September|October 2013 | Vol. 9 No. 5 A publication of the Wisconsin Institute of CPAs | www.wicpa.org
BEYOND BUSINESS AS USUAL Educator Meaghan Voigt gives her students a glimpse at accounting
PLUS:
Wisconsin accounting grads ace CPA Exam Local top CPA Exam performers earn Elijah Watt Sells Award CFOs discuss prospects, challenges facing businesses
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
•E ngage in discussions to gain insights into generational impacts, perceptions, opportunities and challenges.
Appleton
• F ind out how you can maximize the performance of the different generations.
Friday, Oct. 11 noon – 4 p.m.
Brookfield
•W alk 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 lunch at afternoon programs.
To register, visit www.wicpa.org/fallfocus2013
Event sponsored by:
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.
A publication of Wisconsin Institute of CPAs | www.wicpa.org
September/October 2013 Vol. 9 No. 5
20 Features
Columns
4 Wisconsin pride! State’s CPA Exam takers make the grade as passing rates soar. By Robert A. Gruber, Ph.D., CPA, CGMA and Cindy J. Gruber, MBA, CPA 10 Three’s a charm Local top 2012 CPA Exam performers earn prestigious Elijah Watt Sells Award. By Tannette Johnson-Elie 16 Where are they now? Past Elijah Watt Sells Award winners continue along a path of success. By Tannette Johnson-Elie 20 Beyond business as usual Accelerated accounting course jump-starts students’ interest in accounting. By Cynthia M. Hodnett 24 Prospects and challenges What gets Wisconsin’s CFOs up in the morning? WICPA members managing their companies’ bottom lines maintain positive outlook despite economic uncertainty. By Donna Pinsoneault
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30 TAX Conservation easements: What they do for all of us Get a primer on conservation easements and examine trends concerning their taxation. By Daniel B. Geraghty, CPA, J.D. 32 FRAUD Common fraud at government/ nonprofit entities, auditor’s responsibility under GAAS Nonprofits’ anti-fraud plans should include awareness, external audits and internal control systems. By Yigit Uctum, MBA, CPA, CFE 34 TECHNOLOGY 2013 trends in health care technology New technology can help CPAs in health care industries manage data. By Janice S. Ahlstrom, FHIMSS, CPHIMS, RN
34 Departments 2 Membership Matters | member benefits 3 Outlook | chair’s letter 9 Spotlight | from the editor 15 In Touch | president & ceo’s message 28 Kudos | members in the news 28 Odds & Ends | news briefs 29 Memorials | departed members
On Balance
September|October 2013
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{ Membership Matters | more involvement }
Belong to something MORE: EDUCATION! By Barb Gamez, vice president of Membership & 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 Angela Wade 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.
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s a WICPA member, you realize that Continuing Professional Education (CPE) is about more than just receiving credit for attending an educational session. It’s about your professional credibility. Equally important is that you’re demonstrating a commitment to your profession, your clients, your company and yourself. You’re committed to going the extra mile to increase the value you provide by staying ahead of the latest issues, regulations, changes and trends. With so many places to get CPE these days, where do you begin? How do you find CPE that fits your schedule and your budget? Which topics do you need most? How can you be sure of the content quality? The best place to start is with the WICPA! Just as you’re committed to maintaining your knowledge and expertise, the WICPA is committed to providing you more high-quality, cost-effective CPE options. Because many of our conference topics and presenters are thoughtfully selected by fellow WICPA members, you can be sure you’re getting quality content that’s timely, practical and relevant to you.
In-person CPE: Focused learning with valuable networking While it may be difficult to schedule, sometimes getting out of the office is just what you need, even if it’s only for an hour. WICPA hosts several one- to fourhour statewide breakfast, lunch and TGIF programs. New locations have been added for several eight-hour seminars, including Manitowoc and Wausau. Seminars will
also continue in Appleton, Eau Claire, Green Bay, Madison and Brookfield. Nearly 40 new seminars have also been added this year, including the latest issues impacting the Patient Protection and Affordable Care Act, Social Security and Medicare. New seminars are also available for management and emerging professionals, including advanced business law, presentation and communication skills for finance professionals and fostering superior employee performance.
Online CPE: Conveniently at your own pace When you have only a few hours and can’t get out of the office, online CPE is a convenient alternative. Through the WICPA, you have thousands of webinars and self-study options from nearly a dozen different providers. The newest provider, CalCPA, offers more than 600 live and recorded webcasts. You save money and time with WICPA member discounts. One new option for online CPE is WICPA’s on-demand webinars. Seven WICPA on-demand programs from the 2013 CPAs in Industry Spring Conference are available. Options range from one CPE credit for one program or all of them for 7.5 CPE credits. Watch for more WICPA on-demand programs this fall. If you haven’t looked at WICPA’s CPE offerings lately, now’s the perfect time. Not only does the current three-year CPE reporting period for membership end Dec. 31, 2013, there are also many new topics, formats and locations available. Whatever CPE you need, whenever you need it, the WICPA is your best resource for credit and credibility.
Your membership to-do list this month: View the online CPE Catalog: www.wicpa.org/CPEcatalog. Use the online CPE Tracker to track your CPE: www.wicpa.org/CPEtracker. Nominate a fellow CPA for one of nine 2014 WICPA Excellence Awards: www.wicpa.org/awards.
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{ Outlook | chair’s letter } “As Walt Disney said, ‘Times and conditions change so rapidly that we must keep our aim constantly focused on the future,’ which will require a diligent effort to chart a national strategy for the next generation of accountants.”
Shaping the next generation of accountants
Shutterstock.com
T
wo recent AICPA reports highlight trends that are certain to impact you and the rest of the CPA profession in the near future. In 2012, the American Accounting Association and the AICPA published the Pathways Commission’s report on higher education, “Charting a National Strategy for the Next Generation of Accountants.” The commission’s charge was to “study the future structure of higher education for the accounting profession and develop recommendations to engage and retain the strongest possible community of students, academics, practitioners, and other knowledgeable leaders in the practice and study of accounting.” In addition, the commission investigated ways to enhance the opportunities and relevance of the accounting education experience in the broadest sense. The report presented seven recommendations and several action items to address each recommendation. While a complete list is beyond the scope of this letter, a few notable items include: • Develop mechanisms to meet the future demand for high-quality accounting faculty. • Reform accounting education so teaching is respected and rewarded. • Improve the ability to attract high-potential, diverse entrants into the profession. In 2011, the AICPA’s “Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits” showed record numbers of accounting students and graduates. • 226,108 students were enrolled in accounting programs during the 2009–2010 academic year, 6 percent more than in 2007–2008. • A record 68,639 students graduated with accounting degrees in 2010. • Almost 40 percent of the accounting graduates hired in 2011 by CPA firms had master’s degrees, compared with 26 percent in 2008. • By contrast, 43 percent of graduates hired had bachelor’s degrees, down from 56 percent in 2008. But a shortage of entry-level accountants continues to grow as experienced CPAs are retiring far faster than they
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can be replaced, despite record numbers of accounting grads and CPA Exam candidates. In addition, the U.S. Department of Labor’s “Bureau of Labor Statistics Occupational Outlook Handbook” predicts that the number of accounting jobs nationwide will grow by 18 percent by 2016. The “graying” of the accounting profession is also evident. From 2000 to 2013, the number of WICPA members ages 29 and younger decreased by 22 percent, and the number ages 30 to 39 decreased by 54 percent, according to Dennis Tomorsky, CPA, J.D., CGMA, WICPA president & CEO. Also, the number of members ages 40 to 49 declined by 32 percent while those ages 50 to 59 rose by 71 percent. Meanwhile, those ages 60 and older increased by 140 percent. As Walt Disney said, “Times and conditions change so rapidly that we must keep our aim constantly focused on the future,” which will require a diligent effort to chart a national strategy for the next generation of accountants.
Robert A. Gruber, CPA, Ph.D., CGMA is a professor and Master of Professional Accountancy program On Balanceof Wisconsin–Whitewater. September|October 2013 coordinator at the University Contact him at 262-472-5463 or gruberr@uww.edu.
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Wisconsi prid ! STATE’S CPA EXAM TAKERS MAKE THE GRADE AS PASSING RATES SOAR. BY ROBERT A. GRUBER, PH.D., CPA, CGMA AND CINDY J. GRUBER, MBA, CPA
W
isconsin isconsinaccounting accountingstudents studentscontinued continuedtheir their long-standing long-standing tradition tradition of excellence of excellence in 2012 in 2012 on the on the Uniform Uniform CPACPA Examination. Examination.With Withaapassing passingrate rateofof66.1 66.1 percent percent compared compared to to thethe national national average average of 54.3 of 54.3 percent percent for first-time for first-time CPA
exam CPA Exam takerstakers in 2012, in 2012, their performance their performance is a source is a source of prideoffor pride them, fortheir them, parents, their parents, accounting accounting educators, educators, Wisconsin Wisconsin accounting professionals accounting professionals and the WICPA. and The thevalue WICPA. of the Thestrong valueMidwest of the strong work Midwest ethic is certainly work ethic aliveisand certainly well inalive Wisconsin! and well in Wisconsin!
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September|October 2013
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sin INTRODUCTION The Uniform CPA Examination is the test that an individual must pass to qualify for licensure as a CPA in any of the 55 U.S. jurisdictions (the 50 states, District of Columbia, Puerto Rico,
interest. Public interest is protected when only qualified individuals are admitted into the profession.
ONE OF THREE LICENSURE REQUIREMENTS The examination is one of the “Three E’s” — Education,
U.S. Virgin Islands, Guam and the Commonwealth of Northern
Examination and Experience — that constitute the
Mariana Islands). The CPA Exam is also administered in six
requirements for CPA licensure. Of these three requirements,
international locations: Bahrain, Japan, Kuwait, Lebanon,
only the CPA Exam is uniform, i.e., it is the only examination
United Arab Emirates and Brazil.
that is accepted for CPA licensure by all U.S. jurisdictions, while
The exam’s purpose is to provide reasonable assurance
education and experience requirements may vary from one
to jurisdiction boards of accountancy that those who pass
jurisdiction to another. Candidates for CPA licensure must
it possess the level of technical knowledge and the skills
meet all three requirements. As a result, passing the exam
necessary for initial licensure in protection of the public
alone is not sufficient to qualify for licensure.
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On Balance
September|October 2013
5
STRUCTURE
and highest average scores in 2012. This is not a one-time phenomenon for Wisconsin students. Wisconsin has been
The exam currently consists of four sections: Auditing and Attestation (AUD), Business Environment and Concepts (BEC),
ranked in the top 10, or named an honor roll state, for more
Financial Accounting and Reporting (FAR), and Regulation
than 40 years. (Honor roll states exceed the national average on
(REG). These four sections represent 14 hours of testing.
all four sections in a given year.)
The examination is available during specific periods called
First-time candidates (Wisconsin versus all jurisdictions)
testing windows. The first two months of each calendar quarter
Table 3 focuses on first-time CPA Exam participants in 2012,
is an open testing window. Therefore, there are four testing
i.e., unique candidates who took a section for the first time. In
windows each year. March, June, September and December
addition, Table 3 presents average scores and passing rates.
are closed for testing. There is no minimum number of sections
Table 3
that must be completed in a testing window. You may take any
First-time (All U.S. schools)
section in any order, and you do not have to pass one section prior to applying for another.
BOASTING RIGHTS General demographics Table 1 shows the number of candidates that took the CPA Exam in 2012, including a detailed breakdown by section. In addition, it presents the scores and passing rates for each
All degrees
Candidates
Sections
Aver. score
% Pass
Within 1-year
24,044
51,372
74.9
61.0
Over 1-year
38,778
78,992
70.8
50.1
Total
62,822
130,364
72.4
54.3
AUD
34,340
34,340
72.6
49.5
BEC
30,830
30,830
75.1
63.6
FAR
33,417
33,417
70.7
52.7
REG
31.777
31,777
71.5
52.0
section and the number of candidates passing their fourth and First-time (Wisconsin schools)
final section.
All degrees
Sections
Aver. score
% Pass
Within 1-year
585
1,402
78.7
70.4
and passing rate for first-time (FT) candidates as compared to
Over 1-year
551
1,392
75.0
61.8
re-exam (RE) candidates. The message seems clear: 54.3 percent
Total
1,136
2,794
76.9
66.1
AUD
697
697
76.5
56.7
BEC
667
667
79.6
75.3
Top performing states
FAR
731
731
75.9
67.9
Table 2 lists the top 10 states in regard to highest pass rates
REG
699
699
75.8
65.0
But the most interesting result in Table 1 is the number, score,
of first-timers pass versus 41.7 percent of candidates who are retaking a specific section.
Candidates
Table 1 Overall performance
Table 2
Section performance
Highest pass rates
Highest average scores
Sections
Score
% Passing
1
Utah
61.2%
1
Utah
75.5
Unique candidates
92,839
First-time
139,101
72.4
54.3%
2
Missouri
57.7%
2
Missouri
74.6
New candidates
40,963
Re-exam
106,092
70.7
41.7%
3
Wisconsin
56.8%
3
Wisconsin
74.5
Total sections
245,193
Total
245,193
71.7
48.9%
4
Michigan
55.8%
4
Michigan
74.3
Passing 4th section
26,152
5
Iowa
55.7%
5
Oregon
74.1
AUD
66,234
72.4
46.9%
6
South Carolina
55.7%
6
Florida
74.1
Sections/candidate
2.64
BEC
56,844
73.0
52.8%
7
Minnesota
55.3%
7
Minnesota
73.9
Passing rate
48.9%
FAR
60,150
70.3
48.0%
8
Oregon
55.2%
8
Iowa
73.8
Average score
71.7
REG
61,965
71.1
48.1%
9
Florida
54.9%
9
Nebraska
73.8
% First-time
56.5%
Total
245,193
71.7
48.9%
10
North Dakota
54.7%
10
Kansas
73.8
6
On Balance
September|October 2013
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Wisconsin–Madison), Codie Dull (University of Wisconsin–
Table 4
Madison) and Tyler J. Kleppe (University of Wisconsin–
FT and RE Passing Rates
AUD
BEC
FAR
REG
Total
Missouri
52.6
67.9
53.9
58.2
57.7
Whitewater). The award is bestowed upon candidates who have
Wisconsin
50.8
63.7
57.9
56.2
56.8
obtained a cumulative average score above 95.5 across all four
Michigan
52.5
62.5
55.0
54.4
55.8
Iowa
50.8
66.1
54.6
53.3
55.7
sections of the exam during the 2012 calendar year on their first
Minnesota
52.3
63.4
53.2
53.5
55.3
North Dakota
49.0
58.1
59.3
53.3
54.7
Illinois
50.0
61.9
51.0
50.6
53.0
Nebraska
45.5
62.9
50.0
55.2
52.7
Kansas
47.1
59.5
53.5
52.2
52.7
Indiana
49.7
58.9
47.6
46.6
50.4
Kentucky
45.1
53.5
45.9
55.1
49.7
Table 4 shows the passing rates for the four sections and the overall results on the 2012 CPA Exam for Midwest states. It certainly is no fluke seven of the top 10 states are in the Midwest.
CONCLUSION Finally, three Wisconsin graduates won the prestigious Elijah Watt Sells Award in 2012: David Canedo, CPA (University of
attempt. More than 92,000 candidates sat for the exam in 2012. Thirty-nine candidates met the criteria. Wisconsin’s state motto is “Forward.” But in relation to its accounting programs and accounting graduates, the motto could be adapted to “Forward with great pride!” Robert A. Gruber, Ph.D., CPA, 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. Cindy J. Gruber, MBA, CPA is an accounting instructor at Marquette University in Milwaukee. Contact her at 414-288-1466 or Cindy.Gruber@Marquette.edu.
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On Balance
September|October 2013
7
2 0 14
KNOW SOMEONE WHO STANDS OUT IN A CROWD? The hustle and bustle of daily routines can make days and years pass by before we take a moment to reflect on colleagues who have
impacted our lives and the lives of others. those who stand out, and give back to them
Take a moment today to think about for giving you so much.
CONSIDER NOMINATING: • An exceptional co-worker. • A mentor. • Someone who sparked your passion for the profession. • Someone who shares his or her talent and gift with others. • Someone who gives back countless hours to the community or nonprofit group.
ACCEPTING NOMINATIONS FROM MONDAY, SEPT. 2-FRIDAY, NOV. 22, 2013.
9 AWARD CATEGORIES Show your appreciation today by submitting your nomination at
8
On Balance
September|October 2013
www.wicpa.org/awards www.wicpa.org
{ Spotlight | letter from the editor } “Our state’s recent performance on the CPE Exam represents the vast knowledge and hard work it takes to become a leading CPA.”
Wisconsin accounting students aim high, score big
Photography by John Nienhuis
W
isconsin has a lot to celebrate for its recent successes in the accounting profession. Our state’s accounting students who took the Uniform CPA Examination for the first time in 2012 are among the nation’s top CPA Exam performers. And, three of them have earned national recognition for their top performance on the exam. Our state’s recent performance on the CPE Exam represents the vast knowledge and hard work it takes to become a leading CPA. You should be proud to belong to a profession that encourages this success. You can read more about it in this issue of On Balance. The article, “Wisconsin pride!” by WICPA Chair Robert A. Gruber, Ph.D., CPA, CGMA and Cindy J. Gruber, MBA, CPA highlights the top performance of students who took the exam for the first time in 2012. According to the article, the exam takers earned a passing rate of 66.1 percent compared to the national average of 54.3 percent. Freelance writer Tannette Johnson-Elie introduces three of the examinees who have also earned the Elijah Watt Sells Award: David Canedo, CPA, Codie Dull and Tyler J. Kleppe. The award is presented to individuals who have earned a cumulative average score above 95.50 across all four sections of the Uniform CPA Exam, completed testing in 2012 and passed all four sections of the exam on their first attempt. Canedo, Dull and Kleppe are now among an elite list of Wisconsin accounting graduates who’ve earned the Sells Award. Read about several past Sells Award winners in the article, “Where are they now?” by Johnson-Elie. The article features several past winners who reflect on how earning the award is a source of pride and how it led them toward building successful accounting careers in various sectors, including public accounting, higher education, law and government.
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Next, read an article I wrote, “Beyond business as usual.” The article features several students from Divine Savior Holy Angels High School in Milwaukee who got a glimpse at accounting careers by taking an accelerated introductory accounting course in the summer. Learn about other accounting-related issues, including prospects and challenges that motivate chief financial officers. Also learn about new technology that helps CPAs in health care manage data effectively. Finally, read about your fellow WICPA members who met with local and national politicians in Washington, D.C. to discuss issues impacting CPAs.
Cynthia M. Hodnett is editor of On Balance magazine. Contact her at 262-785-0445 ext. 3004 or cynthia@wicpa.org.
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Th a
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On Balance
September|October 2013
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hree’s
harm Recent Wisconsin accounting graduates among nation’s top CPA Exam performers By Tannette Johnson-Elie The path to passing the Uniform CPA Examination can be arduous. But thanks to dedication and hard work, Wisconsin CPA examinees David Canedo, CPA, Codie Dull and Tyler J. Kleppe were up for the task, and they earned the top honor for their performance. Canedo, Dull and Kleppe are among 39 CPA Exam candidates nationwide who have received the 2012 Elijah Watt Sells Award. The award is presented by the American Institute of CPAs to candidates who earn a cumulative average score above 95.50 across all four sections of the exam. More than 92,000 individuals across the U.S. sat for the CPA Exam in 2012. To receive the distinguished Sells Award, candidates must pass each exam section on their first attempt. The award was created by the AICPA in 1923 to honor CPA Elijah Watt Sells, founding partner in Haskins & Sells, a predecessor to Deloitte & Touche, and one of New York state’s first certified public accountants. A common factor in the success of many Sells Award winners is that they use the Becker CPA Exam Review and spend 20 or more hours per week studying for the CPA Exam, research shows. “It’s well-organized, and they demand a lot in terms of getting prepared,” said WICPA member Michael D. Akers, CPA, professor and accounting department chair at Marquette University. “If candidates follow that regimen and spend the time getting prepared, they have a higher potential of doing well on the exam.”
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On Balance
September|October 2013
11
“
WINNING THIS AWARD IS HUMBLING. IT’S DEFINITELY AN HONOR THAT I TAKE SERIOUSLY.” – Tyler J. Kleppe of me. I still have to earn my reputation through my work,” he said. “I love working here at Vrakas/Blum. I feel there’s more of a chance to grow with the firm.” “I took the same approach as how I prepared for finals in college. I studied a couple hours each day to go about it slow,” said Dull, who received a Bachelor of Arts in Business Administration and a Master of Professional Accountancy from the University of Wisconsin–Madison. “I recommend understanding your own unique learning style and how you best study for an exam.”
Kleppe. Each candidate dedicated at least three months or more to preparing for the CPA Exam. Canedo is an accounting associate with Vrakas/Blum S.C., in Brookfield, where he has been employed since May 2013. Before joining Vrakas/Blum, he was an intern in PricewaterhouseCoopers’ (PwC) Chicago office for four months in 2011, and worked in the firm’s Milwaukee office briefly in 2012. “He’s a real hard worker. He’s done a great job for our firm,” said Brad J. Hermes, CPA, shareholder in the audit and business advisory practice at Vrakas/Blum in Brookfield. “This award shows what good, old-fashioned hard work will do for you. It gives us something to be proud of as a firm.” A graduate of UW–Madison with a Bachelor of Arts in Accounting and a Master of Professional Accountancy, Canedo was initially interested in pursuing international business when he entered college. “I was inspired by my MexicanAmerican roots,” Canedo said. “When I took my first accounting class, I did really well. I liked that you could see everything in tangible ways.” Now, Canedo hopes to make his mark on the accounting profession. “I still have a long way ahead
Dull is an experienced associate with PwC in Milwaukee where he has worked for two years. He was having a low-key
Photography by Angela Wade
Akers is also working on an academic paper for a national journal that examines the study habits of Sells Award winners, in collaboration with WICPA member Don E. Giacomino, CPA, accounting professor and Donald F. Flynn and Beverly L. Flynn Chair at Marquette. “This award clearly is the elite as far as performance on the CPA Exam,” said Akers, who is also the Charles T. Horngren professor at Marquette. “A person has to be highly motivated to want to perform at this level.” Consider Wisconsin’s Sells Award winners Canedo, Dull and
L-R: David Canedo, CPA and Tyler J. Kleppe 12
On Balance
September|October 2013
www.wicpa.org
day at work when he received the news he had won the 2012 Elijah Watt Sells Award. “I was real excited. There wasn’t much work getting done after I found out I won,” Dull said. “Fortunately, Fridays are slower than other days at the office. I was excited to share this news with my parents.” Dull hopes his distinction as a Sells Award winner will open doors to better opportunities. “It holds a lot of weight,” said Dull, who enjoys running marathons in his spare time. “It definitely is a great accomplishment that will have an impact on my career.” For Kleppe, receiving the Sells Award is validation for the hard work he devoted to preparing for the CPA Exam. “For six months-plus, my main focus was the CPA Exam,” said Kleppe, who hopes to teach at the college level someday. “I studied every day. I made it basically a full-time job.” Kleppe is a staff accountant with Smith & Gesteland LLP in Madison. He started as an intern in 2011, and was hired fulltime one year later. Kleppe graduated with a Bachelor of Arts
Codie Dull
Congratulations
in Accounting and a Master of Professional Accountancy from UW–Whitewater. Jeffrey L. Schleicher, CPA managing partner at Smith & Gesteland, was not surprised that Kleppe earned the AICPA’s top honor. Kleppe is among a handful of Smith & Gesteland employees who have won the Elijah Watt Sells Award. “It didn’t surprise us because I knew Tyler’s academic history, and the energy he was putting into studying for the exam,” Schleicher said. “Tyler is very much career-oriented. He has the desire to succeed in public accounting.” Despite the hard work and effort they put into preparing for the CPA Exam, Canedo, Dull and Kleppe never imagined they would win the prestigious Sells Award. “I was confident in my performance, but it was still overwhelming when I found out I was a Sells winner,” Kleppe said. “It’s a small fraternity of people who have won it. Winning this award is humbling. It’s definitely an honor that I take seriously.” Tannette Johnson-Elie is a freelance writer in Gurnee, Ill. Contact her at tjohnsonelie@gmail.com.
Vrakas/Blum is Proud to Congratulate
OUR OWN DAVID CANEDO
on your outstanding accomplishment!
As a Winner of the 2012 AICPA Elijah Watt Sells Award
WINNER of the 2012 Elijah Watt Sells Award PricewaterhouseCoopers LLP 100 East Wisconsin Avenue, Suite 1800 Milwaukee, WI 53202
www.wicpa.org
445 S. Moorland Rd., Ste. 400 • Brookfield, WI 53005-4254 P: (262) 797-0400 • F: (262) 797-7895 • www.v-b.com
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n i a p c i w . C . D , n o t g n i Wash
L-R: Robert A. Gruber, Ph.D., CPA, CGMA; Rep. Thomas Petri; Dennis Tomorsky, CPA, J.D., CGMA L-R: Nicholas S. Lascari, CPA, CEA, CGMA; Rep. Paul Ryan; Tammy Hofstede; Karla E. Blair, CPA
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L-R: Tammy Hofstede, WICPA CFOO; Rep. Frank James Sensenbrenner Jr.; Karla E. Blair, CPA L-R: Dennis Tomorsky, CPA, J.D., CGMA; Robert A. Gruber, Ph.D., CPA, CGMA; U.S. Sen. Ronald Johnson; Nicholas S. Lascari, CPA, CEA, CGMA
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{ In Touch | president & CEO’s message } “We explain to Wisconsin lawmakers that WICPA members are experienced and knowledgeable experts with respect to business and tax matters.”
WICPA representing your interests in Washington, D.C.
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ICPA members Robert A. Gruber, Ph.D., CPA, CGMA; Nicholas S. Lascari, CPA, CEA, CGMA; Karla E. Blair, CPA; Tammy Hofstede and I visited Wisconsin’s senators and congressional representatives in Washington, D.C., on May 21, 2013. Our visits were part of the American Institute of CPAs Spring Council meeting that occurs in Washington, D.C., each odd-numbered year. These biannual visits allow CPAs from all 50 states to share the perspective of the CPA profession with lawmakers who shape policies impacting CPAs, their employers and their clients. Thanks to WICPA Executive Relations Manager Jessica Barillari coordinating the logistics of our legislative visits this year, WICPA members were able to visit the offices of all Wisconsin senators and congressional representatives. Key points we made in our meetings with lawmakers this year included: • Promoting mobile workforce legislation that would prohibit states from subjecting individuals to income tax unless they work at least 30 days in a state outside their state of residency. • Promoting logical tax return due dates to allow a more timely flow of information from passthrough entities to their owners. • Promoting tax simplification. • Encouraging lawmakers to understand that large deficits are unsustainable and to address the national debt. • Encouraging narrowing the definition of municipal advisors in the Dodd–Frank Act to exempt from burdensome U.S. Securities and Exchange Commission registration those CPAs who are performing the customary and usual accounting services for a municipality. Lawmakers’ busy schedules often required us to meet with their staff members rather than the lawmakers themselves. Our experience has been that these legislative aides are extremely knowledgeable, take
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careful notes and ask good questions of the WICPA members with whom they visit. We explained to Wisconsin lawmakers that WICPA members are experienced and knowledgeable experts with respect to business and tax matters. We concluded our visits by inviting them to contact us with any questions they might have regarding the impact of current or proposed laws on Wisconsin residents and businesses. You have the opportunity to shape public policy in the Wisconsin Capitol by contributing to the WICPA CPAC and LIF advocacy funds (tinyurl.com/aqwbpob). You can also participate by responding to WICPA requests to contact your legislators to share CPAs’ positions on matters and joining fellow WICPA members when we visit with legislators in Madison every other year. 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.
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Where are they
?
now
Past Sells Award winners continue along path of success By Tannette Johnson-Elie
S
ince winning the Elijah Watt Sells Award in 1991, Mary J. Behling, CPA has made major strides in her career, rising from entry-level to leadership of the Fort Atkinson accounting practice that her father built.
Behling, a 1991 Sells award winner, is managing
partner of Behling, Jasper & Selberg, LLC, founded by
who graduated with a bachelor’s degree in accounting
her father, Robert N. Selberg, CPA in 1975.
from the University of Wisconsin–Whitewater in 1990.
“When I came into accounting there weren’t many 16
women running CPA firms in the ‘90s,” said Behling,
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“Winning the Sells Award was validating. It gave me www.wicpa.org
Other Sells awardees from Wisconsin include:
the confidence to move forward with my career and
•
ultimately buy my dad’s practice.”
Gene A. Gohlke, CPA, 1965 winner, is retired and lives in Falls Church, Va.
Peter E. Wick, CPA is a tax manager at Baker Tilly Virchow Krause, LLP in Appleton. He received the Sells
•
Ernest I. Hanson, CPA, Ph.D., 1976 winner, is a retired accounting professor from UW–Madison.
Award in 2005. •
“You study hard and to win an award for just trying
Rebecca W. Jungwirth, CPA, 1978 winner, is retired and lives in Appleton.
your hardest is quite an accomplishment,” Wick said. •
Kevin D. Anderson, CPA, J.D. is a partner with BDO
George R. Kamperschroer, CPA, 1983 winner, is an accountant at Neider & Boucher, S.C., in Madison.
USA in Bethesda, Md., where he has been employed
•
since 2007. Anderson won the Sells Award in 1976
Jennifer R. Luchs, CPA, 2008 winner, works on the tax staff at Deloitte Tax LLP in Milwaukee.
shortly after graduating from UW–Whitewater with a
•
bachelor’s degree in business administration.
Kelly L. Mogensen, CPA, 2002 winner, is an accountant at IBM in Durham, N.C.
He graduated from the University of Michigan Law
•
School in 1981, and joined the Milwaukee law firm
Richard W. Pitzner, CPA, J.D., 1969 winner, is an attorney at Murphy & Desmond, SC in Madison.
of Foley & Lardner that same year, becoming partner
•
before joining the U.S. Treasury Department in 1995.
Andrew N. Rebstock, CPA, 2009 winner, works on the accounting staff at PwC in Milwaukee.
While it’s been 37 years since Anderson won the
•
Sells Award, it’s still a source of pride for him today. “It’s a tribute to the educational system in Wisconsin and particularly at UW–Whitewater,” he said.
Michael E. Whittle, CPA, 1979 winner, is a partner at Mike Whittle S.C. in Brown Deer.
Tannette Johnson-Elie is a freelance writer in Gurnee, Ill. Contact her at tjohnsonelie@gmail.com.
Send us your
Nominations
The WICPA and Educational Foundation Nominations Committees are seeking candidates to serve three-year terms on the WICPA Board of Directors and the WICPA Educational Foundation Board of Directors.
WICPA Board members’ responsibilities include:
Foundation board members’ responsibilities include:
• •
• • •
•
•
Keeping up-to-date on professional issues. Providing strategic governance in accordance with the WICPA Strategic Plan, mission & vision, including: • Policy relating to legislative, regulatory or ethical matters affecting WICPA members. • Approval of budgets. Meeting four times a year.
To apply: Visit www.wicpa.org/2013BoardApplication
• • • •
•
Assisting in efforts to attract students to the profession. Providing scholarships for college students. Co-sponsoring a two-week, on-campus business experience for minority high school students. Offering the only accounting-related CPE for high school accounting teachers in the state. Awarding grants to high school teachers who develop educational programs to promote accounting career awareness. Serving on subcommittees of the board. Meeting two times a year.
To apply: Visit www.wicpa.org/2013EFBoardApplication
All applicants must be WICPA Fellow* Members in good standing. Submit the completed application and your resume to Jessica Barillari, WICPA Executive Relations Manager by Friday, Nov. 15, 2013. *A person who has obtained a valid certificate as a CPA from the Accounting Examining Board of the State of Wisconsin, or from a similar legally constituted authority in any other state, possession or territory of the United States or the District of Columbia
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NEW CPAS, WELCOME TO THE PROFESSION! CONGRATULATIONS ON RECEIVING YOUR GOLDEN TICKET – YOUR CPA LICENSE!
Fifty-two newly licensed CPAs celebrated the accomplishment of becoming a CPA at the 6th annual New CPA Welcome Dinner on Thursday, June 6 at the Italian Conference Center in Milwaukee. Attendees were entertained with a “Willy Wonka” theme, which included colorful decorations and sweet surprises. The dinner, attended by 128 people, included a keynote speech by WICPA member Jeff Lemmermann, CPA, CITP, CISA, CEH, who dressed in Wonka attire for the evening.
EvEnt photos can bE viEwEd at tinyurl.com/nEwcpa13
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TOGETHER, WE HAVE THE POWER TO MAKE A DIFFERENCE.
the ution to b i r t n o c aign Your LIF camp
PAC/ WICPA C areness w A l a c i t i for Pol ICPA to: W e h t s allow 1. Strengthen the voice and visibility of the WICPA and CPAs in Wisconsin. 2. Educate lawmakers about the issues impacting Wisconsin CPAs.
3. Support the election campaigns of candidates who support our issues. 4. Ensure a healthy business climate for CPAs and the clients you serve.
Visit www.w
to learn mo
icpa.org/cp
re and mak
www.wicpa.org
aclif
e a contribu
tion today.
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BEYOND
BUSINESS AS USUAL
Accelerated accounting course jump-starts students’ interest in accounting
By Cynthia M. Hodnett • Photography by John Nienhuis
S
ummer’s over, and a new school year has begun at Divine Savior Holy Angels High School (DSHAHS) in Milwaukee. But the business of learning didn’t end for its students enrolled in an accelerated accounting class in June. The students spent three weeks learning technical accounting concepts, including business operations, bookkeeping with debit-and-credit journal entries and preparing end-of-the-month financial statements, said Meaghan Voigt, business department chair and Future Business Leaders of America advisor at DSHAHS. This summer was the fourth summer that DSHAHS offered the
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accelerated summer accounting course, Voigt said. During one class, each student created a “company” and addressed how they would secure their company’s assets from external and internal fraud. They were also tested on what they learned in class. And, as a final project, they participated in a simulation-based journalizing transactions and posting the transactions to the accounts in the general ledger. “I want to give them the basic concepts of business and accounting, and I try to make the course fun and use everyday examples to keep them interested,” Voigt said.
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Caitlin Multerer, a DSHAHS senior who took the course as a freshman, said the class is helpful to students who are undecided about their academic and professional future. “I didn’t really know a lot about accounting before I took the class, but I definitely feel like I learned a lot,” said Multerer, who served as a teacher’s assistant to Voigt during the 2013 summer high school accounting class. “After taking the class, I learned that I really enjoy accounting, and that I like the journalizing and learning about different businesses.”
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LESSONS BEYOND THE CLASSROOM The students also met with business professionals like Caitlin Fentzlaff, an experienced associate at PricewaterhouseCoopers in Milwaukee. Fentzlaff, a 2008 DSHAHS graduate and 2012 Boston College graduate, said taking the summer high school accounting course influenced her to pursue an accounting degree and an accounting career. She hopes the class does the same for the students. “I encouraged them to take more accounting classes if
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they’re even slightly interested in the subject, as there are so many doors opened for accounting majors and/or CPAs,” she said. “I also wanted to show them exactly what I do as an auditor, so I explained to them how I tested revenue at one of my client’s a few months ago and walked them through my testing spreadsheet.” The summer accounting course is one of two accounting courses that Voigt brought to the high school’s business curriculum. Several years after introducing the summer accounting class to the high school, Voigt partnered with Michael D. Akers, CPA, WICPA member and chair of the accounting department at Marquette University, to bring first-level accounting curriculum to the high school during the 2010–2011 academic year. Curriculum taught in the summer accounting course and the one offered during the academic year examine topics covered in the introductory accounting course taught at the university, Voigt said. Both courses provide students with a glimpse of what they would
Students today. CPAs tomorrow.
likely study in their college accounting courses, Akers said. “The DSHA summer accounting course developed by Meaghan Voigt is important for two specific reasons,” said Akers, who is also a Charles T. Horngren professor at Marquette. “First, students are exposed to and learn the foundations of accounting, which is essential for anyone pursuing a business career. Second, the large number of students taking the course indicates that it is well received and adds value to the DSHA curriculum, which should enhance the image of accounting.” Voigt echoed Akers’ statements. “Hopefully, after they’ve taken the class they can see that learning business and accounting is a good foundation, no matter which field they choose,” she said. Cynthia M. Hodnett is editor of On Balance magazine. Contact her at 262-785-0445 ext. 3004 or cynthia@wicpa.org.
Invest in the future of the
accounting profession.
You have the opportunity to impact thousands of accounting students and educators in Wisconsin. Through your contribution to the WICPA Educational Foundation, Inc., you can help us reach students and teachers in high school and college to create awareness about the accounting profession. You can also make an important difference by supporting students on their way to becoming CPAs. As the end of 2013 draws near and you may be doing some tax planning, please consider contributing to the WICPA Educational Foundation. Visit www.wicpa.org/EF to contribute online and for more information about the Foundation’s current initiatives. Contact Tammy Hofstede at 800-772-6939 ext. 3013 or tammy@wicpa.org with questions.
The CPA profession thanks you.
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www.wicpa.org
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istockphoto.com
PR AN
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ROSPECTS NDCHALLENGES WHAT GETS WISCONSIN CFOs UP IN THE MORNING? By Donna Pinsoneault
What happens when confusion is trending in the marketplace? Chief financial officers hone in on what’s really important, and help others in their organizations get excited about possibilities. They also ensure that quality, service and, above all, people remain front and center. Jeff Lemmermann, CPA serves as chief financial officer and chief information officer at Precision Plus, Inc. The Elkhorn manufacturing firm uses Swiss-designed technology to produce metal components for multiple industries. Sustaining its reputation for values-driven, custom-crafted quality means finding highly skilled workers who understand how to use programmable machines with efficiency, precision and ingenuity. That need, along with confidence in the trend toward re-shoring, prompted the company to develop expansion plans and enhance employee development. “We hired people with strong backgrounds in education to design effective training programs and develop our own training lab,” Lemmermann said. Precision Plus is also investing in leadership development. “Our leadership group is well-diversified and strong,” he said. “Rather than bringing people in who don’t know our company and culture, we look for leaders within work groups who can keep the momentum rolling.” Investing in training is also a priority at Goodwill Industries of Southeastern Wisconsin, Inc., which added nearly 30 retail stores in the last six years.
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Goodwill employs more than 5,500 individuals in various roles including administration, laundry, packaging and food service. “Talent management is a big focus for us,” said Senior Vice President & Chief Financial Officer Chuck Stadler, CPA. “The skills gap is real, and it has impacted how we deliver training.” In addition to creating Goodwill University, Goodwill rolled out a Web-based learning management system for its own employees, and developed mission-based activities to help other companies source qualified talent. Activities include Goodwill Talent Bridge, Workforce Connection Centers and customized employer training courses to broaden learning experiences outside of the classroom. “We work closely with our employer partners to understand what specific skill sets and needs they have, then develop customized training that prepares individuals to fully engage in the work experience,” Stadler said. “Many potential employees benefit from ‘soft skill’ training too — learning how to engage effectively with peers and management, as well as basics like being respectful and consistently showing up on time.”
ON THE OTHER HAND…
Challenges are trending, especially those related to the Patient Protection and Affordable Care Act. Aiming to provide affordable health care for every American, the act sets up a system of choices for individuals, families and small businesses, as well as establishes insurance industry regulations. CPAs across the board are navigating through uncertainties to prepare for implementation. “It’s well-intentioned, but the complexity of the rules and how to apply them becomes difficult,” Stadler said. “We have planned for increased benefit costs and additional human resources needed for employee
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education and administration of this act.” Along with proposed changes in the tax code, uncertainty surrounding the Affordable Care Act limits a company’s ability to implement forward-thinking strategies. “Our recent insurance quote was 30 percent higher than last year for the same type of coverage,” Lemmermann said. “What happens the year after this and the year after that? We have ambitious plans and are going to need more people, but can we afford to bring them on with that giant question about the cost of benefits looming? It’s nearly impossible to project.” Amy Grinnell, CPA, finance director and controller with Madison’s Dean Health Plan, described the challenges from the health insurance industry’s perspective. “We’re taking a historically static industry and making it real-time and retail based,” she said. “Consumers will have the ability to purchase health insurance through the federally facilitated marketplace or exchange.” Dean Health Plan is the insurance arm of Dean Health System and SSM Healthcare. Owned by a physician group and a hospital organization, the company is in a unique position. “We are living the model the government is trying to create — synergy between the insurance company and provider community with the individual member at the center,” Grinnell said. Challenges include sorting through what is already mandated, what is still to be determined, what will apply to everyone and what will not. One mandate, for example, requires all health insurance companies to provide real-time transfer of information, such as validating member eligibility, between the insurance company and the provider within 20 seconds. “It’s designed to make it easier for the insured to do business with both the insurance community and the provider community,” she said.
www.wicpa.org
Another example includes paying providers with electronic remittance advices that contain a unique transaction re-association number. The number allows providers to take a financial transaction received directly in their bank account and associate it with an electronic remittance file received from the insurance company or their respective clearinghouse within a three-day window, Grinnell said. Grinnell also said insurance providers benefit from investing in and retaining employees, as well as from investing in technology. “Short-term, we must get compliant with the mandates while continuing to look ahead at the potential and think about where this new marketplace can take us,” she said. “Our success is contingent upon having talented employees, as they will position us to react quickly to an ever-changing environment.” Lemmermann and Stadler share Grinnell’s positive view. Both say their organizations intend to do the best they can for their employees. “Our employees are our greatest assets,” Lemmermann said. “Nothing really happens without them. We are fortunate to have people who are invested and believe in what they are doing. When an organization has people like that, you all have success and enjoy what you are doing more.” Stadler is also excited about the people Goodwill serves. “They are the untapped resources that can leverage where our city and region can go,” he said. “We just need to make sure that the talent is there so businesses can come out of this recessionary time and move in a positive direction.”
Donna Pinsoneault is a writer in Brookfield. Contact her at 262-821-9483 or dpinsoneault@gmail.com.
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kudos Nicholas Banach has been hired as a staff accountant at Komisar Brady & Co., LLP in Milwaukee. Greg J. Barber, CPA has been named president of Schenck SC. Todd A. Behm, CPA, a shareholder of Schenck SC in Appleton, has celebrated his 20th anniversary at the firm. Barbara G. Ecklond, CPA
David Canedo, CPA has been hired as a staff accountant at Vrakas/Blum, S.C. in Brookfield. Michael J. Eberle, CPA has been promoted to senior accountant at Winter, Kloman, Moter & Repp, S.C. in Brookfield. Matthew P. Eckelberg, CPA has been selected to be partner-incharge at Hawkins, Ash, Baptie in Marshfield.
Eric J. Golueke, CPA
Barbara G. Ecklond, CPA has been named principal-in-charge of SVA Certified Public Accountants, SC in Milwaukee. Eric J. Golueke, CPA has been hired as an accountant at Reilly, Penner & Benton LLP in Madison. William D. Goodman, CPA has retired as president of Schenck SC. Lonnie P. Hampton, CPA has been named shareholder of Schenck SC in Green Bay.
Lonnie P. Hampton, CPA
Kirsten L. Hoffman, CPA, a supervisor at Schenck SC in Appleton, has celebrated her fifth anniversary at the firm. Jay M. Kramer, CPA, MST has been appointed as partner-in-charge at Hawkins, Ash, Baptie in Green Bay. David L. Maccoux, CPA has been named managing shareholder of the Government and Not-For-Profit Practice at Schenck SC in Green Bay.
Kirsten L. Hoffman, CPA
Gary R. Moss, CPA has been hired as director of the Baker Tilly Enterprise Risk and Information Services practice in Milwaukee. Moss has also been named as the National Leader of the firm’s Healthcare Advisory and Internal Audit team. Michelle R. Mulloy, CPA, a tax supervisor at Schenck SC in Green Bay, has celebrated her 15th anniversary at the firm. Patrick J. Ness, CPA, a shareholder at Schenck SC in Appleton, has celebrated his 15th anniversary at the firm. Joel G. Nettesheim, CPA has been appointed to the board at Brookfield Academy, according to The Business Journal of Milwaukee.
Michelle R. Mulloy, CPA
Robert W. Parrish, CPA has retired after leading Wipfli LLP’s health care industry practice in Eau Claire for the past 15 years. Kelly R. Runge, CPA has been named senior manager of the Small Business Accounting Services practice at Wipfli LLP in Green Bay. Carl E. Schultz, CPA has been appointed president and chief operating officer of SVA.
Brian J. Strnad, CPA
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Brian J. Strnad, CPA, a shareholder of Schenck SC in Green Bay, has celebrated his 25th anniversary at the firm.
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Odd & Ends Hawkins, Ash, Baptie & Company expands Green Bay office Hawkins, Ash, Baptie & Company, LLP, based in La Crosse, merged with the Green Bay office of Anderson, Tackman & Company, PLC on Sept. 1, 2013. The merger has expanded Hawkins Ash Baptie’s Green Bay office, and it now has four partners and 20 employees. As a result of the merger, the office relocated to 2360 Dousman St., Green Bay.
Calculate your company’s costs under health care reform LarsonAllen LLP is offering the Health Insurance and Penalty calculator (www.larsonallen. com/HIP/). The calculator provides specific, concrete information to help your business determine the additional costs of health reform.
Kolb+Co. merges with Illinois-based firm Brookfield-based Kolb+Co. merged with Sikich LLP in Naperville, Ill. on Aug. 1, 2013. The merger marks Sikich’s first entry into the Wisconsin market, making it the firm’s second-largest office in the nation. As a result of the merger, Sikich now has more than 450 employees nationwide, including more than 60 professionals and 15 partners from the former Kolb+Co.
Survey: Some Americans enjoy doing their taxes A number of respondents to a recent survey from the Pew Research Center (tinyurl.com/bq5tykj) say they either like (29 percent) or love (5 percent) compiling their income tax returns. Twenty-nine percent of these people like doing their taxes because they anticipate getting a return, while 17 percent like doing them because they are good at it. Most Americans, 56 percent, have a negative feeling about the process.
CORRECTION Kevin Behnke, CPA was promoted to senior manager at Hawkins, Ash, Baptie & Company, LLP in Manitowoc. We apologize for the error.
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memorials DALE M. BARBIAUX, CPA (1953–2013) Dale M. Barbiaux, CPA died May 20, according to the Green Bay Press-Gazette. He was 59. Barbiaux’s career included positions as a financial advisor at Robert W. Baird & Co. Inc. in the Stary/ Barbiaux Group of Private Wealth Management, vice president of tax and corporate secretary of Paper Converting Machine Company and executive director of Cerebral Palsy, Inc. He also taught accounting at Northeast Wisconsin Technical College. The Green Bay resident both earned his certified public accounting license and joined the WICPA in 1988.
KENT J. DALSING, CPA (1966–2013) Kent J. Dalsing, CPA died June 2, according to the Wisconsin State Journal. He was 47. Dalsing earned his accounting degree from the University of Wisconsin–Platteville. Later, he graduated from the Graduate School of Banking at University of Wisconsin–Madison.
He earned his certified public accounting license in 1993 and also held a certified internal auditor designation. His accounting career included positions at Clifton Gunderson LLP (now CliftonLarsonAllen LLP), Grant Thornton LLP and Cuna Mutual Group. Since 2006, he was the chief operating officer and executive vice president at the Bank of New Glarus. The New Glarus resident joined the WICPA in 1992.
KENNETH E. NOBLE, CPA (1944–2013) Kenneth E. Noble, CPA died May 7, according to the Marshfield News Herald. He was 68. Noble served in the Wisconsin National Guard and earned his degree in business administration. He operated his firm, Kenneth E. Noble, C.P.A., S.C., for several years. As a part of his retirement, he sold his firm to Hawkins, Ash, Baptie & Company, LLP. He later worked in the firm’s Marshfield’s office before retiring again. The Marshfield resident earned his certified public accounting license and joined the WICPA in 1984.
WICPA audited
financial statements now available online
The Finance Committee of the WICPA Board has reviewed and approved the WICPA audited financial statements for the fiscal year ended April 30, 2013. The WICPA Educational Foundation Board has reviewed and approved the audited WICPA Educational Foundation financial statements for the fiscal year ended April 30, 2013. In order to make the audited financial statements available to WICPA members in the most cost effective and efficient manner, the Finance Committee determined that the complete audited financial statements will be available for all members to view on the WICPA website at www.wicpa. org/FinancialStatements rather than published in On Balance. Your username (your last name, apostrophe and hyphen included) and password (your membership ID number found on your dues invoice) is required to access the statement online.
www.wicpa.org
Members may also request a printed copy of the audited financial statements by contacting WICPA Chief Financial & Operating Officer Tammy Hofstede at 262-785-0445 ext. 3013 or 235 N. Executive Drive, Suite 200, Brookfield, WI, 53005. Sincerely,
Robert A. Gruber, Ph.D., CPA, CMGA, WICPA Chair
Dennis Tomorsky, CPA, J.D., CGMA President & CEO, WICPA
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Conservation easements: What they do for all of us
By Daniel B. Geraghty, J.D., CPA
Wisconsin’s leading conservationalist Aldo Leopold once said, “Conversation is a state of harmony between man and land.” Unfortunately, there is sometimes a state of disharmony between taxpayers and the Internal Revenue Service (IRS) when it comes to conservation easements. This article briefly describes conservation easements and trends concerning their taxation.
What is a conservation easement? There are an estimated 100,000 conservation easements in the United States, covering more than 19 million acres (roughly the size of South Carolina). A conservation easement is a self-imposed restriction on land that forever prevents certain changes or activities, primarily its development. The landowner typically donates the easement to a land trust formed as a 501(c)(3) charity. This is done in a conservation grant agreement that is recorded with the register of deeds. In turn, the land trust accepts the easement and agrees to monitor the property to ensure compliance with easement terms.
Tax implications From a tax perspective, conservation easements generate a charitable contribution if properly structured. The Internal Revenue Code (the Code) generally prohibits a deduction of less than an entire interest in property such as a grant of an easement. However, the Code contains an exception for “qualified conservation contributions.” Specifically, Code § 170(b) allows a deduction if
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{ Tax | conservation easements }
a taxpayer donates a “restriction granted in perpetuity on the use of real property that will be used for a conservation purpose.” A conservation purpose exists “where it protects land for outdoor recreation or the education of the general public; the natural habitat of fish, wildlife, or plants, such as farmland or forest land; or historically important land area or a certified historic structure.”1 Significantly, granting public access to one’s property, while allowed, is not required to obtain a deduction. Restrictions can be placed on the property with virtually no change in the property’s immediate use so long as the use does not conflict with the stated conservation purpose. As with any property contribution in excess of $5,000, a conservation easement must be supported by a “qualified appraisal.” Given their nature, conservation easements are not typically bought and sold. Instead, the appraiser reviews the property’s value before and after the easement — in other words, the diminution in value as a result of the easement. While most property contribution deductions are limited to 30 percent of adjusted gross income, Congress has repeatedly extended provisions that permit up to 50 percent of adjusted gross income being reduced for conservation easements and up to 100 percent qualified farmers and ranchers.
Recent trends The IRS does not share the congressional view that conservation easements are a good thing. Admittedly, there have been some abuses in recent years with taxpayers taking very aggressive positions. That said, the IRS has also taken an aggressive position in litigating cases. Currently, there are dozens of cases pending in U.S. Tax Court, with numerous decisions and several significant appellate decisions over the past five years. Prior to five years ago, the cases were few and far between. The issues are primarily whether the technical requirements for a deduction have been met or a challenge to valuation. At times, there seems to be an inordinate amount of focus on some of the technical
requirements. For example, the IRS has attacked appraisals as not being “qualified,” as they did not state a reliable method or basis of the appraisal, a technical requirement of the regulations. The Tax Court accepted this argument in one case, but the decision was sensibly vacated by the Second Circuit. See Scheidlman v. Comm’r, 109 AFTR 2d 2536 (CA 2, 2012). Another example of a technical attack is the IRS asserting that a taxpayer did not receive a contemporaneous written acknowledgement of the donation. The Tax Court has rejected this argument several times, pointing to the document granting the easement as having all of the required information. Other attacks have been on the stated conservation purpose, any type of quid pro quo (common with developers granting easements), whether any mortgages are properly subordinated to the land trust, whether the restrictions actually protect the property in question, whether the easement was actually recorded, and whether the restrictions were already in place, e.g., through local zoning ordinances. In addition, the IRS will typically question the arrived-at valuation, asserting a 40 percent penalty where the return position is more than 200 percent of the final determination.
{ Tax | conservation easements }
“Conservation easements can be a powerful tool for preserving our lands and for generating tax benefits.”
Conclusion Conservation easements can be a powerful tool for preserving our lands and for generating tax benefits. As with most powerful tools, care must be exercised when planning and executing conservation easements. The conservation purposes and restrictions must be fully documented and the technical requirements understood and complied with in the proper documents. Properly doing so will allow a donor to achieve harmony with both the protected land and the IRS. Daniel B. Geraghty, J.D., CPA is a tax attorney and Tax Controversy and Litigation Team Leader at Whyte Hirschboeck Dudek S.C. in Milwaukee. Contact him at 414-978-5518 or dgeraghty@whdlaw.com.
1Protection of historic structures is typically done by what is known as a façade easement.
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On Balance
September|October 2013
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By Yigit Uctum, CPA, CFE, MBA
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On Balance
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Fraud has been a serious problem that has moved to the front of public consciousness in recent years. Although the average losses due to fraud at governmental and nonprofit entities are less than those at for-profit entities, the number of incidents is substantial. Governmental and nonprofit entities typically have understaffed accounting departments and unconventional revenue and expense streams that make detecting and preventing fraud difficult.
Decoding the fraud triangle Three factors are present in every situation of fraud, also known as the fraud triangle. The triangle consists of lack of adequate internal controls (opportunity), the need to maintain an expensive lifestyle or pressure to meet goals (incentive/pressure) and the mindset to justify fraud (rationalization). The limited resources and staff make it difficult for governmental and nonprofit entities to establish adequate internal controls and this creates the opportunity for fraudsters and makes these entities vulnerable to fraud. Based on a 2012 Global Fraud Study conducted by the Association of Certified Fraud Examiners (ACFE), corruption was the most frequent fraud scheme, followed by billing, noncash, skimming and expense reimbursements as the top five fraud schemes in the government and public administration industry. For religious, charitable or social services industry, billing was the most frequent fraud scheme, followed by check tampering, expense reimbursements, skimming and corruption. ACFE defines corruption as a scheme that involves the employee’s use of influence in business transactions in a way that violates duty to the employer for obtaining a benefit. Examples of corruption schemes include bribery, extortion and conflict of interest. In a billing scheme, a person causes the organization to issue a payment by submitting invoices for fictitious goods or services, such as
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{ Fraud | Generally Accepted Auditing Standards (GAAS) }
Common fraud at government/nonprofit entities, auditor’s responsibility under GAAS
{ Fraud | Generally Accepted Auditing Standards (GAAS) }
creating a shell company and billing the organization for services actually not rendered. Noncash schemes include inventory theft or theft of confidential information. Skimming schemes include any scheme in which cash is stolen from an organization before it is recorded in the organization’s books and records, such as stealing of cash and checks before they are deposited in the bank. Expense reimbursement schemes include any scheme in which an employee makes a claim for reimbursement of fictitious or inflated business expenses. Finally, check tampering schemes include any scheme in which one steals an employer’s funds by intercepting, forging or altering a check drawn on one of the organization’s bank accounts.
Establishing strong anti-fraud measures One of the most frequently used anti-fraud controls by governmental and nonprofit entities is external audits of financial statements. The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud defined in AU Section 316 (Consideration of Fraud in a Financial Statement Audit). AU Section 316 also requires the following from auditors during a financial statement audit: • Exercise professional skepticism when considering the possibility that a material misstatement due to fraud could be present. • Discuss among engagement personnel regarding the risks of material misstatement due to fraud. • Obtain the information needed to identify risks of material misstatement due to fraud. • Identify risks that may result in a material misstatement due to fraud. • Assess the identified risks after taking into account an evaluation of the entity’s programs and controls.
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• • •
Respond to the results of the assessment. Evaluate audit evidence. Communicate about fraud to management, those charged with governance and others. • Document the auditor’s consideration of fraud. Although auditors perform various procedures to detect material misstatements due to fraud, external audits are not effective for detecting fraud, contrary to popular public perception. The reasonable assurance provided by the external audits is a high level of assurance, but not absolute level of assurance. In fact, while 7 percent of fraud was detected by accident, 3.3 percent of fraud was detected by external audits based on the “2012 Global Fraud Study.” Based on the study, tips from employees, consumers and others discovered 43.3 percent of fraud, 14.6 percent was detected by management reviews and 14.4 percent was identified by internal audits. The main inherent limitation of audits are the limitation of cost, use of sampling, the use of materiality concept, auditors’ reliance on the organization’s representations in the audit, and the possibility of management fraud. Successful perpetrators of fraud are usually familiar with the audit procedures and try to find ways to conceal the fraud. Fraud prevention and detection is the responsibility of management and governmental and nonprofit entities. The entities should not rely on external audits as the primary fraud detection method. All entities should consider adopting formal anti-fraud programs that include effective fraud reporting mechanisms. They should also consider education of employees and board directors on fraud prevention and detection, and establishing strong internal control systems. Yigit Uctum, CPA, CFE, MBA is a manager at Wegner CPAs in Madison. Contact him at 608-442-1965 or yigit.uctum@wegnercpas.com.
On Balance
September|October 2013
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in health care technology By Janice S. Ahlstrom, FHIMSS, CPHIMS, RN
of increased focus on the management of health information and information as an organizational asset. We are poised to dramatically accelerate the process of understanding how we deliver health care and have the capability to more rapidly incorporate findings into practice to improve care delivery and lower cost. Several technology trends have converged to facilitate this era of information and understanding. We must first obtain and manage health data before we are able to exchange it with others. With access to data across multiple care settings, we can analyze care delivered and move to incorporate new insights and understanding into practice. The latest trends support the overarching goals of the Patient Protection and Affordable Care Act (PPACA) to expand delivery of health care, reduce costs, identify best practices and accelerate their implementation. The following illustrates health care information’s logical life cycle.
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On Balance
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{ Technology | managing health care data }
2013 Trends
Health care technology has entered a new era
{ Technology | managing health care data }
HEALTH CARE INFORMATION LIFE CYCLE
modes by which care may be accessed and delivered. The use of patient portals has grown rapidly with meaningful use requirements for this access and modified patient and care provider communications. Also, the use of telemedicine technologies by health care systems to deliver care to geographically dispersed settings has shaped a new type of encounter, the e-patient visit.
EXCHANGE DATA Cloud computing and server virtualization are trends that fuel the exchange of health information and generate additional trends for the security of health information. Server virtualization has reduced the cost of hardware to implement and maintain an EHR system. Furthermore, it helps to provide
OBTAIN AND MANAGE DATA
the needed redundancy for EHRs. Cloud computing
To evolve health care, we had to obtain and
is accelerating at a slower pace. Organizations are
manage data regarding care delivery as discrete
adopting private cloud technologies, and vendor
data. Our ability to do this was enhanced with the
offerings continue to mature, improve their security
legislated incentives of the Health Information
models and become more cost-effective. Cloud
Technology for Economic and Clinical Health
computing is held back due to HIPAA concerns.
(HITECH) provision of the American Recovery
Health Information Exchange (HIE) mandated
and Reinvestment Act (ARRA). This provision has
by ARRA HITECH provisions has the industry moving
driven increased implementation of electronic
toward health information exchange with increased
health record (EHR) systems in both inpatient and
speed as health reform (Affordable Care Act)
ambulatory care settings. Health care providers
initiatives take effect. The prevalence of HIE between
and vendors are working to implement and evolve
providers will continue to increase to support
software applications and processes to meet the
effective care delivery, operations, research and cost-
objectives and measures defined by HITECH for
savings initiatives.
meaningful use. Enhancing our ability to obtain and manage data beyond the EHR systems is the explosive creation and use of mobile health applications and devices by both care providers and consumers. Devices like smartphones, iPads and tablets with health applications are transforming care delivery and move care well beyond the doctor’s office, increasing
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EHR vendor consolidation in the United States will continue and likely accelerate with increasing application development demands driven by evolving meaningful use objectives and measures. Consolidation will have limited impact to improve the exchange of data given the number of industry vendors.
On Balance
September|October 2013
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{ Technology | managing health care data }
ANALYZE DATA
and wireless asset management. The use of mobile
Data and clinical analytic tools are areas of greatest
devices via wireless networks is now highly prevalent in
need in health care technology. Most EHR systems do not
the health care industry. Management of both information
provide the needed analytic tools or reporting required
breaches and wireless assets will be one of the greatest
to analyze the enormous volume of health care data now
challenges ahead. One look at the breaches of more than
amassed. Beyond analytic tools, several barriers exist to
500 individuals on the Health Information Privacy area
understand the health data in our possession and move
of the Office of Civil Rights website leaves no doubt that
to useful information and knowledge. These barriers
mobile devices and internal employees of our health care
include the lack of trained clinical informaticists and
organizations are the greatest security risks we have to
further the lack of integration of clinical, financial and
manage.
administrative data. Access to payor and pharmaceutical
CONCLUSION
data to provide complete analysis for both clinical and
This new era of information management with an
operational purposes is needed. Both provider and payor
increased capability to understand the care we provide
organizations look to increase clinical informaticist staff.
and how to improve it and reduce its cost is welcome
INCORPORATE FINDINGS INTO PRACTICE
and long sought in the health care industry. The discrete
The Affordable Care Act will increase the speed by
data captured via our EHR systems will increasingly
which care delivery and operations best practices are
become a central asset to effectively manage clinical
incorporated into the industry. The focus on population
care and operations of health care organizations. The
health management has emerged as a key component
U.S. health care industry now needs to advance rapidly
to manage the out-of-control spending seen in our
along the knowledge management continuum from data
health care industry. U.S. health care expenditures and
to information, knowledge of patterns and, ultimately,
care delivery outcomes are far out of alignment when
wisdom of the principles required to effectively manage
compared with other industrialized countries of the world.
health care delivery, quality and cost.
ASSOCIATED TRENDS Associated health care technology trends created by advancing technologies include data breach prevention
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On Balance
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Janice S. Ahlstrom, FHIMSS, CPHIMS, RN is a partner at Wipfli LLP in Milwaukee. Contact her at 414-431-9352 or jahlstrom@wipfli.com.
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Craig H. Zetley, Attorney at Law, CPA