NJCPA MAY/JUNE 2013 by The Warren Group

Co Sp nv eci Iss en al ue tio n Magazine of the

New Jersey Society of Certified Public Accountants

Technology First Impressions of Windows 8 Six SEO Tips for CPAs Beyond Excel Basics Managing Digital Documents Scan for a Special Message from the NJSCPA

May â&#x20AC;˘ June 2013

May • June 2013

features

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

Ellen C. McSherry, CGMA Chief Operating Officer emcsherry@njscpa.org

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

David Plaskow Managing Editor dplaskow@njscpa.org

Jeanette L. Miller Editorial Assistant jmiller@njscpa.org

Editorial Advisory Board Neil B. Becourtney, CPA Timothy A. Burley, CPA Salvatore A. Collemi, CPA Rebecca B. Fitzhugh, CPA Catherine Z. Horn, CPA Bernard M. Kiely, CPA Marcella LoCastro, CPA Anthony F. Marone, CPA William C. McNamara, CPA Marc D. Mintz, CPA John F. Raspante, CPA Margaret Van Brunt, CPA

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

First Impressions of Windows 8 Find out if the latest software package from Microsoft is a step forward or backward for users. Six SEO Tips for CPAs Learn several search engine optimization (SEO) tips that you can do right now to increase the ranking of your website. Beyond Excel Basics See how Excel Add-In tools can vastly enhance auditing, business valuations, financial statement preparation and business financial planning processes. Managing Digital Documents Discover what you can do to navigate the increasingly complex digital document management process, thereby enhancing client service.

10 14 16

4 Close Up So You Want to Be a Rock 'n' Roll Star

28 Tax Talk Critical Questions Surround the New Medical Device Excise Tax

6 News Briefs 30 Tech Center 18 A&A Buzz Advanced Pivot Tables Is It Worth Investing in Audits for Technology Startups? 42 Student Outlook NJSCPA Celebrates Its 20 Best Practices 53rd Awards Ceremony Are You Maximizing LinkedIn? 44 Legislative Views Governor Signs Tax Credit for 22 Financial Planning Investments in Emerging Helping NJ Homeowners Tech Companies Stay Afloat 46 Member Profile 24 Forensic File Where There’s Smoke, Palimony Case Law in NJ There’s This CPA 25 Industry Insights A Pair of Financial Reporting Tools 26 Small/Sole Practitioner Ten Ways to Prevent Hackers

Society Pages 2013/14 Executive Committee, 32 2013-16 Board of Trustees, 34 CPE Offerings and Events, 36 Member Benefits, 37 Get Involved, 38 NJ State Board of Accountancy Report, 40 Classifieds, 41

The Warren Group Design / Production / Advertising thewarrengroup.com custompubs@thewarrengroup.com

New Jersey CPA (ISSN 1534-6692) is published six times per year by the New Jersey Society of Certified Public Accountants, 425 Eagle Rock Avenue-Suite 100, Roseland, NJ 07068. Issue No. 39 Copyright © 2013 New Jersey Society of Certified Public Accountants. Annual membership dues includes $9 for a one-year subscription to New Jersey CPA magazine. Members may not deduct subscription price from dues. Periodicals postage paid at Roseland, NJ, and at additional mailing office. POSTMASTER: Send address changes to New Jersey CPA, 425 Eagle Rock Avenue, Suite 100, Roseland, NJ 07068-1723. The materials and information contained within New Jersey CPA are offered as information only and not as practice, financial, accounting, legal or other professional advice. The opinions expressed herein are those of the authors and not necessarily those of the New Jersey Society of CPAs. Publication of an advertisement in New Jersey CPA does not constitute an endorsement of the product or service by the New Jersey Society of CPAs.

o ey xp rs E Je & w on er Ne nti eak e p nv S Co

So You Want to Be a Rock ‘n’ Roll Star

When rocking between rehearsals at the camp, it’s not uncommon to hear the counselors break down each song, verse by verse, and work with campers to figure out which styles will make the song more impactful. Companies and brands need to do the same; they need to examine each piece of a program and think about how to make it more effective, to better reach their target markets in every way possible. When listening to hits from The Allman Brothers Band, Jane’s Addiction or The Who, it’s natural to think that these rock stars were born with that talent, that musicianship comes as easy to them as breathing. Well, that’s not the case; practice makes perfect. It’s the same for entrepreneurs. Whether trying to get a million-dollar investor or trying to sell a million CDs, the key is practicing to perfection. Rather than run from failure, learn from it. Realize what can be improved, and act on it. On the surface, the commonalities between rock stars and businesspeople might seem negligible. But they’re far greater than you may think. Rock and roll can provide a roadmap for how to run any business – from staffing to marketing to technology and more. A business no longer has to stop at mere success, but it can rock its way to the top! Catch Fishof’s general session on “Rock Your Business: What You and Your Company Can Learn from the Business of Rock and Roll” at the NJSCPA Convention & Expo in Atlantic City, June 12-14. Visit njscpa.org/convention for more information. David Fishof is the founder and creator of the Rock ‘n’ Roll Fantasy Camp and author of Rock Your Business: What You and Your Company Can Learn from the Business of Rock and Roll. Fishof makes dreams come true for rock ‘n’ roll fans all over the world with his ever-expanding Rock ‘n’ Roll Fantasy Camps. To learn more about the Rock ‘n’ Roll Fantasy Camp, visit njscpa.org/newjerseycpa/mayjune13.

Rock ‘n’ Roll Fantasy Camp founder David Fishof (left) greets Eagles guitarist Joe Walsh.

o an ordinary businessperson, rock and roll’s influence may be limited to some steering wheel drumming when KISS comes on the radio after a long day at the office. David Fishof, however, is no ordinary businessperson. Fishof has realized, through his history working with legendary artists, such as Ringo Starr and The Monkees, that rock and roll is so much more than hotels and guitar strings; it’s about having a solid business plan. In his book, Rock Your Business, Fishof examines rock stars’ successes and how you can rock your business to the top of the charts. After conquering the sporting agent market – representing athletes such as Phil Simms, Lou Piniella and others – Fishof created the Rock ‘n’ Roll Fantasy Camp, which provides threeand five-day excursions for music lovers to meet, rehearse and perform with some of the world’s most talented musicians. Campers come to realize that the business of rock and roll applies to entrepreneurs of all shapes and sizes. After all, U2’s Bono owns a stake in Facebook, Sammy Hagar is a tequila mogul and Mick Jagger studied at the London School of Economics. Fishof has extolled his theories on the correlation between rock and roll and entrepreneurship in a variety of ways. His aforementioned book focuses on four main business-oriented pillars: dream bigger; attract an audience; overcome enormous obstacles; and take it to the next level. Each of these pillars takes examples from some of the world’s biggest rock stars. The Rock ‘n’ Roll Fantasy Camp serves as more than just a once-in-a-lifetime experience. In addition to jamming with childhood heroes, businesspeople learn about opportunity in both the world of music and in business. The rock stars not only help shape the bands and their songs using their first-hand experience of maneuvering the often-treacherous waters of the music business, they help campers shape their businesses for the competitive long-term.

2012/13 Board of Trustees EXECUTIVE COMMITTEE President Thomas F. Roche III, CPA President-Elect Gerard Abbattista, CPA Secretary Brad E. Muniz, CPA Treasurer Walter J. Brasch, CPA Immediate Past President Carole A. Hedinger, CPA CEO & Executive Director Ralph Albert Thomas, CGMA

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

TRUSTEES Jose E. Bombino, CPA Susan Burke-Leichner, CPA William A. Cadmus, CPA Edward I. Guttenplan, CPA Michael W. Gutwetter, CPA Karl A. Halteman, CPA Robert P. Herman, CPA Maryann Holloway, CPA Kenneth Pogrob, CPA Jody Rorick, CPA Mary E. Zago, CPA Joseph A. Zielinski, CPA

2013 NJSCPA CONVENTION & EXPO June 12-14, 2013

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• Discuss new ideas • Earn CPE credits • Have some fun Our line-up of national speakers – including a noted economist, a New York Times best-selling author, an accomplished consultant, an expert in human dynamics, and even a successful rock and roll entrepreneur – will share their beliefs and ideas on what you need to do to succeed amidst an uncertain business landscape.

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N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

NEWS AICPA Seeks Rental Real Estate Clarification

The American Institute of CPAs has urged the Internal Revenue Service (IRS) to clarify when a taxpayer with rental real estate activity must file a Form 1099-MISC, “Miscellaneous Income,” for payments to third parties of $600 or more in a year and has asked the IRS to remove two questions from Form 1040, Schedule E, until such guidance is issued.

FASB Issues ASU on Proposed Clarification to Fair Value Disclosure Exemption Affecting Private Companies and Not-for-Profit Organizations

The Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2013-03, Financial Instruments (Topic 825): Clarifying the Scope and Applicability of a Particular Disclosure to Nonpublic Entities, which clarifies the scope and applicability of a disclosure exemption that is specific to private companies and not-for-profit organizations that resulted from the issuance of Accounting Standards Update No. 2011-04,

briefs

Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The update clarifies that the requirement to disclose “the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, 2 or 3)” does not apply to private companies and nonpublic not-for-profit organizations for items that are not measured at fair value in the statement of financial position, but for which fair value is disclosed. Visit fasb.org.

government combination is a government merger, a government acquisition or a transfer of operations; using carrying values to measure the assets, deferred outflows of resources, liabilities and deferred inflows of resources combined in a government merger or transfer of operations; measuring acquired assets, deferred outflows of resources, liabilities and deferred inflows of resources based upon their acquisition values in a government acquisition; and reporting the disposal of government operations that have been transferred or sold. The requirements are effective for periods beginning after December 15, 2013, and should be applied on a prospective basis. Early application of the standard is encouraged. Visit gasb.org.

New GASB Standard for Government Combinations and Disposals of Government Operations

What’s Your Story?

The Governmental Accounting Standards Board (GASB) published GASB Statement No. 69, Government Combinations and Disposals of Government Operations, intended to improve accounting and financial reporting for U.S. state and local governments’ combinations and disposals of government operations. The statement provides guidance for whether a specific

Do you have the world’s largest collection of salt and pepper shakers? Have you been a contestant on a TV game show? Did you invent the spork? We want to know. New Jersey CPA magazine is looking for candidates for its Member Profile column. Profilees should have a unique hobby or pursuit – the quirkier the better. If you have an interesting personal story to tell, contact the magazine’s editor, David Plaskow, at dplaskow@ njscpa.org.

NJ 2012/13 Winter Storm Season by the Numbers 50,80,000 Department of Transportation expenses for materials,

NJ Ban on Credit Card Surcharges Gathers Momentum

labor and equipment

172.15 Average hourly pay of private snow removal contractors 2,000 Number of state plows used 22 Number of statewide storm events

The New Jersey Assembly Financial Institution and

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Insurance Committee approved a motion that would prevent retailers from imposing credit card surcharges on customers. Due to recent changes in national credit card regulations, merchants can levy a surcharge – typically from 1.5 to 4 percent – on consumer purchases. The surcharge does not apply to debit cards, and gas stations would still be able to charge differently for cash or credit payments. Currently, 10 states do not allow such surcharges. The bill now goes to the full Assembly; there is also a similar bill pending before the NJ Senate.

New Licensee Reminder

The Society reminds new CPA licensees that they are required to take the New Jersey Law and Ethics course within six months after licensure. Furthermore, they are required to send a copy of the course certificate to the New Jersey State Board of Accountancy within 30 days of completing the course. For more information about this requirement or how to track your completed courses, visit njscpa.org/ethics.

NASBA Urges AICPA to Withdraw Private Company Accounting Proposal

The National Association of State Boards of Accountancy (NASBA) Board of Directors adopted a resolution regarding the AICPA exposure draft: Proposed Financial Reporting Framework for Small- and Medium-Sized Entities (FRF-SME). The NASBA urged the AICPA

to either table or withdraw the proposal in order to allow the Financial Accounting Foundation’s Private Company Council adequate opportunity to develop standards uniquely applicable to private companies that can be authoritative and part of generally accepted accounting principles. Visit nasba.org.

POGO: Revolving Door at SEC Creates Risk of Regulatory Capture

According to a report by the Project on Government Oversight (POGO), a revolving door blurs the lines between one of the nation’s most important regulatory agencies and the interests it regulates. Former

employees of the Securities and Exchange Commission (SEC) routinely help corporations try to influence SEC rulemaking, counter the agency’s investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals and win exemptions from federal law. POGO’s report examines many manifestations of the revolving door, analyzes how the revolving door can influence the SEC and explores how to mitigate the most harmful effects. Visit pogo.org.

Oversight Board (PCAOB) released a report summarizing inspection observations identified in the 2007-10 inspections of U.S. firms that audited 100 or fewer public companies. According to the report, 44 percent of the audit firms inspected during the 2007-10 period had at least one significant audit performance deficiency, compared to 61 percent in the 2004-06 triennial. Of the individual audits inspected during 2007-10, 28 percent had at least one significant audit performance deficiency compared to 36 percent of the audits inspected from 2004-06. The report includes observations from 748 inspections of 578 domestic

PCAOB Issues Report on Domestic Firm Inspection

The Public Company Accounting

triennial firms conducted in the 2007-10 period and encompasses inspection staff reviews of aspects of 1,801 audits. Visit pcaobus.org.

Budget Sequestration Reduces Some Tax Credits and Awards The IRS has announced that federal budget sequestration has resulted in required cuts to certain credits and awards, effective March 1. These required cuts include reductions to the refundable portion of the Small Business Health Care Tax Credit for certain small tax-exempt employers, award payments to whistleblowers and refundable credits applicable to certain qualified bonds.

njscpa.org Spotlight

New and Improved Mobile App for Connect Now Available The New Jersey Society of CPAs is pleased to offer an enhanced mobile app for Connect, the Society’s online community for members. Available for Apple and Android smartphones and tablets, the app allows you to participate in discussions; search, find and connect with other members; view Society events; and read the latest professional news. Features include: • Discussions – Collaborate with other members, and get answers to your questions. All of the eGroups that you are subscribed to on Connect are available via the mobile app, including the Open Forum. Read and reply to existing discussions, or start a new discussion.

• Events – View a schedule of upcoming NJSCPA seminars, conferences, chapter events and committee meetings. • Inbox – Access your Connect inbox. • News – Read the Society’s Twitter feed to stay up-to-date on the latest professional news. • People – Get quick access to your fellow NJSCPA members. View all of the members you have become contacts with on Connect, or search the full membership directory.

2. Once downloaded, launch the app and select “NJSCPA.” 3. Log in using your NJSCPA username (email address) and password (member ID number, unless you’ve changed it). Questions? Contact Rachael Bell at rbell@njscpa.org or 973-226-4494 x220.

To download the app: 1. Visit your device’s application store and search for the app named “MemberCenteric” by Results Direct.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

First Impressions of Windows 8 On October 26, 2012, Windows 8 officially became the latest version of Microsoft’s flagship operating system. With previous Windows upgrades, you could pretty much be up and running on a new PC quickly – well, as long as you weren’t using Windows Vista. To me, Windows 8 feels designed to stop you in your tracks at every turn or make you jump through unnecessary hoops until you get the lay of the land. You’re going to experience this to a lesser extent in Office 2013, as well. I’ll describe my initial experiences with Windows 8 in hopes that it will aid your eventual transition.

By David H. Ringstrom, CPA Accounting Advisors, Inc.

Windows 8 perpetuates the current peek-a-boo fad software designers have embraced as of late. Long-term computer users are accustomed to always seeing a button or menu through which they can access programs or features. This simultaneously goes out the window and gets skewed in Windows 8. Many Windows 8 features require you to move your mouse to a particular location on your screen and hover. For instance, you won’t see a visible Start button, nor will you initially see N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

a taskbar, but rather a “start panel” that is comprised of tiles. Think of these tiles as icons on steroids. Tiles can be of various sizes and may blink at you to the point of distraction. My first order of business was to remove all of the blinking tiles, and I’m slowly accumulating tiles that let me access features and programs that I actually use. However, this start panel isn’t your actual desktop, at least not in a traditional Windows sense. To get to your true Windows desktop, you’ll click on a tile labeled Desktop, as shown in Figure 1. When you locate your desktop, you can place icons on it just as you would in previous versions of Windows. The desktop also has a taskbar that you can pin items to as you may have done in Windows 7 and earlier, as shown in Figure 2. In essence, you’ll have two desktops, whether you like it or not. The start panel is a reimagination of the traditional Start menu (did I mention that the start panel scrolls to the right when your mouse touches the right edge of your screen?). Once you’ve launched your desktop by clicking on its tile, you can return to it by pressing Alt-Tab, or access the start panel again by moving your mouse to the lower left-hand corner of the screen, hovering for a moment, and then clicking the Start button that appears, and then clicking on the desktop tile again.

Figure 1

Figure 2

Figure 3

Figure 1: Windows 8 doesn’t offer a start menu and only indirect access to a Desktop screen. Figure 2: You can establish a traditional desktop and taskbar in Windows 8. Figure 3: Many Windows 8 features, such as the Charms bar, require you to move your mouse to certain screen positions. Moving your mouse to either corner on the right-hand side of your screen reveals a hidden toolbar, known as the Charms bar, shown in Figure 3. The first icon on this panel is a Search command, which I’ve found to be the most useful feature in Windows 8. You can use this panel to search for programs, files or features such as the Windows Control Panel. You can then pin selections from the search results list to your desktop, start panel or taskbar so that you can find them without searching again later. Get used to searching, though, because you’ll either be using the Search charm or using Google to figure out even the most basic functions in Windows 8. To give you a sense of what I mean, here’s how you shut down your Windows 8 computer: • Move your cursor to either corner on the right-hand side of your screen to

display the Charms bar. • Within the Charms bar, click Settings. • Within the Settings panel, click Power. • Within the Power section, choose Sleep, Shut Down, Restart or Update. A couple of undocumented methods for shutting down a Windows 8 computer include holding down the power button on the front of your PC or yanking the cord out of the back of the computer. Yes, I know these aren’t appropriate, but you’ll be tempted. In short, all of the functionality that you’re accustomed to is available in Windows 8, but you’re going to have to dig to find it. Microsoft has foisted on us a grand vision of a single operating system for all devices. I can see where Windows 8 could be useful on a tablet device, but on a traditional, nontouch screen computer, it’s been an exercise in frustration.

We Go To Work For You.

There are some aspects of Windows 8 that I do like, and I’m sure over time I’ll acclimate to the changes. If you’re intrigued by Windows 8, make sure that you plan adequate time to get up to speed. In my experience, it’s an operating system that focuses on bells and whistles rather than productivity. Hopefully, Microsoft will recant and give professionals the ability to turn off the glitz and actually get some work done. David H. Ringstrom, CPA, heads up Accounting Advisors, Inc., an Atlantabased software and database consulting firm providing training and consulting services nationwide. Contact him at david@acctadv.com or follow him on Twitter @acctadv. This article originally appeared on AccountingWEB at accountingweb.com.

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Six SEO Tips for CPAs Let’s focus on six specific search engine optimization (SEO) tips that you can do right now to increase the ranking of your website in search engine result pages (SERPs). Any one of these tips could be an article on its own, so I’ll stick to a high-level summary. Some of these tips may require a technical solution, so be sure to consult with your webmaster before making any changes if you’re not comfortable doing them yourself.

By Gregory J. Wright American Institute of CPAs

1. Have great content. Gone are the days of link directories, hidden keywords, keyword stuffing and even Meta tagging keywords. Search engines, like Google, now rank websites based on the quality of the content. Websites that are updated often and contain fresh, new material will rank higher on SERPs. Be sure your content is also unique! Your website should never have more than one page with content that is a duplicate. Adding a blog to your existing website is an easy way to provide your visitors that N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

updated content. Just make sure you’re updating the blog on a regular basis and targeting your content to the right audience. The American Institute of CPAs offers a member guide to blogging at aicpa.org/career/marketing/pages/ socialmediamarketing.aspx that can help you launch your own blog. 2. User experience. Having great content will keep visitors on your site longer and coming back for more. Search engines now monitor how much time visitors spend on your site and how often they return. Those factors feed into how your site is ranked in SERPs. Another user experience factor that impacts SERPs is site load time. That’s right, that cool flash website you have isn’t helping your search results. The average website takes six seconds to load. That may not sound like a lot, but based on industry observations, any website that takes more than three seconds to load will reduce your rank in SERPs. Optimally, your website should load, on average, in 1.5 seconds or less. You can check your site load time using webpagetest.org or

Google Analytics, which recently incorporated site speed into its metrics reporting. 3. Socialize. There’s a bit of a debate in the SEO industry about how much impact social media has on your SERPs. Regardless of how much influence it has, the point

remains that social media does influence your SERPs. Making sure your content is shared on Twitter, Facebook, LinkedIn and Google+ is a simple task. Just include social media share buttons. But getting your own social media accounts on

Twitter, Facebook, LinkedIn, Google+ and YouTube will help spread your website and content. The more users that share your content on social media properties, the greater the chance it will positively impact your SERPs. The AICPA offers member

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guides to social media at the website listed under the first tip, “Have great content,” which can help you get started. 4. Link building. Other factors search engines take into account when ranking your website are links to your site and the authority of the domain it comes from. Government (.gov) and education (.edu) sites are among the most official and can really boost your search ranking when they link to your site. Obtaining link backs from other domains, such as .com and .org, is beneficial as well. The more quality domains that link to your site, the higher ranked your site can become. Work on developing relationships with other sites in your industry and clients to encourage link sharing. 5. Tag it. Just like XBRL, you can tag your web pages’ content to control how it appears in SERPs. At a minimum, every page must have a unique page title and Meta description. Search engines use every bit of this information to

rank your site. Only the first 65 to 70 characters of page titles show in search results depending on the search engine, so keep your title short and descriptive. Your Meta description character limit also varies by search engine, the average is about 150 characters. These two simple tags control the hyperlinked text and the description below it in SERPs, so it’s extremely important to include. You should also tag your images with “alt” text. This will help your images show up in SERPs, which can drive additional traffic to your website. If you want to challenge your tagging skills, explore schema.org. It offers microdata tags for most everything: events, products, movies, people and the list goes on. Google has already started using the tagged microdata in SERPs. 6. Know your audience. Last, but certainly not least, is to include your keywords everywhere. Make sure your page titles, descriptions, image alt text, URLs, content, anchor links, headlines and so

forth contain the keywords you’re targeting. But what keywords do you use? You want to make sure you are using the same keywords potential visitors will use to find your site. There are a number of free keyword lookup tools, such as keyworddiscovery.com, that can help you target your content. Bonus tip: Make sure you’re using search-friendly URLs. If your URLs are coded by your content management system, or in some other way, change them. You want your URLs to be as searchable as the content on the page. Gregory J. Wright, M.B.A., is the communications manager for the American Institute of CPAs. He serves as editor for CPA Letter Daily, AICPA News Update, AICPA Insights, IFRS Report, Forensic & Valuation Reporter, Financial Planning Digest, BusIndNews and InfoTech Update. He also manages the CPA Letter Daily’s Twitter account and various other communications projects. This article originally appeared on AICPA Insights.

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Beyond Excel Basics

Professionally speaking, CPAs are actually a diverse lot. If there is a common denominator to be found, it may very well be the spreadsheet. Analysis, presentation, forecasting and general creativity using 10 digits sow the foundation for a great deal of our daily toil. Let’s examine Excel Add-In tools for applications such as auditing, business valuations, financial statement preparation and business financial planning. Best of all, these programs leverage your existing knowledge of the familiar Excel spreadsheet without you having to learn complicated new programs from scratch. Auditing

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

ActiveData for Excel Professional Edition from InformationActive, Inc., is targeted specifically to accounting, auditing, banking and other financerelated professionals. Installation of this Excel Add-In program adds an ActiveData tab just to the right of the familiar Data tab on the Excel ribbon tool bar. More than 100 features, tools and computer-assisted audit techniques provide a wide-ranging ability to manipulate, analyze and report on pertinent data simply by selecting from drop-down menus. One section N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

of the program’s command menu offers worksheet, column, row and cell manipulation. A second menu section offers a plethora of data analysis commands, including duplicates, gaps, statistics, aging, summarization, highs and lows, and stratification, among others. To better acquaint you with the capabilities of this tool, download the free e-book currently available on InformationActive’s website titled Fraud Detection with ActiveData. The book covers specific techniques for uncovering accounts payable, accounts receivable and general ledger fraud, and it includes workbooks with sample data. Furthermore, an eight-hour CPE course – Auditing, Fraud Detection and Cash Recovery Using ActiveData – is also available. If you require a more sophisticated set of audit software products (like ACL from ACL Services, Ltd.) consider ACL Acerno, an add-in for Excel that lets you work with data produced from its ACL Desktop or ACL AuditExchange programs.

Business Valuations Business valuation services have become a mainstay for CPAs. ValuSource has been a leading software provider in this field for more than 25 years. Its Express Business Valuation software program can assist with preparing professional and customizable valuations utilizing

the familiar Excel spreadsheet and Microsoft Word document processor. Installation of the Express Business Valuation program provides three main tabs: Home, Analysis and Reports. From the Home tab, you can open existing valuations, create new ones or view samples. Selecting the Analysis tab enables access to the 125 pages of spreadsheet templates that provide input cells for areas including: • Deal structure • Financial statements and adjustments • Financial statement analysis • Schedules • Valuation methods (income approaches, market approaches, cost approaches, custom methods) • What-if analysis A total of 20 valuation methods are supported and can be compared with 15 valuation databases, which are directly downloadable into Express Business Valuation, including BIZCOMPS, ValuSource’s RMA Annual Statement Studies and Internal Revenue Service Corporate Ratios. Selecting the Reports tab provides access to a built-in 25-page report that can instantly be generated in Microsoft Word and then edited as required. Adding the optional Business Valuation Report Writer expands your report output to 50 pages and provides three unique valuation report formats. All reports are dynamically linked to the analysis data and are updated contemporaneously.

Financial Statement Preparation CPAs obviously prepare financial statements, and they clearly know Microsoft Excel. Could anything be more natural than using Excel to prepare financial statements? Imagine the productivity gains if Excel-formatted financials could be dynamically linked with your general ledger! F9, an Excel Add-In, has been available for more than 20 years. This program is owned by an independent

business unit of Infor, one of the world’s largest providers of enterprise software and services. Infor boasts that F9 is available for 150-plus accounting and enterprise resource planning systems and can be custom configured to any general ledger program. Features such as drill down, consolidations, budgeting, data analysis and scheduled distribution of statements are all possible within the confines of Excel. Sage Group PLC – owners of such popular accounting programs as Sage 50 (Peachtree/Quantum), Sage 100 (MAS90/200), Sage 300 (Accpac) and Sage 500 – offers a similar ability to analyze and prepare financial statements in Excel through its acquisition of Alchemex. If you are looking for a comparable solution but are using one of the Microsoft Dynamics lines of accounting software, investigate JetReports Add-Ins for business intelligence and advanced reporting within Excel.

While you use the Home tab primarily for general housekeeping activities, the Model tab powers this application. Here, you can set timeframes of monthly, quarterly and annually, and select such statements as: • Balance sheet • Income statement • Cash flow statement • Ratios statement • Custom statements You can input forecasting assumptions for various changes in groups of general ledger account items. Additionally, the ratios statement is broken down by operating, investing, financing and cash flow measurements. Finally, the Format tab provides for row and data manipulation in addition to statement presentation and guidance on underlying assumptions and terminology.

Business Financial Planning

The above examples are by no means exhaustive. Additional spreadsheet addins exist for tax planning, depreciation and many other applications.

If you are searching for an Excel AddIn that can assist with a consistent methodology for business financial planning, Financial Genome from Modernsoft may be your answer. After installing the program and entering the Financial Genome Environment, the application is driven from three custom tabs: Home, Model and Format. Data can be entered manually, dynamically mapped to existing Excel spreadsheets or electronically imported from QuickBooks.

Marc D. Mintz, CPA, CITP, CGMA, is the managing member of Marc Mintz & Associates, LLC, a technology consulting firm that assists businesses with strategic planning and the selection and implementation of information technology systems. Mintz is currently chair of the New Jersey Society of CPAs Strategic Planning Committee and an Editorial Advisory Board member of New Jersey CPA magazine. Contact him at marc@ marcmintz.com or 973-808-9040.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Managing

Digital Documents Managing digital documents has become increasingly more complex and important thanks to the proliferation of electronic file rooms, ease of converting documents from paper to digital images and continued migration to the cloud for storing source documents.

By James C. Bourke, CPA WithumSmith+Brown

There’s not an area within a CPA firm today that does not deal with the abundance of digital documents. Digital documents exist everywhere, from local machines such as laptops and desktops, smartphones, email, memory sticks and virtually on every storage medium that exists within a firm today. Controlling and managing these documents are critical to ensuring that documents can be easily located and identified, client information that is deemed personal and confidential is kept private and secure, and digital images will be destroyed in accordance with the firm’s data retention policy. Managing the enormous amount of these digital images takes upfront planning. Think of your old file room. It contained multiple client-specific Redwelds, each containing multiple files related to tax, accounting, correspondence and so on. The file room in the new digital world takes that model to a whole other level, allowing for easy identification, secure N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

storage and programmed destruction of the documents. If I had to give only one piece of advice, it would be to not recreate the wheel. Our landscape today is loaded with many web-based data or content storage applications. A majority of them have built-in features that allow for easy identification, secure storage and document destruction. With many of these platforms operating under the software as a service model, you simply pay for the “portion” you need. In other words, sole practitioners can afford to be on the same platform as large national firms. In fact, many are. As for selecting in-house or webbased applications, when it comes to document storage, web-based is the only way the go. Let’s face it, we are all in the business of providing top-quality accounting, tax and consulting services. Although in-house storage is readily available and fairly inexpensive, we are not in the business of storing documents nor maintaining the infrastructure necessary to protect them. Web-based document storage facilities, to a great extent, exist in secure data centers and are protected from climatic events, provide redundant access points and are replicated across various geographic regions. Try doing that with an in-house system.

Ease of Identification Many document storage applications

allow for some flexibility in the indexing scheme utilized to store and identify documents. This was done in order to allow the products to be readily accepted and acquired by more firms. When it comes to identification, take your old file room to the next level. For example, in most systems, the starting point is the client name. A client number is added to allow for additional search capabilities. Is the document related to tax or accounting? If tax, identify the entity (individual, corporation, partnership,) and form types (1040, 1065, 1120, 1120S). If accounting, identify the level of service (compilation, review, audit). Identify the year to which the items relate, and also tag the document with the current date.

Privacy Prior to selecting a solution, ensure that the documents will be stored in a secure location. Ask for a copy of the data center’s service organization control (SOC) report. SOC reporting on data centers replaces those reports previously known as SAS70 reports. If a SOC report is not available, look elsewhere for a vendor that has one.

Auto Destruction Another important consideration when selecting a document management application is to ensure that the application will be able to easily identify and destroy documents under the firm’s document retention/destruction policy. Although storage charges are nominal, the proper destruction of documents once they have reached their retention

end is critical to maintaining a healthy file room.

Portals Another unique feature of digital documents relates to the ease of collaborating with clients and business associates. A good data or content management system today offers a bidirectional portal. Bidirectional portals allow clients to send private and secure documents directly to your digital file room, or some other holding area, until accepted into your electronic file room. That same bidirectional portal will allow your clients to view and select private and secure documents that you have specifically made available to them. Some document management systems market the portal as a component of the existing management system, while others offer it as a stand-alone application.

Additional Resources and Information The American Institute of CPAs, in collaboration with the Association for Accounting Marketing, hosts its annual TECH+/Practitioners symposium. In addition to connecting practitioners with the latest technological information, the symposium drills deep on subjects such as document management and related best practices. To learn more about the presentations and panel discussions at this year’s symposium, June 10-12 in Las Vegas, visit cpa2biz.com/conference. When it comes to helping ensure that data stored in the cloud is secure, the AICPA and the Canadian Institute N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

of Chartered Accountants have come together to offer service organization control (SOC) reporting. For additional information on the various levels of SOC reporting, go to the following links: • aicpa.org/interestareas/frc/ assuranceadvisoryservices/pages/ serviceorganization’smanagement.aspx • aicpa.org/interestareas/frc/ assuranceadvisoryservices/pages/ sorhome.aspx • aicpa.org/_catalogs/masterpage/search. aspx?D=4294965179:4294965150||1 For additional resources on vendors currently offering solutions in this space, check out the following: • cs.thomsonreuters.com/gofileroom • cs.thomsonreuters.com/filecabinetcs • cchgroup.com/webapp/ wcs/stores/servlet/category_ accounting-audit_10151_1_10051_50002261_50002261_y • efilecabinet.com James C. Bourke, CPA, CITP, CFF, CGMA, is a partner at WithumSmith+Brown where he is director of firm technology. He is a past president of the New Jersey Society of CPAs, currently serves as chair of the AICPA TECH+ Conference and is a past chair of the AICPA CITP Credential Committee. He has been named by Accounting Today magazine as one of the “Top 100 Most Influential People in Accounting” for the past five years. Contact him at jbourke@ withum.com or follow him on Twitter @jimbourke.

A&A

buzz

Is It Worth Investing in Audits for Technology Startups? B Y M ARC FOGARTY, C PA, E I SNE RAM PE R LLP

“T

o audit or not to audit?” is a common question for management of technology startup companies. There are several factors to consider when determining if a new tech company needs an audit. First, if an audit is a requirement for those third parties that are providing funding, then the answer is yes. Where it is not a requirement from the funding sources, management needs to have a clear vision for the company’s future. For example, if management’s objective is long-term company operations, the answer may be different than if management intends to grow the company for three years and sell or have an initial public offering.

Most funding sources – whether it is a bank, venture capitalist or hedge fund – usually require some type of attestation from an independent accountant. The specific type of attestation depends upon operations risk, management experience and investor risk tolerance. The level of service required will typically vary among a compilation, review or audit. A compilation is the most basic and provides the financial statement reader no assurances with respect to the information contained. A review provides a lower degree of assurance than audits and only expresses limited assurance that the financial statements are free from material N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

misstatements. Finally, an audit provides reasonable assurance about whether the financial statements are free of material misstatements. Since an audit provides the highest level of assurance and involves the most amount of work from management and the auditors, the technology startup’s management team must be prepared for what is ahead. If this is a first-time audit for the management team, it should become familiar with the process by talking to other technology startups that have been audited. At the core of this will be selecting an independent accounting firm – preferably one with experience in tech audits. Prior to that, however, the company needs to ensure that its books and records are in order and its controls documented. Keeping accurate and timely financial records and controls will make the process more efficient. Management must understand that the audit process is time-sensitive and can vary greatly in terms of timeframe and cost. Lenders will typically require companies to track their spending and document their use of cash on a monthly basis. This tracking will not necessarily align itself with the framework that the audit firm uses in its financial reporting. For example, investors for an early-stage technology company that is looking to get its product approved by the Underwriters Laboratories may be more concerned with how much the product has cost to date, future cost, future selling price and ability to make future enhancements, and less concerned with the fact that the company gave stock warrants and options to vendors

Administered by

and employees. During an audit, the accounting for these types of equity transactions may take significant time to understand, describe and record correctly. Investors are likely aware that they have taken place, but may not want to fund the company so they can properly account for them. Their concern is likely aligned to the success of the product/service and an ultimate exit strategy. Early-stage tech companies typically struggle with having adequate financial resources to attract the talent necessary to work on development, business operations and financial reporting. As such, the area that usually falls off is financial reporting. Most technology entrepreneurs are more concerned with product/service development and financings, rather than historical financial information. When financial reporting resources are not adequate at organizations where an audit is required or undertaken, the timeframe in which the audit gets completed is usually spread out enough so that the audit’s benefit is usually lost to those reviewing the financial statements. If the audit is done in a timely manner, it can be very useful to business owners. Audits are great tools to understand where a company has been and perhaps where it is headed, but aligning the goals of the management team and investors is key to making that audit a truly useful tool worth investing in. Marc Fogarty, CPA, CFE, is a partner at EisnerAmper LLP. He is a member of the New Jersey Society of CPAs Accounting & Auditing Standards Interest Group. Contact him at marc.fogarty@ eisneramper.com or 732-947-3607.

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BEST

practices

Are You Maximizing LinkedIn? BY ANGELA S. C ALZONE, CHANGE & RESPONSE STRATEGIES, LLC

inkedIn clearly has had a profound impact not only on the way we communicate and conduct business, but on the speed, efficiency and agility with which we do it. Where Facebook became the go-to website/application for social networking from a personal perspective, LinkedIn blazed a trail for social networking for professionals. Since its launch in 2003, LinkedIn has garnered more than 200 million users in 200-plus countries. As with most social networking platforms, there are many bells and whistles that you may not even be aware of – some worthwhile, some not so much. Let’s examine some of the more productive features of LinkedIn that you should consider incorporating into your regular usage:

allowing every email you send to become another possible connection. You can also manage and view your connections by company, locations and type of contact.

Groups Search and join groups that interest you, such as professional groups, media outlets or alumni organizations. LinkedIn will even provide suggestions: “Groups you may like.” When you join a group – some are open and some require approval from the host – you can view information on when the groups formed and number of members. Most important, you can participate in or initiate a discussion thread to get insight from group members.

Home Page Your LinkedIn homepage is the hub of your network, incorporating a continuous stream of news, status updates, and questions and answers from your connections as well as job postings, relevant groups, people you may know and companies to follow. Don’t just be a spectator; try to actively post news and articles in the “Share an update” box next to your headshot. Postings should be measured and relevant to your industry. You also have the option to cross-post to your Twitter feed via the “Share with” drop down box just below. And, it’s informative, as well as interesting, to check out the “Who’s Viewed Your Profile” section.

Announcements When you want to make an announcement, LinkedIn Announcements carries the information directly to the inboxes of your connections and/or your discussion group members. Consider the frequency and content of updates so that contacts will see them as helpful, rather than feel as if they are being spammed.

Job Searching As a leading site for employers, LinkedIn offers a useful tool for finding jobs or having jobs find you. With LinkedIn, employers can easily share posts or provide greater details to contacts who can, in turn, readily share them with their colleagues and connections. Employers can view not only a job seeker’s LinkedIn profile, but they can also see who has recommended and/or endorsed the applicant. Follow companies that may interest you to get their latest information on expansion, hiring and innovation. You can also distribute your resume to your connections for greater visibility, as well as upload your resume into your profile.

Profile Creating your profile is the first and most important step in getting started on LinkedIn. Make sure your profile (with professional headshot) is current. Include a background summary and work experience, along with education, publications, organizations, courses taught and community service. A powerful feature is the ability to link to actual projects and programs that you have managed or participated in. A word about Recommendations and Endorsements: It’s perfectly acceptable to actively seek and give endorsements and recommendations to those colleagues with whom you’ve had a productive relationship. While Recommendations and Endorsements are often viewed as “scratch my back, and I’ll scratch your back,” don’t feel compelled to endorse someone.

Inbox All of your LinkedIn interactions take place via your Inbox, where you can easily manage, organize and archive your messages, connections and invites all in one place. Treat this inbox as you would your work inbox. Reply to messages in a prompt and professional manner.

Contacts

Angela S. Calzone is comanaging member of Change & Response Strategies, LLC, a management consulting, customized training and outsource support services firm. Contact her at acalzone@changeandresponse.com.

Reach out through LinkedIn to people you meet at various events, seminars and continuing education classes. Include a link to your LinkedIn profile in your standard email signature,

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FINANCIAL

planning

Helping NJ Homeowners Stay Afloat B Y CHR IS TINA J. B ANASI AK , NE W J E R SE Y ASSO C I ATI O N O F R E A LTO R S

While CPAs are not expected to be experts in all matters real estate, as trusted business advisors, CPAs should be aware of some real estate strategies and resources that are available to clients should those clients find themselves “underwater” on a mortgage:

Contact the Lender This should be option number one. Lenders might be able to modify the loan or let a homeowner refinance under new conditions. Having all documentation is critically important.

Call a Certified Counselor The foreclosure process involves numerous stages and notifications and can be avoided if it is early enough in the process. If the lender cannot make any mortgage payment adjustments, there may be some adjustments homeowners can make to improve their financial situations. Counselors certified by the U.S. Department of Housing and Urban Development can offer free advice to homeowners.

n February 2013, nearly one year after the National Mortgage Settlement, an oversight report indicated that more than $45 billion has been distributed in direct mortgage relief to 550,000-plus homeowners nationwide. The progress that is being made on this landmark settlement to combat mortgage loan servicing and foreclosure abuses spells good news for those who were provided inappropriate loans or whose loans were not serviced lawfully, and it is a major step in repairing one of the many reasons why today’s homeowners are struggling to meet their monthly mortgage payments. There are various state and federal resources available to help New

Jersey homeowners who are unable to make their payments. While recovery from Hurricane Sandy is one key obstacle, many families statewide are also experiencing prolonged unemployment and other financial pressures. According to the Mortgage Bankers Association, almost 20 percent of New Jersey mortgages were either late on payments or in foreclosure in the fourth quarter of 2012. This is compared to about one in every nine mortgages nationally. Even though most Garden State areas remain stable, and some areas are even showing growth, many residents continue to find themselves owing more than their homes are currently worth. N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

The Making Home Affordable (MHA) Program Under the MHA, the Home Affordable Refinance Program and Home Affordable Modification Program are both designed to evaluate a current loan agreement and optimize the terms to make payments more affordable. The application deadlines for all MHA program options have been extended to December 31, 2013 (makinghomeaffordable.gov).

New Jersey’s HomeKeeper Program Through this program, funded by the U.S. Treasury’s Hardest Hit Fund, the New Jersey Housing and Mortgage Finance Agency is administering 0-percent interest loans with a

maximum amount of $48,000 over 24 months to an eligible homeowner to pay for mortgage, taxes and related insurance. After five years, the loan is forgiven at the rate of 20 percent per year (njhomekeeper.com).

The New Jersey Judiciary Mediation Program This program can assist homeowners if foreclosure proceedings have already begun. Assistance is available in the form of free housing counselors to review financial status, attorneys who can help review legal documentation and negotiate, and neutral mediators to help homeowners and lenders find agreeable solutions to mortgage difficulties. Visit njforeclosuremediation. org or call 888-989-5277.

Dial 211 This partnership between nonprofit organizations and the state of New Jersey offers information on housing assistance, support for paying utilities and other helpful community programs to help homeowners avoid foreclosure (nj211.org).

Short Sales Another option to consider in avoiding foreclosure is a short sale. A short sale is a transaction where the home is sold for less than the amount required to pay off the property liens. Short sales can help homeowners recover some home value and preserve some of their credit. However, these transactions can be complicated, so it is recommended that homeowners seek the assistance of

a knowledgeable realtor to navigate the transaction and market the property, as well as consult with an attorney and tax professional to clarify financial questions. Mortgage difficulties can be overcome, but reaching the best solution will happen when the homeowner leverages the skills and expertise of his or her team of trusted business advisors. Christina J. Banasiak is the president of the New Jersey Association of Realtors. Visit njar.com.

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FORENSIC

file

Palimony Case Law in NJ B Y LYNNE BROZA, CPA, C OWAN, GU NTE SK I & C OM PA N Y, P. A .

ew Jersey first established the concept of palimony in the 1979 case of Kozlowski v. Kozlowski. Since then, there have been several notable cases in the state, but arguably the biggest impact was the enactment of NJ Statute 25:1-5(h) in January 2010. Under that statute, in order for one party to make a claim of palimony, there had to be a signed written agreement in place. No longer would oral promises, even if clearly established, be sufficient. As sometimes occurs with a new law, not all of the nuances were completely addressed ahead of enactment. The immediate question that arose with this new statute was whether the law was to be applied retroactively or prospectively. The 2011 case of Botis v. Estate of Kudrick, 421 N.J. Super, 107 (App. Div. 2011) answered this question. Ms. Botis and Mr. Kudrick began a relationship and had cohabitated for more than 30 years at the time of Kudrick’s death in 2008. Botis alleged that throughout the cohabitation period, Kudrick had greater financial resources than she, and he verbally promised to always take care of her. She also indicated that certain of her funds helped pay for a residence that they shared, and Kudrick had promised her this property upon his death. However, Kudrick’s will left everything to his daughter and grandchildren, with no

provision for Botis. When Botis sued the estate for her share, the estate countered that under the new law, there was no written agreement; thus, Botis had no claim to the estate. The trial court found for Botis, and this was affirmed by the appellate court. Its reasoning included the following: • The language of the new statute stated that “this act shall take effect immediately,” which the courts determined meant prospectively. • Botis’ claim was filed before the law was enacted, so it should not be barred by the new statute. • New Jersey has a history of a “right to support,” which is found in contractual rights, and “the NJ Legislature cannot, without notice and an opportunity to cure, extinguish these well-established rights.” • Kudrick “has no ability to comply with the recently enacted statute, since he is dead.” The Botis decision set a precedent that the new statute would be applied prospectively, not retroactively. This decision was even upheld by the appellate court in a case where the claim was filed in January 2010, just five days before the enactment of the new law. The courts do not rely on matrimonial law in assessing their palimony decisions. Federal tax law N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

defines alimony as between spouses or ex-spouses, so palimony does not fall into that definition. The same is true for tax issues in the transfer of property, in that a cohabitant does not enjoy the rights under Internal Revenue Code Section 1041 for a tax-free transfer. These issues have created many scenarios for forensic accountants and tax preparers. Unlike an alimony award, there is nothing in the tax code that states palimony would be deductible by the payor and includable in income to the payee. So, what are the tax ramifications of a palimony award? Various scenarios have been proffered. • Is it a gift from one person to another, subject to those tax ramifications? • Is it a payment for services rendered, thus creating taxable income to the person receiving the payment, but not necessarily a deduction for the payor? • In the case of a deceased payor’s estate, can the estate take a deduction for the amount of any palimony paid? According to the Ninth Circuit Court of Appeals in Estate of Shapiro v. U.S., 11 C.D.S. 2293, this may be allowed. If you go to the Internal Revenue Service website and search for “palimony,” you get no results. Discussions with your client and legal counsel, as well as a thorough documentation of your position, will be necessary, until tax law catches up with society. Lynne Broza, CPA, ABV, CFF, is the director of the Litigation and Valuation Services Group at Cowan, Gunteski & Company, P.A. She is a member of the New Jersey Society of CPAs Business Valuation Forensic Litigation Services Interest Group. Contact her at lbroza@ cowangunteski.com.

INDUSTRY

insights

A Pair of Financial Reporting Tools B Y VICTORIA KOS UDA, C PA, B E YO ND F I NANC I ALS C O N S U LT I N G , L L C

ccountants just love ending each month by closing the books and reporting results. Both small and large companies rely on general ledger packages or enterprise resource planning (ERP) systems to process transactions and produce financial statements. While these systems meet specific needs, finance departments typically require more analytical capabilities than these systems can provide. A common approach to enhanced financial reporting is to extract data from the general ledger/ ERP system and load it into a database environment that can be accessed by more advanced reporting tools. There are many financial reporting products on the market. Two of the more popular options are IBM’s Cognos TM1 and Oracle’s Hyperion. Both were developed years ago by smaller companies, but have been recently acquired by the larger players and integrated into their overall product suites. They are similar applications, specifically in their use of online analytical processing (OLAP) technology as the back-end database/ reporting engine. Databases configured for OLAP use a multidimensional data model, the benefit being the ability to slice and dice information as needed. Specifically, it provides the ability to select combinations of information from multiple dimensions to report on drilled-down or rolled-up results. For instance, a report may require sales for product A in region 1 by month. Product, region and month are the dimensions. The user will create the report with the chosen dimensions. The database will then trigger on-thefly calculations to report the numbers specific to the dimensions selected.

Data stored in OLAP databases is typically accessed using Excel or a web browser interface. The front-end tools let the user access the reporting dimensions and drag and drop them into a report. In addition to numerical results, these tools can provide graphical representations of selected data with views and filters personalized for the end user. Reports can be used directly by financial managers as well as distributed to nonfinance users. Hyperion uses Oracle Essbase as the back-end OLAP data store. Visualize its multidimensional model as a large cube of data that can be broken off into blocks for reporting. There are various Hyperion reporting products available for Oracle Essbase, including Oracle Hyperion Smart View for Office, Hyperion Interactive Reporting, Hyperion Web Analysis and Hyperion Financial Reporting. Each of these tools enables users to interact with the data stored in the Oracle Essbase application. The wide variety of tools available within the Oracle product suite is a key strength of Hyperion. These tools can work alone or in tandem. In addition, it can integrate with the entire Microsoft Office suite, not just Excel. Hyperion has strong on-the-fly visual analytics and comes with a large number of prebuilt reports and out-of-the-box calculations. One disadvantage of Oracle Hyperion is that the technology can be complex to manage. An Oracle Hyperion setup is best maintained by an information technology (IT) department. TM1’s data is stored and reported in many smaller, multidimensional cubes. Mini cubes are built for various reporting purposes with dimensional hierarchies. Users can pull data from multiple cubes to build N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

reports. TM1 data can be accessed via Excel or a web interface. TM1 is comprised of a simpler set of tools than Hyperion; nothing is prebuilt. With a TM1 implementation, the organization must build the reporting and data calculations from the ground up. Simplicity and customization capabilities are TM1 strengths. It is more flexible than Hyperion, even though there are less overall configuration options. Since the cubes and technology have a more simplistic approach, the finance department can generally maintain the application on its own. Loading data and adding dimensions are easy enough for a financial analyst to manage. At a high level, Hyperion and TM1 are very similar. Both require the organization to understand its reporting needs and define dimension structures. As with any software selection process, an organization must assess the reporting requirements, end users, training needs, system maintenance and the overall IT strategy. Regardless of selection, Hyperion or TM1 will provide a finance department a new level of reporting and analysis capabilities. Victoria Kosuda, CPA, CITP, is a technology consultant for Beyond Financials Consulting, LLC. She is the vice leader of the New Jersey Society of CPAs Technology Interest Group. Contact her at vicki@ beyondfinancialsconsulting.com or 908-358-4680.

SMALL/SOLE

practitioner

Ten Ways to Prevent Hackers B Y JA IME C AMPBEL L , CPA, B ARTOLOM E I PUC C I ARE LL I , L L C , A N D DAV I D C A M P B E L L , T I E R O N E S E RV I C E S , L L C

cases using scanning tools that look like a pen. Many companies have a clean desk policy, requiring employees to secure sensitive papers when leaving for the night. 4. Your password should never resemble an actual word. An ideal password is easy for you to remember and difficult for someone else to guess, for example: msAwbi11 = my son Aidan was born in November. Note the combination of uppercase, lowercase and numbers. If possible, also include special characters such as @ and $.

Hardware

acking techniques range from the highly technical to as basic as exploiting human tendencies. As such, successful techniques to prevent hackers vary accordingly. No matter how expensive and robust your technological security, the weakest link in any company is still the human element. Antivirus software and firewalls suffice, unless someone uses nontechnical means to obtain your company’s information or overrides security measures.

The Human Factor 1. Establish points of contact and protocols for your vendor communications. A potent hacker tool is a nontechnical technique called social engineering. An alleged vendor calls with basic information such as your business address, the last four digits of your bank or credit card number or even your full account number for the vendor. They usually want

your full bank account or credit card information. 2. Phishing scams usually appear as legitimate-looking emails or websites from familiar institutions, such as your bank, the Internal Revenue Service or Intuit. However, the URL links to a spoof site with a similar name. Examine the URL before clicking it, and call the vendor using a number verified independently, rather than the number provided in the email or on the website. If a shortened link is used, paste it at unshorten. com and view the full address without going to the site.

Passwords 3. Hackers also appear as vendors that businesses might expect: consultants, delivery people, cleaning crews, HVAC technicians. It’s easy for an unsupervised person to search your desk and copy written passwords, in some N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

5. Hackers often go dumpster diving. Every time you replace your computer, use a vendor who specializes in the secure destruction of your old hard drives. Some companies will melt them for you. If you use CD backups, have a shredder onsite for your old backups. 6. Many think about hacking in terms of attacks on computer systems, but hackers have the ability to scan the magnetic strips from your credit cards. Purchase magnetic shielding for your wallet, or purchase a wallet with the shielding built in. Some RFID tags are also protected by this shielding. 7. Only use USB drives that are encrypted. You can get 256-bit AES encryption and stronger in some cases. These devices come with chips that make them even harder to circumvent.

Software 8. Having a strong antivirus software client can protect your company information and client data from malicious attacks. To ensure that your system is protected, set your

antivirus’ automatic updates for at least weekly. Use the mantra “think before you click,” and pay attention to the messages displayed by your antivirus software. Don’t adopt the habit of automatically clicking “allow.” That one moment of inattention can result in a significant loss. 9. Ensure that automatic updates are turned on for your operating system, whether you are working on a Mac or a PC. On Microsoft’s Update Tuesdays – the second Tuesday of every month – it releases security patches for

exploits, glitches or bugs that have been identified in the Windows operating system.

Mobile Devices 10. Antivirus and firewall software is available for tablets and smartphones, and some vendors have encrypted SIM cards. These devices are just as important to protect as desktops and laptops, as they can be a gateway to your contacts, client data and financial information – especially for those companies that accept payments via mobile devices.

To hear Jaime discuss a few bonus ways to prevent hackers, visit this video link: njscpa.org/ newjerseycpa/mayjune13. Jaime Campbell, CPA, M.B.A., CTT, MCT, leads the technology training services at Bartolomei Pucciarelli, LLC. She is a member of the New Jersey Society of CPAs Technology Interest Group. Contact her at jcampbell@ bp-cpas.com. David Campbell is the managing partner of Tier One Services, LLC. Contact him at david@ tieroneservices.net.

NJSCPA 15% Auto Insurance Discount On average, drivers who switch to Plymouth Rock using a group discount save $517 per year.

NJSCPAQuote.com 888-391-4911 Plymouth Rock Assurance is a marketing name used by a group of separate companies that write and manage property and casualty insurance in multiple states. Insurance in New Jersey is underwritten by High Point Property and Casualty Insurance Company and its affiliates. Each company is financially responsible only for its own insurance products. Certain restrictions and limitations apply. For a full description of the programs, features, and coverages, please visit PlymouthRockNJ.com. Group discounts apply to policies written in High Point Property and Casualty Insurance Company. May not be combined with any other group discounts. Annual average savings based on group customers who switched to High Point Property and Casualty Insurance Company from 1/2010 to 4/2012. Your premium may vary due to available discounts, eligibility requirements, driving record, and other factors. ©2013 Plymouth Rock Management Company of New Jersey. All rights reserved. 6845/032013 N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

TAX

talk

Critical Questions Surround the New Medical Device Excise Tax BY EDWARD P. RIGBY, CPA, AND BRIAN P. COLLINS, CPA, PARENTEBEARD, LLC

new medical device excise tax was enacted as part of the Affordable Care Act (ACA) under Internal Revenue Code (IRC) Section 4191 effective for sales occurring after December 31, 2012. The tax is 2.3 percent of the price for which taxable medical devices are sold by the manufacturer, producer or importer. In advising your medical device industry clients, several critical issues include: • What constitutes a taxable medical device? • What are the tax exemptions? • How are sales of taxable medical devices for further manufacture or export treated? • What are the tax filing and payment requirements?

What Constitutes a Taxable Medical Device? According to Section 4191(b)(1), a “taxable medical device” is linked

to the definition of a “device” under Section 201(h) of the Federal Food, Drug and Cosmetic Act (FFDCA). This definition is also linked to the listing requirements for a “device” by the Food and Drug Administration (FDA) under Section 510(j) of the FFDCA.

What Are the Tax Exemptions? The Section 4191 regulations provide a safe harbor provision that includes devices identified in the FDA’s online IVD Home Use Lab Tests; “over the counter” (OTC) devices in the relevant FDA classification regulation heading; and OTC devices in the FDA’s product code name, classification name and listing database. The safe harbor also includes certain devices that qualify as durable medical equipment, prosthetics, orthotics and supplies. Per IRC Section 4191(b)(2), the excise tax does not apply to sales of N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

eyeglasses, contact lenses, hearing aids and any other medical device the Internal Revenue Service (IRS) determines is generally purchased by the public at retail for individual use (retail exception). Thus, if the device does not meet the safe harbor criteria, taxpayers may still meet this retail exemption. A device is considered available for purchase by the general public if it is regularly available for purchase and use by individual consumers who are not medical professionals, and if the design of the device demonstrates that it is not primarily intended for use in a medical institution or office by a medical professional. Factors satisfying the retail exemption criteria include whether consumers who are not medical professionals can purchase the device in person, over the telephone, via the Internet and through retail businesses or medical supply stores; and whether consumers who are not medical professionals can use the device safely and effectively for its intended medical purpose with minimal or no professional training. A medical device is considered designed primarily for professional use if it generally must be implanted, inserted, operated or otherwise administered by a medical professional; and if the cost to acquire, maintain and/or use the device requires a large initial investment and/ or ongoing expenditure not affordable for the average individual consumer.

Tax-Free Sales for Further Manufacture or Export The ACA added IRC Section 4191 to the manufacturers excise tax rules (Chapter 32 rules), emphasizing that such rules are “longstanding.” The

Rutgers School of Business–Camden brings the successful

rules relating to tax-free sales of taxable medical devices for further manufacture or export are provided under IRC Section 4221 and the associated regulations. Under Section 4221, the tax imposed by Section 4191 does not apply to the sale of taxable medical devices for use by the purchaser for further manufacture or for resale by the purchaser to a second purchaser for use in further manufacture. Regulation Section 48.4221-2 sets forth rules for tax-free sales of articles to be used or resold for further manufacture, including proof of resale for use in further manufacture. To make a tax-free sale for further manufacture or export, the manufacturer, first purchaser and, in some cases, the second purchaser must register with the IRS by filing Form 637. Regulation Section 48.42212(c) provides the requirements of appropriate proof of resale that the manufacturer needs to receive.

Tax Filing, Payment Requirements and Penalty Relief The medical device excise tax is reported on Form 720, Quarterly Federal Excise Tax Return, which is typically filed quarterly; medical device manufacturers are generally required to make semimonthly tax deposits. According to IRS Notice 2012-77, the IRS and Treasury Department will provide temporary penalty relief for failure to make timely deposits (under IRC Section 6656) for the first three calendar quarters of 2013. Edward P. Rigby, CPA, M.S.T., is a principal in the tax department and Brian P. Collins, CPA, is a partner at ParenteBeard LLC. Both are members of the New Jersey Society of CPAs. Contact them at edward.rigby@ parentebeard.com or brian.collins@ parentebeard.com.

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The PMAc program is designed for accounting professionals who wish to earn a Master of Accountancy degree without disrupting their full-time career. The PMAc curriculum develops participants’ critical thinking, communication, and analytical skills while meeting the 150-hour requirement for the CPA examination. Information Session Dates: Thursday, March 21 6:30-8:00 PM Tuesday, April 23 6:30-8:00 PM Location: The Enterprise Center at Burlington County College (BCC) 3331 Route 38 Mt. Laurel, NJ 08054 To Register: Visit pmac.rutgers.edu/infosessions or call 856-225-2700

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Advanced Pivot Tables B Y CRAIG JACKS ON, C PA, W I SS & C OM PANY, LLP

icrosoft Excel’s pivot tables offer powerful, fast ways of analyzing and consolidating large amounts of data so that users can quickly extract critical knowledge. They can be arranged dynamically; you can click and drag to rearrange/add fields according to your needs to help you find relationships in data. Here are some beyond-the-basics tricks and tips that will help you work with data in a pivot table.

Start with Clean Data The data in your source spreadsheet should look like a database – with data in columns and rows without

blanks. Columns need headers, and rows need row names. Totals, averages, notes and any other text you placed at the bottom of your spreadsheet which should not be included in your pivot table should be separated by a blank row. Most clients have software that will allow their trial balances to be exported to Excel. Once in Excel, some data clean up may be necessary to get your trial balance into a functional format. When you export your trial balance into Excel, it will bring over a column of account names and the amounts in each account. You should classify the accounts according to financial

statement and/or tax groupings by inserting a column next to the account descriptions and entering a standard description for all of your groupings. Journal entries can be appended to the bottom of the data array. Debits will be positive amounts, credits will be negative – be sure to use the exact account description for your journal entries. Make a note of any adjusted journal entries so you can easily identify them later. To create a basic pivot table from your trial balance, select a cell in the data set, choose Insert, Pivot Table, then click OK to insert a pivot table as a separate worksheet in your Excel file.

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To create an adjusted trial balance, click and drag the account description to the row field, and click and drag the amount to the value field. You will now have an adjusted trial balance. The adjusted trial balance should subtotal to zero if input correctly. To switch over to financial statement groupings, simply uncheck the account field on the righthand side and check the FS account field.

To Quickly See What the Grouping Contains Double click the value and a grouping report will open in a new tab.

Add Another Journal Entry to an Existing Pivot Table Open your trial balance worksheet and add the entry. Go back to the pivot table, locate the pivot table tools and click on Options. Toward the middle of the toolbar, locate and click the button

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labeled “Change Data Source.” A dialog box will open and bring you back to your trial balance worksheet. Change the range to include the new journal entry you just added.

select “Running Total In.” Choose which field you want to use as the base field and click OK.

Common Pivot Table Errors

Change to Running Totals

Almost all pivot table users will get error messages that the pivot table data source or reference is not valid. Finding the reason why can be frustrating. The top three possible reasons for the error are (1) fields in the data that are not named, including hidden columns; (2) names of the fields are too long, more than 255 characters; and (3) the named range underlying the pivot table is broken. Use the wizard or the ribbon to identify underlying data and ensure the named range is not showing a #REF error.

Choose the first cell that contains the data for the running total, right click and choose “Value Field Settings.” Edit the “Custom Name” field according to your needs. On the “Show Values As” tab,

Craig Jackson, CPA, is a tax manager at Wiss & Company, LLP. He is a member of the New Jersey Society of CPAs. Contact him at cjackson@wiss.com.

Quickly Alternate How Data Is Summarized By default, Excel summarizes pivot data by “sum” or “count” depending on data type. You can easily change this to “average,” “count” and so on by right clicking pivot table values (not on row or column headings) and selecting “summarize data by,” then choosing your desired option.

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SOCIETY

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2013/14 Executive Committee Gerard Abbattista, CPA EisnerAmper LLP President

Gerard Abbattista, CPA, Partner at EisnerAmper LLP, Edison, joined the New Jersey Society of CPAs in 1985. He has served on the NJSCPA Board of Trustees as treasurer and trustee. He is a member of the Committee Operations, Finance and Retirement Savings Plan committees, and trustee of the Education Foundation Board of Trustees and the NJSCPA Scholarship Fund. He has served as a member of the Professional Conduct, Strategic Planning and Investment committees. In the Middlesex/Somerset Chapter, he has served as president and director. He is a member of the American Institute of CPAs and serves as treasurer of the Gilda’s Club of Northern New Jersey. Abbattista earned his B.S. in accounting from Seton Hall University. He and his wife, Debra, reside in Westfield and have a son and two daughters.

Brad E. Muniz, CPA

Sobel & Company LLC, CPAs President-Elect Brad E. Muniz, CPA, Partner in Charge of Accounting and Auditing at Sobel & Company LLC, CPAs, Livingston, joined the New Jersey Society of CPAs in 1991. He has served on the NJSCPA Board of Trustees as secretary, treasurer and trustee. He is a member of the Accounting & Auditing Standards Interest Group, Finance and Strategic Planning committees, Scholars Institute Advisory Board and is a trustee of the Education Foundation Board of Trustees. He has served as a member of the Volunteer Relations and Investment committees and the NJ-CPAPAC. In the Morris/Sussex Chapter, he has served as president, vice president, treasurer and director. He is a member of the PKF North America Network and has served on its CPE Committee and as vice chair of the Accounting & Auditing Committee. In his community, Muniz is a board member of the Milton School and treasurer for Family Intervention Services. Muniz earned his B.A. in accounting from William Paterson University. He and his wife, Diane, reside in Parsippany and have two daughters and a son.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Walter J. Brasch, CPA ParenteBeard LLC Secretary

Walter J. Brasch, CPA, Regional Managing PartnerNJ Metro Region at ParenteBeard LLC, Clark, joined the New Jersey Society of CPAs in 1977. He has served on the NJSCPA Board of Trustees as a trustee and treasurer. He is a member of the Governmental Accounting & Auditing, Accounting & Auditing Standards and Health Care interest groups; and trustee of the Education Foundation Board of Trustees. He has also served as chair of the NJ-CPA-PAC and the Finance Committee. In the Monmouth/Ocean Chapter, he has served as president, vice president, secretary and director. Brasch is a member of the Health Care Financial Management Association, associate member of the New Jersey Bankers Association and board member of the New Jersey State Chamber of Commerce. In his community, Brasch has served as board chair and treasurer of the Raritan Bay Medical Center, alumni association president of Christian Brothers Academy (CBA), board member and honorary committee chair of the American Cancer Society and board member and treasurer of the Boy Scouts of America, Monmouth Council. He is a recipient of the CBA Alumnus of the Year Award and currently serves on the CBA Major Gifts Committee. Brasch earned his B.B.A. in accounting from St. Bonaventure University. He and his wife, Ann, reside in Little Silver and have a son, daughter and two grandchildren.

John M. Szczomak, CPA

Smolin, Lupin & Co., P.A. Treasurer John M. Szczomak, CPA, Member at Smolin, Lupin & Co., P.A., Fairfield, joined the New Jersey Society of CPAs in 1990. He has served on the NJSCPA Board of Trustees as a trustee and vice president. He is a member of the NJSCPA Committee Operations and Professional Conduct committees, Cooperation with Bankers and Health Care interest groups and is an NJCPA-PAC trustee. In his community, Szczomak is treasurer of the Passaic Valley Elks and the New Jersey State Elks Association, on the board of the Fighting Children’s Cancer Foundation and chair of St. Bonaventure Roman Catholic Church’s Finance Committee. Szczomak earned his B.A. in accounting from William Paterson University. He resides in Paterson.

Thomas F. Roche III, CPA

Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC Immediate Past President Thomas F. Roche III, CPA, CGMA, Principal at Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC, Cranford, joined the New Jersey Society of CPAs in 1981. Roche’s involvement with the NJSCPA began as a member and chair of the Young CPAs Committee. He currently serves on the Nominating and Retirement committees and chairs the Council of Past Presidents. He has served on the NJSCPA Board of Trustees as president, vice president and trustee. He was a member of the Finance, Meetings & Special Events and Committee Operations committees; chair of the Insurance Trust; trustee of the NJSCPA Scholarship Fund and NJ-CPA-PAC; and secretary of the Nominating Committee. In the Union County Chapter, he has served as treasurer, secretary, vice president and president. Roche is a member of the Commerce & Industry Association of New Jersey, the Gateway Regional Chamber of Commerce and a past president of the Union Township Chamber of Commerce. In his community, Roche serves as treasurer of the Westfield Police Athletic League and board member of the Stephen F. Mannuzza Foundation, Inc. He has been recognized as a “Five-Star Wealth Manager” from 2011-13 by New Jersey Monthly magazine. Roche earned his B.A. in accounting from Pennsylvania State University. He and his wife, Nancy, reside in Westfield and have a son, daughter and granddaughter.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Ralph Albert Thomas, CGMA

New Jersey Society of CPAs CEO & Executive Director Ralph Albert Thomas, CGMA, began his service as Executive Director of the New Jersey Society of CPAs in 1999. He is a member of the American Institute of CPAs and serves on the AICPA National Commission on Diversity and Inclusion. He has also served on the AICPA’s Group of 100, Business and Industry Executive Committee, CPA Vision Project Team, Peer Review Executive Committee Board, Strategic Planning Committee and AICPA Council. Thomas also serves on the board of the CPA/SEA. Thomas is a member of Lehigh University’s Board of Trustees, College of Business Board of Advisors, Audit Committee and has served as president of Lehigh’s Alumni Association. Thomas also serves and/or has served on the Accounting Advisory Boards of Rutgers and Seton Hall Universities and Thomas Edison State College. He is a board member of The ARC of Essex County and is a member and former president of the National Association of Black Accountants. Thomas was selected by Accounting Today as one of the “Top 100 Most Influential People in Accounting” from 2010-12. Thomas is also a member of the New Jersey Chamber of Commerce Cornerstone Initiative. Thomas earned a B.S. in business and economics and an M.B.A. from Lehigh University. He and his wife, Valerie, reside in South Brunswick and have a daughter.

SOCIETY

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Board of Trustees Trustees serving a three-year term expiring May 31, 2014

Edward I. Guttenplan, CPA

Karl A. Halteman, CPA

Jody Rorick, CPA

Mary E. Zago, CPA

Wilkin & Guttenplan, P.C.

WIL Research Holdings

Jody Rorick, CPA

Union County College

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

William A. Cadmus, CPA

Michael W. Gutwetter, CPA

Robert P. Herman, CPA

Joseph A. Zielinski, CPA

WithumSmith+Brown

Michael W. Gutwetter, CPA

Net@work

Money Management Financial Services

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

Sharon J. Bishop, CPA

Leonard N. Brooks, CPA

Joseph C. DiFalco, CPA

Edward G. O’Connell, CPA

Bishop & Bishop, P.C.

The Children’s Place

EisnerAmper LLP

WithumSmith+Brown

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

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CPE Offerings and Events Upcoming Education Foundation Events Date

Event/Code

Location

CPE Credit

5/21

Audits of Employee Benefits Conference (E1305310)

Iselin

8/AA

5/21

CPA Exam Application: Dotting Your I's, Crossing Your T's (E1305325)

Roseland

N/A

5/21

CPA Exam Study Session – "Failure Is Not an Option" (E1305335)

Roseland

N/A

5/29

New Jersey Law and Ethics Webinar (E1305264)

N/A

4/PE

6/3

Effectively and Efficiently Reviewing Audit Workpapers: The First Line of Defense Against Deficient Audits (E1306151)

Voorhees

8/AA

6/4

Audits of 401(k) Plans: New Developments and Critical Issues for an Effective and Efficient Audit (E1306161)

Voorhees

8/AA

6/5

Get Ready for Peer Review (E1306291)

Iselin

8/AA

6/5

How to Settle an Estate for a Client from A to Z (E1306171)

Jamesburg

8/TX

6/6

AICPA Peer Review Program (E1306281)

Iselin

8/AA

6/7

Loscalzo's Disclosure – The Key to Financial Statements (E1306031)

Iselin

8/AA

6/10

Revenue Recognition (E1306243)

Roseland

8/AA

6/12

Update for Accountants and Auditors (E1306251)

Iselin

8/AA

6/12-14

2013 NJSCPA Convention & Expo (E1306020)

Atlantic City

18/MC

6/14

Construction Contractors Advanced Issues (E1306271)

Iselin

8/AA

6/17

Loscalzo's 2013 FASB and AICPA Update (E1306041)

Roseland

8/AA

6/18

Latest Developments in Government and Nonprofit Accounting and Auditing (E1306181)

Iselin

8/AA

6/19

A Complete Guide to the Yellow Book (E1306191)

Iselin

8/AA

6/19

Loscalzo's Frequently Asked Questions on Not-for-Profit Accounting, Auditing, Governance and Disclosure Topics (E1306111)

Roseland

8/AA

6/20

Governmental Accounting and Auditing Conference (E1306230)

Edison

8/AA

6/26

New Jersey Law and Ethics Webinar (E1306054)

N/A

4/PE

6/26

Young Professionals Golf Clinic and Happy Hour (E1306260)

Clark

N/A

6/20

Loscalzo's Frequently Missed Issues for OMB Circular A-133 Audits (E1306121)

Iselin

8/AA

6/20

Loscalzo's Compilation and Review Essentials – Rules for Local Practitioners (E1306321)

Roseland

8/AA

6/24

Loscalzo's Using Tax Basis and Other Special Purpose Frameworks Presentations Effectively and Professional Ethics for New Jersey CPAs (E1306101)

Roseland

4AA, 4/PE

6/24

Hot IRS Tax Examination Issues for Individuals and Businesses (E1306201)

Voorhees

8/TX

6/25

From Hiring to Firing and Everything in Between: Legal, Tax and Health Care Issues (E1306213)

Voorhees

8/TX

6/26

The Complete Guide to Liquidation of Business Entities (E1306223)

Voorhees

8/TX

6/26

Loscalzo's Audits of Defined Contribution Pension Plans (Emphasizing 401(k) Plans) (E1306133)

Roseland

8/AA

6/27

Loscalzo's Current Practice Issues and Solutions in Audits of Employee Benefit Plans (E1306141)

Roseland

8/AA

6/27

Financial, Estate and Tax Planning for Individuals Over 55 (E1306081)

Iselin

8/TX

6/28

Navigating Divorce: Tax and Litigation Issues (E1306093)

Iselin

8/TX

Upcoming Chapter Events Date

Chapter

Event/Code

Location

CPE Credit

5/15

Southwest Jersey

Accounting and Auditing Update (E1305039)

Berlin

4/AA

5/15

Atlantic/Cape May

Financial Planning (E1305029)

Northfield

2/CS

5/16

Monmouth/Ocean

Lease Accounting (E1305209)

Neptune

2/AA

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

5/16

Southwest Jersey

Happy Hour (E1305359)

Cherry Hill

N/A

5/16

Bergen

Awards Night (E1305069)

Ramsey

1/PD

5/17

Mercer

Accounting and Auditing Update (E1305099)

West Windsor

8/AA

5/17

Essex

Pension Update (E1305109)

East Hanover

4/CS

5/18

Hudson

Semiannual Tax and Accounting Seminar (E1305179)

Secaucus

4/TX, 4/AA

5/21

Middlesex/Somerset

New Jersey Law and Ethics (E1305129)

Somerset

4/PE

5/21

Union County

Awards Nights – Technology Update (E1305119)

Union

2.5/CS

5/22

Morris/Sussex

Accounting and Auditing Update (E1305189)

Mount Olive

6/AA

5/22

Monmouth/Ocean

Accounting and Auditing Seminar (E1305219)

Neptune

4/AA

5/30

Monmouth/Ocean

New Jersey Law and Ethics (E1305259)

Neptune

4/PE

6/3

Bergen

Annual Golf Outing (E1306319)

Franklin Lakes

N/A

6/6

Passaic County

Annual Scholarship Beefsteak Dinner and Past Presidents Gala (E1306339)

Paterson

N/A

6/7

Essex

Federal Tax Update (E1306019)

East Hanover

4/TX

6/18

Monmouth/Ocean

Annual Golf Outing (E1306079)

Neptune

N/A

6/27

Monmouth/Ocean

Lakewood Blueclaws Baseball Game and Picnic (E1306069)

Lakewood

N/A

KEY AA – Accounting & Auditing MT – Management

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

EC – Economics PE – Professional Ethics TX – Taxation

MC – Multiple Categories PM – Practice Management

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

Your NJSCPA Membership Matters Your life is busy. Every day you handle priorities, meet obligations and try to do the things you enjoy. Your New Jersey Society of CPAs membership may not always be top of mind during those times, but it matters most when you: Need an answer to a technical question – Quickly get an answer on the Connect Open Forum (njscpa.org/connect). Need to organize all of your CPE credits – Access the NJSCPA CPE Tracker to download certificates and record credits from courses taken elsewhere (njscpa.org/cpetracker). Are concerned about a critical piece of legislation affecting your career or business – Find out up-to-the-minute details about the Society’s advocacy efforts (njscpa.org/news/legislative-news). Need easy access to quality CPE that applies to your specialization – Register for a local CPE course or webinar (njscpa.org/catalog). Want to improve your leadership and communication skills – Volunteer for an NJSCPA committee, chapter position or short-term opportunity (njscpa.org/getinvolved).

Are having a complicated licensing issue – Call the NJSCPA at 973-226-4494 to receive guidance about New Jersey State Board of Accountancy regulations. Stay current on the latest professional happenings – Read New Jersey CPA, visit njscpa.org, read E-NEWS and stay connected with the NJSCPA on social media. Are preparing for the CPA exam – Attend the Society-sponsored exam review course or meet other young professionals who are going through it (njscpa.org/students). Want to save money on business products and services – Find discounts through the Member Benefits Marketplace (njscpa.org/ marketplace). Are looking for a new job – Post your resume and review job postings on the NJSCPA Job Bank (njscpa.org/jobs). Want to continue receiving all of the benefits of NJSCPA membership – Renew your NJSCPA membership today at njscpa.org/renew and it will be there when it matters.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

SOCIETY

pages

Get Involved Interest Groups and Committees Launch a New Year Get involved. Join an interest group. Connect. Learn. Make a difference. You’ve heard it before. Does it really matter? It sure does. In fact, one in nine members is a member of a New Jersey Society of CPAs interest group or committee, with 95 percent of participants indicating they will continue their annual participation. Why? Because members want to help others, give back to the Society and the profession, increase their visibility for professional or social advancement, obtain satisfaction they may not get at work, explore strengths, and share knowledge and skills. This doesn’t just happen. Each interest group and committee is helmed by leaders and vice leaders with a passion for their technical areas and skills to connect community members. Here is the 2013/14 slate of leaders for NJSCPA volunteer interest groups and committees. Contact them through Connect at njscpa.org/connect, or join a group at njscpa.org/getinvolved.

Volunteer Interest Groups and Committees Accounting & Auditing Standards Business Valuation Forensic Litigation Services Cooperation with Bankers Educators Federal Taxation Financial Literacy Governmental Accounting & Auditing Health Care Insolvency & Reorganization Nonprofit Personal Financial Planning State Taxation Student Programs & Scholarships Technology

2013/14 Leader and Vice Leader Renee Rampulla, CPA Peggy F. Gallagher, CPA June M. Toth, CPA

Community Members 251

Michael J. Coletti, CPA JoAnne Geylin, CPA Robert A. DeFilippis, CPA TBA Jean I. Abbott, CPA Adriano DePina Jr. , CPA Robert W. Swisher, CPA David J. Gannon, CPA Kathleen F. Powers, CPA Steven N. Dioguardi, CPA Elizabeth Y. LaCorte, CPA James P. Mulroy, CPA Amy Y. Both, CPA Guy McPhail, CPA Brian M. Picariello, CPA John C. Genz, CPA Mark J. Philips, CPA Christopher M. Lovasz, CPA TBA Christopher M. Chudyk, CPA Victoria Kosuda, CPA

120

191

63 573 45 107 87 46 150 128 481 79 161

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Evernote Versus OneNote

By Victoria Kosuda, CPA, Beyond Financials Consulting, LLC The tag lines listed on the Evernote website include “Remember Everything,” “Capture Anything” and “Access Anywhere.” These headlines describe the benefits of Evernote perfectly and, in many cases, also apply to its main competitor, OneNote. Evernote is one of the most useful apps on the market today. It is an ever-expanding tool that allows a user to capture, file and organize information. The design is basic and flexible. It syncs to your computer and all of your devices so that you can access your information anywhere. Evernote is an online app that is organized into notebooks and notes. A note could be considered a page in a notebook. A notebook may be created for a client, project or any other category. Any information that you need to store, remember or refer back to can be entered or attached to a note within a notebook. The following are some basic functionalities: • A note is a blank page with formatting options, similar to a Word document. • You can format with lists, bullets, checkboxes or tables to organize information. • You can attach files to a note like you would to an email (documents, pictures, scans, receipts). • You can attach a voice note. • Your account is assigned an Evernote email address where you can send an email that automatically creates a note. • You can assign tags to a note to allow for easy keyword searches. • Searches are so sophisticated that you can even search for specific words in scanned documents. • You can share notes with other Evernote users. Evernote is a great app to start using for some simple lists or task management, and eventually you’ll be looking to do more. Your

notes are available via the Evernote website on your computer or via your smartphone or tablet. All data is continuously synced. Evernote works with both Windows and Mac and is available on all mobile platforms. A comparable product to Evernote is Microsoft OneNote. OneNote has been included in Microsoft Office since Office 2007 and has been improved upon with Office 2010. OneNote’s features and benefits are similar to Evernote. OneNote has a broad range of note templates to use for almost any need. It’s a stronger tool for teams and deeper levels of organization (five levels of notes in a hierarchy). OneNote has more structure than Evernote and is robust enough to use as a knowledge base versus a simple note-taking app. It has a wide variety of fonts, page colors, styles and drawing tools. OneNote is available with Office for Windows via the OneNote website and on some mobile platforms. Both Evernote and OneNote are tools that can provide great benefits. Potential users should look at their specific needs to determine which tool is preferable. In some cases, you may want to use both. The benefits are well worth the time to investigate. If you just want to get a flavor for the benefits, download Evernote (for free) and start using it. Victoria Kosuda, CPA, CITP, is a technology consultant for Beyond Financials Consulting, LLC. She is the vice leader of the New Jersey Society of CPAs Technology Interest Group. Contact her at vicki@beyondfinancialsconsulting.com or 908-358-4680.

Get Involved Now

Volunteer opportunities are available throughout the year. Let us know how you’d like to be involved at njscpa.org/getinvolved. Here is an activity that needs your support now: Leader-Level Engagement – Society leadership participates in addressing issues critical to the profession. Leaders have generally been actively involved with the Society and are expected to participate through in-person meetings, conference calls and email to achieve objectives that support the NJSCPA strategic plan. To be considered for an appointed leadership position for 2014/15, complete your Volunteer Interest Profile at njscpa.org/ getinvolved.

Members Are a Hit on NJ 101.5 FM The NJSCPA’s tax-season campaign with New Jersey 101.5 FM radio was a great success, providing listeners useful information on the station’s website as well as driving approximately 900 people to moneymattersnj.com. The Society thanks these members for authoring tax-season articles for the public and appearing in the accompanying NJ 101.5 promotional videos: Christopher M. Colyer, CPA

Wiss & Company, LLP

“Financial Strategies for 2013 and Beyond”

Deirdre Hartmann, CPA

Nisivoccia LLP

“Medicare Tax/Noncompliance Penalties”

Barry S. Kleiman, CPA

Untracht Early LLC

“Less-Thought-of Tax Deductions”

James A. Lawrence, CPA

Traphagen Financial Group

“Tax Refund or Tax Bill: Now What?”

Maryann Reyes, CPA

WeiserMazars LLP

“Choosing a Tax Advisor”

To see your colleagues in action, visit this video link: njscpa.org/nj1015. 17224 Online MAcc NJSCPA v3_Layout 1 1/30/13 5:56 PM Page 1

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Lawrenceville, NJ

SOCIETY

pages

NJ State Board of Accountancy Report New Licensees Need to Be Mindful of Requirements Newark (February 21) Miscellaneous

The board received a letter from an individual who had taken the Registered Municipal Accountants Exam and questioned the fairness and relevancy of the test. He had requested information from 2008-12 on the number of people who took the exam, the number of people who passed the exam, and the names and firms of people who graded the exams. The board will respond with the information and reminds test takers that they can review their graded exams. The board responded to focus questions from the National Association of State Boards of Accountancy (NASBA): • What are you doing to increase CPE compliance? Performing CPE audits. • Do/should forensic accountants hold a private investigator license in your state? No. • What are key initiatives in your state? Peer review and CPE compliance. • How can the NASBA assist your state board? A national CPE tracker program and public relations information.

Committees

Monitoring Profession – A number of new licensees have not sent in copies of their NJ Law and Ethics course certificates, which they are required to send to the board within 30 days of taking the course. (New licensees are required to take the NJ Law and Ethics course within six months after licensure.) The board did not indicate if it was because they didn’t take the course or simply didn’t send a copy of the certificate.

Regardless, letters will be sent to those in noncompliance. Statutes/Rules/Regulations – There was a discussion regarding including language in the regulations that the American Institute of CPAs Code of Professional Conduct would be referenced should the NJ regulations be silent. So as to maintain clarity and not potentially confuse licensees of the prevailing code, the board’s regulatory analyst will craft language for the committee’s review.

Public

New Jersey Society of CPAs CEO & Executive Director Ralph Albert Thomas, CGMA, mentioned that the Internal Revenue Service (IRS), in losing a recent legal case, does not have the authority to regulate tax return preparers. The IRS is appealing the court’s decision. Thomas discussed diversity and inclusion efforts in the accounting profession and that he is part of a national commission to develop strategies and initiatives to get more minorities into the hiring pipeline. Thomas indicated that the NJSCPA received a favorable report concerning the oversight of its peer review program and will send copies of the oversight report and administration plan to the state board.

Newark (March 21) President’s Remarks

Board President Keith Balla, CPA, welcomed two new members to the board who are both Public Accountants.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

Committees

Education – The committee chair attended a meeting of the New Jersey Society of CPAs Educators Committee. One issue of note was regarding potential licensees who have gone to multiple colleges. Should they submit relevant credits versus all of their transcripts? The committee will need to take a closer look at the wording of the licensee application. Ethics – The committee developed a standardized checklist of approval items for law and ethics course providers. Monitoring Profession – The committee is compiling a list of law and ethics course attendees from the previous triennial. Nominating – The committee presented officer candidates for the board’s next term. Voting will take place at the board’s April meeting. Peer Review Oversight – The committee received the NJSCPA’s peer review oversight report, which had a clean opinion.

Public

New Jersey Society of CPAs CEO & Executive Director Ralph Albert Thomas, CGMA, welcomed the new board members. Thomas discussed working with the Internal Revenue Service on abatements for tax penalties and interest due to the fiscal cliff. He also mentioned that Governor Christie’s recent budget address appeared to be business-friendly, with no new taxes. Thomas talked about the AICPA and former Comptroller General David Walker of the U.S. Government Accountability Office teaming up with other business groups for a government transformation initiative that hopes to increase government efficiencies.

CLASSIFIEDS

Mergers/Acquisitions

Professional Services

New Jersey – CPA firm wishes to acquire or merge with progressive, small to mid-sized firms. File 0701

Financial statements – If your client needs an audit, review or compilation and you don’t do them, we can. You still do the taxes and other work for your client. Free estimate: diane@slcpa.net.

Northern NJ, medium-sized, full-service and peer reviewed CPA firm is interested in acquisition or merger of smaller firm or affiliation with retirement-minded practitioner. If interested, please send your confidential information to northernnjcpafirm@gmail.com.

Real Estate Real estate appraising – Tax assessment appeals, eminent domain (condemnation), unique properties; commercial/residential; consulting; business valuations. Contact Charles A. McCullough, CPA, M.B.A., State Certified General Real Estate Appraiser, American Society of Appraisers member: cmccullough@camcpavalue.com, renwickandassociates.com, 856-779-7050, 609-923-5879.

Want to sell or merge your accounting practice? Accounting Practice Sales has qualified buyers waiting and financing available to sell your practice quickly and get you the best deal possible. For information regarding our risk-free and confidential services, call Bradley Holmes at 800-397-0249. Buyers see listings and register for free email notifications at accountingpracticesales.com.

Newly renovated and beautifully appointed office building, 5,000 square feet in Fair Lawn, available for lease or lease/option to buy. Ideal for emerging CPA firm. Plentiful off-street parking and convenient to GWB/NYC and routes 4, 20, 80 and GSP. Call Jeff St. Thomas, McBride Corporate Real Estate, at 201-848-6119 or email stthomasj@ mcbridecorpre.com.

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

Classified Advertising Replies to ads with file numbers should be sent to: File________________________

Pro Bono

New Jersey CPA Classifieds 425 Eagle Rock Avenue, Suite 100 Roseland, NJ 07068-1723

NORWESCAP, a nonprofit serving low-income people in northwest NJ, seeks a board treasurer. Meetings are held the third Wednesday of the month in Phillipsburg. Contact Terry Newhard at newhardt@ norwescap.org or 908-454-7000 x110. Visit norwescap.org.

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

The Village Charter School, a K-8 school located in Trenton, seeks a CPA to serve on its board. Contact Paul DeWitt at pdewitt@ villagecharter.org.

Plus, look for our ...

Magazine of the

New Jersey Society of Certified Public Accountants

July • August 2013

July/August Coming Attractions

Succession Planning n Practice Growth During Succession n Succession Planning at a CPA Firm n Mitigating Risk During Succession n Succession Planning at a Family-Owned Business N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

STUDENT

outlook

NJSCPA Celebrates Its 53rd Awards Ceremony T

he New Jersey Society of CPAs Scholarship Fund awarded more than $465,000 to 80-plus New Jersey high school and college students at the 53rd annual NJSCPA Scholarship Awards Ceremony in April. We applaud our members, chapters and firms for supporting the Society’s efforts in helping secure the future of the CPA profession. Congratulations to these scholarship recipients: In Name of Awards Bowman & Company LLP (In Memory of Lisa A. Donahue) (Patron Level) Rebekah Calverley ($5,000) Rowan University CohnReznick LLP (Benefactor Level) Joshua Carty ($5,000) The College of New Jersey Tomasz Hajduk ($5,000) Rutgers University – New Brunswick EisnerAmper LLP (Partner Level) Howard Telson ($5,000) The College of New Jersey Fazio, Mannuzza, Roche, Tankel, LaPilusa, LLC (Partner Level) Shondel McPherson ($5,000) Saint Peter’s University Frazer, Evangelista & Company, LLC (Patron Level) Marc Solecitto ($5,000) Seton Hall University Lenore and Frederick Horn (In Memory Of) Natalia Mendoza ($5,000) David Moran ($5,000) Fairleigh Dickinson University John Lee (In Honor Of) Victoria Marquardt ($5,000) Rider University Monmouth/Ocean Chapter Scholarship (In Memory of Joseph D. Leone Jr.) Matthew Sampson ($5,000) Rider University

NJSCPA Council of Past Presidents Award (Patron Level) Daniel Lane ($5,000) Montclair State University Rothstein Kass & Company, P.C. (Benefactor Level) Deirdre Kane ($5,000) Seton Hall University Natallia Khadasevich ($5,000) Montclair State University Smolin, Lupin & Co., P.A. (Partner Level) Michael Addeo ($5,000) Rowan University Paul Stahlin, CPA (In Honor Of) Danielle Miller ($5,000) Montclair State University Union County Chapter Scholarship (In Honor of Thomas F. Roche) Bayaan Oluyadi ($5,000) Monmouth University Untracht Early LLC (Patron Level) Shmuel Libby ($5,000) Rutgers University – Newark WeiserMazars LLP (Patron Level) Moshe Wallach ($5,000) Rutgers University – Newark WithumSmith+Brown (Benefactor Level) Erik Marcus ($5,000) The College of New Jersey Jessica Woolley ($5,000) Monmouth University Z. Thaddeus Zawacki (In Memory Of) Patrick Kinzler ($5,000) Seton Hall University N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

NJSCPA College Awards Montclair State University Richard Park ($5,000) Judy Rubino ($5,000) New Jersey City University Alysson Vamvas ($5,000) Ramapo College of New Jersey Claude Barnes ($5,000) Allyson King ($5,000) Stephen Scorzo ($5,000) Joseph Zapf ($5,000) Richard Stockton College of New Jersey Michael Kramer ($5,000) Calvin Longer ($5,000) Joseph Vargo ($5,000) Rider University Jonathan Grossman ($5,000) Michael Lombardo ($5,000) Jonathan Moyer ($5,000) Lisa Neubert ($5,000) Denise Ober ($5,000) Rowan University Amira Anderson ($5,000) Rutgers University – Camden Courtney Greenhalgh ($5,000) Rutgers University – Newark Chris Arthur Jr. ($5,000) Aisha Ghani ($5,000) Christopher Vasquez ($5,000) Ashlee Wright ($5,000) Rutgers University – New Brunswick Vivian Chiu ($5,000) Kelsi Morrison ($5,000) Justin Murberg ($5,000) Seton Hall University Matthew DeLorenzo ($5,000) James Fylstra ($5,000) Megan Sherwood ($5,000)

The College of New Jersey Gregory Baroni ($5,000) Greg Oriolo ($5,000) Michael Palantone ($5,000) Erin Silkowski ($5,000)

Brigitte Cohen ($8,000) Wayne Hills High School

Minority Scholarships NJSCPA/Northern New Jersey-National Association of Black Accountants Tyraesha Hagans ($5,000) Rutgers University – Newark Ashlee Wright ($5,000) Rutgers University – Newark

April Dellner ($8,000) Toms River High School East

Chapter College Awards Atlantic/Cape May Chapter Joseph Diano ($4,000) Richard Stockton College of New Jersey Mercer Chapter Melody Hicks ($2,500) Wesley Maziarz ($2,500) Abhinav Mereddy ($2,500) Ka Chun Wong ($1,500) Jun Zheng ($1,500) Mercer County Community College Scholarships Funded by the Big Four Accounting Firms (Awarded over four years) Deloitte Jessica Berardinelli ($7,000) Hanover Park High School Ernst & Young LLP John Flynn ($7,000) St. Augustine Preparatory School KPMG LLP Annalyse Culp ($7,000) Clayton High School PricewaterhouseCoopers LLP Jennifer Oberman ($7,000) Washington Township High School NJSCPA High School Awards (Awarded over four years) Cory Andrews ($8,000) Deptford High School

Nichole Colagrosso ($8,000) Toms River High School East

Jessie Fifield ($9,000) Colts Neck High School Benjamin Kats ($7,000) Montville Township High School Brian Lukacsy ($8,000) Clearview Regional High School Mansi Parikh ($7,000) Roxbury High School Ashley Perez ($8,000) Sayreville War Memorial High School Muhammad Rasheed ($7,000) Nutley High School Vanessa Richards ($9,000) Washington Township High School

ADVERTISERS INDEX New Jersey CPA is the only way to reach each of the 15,500 members of the New Jersey Society of CPAs, and 55 percent of readers take action after seeing an advertisement in the magazine – by either purchasing the product, contacting the advertiser, visiting a website or recommending the product or service to a client.

NJ Accounting, Business & Technology Show Advertisers

Page # Booth #

Accounting Practice Sales

accountingpracticesales.com ADP 31 210 accountant.adp.com/my-number Askin, Weber & Reed, Inc.

516

415

115

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Madeline Rosenfeld ($9,000) Livingston High School Christopher Sardo ($8,000) Hanover Park High School Ryan Smith ($8,000) West Orange High School

Additional Advertisers Audimation 11 audimation.com Bloomfield College

bloomfield.edu CapitalOne Bank

capitalone.com

Jenna Tornatore ($8,000) Clayton High School

Fulton Bank of New Jersey

Alexandra Wallach ($9,000) Manalapan High School

People's United Business Capital 13

NJSCPA Outstanding Performance Award Carly Stelljes ($10,000) Northern Burlington County Regional High School To support the NJSCPA Scholarship Fund, visit njscpa.org/scholarship. N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

222

fultonbanknj.com peoples.com Plymouth Rock Assurance

njscpaquote.com Provident Bank

providentnj.com Rider University

rider.edu/macc Rutgers rutgers.edu

29, 35

LEGISLATIVE

views

Governor Signs Tax Credit for Investments in Emerging Tech Companies B Y JOHN C . GENZ, CPA, E I SNE RAM PE R LLC

n January, Governor Chris Christie signed into law the NJ Angel Investor Tax Act, which revives and expands the expired “Small New Jersey-Based High-Technology Business Investment Tax Credit.” It establishes credits equal to 10 percent of a taxpayer’s qualified angel investor cash investment in an emerging technology business, up to a maximum allowed credit of $500,000 per year for each qualified investment against corporation business and gross income taxes. The program is subject to a $25 million annual cap. The law went into effect immediately and applies to tax periods beginning on or after January 1, 2012. It applies to several industries including, but not limited to, hardware and software development, biotechnology, information technology, film and television production, life sciences, medical device technology, mobile telecommunications and renewable energy. For individual investors, the credit is first applied to the taxpayer’s New Jersey Gross Income Tax liability. Any excess is refunded. For corporate business investors, if the tax credit amount exceeds the taxpayer’s corporate business tax liability, the investor may choose between having the amount of the excess refunded or carried forward to be applied against tax liabilities in the next 15 years. “Qualified investment” means the nonrefundable transfer of cash to a New Jersey emerging technology business by a

taxpayer who is not a related person (80 percent or more direct or indirect control) of the NJ emerging technology business, the transfer of which is in connection with either (1) a transaction in exchange for stock, interests in partnerships or joint ventures, licenses (exclusive or nonexclusive), rights to use technology, marketing rights, warrants, options or any items similar to those included herein including, but not limited to, options or rights to acquire any of the items included herein; or (2) a purchase, production or research agreement. “New Jersey emerging technology business” means a company with fewer than 225 employees of whom at least 75 percent are filling a position in New Jersey, that is doing business, employing or owning capital or property, or maintaining an office in this state and (1) has qualified research expenses paid or incurred for research conducted in this state; (2) conducts pilot scale manufacturing in this state; or (3) conducts technology commercialization in New Jersey. To see the full text of the new law, visit njleg.state.nj.us/ lawsconstitution/chapter.asp and look for P.L.2013, c.14, under the Chapter Laws 2013 section. John C. Genz, CPA, is the partner-in-charge of EisnerAmper’s state and local tax group. He is the leader of the New Jersey Society of CPAs State Taxation Interest Group. Contact him at john.genz@eisneramper.com.

Minimum Wage on the Ballot for November The New Jersey Legislature passed a resolution in February that will put the minimum wage issue on the ballot for a public vote during November’s elections. The proposed constitutional amendment would increase New Jersey's minimum wage 14 percent to $8.25 an hour on January 1, 2014. In the following years, it would increase automatically every year to match the Consumer Price Index. The move to put the issue on the ballot as a constitutional amendment came after Governor Christie conditionally vetoed legislation sponsored by the Democratic Senate President and the Assembly Speaker that would have instituted similar minimum wage increases by statute. In his conditional veto, Christie offered to sign legislation that would phase-in a smaller increase and not include the annual automatic wage increases. The sponsors of the vetoed legislation rejected the offer and opted

to pass a resolution putting the issue on the ballot as a constitutional amendment. The bill’s supporters, including many unions and Democratic legislators, argue the amendment is needed to ensure New Jerseyans receive a fair minimum wage. Opponents, including most Republican legislators and many business groups, argue that the 14-percent hike is too much during New Jersey’s struggling economy, and the automatic annual increases will hamstring businesses’ ability to react to emerging economic conditions similar to the Great Recession and Hurricane Sandy. They also argue that the NJ State Constitution is not the proper place for an amendment addressing issues like the minimum wage. They say the constitution is a foundational document that guarantees basic rights and shouldn’t be used to enforce wage contracts.

N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

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MEMBER

profile

Where There’s Smoke, There’s This CPA BY DAVID PLASKOW, NJSCPA PUBLIC ATIONS EDITOR

“T

here was a fire in Jersey City a few weeks ago where a couple of firefighters got hurt,” says Michael Cleary, CPA, and Jersey City Fire Captain. “My wife, Jennifer, basically said ‘couldn’t you just stick to being a CPA, the worst that may happen is a paper cut.’” No luck – Cleary enjoys his firefighter role. But how does someone go from fighting tax deadlines to fighting fires? “I enjoyed my accounting classes in high school and began in Kean’s accounting program in 1984,” recalls Cleary. “But I wasn’t mature enough then and really didn’t take college seriously. So, to hedge my bets, I took the fire department exam that same year.” The physical test included running with a ladder and hose, climbing a rope and carrying a 150-pound dummy. Four years later, in 1988, Cleary, still at Kean, was hired by the Jersey City Fire Department and took a sabbatical from college. “In the fire department, you work 24-hour shifts and then you’re off for 72 hours, which is a great schedule,” explains Cleary. “So you have all this downtime to work, study or get in trouble.” Cleary chose to study and get serious about college, and he went back to Kean where he received his B.S. in accounting in 1992. But the CPA designation – for a firefighter? “I passed the last part of the CPA Exam in 2008,” says Cleary. “I had the time to study and thought that was the natural progression for an accounting major.” Shortly thereafter, Cleary joined the New Jersey Society of CPAs. “I have limited interaction with other accountants, and the Society affords me that interaction. I can also stay current with the accounting landscape through the magazine, website and CPE

courses,” notes Cleary. In 2003, Cleary put that accounting experience to use for John Graziano and Company in Hazlet. “John was from Jersey City and he was opening an office in Hazlet. I can schedule parttime tax work around my other job,” says the Middletown resident. He’s been at the firm ever since. What does Cleary do when he’s not fighting fires in buildings or on tax forms? He enjoys taking family vacations, volleyball and fishing. A 10-pound bluefish is his favorite catch. He’s also helped out with his son, Dylan’s, soccer team and is the treasurer for the Jersey City Firefighters Emerald Society. “I’m pretty popular around the firehouse during tax time,” laughs Cleary. “But my accounting background really comes in handy during contract negotiations and retirement issues.” He was also appointed to the State Investment Council, which formulates investment policies for the NJ pension system. Cleary has worked his way up the ladder, so to speak, at New Jersey’s largest fire department, which has approximately 550 individuals. In 2005, he became a captain, which includes being in charge of one fire truck and three to four men. He’s responsible for safety training, maintenance and compliance, and he still goes on calls. He’s passed the test N E W J E R S E Y C P A • M AY • J U N E 2 0 1 3

to become a battalion chief and hopes to be promoted this year, which means he would oversee seven or eight trucks and one-quarter of the city. Battalion chief is less hands-on and more management- and budgeting-oriented, which dovetails nicely with his CPA background. “That’s one difference between a government job and working at an accounting firm,” says Cleary. “When you pass the CPA exam, you’re a CPA. You can pass the oral, written and physical parts of the fire department exam. But, then you’re put on a list to be promoted, and municipal budget cuts may delay your advancement.” Nevertheless, Cleary wouldn’t trade it for anything. And the people of Jersey City are lucky to have him. “While there’s a certain amount of downtime – no Dalmatians in the firehouse to play with – some days we’ll get a dozen calls,” he points out. “You can’t help but get a lot of satisfaction from pulling someone out of a burning building.” Cleary should know; he’s received several commendations for going above and beyond the call of duty to save members of the public.

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# CAMICO CLUE

YOUR NJCPA PREFERRED PROVIDER OF PROFESSIONAL LIABILITY INSURANCE AND RISK MANAGEMENT SERVICES

Writing that re-finance letter to a lender, assuring your client’s creditworthiness could expose you to a lawsuit CAMICO continues to receive hotline calls from policyholders who are asked to write a letter to their client’s lender providing assurance of their client’s ability to meet a loan commitment. We understand the CPA’s dilemma of wanting to help the client, while under pressure to do something they are not comfortable with. CAMICO actively helps CPAs craft an appropriate response to lender letter requests and to other versions of third-party reliance requests. The responses clearly state services rendered without providing any assurance, thus avoiding violation of professional standards.

Alexander J. Gold Assistant Vice President Bollinger, Inc.

SOLUTION To request a quote or to discuss your firm’s insurance needs, contact:

www.camico.com

Alexander J. Gold, AVP Accountant Professional Liability Program Manager Tel: 973.921.8385 Fax: 973.921.2876 Email: alex.gold@bollingerinsurance.com

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CAMICO and Bollinger, Inc., understand the pressures faced by CPA firms, together with the need for better risk management and high standards of professionalism. For over 26 years, CAMICO has helped CPAs address professional challenges and concerns with our feature-rich Professional Liability Insurance policy and Risk Management Program. So you can spend more time building your practice and less time worrying about a potential claim.