by-step on how to make changes in your life. This tome provides inspiration to make a change by allowing each of us to acknowledge that change can be intimidating, even though it needn’t be. Posen says a losing game is a “way of acting or thinking that is not working or is costing more than it’s worth.” A losing game can be anything from putting off a vacation because you’re too busy at work to consistently doing more for others than for yourself. This book provides examples of common losing games: perfectionism, workaholism, being a pleaser, poor time management and poor nutrition.

Realize Something Is Not Right As a full-time working mother of two, I’m often tough on myself when it comes to my home/life balance. It’s easy to tell myself that I’m not spending enough time at work, or I’m not available to my family as much as I’d like to be. These “mind traps” are taking up too much of my time and energy. Posen made me realize that it’s about letting go and finding a balance, as well as making sure that you don’t ignore yourself in the process.

I look at myself and the situation at hand. There are times where I feel like I’m powerless, but I can regain control. As Albert Einstein stated: “When you change the way you look at things, the things you look at change.”

Realize You Can Make a Change

Overcome Feeling Powerless

The first thing I need to do is change my thinking so that I don’t perpetuate self-defeat. The next is to “reframe” or change the way

Posen provides us with the ideals that we need to keep in mind when we feel powerless. These ideals include practicing gratitude,

NEW JERSEY CPA • March • April 2014

keeping a sense of humor, and committing to a balanced diet and consistent exercise. Posen gives us examples that are familiar and reminds us of questions we ask ourselves and excuses we fall back on: • Why haven’t I made these changes before? • I don’t have enough time. • I don’t need that much sleep anyway. • There is simply too much to do; I couldn’t possibly pamper myself.

• Who are my mentors, and why do I admire them? • What time in my life made me really happy and why? Pick something that excites you and picture yourself achieving this goal. See Dr. Posen at the 2014 NJSCPA Convention & Expo, which is being held Wednesday, June 4, through Friday, June 6, at Bally’s in Atlantic City. For more information and to register, visit njscpa.org/convention.

Unless we “take a break from the game,” we can’t recharge and maintain a balanced and healthy life.

Take a Moment and Reflect Are you stressed because you’re working more than 60 hours a week and studying for the CPA Exam, yet you haven’t been to the gym in more than a month? Remember, you are choosing your behaviors. It will take some time and much planning. Maybe you need to get through a work deadline; however, take some time to plan what you will do for yourself as soon as the deadline is over. Make time to see friends you haven’t seen in a while, go to a movie or read a book. Review everything on your plate, and create an organized to-do list. Are there things on the list that can be delegated? This can reduce your stress level immediately. Make a plan of attack and go from there.

why do that when we have the power to act on what we want? So, ask yourselves: • What are my dreams? • What do I want my life to be like?

Give Yourself Permission to Change If you feel like you simply cannot give yourself permission, Posen suggests finding a friend, explaining your situation and receiving the permission you need from them. Perhaps hearing it from a third person is the extra push you need. Do you feel selfish if you devote time to yourself? Do you often say “can’t” when you really mean “won’t?” The most important thing I learned from Always Change a Losing Game: Winning Strategies for Work, Home and Health is that we need to decide what changes we want to make and then resolve to make them happen. We can go through life saying “I should have, I could have,” but NEW JERSEY CPA • March • April 2014

Maryann T. Reyes, CPA, PFS, is a senior manager in WeiserMazars LLP’s private client services group. She is a member of the New Jersey Society of CPAs. Contact her at maryann.reyes@weisermazars.com.

SOCIETY

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NJ State Board of Accountancy Report “Death Penalty” Legislation Requires Streamlining Newark (January 30) President's Remarks NJ State Board of Accountancy President John F. Dailey, CPA, mentioned the passing of New Jersey Society of CPAs member Nicholas Costantino, CPA.

Committees Ethics – The New Jersey Society of CPAs submitted course updates to its law and ethics course. RMA – Of the 20 people who had taken the Registered Municipal Accountants Exam in December, six had passed. Dailey indicated that the recent changes to the exam proved helpful. The board estimates there are approximately 200 New Jersey RMAs. Education – Committee Chair Ainsley Reynolds, CPA, encouraged the board to help create awareness for the profession, particularly in inner-city schools. He cited the stagnant growth in the number of African-American accountants.

Magazine of the

Statutes/Rules/Regulations – The governor signed legislation (A1545) eliminating the “CPA death penalty” which required licensees who let their licenses lapse for more than five years to retake the CPA Exam. As the legislation takes effect August 1, the board needs to make sure any administrative processes are updated and streamlined. Monitoring Profession – The committee is making progress on the CPE audits. Committee Chair Keith S. Balla, CPA, recommended some sort of reconciliation form for the next triennial where law and ethics providers would keep track of attendees who sign in versus certificates issued.

Public New Jersey Society of CPAs CEO and Executive Director Ralph Albert Thomas, CGMA, indicated that the Society’s recent women’s conference was well received. Upcoming dates include April 24, NJSCPA Scholarship Ceremony; May 14 and 15,

New Jersey Society of Certified Public Accountants

May • June 2014

May/June – Coming Attractions

Technology l

A Bring-Your-Own-Device Policy at Work What Is Business Intelligence?

Data Encryption

XBRL Is Here: Who’s Mining Your Data?

NJ Accounting, Business & Technology Show; May 28 and 29, Scholars Institute; and June 4-6, NJSCPA Convention & Expo. Thomas offered the Society’s assistance to the board in helping streamline the reciprocity process per (A1545). Also on the legislative front, while Assemblywoman Nancy Munoz withdrew a bill (A4378) imposing mandatory audit firm rotation for local government audits, the NJSCPA is creating a task force to explore some of the Assemblywoman’s concerns such as municipal- and county-level controls. Nationally, the Society continues to work with the American Institute of CPAs on a mobile workforce initiative. The AICPA is also launching an advanced placement program together with academia to help continue to draw the best and brightest to the accounting profession. Society leaders will be having a conference call with Senator Cory Booker’s office to discuss cash basis accounting. Referring back to a proposed law and ethics provider reconciliation form, Thomas discussed the need for more provider oversight, including surprise facility inspections. Board legal counsel Tobey Palan indicated the resources do not exist to police all courses, but if anyone is privy to any provider transgressions, he or she should inform the board so that it may take action. Daily will ask the Ethics Committee for any suggestions, and Balla will ask NJSCPA Chief Learning Officer Jim Hardenberg, CPA, for input.

Old Business As reported in the January/February issue, the board voted to abolish the cap on the number of self-study CPE credits practitioners can take per triennial. However, the lengthy state approval process will make it quite a while before the issue is finalized.

NEW JERSEY CPA • March • April 2014

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Mergers and Acquisitions North NJ CPA looking toward retirement. Practice grosses $375K. Looking for a CPA to take over practice in very near future as retiring partner works part-time. Location and staff must remain. Must be reliable, willing to move into existing location and have small existing practice. Email cpanj2010@gmail. 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. Traphagen Financial Group, a well-established firm in Bergen County with diverse client base and credentialed support staff, is seeking small firms and sole practitioners for acquisition or merger. We are looking for firms ranging in size from $300,000 to $700,000. This is an opportunity to align with a quality firm while continuing to provide your clients with exceptional service. To confidentially discuss this opportunity, please email us at iaishia@tfgllc.com. 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, ext. 22, or cgutt@dglcpa.com. New Jersey – CPA firm wishes to acquire or merge with progressive, small to mid-sized firms. File 0701 Well-established Essex County firm seeks small to medium-sized firms contemplating client services succession and/or expansion. We put our clients above all else. Office space accommodates 30-plus. Contact us to align with a growing brand of CPAs like you. File 12213

Woodbridge CPA looking toward retirement. Gross $300K. Looking for CPA to take over practice in near future as retiring partner works part-time. Must multi-task and have small existing clients. Fax contact information to 732-283-3329. South Jersey (Camden County) CPA tax and accounting practice for sale (approx. $220K). I am a sole practitioner and looking to retire. Email inquiries and contact information to snjcpa@verizon.net. Northern NJ, medium-sized, full-service and peer-reviewed CPA firm is interested in acquisition or merger of smaller firm or affiliation with retirement-minded practitioner. If interested, please send your confidential information to northernnjcpafirm@gmail.com. File 92613 The Curchin Group, LLC, a central NJ, Monmouth County firm is seeking to merge-in near-retirement sole practitioners and small firms needing succession planning. Other individuals seeking growth and expansion are welcome to inquire. Initial practice continuation also an option. Reply in confidence to Peter Pfister, CPA, at 732-747-0500 or ppfister@ curchin.com. 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 me at 800-839-5767 to have a confidential conversation.

Real Estate Real estate appraising/consulting. Commercial/industrial/residential; expert witness; business valuations. Contact Charles A. McCullough, CPA, M.B.A., State Certified General Real Estate Appraiser, American Society of Appraisers member: cmccullough@camcpavalue.com, 609-923-5879; renwickandassociates. com, 856-779-7050.

NEW JERSEY CPA • March • April 2014

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

ADVERTISERS INDEX New Jersey CPA is the only way to reach each of the 15,500 members of the New Jersey Society of CPAs, and 55 percent of readers take action after seeing an advertisement in the magazine – by either purchasing the product, contacting the advertiser, visiting a website or recommending the product or service to a client. For advertising opportunities, contact: Companies A-L Aileen Kronke 770-431-0867 x212/aileen@lionhrtpub.com Companies M-Z John Davis 770-431-0867 x226/jdavis@lionhrtpub.com

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STUDENT

outlook

Spanning the Continents for an Accounting Education B y Chris Arthur, Ru tgers University

eing born in Ghana, I learned quickly how to survive poverty. Although rich in culture, this developing African country offers access to health care, education and housing only to a privileged few. Being in such an environment has inspired me to work harder and excel so that I can one day make life better for myself, my family and others. In 2008, my brother, sister and I moved to the United States to join our father to have access to better education and opportunities. There are limited jobs for college graduates in Ghana, and unemployment among college graduates is extremely high. Furthermore, college tuition is extremely expensive, and financing is almost nonexistent. In the U.S., however, college loans, grants and scholarships give everyone a chance to better themselves. I began my college career at the Rutgers Business School majoring in accounting. I initially took student loans. Later on, through hard work and dedication, I received several scholarships from accounting organizations and firms that saw the need to invest in future accountants and leaders. Perhaps coming from an African nation has given me heightened awareness of the lack of AfricanAmericans obtaining their CPA licenses. I believe there are various reasons why large numbers of African-American business students do not take the CPA career path. One reason is that they

Ghana 24,200,000 .................Population 92,099 ....... Area in square miles 1,670 ....... Dollar per capital GDP 30.............................. Median age

do not see the importance of obtaining the license, since many industries do not require CPA certification. Instead, they end up obtaining other credentials – ones that appear relatively easier to obtain and have low failure rates. Secondly, I believe the financial sector is siphoning more young people away from accounting due to huge salaries along with the allure of an M.B.A. in finance. Third, there is the perception of restricted access to partnership opportunities based on the relatively small number of African-American partners in public accounting, which may discourage African-American graduates from undertaking the high cost, time and credentialing, believing there is little hope of ever becoming a partner. Last, but not least, I believe many African-Americans do not graduate with accounting degrees due to a lack of support systems for African-American students who are struggling with course work. This is a problem that the National Association of Black Accountants (NABA) tries to solve, but the lack of a grass-roots membership makes it challenging. As president of Rutgers’ Student Chapter of NABA, I strive each day to recruit as many African-Americans as possible to keep them active and interested in the accounting profession. There are definite strategies that could be taken to increase the number of African-Americans who pursue the CPA path. Most students are unaware of NEW JERSEY CPA • March • April 2014

the life-long advantages of obtaining the CPA credential. Educating these students – both by schools and organizations – on the many benefits of licensure will go a long way toward creating interest in the accounting profession. Scholarship awards have also been very beneficial in attracting and supporting great talent, as well as serve as a platform to create awareness. The New Jersey Society of CPAs, American Institute of CPAs, NABA, Association of Latino Professionals in Finance and Accounting, and Pan-Asian Leaders in Finance and Accounting are doing a great job by providing scholarships, career fairs, information sessions and workshops for minority accounting students. This provides a support network as well as a bridge between minority students and the accounting profession. This contributes to diversity initiatives at accounting firms, such as internships, externships, mentoring and other leadership programs. I believe much is being done to increase the number of AfricanAmericans in the accounting profession, and I trust that with time we will see that translate to more African-American CPAs at the C-suite and partner levels. Chris Arthur is an accounting student at Rutgers University. He is an NJSCPA Student Member and the president of Rutgers’ NABA Chapter. Contact him at arthchrisjr@yahoo.com.

LEGISLATIVE

views

Major Bills Affecting CPAs Reach Critical Juncture B y Jeffrey T. Kaszerman , NJ SC PA Government R elations D irector

CPA Death Penalty Passes Legislature On January 13, Governor Chris Christie signed legislation (A1545) into law which will eliminate the “five-year death penalty” provision for CPAs and other licensed professionals. The bill also streamlines the reciprocity process for out-of-state professionals applying for licensure in New Jersey. The New Jersey Society of CPAs was the main supporter of this legislation and has lobbied forcefully for it the last two years. The new law, P.L.2013, c.182, takes effect on the first day of the sixth month following the signing of the bill on January 13. It eliminates the current requirement that licensees who let their licenses lapse for more than five years must retake the CPA Exam to get their licenses back. This requirement is often referred to as the “CPA death penalty,” due to the devastating impact on practitioners’ careers. In an NJSCPA survey of other states, Texas was the only one of the 37 responding states that had a similar law. Under P.L.2013, c.182, retaking the exam is replaced with a new provision that allows a licensing board to review the circumstances of each lapsed licensee and tailor a remediation to address the licensee’s specific situation before reactivating or reinstating a lapsed license. For example, the NJ State Board of Accountancy would likely require that CPE be brought up-to-date before reinstating a CPA license. This provision is much more practical and efficient than requiring licensees to retake an exam that is extremely difficult, even for applicants who are just out of college and have been preparing for the exam for years. The bill will also streamline reciprocity by allowing for quick licensure upon proof of out-of-

state licensure from states with “substantially equivalent” standards. It can take up to six months for CPAs to get reciprocity in New Jersey due to the burdensome process currently in place. Streamlining the reciprocity process is extremely important as the CPA profession becomes increasingly mobile and many CPAs practice on an interstate basis. To see this legislation, visit njleg.state.nj.us.

Mandatory Audit Firm Rotation Bill Withdrawn Assemblywoman Nancy Munoz, sponsor of legislation imposing mandatory audit firm rotation for local government audits, agreed to withdraw the bill after meeting with NJSCPA representatives who explained why the proposal is actually counterproductive. The Society has long argued that while mandatory rotation may seem appealing on the surface, in reality it puts an entity at a greater risk of fraud going undetected, can easily lead to lower audit quality and is very costly. It leaves the new audit firm with significant startup costs and a steep learning curve. It also leaves the door open to more fraud and waste, as the new auditors are less likely to spot suspicious transactions due to the knowledge gap they must overcome in the beginning years of taking on a new client. The Society is working with Assemblywoman Munoz on drafting alternative legislation that would strengthen the governmental audit process in New Jersey. The centerpiece of this effort will be the Society’s 2010 white paper: NJSCPA Recommendations for Reforming the External Audit Process for Local Government Entities in NJ. For a NEW JERSEY CPA • March • April 2014

copy of this white paper, contact Jeff Kaszerman at jkaszerman@njscpa.org.

Patent Trolling Legislation Passes U.S. House In December, the U.S. House of Representatives passed legislation (H.R. 3309) to discourage “patent trolling” that hurts many businesses, including CPA firms. The bill is supported by the NJSCPA, American Institute of CPAs and many business organizations. The trolls, formally known as patent assertion entities, enforce patent rights against alleged infringers in an attempt to collect licensing fees, but they don’t make any goods or provide services based on the patents. Some New Jersey CPA firms have been targeted by these trolls. The trolls use patents as legal weapons, often buying up patents cheaply from companies in financial straits. Many patents are very vague, covering everyday types of computing. Armed with these vague patents, the trolls send out letters to companies threatening legal action unless the alleged infringer agrees to pay a licensing fee. Many companies that receive these infringement letters will choose to pay the licensing fee, even though they know the claim is frivolous, because patent litigation is extremely expensive.

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Lifting as We Climb By David Plaskow, NJSCPA Communications Manager

rowing up in a single-parent household in the rough-andtumble Bronx of the 1970s and 1980s, things could have turned out very differently for Ainsley Reynolds, CPA, CGMA. But having strong role models helped propel him to SUNY Stonybrook. “I was completing a B.S. in economics, but had an accounting professor my junior year who really sparked my interest in accounting as a career,” says Reynolds. “Since Stonybrook didn’t have a graduate program in accounting, I went for an M.B.A. at St. Johns. Accounting is so important; it’s weaved into almost all aspects of life and business.” Reynolds began his career at PriceWaterhouse in 1997 in the audit and business advisory services area auditing mutual funds, hedge funds and venture capital funds. In 2001, Reynolds did a stint at Deutsche Bank and in 2003 at Hilton Hotels. “I made a conscious, strategic decision to learn both sides of the audit process, as well as the public and private aspects of auditing,” notes Reynolds. “If you’re going to do something, do it all the way,” advises Reynolds. And that’s why, in 2003, he obtained his CPA designation. “Being a CPA takes you from having a job to having a career.” That same year, he joined the New Jersey Society of CPAs. “The Society helps me stay abreast of all things in the profession,” adds Reynolds. “And I enjoy attending the networking events.” In 2007, state government beckoned and Reynolds accepted the position of director of accounting at the New Jersey Division of Investments where he manages the state pension fund. “The government sector is one of the few places where you can be in charge of billions of

dollars,” comments Reynolds. Since moving to Franklin Township, Reynolds has become quite active in his adopted state. He’s the state president and NJ district director of his fraternity, Alpha Phi Alpha Fraternity, Inc., and he’s a member of the NJ State Board of Accountancy. In his spare time, he is a certified NRA firearms instructor and a “master BBQ chef” who’s won a trophy for his Jamaican spiced turkey. When Reynolds and his fraternity brothers get together, however, it’s not to reminisce about the good old college days over a better brand of beer. They started a mentoring program for at-risk youth in 2004 at Piscataway High School. The program includes high-profile speakers, sessions on investing and public speaking, mock career fairs and trips to colleges. More than 20 of Reynold’s fraternity brothers participate. “We have judges, doctors, soldiers, businesspeople and others who can share their success stories with the kids,” says Reynolds. “Our first year, the school had no AfricanAmerican kids in the National Honor Society. By the time this group graduated high school, there were nine.” In 2009, the program, Mentoring and Leadership Equals Success (MALES), underwent a few changes. It moved to Somerset Intermediate School where one of Reynold’s fraternity brothers is the principal. It also dropped the participatory age to fifth graders. “That seems to be about NEW JERSEY CPA • March • April 2014

the time where kids become vulnerable,” states Reynolds. “And it’s much easier to mentor them into a good situation than pull them out of a bad one.” The program also became less race-based and more class-based, which made it more diverse. “The school and the parents have welcomed us with open arms,” notes Reynolds. “I just get so much satisfaction from helping someone who was in my shoes many years ago. I’m a member of the National Association of Black Accountants and its motto is ‘Lifting as we climb,’ which is something I try to live by.” Approximately 200 kids have been part of the MALES program since its inception. While there are many success stories, Reynolds recalls one: “There was one individual who wrote, telling me that the program inspired him to become a teacher. He received a full scholarship to NYU and upon graduation received a substantial offer from a company down South. However, he asked the company to defer his offer for two years so he could participate in Teach For America, which the company did. This young man felt an obligation to give back, and that’s what our program is all about.”

To see video of Ainsley Reynolds mentoring youngsters, visit njscpa.org/ newjerseycpa/marapr14.

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