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Fraud and Forensic Accounting IssueThe future of forensic accounting

Do you need a whistle-blower policy?

Financial statement fraud

Occupational fraud: protect your company

PRSRT STDU.S. POSTAGE

PAIDPERMIT NO. 1077TWIN CITIES, MN

table of contents

MNCPA Footnote April 2011 3

features

8-11 Detect and prevent fi nancial statement fraudHistorically, fi nancial statement fraud accounts for 5 to 10 percent of all fraud cases and 90 to 95 percent of dollar loss. Nationally known fraud expert, Glenn Helms, explains how fi ndings from a recent study apply to small and large companies.

12-14 Occupational fraud: Don’t let it drain your companyOccupational fraud costs organizations. Learn how to detect it, prevent it and what you should do if you suspect it.

15 Forensic accounting plays key role in U.S. Postal InspectionMeet MNCPA, member Vincent Lloyd, CPA and former investigator for the U.S. Postal Service.

16-18 Peer reviewers fi nd required disclosures missing Companies and their auditors often miss certain required disclosures when issuing fi nancial statements. Help your clients conform to the accounting standards and your fi rm achieve positive peer review results.

19 Meet Sara Portner, MNCPA’s new board chairMeet the multi-faceted new chair of the MNCPA board. A single mother of two girls who rides a Harley, dances, and serves as controller of a leading Minnesota construction company.

departments

4 Ethics Q & ATh e case of the refund making the heart grow fonda

5 Chair’s InkwellChange brings opportunity

6-7 Member NotesPromotions, new hires and member news

26-27 Capitol TransactionsMNCPA holds CPA Lobby Day

27 BOA BusinessWhat to do if your CPA certifi cate is revoked

28-29 CPE CreditsContinuing education

30-31 Classifi edsSearch business services, employment and practices for sale

33 Tangible AssetsMNCPA savings and events

34 Journal EntriesMNCPA event photos

advertisers4 ADP

30 Allodium Investment Consultants

31 Borene Law Firm

31 Carlson School of Management Master of Accountancy

36 Certes Financial Pros

30 CresaPartners

30 Mark A. Sellner, CPA

11 Marsh US Consumer

22 MNCPA Membership

7 MNCPA Exhibiting

2 Robert Half Management Resources

35 SALO, LLC

32 U.S. Bank

30 Value Consulting Group

20-21 Looking to the future of forensic accountingForensic accounting provides growth and opportunities. Hear from two forensic accounting leaders about what the future holds for CPAs.

23 Pitfalls in the formation of LLCsDo you set up LLCs for your clients? Make sure you complete the correct paperwork.

24-25 Does your organization need a whistle-blower policy?Anonymous reporting mechanisms aid organizations. Read how to successfully implement a whistle-blower policy at your company.

ethics q & a

4 MNCPA Footnote April 20114 MNCPA Footnote April 2011

Fonda Dollars, CPA, was reviewing her new client’s prior year tax return and noticed an error in the 2008 Form 1040. It was a doosey. Fonda calculated that the 1040x would yield a refund of $1.3 million. She told her new client that her fee would be $26,000 for the amended return preparation; 2 percent of the refund.

Q: Is this a permitted contingent fee?

A: Yes. Th e refund is greater than the threshold for review by the Joint Committee on Internal Revenue Service Taxation (over $1 million) and therefore, a contingent fee is permitted. [See ET 302.02]

View past Ethics Q & A columns at www.mncpa.org/ethicsqanda.

Ethics Corner

New! Fiduciary Duties of Loyalty and Care

April 20 (FDLC4) 8:30 a.m. - noonMNCPA, Bloomington 4 Ethics hours Stephen Young, JD

Cases in Corporate Ethics — Discussion of Real-Life Confl icts

May 26 (CCE41) 8:30 a.m. - noon 4 Ethics hours MNCPA, Bloomington John Daly, MBA, CPA, CMA, CPIM

Ethics in the Real World — Living Values for Today

May 26 (ERW4) 1 - 4:30 p.m. 4 Ethics hours MNCPA, Bloomington John Daly, MBA, CPA, CMA, CPIM

Visit www.mncpa.org/cpe for details.

The case of the refund making the heart grow fondaBy Charles Selcer, CPA

Vaughn LazarV.P. of marketingPizza FusionFort Laudersale, FL

© 2010 ADP, Inc. The ADP Logo is a registered trademark of ADP, Inc. ADP’s 401(k) plan enrollers are employees of ADP Broker-Dealer, Inc. One ADP Boulevard, Roseland, NJ 07068, subsidiary of ADP, member NASD, SIPC.

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Footnotewww.mncpa.orgVol. 80, No. 2, April 2011

Minnesota Society of Certifi ed Public Accountants1650 W. 82nd St., Suite 600

Bloomington, MN 55431-1458

phone: 952-831-2707

toll-free: 800-331-4288

Editor in ChiefDeborah Lawrence

[email protected]

Managing EditorLiz Beckmann

[email protected]

Art Direction & ProductionTherésa Weseman

[email protected]

Advertising

Leslie Mueller

[email protected]

Staff WriterAnne Janotta

[email protected]

Published nine times a year, the

Footnote provides information to

members of the Minnesota Society of

Certifi ed Public Accountants pertinent

to the organization and the profession.

Opinions expressed in the Footnote

are those of the authors and do not

necessarily refl ect Society policy or

editorial concurrence. Publication of

advertisements does not constitute an

endorsement of products or services.

2011-2012 MNCPA Board of DirectorsChair, Sara Portner

Chair-elect, Barb Steinhauser

Vice Chair, Robert Sannerud

Secretary, Melanie Mogg

Treasurer, Dave Stene

Past Chair, Jim Eichten

President, Betsy Adrian

Directors; Brett Aamot,

Christine Piché, Brenden Schaaf,

Bertha Hsiao, Nate Albrecht,

Jennifer Carlson, Grover Cleveland,

Jim Nichols, Dan Puhl, Debra Thompson

2011-2012 Footnote Advisory GroupNate Albrecht, Jennifer Carlson,

Don Cochran, Todd Koch,

Carolee Lindsey, Robert Lynn,

Brenden Schaaf

Footnote ArchivesView past Footnote articles at

www.mncpa.org/footnote

Some images purchased from

istockphoto.com

Contents copyright 2011


chair’s inkwell

Sara Portner

Change brings opportunity


Even if you’re on the right track, you’ll get run over if you just sit there. — Will Rogers

I begin my fi rst Inkwell with a quote from an American comedian, a quote that I fi rst saw at a popular tourist attraction in Bayfi eld, Wisconsin during a motorcycle trip. Th is statement relates well to the state of our profession today ... a well-established profession that is changing, and if we believe that change doesn’t pertain to us, the change will just pass us by. Change is not always welcome or easy; but change brings opportunity. I would like to highlight the following changes in the profession and the opportunities they present for CPAs.

Our profession adapted to Sarbanes-Oxley and increasing regulations due to the widespread fraudulent acts of entities such as Enron and WorldCom, and the opportunities in forensic accounting continue to grow. An increasing awareness of ethics is interwoven into our daily lives, whether we are CPAs in private industry or serving clients and the public. Personnel at all levels in organizations can better understand fraud and even detect fraud. Auditors also review internal controls with specifi c fraud indicators in mind. Greater awareness and changed philosophies hold us more accountable and results in stronger, more ethical and healthier organizations.

Sustainability accounting is a new opportunity for CPAs, as organizations look for a means to measure and report their environmental impact and ensure compliance with certain systems and regulations. Sustainability in this context is more than just “going green” — organizations want to validate how their systems reduce their carbon footprint and use resources wisely. CPAs can capitalize on this trend by providing analytical and reporting services to these organizations.

International Financial Reporting Standards (IFRS) is now included in the CPA exam and many organizations with international operations are already implementing certain standards. As businesses grow and engage in international business, CPAs will need to understand the methodologies and regulations under IFRS and be able to report fi nancial results under these standards.

At the national level, the new IRS Regulated Tax Preparer designation will allow many preparers to market themselves as tax professionals. CPAs have the opportunity to promote the importance of the CPA certifi cation and demonstrate the solid competency and integrity of the CPA credential.

Members can also fi nd a variety of opportunities within the MNCPA including serving as mentors to accounting students; volunteering on conference task forces and advocating at the legislature; becoming involved in the Leadership Cabinet and the Young Professionals Group.

I am sure that many of you, like me, entered the accounting profession and became CPAs because you saw opportunities whether they were fi nancial, growth-oriented, or because you wanted to help others. As I begin my term as the MNCPA Chair, I look forward to working with you through the changes that are happening right now and look forward to future opportunities that exist for our profession and the MNCPA.

member notes

6 MNCPA Footnote April 2011

Connect with us on

www.mncpa.org/social

New hiresMichael Breza, CPA, MBT, joined Olsen Th ielen CPAs as principal in the tax department.

Oppenheimer Wolff & Donnelly hired Matthew Krogh in its corporate fi nance and transactions team as an associate attorney.

Certes Financial Pros announced the addition of Larry Revier, CPA (inactive), to its SNI Financial permanent placement client services team.

PromotionsEric Baertsch, CPA, become a partner at Legacy Professionals LLP. He is the partner in charge of the Minneapolis offi ce.

Ania Esanbock, CPA, was promoted to manager at Blanski Peter Kronlage & Zoch, P.A. She will continue to lead client fi nancial statement engagements and other client services.

Smith, Schafer and Associates, Ltd. promoted Tim Pass, CPA, to principal. Pass works in the fi rm’s Edina offi ce.

Mike Schuff enhauer, CPA, was promoted to president of MultiSource Manufacturing, LLC.

Mahoney Ulbrich Christiansen Russ PA announced the following promotions:Brian Caldwell, CPA — senior accountantGreg Bienias, CPA — senior accountantJayme Andrews, CPA — supervisorDean Dziasek, CPA — supervisorLuke Roessler, CPA — supervisorMark Kotsonas, CPA — managerTom Johnson, CPA — manager

Member newsCal Anderson of JJ Taylor Distributing in Minneapolis, presented information about the accounting profession to approximately 100 students at Zimmerman High School as part of the MNCPA’s Talk to the Students program.

Dane Boeckermann, CPA, Boeckermann, Grafstrom & Mayer LLC, earned the Certifi ed in Financial Forensics (CFF) credential by the AICPA.

John Edson, CPA, CFF, CVA, Blanski Peter Kronlage & Zoch, P.A., Certifi ed Public Accountants and Consultants, was elected to the board of TwinWest Chamber of Commerce Foundation.

Don Zibell spoke to nearly 100 students at Roseville Area High School about why he chose to become a CPA and the opportunities for students who choose accounting.

Firm NewsAbdo, Eick & Meyers, LLP is a new independent member fi rm of DFK International/USA. DFK International/USA, a Top 10 international association of independent accounting and management consulting fi rms.

Abdo, Eick & Meyers, LLP raised more than $2,400 and sent 17 employees into the freezing water at Weaver Lake in Maple Grove to support the Special Olympics of Minnesota in February.

Baker Tilly Virchow Krause, LLP is now registered with the Canadian Public Accountability Board. As members of the CPAB, the fi rm can provide audit services to U.S. companies that are listed on the Toronto Stock Exchange and the TSX Venture Exchange.

Certes Financial Pros, announced the recent addition of a sister division, SNI Financial. SNI Financial provides fi nance and accounting permanent placement. Dave Schneider, director of recruiting, transitioned from his role previously held with Certes’ Perm Placement Network to the SNI Financial team.

MichaelBreza

LarryRevier

AniaEsanbock

TimPass

Dane Boeckermann

JohnEdson

Abdo, Eick & Meyers, LLP employees jump into freezing water to support Special Olympics of Minnesota.

DaveSchneider

member notes


KarenOman

Are you looking for new business?

Are you looking for a way to reach key fi nancial decision makers?

If so, the MNCPA is for you! Exhibit at one of our three conferences

Management & Business Advisors June 27-28

Construction & Real Estate September 21

Tax Conference November 14-15

More questions? Contact Leslie Mueller, Business Development at 952-885-5520 or [email protected]

WANTED: EXHIBITORS

Learn more at:www.mncpa.org/exhibit

YPG Captain Program: Developing your future leadersTh e beauty of the Young Professionals Group is that it’s fun but with a very specifi c purpose. Th e YPG provides an environment for emerging leaders to develop personally and professionally, enhancing the individual’s image as well as the fi rm or company. So both you and your fi rm or company reap the benefi ts.

As a YPG Captain You build your professional network and develop leadership

skills needed to further your career. You earn points toward great prizes when you spread the word

about the YPG, and attend social and educational events.

As a fi rm or company with a YPG Captain You show that you’re a premiere employer who supports and

encourages employee growth and development. Your fi rm or company gets recognized at events, on the

website, in the MNCPA education center and in the Footnote.

Prize structure $500 Visa gift card – 1st place $300 Visa gift card – 2nd place $200 Visa gift card – 3rd place

YPG Captain Welcome Lunch2011 Captains are encouraged to join us for lunch to meet your fellow captains, discuss the program rules and get an idea of what’s in store for you for the 2011 YPG season.

April 27MNCPA Education Center – BloomingtonNoon – 1:30 p.m.

We’re still looking for 2011 Captains. Th e captain term runs from April 1 – March 31. CPAs and aspiring CPAs in public accounting and business and industry are welcome. For more information or to register, contact Stephanie Schmidt at [email protected] or 952-885-5523 or visit www.mncpa.org/ypg.

Th e YPG is a great way to meet other young professionals that are experiencing the same career challenges that I am, in a fun and relaxed atmosphere. – Cayla Schroeder, Senior Accounting Associate, Eide Bailly

In memoryKaren L. Oman, 57, passed away on Feb. 25. Oman became a CPA in 1977. In 1994, she launched, Certes Financial Pros, a temporary staffi ng company specializing in fi nancial professionals. Oman championed work/life, off ering fl exible work options to her employees. She guest lectured on career and family issues

at MNCPA and industry conferences; and, until recently wrote a regular column in MNCPA’s Footnote. Oman served on the MNCPA board in 2003-2004. For her eff orts, she was listed among the 10 Best Bosses by Fortune Small Business magazine and Entrepreneur of the Year by Ernst & Young. MNCPA has made a contribution in Oman’s name to the MNCPA Scholarship Fund.

Correction: Incorrect information was included on the board ballot in the February/March 2011 Footnote. Brenden Schaaf has been a member of the MNCPA for 13 years.


Detect and prevent fi nancial statement fraud By Glenn Helms, PhD, CPA, CFF, CITP, CISA, CIA

Th e Auditing Standards Board defi nes two categories of fraud — fi nancial statement fraud and misappropriation of assets. Many CPAs tend to focus on misappropriation of assets fraud (theft of cash and misuse of property, equipment, etc.) and not on fi nancial statement fraud, due to both the higher occurrence of the former type of fraud and the publicity usually associated with it. Historically, fi nancial statement fraud accounts for 5 to 10 percent of all fraud cases and 90 to 95 percent of the dollar loss.

Th e Committee of Sponsoring Organizations, which provides the framework of internal control used by public and nonpublic entities, recently issued the results of a 10-year comprehensive study on fi nancial reporting fraud by publicly held companies.1 However, many of the study’s fi ndings can be generalized to nonpublic entities. For example, this study found that the most common method of overstating fi nancial statements is to overstate revenue, which in turn should increase the company’s stock market value and possibly management compensation. Many smaller nonpublic entities also overstate revenue for numerous reasons. For example, revenue might be overstated to meet loan debt covenant requirements (see key study fi ndings on page 10).

Who commits fi nancial statement fraud, and how it’s detected?Financial statement fraud is typically committed by senior management overriding internal control.

Oftentimes, senior management initiates or instructs a subordinate(s) to initiate improper journal entries. Th ese journal entries are sometimes made on spreadsheets from which fi nancial statements are prepared (top-sided journal entries). Th e use of journal entries to perpetrate fi nancial statement fraud provides an audit trail, which increases the likelihood that fraudulent journal entries can be detected.

1 COSO comprises fi ve sponsoring organizations: the American Accounting Association, the American Institute of Certifi ed Public Accountants, Financial Executives International, the Institute of Management Accountants and The Institute of Internal Auditors.


Table 1: Common Financial Statement Fraud Schemes Scheme to Misstate Financial Statements

% of companies using fraud method4

Improper revenue recognition:

Recording fi ctitious revenues Recording revenues prematurely No description/”overstated”

61%

48%35%2%

Overstatement of assets(excluding accounts receivable overstatements due to revenue fraud):

Overstating existing assets or capitalizing expenses

Recording fi ctitious assets or assets not owned

51%

46%

11%

Understatement of expenses/liabilities

31%

Misappropriation of assets 14%

Inappropriate disclosure (with no fi nancial statement line item effects)

1%

Other miscellaneous techniques(acquisitions, joint ventures, netting of amounts, etc.)

20%

Disguised through use of related-party transactions

18%

Insider trading also cited 24%

Possible red fl agsMore than half of the sample companies misstated the fi nancial statement information by overstating assets. Table 2 (page 10) highlights the typical asset accounts overstated by these companies. Even after excluding the eff ects of misstating accounts receivable due to the revenue recognition frauds, the two most common asset accounts misstated were inventory (51 cases) and accounts receivable (43 cases).5

Story continued on page 10.

2 AU 316.3 Beasley, Mark W., Carcello, Joseph W., Hermanson, Dana R., and Neal, Terry R., Fraudulent Financial Reporting 1998-2007: An Analysis of U.S. Public Companies (Committee of Sponsoring Organizations of the Treadway Commission: Durham, NC), May 2010.4 The subcategories, such as premature revenues or fi ctitious revenues and assets, do not sum to the category totals due to multiple types of fraud employed at a single company. Also, because the fi nancial statement frauds at the sample companies often involved more than one fraud technique, the sum of the percentages reported exceeds 100 percent.5 An overstatement of revenue would cause an increase in accounts receivable and a misstatement of inventory when a fi ctitious revenue is recorded. Revenue would increase, accounts receivable would increase, inventory would decrease and cost of goods sold would increase.


For example, AU 316 requires the external auditor to account for all journal entries made during the year, and to test a sample of these journal entries to detect fraudulent fi nancial reporting scheme.

Another method used by management to manipulate fi nancial statements is to make unreasonable assumptions with regard to estimates. For example, in the Waste Management Inc. fraud, management extended the estimated useful life of its garbage trucks to decrease depreciation expense and increase net income. Another estimate commonly manipulated is allowance for doubtful accounts. An understatement of this estimate both increases net assets and overstates net income.

External auditors might detect estimate fraud when reviewing management’s estimate assumptions for reasonableness and perform a retrospective review of the accounting estimate.2 Additionally, management’s assumptions and estimates can be compared with other companies in the same industry for reasonableness to detect this type of manipulation.

How to prevent fi nancial statement fraudTwo controls noted by the PCAOB to mitigate the risk of management override of internal control, include establishment of a whistle-blower hotline and the formation of an independent audit committee. Another control is to have transactions (including journal entries) in excess of a certain amount approved by an independent committee of the board.

Techniques used to misstate fi nancial statementsTh e two most common techniques used to fraudulently misstate fi nancial statements involved improper revenue recognition and asset overstatements. Sixty-one percent of frauds involved revenue recognition, while 51 percent involved overstatement of assets, primarily by overvaluing existing assets or capitalizing expenses. Th e understatement of expenses and liabilities was much less frequent (31 percent). Misappropriation of assets occurred in 14 percent of the fraud cases, which was similar to the 12 percent reported in COSO’s 1999 study (see Table 1).


COSO study — fi nancial statement fraudCOSO sponsored a study, “Fraudulent Financial Reporting: 1998-2007” (issued May 2010), to provide a comprehensive analysis of fraudulent fi nancial reporting occurrences investigated by the Securities and Exchange Commission between January 1998 and December 2007.3 Some of the important fi ndings are:

Th ere were 347 alleged cases of public company fraudulent fi nancial reporting from 1998 to 2007, versus 294 cases from 1987 to 1997. Consistent with high-profi le frauds such as Enron and WorldCom, the dollar magnitude of fraudulent fi nancial reporting soared in the past decade, with total cumulative misstatement or misappropriation of nearly $120 billion across 300 fraud cases. Th is compares to a mean of $25 million per sample fraud in COSO’s 1999 study. While the large, high-profi le frauds of the early 2000s skewed the 1998-2007 total and mean cumulative misstatements or misappropriations upward, the median fraud of $12.05 million in the present study was nearly three times larger than the median fraud of $4.1 million in the 1999 COSO study.

Th e companies allegedly engaging in fi nancial statement fraud had median assets and revenues just under $100 million. Th ese companies were much larger than fraud companies in the 1999 COSO study, which had median assets and revenues under $16 million.

Th e SEC named the CEO and/or CFO for some level of involvement in 89 percent of the fraud cases, up from 83 percent of cases in 1987-1997. Within two years of the completion of the SEC’s investigation, about 20 percent of CEOs/CFOs had been indicted, and more than 60 percent of those indicted were convicted.

Th e most common fraud technique involved improper revenue recognition, followed by the overstatement of existing assets or capitalization of expenses. Revenue frauds accounted for more than 60 percent of the cases, versus 50 percent in 1987-1997.

Twenty-six percent of the fraud fi rms changed auditors between the last clean fi nancial statements and the last fraudulent fi nancial statements, whereas only 12 percent of no-fraud fi rms switched auditors during that same time. Sixty percent of the fraud fi rms that changed auditors did so during the fraud period, while the remaining 40 percent changed during the fi scal period just before the fraud began.

Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange or material asset sales following discovery of fraud at rates much higher than those experienced by no-fraud fi rms.

Table 2: Fraud Cases With Asset Accounts Misstated

Type of AssetNumberof Cases

Inventory 51

A/R 43

PP&E 24

Cash/Marketable —

Securities 19

Loans/Notes Rec. 13

Investments 12

Prepaid Expenses 11

Th erefore, if these assets increase from the prior year, this could be a red fl ag that fi nancial statement fraud is occurring. Management should explain the increases in these accounts in the current year and/or a trend in the increase in these accounts over several years.

Story continued from page 9.

Learn more about fraud from Glenn Helms

Forensic Accounting — Fraudulent Reporting and Concealed AssetsJune 20 (FAFR) • MNCPA, Bloomington

Top 10 Fraud Schemes — How to Detect and Prevent Th emJune 21 (TMCF) • MNCPA, Bloomington

Common Frauds and Internal Controls for Revenue, Purchasing and Cash ReceiptsJune 22 (ZHCFIC) • Rochester Golf and Country ClubRegister at www.mncpa.org/cpe.

17th Annual MNCPA Management & Business Advisors Conference (MBAC11)June 27-28 (XMBAC) Minneapolis Convention Center• Session C1: Internal Controls for REALLY

Small Businesses • Session E1: Th e State of the Art of FraudRegister at www.mncpa.org/mbac.


Glenn L. Helms, PhD, CPA, CFF, CITP, CISA, CIA, an award-winning instructor, has extensive public accounting experience and serves as a consultant to various organizations and CPA fi rms. Helms has authored six books for the AICPA addressing fraud, security and controls in a variety of traditional and IT accounting environments. His e-mail address is [email protected].

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Consistent with COSO’s 1999 study, the industries where fraud most frequently occurred included computer hardware and software and other manufacturing. However, the fraud occurred across a variety of industries. Th ese fi ndings suggest that any actions to prevent, deter or detect fraud should not be limited to any particular industry.

Most frauds were not isolated to a single fi scal period. Th e average fraud period extended 31.4 months, with the median fraud period extending 24 months. Th is was slightly longer than the average and median fraud periods of 23.7 and 21 months, respectively, reported in COSO’s 1999 study. Th is fi nding suggests that once fraud is initiated in one fi nancial period (quarterly or annual), management often continues to perpetrate fraud in each quarterly and annual fi nancial statement fi ling for about two years.

Th e researchers noted that, given the small number of frauds examined in this study that involve time periods subsequent to the issuance of the Sarbanes-Oxley Act of 2002, additional research will be needed once suffi cient time has passed to allow for more observations of SEC fraud investigations involving post-SOX time periods before any conclusions can be reached about the eff ectiveness of that legislation in reducing instances of fraudulent fi nancial reporting.

ConclusionOne of the most interesting fi ndings of the recent COSO study is that additional research will need to be conducted to assess if PCAOB-recommended controls are eff ective in reducing the occurrence of fi nancial statement fraud. Revenue fraud increased from 50 percent of all cases to 60 percent of all cases between the two 10-year studies. Th is might suggest that audit procedures to detect fraudulent fi nancial reporting contained in AU 316 are not as eff ective as is believed. All CPAs interested in internal control should look forward to the fi ndings of the next COSO study, which should provide insight into whether SOX legislation and PCAOB-recommended controls, such as whistle-blower hotlines and independent audit committees, are eff ective in reducing fraudulent fi nancial reporting.


Occupational fraud is an ever-increasing cost to organizations in the United States and worldwide. Th e Association of Certifi ed Fraud Examiners (ACFE) estimates that a typical organization loses approximately 5 percent of its gross revenues to fraud annually, that’s $2.9 trillion in gross world product.1

So what does this mean to an average U.S. company? According to the ACFE, more than 56 percent of the cases investigated and reported during 2009 and 2010 occurred in the U.S. Th e U.S. had the lowest median loss per case at $105,000, with the majority of fraud schemes involving cash misappropriation. Europe had the highest median loss of $600,000 with the highest amount of fraud schemes involving corruption. A startling 25 percent of the cases investigated from

and identifi es the person involved and date and time of transactions. Th ese trails enable critical forensic examiners to research questionable transactions.

Increase anti-fraud controls Anti-fraud internal controls in the following areas can help all businesses reduce their fraud risks:

Cash schemes — Billing, skimming, larcenies, check tampering, cash on hand, register disbursements and payments to employees (expense reimbursement, benefi ts and payroll)

Non-cash — Inventory Financial statement frauds

A sample of anti-fraud internal controls for these process areas can be found on page 13.

Occupational fraud: Don’t let it drain your companyBy Abigail Grenfell

2007-2010 resulted in losses in excess of $1 million, with the typical fraud scheme underway at least two years prior to its detection. Small businesses in the U.S. are particularly vulnerable and realized signifi cantly higher median loss per case at $150,000.

Larger and medium-sized organizations tend to have integrated fi nancial systems that replace manual processes typically found in smaller organizations. An integrated system serves operational and anti-fraud control purposes. Solid fi nancial systems have controls built within that help ensure that subledgers reconcile to the general ledger, transactions cannot be reopened and subsequently modifi ed, and most importantly a sophisticated audit trail. Audit trails keep a history of transactions, changes to transactions

1 Report to the Nations on Occupational Fraud and Abuse, Association of Certifi ed Fraud Examiners, 2010.


Understand occupational fraudA solid anti-fraud program can reduce risk, deter employees considering fraudulent activities, provide a mechanism for reporting suspected fraud, and demonstrate the organization’s intolerance policy. Anti-fraud measures and internal controls should be customized based on specifi c risks faced by the organization and its operations.

Th e following fairly standard controls can easily be tailored and implemented quickly and cost-eff ectively to help companies reduce their risk of fraud:

Fraud risk reductionsCode of business conduct and ethicsEstablish a code of business conduct and ethics and disseminate it to all employees annually for review and signoff . Th e code promotes honesty, ethics and integrity within the organization, with demonstrated action by the senior offi cials and modeled by each and every employee. Consult with your legal counsel before releasing your company code to ensure it complies with applicable federal and state laws.

Employee handbookEmployee handbooks provide written guidance of the company’s policies. Handbooks may also contain methods to report violations of company policies. Again, consult with your legal counsel to ensure federal and state employment law compliance.

Background checks Verify an applicant’s prior employment history and education as well as involvement in any criminal and civil action. Oftentimes individuals who committed fraudulent actions at a prior employer were not criminally prosecuted. However, they may have been sued for damages in a civil action.

Job rotation and mandatory vacations Requiring job rotation and mandatory vacations is one of the most impactful anti-fraud controls a company can implement. Most asset misappropriation fraud schemes occur for a considerable period of time prior to detection, generally 18 to 24 months, and need constant attention from the perpetrator to avoid discovery.

Monitoring of bookkeepingCareful monitoring of bookkeeping services performed by an outsourced service provider is essential. Bookkeepers have access to cash receipts, cash disbursements and payroll processing, areas at high risk of fraud. Management should consider requiring the fi rm to provide proof of professional liability insurance. In addition, conduct background checks on any

Anti-Fraud Controls Cash schemes

Ensure your main operating bank account is a controlled disbursement, zero-balance account

Utilize a lockbox service for cash receipts Require authorized purchase orders, separate staff for

receiving and matching packing lists and invoice to the purchase order

Bond employees who handle cash payments and cash receipts

Prohibit use of a rubber signature stamp on disbursement checks

Payments to employees Utilize SAS 70 certifi ed payroll service provider Encourage direct deposit for all employees Process employee expense reimbursement through

your payroll service provider Consider outsourcing benefi ts administration

Non-cash Utilize an outsourced service provider to perform

physical inventory at least annually Security tags should be placed on retail inventory Daily or weekly cycle counting of high-priced inventory

items and items subject to the greatest theft risk


Requiring job rotation and mandatory vacations is one of the most impactful anti-fraud controls a company can implement.

individual the bookkeeping fi rm has working on your account, including verifi cation of their current CPA license with the Board of Accountancy. Monitor individuals without CPA licensure to ensure they have the proper accounting knowledge to perform these services. Currently, there are no licensing requirements for bookkeeping services so additional diligence is practical.

What should you do if you suspect fraud?Employee should discuss concerns with their immediate supervisor. If you believe your supervisor might be involved, consider following the organization’s procedures for reporting concerns related to accounting, auditing and internal accounting controls. Be as specifi c as possible, include the names of individuals you believe are involved, dates the transactions occurred, identify information about the transactions (e.g., vendor name, vendor invoice number, journal entry reference number) and why you believe the transactions were inappropriate.


Most organizations have a non-retaliation policy for reporting in good faith and mechanisms to research and resolve reports of accounting, auditing and internal accounting control concerns. If your organization does not have a reporting mechanism, consider discussing your concerns with another member of management.

If you are part of a CPA fi rm hired by the organization, discuss your concerns within the hierarchy of the fi rm. If you are the fi rm owner, discuss your concerns with your client. Th ese conversations can be a diffi cult; approach them with caution and thought. Whether you discuss your concerns internally within the fi rm or directly with the client, provide specifi c examples of the transactions. Focus on why the transactions concern you rather than focusing on the individual or individuals who may have been involved. Your client should discuss the matter with their legal counsel.

Business owners think fraud will never happen in their company, and when it does, it can be devastating, both fi nancially and through violation of trust. Oftentimes the fraudster is in a position of trust and has been with the company for several years. You are in the role of trusted advisor with a fi duciary responsibility to your client. You must balance this responsibility with the risks you encounter if the person is innocent. Determination of fraud is the role of a judge or jury during criminal prosecution.

A proactive approach to fraud prevention reduces your company or your clients’ risk, protects their investment and conveys a high standard of ethics and integrity within the organization. CPAs and internal audit experts play a critical role in designing the appropriate internal controls based on the size and type of organization as well as your product or service provided.

Abigail Grenfell is president of Internal Control & Anti-Fraud Experts, LLC, a fi rm specializing in fraud prevention, detection and investigation, development of anti-fraud programs, design and assessment of internal controls. She is a member of the MNCPA and can be reached at [email protected].

Small businesses in the U.S. are particularly vulnerable and realized signifi cantly higher median loss per case at $150,000.


Learn more about fraud from Abigail Grenfell

Common Occupational Frauds and Schemes — Cash, Purchasing and Payroll Processes April 26 (COFS1) • 8:30 a.m. - noon MNCPA, Bloomington

Common Occupational Frauds and Schemes — Sales, Order-to-Cash and Inventory Processes April 26 (COFS2) • 1 - 4:30 p.m. • MNCPA, Bloomington

Visit www.mncpa.org/cpe for details and registration.

Last chance to register!


Coming in the May FootnoteFive most important internal controls in the prevention of losses due to fraud


MNCPA member Vincent Lloyd has lived a life of intrigue. After Lloyd earned his CPA credential, his mother, a life-long U.S. Postal Service employee, encouraged him to apply for an opening as a U.S. postal inspector. Little did he know how exciting a postal inspector’s job could be.

Lloyd started in the St. Paul division of the U.S. Postal Inspection Service in 1989. “Here I was, a CPA, and they are taking me along to investigate all sorts of white collar crimes,” said Lloyd. “We had 16 CPAs working in various fraud programs in Chicago, more CPAs than attorneys.”

In the early 90s, Lloyd conducted an audit of a fraud perpetrated in district postal offi ces over a period of three years. Back then, postal offi ces paid bills using multi-part carbon checks. Th e post offi ce kept the fi rst carbon, the other copy was supposed to go to disbursing offi ce for reconciliation.

“I analyzed eight quarters of Treasury-issued checks and identifi ed $25 million in unreconciled checks,” he said. Eventually the trail led to fi ve postal employees who worked in fi nance roles in four diff erent locations. “One of them used the money to buy a building that he intended to sell back to the postal service at an infl ated amount of money.”

Th e discovery of such widespread fraud prompted the USPS to switch to commercial banking to maintain better control.

Lloyd also investigated contract fraud — among the cases one involving USPS vehicle maintenance contracts in Chicago. Th e fraud came to light when a postal vendor complained that he no longer got any maintenance work. Th e vendor noticed postal vehicles parked at another nearby maintenance facility. By cross-matching fi nancial records, Lloyd discovered that a postal employee altered records and diverted the work to her boyfriend’s auto maintenance business.

More recently, Lloyd got pulled into the investigation of Minnesota businessman Tom Petters. Th e IRS and FBI planned to raid Petters’ offi ce in Minnetonka. Th ey needed trucks to transport Petters’ business records. According to Lloyd, it would take the FBI too long to get trucks using the normal chain of command, so they contacted the postal service for assistance. “If you look closely at the raid video, you can see three postal trucks and postal inspectors,” he said.

After 20 years of contract audit, narcotic and undercover investigations with the U.S. Postal Inspections Service, Lloyd retired in early 2009. He has settled down to a more subdued life helping clients with tax matters and fi nancial planning.

Forensic accounting plays key role in U.S. Postal Inspection

Postal trivia:

Who was the f irst postal inspector?

What year did the USPS become an independent agency of the U.S. Government?

In the original movie Wall Street, which actor was arrested by a postal inspector for insider trading?

A. Benjamin Franklin in 1775

B. 1971

C. Charlie Sheen


Peer reviewers fi nd that companies and their auditors often miss certain recently required disclosures when issuing fi nancial statements. Helping your clients conform to the accounting standards will help your fi rm achieve positive peer review results.

Make sure that your clients disclose the following:Subsequent eventsCompany management must evaluate subsequent events for potential recognition or disclosure in the fi nancial statements. New disclosure requirements included in a recently issued accounting standard require disclosure of the date through which that evaluation was made.

A recent amendment to the accounting standard exempts SEC fi lers from the “date through which that evaluation was made” disclosure requirement.

Subsequent events are events or transactions that occur subsequent to the balance sheet date, but before fi nancial statements are issued or available to be issued. Th e term “issued’ is used for entities that are SEC fi lers or conduit debt obligors. Th e term “available to be issued” is used for all other entities. Th e disclosure of the date the evaluation was made must be included in the disclosure even if there are no subsequent events that must be disclosed.

To conform to auditing standards that require the auditor to obtain suffi cient appropriate audit evidence, the auditor’s report cannot be dated earlier than the date of management’s evaluation of subsequent events. Consequently, the date of the management representation letter, the date of the auditor’s report, and the date of management’s evaluation of subsequent events are likely be the same.

Don’t let your clients get caught shortPeer reviewers fi nd required disclosures missing By Barbara A. Beltrand, CPA, MLS, MBA and David J. Thorp, CPA


Th e disclosure could be something like this:

Management evaluated events and transactions that occurred after the balance sheet date for potential recognition and disclosure through [date], the date on which the fi nancial statements were [issued] [available to be issued].

If the entity experiences no subsequent events, the above disclosure may be the only disclosure in the subsequent events footnote.

Uncertain Tax PositionsCompanies assert uncertain tax positions in a variety of ways:

Claiming a deduction with uncertainty about whether a taxing authority would accept the deduction in part or in full.

Choosing to not fi le a tax return in a state where the company may have nexus and there is uncertainty about whether the taxing authority would assert or enforce nexus.

Filing as a tax exempt entity when there may be uncertainty about the tax exempt status of the entity, because of particular activities or transactions.

Management must assess whether the tax position would more likely than not be sustained if the position was subject to review by a taxing authority. Management must assume, when analyzing the company’s tax positions, that the tax positions that the company asserts would be subjected to review. In situations where management has determined that an uncertain tax position will more likely than not be sustained, the fi nancial statement eff ect is required to be recognized. Many practitioners also prepare tax returns for their fi nancial statement clients, and most likely have advised their clients against taking tax positions that may expose them to income tax penalties (not to mention potential tax preparer penalties assessed against the practitioner). As a result, many clients have concluded that this standard has no eff ect on their fi nancial statements.


Helping your clients conform to the accounting standards will help your fi rm achieve positive peer review results.

MNCPA Peer Review CommitteeMNCPA’s Peer Review Committee consists of experienced MNCPA volunteers who are interested in:

Promoting high professional standards Maintaining the integrity of the CPA profession Upholding the public image of CPAs in public

accounting Providing education and guidance to CPAs enrolled

in the peer review program

Every engagement or system peer review administered by the MNCPA comes before the committee for fi nal approval. Th e committee evaluates the results of the review and may accept the review as performed or may require follow-up action from the reviewed fi rm. Th e committee maintains two Report Acceptance Bodies (RABs) which meet monthly on an alternating basis from May through January.

Visit www.mncpa.org/get-involved to learn about volunteering on the peer review committee.

Learn more about the peer review program at www.mncpa.org/peerreview.

Do you have a question about peer review?Th e MNCPA maintains a Peer Review eDiscussion group for members interested in the peer review process. Submit questions about having or performing a peer review to the group for comment or guidance. Sign-up today at www.mncpa.org/lists.

Ready for your next peer review?Learn how to prepare for peer reviews and what can be done on a daily basis to create a strong quality control environment.

Upcoming Peer Review — Is Your Firm Ready?May 25 (SNPR) • MNCPA, Bloomington Michael Brand, CPA

Learn more at www.mncpa.org/cpe.



For entities that have determined they have no recordable uncertain tax positions, the disclosure could be as simple as this:

Th e company adopted the income standard related to the recognition and measurement of uncertain tax positions. Th e adoption of this standard had no fi nancial statement eff ect for the company. Th e company is no longer subject to federal tax examinations for the years prior to [year] and no longer subject to state income tax examinations for the years prior to [year].

We urge practitioners to consult authoritative literature and to utilize disclosure checklists when assessing client disclosures. Make sure your clients have included these required disclosures so that you can increase the chance of smooth sailing during your fi rm’s next peer review.

Subsequent events disclosure is required by Statement of Financial Accounting Standard No, 165, Subsequent Events, as amended by ASU No. 2010-09 (codifi ed in FASB Accounting Standards Codifi cation (ASC) 855-10).

Uncertain tax positions disclosure is required by FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codifi ed in FASB ASC 740-10).

Barbara A. Beltrand, MBA, CPA, MLS, is a tenure track faculty member at Metropolitan State University. She has performed quality reviews of fi nancial reporting engagements including audit, review, compilation, and other attest and non-attest engagements. She is a member of the MNCPA Report Acceptance Body of the Peer Review Committee and a

member of the AICPA and the MNCPA. She can be reached at [email protected].

David J. Th orp, CPA is a principal in the Assurance and Accounting Group with LarsonAllen LLP in Minneapolis. He is part of the fi rm wide resource group providing quality review and technical assistance to the fi rm’s clients and staff related to audit and accounting matters. He is a member of the MNCPA Report Acceptance Body of the Peer Review Committee

and a member of the AICPA and the MNCPA. He can be reached at [email protected].

Th ough SEC fi lers are subject to additional disclosure requirements, the basic disclosure provisions pertaining to uncertain tax positions include:

Disclosure of information related to interest and penalties recognized in the fi nancial statements

Certain information for entities who have recorded the eff ects of uncertain tax positions

Th e description of tax years that remain subject to examination by major tax jurisdictions

Peer reviewers have noticed that another common omission is the disclosure of the tax years subject to examination.

For entities that have recorded the fi nancial statement eff ects of recordable uncertain tax positions and that have penalties and interest, the disclosure could be something like this:

Th e company has adopted the income standard regarding the recognition and measurement of uncertain tax positions.

Th e company’s policy is to classify interest and penalties associated with uncertain tax positions in our provision for income taxes. At [balance sheet date], we recognized accrued interest and penalties of [$x] that are associated with our tax positions. During the year ended [date], accrued interest and penalties associated with uncertain tax positions increased [$x].

Th ere is a reasonable possibility that the total amount of unrecognized tax benefi ts as of [balance sheet date] will signifi cantly change within the next year. [Disclose the nature of the uncertainty that could give rise to a signifi cant change in unrecognized tax benefi ts, the nature of the event that could occur during the next year (e.g. changes in tax law, expiration of the statute of limitations, tax authorities audits and authoritative guidance, audits by taxing authorities, settlements proposed by taxing authoritative, etc.), and an estimate of the range of possible changes (or a statement that a reasonable estimate is not possible).]

Th e company is no longer subject to federal tax examinations for the years prior to [year] and no longer subject to state income tax examinations for the years prior to [year].

Peer reviewers have noticed that another common omission

is the disclosure of the tax years subject to examination.

MNCPA Footnote April 2011 19 MNCPA Footnote April 2011 19

We asked MNCPA’s new board chair, Sara Portner her thoughts about the accounting profession and hopes for her term. As controller of Frana Companies, a Minnesota-based construction company plus experience in public accounting, she understands the diversity of MNCPA membership. While holding a well-rounded career, she also makes time for interesting hobbies while raising two young daughters. She’s a motorcyclist, holds a minor in dance education, scrapbooks and recently tried out for NBC’s America’s Got Talent with her dance team.

What would you like to accomplish as Chair? I want to meet with members to talk about the issues impacting them and expand our successful Young Professionals Group into a group of emerging leaders for those members who “graduate” from YPG.

How has the MNCPA helped you succeed? Th e MNCPA is my “fi rst stop” for information, whether it’s CPE, resources to other agencies, or networking with professionals who can answer my questions and provide feedback on accounting issues.

As a member in Business & Industry, what do you offer to members? I wear many hats. I’m called upon for non-accounting duties such as human resources, offi ce management, safety development, and technology support. A company’s fi nance and accounting staff often manage projects not directly related to their position.

What are the biggest challenges you feel the profession faces today? Convergence with IFRS, attracting students into the profession, retaining quality staff , and budget constraints and competition that impact businesses and client bases.

What’s the best business advice someone gave you? Work hard, learn as much as possible, and rely on yourself for career growth and success.

What piece of technology is indispensable in your life? I just purchased an iPhone and honestly don’t know how I lived so long without it!

How would you like to have members be involved in the profession? I think every member should be involved in the way that works for him or her. Being involved can be as simple as serving on a task force, taking MNCPA CPE, or mentoring a student or newer CPA. Th ere are so many opportunities at the local, state and national levels. If it works for you, get involved!

Meet Sara Portner, MNCPA’s new board chair

I have always wanted to be a CPA and had long-term goals for my career at a very young age. As my career

progressed, some of my goals changed, and I try to view each day as a new opportunity.

Looking ahead 10 years, what three changes do you expect in the accounting profession? Th e CPA profession will become even more involved in the legislature. More CPAs will sit in the seats and serve as advisors for strategic planning, budgeting and tax legislation. Individuals working in the profession will come from varied backgrounds and degrees. Th e profession will implement new standards and/or expand standards to meet the needs of all users of fi nancial information and to work in a global economy.


Th ere is a point where the accounting and legal professions merge. A point when you have to investigate, analyze, interpret and communicate. It’s a point where you often have to put pieces together with partial information that is buried in a sea of data, and then present a clear picture of the situation to a jury, judge or mediator. Th is point is called forensic accounting. When you speak to practitioners who specialize in forensic accounting — such as Mike Ueltzen, CPA, CFF, CFE, and Ronald Durkin, CPA, CFF, CFE, CIRA, — you quickly understand why the forensic accounting practice area is set for tremendous growth and opportunity.

Ueltzen, chair of the CFF Credential Committee, and Durkin, a member of the AICPA National Accreditation Commission, recently discussed the state of forensic accounting, its future and the Certifi ed in Financial Forensics (CFF) credential during telephone interviews with the AICPA.

What is the most enjoyable part of forensic accounting for you?Ueltzen: I love what I do — the people I work with, the cases I am working on and the adrenaline rush that comes with it. Th e adrenaline rush means you know you are going into the courtroom, a deposition, a mediation or a meeting and somebody is going to try to discredit you. As long as you are on solid ground, you are good. But you never know what they are going to say, what they are going to do and how they are going to come at you. So I like being at the top of my game.

Durkin: Th is is hallowed ground for me. I love doing this stuff . Combining the FBI skill set that I have learned and the CPA skill set that I have acquired over the years — it’s exciting. I’ve always wanted the CFF credential, to be one that stretches across multiple, diff erent areas.

What do you see as the biggest challenge in forensic accounting?Durkin: I think that everybody needs to be better equipped to deal with fraud issues, both proactively and reactively. Proactively means being alert to the possibility that fraud could exist and what types [auditors] may fi nd. From the reactive side, we need to equip accountants to be better at interviewing. I think interviewing skills are weak today.

Ueltzen: Th e biggest challenge is fi nding good forensic accountants. Finding people that are willing to step up, accept a challenge and be cross examined. To fi nd people willing to deal in areas where they may not feel totally comfortable because there are no absolutes; and people that are willing to tell their story in front of a large crowd in adverse conditions and subject themselves to cross examination.

What do you see as the biggest opportunities in forensic accounting?Ueltzen: Th ere is an incredible opportunity to join in this arena of the profession and learn a specialized skill set. Let’s face it, if you pick up an article about a bank failure, an industry failure or Madoff , who are among the fi rst to arrive on the scene? Th e forensic accountants with the special skill set, the interviewing skills, the ability to conduct computer forensics, the ability to take incredible amounts of data and tell a story. It’s the forensic accountant who is called upon. Somebody with some special experience to help unravel those messes.

What does it take to be a forensic accountant and do the job well?Durkin: You’ve got to keep your eyes open for clues, be intuitive and more than skeptical. I call it forensic thinking. You’ve got to be alert to the possibility that there is more than meets the eye. You need to understand that the essence of fraud is concealment. You’ve got to have the ability to not give up, push through to the conclusion and deal with incomplete facts. You need to be able to do the analysis and understand how it will play out in court. You must be able to communicate.

How do you see forensic accounting changing and evolving in the future?Ueltzen: Th ere is a very large cadre of very good forensic accountants who are all getting into their late 50s, early 60s and the real challenge is — and it’s a wonderful challenge for younger professionals, the opportunities are going to be incredible for the next generation.

Durkin: In the next 10 years you are going to have forensic training, forensic resources and forensic applications spread more broadly than just in a consulting practice. I think you’ll see growth in audit, internal audit, across industry and in government. Th ese are the growth areas for forensic accounting.

Ueltzen: Th ere are something like 800 FBI agents who are also CPAs. Th at speaks volumes about the demand for CPAs with special skills and training, not only in the private sector where I practice, but also in the public sector.

Looking to the future of forensic accounting

Having a forensic accounting designation will help you compete in this highly specialized world in the future.


What kind of impact do you see the CFF exam having on forensic accounting?Durkin: It’s worth studying and taking the exam because when you get the credential, you’ll have something very special you can use into the future. Having a forensic accounting designation will help you compete in this highly specialized world in the future.

The CFF exam and beyondUeltzen and Durkin have a genuine passion for forensic accounting and have helped to establish a solid foundation for continued growth as the CFF credentialing process takes off . Th at’s good news since white collar and fraud crimes have now reached $3 billion a year and the Bureau of Labor Statistics predicts that the forensic accounting fi eld will grow 16 percent by 2016.

Th e inaugural CFF exam results have been released and 81 percent of the test takers passed the exam. Of the 81 percent, 70 percent took the online Financial Forensic Accounting Education Series.

Th e CFF exam will now be off ered twice per year. Th e spring exam dates are from June 1 – June 30 and the fall exam dates are from Nov. 7 – Dec. 10. Registration will be on a year-round basis, but you must choose one exam per year. For more information about exam registration and content, visit aicpa.org/cffexam.

Article provided by the AICPA.

Augment your fraud expertise with upcoming CPE

Common Occupational Frauds and Schemes — Cash, Purchasing and Payroll Processes April 26 (COFS1) 8:30 a.m. - noon MNCPA, Bloomington Abigail Grenfell, CFE, MBA, CIA

Common Occupational Frauds and Schemes — Sales, Order-to-Cash and Inventory Processes April 26 (COFS2) 1 - 4:30 p.m. MNCPA, BloomingtonAbigail Grenfell, CFE, MBA, CIA

Forensic Accounting — Fraudulent Reporting and Concealed AssetsJune 20 (FAFR) MNCPA, BloomingtonGlenn Helms, Ph.D., CPA, CFF, CITP, CISA, CIA

Top 10 Fraud Schemes — How to Detect and Prevent ThemJune 21 (TMCF) MNCPA, BloomingtonGlenn Helms, Ph.D., CPA, CFF, CITP, CISA, CIA

Common Frauds and Internal Controls for Revenue, Purchasing and Cash ReceiptsJune 22 (ZHCFIC) Rochester Golf and Country ClubGlenn Helms, Ph.D., CPA, CFF, CITP, CISA, CIA

17th Annual MNCPA

Management & Business Advisors Conference June 27-28 (XMBAC) Minneapolis Convention Center Session C1: Internal Controls for REALLY Small Businesses Session E1: Th e State of the Art of Fraud

Learn more at www.mncpa.org/cpe.

Your MNCPA membership speaks volumes

Minnesota Society of Certi fi ed Public Accountants

Your reputati on is criti cal to your professional success. Whether it’s your company, colleagues or clients, you want others to view you as someone who is well-educated, connected and community-focused.

By belonging, your MNCPA membership says all that and more.

Renew your membership today and let us do some of the talking.

RENEW TODAY!www.mncpa.org/renew


Limited liability companies have become so commonplace that they are frequently taken for granted. Recently cottage industries have sprung up on the Internet off ering to help businesses incorporate or form LLCs for as little as $49 plus state fi ling fees.

Certifi ed Public Accountants also may fi nd it tempting to supply standard LLC formation documents to clients interested in setting up new businesses, or to even prepare and fi le the documents for the client. Increasingly, we have encountered situations in which the documentation setting up a new LLC has been insuffi cient to protect the client against personal liability or to take advantage of favorable provisions under Minnesota law.

While the intent, to help their clients save money, is honorable; forming an LLC can involve more than completing some simple forms. Th e reality is considerably more complex and, in our experience, many CPA-formed LLCs do not take advantage of helpful features under Minnesota law.

A common scenario is to have the client complete and fi le the standard form for Articles of Organization provided by the Minnesota Secretary of State, without preparation of any other documentation. Unfortunately, the form is not suffi cient. Additional documentation is required to appoint a board of governors, appoint managers or offi cers, designate the member(s) and percentages of ownership, authorize the acceptance of contributions to capital, and designate individuals who have authority to conduct banking transactions. If the LLC has more than one member, a member control agreement is highly recommended. A member control agreement includes provisions for voting and management rights; designation of the disposition of a membership interest upon the death or disability of a member; involuntary or voluntary transfer by a member; allocation of profi ts and losses; and how the parties will take distributions. Failure to include this minimal documentation can impact whether the LLC will provide the liability shield, for which it is organized.

By using just the LLC form from the Secretary of State’s offi ce, a business (especially one with more than one owner) may lose the protection of provisions that limit the liability of board members; permit action to be taken in writing without unanimous consent of the board members (which greatly eases the burden of administration); waive preemptive rights; and waive cumulative voting rights. Th ese provisions are particularly important in the typical scenario, in which there is a majority owner and a minority owner, possibly combined with an employee who was given a small ownership interest.

Th e preparation of the documentation required to properly organize an LLC and take advantage of the favorable provisions under Minnesota law is not particularly complex or expensive. Th e consequences for failing to do so, range from inconvenience to expensive litigation — possibly the loss of the liability shield. Not only will preparation of proper documentation and organization of an LLC provide the protections described above, the process can also lead to helpful and productive conversations among the members, reducing the likelihood of misunderstandings after the LLC is formed.

Th e failure to properly form an LLC could have grave consequences not only to the owner of the LLC but also the professional who assisted in the formation of the LLC.

Pitfalls in the Formation of LLCsBy Dave Senger, JD and Tom Shroyer, JD

Dave Senger is a member of Moss & Barnett’s business law and wealth preservation and estate planning practice areas. He can be reached at 612-877-5262 or [email protected].

Th e failure to properly form an LLC could have grave consequences not only to the owner of the LLC but also the

professional who assisted in the formation of the LLC.

Tom Shroyer is a member of Moss & Barnett’s litigation practice area. He can be reached at 612-877-5281 or [email protected].

business & industry reports


Whistle-blower protection is a critical part of fraud prevention and the Sarbanes-Oxley Act of 2002 (SOX). Policies and anonymous reporting mechanisms are both mandated provisions for all entities that adopt SOX. Yet the fraudulent scandals that prompted Congress to enact SOX have not been limited to publicly held corporations. Increased scrutiny is a prevailing theme for all organizations, and no company is immune to fraudulent or unethical incidents.

As a result, organizations from a wide range of industries are recognizing that an anonymous reporting mechanism is a very valuable tool for uncovering and preventing a host of violations — potential misappropriations, regulatory violations, misconduct, harassment, discrimination, safety violations, misuse of intellectual property, confl icts of interest, workplace violence, substance abuse, and more.

Th is brief primer provides helpful insights regarding successful implementation of whistle-blower policies.

What types of organizations should consider implementing anonymous hotlines? Any organization — private to non-profi t — from any industry can benefi t from anonymous reporting opportunities. It is an especially important initiative for those organizations that wish to enhance their GRC — develop better Governance, improve Risk Management, and ensure Compliance practices.

Why do organizations need such programs and policies?In addition to mitigating risks, anonymous reporting and whistle-blower policies and programs provide numerous benefi ts on many levels.

Refl ect the organization’s commitment to ethical conduct. Not only is following a code of ethics the right thing to do, it can give an organization a competitive advantage by boosting its ability to attract a qualifi ed work force. In addition, customers regularly reward ethical companies with their purchase power and their brand loyalty.

Leverage their best sources of information — individuals. Th e Association of Certifi ed Fraud Examiners’ (ACFE) research has shown that the most powerful weapons for detecting and stopping the cycle of abuse and fraud are an organization’s own employees. Not only are employees a valuable source of information, but customers, vendors, and other stakeholders can be valuable sources of potential wrongdoing. In fact, the most common way frauds are discovered is through tips. According to the 2010 ACFE Report to the Nations, three times as many frauds were uncovered through tips than by any other method.

Enhance the eff ectiveness of fraud fi ghting. Employees are reluctant to report potential wrongdoing or violations if they believe they’ll be identifi ed. Anonymity helps remove this and other obstacles to blowing the whistle.

Provide the opportunity to address problems internally before they’re reported to outsiders. Having a program in place reduces the risk of individuals going elsewhere with their concerns, potentially damaging the organization’s reputation and causing further unnecessary fi nancial harm. Today, employees can report wrongdoing and receive fi nancial incentives for doing so through various governmental whistle-blower opportunities like Qui Tam, the Foreign Corrupt Practices Act, SOX, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Without its own program, an organization becomes more vulnerable to more onerous investigations and costly lawsuits.

Help organizations meet various federal requirements. Th e updated IRS Form 990 requires non-profi ts to disclose governance practices including whether they have a whistle-blower policy. Likewise, companies working on U.S. government procurements are required to have a code of ethics for Federal Acquisition Regulation contracts and subcontracts in excess of $5 million. Whistle-blower provisions are also required for stimulus fund recipients of the American Recovery and Reinvestment Act.

Does your organization need a whistle-blower policy?A primer on how to create a policy for businesses of all sizesBy Marc W. Courey, CPA, CFF, JD, LLM, CFE, CICA, CCEP

business & industry reports


Support regulatory compliance eff orts. Many organizations have internal controls and operating procedures to detect, prevent, and deter improper activities as part of regulatory compliance. Hotlines are another valuable move toward compliance.

How should organizations implement a whistle-blower program?Establishing a whistle-blower policy requires careful, advance planning. Th e stakes are too high to build one on the fl y. Mishandling a tip can potentially do more damage than not having a reporting mechanism in the fi rst place.

As part of planning, make decisions up front to determine which individuals and what departments will receive reports and complaints and how investigations will be conducted. Among the items to address:

Handling of reports. Tips about possible wrongdoing may come via phone, the Web, e-mail, or letters. Companies must identify and train teams responsible for fi elding reports.

Investigation team. Th e investigation team can include representatives from any number of departments — human resources, internal audit, general counsel, risk management, ethics and compliance, operations, senior management, and communications. Th e nature of the tip will determine involvement.

Maintaining confi dentiality and information security. Organizations must have a secure tracking system in place to follow up on complaints, thoroughly pursue their investigations, and ensure fi nal closure. Again, data security and confi dentiality must be preserved throughout the process.

Communication protocols. It’s crucial that employees know their organization acts on reports of wrongdoing. Th at’s not to say details should be divulged, but some type of feedback loop encourages continued use of the hotline. Otherwise, employees will stop supplying tips, or worse, will engage in unethical or unauthorized behavior.

What are the potential pitfalls? Among the obstacles to successful implementation of a whistle-blower policy:

Insuffi cient communication that creates a “hotline in a vacuum.” Communicating clear guidelines about what’s acceptable and unacceptable is vital to creating a sound fraud prevention environment. Organizations need a written code of ethics and a program that supports both ethical behavior and anonymous reporting of suspected wrongdoing through training and ongoing awareness campaigns.

Ill-equipped response. Personnel must be properly trained to solicit key facts and perform due diligence to vet calls and verify the authenticity of complaints. Th e investigation team must also be prepared to work within the proper framework of each individual issue.

No appropriate disciplinary action taken when warranted. Problems that go unaddressed will only become greater and more costly. It also undermines the eff ectiveness of the policy and discourages future reporting.

Appearance of reprisal. Employees must be assured that they can, in good faith, report suspected wrongdoing without fear of reprisal. However, organizations should take appropriate disciplinary action when reports are not made in good faith.

Issues that accompany multinational organizations. Privacy laws vary greatly and are frequently stronger in some countries than they are in the United States. In addition, multilingual considerations can compound the challenges of taking and investigating reports.

What’s the next step? Having a whistle-blower program or capability can be an important component of an organization’s commitment to ethical business practices, as well as an important source of information about potential fraud or abuse. Successful implementation requires thoughtful preparation of the supporting policies and procedures to allow organizations to prepare for and respond appropriately to whistle-blowers.

CPAs and the organizations they serve can fi nd additional resources for creating or updating a whistle-blower program from these groups:

AICPA – www.aicpa.org Society of Corporate Compliance and Ethics –

www.corporatecompliance.org Open Compliance and Ethics Group – www.oceg.org Th e Center for Association Leadership –

www.asaecenter.org

Marc Courey CPA, CFF, JD, LLM, CFE, CICA, CCEP is director of litigation support, fraud, and forensic services at Wipfl i LLP. Courey provides his clients with assistance in a variety of areas including fi nancial and digital forensic investigations, risk assessments, internal controls analyses, and e-discovery and litigation preparedness. He is a member of the MNCPA and

is admitted to the State Bars of Minnesota and South Dakota. He can be reached at mcourey@wipfl i.com.

Having a whistle-blower program or capability can be an important component of an organization’s

commitment to ethical business practices.

capitol transactions


State agency Licensees/ fi rms

Total staff (FTE)

Investigators Ratio

AELSLAGID* 17,805 5.5 1 3237:1

Board of Dentistry 16,250 10 1 1625:1

Board of Cosmetology 38,000 13 4 2923:1

Board of Physical Therapy 5,200 3 0 1733:1

Board of Psychology 3,400 11 2 309:1

Board of Pharmacy 18,618 11 5 1693:1

Board of Chiropractic 2,500 5 1 500:1

Board of Accountancy 17,072 3.5 1 4878:1

*AELSLAGID=Board of Architecture, Engineers, Land Surveying, Landscape Architecture, Geoscience and Interior Design

MNCPA holds CPA Lobby DayTh e Minnesota Society of Certifi ed Public Accountants (MNCPA) hosted its annual CPA Lobby Day on Feb. 8 at the Minnesota State Capitol. Th e chill of one of the coldest days of the year didn’t prevent Minnesota CPAs from gathering to educate state lawmakers about the challenges facing Minnesota businesses.

CPA Lobby Day is one of the MNCPA’s most impactful events. Th is year, with a near record attendance, members participated in more than 120 meetings with legislators. CPAs in all areas of the profession and from all experience levels joined the action, including many young professionals and fi rst-time attendees.

Members urged legislators to conform Minnesota tax laws to federal tax laws, especially in the areas of estate tax, the alternative minimum tax (AMT), and the Internal Revenue Code Section 179 expensing. As a result of non-conformity, Minnesotans pay millions more in additional tax than if the state conformed to federal standards.

Since 2002, Minnesota has stepped up tax audits to collect more money owed to the state. CPAs told state legislators about their frustrations with the new and often inexperienced auditors. Th ey encouraged lawmakers to improve the training and mentoring of new Minnesota Department of Revenue auditors.

CPAs also appealed to legislators to appropriately fund the Minnesota Board of Accountancy (BOA) so it can continue to properly regulate the CPA profession. Th ey advocated for consistency between the number of licensees and the number of board staff , and compared the ratios to those of other state agencies.

Staffi ng levels at Minnesota professional boards

Attendees heard from several key members of the legislative leadership including, Rep. Kurt Zellers, Speaker of the House; Rep. Greg Davids, House Tax Committee Chair; and Rep. Bob Gunther, House Jobs and Economic Development Finance Committee. MNCPA members, Sen. Ted Daley and Sen. Michelle Benson, also addressed the group.

Between meetings and speakers members learned more about the issues aff ecting CPAs, and networked with fellow attendees and legislators.

“CPA Lobby Day is a great opportunity to represent the CPA profession,” said fi rst-time attendee, Kraig Haenke of Haenke Business Solutions, Ltd. “Th is event alone was worth my membership dues.”

CPA Lobby Day is an annual event that raises the visibility of the CPA profession at the Capitol and provides a voice for the profession at the highest legislative level.

Members who couldn’t attend CPA Lobby Day can still support the profession and the MNCPA. Become a key legislative contact and educate your legislators on what is important to you and the profession. Share the MNCPA legislative agenda and issues discussed at this year’s CPA Lobby Day with your legislators.

Learn more about the issues and get involved at www.mncpa.org/gr.

Geno Fragnito, director of government relations, is the MNCPA’s registered lobbyist working full time on behalf of the membership.

Th roughout the legislative session he is often at the Capitol discussing the MNCPA legislative agenda with Minnesota lawmakers. For more information or to get involved contact Geno at 952-885-5534 or [email protected].

State agency licensees to staff ratio


BOA business Minnesota Board of Accountancy

What to do if your CPA certifi cate is revokedChanging seasons means changing certifi cate statuses for some Minnesota CPAs. Each spring, usually at the Minnesota Board of Accountancy’s (BOA) April meeting, CPA certifi cates for those not meeting the standards set by the BOA will be revoked.

Only the BOA can revoke CPA certifi cates. A revoked certifi cate is the result of not properly renewing for two years in a row. While the deadline to renew is always Dec. 31, renewal is now based on a three-year cycle determined by the fi rst letter of your last name. Th e Dec. 31 deadline aff ects both active and inactive CPAs.

CPAs who have failed to renew for two years will receive a fi nal warning letter from the BOA in late February. Th is letter will explain that in April certifi cates will be revoked for those who fail to take the necessary steps to bring their certifi cate back to proper status. Th ose steps involve paying renewal fees and late fi nes as well as bringing your CPE hours up to compliance.

Following the BOA’s April meeting when a list of CPAs to be revoked is approved, a letter is sent to each CPA who has been aff ected, notifying them of the status change. A revoked certifi cate status is also a matter of public record, appearing on the BOA’s online CPA database as well as in the BOA’s publication Th e Board Report.

If you fi nd yourself in this situation, there are things you can do to reverse your revoked certifi cate status. Refer to Minnesota Statute 326A.09 for specifi cs. Until you take action, you are not considered a CPA in the state of Minnesota and therefore cannot hold yourself out as one.

A revoked certifi cate can be brought back to active or inactive status at any time, provided you pay the necessary fees and fi nes and follow the proper steps as stated by the BOA. Th is includes applying to have your certifi cate reinstated, a step that requires approval by the BOA’s complaint committee.

To take your CPA certifi cate from revoked to active status, you will need to fulfi ll 120 hours of CPE before any changes can be made. If you were active prior to being revoked and now wish to change your certifi cate status from revoked to inactive, you will need to show proof of 120 CPE hours from the time that you were active prior to revocation. Th ere is no CPE requirement to change your previously inactive status from revoked back to inactive.

Have a specifi c revoked CPA certifi cate question? Th e BOA can be reached at 651-296-7938 or www.boa.state.mn.us.

For complete information regarding the BOA’s renewal and CPE reporting process, visit the MNCPA online at www.mncpa.org/renewal.

CPA Lobby Day is a great opportunity to represent the CPA profession: Th is event alone was worth my membership dues. First-time attendee, Kraig Haenke of Haenke Business Solutions, Ltd.

After returning from their legislative appointments, Steve McDonald, Sarah Christianson, and Herb Schechter feel confi dent that they made an impact on their legislators.

Between meetings and speakers, attendees networked with peers and discussed this year’s legislative agenda.

cpe credits


Save $50! Register by June 3

Business & Industry CPEMake every move count with game-winning education from the MNCPA. Th ese courses are dedicated to the unique needs of CPAs working in business and industry — attend any course listed here and register for your chance to win an Apple iPad 2, courtesy of sponsor Certes Financial Pros.

April 19 Outlook Essentials (OUT4) 8:30 a.m. - noon

Word Essentials (WOR4) 1 - 4:30 p.m.

New! Is the Generation Gap Alive and Well in the Business and Corporate World? (GGAW4)

8:30 a.m. - noon

April 20 Excel PivotTables for Accountants — Part 1 (PT14) 8:30 a.m. - noon

Excel Macros — Part 1 (EXM4) 1 - 4:30 p.m.

New! Fiduciary Duties of Loyalty and Care (FDLC4) 8:30 a.m. - noon (4 Ethics hours)

April 21 QuickBooks — Reconciling and Analyzing Financials (QRA4) 8:30 a.m. - noon

QuickBooks — Advanced Reporting (QFR4) 1 - 4:30 p.m.

April 26 New! Common Occupational Frauds and Schemes — Cash, Purchasing and Payroll Processes (COFS1) 8:30 a.m. - noon

New! Common Occupational Frauds and Schemes — Sales, Order-to-Cash and Inventory Processes (COFS2) 1 - 4:30 p.m.

New! Dealing With Problem Employees — When Employees Behave Badly (DPE4) 8:30 a.m. - noon

New! Financial Sector Issues and the Role of the Federal Reserve (RFR4) 8:30 a.m. - noon

April 27 New! Annual Accounting Update for Industry (AAUI)

New! Health Care Reform — Implications for Employers (Live Webcast) (WCHCE1) 9 - 10:40 a.m.

May 2 Minnesota Community Bank Update (CBU)

Visit www.mncpa.org/bicpe for detailed course information and registration.

Train your staff as a teamBuild leaders and strengthen your bottom line with MNCPA on-site training. You choose the date, time and topic, and we’ll work with you to customize the content to fi t your specifi c needs. Contact Kate Cooper at 952-885-5508 or [email protected] for more information.www.mncpa.org/onsite

ConferencesFor complete details and registration, visit www.mncpa.org/conferences.

MNCPA

Audits of Employee Benefit Plans ConferenceEmployee benefi t plan audits require a keen eye for accuracy. Come to this special one-day event to learn what you should look for and where to fi nd it. Discover best practices to perform high-quality audits, better serve your clients and create a positive engagement experience. Receive practical guidance from national and local experts as you discover how to avoid common audit defi ciencies, navigate Form 5500, overcome fi nancial reporting challenges and more.

May 17 (XAEBC) • 8 CPE hoursCrowne Plaza Minneapolis West, Plymouth

25th Annual MNCPA

State Taxation of Multistate Business ConferenceNewly passed legislation is resulting in everything from nexus standard developments to sales factor changes. Th is specialized one-day conference off ers a clear view of what’s coming on the horizon. Examine recent and proposed tax law changes and learn what their impact will be on businesses. Get real-world industry perspectives on hot topics from major corporations like Best Buy, Carlson Companies, TCF and more.

May 24 (XSTMB) • 8 CPE hours (CLE application pending)Earle Brown Heritage Center, Brooklyn Center

Plan ahead!17th Annual MNCPA

Management & Business Advisors ConferenceVisualize this: eff ective business strategies and systems, organizational synergy and bottom-line success. As a fi nancial professional, you can make it all happen. Come to this two-day event to grow your knowledge in key disciplines such as strategic planning, operations, fi nancial reporting, risk management, employee relations and much more.

June 27-28 (XMBAC)16 CPE hours (6 Ethics hours available)Minneapolis Convention Centerwww.mncpa.org/mbac

cpe credits


Webcast CalendarFor the most up-to-date calendar, visit www.mncpa.org/webcasts.

April 20 Financial Statement Presentation and Disclosure (Replay) (WCPDO6)

April 21 Elements of Eff ective Operational Budgeting (Replay) (WCBUD6)

April 21 Resolving Ethical Confl icts (Replay) (WCETHIC7)

April 27 Health Care Reform — Implications for Employers (Live) (WCHCE1)

April 28 Th e CFO’s Role in Banking and Finance (Replay) (WCCFOB7)

May 10 Governance-Enhancing Risk Management (Replay) (WCERM6)

May 11 Th e High Road Approach to Diffi cult Conversations (Replay) (WCDIFF6)

May 17 MNCPA Audits of Employee Benefi t Plans Conference (Live) (WCXAEBC)

May 18 Construction Industry Accounting and Tax Update (Live) (WCCI1)

Webcast registrations must be done online at www.mncpa.org/webcasts.

Online Faxwww.mncpa.org/cpe 1-888-487-9931

Mail PhoneMinnesota Society of CPAs 952-831-27071650 W. 82nd St., Suite 600 1-800-331-4288Bloomington, MN 55431 option 1

Register Now

A one-year subscription to Surgent McCoy’s 2011 Essential CPE Collection is now available for just $219.95 plus tax for MNCPA members. Learn at your

own pace with 62 courses in seven areas of study. Find out more at www.mncpa.org/selfstudy.

2011 CPE catalog is now online!Whether you work in public practice, industry, not-for-profi t, government or education, the 2011 CPE catalog has annual favorites and brand new courses to help you keep up with the latest developments in your fi eld. Make 2011 a standout year — check out the catalog at www.mncpa.org/2011catalog and look for the printed version in your mailbox soon.

New webinars available!Audit Express Live Webinar SeriesGet the guidance you need to improve your audit process and become more profi table and effi cient. Th ese live webinars, designed and taught by audit expert Alan Anderson, CPA, guide you through the entire audit process from planning to opinion.

Each two-hour webinar will build a stronger foundation for your audit team, allowing you to exceed your clients’ expectations and structure a more effi cient, profi table audit process.

Audit Process Live Webinar Series — A Common-Sense Approach to the Audit ProcessMay 2 Applying JIT Manufacturing Concepts to

Improve the Audit Process (WC1AJ1)

May 9 Audit Planning is a Two-Way Street — Both the Auditor and the Company Need to be Involved (WC1AA1)

May 23 A Practical Approach to Understanding Audit Risk (WC1AU1)

June 1 Internal Control — So Much Time for so Little Benefi t (WC1AI1)

June 8 Fieldwork Complete — Is the Audit Complete? (WC1AF1)

June 15 Evolving Risk Landscape and its Impact on the Audit Opinion (WC1AE1)

Keys to Auditor Success Live Webinar SeriesSept. 7 Th e Goal of the Audit (WC2AG)

Sept. 21 Setting Your Staff up for Success for the Audit (WC2AS)

Sept. 28 Th e Pros and Cons of E-mail Use During an Audit (WC2AP)

Oct. 5 Technology — A Blessing or Curse During the Audit? (WC2AT)

Oct. 19 Th e Characteristics of an Auditor (WC2AA)

Oct. 26 Total Client Service — Did You Deliver All of Your Services, or Just the Audit? (WC2AC)

Time: 9 — 10:40 a.m.

Credits: 2 CPE hours per webinar

Early bird fee: $79 nonmember / $59 member (per webinar) when you register at least one week before the event

Standard fee: $99 nonmember / $79 member (per webinar)

Optimize your effi ciencies and register your team.Th ese webinars off er the ultimate in fl exibility — register for just one, pick and choose a few for your team, or for the maximum benefi t, participate in all 12 webinars. For details and registration, visit www.mncpa.org/auditwebinars.

classifi eds


Mark A. Sellner, CPACPA, JD, LLM (taxation), CFP®

Tax Research and Planning

[email protected]

Assisting You in Advising Your Clients

• ASA Certified Business Appraisals• Litigation Support Services• Competitive Pricing

763.473.3578www.valcongrp.com

Patrick Schmidt, ASA, MBA Jennifer Loeffler, CPA/ABV, ASA

~ Passionately Independent Advice ~

David J. Bromelkamp 612-230-3702

www.aicria.com

Allodium Investment Consultants is a Registered Investment Advisor.

BusinessValuationsWhether for gift or estate taxes, or just to determine what a business is worth, James R. Heintz, Ltd. prepares SSVS compliant, Certifi ed business valuations. Call Jim to discuss your client’s specifi c needs 763-377-7074. Email: hjrltd@qwestoffi ce.net; visit www.jamesrheintzltd.com.

EmploymentAudit/Accounting ManagerBurnsville CPA fi rm seeking Audit/Accounting Manager. Qualifi ed CPA candidates should have 7-plus years of CPA experience providing attest, compilation and advisory services to clients. Responsibilities include: management and direction of multiple client engagements; performance of attest services; preparation, analysis and compilation of fi nancial statements; and familiarity with individual, corporate and non-profi t income tax preparation and review. Charitable gambling audit experience a plus. Growth potential limited only by candidates ability and motivation. Competitive salary and benefi ts to meet both short and long-term career goals. Qualifi ed candidates please send resume and salary requirements to [email protected].

PracticeAre you considering retirement or selling your practice?Looking at the next generation to take over your fi rm? Sometimes an alliance with another fi rm can be the right fi t. Th rough the years, we’ve helped several fi rms join our team or transition their practice into our growing, successful company. Start with a simple conversation, and contact Kathy at [email protected] to discuss your plan in confi dence.

VolunteerLaw Enforcement Association Needs AssistanceTh e Minnesota Association for Injured Peace Offi cers (MAIPO) is a organization that assists peace offi cers who have been seriously injured on duty. It is a 501(c)3 tax exempt charity that has been in existence since 2009 and needs advice and counsel in fi nancial matters.

Please visit website wwww.offi cerneedshelp.com for further information. If you are interested in providing pro-bono assistance please correspond by email at [email protected] or call President Jim Crawford at 651-295-6232.

classifi eds


Online classifi ed rates$40 insertion fee, plus $1.35 per word.

Footnote combined with online classifi ed rates$55 insertion fee, plus $1.35 per word.

Submitting classifi ed adsClassifi ed ads must be submitted online at www.mncpa.org/submitad

Get a bigger presence with display advertisingTo request display ad rates or for more information on display advertising contact: Leslie Mueller, [email protected] or call 952-885-5520 or visit www.mncpa.org/advertise

DeadlinesAll advertising, display and classifi ed ads must be received the 28th two months prior to the month of publication (i.e., Feb. 28 is the deadline for the April issue).

Blind box rates and repliesBlind box numbers are available for $25 per insertion. Responses should be e-mailed to [email protected], faxed to 952-831-7875 or mailed to MNCPA, 1650 West 82nd Street, Suite 600, Bloomington, MN 55431-1458. Please include the box number.

MNCPA Advertising Rates and Specifi cations

Find Employees

Are you properly staff ed?Post a classifi ed ad on the MNCPA website.

Visible — MNCPA website receives over 2,000 hits per monthTargeted — Reach fi nancial professionalsAff ordable — Classifi ed ads run for a minimum of 30 days

For more information contact: Leslie Mueller, [email protected] or 952-885-5520www.mncpa.org/adrates

Master of Accountancy

NEED HELP TAKING THE NEXT STEP IN YOUR ACCOUNTING CAREER?

THE CARLSON SCHOOL OF MANAGEMENT, MASTER OF ACCOUNTANCY (MAcc)

PROGRAM IS NOW ACCEPTING APPLICATIONS FOR FALL 2011

FULL AND PART-TIME ENROLLMENT.

For more information and to apply, go to: http://www.carlsonschool.umn.edu/macc

tangible assets


Career tools for companiesSo much of today’s job market is about getting your name out there. Th is isn’t only for individuals looking for their next position; it also holds true for companies, as well. If your organization is looking to hire, look to the MNCPA for help.

Accounting Employer DirectoryCompanies with at least one MNCPA member can create an online listing, searchable by those interested in potential opportunities.

Temporary WorkFor those short-term opportunities, create a listing to be viewed by MNCPA members.

Learn more about these and other MNCPA career tools at www.mncpa.org/careers.

2011 Minnesota Business Ethics AwardCome celebrate the outstanding character of Minnesota’s business community and recognize fi rms with cultures of integrity. Honor ethical excellence and attend the MBEA Awards Luncheon on May 18, from noon to 1:30 p.m. at the Nicollet Island Pavilion in Minneapolis. Hear keynote speaker Nancy Feldman, President and CEO of UCare. Please register at www.mnethicsaward.org.

Spring Recognition Dinner – May 26Passing the CPA exam and earning the CPA designation is a momentous occasion. So what are we doing to honor that? We’re gearing up for a momentous occasion of our own, the MNCPA Spring Recognition Dinner. Join friends, family and coworkers as we celebrate Minnesota’s newest CPAs. Th e event will honor CPAs who were initially certifi ed between October 2010 and April 2011.

Metropolitan Ballroom — Golden Valley, MN5:30 p.m. — Social Hour & Reception6:30 p.m. — Dinner7:30 p.m. — Recognition Ceremony

Keynote speaker: Nancy Bologna

Visit www.mncpa.org/recdinner for more details or contact Stephanie Schmidt at [email protected] or 952-885-5523.

MNCPA Pro E-mail: keeping it professionalFrom business cards to letterhead to resumes, you know the importance of keeping things professional. Why shouldn’t your e-mail address be the same? Register for a free MNCPA Pro e-mail account, and keep it professional in every e-mail you send.

Contact the MNCPA membership department at 952-831-2707 ext. 2 for details.

Accountants Concerned for AccountantsIt’s that time of year again where so many are feeling the pressure of long days, a heavy workload, high expectations and even the drain of a long winter. Th is can take its toll on anyone and unfortunately, may lead to unhealthy behavior.

Accountants Concerned for Accountants (ACA) is an organization that educates and assists CPAs and their families about alcoholism, chemical dependency and other addictive diseases.

If you know of anyone who might be experiencing diffi culty or you think you might see signs of addiction in a friend or co-worker, there’s a group in Minnesota that can help.

For more information, visit www.mncpa.org/aca.

journal entries


YPG Happy Hour on the HillFollowing an after-hours tour of the Minnesota State Capitol, Cody Warren, David Kloskin, Beth Franklin and Mark Annis get to know Rep. Pat Garofalo (center) at Pazzaluna Urban Italian Restaurant & Bar.

Helping change happenMNCPA member Carl Peterson testifi ed in support of full conformity and told legislators how non-conformity impacts their constituents at a Senate Tax Committee meeting in February.

MNCPA thanks outgoing board membersAt the February board meeting, MNCPA board chair, Jim Eichten presented Vicki Johnson with a plaque in honor of her board service. Outgoing board members not pictured include Dennis Schmidt and Danielle Buchberger.

The more CPAs, the greater the impactTop: Between meetings with their legislators, CPA Lobby Day attendees, Janet Vanatta and Mike Casserly, share their thoughts on issues impacting the CPA profession.

Bottom: Clark Olsen, Christina Herzog, and Lisa Roden are three of 66 members who attended this year’s event making it one of the most well attended in recent years. Learn more about CPA Lobby Day on pages 26-27.

Who really knows you? “My fish know me.”

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It’s who you know – and who really knows you.

We understand what our clients, candidates andconsultants want – it’s the only way to create theideal opportunity. Expand your network. Get toknow us at 612.230.7256(SALO).For the latest Twin Cities staffingforecast visit Salollc.com

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In loving memory of Karen Oman, Founder of Certes Financial Pros.

®

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