Keeping Up with AccountingMACPA’s PIU Town Hall Series

On the road again…Fall, 2010

Presented by:Tom Hood, CPA.CITP

CEO & executive Director

Why we are here?Why we are here?

CPA

Are you an untouchable? We hope to help you become one…

A Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed.

He said it was interesting: lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn’t there.

But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the new untouchables.

What is the # 1 reason leaders (and their organizations) fail?

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Being in business today feels like being in permanent whitewater

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You feel overwhelmed by the rapid and turbulent pace of change and uncertainties in business today

Photo: Pratt’s surfing page

You need new skills and new approaches to ride these waves of

change

You will learn to become a navigator of change using BLI's I2A - Insight to Action strategic thinking system

Sight Insight Create Communicate Inspire!

It’s not what you look at that matters, it is what you see – Henry David Thoreau

“The faster you go, the further ahead you have to see.”

Latest trends and issues facing CPAs

• Economy • Globalization• Technology

– Cloud– Social web & social

media• Workforce &

demographics• Regulations & standards

Is this the perfect storm?

The fact of the matter is, this is not a normal

downturn, this is a …fundamental re-SET!- Steve Ballmer – CEO Microsoft

Welcome to the Re-Set economy!

“As it relates to science and technology, the rate of change in the next decade, is likely to be 4 to7

times faster than in the last decade. If it is 4x faster it would be like planning for 2010 in 1890, if it is 7x

faster it would be like planning for 2010 in 1670.” -Expert on Education Panel, The Aspen Institute

How many of you think changes will slow down in the near term?

Globalization

1. Growth of consumers in emerging economies

2. Technologies that empower consumers & communities

3. Increase in labor productivity in developed markets

4. Shift of economic activity between and within regions

5. Increasingly global markets for labor & talent

5 Forces of Globalization

It is not either global or local, it is AND…

Glocal

Technology

• Information Security Management

• Privacy Management• Secure Data File Storage,

Transmission and Exchange

• Business Process Improvement / Work Flow

• Mobile & Remote Computing

• Training & Competency• Identity & Access

Management• Improved Application &

Integration• Document, Forms, Content

& Knowledge Management• Electronic Data Retention

Strategy• Cloud computing

The SEC Mandate

By 2010, Millenials/Gen Y-ers will outnumber Baby Boomers.

Technology & Web 2.0

Here are five major benefits that The Economist report says that social media has created:

1. Trusted online venues where real people can meet up using their real identities.

2. New ways for firms and organizations to reach their customers and those who influence them.

3. Reduced friction in labor markets by allowing employers and prospective employees to find each other and connect.

4. Faster information flow and communication inside companies and organizations.

5. A "free and immensely powerful set of communication and collaboration tools to everyone on Earth who has access to a broadband internet connection."

Social media = social capitalreal world examples

8,181 VIEWSAUCKLAND, NZ

15 MINS

MACPA social media efforts featured in J of A and win 3rd place in Mobbies,

Top 75 Biz blogs & Top 50 Acctg blogs

MACPA won 2 out of top 10 Biz

blogs in MD

Risk Management• Educate & train your staff• Set security & usage policies• Restrict Access during certain

times (if you have to)• Monitor – using search &

google alerts

Workforce / Pipeline

25%Of your high potential

employees will leave as soon as they can!

Live First, Work Second

Digital Natives

These guys are retiring

These are the new workers

These are making the purchasing

decisions

Email Generation

Facebook Generation

GenerationsGeneration Gap? Or Generation Lap?

“In 1997, young people for the first time were recognized by adults as being authorities on something truly revolutionary – digital technology, interactive media, and collaboration.”

– Don Tapscott “Growing Up Digital”

NGenophobia—the irrational and morbid fear of youth, especially with regards to

their use of the Internet

Bottom Line: How to keep your star talent

• Engage your top performers• Coach tomorrow’s leaders• Manage your Millennials

Think A M P• Autonomy• Mastery• Purpose

CPA Profession

First wave – the public co consolidators

Second wave – small practices unite

Third wave – super-regionals, national, global

The urge to merge?

47,000 to 40,000

2009 – 67 – 821,000,000

Top 10 Issues Facing CPAs1. Economic Outlook 2. Tax 3. Business Operations 4. Implementation and Execution

of Plans 5. New Business Development 6. Personal/Professional

Development 7. Management and Leadership 8. Financial Regulatory Reform 9. Access to Financing and Credit 10 New Accounting Standards,

IFRSSource: CPA Trendlines for AICPA Feb, 2010

Top Ten Issues for MFG1. Regulatory/Legislative (56)2. Private Company Leadership (47)3. Capital Markets Awareness / Recognition (34)4. Rethinking Business Model (25)5. Protect Audit/CPA Franchise (20)6. Risk Management (Audit efficiencies) (20)7. Leadership Development / Succession

Planning (19)8. Global / International (Clients / IFRS /

Branding) (17)9. Leveraging Technology & Social Media (17)10. MFG Issues specific forums / focus groups (8)

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Business & Industry Responsibilities

AICPA Core – 1/3 of B&I Responsibilities

Financial accounting

Financial reporting

Audit

Tax

2/3 Addi-tional

1/3 Core

AICPA non-Core – 2/3 of B&I Responsibilities

Strategic planning

Sustainability

Budgeting

Financial operations management

Risk management & internal controls

Internal audit

Governance

HR & benefits

IT, legal, purchasing

Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB

CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB

State CPA Statutes (Law)State Boards of Accountancy issue licenses and regulate CPAs

The (infra) Structure of the CPA Profession

Where do major changes come from?Most changes come from regulators and standard setters

Us – AssociationsMACPA & AICPA

OR

Them – Federal & Statelegislators Infrastructure

New laws, regulations& regulators

Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010

Crisis hits news

Bureau of Consumer Financial Protection

848 pages

533 regulations60 studies94 reports

HR 4173

An example of how we protecting CPAs by mobilizing our members

Inform & engage members• Town Hall meetings• Publications• Web• Social media – blogs, twitter,

Youtube, and slideshare

Protecting by advocating for members (CPAs) = real results!

Retained independent structure of financial accounting standards (FASB)

Modified provision to audit broker-dealers (PCAOB)

Exempted CPAs from CFPA registration due to existing licensing and oversight

Stopped excessive liability exposure for auditors (aiding & abetting)

Commented on SOX 404(b) exemptions

Working together with the AICPA and many State CPA Societies achieved these:

An example - CPE Regulations involved all levels – law, regulations, and procedures

Legislation

Regulations

Policies & Procedures

• SB 128

• 09.24.02 Regulations

• Fields of study

Maryland Senate & House passes bill

A Bill SB 128From State Board

LawMaryland Governor signs into law

Maryland State Board of Public Accountancy

Clarify thru regulationsAnd enforce the law

Example - CPA Mobility and uniformity achieved through collaboration in profession

TX

WA

OR

CA

NV

ID

MTND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WVNJDE

DC

MD

*PA

CPA Mobility Enacted 46

CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA

*

In Process

Awaiting Governor Signature - 1

NH

CPA Mobility Legislation Pending - 2

VT

PR

GU

U.S. VIRGIN ISLANDS

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• Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies

• 47 states passed legislation in three (3) years

• Maryland enacted it in 2008

An example of “us” - The 120/150 Hour CPA Exam Bill (HB 1137)

Changes the requirements to sit for the CPA exam to allow you to sit for the Exam upon completion of 120 hours (and the requirements of section 1 & 3) and get licensed upon completion of the final 30 credit hours (and the requirements in group 2)

A tale of two bills…

The clock runs out at midnight

Recent Leg / Reg Changes you need to know!

New Mobility Law Maryland Individual Tax Preparer Act New Corporate Reporting Requirements Peer Review Requirement – October 1st New CPA Exam Requirements New CPE regulations Mandatory e-file New Non-Profit Audit Requirements > $500,000 MD Independent Contractor Legislation

CPA Day in AnnapolisJanuary 19, 2011

MACPA 2011 Agenda

• Pass 120/150 legislation• Stop Sales Tax on

Accounting Services• Exempt CPAs from Debt

Counseling Bill• Stop Trial Lawyers

attempts at Tort Liberalization – Comparative Fault

• Pass Safe Harbor legislation

Increasing changes and complexity in standards & regulations

• Financial Accounting• FASB – IASB Convergence• Private Company Standards (FAF Blue Ribbon Task Force)• Public Companies – SEC Roadmap

• Tax• Tax Preparer regulation – IRS• Tax changes – Estate, 1099s, Tax rates• Sub S employment tax

• Other• Convergence – ASB Clarity project• Convergence – PEEC• SSARS 19

Four innovations you should know about in the CPA Profession

• Financial Literacy• Sustainability

Reporting (CSR)• eXtensible Business

Reporting Language (XBRL)

• Learning & Career Management

“What got you here won’t get you there.” – Emmanuel Gobillot - Leadershift

Is leadership different?

Turbulent times require new skills and new thinking

Source: Chief Learning Officer magazine

“we were surprised to see soft-skills deficiency to be a

more pressing issue”

Source: Grant Thornton – The evolving talent profile report

The Top Three Training Issues for Companies

1) Training around soft skills (communication, critical thinking and problem solving abilities)

2) Complexity of standards (fair value, risk management)

3) Evolving regulatory framework (IFRS, Convergence, Private company standards)

Five Qualities of Extraordinary Leaders

1. Sight - Ability to see emerging patterns and shift perspective when necessary

2. Insight - Ability to learn faster than the rate of change in your industry

3. Create - Ability to think strategically and critically to gain insights that create new opportunities

4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work

5. Inspire – Ability to mobilize support and engage others to join you in ACTION

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Our research shows three major skills:

• Strategic thinking• Strengths-based

leadership• Network leadership

Making sense of a changing &

complex world

How is the world

changing?

What does it mean to

us?

What possibilities do we see?

What direction should we go?

Leadership is ultimately about creating a way for people to

contribute to making something extraordinary happen

Leadership is to deliver hope and inspiration to help people accomplish

more than they thought possible

Leadership defined

The only question for leaders

Have I made you feel stronger and more capable?

Source: Emmanuel Gobillot - LeaderShift

Leadership defined

The four most important words for organizations

are, “what do you think?”

- Tom Peters

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632-2301E-mail tom@macpa.org

Web http://www.macpa.orgBlog http://www.cpasuccess.com

CONNECT – PROTECT - ACHIEVE