CPA Success

Are you keeping up with accounting?

This post is different. Instead of our usual one topic, I am taking you on a quick tour of several topics that are breaking as I write this.

Staying on top of a today's rapidly changing environment is not an easy task, but it's a critical skill for every CPA. Here at the MACPA, we have been trying hard to find ways to keep you up on the fast-moving world of the CPA profession.

"Keeping Up With Accounting" is the name of this year's PIUs (professional issues updates / town hall meetings), and it has never been more important.

Here are some recent developments worth paying attention to:

1. Green Counters, from CFO magazine: Are you ready to "account" for green? This article focuses on the real need for companies to document and account for carbon emissions under the new cap-and-trade legislation. This magnifies our need to be ready to account for "green," sustainability. (See our prior post on sustainability, including a podcast with new AICPA instructor Gary Langenwalter.)
2. Madoff sentenced to 150 years:  Edith Orenstein at FEI covers this well.
3. Financial system regulation reform: A major topic of our PIUs. Here is a recap of two panels from our MDBizExpo that covers these breaking topics (again from our friend at FEI, Edith Orenstein).
4. XBRL crosses technology and regulations with the SEC mandate only a few weeks old: Here is a recap from the MDBizExpo session with the SEC, XBRL's founder, and two early filers (McCormick and Microsoft).
5. Social media and CPAs: Francine McKenna at Re: The Auditors covered our social media dream panel in this post. Also see this Journal of Accountancy interview with yours truly on social media and CPAs. You can also see the slideshow from Rick Telberg on "Social Media: New Marketing Technologies for Accounting Firms."

Or you can watch a stream of the breaking topics from our MDBizExpo on our social mash-up.

Our "Keeping Up With Accounting" PIUs start with the mega-trends and forces creating much of the changes we are seeing.

First, there is the recession, economy and major scandals (Madoff and Satyam). Then there are the four mega-trends of (1) regulations and standards, (2) globalization, (3) changing workforce demographics / generations, and (4) technology. You can see my latest slide deck on SlideShare.

I hope this helps you stay on top of our fast changing profession!

XBRL and government: A marriage made in ... Nevada?

Can XBRL possibly live up to the hype?

Beats me, but it's certainly doing its best.

Supporters say it will revolutionize everything from corporate soup to nuts. And though many financial executives call the data tagging language a boon to financial reporting, some question whether it will ever pull its weight in internal operations.

Kim Wallin must have missed that memo.

Wallin is controller for the state of Nevada. She's also a CPA, and she is seeing huge benefits in applying XBRL to initiatives within her state's government.

Here's an example: Since applying XBRL to the grants reporting arena in its Department of Agriculture, Nevada has cut the time it takes the grants manager to prepare a report from two weeks to less than a day.

Here's another: Wallin is preparing to launch a pilot program in which XBRL becomes part of the state's debt collection process. She estimates Nevada will save up to $600,000 in staffing costs over two years by using the language. And since XBRL will enable existing staff to focus on debt collection rather than administrative tasks, Wallin says the state could bring in as much as $5 million in additional revenue over those same two years.

She also has co-authored a white paper that outlines ways in which states can use XBRL to streamline the reporting and registration process for new businesses.

And there's more. Wallin is hoping to apply XBRL to other state operations ... and she says other states can do the same thing.

In an era when everyone is trying to do more with less, saving time and money might just be the incentive other states need to put XBRL into action.

Still, there will always be some folks who just don't get it. Exhibit A is the colleague at a recent Institute of Management Accountants conference who asked Wallin, "Why would anyone want to use XBRL? It just makes it too easy for people to have access to information."

"And the problem with that is ... what?" she asked him. "Isn't transparency what we want?"

More than that, it's what we need.

Wallin spoke with me on the phone recently from Paris, where she was attending the 19th XBRL International Conference. Listen to our conversation in its entirety in this CPA Spotlight podcast.

• Subscribe to our podcast here, or search for "CPA Spotlight" in iTunes.

Plenty of other XBRL resources are floating around out there, starting with these:

• XBRL International
• XBRL U.S.
• SEC resources
• IASB resources
• The ABCs of XBRL: Here's what it can do
• XBRL case studies
• Demonstrations of XBRL in action
• More demos: Microsoft | Edgar Online | Rivet Software Crossfire | Google OneBox
• XBRL taxonomies
• Six Steps to XBRL (from the Journal of Accountancy)
• ROI on XBRL (from the Journal of Accountancy)
• Improved Business Process through XBRL
• Benefits and uses for business

Don't put security on the chopping block

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.

Budgets are tight these days, and in their bid to save money, companies are serving notice that everything is on the table. There are no sacred cows in a recession.

But Adam Mahle of the Ohio Society of CPAs says there should be. In this TechieBytes post, he says there is one item in the budget that should be strictly hands-off when it comes to budget cuts. Adam?

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Everyone is aware that budgets everywhere are shrinking. One area that should always remain a priority is information security. Unfortunately, with the downturn in the market, more and more IT departments are working with ever dwindling budgets -- budgets that often leave those implementing technology to have to make hard choices. The practicalities of continuing to keep the infrastructure running have taken priority over keeping the network safe.

Data intrusion is a constant threat in our modern world. Don’t think someone is trying to access your data? Well, you would be very terribly mistaken. People exist who try to gain any access to any data that they can get. Your data is at risk. This has been proven time and time again.

Companies and individuals need to take a long, hard look at the cuts they are looking to make. Regular reviews of your infrastructure need to be undertaken. If you are in charge of IT, finances or just run your own business, you need to be aware of what measures are being taken to protect your data -– and that those measures are adequate.

Tight budgets may, in fact, be here for the foreseeable future, but you don’t want to put off the security changes that your network needs because you cannot afford it. Instead of giving up because of your budget, start looking at the alternatives. Just because you can’t afford the package that everyone else is using doesn’t mean there isn’t something just as good or far better than what you have, for much lower pricing -– or possibly even free.

Start looking at open-source alternatives. Open-source products are often free and comparable to commercial products. Tons of software pieces exist. For example, need a VPN to connect to your office securely when remote? Try OpenVPN. Need a replacement for your aging firewall that doesn’t support newer protocols or provide the security that you require? Try SmoothWall. Need to replace your anti-virus with a lower-cost solution? Check out Clam (free) or F-Prot ($50 per year for 10 computers).

The moral here: You don’t need to forgo the protection that you need simply because your budget has become too tight. If you spend some time to look for a solution, you might just find that the solution has been there for a while and at a much more reasonable cost than you had thought.

You need to protect your network, your computers and your data. Don’t make the mistake that so many others have made. Don’t put your security on the chopping block.

XBRL: Two views from the frontlines

Few people are disputing the theory behind XBRL's role in financial reporting. Better, more accurate, more timely information -- who could possibly argue with that?

Beyond that? Time will tell.

"XBRL will make (financial) information that much easier to find, that much easier to use, that much easier to understand," said David Blaszkowsky (pictured), director of the SEC's Office of Interactive Disclosure. "That, in turn, will enable the issuer and investor to be able to make better decisions and make our market a richer and more effective place."

Blaszkowsky, on hand at the 2009 Maryland Business and Accounting Expo to talk about XBRL and the SEC's corporate-filing mandate, said a recent voluntary XBRL filing program offered plenty of lessons for companies that are just getting started on the road to XBRL.

Most of those lessons are found on the SEC's online XBRL resource page in the forms of FAQs, taxonomies, podcasts and webcasts.

One of the companies contributing to that knowledge base is McCormick and Company. The Baltimore-based spice giant has gone through a couple of voluntary XBRL filings, and Ken Kelly says the experiences have proven XBRL's worth in the financial reporting arena.

"It's one of those things whose time has come," Kelly, McCormick's senior vice president and controller, said at the Expo. "For the marketplace, it's the right place to be and a good project, and I think it will bear fruit into the future."

Among Kelly's lessons:

• Get started now. "Don't wait until it's creeping up to you on a quarterly filing," he said.
• Plan your strategy. "Make sure you have a good, thought-out plan as to how you're going to do this, when you're going to do it and what the steps are, and then execute that plan," said Kelly.
• Outsource with care. "Make sure you have the right accountability and responsibility for that filing -- that you don't just abdicate responsibility for what's in that filing to an outsourced provider," said Kelly. "They can be very helpful. At the same time, they don't know your company like you know your company."

Beyond financial reporting, though, Kelly said the jury is still out on XBRL. Many are touting XBRL as a boon to internal operations as well, but Kelly isn't sold ... yet.

"Maybe I just haven't seen enough of it, but I don't see it being a big add-on internally to a company managing its business," he said. "I think it's a great thing for portraying our company outside to our shareholders and investors. ... Other people see (improved internal operations) as an expectation. I don't hold that as an expectation."

• Watch the video interviews with Blaszkowsky and Kelly in their entirety on our MDBizExpo Live! site.

Regardless, XBRL is making a name for itself outside corporate America. A recent post highlights Nevada Controller Kim Wallin and her efforts to incorporate XBRL into her state's operations. I spoke with Wallin on the phone from the 19th XBRL International Conference in Paris; that conversation will be at the center of an upcoming post.

Stay tuned ...

Top 10 small business trends

Small business is the engine that will pull us out of this recession. That is what everyone seems to agree on, which means we should be watching the major trends affecting small business.

Blogger Steve King over at Small Business Labs (one of my favorite blogs on SMB trends) posted this presentation and post titled Presentation on 2009 Top 10 Business Trends, which includes a link to a text version. Here they are:

1. The recession drives small business innovation (and efficiency).
2. Government plays an increasing role in the economy.
3. Global infrastructure and stimulus spending.
4. The number of small businesses will increase in 2009.
5. Small business globalization will temporarily slow.
6. Baby boomer retirement problems lead them to small business.
7. Gen Y turns to small business.
8. Mobile computing continues strong growth.
9. Cloud computing becomes mainstream for small business.
10. Small business use of online marketing tools expands.

You can view the full presentation on SlideShare at this link.

XBRL: 'The curtain is rising on Act 2'

Welcome to XBRL: The Sequel.

More than 400 executives from some 40 countries converged on Paris for the 19th XBRL International Conference, and the big news was the evolution of the data tagging language itself. XBRL, say those in attendance, has moved beyond mere compliance and financial reporting and is proving its mettle as a solution for reducing costs and increasing competitiveness.

"This conference is a sign that the curtain is rising on Act 2 for XBRL," Mark Bolgiano, CEO of XBRL US, said in a conference call from Paris. "It's clear that XBRL is being used for all sorts of non-financial reporting activities. The momentum has taken us beyond a completely compliance-driven environment to one that's being driven by cost and competitiveness."

• Listen to the conference call in its entirety.

As proof, Bolgiano pointed to a recent collaboration between XBRL US, the Depository Trust and Clearing Corporation (DTCC) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to "fundamentally change" the process of announcing corporate actions. The collaboration will use XBRL to capture and standarize information as a corporate action is announced, "bringing greater accuracy and reducing risks and costs by improving transparency and communication between issuers and investors."

Then there's the example being set by Nevada Controller Kim Wallin. Here's how XBRL International  describes it:

In a white paper co-authored with Liv Watson, vice chair, XBRL International, and Shweta Gupta of IRIS Business Services, Wallin outlines how XBRL can achieve a long-envisioned objective of providing an integrated platform across various agencies within a state government, thereby simplifying the costs of doing business.

“Currently, new businesses need to go to the Secretary of State, then to the Department of Taxation, then to Unemployment, to DMV to register vehicles, to the city, to the county, etc., to obtain all the permits, licenses and so on to do business in the state,” she says. "And every place you go, you have to fill out a form with your name, address, ID number -- basically the same information at each location. If you use XBRL in a business portal, you would fill out name, address, ID number, etc., and then the data can go out and populate the other systems. If you do it without the XBRL, systems don't talk to one another."

The ultimate goal, Watson says, is to create and approve an XBRL taxonomy for this type of stuff so that all states can put it to use.

Imagine applying XBRL to every area in which governments are being strangled by informational red tape. The potential savings are huge. And not a financial report in sight.

That's not to say financial reporting has taken a back seat. Starting with their June 15, 2009 quarter, the 500 largest public U.S. companies are now required by the SEC to use XBRL to file their financial statements. We'll take a closer look tomorrow at what the SEC -- and at least one public company -- have learned from the process thus far.

In the meantime, check out these other XBRL resources:

• Virtual workshop examines reality of XBRL
• Competing to find XBRL solutions
• XBRL International
• XBRL U.S.
• SEC resources
• IASB resources
• The ABCs of XBRL: Here's what it can do
• XBRL case studies
• Demonstrations of XBRL in action
• More demos: Microsoft | Edgar Online | Rivet Software Crossfire | Google OneBox
• XBRL taxonomies
• Six Steps to XBRL (from the Journal of Accountancy)
• ROI on XBRL (from the Journal of Accountancy)
• Improved Business Process through XBRL
• Benefits and uses for business

Codification: Lots of optimism, a few 'gray areas'

The countdown to Codification continues.

The Accounting Standards Codification -- the FASB's effort to reorganize thousands of U.S. GAAP pronouncements under about 90 accounting headings -- will be launched on July 1, and everyone is tingling with anticipation.

OK, not everyone. According to Rick Telberg, a recent Grant Thornton study found that only 46 percent of CFOs and senior comptrollers even know about the project.

Considering it's "probably the biggest change in the structure and organization of GAAP 'in over 50 years,'" they'd better start paying attention soon, Schneider Downs Audit Manager Mara Bruce told Telberg. “It’s time to start to learn to navigate through the codification, so you aren’t left in the dark.”

CFO's Alix Stuart says there are some "gray areas" of uncertainty with the Codification. CFOs, for instance, will have to "change financial statements to eliminate the old rule references and either replace them with topic and subtopic numbers," Stuart writes. They'll also have to adjust their internal controls to take the Codification into account.

Still, Stuart reports that most executives who do know about the project are generally positive in their assessments. "It's a great step, and will absolutely decrease the amount of time my staff spends on accounting research," Steffan Tomlinson, CFO of Aruba Networks, told Stuart.

According to the FASB, the Codification will be available in two views:

• A basic view, free to all, that provides access to all authoritative non-governmental U.S. GAAP, including relevant SEC content, organized by topic; a utility to identify the location of original standards; and basic print functionality.
  
• A more robust professional view designed for accounting and reporting professionals, analysts and investors that includes cross-referencing, search functionality, archiving features, the ability to send comments to colleagues via e-mail, and more. A single annual subscription to the professional view is $850; discounts are available for multiple-use agreements.
  
• Academic access. According to the FASB, "the Financial Accounting Foundation, through a special program with the American Accounting Association, will provide free access to the professional view for faculty and students of accounting programs at post-secondary educational institutions." Get details here.

Registration for the Codification will begin on July 1 at the official Codification Web site.

There are plenty of resources available to guide you through the Codification maze. Among them:

• An online tutorial and a "Notice to Constituents" that includes a bunch of background information, both of which are available on the Codification Web site
• A PowerPoint tour of the Codification Web site
• A Codification Q&A
• An archived FASB webcast entitled "The Move to Codification of U.S. GAAP"
• “Countdown to Codification Alerts,” a series of weekly FASB e-mails featuring tips to help ease the transition to the new research system
• Further details and resources from the AICPA
• A Codification update from ACPEN

PCAOB's Olson: Crisis puts CPAs in spotlight

Global business is a glass-half-empty or glass-half-full proposition. Those who play in the global arena are either worried about the challenges it presents or drooling over its opportunities.

As chair of the Public Company Accounting Oversight Board, Mark Olson gets paid to focus on the challenges. As its name suggests, the PCAOB oversees the accountants and auditors who keep watch over the nation's public companies. Olson's job is to find the broken stuff in that system and fix it.

At the Maryland Business and Accounting Expo, though, he was all about the opportunities.

In a speech before Maryland's newest CPAs, Olson said the globalization of business and efforts to converge accounting standards via IFRS "have turned the CPA credential into a global asset."

"The complexity of accounting in a global economy highlights the importance of applying professional skepticism by the CPA," said Olson, who will step down as PCAOB chair on July 31. "The same factors that create complex ethical challenges are also creating an environment where new opportunities abound. An increasing global economy, rapidly changing technology and the depth of our capital markets are driving new opportunities for CPAs and changing existing jobs at a remarkable rate."

In other words, he told the new CPAs, it's a great time to be joining the profession.

But it's not just about career development. The recession's global reach has brought unprecedented complexity to the investment, credit and regulatory functions and placed renewed importance on the role CPAs play in the global economy.

"The public looks to the technical skills of the CPA to untangle the complexities inherent in the financial crisis. Companies and investors look to CPAs to provide critical insight and strategic thinking when faced with the challenges of operating in today's environment," Olson said. "The current global economic crisis demonstrates the vital role CPAs play in the effective operation of financial markets and the financial regulatory regime."

Olson had lots more to say, not only about the global business environment but about ethics and CPAs' responsibility to protect the public interest as well. Listen to his speech in its entirety in this CPA Spotlight podcast.

• Subscribe to our podcast here, or search for "CPA Spotlight" in iTunes.

What opportunities are you seeing on the global stage these days?

CITP credential gets a facelift

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.

I'm a little late to the party with this one, but it's still worth noting that the AICPA has revised its Certified Information Technology Professional, or CITP, credential.

Here's the scoop from the AICPA:

The revised credential will concentrate on information technology expertise relating to audit and attest services and financial data components, analysis and reporting. The holder of the revised credential represents a CPA who provides assurance to financial information or insight to business data, process or reporting.

Get more details about the revisions here or on the CITP Web site.

Protect the public? You have their word.

CPAs don't have to take an oath before launching their careers. Someone must have figured that a college degree, a tough exam, a year of experience and lifelong learning were plenty of requirements without tacking on a ceremonial oath as well.

In Maryland, though, they take an oath anyway.

Sure, it's ceremonial. It's also a hugely important and powerful reminder of a CPA's responsibility to protect the public interest.

On June 16, following Day 1 of the Maryland Business and Accounting Expo, nearly 100 new Maryland CPAs vowed to "uphold the honor and dignity of the accounting profession and abide by the rules of professional conduct" during the third annual swearing-in ceremony for Maryland's newest members of the profession.

Earning a CPA license "truly is a major accomplishment," MACPA Executive Director Tom Hood told the new CPAs, "and we think it's probably more important now than in any other recent time, because of what's going on in the marketplace. This event puts the exclamation mark on our public-interest responsibilities, and that goes for all CPAs."

Mark Olson agrees. The outgoing chair of the Public Company Accounting Oversight Board, or PCAOB, was on hand to congratulate the new CPAs ... and to drive home the purpose of the event one last time.

"In joining the profession, you have an obligation to uphold the highest ethical and professional standards and are responsible for ensuring that trust in the CPA profession continues," Olson said. "Taking this oath is a reminder of the trust that the public places in CPAs and your commitment to uphold that trust."

• View some more photos from the event.

I love this event. Not only does it give new CPAs and their families an opportunity to celebrate their accomplishments, but it forces those attending to actually verbalize their commitment to serving the public. Earning your license is one thing. Actually standing in front of state and federal regulators, raising your right hand and promising to do the right thing is a powerful step. I'd be willing to bet it's one they'll remember when faced with professionally and morally difficult decisions.

Welcome to the profession, folks. Now make us proud.