New Jersey CPA - May/June 2014

Co Spe nv cia Iss ent l ue ion Magazine of the

New Jersey Society of Certified Public Accountants

May • June 2014

Technology Embrace the Bring Your Own Device Policy Just What Is Business Intelligence?

Think Before You Sync Who’s Min(d)ing Your XBRL Data?

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May • June 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

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Embrace the Bring Your Own Device Policy Discover the operational challenges of allowing employees to use their own devices for work and how to create an effective BYOD policy.

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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

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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.

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Just What Is Business Intelligence?

Learn how to use business intelligence to transform voluminous raw data into actionable information leading to a competitive advantage.

Think Before You Sync Find out five key strategies to help you maintain centralized control of your files and mitigate file security issues.

Who’s Min(d)ing Your XBRL Data?

Examine who’s using XBRL and if it is fulfilling its promise of reducing risk and costs, enhancing controls and offering greater transparency and oversight.

2 Close Up Who Needs Cybersecurity?

4 News Briefs

17 A&A Buzz Does the Group Audit Standard Apply to My Audit?

18 Best Practices Cloud Content Ownership 20 Business & Industry Insights Compliance Monitoring Costs and Penalties 22 Financial Planning Oil and Gas Partnership Investments

28 Tax Talk Managing NJ Sales Tax Audits 29 Tech Center Is a Tablet All You Need?

39 Legislative Views Society Provides Lt. Governor with Tax Concept Paper 40 Student Outlook NJSCPA Celebrates Its 54th Scholarship Awards Ceremony 42 Member Profile Technically Speaking

Society Pages 2014/15 Executive 24 Forensic File Committee, 30 CAATTs as Part of Your Board of Trustees, 32 Forensic Accounting Toolbox NJ State Board of Accountancy Report, 33 26 Small/Sole Practitioner CPE Offerings and Events, 34 Tax Prep Software Conversion Member Benefits, 35 Get Involved, 36 Classifieds, 38

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. 45 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.

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Who Needs Cybersecurity?

nv N ew en Je Sp tion r sey ea & ke E x r po

B y Paul Rosenzweig, Red B ranch C ons u lting, P L L C

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usinesses in America today are else. If I don’t buy an anti-virus systematically underinvesting in program and my computer system cybersecurity systems. Estimates vary, becomes part of a botnet – a slave but a study by the Ponemon Institute computer system where I’m taken over indicated that if our by someone else and goal is to stop 95 used as an attack point percent of the cyber – the harm is to the intrusions before people under attack. If they occur, then we I’m holding the personal are spending only 10 data for a number of percent of what is my customers and the required. If this was system gets breached, it’s a test, our national the customers who are at cybersecurity grade risk of identity theft and would be a D- at fraud, not me. best.

That explains why Why don’t nobody invests enough in businesses and cybersecurity; it simply Ro se n z w e ig individuals see the doesn’t matter to them need for investing in directly. It doesn’t affect cybersecurity? In reality, they don’t see their bottom lines. To change that, the lack of security as a potential cost. some people think we need federal All they see is the expense of protecting regulation. Another possibility is themselves, not the expenses they might greater transparency to let the market incur if they don’t protect themselves. push a better result. That’s why the This all comes back to the classic Securities and Exchange Commission economic idea of an externality: the has issued guidance requiring the basic problem that mistakes I make disclosure of material cyber risks in don’t impose a cost on me, they publicly traded companies. Finally, impose a cost on someone else. That’s some want to see a tort liability system a problem because I’m not going to so that if my failure to act harms you, pay any money to make you safe; I pay. Whatever it is we do, we need that’s usually your responsibility. So to do something right now because we if you have to rely on me, and I don’t all need cybersecurity, and we aren’t do anything, that’s a problem for you getting enough of it. more than for me.

A classic type of externality is A True Story manufacturing pollution. I make the Company A provided consulting product and sell it for a profit, but the services related to commodities and costs of unclean air are paid by the their commercial use. Little did it thousands of neighbors of my plant, know that those same commodities not me. I don’t have an economic were of strategic interest to a foreign incentive to clean up the mess, and nation. that’s the typical explanation for why Company A was surprised one day government steps in and regulates to find that its public website had been manufacturing and makes me clean it “harvested” by the aforementioned up. It’s for the common good. foreign nation. It learned about the Cybersecurity is much like that. effort when calls started coming in When I don’t protect my computer, from customers; they were getting most of the damage is done to someone strange emails that had the right N E W J E R S E Y C P A • M ay • J U N E 2 0 1 4

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return address but sounded odd.

What would you do if you were Company A? Would you notify your other customers, the FBI, your lawyer?

That’s why it pays to plan now.

See Rosenzweig’s general session, “Thinking About Cybersecurity: From Cyber Crime to Cyber Warfare, How Conflicts in Cyberspace Are Challenging America and Changing the World,” at the NJSCPA Convention & Expo in Atlantic City, June 4-6.

Visit njscpa.org/convention for more information.

Paul Rosenzweig is the principal of Red Branch Consulting, PLLC, and the former Deputy Assistant Secretary for Policy in the Department of Homeland Security. Contact him at paulrosenzweig@ redbranchconsulting.com.

2013/14 Board of Trustees 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 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

NEWS FASB Issues Accounting for Goodwill, Interest Rate Swap Updates

The Financial Accounting Standards Board (FASB) issued two updates to U.S. generally accepted accounting principles that provide alternatives for private companies on the subsequent accounting for goodwill and for interest rate swaps – specifically a simplified hedge accounting approach for certain types of swaps.

FASB Accounting Standards Update No. 2014-02, Intangibles – Goodwill and Other (Topic 350): Accounting for Goodwill, permits a private company to subsequently amortize goodwill on a straight-line basis over a period of 10 years, or less if the company demonstrates that another useful life is more appropriate. It also permits a private company to apply a simplified impairment model to goodwill.

FASB Accounting Standards Update No. 2014-03, Derivatives and Hedging (Topic 815): Accounting for Certain Receive-Variable, Pay-Fixed Interest Rate Swaps – Simplified Hedge Accounting Approach, gives private companies – other than financial institutions – the option to use a simplified hedge accounting approach to account for interest rate swaps that are entered into for the purpose of economically converting variable-rate interest payments to fixed-rate payments.

AICPA Provides Guidance on Personal Financial Planning

The American Institute of CPAs has released additional guidance for CPAs who offer personal financial planning services. The AICPA Statement on Standards in Personal Financial Planning Services covers all aspects of the planning process, from obtaining information

briefs to communicating and implementing recommendations. The standards require complete transparency on factors such as compensation and potential conflicts that could influence client decision making. They are authoritative and enforceable and must be followed by all AICPA members who do financial planning.

Do You Have What It Takes to Make the CPA-List?

New Jersey CPA magazine is excited to announce a special section in its upcoming September/October issue: The NJSCPA "CPA-List." We will be spotlighting those Society members who are practicing at the highest levels in a specific accounting discipline: accounting & auditing, financial planning, forensic accounting, governmental accounting, health care accounting, nonprofit accounting, taxation or technology. Our selection of the CPA-List will be determined by the candidate’s involvement in the following weighted criteria: • Professional Activities – Experience in a particular niche; key accomplishments at a firm; professional activities including speaking, teaching or authoring; professional credentials/designations; media exposure (worth 50%).

• NJSCPA Involvement – Society/chapter involvement, volunteering, committees/ interest groups, speaking/authoring (worth 30%).

• Community Service – Participation with civic groups, such as the Red Cross, Chamber of Commerce, Habitat for Humanity, that positively impact the community (worth 20%).

The nomination form is available at njscpa. org/newjerseycpa. Please complete one form per candidate per specialty area.

NJ Crime Guns by the Numbers 2,112

Number of guns used in crimes in NJ in 2012

278 Number of guns from PA (most from another state) 20 Percent of guns (425 total) purchased in NJ 3 State’s rank of strictest gun laws in the country

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Self-nominations are permitted. Please email your submissions to dplaskow@njscpa.org.

Submissions are due no later than June 12.

PCAOB Abandoning Auditor Rotation?

After wrestling with auditor rotation for three years, the Public Company Accounting Oversight Board (PCAOB) may have finally conceded defeat. According to the CFO Journal, PCAOB Chair James Doty told the Securities and Exchange Commission that “We don’t have an active project or work going on within the board to move forward on a term limit for auditors.” However, Doty added, the PCAOB would “continue to think about what impacts independence.”

IRS Has No Legal Authority on Licensing Scheme

The D.C. Circuit Court of Appeals ruled that the Internal Revenue Service (IRS) had no legal authority to impose a nationwide licensing scheme on tax return preparers that would have required testing and continuing education as Registered Tax Return Preparers.

The decision affirms a January 2013 ruling by the U.S. District Court that struck down the IRS’ new regulations as unlawful.

“123456” Is Worst Password SplashData has announced its annual list of the most common passwords found on the Internet.

This list shows that many people continue to put themselves at risk by using weak, easily guessable passwords:

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123456 password 12345678 qwerty abc123 123456789 111111 1234567 iloveyou adobe123

SplashData suggests you combine random words instead of using common phrases, and don’t use the same password for all sites. Visit splashdata.com.

NJ to Implement New e-Procurement System

The state of New Jersey will be rolling out a new electronic procurement system for all state bids and contracts beginning on October 14, 2014. Vendors will need to register on the new system beginning April 22, and they do not need to pre-qualify to bid on state work.

Vendors will be able to search all open bids, RFPs and contracts and can submit bids and information electronically.

The system will not apply to municipal, county and NJDOT construction projects.

Visit nj.gov/treasury/purchase to learn more.

Study: NJ Leads the Pack in Outbound Migration

United Van Lines announced the results of its 36th annual “migration” study, which tracks which states the company’s customers move to and from during the course of the year. New Jersey (62

percent) displaced the outbound leader from last year, Illinois (60 percent) reclaiming the top spot for high-outbound migration that it held in 2010. The top-five outbound states for 2012 were: 1. New Jersey 2. Illinois 3. West Virginia 4. New York 5. New Mexico

FASB Codification Tablet-Enabled

The FASB Accounting Standards Codification has been enabled for use on tablet devices. It contains authoritative generally accepted accounting principles recognized by the FASB to be applied by nongovernmental entities, including public and private companies and not-for-profit organizations. FASB codification subscribers can access the new tablet view through iOS (iPad) and Android-based devices at https://asc. fasb.org.

njscpa.org Spotlight

Check Your Pulse

The New Jersey Society of CPAs recently launched a new email publication, NJCPA Pulse. Delivered every other Thursday, Pulse delivers customized content to each recipient based on numerous factors including demographic criteria, industry sector, member type and – most importantly – interest areas.

Your personal copy of NJCPA Pulse will contain content applicable to you – so it is vital that you ensure your Areas of Interest (AOIs) are up-to-date.

Visit njscpa.org/profile to review and update your AOIs. NJCPA Pulse includes professional news on the national and local levels, announcements of Society programs and services, job postings, upcoming events and more. This new publication replaces three previous email newsletters: E-NEWS, E-Young CPA (for professionals age 35 and younger) and Tomorrow’s CPA (for accounting students). All of the content previously delivered via those e-newsletters will now be included in Pulse.

If you have any questions or are not receiving NJCPA Pulse and wish to, contact Rachael Bell at rbell@njscpa.org or 973-226-4494 x220.

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Embrace the Bring Your Own Device Policy Once you decide to allow employees to bring their own devices into the workplace, implementing a concurrent mobile device management tool is a must. Simply put, a bring your own device (BYOD) policy is where employees bring their own technology into the work environment and request that they be permitted to connect those devices into the workplace technology.

A Gartner study recently found that BYOD forces employers to wrestle with three operational challenges:

By James C. Bourke, CPA WithumSmith+Brown

Governance and Compliance – BYOD could cause employers to violate rules, regulations, trust, intellectual property and other critical business operations.

Mobile Device Management – Employers must manage growing workforce expectations around mobility.

Employees use many devices, and they expect to use any device or application anytime, anywhere.

Security – If left unmanaged, BYOD can lead to loss of control, impact N E W J E R S E Y C P A • may • june 2 0 1 4

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network availability and cause data loss. Develop and implement the right network access strategies and policies to secure your environment.

Estimates are there will be more than two billion smartphones globally by the end of 2015. If left unmanaged, most of your employees will attempt to use their mobile and other personal devices in your work environment.

This use, without the supervision of a mobile device monitoring tool, coupled with no BYOD policy, could result in a worst-case scenario: a breach of client information.

So, where do you start and how do you make sure you do everything you can to keep employees happy and productive, yet protect your firm and client data? Use these three steps to create an effective BYOD policy:

Step 1

Embrace the fact that your employees are avid users of smartphones, iPads, tablets, netbooks and other portable devices that receive and send data via mobile or Wi-Fi connectivity. Your

employees might be more efficient at responding to client needs on their devices rather than the company’s devices. Employees may not even be using the company’s devices but, instead, using their own devices to transmit firm information in an uncontrolled and unmonitored fashion.

If you currently provide your employees with firm-owned mobile devices, revisit this policy. With an average cost of $100 per month to provide each employee a mobile device, the savings could add up quickly by eliminating that cost. Even if the firm adopted a BYOD reimbursement policy of $50 per month, the firm could easily cut in half its annual wireless communication cost. In many parts of the country, it is possible for an employee to secure a more cost-effective wireless device and plan, versus an employer having hundreds or thousands of employees and mobile devices under its plan.

Estimates are there will be more than two billion smartphones globally by the end of 2015.

Step 2

Implement a mobile device management tool. While technologies like Microsoft’s Exchange Server allow device management through its Active Sync (EAS) technology and Apple through its iOS 6.0 and greater, there are many other, more powerful and feature-rich, third-party mobile device management tools on the market. AirWatch, Zenprise, Boxtone and others have features that allow you to segregate

personal from business data, remotewipe specific data, prevent harmful attachments from being transmitted and more.

The mobile device management tool will likely come with features that many firms won’t need. For example, most of these tools allow for tracking of the device through GPS coordinates and logging of both text messages and Internet browsing activities. While it’s true that existing technologies allow for such activities by the employer, adding these features at the same time that BYOD is implemented will result in a new BYOD policy that may not be embraced by your employees.

Step 3

Communicate the BYOD policy to each staff member. It should apply to everyone, from intern to managing partner. The policy’s purpose is to put every device that may exist inside the firm and/or contain any firm or

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client data under the watchful eye and control of the firm. The key components of a BYOD policy should include: Policy Scope – It should indicate that all non-firm-owned devices that are brought into the firm are covered under the terms of the policy.

Required Employee Action – The policy should indicate employee actions when they wish to bring personal devices into the work environment.

Employer Reaction – The policy should indicate employer steps to attach devices to firm resources. For example, this is where the employer will generally detail security measures it will take (i.e., attaching the device to allow for sharing in all firm resources, remote wipe if lost or stolen, segregate business from personal information).

Policy Term – Length and duration of the BYOD policy.

Ramifications – Consequences for failing to adhere to the terms detailed in the policy.

Finally, a word about friction that may develop between management and internal information technology (IT) staff when implementing a BYOD policy. Since their role is to be an “enabler” and allow the firm’s staff to easily service clients as well as protect the firm and its resources, internal IT staff need to understand that there is no longer a need for them to know the devices’ specifications and how to repair every device that is in the hands of staff. The role of IT in this process is to know the BYOD policy and be comfortable that the mobile device management tools are doing their jobs N E W J E R S E Y C P A • may • june 2 0 1 4

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to keep the staff, the firm and the client data safe and secure.

James C. Bourke, CPA, CITP, CFF, CGMA, is a partner at WithumSmith+Brown where he is director of firm technology. He is a past president of the New Jersey Society of CPAs and currently serves as co-chair of the American Institute of CPAs Tech+ Conference. He has been named

by Accounting Today magazine as one of the “Top 100 Most Influential People in the Profession” and by CPA Practice Advisor as one of the “Top 25 Thought Leaders in Public Accounting Technology.” Contact him at jbourke@ withum.com.

See Bourke discuss an effective BYOD policy. Visit njscpa.org/ newjerseycpa/mayjune14.

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ADVERTISEMENT

Moving Your Practice Online By Stacy Kildal Ten years ago, I started my own business because I wanted the flexibility to work anywhere and control my schedule. My success and ability to maintain my flexible schedule comes from running an online practice. You may be contemplating moving your practice online, too.

Here’s my step-by-step guide to help get you started.

Step 1: Join the Intuit® QuickBooks® Cloud ProAdvisor Program. This program, which has more than 90,000 members worldwide, offers several resources: Intuit product discounts for QuickBooks Online and QuickBooks Online Accountant, ongoing training and product certification, a dedicated account manager, assistance with marketing your practice and much more.

Step 2: Find the technology that allows you to work remotely. For me, the choice was

clear: Intuit QuickBooks Online (QBO) and QuickBooks Online Accountant.

Intuit is a company I respect, and QBO is the leading online financial software in the industry, with more than 1.5 million users worldwide. You also need to consider hardware. I use a Mac to support my clients. With native software, I support QuickBooks Mac and QBO clients. I service QuickBooks Pro, Premier and Enterprise clients with a hosting service.

Step 3: Offer an incentive for existing clients to go remote (if they are hesitant). Explain

that you will serve them better because you aren’t traveling to appointments all day. I calculated my savings in fuel, time and mileage and passed it on to clients as a reduction in their flat monthly fees. I asked clients who were hesitant to try it for one month. If they didn’t like it, I offered to refer them to another expert. I lost one client after switching to online.

Step 4: Bring new clients on as remote only. I tell prospects

that I use QuickBooks Online and SaaS add-ons as needed. There are nearly 50 apps that integrate with QBO, from inventory and timesheets to CRM and payroll. At first, I offered a “first month free” option if the new client was reluctant to be online. Now, if they are reluctant, I refer them to someone else.

Step 5: Provide value/flat-fee pricing. With the automation and

always-on access of online software, I offer flat-fee pricing and monthly billing.

I have an in-depth interview with the client regarding options, expectations and existing workflow. Together, we determine roles and responsibilities. I then calculate a monthly fee. We both sign an engagement letter. The client signs an authorization form allowing me to charge their credit card or do a monthly EFT. This simplifies billing and budgeting for us both, establishes clear expectations with the client and doesn’t penalize me for being efficient and billing fewer hours.

Step 6: Specialize. Find a niche,

whether it’s software applications (as I did with QuickBooks Online), a feature (inventory) or an industry (healthcare).

Step 7: Market yourself!

Marketing is easier and less expensive with social media: Twitter, Facebook, LinkedIn and blogs are at your fingertips.

Help forums also help build your brand.

Many clients start by contacting me to say thank you for information I provided in a blog or forum. YouTube, Vine, iGivit and other video options also provide great ways to show all you have to offer!

With all your social media activity, have a website so prospects can find you, understand the services you provide and know how to contact you.

Step 8: Use video conferencing to “meet” your clients. One prospect was

hesitant to hire me until we did a Google Hangout. With so many free or low-cost choices—Skype, FaceTime, Google Hangout, Fuze, iVisit, Webex—it’s easy to find one that works for you and your clients.

Step 9: Create your own network. Connect with people who

do what you do, but not exactly. I’m not an expert in ecommerce, non-profits or franchise setup and training. But I know people who are and refer potential clients to them. They do the same for me.

Step 10: Form strategic alliances. Work with people

outside your industry that you use and feel confident recommending to your clients, and with whom you can trade referrals. I have a business coach that I refer clients to when they need help with focus and planning; she refers clients that need help with their back-office technology or processes.

Now you are ready!

Start with one client. You won’t be disappointed, and I bet you’ll never look back.

About StAcy KildAl Stacy Kildal of Kildal Services LLC is the nation’s foremost expert in QuickBooks Online.

Just What Is Business Intelligence?

Business intelligence (BI) is a generic term associated with transforming voluminous raw business data into useful and actionable information. It provides intelligence that extends beyond traditional financial and operational reporting. These resources are then used for enabling business strategies, decision making and business planning which often provide astute adopters with a competitive market advantage.

By Marc D. Mintz, CPA Marc Mintz & Associates, LLC

However, much confusion is associated with BI as individual software companies and Software as a Service (SaaS) providers attempt to meld the names of their individual products and services with this wideranging business reporting concept.

Consequently, the individual tools, information and reports that comprise BI will be unique by industry, company and stakeholder. Retrieving the appropriate information from available sources – which can then be used for making the best business decisions – is the ultimate objective of any BI system.

While there is nothing inherently new regarding the importance that business places on timely, accurate and incisive reporting, numerous factors have set the stage for the proliferation of innovative BI systems. In fact, the American Institute of CPAs’ widely respected “Top 10 Technology Initiatives” had listed “Enabling Decision Support N E W J E R S E Y C P A • may • june 2 0 1 4

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and Analytics” as the seventh most important technology issue facing CPAs for both 2013 and 2012. An eruption resulting in copious volumes of data, an ability to accumulate information from disparate systems and an explosion of relatively low-cost data aggregation and analysis tools have all contributed to the expanded interest in BI.

BI Uses and Attributes

Real-time analysis using customized views of transactional information provide interested parties with the ability to improve decision making.

Information is extracted, accumulated and analyzed from individual source documents across an entire organization. Cash register transactions from point-of-sale systems, work orders from the manufacturing floor and orders from a company’s online store are all simultaneously brought together. Enhancing existing streams of revenue, mitigating costs, identifying new products, and optimizing prices and availability of information for negotiating with vendors are just some of the benefits that can be realized when line personnel are empowered with properly digested and accurate information. Decisions are based on expert systems and analysis and not subjective criteria, gut feel or by the seat of one’s pants.

BI decentralizes access to information so various segments can proactively utilize information that is predictive and not historical. Users become empowered

through timeliness and self-reliance.

Cloud-based BI services can eliminate the need for costly infrastructure or the development of data warehouses.

Information technology (IT) staff time is minimized. Effective BI systems are capable of accumulating data through techniques such as querying and data mining. Information is then evaluated through various analytical processing techniques. Data and results are presented using dashboards and highly customized reporting schemes that rely heavily upon the expert insight of seasoned employees and industry experts, which are necessary prerequisites when establishing such systems. Custom views of data are designed by function, person and purpose and can be further carved by department, region and location.

Additional parameters for timeframes such as hour, day, month or year may also be included.

Best Practices and the CPA’s Role

Critical to the success of any BI project is accurate data. It would be imprudent to attempt to implement a BI project if the nuts-and-bolts accounting and daily transaction processing systems are anything but fully dependable. BI cannot be a shortcut to empower an inherently unreliable system.

Review your current business decision-making processes and, more importantly, document the deficiencies of your present system.

Review business strategies, analyze company strengths and weaknesses, and define a clear set of business objectives. Finally, identify the information that will be required to make decisions which will allow your organization to achieve its stated business objectives. It is critical that the employees responsible for working with any new BI system be part of the selection process. Review and selection decisions are too often made by system non-users who lack the practical knowledge required for guaranteeing success. It can also become convenient for employees uninvolved in the review process to sabotage an implementation because

they had little stake in its selection.

CPAs are well-positioned to recognize and lead BI projects.

Identifying key performance indicators, which can most reliably measure and predict strategic and operational success, falls within the purview of progressive CPAs with strong analytical talents. Familiarity with high-level financial data and detailed transactional workflow, in conjunction with their role as a trusted and impartial advisor, provides the necessary buy-in across multiple levels within an organization. Many of today’s current BI systems rely heavily upon data manipulation and presentation tools, such as Microsoft Excel, always a stronghold for CPAs and other financial professionals. The science and art of BI presents CPAs with an opportunity to move beyond traditional reporting and compliance roles and expand to higher-value skill sets and services that are both predictive and strategic.

Marc D. Mintz, CPA, CITP, CGMA, is the managing member of Marc Mintz & Associates, LLC, a technology consulting firm that assists businesses with strategic planning and the selection and implementation of information N E W J E R S E Y C P A • may • june 2 0 1 4

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technology systems. He is currently chair of the New Jersey Society of CPAs Strategic Planning Committee and on the Editorial Advisory Board of New Jersey CPA magazine. Contact him at marc@ marcmintz.com or 973-808-9040.

Additional Resources From Insight to Impact: Unlocking Opportunities in Big Data, a report from the Chartered Global Management Accountants (CGMA), explores harnessing data for competitive advantage (cgma.org).

Improving Decision Making in Organizations: Unlocking Business Intelligence, another report from the CGMA, explores developments and the roles of CPAs and management accountants in the field of data analysis and BI (cgma.org).

Business Intelligence in the Enterprise: A Framework for Enterprise Business Reporting, a report from the AICPA IT section, also deals with timely BI issues (aicpa.org).

Think Before You

Sync

Syncing files from a local computer or device to the cloud is a common business practice in today’s mobile-driven world – as common as the Internet, an app store and all the other day-to-day necessities.

In fact, it is probably the best example of the consumerization of information technology for small business owners. Apps like Dropbox have had a transformative impact on the expectation for accessing digital content. Simply put, the new norm is “full access to all of my data from the device of my choosing.”

By Eric Pulaski SmartVault Corporation

Over the past few years, the practice of syncing business files to personal devices has evolved from a simple function to a mission-critical solution, required for working outside of a traditional office environment. This is not exactly a shocking transformation given that we live in an on-demand world where it is common for professionals to work remotely and from a variety of devices: laptops, tablets and smartphones. The transition from brick-and-mortar offices and employer-owned hardware to virtual locations and a bring your own device policy has forever changed how firms operate.

File syncing is a here-to-stay solution.

Today’s mobile professionals demand it because it allows them to work from anywhere on their own local devices and access and share files that have been synced to the cloud even when the Internet is not available.

However, while file syncing offers immense value and many conveniences, it also creates its own set of issues – relative to security – that accountants N E W J E R S E Y C P A • may • june 2 0 1 4

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need to consider in their business practices. It is important to balance the value of syncing files with a firm’s business and compliance requirements.

The core issue caused by syncing files to multiple devices is the loss of centralized control. The moment a company’s files are synced to multiple devices, those files are subject to the personal security habits of that user or employee – regardless of whether an employee is working on his or her own device or one that was issued by the firm. What happens if the employee’s device is sold, lost or stolen?

The answer is that company documents go with it.

Top Five Sync Strategies

If an employee at a firm has files synced to his or her devices (once synced, always synced), what is the process for protecting those files after an employee is terminated, quits or leaves after seasonal work is complete? As file syncing has gained in popularity, many businesses have felt the pain of losing control. As the guardian of clients’ financial documents, you must establish policies for working with solutions that sync files automatically.

Here are a few syncing strategies to help mitigate file security issues: • Encrypt Folders on Local Computers – If employees have the freedom to sync firm files to personal mobile devices, make sure all files are encrypted. This extends security to files sitting on devices owned by staff. It ensures that in the event an employee’s device is lost or stolen, access to sensitive files will not be granted to the individual who recovers the device.

If a device is lost or stolen and you can demonstrate that no one can access the data, client notification is not required. Encrypting data (assuming the encryption key is not

stored with the device) and changing a password for an on-the-cloud device are two approaches that will protect you from a security breach.

• Create Strong Passwords – For encrypted files, ensure that passwords are strong (i.e., do not make your password “12345’). This is an alltoo-common issue in firms. With the variety of passwords that the typical individual has to track, it’s understandable to want to create simple, easy-to-remember pass codes. However, don’t cut corners when it comes to the safety of your files. Solutions such as LastPass and PassPack can help manage multiple passwords.

• Sync Only as Needed – Don’t allow for a complete sync of your firm’s entire file directory. Instead, only allow staff to sync the files absolutely required. Sync on an as-needed basis only. You could also set up defined “employee share” folders and restrict file syncing to these folders.

• Use the Remote Wipe Function – This is a key feature in syncing solutions for business users. It allows the removal of all synchronized files

from a computer in the event of loss or theft. Some offerings also include the ability to transfer ownership of a computer.

• Go All-Cloud – The final (and only foolproof) sync strategy is to not sync at all. Advanced cloud file management applications provide easy, fast access to files and data anytime, from anywhere and from any device. Firms that move to an all-cloud system and away from syncing files to personal devices altogether eliminate the risk of files being distributed on various machines among multiple people.

Using the cloud exclusively for file management is the best policy to maintain full control of your files.

Think It Through

There’s no question that file syncing can increase firm efficiency and staff productivity, but it’s important to understand the risks and potential compromises to data security. Think before you sync. For accountants, data security is a top priority, so if syncing files is part of the daily process, it may be time to develop new policies N E W J E R S E Y C P A • may • june 2 0 1 4

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to safeguard sensitive and confidential financial information.

Client Notification Requirements Forty-six states have laws regarding security breach notification. If a computer, smartphone or tablet is lost or stolen and the device contains clients’ personal identifiable information, you are required by law to notify all clients of the security breach. So, make sure you become familiar with your state’s notification requirements.

Eric Pulaski, CEO and founder of SmartVault Corporation, has more than 20 years of experience in network security systems with a focus on cloud computing. SmartVault offers document management solutions using cloud-based technology centered on integration with applications customers currently use.

Contact him at eric@smartvault.com.

Who’s Min(d)ing Your

XBRL Data?

“Is anyone using XBRL?” This is a common question, especially from U.S. Securities and Exchange Commission (SEC) filers who don’t believe that the actual current and potential future benefits merit their costs. Some feedback seems discouraging, but the broad answer is, “In more ways than you might imagine.” Yes, it’s often not “who,” but “what” is using XBRL.

By Eric E. Cohen, CPA PricewaterhouseCoopers LLP

Extensible Business Reporting Language (XBRL) is often compared to the Universal Product Code (UPC) which revolutionized the retail industry.

Critics originally proclaimed that the UPC “offers so little return that it simply won’t be worth the trouble and expense.” Will XBRL’s critics someday be similarly perceived? Let’s examine the background of the SEC mandate, evidence of use and the value of XBRL to consumers and producers.

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Mandate Background

Five years into the SEC’s XBRL mandate, 9,800 companies filing U.S. generally accepted accounting principals have submitted 90,000 exhibits with 63 million data points in XBRL. For the last three years, every number in every financial statement, including those otherwise hidden away in paragraphs of text, is structured and available from virtually every filer.

What about quality? Challenges have been noted when using XBRL data.

Widespread quality issues, including numbers being provided as negative when they should be positive, lack of completeness and consistency, and over-customization mean the raw data requires additional effort to be relied upon. However, XBRL holds the potential for reduced costs, enhanced controls, reduced risks, greater transparency and better oversight. So, is it proving itself?

Who Is Using XBRL Today?

Market participants say XBRL is, in fact, proving itself. This is evident in the SEC’s own use of the Electronic Data Gathering, Analysis and Retrieval (EDGAR) data, the growth in analytical tooling and market participant feedback.

The first-user community is the SEC. The Division of Economic and Risk Analysis is using XBRL data to support its oversight efforts. The SEC’s strategy broadly calls for an increased focus on analytics with plans that “filings structured for automated data retrieval and analysis will replace all filings submitted through the EDGAR system.”

EDGAR was designed to “make corporate and financial information available … in a matter of minutes.”

That was largely unattainable before XBRL exposed numbers – whether on the face of the financials or in the note disclosures – for faster, automatic and inexpensive discovery, consumption and analysis.

BlueMatrix, a global securities research platform, began leveraging XBRL content to supply more than 800 buy-side and sell-side firms, most unaware they use XBRL. The EDGAR Dashboard of XBRL Cloud publishes automated, real-time feedback on exhibit quality, which forces management, investor relations personnel and consultants to answer for perceived errors. Tagnifi took a different approach: identifying potential errors and directly asking management for corrections, with a copy to the SEC. XBRL exhibits on EDGAR are available as raw files or in a viewer where users see a standardized

Extensible Business Reporting Language (XBRL) is often compared to the Universal Product Code (UPC) which revolutionized the retail industry.

presentation and can drill down to underlying definitions and other information. Users wanted help manipulating the data. Solutions emerged for different types of users: simple on-screen presentation, automated entry into Excel templates, summarized data with drilldown to detail and then to the original representation, comparisons – across periods and filers – and raw data sets queryable with SQL. XBRL consumption was also added to production software to simplify

benchmarking and create more reusable reports.

XBRL US produced a historical database for members and subscribers and then sponsored an annual challenge to encourage the development of open-source analytical tools. Some, such as Calcbench and XBRLAnalyst, went commercial, while others moved forward with open source, like Arelle.

Other market participants capitalized on the reduced mechanical effort of XBRL to populate their own models and tools.

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Calcbench compensates for data quality issues, making adjustments to the reported data for common errors, such as period-to-period inconsistencies. It shares its adjustments, at no charge, with the original filer through a portal.

Calcbench’s Ariel Markelevich notes, “Consider a footnote disclosure query. You can now find numbers in text, drill into the numbers and back through their history within five minutes after being filed; you simply couldn’t do that any other way.”

XBRLAnalyst appeals to those who simply want a wizard-driven way to get data into XBRL as well as to those who want powerful analytics, personalized aggregations and drill-back to original reported data. As Ilya Vadeiko of FinDynamics notes, “Everything is possible now with XBRL as it was with processed data. There’s nothing scary about XBRL; you can begin working with it right in Excel.”

XBRL Value

Arelle has an RSS Watch function that can constantly monitor the SEC’s XBRL RSS feed and notify you when the conditions you establish are met. Arelle’s developer, Herm Fischer, works to socialize future data and tools, “As you prepare a filing, information autocompletes as you type it, like a search engine. You’ll see how competitors tagged, who got audited, historical comparisons – the whole world of data.”

SEC Filings for Humans is the work of one person fed up with difficultto-use tools, leveraging XBRL and other content. Its developer went from learning how to build a website to exposing XBRL and other data in seven months. Non-humans process XBRL as well. The U.S. Equity News delivers reports in real-time, and the Thinknum web platform for financial analysis enables its users to develop models that update instantly as XBRL data is published.

XBRL faced a chicken-and-egg situation: Until there was a critical mass of data, users didn’t want to invest in analysis tools; and without a critical mass of users, filers didn’t recognize the benefits of creating quality XBRL. Filers can now be encouraged that their efforts to create quality XBRL are leading to valuable use and can be used as feedback to create better XBRL. Investors can learn how others are gaining faster and deeper insight through XBRL-equipped tooling. Auditors can populate disclosure checklists.

Academics can research XBRL and provide data for students. And regulators can gain insights in XBRL market usage.

Eric E. Cohen, CPA, is the XBRL global technical leader for PricewaterhouseCoopers LLP. Contact him at eric.e.cohen@us.pwc.com.

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A&A

buzz

Does the Group Audit Standard Apply to My Audit?

By Brian P. Collins, CPA, ParenteBeard LLC

T

he American Institute of CPAs issued the clarified audit standards in 2012. They were effective for audits of financial statements ending on or after December 15, 2012. While much of the clarified standards consisted of nothing more than a reshuffling of the deck, some significant changes were introduced. Perhaps the most significant changes were introduced in AU-C Section 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors), which superseded AU Section 543, Part of Audit Performed by Other Independent Auditors. AU Section 543 provided the guidance on how to conduct an audit that involved other auditors. AU-C Section 600 significantly expands the scope and addresses how to conduct effective group audits.

A group audit is an audit of group financial statements. Group financial statements are financial statements that include the financial information of more than one component, which is defined as an entity or business activity for which group or component management prepares financial information that is required to be included in the group financial statements. The following (partial list of) entities are normally considered a component under the clarified standard: • Branch • Cost method investment • Division • Equity method investment • Foundation • Joint venture • Subsidiary • Variable interest entity Because the superseded guidance in AU Section 543 focused on the

involvement of other auditors, many auditors over the course of the last 12 to 18 months did not identify all of the audits to which the new group audit standard applied because there were no other auditors involved in the audit.

The AICPA began to tackle all of the questions around the new group audit guidance in November 2012 with the issuance of the Technical Practice Aid, (TPA) TIS Section 8800, Audits of Group Financial Statements and Work of Others. The TPA was updated in June 2013 and covers a wide range of topics. The following are responses to two questions related to group audits where only one auditor audits all of the components.

8800.09 Component Audit Performed by Other Engagement Teams of the Same Firm

Inquiry – Do the requirements of AU-C Section 600 apply when a CPA firm uses auditors in different offices of the firm to perform various audit procedures related to the audit of a single entity’s financial statements?

Reply – If the group engagement team identifies components in the financial statements of a single entity, it is a group audit and AU-C Section 600 applies. As defined in AU-C Section 600, a component auditor may be part of the group engagement partner’s firm, a network firm of the group engagement partner’s firm or another firm. (See paragraph .11 of AU-C Section 600.)

8800.24 Applicability of AU-C Section 600 When Only One Engagement Team Is Involved

Inquiry – Company X consolidates the operations of entity A. The same group N E W J E R S E Y C P A • M AY • J U N E 2 0 1 4

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engagement team that audits company X also audits entity A. Because only one engagement team is involved, does AU-C Section 600 apply? If so, what does AU-C Section 600 require that is not already covered by other auditing standards?

Reply – AU-C Section 600 applies to all audits of group financial statements, which are financial statements that contain more than one component.

In the circumstances when the same engagement team audits all components of the group, the considerations addressed in AU-C Section 600 that relate to component auditors are not relevant. However, considerations addressed in AU-C Section 600, such as understanding the components; identifying components that are significant due to individual financial significance and the significant risk of material misstatement; determining component materiality; understanding the consolidation process; and addressing the risks, including aggregation risk, of material misstatement in the group financial statements; are relevant in all group audits.

Early identification of the audits to which the group audit guidance applies is key. The application of the group audit guidance has been an area of focus in peer reviews and will likely remain an area of focus in the upcoming peer review cycle.

Brian P. Collins, CPA, CGMA, is a partner and the regional accounting and audit director at ParenteBeard LLC. He is a member of the New Jersey Society of CPAs Accounting & Auditing Standards Interest Group. Contact him at brian. collins@parentebeard.com.

BEST

practices

Cloud Content Ownership

By Ryan J. Lapinski, CPA, Johnson Lambert LLP

T

here are several matters one must consider to ensure that best practices are used over the ownership of content being stored in the cloud.

important for you to understand the sensitivity of the data being stored and the potential risks of storing specific data in the cloud. You may still opt to go ahead with storing that data, or you may not. The provider will have controls in place to protect your data, but adding your own encryption creates an extra layer of security that you control. Symmetric is one form of encryption method where a “key” makes data unreadable when transmitted, and only with that same key can a user read that data.

Who Owns the Data?

One would presume that the original owner would retain ownership when storing data in the cloud, but that may not always be true. Ownership can vary depending on the terms of the contract with a specific provider. Some providers may retain certain rights to your data, while others retain none. It is crucial to understand the contract with a potential provider and ensure that the contract explicitly affirms your ownership over the data uploaded. If it states otherwise, you may want to take your business elsewhere.

Can the Cloud Provider Use Your Data?

With ownership clearly defined, it is crucial to identify the limitations of how the provider could potentially use your data. Certain providers track your connection locations, connection times, the devices and applications used, the amount of storage used, along with various other statistics. Providers have the right to collect statistical data based on their system usage, but some could potentially use this information to facilitate advertising. You should understand what information the provider is collecting, the possible use of said information and where it could possibly end up.

It’s estimated there’s one exabyte of data stored in the cloud.

What Happens When a Contract Is Terminated?

Where Is Your Data Being Stored?

The geographical location and laws within that specific jurisdiction can determine your rights over your data. Paired with a clear definition of ownership rights within the contract, you must know where your data is being stored and the associated laws in that location. Laws and regulations vary depending on locality, and although you may be governed by a certain set of laws, the same cannot be said about your data. Privacy laws vary around the world, and if your data resides in a location with different laws, you may potentially be forfeiting your rights over the data.

How Does the Cloud Provider Protect Your Data?

When contracting with a cloud provider, you are entrusting it to handle your data safely and securely, but it only retains some of the responsibility.

Ultimately, you are solely responsible for the data you transfer into the cloud as well as any consequences that may happen due to a possible breach. It is

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Within the contract, you should understand and state the procedures in which your data should be returned.

One of the questions that should be addressed is: “When will your data be returned?” This should be addressed based on your business’ needs; for instance, whether it will be returned following the contact termination or at an established date. Another is: “How will your data be returned?”

The format in which you wish to receive the data must be stated specifically to meet your expected needs. “How long after the contract will your data be accessible?” This should be based upon the time needed if moving to a new provider or bringing your operation in-house. And finally, “What happens to my data after contract termination?” The deletion process for your data should be clearly stated within the contract, laying out the process along with a timeframe in which it will be removed.

Ryan J. Lapinski, CPA, M.B.A., is a senior associate at Johnson Lambert LLP. He is a member of the New Jersey Society of CPAs Technology Interest Group. Contact him at rlapinski@ johnsonlambert.com.

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BUSINESS & INDUSTRY

insights

Compliance Monitoring Costs and Penalties B y Daniel R. Arc uri, C PA, L’ Oreal

F

inancial compliance, regulatory monitoring and potential penalties have become increasingly relevant topics for all businesses over the past decade, especially with the implementation of the SarbanesOxley Act (SOX) in 2002. One must understand, though, that these issues are not only relevant to large, publicly traded corporations but to small and medium-sized businesses as well.

Costs

Independent surveys have reported that approximately half of the large corporations expect their compliance budgets to increase for the 2014 fiscal year. Many of the increases will be devoted to compliance with new federal rules and deadlines.

Additionally, approximately half of

the surveyed companies also report rising costs in external audit fees.

As of 2008, the total cost of compliance with federal regulations equated to approximately $15,586 per household, or more than $1.75 trillion in total – 14 percent of the U.S. national income.

Large corporations pay approximately $8,086 per employee, but small businesses with less than 20 employees pay approximately $10,585 annually per employee. Other studies show that it is approximately $7,000 per employee for small businesses, but both reports state that the costs are significantly higher per employee for smaller businesses than for larger businesses. This can easily add up to millions of dollars in costs for large companies.

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Additionally, businesses spend more money and more hours on compliance efforts with the federal tax code than on other areas of compliance.

Regarding compliance with the federal tax code, corporations make up 60 percent of the total compliance cost, and individuals and nonprofits make up 40 percent of the $160 billion aggregate compliance cost.

Companies also need to work even harder in order to improve their compliance, and only a handful of companies have fully automated more than half of their key SOXrelated controls. This is something to look forward to in the long run in order to bring more efficiencies and cost reductions to the compliance process. According to James Fanto, a law professor at Brooklyn Law

School, “The assumption always was that costs would go down in time as companies became more accustomed to SOX and perhaps automated, but the data suggests that the costs are still significant and automation has not fully occurred.”

The increase in compliance costs is due to many factors, but there are some key factors that have led to the largest increase in costs. Recently, there has been an increase in the amount of time spent on control documentation for high-risk processes, as well as in the amount of time spent on key business process walkthroughs. According to a 2013 survey by Protiviti, for a global business consulting and internal audit firm, the increase in SOX compliance costs exceeds the increase in the inflation rate for 87 percent of

companies. Additionally, 65 percent of organizations will spend less than $500,000 on SOX compliance costs, and 75 percent will spend less than $1 million. Out of midsized companies, only 13 percent will spend more than $1 million on SOX compliance.

Although SOX and audit costs are rising for many public companies, on average, companies have reported that the benefits and value of quality financial reporting still exceed the related and necessary costs.

Penalties

In addition to the increase in compliance costs, criminal penalties have been more strict since the implementation of SOX. For example, for obstructing a federal investigation, the penalty can be a fine and/or

up to 10 years’ imprisonment. For knowingly intending to defraud a purchaser of securities, the sentence is likewise a fine and/or up to 10 years’ imprisonment. For a CEO or CFO who willfully violates the certification of the company’s financials, the fine is up to $5 million and/or a prison sentence of up to 20 years. The maximum prison term for mail fraud has also increased from five years to 20 years. Alter, destroy or conceal records and documents and you’re looking at a fine and/or prison term of up to 20 years.

Daniel R. Arcuri, CPA, M.B.A., works for L’Oreal. He is a member of the New Jersey Socetiy of CPAs Tomorrow’s CPA Editorial Advisory Board. Contact him at daniel.arcuri1@gmail.com.

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FINANCIAL

planning

Oil and Gas Partnership Investments B y David Plaskow, N J SC PA C omm u nications M anager

O

ver the years, more taxpayers have invested in the oil and gas industry. For those practitioners who have dealt with these types of investments, you can understand how it adds a level of complexity to clients’ tax returns. Let’s examine the different types of investments and the associated tax benefits.

Companies that try to harvest the underground oil and gas reserves need capital to buy equipment to create a well and harvest that energy, and they will often look to the markets to raise capital. Of course, there are certain risks associated with these types of investments, so the Securities and Exchange Commission (SEC) may require investors to be accredited. To

be an accredited investor, one must meet certain income and net worth requirements.

Mutual funds are the most basic type of investment strategy if you’re interested in oil and gas. These investments are like any other mutual funds in that they are actively managed and comprised of numerous different stocks, but they differ in that the stocks are specific to the oil and gas industry.

Any income distributed to investors of the mutual fund is taxed as any other mutual fund.

Another type of investment strategy is to hold a royalty interest in an oil and gas well. If you own land that contains an oil or gas reserve, this type of interest allows you to retain N E W J E R S E Y C P A • may • june 2 0 1 4

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ownership of that land while reaping the financial benefits associated with oil and gas reserves. Typically, a company will contract to harvest the oil and gas from your property and pay you a royalty based on the productivity of the reserve. The royalties received are taxed as any other royalty income.

The most common form of investment is holding an interest in an oil and gas master limited partnership, which is highly liquid. It’s similar to a stock in that the investor receives units that are traded on stock exchanges, just like traditional stocks. A distinct difference, however, is that all income is passed through directly to investors, avoiding double taxation. One reason these investments are popular is

because of the tax advantages.

The Internal Revenue Code provides several distinct incentives for the investment in and development of oil and gas exploration activities. An investor must hold a working interest in an oil and gas activity in order to take advantage of these tax benefits.

Partners in a partnership are deemed to hold a working interest in the activity, so investing in an oil and gas master limited partnership will allow investors to qualify. However, mutual funds and royalty interests do not qualify.

A significant advantage available to a master limited partnership is the deduction of intangible drilling costs.

These costs, which include everything except the actual drilling equipment, are 100-percent deductible in the year incurred. Intangible drilling costs typically constitute between 60 percent and 80 percent of the total cost of the

Key NJ Oil Refineries Bayway, Linden Paulsboro Asphalt, Paulsboro Paulsboro, Paulsboro Perth Amboy, Perth Amboy well, so this write-off is a great investor benefit. As long as the well starts to operate by March 31 of the year following investment, the deductions will be permitted. For example, if we assume that the total cost of drilling a well was $500,000, and 80 percent was considered intangible drilling costs, $400,000 would be deductible in the first year of investment.

Another significant tax advantage available to investors is the depletion allowance. Also known as the Small Producers Exemption, the depletion allowance permits a deduction of 15 percent of the gross income from oil and gas producing activities, subject to a taxable income limit. This tax benefit is not available to large oil companies, retail petroleum marketers or refiners that process more than 50,000 barrels per day. Also, certain wells meeting the Internal Revenue Service’s marginal production guidelines are permitted to exclude up to 25 percent of the gross income produced by that well.

Oil and gas investing is not for everyone. The multitude of risks is one reason why the SEC may require investors to be accredited. However, oil and gas partnerships can be both profitable and yield numerous tax advantages to your clients.

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Forensic

file

CAATTs as Part of Your Forensic Accounting Toolbox B y M ichelle Morris , Withum Smith+ B row n

I

n some instances today, detecting audit fraud may not be possible without the use of CAATTs (computer assisted audit tools and techniques).

Imagine having to review a company’s entire general ledger over a period of four years manually, line by line. By using CAATTs, this task becomes much less daunting.

Preserving the integrity of the original data is an important aspect for fraud audits. By utilizing a type of CAATTs software, like generalized audit software (GAS), for those engagements you maintain data integrity. CAATTs or GAS, such as ACL Analytics and IDEA Data Analysis Software, use a copy of the original data and do not ruin the integrity of the original data, which helps eliminate some mistakes or changes that occur to the data

when using Excel. An integral step when importing the original data is to first verify its integrity against the operational computer or source.

Comparing the totals from GAS to the exact data from the source brings assurance that you are working with a complete set of data.

Another benefit of CAATTs is the ability to do more with the same amount of resources. CAATTs make it possible to test and review data efficiently and effectively on a large scale, including the power to audit 100 percent of the data. This gives the auditor the ability to identify more red flags than may have been apparent had he or she only looked at a sample of transactions. The following is a list of key analyses within CAATTs that are useful for forensic accountants and fraud auditors: N E W J E R S E Y C P A • may • june 2 0 1 4

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• Gaps – This test allows the user to identify any missing check numbers, invoices and so on. For example, you may see a large gap between checks which could be an authorized signer pulling checks from the bottom to write a fraudulent disbursement.

• Duplicates – Similar to the gap test, this allows the user to identify any duplicate transactions or data. For example, one can check for duplicate return transactions or for duplicate vendor numbers.

• Transactional Matching – This test allows the user to match different reports. For instance, you may want to match inventory receipts with vendor ledger amounts for any variances. You may also want to match vendors’ and employees’ names, addresses and phone numbers. You can also compare

items sold to the sales price to identify items sold for less and by which sales clerk.

• Period-to-Period (Trends) – This allows the user to identify any increase or decrease in certain accounts or even vendors and customers. For example, you could compare data for a specific account month to month over a period of four years and identify any changes that may require additional explanation from management. Another example is to compare sales prices across different store locations.

• Benford’s Law – This is used to identify anomalies in the leading digits of amounts because digits do not randomly occur as the leading digit or digits.

Benford’s Law says that the leading digits do not occur randomly in a random large set of numbers. Due to the fact that Benford’s analysis is more accurate when using a large number of transactions, it’s best to analyze the entire account rather than a sample of the account. Accounts receivable, accounts payable and most revenue and expense accounts are the best types of accounts on which to use Benford’s Law analysis because they consist of transactions that result from combining numbers (i.e., number of items purchased multiplied by the price per item). After running Benford’s analysis on the accounts receivable data, you may find a difference between the distribution of the first digit when compared to the

expected Benford distribution. This would require additional explanation from management and further investigation.

When used alone, CAATTs and GAS are not guaranteed methods to identify or catch fraud. Instead, they should be used as tools to better assist in the effectiveness of identifying fraud and the efficiency in reviewing a large population of transactions.

Michelle Morris is a senior accountant at WithumSmith+Brown. She is a New Jersey Society of CPAs CPA Candidate Member. Contact her at mmorris@ withum.com.

The Personal Banker to the CPA’s in New Jersey Top 1% of Loan Originators among

New Jersey banks and throughout USA

Top 1% of Mortgage Originators in America – Ranked by Scotsman Guide, Origination News and Mortgage Executive Magazine

Changing real estate market conditions create opportunities and challenges. I Specialize in serving the real estate needs of New Jersey CPA’s and their clients.

Please join my session at the NJSCPA 2014 Annual Convention – June 4th 2014 called Straight from the Top: Top Issues Facing Real Estate from 9:00am to 11:30am. I will be accompanied by Geoffrey M. Connor, former Commissioner of Banking for New Jersey.

Also, to learn more about real estate and finances, hear me live weekly as a Co-Host on 1160am WVNJ “The Real Estate and Money Show” 10:00am to 11:00am every Thursday or listen live via the website realestateandmoneyshow.com Marc C. Demetriou CLU, ChFC, NMLS #111118 Branch Manager/Mortgage Consultant Residential Home Funding Corporation Email: mdemetriou@rhfunding.com 39 Main Street, Bloomingdale, NJ 07403

Phone: 973-492-0117

www.RHFBloomingdale.com Licensed Mortgage Banker – CT Banking Dept., FL Banking Dept., NJ Dept. of Banking & Insurance, NY Banking Dept., PA Dept. of Banking & Securities – NMLS #34973

Fax: 973-492-0118

Cell: 201-286-3386

N E W J E R S E Y C P A • may • june 2 0 1 4

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Approved and licensed by the New Jersey Board of Accountancy to offer CPE credits to CPA’s and accountants.

Top rated CPE instructor and frequent speaker at chapter meetings and accounting firms throughout the state.

Small/Sole

practitioner

Tax Prep Software Conversion B y Vincent Passarella , C PA

T

o put it simply, there are several moving pieces in executing an effective software conversion. My goal is to not spell out steps one through ten in a conversion. Rather, I would like to highlight the little details from personal experiences and from research that often go unnoticed and could lead to the eventual success or disaster of a tax prep software conversion.

Do Your Due Diligence

The first task that a firm should tackle is which of the numerous tax programs it is going to convert to. This should entail extensive research on the products and, more importantly, meeting with vendors to get an idea of which product will be the most compatible, especially from a data integration standpoint. Since there are so many programs available to tax practitioners, and the bells and whistles are pretty much the same, the deciding factor is going to come down to cost and who is going to provide the best customer support during the transition and post go-live date.

Speaking of the go-live date, this is another important aspect that should be identified early in the conversion process. January 1 would make the most sense, but firms don’t always have this luxury. If this is the case, the most realistic point – with little service interruption – should be selected after tax season.

Create a Conversion Plan

Once the product has been selected and the conversion date has been established, the firm should then develop a conversion plan and identify the key players who are going to execute the plan. Obviously, the sole practitioner will be driving the ship on his or her end, but some small firms may have the luxury of developing a transition team, which could consist

of partners, seniors and information technology staff. Vendor engagement will be quite instrumental in not only the research phase but, more importantly, during the period leading up to the eventual conversion.

Develop a Timeline

Whether it is a large firm, small firm or sole practitioner, creating a timeline of events that need to occur, including the actual go-live date, will help tremendously with the project. Identify within a timeline the associated to-do list, complete with due dates and those in charge of the tasks. One of the wildcards that should help keep the project on time is setting a periodic meeting with all of those involved to review the status of open items, especially as they relate to due dates.

This will help minimize the likelihood of the conversion happening without a hitch and on a timely basis, while also identifying any action items that may not have been noted previously.

Train Staff

New product training is another key aspect to include in the conversion plan prior to the go-live date. This should be one of the key selling points to look at when reviewing vendors. You can have the greatest program in the world, but if nobody knows how to utilize it, N E W J E R S E Y C P A • may • june 2 0 1 4

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it is all for naught. Training personnel should be linked to beta testing the product, especially for those on a tight timeline and budget or for anyone looking to gain process efficiencies.

Secure PostImplementation Support

Troubleshooting support is a prime feature after the go-live date, which is another important aspect in the vendor selection process. Look for the vendor who is going to go handin-hand during the conversion and not jump ship after the conversion date. Support should consist of on-site vendor personnel, especially shortly after the conversion date and before going to traditional hotlines. More often than not, a hitch or two is sure to occur after the go-live date, so having onsite support will help minimize any downtime once the new product takes hold.

Software conversions have a high potential of items that could fail.

But with ample vendor research and planning you, too, can have a successful tax prep conversion.

Vincent Passarella, CPA, M.B.A., is a sole practitioner. He is a member of the New Jersey Society of CPAs. Contact him at 609-707-7844.

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Fu l l S e r v i c e

Payroll From the maker of

TAX

talk

Managing NJ Sales Tax Audits B y Rochelle Kimmins , C PA, The M ironov Gro u p, L L C

S

o, your client is being audited by the state of New Jersey. Let’s examine the essential details concerning the NJ audit process, including tips for handling common problem areas.

What to Expect

As the tax controversy professional, you need to be prepared for any auditor questions. Even though auditors are principally looking for underreported sales and use taxes, they will also conduct a review of income tax returns, payroll taxes and other miscellaneous taxes and fees. Typically, the auditor will compare revenue per books and income tax returns to sales reported on sales tax returns for the same time period. You may be asked to reconcile bank statements to sales reported on sales tax returns. The auditor may also wish to verify that sales tax payable per the books equals sales tax paid.

Auditors will select a sample of transactions during the audit period and extrapolate the results across the period under audit. For sales transactions selected in the sample, you may be asked about properly charging tax on taxable sales and posting sales and sales tax collected

to appropriate accounts. For exempt sales, you may be asked to provide documentation to the auditor, such as exemption certificates. The auditor will also examine a sample of purchase transactions to identify purchases on which use tax should have been paid.

You may be asked to show that when vendors failed to properly charge sales tax, your client accrued and paid use tax. One area in which the auditor examines 100 percent of purchases for the audit period is fixed assets. Be prepared to show the auditor invoices with the proper sales tax paid for every fixed asset purchase.

The auditor will also ask you to provide sales tax returns, income tax returns, payroll tax returns, general ledger reports, sales journals, exemption certificates, purchase and cash disbursement journals, bank statements and fixed asset schedules.

Always be forthright in answering all (and only) the questions posed by the auditor.

Tax Assessments

If the auditor determines that additional tax is due, he or she will conduct a post-audit conference with you to communicate audit findings, provide a notice of additional taxes due, and indicate any late payment penalties and interest. If you and your client agree with the findings, your client will be asked to sign the post-audit conference report.

If you disagree with the audit findings, you can show cause. If you are still unable to satisfactorily resolve the disagreement, you may file an appeal within 90 days.

Self-Audits

The best way to prepare for a possible audit is for you or the client to periodically conduct self-audits of sales and use tax compliance.

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This will identify areas where compliance is lacking so that your client can implement procedures to reduce or eliminate the possibility of assessments should it be audited by the state.

A self-audit program should address both sales and use tax compliance. If the business collects sales tax, select a random sample of different types of sales (e.g., over-the-counter sales and Internet sales, taxable sales and exempt sales). For each sale included in the sample, verify that the correct amount of sales tax was collected from the customer and properly posted to the sales tax liability account. For sales exempt from sales tax, confirm the client has obtained appropriate documentation, such as a resale or other exemption certificate, from the customer.

To test use tax compliance, select a sample of different types of vendor invoices, including purchases of machinery and equipment, office supplies and service providers. For each vendor invoice included in the sample, verify that sales tax was charged for taxable purchases. If a vendor did not charge sales tax, confirm that your client accrued and paid use tax.

The self-audit should also include a review of sales tax return preparation.

Verify that sales and use tax is recorded properly on the returns and the client filed returns timely. The tax liability on the returns should agree to the general ledger balances of sales and use tax accounts. If you discover compliance problems via the self-audit, advise your client to implement procedures to address each area of concern.

Rochelle Kimmins, CPA, M.B.A., CFP, is a tax manager at The Mironov Group, LLC. She is a member of the New Jersey Society of CPAs. Contact her at rkimmins@mironovgroup.com.

TECH

center

Is a Tablet All You Need?

B y A nthony Mongel uzo, PC S

A

common technology question facing accountants these days is whether they should use a tablet as their main computing tool or stick with the traditional laptop.

The Pros

Let’s start with the positives: The portability, weight and sleekness of a tablet are appealing. It’s perfect for what many people consider light computing, such as taking notes, performing minor bookkeeping tasks, checking email and even taking photos.

There are also several nonaccounting advantages to tablets. They virtually turn on immediately – without a long boot time – and if you have to give a presentation, the tablet has a sleeker look than most laptops. By using a tablet, you’ll portray yourself as someone who’s tech savvy and “with it.” This may or may not matter to your clients, but it still might convey a message that you’re an accountant who is current on everything from tech devices to Internal Revenue Service regulations.

The Cons

If you’re a power accountant, however, you’ll find the tablet wanting. There’s usually no mouse, and if you need the full tax form it’s not always available on the tablet. In short, it’s not fully functional.

Netbook, the Best of Both Worlds?

A CPA recently asked me about a tablet’s lack of functionally. I said, “Bob, you’re ready to spend $400 or $500 on a tablet that won’t do everything you want. Why don’t you spend the same amount for a lowend laptop that will give you all the juice you need, has a lot of battery life, and is light and smaller?” I saw the I-guess-you’re-right look cross his face, and then I confused him even more. “There’s also the netbook option. It’s really a fully functional computer, barely weighing more than a few pounds and has a full keyboard and a mouse. What else do you need?”

A Dual Approach

Global Tablet Sales (in units)

2010

17,576,000

2011 59,954,000 2012 131,388,000 2013 193,450,000

I reached out to Calvin Harris Jr., CPA, head of change management for Harvin Consulting, a firm that provides on-call CFO and project management services, because he has a somewhat different approach: “I have both an iPad tablet and a Dell laptop, and I can’t imagine doing business without both. Each device has very strong benefits, along with some weaknesses. Fortunately, where one device is weak, the other is quite strong. When I need power, my laptop is the device of choice, such as for spreadsheets or data analysis. While I’m comfortable typing on my iPad, I grab my laptop when it’s time for report or blog writing. However, when N E W J E R S E Y C P A • may • june 2 0 1 4

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I am meeting a prospective client, my iPad is always nearby. I can quickly take a client to our website or show him or her media that would be too cumbersome to view with my laptop.

I have tried foregoing each one at various points, but I keep coming back. I simply love the flexibility that carrying both allows.”

Your Approach

Harris’ approach actually echoes what I often preach: Follow a system that works for you. Many accountants might find the two-device approach unappealing. But, in the end, you have to weigh the pros and cons for your business needs. And your approach has to be measured according to not only today’s needs, but against the changing world around you.

My advice is to stick with a netbook for your accounting activities.

However, things change rapidly in the IT world, and this advice could be dated by the end of the year. Personal computers are about 30 years old, and we’re just on the cusp of mobile.

There’s no doubt that we’re shifting to mobile devices. But, in the near term, a small laptop or netbook should handle all of the accounting chores you might have. Or, if you’re like Calvin Harris, you can always choose to have the best of both worlds.

Anthony Mongeluzo is CEO and president of PCS. Contact him at 856596-4446 or anthony@helpmepcs.com.

SOCIETY

pages

2014/15 Executive Committee Brad E. Muniz, CPA

Sobel & Company LLC, CPAs President Brad E. Muniz, CPA, Partner in Charge of Accounting and Auditing at Sobel & Company LLC, CPAs, Livingston, joined the New Jersey Society of CPAs in 1991. He has served on the NJSCPA Board of Trustees as president-elect, secretary, treasurer and trustee. He is on the Finance, Strategic Planning and Retirement Savings Plan committees; Scholars Institute Advisory Board; Accounting & Auditing Standards Interest Group; Education Foundation Board of Trustees; and NJ-CPA-PAC. He has served as a member of the Investment and Volunteer Relations committees. In the Morris/Sussex Chapter, he has served as president, vice president, treasurer and director.

Muniz is a member of the American Institute of CPAs. He is a member of the PKF North America Network and has served on its CPE Committee and as vice chair of the Accounting & Auditing Committee.

In his community, Muniz is a board member of the Milton School and treasurer for Family Intervention Services.

Muniz earned his B.A. in accounting from William Paterson University. He and his wife, Diane, reside in Parsippany and have two daughters and a son.

Frank R. Boutillette, CPA WithumSmith+Brown President-Elect

Frank R. Boutillette, CPA, Partner at WithumSmith+ Brown, New York, joined the New Jersey Society of CPAs in 1986. He has served on the NJSCPA Board of Trustees as treasurer and trustee. He is a member of the NJSCPA Finance and Peer Review Executive committees; an Education Foundation trustee; and on the Accounting & Auditing Standards, Governmental Accounting & Auditing, Health Care and Nonprofit interest groups. In the Middlesex/ Somerset Chapter, he has served as director, secretary and treasurer.

Boutillette has served as member of the American Institute of CPAs Peer Review Board and is currently a member of its Quality Control Materials Task Force. He is a frequent lecturer on accounting and auditing topics for the NJSCPA and other organizations.

Boutillette earned his B.A. in accounting from Rutgers University-Newark. He is a resident of Toms River.

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Edward I. Guttenplan, CPA

Wilkin & Guttenplan, P.C. Secretary Edward I. Guttenplan, CPA, CGMA, Managing Shareholder at Wilkin & Guttenplan, P.C., East Brunswick, joined the New Jersey Society of CPAs in 1981. He has served on the NJSCPA Board of Trustees as a trustee and is a member of the NJSCPA Student Programs & Scholarships Committee. He has served as a member of the Accounting & Auditing Standards and E-File interest groups and the Human Resources and Special Awards committees.

He is a recipient of the NJSCPA Medallion Leadership Award. In the Middlesex/ Somerset Chapter, he has served as treasurer, secretary, vice president and president.

Guttenplan is a member of the American Institute of CPAs and is active with many community organizations and boards.

Guttenplan earned his B.S.A. and M.B.A. in accounting from Boston University. He and his wife, Bonnie, reside in Highland Park and have two sons and a daughter.

John M. Szczomak, CPA

Smolin, Lupin & Co., P.A. Treasurer John M. Szczomak, CPA, Member at Smolin, Lupin & Co., P.A., Fairfield, joined the New Jersey Society of CPAs in 1990. He has served on the NJSCPA Board of Trustees as a trustee, vice president and treasurer. He is a member of the NJSCPA Finance, Investment and Professional Conduct committees; Cooperation with Bankers and Health Care interest groups; and is NJ-CPA-PAC vice chair. This is Szczomak’s second term as treasurer.

Szczomak is a member of the American Institute of CPAs. In his community, Szczomak is treasurer of the Passaic Valley Elks and the New Jersey State Elks Association, on the board of the Fighting Children’s Cancer Foundation and chair of St. Bonaventure Roman Catholic Church’s Finance Committee.

Szczomak earned his B.A. in accounting from William Paterson University. He and his wife, Jodi, reside in Paterson.

Gerard Abbattista, CPA

EisnerAmper LLP Immediate Past President Gerard Abbattista, CPA, Partner at EisnerAmper LLP, Iselin, joined the New Jersey Society of CPAs in 1985.

He has served on the NJSCPA Board of Trustees as president, treasurer and trustee.

He is on the Finance and Retirement Savings Plan committees; a trustee of the Education Foundation and NJSCPA Scholarship Fund; and a member of the Scholars Institute Advisory Board. He has served as chair of the Scholarship Awards and Committee Operations committees and a member of the Strategic Planning, Professional Conduct and Investment committees. In the Middlesex/Somerset Chapter, he has served as president and director.

He is a member of the American Institute of CPAs where he serves on its Governing Council.

In his community, Abbattista has served on the board of several business and charitable organizations and currently serves as treasurer and member of the board for Gilda’s Club of Northern New Jersey.

Abbattista earned his B.S. in accounting from Seton Hall University. He and his wife, Debra, reside in Westfield and have a son and two daughters.

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Ralph Albert Thomas, CGMA New Jersey Society of CPAs CEO & Executive Director Ralph Albert Thomas, CGMA, began his service as CEO and Executive Director of the New Jersey Society of CPAs in 1999. He is a member of the American Institute of CPAs and serves or has served on numerous AICPA committees and the AICPA Council. He was appointed to the inaugural AICPA National Commission on Diversity and Inclusion.

Thomas also serves or has served on the Accounting Advisory Boards of Rutgers University, Seton Hall University, Montclair State University and Thomas Edison State College. He is a member of the Lehigh University Board of Trustees and Chair of Lehigh’s Diversity and Inclusion Subcommittee.

Thomas has been actively involved since 1977 as a member of the National Association of Black Accountants (NABA) and was elected National President of NABA for fiscal years 1990-92.

Thomas is a member of the New Jersey Chamber of Commerce Cornerstone Initiative, the National Association of State Boards of Accountancy State Society Relations Committee and the CPA/SEA Board’s State Society Network.

Thomas was selected by Accounting Today as one of the “Top 100 Most Influential People in Accounting” for the past four years.

Thomas earned a B.S. in business and economics and an M.B.A. from Lehigh University. He and his wife, Valerie, reside in South Brunswick and have a daughter.

SOCIETY

pages

Board of Trustees Trustees serving a three-year term expiring May 31, 2015

William A. Cadmus, CPA Michael W. Gutwetter, CPA Robert P. Herman, CPA WithumSmith+Brown Michael W. Gutwetter, CPA Net@work

Joseph A. Zielinski, CPA Money Management Financial Services

Trustees serving a three-year term expiring May 31, 2016

Sharon J. Bishop, CPA Bishop & Bishop, P.C.

Leonard N. Brooks, CPA Regeneron Pharmaceuticals, Inc.

Joseph C. DiFalco, CPA EisnerAmper LLP

Edward G. O’Connell, CPA WithumSmith+Brown

Audrey J. Sherrick, CPA Friedman LLP

Lorenzo T. Vanore, CPA ASDS Consulting Services

Trustees serving a three-year term expiring May 31, 2017

Sarah Krom, CPA

Sharpe, Kawam, Carmosino & Company, LLC

William J. Ryan III, CPA Smolin, Lupin & Co., P.A.

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NJ State Board of Accountancy Report Peer Review Noncompliance Drops Dramatically Newark (February 20) Miscellaneous

Arlene Ferris-Waks from the New Jersey Bureau of Securities gave a presentation to the board indicating if it becomes privy to issues such as exotic investments or hand-written tax returns and has concerns or questions, it can contact the NJ Bureau of Securities. The bureau is also available for presentations on investment fraud. The board suggested mutual website links.

NASBA

One of the issues discussed at a recent meeting of the board of the National Association of State Boards of Accountancy (NASBA) was the possibility of a national database of CPE certificates.

Committees

Peer Review Oversight – The list of noncompliant firms is down to 172 from 700, and there’s only one instance of a possible accelerated review. If practitioners had a peer review or filed an exemption and have any questions, they can contact the NJ State Board at 973-504-6380. The Society is also available to answer peer review questions at 973-226-4494.

Nominating – The committee put forth the following officer candidates for 2014/15: John F. Dailey, CPA, President; Daniel J. Geltrude, CPA, Vice President; Jorge A. Caballero, CPA, Secretary; and Sara DeSmith, CPA, Treasurer. The vote will be held during the next meeting.

Public

New Jersey Society of CPAs CEO and Executive Director Ralph Albert Thomas, CGMA, mentioned that the Mobile Workforce Act (S1645) has been posted in the Senate.

Senator Robert Menendez is a co-sponsor of the legislation. S1645 would limit the authority of states to tax certain income of employees for duties performed in other states.

A1245 has gone to committee in NJ. This bill seeks to lessen the amount of time someone can initiate a civil action against a professional from six to two years.

The NJSCPA task force on audit firm rotation is meeting and will present suggestions to Assemblywoman Muniz who had withdrawn a bill on mandatory audit firm rotation. Daily suggested including mandatory audit committees and mandatory documentation of controls.

Newark (March 20) Miscellaneous

There is pending legislation (S681) which indicates that if certain offenders with a prior substance abuse problem can prove rehabilitation and become certified as such by the court, then that prior behavior will not be used against them regarding licensure.

The board opted not to comment on this.

Committees

Ethics – The committee will be meeting with NJ Law and Ethics providers in June. Also, the committee reviewed and approved proposed changes to the Society’s program with a pair of suggestions regarding notations. New Jersey Society of CPAs CEO & Executive Director Ralph Albert Thomas, CGMA, inquired

Magazine of the

if all providers were required to resubmit their programs if they had changes. He was told that all sponsors are, in fact, required to provide proposed program changes.

Nominating – The officer candidates put forth during the February 20 meeting were all elected.

Public

Thomas discussed his recent attendance at the American Institute of CPAs Regional Council meeting. The meeting highlighted two significant areas (1) the future of peer review. There was discussion that the current system is perhaps antiquated given today’s complexities. A future peer review program may consist of a process with a heavier reliance on technology and is more continuous, rather than once every three years; (2) the future of professional learning.

New CPA platforms may stress competency over compliance, more flexibility and “micro options.” Thomas mentioned that the AICPA, NJSCPA and NASBA each have task forces examining CPE delivery.

Board President John F. Dailey, CPA, said that the board should look at the CPE regulations and work toward consistency with other jurisdictions where possible.

Daily encouraged board members to attend the NJSCPA Scholarship ceremony in April.

New Jersey Society of Certified Public Accountants

July • August 2014

July/August – Coming Attractions

Obamacare l l l l

ACA Update Medical Sector Consolidation and CPA Opportunities Managing Costs in an Era of Reform Obamacare and Small Businesses

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SOCIETY

pages

CPE Offerings and Events Upcoming Education Foundation Events Date

Event/Code

Location

CPE Credit

5/14-15

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

Secaucus

12/MC

5/20

Small Business Conference (E1405290)

Roseland

8/MC

5/21

New Jersey Law and Ethics Webinar (E1405254)

N/A

4/PE

5/21

Tax Debriefing: What Worked, What Didn’t, Software Issues, Tax Issues and Forms (E1405207)

Roseland

2/TX

5/22

Cooperation with Bankers Breakfast: Important Changes in NJ’s LLC Law (E1405310)

Iselin

1/TX

5/22

Facebook for Business Webinar (E1405264)

N/A

1.5/CS

6/4-6

2014 NJSCPA Convention & Expo (E1406020)

Atlantic City

Varies

6/9

Advanced Estate Planning Strategies (E1406321)

Roseland

8/TX

6/9

Annual Update for Accountants and Auditors (E1406371)

Iselin

8/AA

6/10

Financial Statement Analysis: Basis for Management Advice (E1406283)

Iselin

8/MT

6/10

Group Audits: Clarifying the Complexities (E1406331)

Roseland

8/AA

6/11

AICPA Peer Review Program Advanced Course (E1406251)

Iselin

8/AA

6/11

Toolkit of Best Practices for Today’s Controller and Financial Manager (E1406343)

Jamesburg

8/MT

6/12

FASB Review for Business and Industry (E1406243)

Jamesburg

8/AA

6/12

Loscalzo’s 2014 FASB and AICPA Update (E1406071)

Roseland

8/AA

6/12

Issues Watch with Ralph Thomas (E1406394)

N/A

1/SK

6/16

Auditing Employee Benefit Plans (E1406351)

Iselin

8/AA

6/16

Loscalzo’s Disclosure – The Key to Financial Statements (E1406081)

Roseland

8/AA

6/17

Accounting and Auditing Update for Small Businesses (E1406361)

Iselin

8/AA

6/17

Loscalzo’s Lease Accounting in Transition (E1406093)

Roseland

8/AA

6/17

Twitter for Business Webinar (E1406114)

N/A

1.5/CS

6/18

Loscalzo’s GAAP Refresher (E1406191)

Roseland

8/AA

6/18

New Jersey Law and Ethics Webinar (E1406034)

N/A

4/PE

6/19

Loscalzo’s Compilation and Review Practice Guide (E1406201)

Roseland

8/AA

6/23

Auditing Defined Contribution Plans (E1406313)

Iselin

8/AA

6/23

Loscalzo’s Governmental Update and Major Accounting and Disclosure Issues (E1406181)

Voorhees

8/AA

6/23

The Best Income Tax, Estate Tax and Financial Planning Ideas of 2014 (E1406101)

Roseland

8/TX

6/24

Audits of 401(k) Plans (E1406271)

Roseland

8/AA

6/24

Loscalzo’s Guide to Compliance Auditing – Step by Step (E1406171)

Voorhees

8/AA

6/24

The Best Income Tax, Estate Tax and Financial Planning Ideas of 2014 (E1406121)

Jamesburg

8/TX

6/25

Loscalzo’s Audits of Defined Contribution Pension Plans (Emphasizing 401(k) Plans) (E1406163)

Roseland

8/AA

6/25

Navigating Divorce: Tax and Litigation Issues (E1406213)

Iselin

8/TX

6/25

Young Professionals Golf Clinic and Happy Hour (E1406410)

Clark

N/A

6/26

Forensic Accounting: Fraudulent Reporting and Concealed Assets (E1406293)

Roseland

8/AA

6/26

Loscalzo’s FAQ – Employee Benefit Plan Accounting and Auditing (E1406151)

Roseland

8/AA

6/26

Financial, Estate and Tax Planning for Individuals Over Age 55 (E1406221)

Iselin

8/TX

6/27

Annual Update for Compilation and Review Engagements (E1406261)

Iselin

8/AA

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Upcoming Chapter Events Date

Chapter

Event/Code

Location

CPE Credit

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

5/16

Southwest Jersey

Accounting and Auditing Update (E1405089)

Berlin

4/AA

5/16

Mercer

Accounting and Auditing Update (E1405139)

West Windsor

4/AA

5/16

Passaic County

New Jersey Law and Ethics (E1405389)

Paterson

4/PE

5/16

Essex

Pension Update (E1405059)

East Hanover

4/AA

5/17

Hudson

Semiannual Tax and Accounting Seminar (E1405149)

Secaucus

4/TX, 4/AA

5/20

Atlantic/Cape May

Finance (E1405079)

Northfield

2/CS

5/20

Monmouth/Ocean

Accounting and Auditing Seminar (E1405189)

Neptune

4/AA

5/20

Union County

Awards Night/Internal Control – COSO Framework (E1405159)

Garwood

2.5/AA

5/22

Monmouth/Ocean

Real Estate Updates (E1405199)

Neptune

2/AA

5/22

Mercer

Trenton Thunder Baseball Game (E1405279)

Trenton

N/A

6/2

Bergen

Golf Outing (E1406429)

Franklin Lakes

N/A

6/11

Southwest Jersey

New Jersey Law and Ethics (E1406069)

Voorhees

4/PE

6/11

Monmouth/Ocean

Lakewood Blueclaws Baseball Game (E1406059)

Lakewood

N/A

6/17

Morris/Sussex

New Jersey Law and Ethics (E1406459)

Mount Olive

4/PE

6/20

Essex

Federal Tax Update (E1406019)

East Hanover

4/TX

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

Your NJSCPA Membership Means…

Access to timely, quality CPE that matches your specialization – Easily register for a local CPE course or webinar at njscpa.org/ catalog.

Advocacy on your behalf on important issues – Find out up-to-the-minute details about the Society’s advocacy efforts through New Jersey CPA, NJCPA Pulse or other Society communications.

Answers to technical questions – Quickly get a comprehensive answer on the Connect Open Forum at njscpa.org/connect.

Assistance with complicated licensing issues – Call the New Jersey Society of CPAs to receive guidance about New Jersey State Board of Accountancy rules and regulations.

CPA Exam preparation coaching – Attend the Society-sponsored exam review course, or meet other young professionals who are planning on taking the CPA Exam.

Job Search Tools – Post your résumé and review job postings on the NJSCPA Job Bank at njscpa.org/jobs.

Leadership and communication skills training – Volunteer for an NJSCPA committee, chapter position or short-term opportunity at njscpa.org/getinvolved.

Organization of all of your CPE credits – Access the NJSCPA CPE Tracker to download certificates and record credits from courses taken elsewhere at njscpa.org/cpetracker.

Savings on business products and services – Find discounts through the NJSCPA Member Benefit Marketplace at njscpa.org/marketplace.

Your Society membership means being part of an organization that supports its more than 15,000 members in fulfilling their professional responsibilities and achieving success through leadership, education, networking and community involvement initiatives. Renew your NJSCPA membership online today at njscpa.org/renew. Not a member? Learn more about the NJSCPA and join online at njscpa.org/join.

N E W J E R S E Y C P A • M ay • june 2 0 1 4

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SOCIETY

pages

Get Involved Get Involved with Volunteer Groups and Communities Did you know one in nine members has joined a New Jersey Society of CPAs interest group or committee, with 95 percent of participants indicating they will continue their annual participation? Why? Because members want to help others, give back to the NJSCPA and the profession, increase their visibility for professional or social advancement, obtain satisfaction they might not get at work, explore strengths, and share knowledge and skills. Interest groups and committees typically hold six to eight in-person meetings per year.

Interest groups provide attendees with one or more CPE credits at each meeting. You can also network with group and committee members through Connect, the NJSCPA’s online community for members.

Each interest group and committee is helmed by leaders and vice leaders who are excited about connecting with members in their technical areas. Here is the 2014/15 slate of leaders for NJSCPA volunteer interest groups and committees: Volunteer Interest Groups & Committees

2014/15 Leader and Vice Leader

Community Members

Accounting & Auditing Standards

Peggy F. Gallagher, CPA

256

Business Valuation Forensic June M. Toth, CPA Litigation Services Megan A. Cicchetti, CPA

215

Cooperation with Bankers

JoAnne Geylin, CPA

123

Federal Taxation

James A. Lawrence, CPA Shaune Scutellaro, CPA

590

Governmental Accounting & David J. Gannon, CPA Auditing

109

Health Care

Steven N. Dioguardi, CPA

95

Nonprofit

Amy Y. Both, CPA

153

State Taxation

Mark J. Philips, CPA

483

Student Programs & Scholarships

Christopher M. Lovasz, CPA Henrietta G. Fuchs, CPA

76

Technology

Victoria Kosuda, CPA

171

NJSCPA Connect – Open Communities

Community Composition

Community Members

Accounting Educators

Accounting educators (high school or college)

64

Bergen Practitioners

Public practice CPAs in Bergen County

78

Financial Literacy

Members interested in educating the public about their finances

67

Firm Administrators

Members and nonmembers involved with firm administration

34

Members in Transition

Members in career transition, including unemployed or underemployed members who are actively looking for work

64

Monmouth/Ocean CPAs

Members in Monmouth and Ocean counties

141

Social Media for CPAs

Members and firm representatives interested in social media best practices

83

Access or join interest groups, committees and open communities through Connect at njscpa.org/connect.

Federal Taxation Interest Group Hangs Out

The NJSCPA Federal Taxation Interest Group is providing content in new ways in order to reach more members who need to know what’s happening in the world of federal taxation. Using Google Hangout On Air, they are streaming their meetings live to members who can’t attend in person. The recording is then archived on the NJSCPA YouTube channel. “We looked at the mission of the Fed Tax Interest Group and realized our primary goal is to educate more CPAs – to

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

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individual, group or firm. Commit to a whole day of volunteering or just a few hours – it’s up to you. Visit njscpa.org/volunteer-contribute/ cpa-month-of-service for more information.

Junior Achievement Accountant Bowl-A-Thon – The 10th annual bowl-a-thon will be held on Wednesday, May 21, 5:30-7:30pm at Playdrome in Cherry Hill, Woodbridge Lanes in Woodbridge, Hanover Lanes in East Hanover and other locations throughout New Jersey.

It’s an event full of networking, team building and fun. Money raised will support Junior Achievement’s mission of financial literacy education. Contact Nora Jones at njones@paoliniandscout.com for more information.

NJSCPA Leadership Positions – Here is your chance to help lead the NJSCPA in furthering the profession. Leaders have generally been actively involved with the Society and are expected to participate through in-person meetings, conference calls and email to achieve objectives that support the NJSCPA strategic plan. Members interested in serving in leadership positions for 2015/16 and beyond – including board of trustees, chapter boards, group leader or committee chair, and standing committees – must complete a Volunteer Interest Profile at njscpa.org/getinvolved to be considered. Contact Carolyn Hook at chook@njscpa.org or 973-226-4494 x221 for more information.

deliver content to them whether or not they can come to meetings, and whether or not a CPE credit is earned,” says interest group leader James A. Lawrence, CPA. CPE is not awarded to participants who are not on site. “Of course, we want members to come to meetings,” adds vice leader Shaune Scutellaro, CPA. “There’s no better way to make contacts than by coming in person. But we realize members are busy and are looking for alternative ways to catch up and stay connected.” Visit youtube. com/njscpa and click the Federal Taxation Playlist to see videos of the group’s most recent meetings.

Get Involved Now

Volunteer opportunities are available throughout the year. Let us know how you’d like to be involved at njscpa.org/getinvolved. Here are a few of activities that need your support now: NJ CPA Month of Service – Organized by the New Jersey Society of CPAs, this month of volunteer service will take place May 2014. CPAs across the state will work at volunteer locations encompassing a variety of organizations, demonstrating the CPA profession’s ongoing commitment to serving the communities where its professionals live and work. The Society encourages you to volunteer for a community organization of your choice. You can choose to participate as an

Building and growing relationships for 175 years.

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N E W J E R S E Y C P A • may • june 2 0 1 4

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CLASSIFIEDS Marketing Support Save 20 percent on PR, marketing, branding and coaching services with PRCounts, an NJSCPA Member Benefit Provider. Contact Eileen Monesson at 609-570-2150 or emonesson@prcounts.com; prcounts.com.

Classified Advertising

Morris County CPA firm with retirement-minded partner seeks CPA to acquire practice. Remaining partner and key employee will stay on during transition. Practice is 95-percent tax prep, grosses $450K and is peer reviewed. Call 973-971-9966 or email pgmcpa@aol.com.

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

Mergers/Acquisitions 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.

Parsippany, NJ. Three-partner CPA firm seeks retirement-minded practitioner to merge/ acquire practice ranging from $100K and up.

Please contact Carl Gutt 973-451-0800 x22 or cgutt@dglcpa.com.

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.

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.

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

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.

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.

Professional Services Add a wealth management division to your accounting practice. Successful Bergen County high net worth financial planning and money management firm wants to work with your firm to create a financial services division.

For 30-plus years we have been successfully implementing professional partnerships with CPA firms to increase their revenues by offering financial products to their clients.

Contact Steven Kolinsky at 201-474-4012 or skolinsky@kolinskywealth.com.

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.

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

ADVERTISERS INDEX 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

NJ Accounting, Business & Technology Show Advertisers

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Accounting Practice Sales accountingpracticesales.com

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ADP accountant.adp.com

16 210

Camico camico.com

C4 415

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222

501

Kolinsky Wealth Management, LLC 23 115 kolinskywealth.com

Additional Advertisers Next Generation Trust Services nextgenerationtrust.com

C2

Plymouth Rock Assurance njscpaquote.com

7

PNC Bank pnc.com

3

Provident Bank providentnj.com

37

Residential Home Funding rhfunding.com

25

Rutgers C3 pmac.rutgers.edu Xcel Federal Credit Union xcelfcu.org

21

LEGISLATIVE

views

Society Provides Lt. Governor with Tax Concept Paper B y Jeffrey T. Kaszerman , NJ SC PA Government R elations D irector

I

n December, the NJ State Chamber of Commerce (NJCOC) contacted the New Jersey Society of CPAs with a request to assist it with preparing recommendations for Lt. Governor Kim Guadagno on increasing economic activity in NJ by providing preferential tax treatment on capital gains for businesses. The NJCOC, a longtime alliance partner with the NJSCPA, is working with the Lt. Governor’s office on proposals to stimulate the economy in NJ, as well as keep and attract businesses to the state.

Unlike the federal government and many states, New Jersey does not offer a preferential tax rate for business owners who generate income from capital gains. According to a February 2013 Tax Foundation study, NJ has the fourth highest capital gains tax rate in the U.S. Many economists believe that reducing the tax rate on capital gains for business owners would help to generate economic growth.

The federal government and many states offer a preferential tax treatment on income derived from long-term capital gains because it spurs investment and savings. As the Tax Foundation study noted, high capital gains tax rates create a bias against savings – resulting in less available capital for investment opportunities – and raise the cost of capital. High rates also create a lock-in effect that hinders the movement of funds to better investments.

Two primary ways the federal government reduces the tax on capital gains for businesses and business owners is by excluding a portion of certain types of long-term, economically stimulating capital gains from taxation, or by offering a future tax benefit allowing capital losses in one year to be applied against capital

gains in a future year.

A task force organized by the NJSCPA State Taxation Interest Group to review this issue met several times in December and created a concept paper offering several recommendations for the Lt. Governor to consider. While the task force felt that providing capital gains tax relief to all individuals owning stocks and bonds would also be beneficial, it recognized that NJ’s short-term fiscal situation and political realities would probably not allow for the loss of revenues this would cause.

Concept Paper Recommendations

Provide a modified version of the federal capital gains tax relief offered in Internal Revenue Code (IRC) Section 1202 – Section 1202 of the IRC allows a taxpayer to exclude from taxation a portion of capital gain income from certain long-term investments in qualified businesses.

While Section 1202 relief is limited to capital gain on sales of certain corporate stock, the task force recommended extending it to other types of investment securities, such as interests in partnerships, limited liability companies and S corporations.

Allow offsetting of future capital gains with current capital losses – The task force recommended providing a capital loss carry-forward provision that allows gross income taxpayers the ability to offset future capital gains with current-year capital losses.

This would provide a benefit to all resident and nonresident gross income N E W J E R S E Y C P A • may • june 2 0 1 4

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taxpayers, making New Jersey a more tax friendly state. This also brings the New Jersey gross income tax system closer to the federal tax system and the many other states using federal adjusted gross income as their state’s personal income tax base.

Expanding the Angel Investor Tax Credit – The task force recommended the state consider expanding the refundable Angel Investor Tax Credit to include nontechnology businesses attracted to the state of New Jersey (e.g., manufacturing, distribution, printing, data warehouses); increasing the qualified investment limit from $5 million; and/or increasing the dollar limit from $25 million to a higher, but still manageable, number.

Targeted estate tax relief – While the task force felt that wholesale death tax reform is needed in New Jersey, it recognized that political and fiscal constraints may allow only for limited relief targeted to encourage investment and job growth. The task force recommended a new deduction from the New Jersey adjusted taxable estate for decedents who owned qualified New Jersey small business or farm property.

As of this writing, the concept paper is in the hands of the Lt. Governor and we are awaiting a response.

STUDENT

outlook

NJSCPA Celebrates Its 54th Scholarship Awards Ceremony T

he New Jersey Society of CPAs Scholarship Fund awarded more than $520,000 to 85-plus New Jersey high school and college students at the 54th annual NJSCPA Scholarship Awards Ceremony in April. We applaud our members, chapters and firms for supporting the Society’s efforts in helping secure the future of the CPA profession. Congratulations to these scholarship recipients:

In Name of Awards

Bowman & Company LLP (In Memory of Lisa A. Donahue) (Patron Level) Christina Nitzsche ($5,500) Rowan University CohnReznick LLP (Benefactor Level) Melody Hicks ($5,500) The College of New Jersey Lucille Scharback ($5,500) Rutgers University – New Brunswick EisnerAmper LLP (Partner Level) Alyson Dritschel ($5,500) The College of New Jersey Frazer, Evangelista & Company, LLC (Patron Level) Angelo Gasbarro ($5,500) Seton Hall University Lenore and Frederick Horn (In Memory Of ) Ruth Landau ($5,500) Nicole Salazar ($5,500) Fairleigh Dickinson University John Lee (In Honor Of ) Manuel Vargas ($5,500) Rider University Monmouth/Ocean Chapter Scholarship (In Memory of Joseph D. Leone Jr.) Chanelle Beardsley ($5,500) Monmouth University

NJSCPA Council of Past Presidents Award (Patron Level) Valentina Cruz ($5,500) Kean University O'Connor Davies, LLP (In Memory of Stephen Mannuzza) Jennifer Han ($5,500) Rutgers University – New Brunswick Passaic County Chapter Scholarship (In Memory of Harold Leib) Kayla-Lynn Kasica ($5,500) William Paterson University of New Jersey Rothstein Kass & Company, P.C. (Benefactor Level) Kelly Coyne ($5,500) Rutgers University – New Brunswick Jim Larios ($5,500) Rider University Smolin, Lupin & Co., P.A. (In Memory of Nicholas Harris) (Partner Level) Anthony Darakjy ($5,500) Ramapo College of New Jersey Untracht Early LLC (Patron Level) Dayana Zeballos ($5,500) Caldwell College WeiserMazars LLP (Patron Level) Andrew Farinich ($5,500) Fairleigh Dickinson University

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WithumSmith+Brown (Benefactor Level) Alissa Mustillo ($5,500) Monmouth University Helene Previti ($5,500) The College of New Jersey Z. Thaddeus Zawacki (In Memory Of ) Christopher Phillips ($5,500) Seton Hall University

NJSCPA College Awards Kean University Jian Xie ($5,500)

Monmouth University Nicole Chechko ($5,500) Kevin Gilsenan ($5,500) Alexandra Tuyahov ($5,500) Richard Stockton College of New Jersey Jenna Saccoccio ($5,500) Rider University Karen Canino ($5,500) Kristin Elias ($5,500) Frank Kellogg ($5,500) Timothy Monticchio ($5,500) Kaitlyn Ramsen ($5,500) Joseph Wisniewski ($5,500) Rowan University Francis Mannera ($5,500) Charles O’Brien ($5,500) Joseph Zuchowicz ($5,500) Rutgers University – Camden Cameron Scotese ($5,500) Marcella Singley ($5,500)

Rutgers University – Newark Neil Patel ($5,500) Rutgers University – New Brunswick Evan Froehlich ($5,500) Dean Hoshia ($5,500) Sinkyu Hyun ($5,500) Mita Joshi ($5,500) Bhavini Kunvarjee ($5,500) Elise Liberman ($5,500) Matthew Manigold ($5,500) Trisha Patel ($5,500) Valeria Chavez Rivas ($5,500) Valerie Wollek ($5,500) Seton Hall University Ryan Bruskin ($5,500) Alexa DellCioppia ($5,500)

Scholarships Funded by the Big Four Accounting Firms (Awarded over four years) Deloitte Peter Amerman ($9,000) Manasquan High School

Ernst & Young LLP Jake Howell ($9,000) Somerville High School

KPMG LLP Megan Montero ($9,000) Fair Lawn High School

PricewaterhouseCoopers LLP Cindy Wei ($9,000) Montville Township High School

William Paterson University of New Jersey Renzo Diaz ($5,500) Craig Weintraub ($5,500)

NJSCPA High School Awards

Minority Scholarships

Sarah Anthony ($8,000) Lenape Valley Regional High School

AICPA/NJSCPA Chakele Chavies ($5,000) New Jersey City University Anna Li ($5,000) Rutgers University – New Brunswick NJSCPA/Northern New JerseyNational Association of Black Accountants Curyn Bellfield, ($5,500) The College of New Jersey Jenae Keith ($5,500) Rutgers University – New Brunswick

Chapter College Awards Atlantic/Cape May Chapter Marc Gennello ($4,000) Meshwa Patel ($4,000) Richard Stockton College of New Jersey

(Awarded over four years) Joelle Abi-Nader ($8,000) Bridgewater-Raritan High School

Jennifer Baron ($8,000) Livingston High School Julia Castronovo ($7,000) Paramus High School Matthew Deitz ($7,000) Watchung Hills Regional High School Laura Dewey ($8,000) Pinelands Regional High School Lucille Finnegan ($8,000) Warren Hills Regional High School Renee Gioe ($7,000) Westwood Regional Jr./Sr. High School

Mercer Chapter Marta Illes ($1,500) Mirika Martin ($2,500) Steven Rivera ($1,500) Aaron Truppo ($1,500) Ka Wong ($2,500) Mercer County Community College

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Austin Jenkins ($7,000) Hamilton High School West Thomas Kleinhans ($7,000) Gloucester County Institute of Technology Brittany Kokoszka ($8,000) Sayerville War Memorial High School Rebecca Kreutzer ($7,000) Westfield High School Kyle Mallon ($8,000) Cranford High School Crystal McDonald ($7,000) Livingston High School Lauren Naphtali ($7,000) Livingston High School John Oblachinski ($8,000) Cranford High School Justin Plunkett ($8,000) Wayne Valley High School Danielle Portnoy ($8,000) Wayne Hills High School Carolyn Previti ($8,000) Ocean City High School Shilan Shah ($8,000) Old Bridge High School Anushree Sikchi ($7,000) South Brunswick High School Annie Zheng ($7,000) Cherry Hill High School East To support the NJSCPA Scholarship Fund, visit njscpa.org/ scholarship.

MEMBER

AB S S p h ow T ea ke r

profile

Technically Speaking

By David Plaskow, NJSCPA Communications Manager

A

sk Jaime Campbell, CPA, her passions growing up and she says playing the piano and crunching numbers.

“I played the piano from kindergarten through fifth grade,” says Campbell. “But in fifth grade my mom, Marcy, really changed the trajectory of my life. She noticed that math came easily to me. So, she got me access to a special program and I was soon doing college-level math as an 11-year-old.”

Campbell’s dad, Bob, didn’t do anything to assuage young Jaime's love of math. “For fun, my dad and I did logic puzzles,” recalls Campbell. “He was a controller for a nonprofit and later opened his own tax practice.”

But late in her high school career, Campbell was drawn back to the piano, “partly because my mom said she was going to sell our piano if I wasn’t using it,” she laughs. “I became the accompanist for the school choir and ultimately decided to major in music at college.” She received a bachelor of music education from Florida State University in 1997 and soon thereafter became the music teacher at a Florida elementary school. “That was really my first entrepreneurial endeavor,” notes Campbell. “I revamped the music program and got the kids’ and the administration’s buy-in.”

In 2000, Campbell moved to New Jersey due to her husband David’s job and she took a music teaching job at a school in Highland Park, but something was amiss. “I just didn’t want a career in music anymore,” says Campbell. “Being good at math, I thought the accounting profession would be a nice use of my logical thinking, and my dad told me that I’d never be out of a job.” So, she began an accelerated M.B.A. program at Rutgers for nonbusiness majors.

After graduating in 2003, Campbell began at Bartolomei Pucciarelli as a generalist doing tax and audits. Two years later, she went for her CPA license. “I’m a letter junkie,” exclaims Campbell.

“But it also enhances earning opportunities and helps build client trust. Whatever I focus on, I try to take it to the limit.”

“One way I’ve met such incredible people is by being a member of the New Jersey Society of CPAs,” declares this NJSCPA Woman of Note. “Even though we’ve since moved to South Carolina, I use the Society’s Open Forum for referrals and I’m active with the Technology Interest Group. I’m even speaking at the NJ Accounting, Business & Technology Show. I believe that if you’re a professional, you join professional organizations and good things will happen.”

In her downtime, Campbell still likes to play music. And now she can be a music teacher to her one-year-old daughter, India Dawn.

Campbell’s first exposure to technology was attending a computer programming camp when she was age 12. “I made a rectangle move across the screen and thought I was hot stuff,” she says. She even blended technology with her love of music by using a computer program to compose songs. Later, as a music teacher, she used technology to track attendance and create a class website.

“I really fell in love with Excel in grad school,” reveals Campbell.

“You enter a couple of numbers and, like magic, instantly get an answer without doing manual calculations.”

“When I got to Bartolomei Pucciarelli, I wanted to make a unique contribution,” notes Campbell. “I continued to develop a deep expertise N E W J E R S E Y C P A • may • june 2 0 1 4

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in Excel and QuickBooks. I went from being a tax preparer for clients to their technology advisor. And the firm was able to expand its service offerings.”

Campbell has been a recurring technology speaker for the Society at the Accounting, Business & Technology Show, Annual Convention & Expo and chapter events. She has taught at Kean University and is a Certified Technology Trainer and a Microsoft Certified Trainer. She’s even authored the QuickBooks Cookbook for Experts, which was in the top 0.4 percent in sales on Amazon.com.

The Campbells moved to South Carolina in 2013 to be near David’s parents. The couple formed a consulting firm that uses technology to help make clients’ finances work smarter. “It’s wonderful to be entrepreneurs and parents all from the comfort of our home,” says Campbell.

’

Jaime Campbell s Top Tech Trends

Access – Continue moving accounting into the cloud.

Integration – The use of a single device and single program.

Security – Protecting information and automating info sharing.

The New Normal: Surviving and Thriving

BALLY’S ATLANTIC CITY

JUNE 4–6, 2014

Don’t miss this once-a-year opportunity to discuss new ideas, earn CPE credits and have some fun! Register today at NJSCPA.ORG/CONVENTION.

The American Institute of CPAs Benevolent Fund was established in 1933 by AICPA members to assist other members through temporary periods of financial difficulty.

When our members face difficult circumstances that are beyond their financial means, the Fund is here to help. Financial assistance grants are provided on a case-by-case basis, depending on financial need and circumstances surrounding that need. Some examples of the types of assistance available are temporary living expenses and temporary medical expenses. One-time emergency grants also are available to help with natural disasters and other unexpected events.

If you need assistance, simply visit the Benevolent Fund web page on aicpa.org and follow the instructions to apply. You may also contact the Benevolent Fund administrator via phone at 866.527.2228 or email at Benevolent_Fund@aicpa.org.

The Benevolent Fund is a 501(c)(3) organization.

13952A-805

If you wish to make a charitable gift to the Benevolent Fund, visit the web page on aicpa.org.

Your NJSCPA Preferred Provider of Professional Liability Insurance and Risk Management Services

www.camico.com/momentum

Gordon Gray Professional Liability Specialist 973-921-8384 Gordon_Gray@AJG.com

Momentum.

CAMICO is constantly taking its unparalleled insurance and risk management services further. Enhancing services, products and solutions for CPA firms since 1986, we have been building value and providing even greater benefits and options for policyholders for 28 years.

We specialize in CPA firms. This is all we do, and we do it better than anyone else. With our Accountants Professional Liability program through Liberty International Underwriters, we can provide your firm with even greater capacity, options, flexibility and benefits.

Find out for yourself why more CPA firms are choosing CAMICO.

Accountants Professional Liability coverage is underwritten by CAMICO Mutual Insurance Company and/or Liberty Insurance Underwriters Inc. Liberty Mutual currently carries an A.M. Best rating of “A (Excellent).” Actual coverage may vary and is subject to policy language as issued. ©2014 CAMICO Services, Inc. License #0C09618.