July|August 2014 | Vol. 10 No. 4 A publication of the Wisconsin Institute of CPAs | www.wicpa.org
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A publication of Wisconsin Institute of CPAs | www.wicpa.org
July/August 2014 Vol. 10 No. 4
10 Features
Columns
4 Winds of change Wisconsin adopts new CPA Exam education requirements that streamline the licensure process. By Robert A. Gruber, Ph.D., CPA, CGMA and Dennis F. Tomorsky, CPA, J.D., CGMA
24 INDUSTRY Q&A with Barry Melancon, CPA, CGMA, AICPA president & CEO Melancon discusses professional issues including GAAP, diversity and the FRF for SMEs framework. By AICPA Communications Team
10 A contender in forensic accounting Forensic accountant Vince E. Morelli, CPA, CFE uses numbers to fight fraud. By Cynthia M. Hodnett
28 HUMAN RESOURCES Have you updated your employment application recently? Asking the right questions on your company’s employment application can protect you against possible lawsuits. By Mitchell W. Quick, J.D.
16 Do what you love and love what you do These career development tips can benefit accountants at all experience levels. By Cheryl L. Aschenbrener, CPA
30 TAX A practitioner’s responsibilities in offshore reporting cases Learn what to do when a client has an undisclosed foreign account. By Brian H. Mahany, Esq.
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30 Departments 3 Outlook | chair’s letter 9 Spotlight | from the editor 15 In Touch | president & ceo’s message 19 Memorials | departed members 20 Odds & Ends | news briefs 20 Kudos | members in the news 21 Membership Matters | member benefits
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What’s new with you? 2013 Apex Award for Publication Excellence
Update your membership profile and stay connected >
2014–2015 WICPA OFFICERS/BOARD MEMBERS Chair Jean M. Hansen, CPA, MBA, CGMA Chair-elect Martin D. Verhelst, CPA Past-chair Robert A. Gruber, Ph.D., CPA, CGMA
Help us and your fellow members get to know you better for greater networking opportunities and greater control of the communications you want to receive from us. Update your member profile today by logging in to www.wicpa.org/memberprofile with your WICPA username and password.
Secretary-treasurer Joy L. Hertlein, CPA, CGMA Directors Lucien A. Beaudry, CPA, J.D. Kyle J. Beld, CPA Greta C. Diercks, CPA Katherine L. Hauser, CPA, CGMA Matthew A. Los, CPA Kelly K. Miller, CPA Scott D. Miller, CPA, ABV, PFS, CVA Gregory L. Ryan, CPA Wendi M. Unger, CPA AICPA Council Karla E. Blair, CPA Nicholas S. Lascari, CPA, CEA, CGMA
Vice President of Communications Amy E. Gaeth Vice President of Membership & Marketing Barb Gamez Editor Cynthia M. Hodnett Copy Editor Joan Bahr
2014
President & CEO Dennis F. Tomorsky, CPA, J.D., CGMA
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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 2014 On Balance.
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{ Outlook | chair’s letter } “Today’s CPA professionals are trained and educated to practice many of the entrepreneurial qualities of successful business owners.”
Entrepreneurial spirit
W
alt Disney clarifies it best: “If you can dream it, you can do it!” Today’s CPA professionals are trained and educated to practice many of the entrepreneurial qualities of successful business owners. An entrepreneur is defined as the owner or manager of a business enterprise who by risk and initiative attempts to make profits. Three critical characteristics prove our profession intertwines entrepreneurial spirit regularly.
Passion runs deep Passion is the powerful feeling of enthusiasm we all have inside of us. We are all enthusiastic and passionate about something. That enthusiasm is very powerful. When we can combine it with our work, we are setting ourselves up well for achieving true success. The more enthusiasm we have, the more inclined we are to work harder at improving ourselves. This will allow us to continuously get better at the work we do, with the goal of also increasing our salary potential. Ensuring we are passionate about our work will provide us with a meaningful career, and it will guarantee personal satisfaction.
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Understands failure is not final Ideas are great but implementation is everything. Outstanding leaders quickly weigh, assess, decide and then immediately act — because decisiveness and action build confidence and momentum. That is why making a poor decision is often better than making no decision at all. Mistakes can almost always be corrected. You should always try, but adapting, learning and revising so you get it right in the end matters a lot more. We all make bad decisions. What matters most is what we do after we make those mistakes and take responsibility to overcome challenges.
Respected by others Mutual respect is the cornerstone of every relationship. Respect signals ethical intent and communicates there is no
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hidden agenda. The desire to share knowledge and experiences gives added credibility when you persuade someone to do business with you. Success in business unquestionably requires some willingness to cooperate with and have faith in others. Trustworthiness is hard to measure, but it is usually earned over a period of time while consistently delivering high-quality business expectations. Entrepreneurial spirit is alive and well in the accounting profession. Each and every one of us, as a CPA, has the capability of expanding our career into an improved version of who we currently are. Do not be afraid of failure or taking calculated risks. The rewards are worth it. And feel free to use all the resources that your WICPA membership offers in assisting you on this journey. That is the true competitive advantage. I challenge everyone in this amazing profession to “Dream big and make it happen!”
Jean M. Hansen, CPA, MBA, CGMA is CFO/ vice president-finance at Manitowoc Tool & On Balance July|August 2014 Machining LLC. Contact her at 920-682-8825 ext. 114 or jhansen@mantool.com.
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Winds of change 4
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tax laws continue at an exponential rate and business
The AICPA and NASBA have worked hard over the
methods have become increasingly complex, including
past decade to make the rules for obtaining a CPA
improvements in technology. Thus, hiring competently
license uniform over all jurisdictions. But each jurisdiction
trained and educated staff members continues to be the
has its own state board of accounting, which sets the
No. 1 reason for the 150-hour rule for licensure.
accounting rules and regulations on its own and based
By January 2014, all 55 licensure jurisdictions, except
on the characteristics of its own constituents. In general,
Colorado, New Hampshire, and Vermont, have adopted
all jurisdictions use the following “three Es” for CPA
the 150-credit hour rule for licensure. Vermont and New
licensure:
Hampshire are scheduled to adopt the rule by July 2014; Colorado is scheduled to do the same by July 2015.
• Education: four-year bachelor’s degree or higher plus 150 credit hours. • Exam: Four sections of CPA Exam.
Act 114 and AB669 also bring to light the simple fact there is little uniformity when it comes to the Uniform CPA Exam. In fact, the only thing that is the same across all 55 jurisdictions is the requirement that all candidates pass the CPA Exam.
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• Experience: One year of relevant work supervised and verified by a CPA. But one significant difference is the number of hours required to take the CPA Exam. • Thirty-four jurisdictions, e.g., Iowa, Minnesota and Michigan, require 120 hours.
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• Wisconsin is the newest member of this group.
The table on the preceding page summarizes most of the
• Eight jurisdictions, e.g., Indiana and Missouri, require
requirements for Wisconsin and its three closest neighbors.
150 hours but allow for a defined time period to complete the education requirement following the
The jurisdictional CPA Exam requirements were clearly
actual date the CPA Exam is taken. • Fifteen jurisdictions, e.g., Illinois and Utah, require the completion of 150 hours. • One jurisdiction, the Virgin Islands, has no education requirement to take the CPA Exam until 2019. Other CPA Exam requirements that differ include requiring citizenship (four), state residency (16), and providing Social Security numbers (49). Other differences exist for the required hours in accounting and types of accounting courses, experience requirement once the 150 hours have been earned, and the nature of the required ethics exam component.
underscored by 2013 Wisconsin Act 114 and AB669. Students and employers must be aware of CPA Exam and subsequent licensure requirements in their respective jurisdictions. Fortunately, there are plenty of high-quality and easily accessible resources available at
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 gruberr@uww.edu. 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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July|August 2014
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{ Spotlight | letter from the editor } “Infamous accounting scandals such as Enron and Tyco may have ended a few accounting careers. But these incidents have created thousands of forensic accounting jobs, making it one of the most secure career paths.”
Demand for forensic accounting remains RED-HOT
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I
nfamous accounting scandals such as Enron and Tyco may have ended a few accounting careers. But these incidents have created thousands of forensic accounting jobs, making it one of the most secure career paths. Demand for accountants is projected to grow by 22 percent through 2018, according to the Bureau of Labor Statistics. Some of this demand is expected for forensic accountants, which is illustrated in the 2011 American Institute of Certified Public Accountants (AICPA) Forensic and Valuation Services (FVS) Trend Survey. About half of the survey’s respondents said they devoted more time to forensic work that year, an average increase of 20 percent. About one-quarter have added more professionals to their practices. In March 2014, the AICPA introduced its forensic accounting mentorship program. The program is designed for AICPA members interested in developing their skills and business practices in forensic accounting through the help of more experienced forensic professionals. But what is the reason behind this growth? The Association of Certified Fraud Examiners estimates that in this year alone, $600 billion will be lost by organizations as a result of fraud and abuse of company funds. The Sarbanes-Oxley Act in 2002, passed to prevent future accounting fraud cases, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, have driven growth and public awareness in accounting and auditing fields. A number of the WICPA’s 7,000-plus members work in forensic accounting. One of them is Vince E. Morelli, CPA, CFE, a forensic accountant at Chortek LLP in Waukesha. In this issue of On Balance, learn how Morelli’s passions of forensic accounting and boxing have influenced his career and personal life.
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Also read about the recent law change to Wisconsin CPA Exam education requirements. The change allows candidates to take the CPA Exam once they complete the equivalent of a bachelor’s degree in accounting with 120 credit hours. However, they will not be licensed as CPAs in Wisconsin until they complete 150 hours. Finally, check out other topics, including career development tips, updating your company’s employment application and tax preparer responsibilities regarding offshore reporting.
Cynthia M. Hodnett is editor of On Balance magazine. Contact her On Balance 2014 at 262-785-0445 ext. 3004July|August or cynthia@wicpa.org.
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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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SPECTRUM
INVESTMENT ADVISORS
Thank you
to all who attended the
9th Annual Retirement Plan Investment Seminar Co-sponsored by Spectrum Investment Advisors and the Wisconsin Institute of CPAs. - The event was held at the Country Springs Hotel in Waukesha, WI on June 18, 2014 -
2014
PLANSPONSOR
RETIREMENT PLAN ADVISER TEAM YEAR FINALIST
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OF THE
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Spectrum Investment Advisors, Inc. a registered investment adviser and a separate entity from LPL Financial. Spectrum Investment Advisors, Wisconsin Institute of CPAs and LPL Financial are unaffiliated entities.
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800-242-4735 Colors Simplify Investing速 www.wicpa.org
{ In Touch | president & CEO’s message } “CPA candidates, their employers and accounting educators are now considering how the law change will impact curricula and course choices, as well as exam-taking strategies and logistics.”
CPA Exam education requirements: All over the map
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ou’ve probably heard that a law change recently conformed Wisconsin’s Uniform CPA Exam education eligibility to the same 120 credit hours required by 33 other jurisdictions. These jurisdictions, including Wisconsin, still require 150 credit hours for CPA licensure. An article in this On Balance issue written by Robert A. Gruber, Ph.D., CPA, CGMA and me highlights this change, plus educational and other CPA Exam eligibility requirements that vary among jurisdictions. Passionate arguments have been made for more than 30 years about the number of credit hours that should be required to take the CPA Exam. Regardless of your position on the matter, it’s important that CPA candidates understand the CPA Exam eligibility requirements, including jurisdictional variations. CPA candidates, their employers and accounting educators are now considering how the law change will impact curricula and course choices, as well as examtaking strategies and logistics. The WICPA continues to collaborate with the Wisconsin Department of Safety and Professional Services (DSPS), Wisconsin Accounting Examining Board (AEB) and the National Association of State Boards of Accountancy (NASBA) to provide information that can help with CPA Exam planning. A couple of basic points to note: The requirement to complete 120 credit hours to take the CPA Exam in Wisconsin became effective on April 10, 2014. Also, the NASBA website that applicants use to register for the exam was updated on April 11 to allow Wisconsin candidates to register to take the exam with 120 credit hours. Questions that were unanswered as of May 12, when I wrote this column, include the date on which the DSPS and AEB will begin processing CPA license applications for candidates who passed the exam with 120 rather than 150 credit hours. Another issue is whether CPA Exam candidates can take the exam
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as early as 60 days before completing the exam education eligibility requirements, which they could do when 150 credit hours were required for the exam. The WICPA’s CPA Exam Web page (www.wicpa.org/ wicpaexampage) will be updated periodically to include CPA Exam eligibility information under the recent law change as it is available from the regulatory authorities and organizations administering the exam. Please let me know your thoughts on the CPA Exam education eligibility requirement, and any questions you would like us to research and include on our CPA Exam Web page.
Dennis F. Tomorsky, CPA, J.D., CGMA is president & CEO of the Wisconsin Institute On him Balance July|August 2014 of CPAs. Contact at 262-785-0445 ext. 3014 or dennis@wicpa.org.
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DO
WHAT
YOU
LOVE AND LOVE WHAT YOU DO
BY CHERYL L. ASCHENBRENER, CPA
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EFORE COLLEGE, MY DAD TALKED A LOT WITH ME ABOUT A GREAT CAREER FOR A WOMAN WHO WANTS TO BALANCE BOTH A CAREER AND A FAMILY. HE SUGGESTED BECOMING A CPA.
I
t seemed like a well-rounded business degree that could lead
MANAGEMENT TRACK CPAS: Get the staff behind you. Many
me to several career paths, so I chose to study accounting at the
people worry about managing the engagements. You need to get
University of Wisconsin-Whitewater.
the next generation to support you. Let them know they are valued
BUT BEING A CPA HASN’T ALWAYS BEEN EASY: There are
things I know now I wish I had known much, much earlier, such as the importance of networking. Moving ahead in your career and becoming successful is certainly not something you can do on your own. You will need to gain the support of others in order to grow. And with that said,
by complimenting their work and asking for their help. Even if you know it will take twice as long for them to do the work, it gives them opportunity, which they will appreciate. And last but not least, thank them. CPAS EAGER TO MAKE PARTNER: Make sure you’re with
I have the following advice for accountants and CPAs at all levels:
the right company and understand what is going to be expected of
ACCOUNTING STUDENTS: GET INVOLVED: Studying
you. As a partner, you will be attached to the company for a long
accounting can be difficult and sometimes tedious. But getting involved offers more opportunities and motivation to keep going. As I mentioned earlier, networking is critical. The first networking event I went to was speed networking. I sat at a table with three other people for three to five minutes, and then many other tables with different people for another three to five minutes. We were constantly moving, and it allowed me to talk with everyone. Learn how to do your best networking. And don’t force yourself to do something you don’t enjoy. It will show to others. EARLY CAREER ACCOUNTANTS: Once you get your first full-time job, keep yourself involved. It’s important to remember accounting is a career, not a job. Don’t just go into the office, do your work and go home. Join your local accounting association. Ask to be a guest
time, if not the rest of your life, so make sure it’s right. Look at it like a marriage. There can be many personalities. It should create a fun, enjoyable and challenging environment for you. Also, look to your clients and those who respect you. You are obviously going to have to build up your personal brand image, and these are the individuals who will support you in this process. NEW PARTNERS: Know your value and capabilities, and build it up. Often as a new partner, people want you to build your skill set and your book of business. Cross-selling is a great opportunity to build signature clients who are loyal and view you as an extension of their team. I was fortunate to find a firm right out of college where I saw myself
speaker in a course you excelled in, and enjoyed, at your alma mater.
for a long time, and I’m still there. Throughout your career, it might be
If the university has a formal mentor program, sign up to mentor an
tempting to switch paths, and there’s nothing wrong with changing
accounting student. If there is no formal mentor program, ask the
directions for another opportunity that presents itself. What has kept me
accounting department how you can get involved with guiding some of
in public accounting are the clients.
the accounting students. Seek out LinkedIn or other social media outlets. Begin meeting others through connections you have made and building your network. ACCOUNTANTS PREPARING FOR THE CPA EXAM: Study hard, and get it behind you. Once you have it behind you, it’s your ticket to everything. Plus, it’s amazing how much more time you will have back in your life. If you can, take it during school. In Wisconsin, it’s available at most universities. It’s extremely difficult to study for the CPA Exam once you’re working, so if you can tackle it while in school or during the summer before you start working, do it.
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I am constantly challenged and continually trying to make my clients more competitive or make them better overall companies. With many of my clients, I’m the go-to person for a lot of business strategy questions and advice. I’m like the chief operating officer. When it comes to your career and working relationships, a great partnership with a great client is extremely gratifying. The bottom line is DO WHAT YOU LOVE, AND LOVE WHAT YOU DO.
Cheryl L. Aschenbrener, CPA is a partner at Sikich LLP in Brookfield. Contact her at 262-754-9400 or caschenbrener@sikich.com.
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IF YOU KNEW THE KEY TO RETAINING YOUR TOP TALENT... WOULD YOU TRY IT? Based on his book, Employee Retention Fundamentals... No Nonsense Strategies to Retain Your Best People, Jeff Kortes will provide insight into the thoughts and reasoning of employees who decide to or are contemplating leaving their jobs in various organizations. Through humorous, real-life stories and interactive participation, Jeff has created a program that helps organizations discover ways to gain a competitive edge when trying to retain talent to compete in the marketplace.
DURING THE PROGRAM YOU WILL U nderstand reasons why solid performers leave an organization AND be able to act on those reasons to increase retention. Begin developing a strategic roadmap of activities that can be implemented to drive employee retention. Identify gaps in your strategic retention plan. Build retention into key metrics of the organization so retention becomes a competitive advantage. nderstand key retention factors that are important to different U generations.
EVENT DETAILS Eau Claire
Green Bay
11:30 a.m. – 2:30 p.m.
11:30 a.m. – 2:30 p.m.
Friday, Sept. 12
Plaza Hotel & Suites
Friday, Oct. 3
Radisson Paper Valley Hotel
Madison
Waukesha
7:30 – 10:30 a.m.
7:30 – 10:30 a.m.
Friday, Sept. 19 Crowne Plaza
Friday, Oct. 10
Milwaukee Marriott West
Cost: $50 members/ $60 nonmembers CPE credit: 3 hours ** Registration also includes a copy of Jeff’s book Employee Retention Fundamentals…No Nonsense Strategies to Retain Your Best People. **
Jeff Kortes has more than 30 years of experience in human resources. Throughout his career he has worked to recruit, retain and develop employees, at all levels, at companies including ConAgra Foods, industrial equipment supplier SPX, automotive retailer Midas International, and more. He has helped businesses with as few as 10 employees compete with larger employers in recruiting and retaining the “A” talent they needed to survive and thrive.
Plus
Meet new WICPA Board Chair Jean M. Hansen, CPA, MBA, CGMA and receive a brief professional issues update from WICPA President and CEO Dennis F. Tomorsky, CPA, J.D., CGMA.
Breakfast will be provided at morning programs and a light lunch at afternoon programs.
Visit wicpa.org/FallFocus for more information and to register.
memorials James H. Castle, CPA (1942–2014) James H. Castle, CPA died Jan. 10, according to the Wisconsin State Journal. He was 71. Castle earned his degree in business administration from Bowling Green State University in Bowling Green, Ohio. He earned his certified public accounting license in 1972. He owned an accounting practice in Cedarburg for several years until his retirement. The Cedarburg resident joined the WICPA in 1972.
Kenneth W. Feld, CPA (1918–2014) Kenneth W. Feld, CPA died Jan. 14, according to the Milwaukee Journal Sentinel. He was 95. Feld earned his degree from Marquette University in 1940. Later, he served in the U.S. Army during World War II. After being discharged, Feld began his accounting career with Fontaine McCurdy and Co. In 1945, he earned his certified public accounting license. He then became business manager of Ryan Automotive. In 1960, he and DuWayne Schumacher formed Feld, Schumacher & Company, LLP accounting firm in West Allis where he worked into his 80s. The Elm Grove resident joined the WICPA in 1945.
Clair R. Martin, CPA (1922–2014) Clair R. Martin, CPA died Feb. 14, according to the Oshkosh Northwestern. He was 91. Martin enlisted in the Army National Guard 127th Infantry 32nd Red Arrow Division. He served in the Asiatic-Pacific Theater New Guinea, Philippines, New Zealand and Australia before being honorably discharged in 1945. He then earned his accounting degree and taught accounting courses. Later, he completed additional courses at the University of Wisconsin-Madison. He earned his certified public accounting license in 1953. His accounting career included the position of vice president of finance at Miles Kimball Company. The Oshkosh resident joined the WICPA in 1954.
Les S. Tarjan, CPA, CITP, CGMA (1956–2014) Les S. Tarjan, CPA, CITP, CGMA died May 8, according to the Milwaukee Journal Sentinel. He was 57. Tarjan graduated from the University of Wisconsin-Stevens Point. He earned his certified public accounting license in 1984 and later earned his CITP and CGMA licenses. His accounting career included serving as partner at what is now Sikich LLP in Brookfield. The Elm Grove resident joined the WICPA in 1983.
Donald E. Wahlen, CPA (1938–2014) Donald E. Wahlen, CPA died Jan. 30, according to the Milwaukee Journal Sentinel. He was 75. Wahlen served as a first lieutenant in the U.S. Army. His accounting career includes serving as CFO of Brungart Equipment. He earned his certified public accounting license in 1966. Wahlen joined the WICPA in 1965.
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kudos Stephen R. Bant, CPA, MBA was recently named managing partner with Coleman & Hartman in Rice Lake, according to The Chronotype. Amy M. Driessen, CPA, a shareholder at Schenck SC in Appleton, recently celebrated her 25th anniversary at the firm. Amy M. Driessen, CPA
Bob Freese, CPA, a manager at Schenck SC in Milwaukee, recently celebrated his 10th anniversary at the firm. Jeff T. French, CPA was recently named national managing partner of the Grant Thornton LLP Consumer and Industrial Products practice and leader of its Manufacturing practice.
Bob Freese, CPA
Janean A. Robenhorst, CPA Andrew Mugerauer, CPA
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U.S. businesses hopeful about nation’s economy
Eric J. Matschull, CPA was recently promoted to audit manager at Sattell, Johnson, Appel & Co., SC in Menomonee Falls.
PwC ranked No. 1 accounting firm in North America
Richard W. Pitzner, CPA, J.D. was recently hired as an attorney at DeWitt Ross & Stevens SC in Madison.
For the second consecutive year, PricewaterhouseCoopers (PwC) was named No. 1 in the Vault Accounting 50 Rankings of best accounting firms in North America (tinyurl.com/ vault2014rankings). Ernst & Young LLP was named No. 2 and Deloitte was named No. 3.The rankings are based on categories including work/life balance, culture, training, business outlook, compensation and industry prestige.
Sheila A. Polak, CPA has been promoted to CFO of Park City Credit Union in Merrill, according to the Tomahawk Leader.
Survey: Many job seekers struggle with interviewing
Joseph F. Schirger Jr., CPA, MT, a manager at Schenck SC in Milwaukee, recently celebrated his 10th anniversary at the firm. Daniel J. Walsh, CPA, J.D. was recently hired as a partner at Stellpflug Law, SC in De Pere.
Joseph F. Schirger Jr., CPA, MT
The Fond du Lac CPA firm formerly named Huberty & Associates is now Huberty CPAs & Trusted Advisors. The newlynamed firm has 32 employees, half of whom are certified public accountants. Located at 145 S. Marr St., the company has expanded into nearby communities with offices in Ripon, Plymouth, Campbellsport and Markesan. The company’s owners include Ann B. Freund, CPA, Gary G. Born, CPA and Gregory G. Feucht, CPA, CVA.
Mark A. Hanson, CPA, CVA, ABV, a shareholder at Schenck SC in Appleton, was recently appointed to The Appraisal Foundation’s Business Valuation Resource Panel.
Andrew Mugerauer, CPA, a manager at Schenck SC in Appleton, was recently named shareholder of the firm. Mark A. Hanson, CPA, CVA, ABV
Fond du Lac CPA firm gets a new name
Optimism about the U.S. economic outlook continues to grow among the nation’s business leaders, according to a recent American Institute of Certified Public Accountants (AICPA) survey (tinyurl.com/aicpasurvey). A takeaway from the first-quarter 2014 AICPA Business and Industry Economic Outlook Survey is that optimists about the nation’s economy now outnumber the pessimists 49 to 20 percent, with 31 percent neutral. A year ago, 32 percent of respondents were optimistic about the U.S. economy. The survey was taken by 867 CPA decision-makers, mainly CEOs, CFOs and controllers in business and industry.
Jason R. Graham, CPA was recently named CFO of Journal Communications, Inc. in Milwaukee, according to the Milwaukee Journal Sentinel. Brian M. Gunderson, CPA, MPA, a manager at Schenck SC in Fond du Lac, was recently named shareholder at the firm.
Brian M. Gunderson, CPA, MPA
Odd & Ends
Richard F. Zalewski, CPA, CFO of Milwaukee Center for Independence, recently received the Patriot Award from the Department of Defense in recognition of extraordinary support of one of the company’s employees who serves in the Wisconsin Army National Guard.
On Balance
July|August 2014
Most job candidates are confident about their resume, but they are unsure about their interviewing skills, according to a recent article in CGMA Magazine (tinyurl.com/cgmasurvey). The article highlights this and other findings from a recent survey by Accountemps, which asked U.S. CFOs to identify areas of the job application process where applicants made the most mistakes. Forty-three percent of respondents indicated job candidates make the most mistakes during the interview, up from 32 percent in 2010, the last time Accountemps asked that question. The next most common trouble area is the resume, cited by 19 percent of the voters versus 28 percent in 2010.
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{ Membership Matters | member benefits } “As thousands of visitors to our website have discovered, there are a number of online tools and features to enhance your membership.”
WICPA.org: Make it your own If you haven’t visited the WICPA website lately, it’s time to take another look. Over the past year, the WICPA website has had 418,560 page views, with 44,150 new visitors and 41,148 returning visitors. The most frequently visited pages include “CPE,” “My Membership” and membership dues renewal. As thousands of visitors to our website have discovered, there are a number of online tools and features to enhance your membership. Starting with the homepage, you can quickly find details about upcoming events and the latest news with just one click. Did you know you can customize the WICPA website with Quick Links? When you login, you can add any page you frequently visit to your list of Quick Links from the top right corner of every page. You can then access those pages from anywhere on the site. If you often use the CPE Tracker or Volunteer Tracker, add it to your Quick Links list. If you frequently visit the CPE catalog, add it to your Quick Links. You can further customize the links to access other state and national news sources. After logging in and going to the My Membership page, click on “add gadgets” to add links to a variety of news sources such as CNN Money, NASBA News, Financial Times and many more. Once you’ve added those links to your list of gadgets, the top headlines from those sites will appear on the My Membership page. You can get the latest news from these sources without having to visit multiple other websites.
Get social with the WICPA and other members While you’re online, be sure to connect with us and your peers on our social media sites, including Facebook, LinkedIn and even YouTube. Link to each page from the icons on the WICPA website home page, located under our Twitter feed. The WICPA LinkedIn group now has more than 2,600 accounting professionals. Once you join the WICPA
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LinkedIn group, you can find and connect with other members or share and comment on articles. If you haven’t already, be sure to “Like” the WICPA on Facebook to see posts, comments and photos of upcoming and recent events. Check our page often for chances to win prizes just for commenting! From the WICPA’s YouTube channel, view videos of your peers and the 2014 WICPA Excellence Awards recipients, where they share what the award means to them. You’ll find it’s worth taking some time to discover how you can make this member benefit your own.
Member benefit spotlight Keep track of your CPE and your volunteer time in one place on the WICPA website with “My CPE Tracker” and “My Volunteer Tracker.” All of the CPE you complete through the WICPA and any WICPA volunteer service is automatically added for you.
Barb Gamez is vice president of Membership & Marketing of the Wisconsin Institute of On Balance CPAs. Contact her at 262-785-0445July|August ext. 3012 2014 or barb@wicpa.org.
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2014
Escape to
Excellence Nearly 250 members escaped on a journey to celebrate excellence in the CPA profession at the 2014 Member Recognition Banquet & Annual Business Meeting on May 8 at Potawatomi Bingo Casino in Milwaukee.
The evening’s activities included a New Member Welcome & Networking Reception, a traditional family style Hawaiian dinner and entertainment by talented island musicians and authentic Hawaiian dancers.
A memrabteior n‌ celeb
The Annual Business Meeting was part of the program, during which the incoming WICPA board of directors was elected, WICPA members were recognized for 10, 25 and 40 years of membership and several members were honored with WICPA Excellence Awards. An added element of video was introduced this year, showing prerecorded acceptance speeches from our Excellence Awards recipients.
SAVE THE DATE! View highlight video at 22
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May 7 - Milwaukee 2015 Member Recognition Banquet & Annual Business Meeting
We’re Moving ….but not too far!
Effective July 28, 2014, the WICPA will relocate to a new office space just west of its current location. Be sure to update your records with our new address! You’ll find us in the Ruekert-Mielke Building W233N2080 Ridgeview Parkway, Suite 201 Waukesha, WI 53188 ∙ www.wicpa.org
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{ Industry | professional update }
{ Industry | professional update }
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We Solve Tax Problems
•IRS and Wisconsin Tax Audits •Tax Appeals •Tax Collection Problems •Offers in Compromise •Property Tax Challenges •Non-filers •Foreign Account Disclosures
Milwaukee 700 North Water Street Milwaukee, WI 53202 Tel 414.276.5800 Fax 414.276.0458 Delafield 400-D Genesee Street Delafield, WI 53018 Tel 262.646.5812 Fax 262.646.3340 Attorney Robert Teuber (414) 276-5800
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{ Human resources | employment application }
{ Human resources | employment application }
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A practitioner’s responsibilities in
offshore
reporting cases By Brian H. Mahany, Esq.
R
ecently, we held an in-house CPE for CPAs in Elgin, Ill. As the preferred legal services provider to a national CPA organization for offshore reporting topics, we frequently speak about Foreign Bank and Financial Accounts (FBARs), Foreign Account Tax Compliance Act (FATCA) and other offshore topics. During our presentation we were asked what responsibilities CPAs have during their intake process, particularly if they suspect the client has an unreported offshore account. The answer to the question lies in Circular 230, but most of us typically don’t refer to that document on a daily basis. Clients get quite unhappy when they receive a notice from the Internal Revenue Service (IRS) imposing penalties. This is especially true if the penalties are related to unfiled FBARs. It seems the IRS takes the default position that a client’s failure to file FBARs and report a foreign account was “willful.” As most accountants reading this post already know,
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{ Tax | offshore reporting }
{ Tax | offshore reporting } penalties for willful failure to file an FBAR are huge — up to the greater of $100,000 or 50 percent of the historic high balance of the account. Luckily for taxpayers, the IRS says some folks may claim a “reasonable cause” defense against these onerous penalties by blaming the preparer. That’s great for the taxpayer but not so good for the preparer who then has an unhappy client and may have to fight preparer penalties as well. The reasonable reliance claims fall into two camps: “My accountant never properly explained my foreign reporting obligations,” and/or “My accountant never even asked me if I had foreign accounts.” Both are closely related. To qualify for a penalty relief, the taxpayer must demonstrate that he or she reasonably relied on the accountant’s advice. There is a difference, then, for clients who received bad advice versus no advice at all. So what are our obligations as tax attorneys, CPAs and preparers? Look no further than Circular 230 for the answer. According to the IRS, practitioners who prepare income tax
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returns have a duty under Circular 230 to inquire of their clients with sufficient detail to prepare correct responses to the foreign bank and financial account questions. The required level of due diligence required is addressed in Circular 230. What does Circular 230 say? Let’s start with section 10.22.
§10.22 Diligence as to accuracy (a) A practitioner must exercise due diligence: 1. In preparing or assisting in the preparation of, approving, and filing tax returns, documents, affidavits and other papers relating to IRS matters. 2. In determining the correctness of oral or written representations made by the practitioner to the U.S. Department of the Treasury. 3. In determining the correctness of oral or written representations made by the practitioner to clients with reference to any matter administered by the Internal Revenue Service.
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{ Tax | offshore reporting }
Later, section 10.34(d) says a practitioner “generally may rely, in good faith and without verification, on information furnished by a client.” There is a requirement to make “reasonable inquiries” if the information provided by the taxpayer appears questionable or incomplete. There is a dearth of case law, however, interpreting these provisions of Circular 230. That leaves us with general IRS guidance, best practices and common sense. These all dictate that practitioners should make inquiries if there is reason to believe their clients are engaged in offshore transactions or have foreign source income or accounts. As a general rule, we recommend asking every client these questions and not simply relying on boilerplate disclosures in an engagement letter or a general question placed in an organizer or tax planning worksheet. This is especially true if you know the client is a dual national, green card holder, recent immigrant, has family in another country or has foreign business interests. We also recommend speaking in terms of accounts or transactions located “outside the United States.” Using the term “foreign account,” for example, to someone who is a green card holder is an invitation to confusion. To those folks, their “foreign”
account may be the one in the United States. Section 10.34(c) requires practitioners to warn clients of potential penalties that may apply, including penalties that can be avoided by disclosure. With a current amnesty program, special nonresident expat amnesty and other disclosure options, make sure your clients understand their options. If the client has complex offshore reporting issues, are you required to do the work? Not necessarily. If you don’t feel competent or the required work is beyond the services you typically provide, make sure you are clear in what services you are performing and that your clients understand their options. Simply preparing their 1040 or 1120 return without discussing FBARs is not an option. Consider teaming up with another firm that handles offshore reporting. If your client has illegal source income, has several years of unfiled FBARs or wants to pursue a traditional disclosure instead of going through the IRS amnesty program, consider partnering with a law firm experienced in these matters. Brian H. Mahany, Esq. is an attorney and principal at Mahany & Ertl in Milwaukee. Contact him at 414-223-0464 or brian@mahanyertl.com.
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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
We’re moving! You’re invited to celebrate with us! Save the date Oct. 9, 2014
WICPA Open House W233 N2080 Ridgeview Parkway, Suite 201∙Waukesha, WI 53188 www.wicpa.org/move