MACPA Fall Professional Issues Update (PIU) - Town Hall
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Transcript of MACPA Fall Professional Issues Update (PIU) - Town Hall
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MACPA’s PIU Town Hall SeriesFinding Opportunities Amidst
the TurbulenceFall, 2010
Presented by:Tom Hood, CPA.CITP
CEO & executive Director
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The recession is over? Many of our CPAs are continuing to see rough seas ahead
5
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CPAs and businesses are
feeling overwhelmed by
the rapid and turbulent pace of
change
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You would like to be ahead of the waves instead of being crushed by them
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Photo: Pratt’s surfing page
Today we will show you how MACPA can help you survive and thrive these waves of change
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Our agenda
• What do we see?– Economy – Regulations & Standards– Globalization– Technology–Workforce & demographics
• What are we doing about these issues?• Where are the opportunities and how we can help?
• What does it mean to lead in turbulent times?
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Ever feel like you need an evacuation route?
“But a time of turbulence is also one of great opportunity for those who can understand, accept and exploit the new realities. It is above all a time of opportunity for leadership.”
‐ Peter Drucker, Managing in Turbulent Times
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A useful framework for dealing with change – strategic thinking using our i2a –
Insights to Action SystemMaking sense of
a changing & complex world
How is the world
changing?
What does it mean to us?
What possibilities do we see?
What direction should we go?
Who do we need to inspire to help us get
there?
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Why we are here and what we are doing about it
Why we are here and what we are doing about it
CPA
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The Economy
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Report from the future…
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Where have the jobs gone – 8,000,000 down
Source: Small Business Labs blog – Fidelity.com
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Are we in the “Loch Ness Monster” Economy?
“Characterized by a series of dips superimposed on a slow underlying economy thru 2020” ‐ Business Redefined by Ernst & Young
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Is it a two speed economy?
Global vs DomesticRegional vs National
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The Economy – MarylandWill we be one of the lucky ones?
5th Lowest unemployment last year• Eds• Meds• Feds
Last month unemployment rate 7.3% statewide average
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Re‐Set, Re‐Think, Re‐ImagineAnticipation of a very large business model change amidst rapid change – Steve King
There are two recessions – the obvious one and the not so obvious, the end of the industrial age where perfecting the model was the key. The new model will be completely different. – Seth Godin
#4 Rethinking the Business Model (25) from AICPA MFG
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E&Y report outlines steps to grow in the “new normal”
Source: Ernst & Young report – Planning for Growth, Embracing the new “normal”
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Want to know more? Join us on 1/07/2011
Fourth Annual First Friday Economic Outlook Forum
Baltimore Marriott Waterfront11:00 am – 2:30 pm
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Regulations & Standards
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Massive legislation in a very short timePatient Protection Act Dodd-Frank Wall Street
Reform & Consumer Financial Protection Act
Small Business Tax Relief Act
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The Federal Issues• FTC Red Flags rule –privacy & identity theft
• Tax Preparer Registration & PTIN issue
• Patient Protection Act & 1099’s
• Sub S. Employment Tax Issue
• H.R.5297 ‐ Small Business Jobs and Credit Act of 2010
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The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under
urban streets, it is often invisible until it breaks.
A useful framework to understand the CPA profession
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Our infrastructure for regulating the US financial markets has been created from a series of reactions to crises and changes and
is in need of repair.
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Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB
CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB
State CPA Statutes (Law)State Boards of Accountancy issue licenses and regulate CPAs
The (infra) Structure of the CPA Profession
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Where do major changes come from?Most changes come from regulators and standard setters
Us – AssociationsMACPA & AICPA
OR
Them – Federal & Statelegislators Infrastructure
New laws, regulations& regulators
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TX
WA
OR
CA
NV
ID
MTND
SDWY
UTCO
AZ NM
HI
OK
KS
NE
MN
IA
MO
AR
LA
MS AL *GA
FL
WI
IL
MI
IN
KY
TN
SC
NC
VA
OH
NY
ME
CT RI
*MA
AK
WVNJDE
DC
MD
*PA
CPA Mobility Enacted 46
CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA
*
In Process
Awaiting Governor Signature - 1
NH
CPA Mobility Legislation Pending - 2
VT
PR
GU
U.S. VIRGIN ISLANDS
29
• Collaborative effort with AICPA –CPA/SEA – NASBA & State CPA Societies
• 47 states passed legislation in three (3) years
• Maryland enacted it in 2008
What did we do when you were forced to have a license in every state you file
taxes in?
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An example ‐ CPE Regulations involved all levels – law, regulations, and procedures
Maryland Senate & House passes bill
A Bill SB 128From State Board
LawMaryland Governor signs into law
Maryland State Board of Public Accountancy
Clarify thru regulationsAnd enforce the law
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Changes the requirements to sit for the CPA exam to allow you to sit for the Exam upon completion of 120 hours (and the requirements of section 1 & 3) and get licensed upon completion of the final 30 credit hours (and the requirements in group 2)
An example of “us” - The 120/150 Hour CPA Exam Bill (HB 1137)
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A tale of two bills – clotheslines and 120/150 hours
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The clock runs out at midnight and we have to come back again next year
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Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010
Crisis hits news
Bureau of Consumer Financial Protection
848 pages!
533 regulations60 studies94 reports
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It’s 7:00 am at a town hall meeting in Aberdeen when the
AICPA alert comes in…
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More than 100 MACPA members call our senators and we defeat the amendment!
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Protecting by advocating for members (CPAs) = real results!
Retained independent structure of financial accounting standards (FASB)Modified provision to audit broker‐dealers (PCAOB)Exempted CPAs from CFPA registration due to existing licensing and oversightStopped excessive liability exposure for auditors (aiding & abetting)Commented on SOX 404(b) exemptions
Working together with the AICPA and many State CPA Societies achieved these:
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The Federal Issues – more waves of change
• H.R.5297 ‐ Small Business Jobs and Credit Act of 2010
• Estate Tax – on again – off again –on again
• FTC Red Flags rule – privacy & identity theft
• Tax Preparer Registration & PTIN issue
• Patient Protection Act & 1099’s
• Sub S. Employment Tax Issue
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Remember this? $3,500.00 penalty applies
AICPA members have 90 Days from the date the court decision is rendered to comply if the FTC wins – all
others must comply by 12/31/2010
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IRS Tax Preparer Registration
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MACPA Fed & State Tax listservs
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Update on PTIN
• Need “new” PTIN before 01/01/2011• Required for Signing Preparer or preparer of all or substantially all of tax return (major victory)
• Fee is $64.25• Only Actively Licensed CPAs exempt from exam• Registering gives your staff up to three years for exam
• CPAs in industry are exempt from filing for employers
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Health Care & 1099 issue
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Health Care & 1099 issue
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Health Care & 1099 issue
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Health Care & 1099 issue
We are still working on this – will be pushing Congress between now and 2012 to repeal this
bad legislation and will need your grassroots support
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The State Issues – cascading from the federal level and revenue shortfalls
• Maryland Privacy Act• Maryland Tax Preparer Regulations
• Maryland Consumer Protection & Debt Counselors
• Sales Tax on Accounting & Tax Services
• Combined Reporting
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Recent Leg / Reg Changes you need to know!
New Mobility LawMaryland Individual Tax Preparer ActNew Corporate Reporting RequirementsPeer Review Requirement – October 1stNew CPA Exam RequirementsNew CPE regulationsMandatory e‐fileNew Non‐Profit Audit Requirements > $500,000MD Independent Contractor Legislation
CPA Day in AnnapolisJanuary 19, 2011
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MACPA 2011 Agenda• Pass 120/150 legislation• Stop Sales Tax on Accounting
Services• Exempt CPAs from Debt
Counseling Bill• Stop Trial Lawyers attempts at
Tort Liberalization –Comparative Fault
• Pass Safe Harbor legislation
CPA Day in AnnapolisJanuary 19, 2011
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Help us help you – support our PAC
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Our State Tax Committee takes a proactive position in General Assembly
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Professional Standards are also rapidly changing
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What do these guys have to do with accounting standards?
A: More than you think
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SECFASB
FASBPCFRC
IASBIFRS & SME
PCAOB AICPAASB, ARSC, PRB
IAASB
AICPAPEEC
AICPAPEEC
IFAC
Public Company Private Company Int’l Company
FinancialReporting
Audit /Attest PerformanceStandards
Code of Conduct
Another way to look at standards & oversight
State Oversight & Enforcement of CPA LicenseCPALicensure
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Six Ways Convergence is happening1. FASB – IASB Convergence Project2. SEC IFRS – The Long and winding roadmap3. Private Company Standards4. AICPA Auditing Standards Board ASB Clarity
project5. AICPA Professional Ethics Executive
Committee – convergence6. Green / Sustainability reporting
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FASB – IASB Convergence Project extends deadline by six months to 12/31/2011
Source: Journal of Accountancy, August 2010
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The Blue Ribbon Committee narrows the field down to the final three
From seven to three options1. U.S. GAAP with Exclusions for Private Companies2. U.S. GAAP—Baseline GAAP with Public Company Add-Ons3. Separate, Stand-Alone GAAP Based on Current U.S. GAAP
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INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTION
Governmental auditors are also experiencing changes and convergence
• Increases in audits of ARRA
• Increases in A-133 audits
• Changes in Yellow Book
IAASB
IASB
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Maryland ranks in top five states with highest audit deficiencies with DOL
EBP Audits (401k) & 403(b) Audit Quality must be raised in
Maryland
MACPA worked with the DOL to put on our first Employee Benefit Plan Conference in May, 2010
Look for the second annual conference in May, 2011
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Sustainability is a growing global trend and showed up a key training needs for finance
professionals
www.integratedreporting.org
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70% of consumers are looking for businesses adopting sustainable business practices
Can green give you a competitive advantage?
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Globalization
As the globe shrinks,
opportunities grow for CPAs
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Globalization – Chinese auditors visit MACPA Towson CPA Center
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5 Forces of Globalization
1. Growth of consumers in emerging economies2. Technologies that empower consumers &
communities3. Increase in labor productivity in developed markets4. Shift of economic activity between and within
regions5. Increasingly global markets for labor & talent
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Growth is projected to come from overseas for the next five years while the
US remains flat
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Priority #1 Exports by Small to Medium Enterprises (SME’s)
• 33 % shipments overseas by UPS
• 25% of small practices had international clients
• US targets 100% increase in exports by SMEs
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It is not either global or local, it is AND…
Glocal
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Technology• Cloud• Mobile• Location‐based / Augmented Reality
• Security / Privacy• Social Media• XBRL
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Are you on Facebook?
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72% of Finance Professionals have a social media account
Source: Mergis Group Survey
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It’s the power of the network
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It’s the power of the network
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Social media = social capitalreal world examples
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72% Said it increased productivity by:
72% get answers to questions68% finding information needed to be successful62% know what kind of help is available
Source: CFO Magazine, July 2010
The Cost of Social Media Phobia?
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The IRS is on Twitter are you?
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The AICPA is on Twitter are you?
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The MACPA is on Twitter
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XBRL & the SEC Mandate
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MAPCA’s XBRL ProjectTrying to learn what it is all about
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Cost of compliance is rising
Source: US SBA Office of Advocacy
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Could we use $200 million a year for businesses and government in Maryland?
21.4 million people = $800 Million
5.6 million people = $200 Million?
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Workforce & Demographics
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Workforce & Demographics
Email Generation
Facebook Generation
These guys are retiring
These are making the purchasing decisions
These are the new workers
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5 Generations in the workforce
Live First, Work Second
Digital Natives
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They (younger generations) understand the technologies and values that shape the mind set of the
demographic. In short, they hold the answers to what it will take to transform and sustain a firm. - Jim Boomer
Are you already missing the next generation of clients?
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Bottom Line: How to keep your star talent• Engage your top performers• Coach tomorrow’s leaders• Manage your Millennials
Think A M P• Autonomy• Mastery• Purpose
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Bright spot?
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Despite major challenges, the CPA profession has maintained its trusted advisor status with the
public and investor communities Both Investors and Business Decision Makers rate CPA’s at the top of all professions, right after physicians.
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Accounting Firms Most Trusted Advisors
• Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups
• “Echo Boomers” (18‐34) rated accounting firms highest–74%
67%62%
55%51% 49% 47%
36%
Acctg FirmsBanksInvestment FirmsHealth Ins. Co.Mortgage CompaniesGov't regulatorsCredit Card Co.
Source: Harris Poll, May 18
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CPAs most profitable small businesses
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Why we are here and what we are doing about it
Why we are here and what we are doing about it
CPA
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Connecting our members to their Profession, each other, and the community
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Connect
• Connect to the Profession• Connect to each other• Connect to our community• Drive the market to our members
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Connect to students to fill the pipeline and promoting the CPA Career
Tomorrows CPA.org New/Young Professionals Network MACPA
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Connect – drive the market to our members
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New social media tools allow us to connect to more members in more
ways
MACPA won 2 out of top 10 Biz blogs in MD
MACPA social media efforts featured in J of A and won 3rd place in Mobbies,
Top 75 Biz blogs & Top 50 Accounting blogs
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Protect – the public interest and the CPA license and brand
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Finally, the penalty for practicing illegally as a CPA gets serious
11 ½ years in jailUp to $ 11,500
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The history of associations – Why do we exist?
The First Amendment of the US Constitution allowed “associations”:
• freedom of speech• to peaceably assemble• to petition the Government for a redress of grievances
Bill of Rights - submitted to the states for ratification on September 25, 1789 and adopted on December 15, 1791
US Constitution Bill of Rights
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Achieve – our mission is to help you achieve success in a
rapidly changing world
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Associations have enduring benefits for both the individuals and organizations that support them
“Association members earn, on average, $10,000 more per year than non-members” And are 19%
more likely to say they are “very-satisfied” with their jobs than non-members”
Source: Where the Winners Meet Study
by the William E. Smith Institute for
Association Research
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Top 10 Issues Facing CPAs1. Economic Outlook 2. Tax 3. Business Operations 4. Implementation and Execution
of Plans 5. New Business Development 6. Personal/Professional
Development 7. Management and Leadership 8. Financial Regulatory Reform 9. Access to Financing and Credit 10 New Accounting Standards,
IFRSSource: CPA Trendlines for AICPA Feb, 2010
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Top Ten Issues for MFG1. Regulatory/Legislative (56)2. Private Company Leadership (47)3. Capital Markets Awareness / Recognition (34)4. Rethinking Business Model (25)5. Protect Audit/CPA Franchise (20)6. Risk Management (Audit efficiencies) (20)7. Leadership Development / Succession
Planning (19)8. Global / International (Clients / IFRS /
Branding) (17)9. Leveraging Technology & Social Media (17)10. MFG Issues specific forums / focus groups (8)
107
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Business & Industry ResponsibilitiesAICPA Core – 1/3 of B&I Responsibilities
Financial accountingFinancial reportingAuditTax
2/3 Additional
1/3 Core
AICPA non-Core – 2/3 of B&I Responsibilities
Strategic planningSustainabilityBudgetingFinancial operations managementRisk management & internal controlsInternal auditGovernanceHR & benefitsIT, legal, purchasing
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1. Economic Recovery and the U.S. Fiscal Outlook2. Health‐Care Reform3. Employee Benefits4. Financial Regulatory Reform5. Global Convergence of U.S. GAAP and IFRS6. Financial Instruments7. Financial Statement Regulation8. Revenue Recognition9. Business Taxation10. *XBRL
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Top Ten Issues for FEI
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Grant Thornton report outlines 8 key areas for CFOs to focus on
1. Developing soft skills2. Understanding and applying international accounting standards3. Understanding complex accounting & auditing standards4. Adapting to an evolving regulatory framework 5. Addressing new external reporting needs6. Understanding ERP or IT systems & XBRL7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge & company's non-financial business drivers
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Top 10 Opportunities for CPAs1.Valuation2.Forensics and fraud3.Governmental –
State/local/NFP4. International
(IFRS and tax)5.Health care
6. Green / sustainability7. XBRL8. Tax planning9. Enterprise Risk
Management10. Renewable energy
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Achieve - Technical skills are not adequate to keep up with the rapidly changing world
1. Communication & Leadership
2. Strategic & Critical Thinking3. Focus on the Customer,
Client, and Market4. Interpretation of Converging
Information5. Technologically adept
We created our Business Learning Institute to research, develop and teach these skills
Top 5 Competencies for the future are:
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Achieve – Our own BLI program at the AICPA Leadership Academy
Our “soft” skills are nationally recognized!
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What is leadership and why is it important?
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Leadership = Multiplication• 15 X – ROI strategy as process & alignment
• 8 X – Strengths• 6 X – Trust & Engagement• 20 X ROI Culture• 10 X ROI Leadership
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How is leadership changing?
“What got you here won’t get you there.” – Emmanuel Gobillot - Leadershift
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How Leadership is changing?
From• Information Stocks• Pyramid• Push• Centralized• Contractual
To• Information Flows• Network• Pull• Distributed• Engagement
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Leadership is still about…
• Engagement• Alignment• Accountability• Commitment
“First I get all of my men facing the same direction.”- Napoleon
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Soft is HardHard is Soft‐ Tom Peters “In Search of Excellence”
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Turbulent times require new skills and new thinking
Source: Chief Learning Officer magazine
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Our research shows three major skills:
• Strategic thinking• Strengths‐based leadership
•Network leadership
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The Red Queen was optimistic!
"Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
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The Tortoise was right
Sometimes you have to go slow to go fast
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Elvis was wrong!What we need is
a little more conversation!
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Five Qualities of Extraordinary Leaders1. Sight - Ability to see emerging
patterns and shift perspective when necessary
2. Insight - Ability to learn faster than the rate of change in your industry
3. Create - Ability to think strategically and critically to gain insights that create new opportunities
4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work
5. Inspire – Ability to mobilize support and engage others to join you in ACTION
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The only question for leaders
Have I made you feel stronger and more capable?
Source: Emmanuel Gobillot -LeaderShift
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Leadership defined
The four most important words for organizations are, “what do you
think?”‐ Tom Peters
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Tom Hood, CPA.CITPCEO
Maryland Association of CPAsBusiness Learning Institute
(443) 632‐2301E‐mail [email protected]
Web http://www.macpa.orgBlog http://www.cpasuccess.com