Piu Keeping Up With Accounting Spring 2010 Salisbury

Keeping Up With AccountingSalisbury University BAP & IMA

March 9, 2010March 9, 2010

Tom Hood CPA CITPTom Hood, CPA.CITPCEO & Executive Director

Business Learning InstituteMaryland Association of CPAs

What is a Profession?Professions enjoy a high social statusProfessions enjoy a high social status, regard and esteem conferred upon them by society. This high esteem arises primarily from the higher social function of their work, which is regarded as vital to society as a whole g yand thus of having a special and valuable nature.All f i i l t h i lAll professions involve technical, specialized and highly skilled work. Training for this work involves gobtaining degrees and professional qualifications without which entry to the profession is barred Training also

CertifiedPublicprofession is barred. Training also

requires regular updating of skills. Source: Wikipedia

Public Accountant

Three Attributes of a Profession

1.A body of knowledgey g2.A code of conduct3 A public interest

“CPAs ARE the3.A public interest

CPAs ARE the DISCIPLINE in business!”Jim CollinsJim Collins

License > CertificationLicense > Certification

Certified & Licensed by the go ernment

Certified by an organi ationthe government

• CPA• Doctors

L

organization• CFP• CFE

CIA• Lawyers• Teachers• Regulated by federal & state law

• CIA• CITP• BVLS• PFSPFS• These are credentials not

governed by state lawResponsible to society

CPAs swear oath to “protect the public interest”interest

Maryland DLLR Swearing-in of new CPAsJune 28, 2010

At the MACPA Member Summit

y g

How to become a CPA?The Four E’s - Maryland Example

1 Education – Bachelor’s degree + 30 hours1. Education Bachelor s degree + 30 hours2. Examination – Pass the Uniform CPA Exam3. Ethics – Maryland requires a separate ethics

examexam4. Experience – 1 year of experience working with a

CPAThereafter, they are required to complete 80 hours of continuing education every

two years, including four hours of ethics training.

Most states abide by some version of these criteria which are covered in a conceptMost states abide by some version of these criteria which are covered in a concept of “substantial equivalency in the Uniform Accountancy Act by the AICPA-NASBA

The “New” CPA examFour PartsFour Parts

1. Auditing & Attestation2. Business Environment Concepts3 Fi i l A ti & R ti h d t3. Financial Accounting & Reporting - hardest4. Regulation

60

3rd Annual Investor Education SurveyLevel of Investor Confidence in U.S. Capital Markets

40

50

20

30

0

10

G t d l Q it bit S V littl NGreat deal Quite a bit Some Very little None

2008 2009

Attitudes toward CPA CredentialAttitudes toward CPA Credential

76% 74%%

60%66%

43%

31%

43%InvestorsBDMs

More confident in a job done by a CPA than if it 

were done by an accountant not a CPA

CPA requires more rigorous training and testing than any other fi i l d i l

Accountants certified by non‐U.S. organizations, such as the 

Association of Chartered Certified Accountants (ACCA), accountant not a CPA. financial credential. are just as qualified as CPAs.

9

Top 5 Attributes of CPAs from the public (investors & BDMs)(investors & BDMs)

• Has integrity• Competent• Competent• Objective• Able to synthesize• Able to synthesize

information• Focused on client• Focused on client

needs

10

Benefits of being a CPA professionalS i h• Service to others and the communitycommunity

• Doing work that mattersmatters

• Being on the cutting edge ofcutting edge of society

• Being in onBeing in on what’s happening

• Belonging to a g gcommunity of professionals

Our members are feeling a tsunami of changestsunami of changes

Q: What is the # 1 Issue facing all CPAs?

12

A: Keeping up with changing standards & regulations

The Perfect Storm of Trends & Forces

• EconomyS d d L i l i & R l i• Standards, Legislation & Regulation

• Globalization• Workplace & generations• TechnologyTechnology

13

What are MACPA members saying?

What phrases, images, topics stuck out p , g , pfor you?

• Generations• IFRSIFRS• XBRL• Social Networking

T• Transparency • Change!

Top 10 Issues Facing CPAs1. Economic Outlook 2. Tax 3 Business Operations3. 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 Credit9. Access to Financing and Credit 10 New Accounting Standards, 

IFRS

Source: CPA Trendlines for AICPA Feb, 2010

The economy is uncertainWhi h ill it b ?Which will it be?

• Pending home sales index rose 6.4% in August to the highest l l i M h 2007 (N ti l A i ti f R lt )level since March 2007 (National Association of Realtors)

• Spending by U.S. consumers climbed in August by the most since 2001 (Commerce Dept.)( p )

• Unemployment rate climbs to 9.8% (Labor Dept.)

Slow Growth Double Rebound

Slow GrowthDip

A useful framework to understand the CPA professionthe CPA profession

What does the CPA profession support?What does the CPA profession support?What is under the CPA Profession?

Federal Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB

CPA Profession Standards – AICPA & FASB GASB FASAB IASB IFAC& FASB, GASB, FASAB, IASB, IFAC

State CPA Statutes

police power of the states to protect their citizens vs commerce clause

Another View

SEC FASB IASB

Public Company Private Company Int’l Company

Financial SECFASB

FASBPCFRC

IASBIFRS & SME

FinancialReporting

PCAOB AICPAASB

IAASBAttest PerformanceStandards

AICPA AICPA IFACCode of Conduct

PEEC PEECIFAC

CPAState Oversight & Enforcement of CPA License

CPALicensure

US Treasury

MD ComptrollerMD Comptroller

MD Comptroller

CAQ

Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA

Standards Changes• AS 5 - PCAOB• AS 5 - PCAOB• IFRS – SEC International gets legs (again)• Fair Value Accounting• XBRL – SEC mandatory• Codification Project – FASB• Clarity Project – ASB

– Convergence with international• Reliability Project (comps & reviews)• DOL 403 (b) Plans• DOL 403 (b) Plans• Internal Control – COSO• Fin 48 effective 2009

990 C• Form 990 Changes• Fraud & Forensic SAS 99• FASB – IASB Convergence Project

“the basic physical and organizational t t d d f th ti fstructures needed for the operation of a

society or enterprise”

The infrastructure for the free market was found to be in disrepair in this latest market crisis and the CPA profession is a critical

componentcomponent

What happens when the infrastructure breaks?breaks?

• Fair Market Value (Acctg Standards)• Futures & DerivativesFutures & Derivatives• Investment Advisors & Broker-Dealers

When is the last time these guys had accounting as the major topic of their agenda?

Where do major changes come from?Us – MACPA & AICPA Them

OR

“No man’s life, liberty, or happiness are safe when the legislature is in session”the legislature is in session

– Mark Twain

IRS 7216, FTC Red Flags, Sales Tax on Services, Tax Preparer regulations, Wall Street Reform Act Sarbanes-Oxley ActReform Act, Sarbanes Oxley Act…

An example of “they” - The Consumer Financial Protection Act

1. Promote robust supervision and regulation of financial firmsfirms

2. Establish comprehensive regulation of financial marketsmarkets

3. Protect consumers and investors form financial abuseabuse

4. Provide the government with the tools it needs to manage financial crisisa c a c s s

5. Raise international regulatory standards & improve international cooperationp

http://www.financialstability.gov/docs/regs/FinalReport_web.pdf

An example of “us” - The 120/150 H CPA E Bill (HB 1137)Hour CPA Exam Bill (HB 1137)

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 creditcompletion of the final 30 credit hours (and the requirements in group 2)

GlobalizationGlobalization

IFRS – International Financial Reporting StandardsFinancial Reporting Standards

"Accounting standard setters should take action to make significant progress towards a single set of high g p g g gquality global accounting standards by the end of 2009.“ – from G-20 Report The Washington Action Plan

SEC Roadmap releasedSEC Roadmap releasedEarly adopters can file using

Large Acceleratedcan file using

IFRS 2010

Accelerated Filers2014

Small-caps2016

2011Official SEC

decision

2015Accelerated

filersdecision point

filers –second wave

GAAP, IFRS & Private Company standards

2,500 pages 25,000 pages

Workforce /Generations

Pipeline - Good Newsp20% avg increase in

Graduates & enrollments!

Staff Shortage + Four Generations in workplace = Trouble!workplace = Trouble!

90,000,000

70,000,00080,000,000

StaffShortage

50,000,00060,000,000

30,000,00040,000,000

010,000,00020,000,000

0Matures Boomers X'ers Millenials

Four Generations in the WorkplaceIssue: Generational Differences

• Matures 65 - 100• Boomers 46 - 64• Gen X 30 - 45• Millennials 11 - 29

Which one are you?

Another way of looking at this…Another way of looking at this…

Self Actualization

Belonging Needs

Esteem NeedsEsteem

Safety Needs

Belonging Needs

Love & Belonging

Physiological NeedsSafety & PhysiologicalSafety & Physiological

Maslow’s hierarchy of needs

Here comes the Net Generation"There is plenty of cause for alarm and/or optimismThere is plenty of cause for alarm and/or optimism when it comes to my generation; even I can see that. Still I think the negative views of us come from a fear of the unknown, a fear of change. Our world is evolving at a rapid rate, and that can be scary for

ld tiolder generations— Savannah Jones, 17, Portland, Oregon

NGenophobia—the irrational and morbid fear of youth, especially with regards to their use of the Internet

GenerationsGeneration Gap? Or Generation Lap?Generations

One third (35%) of American adult internet users have aadult internet users have a profile on an online social network site, four times as many as three years ago, but

ill h l h h 6 % fstill much lower than the 65% of online American teens who use social networks

“In 1997, young people for the first time were recognized by adults as being th iti thi t l l ti digital technology interactiveauthorities on something truly revolutionary – digital technology, interactive

media, and collaboration.” – Don Tapscott “Growing Up Digital”

Technologygy

• Information Security Management

• Privacy Management

• Training & Competency• Identity & Access

Management• Privacy Management• Secure Data File Storage,

Transmission and

Management• Improved Application &

IntegrationExchange

• Business Process Improvement / Work Flow

g• Document, Forms, Content

& Knowledge ManagementEl t i D t R t tiImprovement / Work Flow

• Mobile & Remote Computing

• Electronic Data Retention Strategy

p g

The SEC Mandate

By 2010 Millenials/Gen Y-ers will outnumberTechnology & Web 2.0

By 2010, Millenials/Gen Y ers will outnumber Baby Boomers.

The New Math

Social Networking (Old)

Social Media (New)+A change in the way we build= A change in the way we build 

relationships=

Source: Matt Goddard, CEO R2integrated 

Old School vs. New School

Chamber of Commerce

Class Reunions

Friends and Family

E‐mail

I d t M tiIndustry Meetings

NewslettersNewsletters

It’s all about your WhuffieIt s all about your WhuffieWhuffie is the culmination of your reputation, 

i fl b id i d b di i linfluence, bridging and bonding capital, current and potential access to ideas, talent 

d d f dand resources, saved‐up favors, and accomplishments.

‐ Tara Hunt “The Whuffie Factor”

It’s about the Network Effect

How big is your 

network?

“In a sentence {to recognize a network} means ‘To discover how A, who is in touch with C,Is affected by the relation between B and C.” – Russ Eckel “Becoming the Eye of the Tiger”

Whuffie Example

Get found – Digital FootprintsGet found  Digital Footprints

Use the tools and don’t let the tools use you!you!

• Social media requires loosening the reins onloosening the reins on technology platforms and accessS i l di• Social media management requires constant care and feeding, as well as 

i imonitoring• Because social media is 

MASS media mistakesMASS media, mistakes and missteps are 

amplifiedamplified 

nGenophobia is out there…nGenophobia is out there…

Social Notworking is a managerial problem, not a technology problem.

If a salesman spends his day making personal phone calls rather than phoning potential customers, the solution is not to take away the phone. The solution is to make clear what i d i t t blis and is not acceptable behavior and…

Discussion at AICPA Leadership AcademyDiscussion at AICPA Leadership AcademyChicago, July, 2009

Next steps…1. Educate yourself –

www.cpalearning2.com2. Create your digital footprint. Create y g p

profiles on Facebook, LinkedIn and Google. 

3. Start listening. Use Google Reader or Bloglines to begin reading thoughtBloglines to begin reading thought leaders in your profession or areas of interest. 

4. Continue listening. Create your Twitter4. Continue listening. Create your Twitteraccount and follow your profession and areas of interest. 

5. Start sharing. Create a blog and record h hyour thoughts. 

6. Share. Recognize and promote the people you find interesting. 

What is different about where we are now?

“As it relates to science and technology, the rate of change in the next decade is likely to be 4 to7 timeschange in the next decade, is likely to be 4 to7 times

faster than in the last decade. If it is 4x faster it would be like planning for 2010 in 1890, if it is 7x faster it

would be like planning for 2010 in 1670 ”would be like planning for 2010 in 1670.-Expert on Education Panel, The Aspen Institute, 2007

The meta map of the I2A™Strategic Thinking System provides an architecture or framework to structure thinking and conversation as you

53

architecture or framework to structure thinking and conversation as you engage. When talking about complex issues that aren’t completely understood, or debating solutions where there are multiple points of view, it is easy to get lost in the conversation and prematurely locked into a solution.

Five Qualities of Extraordinary Leaders1. Sight - Ability to see emerging

patterns and shift perspective when necessary

LC 2. Insight - Ability to learn faster than the rate of change in your industry

3 C tLC

3. Create - Ability to think strategically and critically to gain insights that create new opportunitiesopportunities

4. Communicate - Ability to collaborate inside and outside your organization and to build you o ga a o a d o bu dand sustain social networks of people engaged in the work

5. Inspire – Ability to mobilize psupport and engage others to join you in ACTION

What is above knows what is below, but what is below does not know what is above. One climbs, one sees One descends one sees no longer butone sees. One descends, one sees no longer, but

one has seen. There is an art of conducting oneself in the lower regions by the memory of

what one saw higher up. When one can no longerwhat one saw higher up. When one can no longer see, one can at least still know.

-Rene' Daumal

“The faster you go, the further ahead you have to see.”

So what does the future look like for CPAs?

The Year of the CFO

As financial skills are valued more highly, CFOs will make it to the corner office in greater numbers than before. Recession, credit crunch and the increasingly complex nature of global companies will all play directly into the bean counter’s handsdirectly into the bean counter s hands.

Source: The Economist Magazine The World in 2009 Nov, 2008

Accounting is the quickest path to the corner officethe corner office

1. Broader and longer line of sight (future focus)

2. Network leadership 3. Strong analysis skills

(financial and ti l)operational)

4. Communication skills5. Global perspective

Top 5 skills of the post-recession leader p p– CLO Magazine

In 1997, the CPA profession crowd-sourced its future with over 3,500 CPAs in the CPA Vision P j tProject

Our core purpose, our reason

CPAsCPAsCPAsCPAs

p p ,for being is

CPAs...CPAs...Making senseMaking sense

CPAs...CPAs...Making senseMaking senseMaking sense Making sense of a changing of a changing Making sense Making sense of a changing of a changing and complex and complex

worldworldand complex and complex

worldworldHere is what they world.world.world.world.Here is what they said…

Our Vision Statement for the future is:( mandates to ourselves for a successful future)

CPAs are the trusted professionals who enablepeople and organizations to shape their future.C bi i i i ht ith i t it CPA d li l b

• Communicating the total picture with clarity and

Combining insight with integrity, CPAs deliver value by:

picture with clarity and objectivity,

• Translating complex g pinformation into critical knowledge,

• Anticipating and creatingAnticipating and creating opportunities, and

• Designing pathways that t f i i i t littransform vision into reality.

This means we want to move up the business value chain & add value by:business value chain & add value by:

Business Infor Knowl DeciBusiness events Data Infor-

mationKnowl-edge

Deci-sions

Communicating with clarity and objectivityCommunicating with clarity and objectivityCommunicating with clarity and objectivityCommunicating with clarity and objectivity

Translating information into knowledgeTranslating information into knowledge

Anticipating and creating opportunitiesAnticipating and creating opportunities

Designing pathways to transform vision toDesigning pathways to transform vision toDesigning pathways to transform vision to Designing pathways to transform vision to realityreality

Using these competencies needed for a changing & complex worldp

• Change Management (C)St t i Abilit (S)

• Communication & Leadership

2008 – Deloitte Research 1998 – CPA Vision Project

• Strategic Ability (S)• Critical Thinking (S)• Business Perspective (C)

Leadership• Strategic & Critical Thinking• Focus on the Customer, • Business Perspective (C)

• Organizational Agility (C)• Dealing with Ambiguity

Client, and Market• Interpretation of Converging

Informationg g y(S)

Information• Technologically adept

C – CatalystC – CatalystS - Strategist

Standing on these core values

S h t d thi t ?So what does this mean to you?

How to avoid the “lost generation” syndrome

66

Are you an untouchable?A W hi t l f i d tlA Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed.

He said it was interesting: lawyers who were used to just showing up and having work handed to themand having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn’t there. j

But those who have the ability to imagine new services, newto imagine new services, new opportunities and new ways to recruit work were being retained They are the newretained. They are the new untouchables.

Are you indispensable?Imagine an organization with an employee who can accurately see the truth, understand the situation, and understand the potential outcomes of various decisions.outcomes of various decisions. And now imagine that this person is also able to make something happenhappen.

This is our leader, our marketer, our linchpin!

Six Career Lessons from Johnny Bunko

1. There is no plan2 Think strengths not2. Think strengths, not

weaknesses3 It’s not about you3. It s not about you4. Persistence trumps talent5 Make excellent mistakes5. Make excellent mistakes6. Leave an imprint

Who is in charge of your career?1 Know thyself what are1. Know thyself – what are

your strengths? Passion? Your hedgehog?

2 O ttit d &2. Own your attitude & behavior

3. L>C Learn faster than your profession / industry

4. Use your sight and insightsg

5. Relationships are the new “hard” skill

6 Communication6. Communication, communication, communication

7 Use the tools don’t let7. Use the tools, don’t let the tools use you

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632‐2301E mail tom@macpa orgE‐mail tom@macpa.org

Web http://www.macpa.orgBlog http://www.cpasuccess.com

MACPA resources• CPA Success, our daily blogwww.CPASuccess.com

• CPA Spotlight, our weekly podcastwww.macpa.org/podcast

• Other MACPA blogs:

• wwwCPALegislativeInsider com• www.CPALegislativeInsider.com

• www.NewCPAs.com

• CPA Learning 2, a Web 2.0 playground by CPAs for CPAswww.CPALearning2.com

72

Professional Issues UpdateSpring, 2010Spring, 2010Tom Hood, CPA.CITP

CEO & Executive DirectorMaryland Association of CPAs

http://www.MACPA.orgt @tom@macpa.org

• Follow me on: Twitter: http://www.Twitter.com/tomhood LinkedIn: http://www.linkedin.com/in/tomhood Facebook: http://www facebook com/thoodcpa Facebook: http://www.facebook.com/thoodcpa Plaxo: http://tomhood.myplaxo.com Slideshare: http://www.slideshare.net/thoodcpa Youtube: http://www.youtube.com/thoodcpa Second Life avatar name: Rocky Maddaloni