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The Risk of Doing Nothing: Common-Sense Cybersecurity

Technology has brought us a world of convenience. You place an order and it is delivered to you the next day – all with a click of a button. Ten years ago, you would have been able to see it only in a sci-fi movie. Today it is a part of your routine. However, as we all know, there are always two sides of a coin. The flip side of this one is your cybersecurity.

To enjoy all the benefits of modern day technology you must expose your personal and financial information in the cyber space. That is the rule of the game today. Think about that ‘old school’ pickpocket thief, who is always there to snatch your wallet with your picture ID, credit cards and other valuables. The good thing is we know how to protect ourselves from them because the pick pocketers have been around for ages.  We keep the wallet in the front pocket on a busy street, we don’t carry all our cash everywhere we go and don’t visit certain places if we know they are not safe, etc. Everyone knows these common-sense rules, but when it comes to cybersecurity, some older and more experienced people are more vulnerable to the thieves than children. Why?

The answer is pretty obvious – people from older generations did not grow up in the cyber age, they simply do not know the rules of the game. But protecting yourself from hackers is very similar to protecting yourself from a thief. Here are some basic rules of common-sense cybersecurity that will help you to feel safer, enjoying everything that the modern world has to offer.

Be vigilant – the bad guys are out there. Think about it as being on a busy street in a bad neighborhood. What can make you feel safe? The presence of the law enforcement personnel. In the cyberworld this enforcement is your antivirus and malware software like ESET, McFee or Norton Security and many others. This is your first line of protection against cybercrime. But, don’t think this is enough!

Be diligent – your password is your second line of defense. However, there is no password that cannot be broken by today’s superfast computers. In other words, it is not ‘if’, it is the matter of ‘how long’ it will take. Even though creating a strong password may sound like a rocket science today, it is not that complicated if you know the rules of the game. For the latest recommendations for password security check this article https://lifehacker.com/how-to-create-a-strong-password-1797681069

A password is not the last line defense anymore… The current standard in login security is two-factor authentication. Make sure you have it activated for every significant login you have. We will give you more updates on how to protect your financial information in our future posts.

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Don’t risk it: Get familiar with investment strategy

Don’t risk it: Get familiar with investment strategy

There are many ways to invest your hard-earned money, but the goal is always the same: to grow your wealth. But a recent survey conducted by Harris Poll on behalf of the AICPA found that many Americans are embracing high-risk strategies that put their savings in jeopardy while doing minimal, if any, financial research upfront.

David Almonte, CPA, member of the AICPA’s National CPA Financial Literacy Commission, spoke to AICPA Insights about the survey results and what Americans should know about investing strategy.

What was your initial reaction after seeing the survey results? Was there anything that stuck out to you?

David Almonte: I was both surprised and concerned by the results. I was especially surprised that nearly half of Americans say a volatile market offers an easy way to make a profit. And that concerns me because it also offers an easy way to lose a lot of money in a non-diversified or overly aggressive portfolio.

The steady market gains from the past several years, though good for the average investor portfolio, run the risk of making people feel safe without considering the downsides of investing in a volatile market. The past year or so at a minimum has been an extremely volatile time in the stock market — where the market will rise or fall at the drop of a tweet. For less educated investors, it can be dangerous because they may be investing based on information gained from fake news articles. Or they’re investing in extremely volatile vehicles such as digital currencies without knowing the market or understanding personal risk appetite.

How can someone new to the market distinguish between investing and speculating?

DA: Investors need to be aware of the amount of risk undertaken in each type of investment and the corresponding returns associated with such risk. When an individual invests in a speculative stock, he or she must be ready to lose the entire investment — potentially very quickly (which could happen when investing as well, but usually losses occur over time, if they were to occur). On the other hand, speculating can bring much larger returns, but you’re opening yourself and your portfolio up to a lot more risk in return of chasing higher profits. Speculating can be part of your portfolio, but a very small part. The amount of speculative investments in your portfolio will depend on your personal risk tolerance.

For those investors who may need to start at the beginning, how can they evaluate their own personal risk tolerance to guide an overall investment strategy?

DA: Think about how you would feel if you lost $5 from your wallet right now. Would you be sad or mad? How much would it bother you, or how bad would it hurt you financially? What about $50, $100 or $1,000? The lower the dollar amount that would bring pain to you and your portfolio, the lower your personal risk tolerance.

When it comes to investing, the rule of thumb is that the younger you are, the more risk you can handle because you have the most important thing in the investing world on your side: time. If you are five years from retirement and deal heavily in risky investments, you could lose everything with no time left to make it up.

How would you describe the current state of the market and what it means to the average investor?

DA: The market is up… no, wait; it’s down… no, wait; it’s up again. There’s a reason experts say to invest for the long term. If you’re investing consistently, over time, the bumps in the road tend to smooth out. There is no place for emotion in the investing world, as good stocks will go down, and bad stocks will go up — sometimes for reasons that can be very difficult to tell.

For the average person just getting into investing, where should they start to educate themselves?

DA: The best time to get educated about financial markets is at an early age so you can grow comfortable with the concepts and terms before you make your first investment. However, it’s never too late to learn. Growing up, my family had annual stock market competitions where my four brothers and I each got $1,000,000 (fake) to invest over a six-month time horizon. Whoever had the most money at the end of the time frame (again, fake dollars) won a prize. Financial verbiage was in my blood pretty much since birth. But for many Americans, this may not be the case.

I suggest people begin by understanding their personal risk tolerance, defining their investing time horizon and researching different types of investments. And don’t be afraid to ask an expert for help and advice along the way. We all work hard for our money, and a better understanding of the basics of investing means that we can have our money working for us.

The AICPA’s 360 Degrees of Financial Literacy website is full of free resources investors can use to evaluate their personal financial risk tolerance and create an investment strategy to match. The website also offers tools to educate investors on the stock market.

 **the above insight is background information and not intended as specific investment advice

Jon Lynch, Manager, Public Relations, Association of International Certified Professional Accountants

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What college football can teach you about project management

What college football can teach you about project management

Football is the most popular sport in America, and according to a recent Gallup survey, more than half of us are college football fans.

It shouldn’t be a surprise that Americans love football. It brings us together as much as it tests our rivalries. We tailgate, paint our faces and crowd into stadiums and onto couches. Every season is different from the last, making us hold our breath to the very end.

If you’re a college football fan, you’re probably feeling twinges of anticipation — and nervousness — this week. It’s an exciting time, and you’re no doubt hoping your team comes out on top.

But football is more than just a game. If you look closely, it can teach you a thing or two about valuable business skills. You can find players deploying some of the most difficult-to-master project management tactics out on the gridiron.

Here’s how last year’s National Championship contenders succeeded — or failed — at implementing key project management skills, and how you can learn from them even before the season’s first snap.

A solid contingency plan can save a project

Last year, the University of Georgia’s season did not get off to a good start. Star quarterback Jacob Eason was injured in the first quarter of the first game of the season. He was removed from play, but Georgia had a backup plan: a freshman quarterback. The situation wasn’t ideal for the Bulldogs, but it worked. Jake Fromm had spent the pre-season training with the team, so he came in strong. Georgia didn’t miss a beat, and Fromm led the team to the National Championship game.

It’s easy to ignore your project’s potential risks and obstacles during the planning phase (i.e., pre-season), but it’s vital you come up with a contingency plan early on that addresses common project obstacles, such as budget constraints or unexpected delays. Creating a plan B can help mitigate the damage if something unexpected occurs. Start by identifying potential risks and determine how likely these issues are to affect your project. Establish how you will address the obstacles and take steps to prevent them. If the worst happens, be ready to implement your contingency plan.

Good communication is key to every team’s success

The University of Alabama had yet another fantastic football season last year, but a single poorly played game almost did the Crimson Tide in. In arguably their biggest game of the year, Alabama faced off against the Auburn Tigers. And they lost. A contributing factor was a series of fumbled snaps. The center did not know when to snap the ball to the quarterback, and it was all due to a lack of communication.

Even the strongest teams can fall apart if teammates don’t talk to one another, and it’s your job as the project manager to lead the conversation. But talking alone isn’t effective if no one understands what you’re trying to tell them.

Keep communication lines open, transparent and consistent. Be honest about your project’s goals and share your expectations with the team.

Be available for any questions your team may have. Encourage them to ask questions if they need more information or clarity at any point in the project. Check in with your team, too. Ask them how the project is moving along and what you can do to alleviate any pressure points.

Remember, communication is a two-way street, and project managers should not be the only ones talking. Listen to the input your teammates share. Hear their concerns and ideas and answer their questions thoughtfully.

Take time to soak up conversations and engage with your team members and stakeholders. When people feel heard, they feel valued. Your project will not only benefit from it, but your work relationships will too.

Accountability starts with you

When a football team fails to perform as expected, it’s often the coach who shoulders the blame. Alabama’s head coach, Nick Saban, took that rule to heart, making the tough decision to remove his star quarterback from the game when the Crimson Tide started falling behind in the Championship game. Freshman Tua Tagovailoa came into play. Despite the backlash, Saban took responsibility for the move and praised Tagovailoa for leading the team to victory, overcoming the Bulldogs in overtime.

After the hard loss, University of Georgia head coach Kirby Smart remarked, “we didn’t finish when we had to,” making no excuses for his team’s loss and taking responsibility for not pulling through. Instead of placing blame elsewhere, he looked ahead, reevaluated what worked and what didn’t and vowed to push on next season.

Why did both coaches take responsibility for their team’s shortcomings? Because it’s their job to lead their team to success.

And it’s your responsibility to do the same for your project. In an office environment, you’re accountable for your work. While some mistakes may not be directly your fault, it’s ultimately your responsibility to address them. Taking ownership of errors can make you a better project manager, but only if you learn from them and take steps to keep them from happening again. It’s your job to get the team moving in the right direction so they can take home the trophy.

Regardless of whom you root for, this college football season is poised to be the best yet. While only one school will earn the national title, your team can be successful year-round if you implement what you learn from the game.

Allison Carter Fanney, Communications Manager — Tax, Association of International Certified Professional Accountants

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The Risk of Doing Nothing: Common-Sense Cybersecurity

The Risk of Doing Nothing: Common-Sense Cybersecurity

September 3, 2018 in Cybersecurity

Save time with bank rules using QuickBooks Online

Save time with bank rules using QuickBooks Online

September 1, 2018 in QuickBooks Online

An investment in knowledge pays the best interest

An investment in knowledge pays the best interest

August 31, 2018 in Quotes

Check your IRS refund status online

Check your IRS refund status online

August 30, 2018 in Income Tax

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WHY CHOOSE RW WEALTH

[vc_empty_space height=”15px”][vc_column_text]We are a multi-faceted financial services firm that cares a great deal about the financial health of the people and communities where we have lived and worked for almost 25 years.[/vc_column_text][vc_empty_space height=”40px”]Read more[/vc_column][vc_column width=”1/3″][vc_single_image image=”3406″ img_size=”360×270″]

WEALTH MANAGEMENT

[vc_empty_space height=”15px”][vc_column_text]RW Wealth is a Registered Investment Advisor firm that focuses on developing a personal relationship with each client.  Only then are we able to work together, applying sound investment strategies, to realize a secure financial future.[/vc_column_text][vc_empty_space height=”22px”]Read more[/vc_column][vc_column width=”1/3″][vc_single_image image=”3410″ img_size=”360×270″]

ACCOUNTING

[vc_empty_space height=”15px”][vc_column_text]RW Wealth specializes in accounting for small to mid-size companies, including single member LLCs. We can become your accounting department or provide guidance and support, if you wish to do the majority of bookkeeping inhouse.[/vc_column_text][vc_empty_space height=”25px”]Read more[/vc_column][/vc_row][vc_row full_width=”stretch_row” video_bg=”yes” has_content=”inside” css=”.vc_custom_1501088310570padding-top: 80px !important;padding-bottom: 120px !important;background-image: url(http://astudio.si/accounting-new/demo-8/wp-content/uploads/2014/11/satementD8.jpg?id=2349) !important;” el_class=”text-center”][vc_column][vc_column_text]

REACH YOUR POTENTIAL FOR FINANCIAL SECURITY 

We put our expertise in tax, accounting and wealth management to work for you.

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RW WEALTH SERVICES

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RW Wealth management

Financial security

We believe that every investor is unique. Taking into account your risk tolerance, required rate of return, liquidity and income needs, tax situation, and time horizon, we develop an Investment Strategy just for you.

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Income Tax Services

Ensuring compliance

RW Wealth prepares federal and multi-state income tax returns for individuals, trusts, estates and not-for-profit organizations as well as corporations, S-Corps, LLCs, LLPs and partnerships. Because we keep up with changes in tax legislation, we offer a pro-active approach to tax preparation providing our clients with solutions before they become tax problems.

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QuickBooks accounting

Streamlined records and financial reporting

With QuickBooks, your business accounting can be simplified. Everything is in one place—your accounts, expenses, invoicing, billing, and bookkeeping making it incredibly simple to pay employees and work with the accountant when annual tax time rolls around.

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Small Business Accounting

Helping you to focus on running your business

RW Wealth understands that when you own a small business, there are often not enough hours in a day to run the business and to stay on top of the necessary paperwork required for sound bookkeeping. We can help you with the reconciliation of bank and credit card accounts, generating financial statements, upkeep of the general ledger and on-going accounting software support.

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QuickBooks consulting

Setup and on-going support

We can help you determine which accounting software package is right for your business.We will set up your company file with an appropriate chart of accounts and determine beginning balances. We are here every step of the way to provide training in the effective use of QuickBooks and on-going support when you have questions.

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Payroll Services

Save time and eliminate hassles

RW Wealth offers cost effective, time saving and worry-free payroll solutions that meet your business’s unique needs. Outsourcing your payroll to experienced providers means that you have more time to focus on increasing profits!

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NEW BUSINESS FORMATION

[vc_empty_space height=”15px”][vc_column_text]Have you ever thought about owning your own business?

Opening your own business is exciting, even thrilling.  It’s everything that comes after “the excitement has worn off” that determines whether a small business will make it or not.  It’s up to you to maintain that initial level of enthusiasm indefinitely.

A methodical plan of action is needed to achieve your goal of being your own boss and running a successful business.  Success lies in the approach you choose to take.  RW Wealth can help you avoid the common pitfalls that many small business owners make when starting their new venture.[/vc_column_text][vc_empty_space height=”25px”][vc_single_image image=”3412″ img_size=”1130×376″]Read more[/vc_column][/vc_row][vc_row full_width=”stretch_row_content” parallax=”content-moving” parallax_speed_bg=”1″ css=”.vc_custom_1500650454120background-color: #abd1da !important;”][vc_column width=”1/4″][vc_single_image image=”3298″ img_size=”full” alignment=”center”][/vc_column][vc_column width=”1/4″]

Dan Worrell, CPA

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[/vc_column_text][vc_empty_space height=”15px”][vc_column_text]A graduate of University of North Florida with a B.A. in accounting, Dan received his designation of CPA in 1994.  Dan provides CPA and income tax services to a number of health care professionals, contractors, retail companies, internet based companies, equipment distributors, and specialty companies who have multi-state operations.   Dan also provides income tax and investment management for individuals who expect exemplary service.[/vc_column_text][/vc_column][vc_column width=”1/4″][vc_single_image image=”3299″ img_size=”full” alignment=”center”][/vc_column][vc_column width=”1/4″]

HAL Ringeisen, CPA

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                                      President

[/vc_column_text][vc_empty_space height=”15px”][vc_column_text]Hal graduated from Florida State University with a B.S. in Marketing and from the University of Cincinnati with a M.B.A. in Finance.   He started his financial career in 1981 as a management consultant with Arthur Andersen & Company in Tampa, Florida and worked with a number of companies in the manufacturing, distribution, food service, health care and hospitality industries.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1499806476768padding-bottom: 40px !important;background-color: #ffffff !important;”][vc_column]

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Get your groove back: 4 tips to ramp up for fall busy season

Get your groove back: 4 tips to ramp up for fall busy season

Is there any season more relaxing than summer? The weather is warm. The days are long. Perhaps best of all, busy season is still a ways off. There’s no cause to worry about extensions or business returns or even tax reform, right?

Nope. Believe it or not, summer is winding down and the fall busy season is ramping up. Now is the time to shake off that beach brain and prepare for what’s ahead. You’ll thank yourself in October, not to mention in February and March. 

Get caught up on continuing education

Summer is a prime time to tackle your CPE requirements as it’s the sweet spot between the two busiest times of the year for tax practitioners. But there’s a second reason why now may be a good time to hit the books: tax reform.

Recently, heaps of IRS guidance and proposed regulations came out on key tax reform issues, such as the Sec. 199A qualified business income (QBI) deduction. And this affects your clients right now. Staying on top of these changes means your clients — particularly small business owners — will get the high-quality tax planning services they need to stay ahead.

Learn more about the Sec. 199A deduction with this overview webcast. Then take a deeper dive into case studies to gain a better understanding of how the deduction actually works. Once you’ve mastered QBI, find out about other tax reform issues with this webcast to help you target planning opportunities stemming from the legislative changes. These webcasts offer invaluable information and two CPE credit hours each.

For a broader look at tax issues and updates, register for the AICPA National Tax Conference Nov. 12-13 in Washington D.C. and also online. Earn up to 18 CPE credits while learning how to navigate the changing tax landscape.

The stream of guidance is unlikely to stop anytime soon. The AICPA will be creating new webcasts and resources to accommodate it, so be sure to be on the lookout for more CPE opportunities.

Communicate with clients on due dates and tax planning

  Reach out to clients —especially those with partnership or other business returns due Sept. 17 — to remind them of upcoming deadlines. Now is also an excellent time for your clients to schedule a fall visit to learn what they can do to minimize their tax liability.

Consider sending a letter to communicate proactively with your clients about tax reform changes and the planning opportunities that may result. Tax, PFP and PCPS Section members and PFS credential holders can use the tax reform planning letters found on the Tax Reform Resource Center. While you’re there, check out other useful tax reform resources like FAQs and podcasts.

Review best practices, return processes and client roster with staff  

  Suggesting that you read Statements on Standards for Tax Services at the beach is pushing it, so perhaps do this once you get back to the office. While you’re at it, schedule a pizza lunch with your staff to go over these standards and review any issues that came up in the spring. This conversation can serve as a springboard for another important discussion: are there clients who are not a good fit for the firm? If you determine you need to let a client go, alert them now so they have time to find someone else.

Either at this session or another, you can also go over the firm’s preparation process and brainstorm any workflow changes that can make procedures even more efficient.

Tackle technology, staffing and office upgrades

Is there a printer or scanner giving everyone fits? What about the workflow or preparation software you’re using? Deciding on new technology or software can be time intensive. But don’t put it off. Acting now gives your team more time to adjust to the change.  

Based on your review of how last season went, consider what administrative or tax preparation help you need, too. Competition for tax associates will increase as the year closes and hiring people over the holidays is tough, not to mention a hassle. 

Finally, take a hard look at the office decor, particularly in the client waiting area and other public spaces. Getting these in shape now will enable you to avoid juggling renovations and clients at the same time.

Summer is still with us until Sept. 22. While a busy fall is just head, be sure to take some time out to enjoy a few slices of watermelon. Because before you know it, we’ll all be eyeballs deep in pumpkin spice everything.

Allison Carter Fanney, Communications Manager — Tax, Association of International Certified Professional Accountants

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The secret about change almost no one knows

The secret about change almost no one knows

If you search Amazon’s selection of books for “change,” you get over 50,000 entries. Some are about dealing with change. Others are about driving change, managing change or learning how to change. They are self-help books and management manifestos. And all of them trade on one undeniable and human fact: change stimulates and sometimes frightens us. We’re always looking for new ways to understand and handle it.

Somewhere between the promises of success if you learn how to change and the warnings of stagnation if you don’t is a relatively untraveled path. It’s a journey of self-exploration that can have an immense influence on how you see and respond to the world as it evolves. I walked many clients through that journey, which I called the A to C Disconnect.

Who do you think you are?

The first tenet (or A) of the A to C Disconnect is simple: write out who you think you are or, in the case of an organization, write out what you think your organization represents. This should probably be reflected in your mission or vision statements if you have them. You don’t need to be comprehensive, but you should be touching on what you think is the most important detail.

This might sound simple, but I’ve found many organizations struggle, even with a copy of their mission statement in hand, to articulate what they stand for. The reason for this is easy to explain and is the crux of the A to C Disconnect: we often haven’t achieved our ideal state yet. The idea at this point in the process isn’t to be aspirational, it’s to determine what you have internalized as truth: who DO you think you are?

“I’ve been meaning to volunteer at the soup kitchen” isn’t who you are. “I’ve thought about volunteering at the soup kitchen while actually sitting on the couch and watching Law and Order” is who you are. Big difference. But both people and organizations get tied up in lofty, sometimes delusional thinking because they aren’t being honest with themselves about what they aspire to vs. what they have actually achieved. That can make your world come crashing down around you. A short, true story you might already know will help illustrate.

At the beginning of 1996, Kathie Lee Gifford had the world by the tail. Her popular morning show with co-host Regis Philbin had made her a household name. With a devout spiritual belief and squeaky-clean, girl-next-door image, Ms. Gifford began trading on her good name to build her personal brand, including offering a successful clothing line sold in Wal-Mart stores nationwide.

At this point, Ms. Gifford had likely internalized her external persona: honest, upstanding, gentle and moral. So when allegations (later shown to be true) emerged that the factories making her clothing not only featured horrific working conditions, but also largely employed child labor, it was a stark contrast to what she had projected and perpetuated in the marketplace about herself. The truth, that she wasn’t directly involved with decisions about how or where her clothing was made and wasn’t personally responsible, unfortunately didn’t help her cause. It was a PR nightmare.

Would Kathie Lee have had the information she needed to offer an honest self-assessment? Did she truly know who she was? In the A to C Disconnect, “B” is the critical step. It’s the secret of change that very few people know.

Who you actually are

Self-discovery stinks. Most times, if we do it right, we learn uncomfortable truths about ourselves or our businesses. But it’s essential if you want to achieve your aspirations. In Kathie Lee’s case, it would have meant investigating all aspects of her brand, making certain that each step along the way was aligned to her personal vision and public, external persona. Had she learned that impoverished children were making her clothing in unspeakable, near-slavery conditions, she’d immediately have spotted the misalignment with her image as “America’s Sweetheart.” It’s safe to assume she’d have taken proactive steps to correct it.

How do we learn who we or our businesses actually are? Simple: ask. Whether you conduct a full-blown market research project to gather public or client perceptions of your business, hand out simple surveys or just ask a number of friends, coworkers or clients you trust to tell the truth, you’re likely to hear something surprising. Don’t shy from feedback that seems negative on the surface. It could be the key to what’s holding you back from your aspirations. Instead, investigate further. Reach out a second time to confirm information you learned from your first investigation. What doesn’t align with your internalized notions of yourself or your company? What is happening that defeats your aspirations or worse, portrays the very opposite as in Kathie Lee’s case?

Who you want to be

This kind of honesty allows you to realize the “C” in the A to C Disconnect, which is “Who you want to be.” These are your aspirations. They represent what you have always envisioned for yourself or your organization. Taking the self-discovery trip through the “B” of the A to C Disconnect helps you aim for your goals with more accuracy by identifying what actions and perceptions exist that don’t align with your ideal end state.

But if you try to skip B to go directly to C from A, you’re certain to find you’re stymied or worse, doing something self-destructive you weren’t even aware of that squelches any chance you have of being who you want to be. Be honest, be direct and be flexible. Self-discovery is the secret to change that few people or organizations are willing to engage. Those who do will reap the benefits.

On your journey of self-discovery, you might consider a Client Advisory Board. CABs enable firms to hear directly from their clients about how they are fulfilling client expectations and about how the firm can improve, cross sell and add to its service offerings. Check out the PCPS Client Advisory Board Toolkit to get started on your path.

Adam Junkroski, Lead Manager – Communications – Tax & PFP, Association of International Certified Professional Accountants

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New HS course gives insights into real accounting careers

New HS course gives insights into real accounting careers

How well do you remember your first accounting course?

The American Institute of CPAs knows that a student’s first classroom experience with accounting goes a long way towards determining if they’re going to wind up entering the profession. That’s why it’s crucial for students to be exposed in high school to a course that goes beyond debits and credits into some of the higher order skills that CPAs need to thrive in today’s profession, such as critical thinking and problem solving.

The AICPA is working to create a formal process that will introduce talented high school students to the profession at an early age through the AICPA Accounting Program for Building the Profession (“AICPA APBP”) course and related qualifying examination. APBP is a program that trains high school educators to teach a higher-level accounting curriculum that is a combination of financial and managerial concepts. It’s comparable to what a college student would learn in an entry-level accounting course.

I sat down with Yvonne Hinson, AICPA Academic in Residence, who works closely with the program to find out why this is such an important initiative for the accounting profession.

James Schiavone: The AICPA acquired the APBP roughly a year ago. What are some of the goals the Institute has for the program?

Yvonne Hinson: When we acquired the AICPA APBP program, we set out to accomplish several things. One of our primary goals was to increase the number of teachers trained to teach a college level advanced high school accounting course and provide more tools for the teachers who teach this course. In addition, we wanted to increase resources for their students and build up the number of universities accepting a passing score on the qualifying exam for course credit at their university. 

We are very excited to be rolling out an advanced version of our highly popular Bank On It game, which will be structured around the APBP curriculum.

And from a profession wide standpoint, the success of this program shows support for an “Advanced Placement” accounting course in high schools, which is a long-standing goal.

JS: What role do the State CPA Societies play in the program?

YH: State societies are critical to the success of this program. They currently work with us to help get the word out about trainings to high school teachers and universities and they also partner to provide the training sessions for high school teachers. They play a role in working with universities in their state to increase the number of universities accepting college credit for the qualifying exam.

Because they have close relationships in their states, they’re able to provide valuable insight into the best contacts and relevant resources to help connect us with high school teachers. And many of them are also working to support high school teachers by finding CPAs to come into their classrooms to teach students about all the possibilities an accounting career affords.

 JS: The accounting profession competes with multiple prestigious fields including Science, Technology, Engineering and Math (STEM) for talented students. How can this program help draw more high performing students to major in accounting?

 YH: This program helps us in the competition for talent because it gives students a better understanding of the dynamic skill set that’s actually needed to thrive in today’s accounting profession. It debunks the myth that accounting and bookkeeping are the same thing by demonstrating how the profession integrates accounting knowledge with technology and analytics skills. It also gets to the business reason behind transactions.

And because accounting today often involves work with some ambiguity, we need students who have critical thinking skills entering the profession. I believe this course does a wonderful job of getting that message across to students while teaching them about the critical role accounts play in the wider business world and the global economy. For many students, it’s eye-opening and allows them to see the profession in a new light.

 JS: You spent time earlier in your career as an accounting professor. What are some advantages incoming freshman accounting students have if they’ve taken an advanced course in high school?

 YH: A high school course that gives students a realistic picture of what the accounting profession is all about provides students with the facts they need to make an informed decision on accounting as a college major earlier. We are seeing that students want to make career decision earlier – if they don’t have an accurate picture of what a career in accounting looks like, they may not be as likely to consider it.

In addition, even if they do not take the qualifying exam, they will have a leg up when  taking their first college accounting course. And if they do take the qualifying exam and receive credit for the course at a university, they will be ready to move to an upper level accounting course earlier and that can help motivate them to choose accounting as their major.

 JS: How can high school teachers or educators interested in going through the program or offering it at their school get more information?

YH: Teachers may find more information about our course and resources at https://www.startheregoplaces.com/APBP. And universities who are interested in the process for accepting the APBP course for college credit can contact. APBP@aicpa-cima.com.

James Schiavone, Senior Manager, Public Relations, Association of International Certified Professional Accountants 

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7 ways to beat back-to-school stress

7 ways to beat back-to-school stress

It’s the hottest part of the summer, and my kids are out of control. They’d sleep ‘til noon and stay up ‘til after midnight if I let them. While attempting to wake the youngest for camp this week, I daydreamed about our efficient school year morning routine.

Just then, I couldn’t remember when my kids start school. I knew it was soon. Very soon. But the dates weren’t in my phone. Panic! Wait. Found it on the school website. We’ve got 19 days.

Most parents — and kids, too — feel at least a little pressed for time around the beginning of the school year. So, I did some research and made a checklist to get my family through these dog days of summer and into the back-to-school mindset.

Crack the whip. Getting the kids back in a routine will help the first few weeks of school go much more smoothly. Ease them into the new school year by reestablishing regular wake-up and bedtimes that incrementally progress toward the school schedule. If your house looks like mine, a list of housekeeping chores can also help the kids — and grown-ups — get back on track.

Hold a scheduling party. Attendance by all family members is required. Bring phones, laptops, school calendars and athletic/activity schedules. Consider setting up a Google Calendar that everyone in the family can access from his or her smart phone, tablet or computer. You can print it out on a weekly or monthly basis, too. Don’t forget the new puppy or kitten that joined the family over the summer will need its school schedule, too.

Sign up before it’s too late. Signups for fall sports and activities seem to get earlier every year, with most deadlines in July or early August. Some signups may be the first week of school. If your kids are interested in a fall sport or activity and haven’t signed up yet, track down the info ASAP. Keep in mind that a physical is usually required.

Host a runway show. I’ve learned the hard way that taking an inventory of my kids’ clothing is not enough. What you thought would fit may not. Have the kids model their clothes — I promise you’ll all have some great laughs! Note sizes and you’ll be in a much better position for shopping.

Sell, trade or donate the no-fitters. Trendy items in good condition can fetch good prices at shops such as Once Upon a Child, Plato’s Closet (teens) and Uptown CheapSkate. You can even ship clothes off to an online consignment shop like Thredup, which includes a handy estimator tool for how much you’ll make. Many used clothing shops will pay you more for your items if you accept store credit instead of cash, which gives you an opportunity to teach your kids about trading and bargain hunting. Of course, charity thrift shops run by the Salvation Army and Goodwill are always looking for used clothing.

Don’t take Santa’s place. Think of back-to-school shopping in terms of “what they need between now and the end of the year.” Shopping for the whole year is overwhelming and unnecessary. Let Santa take care of winter and spring clothes. Tweens and teens? Give them a budget and some requirements and let them do the shopping (return receipts required).

Plan for the first week of school. Remember that school traffic the first few days will be worse than normal. Navigation apps like Waze and Google Maps can help you plan your school traffic route. If you have kids going to a new school, decide whether you’re doing car line or the bus. Which bus will it be? What is the bus schedule? Where is the bus stop? What is the car line route? When does the line open?

We may not be able to turn down the August heat, but we hope these tips will help make it more bearable. For more help on how to get back to the grind, take a look at the Human Intelligence Series from the Association of International Certified Professional Accountants. You’ll find tips on stress management, prioritization and more!

Heather O’Connor, Senior Manager – Communications, Association of International Certified Professional Accountants

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Confessions of a young tax practitioner

Confessions of a young tax practitioner

Olena Romanchuk, CPA, knows what it’s like to fall in love with tax at an early age. She was only fifteen the first time she pored over a stack of ledgers. After studying accounting in her home country of Ukraine, Olena came to the United States as an exchange student. She later attended Western Carolina University and fell for the tax profession all over again.

While Olena was developing her tax skills, Glenda Bowman was trying to figure out exactly what she wanted to do in college. As the first person to pursue a bachelor’s degree in her immediate family, just getting to college was a significant accomplishment. She said she was a typical college student who went straight into general business before she felt something click in her first accounting class that led her to embrace the profession and become a CPA.

College life was a different experience for Thomas Presley. He said he knew precisely what he wanted to do, and that wasn’t accounting. The son of an IRS agent, Thomas wanted to be an engineer. But a physics class made him think twice, and a childhood interest in the tax profession took hold as he followed through to earn his CPA.

Despite having different backgrounds and following different paths, Romanchuk, Bowman and Presley each have one thing in common. They are part of the new wave of tax practitioners poised to drive the profession into the future.

These three CPAs joined staff of the Association of International Certified Professional Accountants in June for an honest conversation about the tax profession. They tackled topics ranging from tax reform to technological changes to what the profession will look like in the future. Here’s what they had to say.

Technological advancements and the tax profession

A sole practitioner in Wake Forest, N.C., Presley said young tax professionals are not afraid to try out new technologies or embrace the changes that come with the job. For him, it’s about reevaluating his clients’ needs to take them to their next financial level. This means rolling with the punches as they come his way.

“It boils down to the fact that we cannot be stagnant,” he said. “We need to move forward with the industry and new tax laws with new computer programs, new software, and new technologies across the board.”

It’s CPAs like Romanchuk who are helping to drive these technological changes. As a tax analyst at Drake Software, Romanchuk’s job is to interpret tax law and help make software that enables tax practitioners to do their jobs better. She equates this tax technology to life — it’s always changing. That’s what she most loves about tax.

“It’s something that I enjoy doing. I like to navigate through a small portion of tax law, then step back and look at it as a whole to solve the puzzle,” she said. “We just need to adapt to it, to use technology. It helps us do meaningful work.”

“In almost every way, the tax profession of tomorrow will look very different than it looks today,” Bowman said. “Every day, I learn of a new tax service, a new tax technology, and a new tax challenge facing our clients. As long as our clients’ business environment and demands continue to change, the tax profession will continue to change almost on a daily basis.”

Legislative changes and the role of the CPA in clients’ lives

Presley said that he loves tax reform because it gives him a new problem to solve. He admits that it can be frustrating to wait for the IRS to iron out all the details, but that it simply adds to the overall excitement and feeling that he is on the cusp of a very exciting time for the profession.

He wasn’t alone in that sentiment.

“I think there are challenges and advantages,” Romanchuk said. “The advantage is that young CPAs who don’t have a lot of experience are now on the same playing field as seasoned CPAs. It is an opportunity in learning and exploring.”

Bowman, who works as a tax manager at Ernst & Young (EY), finds that the changing nature of tax legislation feeds her passion for the profession. And she said it’s her job to keep up, particularly when clients are looking for answers.

“The tax profession is always changing, and my clients see me as their advocate and not just a service provider,” she said.

“Having reform, whether it be small or large, gives me the opportunity to provide a value-added service to any and all of my clients,” Presley said. “Tax reform gives me a new problem to solve. So, I say ‘bring it on.’”

This generation’s take on what’s next for tax

Bowman lives and breathes tax. Outside of travel, Bowman admits she doesn’t have a lot of hobbies, but that’s because her career directly touches on what’s at her core — her community.

“Tax is more than just a daily job. We are here to contribute to our communities, contribute to the economy, and contribute to the businesses of our clients,” she said. “If you enjoy the highly technical nature of tax, are interested in the way tax and business strategies impact our local and global economies and want to be part of a truly innovative environment, you should join the tax profession.”

Romanchuk thinks the nature of the tax profession is what makes it so exciting. She describes tax as a series of flavors — a wide set of options for curious minds.

“I have not met a tax professional who would say that their job is boring or not challenging enough,” she said. “If you like challenges, analytical work and problem solving, then the tax profession is for you.”

“This new generation of CPAs in the tax profession, I believe, is going to reform the CPA firm,” Presley said. “The accounting profession must continue moving forward. Because if you are not moving forward, you are getting left behind. And that’s just not the way this generation works.”

Endnote

Romanchuk and Presley joined Tax Policy & Advocacy Senior Manager Amy Wang, CPA, and Tax Practice & Ethics Senior Manager Susan Allen, CPA, CGMA, for a live panel discussion tackling these issues. A rebroadcast of the panel can be found here.

The Young CPA Network provides a place where new and emerging professionals can forge valuable relationships and find the information and resources they need to help enrich and support their careers. And to find out how you can take on a career in tax, visit aicpa.org/taxcareers to learn about exciting new ways to take your passion to the next level.

Allison Carter Fanney, Communications Manager – Tax, Association of International Certified Professional Accountants

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Why assess audit risk? So you don’t get lost in the woods

Why assess audit risk? So you don’t get lost in the woods

Picture this: You’ve finally made it through busy season. You’ve booked a family trip to a remote cabin in the mountains to unplug and relax. Your out-of-office message has been turned on and you’ve planned plenty of outdoorsy activities for you and your family. You’ve written out a packing list and checked off every item: Clothes? Check. Hiking boots? Check. Bug spray? Check. Snacks and entertainment to ward off your kids’ boredom- and hunger-related complaints during the long car ride? Check.

The car’s all packed, everyone’s buckled in and your GPS is set up on the dashboard. Now that you’re ready to embark on a journey to the middle of nowhere, you reach for your GPS…

…and throw it out the window.

Probably not the best way to get where you need to go, right?

Even if you’re too proud to ask for directions when you’re on a road trip, when planning your audit, it should be a different story.

Why does risk assessment matter?

The goals of identifying, assessing and responding to risk are at the core of every audit. Identifying and assessing a client’s specific risks drives the audit procedures you should perform and helps you avoid inefficient over-auditing. Even more seriously, this process helps you avoid a failure to obtain sufficient appropriate audit evidence to support your opinion. Put plainly: Risk assessment is crucial for a quality audit.

However, data collected by the AICPA Peer Review Program in 2016 show that many firms need to improve compliance  with AU-C Section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement or AU-C Section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained.

Many auditors believe they can perform a quality audit without properly considering their client’s risks of material misstatement, but that’s simply not true – and it’s leading to violations of professional standards.

The audit risk model

To understand why risk assessment is so important, we have to start with the audit risk model, displayed below:

Audit risk is the risk that the firm will issue the wrong audit opinion when the financial statements are materially misstated. Our objective as auditors is to reduce audit risk to an acceptably low level. Audit risk is composed of:

Inherent risk, which is the risk of material misstatement assuming there are no related controls;

Control risk, which is the risk that the client’s controls will not prevent or detect a material misstatement; and

Detection risk, which is the risk that the auditor will not detect a material misstatement.

Inherent and control risk combine to form the risk of material misstatement, or RMM. These risks exist independent of the auditor and cannot be reduced through substantive procedures. So, if RMM is moderate or high, how do we reduce audit risk to an acceptably low level? We do this by manipulating the only risk that we can control: detection risk.

Detection risk is influenced by the nature, timing and extent of your audit procedures. For example, if you wanted to reduce detection risk, you might:

Change the nature of your procedures by vouching transactions instead of performing analytics;

Alter the timing of your procedures, performing them after year-end instead of during the interim; or

Increase the extent of your procedures by selecting a larger sample of items for testing.

Without first properly assessing inherent and control risk, you would have no basis for assessing detection risk and no way to plan the nature, timing and extent of your procedures. You might as well be throwing darts blindfolded – or driving aimlessly through the mountains with no map or GPS.

Regardless of the amount of testing you perform, if you don’t identify and assess your client’s specific risks, you’ll fail to comply with Generally Accepted Auditing Standards (GAAS). The result will be what the Peer Review Program calls a “materially non-conforming engagement.”

Peer reviewers are in the process of being retrained on this concept. That means even if your reviewer took a different stance in the past, going forward, engagements that are not built around identifying, assessing and responding to the client’s risks will be considered non-conforming.

Resources to help

Keep an eye out for future blog posts in which we’ll discuss risk assessment and response in further detail. Additionally, the AICPA has a free toolkit at aicpa.org/riskassessment to help you perform more effective risk assessments, appropriately link your risk assessments to your audit procedures and comply with the standards. The toolkit includes resources such as an audit risk assessment tool with accompanying video guides, a staff training workshop, an internal inspection aid and an aid for identifying controls at smaller entities.

Proper risk assessment drives your audit procedures, so it’s crucial to get it right. And when you’re literally driving on your next road trip, don’t toss your GPS out the window when you leave.

Carl R. Mayes Jr., CPA, AICPA Senior Manager—Special Projects, Association of International Certified Professional Accountants

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Beyond robotics: How AI can help improve the audit process

Beyond robotics: How AI can help improve the audit process

The CPA profession has been hearing a lot about Robotic Process Automation (RPA), a software technology that can help auditors sift through structured data. But RPA can only do so much. Abigail Zhang, a PhD student in the Department of Accounting and Information Systems at Rutgers Business School, explains why auditors should also consider Intelligent Process Automation (IPA).

What is IPA?

Intelligent Process Automation (IPA) includes:

Robotic Process Automation (RPA)

Artificial Intelligence (AI)

Cognitive Computing (CC)

Other technologies

While RPA is good for some tasks, IPA expands its functions to make the automation scalable, flexible and intelligent. IPA is the trend of the future in automation, and the major RPA vendors are competing to make their products AI-powered.

What are the limits of Robotic Process Automation (RPA)?

RPA is “robotic” in the sense that it can only automate tasks that are repetitive, standardized, structured and rule-based. It cannot adapt to changes. RPA cannot:

Deal with unstructured data (e.g., emails, social media postings, news and audio) or semi-structured data (e.g., invoices and contracts).

Make complex decisions that require a higher level of cognitive judgements.

Analyze and further process exceptions.

What makes Intelligent Automation Process (IPA) preferable for audits?

In general, IPA can do whatever RPA can do and then some.

IPA integrates artificial intelligence and other technologies with RPA, unlocking the potential in each technology. IPA forms an intelligent digital labor force that can help humans with tasks that RPA alone cannot handle. Besides the RPA-type structured tasks, IPA can also process unstructured data like emails, perform complex data analysis, process exceptions, conduct predictive analysis, adapt to changes and learn through time.

Unlike RPA, which can only execute pre-programed procedures, IPA can “sense,” “think” and “act.” When the IPA is not able to deal with certain tasks, it will forward them to a human and learn from what the human does. 

IPA can potentially be implemented with many repetitive knowledge workers’ tasks. For example, in the banking industry, IPA could be used to understand and act upon digitized documents, optimize solutions to unexpected events, monitor human transactions and prompt alerts for any abnormal activities. In the finance industry, IPA could be used in account reconciliations, financial closures, and financial planning and analysis. In the insurance industry, IPA could be used in underwriting and claims/billing processes.

What can’t IPA do?

IPA can’t totally replace human workers. Although IPA contains artificial intelligence and cognitive technologies, it will not – and is not supposed to – expel humans from the workflow. Rather, IPA is aimed to diminish employee time spent on manual and repetitive tasks, to assist them in creative and high value-added tasks and to help make better decisions.

How can auditors implement IPA?

The general rule for implementing IPA is to “start small and then grow.” Firms, regardless of size and industry, should start with RPA to automate the tasks that are most time-consuming, repetitive, standardized and rule-based. These are the “low-hanging fruits” that can immediately benefit firms. Firms can then gradually add artificial intelligence and cognitive components. 

When adopting IPA, firms should consider the following questions:

Is the task structured, semi-structured or unstructured?

Is the task automatable?

If the task will be automated, what potential automation tools can be used for this task?

Is there any need to redesign the process for more efficient automation?

How can small CPA firms benefit from IPA?

IPA might help small firms remain competitive in the market. First, because it operates on top of existing firm systems, the IPA solution is generally more affordable and agile than creating new IT systems. Second, if properly implemented, the time and cost savings from the tasks that are most repetitive, standardized and rule-based will be immediate and very large. Third, if the firm uses a vendor-supplied RPA/IPA platform, they can avoid having to hire a “hard coding” expert. Firms would be able to directly use the artificial intelligence and cognitive functions in those platforms right off the shelf.

How might clients and the public benefit from IPA used by auditors?

The assurance industry can also benefit from IPA. Currently, auditors are still burdened with high-volume and repetitive tasks. In my research exploring the potential applications of IPA in audits, an “auditor-in-the-loop” IPA ecosystem was constructed. In this ecosystem, the structured and semi-structured tasks (e.g., reconciliations, recalculations and confirmations) can be automated in an unattended way, almost without auditors’ intervention. The unstructured tasks (e.g., internal control risk assessment) can be partially automated (i.e., attended automation) in the sense that AI/cognitive computing will assist auditors. In the IPA ecosystem, auditors and bots will augment each other’s abilities and cooperate to complete audit engagements.

Also, there could be a major benefit from IPA in the audit: increased audit quality. First, the auditors can focus more on the tasks that need professional judgment, and they can make better decisions with the assistance of AI and cognitive computing. Second, automation can almost eliminate human errors in repetitive tasks. Third, IPA allows auditors to perform full population testing, which can provide more convictive support for the audit opinion than traditional sampling methods.

Any final thoughts?

“Automation is constantly changing and does not stop at RPA.” Accounting professionals should be prepared for and have an open mindset about the future.

The information in this blog is based on the working paper, “Intelligent Process Automation in Audit” by C. Zhang, 2018.

Chanyuan (Abigail) Zhang, PhD Candidate – Rutgers Business School. Chanyuan is a PhD candidate in the Department of Accounting and Information Systems at Rutgers Business School.

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Calling all tax CPAs: help quality reviews take center stage

Calling all tax CPAs: help quality reviews take center stage

Data breaches happen daily. We see it in the news, and we hear it from our clients. Clients trust us with their private information including Social Security numbers, paystubs, birthdays and other data valuable to identity thieves.

We need to maintain security and provide the best service for our clients. To do this, we must observe two things: integrity and adherence to the quality of services we deliver. And both require obedience to specific standards of behavior.

In the case of quality, there are many ways to prove we’re adhering to standards. Reviews of our work are one. But doing so can raise significant concerns for practitioners, particularly when it comes to logistics.

Practical applications of tax practice reviews

In a practice environment, reviews take place as part of our daily routine. When a client engages a firm to provide professional services, the firm gathers and evaluates data and information necessary to complete the job to produce a deliverable. During this process, the final product — whether it’s a set of financial statements, a tax return or an advisory memo — undergoes a review to make sure the finished product is complete and accurate.

Other times, an outside organization like the American Society for Quality (ASQ) or the International Organization for Standardization (ISO) grants a specific accreditation. These types of endorsements demonstrate the firm is following prescribed standards. This assures the customer that what an organization should be doing — or says it’s doing — is being done. A mandated peer review exercise is usually done in the context of an attest practice. However, this type of third-party quality review can be undertaken by other parts of a firm’s practice on a voluntary basis. Having an outside party review an organization’s operations, policies and procedures is another way to demonstrate quality in performance.

The recently updated AICPA Tax Practice Quality Control Guide states that one of the key elements of maintaining a quality control system is the monitoring of operations. This can be straightforward for larger firms that often have internal groups review the actions of individual departments. This makes sure all employees adhere to the firm’s standards of quality, regardless of the physical location of the office or the client’s business or size.

It’s much more challenging for a smaller firm or a sole practitioner. Issues could arise such as a lack of sufficient internal resources or enough qualified personnel on staff to perform such an examination. And if someone outside the firm is engaged in the review, it’s essential they adhere to the rules surrounding access to confidential client information.

Guiding the way for easier quality reviews

Many firms wonder if a client’s permission is required for their records to be included in such a quality review. Recently, the AICPA’s Professional Ethics Executive Committee (PEEC) issued an exposure draft titled Disclosing Client Information in Connection With a Quality Review. This is intended to be a new interpretation of the Confidential Client Information Rule (AICPA, Professional Standards, ET sec. 1.700.001) of the AICPA Code of Professional Conduct, which would expressly allow a CPA to undertake such an assessment without violating the Code of Professional Conduct.

An existing exception to this rule restricting the exchange of confidential client information is in place for firms undergoing a mandatory peer review. Such confidential information can also be shared in conjunction with the evaluation of a professional practice subject to an acquisition or if such a review was required by a state board of accountancy or state society.

If adopted, this interpretation would allow for voluntary tax practice reviews to take place as long as:

the member complies with Treasury Regulation 301.7216-2(p) related to disclosures of tax return information that occur during such a review, and

the member who performs such a review, doesn’t use the information obtained during the review to their advantage nor do they disclose any confidential client information that comes to their attention during the review engagement.

By issuing this interpretation, PEEC clarifies these reviews can take place without exposing a member to any violation of the AICPA’s Code of Professional Conduct.

What’s next?

Firms of any size that voluntarily undergo a tax practice review clearly demonstrate they’re focused on maintaining the high-quality standards clients expect. Therefore, PEEC encourages all interested parties to comment on this proposed interpretation.

Comments should be submitted via email to: Ethics-ExposureDraft@aicpa-cima.com by August 20, 2018. After evaluating the comments, PEEC may decide to publish the proposed interpretation in a final release. Once published, the interpretation will become effective on the last day of the month in which the release is published in the Journal of Accountancy, unless otherwise stated in the release.

Henry Grzes, CPA – Lead Manager, Tax Practice & Ethics, Association of International Certified Professional Accountants

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5 lessons learned from the closing of a historic candy company

5 lessons learned from the closing of a historic candy company

NECCO Wafers are one of America’s most historic candies. Union soldiers carried them in the Civil War. Arctic explorer Donald MacMillan stocked them on his voyage to northern Greenland in 1913. The United States Army issued them to GIs in World War II. Generations of kids begged their parents for them at gas stations and checkout lines across the country.

After 170 years of operation, in May 2018, the bankruptcy court auctioned off the New England Confectionery Company’s (NECCO) assets. Round Hill Investments, of Greenwich, Conn., agreed to buy NECCO for $17.3 million. Though, just this week on July 24, 2018 and according to the Boston Globe, Round Hill abruptly shut down its operations and closed the doors at the Revere, Mass., candy factory. The company stated it had sold NECCO to another candy manufacturer but didn’t disclose the details. How could a company that survived catastrophic fires, wars, recessions, the Great Depression and so many other trials fail in today’s environment?

There’s no simple answer. But there are lessons we can learn and apply in our firms and businesses and in the advice we share with others.

Embrace technology.

NECCO started when brothers Oliver and Silas Chase invented a candy making machine in 1847. This and subsequent machines essentially created the mass-produced candy industry. Somewhere along the way, NECCO lost its edge as a technology leader. More recent reports on NECCO’s manufacturing facility focused on the history and nostalgia of its 1940s era machines still in use. Finding new ways to automate manual tasks launched the company in 1847. But automation still drives growth today, and NECCO was unable to adapt.

Carry your clients forward.

Although NECCO suffered growing criticism over the texture and flavor of its Wafers, its core customers resisted product updates. When NECCO replaced its artificial flavors and colors with natural substitutes in 2010, its customers rejected the changes. NECCO was forced back to the old formula — the one Millennials weren’t buying. Yes, you need to listen to your customers, but you also can’t let your customers stop you from repositioning for the future. Most will accept incremental changes even if there’s some grumbling — just don’t change too much at once.

Focus on the core of today and tomorrow.

Like many consumer product companies, NECCO went through a diversification phase. They were making all kinds of candy and increasingly faced competition from lower-cost manufacturers. They eventually figured out that they needed to focus on their core products. But their core products were facing new headwinds from more health-conscious consumers with new taste preferences. You need to know when to protect your core and when to reconsider its viability.

Limit long-term commitments.

NECCO took good care of its employees as every responsible business should. But high fixed labor costs and legacy employee benefits put them in a position where they couldn’t be nimble. Ultimately, NECCO may have failed its employees by not making the hard decisions sooner. Whether it’s a long-term lease, a partner buyout plan or multiyear service contract, you must leave room to pivot when unforeseen circumstances arise.

Don’t become complacent.

Over its 170-year history, NECCO took many risks and experienced many failures. From that process, they achieved success over an exceptionally long period. So, what happened? Did they become complacent in their success or avoid taking risks? The temptation to avoid opportunities when things are going well can be the biggest risk of all. Calculated risk-taking should be part of your strategy. If your core is successful, protect it and keep an eye on the changing environment. When your core isn’t successful, take calculated risks knowing that some of the time you’ll fail before you ultimately succeed.

The AICPA provides many resources and tools to help small firms develop their practices and provide new services to their clients. When it comes to client services, consider thinking outside the box. Whether your clients ask for tax planning or need assistance with estate and trust planning, make sure they know you can help them with their financial planning needs. This webpage and worksheet can help you get started.

Lisa Simpson, CPA, CGMA, Associate Director – Firm Services, Association of International Certified Professional Accountants

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Could IRS reform mean smoother waters for tax practitioners?

Could IRS reform mean smoother waters for tax practitioners?

“. . . once again there is an historic opportunity to overhaul the IRS and transform it into an efficient, modern, and responsive agency.” – Report of the National Commission on Restructuring the IRS, 1998

Last year, I wrote a blog about tax reform and quoted country singer Michael Ray that “[t]oday only happens once in a lifetime.” I talked about how I was around for the 1986 tax reform process and passage of the legislation, so happening once in a lifetime might be twice for me, as tax reform was then developing. I’m also hoping that twice in a lifetime refers to IRS reform.

I’ve drafted several blogs about IRS reform including a recent one in May. But I’m moved to write again because July 22, 2018 is the 20th anniversary of the Internal Revenue Service Restructuring and Reform Act of 1998, H.R. 2676. In one of the more expeditious, and bi-partisan processes in my 35 years in advocacy, Congress:

Approved L. No. 104-52, H.R. 2020, that created the National Commission referred to above on November 19, 1995 (and amended on April 26 and September 30, 1996)

Gave the National Commission a year from its last amendment to issue its Report which was done on June 25, 1997

Passed the actual restructuring legislation, L. No. 105-206, H.R. 2676, on July 22, 1998

What’s amazing is that, on average, only about five percent of bills introduced in Congress are ever signed into law. And many of those were originally introduced in a prior Congress and failed to move. The 1998 legislation emerged from a bi-partisan Commission that issued its report in only a year. Surprisingly, it was enacted a year later.

The introduction to that report stated: “[I]t has been over forty years since Congress and the President have considered significant reforms to the . . . IRS. With this report, once again there is an historic opportunity to overhaul the IRS and transform it into an efficient, modern, and responsive agency.” That time is here again.

In April, the AICPA undertook its fourth “Survey on Tax Practitioners’ Experience with the IRS” in an attempt to guage our members’ experiences. There has been some improvement since 2015 but problems still abound:  

Although overall practitioner wait times to talk to IRS assistors have decreased, the satisfaction with the quality of the service has also decreased.

Courtesy disconnects and long wait times are still happening, mainly during non-busy season.

The biggest impact to practitioners remains the inefficiency with which the IRS responds to written communications. There has been no significant improvement in the IRS’s ability to provide a “substantive response” to correspondence in a timely manner. This is happening despite the IRS saying that additional funding from Congress was for more telephone assistors who would focus on correspondence when they weren’t handling calls.

Other reasons for practitioner dissatisfaction with the IRS are the long wait times and the inability to talk with someone knowledgeable who can actually help resolve a taxpayer issue.

Over half of practitioners do not think the IRS is on the right path to becoming a modern-functioning, evolutionary and respected federal agency.

These member reactions, which were evident in earlier survey results, were part of the reason the AICPA led an effort, in collaboration with other professional organizations and former IRS executives, to develop a framework we called “Ensuring a Modern-Functioning IRS for the 21st Century.”  A central part of that effort is our push for a dedicated “practitioner services” division that would centralize and modernize the IRS’s approach to tax practitioners. Simply put, this division would allow the IRS to leverage its limited resources to serve taxpayers by doing a better job with practitioners.

So where do things stand? A package of nine bills have been introduced, and are intended to:

Redesign the IRS to emphasize customer service,

Provide new taxpayer appeal rights,

Improve responsiveness to victims of identity theft,

Modernize IRS technology.

These bills were appended to H.R. 5444, the Taxpayer First Act, and passed unanimously in the House on April 18. Senate Finance Committee Chair Orrin G. Hatch (R-UT), and Sen. Ron Wyden (D-OR)., the committee’s ranking member, introduced similar legislation, S. 3246, the Taxpayer First Act of 2018 on July 19. In addition, Senate Finance Committee members Rob Portman (R-OH) and Benjamin Cardin (D-MD) are expected to introduce “complementary” legislation to S. 3246 the week of July 23. However, with the mid-term elections looming, it’s unlikely we’ll see movement. Maybe during the “lame-duck” session of Congress where, starting November 13, the House will be in session for 16 days and the Senate for 19 days…

As Hal Borlan, an American author, journalist and naturalist once said, “[k]nowing trees, I understand the meaning of patience. Knowing grass, I can appreciate persistence.” Persistence is a good virtue in the legislative process. And persistence will be necessary to once again pass IRS reform even if we have to look all the way back to July 22, 1998.

Edward Karl, CPA, CGMA, Vice President- Taxation, Association of International Certified Professional Accountants

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5 podcasts for your summer road trip

5 podcasts for your summer road trip

Taking a family road trip is one of the rites of passage that we all go through during summer. The kids have their iPads and books, the dog has his bone, and that just leaves the adults to find ways to make the long hours go faster. You can either click the radio buttons a thousand times to find a station remotely tolerable, you can listen to the kids fight about who is touching who, or you can find an alternative.

Enter the podcast

A podcast is a great way to make the miles fly by. Of the more than 550,000 podcasts you can listen to, you’ll find educational, entertaining, or just plain random content. Did you know that there is a 51% chance that a flipped coin will land on the side that was facing up when it was flipped? A fun fact and I learned it from a podcast!

5 podcasts to help you survive

The Tim Ferris Show – Tim Ferris looks for productivity tips in places most people wouldn’t think of. His discussions on leadership, productivity, personal achievement, and business are born from chess strategies, sports men and women, politics and top business people.

Planet Money by NPR – The economy explained. Imagine you could call up a friend and say, “Meet me at the bar and tell me what’s going on with the economy.” Now imagine that’s actually a fun evening.

School of Greatness – Hosted by Lewis Howes, this podcast thrives on the foundation of sharing stories of greatness. He emphasizes that everyone has the potential to achieve success, regardless of what they’ve gone through in life.

Radiolab – Hosted by Jad Abumrad and Robert Krulwich, is a radio show and podcast weaving stories and science into sound and music-rich documentaries.

Wait, What, Don’t Tell Me – NPR’s weekly current events quiz. Have a laugh and test your news knowledge while figuring out what’s real and what they’ve made up.

There are several great podcasts available related to the profession, including the Journal of Accountancy and Beyond Disruption, a new series on iTunes. Each week, Beyond Disruption brings you global expert insights on leveraging disruption today and preparing our profession for tomorrow.

Tune in and turn it up

Of course, podcasts are not just for family road trips, they can make your commute to and from work each day bearable, and they can make time fly by when you are sitting at your desk or running at the gym. Another great thing about podcasts is that you can listen to them anywhere from your phone, computer, or tablet.  

The key to happy listening is finding a podcast that keeps your attention and entertains you. Now off you go my friend, go pick out a podcast, throw the family in the car, and start your summer adventure!

Heidi McBurney, Communications, Association of International Certified Professional Accountants

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I jumpstarted my productivity in 15 minutes – and you can, too!

I jumpstarted my productivity in 15 minutes – and you can, too!

It was early January 2014. The Kansan plains were covered in a crunchy layer of frozen grass, the overcast sky giving little indication that the ice would soon melt. Staff at Swindoll, Janzen, Hawk & Lloyd – a small accounting firm – were eager to step in from the cold to start their day. But this day would start differently than others. No one opened their laptop. No one phoned clients. No one crunched numbers. Instead, everyone, from partner to administrative assistant, had their heads down in a nonfiction book of their choice. They read uninterrupted, untethered from technology, for 15 minutes. You see, this firm had taken the first step in a journey that would evolve from an experiment into a successful on-the-clock reading program. And that reading program would evolve them too. 

Admittedly, The First 15 reading program took some time to get off the ground because, although everyone agreed to the merits of reading, no one had time for it. That’s when Chet Buchman, managing partner and eventual architect of the reading program, suggested paying for people to read on the clock. “You can’t control what people having going on at home…but you do have the ability to influence what happens when they’re on the clock.” 

Only 10% of the firm read on a consistent basis at the program’s launch. In the last year, however, staff members read over 439 books, adding up to just over 76,000 pages. They read only nonfiction books with real life, real world application. It’s an exercise that Buchanan and his partners state has contributed to a marked increase in productivity, revenue and morale.

I was skeptical when I heard these claims. Don’t get me wrong: like many of you, I watched Reading Rainbow as a child. I get that books are cool – that they serve a real purpose. I was just having trouble connecting increased revenue and productivity to the act of reading. If anything, I thought it would cut into a firm’s bottom line. So, I decided to test this out myself. For two months, I etched out fifteen minutes from my busy schedule to read self-help books, inspirational autobiographies and collected essays on anything from technology to an insanely poetic 17th century rumination on something as seemingly banal as urn burials.

Here’s what happened.

Increased focus

The first three or four days were rough going. Cutting my technology cord brought me significant anxiety. I’m sure you know the type: feverishly responding to texts and emails, unable to ignore news flash notifications, always searching for the next best meme. That was me, and maybe it’s you, too. But it doesn’t have to be. Like me, your fledgling days in The First 15 may cause cold sweats and unexplainable heart palpitations. But, also like me, you’ll get through it, even if you need your colleagues to steal your phone while you read. And, in less than a week, you’ll find, as I found, an exponential increase in focus. My mind stopped racing hither and thither. I didn’t bounce back and forth between the task at hand and emails, checking stocks and stalking my favorite celebrity chefs’ Instagram stories.

Confidence in communicating

The more I read, the better I became at communicating. Simply by devoting more time to the consumption of ideas, I felt less apprehensive using language to express my own – both in writing and in speaking. Previously, I’d kept quiet in meetings. I feared I’d forget my words – that I’d fumble my way aimlessly through sentences, unable to properly string words together in a meaningful way. Now, by reading the stories of others, I’ve become a storyteller myself. Moreover, I’m able to pull anecdotes and facts from the books I’ve read to support my own ideas.

Improved memory

Do you remember that movie Still Alice, starring Julianne Moore? It’s about a woman with early onset Alzheimer’s. After watching it, I was sure I suffered the same affliction. Of course, it couldn’t be that – with a smartphone doing all my remembering for me – I’d allowed my memory muscle to atrophy! But, as it turns out, that’s exactly what had happened. Reading, especially if it’s relegated to just 15 minutes a day, forces the brain to pick up where it left off the day before. It’s forced to up its memory game. I found this tremendously beneficial. As mentioned, I grew more confident speaking, no longer fearing I’d forget simple words. Plus, I went from a networking zero to a networking hero, with a new knack for remembering people I met – and some facts about them.

A new, improved addiction

Ultimately, 15 minutes a day wasn’t enough. I didn’t want to wait a day to finish a thought, an idea, a book. I wanted to keep reading and filled any rare moment of downtime by reading a few more pages. And I got faster at reading, too, which meant I consumed more ideas, more anecdotes, more data. I went to bed at night with a book in my hand instead of an iPhone, and I’ve truly become a better person – and employee – because of it. I’m doing more work, better work, and I’m bringing innovative, cost-cutting ideas to the table. The AICPA’s Private Companies Practice Section (PCPS) has adopted The First 15 reading program, making email templates and other program tools available to PCPS members. The program truly improved my performance and can do the same for you.

Brock Faucette, Manager, Corporate Communications, Association of International Certified Professional Accountants

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5 tools to help your firm operate effectively

5 tools to help your firm operate effectively

Summer is a time for relaxing vacations, outdoor concerts and barbecue gatherings. It’s also a time to hit the recharge button and revisit the goals you planned to achieve by year’s end. Many CPAs set aside time during the summer months to focus on their firm’s operations and growth opportunities. The good news is that there are resources available to AICPA members to help you reach these goals and improve your firm’s overall success. Here are some tools for efficient firm management:

Gain perspective with benchmarking metrics.

Metrics provide you with invaluable information. The PCPS/CPA.com National Management of an Accounting Practice (MAP) Survey is a unique benchmarking resource that provides firms of all sizes with the key performance indicators they need to make many important management decisions such as firm realization, billing rates and compensation, net remaining per owner and more. The 2018 MAP survey has been significantly streamlined to make it even easier and faster to take. If you want to know where you stand compared to other firms in your region or nationally, I’d urge you to take the survey before it closes this month. Firms that participate receive a customized report comparing their responses to those of firms with similar net client fees, firms in the same region, and against top performing firms. PCPS members also get additional tools, including PowerPoint trend reports and the ability to run customized reports utilizing filters.

Plot your future course.

The Firm inMotion e-Toolkit helps you navigate the latest trends and provides customizable tools for firms of all sizes as well as insights into best practices. The toolkit is divided into sections practitioners have identified as key to success in a quickly changing environment. See how insights from other firm owners can help you prepare for what’s next.

Make the most out of your firm size.

Smaller firms have a lot going for them, and the Small Firm webpage can help you benefit from your strengths. Whether you want to enhance your value-added services, keep up with the latest news in tax, audit and accounting or advisory services, or explore strategic planning for firms like yours, you’ll find all the information you need in this centralized resource. 

Enhance your client relationships.

You and your team develop deep bonds with many of your clients. The PCPS Trusted Client Advisor Toolbox supports those strong ties with resources to help you identify and follow through on consulting opportunities. Help your team learn how to define client needs, articulate the value of the services they can offer and get buy-in for additional engagements.

Think outside the box when it comes to client services.

Being your clients’ trusted adviser means playing an active role in their financial big picture. Whether your clients ask for tax planning or need assistance with estate and trust planning, make sure they know you can help them with all their financial needs. This webpage and worksheet have more information on planning and tax advisory services.

Resources at your fingertips

As you review your firm’s operations, remember it’s not necessary to reinvent the wheel when it comes to developing growth strategies and planning for the future. There’s a wealth of resources waiting for you as you work to fine-tune your practice and set it on course for even greater success. Let these tools help guide you as you plan for a smooth and profitable last half of the year.

Mark Koziel, CPA, CGMA, Executive Vice President, Firm Services and Global Alliances, Association of International Certified Professional Accountants

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