On Balance July | August 2013 by WICPA

July/August 2013 | Vol. 9 No. 4 A publication of the Wisconsin Institute of CPAs | www.wicpa.org

the career Laura B. Huggett, CPA, recruiter, Baker Tilly Search & Staffing, LLC

PLUS:

Detecting resume fraud Whatâ&#x20AC;&#x2122;s new with labor laws? Getting executive compensation right

A publication of Wisconsin Institute of CPAs | www.wicpa.org

July/August 2013 Vol. 9 No. 4

22 Features

Columns

12 The career insider Recruiter Laura B. Huggett, CPA helps employees and those who hire them find a perfect match. By Cynthia M. Hodnett 18 Emerging trends in labor and employment law New federal rulings, including health care reform, are shaping trends in labor and employment law. By John J. Kalter, J.D. 22 Executive compensation: Pay justified through performance Regulatory compliance and transparency requirements are driving many companies to review their executive compensation programs. By Eric J. Gonzaga, J.D. 24 Avoiding EEOC scrutiny: Employer vigilance against discrimination of previously unprotected groups EEOC offers new guidance for employers, including changes about federal antidiscrimination law for new protected groups. By Emily A. Constantine, J.D.

www.wicpa.org

30 TAX IRS updates employee health benefits reporting guidelines New updates include frequently asked questions regarding W-2s and a chart listing each health care coverage type, and boxes indicating whether employer reporting is required or optional. By Scott E. Hess, CPA 32 FRAUD Liar for hire: How to detect resume fraud Make pre-employment screening one of your company’s priorities for detecting resume fraud. By Stephanie A. Barganz CPA, CFF, CVA, SPHR 34 INDUSTRY HR prepares for the changing world of accounting Firms adapt recruitment, retention and diversity efforts to hire the best and brightest employees. By Sue Durst

On Balance

July|August 2013

{ Membership Matters | more involvement }

Belong to something MORE: CREDIBILITY! By Barb Gamez, vice president of Membership and Marketing, WICPA 2008 Clarion Award Winner

2013-2014 WICPA OFFICERS/BOARD MEMBERS Chair Robert A. Gruber, Ph.D., CPA, CGMA Chair-elect Jean M. Hansen, CPA, MBA, CGMA Past-chair Danica E. Olson, CPA, CGMA Secretary-treasurer Joy L. Hertlein, CPA, CGMA Directors Kyle J. Beld, CPA Greta C. Diercks, CPA Katherine J. Hauser, CPA, CGMA Kelly K. Miller, CPA Joan M. Phillips, CPA Matthew I. Raunio, CPA Gregory L. Ryan, CPA Carver Smith, CPA Martin D. Verhelst, CPA AICPA Council David O. Christianson, CPA Karla E. Blair, CPA President & CEO Dennis F. Tomorsky, CPA, J.D., CGMA Vice President of Communications Amy E. Gaeth Vice President of Membership & Marketing Barb Gamez Editor Cynthia M. Hodnett Copy Editor Joan Bahr Design & Layout Kathleen Hess Advertising Manager Ellen Engel Printing Marek Printing Join us online!

On Balance is published six times a year by the Wisconsin Institute of Certified Public Accountants (WICPA). Change of address should be sent to: Membership, 235 N. Executive Drive, Suite 200, Brookfield WI 53005; Phone: 262-785-0445 or 800-772-6939 (WI/MN); Fax: 262-785-0838; email: jessica@wicpa.org. Statements and opinions expressed are those of the authors and not necessarily those of the WICPA. Publication of an advertisement does not constitute an endorsement of the product or service by On Balance or the WICPA. Articles may be reproduced with permission. © Copyright 2013 On Balance.

On Balance

July|August 2013

When you think of credibility, what comes to mind? When I think of credibility, I think of trust. It takes time to build, based on proven actions, yet it may take just one action to diminish or destroy it. Whether it’s an individual or a company, having credibility is a cornerstone of success. Developing credibility requires visibility. Your WICPA membership offers many ways to increase your visibility, providing more credibility for you and your organization. Find a CPA directory: Free listing for your firm The Find a CPA directory on the WICPA website helps the public find and connect with a CPA member that can best meet their financial and business needs. Visitors can search by company name, city, services offered or industries served. The Find a CPA sign-up form allows you to indicate the counties and industries you serve, as well as your areas of practice. You can also include a link to your website. The WICPA drives business to members via the Find a CPA directory while promoting the value of CPAs through radio, print and online advertising throughout Wisconsin. WICPA logo: Show your membership pride As a member, you demonstrate your commitment to the profession and to high standards. You are dedicated to enhancing your technical skills and professional knowledge to better serve your clients and companies. Your WICPA membership sets you apart. Let the public know you’re a proud member by including the WICPA logo in your advertising and promotional materials as well as on your company website. The logo may only be used by WICPA members in good standing and with prior permission from the WICPA. To request permission and

an electronic file of the WICPA logo, contact me at 800-772-6939 ext. 3012 or barb@wicpa.org. Please include how you plan to use the logo. Public speaking: Increase your visibility Do you specialize in a technical topic? Another way to gain credibility is to share what you know with other members as a presenter at a WICPA breakfast meeting, seminar or conference. To be considered for a WICPA speaking opportunity, contact CPE Program and Event Administrator Shaun Krueger at 800-772-6939 ext. 3024 or shaun@wicpa.org. Media spokesperson: Be the expert Another way to position yourself as an expert and gain credibility is to be a WICPA media spokesperson who can be available for interviews. The WICPA regularly receives calls from the media looking to interview CPAs who can discuss a variety of financial and business topics. If you are interested in becoming a WICPA media spokesperson, contact Membership Marketing & Student Initiatives Manager Mary Murray at 800-772-6939 ext. 3005 or mary@wicpa.org. Write for On Balance or The Bottom Line: Share your expertise Your WICPA membership also offers you the chance to share your knowledge in print. Not only will you gain positive visibility among nearly 8,000 peers, you’ll also earn CPE credit. WICPA members consistently tell us that they highly value the peer-driven content of these publications. Contact Writer/ Editor Cynthia M. Hodnett at 800-772-6939 ext. 3004 or cynthia@wicpa.org to submit an article to On Balance. Contact Vice President of Communications Amy E. Gaeth at 800-772-6939 ext. 3006 or amy@wicpa.org to submit an article to The Bottom Line.

Your membership to-do list this month:  Add your firm to the Find a CPA directory: www.wicpa.org/FindaCPAsignup.  Review WICPA logo use guidelines and request the WICPA logo: www.wicpa.org/logo.  Submit an article for consideration in a future WICPA publication: cynthia@wicpa.org. www.wicpa.org

{ Outlook | chair’s letter } “According to Wikipedia, human resources simply means ‘the set of individuals who make up the workforce of an organization.’ But there is nothing simple about working with people.”

Putting the ‘human’ in human resources

Shutterstock.com

had the pleasure of attending the 2013 WICPA Member Recognition Banquet & Annual Business Meeting at the Potawatomi Bingo Casino in Milwaukee on May 9. It was a superb evening! The WICPA staff who planned and carried out the event did an outstanding job. They should be recognized for going beyond normal expectations. Please plan to attend next year’s event on May 8. It will definitely be worth your time! The theme for this issue of On Balance is human resources. According to Wikipedia, human resources simply means “the set of individuals who make up the workforce of an organization.” But there is nothing simple about working with people. And I think that’s what makes life interesting and exciting! People also make life challenging, befuddling and frustrating. But we should remain positive, right? One of the most common misconceptions regarding the accounting profession is, “It’s about numbers, not people,” or “I’m not good with people, so I think accounting is for me.” Another is, “I’m good at math, so I’ll be good at accounting.” Many times when my graduate students and young professionals speak to high school accounting students, they often report back similar sentiments such as, “I’m interested in accounting because I just don’t like talking to people!” And some recent graduates are surprised at how much accounting is done in groups via committees and uses human resources, i.e., individuals, other than themselves. Finally, effective and efficient leadership has been popularly described as “getting things done through others,” although this philosophy has been questioned recently. In 1989, Robert Fulghum wrote the thoughtprovoking book, “All I Really Need to Know I Learned in Kindergarten.” Perhaps you’ve read it. It is basically a collection of short essays described as “uncommon thoughts about common things.” Naturally, one of the implied underlying themes of the book is dealing with people, i.e., human resources. Fulghum begins with the statement, “Wisdom was not at the top of the graduate school mountain, but there in the sandbox of kindergarten.” His proverbs or pearls of wisdom include: • Share everything. • Play fair. • Don’t hit people. • Put things back where you found them.

www.wicpa.org

• Don’t take things that aren’t yours. • When you go out into the world, watch out for traffic, hold hands, and stick together. • The first word in the “Dick and Jane” books is the biggest word of all — “LOOK.” (In volume two, I believe Jane adds “LISTEN.”) I don’t want to philosophize or preach, but it doesn’t take much of an imagination to see how Fulghum’s lessons apply to working with our peers, managing our supporting staff, dealing with customers or clients, and acting with civility. Another good book I recommend is “Choosing Civility” by P. M. Forni. He discusses 25 civility rules, including: pay attention, acknowledge others, listen, speak kindly, respect others’ opinions and be agreeable. The staff at the WICPA epitomizes Fulghum’s lessons and Forni’s rules. They are a well-oiled, collegial, professional group focused specifically on serving you, WICPA member, and the accounting profession in general. After all, they are your human resources and proud to LOOK and LISTEN! As Walt Disney once said, “Of all the things I’ve done, the most vital is coordinating those who work with me and aiming their efforts at a certain goal.” Robert A. Gruber, CPA, Ph.D., CGMA is a professor and Master of Professional Accountancy program coordinator at the University of Wisconsin–Whitewater. Contact him at 262-472-5463 or gruberr@uww.edu

2013 AWARDS WICPA members receive Excellence Awards Congratulations to the one CPA firm and eight WICPA members who were recently presented 2013 WICPA Excellence Awards by the Awards Selection Committee. Recipients were recognized at the 2013 Member Recognition Banquet & Annual Business Meeting for their contributions to the accounting profession and the organization.

Outstanding CPA in Government Award Recipient: David M. Geertsen, CPA, director, Kenosha County Department of Finance and Administrative Services, Kenosha “It is indeed an honor to receive this award, and it is very much appreciated. This award is not just for me, it is also a tribute to my family, friends, and co-workers who worked so hard in so many ways to achieve excellence in Kenosha County and at the State of Wisconsin Investment Board. It has been a privilege to serve as the chief financial officer for the county for the past 25 years and as a trustee for the State of Wisconsin Investment Board for eight years. I am humbled to receive this honor, and offer my gratitude to the WICPA for the award.”

On Balance

July|August 2013

Educator Award: William S. Tatman, CPA, accounting lecturer and internship director, University of Wisconsin– Whitewater, Whitewater “When I received the call telling me that I had won this award, I was truly amazed and humbled. Amazed, because I’m definitely not your typical educator. I spent 19 years in public accounting before I decided to teach. Humbled, because over the course of my career, I’ve had the privilege of getting to know many of the great educators around the state. To be considered in the same league with them is truly an honor.”

www.wicpa.org

Business & Industry Award Recipient: Joy L. Hertlein, CPA, CGMA,

chief financial officer, New Berlin Plastics, Inc., New Berlin “Being selected for the Business & Industry Award is a tremendous honor. By the very existence of this award, the WICPA recognizes that more than 50 percent of its members work outside of public accounting and has therefore always strived to address business and industry member needs and provide knowledge sharing, networking, and continuing education opportunities. I look forward to my continuing involvement with the WICPA, an organization that is helping to contribute to the success of companies in Wisconsin by providing educational, leadership and networking opportunities to CPAs throughout the state.”

Spirit Award Recipient: Steven R. Volz, CPA,

partner, Reilly, Penner & Benton LLP Milwaukee “I am honored to receive this award in recognition of more than 35 years of service on a number of WICPA committees/task forces, in addition to a couple of AICPA committees. I became involved in committee work because of my interest in giving back to the profession. The involvement in committee work has allowed me to improve and maintain my technical skills, and improve my public speaking and confidence in front of clients. In addition, the networking opportunities have been tremendous and have helped me grow as a CPA and individual. The CPA profession is constantly changing and is very challenging, and I believe committee work can help all CPAs meet these challenges.”

Congratulations! Joy Hertlein Recipient of the 2013 Business and Industry Award.

New Berlin Plastics, Inc. www.wicpa.org

On Balance

July|August 2013

Outstanding Young Professional Award Recipient: Lucas A. Rocole, CPA,

Distinguished Career Award Recipient: Nicholas S. Lascari, CPA, CGMA, CEA,

AWARDS

manager, Wipfli LLP, Milwaukee

“I spent time thinking about what this award means to me, and the single word that repeatedly comes to mind is ‘opportunity.’ I am blessed to be given the opportunity to represent young professionals through the WICPA this year. As I continue to think about all the opportunities I have been given, it would be foolish to think that without so many opportunities, I wouldn’t be writing this letter today. I believe this award is a culmination of all the opportunities I have been given to date and an opportunity for me to say thank you.”

2013

On Balance

July|August 2013

partner, Balistreri, Jezo & Lascari, LLP, Brookfield “I am humbled to be chosen and proud to have served our profession for a long time (I’m not done yet). If success is measured by the friends you keep, then success as a CPA comes from helping others because a CPA’s work is respected and appreciated. I have had the honor of serving with many CPAs and many organizations along this ride. I have had the pleasure and privilege to work with magnificent people and highly respected CPAs through my entire career. Thank you for being friends. Thank you for this award.”

www.wicpa.org

Public Service Award Recipient: Dennis J. Langenberg, CPA,

Achievement Award Recipient: David O. Christianson, CPA,

shareholder and chief operating officer, Schenck SC, Green Bay

partner, Wipfli LLP, Milwaukee

AWARDS

www.wicpa.org

“I am truly honored to be receiving an award for an opportunity to serve my profession, an opportunity that has enhanced my career in immeasurable ways. During my years of involvement, my message to younger professionals has consistently been that without getting involved, you won’t understand what you are missing, and I’ve encourage them to do so. My belief is that we should be committed to giving back to our profession, working to keep it the greatest of all the professions.”

2013

“I am very honored and humbled to be selected for this award. My career as a CPA has allowed me to earn a very good living, and at the same time, it has also provided me the opportunity to interact with many others in the communities I have lived in. I feel it is important to all of us who are rewarded by our communities to reciprocate and give back to our communities. This public service award reminds me that I am fortunate that I am a CPA and that I have the time and expertise to make a difference in our communities.”

On Balance

July|August 2013

Firm Public Service Award Recipient: Wipfli LLP, Dale E. Muehl, CPA, shareholder and chief operating officer, Wipfli LLP, Milwaukee “At Wipfli, a Wisconsin-based CPA and consulting firm across 24 locations and 1,100 associates, we have always encouraged efforts to make a difference in the communities where we live and work. In 2012, Wipfli’s associates across the country dedicated more than 3,500 work hours to 56 organizations on that one day, and many more throughout the year. We are very proud of what our associates contribute to their communities on Community Day and all year round. We also know that volunteerism is a proud tradition among CPAs and their firms, which makes us proud of our profession and its commitment.”

2013

AWARDS

On Balance

July|August 2013

Start thinking about your 2014 nominations now!

www.wicpa.org

2013

With attendance up 30 percent from last year, nearly 300 members and guests attended the 2013 Member Recognition Banquet & Annual Business Meeting on May 9 at Potawatomi Bingo Casino in Milwaukee. The evening’s activities included a welcome reception for new members, a networking reception and a three-course dinner. The Annual Business Meeting was part of the program, during which the incoming WICPA board of directors was voted in, WICPA members were recognized for 10, 25 and 40 years of membership and several members were honored with WICPA Excellence Awards. Afterward, attendees enjoyed socializing while they participated in entertainment provided by Arté Wine and Painting Studio, LoDuca Bros., Inc. Wine Tastings and Niemann’s Chocolates.

Photos courtesy of Janet McMillan

SAVE THE DATE! www.wicpa.org

2014 Member Recognition Banquet & Annual Business Meeting May 8, 2014 | Potawatomi Bingo Casino, Milwaukee

On Balance

July|August 2013

DURING THIS ACTIVITY, YOU’LL FIND OUT HOW TO • EXPAND YOUR PROFESSIONAL NETWORK • DEVELOP LEADERSHIP SKILLS • SAVE TIME & MONEY

ANSWER: WHAT IS A

WICPA FIRM VISIT? Whether it’s during lunch hour, a staff

You’ve invested money in WICPA membership. Are you using it to its full potential? Find out with a firm visit!

meeting or anytime that works for you, we’ll show you how to make the most of your WICPA membership investment.

DON’T PUT YOUR MEMBERSHIP ROI

IN JEOPARDY.

SCHEDULE YOUR FIRM VISIT TODAY.

CONTACT:

Leah Grunewald Membership Development Manager

262-785-0445 ext. 3026

leah@wicpa.org

www.wicpa.org 10

On Balance

July|August 2013

www.wicpa.org

{ Spotlight | letter from the editor } “Although this time of year may not be your slow season, I hope you get a chance this summer to escape the hectic world of working in accounting, if only for a little while. So go on and attend that cookout, take that vacation, and read On Balance.”

Ease into summer with On Balance

shutterstock.com

ookouts, vacations and warm weather are all signs that summer is finally here. Hopefully you are taking some time to relax, perhaps while reading this issue of On Balance. The following pages examine human resources topics while offering some useful best practices and solutions for your business. The following is a snapshot of what you can find. The article, “HR prepares for the changing world of accounting,” by Sue Durst shows how firms can adapt recruitment, retention and diversity efforts to hire best and brightest employees. Next, read about the high costs of resume fraud for businesses by reading the article, “Liar for hire: How to detect resume fraud,” by Stephanie Barganz, CPA, CFF, CVA, SPHR. In addition to identifying problems that a business can face after making a “bad hire” because of resume fraud, Barganz shows how to detect it by using methods such as pre-employment screening. Then, read how regulatory compliance and transparency requirements are driving many for-profit and not-for-profit companies to review their executive compensation programs in “Executive compensation: Pay justified through performance,” by Eric J. Gonzaga, J.D. Later, consider how several federal mandates, such as health care reform, are expected to shape trends in labor and employment law by reading “Emerging trends in labor and employment law,” by John J. Kalter, J.D. Employers providing health benefits to their employees may be interested in reading, “IRS updates employee health benefits reporting guidelines,” by Scott E. Hess, CPA. The article includes an update on reporting guidelines, IRS’ frequently asked questions regarding W-2s, and a chart listing each health care coverage type and boxes indicating whether employer reporting is required or optional.

www.wicpa.org

Also read about CPAs working in human resources, such as Laura B. Huggett, CPA, a partner at Baker Tilly Virchow Krause LLP and manager of staff operations at the firm’s recruiting and temporary staffing company, Baker Tilly Search & Staffing, LLC. The article, “Career insider,” discusses Huggett’s transition from working in accounting to matching employees with those who want to hire them. Although this time of year may not be your slow season, I hope you get a chance this summer to escape the hectic world of working in accounting, if only for a little while. So go on and attend that cookout, take that vacation, and read On Balance.

Cynthia M. Hodnett is editor of On Balance magazine. Contact her On Balance July|August 2013 at 262-785-0445 ext. 3004 or cynthia@wicpa.org.

the career by Cynthia M. Hodnett photography by John Nienhuis

mployees need and want the right jobs, plus businesses need and want the right employees. So when the two groups decide to join forces, they rely on professionals like Laura B. Huggett, CPA to help them become the perfect match.

Huggett, a partner at Baker Tilly Virchow Krause LLP and president

at the firmâ&#x20AC;&#x2122;s recruiting and temporary staffing company, Baker Tilly Search & Staffing, LLC, has been in the business of matching workers with employers who want to hire them for the past 18 years.

On Balance

July|August 2013

www.wicpa.org

On Balance

July|August 2013

had almost 10 years as a CPA, and I “Ididn’t want to start over,”

she said. “As an auditor, I enjoyed meeting with clients. I didn’t abandon

but I wanted to transition into a position where I could do some of the other things that I enjoy. my CPA training,

”

“We sit down with both sides and lay out what their needs are and what they can offer to the other side,” she said. “For the company, we look at what the company’s business philosophy, goals and needs are, and for the candidate, we look at what their needs are, what their skill set is, and where do they want to go in their career. It’s not a perfect process and often requires some level of compromise from one or both parties, but there needs to be a reality check on both sides so there is a good fit for both.” Baker Tilly Search & Staffing, LLC is a full-service temporary staffing and recruiting service, specializing in accounting and finance. About 35 staff work out of offices in Milwaukee, Minneapolis, Madison, Janesville and Chicago. Huggett’s team helps all sizes of companies identify candidates for accounting and finance positions. Especially with the small to midsized clients, they also help to develop strategic recruiting plans to fill key positions, identify turnover trends, develop effective retention strategies and create effective compensation packages.

Highly-skilled in high demand

Many employers continuously rely on Huggett and her staff for their hiring needs, including Total Administrative Services Corporation (TASC), a thirdparty administrator in Madison. About 75 percent of the company’s current professional accounting staff were hired by the recruiting and staffing firm, said the company’s Chief Financial Officer Steve Cable. “They are our go-to organization for our finance staffing needs due to their understanding of a company’s needs and the local talent market,” Cable said. “They are fantastic to work with. They work to go 14

On Balance

July|August 2013

beyond the best technical person, and find both a strong technical person but also a good fit to our team.” Huggett primarily works with professionals — many who are referrals or even past clients — who have three to 10 years of professional experience, although they are often engaged in higher level searches as well. People have many reasons for changing positions; however, the pursuit of interesting and challenging work, and the ability to work for someone they can learn from and respect, are key reasons why most employees change careers. Sometimes a person may be forced into a job search due to downsizing or a need for a flexible work arrangement. Huggett’s firm also helps people in transition to find both temporary and permanent employment. Those with accounting and auditing skills, she said, are currently in high demand, especially those with expertise in cost accounting, and financial reporting and analysis. She also pointed to data from the Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2012–2013 Edition, which estimates employment of accountants and auditors is expected to grow 16 percent from 2010 to 2020. And, when it comes to salary, most job changers typically see a 3 to 10 percent increase in salary. “It’s a good time for CPAs who are looking to change jobs,” she said. “There’s always a market for the best people, especially for those who keep their skills current.” Huggett, a WICPA member since 1994, knows firsthand about what it’s like to change careers. She earned a Bachelor of Business Administration in accounting from Augustana College in Rock Island, Ill. in 1986. Upon graduation, she worked in public accounting, as well as for privately owned companies in positions including auditor and controller. Although she enjoyed auditing and accounting, Huggett decided to switch careers. She found her ideal www.wicpa.org

job in 1995 when she joined Virchow Krause (which later became Baker Tilly Virchow Krause) to launch Baker Tilly Search & Staffing, LLC. “I had almost 10 years as a CPA, and I didn’t want to start over,” she said. “As an auditor, I enjoyed meeting with clients. I didn’t abandon my CPA training, but I wanted to transition into a position where I could do some of the other things that I enjoy.” Huggett credits her start in accounting with helping her to become a well-rounded business leader. “You hang on to the various aspects of the (CPA profession), but you also need to learn things such as how to interview clients, understand hiring employment laws and how to comply with them.”

‘Take a risk, but take a calculated risk’

Huggett has helped accounting professionals like Anita Kroll, accounting manager at Telephone and Data Systems in Madison, find new career paths. Kroll met Huggett eight years ago around the time she moved from a career in public accounting to one in industry. “She understands what that transition looks like and what the pros and cons are of the alternatives because

she’s been there,” Kroll said. “She helped me find the right position at the right company. Her company knows the business community in Madison very well, and they have a deep understanding of the different cultures at these companies because they’ve built so many relationships.” Potential career changers should have a game plan that includes acquiring adequate and relevant work experience and training before changing careers, Huggett said. But those with accounting backgrounds shouldn’t hesitate to sell their education and work experience when applying for jobs. “I think starting out in accounting teaches you so much about business and building relationships, so I’m grateful that I have that foundation,” she said. “If you get to the point that you don’t love going to work, it’s probably time to do something else. Take a risk, but take a calculated risk. You already have the training and background to be a CPA, so commit to obtaining the training that you need for a new career.”

Cynthia M. Hodnett is editor of On Balance magazine. Contact her at 262-785-0445 ext. 3004 or cynthia@wicpa.org.

Got a wild side?

v a l u a b l e R e s o u r c e , & A Tr ue

r Bene f i t .

A T r u s t e d Pa

emb e

M We’ll get you covered.

In n e r,

Home & Auto, Life, Health, Disability Contact us: 800-637-4676 • 414-277-0154 info@insuranceformembers.net

www.wicpa.org

On Balance

July|August 2013

Generational Differences in the Workplace? your multi-generational team when you attend the 2013 WICPA Fall Focus! Today, there are four generations in the workplace, with an increasing number of millennials joining the workforce daily. Generational differences often lead to miscommunication, which can leave your team feeling frustrated. These generational differences require a high level of authentic leadership capability from today’s leaders.

The Generations Drive Leadership 2.0

Eau Claire

Thursday, Sept. 12 noon – 4 p.m.

Madison

• L earn about the generational values, characteristics, defining events and demographics of Traditionalists, Baby Boomers, Gen Xers and Millennials.

Friday, Sept. 20 8 a.m. – noon

• Engage in discussions to gain insights into generational impacts, perceptions, opportunities and challenges.

Appleton

• Find out how you can maximize the performance of the different generations.

Friday, Oct. 11 noon – 4 p.m.

Brookfield

• Walk away with leadership strategies to enhance your authentic leadership capability.

Friday, Oct. 25 8 a.m. – noon

Plus, meet new WICPA Board Chair Robert A. Gruber, Ph.D., CPA, CGMA and receive a brief professional issues update from WICPA President and CEO will will be provided at ABreakfast light lunch be provided at afternoon programs and breakfast will be provided at morning programs. Dennis F. Tomorsky, CPA, J.D., CGMA. morning programs and a light

Mary Torrez

President, CORE

Stacey Murphy CEO, CORE

We recognize the opportunity to develop authentic leaders across all industries that innovate and execute, lead and develop, increase self-awareness and leverage emotional intelligence. It’s all about high professional and high potential leaders. We work with leaders and companies who are progressive in their business practices and recognize the value of investing in talent.

lunch at afternoon programs.

To register, visit www.wicpa.org/fallfocus2013

Event sponsored by:

On Balance

July|August 2013

www.wicpa.org

{ In Touch | president & CEO’s message } “The expertise of today’s HR professionals includes an understanding of employment and benefits laws, payroll practices, workplace technology and worker training. It also includes talent management, and the application and interpretation of employee tests that identify and optimize workplace cultural benefits of diverse employees’ interpersonal styles.”

HR: A continuing evolution

shutterstock.com

he clinical reference to ourselves and colleagues as “human resources” seems to minimize the importance of human nature in our workplace interactions. While we are indeed “resources” and “human,” evolving human resources (HR) practices focus as much on the human dimension of employees as on their role as resources. Thoughtful practices relating to professional development, leadership skills, career paths, onboarding, workplace culture and cross training are increasingly supplementing the more traditional clerical HR tasks. These tasks are related to documents, processes and administration of hiring, compensation, benefits and annual performance reviews. Individuals at all organizational levels are increasingly expected to develop leadership skills that optimize organizational human resources, as the old top-down autocratic management tactics are being replaced by more collaborative leadership models. Research demonstrates there are greater productivity and profit increases from employee engagement than from time clocks. Employee surveys show that employees are more interested in learning new skills and having their recommendations seriously considered by superiors than they are in compensation and benefits. Small organizations with limited resources often use specialized consultants to provide high level HR expertise that greatly improves workplace culture and efficiency, as well as to assist with routine administrative HR activities. The personnel department of years ago has been replaced with internal and external HR professionals who collaborate to increase efficiency and minimize risk. The expertise of today’s HR professionals includes an understanding of employment and benefits laws, payroll practices, workplace technology and worker training. It also includes talent management, and the application and interpretation of employee tests that identify and optimize workplace cultural benefits of diverse employees’ interpersonal styles. The WICPA uses internal staff to very efficiently manage many HR activities performed collaboratively

www.wicpa.org

by employees and external service providers. An outside service applies its core competency in payroll to quickly and accurately process WICPA paychecks with minimal risk. This frees up staff resources that can be deployed on tasks with greater return on investment to members. Another HR vendor assists the WICPA in updating job descriptions, revising talent management processes and updating our employee handbook for review by external employment law attorneys. All staff members benefit from workplace culture and leadership training. And our thoughtful on-boarding process helps new hires and their colleagues get to know each other and their roles, accelerating efficient collaboration and reducing costly turnover. We’ll all benefit as HR practices continue to evolve and add value to your workplace and ours. Dennis F. Tomorsky, CPA, J.D., CGMA is president & CEO of the Wisconsin Institute of CPAs. Contact him at 262-785-0445 ext. 3014 or dennis@wicpa.org.

shutterstock.com

On Balance

July|August 2013

www.wicpa.org

EMERGING TRENDS IN LABOR AND EMPLOYMENT LAW By John J. Kalter, J.D.

ith the re-election of President Barack Obama and continued divided government in Washington, D.C., some new (and continuing) trends in labor and employment

law have emerged in 2013. The employment arena continues to be a significant focus of the Obama administration and its agencies with relatively aggressive interpretations of labor and employment issues continuing to be taken by the government. Though difficult to predict, based on recent past history, certain emerging trends can be gleaned from the activities of government agencies. The following are some of those potential trends.

www.wicpa.org

On Balance

July|August 2013

For employers, this high level of activity means that there should be a heightened awareness of the risks of discrimination and retaliation claims from applicants, employees and former employees.

2. 20

On Balance

July|August 2013

Implementation of the Affordable Care Act With the 2012 decision of the U.S. Supreme Court, which largely upheld the Affordable Care Act, and the re-election of President Obama, it appears to be a certainty that health care reform as mandated by the Affordable Care Act will become effective Jan. 1, 2014. While the details of health care reform are too broad a topic for the scope of this article, employers should carefully review the impact of the health care legislation on their workplaces and monitor developments as both state and federal governments establish rules and the infrastructure to implement this enormous change to the nation’s health care system. Employers should work with their health insurance brokers and attorneys to make decisions, where possible, about options and opportunities presented by health care reform. The time to do so is now, not after the reform goes into place next year.

Continued NLRB activism Despite a federal court of appeals ruling that the National Labor Relations Board (NLRB) has operated since January 2012 without a required quorum, the NLRB has continued its activist agenda. For example, in a December 2012 case, WKYC-TV Inc., the NLRB abandoned a 50-year rule and found that an employer’s obligation to collect union

dues continues after the expiration of the union contract which established the dues collection arrangement. While the finding is troubling, the most important take-away from this decision is that the current NLRB appears to be willing to upend established precedent that has guided employers and unions for considerable periods of time. Similarly, the NLRB continues its recent focus on employee rights to “protected, concerted activity.” The National Labor Relations Act (NLRA) contains a protection for employees who act together regarding their wages or working conditions. Over the past several years, the NLRB has applied this protection in novel ways to prohibit discipline or termination of employees engaged in forms of collective complaining about their work on social media, such as Facebook and Twitter. In addition, the NLRB and its administrative law judges have taken the concept of protected, concerted activity and applied it to invalidate certain employer confidentiality policies, and mandates and certain at-will employment statements. Employers should monitor the NLRB’s activity in this and other areas, as the NLRB seems willing to apply novel interpretations to long-standing labor and employment situations.

Record-breaking year for the EEOC The U.S. Equal Employment Opportunity Commission (EEOC) reported a record-breaking year with regard to its recoveries against employers. The EEOC

www.wicpa.org

recorded $365.4 million in monetary damages from employers in its 2012 fiscal year, the highest level of monetary relief ever reported. This record comes on the heels of two years in which the EEOC reported receiving record levels of discrimination claims. For employers, this high level of activity means there should be a heightened awareness of the risks of discrimination and retaliation claims from applicants, employees and former employees. The EEOC’s current high numbers of discrimination claims began in fiscal year 2008 and have remained steady, a phenomenon of high claim levels that seems to indicate a new normal.

Updated forms and procedures The U.S. Department of Labor (DOL) has issued final regulations implementing statutory amendments to the federal Family and Medical Leave Act (FMLA). The new regulations incorporate FMLA amendments, which Congress passed in 2010 relative to military family and airline industry employees and became effective in early March 2013. Among other things, the new regulations require covered employers to post a new FMLA poster, which can be found at the DOL’s website, www.dol.gov. In addition, the U.S. Citizenship and Immigration Services (USCIS) has issued a revised Form I-9. The new form should have been used by May 7, 2013.

Review, again, social media policies As previously noted, the NLRB has been active with regard to social media, and the law in this area has been evolving rapidly and in changing directions. For those employers with social media policies, it is advisable to have those policies reviewed in light of the most recent pronouncements and decisions from the NLRB. While social media policies are an advisable tool, given how quickly this area of the law is changing, it is recommended to have them reviewed frequently. Other trends will surely emerge, and employers should stay tuned in to labor and employment developments as the year progresses.

John J. Kalter, J.D. is a shareholder in the Labor and Employment Law Practice Group in the Milwaukee and Waukesha offices of Godfrey & Kahn, S.C. Contact him at 414-287-9507 or jkalter@gklaw.com.

CPE with John J. Kalter, J.D. n Issues involving the disabled employee: Managing employee medical conditions 7:30 – 9 a.m. | Sept. 19, 2013

n The ultimate employee handbook: Suggestions for creating a valuable personnel policy manual 7:30 – 9 a.m. | Nov. 14, 2013

WICPA CPE Catalog: https://www.wicpa.org/public/catalog/coursesearch.aspx.

www.wicpa.org

On Balance

July|August 2013

Executive compensation:

Pay justified through performance How have companies reacted?

The following are summarized market trends in both for-profit public companies, and their counterparts in the not-for-profit space. Note that the trends have a consistent theme — pay for performance and elimination of pay practices that will result in potentially poor optics. In public companies, we have observed the following trends during the last three years: • Modest increase in salaries. • Strategic annual incentive pay, linked to an array of financial and non-financial outcomes. • An increase in the use of performance shares, or stock granted only in the event of achievement of multiyear performance criteria, e.g., shareholder return delivered to actual stockholders, cash flow, return on capital and revenue. • Use of two or more long-term incentive vehicles, with performance shares often used as complement to appreciation only, full value, or cash-based plans. 22

On Balance

July|August 2013

• Increase in required ownership levels of company stock, through employment. • A reduction in benefits and perquisites, and certainly modest addition of such practices. Many firms have eliminated defined benefit deferred compensation, or at a minimum replaced with defined contribution plans. • The elimination of gross-up practices in the event of negative tax event to an executive. • Elimination of single trigger change in control policies, and movement toward double trigger policies that require both the change in control event, and involuntary termination of the executive. • Claw-back policies that require payback for any performance pay received by any officer, to the extent a result of financial misrepresentations, intentional or not. In not-for-profit organizations, we have observed many similar trends: • Modest salary increases. • An increase in the use of “at-risk” compensation, with annual www.wicpa.org

shutterstock.com

By Eric J. Gonzaga, J.D.

incentives becoming the overarching norm at all nonprofits, and many implementing long-term incentive pay. • More rigorous goal-setting methodologies, with movement away from purely discretionary awards to awards for achievement of pre-defined outcomes. • Performance metrics and compensation tied to mission-based goals and strategies, which include financial performance, but with comparable focus on community benefit outcomes and constituency satisfaction. • The reduction of perquisites, such as country club, auto allowance and supplemental retirement. • The decrease or elimination of high-level director compensation altogether, or conversely the addition of modest director compensation, recognizing that the work efforts of board members are inherently broader. In public companies, we are seeing a distinct movement toward a “balanced long-term incentive portfolio” that uses a mixture of longterm incentive vehicles. Accounting changes have given rise to greater flexibility, and long-term plan designs are increasingly driven by where a company is and where it wants to go, and, as a result, a pay plan that communicates the right objectives to shareholders. Plan designs are looking for the right balance of long-term incentive vehicles to recruit, retain and motivate top-level talent, while ensuring a strong linkage to company performance. Companies are commonly using a mixture of appreciation-only awards (stock options), full-value awards (restricted stock, restricted stock units) and performance awards (performance shares, long-term cash awards). In not-for-profit organizations, we are also observing a move toward greater use of long-term incentive programs, particularly at the largest organizations. These long-term plans are cash based and typically tied to long-term financial success and a long-term mission-focused performance measure. In addition, non-qualified deferred compensation programs continue to be prevalent in the not-for-profit market.

So, where are we headed?

diligent in the governance of executive compensation, and work toward finding the right balance of competitive compensation and pay-for-performance. We see the trends as follows: • Appropriate executive compensation philosophy that documents what peer groups you use to set compensation levels, the process you follow to determine executive compensation goals, and the rationale for your target and maximum positioning of total compensation and its individual elements. • Position salaries at moderate levels. We expect executive salary increase budgets in the 3 percent range for the foreseeable future, so use it wisely. Ensure executives below market can move to market gradually and move salaries above market levels only for extended outstanding performance, or select recruitment/retention considerations. • Use a balance of annual and long-term incentives that provide market pay for good long-term performance, and competitive upside for sustained long-term performance. • Provide “security” to your select executives, so they are focused on their jobs. Benefits, such as retirement and employment contracts with severance agreements, are components of the competitive landscape. However, if you use such agreements, ensure they are justified by external standards, and vetted at the board level. • Customize your disclosures. Whether you are a public company or not-for-profit, the required disclosures certainly assist in documenting your pay practices. However, given the need for transparency, and the inherent complexities of presenting your pay program based on regulatory standards, you need to tell the full story. Take your disclosures a step further, and provide supplementary disclosures that ensure the “reasonableness” of the decision-making process is apparent. Eric J. Gonzaga, J.D. is managing director and the Midwest practice leader for Grant Thornton’s Compensation and Benefits Consulting (CBC) group in Minneapolis, Minn. He is also the national leader for health care CBC. Contact him at 612-677-5336 or at Eric.Gonzaga@us.gt.com.

This past year has seen transparency and compensation optics take center stage, and we see this trend continuing as external constituents and watchdog groups push for absolute transparency. Organizations should obviously be

www.wicpa.org

On Balance

July|August 2013

itsockphoto.com

On Balance

July|August 2013

www.wicpa.org

Avoiding EEOC scrutiny:

Employer vigilance against discrimination of previously unprotected groups By Emily A. Constantine, J.D.

n Dec. 17, 2012, the U.S. Equal Employment Opportunity Commission (EEOC) approved its Strategic Enforcement Plan (SEP), which identifies the agency’s national enforcement

priorities for fiscal years 2013–2016. While the priorities appear to be relatively straightforward, avoiding EEOC scrutiny may be complicated by recently developed theories of discrimination and expansions of protected classes. This article will discuss the EEOC’s enforcement priorities and describe developing legal theories the EEOC will likely pursue.

www.wicpa.org

On Balance

July|August 2013

National priorities1 1. Eliminating barriers in recruitment and hiring. The EEOC will target class-based recruitment and hiring practices that discriminate against racial, ethnic and religious groups, older workers, women and people with disabilities. 2. Protecting immigrant, migrant, and other vulnerable workers. The EEOC will target disparate pay, job segregation, harassment, trafficking and discriminatory policies affecting vulnerable workers who may be unaware of their rights under the equal employment laws, or reluctant or unable to exercise them. 3. Addressing emerging and developing issues. The EEOC will target emerging issues in equal employment law, including issues associated with significant events, demographic changes, developing theories, new legislation, judicial decisions and administrative interpretations. 4. Enforcing equal pay laws. The EEOC will target compensation systems and practices that discriminate based on gender. 5. Preserving access to the legal system. The EEOC will target policies and practices that discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or that impede the EEOC’s investigative or enforcement efforts. 6. Preventing harassment through systemic enforcement and targeted outreach. The EEOC will pursue systemic investigations and litigation and conduct a targeted outreach campaign to deter harassment in the workplace.

Recommendations for employers Although most employers are well aware of “traditional” forms of discrimination and harassment, employers should also review their policies for compliance with recent federal case law and EEOC guidance. For example, in April 2012, the EEOC released guidance concerning the consideration of arrest and conviction records in employment decisions. That guidance cautioned that “[a] covered employer is liable for violating Title VII when the plaintiff demonstrates that the employer’s neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group and the employer fails to demonstrate that the policy or practice is job related for the position in question and consistent with business necessity.”2 Although employers who comply with Wisconsin’s prohibition on conviction record discrimination will likely also meet the requirements set forth in EEOC guidance, employers should regularly review their hiring practices to ensure that all similarly situated applicants are being treated equally. Employers should also consider how emerging technology, such as the use of social media to review applicants, will impact compliance with federal anti-discrimination law. For example, regulations interpreting the Genetic Information Non-Discrimination Act of 2008 — which the EEOC enforces — specifically prohibit employers from “conducting an Internet search on an individual in a way that is likely to result in a [covered employer] obtaining genetic

U.S. Equal Employment Opportunity Commission Strategic Enforcement Plan, FY 2013–2016. EEOC Enforcement Guidance, Consideration of the Use of Arrest and Conviction Records in Employment Decisions, available online at www.eeoc.gov/laws/guidance/arrest_conviction.cfm#IIIB. 1 2

On Balance

July|August 2013

www.wicpa.org

Some individuals may also be entitled to Title VII protection based on their dietary practices. In particular, veganism — a strict form of vegetarianism whereby the individual eschews all animal products, including meat, fish, dairy, eggs, wool, honey, etc. — may be entitled to a “reasonable accommodation” under Title VII.

information.”3 Simply put, information concerning an individual’s protected characteristics — such as age, race, or religion — cannot form the basis of a hiring decision, regardless of whether the information is obtained from an application, in an interview, by conducting a Google search, or by reviewing the applicant’s Facebook page.

‘New’ protected classes identified In addition to changing technology and practices, federal anti-discrimination law itself is undergoing a significant expansion: Novel interpretations of Title VII have essentially created “new” protected classes under administrative and federal court precedent. For example, although neither “sexual orientation” nor “gender orientation” are protected classes under Title VII, the EEOC has recently pursued discrimination claims on behalf of transgendered individuals under a “sex-stereotyping” theory. For example, in Macy v. Holder, the EEOC explained: When an employer discriminates against someone because the person is transgender, the employer has engaged in disparate treatment related to the sex of the victim. This is true regardless of whether an employer discriminates against an employee because the individual has expressed his or her gender in a nonstereotypical fashion, because the employer is uncomfortable with the fact that he person has transition or is in the process of transitioning from one gender to another, or because the employer simply does not like that the person is identifying as a transgender person. In each of these circumstances, the employer is

making a gender-based evaluation, thus violating the U.S. Supreme Court’s admonition that an employer may not take gender into account in making an employment decision.4 Some individuals may also be entitled to Title VII protection based on their dietary practices. In particular, veganism — a strict form of vegetarianism whereby the individual eschews all animal products, including meat, fish, dairy, eggs, wool, honey, etc. — may be entitled to a “reasonable accommodation” under Title VII. In Chenzira v. Cincinatti Children’s Hospital5, a federal district judge found it “plausible” that an employee “could subscribe to veganism with a sincerity equating that of traditional religious views,” and thus permitted a vegan’s claim of religious discrimination under Title VII to proceed.

Conclusion In FY2012, the EEOC took an aggressive stance and obtained $365.4 million through its administrative enforcement process alone, the largest-ever amount of monetary recovery from private sector and state/local government employers. The EEOC will likely continue to vigorously enforce federal anti-discrimination law in 2013 and beyond. To avoid coming under the EEOC’s radar, employers should remain vigilant against both “obvious” forms of discrimination, as well as more subtle, and unintentional, systemic discrimination or discrimination against individuals in previously unprotected groups. Emily A. Constantine, J.D. is an attorney with Whyte Hirschboeck Dudek S.C. who represents employers in employment law and litigation matters. Contact her at 414-978-5434 or econstantine@whdlaw.com.

See 29 CFR § 1635.8 Mia Macy v. Eric Holder, Attorney General, Department of Justice, Appeal No. 0120120821, Agency No. ATF-2011-00751. 5 Chenzira v. Cincinnati Children’s Hosp. Med. Ctr., No. 1:11–CV–00917, 2012 WL 6721098 (S.D. Ohio Dec. 27, 2012) 3 4

www.wicpa.org

On Balance

July|August 2013

kudos Alan H. Arnold, CPA, a manager at Schenck SC in Appleton, has celebrated his 25th anniversary at the firm. Johnnie C. Bannier, a doctoral student at the University of Wisconsin– Whitewater, has been hired as a seasonal tax senior at Kolb+Co. in Brookfield. Alan H. Arnold, CPA

Kelly L. Block, CPA, a tax manager at Schenck SC in Manitowoc, has celebrated her 10th anniversary at the firm. James B. Boutelle, an accounting major at the University of Wisconsin– Whitewater, has been hired as a tax intern at Kolb+Co. in Brookfield. Mark P. DeBroux, CPA has been named shareholder of Schenck SC in Appleton. Stephen L. Franke, CPA has been named shareholder of Schenck SC in Fond du Lac.

Kelly L. Block, CPA

John F. Hager, CPA, J.D., an attorney at Hager, Dewick & Zuengler, S.C. in Green Bay, has been selected by his peers for inclusion in The Best Lawyers in America 2013 in the area of corporate law. Thomas P. Luken, CPA, a shareholder and president of Kolb+Co. in Brookfield, has been elected as a director for the Council of Small Business Executives.

Mark P. DeBroux, CPA

Rep. Howard L. Marklein, CPA (R-Spring Green) has announced he will run for the 17th Wisconsin Senate seat in 2014, according the Green Bay-Press Gazette. The WICPA does not endorse any candidate running for public office. The views of any candidate do not necessarily represent those of the WICPA, its members or employees.

Krista M. McMasters, CPA, former chief operating officer of CliftonLarsonAllen LLP, has retired from the firm after 35 years of service. Andrew Mugerauer, CPA, a manager at Schenck SC in Appleton, has celebrated his 15th anniversary at the firm. Krista M. McMasters, CPA

Thomas M. O’Brien Sr., CPA has been hired as senior vice president of health care at Acorn Systems in Houston, Texas. Sara Stenz, CPA has been named vice president of accounting and finance at First State Bank in New London, according to the Waupaca County Post. Todd K. Walker, CPA has opened Marilea & Co., a tax and wealth management company in Sheboygan, according to Sheboygan Press.

Thomas M. O’Brien Sr., CPA

Mary Jo Werner, J.D., CPA, CFF, a partner with Wipfli LLP in La Crosse, has earned the Public Service Award from the Wisconsin Association of Homicide Investigators (WAHI) for her contributions to the murder trial of Eric Koula. Werner testified as an expert witness on Koula’s financial status, which was one of the keys to the prosecution establishing the defendant’s motive. Ali Wilkins, an accounting major at the University of Wisconsin– Whitewater, has been hired as a tax intern at Kolb+Co. in Brookfield. Audrey A. Wipperfurth, CPA, has been promoted to senior accountant at Wegner CPAs in Baraboo, according to Wisconsin Dells Events.

Mary Jo Werner, J.D., CPA, CFF

On Balance

July|August 2013

www.wicpa.org

Odd & Ends PricewaterhouseCoopers named No. 1 accounting employer PricewaterhouseCoopers LLP ranks No. 1 in the annual Vault Accounting 50, a listing (http://tinyurl.com/7lj2dws) of top accounting employers to work for in North America based on insider ratings of their employers and competitors. Vault Accounting 50 considers quality of life categories such as work/life balance, culture, training and compensation, along with industry prestige. Also named among the top five best firms to work for in North America are Deloitte LLP, No 2; Grant Thornton LLP, No. 3; Ernst & Young LLP, No. 4; and BDO USA LLP, No. 5.

Survey: Retaining staff a key concern of CFOs

2013

A key concern among many CFOs in the U.S. is retaining valuable staff members, according to a recent survey by Robert Half (http://tinyurl.com/dx5yxpb). Of the 2,100-plus CFOs surveyed, 38 percent identified retention as their top concern with regard to staff.

Summer hours

The WICPA office will close at noon on Fridays, June 7 through Sept. 27.

The VanderBloemen Group gets new location The VanderBloemen Group (VG) has moved into its new office in the St. Paul Place building, 215 W. North St., Waukesha. This former industrial and warehouse facility was converted into professional office space where VG will occupy 9,000 square feet. Renovation of the remaining approximately 8,600 square feet of retail and office space will be ready for rental and occupancy in the fall.

Phishing, identity theft, tax fraud top IRS’ tax scams Identity theft, tax fraud, phishing, and return preparer fraud top the IRS’ 2013 list of top tax scams (http://tinyurl.com/dy5oub3). The list also identifies other schemes commonly committed by and upon taxpayers, including hiding income offshore and falsely claiming zero wages.

it’s time to

renew

your dues keep your vital member benefits coming If you have not yet renewed your 2013–2014 membership, visit http://www.wicpa.org/Content/ home/Members.aspx for quick and easy online payment to keep your valuable member benefits coming, including On Balance magazine. Pay your dues in the “Renew My Membership” section on the Members page. For information regarding your membership or username and password, contact Jessica Barillari at 800-772-6939 ext. 3025 or Jessica@wicpa.org.

www.wicpa.org

On Balance

July|August 2013

{ Tax | health care benefits reporting }

IRS updates employee health benefits reporting guidelines By Scott E. Hess, CPA

On Balance

July|August 2013

Large employers who filed 250 or more Forms W-2 with the Internal Revenue Service (IRS) for 2012 should now have experience with the health care benefits reporting required under the Affordable Care Act. While the requirements have not changed since the January 2013 reporting period, the IRS has updated its online guidance regarding Forms W-2. The Affordable Care Act requires employers that sponsor applicable group health care plans to report in Box 12 as Code DD the value of health care coverage. In its updated materials at irs.gov, the IRS advised that the amount in Box 12 reflect the total health coverage amount paid by the employer and employee. Reporting is not required for retirees receiving no compensation, terminated employees who request a W-2 before the end of the calendar year, or other employees not included in Form W-2 reporting. Reporting for health flexible spending arrangements should not include salary reduction contributions, according to the IRS.

New materials released The IRS has updated its online frequently asked questions regarding W-2s, and has provided a chart listing each health care coverage type and boxes indicating whether employer reporting is required or optional. Included in the chart are 30 coverage types, including dental and vision plans, health reimbursement and health savings arrangements, employee assistance plans, multi-employer plans, and other coverage. The IRS has issued Notices 2012-9, 2011-28 and 2010-69 covering a variety of Form W-2 reporting issues. As the new chart on irs.gov shows, employers who issue more than 250 W-2s for the previous year must report the value of coverage including: • Major medical • Health flexible spending arrangements in excess of the employee’s cafeteria-plan salary reductions for all qualified benefits • Hospital indemnity or specified illness (insured or selffunded) paid through salary reduction (pre-tax) or by the employer • Employee assistance plans, if the employer charges a COBRA premium

www.wicpa.org

• On-site medical clinics, if the employer charges a COBRA premium • Wellness programs, if the employer charges a COBRA premium • Domestic partner coverage included in gross income Exclusions exist for amounts contributed to any Archer MSA or health savings accounts (HSA) and, until further notice, transition relief has been provided for employers who file fewer than 250 Forms W-2, multiemployer plans, health reimbursement arrangements, certain dental and vision plans, and nonCOBRA self-insured plans and employee assistance programs. In addition, employers who provided health coverage to employees before and after termination are advised to use any reasonable method for inclusion, as long as it is applied consistently. Any future IRS changes regarding transition relief will go into effect six months or later after new guidance is issued.

Calculations and penalties Employers have four alternatives for calculating the reportable cost to the employees: • The employer may use the COBRA continuation premium. • If the employer offers an insured group health plan, the premium charged by the insurer is the Form W-2 reportable cost. • For an employer that subsidizes the cost of coverage or determines the cost of coverage by reference to a prior year, the reportable cost is the modified COBRA premium, i.e., the subsidized COBRA cost. • For an employer that charges a composite rate, i.e., the same premium for different types of coverage such as single or family, the reportable cost may be the same amount for all coverage in the particular group, and is to be calculated under one of the three prior methods. W-2 statements are information returns that must be provided to the IRS and to the employee. Incomplete forms subject the employer to a maximum penalty of $100 per return, i.e., $200 per W-2 for the IRS and employee statements. For example, a large employer with 250 employees who fails to

www.wicpa.org

comply may be subject to a $200 penalty per return or $50,000 in total. The requirement remains in effect for government entities (with exceptions for the military), religious organizations and exempt organizations, including employers not subject to COBRA continuation requirements. It does not include recognized Indian tribal governments, as before. Going forward, the only change currently under consideration is a proposal in the IRS 2014 budget that would revise Form W-2 to include an identifying employee number in place of each employee’s Social Security number.

{ Tax | health care benefits reporting }

“Large employers who filed 250 or more Forms W-2 with the Internal Revenue Service (IRS) for 2012 should now have experience with the health care benefits reporting required under the Affordable Care Act.”

Scott E. Hess, CPA is an outsourcing partner at CliftonLarsonAllen in Racine. Contact him at scott.hess@cliftonlarsonallen.com.

Do you know how many hours you volunteer each year?

Now you can keep track with the WICPA online Volunteer Service Tracker! As a WICPA member, you can add the date, type of service and number of hours for all the volunteer service you provide. All WICPA board, committee or task force meetings you’ve attended will be added automatically for you. Visit www.wicpa.org/volunteertracker and login to view or add your volunteer service.

On Balance

July|August 2013

{ Fraud | resume fraud }

How to detect resume fraud

By Stephanie A. Barganz CPA, CFF, CVA, SPHR

On Balance

July|August 2013

According to ADP Screening and Selection Services’ recent report on background screening statistics in the business sector, the following are important findings found in the sample analyzed: (Note: The percentages indicated are overlapping and are of screened background checks.) • 54 percent of 100 percent of candidates screened submitted false information on resumes. • 40 percent of the 100 percent had credit records showing a judgment, lien or bankruptcy, or had been reported to a collection agency they refused to acknowledge. • 6 percent of 100 percent lied about having a criminal record within the last seven years. • 4 percent of 100 percent denied having had a previous workers’ compensation claim.

www.wicpa.org

shutterstock.com

Liar for hire:

Is resume fraud a big deal? You bet it is. Resume fraud costs businesses an estimated $600 billion annually, according to a recent study by the Association of Certified Fraud Examiners. Does resume fraud increase substantially in a weak job market? Not really, according to research. But it is a consistent problem.

{ Fraud | resume fraud }

“It’s interesting that in our profession, we make a living by paying attention to the details. Yet we don’t always apply this skill set to our own business practices.”

What can you do to prevent resume fraud? First and foremost, verify and test. It’s interesting that in our profession, we make a living by paying attention to the details. Yet we don’t always apply this skill set to our own business practices. One of the best things to incorporate to combat resume fraud is a pre-employment screening process. At KMA Bodilly CPAs & Consultants, S.C., we test our candidates on almost everything including writing samples, QuickBooks, mock tax returns and 941 quarterly tax returns. Candidates’ resumes often indicate they are proficient in certain areas; however, candidates and I can vary greatly on how we define proficient. Testing results have been one of my preferred tools in determining candidates’ abilities. Experience and education are key factors in assessing appropriate compensation for new hires. If candidates exaggerate either of these, you may pay them more than they are worth. In our industry, compensation impacts billable rates and should reflect an employee’s ability and skill set. If skills are not evaluated accurately in the beginning, this has a domino effect in several areas of our practice, including additional training time and dollars.

Ideas worth considering:

1. At the beginning of your hiring process, develop a specific job description for each position. Provide the job description to key candidates. Ask them to provide a statement in writing that describes how they best meet your qualifications. 2. Create and emphasize a policy defining the consequences of resume and application fraud. Specifically state these consequences and the conditions for termination on your employment application. 3. Do your homework on establishing specific tests for each job. This includes legal requirements.

www.wicpa.org

4. Balance the human element. Give the candidate, no matter what level they are, the benefit of the doubt, and let them explain their background. There have been instances where incorrect information provided was an honest mistake. If a candidate discloses something unfavorable in the application process, we carefully consider the overall circumstances. We hope to address these issues from the beginning. 5. Look on the Internet. You can supplement your standard pre-employment screening process by checking YouTube, MySpace, Facebook, Twitter and Google. You may find revealing personality traits or other information that points to inconsistencies or false statements which could be cause for further discussions. Consult legal counsel as some states have now restricted employers from asking for Facebook passwords. 6. Verify professional licenses and memberships. Most licensing bodies and professional organizations have websites and list phone numbers for contacts to verify a member’s standing with the group. 7. Confirm the validity of the colleges and universities listed on applicants’ resumes. You can do this through two organizations: National Council for Higher Accreditation (CHEA), www.chea.org and the U.S. Department of Education, www.ed.gov. 8. Educate your recruitment team on how to conduct an effective interview. 9. Remember, complacency can be an enemy. Never overlook misrepresentations because a position has been open for a long time. Recommendations, referrals, and prior contacts with an employee at your firm are not justifications for skipping the background screening process. Anyone can be fooled by a great presentation. Stephanie A. Barganz CPA, CFF, CVA, SPHR is partner at KMA Bodilly CPAs & Consultants, S.C. in Madison. Contact her at 608-664-1047 or stephanie.barganz@cpamadison.com.

On Balance

July|August 2013

{ Industry | human resources in accounting }

HR prepares for the

changing world in accounting

Although human resources concerns continue to expand and become more complex in the world of public accounting, firms typically face the same challenges as organizations in other industries. Several of these issues include recruitment, retention, diversity and the strong desire by employees for professional growth and development. The ongoing competitiveness among accounting firms ensures that finding new ways to attract and retain talent remains

the industry. To attract top talent, many firms are now relying on campus recruitment. Some firms have also moved toward a â&#x20AC;&#x153;grow your ownâ&#x20AC;? approach by hiring recent college graduates, then providing them with a well-rounded training and professional development program.

By Sue Durst

On Balance

July|August 2013

www.wicpa.org

shutterstock.com

a key challenge for many human resources professionals within

{ Industry | human resources in accounting }

Despite the nation’s volatile unemployment and jobless rates, accounting provides good options for employment. U.S. News & World Report ranks accountants No. 36 on their list of the 100 best jobs of 2013, which is exciting news for college graduates entering the workforce.

Keeping the best and the brightest However, retention worries also continue to increase within the accounting industry. In addition to recruitment challenges, many firms are concerned about their ability to retain their top performers. A recent study by the AICPA suggests that career growth opportunities represent one of the key reasons talented professionals join and then ultimately stay long term with a firm.

www.wicpa.org

But these opportunities are only available to the best and brightest. Many new to accounting careers are learning that technical and interpersonal skills are necessary at the staff and senior level. Many outside the profession think accountants spend their days sitting behind desks crunching numbers, which is a misconception. Accountants work with other people to offer ideas and solve business problems. They also need strong analytical skills, an ability to analyze financial data, write and speak clearly and present complex data in terms that everyone can understand. Plus they must be able to work effectively and communicate with colleagues, and build strong relationships with their clients. Great technical staff become partner material when they develop these skills. Therefore, it’s important for firms to offer their employees wellrounded training that includes technical and soft skills. Another retention strategy offered by firms is flexible work schedules. The traditional model of long hours, especially during certain phases of projects and busy season, is changing. More employers are understanding how important work-life balance is to their employees. As the demand for competent staff increases, the willingness to adjust the work environment to employees’ needs and lifestyles will also.

Diversity changes the face of accounting Diversity continues to be a major challenge for the profession. Although accounting has experienced more diversity in in the last few years, improving diversity remains one of its major challenges. While many firms have created diversity programs, which have resulted in an impressive upswing for women in the profession, the same can’t be said for minorities. Firms need to think about how they can be more inclusive when determining their recruitment strategies. But working toward a fully diverse workplace is not without difficulties. The perception is that there is a limited pool of qualified candidates, but 32 percent of all college enrollments were minority students, according to the “Status in Trends in the Education of Racial and Ethnic Groups” July 2010 report. When it comes to accounting programs, only about one-fourth of majors happen to have a minority background. And, 25 percent of the new accounting graduates hired by CPA firms were minorities, according to the “AICPA Report 2011 Trends: Supply of Accounting Graduates and the Demand for Public Accounting Recruits.” At CPA firms, the current average percentage is 49 percent for women and 51 percent for men. However,

On Balance

July|August 2013

{ Industry | human resources in accounting }

â&#x20AC;&#x153;In addition to recruitment challenges, many firms are concerned about their ability to retain their top performers. A recent study by the AICPA suggests that career growth opportunities represent one of the key reasons talented professionals join and then ultimately stay long term with a firm.â&#x20AC;?

83 percent of these combined employees are white, and only 17 percent are of different ethnic backgrounds. This means firms need to realize that valuing and accepting ethnic diversity is vital to the industryâ&#x20AC;&#x2122;s success. Despite accounting being ranked as one of the top college majors, minority students are not considering it a viable option. Many minority students have the perception that accounting is both uninteresting and difficult. There are stereotypes and misconceptions about what accountants do, so they tend to opt for more exciting majors or professions where they see more diversity.

On Balance

July|August 2013

Again, human resources issues in public accounting are similar to other industries regarding recruitment, retention, growth opportunities and diversity. And although accounting has been ranked one of the hot majors for students, the accounting profession needs to stay alert to position itself to compete with others to attract, develop and retain the best and brightest in order to grow and remain successful.

Sue Durst is human resources manager at Wegner CPAs in Madison. Contact her at 608-442-1907 or sue.durst@wegnercpas.com.

www.wicpa.org

The Magazine for Wisconsin CPAs A publication of the

Wisconsin Institute of Certified Public Accountants 235 N. Executive Drive Suite 200 Brookfield, WI 53005 www.wicpa.org