CPA Success

New CGMA designation puts CPAs on a global pedestal

I don't know much, but I know this: Modern accounting goes way beyond the numbers.

Business today is global. The really good CPAs add context to the numbers, scan the horizon for weak signals of disruptive change, and help their organizations navigate an ever-changing world.

In short, CPAs and management accountants today are more than number-crunchers. They're strategic business partners.

Now, they have a designation that reflects that role.

The AICPA and the Chartered Institute of Management Accountants have launched their new Chartered Global Management Accountant (CGMA) designation, a title that emphasizes the strategic role management accountants play in their organizations.

The designation moves the spotlight away from the investment world's obsession with short-term financial results and places it squarely on long-term strategy. The CGMAs themselves will lead that conversation by helping companies "experience maximum integration between financial and non-financial information" and "make better informed decisions," AICPA President and CEO Barry Melancon said.

The designation also dovetails nicely with a couple of other important trends:

• CGMAs are emphasizing the human nature of modern business. An AICPA / CIMA report titled "Rebooting Business: Valuing the Human Dimension" says that "relationships with customers, employees, partners and communities ... will be key to getting things moving again and sustaining success over the long run." Now where have I heard that before? It's a people-first world, and the CGMA is built to thrive in it.


• CGMAs also focus relentlessly on transparency. Said CIMA Chief Executive Charles Tilley: "Global business leaders have to embrace and harness transparency if they're going to succeed in these changing times." I'm guessing XBRL, with its promise of data transparency and efficiency, will play a role in the CGMA world going forward.

But don't ask me. Ask a few of the world's first CGMAs:

MACPA Executive Director Tom Hood: "The CGMA puts an exclamation mark on the CPA license for those of us in business and industry. It recognizes the broad set of skills required by a management accountant in today's rapidly changing and increasingly complex world."

Joselin Martin, an MACPA board member and financial manager with Hayles and Howe, Inc.: "The CGMA credential tells users -– both internal and external -- that I have the skill and experience to translate business data into strategic insights that are future-based, accessible and understandable. It is the perfect complement to my CPA to position myself as the trusted source of strategic financial information in my company."

MACPA Director of Finance Skip Falatko: "The CGMA credential will help me, as an industry CPA, deal with an increasingly complex world by broadening my skills in strategy, leadership, and communication. In short, it will help me connect the dots -- not all of which are financial -- inside and outside my organization.”

The AICPA and CIMA are offering a ton of resources to examine the new designation in detail. They include the following:

• The official CGMA website
• Creating a new worldwide designation to meet the challenges of global business: A Q&A with Barry Melancon and Charles Tilley
• FAQs about the CGMA
• How to qualify
• Why CGMA?
• Benefits of becoming a CGMA
• What is management accounting?

New skills for a new designation: BLI's got 'em
In launching the CGMA designation, officials emphasized the new "success skills" that are critical for sustainable success. They including things like leadership, change management, strategy and ethics, and they're at the center of the MACPA's Business Learning Institute.

"These skills are based on the research from the CPA Vision 2011 Project and were recently refreshed and renewed through the CPA Horizons 2025 Project," said Hood. "We at the Maryland Association of CPAs are ready to help our CPA.CGMA members succeed in the new economy."

Learn more about what BLI has to offer here.

Dodd-Frank: The best (or worst) is yet to come

This one pretty much blew my mind.

The Dodd-Frank Act, a package of financial reforms signed into law in July 2010 in the wake of the credit crisis, isn't even close to being completely enacted. In fact, The Washington Post's Danielle Douglas claims that barely a quarter of the act's regulations have been put into place so far.

That's 25 percent in 17 months. Guess what we've got to look forward to in 2012?

"Bankers have complained that the slow-going implementation makes it difficult to get a handle on added compliance costs and regulators’ expectations," Douglas writes. "Regulators argue they are moving as fast as they can considering 30 federal agencies are tasked with writing some 400 rules of varying complexity. ... There is still a ways to go before the full impact of the legislation is felt. More than half of the rules are not due until 2012 or later."

Then again, given Dodd-Frank's shear size, maybe we shouldn't be surprised after all. The law is an astounding 2,319 pages long. To put that in perspective, the Sarbanes-Oxley Act -- arguably the most important piece of accounting-related legislation to come along since the securities acts of 1933 and 1934 -- is 66 pages long.

It all strikes me as Exhibit A for why you should be planning to attend CPA Day in Annapolis on Jan. 18. If CPAs don't step up and offer some input, politicians will be crafting accounting-related legislation on their own.

Does that sound like a good idea to you? Me either.

Not that Maryland politicians will be considering anything approaching the scope of Dodd-Frank. But you never know when they'll look at something like sales taxes on professional services and say, "That seems like a good idea."

That's when CPAs need to step up and respond, "No, it's not, and here's why."

That's the power of CPA Day. The more CPAs who join us in Annapolis, the more powerful our legislative message becomes.

• Register to attend here.
• Check out our CPA Day Primer before the big event.

Don't sit there waiting for something to happen to you. Make something happen yourself. Join us in Annapolis.

And brace for a wild 2012. There's a lot of Dodd-Frank waiting in the wings.

10 years after Enron, the wound is still fresh

At the risk of ruining your Friday, today is the 10th anniversary of Enron's bankruptcy.

Remember how utterly chaotic that time was? News that shook CPAs to the core surfaced almost daily, 
and the next day brought even worse news. I mean, look at the timeline:

• Dec. 2, 2001: Enron files for the largest-ever U.S. bankruptcy.


• Dec. 3, 2001: About 4,000 Enron employees are laid off in Houston.


• Jan. 9, 2002: The Justice Department opens a criminal investigation into the Enron affair.


• Jan. 10, 2002: Enron auditor Arthur Andersen confirms that it shredded Enron documents.


• Jan. 15, 2002: David Duncan, managing partner of Andersen's Enron engagement team, is fired for his role in the shredding. He is eventually charged with obstruction of justice.


• Jan. 17, 2002: Enron fires Arthur Andersen as its auditor.


• June 15, 2002: Arthur Andersen is convicted of obstruction of justice for the shredding of Enron documents.


• July 21, 2002: WorldCom files for bankruptcy, in the process surpassing Enron as the largest-ever U.S. bankruptcy.


• July 31, 2002: The Sarbanes-Oxley Act is enacted.


• Aug. 31, 2002: Arthur Andersen gives up its CPA licenses and surrenders its right to practice before the SEC, effectively putting the Big 5 firm out of business.

In just nine months, the business and accounting worlds were turned upside down.

The years that followed have been dotted with all of the requisite legal proceedings. Former Enron CEOs Jeffrey Skilling and Ken Lay were indicted in 2004 and found guilty in 2006. Before he was sentenced, Lay died of a heart attack on July 5, 2006. Former Enron CFO Andrew Fastow made a deal with prosecutors and went to jail in 2004. In 2011 he was released to in-home detention in the same home -- valued at nearly $1 million -- where he lived before Enron's fall from grace. His prison sentence will officially end on Dec. 17.

Meanwhile, Enron shareholders lost nearly $11 billion as a result of the collapse. With much of their life savings tied up in company stock, many Enron employees left the company with nothing.

Other scandals have come and gone. By the end of 2002, the bankruptcies of WorldCom ($103.9 billion) and Enron ($65.5 billion) were the largest in U.S. history. Today, they've been dwarfed by the 2008-09 credit crunch bankruptcies of companies like CIT Group, General Motors, Washington Mutual and Lehman Brothers.

Enron is the one we remember, though, isn't it? It gave us notorious villains (Lay, Skilling), memorable heroes (whistleblower Sherron Watkins), personal tragedy, political intrigue and, for CPAs, migraine after debilitating migraine.

You could argue that the profession is better off because of it. We took our lumps, rolled with the punches, and emerged on the far side stronger and more trustworthy than ever. "That which doesn't kill you," etc., etc.

Still, I'm not in any rush to go through something like that again. Are you? Let's just reminisce every 10 years or so and call it good. Deal?

On second thought, let's just forget I brought it up.

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.

DATA Act: The federal case for XBRL

The federal government has come to some hard truths about its financial data.

1. It's wildly inaccurate.
2. The ways in which it's reported are horribly inefficient.
3. Citizens can't trust that they're getting accurate, transparent data from their government until both problems are fixed.

Give the government credit, though. It's trying really hard to do just that.

On Sept. 30, President Obama signed into law the Children and Family Services Innovation and Improvement Act. A provision in that law requires the Department of Health and Human Services to designate common data reporting standards to govern the reports that states submit outlining how they spend federal child welfare funds.

In short, the government has just standardized the reporting process for states that receive federal funds for child welfare programs -- and that standarization will likely look a lot like XBRL.

That's one small step toward accurate data.

The giant leap, though, might be yet to come.

There's a piece of legislation moving through Congress right now called the Digital Accountability and Transparency Act, or DATA Act. That bill calls for the creation of an independent body that would track all federal spending on a single website and require the use of consistent government-wide data standards.

Here's why the DATA Act is a big deal:

Current government spending is reported to databases that feed into the website USAspending.gov. That site "is "plagued with accuracy problems and problems with completeness," says Hudson Hollister. "The reason for that is (government) agencies' inability to get their IT systems to talk with one another."

Hollister is legal counsel for House Committee on Oversight and Government Reform, whose chair, Rep. Darrell Issa, R-California, is sponsor of the DATA Act.

According to Hollister, $80 billion is spent annually on federal government IT, but only 34 percent of the data found on USAspending.gov is believed to be accurate.

"It should be possible," says Hollister, "for citizens, watchdog groups, media, and even the appropriators in Congress to use all of this spending data to judge whether government is working for them or not."

The solution, he and Issa believe, is a single platform for federal spending information, driven by a consistent, government-wide set of data reporting standards.

Sound familiar, XBRL fans?

"The DATA Act does not require the use of XBRL per se," Hollister stressed. "It does require the designation of a reporting standard that has many of the characteristics of XBRL, and to  be blunt, I think XBRL would be the standard that will be selected."

It's nice to see the federal government finally catching up to what the profession and data guru David Stephenson have been saying for years: XBRL has the power to transform our financial world.

And CPAs? They have an important role to play in all of this as well, says Hollister.

"CPAs are to be commended for being impartial in most circumstances -- in business and policy decisions, for instance," he said. "In this case, CPAs can be advocates for the accuracy and efficiency that structured data can bring."

In other words, let the numbers speak for themselves -- and let us help create the standards that help numbers do just that.

Any questions about XBRL's relevance?

Listen to Hollister's comments in their entirety in this MACPA interview.

Want to learn more?
These MACPA programs offer more details about the future of data:

• What Small Public Companies Need to Know About the New XBRL: This webcast is led by XBRL co-founder Eric Cohen, CPA. It's available on the following days: Oct. 20 | Nov. 18 | Dec. 19 | Jan. 19 | Feb. 22 | March 22 | April 24 | May 24


• XBRL and the New Era in Financial Reporting: Moving Beyond Theory: A live, 8-hour program on Jan. 13 in Towson

Sustainability? Try '$ustainability'

We've heard Tom Hood's insightful take on how CFOs can build value through sustainability.

"This is a great opportunity for CFOs to consider taking a leadership role with this emerging issue," Tom wrote recently, and he's right.

Beyond that, it's turning out to be a terrific way to stave off the economic zombies that are roaming the corporate countryside.

"CFOs looking to squeeze as much efficiency out of their plants and operations as possible have found that certain cornerstones of the sustainability movement, such as reducing waste and power usage, offer fresh ways to do what they do so well: manage risk and control costs," writes CFO.com's Kate O'Sullivan. "The environmental benefits are a nice outcome, too, of course, but they are not the main motivation behind many companies' heightened focus on green initiatives."

But what about CPAs in public practice? What's in it for them?

Jennifer Elder has a few ideas.

Jennifer is a CPA, an MACPA member, and president and founder of The Sustainable CFO, and she has some terrific reasons why CPAs need to be paying attention to the sustainability movement.

Hint: It goes way beyond being "green."

• Employee retention: "Generations X and Y cut their teeth on recycling," Elder said. "Recycling and environment issues are important to them. There are a variety of studies that show an employee who believes he or she is working for a socially responsible company is 50 percent more likely to stay. When this economy turns around and jobs are available, you're going to need every reason to keep your employees."
• New services: Alert CPA firms will be able to offer a number of new services that cater to the sustainability movement. These include new reporting services because, as Elder says, "These companies are starting to report publicly. It's not mandated by the SEC yet, (but) it will be."
• A leg up on the competition: "Consumers are looking for (sustainability)," Elder says. "If there are two accounting firms you can choose from and one of them is supporting local community non-profits, I'd go with that firm versus another one that isn't doing that."

Bottom line: Sustainability makes good business sense, and not just for the companies that are doing it.

Listen to Elder's thoughts in their entirety in this MACPA video interview:

What are you doing to boost your triple bottom line? Let us know, then check out these related learning opportunities offered through the Business Learning Institute:

• Sustainability Reporting
• Sustainability: Using the "Triple Bottom Line" to Increase Your Success

Five ways CFOs can build value through sustainability

Yep, it is not going away.

In fact, sustainability is coming faster than you think, according to Accounting Today and Ernst & Young in an article and recent reports.

This is a great opportunity for CFOs to consider taking a leadership role with this emerging issue, which is making its way to CEO agendas.

E&Y's report, How Sustainability Has Expanded the CFOs Role, lists five ways CFOS can build corporate value through sustainability:

1. Actively pursue sustainability reporting in your company (triple bottom-line).
2. Ensure that sustainability reporting is not contained in operational silos. Think "integrated."
3. Use sustainability to increase dialogue with stakeholders in social and environmental issues.
4. Use sustainability reporting to educate your directors and management team about social and environmental issues and risk management.
5. Consider using nontraditional performance metrics in reporting on sustainability

Just last week at our MACPA roundtable with our business and industry CPAs, the issue of sustainability came up as an important emerging issue.

I see this as just another way for CFOs to take a leadership role in adding value and making a difference for their organizations.

How are you adding value?

More from CPA Success on the changing role of the CFO:

• The evolution of the CPA as CFO
• What keeps CFOs and finance pros up at night?
• Top 3 training issues for CFOs and top 3 skills needed
• Surfing lessons! Riding the waves of change

What keeps CFOs and finance pros up at night?

That was the topic at our Business and Industry Roundtable last week. The issues may surprise you.

Here are the top 10 trends and issues facing CFOs and finance professionals:

1. Communicating effectively (new tools vs. face-to-face)
2. Talent / training / succession planning
3. Economic environment
4. Generational / work-life balance
5. Supply chain / rising costs
6. Strategic planning in uncertainty
7. Financial literacy about business
8. Increasing government regulations
9. IT security / privacy
10. Multi-tasking and increasing workload

These were developed after hearing updates by Tom Foard (an AICPA Board of Directors member and past chair of the MACPA and the AICPA BIEC) and Joeslin Martin (chair of the MACPA's Business and Industry Committee). The group also came up with some brainstorms for MACPA to help them deal with this increasingly complex and uncertain environment.

Here were some of my favorite insights from this engaging dialogue:

• The CFO as CAO (Chief Alignment Officer): More and more, the CFO is being called on to make sure the organization is aligned around the business strategy and linkages to the business model, budget, etc.
• Financial profesisonals must go from bean counter to bean growers, helping the business manage both the top line and bottom lines.
• The CFO as a strategic partner driving the business. (Joselin brought in an article titled 10 Questions for Quest CFO Scott Davidson that highlights this trend.)
• Tom Foard highlighted the need for "success skills" like those the MACPA has developed through the Business Learning Institute -- communications. leadership, strategic and critical thinking, and more.

Here is a copy of the meeting notes:

MACPA Business & Industry Roundtable - August 2011

View more presentations from Tom Hood.

Here is our CPA Career Video

How are you dealing with this rapidly changing environment?

MACPA and XBRL: A small biz case study

When folks talk about XBRL, it's usually from a public company perspective -- as if public companies are the only ones that can benefit from efficiency, transparency, speed and cost-effectiveness.

Everyone wants those things -- public companies, sure, but private companies, non-profits and governments as well.

The MACPA wants them too, so it embraced the promise of XBRL and set off to find them.

In an effort to demonstrate XBRL’s scope and versatility, the MACPA is using the data tagging language to populate its financial information and key performance indicator reports. The project could become a blueprint of sorts for how private companies and non-for-profit organizations can take advantage of XBRL’s power.

I had an opportunity to talk to the principals involved with the MACPA's project recently, and to a person, they all agreed: XBRL goes way beyond the public company arena.

Here's MACPA Finance Director Skip Falatko: "XBRL would be an excellent application for the non-profit community. There are about a million and a half non-profits in the U.S., and probably hundreds of thousands of them file Form 990 (the annual non-profit tax return) every year. If the IRS required non-profits to file Form 990 via XBRL, that would greatly increase and improve accountability, transparency and comparability in the non-profit world."

Here's Salisbury University accounting student and MACPA intern Thomas Hood, who volunteered his technical wizardry: "Our ability to take (XBRL) in-house, implement it and see benefits fairly quickly at a pretty low cost made us realize that XBRL Global Ledger is real and can really help."

Here's Beth O'Brien from Altova, which provided the software the MACPA used in its XBRL project: "The MACPA has showed that not only can the benefits of XBRL extend to smaller companies, but they brought the project in-house, did the project very cost-effectively and were able to show some tangible results. ... It's a model case study, really."

Here's XBRL co-founder Eric Cohen, who smoothed out the rough edges with sage guidance and advice: "People think XBRL is all about big companies doing public company filings with the SEC. What's being proven here is that it's an awful lot more than that. There is value to not-for-profits and government entities."

Skip, Thomas, Beth and Eric joined forces to bring the MACPA's XBRL project to life. Listen to my interviews with them in their entirety:

Altova has produced a white paper that examines the MACPA’s project in detail. Read the report in its entirety.

Now tell us: How are you going to harness the power of XBRL?

Trouble's brewing on the horizon. Pay attention.

Remember what Andrew Zolli says about leadership? The biggest reason great leaders fail, he says, is that they fail to detect the weak signals of disruptive change on the horizon.

As Exhibit A, I give you Anheuser-Busch.

In "Dethroning the King: The Hostile Takeover of Anheuser-Busch" (known here in St. Louis as "required reading"), Financial Times reporter Julie MacIntosh examines the internal culture and politics that led to the brewing icon's 2008 takeover at the hands of Belgian / Brazilian beermaking giant InBev.

Anheuser-Busch, of course, is best known as the maker of Budweiser. The company was an American corporate giant, at one point controlling 52 percent of the U.S. beer market and, perhaps more importantly, owning one of the most iconic and beloved American brands out there.

And that, writes MacIntosh, was part of the problem. For years, Anheuser-Busch CEO August Busch III was focused solely on crushing rival Miller and dominating the American beer market. He was so focused on that one goal, in fact, that he failed to ask a simple question: What happens next?

The answer, of course, would be found beyond American borders, but one of Busch's fatal flaws was that he failed to pay much attention to beer's expanding global market. As America's beermaking Goliath, he didn't really need to. But his rivals paid plenty of attention to the global market, buying or merging with foreign beermakers and gobbling up sizeable pieces of the global pie. By the time A-B noticed what was happening, it found itself shut out of the M&A action -- and ripe for a takeover.

It's an amazing story, really -- how a singularly American brand suddenly found itself under foreign control. In St. Louis, a city that in many ways is defined by its connection to Anheuser-Busch, it's also a heartbreaking one.

It's also proof that Andrew Zolli knows what he's talking about. Here's what he told me in 2010:

"Our normal metaphors about innovation are all about breakthroughs, change, things that are different, a radical reframing of an industry. The reality is that most innovative work is incremental improvement. It's about staying ahead of trends as opposed to reacting to trends.

"The challenge is that once you fall behind those trends, a bunker mentality can set in. At that point, you encounter an issue that I call 'cognitive similarity' -- people thinking the same way and making that bunker mentality worse.

"We need to begin to adapt to a world in which we engage the very top of the organization in a conversation about embracing a different kind of risk portfolio. That means having an established set of processes in place in which you have no expectation of return. You understand that you make investments not just for operational excellence, but for learning and adaptation. Those things are inherently uncertain, but if you begin to do them at a small or medium scale, they can yield tremendous benefits."

That's a lesson Anheuser-Busch learned too late, as evidenced by its new name -- Anheuser-Busch InBev.

How are you monitoring those weak signals of disruptive change?