CPA Success

The top five skills of innovators

We think it is being an ambidextrous thinker, being able to think critically (which we CPAs do very well) and creatively. That is what I take away when reading this Harvard Business Review article, "How Do Innovators Think?" (Thanks to friend and colleague Jeannie Patton with the AICPA.)

The article is based on research into the "innovator's DNA" and was based on interviews with some of the top innovators in the market today -- Jeff Bezos at Amazon, A.G. Lafley at P&G, Steve Jobs at Apple, Margaret Whitman and Pierre Omidyar at Ebay.

Here are the top five skills of innovative leaders:

1. Associating -- the ability to make connections across.
2. Questioning -- the ability to ask "What if," "Why" and "Why not."
3. The ability to closely observe details, especially people's behavior.
4. Experimenting -- the willingness to try new experiences and ideas.
5. Social networking beyond your profession -- a curiosity and ability to learn from multiple social networks outside your primary discipline.

Read the full article.

We see a lot of similarities with our own research on leadership skills from our Business Learning Institute. Here is what we see as the top five qualities of extraordinary leaders:

1. Sight -- the ability to see emerging patterns and shift perspective when necessary.
2. Insight -- the ability to learn faster than the rate of change in your industry.
3. Create -- the ability to think strategically and critically to gain insights that create new opportunities.
4. Communicate -- the ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work.
5. Inspire –- the ability to mobilize support and engage others to join you in action.

We have turned this into a leadership development program called i2a: Insights to Action: A Strategic Thinking System, which is also the basis for our i2a: Leadership Academy. Applications are now available for the MACPA's Leadership Academy on May 7-9. 2012. Get details and applications here.

Tell us what you think. Can leadership be taught?

What is the secret to success in the future?

How do you prepare for the future when you don't know what is going to happen five minutes from now?

Crowdsource it.

The AICPA and state CPA societies collaborated and crowdsourced the future of the CPA profession over the past year and recently released the CPA Horizons 2025 Report, which outlines the process and conclusions. This report was unanimously adopted by the governing AICPA Council at its fall 2011 meeting.

MACPA past Chair Kimberly Ellison-Taylor served on the Advisory Panel and was front and center on a panel at Council to discuss the findings and the work. The group took the results and synthesized them into the final report, which was discussed and updated with the comments of more than 300 council members. The comments were added and the report published overnight for the vote on Wednesday morning. That is crowdsourcing at its best.

The process involved more than 5,600 participants via the web, 1,000 in intense grassroots future forums (500 nationally across eight cities and 600 in Maryland), focus groups, interviews with regulators, and the final input of the AICPA Council. All told, those efforts generated 75,000 comments.

Here are some of the insights in the report, "Embracing the Future" (page 45):

• It is a small world after all: Every business must become a global business.
• The future is here: Embracing the future now will ensure our viability in the long run.
• Change is inevitable: Technology is changing the way we work, and the change will continue.
• Generations are working side by side: Baby Boomers are not retiring (soon) and Millennials are bringing a new set of skills and ideals into the workplace.

What we must do:

• Be open to change: Embrace, don't fear the future.
• Be nimble: Adapt traditional services and establish new ones to take advantage of change.
• Be collaborative: Work with each other and with the global community to shape and execute the standards and services that will emerge over the next decade.
• Be forward-thinking: Assess and evaluate the current and future environments and plan accordingly.

Download your copy of the CPA Horizons 2025 report here.

If you are in or near Maryland, stop by one of our townhall meetings (4 hours of free CPE) and hear about the latest results. 

Resources:

• MACPA's CPA Horizons Project: See the top trends to watch and an actual report from the Future Forums.
• See a series of videos from CPAs, students, educators, young professionals about their experiences in the future forums.
• How about holding a future forum for your firm or organization? Click here.
• CPA Horizons 2025 website, full of great resources and research from leading futurists from the AICPA.
• Prior posts from CPA Success here and here.
• Pictures from the Future Forums.

It's never too early to think 'taxes'

Autumn is here. Can tax season be far behind?

Answer: No.

When the leaves fall and the mercury drops, many CPAs find their thoughts turning to tax season, usually in a wake-me-when-it's-over sort of way. Don't get 'em wrong: Tax season pays the bills, and they love what they do, after all. But they don't call it "busy season" for nothing.

This year, reminders of tax season are coming earlier than usual. Consider:

• The IRS has launched the 2012 PTIN renewal process: Thanks to the new Preparer Tax Identification Number (PTIN) process, preparers are required to renew their ID numbers annually, and before the new year begins. "For example," says the IRS, a preparer’s PTIN for 2012 must be renewed by Dec. 31, 2011." In other words, the time is now, preparers. Renew your PTINs here.


• CPAs are raising concerns about an IRS fingerprint plan: If you haven't heard, the IRS has hatched a plan to fingerprint non-CPAs who are required to obtain a PTIN ... and the AICPA is concerned about it. Institute officials and CPAs from across the nation expressed those concerns at a recent IRS hearing. Many of those concerns centered on the added burden the requirement would place on small and mid-size CPA firms. Stay tuned.


• Tax pros are urged to prepare for new e-file rules: This year, "any preparer or firm that reasonably anticipates preparing and filing 11 or more Form 1040 series returns, Form 1041 returns, or a combination of Form 1040 series returns and Form 1041 returns generally must use IRS e-file," the IRS reports. To do that, they must firm obtain an Electronic Filing Identification Number, or EFIN -- and now is the time to get those numbers because, as the IRS warns, "the approval process can take 45 days or more." CPAs can review the process here.


• EITC due diligence now a requirement: Beginning in 2012, the IRS "is issuing regulations that would require paid tax return preparers to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit." The plan, according to the IRS, is to reduce the number of errors that occur on returns that claim the EITC. Find out more here.

It's shaping up as a busier busy season than usual. How are you planning to cope? Let us know by posting a comment, then check out these related programs:

• 2011 MACPA town hall meetings
• 2011 MACPA Advanced Tax Institute, Nov. 7-11, Martin's West, Baltimore
• More MACPA tax programs

More CPAs jump aboard the mobility train

Shove over, will you? Someone else is climbing aboard the CPA mobility bandwagon.

Kari Bedell, executive director of the Greater Washington Society of CPAs, sent notice recently that Washington D.C. Mayor Vincent Gray has signed the Accountant Mobility Act of 2011, making the District of Columbia the 49th U.S. jurisdiction to enact mobility legislation. Pending a 30-day congressional review period, Bedell is confident that "mobility will be effective in the District of Columbia in advance of the Jan. 1, 2013 licensing renewal date."

That's great news for CPAs. Mobility permits a licensed CPA in good standing to practice outside of his or her principal place of buiness without having to obtain another license. One less thing to worry about, right?

Still, six jurisdictions have not yet embraced mobility, and that means we need some direction. Which states are mobility friendly? Which aren't?

The AICPA and the National Association of State Boards of Accountancy have the answers.

In July 2011 they launched CPAmobility.org, a site that breaks down the new practice privilege rules in detail. They've also released a video that teaches CPAs how to use the site and what they can expect when they visit.

"The video demonstrates that in four simple clicks online, CPAs can learn whether their existing home state registration is mobile and allows them to work in other jurisdictions without additional notice, or whether further paperwork is required," the AICPA states.

As more jurisdictions adopt mobility, that becomes less of an issue. Still, until CPAs everywhere are mobile, better safe than sorry.

Watch the AICPA / NASBA video here:

Save the Bay, step 1: Check your mail

A quick reminder for all of you tax preparers out there: Your clients have a chance to save the polluted Chesapeake Bay -- and you have an opportunity to help.

It'll come with a simple check-box donation on state income tax returns. Those interested will be able to enter the amount of their donation on Line 35 of their Maryland income tax return. The donations will go to the Chesapeake Bay and Endangered Species Fund and are split evenly between the Chesapeake Bay Trust and the Wildlife and Heritage Division of the Maryland Department of Natural Resources.

Folks with the Chesapeake Bay Trust have begun sending information to CPAs around the state with details about how they and their clients can get involved. With busy season closing in, preparers will want to keep an eye on their mail for details about how the program works. Check your mailbox, or view and print the mailer here.

According to the DNR, the donations will be used to promote:

• Chesapeake Bay education and restoration projects for students.
• Stream cleanups and tree plantings by community volunteers.
• Habitat research, protection and enhancement for threatened plants and animals.
• Protection of Maryland's endangered species.

Just a friendly reminder. Do your part. Help your clients do their part.

Maybe we can breathe some new life into the Bay.

What's over the Horizon for CPAs?

"If you don't have a vision for yourself or your organization, you will just get sucked into somebody else's vision." -- Watts Wacker, futurist

Thanks to the AICPA, we have a vision for the CPA profession that was created in 1998 (looking ahead to 2011) and is now being updated for 2025. (Pictured at right are AICPA past Chair Bob Mednick, current Chair Paul Stahlin, and yours truly.)

You heard it right -- a vision for the entire CPA profession. AICPA past Chairman Bob Mednick commissioned the first "vision" in 1998, and this year's chair, Paul Stahlin, revisited it this year.

The project involved research with several leading futurists that was used as background for CPAs to identify trends and implications as they look over the horizon out to 2025. The AICPA then used electronic surveys, market research and a grassroots engagement process we developed and ran to get in-depth feedback in 16 sessions held across the U.S. over the spring and summer. (You can see the results from our work in Maryland here.) 

More than 75,000 electronic comments were received, 16 in-depth future forums were conducted with over 600 CPAs, other focus groups were done with regulators and stakeholders, and a massive analysis and synthesis was led by the AICPA Office of Strategy Management.

Here are 10 key insights from the CPA Horizons 2025 Project.

1. Technology: Understand and leverage relevant technology in conjunction with core CPA competencies to deliver superior services. 
2. Pre-Certification and Lifelong Learning: Evolve the educational framework to keep pace with the changing dynamics of business, government and our profession.
3. Worldwide Profession: Position the CPA as a premier designations of the accounting and finance profession throughout the world.
4. Pride in the Profession: Encourage pride among CPAs in the CPA profession and in the value CPAs create throughout society.
5. Trusted Attester: Preserve the role of the CPA as the trusted attester of financial and other information.
6. Trusted Advisor: Promote the CPA as the trusted advisor who develops solutions to complex problems.
7. Market Permission:  Leverage the strengths of the profession to expand market permissions.
8. Marketplace: Address continual changes in the marketplace, economy, businesses, and regulations by managing change.
9. Value Proposition: Increase the visibility of the profession’s value proposition by demonstrating the profession’s core values in multiple areas of business and society.
10. Demographic Shifts: Continue to offer opportunities that enhance the appeal of the profession and be proactive in addressing both U.S. and global demographic shifts.

The CPA Horizons 2025 report from the AICPA will be released today at the AICPA Fall Council meeting in Phoenix, Ariz. 

 Here is a brief clip of what these future forums were all about:

Stay tuned as we post the final report and talk about how you can use this exciting research to think about your own vision for you, your company, firm, or department.

See the post, Perspectives on Business and the CPA Profession: Revisiting the CPA Vision, when Paul Stahlin came to Maryland's CPA Summit in 2010.

AICPA draws a line in the private company sand

CPAs have a message for the Financial Accounting Foundation in their ongoing battle over private company accounting standards, and it goes something like this:

Game on.

The AICPA has issued an ultimatum of sorts to the FAF: Create a separate, independent private company standards board, or watch the AICPA take steps of its own in that direction.

A little history here:

In January 2011, the Blue Ribbon Panel on Standard Setting for Private Companies called for the creation of a new board that would build the blueprint for private company standards. The AICPA backed that proposal, as did thousands of CPAs and most state CPA societies throughout the country. An MACPA task force went so far as to release a white paper that called for the creation of a separate, independent board devoted to private company reporting issues.

"It is clear private company stakeholders see a need to improve standards for private companies," the white paper concludes. "... Any further studies should be limited to determining how the recommended changes can be implemented and not continuing to study whether changes are needed."

The profession's point was clear: In this chaotic economic environment, the Financial Accounting Standards Board is rightfully focused on public company issues. It must leave private company standards in the hands of a separate, independent board.

FAF trustees didn't see it that way. In October, they announced a plan to create what they're calling the Private Company Standards Improvement Committee. That committee would not be independent. In fact, it would be overseen by the Financial Accounting Standards Board and chaired by a member of FASB. In addition, writes Accounting Today's Michael Cohn, "(a)ny changes in accounting standards for private companies would need to be approved by a two-thirds majority vote of the new council and would then be forwarded to FASB for ratification."

That plan doesn't sit well with the AICPA. At the annual fall meeting of its governing Council, the AICPA had this to say:

"Either FAF moves to adopt the Blue Ribbon Panel on Standard Setting for Private Companies’ recommendations for a separate board — which is the AICPA’s preference — or the AICPA will consider other options.

"If FAF continues to pursue its current proposal, the AICPA board of directors will look at other solutions for addressing the needs of private companies. This could include creating a separate standard setting body to develop private company generally accepted accounting principles (PCGAAP) or a comprehensive private company-specific basis of accounting that would deliver meaningful, lasting improvement to private company financial reporting consistent with the Panel’s recommendations."

Time will tell what the FAF thinks about that line in the sand.

In the meantime, the AICPA is urging CPAs to voice their support for a separate private company standards board (or opposition to the FAF proposal — whichever you prefer). They can do so by using this fast, easy tool to send comments about the FAF proposal before the Jan. 14, 2012 deadline.

Have an opinion? Voice it now. Write to the FAF and join the debate.

Professional unity: Leadership, trust, and hard work

The past few years have seen unprecedented legislative and regulatory challenges at both the federal and state levels. It's likely to be as bad or worse in the future.

That was Barry Melancon's opening remarks as he addressed the chairs-elect and the chief staff executives of the state CPA societies at the annual leadership conference sponsored by the AICPA and CPA-SEA (State Executives Association). 

(Pictured at right is MACPA Chair-elect Anoop Mehta, AICPA Chair Paul Stahlin, and MACPA Chair Allen DeLeon from the AICPA Spring Council Meeting in D.C.)

Barry went on to talk about all of the legislative victories in the past year and how we accomplished these working together as the AICPA and the state CPA societies. (See our prior posts, The power of we and What have we done for you lately?)

It is no secret that we are one of the most successful professions from an advocacy and public image perspective. That correlates directly to intentional collaboration and work that comes from meetings like this. Yet there is much more that we accomplish working together for the CPA profession and the public trust -- financial literacy, student recruitment, commitment to the highest standards, maintaining the quality and integrity of the profession, private company standards, and protecting the CPA brand nationally and globally. 

The next session of the leadership conference included a thought-provoking session by my colleague, Gary Bollinger in Indiana, on value propositions and finding your "one thing." (He even used the "City Slickers" scene with Curley that you town hall junkies will remember.)

The closing session was a terrific presentation by Cam Marston of Generational Insights on the four generations in the workforce and the implications for our associations. He gave some great insights into how we can work to turn these generational challenges into opportunities. I happen to think we are in for a golden age of young leadership in the profession (based on our recent experiences with our MACPA Leadership Academy graduates).

Today, we will break out as chief volunteer leaders and chief staff executives by size of membership to share experiences, learn, and collaborate. Our profession's unity is stronger than ever, thanks to all of the hard work of the AICPA, CPA-SEA, and all of our volunteer leaders like Anoop, Paul and Allen. Thanks for keeping our profession strong.

Here are some prior articles featuring Cam Marston from CPA Success: 

• Making the most of generational differences
• Defining the generations: Who are the millennials
• Something's gotta give
• Podcast interview with Cam by MACPA editor Bill Sheridan
• Retaining youth, an article from MACPA

Headlines, regulators take aim at audits

Like it or not, auditors, the spotlight is all yours these days.

Something tells me you won't like it.

In the past week alone, we've read the following:

• PCAOB officials say they are finding more problems -- not fewer -- at the firms it is inspecting. "Too often we find instances where standards aren’t being followed and situations where auditors are accepting evidence from management and not looking for, or ignoring, other evidence that may not corroborate or may contradict management’s position," said PCAOB chief auditor Martin Baumann. "We still find too many situations where professional skepticism is not where we think it ought to be.”


• In an effort to bring more transparency to the public company audit process, the PCAOB says registered accounting firms should be required to disclose the names of engagement partners in their audit reports. “Disclosure of participating firms would shine a light on these relationships and give investors a better idea of whose work supports the audit report they are relying on,” PCAOB member Daniel Goelzer told CFO.com.


• If your audit fees are going up, your company could be in trouble. "A high or rising audit fee can indicate one of two things," Reuters reports. "Either the auditor is charging a risk premium, aiming to cover future legal costs to them of something going awry, or they may just be doing more work on the audit, digging into areas where results are uncertain." Moreover, says Reuters, "audit fees substantially above those paid by competitors and companies of similar size are strongly associated with a slip in operating performance the following year."

Let's face it: No one likes to see their auditor walking through the door. Perhaps unfairly, that bad rep often comes with the job. Still, that's a lot of criticism to swallow in one week.

I'd love to hear our auditors' perspective on all of this. Is this the regulatory equivalent of unnecessary roughness? Or is it a fair attempt to shine the light on real issues that the audit community needs to address to better serve clients and the public at large?

Let us know what you think, then check out these related programs:

• Oct. 17: Auditor's Risk Assessment Process: Tackling the Risk Assessment SASs
• Oct. 19: Uncovering Misappropriation Schemes
• Oct. 24: Sales and Use Tax Audits and Fraudulently Filed State Returns
• Oct. 24 webcast: Strengthen the Inquiry Skills You Need to Gather Evidence
• Oct. 28: Fraud and Risk Management
• Nov. 1: Accounting Services, Compilations and Reviews: Effective Risk Management
• Nov. 7: Accounting and Auditing Current Developments
• Nov. 11 webcast: Top 5 Ways to Get the Most Value for Your Audit Fees

Also available is our "Auditing Bits in Bytes Video-On-Demand," a series of eight individual sessions that guides professionals through the complete audit process. For details, see the “On-Demand” programs at www.macpa.org/selfstudy.

Twitter's not strictly social. That's a good thing.

It's been a while since we talked about social media here, but I read something recently that convinced me it's time to revisit the subject.

It's about Twitter.

None of the social tools out there have been as unfairly maligned as Twitter. Think about it: We keep complaining about "information overload" these days. No less an expert than Clay Shirky says our problem isn't information overload, though -- it's "filter failure."

And yet here's Twitter, a perfect little filter that lets us ignore all the crap out there and follow only the people who add value to our lives. Who can possibly complain about that?

More folks than you think.

The naysayers have always been there, of course. They've dismissed Twitter as mindless 140-character drivel, doing so without following a soul, without sharing a thing, without a single clue about what they're saying. Talk about mindless drivel. That type of criticism is easy to dismiss.

Then you've got the study released recently by Yahoo! Research. Researchers looked at 260 million tweets sent between July 28, 2009 and March 8, 2010, and came to this conclusion:

Twitter isn't very social.

Three compelling findings point to that conclusion:

• 0.05 percent of Twitter users generate 50 percent of all content posted on Twitter. An overwhelming majority of users don't share a thing.


• Twitter users follow back far less than they're followed. They're more selective about who they choose to follow.


• Twitter's "networks" are fragmented. In other words, say the researchers, "Celebrities listen to celebrities, while bloggers listen to bloggers." 

I would argue that those things are actually good from a Twitter user's point of view.

• Few people post anything on Twitter? That makes it easy for us to figure out who's adding real value there.


• Twitter users don't automatically follow back those who follow them? That means they seek value from their network -- and will likely work hard to provide value in return.


• Twitter is fragmented? From a professional point of view, isn't that what we want? If celebrities listen to celebrities and bloggers listen to bloggers, doesn't it follow that CPAs listen to CPAs and those who directly impact the CPA profession? Won't that add value to your Twitter experience?

In Twitter's early days, everyone followed everyone else. Conventional wisdom said the more people you followed and the more people who followed you, the better your Twitter experience. Today, that trend is reversing itself. People are being extremely selective about who they follow.

From a professional point of view, that's when Twitter turns to gold.

Check out these related resources:

• Social media value: It's quality, not quantity
• Twitter: Changing the world ... 140 characters at a time (slides from my presentation to CPAs at Vail Resorts)
• Social media's real, and it works. Here's proof.
• Social media in education? It's a natural.
• CPAs and Social Media: Passing Fad or Valuable Tool? (two-hour webcast)
• Web 2.0: Less Hype, More Help
• Social Media Strategy and Quick Start: Developing and Implementing a Social Media Strategy for CPA Firms and Organizations