Tom Hood, CPA, CITP, CGMA CEO

MACPA & the Business Learning Institute

MACPA Town Hall & Professional Issues Update for MEMBERS

Fall, 2013

http://macpa.cnf.io Ask and answer questions throughout the day here…

Conferences.io was used to engage our members and encourage open Q&A and feedback with this exciting new technology we will begin incorporating into strategic planning and CPE courses for engagement and collaboration.

www.blionline.org

HOW TO PROFIT FROM INNOVATION: Building the Agile Learning Organization

The New Normal - VUCA

Historical Context – The Perfect Storm

•  Web 2.0 •  Globalization •  Generations

Source: Don Tapscott - Wikinomics

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www.SlideShare.net/thoodcpa  

#PIU13  #MACPA  @tomhood  @MACPA  

Download  today’s  slides  at  …  

Insights  to  Ac,on    

“One  without  the  other  is  either  useless  or  destruc,ve”  

The  new  “Big  Four”  

• Standards  &  Leg/Reg  

• Technology  • The  Changing  Workplace  

• Innova,on  

What’s  in  a  list?  

Standards  

•  Interna,onal  –  IASB  &  IFRS  

•  FASB  &  PCC  •  AICPA  &  FRF  –  

SME  •  ASB  –  Clarity  

(12/15)  •  GASB  Pension  •  PEEC  hQp://cpa.tc/1us  

#Accoun,ngStandards  Public  &  Private  Companies  

Private  Companies-­‐  Small  Business  

Public  &  Private  Companies    

Private  Companies    

Private  Companies-­‐  Small  Business  

Financial  ReporFng  

IFRS  (IASB)    

IFRS-­‐SME  (IASB)    

GAAP  (FASB)    

GAAP-­‐PCC  (FASB)    

FRF-­‐SME  (AICPA)    

AudiFng   IAASB   IAASB   PCAOB  ASB  (AICPA)  

ASB  (AICPA)    

ASB  (AICPA)    

Ethics   IFAC   IFAC   PEEC  (AICPA)  

PEEC  (AICPA)    

PEEC  (AICPA)    

Happy  40th  Birthday  FASB!  

10/9/13   T  

FASB  PCC  

#MainStFinancials  

10/9/13   T  

Comfort  LeQers?  

COSO  and  you  

1. Ar,cula,ng  the  role  of  a  company  when  outsourcing  

2. Pu^ng  fraud  right  out  in  the  forefront  

3. Highligh,ng  the  cri,cal  nature    of  IT  

Federal  Agenda  •  Mobile  Workforce  •  Tax  Due  Dates  •  What’s  at  Stake  •  Tax  Simplifica,on  •  Amended  1099s  (de  minimis)  •  DATA  Act  •  Keep  accrual  basis  for  personal  service  companies  (S  Corps  &  Partnerships)  

 

Here  we  go  again…  

#CPAsSavetheWorld  

www.macpa.org

MACPA State Budget Task Force

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www.macpa.org

Record of what has actually

happened

Prepared on an accrual basis

Provide information about longer-term

implications

Financial statement

www.macpa.org

!5,000%

0%

5,000%

10,000%

15,000%

20,000%

25,000%

30,000%

35,000%

Revenues%

Expenses%

Net%

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www.macpa.org

Revenue: how much money the company is bringing in

Expenses: how much money the company

is spending

Earnings Expenses < Revenue = Financially Healthy Company

How a CPA looks at a publicly traded company’s financials

2012 Financial Statements

Revenue = $33.8 billion Expenses

exceeded revenue by $1.0 billion

Note: The Financial Statement Deficit is

down from the 2009 highpoint of

$2.9 billion 6

0"

5000"

10000"

15000"

20000"

25000"

30000"

35000"

40000"

2002" 2003" 2004" 2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012"

Milli

ons!

State"of"Maryland"

Financial Statements!Revenue"&"Expenses"

Revenue"

Expenses"

The"State"of"Maryland"is"showing"a"negaEve"trend"in"covering"expenses."Only"2"years"out"of"11"show"net"revenues"over"expenses"on"a"financial"basis."

7

www.macpa.org

Assets: Property, contracts, and investments owned by a company,

regarded as having value and available to meet debts,

commitments, or legacies.

Liabilities: Debts and obligations arising

from past transactions and

events Net Assets: The residual net

worth of assets minus liabilities. If net assets are

negative you are considered insolvent as your obligations

are more than you own.

Assets > Liabilities = Financially Healthy Company

How a CPA looks at a publicly traded company’s financials

www.macpa.org

0"

5"

10"

15"

20"

25"

30"

35"

40"

45"

2007" 2008" 2009" 2010" 2011" 2012"

State of Maryland!Balance Sheet!

Billions $!

Assets" Liabili4es" Net"Assets"

Net Assets decreased by $8.6 Billion in past 6 years

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Revenue  =  $2.4  trillion   Expenses  =  exceeded  

revenue  by  $1.3  trillion  

2012 financial statements

Assets=  $2.7  trillion  

LiabiliFes=  $18.8  trillion  

Accumulated  deficit=  

$16.1  trillion  

2012 financial statements

Reality of future obligations

These future obligations equal:

Additional social insurance deficit $52 trillion Cumulative deficit 16 trillion Total deficit $68 trillion

In  trillions  

2009 2010 2011 2012

$11.5 $13.5

$14.8 $16.1

Accumulated deficit

Where  were  you  on  January  16th?  

2014  CPA  day  –  January  15,  2014  

#TaxSimplify  

“It  is  more  important  to  stop  bad  bills  than  pass  good  ones.”  -­‐  Calvin  Coolidge  –  President  

•  Sales  tax  on  accoun,ng  and  tax  services  (defeated  several  ,mes)  1997  -­‐  HB  580  ,2001  HB  1337,  2004  HB  1364,    2007  -­‐  HB  448  ,  2012  HB  1051  

•  Maryland  corporate  accountability  (SOX  and  404  for  private  companies  and  non-­‐profits)  2003  –  SB  560  

•  Debt  counseling  registra,on  by  CPAs    2011  -­‐  SB  741  

•  Maryland  Tax  Preparers  2007  -­‐  HB  998  •  Compara,ve  fault  (several  ,mes)  1998  SB  618  ,  

2000  -­‐  SB  779,  2001  SB  483  ,    2007  -­‐  HB  110  •  Elimina,on  of  audit  requirements  for  Maryland  

cemeteries    2011  –  SB  352  •   AG  opinion  allowing  CPAs  to  include  Social  

Security  numbers  on  documents  for  tax  services  –  8/30/2011  

•  Got  Exemp,on  from  MSP  Private  Inves,gator  Registra,on  

If  not  us,  Who?  

Building  and  Maintaining  the  CPA  Infrastructure  

•  Separate  funding  for  the  State  Board  2006  -­‐  HB  103  

•  Experience  requirement  to  make  Maryland  CPAs  compa,ble  with  UAA  (Uniform  Accountancy  Act)  2001  -­‐MD  COMAR  09.24.03.1      

•  Ethics  requirement  for  CPE  2006  -­‐MD  COMAR  09.24.02.02  

•  Mandatory  peer  review  and  prac,ce  quality  2005  –  HB  1223  

•  Exemp,on  for  CPAs  from  Maryland  (and  federal)  tax  preparer  regula,on  2008  -­‐  SB  817  

•  Prac,ce  mobility  2008  -­‐  HB  1296  •  Expanding  acceptable  CPE  methods    2009  -­‐  HB  69  •  120/150  CPA  exam  legisla,on    2011  -­‐  SB  287  •  Restricted  audits,  reviews,  and  compila,ons  to  

CPAs  and  added  safe  harbor  for  compila,ons    2011  -­‐  HB  328  

•  State  Board  of  Public  Accountancy  reauthoriza,on  2013  -­‐  SB  238  

State  Board  of  Public  Accountancy  

•  License  –  Inac,ve  Status  Explained  •  PI  License  Required  in  MD?  •  Firm  Names  –  Do’s  and  Don’ts  •  Mobility  –  Do  You  Have  Staff  Licensed  In  Another  State?  

•  MD  Firm  Permit  Number  –  Website  Requirement  •  State  Board  –  Renewed  Un,l  2025  •  Peer  Review  –  Update  and  Sta,s,cs  •  State  Board  CPE  Audit  Periods  

It’s  really  a  numbers  game  

2,500  188  90  3  

New  CPA  Swearing-­‐in  Ceremony  

November  4,  2013  BWI  Hilton  

#CPATechnology  

AICPA  Top  Technology  Issues  1.  Managing  and  retaining  data  2.  Securing  the  IT  environment  3.  Managing  IT  risk  and  compliance  4.  Ensuring  privacy  5.  Managing  system  implementa,ons  6.  Preven,ng  and  responding  to  computer  fraud  7.  Enabling  decision  support  and  analy,cs  8.  Governing  and  managing  IT  investment/spending  9.  Leveraging  emerging  technologies  10. Managing  vendors  and  service  providers  

RIP  Lotus  1-­‐2-­‐3  &  PC  

#SocialAccoun,ng  

"The  speed  of  change  makes  you  uncomfortable  on  a  regular  basis,"  he  says.  "That's  so  difficult  for  people  who  are  paying  mortgages,  buying  cars,  trying  to  give  their  kids  the  things  they  had,  to  get  them  through  school.  You  want  to  feel  confident  in  the  last  15  years  of  your  career  that  ater  25  or  30  years  of  effort,  it's  just  going  to  work,"  he  says.  "But  it  isn't  so.  And  I  don't  think  you  ever  get  over  the  fear  of  not  knowing.”                        –  Doug  Gould  Ad  Exec  

Genera,ons  

Innova,on  for  CPAs  

•  Big  Four  Trends  –  Social  – Mobile  –  Cloud  –  Big  Data  (XBRL)  

•  Innova,ve  Services  –  Value-­‐added  CFO  –  CFO  Advisory  Services  –  FRF-­‐SME  –  Assurance  on  XBRL  Tagging  –  XBRL  for  research  

 

About  Digital  CPA  

Helping  Prac--oners  Reach  Their  Digital  Des-na-on  

November  20-­‐22,  2013  Gaylord  Na,onal  Resort    

&  Conven,on  Center  Washington,  D.C.    

Learn more or register at: DigitalCPA.com

#IIRC  

hQp://www.theiirc.org  

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<IR> Framework Consultation Draft – released April 16

IIRC  Value  Crea,on  Process  

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www.blionline.org

The Research  

A  2012  survey  by  the  Corporate  Execu,ve  Board  showed  that  60%  of  organiza,ons  were  experiencing  a  leadership  shortage,  an  increase  of  40  percentage  points  from  the  previous  year.  

67%  #1  issue  is  developing  leaders  &  succession  planning  

www.blionline.org

Shift Happens

www.blionline.org

The  high  performers  in  our  survey  invest  more  in  talent,  focus  on  closing  skills  gaps,  have  more  customized  training  and  development  programs,  iden,fy  future  leaders  earlier  in  their  careers,  and  have  robust  succession  plans  in  place.  They  also  focus  more  on  “sot”  leadership  skills  such  as  the  ability  to  embody  the  organiza,on’s  culture  and  values  and  to  lead  effec,vely  in  a  complex  global  business  environment.    

Paradigm Shift

Source: E&Y Paradigm Shift: Building a new talent management model to boost growth

www.blionline.org

•   Innova,on  –  making  changes  in  an,cipa,on  of  future  trends  and  customer  needs  •   Individual  -­‐  The  ability  to  analyze,  and  understand  new  situa,ons  and  new  business  plaxorms  in  a  ,mely  (proac,ve)  manner.    •   Organiza,onal  –  Programs  and  processes  designed  to  enhance  its  collec,ve  ability  to  acquire  new  knowledge  and  skills,  and  to  stay  ahead  of  the  market.    

Source: Bersin & Associates

Innovation = Agile Learning

The right talent at the right time with the right skills

www.blionline.org

•  Career  Path  (Ladder)  •  Competency-­‐based  Learning  •  Curriculum  •  Compliance  Tracking  for  CPAs  •  Content  –  world-­‐class  Technical  &  Leadership  Courses  in  mul,ple  formats  

•  Context  –  Line  of  sight  to  organiza,on  vision,  mission,  strategy  &  culture  

Our approach - The Six C’s

10/9/13   T  

CPAs  are  trusted  advisors  who,  combining  insight  with  integrity  deliver  value  by:  

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CommunicaFng  the  total  picture  with  clarity  and  objec,vity  TranslaFng  complex  informa,on  into  cri,cal  knowledge  

AnFcipaFng  and  crea,ng  opportuni,es    Turning  insights  into  acFon  to  transform  vision  into  reality    

www.blionline.org

www.blionline.org

The  Bounce  

hQp://cpa.tc/2qh    

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Curriculum design by BLI and AICPA using Top 5 Competencies for future from CPA Horizons research and job levels from the BLI “Bounce” Model. Leadership and Communications were combined and the 5th category expanded to include practice specialties for firms and functional areas for corporate. Examples would include: Corporate Accounting, FP&A, divisional reporting, shared services, etc. CPA Firms would have audit, tax, industry specialties. These technical areas would have specific curriculums designed to meet their specific technical competency needs.

Innova,on  &  Accoun,ng  

1. Create  an  innova,on  mindset  

2. Nurture  crea,vity  3. Prepare  the  path  to  profit  

4. Match  metrics  to  the  stage  of  development  

5. Take  a  balanced  view  of  risk  across  the  porxolio  

hQp://cpa.tc/3ey    

The  collaboration curve  is  replacing  the  experience  curve  

“The organizations that will become the household names of this century will be renowned for sustained, large-scale, efficient innovation.

The key to that capability is neither company loyalty nor free-agent autonomy but, rather, a strong collaborative community.”

HBR, July-August 2011

#CC>EC  

#MACPAGROUPS  

Three  Rules  for  Success  

1.  BeQer  before  cheaper  (it's  best  to  compete  on  differen,ators  other  than  price);  

2.  Revenue  before  cost  (priori,ze  increasing  revenue  over  reducing  costs);  

3.  There  are  no  other  rules.  

“In  a  period  of  rapid  change  and  increasing  complexity,  the  winners  are  going  to  be  the  people  who  can  LEARN  faster  than  the  rate  of  CHANGE  and  faster  than  their  COMPETITION.”  

-­‐  Tom  Hood,  CPA.CITP.CGMA  

Average  is  over!  

1. Think  like  an  immigrant  (Paranoid  Op,mist)  

2. Think  like  an  ar,san  3. Think  like  an  innovator  (always  be  in  beta)  

4. Think  like  an  entrepreneur        -­‐  Tom  Friedman  

hQp://cpa.tc/3cr  

hQp://cpa.tc/3cr    

Tom  Hood,  CPA.CITP  CEO  Maryland  AssociaFon  of  CPAs  Business  Learning  InsFtute  (443)  632-­‐2301  E-­‐mail  tom@macpa.org  Web  h`p://www.macpa.org  Blog  h`p://www.cpasuccess.com  Blog  h`p://www.bizlearningblog.com      

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