CPA Report - First Edition 2015

First Edition 2015 South Carolina Association of Certified Public Accountants

2015 Tax Issues in South Carolina n Infrastructure, Education Funding Likely to Top Legislative Agenda n Late Partial Dispositions n Sales of Timber for Individual Taxpayers n Tax Treatment of Tangible Property

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CPA Report

South Carolina Association of CPAs

South Carolina Association of Certified Public Accountants Magazine Volume 45, First Edition 2015

OFFICERS John B. Fennell, CPA, Chair Robert M. Tilton, CPA, Chair Elect Penny Lewis, CPA, Secretary – Treasurer

Open House, page 11

Sharon E. Mann, CPA, Immediate Past Chair

BOARD OF DIRECTORS Patrick P. Carey Jr., CPA Zoe M. Davis, CPA Suzanne M. Harnois, CPA Lesley H. Kelly, CPA Cheryl O. Lang, CPA Brad Leford, CPA J. Patrick (Pat) McDermott, CPA James W. McIlrath, CPA Kenneth L. Newhouse Jr., CPA Erin H. Pate, CAE Jason C. Sweatt, CPA

CHIEF EXECUTIVE OFFICER Erin H. Pate, CAE

MANAGING EDITOR Maureen A. Taylor

GRAPHIC DESIGNER Lisa S. McGee

CONTRIBUTING WRITERS Jason L. Ackerman, CPA Chris Barras, CPA Reva Brennan, MPA, CAE, IOM Mark Crocker, CPA George DuRant, CPA/ABV, CFF, ASA John B. Fennell, CPA William T. Freeland, II, CPA Brian L. Johnson, CPA Barry O. Long, CPA R. Michael Munden, CPA, JD Kenneth L. Newhouse Jr., CPA Erin P. Pate, CAE Carey W. Roof, CPA Maureen A. Taylor

2014-15 EDITORIAL COMMITTEE Charles E. Alvis, CPA, MPA, MBA, Chair Tim Baker, CPA Robert C. Charles, CPA Lisa S. Cooke, CPA Erin H. Pate, CAE Frances J. Pearce, CPA Derrick B. Stark, CPA Maureen A. Taylor

2015 Tax Issues in South Carolina 20 Infrastructure, Education Funding Likely to Top Legislative Agenda 21 Late Partial Dispositions 21

A Look Back

22 Sales of Timber for Individual Taxpayers 23 Tax Treatment of Tangible Property

In This Issue 11 13 14 16 25 26 28 30 32 34 36

Open House 100 Most Influential Accountants Nomination Form Professional Issues Update in Review Young CPAs Complete CPA Leadership Institute For CPAs Going Digital Extends to Currency Ethically Speaking: What Should You Do? Focus on the Future : Engaging the Next Generation IRS, DOR Meeting Recap AICPA Offers a Vision of the Future of Peer Review A Look Back at the Summit Four T’s of Managing Local Government Performance

In Every Issue 5 6 8 31 37

From the Chair Association News On Your Behalf BOA Update Member News

38 Welcome New Members 39 CPE 41 Classifieds 42 Advertiser Index

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of SCACPA. Advertising rates will be furnished on request to SCACPA, Brookland Place, 1300 12th Street, Suite D, Cayce, SC 29033, (803) 791-4181. Publication of an advertisement in The CPA Report does not constitute an endorsement of the product or service by The CPA Report or SCACPA.

Editor’s Note The New Year often gives us pause to reflect on the past while looking to the future. As we embark on 2015 we have ample opportunities to do just that.

This year will mark the association’s 100th anniversary.

It will also signify a new beginning of sorts as we launch a new brand under the name South Carolina CPAs. In his column, Board Chair Bratton Fennell, CPA, CGMA, highlights some of the plans for the centennial year, which will culminate with a Nov. 11 Gala. This is a once-in-a-lifetime opportunity to celebrate your profession. I certainly hope you will take advantage of the festivities and commemorative events throughout the year. I also encourage you to share your memories with us in the form of photos and stories by emailing mtaylor@scacpa.org In planning for 2015, our Editorial Committee also wanted to pay homage to our past, present and future in the quarterly magazine. This issue premieres three new features: Ethically Speaking with George DuRant, CPA, ABV, ASA; Focus on the Future, highlighting educators and post-secondary educational institutions that are preparing the next generation of CPAs; and A Look Back.

For many of you the New Year also means the start of tax season. We asked four CPAs to share what they believe are the hot issues this tax season. In A Look Back, Carey Roof, CPA, shares some of the changes he has seen in his 39 years providing tax services.

In the last issue of the CPA Report we offered a sneak peek of the new logo. We plan to launch the new brand in the spring. As part of the launch, the CPA Report will have a new look and even more new features. As always, we welcome your comments and suggestions.

Until next issue,

Maureen A. Taylor Managing Editor

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South Carolina CPA Report

SCACPA MEMBERS

Wed.,May 6

CPA Day

State House - and -

New CPA Oath Ceremony

Thurs.,May 7 South Carolina

CPA

Annual Member Meeting (888) 557-4814 | www.scacpa.org

From the Chair’s Desk Bratton Fennell, CPA SCACPA member since 1989

I

n 1915, a group of South Carolina CPAs formed an association to help promote a new profession; help its members succeed through networking and learning opportunities; and advocate a standard set of rules that would ensure that work would be done to the highest standards. These original members believed that integrity and professional competency were the cornerstone of the profession.

One hundred years later, the South Carolina Association of CPAs is still following the mission its original members intended. I have now been a member for more than 25 years and I appreciate what the association has done for the profession and for me, personally.

A 100 Year Committee, comprised of 14 members, has been hard at work planning how to celebrate our 100 years as an association. The Centennial Celebration kicked off at the Jan. 13 Open House at our new headquarters located at 1300 12th Street in Cayce, SC. The new office celebrates our heritage, but also provides state of the art technology to help keep our members on the cutting edge. More than 100 members attended the event.

Highlights of the Centennial Celebration include: • Nominations for the 100 Influential People in Accounting in South Carolina. This will be a chance to celebrate those making a positive impact on our profession in our state. (See form on page 13.)

• An opportunity to help fund a Next 100 Years Endowed Scholarship. This fund will be there to help make sure we have qualified CPAs in our state to help us be as successful in our next 100 years. Members are challenged to give $100, in honor of our 100 years.

• A publication documenting the 100 year history of our association. Many of our members have helped put together this history. I believe it will be something that will help provide historical perspective for future members of our organization.

• Celebrations at the chapter level.

The Centennial activities will culminate with our Centennial Gala on Nov. 11 at the Marriott City Center in Columbia in conjunction with our Annual CPA Summit. This is a great opportunity to get together with old friends and professional colleagues. You may even make a few new friends at the event.

Personally, the South Carolina Association of CPAs has had a very positive impact on my professional life and has been a source of many personal friends. I am proud to have been part of its wonderful history and believe that we are positioned to thrive for the next 100 years.

Yours very truly,

Bratton Fennell, CPA Chairman, SC Association of CPAs

(888) 557-4814 | www.scacpa.org

South Carolina CPA Report

5

Promoting the Profession

High School Students Connect with the CPA Profession Two SCACPA members helped high school students connect with the CPA profession as part of a Lunch and Learn at Paul M. Dorman High School in Spartanburg. Angela (Angel) W. Hamilton, CPA, Lee, Broome, MacBay & Associates, LLC, and Bill Robinson, CPA, Gosnell Menard Robinson & Infante CPAs, PA, discussed the various opportunities in accounting and shared resources.

Pictured: Angel Hamilton, CPA, speaks to Dorman High Students

Hamilton said one teacher brought her entire accounting class to the session, making it the largest of the day.

“I talked with them about all of the various avenues a career in accounting can take from the traditional like me, to working as a CPA in a public firm, being an accountant at a company like Nike or Facebook, or even being an accountant with a badge – like a FBI agent. The students were very receptive and asked lots of great questions.” she said.

Hats off to Angel and Bill for helping promote the profession to the next generation of accountants.

Dixon Hughes Goodman Sends Employees Over the Edge for Make-A-Wish S.C. Three employees from Dixon Hughes Goodman took the plunge on Saturday, Oct. 4 by participating in Greenville’s first “Over The Edge” event.

Tricia Wilson, partner, was selected by her colleagues to represent the company as an “edger” at the event. Edgers rappelled over 200 feet off of the Bank of America building in downtown Greenville.

As a Rope Sponsor, Dixon Hughes Goodman sent two additional executives, Kent Satterfield and Greg Taylor, to participate as edgers, as well.

“It was quite a thrill,” commented Wilson, “and the opportunity to raise money for Make-A-Wish South Carolina and other local charities in such a way was incredible.”

Dixon Hughes Goodman chose Make-A-Wish South Carolina as their beneficiary for OTE Greenville and exceeded their goal of $15,000 to over $21,000 for the organization.

Help Select South Carolina's 100 Influential People in Accounting The association will turn 100 in 2015 and as part of the celebration we are honoring 100 Influential People in Accounting. Nominees will be evaluated based on their service to the association and the profession. Individuals may be nominated posthumously. Do you know a CPA that should be included on this list?

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South Carolina CPA Report

Pictured: (From left) Misty Herrin, director of development for Make-AWish South Carolina; Kent Satterfield, Tricia Wilson, Greg Taylor of Dixon Hughes Goodman, and Katlyn Gould, Wish Manager of Make-A-Wish South Carolina, following the successful rappel of 15 stories during the October 2014 “Over the Edge” fundraiser event in downtown Greenville.

CLICK

To download and complete the form visit www.scacpa. org/centennial.

You may also fill out the form located on page 13 and fax or mail to SCACPA.

Influenti in Accoal People unting All entries must be submit ted by May 1, 2015

(If availa

ble)

(If appli

cable) (If availa

ble)

(888) 557-4814 | www.scacpa.org

Calling All Emerging Leaders: Apply for the CPA Leadership Institute Today We are currently accepting applications for the 2015-16 CPA Leadership Institute. Limited to 20 participants, this six-month intensive program is designed to prepare the next tier of CPAs for leadership roles in their organization, the profession and the association. To apply, nominate a young CPA, or learn more, visit www.scacpa.org/leadership.

Nominations Open for SCACPA Board The SCACPA Leadership Selection and Succession Committee is seeking recommendations for members to serve on the SCACPA Board of Directors. Nominees will be considered for a three-year term beginning July 1, 2015. You may nominate yourself or someone else. Nominations must be received no later than March 1, 2015. For additional information on how to nominate, please contact the Leadership Selection and Succession Committee Chair Sharon Mann, CPA, at smann@geninfo.com or SCACPA Chief Executive Officer Erin Pate, CAE, at epate@scacpa.org or (803) 791-4181, ext. 104.

AICPA 2014-15 Volunteers

The following SCACPA members have been appointed to serve on AICPA committees. As an AICPA volunteer you have an opportunity to influence and guide the profession’s direction as well as network with peers.

Ellen K. Adkins, CPA - Technical Standards Subcommittee Joseph Stanton Beck, CPA Accounting and Review Services Committee George Warren DuRant, CPA, ABV, ASA - Joint Trial Board John Frederick Hamilton, CPA, CGMA - Technical Reviewers Advisory Task Force Mark T. Hobbs, CPA, CGMA National Peer Review Committee, National Peer Review Committee Oversight Task Force

Robert M. Moise, CPA Tax Practice Responsibilities Committee Andrew W. Pope, CPA Peer Review Board, Peer Review Board Standards Task Force Sandra G. Roberson, CPA Financial Accounting & Reporting (FAR) Subcommittee Donald P. West, CPA, CITP, eCPPT, CITP - Champion Program, CITP Credential Committee

South Carolina CPAs Request for Proposals The South Carolina Association of CPAs is seeking proposals for Financial Audit and Tax Services for Fiscal Year 2015. Please see the classified section on page 41 for more information.

(888) 557-4814 | www.scacpa.org

SCACPA Brookland Place, 1300 12th Street, Suite D Cayce, South Carolina 29033 (803) 791-4181 or Toll-free (888) 557-4814 Fax (803) 791-4196 | www.scacpa.org

To empower our members to grow professionally by providing education, advocacy, communication and leadership.

Shana M. Adams Membership & Communications Coordinator Ext. 111, sadams@scacpa.org Danielle H. Amran Seminars and Online Learning Manager Ext. 112, damran@scacpa.org Reva E. Brennan, MPA, CAE, IOM Chief Operating Officer Ext. 103, rbrennan@scacpa.org Sharon Gollwitzer Peer Review & Adminstrative Coordinator Ext. 100, sgollwitzer@scacpa.org Karen M. Hancock, CPA Finance Director Ext. 108, khancock@scacpa.org Lisa S. McGee Member Services & Graphic Design Coordinator Ext. 106, lmcgee@scacpa.org Erin H. Pate, CAE Chief Executive Officer Ext. 104, epate@scacpa.org Maureen A. Taylor Marketing & Member Services Director Ext. 105, mtaylor@scacpa.org Meredith W. Williams Conference and Events Manager Ext. 110, mwilliams@scacpa.org South Carolina CPA Report

7

On Your Behalf For the profession, by the profession – that’s what the South Carolina Association of CPAs is all about. Our board of directors, committees and task forces are embarking on projects and programs that strengthen the profession and enable members to improve their knowledge, network and technical skills.

Notice of Annual Member Meeting All members are encouraged to participate in SCACPA’s annual member meeting on Thursday, May 7 from 8:00-8:45 a.m. at the Marriott Hotel in downtown Columbia.

The business meeting will include a membership vote on: • Approval of minutes from the 2014 business meeting, • Approval of the 2015-16 operational budget, and • Election of officers and directors.

SCACPA Board Nominations The SCACPA Leadership Selection and Succession Committee (LSSC), formerly known as the Nominating Committee, is seeking qualified members for director seats on the SCACPA Board of Directors for the term July 2015 - June 2018. Members interested in submitting nominations are encouraged to contact Erin Pate at epate@scacpa.org to receive a

nomination form. Nominations are due by March 2, 2015.

SCACPA board members are colleagues from across the state who are willing to contribute their time and talents to ensure the association achieves its mission to serve South Carolina CPAs. Service on the board is both challenging and rewarding.

If you are selected by the LSSC, and subsequently elected by the membership, you will join fellow leaders in directing the affairs of SCACPA. During your term of service, you will address complex issues affecting your association, the profession, and your firm/employer.

Terms of Office: Each director serves a three-year term. The chair, chairelect, and immediate past chair have a one-year term in office.

The association’s board meets four times a year: January, May, August and October. Board members are expected to participate. The August meeting is a two-day planning retreat. In addition, board members are expected to attend the leadership day and at least one conference, serve as needed on a committee or task force and donate to the Education Fund and to the CPA PAC.

“To stay abreast of tax conformity and practice act legislation you are encouraged to check the SCACPA website regularly and also subscribe to the during-session, weekly e-newsletter called From the Dome.”

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South Carolina CPA Report

The Evolving Peer Review Program Peer review has been top of mind as of late. Marking its 25th anniversary, the program was founded when the profession voted a quarter century ago to create a quality control, practice monitoring program to identify deficiencies and assist in improving the quality of a firm’s work product. Educational and remedial, the program has worked well for many years.

Initially a requirement of members of the AICPA or SCACPA, in 2004 it became a state-mandated program when the S.C. Board of Accountancy initiated legislation to require enrollment of all firms providing attestation services.

SCACPA administers the program in South Carolina for some 530 firms.

This work includes coordinating the enrollment and scheduling processes with firms, three contracted CPA technical reviewers, Review Acceptance Bodies and the Peer Review Committee, which meets four times a year.

At the national level, concerns were raised last year following the U.S. Department of Labor’s review of 5,000 pension plan audits. It seems that this review surfaced two issues: a significant number of these audits were in some way substandard and a sizeable number of firms conducting these audits were not enrolled in a peer review program. These discoveries have instigated not only a concern about practice monitoring but

(888) 557-4814 | www.scacpa.org

also the quality of work being done in certain high risk engagements.

The result is a flurry of activity in an effort to shore up what could be viewed as weaknesses in both these areas.

During the October SCACPA board meeting, Jim Brackens, CPA, AICPA’s vice president of ethics and quality, joined the meeting to discuss the changes taking place in the program. In the near term the AICPA will be working to strengthen the existing program, providing more tools and resources and considering testing for peer reviewers of certain high risk engagements.

Long term, though, there could be significant changes to the program.

To get a glimpse of this, be sure to read Vision of the Future of Peer Review on page 32.

While there are many moving parts in this effort to reform the peer review program, SCACPA is also undergoing internal changes in how we administer the program. Back in September, we experienced an unexpected vacancy in our peer review administrator positon.

While this has caused a few unfortunate bumps in the road for some firms and reviewers, it has given SCACPA leadership an opportunity to reconsider how the program is managed in South Carolina. Currently, SCACPA and the AICPA are co-managing South Carolina’s program by dividing the responsibilities: AICPA is handling much of the scheduling process while SCACPA is handling much of the review process. The partnership is unprecedented and time will tell us if it works well for South Carolina firms and for SCACPA. Your comments are always welcome.

(888) 557-4814 | www.scacpa.org

Legislative/ Regulatory Update The legislative process is dynamic and sometimes unpredictable, which makes writing real-time, useful reports in this magazine a challenge.

(To stay abreast of tax conformity and practice act legislation you are encouraged to check the SCACPA website regularly and also subscribe to the during-session, weekly enewsletter called From the Dome.) To ensure you are subscribed, visit your email preference page. A link can be found at the bottom of your SCACPA email communications.

Back in the November 2014 issue of the CPA Report, you read about the changes and technical corrections to the accountancy practice act that is proposed in a new piece of legislation initiated by SCACPA in 2015.

Every effort will be made to support this bill’s passage in 2015, and SCACPA members who served a Key Person Contacts for legislators will be called upon to help.

Rules Change with the Administrative Law Court The South Carolina Administrative Law Court (ALC) amended its rules last year to limit those who may represent clients before the ALC to only attorneys. This eliminated the specific allowance of CPAs representing a client before the ALC. According to the ALC, less than 10 CPAs utilized this privilege in the past five years.

Todd Dailey, SCACPA’s LARC chair, Erin Pate, SCACPA CEO, and Jeff Thordahl, SCACPA lobbyist, met Oct. 6, 2014 with the long-time staff member and clerk of the ALC to discuss concerns about the change

and to explore any options there may be for reinstatement.

Over time there have been significant technical changes to how the court operates and it is clear they see themselves as a court and not an agency as they once did early in their history.

Two pieces of legislation, in 2004 and 2006, changed the process in the court requiring a heightened knowledge of the admissibility of evidence, objections and other procedural issues including the appeals process. An attorney is generally required to navigate these processes.

SCACPA will continue to study this issue and provide additional commentary and leadership post-tax season. To provide your thoughts and comments, please respond to Erin Pate, epate@scacpa.org.

CPA Leadership Institute Congratulations to the inaugural class of SCACPA’s CPA Leadership Institute (CLI). On Oct. 28, 17 young CPAs completed the sixmonth program designed to develop the next generation of leaders for the association and the profession. Two of the graduates, Jessica Glenney, CPA, Prym Consumer USA, Inc in Spartanburg, and Alan Leichtle, CPA, General Information Services Inc. in Chapin, shared their experience at the Oct. 30 board meeting. Glenney and Leichtle also presented the CLI’s vision plan for the association.

During their August retreat, CLI participants identified three areas they would like to see the association focus on. They are: preparing the CPA profession in South Carolina Continued on page 42 uu

South Carolina CPA Report

9

The AICPA Professional Liability Insurance Program

looks at insurance from a fresh perspective…

YOURS

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We operate similarly.

Whether your CPA firm is a one person operation or national in scope, the AICPA Professional Liability Insurance Program offers insurance products and solutions designed to fit your needs.

Get the benefits of a national provider with the personal service you deserve: • Insurance created to cover the unique exposures of CPA firms • All size firms and areas of practice are eligible

For professional liability insurance designed from YOUR perspective, please contact Charles Cauthen at BB&T Insurance Services, Inc. at 800.868.3721 or CLCauthen@BBandT.com today!

• Premium credits designed to reflect the way CPAs do business Endorsed by:

Endorsed by:

Underwritten by:

Administered by:

More than 25,000 CPA firms depend on the AICPA Professional Liability Insurance Program.

Aon Insurance Services is the brand name for the brokerage and program administration operations of Affinity Insurance Services, Inc. (TX 13695), (AR 244489); in CA and MN, AIS Affinity Insurance Agency, Inc. (CA 0795465); in OK, AIS Affinity Insurance Services Inc.; in CA, Aon Affinity Insurance Services, Inc. (CA 0G94493), Aon Direct Insurance Administrators and Berkely Insurance Agency; and in NY, AIS Affinity Insurance Agency.

One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. The statements, analyses and opinions expressed in this publication are those of the respective authors and may not necessarily reflect those of any third parties including the CNA companies. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2015 CNA. All rights reserved.

E-10486-215 SC

2.

1.

SCACPA kicked off it’s centennial celebration on Jan. 13 with an Open House and a special gathering of Past SCACPA President’s.

3.

4.

(888) 557-4814 | www.scacpa.org

5.

Picture above: 1. SCACPA CEO Erin Pate and Director of Finance Karen Hancock 2. SCACPA Chair Elect Robert Tilton 3. Past SCACPA Presidents - Front row: Fred Stuart, Sylvia Kitchens, Fred Gantt, McRoy Skipper, Donny Burkett, SCACPA Chair Bratton Fennell; Second row: Charles Schulze, John Camp, John Wentzell, Debra Turner, Sharon Mann, Chuck Talbert, Michael Putich; Third row: Carroll Webster, Bob Baldwin, Zeke Montgomery, Pat McDermott, Ernie Passailaigue, Converse Chellis, Bobby Creech, Charles Alvis, Charlie Redfern; Back row: Carl Harper, Tim Baker, Don Hunter 4.

Representative Shannon Erickson 5. Retired SCACPA Member Meyer Drucker and Past President Fred Stuart

South Carolina CPA Report

11

the past, present and future Join us in commemorating 100 years of service!

We will honor our history with a special commemortive publication, celebrate the profession during our Centennial Gala on Nov. 11 at the Marriott City Center and invest in the future with the “Next 100 Year� endowed scholarship.

Visit us at www.scacpa.org/centennial.

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SC Association of CPAs...serving you since 1915.

South Carolina CPA Report

(888) 557-4814 | www.scacpa.org

Influential People in Accounting In 2015, the South Carolina Association of CPAs will celebrate its 100th year. As part of the Centennial Celebration we are seeking nominations for the 100 Influential People in Accounting. Nominees must have been a member of the association at some point in their career. Accounting professionals may be nominated posthumously.

NOMINEES WILL BE EVALUATED ON

All entries must be submitted by May 1, 2015

>> Outstanding commitment to SCACPA and the accounting profession. >> Service to the profession resulting in a significant impact on the profession. >> Dedication of service, distinctive and exceeding the services provided by his/her contemporaries. >> Upholding the highest standards of the accounting profession.

NOMINEE INFORMATION

(Attach additional pages if needed.)

Name:

Firm: (If applicable)

SCACPA Member #: (If available)

Date(s) of Membership:

(If available)

Address: Phone:

Email:

Please describe the nominee’s service to the association (Board, committee, task force, other volunteer service, etc):

Please describe the nominee’s service to the profession (SC Board of Accountancy, NASBA, AICPA, etc):

NOMINATOR INFORMATION Name:

Firm:

Telephone:

Email:

Signature/Date:

Return form and supporting documentation to Maureen Taylor at SCACPA, 1300 12th Street, Suite D, Cayce SC 29033 QUESTIONS? Contact Maureen Taylor at (803) 791-4181 x105 or mtaylor@scacpa.org

2014 Professional Issues Update

22.6 percent of the S.C. Association of CPA’s membership attended a PIU in 2014

Anderson, Charleston, Columbia, Greenville, Hilton Head, Myrtle Beach, Pee Dee, Rock Hill, Spartanburg SCACPA members gathered in nine cities across the state for the annual Professional Issues Update. This year’s topics included: 13 Trends to Watch, Audit Quality & Peer Review, The Definition of Attest, Tax and Legislative Update, Accountancy Issues in Washington, Economic Update, The Future of Work, The Future of Learning and the Future of the Profession.

Members also heard from the association’s lobbying team, Copper Dome Strategies.

Members made their voices heard on what issues they believe the association should advocate for as well as what issue should be a priority for the next legislative session. Using mobile devices, members took part in real-time polling, the results of which appear on pages 14 - 15.

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South Carolina CPA Report

Q. Regarding all your computing devices, which of the following do you use for business purposes? (Select all that apply)

Smart Phone Tablet Laptop Desktop Other

Very Valuable

51.33 %

70.44 % 40.47 % 68.30 % 68.70 % .12 %

Q. In thinking about the ways SCACPA serves you as a CPA, please select the value of your membership: Valuable

40.48 %

Somewhat Valuable

7.4%

Not Valuable

.79%

(888) 557-4814 | www.scacpa.org

Q. Your area of employment - please select one:

52.9%

Public Practice

30.8% Business & Industry

Q. Which of the following is a priority for the next legislative session?

11.7%

Government & Nonprofit

Education

48.9%

Highway Infrastructure Funding

10.2%

Tort Reform

26.2%

Tax Reform

14.7%

Ethics Reform

49.71%

Q. In SCACPA's advocacy efforts, I want the organization to advocate for issues impacting:

29.79% Accountancy, Business & State Issues (888) 557-4814 | www.scacpa.org

4.6%

Accountancy

20.5% Accountancy & Business Issues South Carolina CPA Report

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Young CPAs Complete CPA Leadership Institute

by Maureen Taylor SCACPA Director of Marketing & Member Services

O

n. Oct. 28, SCACPA recognized the next generation of leaders for the association and the profession when 17 young CPAs graduated from CPA Leadership Institute (CLI).

This was the first year the association offered the six-month program, which focuses on strengths-based leadership. Facilitated by Dan Griffiths, CPA, CGMA, with Tanner, LLC in Salt Lake City, the program enabled participants to develop critical and creative thinking skills, acquire practical tools that could be implemented immediately in professional activities, and identify, refine and leverage unique leadership strengths to inspire others and create engaged teams. Plus, CLI participants were able to create a local network with other emerging leaders and build a sense of accountability within this community of peers.

During their final session, the group explored how they can apply their leadership skills within the association and developed a plan for a CLI Alumni Group. Clint Bates of Suggs Johnson, LLC in Anderson was elected chair and Allison Boykin of Intermedical Hospital of SC in Columbia was elected vice chair. Plans include funding a CLI scholarship, holding workshops and social events in conjunction with SCACPA conferences, participating in a yearly service project and conducting an annual Firm/Organizational Roundtable Discussion. The latter would give the alumni an opportunity to gather as a group and discuss issues and concerns facing young CPAs. If you are interested in applying for the 2015 CPA Leadership Institute or would like to nominate a young CPA, visit www.scacpa.org/leadership.

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South Carolina CPA Report

Congratulations to the CLI class of 2014: Jason L. Ackerman, CPA Bernard N. Ackerman, CPA, PA Rock Hill

Jessica T. Glenney, CPA Prym Consumer USA Spartanburg

Jessica L. Bastedo, CPA WebsterRogers LLP, Florence

Patrick T. Hooks, CPA Smith Sapp Bookhout Crumpler & Calliham, PA, Conway

John C. (Clint) Bates, CPA Suggs Johnson, LLC, Anderson Margaret A. Bost, CPA, MACC Burroughs & Chapin Company, Inc. Myrtle Beach Allison E. Boykin, CPA Intermedical Hospital of South Carolina, Columbia Chris Buckliew, CPA Bauknight Pietras & Stormer, PA Columbia Henry O. (Neal) Crider Jr., CPA McGregor & Company, LLP Barnwell

J B. (Burt) Huggins, CPA Smith Sapp Bookhout Crumpler & Calliham, PA, Myrtle Beach David E. Knobeloch, CPA Scott & Company, LLC Greenville Robert A. (Alan) Leichtle II, CPA, MBA, CGMA General Information Services Inc. Chapin Sabrina E. Preston, CPA Dixon Hughes Goodman, LLP Greenville

Erica A. Dawgert, CPA Fluor Corporation, Greenville

Constance M. (Marie) Spearman, CPA Bernard N. Ackerman, CPA, PA Rock Hill

Allyson T. DeHart, CPA The Hobbs Group, PA, Columbia

Alison L. Swaggard, CPA WebsterRogers, LLP, Sumter (888) 557-4814 | www.scacpa.org

“The Institute made me think about things that I wouldn't have ever thought about. It made me aware of the leadership abilities I possess and made me want to be a better leader.

I enjoyed meeting young CPAs from all over the state and believe we had a really good group of people. I look forward to keeping in contact with everyone to see how we progress as leaders together.”

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LEADERSHIP INSTITUTE “The Young Leadership Institute was an opportunity for us to step away from the day-to-day and focus on a strategic plan for our careers. It provided us with some tools and time to start developing that plan and to strategically think about what people and what pathways are going to help us get there.”

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TAX CREDIT? YOU CAN RE-DIRECT UP TO 60% OF YOUR STATE INCOME TAXES TO HELP CHILDREN WITH SPECIAL LEARNING NEEDS! SCHOLARSHIP PROVIDERS SFOs are special 501(c)3 charities that award grants for tuition, textbooks and transportation costs paid by special education students at participating private schools. Several SFOs have signed the Access Opportunity Best Practices Pledge.

DONORS Individual and corporate taxpayers can claim a dollar-for-dollar state income tax credit for contributions to Scholarship Funding Organizations (SFOs).

There is a statewide annual cap of $8 Million for these credits.

STUDENTS Through this new program, disabled students across the state have been given the chance to attend the specialized private school of their families’ choosing!

ST. THOMAS

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corporate coalition for

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OPPORTUNITY SOUTH CAROLINA

www.IndependentEd.org

2015 Tax Issues in South Carolina n Infrastructure, Education Funding Likely to Top Legislative Agenda , page 20 n Late Partial Dispositions, page 21 n A Look Back, page 21 n Sales of Timber for Individual Taxpayers, page 22 n Tax Treatment of Tangible Property, page 23

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South Carolina CPA Report

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Tax Season

Infrastructure, Education Funding Likely to Top Legislative Agenda

by Chris Barras, CPA SCACPA member since 1992

A

s the General Assembly convenes in January each year for the annual legislative session, tax practitioners are always interested (and sometimes anxious) to see what tax legislation will be considered - each year is different with varying tax topics seeming to take priority. In 2014, SCACPA led the effort for timely conformity and the annual conformity update was actually enacted before filing deadlines which was certainly welcome and appreciated. Hopefully we’ll see the same in 2015.

In 2014 we also saw a good bit of discussion around tax “reform.”

While “reform” will continue to be a debate, it’s likely that in 2015 the 121st South Carolina General Assembly will take up a much needed component of our state’s funding sources in the topic of infrastructure funding. In advance of the session, we’ve certainly noted the need for improvements to our roads and bridges, and there’s been a good bit of philosophical discussion on how to provide the needed revenue sources. In fact, the legislative and executive branches of our government and the business community have all highlighted infrastructure funding as a priority.

The South Carolina Department of Transportation (SCDOT) is responsible for maintaining 40,000

“Last November, the state Supreme Court ruled 3-2 that the state has failed to provide a “minimally adequate” education to children in the state’s poorest school districts.” miles of roads and bridges, the fourth largest state maintained system in the nation. Further, South Carolina largely relies on a 16-cent per gallon motor fuel user fee (gas tax) that has not been increased since 1987. Act 98 of 2013 represented the first significant investment in infrastructure since 1987, but proponents of infrastructure funding highlight that needs still top $600 million per year. Road and bridge improvements are vital not only for economic development, but also for the safe and efficient transportation of our citizens and visitors.

Working within obvious budget parameters and constraints, the challenge of course becomes how to pay for infrastructure. Taxes are central to the discussion, with a variety of proposals starting to be discussed – increases to the gas tax, adjustments to the $300 cap on the car sales tax, local referendums to increase local sales taxes, and other tax mechanisms. Notably Gov. Nikki Haley has vowed to veto any tax increase citing the impact and success of Act 98 in 2013. The discussion will certainly be interesting, and we would all

welcome the executive branch and General Assembly working together to find a comprehensive and sustainable solution for funding roads and bridges in 2015.

In addition to infrastructure funding, education funding is likely to get some attention. Last November, the state Supreme Court ruled 3-2 that the state has failed to provide a “minimally adequate” education to children in the state’s poorest school districts. Accordingly, the state is under pressure to address how we pay for K-12 education. While education has been a consistent topic in recent years, the court’s decision could amplify the discussion during the 2015 session. n

Chris Barras, CPA, is an executive director in the Greenville, S.C. office of EY. He has over 23 years of experience in public accounting, specializing in tax services. He oversees E&Y’s state and local tax advisory practice in South Carolina and has Carolinas/Southeast area responsibilities within E&Y’s indirect tax practice, providing tax advisory services to companies in a wide variety of industries.

“...proponents of infrastructure funding highlight that needs still top $600 million per year.”

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Tax Season

A Look Back

Late Partial Dispositions

Carey Roof, CPA SCACPA member since 1979

by Ken Newhouse, CPA SCACPA member since 2001

T

he IRS issued final regulations in August of 2014 on how to determine gain or loss on dispositions of depreciable assets. These regulations cover how to determine the asset disposed and how to account for partial dispositions. They also represent the final piece of the IRS’s revamping of regulations governing tangible personal property and are effective beginning Jan.1, 2014. From these regulations arises significant tax planning opportunity for practitioners. Tax practitioners will want to pay attention to Rev. Proc. 2014-54 which provides guidance for accounting method changes related to these disposition regulations.

Specifically, practitioners don’t want to miss out on a provision allowing for a late partial disposition election that is currently only good for 2014.

Partial Dispositions Under the old regulations, a taxpayer was required to depreciate a capitalized repair as an improvement and continue to depreciate the replaced component (e.g., HVAC units, roof, windows, plumbing, doors, etc.). The taxpayer now has the option in the final regulations to make an annual partial disposition election for qualifying dispositions occurring during the tax year or wait for the whole building system to be disposed. Note that partial disposition is elective except when there is a sale of a portion of an asset, disposition as a result of a

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“...practitioners don’t want to miss out on a provision allowing for a late partial disposition election that is currently only good for 2014.” casualty event, disposition of a portion of an asset in a like-kind exchange or involuntary conversion, or a transfer of a portion of an asset in a nonrecognition transaction.

Planning opportunity Rev. Proc. 2014-54 allows taxpayers to take advantage of this late partial disposition election and to treat it as an accounting method change.

Taxpayers will want to inspect their books to see if they had any repairs or replacements that were capitalized without disposing part of the original assets. This could help offset some of the cost of having to comply with the new repair regulation and may help leave a smile on their face when you hand them your bill. n

Ken Newhouse, CPA, is a tax manager with Moore Beauston & Woodham, LLP, CPAs & Consultants. He is a member of SCACPA’s Board of Directors, the Taxation Committee, the Legislative, Advocacy & Regulatory Committee and the CPE Committee

Carey W. Roof, CPA, of Roof & Williams, PA in West Columbia has been providing tax services since 1976. We asked him about the changes he has seen in that time.

By far the most significant change has been the advent of technology.

When I began doing tax returns it was all by hand. We manually prepared all returns that were usually proofread by a college intern. If mistakes were made you had to re-do. It required a lot of erasing, if mistakes were made.

The most significant advantage to the advent of technology was speed and accuracy. This enabled you to prepare more returns, and thus, take on more clients.

There are also a few disadvantages.

Sometimes you may trust the software, but if the information is not put in correctly then you can get some incorrect results. Also, our government has used technology as an excuse to make the tax code so complicated that nobody can plan for anything. There are way too many tax traps due to various phase outs, alternative minimum tax, depreciation methods, etc. When I first began in 1976 you only needed to know about four depreciation methods. Now, it seems to be at least 100. n

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Tax Season

Sales of Timber for Individual Taxpayers

by Barry O. Long, CPA SCACPA member since 2013

I

ndividual taxpayers have a very specialized set of rules when owning or investing in timber land. There are various options for how timber sales will be reported on the taxpayer’s return and ultimately how the income will be taxed. The taxpayer must be able show they hold the timber property with the intent to make a profit, otherwise it will be considered personal property.

As a personal asset, taxpayer’s will get capital gains treatment on any gain from the timber sale; however, they will not be able to recognize any realized loss.

As long as a taxpayer can show a profit motive for owning the timber land, the timber is considered either a business asset or an investment, depending on the taxpayer’s facts and circumstances and the amount of involvement in the activity. If the timber is owned for investment purposes, any sales of the timber would be taxed as a capital gain or loss and receive the favorable long-term capital gains tax rates if the taxpayer meets the holding period requirements. If the investor itemizes on his Form 1040, he can then deduct the timber management expenses currently on Schedule A as a miscellaneous expense subject to the 2 percent AGI limitation, with the property taxes being fully deductible. Alternatively, the investor can elect to capitalize these expenses into the timber basis and use them to offset any revenue received from a timber sale, thus avoiding the AGI limitation.

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If the timber ownership rises to a level to be considered a business activity, the taxpayer will treat timber as a Section 1231 asset. As such, when the timber is sold, the taxpayer will either receive capital gain or ordinary loss treatment. Any timber management expenses can be deducted currently from the ordinary income of the taxpayer.

For any expenses that are “qualified reforestation expenses,” taxpayers have an additional option to consider.

The taxpayer may elect to immediately deduct $10,000 per qualified timber property by either filling Form T, if required, or attaching a statement to the return containing the timber stand identification number, the total number of acres reforested during the tax year, the nature of the reforestation expense and the total amount that is either being deducted currently (the first $10,000) or being amortized over 84 months (any expense above the $10,000 limit).

All reforestation expenses must be accounted for separately for each qualified timber tract as well as from other timber management expenses.

In order to be a qualified reforestation expense, the expense must be directly related to the planting of a new timber tract or the replanting of a previously harvested timber tract and include items such as site preparation, seedlings and labor. The $10,000 limitation is per qualified timber property which must be at least one acre located in the United States and must be held for the commercial production of timber. Additionally,

“...the investor can elect to capitalize these expenses into the timber basis and use them to offset any revenue received from a timber sale, thus avoiding the AGI limitation. “ all timber land that would typically be managed and harvested together at the same time must be combined into one timber tract for purposes of the reforestation deductions. Any deduction or amortization taken for reforestation expenses is subject to Section 1245 recapture rules if the timber is disposed of within 10 years of the qualified expenditures.

IRS Form T - Forest Activities Schedule is required to be filed with your tax return if you claim timber depletion as a business expense or if you sell timber products in the ordinary course of your business and elect to treat the harvesting of timber as a sale for purposes of receiving the favorable capital gains rate. There is an exception from filing Form T if you only make occasional timber sales as defined by the instructions as “one or two sales every three or four years.” It is a recommended best practice to fill out the Form T and keep it with the tax workpapers as support for any claimed timber deductions, even if it is not required Continued on page 23 uu

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Tax Season

Tax Treatment of Tangible Property

by William T. Freeland, II, CPA

W

ith Revenue Procedure 2014-54, the IRS issued the last portion of longawaited guidance regarding the tax treatment of tangible property.

While lengthy and complex, the regulations are mandatory beginning with the 2014 tax year and will affect all taxpayers who own tangible property.

One key concept in the regulations is the “unit of property” (UOP). In general, for property other than buildings, a UOP consists of all components that are functionally interdependent. For buildings, regulations generally treat each building and its structural components as one UOP. Regulations list eight specific building systems that are treated as separate from the building structure.

Regulations provide for partial asset dispositions (PAD). Taxpayers must still capitalize a new asset but can choose to write off a portion of the old asset. The portion of the asset disposed can be determined using a reasonable method. The 2014 tax year is the last tax year taxpayers can claim a loss on partial dispositions that occurred in prior years.

Regulations allow taxpayers to deduct certain limited amounts paid for tangible property. Taxpayers with an applicable financial statement (AFS) requiring an audit may use the de minimis safe harbor if no more than $5,000 per invoice, or per item as substantiated by the invoice, was paid for the property. For businesses without an AFS, the maximum figure is $500. An annual election is required to use the de minimis safe harbor.

For a building structure or system, the taxpayer must reasonably expect to perform the maintenance more than once during the 10-year period that begins when the structure or system is placed in service. For property other than buildings, the taxpayer must reasonably expect to perform the activities more than once during the property's class life for depreciation purposes.

Regulations add a safe harbor, which allows qualifying small taxpayers to deduct improvements made to a building with an unadjusted basis of $1 million or less. This safe harbor applies if the total amount paid during the tax year for repairs, maintenance, and improvements

“The IRS issued procedures under which taxpayers get automatic consent to the accounting method changes but requires all taxpayers requesting them to use Form 3115.” to the building doesn't exceed the lesser of $10,000 or 2 percent of the building's unadjusted basis. This safe harbor may be elected annually on a building-by-building basis.

A change to conform to the regulations is considered a change in accounting method. The IRS issued procedures under which taxpayers get automatic consent to the accounting method changes but requires all taxpayers requesting them to use Form 3115.n

William T. Freeland, II is a CPA with Dixon Hughes Goodman LLP. He has worked in manufacturing and distribution taxation and research and development tax credits.

uu Sales of Timber for Individual Taxpayers continued to be filed with the taxpayer’s return.

Because of the tax advantages to owning timber as either business or investment property, it is advisable to have documentation of the profit motive from owning the property.

This is where consulting a forester becomes very helpful. The forester can provide a written forest management plan that documents the expected timber growth and projected revenues that will be recognized from the tract in the future. n

Barry O. Long, CPA, works in the tax department of Robinson Grant & Co., P.A. in Bluffton. He is a member of SCACPA’s Sea Island Chapter and the AICPA.

South Carolina CPA Report

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This is NOT Insurance

For CPAs Going Digital Extends to Currency

by Jason L. Ackerman, CPA SCACPA member since 2013

M

ost of you are probably asking yourselves, “What is a bitcoin?” That’s the normal question I receive when I tell my clients that our firm accepts all normal forms of payment, including cash, check, Visa, Mastercard, American Express, and bitcoin.

So what exactly is a bitcoin?

For starters, bitcoin is the first and most famous form of digital currency.

Digital currency is characterized by having no paper form of currency or any centralized government backing its value. Essentially bitcoins are just out there, on the Internet. What gives bitcoin and other digital currency their worth is their usefulness backed by mathematics. Just like other forms of currency, bitcoin is portable, fungible, scarce, diversible, and recognizable. What makes bitcoin and other digital currency unique is that you don’t need an intermediary, such as a bank, to transfer money back and forth. Bitcoins are transferred directly from one person to another over the Internet. Since there is no bank involved, there are almost no transaction fees and the funds can never be frozen.

“Every day over 90,000 bitcoin transactions take place, and more and more mainstream companies are starting to accept bitcoin.”

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The biggest misconception is that bitcoin is bartered anonymously. Bitcoin actually has a better “paper” trail then regular paper money because every bitcoin transaction is recorded in a central ledger that anyone can access; however, bitcoins are traded anonymously. Although you know the username of every bitcoin owner, you do not know the owner behind that bitcoin username unless that owner chooses to reveal him/herself.

Bitcoin was created by Satoshi Nakamoto, who may or may not be a real person, one person, or a group of nerd computer scientists. Nakamoto released a paper in 2008 describing his idea for bitcoin, and then created the software program to mine it (yes mine it!). Satoshi never revealed his identity and in 2011 he faded away from bitcoin saying he had “moved on to other things.” The identity of “Satoshi” is so mysterious that you could spend hours on the Internet reading theories on who he is and if he ever existed in the first place.

Now you might be asking yourself, “Why should I care about bitcoin?”

Bitcoin is fast becoming extremely popular and powerful. Every day over 90,000 bitcoin transactions take place, and more and more mainstream companies are starting to accept bitcoin. On Dec. 11 Microsoft announced that it would accept bitcoin via its XBox terminals. This means that sooner rather than later your clients are going to be asking you that question that every client

“Just like other forms of currency, bitcoin is portable, fungible, scarce, diversible, and recognizable.”

asks you, “How is bitcoin going to affect my taxes?”

In Notice 2014-21, the IRS proclaimed that bitcoin and other digital currency is treated as a capital asset for tax purposes. This means that depending upon the fluctuation of bitcoin against the U.S. dollar, when bitcoin is exchanged could result in a capital gain or loss subject to potential taxes or a loss. Not only that, if a person “mines” virtual currency, the net earnings from their mining could be considered self-employment income!

If you are interested in learning more about bitcoin and how you can help your clients or potential clients in digital currency there are a lot of good online resources. www.bitcoin. org is a great website that can give you a more detailed overview of how bitcoin works. You can also get certified as a digital currency expert via the Digital Currency Council. More information on the certification can be found at www.digitalcurrencycouncil.com If you’d like to start taking bitcoin as a form of payment at your firm you need to establish a digital wallet. The one our firm uses is called coinbase (www.coinbase.com). It is easy to set up and lets you send invoices directly from its website. n

Jason L. Ackerman is a CPA with Bernard N. Ackerman, CPA, PA in Rock Hill. He is an alumni of the association’s CPA Leadership Institute.

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Ethically Speaking:

What Should You Do?

by George W. DuRant, CPA/ABV, CFF, ASA SCACPA member since 1976

A

ssume you are preparing the annual income tax return of a multi-member limited liability company and discover the manager of the company has made unauthorized advances to himself unbeknownst to the other members of the company. If after confirming the situation with the manager and being instructed to not disclose it to anyone, what should you do?

In the absence of extraordinary circumstances, a prudent CPA likely would resign from the engagement because the client’s lack of integrity would pose an unacceptable threat to the CPA’s own ability to act with integrity.

The more difficult dilemma is whether you should also breach client confidentiality by disclosing the advances to the other members.

Weighing against disclosure are legal (South Carolina Code of Laws §40-2190) and ethical (AICPA Code of Professional Conduct §1.700.001) rules that prohibit unauthorized disclosure of confidential client information except under specific circumstances and this situation is not one of the exceptions.

Many believe maintaining confidentiality optimally serves the public interest in the larger scheme of things because it is conducive to clients sharing relevant information with their CPA that otherwise might be kept secret.

Because confidentiality is a fundamental value of the accounting profession and because breaching confidentiality can have serious financial and career implications for the CPA, the duty to maintain confidentiality is a powerful force in deciding whether to disclose.

On the other hand and under unusual circumstances, some see the aspirational and altruistic calling of the public accounting profession to serve the public interest and their duty to always act with the highest sense of integrity as conflicting with the duty to maintain confidentiality. They believe the public interest can be better served by breaching confidentiality under unusual circumstances. Because it can be difficult to predict what action ultimately will serve the public interest better, the more important action determinant is that the CPA acts with integrity (see the AICPA Code at §0.300.030).

The concept of acting with integrity means a whole lot more than just being honest. The following excerpt from Ronald Duska’s book Accounting Ethics (Willey-Blackwell 2011) vividly illustrates what it means to act with integrity.

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“The story of Pinocchio illustrates that lying is only a symptom of the lack of integrity.

People lie because they are self-absorbed. They lie to prevent unpleasantness, look better, avoid a harm, or gain an advantage.

Limiting the concept of integrity simply to being honest is analogous to describing Walt Disney’s story of Pinocchio merely as the tale of a boy whose nose grew when he lied. Certainly, the story tells us not to lie, just as integrity tells us to be honest. But honesty is not a synonym for integrity. Lying and dishonesty are merely symptoms of the lack of integrity, and identifying the lack of integrity only with lying does not embrace the core meaning, any more than Pinocchio’s growing nose is the whole story of Pinocchio.

What does the story tell us? Think back. Geppetto creates a special puppet, Pinocchio, who walks and talks by himself. But he is a wooden puppet, not a real boy. To be a real boy, Pinocchio must become morally complete. What does it take for Pinocchio to become “whole, entire, and undiminished” – that is, to achieve integrity – and become a real boy?

First, he must develop a conscience.

Since puppets don’t come equipped with consciences, he is given Jiminy Cricket. But Jiminy is external to Pinocchio. With Jiminy, Pinocchio hears from the outside what is right and wrong. The code of conduct, which Jiminy represents, is not yet part of Pinocchio. He needs to internalize that code. Similarly, just learning the rules of a profession is not enough. An accountant must internalize and live by those rules.

In his incomplete state, Pinocchio goes off to school. On the way, he meets Gideon and Honest John (who is anything but honest), who entice

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Pinocchio to join a puppet show. They promise him fame, convincing him that a puppet who can walk without strings and talk by himself will become an instant celebrity. Pinocchio soon learns that celebrity and fame do not make him complete. As a matter of fact, celebrity and fame entrap Pinocchio when the puppet master puts Pinocchio in a cage because he is too valuable to be set free.

Jiminy Cricket helps Pinocchio escape, only to see him lured to Pleasure Island, where he can engage in the self-centered pursuit of pleasure without restraint. Unrestrained pleasure, however, does not lead to his completeness either. Rather, it turns him into a jackass, including ears and a tail. With Jiminy’s help, Pinocchio flees the island and returns to Geppetto’s workshop.

Meanwhile, Geppetto, who had gone to sea to rescue Pinocchio from Pleasure Island, has been swallowed by a giant whale, Monstro. Pinocchio, with wisdom and self-control, devises a plan to rescue Geppetto. After the brave and selfless act of entering Monstro’s belly, Pinocchio finally becomes a real boy. He is complete.

He has integrity.

The story of Pinocchio illustrates that lying is only a symptom of the lack of integrity. People lie because they are self-absorbed. They lie to prevent unpleasantness, look better, avoid a harm, or gain an advantage.

People with integrity do not need to lie, because their values are sound.

Moreover, they have the wisdom to recognize that there is nothing for which they should compromise those

values. Individuals with integrity have the courage to live with the consequences of the truth and the self-assurance to give others their due (justice) without unduly fearing for themselves.

Beginning with Plato and Aristotle, traditional ethical theories have placed a high emphasis on integrity, or wholeness. A person was not whole unless he or she possessed what were called the four cardinal virtues – wisdom, justice, temperance, and courage. The individual had integrity only if he or she had all four virtues; each virtue required the others.

With a fuller understanding of what the AICPA Code means by “act with integrity”, would you ever breach client confidentiality to prevent harm to a non-client?

Complex ethical dilemmas deserve careful consideration of duties, virtues, and the likely consequences of action. Thinking about hypothetical dilemmas helps develop good ethical decision making skills necessary to avoid being overwhelmed by powerful situational forces in real life. You are invited to share your thoughts on SCACPA’s LinkedIn site. n

George DuRant is a member of DuRant, Schraibman & Lindsay, LLC in Columbia, South Carolina. George is a past president of the Central Chapter and has been a member of SCACPA and AICPA since 1975. He currently serves as a member of the AICPA’s Joint Trial Board.

South Carolina CPA Report

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Focus on the Future:

Engaging the Next Generation as an Adjunct Professor

by R. Michael Munden, J.D., CPA, CLU, ChFC SCACPA member since 1977

‌ OASTAL CAROLINA UNIVERSITY C Coastal Carolina University is a liberal arts institution located in Conway, S.C. The University offers 67 areas of study toward the baccalaureate degree, and eight master’s degree programs including accountancy and business administration. n Total Enrollment: 9,976 students (Fall 2014)

- Undergraduate: 9,364 students

- Graduate: 612 students - South Carolina residents: 76 % - Out-of-state residents from 25 states: 20.9 % n Students to Faculty: 17:1 n Economic Impact on South Carolina: $498 million n Mascot: The Chanticleer

I

began my teaching career over 40 years ago while a student at the University of South Carolina School of Law. My undergraduate degree was in accounting at USC, so I was a known quantity to the business school administration there. I had asked the chair of the accounting department about teaching accounting classes because I had a friend in law school who did that and said the money was pretty decent. Also, the classes were at night and I already had a day job when I wasn’t in class. I had never taught anything, but in my youthful arrogance, I was pretty sure I could do at least as good a job as the professors who taught me, so why not give it a try?

My opportunity arose when a graduate student scheduled to teach a financial accounting class showed up for the first class, wrote his name on the board, turned around and faced the 30 students and fainted dead away. I was pretty sure I could beat that, so I took over the class the second week. Since that time, I’ve taught at the University of South Carolina, Webster University’s graduate program, and in the undergraduate and graduate programs at Coastal Carolina University (CCU). I’m currently teaching two to three classes per semester at CCU, Financial Accounting in the undergraduate program and tax and law classes in the Master of Accountancy (MAcc) program. I’m one of three graduate faculty members on the MAcc Committee.

The greatest challenge for anyone teaching any class anywhere is to figure out how to engage the students.

It’s a much more difficult chore than trying to make a child eat vegetables, trust me. Out of 60 students in financial accounting classes this past semester, only four actually considered themselves to be accounting

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“ You have to personalize the experience as much as possible and show them why and how accounting will follow them the rest of their lives. It’s also helpful to show them how accounting issues impact their chosen major, which, fortunately, isn’t too difficult.” majors. The rest were there because financial accounting and managerial accounting are required courses for a business degree.

If you’re trying to encourage non-accounting majors to actively participate in an accounting class, it’s almost impossible using traditional lecture techniques. You have to personalize the experience as much as possible and show them why and how accounting will follow them the rest of their lives. It’s also helpful to show them how accounting issues impact their chosen major, which fortunately isn’t too difficult.

Graduate students present different issues. Unlike students in the introductory accounting classes, graduate students in the MAcc program actually want to be there.

Many of them also have full-time jobs (classes are held at night), so workloads are a very real issue, especially since graduate courses are much more complex and intense than undergraduate courses, as a rule. The bottom line though, is that you have to engage the students in the class by making it as interesting, challenging, and rewarding as possible.

The greatest reward for a teacher comes when a student actually puts the time and effort into a class and grasps the subject matter. There’s nothing like the satisfaction you feel when you are struggling to explain a concept, a student is struggling to understand the concept, and suddenly you see the light come on. n

Michael Munden, Esq., P.A., has over 20 years of experience as a tax attorney. He is a non-practicing CPA and also holds the ChFC and CLU designations.

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Cathryn Cushwa

Senior Coastal Carolina University

Why accounting?

I love working with numbers in a very structured and logical way. I greatly enjoy all the different areas of business and I believe that accounting does a fantastic job of pulling all of those business elements and areas together into one cohesive picture, which to me is fascinating!

What’s next?

After graduation I plan on getting my master’s degree and then sitting for the CPA exam. I know it's going to be a lot of work, but I also know that it's definitely going to be worth it!

What is your ideal job?

My ideal accounting job would be as an upper level manager in the audit department of a mid-sized firm. Some people may think it's strange, but as a manager I would have a good combination of travel and office work. I would get to manage people (which is the business side of me coming out), and I am only a step or two away from being a partner if I ever decide that's what I want.

Cathryn is a recipient of the 2014 Sea Island Chapter of SCACPA Scholarship, Burch Oxner Seale Scholarship and SCACPA Scholarship.

Accounting Scholarships Accounting scholarships are available through the SCACPA Educational Fund and are awarded on an annual basis. SCACPA will begin accepting scholarship submissions March 2.

Scholarship recipients must be South Carolina residents and possess a GPA of no less than 3.25 overall, with a GPA in accounting of no less than 3.5. For more information please visit

www.scacpa.org/scholarships.

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IRS and S.C. DOR Meet with SCACPA Members

by Brian L. Johnson, CPA SCACPA member since 2003

O

n Oct. 22, 2014 the SCACPA Taxation Committee hosted a meeting with representatives from the Internal Revenue Service (IRS) and S.C. Department of Revenue (DOR). This annual meeting is open to all SCACPA members and offers CPE credit and a chance to meet and share contact information with members of these agencies. The session allowed for presentation by and open discussion with the agencies. Following are highlights of the day.

Johnnie Goodlett, Collections Division – Goodlett discussed the Fresh Start initiative of the IRS. Fresh Start offers a streamlined process for entering into an installment agreement with the IRS. The initiative has been expanded and is now available for taxpayers who owe up to $50,000. Payment schedules as long as 72 months are available.

There is a three-step process for online installment agreements that can be found on www.irs.gov.

IRS Presentations

Goodlett also discussed payroll tax deposits. Publication 3151A – The ABCs of Federal Tax Deposits is a publication developed to help taxpayers better understand the rules for making employment tax deposits in order to avoid costly penalties.

Henrietta Duncan, Small Business & Self Employed (SBSE) Division of IRS – Duncan encouraged us to ensure our clients were in compliance with 1099 reporting as 1099s are now reviewed as a part of all examinations. She stated that SBSE and Wage & Investment (W&I) are streamlining some services to get better access to information and assist taxpayers.

Duncan along with other IRS representatives stressed the taxpayer Bill of Rights found in Publication 1.

One suggestion she offered to help firms minimize issues with the IRS is to improve the review process in firms.

She stated that many issues they deal with are mindless errors that could be detected during a proper review process.

If you are interested in volunteering as a tax preparer, VITA instructor or quality reviewer of returns at a site, you can earn continuing education credits. Contact Joyce Robbins at joyce.robbins@irs.gov. VITA is also seeking volunteers for the WIS-TV call bank during tax season.

The Taxpayer Advocate Service (TAS) is your voice at the IRS. Their job is to ensure that every taxpayer is treated fairly, and that you know

and understand your rights. They can offer you free help with IRS problems that you can’t resolve on your own. www.irs.gov/Advocate U.S. Tax Court has a website that offers a free way to find opinions on cases that may assist you, www.ustaxcourt.gov.

Ron Nestor, Appeals Division – Nestor stated that the appeals staff continues to downsize due to attrition. There are three appeals officers in Columbia. The average time a case is in appeals now is 188 days.

He reminded us that there must be a statute extension of at least one year to enter into appeals. Appeals must expire with the IRS before the case can go to the tax court.

Tom Sheaffer, Stakeholder Liason and Communications – Sheaffer stated that the SCACPA survey results are shared with key IRS staff who provide a report to Congress about problems with the IRS. He also suggested that CPAs begin using the practitioner priority line. The agents on this line have been given more authority. Callers must have a PTIN to be able to use the line.

Continued on page 31 uu

“Fresh Start offers a streamlined process for entering into an installment agreement with the IRS. The initiative has been expanded and is now available for taxpayers who owe up to $50,000.“ 30

South Carolina CPA Report

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Board of Accountancy

South Carolina Board of Accountancy Update

by Mark Crocker, CPA, S.C. Board of Accountancy Chair SCACPA member since 1982 If you wish in this world to advance, your merits you're bound to enhance; you must stir it and stump it, and blow your own trumpet, or trust me, you haven't a chance. - W. S. Gilbert

O

n the subject of advertising, the S.C. Accountancy Act states in 40-2-110A (11) that “engagement in advertising or other forms of solicitation or use of a firm name in a manner that is false, misleading, deceptive, or tending to promote unsupported claims is prohibited.” ET Section 502 of our professional standards gives further guidance.

I have heard many CPAs say, “I did not enter this profession to be a salesman.” None of us did. However, there are tasteful, professional and effective ways to promote ourselves, our firms and the profession.

uu IRS, DOR Meet continued

SC Department of Revenue Opening remarks were provided by Rick Reames, director of DOR. The DOR is excited about a new electronic filing system that will be rolling out over the next four years. Funding for the system was approved by the South Carolina Legislature last spring and work has already begun.

Mario Alvarez and Sherry Blizzard discussed the new integrated tax processing system which will be branded as DOORWAY. It is a fully integrated tax management system. The sales and withholding tax components are scheduled to be launched Aug.

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Advertising and public relations come in many forms and have changed drastically over time. I recently spoke with a retired CPA who shared a story that demonstrates such evolution. Back in the 60s, he was elected treasurer of his community pool association and had the self-promotional idea to send out the annual dues statements on his CPA letterhead. A complaint was filed with LLR. The Board of Accountancy then censored him to cease and desist. We have obviously come a long way, particularly in this age of social media.

I would like to suggest a cost-effective and enjoyable avenue of getting your name out there. South Carolina has thousands of nonprofit organizations, all of which are governed by volunteer boards. Predictably, all of these boards try to recruit an accountant and CPA, if possible, to round out the experience of its directors. Active participation in such a volunteer board

31, 2015 with corporate, partnership and fiduciary following in August 2016. Individual income tax, including estimated tax payments, should roll out August 2017 and remaining areas such as property tax are to be completed in year four. The system will be user-friendly and real time and will also have a portal which will allow CPAs to access their client’s accounts, if access is granted by the client. The DOR will have focus groups and pilot testing on the program beginning in May 2015 and training will be available starting July 2015.

Charlie Pitts, collections supervisor in Columbia, discussed installment

allows you to serve your community and the organization’s cause while fueling your role and recognition as a leader, team player and philanthropist. Good for you, good for your firm and – bigger picture – good for the profession.

We all have an obligation to protect the public. At the same time, we are compelled to represent the profession well. Our hope is to leave it stronger than we found it for the next generation.

I appreciate the opportunity to serve the profession. I hope to meet many more of my fellow CPAs during my term. n

Mark S. Crocker, CPA, is a partner with Dixon Hughes Goodman, LLP and practices in Greenville, S.C. Long active in the profession, he is a member of the AICPA, has served on the board of SCACPA and is president of its Piedmont Chapter.

payment agreements. Taxpayers can apply for an agreement using form FS-102. There is a $45 fee and the taxpayer must pay of 10 percent of the total tax due with the application.

These payments can be made online.

The DOR has an offer-in-compromise program, but very few are approved.

These sometimes have to go to the director of DOR for approval. n

Brian L. Johnson, CPA, is cofounder of Suggs Johnson, LLC in Anderson. He is chair of SCACPA’s Taxation Committee and a member of the Taxation Network and the Department of Revenue Adhoc Committee.

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AICPA Offers a Vision of the Future of Peer Review The following article was provided by the AICPA

“A key aspect of the concept is a technology platform that joins with human oversight to provide near real-time, continuous analytic evaluation.”

I

t’s 2025. You’re being introduced to Leslie, the quality control partner for her firm. She is in the midst of analyzing client work papers through the firm’s practice monitoring system.

Relieved to see that a flag she raised in the system has been resolved by the audit manager, Leslie now understands that the concern had been a simple documentation issue and not a failure to perform a key audit procedure. With this overview of her firm’s engagements and the assurance that her team has addressed her concerns, Leslie can now approve the work papers with a simple voice command.

Automatically, the system creates and routes her firm’s standard audit opinion letter tailored for the client.

This scenario is what the AICPA asks stakeholders to imagine as they consider and provide feedback on how the 35-year old peer review program might be transformed. On Dec. 15, the AICPA published a concept paper titled “Evolving the CPA Profession’s Peer Review Program for the Future: A provocative vision of what practice monitoring could become,” as part of

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the Enhancing Audit Quality initiative and is seeking SCACPA member input.

The concept outlined in the paper was developed after two years of research and brainstorming by CPA profession leadership, staff, members and volunteers from across the country.

“Today we’re faced with new levels of complexity in an increasingly fastpaced environment,” said Erin Pate, SCACPA CEO. “This thought-provoking concept challenges practitioners to consider and discuss an important transformation. By providing insights and putting our ideas together, we can keep our profession on the forefront of innovation and quality to protect the public interest.”

Elements of the Concept Practice monitoring as described in the concept could potentially increase public protection through enhanced audit effectiveness by: • Highlighting potential quality risk indicators and detecting engagement issues earlier

• Reviewing all firms that perform accounting, auditing and attestation engagements • Monitoring all engagements subject to review A key aspect of the concept is a technology platform that joins with human oversight to provide near real-time, continuous analytic evaluation. Monitoring would initially be conducted by the firm itself. Analytic tools would notify the firm of potential quality risks or engagement issues prior to or during engagements. This notification would then lead to two levels of external monitoring.

In the first level of external monitoring, AICPA-engaged practice monitors would assist firms in addressing quality issues and provide guidance to correct them. The second level would be performed by the firm’s external monitoring team, which would address unresolved issues and conduct periodic inspections of the firm’s system of quality control, including the use of technology and other resources within the firm.

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As currently outlined in the concept paper, the program would be developed and implemented in multiple phases. The first phase begins with a voluntary pilot group of small, medium and larger firms. The paper explains how future phases would transition from voluntary to mandatory participation.

During all phases, a dashboard would provide a snapshot of useful information about the firm’s engagement activities and compliance with performance metrics over areas subject to monitoring. When implementation is complete, the cumulative results of the metrics displayed on the dashboard would generate a rating that would be displayed as a “quality seal.”

Within the concept, the seal would visually confirm the firm’s participation in the practice monitoring program, the extent of services and the degree of compliance with performance metrics. Depending on access privileges and security rights, stakeholders would be able to access various levels of firm-related quality performance information.

IS YOUR DATA SECURE? Security Policies Risk and Vulnerability

Assessments

Penetration Tests

Influence the Program The concept’s vision is meant to change and develop based on stakeholders’ feedback on the paper. Advances in technology and the pilot program’s impact on firms also will contribute to the maturation and transformation of that vision. In time, the AICPA hopes that, through iterative processes, it can enhance the future for practice monitoring by: • Leveraging and incorporating emerging technologies • Providing a platform for more timely and effective audit quality oversight • Delivering more timely and transparent information to stakeholders (clients and oversight bodies) regarding the quality of a firm’s audit performance, and, thus, protecting the public interest • Ensuring that the evolving process and its audit quality tools provide value to firms

Don West, CPA

(803) 315-1299 | don@dpwcpa.com CITP, CISA, CISSP, CEH Member SCACPA, AICPA, ISACA, InfraGard, (ISC)²

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Friend us on Facebook. Chat with us on Twitter. Join our group on LinkedIn.

“The profession is at an early stage in imagining practice monitoring’s future. The concept itself hinges on the input and guidance of practice monitoring’s stakeholders, who are urged to read the paper and comment on it,” said Pate. “SCACPA members will be able to provide thoughtful and diverse perspectives on what the next generation of practice monitoring might look like.”

To learn more, read the concept paper or visit the Future of Practice Monitoring resource page at aicpa.org/practicemonitoringconcept, which features related news and information, including a video.

Comments, due June 15, 2015, may be submitted by email to prsupport@aicpa.org or through the Web at aicpa.org/futurepracticemonitoring. n

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South Carolina

CPA South Carolina CPA Report

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1

A Look Back at the CPA Summit Legislative Leaders Recognized Support of the CPA Profesion

2

3

4

Pictured: 1. Student Recognition Luncheon, 2. Bob Cooper, McKinley Cooper & Co., LLC and Duncan Breckenridge, Baker & Baker RE Developers, LLC, 3. Carolyn Reilly, Thornburg & Reilly, LLC, 4. Clint Bates, Suggs Johnson, LLC, 5. Representative Bill Sandifer, 6. SCACPA Board Chair Bratton Fennell, Senator Thomas Alexander and SCACPA CEO Erin Pate

It was an exceptional occasion recently when SCACPA recognized two state legislators who have shown outstanding leadership and support for the CPA profession. Sen. Thomas Alexander (Seneca), who chairs the S.C. Senate Labor Commerce and Industry Committee, was recognized by the association during an annual gathering of some 30 firm managing partners. [Photo 6] Rep. Bill Sandifer (Oconee), who chairs the S.C. House Labor Commerce and Industry Committee, was recognized before nearly 200 SCACPA members and guests during the student recognition luncheon held at the annual Summit. [Photo 5] SCACPA Board Chairman Bratton Fennell along with chair of the Legislative, Advocacy and Regulatory Committee, Todd Dailey, presented the legislators with an attractive award and thanked each for their leadership. Sen. Alexander and Rep. Sandifer both expressed gratitude for the recognition and expressed respect and admiration for CPAs and the profession as a whole. Most legislation impacting the accountancy profession is reviewed and debated by the LCI Committee in the House and Senate chambers. SCACPA’s heightened legislative efforts in recent years has required a great deal of interaction with and support from these committees. n

6

5

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7

2014 New CPAs (as of 1/5/2015)

* indicates SCACPA members

Judson Abraham Stephen Allen Barbara Anderson* Della Barnhill* Ryan Beck Megan Bennett* Dustin Burick* Frank Burke Summer Castro Ivan Chirolla* Sarah Choman Margaret Clarkson Andrew Coleman Sharon Conkey Kayla Corn Warren Cottingham Daniel Cruice Jeffrey Crumpley* George Deely* Stephanie Denning Rachel Domnick Michael Dorris Samuel Dubose Daniel Dunham Melinda Durant* Robin Embry Bayly Felch* Andrew Finley* Morgan Flynn Lila Fowler Jeffrey Fusile James Gassler* Andrew Godwin*

David Grabosky* Kevin Hamaker Brittany Hannon* Gina Hassert* Josh Horton* Patrick Huffman John Jenkins* John Johnston Damian Jones* Michael Jordan* Karl Jordan Andrew Kaufman John Leighton Xi Li Nathaniel Long Christopher Louthan* Paul Manos Joseph Matsinger Jordan McClaran Thomas McCormick* Matthew McKinney Mollie McTeer* Amber Miller Harrison Miller Heather Mims* Tara Moore* Randi Murphy* W. Newton Patrick Odom* Ben Owen Sarah Owings* Jared Paquette Katherine Parish

Pictured: 7. New CPAs after the semi-annual CPA Oath Ceremony, 8.

2014 Scholarship Winners, 9. Elizabeth Vaughn (Coastal Carolina University), recipient of the Joe Jackson Memorial Scholarship, which is the highest honor awarded to the top recipient.

Westley Partin Joseph Pavone Matthew Perdue Alexander Peter Daniel Pizzari Megan Portnoy John Powers* Charles Prevost* Nicole Rheinlander* James Rogers* Bryan Sanders Stephen Schmidt Lara Schumpert Mark Semo John Shingler IV Zebulon Smith III Michelle Smith Stephen Solesbee*

Rachael Stanton Hannah Stroud* Jay Taylor Jacob Thiry* Rebecca Van Osdol* Martha Walker* Heather Walters* Terri Wilson Angela Wilson* Benjamin Wingo* Benjamin Wise Melynda Wright* Hanna Yamagishi Peter Yiannikouros Bo Zhao* Shanshan Zhou Jamie Ziembo*

8

9

(888) 557-4814 | www.scacpa.org

South Carolina CPA Report

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Based on surveys of over 1,000 local government and business leaders across the world, this report outlines a new role for finance in helping leaders address key performance management challenges.

The “Four Ts”

eXecUTiVe sUmmary

Here are some of the key findings:

Managing Local Government Performance

The business of local government is far from straightforward. Local government Transformation widespread organisations must juggle fiscal, geographicalisand demographicbut challenges its value is not understood while addressing the demands of their manyfully political, regulatory, citizen and business stakeholders.

This applies to all types of local government: We found that, while 70% of local government city, metropolitan, regional or state. were undergoing or had recently organisations The following article was provided

by CGMA. transformation, undergone significant organisational

90% 90%

of local government organisations are transforming of local government

and alocal further 20% planned Based on surveys of over 1,000 government and to do so within the organisations are transforming next 18 months, one third having difficulty only 57 percent of them say they have business leaders across the world, this outlines are etropolitan areasreport continue governments. Success will require disconnects still exist quantifying the financial benefits. the proper budget between to execute their a new role for finance intohelping leaders address grow and increasingly careful planning, execution, monikey performance management challenges. technology strategy, making it underwhat needs and what impact the global economy. toring, and analysis of results.

Yet business utilized as an agent of change.

Are their local governments up for the despite the obvious need, finance local government organisations Here are some of the key findings: challenges ahead? currently plays a limited strategic are providing Today, society demands much role in many local governments. % Transformation is widespread but greater As a not result, local In today’s global marketplace, closer Local government andopenness. business have always governments are making their operaalignments between businesses and seen eye to eye.

While 60% of business leaders The “Four Ts” necessary to its value is not fully understood tions more transparent.

It’s a win-win feel that local government understands their needs local governments have never been change the dynamic. of local government We found that, while 70% of local forlocal all involved, as it enhances regarding regulations, zoning, waste, technology and more critical.

But thegovernment often uneasy of government leadersboth report organisations are transforming organisations were undergoing orof had recently local government leaders agree business and citizen trust whilelocal more than 70% do not consider alliance between the two continues to New research by the AICPAinfrastructure, and difficulty quantifying the financial benefits undergone significant organisational transformation, technology vital to transformation improving internal collaboration and government efforts in service transformation, online be hampered by what businessesisfeel CIMA shows effective performance of local government and a further 20% planned to do so within the processes and improved transparency to have added organizational effectiveness.

Over they need versus what governments management and strong financial of local government leaders report organisations are transforming next 18 months, one third are having difficulty any value to their business. of local government three-quarters are prepared to provide. leadership will reverse the stagnadifficulty quantifying the financial benefits disconnects still exist between quantifying the financial benefits. leaders believe transparency imtion of local governments, and create Local governmentssustainable are whatstruggling business needs and what proves the quality of public service public service delivery. to harness the full There potential of delivery. are government four key areas where local organisations

M

BUT BUT

89

90% 30% 90% 30% BUT BUT

leaders need to focus. new technologies government are providing

Unfortunately, an ongoing chalDubbed the “Four Ts,” they are: 89Technology % adoption is recognised 89% oftechnology, local lenge for local governments is the Local by government and business have not always transformation, transpargovernment respondents as core to transformation 70 % of businessand executives say recruitment retention of toplocal seen eye to eye.

While 60% of business leaders ency, and talent.

30% 30%

efforts, with the biggest improvements being government transformation efforts feel that local government understands their needs talent.

While most believe they fail have citizen focused. Yet although three quarters of local regarding regulations, zoning, waste, technology and to their to add value a well-defined talentbusiness management ofislocal government leaders report The good news that 70 percent governments feel that they areinfrastructure, effectively measuring of local government leaders agree of business executives say local more than 70% do not consider local strategy in place, almost half struggle of local governments are already difficulty quantifying the financial benefits the value of their IT initiatives, 40% struggle to technology is vital to transformation governmentorefforts servicegone transformation, online government transformation effortssector fail to compete with their private undergoing have in recently manage data and share insights. processes and improved transparency to have added to add value to their business rivals. of local government through organizational transforma- leaders report anyofvalue topublic their business. tion their services.

Another difficulty quantifying the financial benefits The Four Ts can help finance leaders While the majority of business 20percent said they plan to do so Local governments2 are struggling TransformaTion and Transparency – managing local government performance manage the forward accounting capaleaders feel their local governments within the next year and a half. They to harness the full potential of bilities so necessary in today’s global understand their needs for zoning, know the need for change exists. But marketplace. Working together, the new technologies waste, technology and infrastructure, does transformation add immediate four key areas help implement future70 percent do not think their efforts value? So far, a third of government Technology adoption is recognised by 89% of local focused, evidence-based and agile in service transformation, online leaders report difficulty quantifying government respondents as core to transformation of business executives say local decision-making, creating stronger processes or improved transparency the financial benefits of such change. efforts, with the biggest improvements being government transformation efforts fail alliances between businesses and add any value to their business. They citizen focused. Yet although three quarters of local totechnology add valueis to their business their local governments. believe government fails to recognize Adoption of central governments feel that they are effectively measuring of business executives say local the investment opportunities that to improving these transformation the value of their IT initiatives, 40% struggle to transformation fail Learn more by viewing the infowill support them. efforts.government Technology quickly improves efforts manage data and share insights. to add value to their business graphic at cgma.org/FourTs. n the communications, efficiencies and

2

70%

70% 70%

Finance management can change decision-making of local governthe status quo, creating new opments. Still, 40 percent struggle to TransformaTion and Transparency – managing local government performance portunities between businesses and manage data and share insights, and

36

South Carolina CPA Report

Not a CGMA designation holder? Find out how to become one at CGMA.org.

(888) 557-4814 | www.scacpa.org

Focus on Membership

Member News

Alison M. Benson, CPA, was made a shareholder of Burch, Oxner, Seale Co., CPA’s, PA. Benson is the first female partner in the nearly 30 year history of the firm.

Tyler K. Gibbons, CPA, has been named a partner at the CPA firm of Riser, McLaurin & Gibbons LLP, located in North Charleston.

Sean C. Kenny, CPA, senior accountant, has joined Moore Beauston & Woodham L.L.P.’s tax and business consulting practice in Charleston.

Firm News

Elliott Davis, LLC was recently recognized for having one of the Best Overall Internships in the country

by Vault.com, an influential source of ratings and insights for students and professionals. The Elliott Davis internship program ranks second, higher than any other accounting firm.

Scott and Company LLC recently promoted eight SCACPA members.

David Knobeloch, CPA, was promoted to manager. Both Stephen Hetherington, CPA, and Ryan LaBrooy, CPA, were promoted to senior accountants. Kelly Damiano, CPA; Charles A. “Chuck” Goessel, CPA; Chris Halkowitz, CPA; Chelsea Shoolbred, CPA; and Sam Wheeler, CPA, were all promoted to the firm’s growing assurance and advisory services team.

Condolences

Roger B. Clinkscales, 60, died Dec. 7, 2014. A native of Greenville, S.C., Clinkscales graduated from Clemson University with a bachelor’s degree in industrial management. A SCACPA member since 1979, he served his local community as a member of multiple civic and professional organizations including Greenville County Redevelopment Authority, the Metro YMCA, and the Greenville Chamber of Commerce. He was a partner at Bradshaw, Gordan, and Clinkscales, LLC.

Share Your News

Send member news announcements to Maureen Taylor at mtaylor@ scacpa.org. Deadline for the Second Edition issue is March 20.

CGMA. Boost your wow factor.

Make it happen at cgma.org

CGMA, CHARTERED GLOBAL MANAGEMENT ACCOUNTANT, and the CGMA logo are trademarks of the Association of International Certified Professional Accountants.

These trademarks are registered in the United States and in other countries.15484B-326

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6/16/14 12:40 PM

South Carolina CPA Report

37

Focus on Membership

WELCOME NEW MEMBERS (through 1/2/15) AFFILIATE Austen J. Barber Greenville, SC Susan H. Brooks Anderson, SC Arthur H. Clephane Hilton Head Island, SC James P. Davidson Mount Pleasant, SC Danielle Grooms Dixon Hughes Goodman, LLP* Charleston, SC ASSOCIATE Sean Kenny, CPA Moore Beauston & Woodham, LLP, CPAs & Consultants* North Charleston, SC Kurt L. Kuchenbrod, CPA Lexington, SC Charles McManus Charleston, SC Rebecca Rainsberger, CPA, CMA Greenville, SC Haley M. Roberts, CPA Dixon Hughes Goodman, LLP* Charleston, SC Dana L. Sunderlin, CPA Mt. Pleasant, SC Mary K. Sursavage, CPA Salem, SC Ashley D. Terdle, CPA Derrick Stubbs and Stith, LLP* Columbia, SC Rosemary K. Thomas, CPA, CGMA Columbia, SC CPA CANDIDATE Corinne E. Buescher Charleston, SC Geoffrey B. Busby Moore Beauston & Woodham, LLP, CPAs & Consultants* West Columbia, SC

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South Carolina CPA Report

*100 percent member firm

Stephen C. Cantrell Chesnee, SC

James L. Gassler, CPA Murrells Inlet, SC

Bryan K. Wates, CPA Murrells Inlet, SC

Brian P. Clark Lugoff, SC

Julie H. Grant, CPA Moore, SC

Drew S. Wilson, CPA Fort Mill, SC

Cynthia L. Cline Little River, SC

James L. Gregory, CPA Rock Hill, SC

Jody A. Zieverink, CPA Charlotte, NC

Jamie R. Johnson Mt. Pleasant, SC

Edward F. Hudak Jr, CPA North Charleston, SC

Marcus A. Jones Loris, SC

Gregory M. Koch, CPA Greenville, SC

Jessica Mata Moore, SC

Casey E. Lewis, CPA Greenville, SC

Joshua McDonald Lexington, SC

Brian J. Marotto, CPA Greenville, SC

Thomas P. McKeever Columbia, SC

Tara J. Moore, CPA Summerville, SC

Brittany N. McLeod Camden, SC

Randi D. Murphy, CPA West Columbia, SC

Judith Amber M. Parshall Cayce, SC

Carolyn A. Reilly, CPA Isle of Palms, SC

Memory H. Ridgeway Mauldin, SC

Christopher J. Render, CPA Columbia, SC

Mary C. Shields Mt. Pleasant, SC

Beverly A. Seier, CPA, CPCU Blythewood, SC

Richard C. Tiller, Jr. Camden, SC

Travis B. Smith, CPA, PFS Dixon Hughes Goodman, LLP* Greenville, SC

Janeen M. Voseller Charleston, SC Ruijing Wang Columbia, SC Joshua A. Wilson Camden, SC FELLOW Christian P. Bassily, CPA Mt. Pleasant, SC Thomas E. Benton, CPA Pamplico, SC Brenda J. Bowen, CPA Columbia, SC Jeffrey W. Crumpley, CPA Isle of Palms, SC

Stephen L. Solesbee, CPA West Pelzer, SC Rebecca A. VanOsdol, CPA WebsterRogers LLP* Summerville, SC Martha G. Walker, CPA Columbia, SC

FELLOW – OTHER John O. Powers, CPA Columbia, SC Dana J. Glynn, CPA Taylors, SC Kathy C. Mercer, CPA Mt. Pleasant, SC FIRM ADMIN Diana M. Bussard Columbia, SC RETIRED John I. Hill III, CPA Greenville, SC STUDENT Sadaf Aijaz Lexington, SC Sharlemagne B. Cook Columbia, SC Nikita D. Dicks Aiken, SC Karleon Y. Goldman Waterloo, SC Jeffery C. Harteg Greenville, SC Nathaniel J. Simmons-Thorne Columbia, SC

Membership Renewals SCACPA’s current membership year runs July 1, 2014 - June 30, 2015. Renewal notices will be sent out in May for the 2015-16 membership year. If you have any questions about your membership please contact Lisa McGee at lmcgee@scacpa.org or (803) 791-4181 ext. 106.

(888) 557-4814 | www.scacpa.org

Focus on CPE

Spring Seminar Sneak Peek* May 8 | Cayce Compilation and Review Practice Guide

May 18 | Cayce NEW! Accounting for New Revenue Standard Workshop

May 19 | Cayce NEW! Compliance Auditing from Start to Finish

May 19 | Charleston IT Risks and Controls in Current and Emerging Environments – Coastal Chapter May 21 | Rock Hill Annual Update for Accountants and Auditors – Catawba Chapter

May 22 | Spartanburg Annual Update for Accountants and Auditors – Foothills Chapter

May 27 | Cayce Annual Update for Accountants and Auditors

May 28 | Florence Annual Update for Accountants and Auditors – Pee Dee Chapter

May 29 | Hilton Head Annual Update for Accountants and Auditors – Sea Island Chapter *Please note dates and locations are subject to change.

To view course details and the complete CPE schedule visit www.scacpa.org/register

Grand Strand Vacation Cluster July 13 - 15 Myrtle Beach

Coastal Vacation Cluster August 10 -12 Charleston

S.C. Ethics CPE Requirement

I

n 2012, the South Carolina Board of Accountancy instituted new regulations governing the CPE ethics requirement. The new regulation states South Carolina licensees are required to obtain six (6) hours of Ethics CPE over a three (3) year period, of the six (6) hours, two (2) must be in South Carolina Rules and Regulations. The first three-year period is Jan. 1, 2013 - Dec. 31, 2015, and then every three years thereafter. For the initial three-year period, licensees who complete an ethics course between May 25, 2012 - Dec. 31, 2012 may apply the hours toward their 2013-2015 requirements.

For more information about the South Carolina ethics requirement, please visit our website at www.scacpa.org/ethics.

Upstate Vacation Cluster September 14 - 16 Greenville

For latest information on the 2015 Vacation Clusters please visit www.scacpa.org/clusters

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South Carolina CPA Report

39

Focus on CPE

CPA Day at the State House - and -

Annual Member Meeting

CPAs in Business & Industry Conference

Audits of Benefit Plans Conference

May 11-12 | Columbia

May 12 | Columbia

May 6 & 7 | Columbia

Government Conference

Nonprofit Conference

May 20 | Columbia

May 21 | Columbia

CONFERENCES

Small Firms Conference

Fraud Conference

June 4 | Cayce

Sept. 24 | Columbia

Financial Planning Conference Oct. 27 | Columbia

Governmental Workshop

CPA Summit

Oct. 29 | Columbia

Nov. 11-12 | Columbia

(Centennial Gala)

Accounting & Auditing Conference Dec. 7-8 | Charleston

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South Carolina CPA Report

(888) 557-4814 | www.scacpa.org

CLASSIFIEDS Are you ready for Retirement? Do you have a Succession Plan? If not, let MBW be your plan.

Are you a one or two partner firm in the state of South Carolina? Are you concerned about the succession of your firm and are interested in capturing the value of your Firm as your retirement stream? Moore Beauston & Woodham (MBW) could be your solution. We have successfully been the succession and retirement plan for many firms in South Carolina and would love to talk with you.

John Beauston, Managing Partner, can help you accomplish your goals of maintaining an income stream after retirement, while giving you peace of mind that your clients are receiving the kind of attention and care you worked hard to provide them. Please give him a call for a confidential consultation at 843-766-5010. uu

Classifieds continued on page 42

TAX CREDIT? You can re-direct up to 60% of your state income taxes to help students with special

South Carolina CPAs South Carolina Request for Proposals Financial Audit and Tax Services for Fiscal Year 2015

CPA

A. Nature of Services Provided The South Carolina CPAs (the Association) is soliciting proposals from qualified firms of certified public accountants to audit its financial statement and provide tax preparation services for fiscal years ending June 30, 2015, 2016 and 2017, with an option for renewal of two subsequent years.

B. Description of Organization The Association’s mission is to empower our members to grow professionally. Our vision is to recognize that our members exist in a constantly changing environment and we will support them as they embrace future opportunities.

We have eight local chapters with separate accounting for each chapter which is handled from the main accounting office and the association financial statements. The Association has a related Education Foundation that is combined with the Association financials and local chapters. The Association is a 501(c)(6) organization and the Foundation is a 501(c)(3) organization.

C. Contact and Additional Information For additional information, or questions, please contact Karen Hancock, finance director, at khancock@scacpa.org, or 803-791-4181 ext. 108.

Please submit proposals no later than April 3.

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Reach 4,000+ potential buyers, renters, consumers and potential staff and partners through our classified listings.

Rates: $1 per word for members, $2/nonmembers, minimum $30. Fee applies to special typeface treatment or adding an electronically submitted logo or art.

For more information contact Maureen Taylor at mtaylor@scacpa.org or (803) 791-4181, ext 105.

(888) 557-4814 | www.scacpa.org

South Carolina CPA Report

41

CLASSIFIEDS

Advertiser Index Buying or Selling an Accounting Practice?

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Charleston, SC asking Columbia, SC asking Midlands, SC asking Lexington, SC asking Rock Hill, SC asking

In October 2013, the board formed a Diversity and Inclusion Work Group to define the issue for the profession in South Carolina and determine how the association could move forward in these areas. Chaired by board member Cheryl Lang, the group compared South Carolina statistics for ethnicity, gender and age to national statistics.

What the group found is that the association like the profession, is behind in its efforts to attract and

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South Carolina CPA Report

Aon/BB&T Insurance Services/ AICPA Professional Liability Insurance Program www.cpai.com Page 10

Don West don@dpwcpa.com Page 33

uuContinued from page 9

Diversity and Inclusion

ADP accountant.ADP.com Inside Front Cover

CGMA (Chartered Global Management Accountant) www.cgma.org Page 37

$250,000.00 $195,000.00 $285,000.00 $150,000.00 $250,000.00

for the next generation; restructuring education and on-the-job training; and promoting and helping to implement cloud-based computing among SCACPA members. It was interesting to see the similarities between the CLI’s vision plan and the board’s strategic goals. For more on the CPA Leadership Institute, see page 16.

Access Opportunity www.independentED.org Page 18 & 41

retain minorities. As our nation becomes more diverse, attracting diverse professionals and students is critical to our long-term success.

The work group presented a white paper to the board at their Oct. 30 meeting. Among the recommendations were the creation of a standing Diversity and Inclusion Committee; considering diversity and inclusion in the activities and actions of the organization; fostering relationships with minority organizations in the state; and outreach to high schools and minority colleges. If you are interested in getting involved in the association’s diversity and inclusion initiatives, contact mtaylor@scacpa.org.

Erin Hardwick Pate, CAE, has served as SCACPA’s CEO since 2005. She currently serves as past-president of the CPA Society Executives Association.

EDOCHOME www.scacpa.org/edoc Page 25 PNC pnc.com/cashflowinsight Back Cover POE Group Advisors PoeGroupAdvisors.com Inside Back Cover

For more information about the CPA Report, or other advertising opportunities, please contact Maureen Taylor, Director of Marketing & Member Services 888-557-4814 or mtaylor@scacpa.org.

(888) 557-4814 | www.scacpa.org

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to support the entire transition with our proven 5-step Seamless Succession™ process.

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South Carolina Association of CPAs

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