Disclosures March/April 2013 by The Warren Group

BROUGHT TO YOU BY THE VIRGINIA SOCIETY OF CPAs

MARCH/APRIL 2013 I VOL. 26 NO. 2 I WWW.VSCPA.COM

BRINGING BACK

FINANCIAL ACCOUNTABILITY 16

Curb your investment confusion

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10 truths about college financial aid

The CITP credential

2013 Conferences — Save the Date Stay up-to-speed through the VSCPA’s live, group update conferences. No matter what your areas of interest are, VSCPA conferences can help you get the CPE and networking you need. Be on the lookout for more information about this year’s conferences: • March 12: 2013 Virginia State & Local Government Day • April 23: 2013 Nonprofit Conference • May 20: Health Care Industry Symposium • May 21–22: 12th Annual Industry Conference • June 6: 15th Annual Educators’ Symposium • June 13: 3rd Annual Employee Benefits Symposium • June 27: 2013 Virginia Accounting & Auditing Summer Conference (Chantilly) • Sept. 17: IRS Liaison Day • Sept. 19–20: 14th Annual Business Valuation, Fraud & Litigation Services Conference • Sept. 23–24: 43rd Annual Accounting & Auditing Conference (Roanoke) • Oct. 17: NEW! Small Firms Symposium • Oct. 28–29: 23rd Annual Professional Development Conference • Oct. 31 – Nov. 1: 5th Annual Technology Conference • Nov. 13: 4th Annual Government Contracting Conference • Nov. 21–22: 43rd Annual Accounting & Auditing Conference (Virginia Beach) • Dec. 18: 2013 Essential Issues Symposium Virginia Society of Certified Public Accountants

To learn more, visit www.vscpa.com/Conferences

INSIDE this issue COVER STORY >>

The 11th-hour Congressional decision on the “fiscal cliff ” brought the dire financial situation of the United States front and center. Three prominent CPAs discuss the serious fiscal issues surrounding our country and offer solutions — and they all believe CPAs to be critical to keeping the government accountable.

FEATURES BRINGING FINANCIAL ACCOUNTABILITY BACK TO AMERICA

SECTIONS 10 PLAIN TRUTHS ABOUT COLLEGE FINANCIAL AID 10

Ernie Almonte, Ed Mazur and Dave Walker, all prominent CPAs on the national stage, discuss their unique perspectives on the federal government’s balance sheet, and where we need to go from here.

CURB YOUR INVESTMENT CONFUSION

There’s a low interest rate environment rate now, so what should an investor do? How should those close to retirement age construct their portfolios? Learn from the recommendations of a brokerage firm, financial planner and CPA.

ADVERTISERS INDEX Audimation Services Inc. p. 21 • Beth A. Berk, CPA p. 3 • CPE Link p. 23 • Digital Benefit Advisors p. 27 • Geico p. 15 • Poe Group Advisors inside back cover

As public funding for higher education institutions wanes, tuition fees continue to rise. Before you or your clients play the financial aid game, take the fear out of the financial aid process.

BACKTALK

LINE ITEMS

DATA DRAFT

TAXATION 7 SELF-ASSESSMENT 28

THE CITP CREDENTIAL: WHAT YOU NEED TO KNOW 24

VSCPA NEWS

If your career has taken you into more of a technology-related direction, it’s time to learn about your credentialing options. The Certified Information Technology Professional (CITP) credential for CPAs shows off your IT smarts.

MEMBER NEWS

ARTICLES

I AM

TECHNOLOGY

VSCPA EDUCATIONAL FOUNDATION 34 CLASSIFIEDS 35 36

Craft hard-to-crack passwords.

disclosures is published bimonthly for members of the Virginia Society of CPAs.

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Our mission is to enhance the success of CPAs.

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BACKTALK you said it

VIRGINIA SOCIETY OF CPAs

4309 Cox Road Glen Allen, VA 23060 Ph. (800) 733-8272 Fx. (804) 273-1741 www.vscpa.com

FROM THE VSCPA FACEBOOK PAGE >>

disclosures http://disclosures.vscpa.com EDITORIAL STAFF Jill Edmonds Managing Editor disclosures@vscpa.com Chip Knighton Contributing Editor cknighton@vscpa.com

VSCPA members and staff outside the General Assembly building on CPA Assembly Day!

Jenny Hansen Communications & Marketing Director jhansen@vscpa.com EDITORIAL TASK FORCE Joan D. Aaron, CPA Lindsay S. Andrews, CPA Adam G. Chaikin, CPA David L. Cotton, CPA Gary D. Dittmer, CPA Elizabeth M. Helle, CPA Clare K. Levison, CPA George D. Strudgeon, CPA Thomas L. Visotsky, CPA DEADLINES Articles and advertising for future issues are due by 5 p.m. on the following dates: July/Aug. 2013 Sept./Oct. 2013 Nov./Dec. 2013 Jan./Feb. 2014 May/June 2014

Apr. 15, 2013 June 15, 2013 Aug. 15, 2013 Oct. 15, 2013 Feb. 15, 2014

Statements of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers, members or editorial staff. The Warren Group Design / Production / Advertising www.thewarrengroup.com custompubs@thewarrengroup.com

FROM THE VSCPA FACEBOOK PAGE >> Question: A federal judge struck down the IRS’s Registered Tax Return Preparer requirements last week. What does this mean for the tax preparation profession? What does it mean for CPAs? Response: I think it means several things. First of all, I'm not sure this is through the appeals process just yet. If the same result holds, I think it means that the IRS has to actually have laws passed to give them the authority to do things. … I would say that for the non-CPA, they just got a HUGE break. AL CARPENTER, CPA Carpenter, Francisco &

Associates, Roanoke

FROM THE VSCPA LINKEDIN PAGE >> Connect [the private social networking group from the VSCPA] looks like a great group. I have many highly skilled candidates looking for jobs. It’s great to be able to give them another connection!

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TWITTERSPHERE >> Yay VSCPA! RT @virginiabiz: It’s here! @ VirginiaBiz Best Places to Work 2013 — @VSCPANEWS

Paper is going the way of the dodo bird. @ cpapracadvisor: No more paper checks for Virginia tax refunds. @VSCPANews — @ MCALLENCPA

Congrats to VSCPA staff members @ MaureenDingus, @mwwash and @ jenrhansen for earning the CAE credential! We are proud of you! — @STEPHPETERS BLOG: www.cpacafe.com CONNECT: http://connect.vscpa.com TWITTER: @VSCPANews, @FinancialFit LINKEDIN: http://tinyurl.com/VSCPALinkedInGroup FACEBOOK: www.facebook.com/VSCPA

MARGIE MINNIX, Reliance Staffing Services, Chesapeake

Get in touch

From the

At the Virginia Society of CPAs, we love to hear from you. Whether it’s a quick email to a staff member, chat on the phone, Disclosures letter to the editor, tweet, blog comment or something different altogether, let us know what you’re talking about, how you feel about different issues affecting CPAs and how we can help.

Attention CPAs:

Whether A Decision Maker Looking To Upgrade Your Talent, Or A CPA Looking to Upgrade Yourself/Your Skills, Ask Yourself: Who really chose who in joining your company? Are you/your professional staff really at the right level where you should be/you need them to be? Are you/your staff in a position that truly suits your/their personality, values, and professional and personal needs?

Why leave your future to chance? If you’re seriously interested in making the “right” move for your next hire, I can help you. I am an actively licensed CPA in Maryland and Virginia with over 20 years of experience including public accounting (E&Y) and consulting (KPMG), financial accounting (American Cancer Society), internal audit (Moneyline Telerate), and recruiting (Acsys, formerly Don Richards). As a networker who truly enjoys helping others and sharing my career experiences to guide fellow professionals, here is how I can help you: Decision Makers:  Ask you questions, and most likely ask many more questions than other recruiters about your company, duties involved, skills required, corporate culture and more  Work with you on finding the “right” professional that is the “right fit”  Provide you with valuable information about the professionals I work with, the marketplace, what your competitors pay, and more Career Seekers:  Guide you on career paths available in public accounting and industry  Enable you to capitalize on your strengths  Coach you on how to put your best foot forward to find the “right fit”  Advise you when to stay in your current position if that is the right move If you’re interested in working with a recruiter who understands your background, skills, and is genuinely interested in helping you find the “right fit”, then I welcome meeting you!

BETH A. BERK, CPA, CGMA Independent Recruiter

Phone: 301-767-0670 Email: BethABerk@msn.com

Specializing in CPA Firm, Accounting & Finance Positions in Metropolitan DC & Nearby Suburbs/Baltimore/Richmond/Tidewater

Connecting You To Your Next Hire

Contingency & Retained Staffing Solutions

matching skills, experience & values with needs

CPA Ambassador for the state of Maryland, sponsored by the AICPA and Ethics Instructor for VSCPA

Serving clients and professionals as an Independent Recruiter since March 2005

LINE items NO. 1 IN REGULATORY ENVIRONMENT >>

Virginia is still a great place for businesses Right-to-work policies, regulatory reform, strong business incentive programs and a AAA bond rating help keep Virginia at the top of the list when it comes to business-friendly environments. Virginia came in No. 2 overall, behind Utah, in Forbes magazine’s annual “Best States for Business” survey. The Commonwealth was ranked No. 1 from 2006–2009 and has come in second every year since. Virginia did capture the No. 1 spot when it comes to the regulatory environment. “My administration has been aggressive in making sure that Virginia has the best possible environment for private sector businesses to start up, grow and create jobs,” said Virginia Gov. Bob McDonnell. Here’s how Virginia fared in other survey factors:

>> No. 22 in business costs >> No. 2 in labor supply >> No. 10 in economic climate >> No. 18 in growth prospects >> No. 4 in quality of life So why did Utah outperform Virginia? Lower labor costs and a stronger economic outlook, Forbes says. For more information on Virginia’s ranking, scan the QR code with your smartphone. n

>> EXCELLENT EXCEL

GAIN PRODUCTIVITY WITH ‘VLOOKUP’ FUNCTION Ever feel like you’re wasting time looking up an amount or an account code to get the information you need into another worksheet? Have Excel’s “VLOOKUP” function do your work in a blink of an eye. VLOOKUP is complicated, but the time it takes you learn its nuances can save you hours, if not days. I once spent an hour showing someone how to use VLOOKUP during their year-end close, and as a result they were able to complete in four hours what had taken 60 hours the year before!

list trying to match the look-up value until one of three things happen: 1.) it finds an exact match; 2.) it gets to the end of the list without finding a match; or 3.) it finds a value larger than the value you want. The latter is one of those nuances that requires you to have the data set in ascending order, but it makes the VLOOKUP function very efficient; this is because it knows to stop looking in the same way you would stop for 6 if you see 4, 5, 7 … Why would you ever look past 7?

The function looks up values the same way you would. It takes the value you want to find and tries to match it to the top left value in a data set. If these values do not match, it moves down vertically the list to test the next value — thus the V for vertical.

Once VLOOKUP finds an exact match, you can have it pull the value from any of the columns from the row where the match was found, which you indicate by setting the column index in the formula. If you want the function to find an exact match, when you set the VLOOKUP formula you will need to set the Range_ lookup to “FALSE.”

VLOOKUP will keep scrolling down the

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I know I may have bitten off more than I can chew with trying to explain VLOOKUP in this short little column. But trust me, Google it and spend some time trying to learn how to use it and you just may be surprised at your return on investment. Next time, I will cover examples of when you may want VLOOKUP to find values that do not exactly match. GEORGE D. STRUDGEON, CPA, is an audit director at the Virginia Auditor of Public Accounts in Richmond. He is a member of the VSCPA Editorial Task Force. Have Excel questions you want him to cover? Email him at george.strudgeon@gmail.com.

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LINE items SURVEY SAYS >>

International execs eye U.S. debt issues

DON’T DO TAX SEASON ALONE

Tax season started late this year, but that doesn’t mean you have to rush, rush, rush without any guidance. Check how you can strongly finish the last month of tax season: ASK YOUR PEERS: You have a wealth of knowledge right at your fingertips. Become active in the taxation community of Connect, the VSCPA’s online member forum at http://connect.vscpa.com. This forum replaces the old VSCPA tax list server, and members consistently use this tool to ask questions of their fellow Virginia CPAs. If you don’t know the answer, we bet someone else does! TAX PRACTITIONER’S TOOLKIT: This marketing kit, available from the American Institute of CPAs (AICPA), has been updated and expanded for 2013. You’ll find tons of resources, like a one-pager to help clients understand all the taxes they will pay. Letters, copy for websites and newsletters, a fiscal cliff presentation, advertisements and more promotional materials are all included in the kit. Find it at http://tinyurl.com/AICPAtaxtoolkit. INTERACTIVE TAX CHECKLISTS: Use these online,

Uncertainty still plagues companies worldwide as they watch how the United States handles its debt ceiling and spending issues, according to a survey of 1,300 Chartered Global Management Accountant (CGMA) designation holders.

interactive tools to find content from the AICPA's Tax Practice Guides and Tax Checklists. Visit http://tinyurl.com/AICPAchecklists.

Just how badly are these executives kept up at night? Shortly after the new year, seven out of 10 believed that the most likely outcome of Congress’s decision on the debt ceiling would be a weaker U.S. dollar. Sixty-two percent believed the U.S. credit rating would be downgraded. Executives reacted in their own companies by delaying hiring (43 percent) and holding cash or postponing capital investment (39 percent). “Management accountants are bracing for short- and long-term implications, even as they look for ways to make their businesses less vulnerable to the pulses of geo-political forces,” said Barry Melancon, CPA, CGMA, chief executive of the American Institute of CPAs (AICPA).

>> Learn more about CGMAs at www.cgma.org.

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DATA draft HERE TO STAY? >>

Social media use still climbing The 2012 statistics are in, and it looks like social media is officially ubiquitous. For more stats like these, including source studies, check out www.sociallyawareblog.com. >> 100 percent of the Ad Age Top 100 Advertisers have established a presence on Facebook. >> Social media accounts for 18 percent of all time spent online. >> The fastest-growing demographic groups using social media are males of all ages and people over age 55. >> 56 percent of Americans have a social networking profile, compared with just 24 percent in 2008. n

Global fraud is on the decline Companies across the world are seeing a drop in fraud, according to the sixth annual Global Fraud Survey from Kroll Advisory Solutions, which polled 839 senior executives. Companies reporting at least one fraud incident in the past year declined for the second year in a row, from 75 percent to 61 percent. That drop directly affected companies’ bottom lines; the cost to companies from fraud fell from 2.1 percent of revenue to 0.9 percent. The reason may be attributable to more companies adopting risk management, such as bribery-risk monitoring and reporting systems. Notably, executives feel most vulnerable to a threat of information theft. n >>

Recession watch: Which states have recovered? It’s been just over five years since the Great Recession began. It officially ended in June 2009, but which states have shown the best and worst recoveries, based upon economic growth and unemployment declines?

BY THE NUMBERS

34 The percentage of Virginians with a college degree, according to stats reported by Forbes magazine

FIVE-YEAR ASSESSMENT >>

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BEST

WORST

1. Michigan 2. Ohio 3. South Carolina 4. Utah 5. Oregon

1. New Jersey 2. New York 3. Connecticut 4. Pennsylvania 5. South Dakota

Virginia checks in at No. 32, showing strong growth in its labor force over the past few years, but with unemployment still higher than its pre-recession rate. n Source: www.24/7WallSt.com

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TAXATION

Attention, tax practitioners: Keep your competitive edge It’s no secret that CPA firms of all sizes continue to face competitive pressures when it comes to their tax practices, both from non-CPA preparers and from difficult economic conditions.

UNDERSTAND THE BENEFITS YOU OFFER You need an accurate sense of what sets your tax practice apart. If you were to spend the next hour — by yourself or with your staff — discussing your firm’s value, what would you come up with? How would you differentiate yourself from your competitors in just a few words? You might say it’s your client service — how you manage each account. Perhaps it’s the breadth of services you offer to address a full range of client needs, so clients receive comprehensive, expert financial advice from your firm. Or maybe it’s how you see what is behind the numbers on a 1040 and ask questions to gain insight into your client’s financial situation, so you can translate that insight into a solid, objective plan of action.

Consumers need to be clear on the distinct benefits of hiring a CPA, and you can help educate them. recognize your value — not only at tax time, but also as they look to their financial futures. When they have a tax, retirement or business concern, they seek the advice of the CPA who has become their trusted financial advisor.

considerable time and attention. The common thread is a consistent emphasis on the qualifications and value that set CPAs apart and can help you stand out in a crowded marketplace.

The materials in the Tax Practitioner’s Toolkit, from the American Institute of CPAs (AICPA), address these kinds of relationships while highlighting the essential differentiator that makes them possible: No other tax preparer has the education, experience and expertise to more ably assist their clients with all their tax and financial needs than a CPA.

The range of client- and prospectfacing materials enables you to reach consumers from many different angles. These include newspaper and magazine ads, blurbs for firm websites or newsletters, speeches and presentation slides, sample social media posts, payper-click ads and brochures covering both tax strategies and the advantages of working with a CPA. n

GET THE WORD OUT

>> The Tax Practitioner’s Toolkit is available at http://tinyurl.com/ AICPAtaxtoolkit.

Within the toolkit are customizable materials intended to help you as a tax practitioner reach potential clients, as well as communicate with clients to whom you’ve already devoted

Source: American Institute of CPAs

VOLUNTEER FOR VSCPA TAX ADVICE PROGRAMS

DEMONSTRATE YOUR VALUE

Whatever specific answers you come up with, it will be time well spent. You’re likely to discover that, while clients come to you for many different reasons, ultimately they seek you out, and stay with you, because they

Richmond-area tax experts: The VSCPA needs your help! The Society is seeking last-minute volunteers for its NBC 12 Tax Call-In Program on Wednesday, March 13, and Wednesday, March 20. CPA volunteers answer phone calls and online questions from viewers and give free tax advice during NBC 12’s evening news broadcast. Contact VSCPA Public Relations Manager David Bass at dbass@vscpa.com or (804) 612-9440 to participate.

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TECHNOLOGY

Take a pass on the lame password Easy ways to construct hard-to-crack passwords BY CHIP KNIGHTON

Numbers. Symbols. Capital letters. And you have to remember all of them. What’s more annoying than the common password?

“qwerty,” “123456” and, um, “password” are just begging to be stolen. If you don’t follow any of the other tips in this article, please at least follow this one. In fact, it’s best not to use any dictionary words at all, or any personal information. Items like initials, birth dates and names of children, pets and spouses are easily accessible to anyone who wants to get your password. And while you’ve already got the space allotted in your brain, your data will be a lot more secure if you don’t use the same password for multiple sites.

THINK OUTSIDE THE ALPHABET Even incorporating numbers is so 2000. For added security, stay on the number row but hit your shift key to add nonalpha characters to your password. Mixing capital and lowercase levels also adds complexity. Consider non-alpha replacements for common characters, like a zero instead of O or $ instead of S.

But until we get futuristic biometric security for our most important accounts, passwords are a necessary evil. And as we saw in the news in 2012 with password leaks from LinkedIn, eHarmony and other sites, it’s more important than ever to help secure your data with a strong password. The average Internet user has 25 online accounts but only 6.5 passwords.1 A

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majority of Internet users have only one or two passwords. Don’t be like them.

WHY YOU MNEED TO USE MNEMONICS MNOW

Here are some ways to make sure your password doesn’t get into the wrong hands — or any hands besides your own.

WHAT NOT TO DO

Remember how you memorized the planets when you were a child? MVEMJSNUP (or just MVEMJSNU if you’re young enough). Reverse the process and let an easily-remembered sentence remind you of your password.

It may seem obvious, but passwords like

Let’s say you have a son named Albert. It

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TECHNOLOGY

goes without saying that he’s a handsome kid. So you should be able to remember that My Son Albert Is So Very Cute. Chop that down to MSAISVC, add a strategically chosen number or symbol, lowercase some letters and you’ve got yourself a password. No kids? Use some other information. Maybe you drive a 2004 Honda Civic, and you’re really happy about it. Your new password, IDA2004HC!, is right there in front of your eyes.

USE THE SPACE YOU’RE GIVEN The days of the short password are in the past. Many sites now allow you 20 to 30 characters to play with. So break out of the abbreviation habit and think up a sentence for your password. Make it something easy to remember, along the lines of your love letter to your precious Albert (or your dependable Honda) from the previous tip. Many sites will allow you to type the entire sentence, spaces and all.

DOUBLE YOUR SECURITY Two-factor identification is a great way to protect yourself from hackers. It involves asking for more than just your password — a good way to think of it is “something you know” (your password) and “something you have” (your phone).

You can enter your password, then have a second code sent to your cell phone. You’ll need both to get into your account. Gmail, Yahoo, Facebook and Dropbox all offer two-factor identification, as does password manager LastPass (more on that below).

• Never send your password to anyone over email.

OUTSOURCE IT

• Lastly, if your password is compromised, CHANGE IT RIGHT AWAY!

• Be skeptical of links asking for logins, passwords and other personal information. If you aren’t sure if a site is legitimate, don’t click the link — type in the provided URL manually.

Password managers put all of your passwords into one secure place. These programs work by maintaining an encrypted database. You can store the key file on a USB drive and keep it with you wherever you go. Of course, you’ll protect this file with a quality password using the tips above. Remembering one excellent password is much easier than remembering a separate password for every site. The aforementioned LastPass, KeePass, 1Password and Roboform are all well-regarded password managers.

STAY AHEAD OF THE BAD GUYS All it takes is one key password falling into the wrong hands to make your life much more difficult. Follow these tips to help stay one step ahead of hackers and thieves. n 1. Herley, C. “So Long, and No Thanks for the Externalities: The Rational Rejection of Security Advice by Users.” Research.Microsoft.com, Sept. 8–11, 2009.

PROTECTING IT ONCE YOU’VE GOT IT These tips also fall into the “what not to do” department, but they’ll help you keep your passwords from falling into the wrong hands.

CHIP KNIGHTON is communications specialist at the VSCPA, as well as contributing editor of Disclosures magazine. Contact him at cknighton@vscpa.com.

• Be sure to log off from any passwordprotected service you use, especially if others are around. • Never type your password into a public computer.

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FISCAL responsibility

Mission critical: Bringing financial accountability back to America BY CHIP KNIGHTON

Three CPAs, all of whom currently or formerly worked in government. Three voices speaking out against the increasingly out-of-balance federal deficit. While fiscal responsibility has been adopted by candidates for offices big and small, these three CPAs are taking action in the effort to bring the federal budget back into balance. Ernie Almonte, CPA, spent 16 years as Rhode Island’s auditor general. Among the changes he made in that office was requiring all audit reports his office produced to be made available to the public on the Auditor General’s website. He was the first public servant elected as national chair of the American Institute

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of CPAs (AICPA) and is currently the chair-elect for the Institute’s National Financial Literacy Commission. He is currently running for governor of Rhode Island. VSCPA member Ed Mazur, CPA, is the senior advisor for public sector services

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at CliftonLarsonAllen. He previously served on the Governmental Accounting Standards Board (GASB) and the U.S. Federal Accounting Standards Advisory Board (FASAB) and headed the Office of Management and Budget’s (OMB) Office of Federal Financial Management. He served as Virginia’s state comptroller

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FISCAL responsibility

from 1980–1991. He recently won the Association of Government Accountants’ (AGA) Author Award for his article, “Our Nation’s Governors — Walking a Tightrope Without a Net,” which appeared in the Journal of Government Financial Managements summer 2011 issue. Dave Walker, CPA, served as U.S. comptroller general for 10 years while also heading the Government Accountability Office (GAO). He recently wrapped up his 10 Million a Minute Tour — the name refers to the rate at which the federal budget deficit is growing — which included stops in Springfield, Richmond and Washington, D.C., among many other locations. The tour is the successor to the Fiscal WakeUp Tour, which Walker began during his time at the GAO. He currently serves as founder and chief executive officer of the Comeback America Initiative. We spoke with Almonte at a VSCPA event in September and caught up with Walker at the 10 Million a Minute Tour stop at the University of Richmond in October. Mazur came by the VSCPA office in October to give his take.

SHINING A LIGHT ON FISCAL PROBLEMS: ERNIE ALMONTE, CPA VSCPA: How did your experiences as auditor general shape your views on fiscal responsibility? EA: For 15 years, I was the auditor general for the state of Rhode Island. In those 15 years, we issued reports — public reports — on our findings and

how the state spent money. In the state of Rhode Island, about $8 billion a year is our budget. About half of that comes from the federal government. I would always look at trends and say, “Well, if you had a business and almost half your money came from one customer, you’d be concerned about whether you’d be able to survive or not.”

"You can have all the bureaucrats have the numbers, ERNIE ALMONTE, CPA but if the outside doesn’t see it and doesn’t challenge the government, I don’t believe it will be fixed." So we started looking at how the federal government handled their money, and it was a scary picture at times. You would see that the deficit was growing and growing. Maybe five years into my role as the auditor general, I met David Walker, the comptroller general for the United States, and I started working with him and the GAO to look at those numbers. … The way he would describe it would be to put the light on the subject. The light would create heat, and the heat would cause action. That’s what our reports really did — they put the light on the problem. VSCPA: Can you go into more detail about the financial relationship between

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the states and the federal government? EA: Every state, no matter what state it is, gets a substantial amount of money from the federal government. If we’re worried about the federal government’s total deficit — which we should be, because it’s over $60 trillion — people talk about $16 trillion. That’s just what’s on the financial statements. There are other liabilities that are not included in that. The rough number is about $60 trillion, so the federal government will have to fix the problem. They probably could fix it one of three ways: Raise revenues or taxes, cut services — which is less money to states, cities and towns — or some combination of the two. We always talk about how water flows downhill. If water does flow downhill, what’s the impact to states? If a substantial amount of their budget will shrink, how are you going to deal with that? How are you going to plan for that? How are you going to take care of your taxpayers and provide services if some of that money goes away? VSCPA: You mentioned the light creating heat and the heat creating action. Is that a “sunlight is the best disinfectant” sort of philosophy? EA: The common theme now is about transparency, but I believe in the sunlight piece to this. You can have all the bureaucrats have the numbers, but if the outside doesn’t see it and doesn’t challenge the government, I don’t believe it will be fixed. That’s why we, as citizens, also have a role — to be more informed of our government and to read these documents. 

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FISCAL responsibility VSCPA: As someone who has been on the government side of things, what’s the biggest obstacle to achieving that kind of transparency? EA: I believe that the biggest obstacle to achieving transparency is that a lot of times, people that are holding office at the time are afraid of delivering bad news. I always talk about how we have the responsibility to have courageous conversations. That’s telling people what they need to hear, not what they want to hear. You might get a bad reception when you tell them, “I can’t build that soccer field for you. I can’t build that new school. I can’t pave this road because we don’t have the money.” Because sometimes, the people on the other side — us, as citizens — are just like, “I want the soccer field. You figure out how to pay for it.” A good financial decision and a good political decision, a lot of times, butt heads. VSCPA: Do you feel like CPAs are uniquely positioned to make the tough financial decisions? EA: I do believe that CPAs are uniquely positioned to help in an environment like this. What we have today is federal deficits, budget deficits, trade deficits. But one of the largest deficits of all is the leadership deficit. As CPAs, we’re trained to handle all the fiscal problems. We help clients with governance issues. We run firms. We’re CFOs, we’re controllers. … I think it would be a great step to have more CPAs in office. They have the skill set to solve financial problems. They have the ability to step back to the balcony and observe things without being emotionally involved in it, the same way they’ve done for their clients their whole career.

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THE CPA IS PART OF THE SOLUTION: ED MAZUR, CPA

of how all of that works and whether quality outcomes are being produced.

VSCPA: You’ve talked about how complicated the lawmaking process is. Is that an indication of why we need more CPAs in office?

VSCPA: What makes government such a complicated beast?

EM: One of the responsibilities of a Certified Public Accountant is to grasp and understand the full complexity of an organization, whether it’s a small business or some of the largest corporations in our country or, certainly, our largest governments. In part, that means you have to comprehend cause and effect relationships. What drives revenues in the case of government? What drives expenditures? How are policies being carried out? Are they being carried out in compliance with the law? How about performance? Are the programs of government really working on behalf of the people, or are they not hitting the mark? The CPA has the experience and has the duty, really, to develop a comprehensive understanding

"The CPA has the experience and the duty to ED MAZUR, CPA develop a comprehensive understanding of how the complexities of government work and whether quality outcomes are being produced."

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EM: State and local governments are required to approve a balanced budget and to have maintained a balance between revenues and expenditures by the end of each year. That means that the policy positions and the attitudes about what’s important on behalf of the people can differ among individual legislators, county supervisors or members of city council. But at the end of the day, they have to accommodate each other and compromise in order to produce an outcome and a level of services for the populace that stays within the resources that the populace agrees, through their representatives, is appropriate. The tremendous disadvantage we have in the federal government — and it’s been building, sadly, for 45 years — is that there is no stop sign. There is no balanced-budget requirement for the federal government. As a result, the members of Congress have learned that they can borrow and borrow and borrow the funds that it takes to have the programs they establish in law. These programs include entitlement programs like Social Security and Medicare, health programs for the needy such as Medicaid, and a host of other programs that bring to Virginia transportation and safety monies, unemployment funds, university research grants, agricultural support payments, K–12 school funds and so forth. The big problem we have right now, and you’ve heard it called the fiscal cliff, is that we are wildly out of balance between what the American people, through their representatives, have indicated they would like to have

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FISCAL responsibility in the way of services, benefits and programs and what they have been willing to pay for. … The Congress has abused, I think, its capability to call upon the United States to borrow to fund programs. That has placed this country in true jeopardy. Our rate of debt in this country is way beyond what it should be. We have borrowed to fight wars. We have borrowed to support payments for entitlements. This has gotten way out of hand. VSCPA: You’ve spoken about the interconnectedness of government and dependence on the federal government as a major issue. Has that exacerbated the problem? EM: There needed to be attention raised to this issue of what I call “intergovernmental financial dependency” — the fact that one layer of government receives funds from other levels of government and that the operations and activities of the federal government all occur within the jurisdiction of a state and specific local government. So you have this very significant integration among the three levels of government. Last spring, with the encouragement of my colleagues at CliftonLarsonAllen, we came out with “Intergovernmental Financial Dependency: A Study of Key Dependency Measures for the 50 States.” It was the first study of its kind. We drew heavily on information from the states themselves, drawn from their comprehensive annual financial reports and from reports required under the Single Audit Act. On average, across the 50 states, 40 percent of all revenues that come into a state government and its discretely reported component units

come from the federal government. So as the federal government seeks to sustain or doesn’t sustain its capacity to continue those flows, state governments and local governments will have a very serious resulting challenge. When you expand your consideration from indirect federal flows to state governments to include the indirect flows that, for example, go from the federal government directly to local governments, for purchases by the federal government from businesses operating within the state, and to federal flows to individual citizens for Social Security payments, Medicare coverage, retirement in the case of military or former civilian federal employees, then the average value of all of that, across the 50 states, equates to 27 percent of state GDP. … We have a window of opportunity in the United States to set aside partisan bickering, to look at the cold, hard facts and to adopt a balanced approach. An approach where the American people can help advise members of Congress as to what they think is important and what can be, at least for a while, set aside. I think the governors of this nation have an incredible opportunity to participate in and stimulate that dialogue. The one advantage the governors have that members of Congress do not have is that they, together with their legislatures, must keep the books in balance. As a result, they’re constantly in the position of going in their citizens and saying, “Here’s what we’re able to do. Here’s what we’re not able to do. This is important, but we can’t afford it right now.” They’re used to making that case. And, with very few exceptions, if you

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think about the last couple of years when state governments have had to reduce expenditures to keep in balance, there have not been riots in the street. People have accepted that knowledge and information. That kind of dialogue and straightforward talk with the American people is what is needed now in addressing the lack of sustainability of the federal government. VSCPA: How can CPAs make an impact on this issue? EM: I think there’s a wonderful way CPAs can be involve in addressing the federal fiscal crisis. It will cause some expenditure of time and effort, but CPAs can take the annual financial statements of their local government. They can take the annual report of their state government. They can take the annual report of the federal government. In each of these reports, there is a management’s discussion and section. You don’t have to read a 250-page report, but you want to spend some time with, maybe, 25 pages. Even in the federal government’s case, they have a citizen’s guide to interpreting that report, which is only 10 or 12 pages long. If a CPA even spends a casual evening reading the highlights of those reports and then goes to their elected representative — be it a county supervisor, a member of the General Assembly here in Virginia or their congressman — and sits down and says, “This means something to me. What does it mean to you? How do you interpret these predictions that we are on an unsustainable course?” And sit there and have a conversation that gets away from platitudes and talking points and hopefully leads that elected representative to begin to cope with and decide their personal commitment to 

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FISCAL responsibility ensuring the ability of our governments to serve for the long term.

A CHIEF ACCOUNTABILITY OFFICER: DAVE WALKER, CPA VSCPA: What was the genesis of the bus tour? What led you to take this route? DW: The reason that we did the bus tour was that I’ve had a hypothesis. Namely, that the American people are a lot smarter than many politicians believe. They’re very disgusted with the lack of action in Washington. They know we’re in trouble. They can handle the truth, and they’re willing to accept tough choices about spending and taxes if they’re part of a comprehensive plan that they deem to be fair. We’re proving that hypothesis to be true throughout the United States. VSCPA: How did you arrive at that conclusion? DW: I arrived at the conclusion as a result of my efforts since 2005. We were here at the University of Richmond near

"The American people are starved for truth, DAVE WALKER, CPA they’re starved for leadership, they’re starved for solutions and they need more of all three." 14

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the end of the 10 Million a Minute Tour, and the so-called Fiscal Wake-Up Tour started at the University of Richmond in 2005. Since then, the situation has gotten much, much worse. Through all of my experiences since 2005, I’ve come to that conclusion, and I wanted to try to be able to find out whether it was the case, and I wanted to do it at a time that mattered — namely, a general election campaign for President, and in places that mattered, primarily swing states. It was kind of a happy accident that it got started in Richmond. The Concord Coalition was one of our primary partners for the Fiscal Wake-Up tour. They’re also one of our primary partners for the 10 Million a Minute Tour. Concord has a pretty good base of supporters in Richmond, and the University of Richmond invited us to come here. We had a pretty good community event, along with business executives, and we also had an event with students here as well. VSCPA: How did your time as a CPA affect your views on fiscal responsibility? DW: As a Certified Public Accountant, obviously, I’m pretty good at numbers. I’m a believer in transparency and accountability. As the comptroller general of the United States, I was, in effect, the auditor general of the United States — the chief accountability officer. I found that the evidence was clear and compelling that our financial condition was much worse than politicians were willing to admit, that it was deteriorating rapidly and that nothing was being done about it. My view was that I needed to do something about it as the auditor general. If I didn’t do it, I didn’t know who was going to do it. Obviously, the politicians aren’t interested in doing

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it. The Federal Reserve chairman really doesn’t view it as his job. He views his job as monetary policy. The administration, obviously, whoever it is, whether it’s the Bush 43 administration or the Obama administration, they really didn’t want to talk about it too much. That didn’t leave anybody but me. I decided to pick up the mantle, and I’m glad I did. VSCPA: What kind of a response did you get from the government? DW: In Congress, at first, there was some resistance. “Why are you speaking out on this?” I said, “Because I’m the auditor general of the United States, the de facto chief accountability officer. If I don’t do it, who’s going to do it? If not now, when? If not me, who?” Now I get a lot of accolades. A lot of people say I was ahead of my time. I’d rather be ahead of my time than behind my time. As far as the people, at first, they didn’t understand how bad the situation was, in part because the politicians didn’t want to tell them how bad it was. But now, especially after the 2008 financial services meltdown, after the problems in Europe, people know that we’ve got big problems and they know that something has to be done about it. They’re ahead of the politicians. They’re starved for truth, they’re starved for leadership, they’re starved for solutions and they need more of all three. VSCPA: What needs to occur to get the movement to reach critical mass? DW: Whoever wins [the presidency] needs to be able to use the power of the presidency, the bully pulpit, to go directly to the American people and make the case that we’re on a burning platform, that we’ve got to make tough

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FISCAL responsibility choices, and provide a way forward. [Note: This interview was completed in fall 2012, prior to the election.] And then, the first three words of the Constitution have to come alive — “We the People” — to put pressure on senators and members of the House to work constructively with the president, to defuse this ticking debt bomb, before we have a debt crisis here. We have more time, but we’re not exempt from the laws of prudent finance. We don’t have unlimited time. VSCPA: Do you think that having more CPAs in public office would help to get a better sense of the financial situation? DW: First, I think we have more CPAs involved in this fight. CPAs are

knowledgeable, they’re respected, they’re credible. They have a unique opportunity and obligation to be involved in this fight. … I think it also would be helpful to have more CPAs in public office. There aren’t as many. Frankly, we need more people with real-world experience. We have too many career politicians, and that’s part of our problem. That’s one of the things that we’re going to have to address through political reforms. VSCPA: What is it in the CPA mindset that can help in solving our fiscal problems? DW: First, CPAs are good at math, and the U.S. is not top 25 in the world at math. In Washington, frankly, they’re

not top 100. Secondly, CPAs think very logically. They’re very results-oriented. In addition to that, they tend to be more pragmatic. They don’t tend to be ideologues. They tend to be very professional in what they try to do. n

CHIP KNIGHTON is communications specialist at the VSCPA, as well as contributing editor of Disclosures magazine. Contact him at cknighton@vscpa.com.

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FINANCIAL planning

Curb Your Investment Confusion Investment and retirement strategies in a low interest rate environment BY TOM VISOTSKY, CPA, AND O. RALPH PUCCINELLI, CPA

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FINANCIAL planning

The baby boomer generation started turning 65 years old in 2011 at an average of roughly 10,000 people per day, and is expected to continue at that rate until 2030. Historically, as individuals near retirement age they rebalance their portfolios into more “safe” options like CDs and bonds. Unfortunately, most of those options now return little to no interest, unless you extend the maturity of the note, or purchase lower rated securities, such as “high yield” or junk bonds. Either of those options has risks of their own. What is an investor to do? We looked at alternatives and tax options and obtained advice from a variety of advisors for everyone to consider in developing their own, or their clients’, investment and retirement strategies.

STATE OF RETIREMENT PREPAREDNESS According to the Center for Retirement Research at Boston College, “people need about 80 percent of their preretirement income” during retirement. Unfortunately, “the typical household nearing retirement has less than $100,000 in savings.” The typical household positioned exclusively in traditional “safe” investments yielding 1–2 percent would only receive $1,000 – $2,000 PER YEAR, pre-tax. Even a million dollar portfolio would only return $10,000 – $20,000 annually, or $833 – $1,667 monthly, without

touching the principal. That is hardly enough to pay bills, much less live comfortably or take that vacation you’ve dreamed about. According to the 2010 Survey of Consumer Finance (SCF), the Federal Reserve’s triennial survey of household wealth in the United States, the need for wealth increased from prior surveys due to “rising life expectancy; the shift to 401(k) plans; increasing health care costs; and lower real interest rates.” No one is complaining about living longer, but additional costs and lower returns put a strain on retirement plans.

for mental stimulation as much as financial security. Putting retirement off to age 70 from 65 increases your Social Security benefits, allows for an additional build-up in your retirement fund, and reduces the years you’ll be drawing down on retirement savings. Another significant decision revolves around your end goal. Are you concerned about leaving a large legacy, or is your primary goal to provide for your retirement? Your withdrawal rate could vary dramatically if you’re willing to draw down from principal as well as investment returns.

RETIREMENT GOALS

TAX CONSIDERATIONS

Attitudes on retirement vary remarkably, and no serious investment plan can be put in place without first determining your goals. Many baby boomers are deciding to work longer,

Changes in tax laws are expected to be implemented over the next few years due to the fiscal challenges facing the federal government. Any strategies you adopt should be reevaluated as tax 

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FINANCIAL planning laws change. Investment choices should also be evaluated based on whether the funds are in a retail account, traditional tax-deferred IRA or tax-free Roth IRA. The greater your percentage of retirement savings in a Roth, the greater your net, after-tax distribution is likely to be. Also, with the scheduled increase in the maximum long-term capital gains rates from 15 to 20 percent, and the imposition of the new 3.8 percent Medicare surtax on capital gains starting in 2013, timing of investment sales in retail accounts will be more critical than ever. As taxes are likely to increase in coming years, there is a great incentive to accumulating funds in a Roth IRA, which can grow and be distributed tax free. While annual Roth contributions are effective, a Roth IRA conversion allows you to put substantial amounts into a tax-free IRA immediately. Taxes would have to be paid on the income triggered by the conversion, so careful consideration should be given to the overall tax consequences. However, you have the option of electing a “reconversion” until the due date of the return, including extensions. Someone who converts early in 2013 could have until Oct. 15, 2014, to decide if it was a good move. If you convert $50,000 and owe an additional $10,000 in taxes, but have a $10,000 gain on your investments that is permanently tax free, you would likely decide to pay the additional taxes. If, however, your investments in the Roth are flat, or down, you can recharacterize the conversion by moving the funds back into your traditional tax-deferred IRA and you will not owe any taxes. This heads-you-win, tailsyou-call-the-bet-off provision is a rare feature in the tax code.

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Roth IRAs have several advantages, including: • Distributions are tax-free. • Distributions are not subject to the 3.8 percent Medicare surtax. • Distributions don’t increase your Adjusted Gross Income, which could otherwise cause you to lose other tax benefits. • There is no required minimum distribution after reaching age 70½. • Contributions can be continued to be made after reaching age 70½. • After five years, there is no 10 percent penalty for early withdrawal for those over age 59½.

EXPERT INVESTMENT TIPS We reached out to experts in various fields to get their perspective on where to put retirement funds to work. THE BROKERAGE FIRM Mike Beall, executive vice president of Davenport & Company, stated that “near-zero interest rates have created a very difficult environment for those who depend on investment income to live. Returns on ‘safe’ investments such as bonds and bank certificates are in the very low single digits at best and short-term fixed income instruments offer a return below recent inflation levels. The dividend yield on the S&P 500 is currently around 2.1 percent versus 1.6 percent on a 10-year treasury bond.” As far as investments, Beall indicated that “a portfolio of higher quality dividend paying equities yielding over

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3 percent can easily be structured.” He cautioned that “while the dividend yield is attractive, one has to live with swings in market values.” However, “the current yield, potential for dividend increases and price appreciation makes dividend paying stocks a risk we (Davenport) believe(s) is worth taking. Even as (if) the favorable tax treatment of dividends is reduced we feel the numbers still seem to favor the ownership of high quality dividend paying equities as part of retirement portfolios.” THE FINANCIAL ADVISOR Daniel Caffrey, a CFP® with Chartered Financial Planning Associates, Ltd., stated that “interest-rate risk and the risk of increasing tax rates are just two of the risks that retirees and those within five years of retirement face. Other risks to consider are inflation, market volatility, longevity, consumption patterns and health care.” He advises clients to consider all of these risks. Caffrey believes “the key to managing these risks is a diversified portfolio that meets the income and liquidity needs of the client while taking into account their goals, objectives and risk tolerance.” Caffrey believes that there are three strategies to consider when planning for retirement income: • Systematic withdrawals (rates vary per year); • Income floor (annuity with lifetime payments, covered by insurance); and • The “bucket” approach (dividing your portfolio into three buckets):

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FINANCIAL planning 1. Short-term income bucket (meets immediate cash flow needs, emergency fund, etc.). Appropriate investments include cash, CDs/money market, short-term bonds, immediate annuities, Social Security/pension income and wages. 2. Mid-term bucket (mix of growth and income investments; replenish shortterm bucket; guard against market volatility). Consider bonds, deferred annuities, absolute return funds, asset allocation funds and balanced funds. 3. Long-term income bucket (inflation hedge; longevity). Utilizing the bucket approach allows you to structure a portfolio that “provides for income needed short term, as well as managing to address the mid and long-term risks someone will face in retirement, taking into account their risk tolerance and proximity to planned retirement age,” according to Caffrey.

PERSONAL FINANCIAL RESPONSIBILITY Another risk to retirement plans revolves around changes in personal circumstances. All too frequently, finances and long-term planning are the sole responsibility of one spouse, or parent or an adult child. Following divorce or loss of a loved one, the nonfinancial spouse is often ill-prepared to assume these financial responsibilities, particularly with all the other emotional pressures they’re dealing with at the time. The same is true of adult children who

inherit substantial funds. Jinette Chiappetta, CPA, of Financial Accounting Services, Ltd. recommends that “all parties be brought up to speed on their financial status and plans, at least annually, by the person charged with handling their finances, or their financial advisor.” She also sees gender differences. Chiappetta noted that “while women have become much more financially literate, there is still a tendency for many women to leave the finances up to their husband.” Those that don’t stay updated on their financial status ignore the fact that the majority of women, at some point, will be solely responsible for their finances. She emphasized that “it’s important to recognize that women often take a different approach to financial strategies and may be more comfortable discussing their options with an investment advisor who understands the effects that may have on investment choices. Many women strive for financial security and peace of mind and tend to be more patient than their male counterparts with their investments, opting for steady, long-term results in a diversified portfolio. Jinette recommends “a mix of incomeproducing assets like preferred stock and tax-exempt bonds (in taxable retail accounts). Women may also have different needs when it comes to insurance or the amount of money they will need to retire comfortably.” She indicated that studies have shown that a significant number of women fear losing everything by outliving their money, “so guaranteed income available through an immediate or deferred annuity could alleviate those fears. Other options for those concerned about their own longterm care should be to consider the

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security of a traditional or a hybrid longterm care policy, which combines life and long-term care insurance into one policy.”

CONCLUSION Investment and retirement strategies will vary based on age, retirement goals and in some cases, gender. Retirement planning is more critical than ever due to increased life expectancy, higher costs and decreased “safe” investment returns as a result of historic low interest rates. Proper planning requires an evaluation of numerous factors including risktolerance, taxes and retirement income needs. Everyone should devote time to retirement planning, managing their finances and tax planning, or at least be updated periodically in each of these areas. n

TOM VISOTSKY, CPA, is a VSCPA past president and is currently an independent consultant in Richmond. He can be reached at tvisotsky@gmail.com. O. RALPH PUCCINELLI, CPA/PFS, CLU, CHFC, is president of Financial Accounting Services, Ltd., specializing as a tax and business consultant. He is a past president of the Richmond chapter of the VSCPA and can be reached at info@fasltd.com.

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FINANCIAL planning

10 Plain Truths About College Financial Aid CPAs can help their clients take the fear out of college costs. BY MOLLY BROWN, CPA

One fact regarding college is indisputable. It is expensive, and getting more expensive every year. According to The College Board, tuition and fees have increased 5.4 percent annually above inflation every year since 2001. Some of the greatest increases have come from traditionally more affordable public colleges and universities, due in large part to shrinking state support. Since the recession hit in 2008, public funding for these institutions has decreased by 14.6 percent. Even parents who have saved for college using section 529 plans are finding it necessary to turn to financial aid to make college possible. For those who are unfamiliar with the financial aid landscape, it can be scary. Families often turn to their CPA for advice in this area. Here are 10 suggestions CPAs can make to take the fear out of financial aid.

1. LOOK AT COLLEGES WITH FINANCIAL AID IN MIND. Rather than eliminating schools from consideration on the basis of tuition rates alone, families should focus on net tuition after financial aid awards. Many people assume that because private colleges and universities have higher published tuition and fees, they are the least affordable. In Newsweek’s rankings of the 20 most affordable colleges, 12 of them are private institutions. Typically, private colleges have more institutional aid available than do public colleges.

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FINANCIAL planning Institutional aid can be meritbased, need-based or both. When touring colleges, be sure to ask about available aid. The College Board, the organization that administers the SAT, offers a wealth of resources at https://bigfuture.collegeboard.org, including a college cost calculator. This calculator gives students and parents a chance to estimate financial aid support from hundreds of institutions based on family financial information.

regular deadline. Some schools award institutional aid on a first-come, firstserved basis, leaving little or no aid available for students who apply close to the stated deadline. Families that have traditionally waited until April to complete their federal tax returns should plan to file as soon after Jan. 1 as possible. If this is not possible, parents should plan to have estimated information compiled by Jan. 1.

FAFSA, as it is not available until Jan. 1 and must be completed for many colleges by Jan. 31. If a family is able to electronically file their tax return two weeks prior to completing the FAFSA, the form is very easy to complete, as the Department of Education can now import Form 1040 information directly from the IRS. The FAFSA must be completed every year, and can be found at www.fafsa.ed.gov.

2. PLAN AHEAD.

3. ALWAYS COMPLETE THE FAFSA.

4. COMPLETE THE CSS PROFILE IF NECESSARY.

Many scholarships offered by corporations and outside organizations require specific student qualifications and multiple stages of screening. This can mean applying before the student’s senior year in high school. Additionally, some schools have earlier application deadlines for students wishing to be considered for meritbased financial aid. For example, the University of Richmond has a Dec. 1 deadline for merit scholarship applicants, compared to their Jan. 15

The U.S. Department of Education administers the Free Application for Federal Student Aid (FAFSA), which is the basis for all need-based federal aid awarded, and for most institutional aid. Parents should not assume that needbased aid is reserved for low-income families. Even families with earnings more than $200,000 are awarded needbased aid at high-cost institutions, especially if there are multiple college students in a single household. There is a short window for completing the

Almost 400 private schools and scholarship programs require families to complete the College Scholarship Service (CSS) Financial Aid Profile, administered by The College Board, in addition to the FAFSA. This profile asks for more detailed information regarding a family’s assets than does the FAFSA. It should be completed prior to or just after the first of the year, requiring families to provide estimated earnings information. This profile can be completed online at 

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FINANCIAL planning www.gofinancialaid.com. Pay attention to the early deadlines for completion of this profile.

5. BE AWARE THAT OUTSIDE MERIT SCHOLARSHIPS OFTEN REDUCE NEED-BASED AID. If a family is expecting to receive needbased aid, it may not be worthwhile to apply for smaller merit scholarships offered by civic groups, parents’ employers and others. A student’s aid package is determined according to the family’s Expected Family Contribution (EFC). Outside scholarships increase the EFC, thereby decreasing the institutional or federal award. Many families have been disappointed to find that smaller merit awards make no net difference in the cost of college. However, it is always a good idea to check with each individual college to find out how this is handled. Some schools first reduce the amount of loans offered when the EFC is increased, leaving grants unchanged.

6. LOOK TO THE FEDERAL GOVERNMENT FIRST. Federal aid comes in several forms — Pell Grants, subsidized loans and federal work study. Pell Grants are given to students with significant demonstrated need. The maximum Pell Grant award for the 2011–2012 school year was $5,550, and can cover not only a student’s tuition and fees, but other costs of attendance such as room and board (even if the student lives at home), books and supplies.

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Work study awards grant on-campus jobs for eligible students. The federal government is the largest source of college tuition assistance. Parents and students can ask questions regarding federal financial aid programs by calling (800) 4-FED-AID (433-3243).

7. KNOW THE DIFFERENCE BETWEEN COLLEGE LOANS. The federal government offers two types of subsidized student loans. Perkins Loans and Subsidized Stafford Loans are awarded directly to students, not their parents, who have the greatest demonstrated need. These loans carry lower-than-market interest rates and require no credit check. If further aid is needed, families can turn to Parent PLUS loans. These loans are also offered by the federal government, and while they carry a higher interest rate than Perkins and Stafford loans, their rates are lower than commercial banks. It will be the student’s obligation to repay the loans upon graduation. Parent PLUS loans, awarded to the parents, require parent credit information, but are not restricted to demonstrated need. When a family receives a college’s financial aid award letter, it often includes one or more of these loan options. It is important to remember that a family is not obligated to take out the maximum award offered. Some states and universities offer loans as well. The very last resort should be commercial loans, as they carry none of the benefits of the other loans, but all of the drawbacks, such as the inability to cancel the debt through bankruptcy.

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8. DO NOT CASH IN RETIREMENT ACCOUNTS TO PAY FOR COLLEGE. Parents will suffer significant penalties for early withdrawal of retirement funds, not to mention the money will not be available to support them in old age. If there are gaps in college funding, parents should talk frankly with their students about lower-cost options such as community college for the first two years and part-time student employment.

9. THINK ABOUT OTHER COSTS OF COLLEGE ATTENDANCE. When touring colleges, families should inquire about student housing options after the freshman year. Some schools offer little opportunity for on-campus housing for upperclassmen, requiring students to move into apartments that often require 12-month leases. While off-campus housing offers students the opportunity to cook their own meals, thus saving on meal plan costs, the overall cost of room and board is usually higher when a student lives off campus. Of course, schools that are located farther from a student’s home can require greater travel expenses during school breaks. Some majors require study abroad experiences as well, which can drive up the overall cost of college.

10. BEWARE OF FINANCIAL AID SCAMS. The Federal Trade Commission has an excellent website to assist students

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FINANCIAL planning and their parents in determining the legitimacy of scholarship programs at www.consumer.ftc.gov. On it, the FTC cautions students to beware of any scholarship solicitation that requires payment of a fee or a credit card number, offers a guarantee or informs the student that they have been selected for a scholarship they did not apply for. While there are legitimate independent financial aid consultants, no consultant has access to scholarship information that is not available to students on their own. The FTC encourages families to report scams to either the FTC or to their state attorney general.

can encourage advance preparation several years before a child begins college. During the senior year, the CPA should be aware of the necessity for quick turnaround on tax returns. This is especially important when a family business is involved and tax returns are more complex. They can also assist clients in making accurate projections and estimates required by the CSS Profile. Accountants should

also discuss with clients the impact that any college loans may make on their future financial plans and those of their children. Extensive college loan debt from undergraduate studies can prevent students from continuing into graduate programs that are often much more costly, and for which little merit aid is available. Like any sizeable investment, a college education must fit in with a family’s overall financial goals. n

MOLLY BROWN, CPA, has been an accounting instructor at her alma mater, James Madison University, since 2002, where she teaches financial, managerial and cost accounting. She also serves as an ethics instructor for the VSCPA and as an essay scorer for the CPA Exam. Molly lives in Staunton with her husband, Stuart, and her daughter, Mary, who will be entering college in the fall of 2013. Contact her at brownmg@jmu.edu.

CPAs can serve as valuable resources to families who are facing the challenge of paying for college. They

20Hours

Self-Study or Live CPE only

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TECHNOLOGY

The CITP Credential: What You Need to Know BY ADAM G. CHAIKIN, CPA/CITP, CGMA

Many CPAs have found themselves in similar circumstances to mine. Your clients, recognizing you as a trusted business advisor, rely on you for advice over and above the standard services that you may offer as a CPA — venturing into the realm of technology.

>> WHAT IS A CITP? “A CITP is a Certified Information Technology Professional. It is the American Institute of CPAs’ credential for CPA technology professionals that illustrates to others that CPA/CIT’s possess both business and technology acumen and should be involved in developing and driving the use of technology to achieve an organization’s goals.” — CITP Benefits Positioning Statement

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TECHNOLOGY

The reason our clients rely on us for this information is compelling. By nature, we are risk-averse and are careful and calculating in our approach to making decisions. There is no better set of characteristics to help our clients make sound technology choices than what we already bring to the table. They trust that our decisions are the right ones for the long term, are wellvetted and are not based on short-lived technology fads in the marketplace. If you are one of those CPAs, similar to me, whose career has moved more directly into a technology-based role, the American Institute of CPAs (AICPA) has the resources and support that you need within the Certified Information Technology Professional® (CITP) credential. How do you differentiate yourself from others who have limited understanding and limited experience? You do this by becoming a CPA/CITP. The CITP credential is way to exhibit to your clients that you have mastered the CITP body of knowledge. This knowledge creates an educational standard across our profession so that people know your advice can be trusted and is based on a strong foundation in technology education. The marketplace is constantly changing. Companies are looking at technology to improve operations and efficiency. Staying on top of evolving standards and emerging technologies that affect audit and financial reporting is critical to your success as a CPA. Here are eight great reasons to obtain the CITP credential: 1. Distinguishes you from non-CPA IT professionals and other CPAs

who lack information management and technology assurance expertise. 2. Affirms your value to employers and current and potential clients and inspires a greater level of confidence in your expertise. 3. Indicates your continual dedication to improving your IT skills and expertise. 4. Demonstrates your commitment to providing assurance to the financial information generated in your firm or client’s organization.

the benefits they have seen from the credential: Tom Achor, CPA/ CITP, owner and principal of Achor Consulting in Portland, Ore.; Peyton Burch, CPA/CITP, senior channel executive at Intacct Corporation in San Jose, Tex.; and Donny C. Shimamoto, CPA/CITP, CGMA, founder and managing director at IntrapriseTechKnowlogies LLC, in Honolulu, Hawaii. 

REQUIREMENTS TO BECOME A CITP >>

5. Displays your ability to offer tremendous insight into business process improvements, data analytics and enhanced business reporting.

• Be an American Institute of CPAs (AICPA) member in good

6. Offers the opportunity to explore new, exciting roles in areas such as information management, internal controls, business process improvement data analytics and enhanced business reporting.

standing. • Hold a valid and unrevoked CPA certificate or license issued by a legally constituted state authority. • Pass the mandatory CITP

7. Increases opportunities for client referrals from other practitioners and consumers.

Examination implemented in July 2012. • Meet the experience requirement, which is a

8. Affords access to a CPA community in which you can share, debate, network and communicate with other business technology experts.

minimum of 1000 hours within the five-year period preceding the credential application. Experience must be related to the CITP body of knowledge.

If the above information is not compelling enough, I have asked a few colleagues to comment on what the credential means to them.

• Meet the education requirement, which is a minimum of 75 hours within the five-year period preceding the credential application. Education must be related to

MEET SUCCESSFUL CITPs

the CITP body of knowledge.

A few CPA/CITPs agreed to discuss

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TECHNOLOGY >>

CITPs VS. TRADITIONAL IT PROFESSIONALS

How will becoming a CITP set you apart from others working in IT-related careers? See the differences below: Traditional Technology Professionals

Certified Information Technology Professionals

Possess technical certification.

Possess technical and business certifications (i.e. CPA and CITP).

Implement new technologies.

Implement new technologies with the new business rules, policies and procedures that go along with them.

Are data-oriented.

Are information or knowledgeoriented.

Are product-driven.

Are solutions-driven.

Communicate primarily in technical

Translate technical communications

terms — both written and oral.

to results-oriented business communications.

Are IT and/or management information Are business owner, stakeholder and systems-oriented.

enterprise-oriented.

Develop IT strategy.

Develop cohesive company-wide integrated business and IT strategies within a company’s strategic business plan.

Are oriented to minimize systems’

Are oriented to address enterprise

downtime and maximize systems’

management, business interruptions,

reliability.

security and privacy issues and increase access to information and knowledge.

Center diagnostic skills and needs

Center diagnostics skills and need

analysis around IT.

analysis around the needs of the business, market opportunities and bottom-line issues.

How has the CITP credential helped differentiate you from other CPAs or consultants? Achor: “A lot of value in the credential is in the network of fellow CPAs who work in business technology — it’s valuable to be able to recognize other professionals who operate in a similar purview between the business and information service areas of

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organizations.” Burch: “The CITP has served as a differentiator for me and I am seeing the value increase. My work frequently puts me in front of CPAs who are either clients or prospects. The CITP designation adds to my credibility as I engage in technology discussions. The credential is certainly a differentiator.”

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Additionally, I consistently engage with our reseller community, which includes a number of CPAs and CITPs. Without the CITP designation, I felt somewhat less credible when dealing with my peers. While this may have only been my perception, the reality is that I now feel like I am on a level playing field. Shimamoto: “The CITP helps me to clearly distinguish myself as a CPA who specializes in technology. The connection to the CPA also associates the attributes of objectivity and competency with my name, for which there is no equivalent in the IT world. I’ve actually beat out other larger CPA firms and IT consultancies on work because the CITP showed the client that I brought the best of both worlds to them.” Do your clients recognize the credential or do you need to explain it? Achor: “Mostly, my clients and other contacts do not recognize the credential. Even fellow CPAs often do not know what it is. But the fact that it’s on my card creates an opportunity to discuss not only the credential and what it means but my own background and qualifications. If I’m the only CPA/CITP that my client knows of, I’m more likely to be the professional they turn to when they have needs at the intersection of accounting and technology.” Burch: “Yes to both. Certainly, clients that are CPAs recognize the credential, and I am seeing an increasing awareness among non-CPAs. Clearly we are not there yet, and sometimes I do need to explain it, but the frequency is diminishing.”

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TECHNOLOGY Shimamoto: “I often need to explain it. However, that opportunity allows me to provide a clear and differentiated message of the value TOM ACHOR, CPA/CITP that I can provide to potential clients. Once clients hear what it means to be a CITP, they are often impressed and I think that provides me an edge over others with more well-known credentials.” Do you think the credential allows you to charge a premium above your standard rate schedule? Achor: “If I have told the story well my clients are likely to favor me over either a business analyst without accounting credentials or an accounting professional without a technology pedigree. That puts me in a better negotiating position for rate or other terms. It is not above my standard rate schedule because this is where my entire practice lies.”

Burch: “A CITP is a CPA with highlevel mastery of a specialized body of knowledge. Most CITPs have gone beyond this high level DONNY C. SHIMAMOTO, mastery of technology CPA/CITP issues and specialized in certain technology-related niches. The real pricing premium comes for CITPs serving clients in their areas of specialty.” Shimamoto: “It definitely allows me to charge a premium. Even though I’m a small firm, my rates are on-par if not higher than other larger CPA firms in my area and rarely do I have to do much rate negotiations with my clients. They recognize the value that the combined CPA and IT expertise brings to the table and are willing to pay more to work with me.” In addition, a LinkedIn poll done on the AICPA CITP credential holders group showed that 26 percent of respondents felt they can charge a

CPAs Take Note.

premium for their services because of their CITP credential.

WHY DO IT? For me, the case for becoming a CITP was very clear. It was a way for me to set myself apart from other professionals. I am a CPA that has the core values of our professionals with a specialization in technology. I hope you too will consider the credential. n

ADAM CHAIKIN, CPA/ CITP is founder and principal of Thought2Execution LLC, a Virginiabased consulting firm specializing in finance, project management and ERP systems implementations. Contact him at Adam.Chaikin@Thought2Execution. com; find him on LinkedIn at www. linkedin.com/in/adamgchaikin; or on Twitter, follow @Thought2Execute.

Digital Benefit Advisors brings full service expertise, technology, innovation and passion to the accounting industry’s employee benefits arena.

Brian Marks, Principal P: 877.998.7272 www.digitalbenefitadvisors.com 4128 Innslake Drive, Glen Allen, VA 23060

Endorsed by the VSCPA

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2/3/2012 5:16:23 PM

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VSCPA self-assessment Complete this 12-question test and submit to the VSCPA for 1 CPE credit. Exams will not be graded until after the submission deadline. A 75 percent or better pass rate is necessary to receive credit. After your exam is graded, you will receive either a certificate of completion via email for your records or an email notification that the 75 percent grade was not met.

SUBMISSION DEADLINE: April 30, 2013. Exams received after this date will not be graded and your money returned. COST: $15 for VSCPA members / $30 for nonmembers. Please note that this exam will not be live online until March 1, 2013. SUBMISSION INSTRUCTIONS You may submit this self-assessment and make the exam payment online at www.vscpa.com/ March2013DisclosuresExam. You may also circle each answer and mail this paper exam to: CPE Team Virginia Society of CPAs 4309 Cox Road Glen Allen, VA 23060 Fax submissions are acceptable to (804) 273-1741. Name _________________________ Address _______________________ _______________________________ Email Address ___________________ Date __________________________ Method of Payment

• Check (payable to the VSCPA) • Credit card Credit Card Number _______________________________

1. WHICH OF THE FOLLOWING IS TRUE ABOUT STATE GOVERNMENTS’ RELIANCE ON THE FEDERAL BUDGET? a. Most states get only a very small portion of their funding from the federal government. b. Because states receive a substantial portion of their money from the federal government, state and local governments will see cuts when the federal government slashes its own budget. c. On average, across the 50 states, federal funding comprises 35 percent of state budgets. d. There is not a lot of integration in funding between federal, state and local governments. 2. HOW CAN CPAS HELP ADDRESS OUR STATE AND NATIONAL FISCAL PROBLEMS? a. Run for office; more CPAs are needed at all levels of government. b. Read state and national annual reports and contact government representatives about discrepancies and issues they find. c. Develop a comprehensive understanding of how government policies and funding work, and help determine if quality outcomes are being produced. d. All of the above. 3. WHICH IS NOT A REASON THE UNITED STATES FACES FISCAL PROBLEMS? a. The federal government has no balanced-budget requirement, so the country borrows to fund programs and operations. b. A lack of transparency has allowed bureaucrats to have information regarding the country’s fiscal situation, but citizens haven’t understood the problem or challenged the government enough. c. Politicians consistently deliver bad news about funding and programs, and tell citizens what they need to hear, not what they want to hear. d. A lack of elected officials with real-world experience means that difficult spending choices are not being made. 4. ACCORDING TO THE CENTER FOR RETIREMENT RESEARCH, WHAT PERCENT OF PRE-RETIREMENT INCOME DO PEOPLE NEED DURING RETIREMENT? a. 50 percent b. 70 percent c. 80 percent d. 100 percent 5. WHICH OF THE FOLLOWING IS NOT AN ADVANTAGE OF ROTH IRAs? a. Contributions are deductible. b. Distributions are tax free. c. Distributions are not subject to the 3.8 percent Medicare surtax. d. There is no required minimum distribution after reaching age 70½.

Expiration Date ________________ Signature _____________________ Date

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VSCPA self-assessment 6. ACCORDING TO MIKE BEALL OF DAVENPORT & COMPANY, A PORTFOLIO OF HIGHER-QUALITY DIVIDEND-PAYING EQUITIES CAN EASILY BE STRUCTURED TO YIELD MORE THAN WHAT PERCENT? a. 2 percent b. 3 percent c. 4 percent d. 5 percent

THE OFFICIAL MAGAZINE OF Virginia Society of Certified Public Accountants

7. COLLEGE-BOUND STUDENTS ARE NOW FINDING: a. Tuition and fee increases every year equal to inflation. b. Tuition and fee increases at traditionally more affordable public schools. c. Financial aid is unnecessary if they have funds in Section 529 plans. d. Private institutions are now cost-prohibitive for most families.

Brought to

8. WHICH WILL NOT HELP A STUDENT LAND FINANCIAL ASSISTANCE FOR COLLEGE? a. Applying before his or her senior year of high school. b. Having families complete their federal tax returns as soon after Jan. 1 as possible. c. Asking about available aid when touring colleges. d. Don’t worry about filling out the FAFSA, as it is only for low-income applicants. 9. WHICH OF THE FOLLOWING ARE RED FLAGS FOR FRAUD WHEN FINDING FINANCIAL ASSISTANCE FOR COLLEGE? a. Scholarship solicitations that require payment of a fee or a credit card number. b. A student is informed he or she has been selected for a scholarship for which they did not apply. c. An independent financial aid consultant promises privileged access to scholarship information only he or she can provide. d. All of the above.

PiPergliinniae in Vi httP://D iScLoSu

25 no. 5 Ber 2012 I VoL.

I WWW.VScPa.coM

New hire training

18 Ethics education race to female 22 Thepartnership

reS.VSc Pa.coM

IN VIRGINIA YOUR ADVERTISING MESSAGE WILL REACH THE MOST INFLUENTIAL CPAs, AS WELL AS THE BUSINESSES AND INDIVIDUAL CLIENTS TO WHOM THEY RECOMMEND PRODUCTS AND SERVICES. START GROWING YOUR

12. WHICH IS NOT A DIFFERENCE BETWEEN TRADITIONAL TECHNOLOGY PROFESSIONALS AND CITPs? a. CITPs develop cohesive, high-level business strategies as opposed to only IT strategies. b. CITPs are product-driven. c. CITPs have both professional and technical certifications. d. Traditional technology professionals focus on ensuring IT systems are functional and have minimal downtime.

MARCH/APRIL 2013

The CPa

SePteMBer/octo

AND ACCOUNTING PROFESSIONALS

11. TO BECOME A CITP, YOU MUST: a. Hold an unrevoked CPA license. b. Meet a 1,200-hour experience requirement. c. Possess only a technical certification. d. Not hold any other specialty credentials beyond the CPA.

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Society of cPas

MARKET TO 11,000 CPAs

10. WHICH IS NOT A REASON FOR OBTAINING THE CERTIFIED INFORMATION TECHNOLOGY PROFESSIONAL® (CITP) CREDENTIAL? a. It distinguishes you from other non-CPA IT professionals. b. It shows you are dedicated to improving your skills. c. It increases the possibility of receiving referrals. d. None of the above.

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BUSINESS NOW.

EMAIL TODAY ABOUT JHARRIS@VSCPA.COM

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VSCPA news

April is Financial Literacy Month The VSCPA mourns the loss of: The VSCPA will focus on financial fitness throughout the month of April during Virginia Financial Literacy Month, as proclaimed by Gov. Bob McDonnell.

The VSCPA offers plenty of ways to help Virginians increase their financial literacy, including its award-winning Financial Fitness initiative. Here are some ways the VSCPA will encourage wise money management during Financial Literacy Month:

>> “ASK A CPA” EMAIL PROGRAM: Virginia CPAs will answer questions from

the public via emails submitted at FinancialFitness.org. Members from across the state are encouraged to participate. >> FINANCIAL FITNESS WORKSHOP: The VSCPA will hold a free financial

fitness workshop for the public. The date and topic of the workshop were not confirmed when this issue went to press. Check www.FinancialFitness.org for updates. >> MEDIA RELATIONS: A Financial Fitness logo will be available, and the VSCPA

will conduct media relations to promote money management topics, as well as tie in Financial Fitness topics to the @VSCPANews and @FinancialFit Twitter feeds. To volunteer for the “Ask a CPA” Email Program, contact VSCPA Public Relations Manager David Bass at dbass@vscpa.com or (804) 612-9440. n

BOB BRYDON, a VSCPA life member

from Richmond. A graduate of Virginia Commonwealth University, he was a partner with Brydon, McRee and Smith, Cherry, Bekaert & Holland and Walker Consulting. He served as president of the Estate Planning Council of Virginia, treasurer of the Society of Colonial Wars in the State of Virginia and lieutenant governor of the Fourth Division of Kiwanis International. BOB FOX of Newport News. An Air Force

veteran, he taught accounting at Hampton Institute (now Hampton University) and Thomas Nelson Community College. JAMES JARRETT, CPA, a VSCPA life

VSCPA staff news Government Affairs Director EMILY WALKER celebrates 10 years with the VSCPA on April 1. Two employees celebrate their second anniversary with the VSCPA: Marketing Specialist TALLEY KING on March 9 and Accounting Assistant CATHERINE MEEHAN on March 14. Education Manager RICHARD GORDON celebrates his first anniversary with the VSCPA on March 12. Marketing Specialist CHRIS MURPHY has left the VSCPA. Good luck, Chris! n

member from Gainesville. An Arkansas native, he worked for the Bethesda, Md., office of Bond Beebe. ALBERT SHANK, CPA, a VSCPA life

member from Roanoke. A World War II veteran and a graduate of Roanoke Catholic School, he took over a small, local firm that would become Brown Edwards & Co, where he retired as senior partner in 1979. n

GET IT ALL ONLINE >>

VSCPA CPE & NETWORKING Visit the CPE Catalog at www.vscpa. com for the latest VSCPA seminars, conferences, webcasts, networking events and more! TALLEY KING

EMILY WALKER

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CATHERINE MEEHAN

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RICHARD GORDON

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VSCPA news

Congratulations to the following members! NEW HIRES >>

APPOINTMENTS & AWARDS >>

MIKE BURRIS, CPA, has been named vice president and chief

NANCY BAGRANOFF, dean of the Robins School of Business at

financial officer for the Sentara Blue Ridge Region, including RMH Healthcare in Harrisonburg and Martha Jefferson Hospital in Charlottesville.

the University of Richmond, has been named to the American Institute of CPAs (AICPA) Board of Directors.

ROB CHURCHMAN, CPA, has joined Cherry, Bekaert & Holland

Winchester, was elected president of the Construction Industry CPAs/Consultants Association.

as an audit partner for the Government Services group in the Richmond office. PROMOTIONS >> PHILIP A. BUSENITZ, CPA, has been promoted to principal at

Matthews, Carter & Boyce in Fairfax.

KEVIN BRANNER, CPA, principal at Yount, Hyde & Barbour in

DEBORAH GILL, CPA, controller at Clark Nexsen in Norfolk,

has been elected president of the National Society for Design Administration. CHARLES HELME, CPA, managing partner at Fairfax firm

Thompson, Greenspon & Co., was elected to the Board of Directors at CPAmerica.

Updegrove, Combs & McDaniel in Leesburg has promoted DONNA MCMULLEN, CPA, to partner.

HAROLD MARTIN, CPA, a partner at

AMANDA ORROCK, CPA, has been promoted to tax manager at

Glen Allen firm Keiter, was inducted into the American Institute of CPAs (AICPA) Business Valuation Hall of Fame.

Christopher A. Enright, CPA, in Richmond. MARTHA MAVREDES, CPA, was appointed Virginia’s auditor

of public accounts, which has a four-year term. The VSCPA endorsed her candidacy for the position.

JANET RIGGS, CPA, a partner at Moss &

STEPHANIE MERCER, CPA, has been promoted to supervisor in

HAROLD MARTIN

the Leesburg office of Updegrove, Combs & McDaniel. JENNIFER ANN SAUNDERS PFITZNER, CPA, MBA, has been promoted to partner at

Saunders and Matthews, PLLC, in Norfolk, and the firm’s name is now Saunders, Matthews & Pfitzner, PLLC. CHRISTIAN SPENCER, CPA, has been JENNIFER ANN SAUNDERS PFITZNER

promoted to partner in the Audit and Assurance Services Department of Tate & Tryon in Washington, D.C. HEATHER TWEEDIE, CPA, has been

promoted to partner at Hottel & Willis in Winchester.

Riggs in Locust Hill, was elected treasurer of the Middlesex County Economic Development Authority.

MIKE TRYON, CPA, partner at Tate & Tryon in Washington,

D.C., has been appointed to serve on the Audit Committee of the American Academy of Physicians Assistants. PAT WARD, CPA, a sole practitioner in Colonial Beach, was

elected to the Colonial Beach Chamber of Commerce Board of Directors. FIRM NEWS >> WITT MARES and PBGH have merged, effective Jan. 1. The

new company, known as PBMARES, LLP, will have offices in Fairfax, Fredericksburg, Harrisonburg, Newport News, Norfolk, Richmond, Warrenton and Williamsburg. n

ANDREW YOUHAS, CPA, has been named

HEATHER TWEEDIE

associate principal at Murray, Jonson, White & Associates in Falls Church.

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VSCPA news

VSCPA Annual Meeting and 2013–2014 Board of Directors The VSCPA Annual Meeting will be held Friday, May 17, at 11:30 a.m. at the Richmond Hilton Hotel & Spa in Short Pump. During the meeting, the Nominations Committee will present the following nominated members for election as 2013–2014 officers and directors: CHAIR

CHAIR-ELECT

James Shepherd, CPA

Colette Wilson, CPA

AT-LARGE DIRECTORS Rebecca Bartholomae, CPA Susan Ferguson, CPA Marc Filer, CPA Richard Groover, CPA Staci Henshaw, CPA Victoria Jones, CPA Bradley Nicklin, CPA A. Marshall Northington, CPA Gary Romer, CPA Lawrence Schwartz, CPA

VICE CHAIRS Lisa Germano, CPA Andrew Martin, CPA James Phillips, CPA Jamie Wohlert, CPA

JAMES SHEPHERD

C nnect

Are you connected? Our new, interactive member directory makes it easy to

 Access members-only resources

 Add your picture  Use LinkedIn® to update your profile  Add contacts

 Create industry-specific discussions

 View accounting jobs

 View event attendees  And more!

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VSCPA 100% Member Firms VSCPA 100% Member Firms show their commitment to their employees, the profession and the association. A 100% Member Firm is simply a Virginia CPA firm or company that has all of its CPAs enrolled as members in the VSCPA. Interested in being listed as a 100% Member Firm? Contact VSCPA Member Relations Director Brenda Fogg at bfogg@vscpa.com or (804) 612-9409. A.F. Thomas & Associates, PC Anderson & Reed, LLP Anderson, White & Company, PC, CPAs Andrews, Barwick & Lee, PC Barnes, Brock, Cornwell & Heilman PLC Beale & Curran, PC Beck & Company, CPAs, PC Bennett, Atkinson & Associates, PC Biegler & Associates, PC BlackHeath Company, PLC Bowling, Franklin, & Co., LLP Boyce, Spady & Moore PLC Britt & Peak, PC, CPAs Bullock & Associates, PC Burdette Smith & Bish LLC Burgess & Co., PC, CPAs Cameron, Moberly & Hamrick, PC Charles S. Pearson Jr., CPA Charles W. Snader, PC Cherie A. James, CPA, PLC Chesapeake Accounting Group PC Christopher A. Enright, CPA, PLC Cole & Associates CPAs, LLC Coley, Eubank & Company, PC Corbin & Company, PC Craver, Green and Company, PLC Creedle, Jones and Alga, PC CST Group, CPAs, PC Dalal & Company David L. Zimmer CPA PC Diane Y. Smith CPA PC Didawick & Company, PC Digital Benefit Advisors Donald W. Coleman, CPA, Inc., PC Douglas L. Thompson, CPA PLLC Duvall Wheeler, LLP Eggleston & Eggleston, PC Elmore, Hupp & Company, PLC Everett O. Winn, CPA, PLC First Capital Bank Frank Edward Sheffer & Company Fritz & Company, PC Garland & Garland, CPAs, PC Garris and Company, PC GL Roberson CPA, PLLC Gregg & Bailey, PC Gregory & Associates, PLLC

Gurman & Company, PLLC Hantzmon Wiebel Harris, Hardy, & Johnstone, PC Harris, Harvey, Neal & Co., LLP Henley & Henley, PC Henry R. Hortenstine III, CPA, PC Hogan & Reed, PC, CPAs Holland & Brown LLP Homes, Lowry, Horn & Johnson, Ltd. Honeycutt & McGuire CPAs Hughes & Basye, PC Hunt & Calderone, PC, CPAs Jay E. Reiner CPA PLLC John M. Watkins, CPA Johnson, Equi & Co., PLC Jones, Adams & Delp, PC Jones, Madden & Council, PLC Jones & McIntyre, PLLC JS Morlu, LLC Keiter Kositzka, Wicks & Company Kris McMackin CPA L.P. Martin & Company, PC Lane & Associates, PC Larry D Greene CPA PC Lauren V. Wolcott, CPA, PC Lent & Hawthorne, PC M. Lee Winder & Associates, PC Mallard & Mallard CPAs, LLC Martin, Beachy & Arehart, PLLC McPhillips Roberts & Deans PLC Michael B. Cooke, CPA, PC Michael R. Anliker, CPA, PC Miller Foley Group Mitchell, Wiggins & Company, LLP Moss & Riggs, PLLC Murray, Jonson, White & Associates, Ltd., PC Nicholas, Jones & Co., PLC*Norris & Associates, PC Paul Mitchell CPA CFP(r) PBMares, LLP R.T. McCalpin & Associates Renner & Company, CPAs, PC Roger L. Handy, PC Rubin, Koehmstedt & Nadler, PLC Russell, Evans & Thompson, PLLC Rutherford & Johnson, PC

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Salter & Associates, PC Saunders, Matthews & Pfitzner, PLLC Scheulen, Patchett & Edwards, PC Sells Hogg & Associates CPAs, PC Spencer, Hager & Mosdell, PC Spitler, Stephens & Associates PLLC Stephen Merritt CPA, PC Stephen T. Shickel, CPA, PLC Steve Guy & Associates, PC Steve Walls & Associates, PLLC Strickland & Jones, PC Sullivan, Andrews & Taylor PC Terry L. Jones, CPA, LLC Thomas E. Fraley, CPA Thompson, Greenspon & Co., PC Tongelidis Consulting, LLC Updegrove, Combs & McDaniel, PLC Valderas & Fishel, PC Verus Financial Partners WalkerChaney, CPAs Wall, Einhorn & Chernitzer Wells, Coleman & Company, LLP Wilkinson Consulting & CPA PLC William B. May, Jr., CPA, PC Yancey, Miller & Bowman, CPAs PLLC Yount, Hyde & Barbour, PC The above list was compiled Jan. 11, 2013. Check http://www.vscpa.com/100Percent for a complete, up-to-date list.

WE WANT TO HEAR ABOUT IT! >>

Email disclosures@vscpa.com if you have exciting news to share. The VSCPA prints news of members’ awards, appointments and promotions as well as new hire and job change announcements. Firm news, as well as mergers and acquisitions, is also welcome.

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VSCPA educational foundation SCHOLARSHIP PROFILE >>

Phillip Stucki: The Best He Can Be

Let’s be clear: the CPA credential is a worthwhile career goal for all personality types. But there are some characteristics that make the profession a natural fit. Phillip Stucki fits those characteristics to a T. Stucki, a junior at Virginia Tech and the recipient of the VSCPA Educational Foundation’s 2012–2013 Yount, Hyde & Barbour

DONATE TO THE FOUNDATION

Each year, the VSCPA Educational Foundation awards scholarships to deserving accounting students like Phillip Stucki at colleges and universities across the Commonwealth. Your tax-deductible donation to the Foundation helps the brightest accounting students across Virginia continue their accounting studies and ensure the future of the CPA profession. Make a difference today by contributing online at www.VSCPAFoundation.com.

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Scholarship, already has a résumé a mile long. He’s a resident advisor in a dorm at the school. He’s currently on hiatus from his role on the drumline (he plays snare) of the Marching Virginians, one of the school’s marching bands. “I didn’t want to shortchange either of the two as obligations,” he says, although he plans to juggle the responsibilities of both next year. And he’s a specialist in the 29th Infantry Division of the Virginia National Guard, where he keeps his drumming skills sharp as a member of the National Guard band. “I’ve got a lot of stuff going on,” he said in perhaps the understatement of the year. “…Time management skills have always helped me out. I’m really strict with my schedule — go to bed at 11, wake up at 7, go to the gym and hit the books. I pretty much stick to my routine. It gives me structure so even though I have a lot of stuff going on, it’s manageable.” Stucki comes by that self-discipline naturally — his father is a retired Army veteran and a government contractor — and he says it helps him “be the best person I can be — mentally, physically, spiritually.” The Stafford native is equally determined in his pursuit of an accounting career, planning to forgo easy

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CLASSIFIED ads classes for a more rigorous schedule to better prepare him for the accounting world. “Virginia Tech offers a five-year master’s that gets you the 150 credits to sit for the CPA,” he said. “I was able to talk to a bunch of guys who had gone that route and they were really happy with how it prepared them for the Exam, as opposed to going on and studying basket-weaving to get the 150 hours.” His level of focus stems in part from a desire to help his family by defraying the costs of his education, but also from an urge to leave his mark at Virginia Tech. That’s part of what led to his role as a resident advisor. But he drew further inspiration from the energy he felt on a Thursday night in the stands at Lane Stadium with his fellow Marching Virginians. “It’s a feeling of being part of this university,” he said. “I felt that if I could help others get that feeling and feel more at home here, I would be giving back. I’d been here for an entire semester prior to that and I didn’t feel like I was a part of the university until I had that experience. I thought if I could help others find that, I would kind of be doing my part.” More than just “being part” of Virginia Tech, Stucki has taken full advantage of the network of former Hokies in the accounting profession. He accepted an externship at Baker Tilly that put him in contact with several Tech graduates who were happy to share their experiences. “It helped me kind of put together a timeline for where I wanted to be in a couple of years and what it was going to take to get me there,” Stucki said. n >>

SCHOLARSHIP APPLICATIONS DUE APRIL 1

Applications for VSCPA Educational Foundation scholarships for the 2013–2014 academic year are due April 1, 2013. These scholarships range from $1,000 to $4,000. Applications are only accepted online, so visit www.vscpa.com/Scholarships to create your account and apply. For more information on VSCPA Educational Foundation scholarships, visit www.VSCPAFoundation.com, email info@ vscpafoundation.com or call (800) 733-8272.

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GROWTH, SALES & ACQUISITIONS BUYING OR SELLING AN ACCOUNTING PRACTICE? Want a “clean exit?” Experience The Seamless Succession™ — to facilitate the absolute best transfer of your accounting practice. Learn more about our unique, 5-step process ... and view our most up-to-date opportunities for purchase. Please visit www. PoeGroupAdvisors.com or email us at info@poegroupadvisors.com. 888-246-0974 $225,000 — Middle Peninsula, VA $295,000 — Between Charlottesville and Richmond, VA $225,000 — Between Richmond, VA and Washington, DC $475,000 — Richmond, VA $300,000 — Richmond, VA Recently Sold: Rock Hill, SC $1,5000,000; Richmond, VA $569,000; Raleigh, NC $191,000 SALE/MERGER OPPORTUNITY — Well established and diversified small Northern VA CPA firm seeks sale/merger opportunities. Practice clientele includes reviews, compilations, write-up services and three non-profit audits. The firm has a significant individual income tax practice as well as a variety of business tax returns. The firm enjoys a long-standing on-site and unqualified or pass peer review history. The firm is that of a sole practitioner seeking retirement or semi-retirement over the next 2 years. Growth and referral opportunities are excellent. Reply in confidence to VSCPA CC #74, 4309 Cox Road, Glen Allen, VA 23060 or classifieds@vscpa.com.

PEER REVIEW WE CAN PERFORM ENGAGEMENT, SYSTEM, OR PRE/ POST-ISSUANCE PEER REVIEWS for your firm. We are experienced and up-to-date on the latest regulations. Call me today to perform your peer review professionally and efficiently. Charles Coker, CPA (703) 931-3290 charles.coker@cpa-coker.com

GET NOTICED IN VSCPA CLASSIFIEDS More than 10,000 CPAs across the region turn to Disclosures for up-to-date information on issues affecting the accounting profession. Reach them all with a cost-effective classified ad! Contact us at classifieds@vscpa.com or visit the VSCPA website at www.vscpa.com and click on “Advertise or Sponsor” under “For the Public.”

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I AM the vscpa

No matter which school Virginia’s students choose, Ometer helps secure their futures. SAVING FOR STUDENTS >>

Two minutes with Gary Ometer, CPA As chief financial officer at the Virginia College Savings Plan, Ometer is responsible for VA529’s financial operations, accounting, investments and financial reporting. VA529 is the largest college savings plan in the country, and offers four tax-advantaged Section 529 with aggregate assets of more than $39 billion and an operating budget of about $20 million. I AM PASSIONATE ABOUT…My beloved Ohio State Buckeyes for one! On a more cerebral note, I am concerned about the decline in fiscal conservatism and continued diminution of federalism in Washington, D.C. Those trends, along with federal budget realities, will, in my opinion, adversely impact Virginia government, corporations and individuals in the coming years. I applaud the VSCPA

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for championing a dialogue among its membership of fiscal sustainability at the state and local government levels. It is an issue of great consequence to Virginia. PEOPLE DON’T KNOW THIS, BUT… I am a multi-gallon blood donor in three states and the District of Columbia. MY ADVICE TO ASPIRING CPAs IS… Always ask “Why?” One of my favorite Thomas Jefferson quotes is inscribed on the facade of the Old State Library Building in Richmond’s Capitol Square. It reads: “Reason and free inquiry are the only effectual agents against error. They are the natural enemies of error and of error only.” WHEN I TOOK THE CPA EXAM… The Richmond Exam was held at the

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Arthur Ashe Center on the Boulevard. I remember it rained one day and water was dripping through the roof. We were sitting at folding tables, some of which were warped and damaged. Haunting still… I NEVER LEAVE HOME WITHOUT… My HP12C calculator and my hard cover calendar. (I am old fashioned!) I AM A CPA BECAUSE…Of a gentleman named Ralph Poe who headed the tax department at the bank I joined right out of college. I met Ralph after completing a management training program and he strongly encouraged me (nagged is perhaps a better term) to complete the 150 hours and take the Exam. I took his advice and never regretted the decision. n

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Virginia Society of CPAs Virginia Society of 4309 Cox Road Glen Allen, VA 23060 Certified Public

Accountants Change service requested

If not you, then who? The VSCPA Educational Foundation Needs Your Support

The VSCPA Educational Foundation rewards nearly $44,000 a year in scholarships to the most deserving accounting students in colleges and universities across Virginia. Your tax-deductible donation to the Foundation will help the brightest students across Virginia to continue their accounting studies.

Make your annual contribution today at www.VSCPAFoundation.com.