CPA Success

Top election issues? Economy, economy, and economy

I love David Walker. He's a CPA with a history of government service, a boatload of troubling numbers in his pocket, and a soapbox. Plus, he's not afraid to say what he really thinks.

And he thinks our nation is in trouble.

Nothing new there. He's been on his sky-is-falling tour for years now and has even made a movie about it.

This time, though, he has election-year candidates in his sights.

Walker led off his most recent appearance on CNBC's "Squawk Box" with this assessment of our nation's economy: "We're not Greece, but we're making some of the same mistakes as Greece. Our government has grown too big, it promises too much, and we've waited too long to restructure."

Ouch.

He saved the really interesting stuff, though, for the president and presidential wannabes. His message: Unless you're talking about our economy and how to fix it, you're wasting our time.

"In the 2012 election, we need to make sure that the economy and how we're going to put our nation's finances in order are top priorities," he said. "It's absolutely essential."

What we're getting instead is all of the usual election-year drivel -- personal attacks, populace claptrap and no one with the guts to tell us what really needs to be done because, frankly, it won't get them elected.

Things could get interesting later this year, though. Walker is convinced a third presidential candidate -- chosen through the non-partisan, non-profit Americans Elect initiative -- will appear on the ballot in all 50 states.

He also said he would fall back on his standing as former U.S. comptroller general to actually endorse a presidential candidate. "The stakes to our country are that high," he said.

That's one endorsement I'll pay attention to. Stay tuned.

One more note: Walker wore his CPA lapel pin on the show. Former MACPA staffer Nancy Coradi tuned in and reports that Walker had this to say when asked why he was promoting the profession: "I am a patriot who can add. ... Why shouldn’t I promote it?”

Why not, indeed?

Opinions diverge on the economy

Note: The following is a guest post from the MACPA's director of finance, Skip Falatko, CPA.

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The Maryland Bankers Association held its fifth annual First Friday Economic Outlook Forum in Baltimore last month, where prominent economists and chief investment officers opined on the economy and markets.

It’s always an interesting event, but more so this year because of diverging opinions on which direction we’re going. I especially liked the fact there wasn’t much “on the one hand / on the other hand” economist-speak. They just put it out there.

This year’s panelists included:

• Jay Bryson, a global economist with Wells Fargo Securities, LLC
• Gregory Miller, chief economist with SunTrust Banks, Inc.  
• Jeffrey Schappe, CFA, chief investment officer with Sterling Capital Management/BB&T

 Moderating the panel was Anirban Basu of Sage Policy Group.

 First, let’s look at comments from last year’s panel and see how they stood up.

• Last year, the panelists predicted the range of 2011 unemployment to be around high 8 percent to 9 percent. Officially, we finished 2011 at 8.5 percent.

• Panelists predicted 2011 GDP to range from 2.9 percent to 4.5 percent. Actual 2011 GDP was 1.7 percent.

• BB&T’s Jeffrey Schappe was bullish on the 2011 stock market. The Dow finished up 5.5 percent, the S&P 500 was almost exactly flat, and NASDAQ was down 1.8 percent.

Here are the comments that stood out among this year’s panelists:

• Wells Fargo’s Jay Bryson expects more of the same economy we’re currently experiencing -- not necessarily a recession, but low growth. So, 2012 and 2013 will be a lot like 2010 and 2011. Europe is the biggest risk factor to our economy as Italy and Spain are too big to bail out.

• SunTrust’s Gregory Miller noted our problems are more than just housing. They are complex, have been a long time developing and will take years to work out. That being said, Miller anticipates 2012 GDP to be around 3.5 percent based on fewer negatives than in the recent past. These negatives include housing contraction and government intervention in the economy which he sees diminishing.

• Gregory Miller added that the real labor market issue is the decline in real wages which impacts 140 million Americans.

• BB&T’s Jeffrey Schappe was less optimistic, noting that people are too complacent about the economy. Schappe stated third quarter 2011 GDP was revised downward (twice) to 1.8 percent, industrial production contracted in November, much of Europe is in a recession, China is slowing down, and we have weak (0.21 percent) gross domestic income, which he sees as a better economic indicator than GDP. Schappe predicts a return to recession in 2012, albeit not as severe as in 2008.

So there you have it. Three divergent views of where we’re headed economically. 2012 will bring us anywhere from a recessionary negative GDP to 3.5 percent GDP growth. Given the weakness in the U.S. and world economies, I tend to be more pessimistic. I’ll predict 2012 GDP of 1.5 percent.

What do you think?

Top eight challenges facing finance executives

Our friends over at Financial Executives International recently shared this list from FEI's CEO, Marie Hollein. 

1. Controlling the U.S. deficit
2. Tax reform
3. Health care uncertainty
4. Dodd-Frank Act implementation and revision
5. Employer-provided retirement plans
6. XBRL
7. Convergence of U.S. GAAP and IFRS
8. Private company accounting

Last August, the MACPA had a group of CFOs and controllers in for a roundtable on what was keeping them up at night and came up with this list:

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

Then there's the latest top trends to watch in 2012 from the CPA Horizons Future Forum process. And here are the lists from 2009 and 2008 from our CFO roundtables.

What I find interesting is that the current list from FEI is focused purely on the business finance and economics issues, whereas our group of CFOs (and the CPA Horizons 2025 research) included much more of the general business, talent, and leadership issues. 

We have been gathering resources for CPAs in the form of training, articles, and podcasts to help them deal with these major issues. Here is a page with each major future trends and links to resources. We also have plenty of programs available for almost all of these topics, either in our conferences and public seminars or available to your firm or organization through our Customized Learning Team. 

Here is our "future trends" resource center. Click on each trend link to see all of our resources for you.

The other interesting insight I take away from all of this is the change from 2009 (in the thick of the recession) from the other years. Three of the seven issues -- layoffs, capital spending cuts, and access to credit) -- have disappeared. Does that mean we are seeing bright posts on the horizon?

Here are upcoming events just for our Business & Industry members:

• Don't miss our special town hall / professional issues update for our business and industry members on March 21 in Timonium (free to MACPA members). Register here.
• Our Business and Industry Conference will be held on April 20 at Turf Valley in Ellicott City. Register here.
• The MACPA's CPA Summit features lots of programming around these big issues. It will be held on June 12 at the BWI Hilton in Linthicum, Md. Get details here.
• Leadership development with our 2012 Leadership Academy is scheduled for May 7-9.

What do you think? Are the big issues of leadership, generations, talent, and communication bigger than the more technical economic issues and why or why not? 

See the top 5 skills of the post-recession leader.

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.

The health-and-wealth gap is disappearing

Common sense tells us there's a correlation between wealth and health, but to actually be shown that correlation is pretty amazing.

That's what Hans Rosling does for us in this eye-popping video. Rosling, a professor of international health at Karolinska Institute, offers visually animated data to show how the health- and wealth-related disparities between nations have narrowed over time. The stunning thing is this: The entire world is becoming healthier and wealthier, though at different rates.

"Despite enormous disparities today, we have seen 200 years of remarkable progress," Rosling says. "That huge historical gap between the west and the rest is now closing. We have become an entirely new converging world, and I see a clear trend into the future. With aid, trade, technology and peace, it's fully possible that everyone can make it to the healthy-wealthy corner.

Our thanks to Jason Blumer for blowing our minds with this yummy piece of eye candy. Watch the video in its entirety here.

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.

Leaders don't guess. They turn insights into action.

I vote that we ban all economic forecasts and surveys from now until the end of time. Ban 'em like asbestos.

Why? Read 'em and weap. Or laugh.

• "Survey Shows Hiring Plans Rising for Accountants, Other Professionals"
• "Little Hiring Growth Planned for 2012"
• "A Double Dip? CFOs Are Divided"
• "CPAs' Economic Outlook Drops in Third Quarter"
• "CFOs Feel Cautiously Optimistic"
• "CFO Optimism Plummets"

Got that? The economy stinks. But not really. And we're hiring! Maybe! And optimism abounds! Except for those pessimists over there. And blah, blah, blah.

Here's a prediction you can take the bank: Guessing isn't going to solve any of our problems.

And neither is blaming the other guy, by the way. Want to know how many jobs have been created by political one-upmanship? None. Zero. Zip.

What we need are politicians who are willing to work across party lines to solve the big problems of the day. What we're getting is pure political hatred, and that accomplishes nothing.

Where are our leaders?

I sat in on the MACPA's three-day Leadership Academy recently, and I was blown away by what I saw. A room full of 40 of the profession's best and brightest -- young CPAs who want to make a difference, who worked together to draft a vision for the profession going forward. In three days, 40 people from incredibly diverse backgrounds agreed unanimously on six bold initiatives that can reshape the profession.

Three days, one bold vision.

You're telling me Congress can't do the same thing? I'm telling you they need to.

Let's stop guessing and hating, people. Let's start working together.

The MACPA's Tom Hood defines today's leadership as "the ability to gain insights and the aptitude to turn them into action."

But you can't gain insights from within. The paradox is this: Insights come the outside. In this "new normal" of constant complexity, no one person has all of the answers. "We" are definitely smarter than "me."

The sooner our elected officials figure that out, the quicker our economy will turn around.

Then, maybe we can start taking those predictions seriously.

Putting Americans to work? Now there's a tough job

President Obama is on the road, trying to sell his jobs package to America. Personally, I'm not sure he's selling it to the right people. Given the toxic political environment in D.C. these days, that thing has a snowball's chance in hell of making it through Congress intact.

But hey, if our elected officials are going to argue, they might as well argue about jobs. It's about freakin' time.

With that in mind, the good folks at CCH have released a new tax briefing that examines the Obama jobs plan in detail. Here's what CCH has to say:

Some of the job creation incentives ... include payroll tax cuts, tax credits to encourage hiring and infrastructure spending to jump-start the economy. The multi-billion dollar package would be paid for by limiting tax deductions for higher income earners, changing the tax treatment of carried interest and other offsets, unless the newly formed Joint Select Committee on Deficit Reduction achieves additional savings by reaching certain deficit reduction targets.

“The administration wants Congress to act on this fast, but it may be difficult for the IRS to administer some of the tax provisions if the package is passed,” said CCH Principal Federal Tax Analyst Mark Luscombe, JD, LLM, CPA. “Tax relief aimed to help small businesses may be a key point for lawmakers to find common ground on this bill.”

Let's take a look at some of the other critiques of the president's plan that are floating around out there:

• President’s jobs bill contains many tax proposals (from the Journal of Accountancy)
• Why the jobs plan falls short (from the Wall Street Journal) 
• Obama’s jobs plan requires the Confidence-Builder in Chief (from BusinessWeek) 
• Dems support Obama’s jobs plan, Pelosi says (from the Washington Post)
• Or do they? Some Democrats balk at Obama’s jobs bill (from the New York Times)
• Boehner lays out GOP position on Obama’s jobs plan (from the washington Post)

What do you think? What's the best way to put Americans back to work?

Md. CPAs discuss future, economy, taxes at town hall

How do you stay on top of the rapidly changing CPA profession?

Collaboration and conversation. The wisdom of the crowd. MACPA town halls / professional issues updates. 

And did I say they are free? Four hours of free CPE to keep our members current and help them during these difficult times.

Sept. 12 marked the beginning of the MACPA's "town hall season," when we engage almost 2,000 of our members in a town hall-style meeting set around a professional issues update (see our slide deck below). We use several engagement tools, including in-line polling (using www.polleverywhere.com), a survey instrument, and plain old Q&A, to get the pulse of Maryland CPAs.

This forms the basis of what we focus on as priorities and how we respond to our member needs. It also mobilizes our grassroots to help us advocate on their behalf in Washington D.C., Annapolis, and at the State Board of Accountancy.

On Sept. 12 in Rockville, with more than 150 CPAs in attendance, here are some of the highlights:

On the economy:

• In midst of strong recovery                            0%
• Recovery is fragile - cautiously optimistic     22%
• Recovery is very fragile                               46%
• Businesses are still struggling                      32%

The No. 1 Maryland legislative concern? Sales taxes on tax, accounting and consulting.

Overall insights from the session:

"Loved the discussion about the future trends and economic update. Legislative and regulatory discussion always great. Wish we had more time to talk about the leadership issues. MACPA's agenda is spot on -- keep up the great work."

Below are the resources we promised to the group:

Presentation loaded on Slideshare.net and downloadable. (Click the view on SlideShare button and select "download.")

MACPA Townhall / PIU Fall 2011

View more presentations from Tom Hood

Here are the videos we could not run due to slow wireless (sorry):

Social Media Revolution 3.0 -- my favorite on the latest trends about social media

Social Media and Learning -- my interview with Journal of Accountancy

How is leadership changing? -- my interview with author/speaker Emmanuel Gobillot, author of Leadershift: Reinventing Leadership for the Age of Mass Collaboration (a great book about how leadership is changing and why)

What is a future forum all about? -- video of future forum process for CPA Horizons 2025 Project. (Click on the link for tremendous resources from the AICPA on future trend research they commissioned.)

Top 20 trends about the future from Intuit's 2020 Project -- MACPA editor-in-chief Bill Sheridan interviews Steve King from Emergent Research.

Why CPAs belong to MACPA -- the CPA Summit video

Here are the two events every CPA in Maryland should attend:

CPA Day in Annapolis -- Jan. 18, 2012 at the Governor Calvert House Hotel (click on link for registration and more free CPE)

MACPA's CPA Summit and Swearing-in Ceremony for new CPAs -- June 11-12 at the BWI Hilton Hotel

Stay up on the latest legislative / regulatory updates here.

Here is the rest of MACPA's fall town hall schedule.

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