CPA Success

In social space, no one can hear you scream

Allow me to follow up on Tom's fine social media post with a word or two about marketing.

Word-of-mouth marketing is the most powerful force known to man. At least that's what we've been told for years now.

The conventional wisdom is this: People don't believe your advertisements or corporate communications ... but if their friends say nice things about your company, they'll love you.

If you're a numbers person, let's put it this way: Only 14 percent of consumers trust ads, but 91 percent say they're "likely" to buy a product based on a personal recommendation.

Then came social media, and marketers just about wet their pants. "Finally," they said, "here's a way to get huge numbers of people talking to each other about our products and services! We can't lose!"

More often than not, though, the marketers are the ones doing all the talking ... and few people are paying attention.

For proof, check out the the 2010 Edelman Trust Barometer, an annual survey that gauges how strongly people trust businesses and government. According to the Barometer, the sources of business information that the public finds most credible are:

• Stock or industry analyst reports: 49 percent
• Articles in business magazines: 44 percent
• Conversations with employees: 41 percent
• News coverage on the radio: 38 percent
• TV news coverage: 36 percent
• Online search engines: 35 percent
• Newspaper articles: 34 percent
• Corporate communications: 32 percent
• Social networking sites: 19 percent
• Corporate or product advertising: 17 percent

So what does that mean?

The naysayers will immediately bellow, "Social media is a waste of time!" And in terms of an immediate marketing ROI, they'd be right.

As a marketing tool, social media is an amplifier: It sends your message to more people. And if people didn't trust your message before, well, it just means that even more people don't trust it now.

See, here's the thing: Social media isn't about marketing or advertising. It's about relationships. Hence the word "social."

It's about building networks of people you trust. It's about sharing information that your followers find valuable, and following people who share information that you find valuable. When you do that over time (and I'm talking months, if not years), you build trust. Then, and only then, can you even think about selling yourself.

Without that trust, you're just screaming into a void.

Social media is not a magic bullet. It is not a quick fix. It's a deliberate, sometimes excruciatingly slow but ultimately rewarding effort to expand one's social network in professionally meaningful ways.

If you think you're going to achieve that by picking up a megaphone and screaming at your audience, you're woefully misinformed.

Just in time for Valentine's Day: An auditor's love story

More than 13 billion videos were viewed on YouTube in December. To the best of my knowledge, none of them were accounting-related song parodies recorded in Second Life.

But that's about to change.

Edith Orenstein and Steven Zelin spent some time recently on CPA Island, the MACPA's Second Life home, recording "If I Were An Auditor," a parody of Bobby Darin's romantic 1966 hit "If I Were a Carpenter." The result is a four-minute video that made its debut on the Financial Executives International Blog, which Orenstein writes and edits.

Orenstein, who wrote the lyrics to the parody, is FEI's director of Accounting Policy Analysis and Communications. Zelin, a CPA, is better known as The Singing CPA. He has recorded four CDs of accounting parodies and children's music.

Orenstein said the project allowed her to pursue her passion for music, work with an inspiring role model in Zelin, and promote FEI's blog at the same time. The virtual recording session, meanwhile, gave her an opportunity to collaborate with fellow accounting and finance bloggers from throughout North America.

"The song," she told AccountingWeb, "is meant to be in good fun, something interesting, and also to provide some visibility perhaps to the FEI blog, and everyone involved with the production team ... to perhaps cross-expose our audiences to each other and bring in some new viewers to learn about what our blogs and organizations have to offer."

More to the point, though, with Valentine's Day on the horizon, who can resist a good love story?

Among the bloggers on hand for the Second Life recording session were:

• Dave Albrecht of Concordia College, author of The Summa;
• Colleen Cunningham, author of the Resources Global Finance and Accounting Blog;
• Michelle Golden, who writes the Golden Practices Blog;
• Gail Perry, managing editor of AccountingWEB;
• Tom Selling, author of The Accounting Onion; and
• Darla Sycamore, author of IFRS News and Views.

The video was produced by the MACPA's Second Life team, chief among them network administrator Mike Tobias, conference manager Dee Day (who portrayed the bride in the video, opposite Shapiro Negotiations Institute's Mark Jankowski in the role of the groom) and CEO Tom Hood.

"It was just another example of the power of social media and virtual worlds to build and strengthen real relationships," Hood told AccountingWeb. "... It was chance to do something really fun amid all of the angst over the economy -- a bright spot, if you will."

• Watch the video here.
• Read the lyrics.
• View photos from the virtual recording session.

Forget best practices. Think next practices

I have been wanting to write this post for awhile, and a recent event has inspired me to actually put digital pen to "paper" and write it.

The picture at right shows me (in avatar form) with Philip Rosedale (founder of the virtual world Second Life) and Byron Patrick (of the MACPA's New / Young Professionals Network and CEO of Hosted Solutions) on stage live to three places -- Las Vegas (for AICPA Tech Plus), Baltimore, and on CPA Island in Second Life.

Some may say it looks like a cartoon, some may say a kid's game. I say it may be the future of education. Philip Rosedale said as much in his talk of the uses of Second Life and his vision for where it is going. Think next practices, not best practices.

That is what one of our BLI instructors, Karl Alrichs, said at 2009 Business and Industry Conference and it had me thinking ever since. Karl said the problem with best practices is that once you you hear about them, they are old news. Things are simply moving too fast. After hearing Philip and our panelists  and talking with our thought leaders at dinner, I think Karl is onto something.

This week is our second Maryland Business and Accounting Expo. As I listened to our speakers and sponsors introduce themsleves at dinner, I kept hearing one thing -- next practices. That is what we will see and hear over the next two days. You will see leading-edge next practices from thought leaders in the field, from Main Street to Wall Street. Among the hot topics featured will be fair market value accounting, enhanced business reporting, XBRL, leadership for high-potential employees, finding opportunities in Maryland, new SBA programs, BRAC, accounting, taxes, technology, and a big dose of social media that you can use right now to get ahead and stay ahead.

I am excited that we could get all of these thought leaders in one place at one time. Our gratitude to them and the brave sponsors and exhibitors who helped us finance such high-quality thought leadership. I Hope to see you there!

As hockey great Wayne Gretzky used to say, "You need to skate to where the puck will be, not where it is."

Here is how you can take advantage of the Expo:

• Follow the action on our social mashup site MDBizExpo Live, featuring video, photos and a Twitter stream from the Expo.
• Join the conversation using the Twitter hashtag #MDBizExpo or tag your photos and content with MDBizExpo.
• Check out the MDBizExpo blog.
• View our Second Life session photos here and here, and read about the SL events on our blogs, CPA Island and CPAs in Second Life.
• Go to www.dubmenow.com and get started with electronic business cards.
• If you want a discount on the new CPA edition of MindManager, use code MACPA when purchasing.

Sick of the recession?

According to more than 1,500 CPA members in our last round of town hall / professional issues updates, the answer is an overwhelming "yes!"

One way we are trying to beat the recession is to come together with Maryland's leading business associations and government agencies at our upcoming Maryland Business and Accounting Expo on June 16-17th. Check out our brief video and slideshow about the Expo and let us know what you think.

Collaborate, innovate, grow at the MDBizExpo on June 16-17.

MDBIZEXPO - 2009

View more presentations from Tom Hood.

See our MDBizExpo blog.

Register here with several options:

• Free pass and six keynotes sessions -- free!
• Two days, 60 workshops, $250 (16 hours of CPE)
• Call our Member Service Center for the daily workshop option -- $125.
• Students, educators and candidate members -- only $25!

Leadership? It's all about playing in the rain

I got caught outside in a downpour today.

Like an idiot, I didn't check Weather.com before leaving for my daily jog through the neighborhood. About halfway through my route, the skies darkened, then opened up entirely. Within minutes, I was drenched.

And you know what? It felt pretty good. I had completely forgotton how refreshing a soaking rain can be on a hot day.

It's a sensation I would never experience, though, if I didn't summon up the courage to leave the dry safety of my comfortable home every once in a while.

Playing it safe will take you only so far nowadays. To really succeed -- to break new ground, to blaze new trails, to lead -- you have to get outside of your comfort zone and take a few risks.

Verasage Institute deep thinkers Ron Baker and Ed Kless said as much during a recent Second Life presentation.

Their seminar focused on the contrasting economic theories of John Maynard Keynes and Jean-Baptiste Say. About midway through the event, though, Baker asked the audience to engage in the following thought exercise:

The following individuals lobby the federal government with a new idea:

• A failed haberdasher
• A sophomore Harvard dropout
• A junior college dropout
• A college student who earned a C+ on his last term paper
• An executive from General Motors

Whose idea will the government fund?

The most likely answer, of course, is the GM executive. Why? Because most people naturally gravitate toward the status quo -- the safe, proven, familiar concepts that don't rock the boat. Who knows what those other upstarts will come up with?

The scenario shifts dramatically, though, when you consider that the failed haberdasher is Wal-Mart founder Sam Walton, the Harvard dropout is Microsoft legend Bill Gates, the JC dropout is talk-radio pioneer Rush Limbaugh, and the C+ college student is FedEx founder Fred Smith.

"Wealth and profits come from risk," Baker told the Second Life attendees, "from taking chances, from entrepreneurship."

From playing in the rain, in other words.

True, in this current economic environment, playing it safe can be a matter of economic survival for some folks. For them, taking risks is just too risky right now.

But when the recession loosens its grip, the next wave of business leaders will likely be the people who don't know enough to come in out of the rain.

Risk management: Do what's right and you won't go wrong

If you had to choose one word that impacts businesses more than any other today, what would it be?

While you're thinking, I'll give you my answer. It's "risk."

Risk is everywhere these days. You can't avoid it. Will your clients pay you? Will they buy from you at all? Will you be able to pay your lenders? Will your lenders be able to lend to you? How will all this affect sales? R&D? Staffing? Training? What will your stockholders have to say?

"Wake me when it's over," you might be saying, and you wouldn't be alone. But as tempting as sleeping away your worries might be, a better option is to manage -- and, hopefully, mitigate -- that risk.

But how?

Bob Tarola has a few ideas.

Tarola is president of the private business advisory firm Right Advisory LLC and a 35-year finance and accounting veteran. In short, he knows his stuff, and he shared some of his risk-management insight during a recent virtual-CPE session on the MACPA's Second Life home of CPA Island.

"Very few organizations have robust enterprise risk management systems," said Tarola, an at-large member of the governing council of the American Institute of CPAs and a past member of the MACPA's Board of Directors. "It is a difficult area to master. The biggest problem is that we don't know what we don't know and therefore may not be focusing on the correct metrics."

When you boil it down to its most basic state, Tarola said ERM is all about managing the risk of disappointment -- disappointment that performance measures have not been achieved, that compensation and career goals have not been met, disappointment among analysts that your company did not meet expectations.

Most important, though, is the risk surrounding a company's growth prospects. That risk might include lots of other risks -- the risk of not meeting sales targets or projections, market share goals, or product development goals and objections.

Interestingly, Tarola says the answers lie as much in doing the right thing as in preventing the wrong thing.

"To manage that type of risk, one has to think about not just what might go wrong, but more important, what must go right in order for that risk to be mitigated," Tarola said. "Whether you're trying to mitigate a negative risk or achieve a positive objective, management's job is to make sure the right activities are occuring to mitigate what might go wrong."

And never underestimate the importance of training, especially in risk-heavy environments like the one we're in right now.

"There's no question that capable, well-trained people help mitigate risk," Tarola said. "As I said earlier, we don't know what we don't know, and the more training we have, the less likely that it will be a problem."

Looking for more details about risk management? Tarola expands on his thoughts in a four-hour Business Learning Institute program titled "Audit Risk: Beyond the Balance Sheet."

We'll also examine the risks inherent in this economic crisis during our second Maryland Business and Accounting Expo, slated for June 16-17 at the Baltimore Convention Center. Get complete details here.

How are you mitigating risk these days?

Back to the future: MACPA and technology

Remember the beginning of the Internet? Do names like Prodigy, Compuserve and AOL bring back memories? Or 2400 baud modems?

The year was 1996 and Barry Ricewas asked to do a road show for the MACPA's seven chapters to promote this new "technology" that would greatly affect the way CPAs do business. That is Barry in the middle with me and the MACPA's COO, Jackie Brown, holding the handouts from that 1996 era. He remembered that we were one of the first state CPA societies to have a Web site and one of the first to have a computer lab.

Barry, a professor of accounting at Loyola University in Maryland,.was featured in the CPA Vision Project as one of the pathfinders in the CPA profession with the use of technology in teaching. He truly saw early on significance of technology to us as professionals. (See Barry's pathfinder profile on the CPA Vision Web site).

He pioneered collaboration via his still-active listservs, Accounting Educators using Computers and Multimedia (AECM) and the CPAs-L Listserv. His passion for teaching and technology has earned him awards and recognition. He was the MACPA's outstanding educator and was recognized by the CPA Vision Project, AAA and Loyola for his contributions to accounting education.

Did I mention that he was one of my favorite accounting instructors at Loyola?

But he did not come to talk about himself. He came to reconnect and see where he could help by volunteering. He also came to tell us he was proud at how far we had come in the use of technology. He loved hearing about our blogs and our efforts to connect with the young generation (and even us older CPAs) using the latest social media tools like LinkedIn, Facebook, Twitter, Flickr and even YouTube.

The big ah-ha for me is that technology continues to shape the way we do business as CPAs and the way accounting is taught in schools. In fact, when you think about how much has really changed, we have adopted an amazing number of changes in the last 12  years. That gives me confidence that we can continue to deal with the ever-increasing amount and pace of change being thrown at us.

• What are CPAs doing online? Complete the first survey by Rick Telberg here.
• See my earlier post on the state of accounting education.
• Edith Orenstein at FEI mentions us in her post Social Media, YouTube and Us.

Thanks, Barry, for making us take the trip back to the future!

Visit the MACPA on Facebook:

• The MACPA's main page on Facebook
• New / Young Professionals Network page
• Business Learning Institute page
• CPA Careers page
• Tomorrows CPA student Web site

And be sure to check out our other blogs:

 

• New CPAs
• CPA Legislative Insider
• CPA Island
• CPAs in Second Life

XBRL adoption: Which path to take?

Now that the SEC is mandating that U.S. companies use XBRL to file their financial statements, the question becomes: What's the best way for companies to do so?

Mike Willis and Eric Cohen have the answers.

Willis, founding chair of XBRL International, and Cohen, a co-founder of XBRL itself, examined the data-tagging language and the benefits it offers businesses during a virtual seminar held on CPA Island, the MACPA's home in Second Life.

The question of how to adopt XBRL loomed large in the presentation. Willis and Cohen said companies have two choices:

Bolt-ons
Companies can employ a "bolt-on" solution in which XBRL is created after the financial reporting process is complete. "Company financial disclosures are typically loaded into desktop applications and then mapped to the U.S. GAAP taxonomy," Willis writes this summary for the Hitachi XBRL Business Unit. "The software facilitates mapping of company data with the taxonomy, then creates the required XBRL formatted report."

Bolt-ons can be outsourced (TryXBRL.com is one possible outsourcing solution) or created internally.

Either way, say Cohen and Willis, bolt-ons are not the most efficient ways of implementing XBRL. They require extra steps beyond the normal financial reporting process, and the bolt-on process is typically manual, which increases the risk of human error.

Embedding
Alternatively, companies can embed the XBRL tags directly into the financial reporting process. This puts XBRL into play throughout the entire process and offers a number of advantages over bolt-ons, including:

• seamless exchange of information between software applications;
• automation of manual processes, bringing lower costs and improved quality;
• enhanced transparency;
• enhanced drill-down capabilities with documented audit trail;
• enhanced testable controls;
• improvements in data quality and access; and
• better access to more relevant information, which results in better decisions.

On the downside, embedding probably is more expensive out of the gate, but those initial costs should dwindle as time goes on.

Your accounting staff also will have to know more about XBRL if you're going to embed the language in your reporting process, which will probably be a pain initially. Over time, though, isn't that knowledge a good thing?

So what are your next steps? Willis and Cohen recommend learning more about XBRL and its implications, identifying and prioritizing your implementation "pain points," talking with your software vendors, then developing your strategies for implementation and governance.

Their seminar will be available as a webcast; keep an eye on the MACPA's CPE search engine for details.

In the meantime, tell us: How are you planning to adopt XBRL?

More on the XBRL mandate ... and a new SEC chair

Yesterday was a big news day for the SEC and XBRL as the long-awaited SEC rule on mandatory XBRL filings was finalized by a vote of 4-1 by the SEC commissioners.

There's a great post on IR Webreport titled "SEC mandates XBRL for financial statements." IR blogger Dominic Jones covers this thoroughly with a great section on the nuts and bolts of XBRL.

Another great post comes from John Turner on XBRL vendor Corefiling's blog Insight, titled "Mandatory filing Q2 2009". Turner talks about how this is a big step toward increasing transparency of financial reporting for all investors. Turner concludes his post, "I think this decision today is much bigger than most people realize."

What is the fuss all about? We believe there are two very significant benefits to using XBRL -- transparency and productivity. In fact, the productivity piece may be the most compelling reason to think about XBRL, for even private companies. XBRL has the capability to automate internal and external financial reporting and significantly drive down costs -- just the type of innovation we need in this down market. While there is still a lot of work to be done on displaying XBRL formatted data, this mandate will cause more vendors to bring solutions to the XBRL arena.

Check out our XBRL session from Second Life:

Check out a summary of our XBRL session in Second Life. See the archive link on the post.

Also, be sure to listen to our podcasts on XBRL:

• XBRL and non-profits: A good fit?
• The road to XBRL, an interview with one of XBRL's founders, Mike Willis of PWC.

We covered XBRL at last year's MDBIZEXPO and will be featuring it again on June 16 and 17 at the Baltimore Convention Center. Get details here.

Search this blog with "XBRL" to see prior postings and resources on XBRL.

In other news, Bloomberg broke the news of Mary Shapiro as the President-elect Obama's pick as the next SEC Commissioner. Shapiro is chief executive officer of the Financial Industry Regulatory Authority. Prior to that, she was the chief regulator for the Commodity Futures Trading Commission. Read Bloomberg's story in its entirety.

Does this pave the way  for the "merger" of the SEC and CFTC? What impact will that have on the PCAOB? On public company filers? Stay tuned ...

Embrace the Web's evolution ... or die

We've spent a lot of time here talking about generational differences and the concessions older managers are making to accommodate the work habits of their younger employees.

Those concessions will turn into an all-out workplace revolution, if I'm reading the results of a new MacArthur Foundation study correctly.

The study, in which researchers interviewed more than 800 young people and spent more than 5,000 hours studying their online activities, found a huge disconnect between what youngsters are doing online and what adults think they are doing.

So what are they doing? Learning, as it turns out.

“It might surprise parents to learn that it is not a waste of time for their teens to hang out online,” said the report's lead author, Mizuko Ito, a researcher at the University of California, Irvine. “There are myths about kids spending time online – that it is dangerous or making them lazy. But we found that spending time online is essential for young people to pick up the social and technical skills they need to be competent citizens in the digital age.”

In a nutshell, the study found that spending time online is not, as many adults fear, a waste of time. Rather, it's teaching young people "the social and technical skills that they need to fully participate in contemporary society," the report states.

And the learning doesn't stop there. Youngsters are also expanding their education by studying specific subjects online -- and that online education is strengthened through the power of social networks. In fact, researchers found that youngsters today are more motivated to learn from each other than from adults.

The report states emphatically that "adults should facilitate young people's engagement with digital media" and "to stay relevant, education institutions need to keep pace with the rapid changes introduced by digital media."

That applies to business leaders as well. Many of them are already changing their business practices to accommodate their millennial workers. When the youngsters in the study hit the workforce, those changes will become an outright reformation. Social networks, Web 3.0 semantics and virtual worlds will invade the workplace and become the new normal.

And why? Because tomorrow's employees will demand them. Why wouldn't they? They've never known a world without them. As a result, businesses that stubbornly cling to traditional business models will lose any chance they had of attracting tomorrow's top talent, and they'll evaporate in the process.

Still think you don't need to pay attention to today's Web 2.0 "fads?" If we don't figure this stuff out now, we'll be completely lost when those "fads" evolve into the next big thing.

And I've got news for you: That evolution has already begun.