MACPA’s Professional Issues Update

Leadership Academy

Presented  by:  Tom  Hood,  CPA.CITP  

CEO  &  execu;ve  Director  

Our  agenda  

• What  do  we  see?  – Economy    – Legisla;ve,  Regula;ons  &  Standards  

– Globaliza;on  – Technology  – Workforce  &  demographics  – CPA  Profession  Trends  

•  What  is  MACPA  doing  about  it?  

Re-­‐Set,  Re-­‐Think,  Re-­‐Imagine  An;cipa;on  of  a  very  large  business  model  change  amidst    rapid  change  –  Steve  King       There are two recessions – the

obvious one and the not so obvious, the end of the industrial age where perfecting the model was the key. The new model will be completely different. – Seth Godin

Grrrank…  The  economy  is  in  a  big  downshiS,  we  are  going  through  Schumpeter’s  wave  of  crea;ve  destruc;on.  

The  next  thing…  Thirty  (30)  years  of  Prosperity?  "Economic  historians  assure  us  that  new  

technology  will  eventually  enable  millions  of  ordinary  employees  to  add  more  value  in  the  

workplace,  increasing  general  prosperity,"  Snyder  says.  Historically,  he  says,  such  periods  of  economic  

prosperity  have  lasted  as  long  as  30  years.      –  Interview  with  Bill  Sheridan  –  MACPA  Chief  Editor  

We  can  choose  to  harness  the  winds  of  change  

The tornado of changes from CPA Vision Project circa 2000

From  feeling  “lonely  at  the  top”  

To  the  wisdom  of  the  crowd  

What CPAs have said abut the future:

1.  Aging population, loss of wisdom, knowledge transfer 2.  Global rules & standards –IFRS – complexity 3.  Information overload, complexity (Need for critical thinking & filter) 4.  Information Security, Privacy & Data Protection 5.  Global Competition, Rise of the Rest 6.  Work-Life Balance 7.  Diversity – Cultural Fusion – Beiging of America 8.  Changing Communication (decline of face-to-face) 9.  Increased Globalization 10. US Deficit 11. Education

The  Economy  

Growth is projected to come from overseas for the next five years while the

US remains flat

CPA  Outlook  

Regula;ons  &  Standards  

Massive  legisla;on  in  a  very  short  ;me  Patient Protection Act Dodd-Frank Wall Street

Reform & Consumer Financial Protection Act

Small Business Tax Relief Act

Recent  example  –  The  Dodd  –  Frank  Wall  Street  Reform  and  Consumer  Financial  Protec;on  Act  of  2010  

Crisis hits news

Bureau of Consumer Financial Protection

848 pages!

533 regulations 60 studies 94 reports

HR 4173

TX

WA

OR

CA

NV

ID

MT ND

SD WY

UT

CO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WV NJ DE

DC

MD

*PA

CPA Mobility Enacted 46

CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA

*

In Process

Awaiting Governor Signature - 1

NH

CPA Mobility Legislation Pending - 2

VT

PR

GU

U.S. VIRGIN ISLANDS

•  Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies

•  47 states passed legislation in three (3) years

•  Maryland enacted it in 2008

What did we do when you were forced to have a license in every state you file

taxes in?

It’s  7:00  am  at  a  town  hall  mee;ng  in  Aberdeen  when  the  

AICPA  alert  comes  in…  

More  than  100  MACPA  members  call  our  senators  and  we  defeat  the  amendment!  

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

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

State CPA Statutes (Law)

State Boards of Accountancy issue licenses and regulate CPAs

The (infra) Structure of the CPA Profession

Professional  Standards  are  also  rapidly  changing  

•  SAS 70 TO SOC Reports

•  FASB / IASB Convergence

•  COSO Integrated Framework (2012)

•  ASB Clarity Project (late 2011)

•  Ethics Codification (late 2012)

SEC  FASB  

FASB  PCFRC  

IASB  IFRS  &  SME  

PCAOB   AICPA  ASB,  ARSC,  PRB  

IAASB  

AICPA  PEEC  

AICPA  PEEC  

IFAC  

Public Company Private Company Int’l Company

Financial Reporting

Audit /Attest Performance Standards

Code of Conduct

Another way to look at standards & oversight

State Oversight & Enforcement of CPA License CPA Licensure

Six  Ways  Convergence  is  happening  1.  FASB  –  IASB  Convergence  Project  2.  SEC  IFRS  –  The  Long  and  winding  roadmap  3.  Private  Company  Standards  4.  AICPA  Audi;ng  Standards  Board  ASB  Clarity  

project  5.  AICPA  Professional  Ethics  Execu;ve  

Commieee  –  convergence  6.  Green  /  Sustainability  repor;ng  

The  ;me  is  now!  Private  Company  Standards    

•  MACPA  Task  Force  releases  whitepaper  and  concludes:    –  Private  Company  Standards  need  to  be  addressed  (costs,  complexity,  OCBOA)  

–  Current  structure  is  not  working  –  PCFRC  recommenda;ons  were  not  addressed,  prior  studies  indicate  issue  

–  Other  jurisdic;ons  around  the  world  recognize  needs  of  private  company  users  are  different  

•  MACPA  Sent  comment  leeer  to  FAF  –  we  are  #  1425  (up  to  2,554  leeers)  

•  Featured  in  CFO  magazine  &  Accoun;ng  Today  

The  Federal  Issues  •  Sarbanes-­‐Oxley  Act  of  2002  •  FTC  Red  Flags  rule  –  privacy  &  iden;ty  theS  

•  Tax  Preparer  Registra;on  &  PTIN  issue  

•  Pa;ent  Protec;on  Act  &  1099’s  

•  Sub  S.  Employment  Tax  Issue  •  H.R.5297  -­‐  Small  Business  Jobs  and  Credit  Act  of  2010  –  1099s  

•  Tax  Patents  •  Next  jobs  bill?  

Protec;ng  by  advoca;ng  for  members  (CPAs)  =  real  results!  

ü Retained  independent  structure  of  financial  accoun;ng  standards  (FASB)  

ü Modified  provision  to  audit  broker-­‐dealers  (PCAOB)  

ü Exempted  CPAs  from  CFPA  registra;on  due  to  exis;ng  licensing  and  oversight  

ü Stopped  excessive  liability  exposure  for  auditors  (aiding  &  abeong)  

ü Commented  on  SOX  404(b)  exemp;ons  

Working together with the AICPA and many State CPA Societies achieved these:

The  Maryland  Story  

Legisla;ve  Advocacy  and  the  Power  of  WE!  

CPA Day in Annapolis – January 18, 2012

MACPA 2011 Agenda 5 for 5!  

ü Pass 120/150 legislation ü Stop Sales Tax on Accounting

Services ü Exempt CPAs from Debt

Counseling Bill ü Stop Trial Lawyers attempts at

Tort Liberalization – Comparative Fault

ü Pass Safe Harbor legislation

CPA Day in Annapolis January 18, 2012

Maryland  CPA  Agenda  2011  How  we  did  it  

1.  Extended tax deadline by one week – federal & state

2.  Ban on Tax Strategy Patents

3.  Clarification on using Social Security Numbers in Maryland (AG opinion)

4.  Advocating Private Company Standards

5.  Testified against sales taxes on accounting services in summer hearings

6.  Maryland license now good in 48 states (NY passes mobility)

Looking  ahead  to  2012  •  Special  Session  to  deal  with  redistric;ng  (and  budget)  –  will  see  tax  proposals  

•  Maryland  Social  Security  Privacy  Act  –  AG  Opinion  

•  Sales  Tax  on  Services  •  Combined  Repor;ng  •  Compara;ve  Fault  =  increase  liability  

•  Quid  Pro  Quo  for  DC  mobility  

CPE  

•  CPE  =  CPE  •  Self-­‐study  allowed  hour  for  hour  &  unlimited  •  4  hour  Ethics  Requirement  every  two  years  •  Peer  Review  qualifies  for  CPE  •  CPE  Audits  

– Sa;sfactory  Compliance  – Adjusted  Compliance  – Audit  Failure  

An  example  -­‐  CPE  Regula;ons  involved  all  levels  –  law,  regula;ons,  and  procedures  

Maryland Senate & House passes bill

A Bill SB 128 From State Board

Law Maryland Governor signs into law

Maryland State Board of Public Accountancy

Clarify thru regulations And enforce the law

New  CPAs  take  oath  to  Protect  the  Public  Interest  

MACPA CPA Summit scheduled for June 11th & 12th, 2012

Globaliza;on  

As  the  globe  shrinks,  

opportuni;es  grow  for  CPAs

5  Forces  of  Globaliza;on  1.  Growth  of  consumers  in  emerging  

economies  2.  Technologies  that  empower  

consumers  &  communi;es  3.  Increase  in  labor  produc;vity  in  

developed  markets  4.  ShiS  of  economic  ac;vity  between  

and  within  regions  5.  Increasingly  global  markets  for  

labor  &  talent    

The counter trend is Localization or think globally, act locally

Globaliza;on  –  Chinese  auditors  visit  MACPA  Towson  CPA  Center  

Global  CPA  Posi;oning  CGMA  

Technology  •  Cloud  • Mobile  •  Loca;on-­‐based  /  Augmented  Reality  

•  Security  /  Privacy  •  Social  Media  •  XBRL  

AICPA  Top  10  Technology  Issues  

   1.  Control  and  Use  of  Mobile  Devices        2.    Informa;on  Security        3.    Data  Reten;on  Policies  and  Structure        4.    Remote  Access        5.    Staff  and  Management  Training        6.    Process  Documenta;on  and  improvements        7.    Saving  and  Making  Money  w/Technology        8.    Technology  Cost  Controls        9.    Budget  Processes    10.  Project  Management  &  deployment  of  new  apps    

Are  you  on  Facebook?  

It’s  the  power  of  the  network  

Social  media  =  social  capital  real  world  examples  

XBRL  &  MACPA  &  You  •  SEC  Mandate  –  June  15,  2011  -­‐  third  wave  •  Radical  Transparency  (DATA  Act  of  2011)  •  Libera;on  of  data  for  financial  analysis  •  Reduced  compliance  burden  (SBR)    

Workforce  &  Demographics  

5  Genera;ons  in  the  workforce  

Live First, Work Second

Digital Natives

The generation gap is widening

What  today’s  workers  want  

Think A M P • Autonomy • Mastery • Purpose

•  Engage your top performers •  Coach tomorrow’s leaders •  Manage your Millennials

The  CPA  Profession  

Flat is the new growth 3% average growth Some declines Competition is increasing

Accoun;ng  Firms  Most  Trusted  Advisors  

•  Generally  speaking,  how  believable  do  you  normally  find  statements  made  by  someone  who  works  for  one  of  these  organiza;ons  or  groups  

•  “Echo  Boomers”  (18-­‐34)  rated  accoun;ng  firms  highest–  74%  

67%  62%  

55%  51%   49%   47%  

36%  

Acctg  Firms  Banks  Investment  Firms  Health  Ins.  Co.  Mortgage  Companies  Gov't  regulators  Credit  Card  Co.  

Source: Harris Poll, May 18

AICPA  /  PCPS  Survey  Results  

AICPA  PCPS  Survey  Results  

Top  10  Issues  Facing  BizInd  1.  Communica;ng  effec;vely  (new  tools  vs  face  to  face)  2.  Talent  –  Training  –  Succession  Planning  3.  Economic  environment  4.  Genera;onal  –  Work/Life  balance  5.  Supply  chain  –  rising  costs  6.  Strategic  planning  in  uncertainty  7.  Financial  literacy  about  business  8.  Increasing  government  regula;ons  9.  IT  security  /  privacy  10. Mul;-­‐tasking  and  increasing  workload  

What CPAs have said abut the future:

1.  Aging population, loss of wisdom, knowledge transfer 2.  Global rules & standards –IFRS – complexity 3.  Information overload, complexity (Need for critical thinking & filter) 4.  Information Security, Privacy & Data Protection 5.  Global Competition, Rise of the Rest 6.  Work-Life Balance 7.  Diversity – Cultural Fusion – Beiging of America 8.  Changing Communication (decline of face-to-face) 9.  Increased Globalization 10. US Deficit 11. Education

What  do  young  professionals  need  to  be  leaders?  

1.  “SoS  skills”  broader  and  more  diverse  knowledge  in  leadership,  management,  change  &  business  development  

2.  Ability  to  tap  into  networks  (AICPA,  others)  to  con;nuously  learn  (including  social  media)  

3.  Learn  and  teach  collabora;on,  &  leadership  4.  How  to  embrace  change  and  be  flexible  &  adaptable  5.  Learn  how  to  lead  teams  6.  Bridge  the  gap  between  “older  leaders”  and  “younger  leaders  7.  Learn  about  themselves  (Strengths-­‐based  leadership)  so  they  can  

be  more  purposeful,  proac;ve  &  mo;vated  

The biggest opportunity for CPAs

As knowledge moves from stocks to flows, how do we stop our inventory

from becoming obsolete?

But  first  a  word  from  our  members  

Why  we  are  here  and  what  we  are  doing  about  it  

C P A

Links  •  Strategic  Planning  

–  hep://www.bizlearning.net/live/i2astrategicplanning  •  Future  Forums  

–  hep://www.bizlearning.net/live/i2afutureforums  –  Leadership  Development  –  hep://www/bizlearning.net/live/i2aleadership  

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•  Search  our  Catalog  –  hep://www.bizlearning.net/learningcenter/customizedtraining/BLI_catalog.cfm  

Tom  Hood,  CPA.CITP  CEO  

Maryland  Associa8on  of  CPAs  Business  Learning  Ins8tute  

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

Web  hNp://www.macpa.org  Blog  hNp://www.cpasuccess.com  hNp://www,bizlearningblog.com