CPA Success

Debunking the CPA exam's urban legends

Is it true that the CPA exam is graded on a curve? That candidates should request a "regrade" if they fail by the narrowest of margins? That "real-time" score reporting is on the horizon?

No, no and no.

Passing the CPA exam is tough enough without having to navigate the minefield of myths that persist about how the exam is administered, graded and reported.

That's why the AICPA has released answers to eight common CPA exam myths and questions. The questions were compiled by the folks at Another71.com, a blog devoted to issues related to the exam. "It is a must-read for anyone planning on taking the Uniform CPA exam," the AICPA reports.

Indeed. And if you have CPA candidates on the payroll, you have two assignments:

1. Encourage -- no, insist -- that they follow through and take the exam.
2. Make sure they read and understand this document. It will answer a bunch of questions and prevent a ton of headaches in advance.

What are you doing to encourage your CPA candidates to sit for the exam?

The recession bites ... and Americans bite back

Looking for a sure sign that times are tough?

Go ask your dentist.

It turns out dentists are seeing an uptick in the number of cases of teeth-grinding they are treating these days. The reason? The Telegraph's Murray Wardrop attributes it to stress caused by the recession.

And that's not all. According to this Time article, dental patients often skip checkups during hard financial times ... then find themselves shelling out big bucks to fix their neglected teeth later.

"With average profit margins at 17 percent, dentistry outpaced accounting, tax preparation, bookkeeping and payroll services (and) legal services among the top performing professions in '08," Time's Sean Gregory reported.

Still, Americans apparently are trying to put all of that dental work to good use. According to the American Institute of CPAs, a bit of economic optimism is poking through the clouds these days -- and we'll take any reason to smile that we can get.

"Nearly half of Americans, 49 percent, say they are pessimistic about the U.S. economic outlook over the next 12 months, a slight decline from 54 percent who were pessimistic in the same survey this time last year," the AICPA reported. "At the same time, the proportion of survey respondents who said they were optimistic or very optimistic about the economy’s future rose to 44 percent in the latest survey, up from 41 percent a year ago."

OK, so it's not exactly the end of the rainbow, but it's a start. These days, a little optimism could go an awfully long way.

Swine flu raises the question: Are we prepared?

It might be time to pull all of those pandemic preparedness manuals off the top shelf and dust them off.

A few years back, paranoid business types pointed to small but frightening outbreaks of a virulent strain of avian flu around the globe and asked, "Are we ready?"

All too often, the answer was, "No." According to a number of studies at the time, businesses were woefully unprepared to address the huge impact a global, deadly flu pandemic would have on business operations -- a frightening thought, since most experts say it's not a case of if such a pandemic will strike, but when.

So we all got a good scare, promised that we had learned a valuable lesson and moved on.

Today, the prospect of a global pandemic is back, thanks to an outbreak of swine flu that has killed scores of people in Mexico, spread to several other countries and sickened at least 20 people in five states in the U.S.

Lots of questions arise when worst-case scenarios start surfacing. What will businesses do when employees can't work, when offices must close, when transportation and other services slow to a crawl, all due to public health concerns?

A long shot? Sure. Extremely long. But when it comes to business continuity, isn't it better to be prepared and have a plan?

Here are some resources that can at least get us started.

• The MACPA's disaster planning resource center
• Expect the unexpected: Prepare your business for disaster (from the Small Business Administration)
• Disaster recovery and business continuity planning (from CPA2Biz)
• Disaster recovery: A guide to financial issues (from the National Endowment for Financial Education, the American Red Cross and the AICPA)
• Emergency management guide for business and industry (from FEMA)

How prepared is your business?

We can do better! 3 things to restore trust in the U.S.

"Who will guard the guardians?"

That was how Congressman Elijah Cummings, D-Md., began as he addressed more than 500 CPAs at the MACPA Government / Not-for-Profit Conference at the University of Maryland Conference Center. Using Plato's question to start, Cummings delivered an emotion-packed speech about government, the economy, and our current state of affairs.

Speaking about the economy, Cummings never imagined that Wall Street could take down Main Street or the entire world economy. I agree with this dead-on (read Wired's article on the financial crisis The Secret Formula That Destroyed Wall Street)

He recalled a story from recent testimonies in Congress in which the rating agencies admitted wrongdoing in their ratings of the financial instruments that blew up our economy. He related how government is also at fault as he talked about the recent rash of cabinet nominees who have not paid their taxes.

Have we entered a culture of mediocrity?

"We can do better than this!"

So what do we need to do about this and what does it have to do with CPAs?

He talked about how we have lost trust -- trust in the markets and trust in government. If you believe trust makes everything move faster (and I do), then we need to work to restore trust!

Here are Congressman Cummings' top three ways to restore trust:

1. High standards
2. Competence and continuing education
3. Empathy

I would add accountability as a fourth item, which I think he was getting at with the "guards of the guardians" reference.

So what does this have to do with CPAs? And what does this have to do with this conference?

It's about standards. It's about a commitment to lifelong learning and a culture of integrity.

Cummings said that we, as CPAs, are a great example of these values in action. I was impressed that he got our core values dead-on -- integrity, competence, continued education / lifelong learning, objectivity, being attuned to broad business issues and protecting the public interest.

He challenged us to help "guard the guardians" as citizens. He called on us to maintain our high standards and to avoid the "soft bigotry of low expectations."

I want to offer a few contributions by CPAs in our efforts to do better in these difficult times:

1. Let's democratize the financial data. Expand the SEC's efforts to implement XBRL at the government level to give us the tools to guard the guardians. (See my prior post, Time for a Revolution.) I think XBRL can do for financial accountability what blogs and social networks have done to hold media and governments more accountable.
2. Our work on financial literacy at both the national and state levels. We have worked with the military to provide free financial planning, brought financial literacy to high schools and colleges, and created a low-income taxpayer alert to protect them from tax preparer fraud, along with serving on the Maryland Coaliation of Financial Literacy.
3. We are working hard to make CPAs better citizens by teaching them the legislative process (federal and state) and how they can make a difference by becoming more involved in the political process. (I am writing this from D.C., where we will be going on Hill visits over the next few days.)
4. We are working collaboratively with Maryland's associations to see if we can help move Maryland forward even faster. We have repurposed our Maryland Business and Accounting Expo to become a platform to come together to collaborate and collectively raise our competency in this changing and complex world. We are working on resources for workers in transition and special training offers for unemployed business professionals.
5. We added an official oath for newly licensed CPAs this past year to demonstrate our profession's commitment to the public interest. The next ceremony is scheduled for June 16 at the Baltimore Convention Center. (More information here.)

Congressman Cummings was at the conference due to the persistence and hard work by Conference Committee member Erin Singshinsuk. Special thanks to conference Chair Joel Grover with the U.S. Department of the Treasury, co-Chair Joe Oliva with the Department of Defense and all of the committee members who worked to have another great conference for our government and not-for-profit CPAs.

• Check out some photos from the event here.
• Congressman Cummings' recommended read, The Speed of Trust, by Stephen Covey.
• See a video clip of last year's swearing-in ceremony.

What do you think? Is the Congressman onto something?

Semantic search tool puts Evri-thing at your fingertips

Saturdays at CPA Success are usually spent reviewing online tools that can help increase our productivity. Keep in mind that we do not endorse any of these services. We simply offer them up for your consideration. Do your own homework and find the service that best meets your needs.

We've been hearing about "the semantic Web" for a while. Now, it appears we're starting to see some practical applications to go along with the hype.

First, a quick definition: In the era of the semantic Web (a.k.a Web 3.0), computers analyze and define all data on the Internet via semantics, or the meanings of that data. It then connects that data to other data (or people, or places, or anything else) based on those semantics.

Think of it this way: Web 1.0 connects people to static information. Web 2.0 connects people to people. Web 3.0 will connect everything to everything.

I know ... clear as mud, right? Just think of it as a much more robust way of being connected to the information that really matters to you.

And that's where Evri comes in. After seeing a demonstration of it at DigitalNow, I'm tempted to describe Evri as a semantic search engine, but that's a little too simplistic.

Let's try this: Evri uses your own content to drive people to the information they want.

VentureBeat's Dean Takahashi describes Evri as a tool that "uses natural language analysis to deliver full pages of results that describe what you’re looking at, the most relevant keywords that are connected with that subject, and other news results that are relevant to the site."

Sarah Perez of ReadWriteWeb describes it this way:

Although still too raw to be your main search engine, Evri has a new 'Collections' feature that lets you follow topics (a.k.a. search queries) that are of interest to you. After returning a list of search results which include Wikipedia entries, news articles, videos, and images, you can click the star labeled "Follow this" to continue to track that topic. What's missing from this feature, though, is an alerting system which will inform you of updates via e-mail or RSS. However, the company says that's coming.

Perez is right: Evri is still in beta and a bit rough around the edges. But the idea is intriguing. Keep an eye on this tool. Chances are you'll be hearing more about it in the near future.

Update: Check out Evri's "post widget," which analyzes blog posts and draws in the most relevant content, according to Evri's search engine. Does it work? What do you think?

Content recommendations from Evri

Notice anything different?

Yes, this is CPA Success -- same blog, same daily analysis of the issues that impact CPAs, their clients and the business world at large.

Our look, though, has changed a bit.

There are a couple of reasons for the facelift:

1. Our previous design looked great, but it wasn't very flexible. It was difficult to add new content to the sidebars of the blog, and we had lots of new information -- news feeds from MACPA.org and other sources, new CPA Spotlight podcasts, feeds from the MACPA's Twitter account, access to our social networks, and more -- that we wanted to share with you. This new design makes it easy for us to add new content quickly.

2. We've been around for a couple of years now, and we just thought it was time for a change.

Thanks for your patience as we try out this new design. We hope you like it! Feel free to use the comments feature below to let us know how we're doing -- and what you think we can do to improve.

Most of all, thanks for reading!

Every man for himself? Hardly.

The business-survival mentality of the recession thus far seems to be "every man for himself." Our natural instinct in turbulent times leans toward self-preservation, so we turn our gaze inward and try to do the things that will ensure our own financial stability.

And that's fine, as long as we don't miss the chaos that has engulfed the lives of those we serve.

Consider this: Fully half of the AARP's members now work. That's according Robert Romasco, secretary / treasurer of AARP's Board of Directors, who outlined the changing needs of the group's members at the recent DigitalNow Conference in Orlando. (Romasco is pictured above at left with keynote speaker Clay Shirky). The numbers have changed so dramatically that the group no longer refers to itself as the American Association of Retired Persons; it's known simply as the AARP.

The notion of workers delaying retirement is nothing new. Mitch Anthony has called it "the new retirementality" -- the idea that if you enjoy your work, why not keep working?

The difference here, according to Romasco, is that today, many of the AARP's members are continuing to work because they can't afford to retire.

Then there's this: One of the fastest growing demographics in America today is made up of those 85 years of age and older. If you're 60, Romasco said, you have a one-in-three chance of living until you're 90.

Put those things together -- an aging population that continues to work well past retirement age -- and you have a situation that impacts every part of an AARP member's life ... health care, Social Security, financial planning, to name just a few.

"The needs of our members have changed dramatically," Romasco told the DigitalNow audience. "We've never seen days like this."

The point is this: Take care of ourselves? By all means. We can't serve others if we cease to exist. That's why the airlines tell us to put on our own air masks first.

But let's not lose sight of our mission. We're all here to serve others -- members, clients, customers, whomever. Fixing our own financial problems means nothing if we don't help those we serve fix their problems, too. The moment our efforts at self-preservation impede our ability to serve others, we've gone too far.

• Here's how the MACPA is helping its members weather the storm.

Learn more at the Expo
The 2009 Maryland Business and Accounting Expo, slated for June 16-17 at the Baltimore Convention Center, will offer lots of recession-survival tips and ideas for how we can better serve our customers in turbulent times. Get complete details and register here.

Layoffs: The recession's anti-strategy

Wanna hear something interesting?

A recent report from Robert Half International finds that leadership and talent are at the top of CFOs' list of the things that will help their companies earn a competitive edge in the next three years.

"So what?" you ask.

Well, it just strikes me as an interesting paradox that, in an era when financial executives place huge value on leadership and talent, some of the highest-profile things to get the ax in the name of recessionary cost savings are jobs and training.

I'm not alone. Management consultant Frank Ryan told me recently that layoffs are a lousy strategy during an economic downturn. And why? Because the people you lay off today will be working for your competitors when the economy finally recovers.

And training? Get real. We're about to be swamped by a huge wave of baby boomer retirements. These people are going to take their leadership skills and expertise with them as they walk out the door. We need to be training people to take their places now.

Fortunately, most CFOs seem determined to protect what's most important. A recent Financial Executive International survey found that 70 percent of executives are targeting other areas for cuts -- including salary freezes, elimination of bonuses and restructuring -- in an effort to avoid layoffs.

More than anything else, that type of creativity -- making necessary cuts while keeping teams in place -- will position companies for success when the recovery comes.

What are you doing to control costs during the recession?

More at the expo
The MACPA's second Maryland Business and Accounting Expo, set for June 16-17 at the Baltimore Convention Center, will offer lots of management and leadership training, and let's face it: This type of training is more important than ever. Get details and register at www.MDBizExpo.com.

Tell us how you're spending our money. And be honest.

Some things just leave you shaking your head.

Take, for instance, the recent news out of Pennsylvania. The commonwealth's auditor general, Jack Wagner, told the U.S. Government Accountability Office that Pennsylvania, in essence, can't be trusted to provide an accurate and open accounting of how it will spend its share of the federal government's stimulus aid.

"We are extremely concerned about the potential for a lack of statewide government transparency and accountability in the use of these vitally important funds," Wagner wrote.

To be fair, Gov. Ed Rendell's office isn't happy with Wagner's assessment, which it believes is "unwarranted."

Either way, it's time we started getting this stuff right.

The Obama administration is demanding greater financial transparency, accountability and oversight from banks and other corporate entities that are receiving federal funds. The SEC is cracking down on credit-rating agencies, demanding that they provide investors with more accurate and objective opinions of the firms they rate.

States, too, should be held accountable for how they spend their stimulus funds. And why not? A lack of these very things helped get us into this mess in the first place.

This is taxpayers' money we're talking about -- yours and mine. We've been promised it will be used to fix our economy.

Let's make sure that it.

• Visit the MACPA's Economic Crisis Resource Center.

The economy at the Expo
The economy and its eventual recovery will take center stage at the second annual Maryland Business and Accounting Expo, scheduled for June 16-17 at the Baltimore Convention Center. Get complete details and register for this groundbreaking event here.

Bump the CEO off the top of your org chart

The typical debate among businesses about social media has been, "Should we do this stuff?"

That debate is over. The answer is, "Yes."

"In the future," says digital strategist Charlene Li, "social networks will be like air" -- vital and ubiquitous, available everywhere. And if that's true, we must learn to use these tools. Now.

The really important questions about social media center on other issues, like, "How do I get started? And once I do, how do I succeed?"

Li, founder of the Altimeter Group and co-author of the influential Groundswell: Winning in a World Transformed by Social Technologies, offered an eye-opening gameplan during her keynote at the 2009 DigitalNow Conference in Orlando.

Li's strategy starts with three basics: Identify your organization's social media evangelists, start small and listen first, and measure the right things. "Your goals will determine your metrics," said Li, so be sure your social strategy runs in tandem with your overall strategy.

What really caught my attention, though, were these brilliant thoughts:

Prepare for organizational change
Most organizational charts are hierarchical -- CEO on top, then directors, managers, etc. Social networks, though, are the anti-hierarchy. They put our customers / clients / members at the top of the chart.

And really, shouldn't they be there anyway?

Sure. But for many people, that's a scary thought. It means giving up control -- or rather, Li said, the illusion of control -- over the conversations about our organizations.

"If you think you're in control now, you're wrong," said Li. "You have to let go of control to be in control."

Peter Hirshberg, chair of Technorati's Technical Committee, agrees.

"Control was so 20th century," Hirshberg said in an earlier DigitalNow keynote. "Today, not engaging with your customers is weakness. Engaging leads to might."

Enter social media. These tools do more than give our customers a way to connect. They promote transparency and build customer loyalty, and those things strengthen our brands -- and our organizations as a whole.

Embrace failure
Starting in 2006, Wal-Mart launched three high-profile social media initiatives ... and watched as they crashed and burned in succession. They finally got it right with Check Out, a terrific blog for Wal-Mart's buyers. It's everything a blog should be -- authentic, responsive, honest, informative, personal.

Wal-Mart wasn't afraid to let failure become part of its social media culture, and eventually -- perhaps inevitably -- that led to success. "To me, that said they really wanted to get it right," Li said.

The lesson is a simple one: If you're afraid of failure, you'll never find the courage to do the things it takes to succeed.

It's a bizarre world we live in. We're bumping our CEOs off the top of our org charts and embracing -- even celebrating -- failure.

And we can thank social media for it all. It's no longer optional. We must figure this stuff out, regardless of the heartburn it causes.

"The most essential tool to have on your desk these days is a big bottle of antacid," Li said with a laugh. "You'll know you're doing it right if it feels a little crazy."

Let the craziness begin.

• Watch Li's DigitalNow presentation in its entirety.
• View photos from DigitalNow 2009.
• Check out other DigitalNow resources.