Choose Your Words Carefully: What These Phrases can Reveal About You

April 11, 2013

The other day, I had one of those moments of clarity. It was that moment managers have when they are surprised by one of their reports sharing a phrase that the manager often uses.

Alan Deichler

Alan Deichler

It’s possible that most of the time the manager won’t even know how they influence those around them until they are given feedback, like a word or phrase they hear you use often.  In this case, my phrase was, “help me understand.”

I had no idea that I used that phrase.

I pondered the feedback for a while, unsure whether I liked that I used a phrase that my team associated with me when I didn’t really know I even used it. After thinking about it, I believe, I like the phrase.

I’ve decided “help me understand,” if used properly is a great way to identify and learn.   As I thought through my usage of the phrase, I came to realize I use it just prior to asking a question about the subject I want to know more about.  It is a way to inspect what I have delegated.  I also found that the phrase comes with two areas that will reveal the kind of manager you want to be.

First, follow up the first statement with an open-ended question rather than a one that directs toward a particular response to leave room for staff to elaborate.  For example, steer clear of the way an attorney would cross-examine a witness.  They will often use a question that most likely will start with the words “Did,” “Do,” “Are,” and “Will.”  They steer the answer in a direction that they want it to go.  I want to learn something new including updates, status, progress and such.  In order to accomplish that these questions must start with words like “How,” “What,” “Where” and “Why.” Read the rest of this entry »

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What Would The U.S. Debt Be If An Accountant Was In Charge?

February 26, 2013
Art Winstead

Art Winstead

It’s always bothered me there has never been a T.V. series or a good movie using an accountant or an accounting firm as the star.

For that matter, I do not know of any athletes that majored in accounting while in college. Nor have I heard of an accountant that became a famous rock star or rapper. Those thoughts have clouded my mind for a number of years.

Okay, so the world may not welcome us to the stage, the screen or athletic fields, but consider this:

What if there was an accountant in charge of the U.S. budget? That’s right; one of us bean-counting nerds in charge of the U.S. budget.

Maybe we could even be granted the title of an appointed Presidential Czar. Now, that would be pretty cool, interesting and no doubt challenging. Think about it, a “CPA Czar,”or the “Czar CPA,” the opportunities are endless.

I just “Binged” US National Debt Clocks (Yep, I am “Binging” now. I got tired of “Google-ling”).

The clock that I selected from the search documented an astounding $16,595,134,780,792 as the amount of the U.S. national debt. That’s real money. It’s more money than I have been associated with as a reporting accountant or auditor. To put it in perspective, it would take 256,964,529 dollars going around the world 64,581 times to amount to the size of the U.S. debt.

So, let’s put the accountant in charge. Think about it:

  • The U.S. books would balance. Have you ever thought about where are all of those debits for the other side of all the U.S. debt credits?
  • The accountant would have all the variable interest entities properly accounted for.
  • The accountant would have the fair value of the U.S. debt fairly stated. Think about that – what is the value of the U.S. debt? Is the value of the almost $17 trillion the U.S. owes? Would the U.S. Government Accountability Office still issue a disclaimer of opinion on the U.S. consolidated financial statements. I am sure the consolidated financial statements recognize all the U.S. government variable interest entities or certainly all component units.
  • If an accountant were in charge, what would the communication letter to those charged with governance read like as to significant deficiencies and material weaknesses? That begs the question; perhaps all deficiencies in internal control for the U.S. are indeed material weaknesses.

I see no reason not to put an accountant in charge of the U.S. debt, could it be any worse?

 

Art Winstead is the Director of Accounting and Auditing Services for CPAmerica International. He has over 30 years of experience with Davenport, Marvin, Joyce & Co., LLP. He manages technical resources, engagement support, audit practice matters, reviews A&A publications for CPAmerica and is a part of the Expert Services team.

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Four Important Elements in Developing A Cybersecurity Policy

November 20, 2012

caution tapeCybersecurity Tips from HPG and Poyner Spruill

By Brooks Malone and Elizabeth Johnson

Corporate directors, general counsel and CIOs have all named cybersecurity as their primary concern, according to a recent survey. Accounting and financial records are a huge target for cyber thieves. The first step in protecting your firm’s data, and that of your clients, is to develop a foundational security policy with trained professionals to implement it, as well as conduct risk assessments on a regular basis. Four important elements in developing and implementing a security policy:

  1. Understand your compliance obligations. A growing body of law dictates information security requirements and noncompliance can result in serious penalties.
  2. Create a data inventory. Know what data you have, where it is stored, and how it is used. Classify data and devices by criticality so you can prioritize recovery and management efforts.
  3. Segment your network. An intrusion into one component should not mean that the intruder has ready access to the entire network.
  4. Encrypt portable devices. In addition, Bring-Your-Own-Device (BYOD) policies have a negative effect on cybersecurity. Employees using their personal smart phones, tablets and computers to access, store and share company files can create a risk. Furthermore, a lack of control over threat protection on these devices places user names, passwords and other account information in jeopardy.

A good resource for small business is the Cybersecurity Planning Guide developed by the FCC.

It should go without saying, don’t forget the basics. More importantly, enforce them. Most business owners and executives are aware that the next four tips are good practices. However, following them is difficult.

  1. Do not use default or “out of the box” passwords and settings. Require strong passwords and/or dynamic authentication and periodic changes to credentials at least every 90 days.
  2. Protect your network and infrastructure from untrusted elements. Anti-malware software is a must, but it still only blocks known malware. Firewalls, Intrusion Prevention, and Web Content Filtering can help prevent and detect attacks.
  3. Train your employees on your programs and keep them aware of threats. They need to understand not to give information over the phone, not to click links and open attachments from unknown senders, and not to re-use and share passwords.
  4. Terminate access rights promptly and completely when an employee or provider leaves or their role changes.

Taking these and other appropriate security steps will not only reduce your business’ vulnerability to a cyber security attack, but also improves compliance with information security regulations while reducing the likelihood of suffering a reportable security breach. Failure to institute a cybersecurity plan opens the door to theft of valuable data, liability and government enforcement, and reputational harm. Cyber security preparedness is no longer just a good idea; it is a necessity for compliance, risk mitigation, and a strong business model.

 

About Brooks Malone:
Brooks Malone is a CPA and firm partner with Hughes Pittman and Gupton, LLP, one of the largest CPA firms headquartered and staffed in the Research Triangle Park region of North Carolina. He works with clients in a variety of industries including information technology, medical device, life science and biotechnology, construction and real estate, service companies and non-profit organizations. His areas of concentration include financial reporting, business consulting and financial planning. Malone can be reached by emailing bmalone@hpg.com or calling (919) 232-5905.

About Elizabeth Johnson:
Elizabeth Johnson is a partner with the law firm Poyner Spruill LLP. Her practice focuses on privacy, information security, and records management. Johnson’s comprehensive, practical approach to privacy law is reflected by the diversity of her clients, which hail from a variety of industries including health care, financial services, insurance, retail, telecom, utility, technology, consumer goods and client services. She has also worked with organizations of various size and scope, ranging from Fortune 100 companies with international reach to local charities. Johnson can be reached by emailing ejohnson@poynerspruill.com or calling 919.783.2971.

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Posted by cpamericaintl

Are you taking advantage of the growth potential in international business?

October 30, 2012

International business development in public accounting is no longer just a specialty niche practiced by a select few.

Rapidly advancing communication technologies and increased global competition have resulted in a smaller world when it comes to doing international business.

CPAmerica International launched its own International Group amid growing international opportunities and a need for association members to look farther outside the box for firm growth.

While everyone can acknowledge the state of international opportunities, not all firms, even the most successful, are confident about how to get started in such unfamiliar territory.

Hesitation can range from not knowing what international business exists in a market and a misunderstanding of what services translate to global business, to a fear of language barriers preventing effective communication.

Beginning this past summer, CPAmerica gauged interest in participation from members on international business topics and conducted its first international group sharing call.  Gale Crosley, CPA, of Crosley + Company, facilitated the call, telling members that the key to beginning an international practice is to get rid of “border thinking.”

Being a U.S. business, with what seem like U.S. clients, does not necessarily mean opportunities are limited to the United States.  As Crosley pointed out, according to the Small Business Administration, four out of ten small businesses are engaged in some degree of international commerce.

Associations with international reach, like CPAmerica, can facilitate this new venture for many firms.  As momentum on the initiative continues to build, CPAmerica International will host a live International Group meeting in Atlanta on Dec. 5. Read the rest of this entry »

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10 Key CPA Firm Leadership Traits

October 16, 2012

Leading a large, multi-owner, CPA firm as managing partner demands skill far beyond technical competency and favorable personality traits.

The effective firm leader is able to herd the firm toward a common vision and prioritize strategies to support the vision, while demonstrating optimism and positive energy each and every day.

The philosophy of CPAmerica International is that many can “manage” a firm, but conscientious firm management is not enough.  The top performing firms in the country have a firm “leader” who has essentially mastered those special behavioral characteristics that contribute to effective leadership.

Although not an exhaustive list, key CPA firm “leadership” traits are:

  • Demonstrating optimism and positive energy under all circumstances, thus motivating and inspiring others even when faced with adverse circumstances
  • Establishing the firm vision and mission in a manner that achieves buy-in from others
  • Setting strategy and priorities and accountability measures to drive performance and achievement
  • Hiring and keeping great talent in a manner that supports firm succession
  • Focusing on a culture of customer focus
  • Building high performance teams, and reshaping low performance teams
  • Delegating and empowering others, thus embracing trust in others
  • Coaching and developing talent, including the talent of fellow owners who were once peers
  • Managing complexity and ambiguity, thus being the one to decide how to decide
  • Maintaining perspective, including humility and gratitude

On Sept. 18 in Denver, twenty relatively new Leading Partners of CPAmerica International member firms gathered to support their common mission to improve through sharing.

This select group had one thing in common – all had been firm leaders for less than three years.  All had been preceded by a leading partner who had set a high bar before their game began. Read the rest of this entry »

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What Happened to all of Those Variable Interest Entities?

September 26, 2012

 

It has been approximately 10 years since preparers of financial statements have been required to consolidate entities that may not have common ownership in excess of 50% (first required with the issuance of FIN 46-R).

This 50% rule was more formally recognized in regard to control through a quantitative measure of voting interest greater than 50%. The reasons for the additional requirement in 2003 had as much to do with entities that were accounted for “off balance sheet” in comparison to those entities in which the more-than-50% threshold existed between common ownership entities.

Keep in mind that FIN 46-R was an interpretation of ARB 51 which replaced FIN 46.

And yes, what we commonly refer to as “FIN 46” is all incorporated in the guidance within FASB Codification Topics 810, 805.

Some of the more discussed reasons for expanding the requirements included:

  • Loans and/or notes receivable
  • Guarantees
  • Certain insurance contracts
  • Derivative contracts
  • Leases
  • Service or management agreements

The requirements became more qualitative as compared to the previous guidance which was based on a quantitative measurement requirement, i.e., the 50% rule.

The new requirements in 2003 were met with much disagreement and confusion as to why – and how – these new requirements should be applied. Read the rest of this entry »

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Choosing The Right Organizational Structure For Your Business

September 20, 2012

 

One of the most important decisions you’ll make for your company is what form of business organization – or business entity– your organization will be.

What are the advantages and disadvantages of your business being a C corporation? An S corporation? A limited liability company? A partnership?

Today’s business owners have many options to choose from when it comes to corporate organizational structure. There isn’t one right answer for every business.

What factors influence entity choice?

Two major considerations in choosing what form of business entity you should use and whether you should incorporate your business are:

  • Protection from legal liability
  • Income tax savings

Most business owners see liability protection and tax reduction as the most important factors affecting entity choice. Liability protection may be obtained even if the selected entity is not a corporation, but state laws vary so it is imperative you consult with legal counsel regarding your state’s liability laws. However, contract terms with lenders, suppliers and other parties may trump liability protection of the entity.

Choosing which business entity is best for your company can be one of the most confusing decisions you have to make. It is also one of the most important ones.

The selection of your company’s entity is a decision that should not be entered into without considerable analysis and professional advice.

Corporations

Corporations are legal entities that are owned by stockholders, and ownership shares may be easily transferred. The life of corporations can extend beyond the participation of their founders. One of the chief advantages of corporations is that the owners are limited in their personal liability to creditors and lawsuits.

  • C Corporation There are no restrictions on the type of shareholder that can own a C corporation. C corporations are taxed as separate entities subject to a separate tax rate schedule.

An advantage of C corporations, unlike S corporations, is that there is no shareholder tax on undistributed earnings.

Another advantage is the tax benefit available for some small businesses organized as C corporations. Small business stock purchased after Sept. 27, 2010, and before Jan. 1, 2012, and held for more than five years, the owner’s entire gain is tax free upon sale. The company that issues the stock must meet technical qualification rules. Qualified small business stock purchased before Sept. 28, 2010, may qualify for partial exclusion of gain. Although this provision is not available for purchases of small business stock in 2012 and subsequent years under current law, it may be extended.  Be sure to check with your tax adviser on the status of this important tax benefit.

C corporations are commonly used by entities planning to go public.

One of the primary disadvantages of a C corporation is double taxation, in which income tax is paid at the corporate rate before any profits can be paid to shareholders. Then shareholders’ dividends are subject to income tax again at the individual rate.

Tax strategies to withdraw earnings in a deductible manner, such as through salaries, rents and interest, may alleviate this double tax burden. Double taxation may also be a major disadvantage upon eventual dissolution. In addition, C corporations may be subject to the accumulated earnings or personal holding company tax.

  • S Corporation An S corporation is a domestic corporation that can’t have more than 100 shareholders, has only one class of stock, and has only U.S. citizens and residents as shareholders. In addition, shareholders generally must be individuals, estates or some trusts.

Named because it is taxed under Subchapter S of the Internal Revenue Code, an S corporation is a U.S. corporation and is taxed as a pass-through entity in which taxable income is taxed to shareholders on their personal tax returns in proportion to their ownership percentage of the S corporation. For state corporate law purposes, S corporations are treated the same as C corporations regarding limited liability. S corporation status must be elected.

The primary advantage of this form of organization is that shareholders have the organizational benefits of a corporation but escape the double taxation of a C corporation. The overall tax burden is lower for profitable businesses when the owners collectively are in a lower marginal income tax bracket than the corporation. Since any profits are taxed to the shareholders in the year they are earned by the S corporation, they generally are not taxed again when they are distributed (as with C corporations). And owners may be able to deduct losses on their income tax returns to offset other income on their returns.

Close attention must be paid to maintaining the necessary basis (and other criteria) to deduct these losses, including correct structuring of corporate debt. Unlike partnerships, debt of the entity does not give S corporation owners basis. The only basis S corporation owners get from debt is any loan directly from the owner to the S corporation. Read the rest of this entry »

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What are you getting out of your CPE training?

August 29, 2012

National Registry of CPE SponsorsDespite generous expenditures, most CPE training dollars filter into a black hole from the standpoint of benefit to the sponsoring CPA firm.

Beyond licensure CPE requirements and individual career development, the sponsoring firm should pay attention to ways it can further maximize those training dollars.

The biggest shortcoming I see among CPA firms is to arrange, schedule and pay for a CPE experience and then not expect the trainee(s) to be debriefed following the training and – further – to not challenge the trainee to “apply” the training in some practical way to contribute to the betterment of the firm.

Firms should consider a recommended process for training, such as:

  1. Match both hard and soft skills training to the career path of the individual.
  2. Hold a pre-training meeting with the trainee before each training event to discuss his or her expectations and the firm’s expectations, to encourage note-taking during the training and to plan to debrief others after the training.
  3. Hold a post-training meeting with the trainee immediately following each event to discuss how the training applies to personal career development, as well as to identify any aspects of the training that can be leveraged throughout the firm.  Specifically, discuss with the trainee the three ideas they want to remember, put into action or change, both on a personal and on a firm level.
  4. Consider placing the trainee in a “training” role so they can re-teach what was learned to others in the firm.  This approach may also qualify for in-house CPE credit for participants.
  5. Set measureable goals to be accomplished as a result of the training.  Revisit progress quarterly.

I’m excited by the requests I receive for guidance on training from learning directors at CPAmerica member firms.

Good tax and audit training is available in many shapes and sizes from a variety of professional vendors and state societies dedicated to quality.  But meaningful soft skills training can be much more difficult to find and is a frequently lost benefit to the firm if a follow up process is not implemented. Read the rest of this entry »

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How to Build a Firmwide Pipeline Meeting

August 23, 2012

At all levels, people will do as they are measured.

This principle underlies the purpose of a pipeline meeting.

A group under the pressure of identifying and presenting changes in the status of prospective clients will likely increase sales activity.

What is a sales pipeline?

A sales pipeline is a report that is recorded and published by the participant for review among colleagues and superiors.  The real concept is that, if sales progression is written or saved for examination, there will be more sales and business development activity.

What do we measure?

Many firms struggle with determining what, exactly, they will measure with the pipeline. The pipeline report can be based on an accepted, formal business development process.  Or it can be a self-designed process based on the firm’s own recognized categories for development of a prospect through the sales process.

The important factor is consistency and regularity of reporting from meeting to meeting.  As the individual prospect is compared to other prospects and moves through the development process, the expectation is that the firm’s responsible individual will do what is required to make the sale.

The process starts by tracking basic information on the targeted prospect, including:

  • Prospect name
  • Decision maker(s)
  • Contact numbers

Also recorded and presented should be a definition of the status of the effort.  It may include selling stages such as: Read the rest of this entry »

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CPAmerica Has Moved! Please update your contact lists.

August 14, 2012

This has been a ­summer filled with changes for us here at CPAmerica International.

We revealed a new logo, moved to a new office and received all new phone numbers. Change can be revitalizing and nerve wracking, but throughout our changes, we want to make sure our members always come first.

We want to remind you that we are always available via email or phone to assist any of you. Feel free to email us or contact us, as always, with any questions, concerns or just to say hello!

New address: 104 N. Main St., 5th FL, Gainesville, FL 32601

New phone: (352) 727-4070

Sincerely,

The CPAmerica Team

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