Tom Hood, CPA.CITP CEO Maryland Association of CPAs
May 20, 2015
Tom Hood, CPA.CITPCEO
Maryland Association of CPAs
Welcome to the Extreme Future!
1. Speed – the rate of change will be blinding, comprehensive in scope and touch every aspect of your life
2. Complexity – A quantum leap in seemingly unrelated forces converging on everything
3. Risk – New risks, higher risks, and more risks4. Change – Drastic adjustments in your work,
community & relationships forcing you to adapt quickly to radical changes
5. Surprise – sometimes good, sometimes difficult to imagine, surprise will become a daily feature of your life
• Competition• Compliance• Convergence• Change• Complexity
We feel overwhelmed by the waves of change
The 5 C’s
There is a way out…
The tornado of changes from CPA Vision Project circa 2000
We can to learn how to harness the winds of change, together!
The Power of We!
“ There isn’ t the luxury of time.We used to say, ‘ Wait untilthis crisis is over and we get backto normal,’ but that never happens.We have to be ‘ change animals.’ ”- Michele McKenzie, President and CEO,
Canadian Tourism Commission
We can become navigators of change
Let’s break it down• Economic• Political / Legislative / Standards• Social / Workforce Demographics• Technology• The Future of our Profession• MACPA resources
Economic
Maryland by the numbers –Unemployment stats
6.0
6.5
7.0
7.5
8.0
8.5
More bright spots
Climbing out faster than most states2009 versus 2007
Most CPAs feel like this with legislative, standards & regulatory changes
Political / Legislative / Standards
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
Update on PTIN
• Need “new” PTIN before 01/01/2011• Required for Signing Preparer or preparer of all or substantially all of tax return (major victory)
• Fee is $64.25• Actively Licensed CPAs and staff exempt from exam
• CPAs in industry are exempt from filing for employers
Health Care & 1099 issue
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
More than 100 MACPA members call our senators and we defeat the amendment!
“But a time of turbulence is also one of great opportunity for those who can understand, accept and exploit the new realities. It is above all a time of opportunity for leadership.”
‐ Peter Drucker, Managing in Turbulent Times
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
26
• Collaborative effort with AICPA –CPA/SEA – NASBA & State CPA Societies
• 47 states passed legislation in three (3) years
• Maryland enacted it in 2008
What did we do when you were forced to have a license in every state you file
taxes in?
The Federal Issues – more waves of change
• FTC Red Flags rule – privacy & identity theft
• Tax Preparer Registration & PTIN issue
• Patient Protection Act & 1099’s
• Tax Strategy Patents• Dodd‐Frank Act• 3% Withholding on GovtPmts
The State Issues – cascading from the federal level and revenue shortfalls
• Maryland Privacy Act• Maryland Tax Preparer Regulations
• Maryland Consumer Protection & Debt Counselors
• Sales Tax on Accounting & Tax Services
• Combined Reporting
MACPA 2011 Agenda5 for 5!
Pass 120/150 legislationStop Sales Tax on Accounting
ServicesExempt CPAs from Debt
Counseling BillStop Trial Lawyers attempts at
Tort Liberalization –Comparative Fault
Pass Safe Harbor legislation
CPA Day in AnnapolisJanuary 18, 2012
How we did it
Looking ahead to 2012
• Special Session to deal with redistricting (and budget) – will see tax proposals
• Sales Tax on Services• Combined Reporting• Comparative Fault =
increase liability• Quid Pro Quo for DC
mobility
It all adds up$ per partner / year
1. CFPA $2502. Tax Prep $1503. Debt $1504. Mobility $500
Total $950
Sales Tax est $22,000 per partner
SECFASB
FASBPCFRC
IASBIFRS & SME
PCAOB AICPAASB, ARSC, PRB
IAASB
AICPAPEEC
AICPAPEEC
IFAC
Public Company Private Company Int’l Company
FinancialReporting
Audit /Attest PerformanceStandards
Code of Conduct
Another way to look at standards & oversight
State Oversight & Enforcement of CPA LicenseCPALicensure
FAF
FASB
PCFRC
GASB
The PlayersThe PlayersSEC
& State Boards & State CPA Societies
BRP
Additional Background InfoAdditional Background Info
15,000 issuers and 28.5 million private companies but GAAP driven by public company issues
Small businesses employ more than half of all private sector workers
Private companies and their financial statement users have information needs that are different than public companies
Similar Issue Outside the US TooSimilar Issue Outside the US Too
Concerns About Private Company Financial Reporting Include:
Concerns About Private Company Financial Reporting Include:
Too many GAAP-specific requirements not useful or relevant for private companies Greater FASB emphasis on public
companiesIncreased cost, complexity, time-
consuming using full GAAPUse of OCBOA raises the issue of what’s
“generally accepted”
Too many GAAP-specific requirements not useful or relevant for private companies Greater FASB emphasis on public
companiesIncreased cost, complexity, time-
consuming using full GAAPUse of OCBOA raises the issue of what’s
“generally accepted”
U.S. Answer: Blue Ribbon Panel on Private Company Financial ReportingU.S. Answer: Blue Ribbon Panel on
Private Company Financial Reporting
Address how accounting standards can best meet private company financial statement users’ needs
Determine future of GAAP standard-setting process for private companies
Sponsored by AICPA, FAF and NASBA
18 panel members: cross-section of financial reporting constituencies, including lenders, investors, owners, preparers and auditors
Blue Ribbon Panel’s ConclusionsBlue Ribbon Panel’s Conclusions
A problem exists that needs resolutionRecommendation #1 - Enhance GAAP
for private companies by making significant modifications, where warrantedRecommendation #2 - FAF should
create a separate private entities accounting standards board
A problem exists that needs resolutionRecommendation #1 - Enhance GAAP
for private companies by making significant modifications, where warrantedRecommendation #2 - FAF should
create a separate private entities accounting standards board
Other Key BRP RecommendationsOther Key BRP Recommendations
Framework for differential decision criteria
3-5 year sunset review to determine effectiveness of new board
5-7 board members
$4-5 million annual budget
FAF “Working Group”FAF “Working Group”
FAF created a “Working Group” on March 4, 2011Comprised of FAF Trustees and
FAF StaffAdded non-profits to the mix
FAF created a “Working Group” on March 4, 2011Comprised of FAF Trustees and
FAF StaffAdded non-profits to the mix
90.87% of MACPA members believe we need Private Company Standards
90.87% of MACPA members believe we need Private Company Standards
Insights form the Spring & Fall, 2010 PIU / town hall meetings covering 2,000+ members
Judy O’Dell chair of FASB PCFRC shared her perspective
Judy O’Dell chair of FASB PCFRC shared her perspective
MACPA’s responseMACPA’s response
MACPA sent comment letter to FAF on December, 2010 for initial surveyMACPA Chair Kimberly Ellison-Taylor
appoints special Accounting Standards Task ForceAccounting Standards Task Force held
meetings from Jan – Mar, 2011
MACPA sent comment letter to FAF on December, 2010 for initial surveyMACPA Chair Kimberly Ellison-Taylor
appoints special Accounting Standards Task ForceAccounting Standards Task Force held
meetings from Jan – Mar, 2011
MACPA Accounting Standards Task Force – The power of “We”
MACPA Accounting Standards Task Force – The power of “We”
Chair:
Art Flach Grant Thornton Public accounting firm
MACPA Facilitators:
Tom Hood MACPA CEO & Executive Director Non-Profit
Jackie Brown MACPA COO Non-Profit
Skip Falatko MACPA CFO Non-Profit
Task Force Members:
Ernie Paszkiewicz Gross Mendelsohn & Assoc. Public accounting firm
Rob Tuggle BB&T Banking
Bill Ziegler BB&T Banking
Carl Kampel Ellin & Tucker Public accounting firm
Joselin Martin Hayles & Howe Private company
Liz Gantnier Stegman & Co. Public accounting firm
Bob Tarola Right Advisory Public company consultant
Mike Manspeaker Smith Elliott Kearns & Company, LLC Public accounting firm
Ken Kelly McCormick Public company
Don McConnell KCI Private company
Jim Canalichio Dixon Valve Company Private company
Jim Jenkins Stout Causey & Horning Public accounting firm
Al DeLeon DeLeon & Stang Public accounting firm
Debra Busk DeLeon & Stang Public accounting firm
Charles Postal Santos, Postal & Co. Public accounting firm
Jim McKinney University of Maryland Educator
OJ Phillips Small Business Administration Government
Our guiding principlesOur guiding principles
Draft conclusions – Not approved by MACPA Board
Draft conclusions – Not approved by MACPA Board
Private Company Standards need to be addressed (costs, complexity, OCBOA)Current structure is not working –
PCFRC recommendations were not addressed, prior studies indicate issueOther jurisdictions around the world
recognizes needs of private company users are different
Private Company Standards need to be addressed (costs, complexity, OCBOA)Current structure is not working –
PCFRC recommendations were not addressed, prior studies indicate issueOther jurisdictions around the world
recognizes needs of private company users are different
Next StepsNext Steps
Finalizing whitepaperApproval and position by MACPA BoardDistribution and communication
Finalizing whitepaperApproval and position by MACPA BoardDistribution and communication
Maryland ranks in top five states with highest audit deficiencies with DOL
EBP Audits (401k) & 403(b) Audit Quality must be raised in
Maryland
MACPA worked with the DOL to put on our first Employee Benefit Plan Conference in May, 2010
Look for the second annual conference in May, 2011
70% of consumers are looking for businesses adopting sustainable business practices
Can green give you a competitive advantage?
http://www.theiirc.org/
Workforce & Demographics
5 Generations in the workforce
Live First, Work Second
Digital Natives
Workforce & Demographics
Email Generation
Facebook Generation
These guys are retiring
These are making the purchasing decisions
These are the new workers
Are you ready for Gen Y?
The Gen-Y guy
Gen Y’s Top Five Ways We Think and Act at Work
1. No expectation of lifetime employment2. A feeling of entitlement with big
expectations3. A hunger for instant gratification and
tangible outcomes4. A new relationship with technology &
communication5. A need for ongoing feedback
“The only way we can go wrong is to discourage these kids. They are set to go. They’re smart. They’re motivated. They understand the problems. They are engaged.”
- David Gergen – Political Analyst
In defense of Gen Y
New CPAs in Maryland
74
166194
236
291
383
457
New CPAs
04 05 06 07 08 09 10
Technology• Cloud• Mobile• Location‐based / Augmented Reality
• Security / Privacy• Social Media• XBRL
Social MediaAccording to CFO magazine
The learning continues by using social media tools to connect the learners
Surfing Lessons!
www.bizlearningblog.com www.cpasuccess.com www.cpalegislativeinsidercom
Comments on BizLearningBlog include a participant and author of book
Jane Bozarth ‐ author
XBRL – Time to pay attention
XBRL & SBR
“You can’t stop the waves, but you can learn to surf”- Jon Kabat-Zinn
Photo: Pratt’s surfing page
Turbulent times require new skills and new ways of thinking
RFTF – Reports from the Future
MACPA’s Board focuses on 2025
Top 10 Trends (and the time to address is now)
1. Pressures on Gov’t & rising deficit2. Changes in learning – informal & on‐demand3. The cloud = flex, global, work anywhere4. Increasing complexity, ambiguity & change5. Globalization and economic shifts6. Information overload7. Shift to consumer power (push to pull)8. Workforce, demographics, the “she” economy9. Going mobile10. Social media = business
Steve King – Emergent Research & author of Intuit 2020 report
1. Developing soft skills 2. Understanding and applying international accounting 3. Understanding complex accounting and auditing
standards4. Adapting to an evolving regulatory framework5. Addressing new external reporting needs6. Understanding ERP or IT systems and technological7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge and
understanding company's non‐financial business drivers
GT: The Evolving Accounting Talent Profile
What’s over the horizon for CPAs?
www.macpa.org/forumhttp://www.aicpa.org/Research/CPAHorizons2025/
In 1997, the CPA profession crowd‐sourced its future with over 3,500 CPAs in the CPA Vision Project
CPAs...Making sense of a changing and complex world.
CPAs...Making sense of a changing and complex world.
Our core purpose, our reason for being is
Here is what they said…
Our Vision Statement for the future is:( mandates to ourselves for a successful future)
• Communicating the total picture with clarity and objectivity,
• Translating complex information into critical knowledge,
• Anticipating and creating opportunities, and
• Designing pathways that transform vision into reality.
CPAs are the trusted professionals who enablepeople and organizations to shape their future.Combining insight with integrity, CPAs deliver value by:
The DNA of the CPA• Communication &
Leadership• Strategic & Critical Thinking• Focus on the Customer,
Client, and Market• Interpretation of
Converging Information• Technologically adept
IBM Global CFO Study shows movement to “Value Integrators”
The Decade of the CFO?
The best CEOs in the world are a combination of CEO, COO and CFO. They are inspirational, financially literate and know the ins and outs of their business at a sophisticated level.
www.macpa.org/forum
Why we are here and what we are doing about it
Why we are here and what we are doing about it
CPA
Tools: MACPA Fed & State Tax listservs
Our colleagues are phenomenal. I see it time and time again, both on this website and elsewhere. Not only "resources" but the human creativity, insight and wisdom so freely given. It reminds me of a karate dojo where members at various levels tutor and mentor those "below" them while being tutored and mentored "from above." Makes me proud to be part of the profession. I'm glad so many recognize how unique and very valuable we as a group are, it's truly remarkable and oh so greatly appreciated. Since I appear to be the sole member practicing at the beach, I would like to suggest maybe a little social mixer for listserv participants before, during, or after the MACPA Beach Retreat? Nothing too formal or structured, but so we all can put faces with names, etc. I see these "flash mobs" on the news, lol, something like that. I will be some sort of forward team arranging a place and maybe a drink or food deal with an OC establishment. I feel that I have come to know many of you but couldn't pick you out of a police line up! It's not just the sole practitioner. There are many of us out here with small practices that don't have the manpower resources to maintain in‐house specialized departments. I find it amazing that even at the height of deadlines there are those who "belly up to the bar," to offer words of wisdom and advice for the practitioner in need. Awesome folks here! . I am, too, a sole practitioner, and this year I used listserv for the first time. Every time I have some problems I couldn't figure out and always had to spend more time than "necessary" to look for publications, look for research materials, etc. But this year, any problem or issue I post there, to my surprising happiness, the answer came in within a couple of hours, without spending my own time. I just waited for any answer to come out from you. And especially this year, which I found out I was having more complicated cases than before, how much I was able to deal with, thanks to all of your suggestions, advices, ideas, all of which truly helped me survive this tough season. And yes, finally, I really think our membership dues become worth when we utilize this group's brainstorming. Thank you all for your invaluable advice and comments, suggestions you have given to me, who has been suffering lack of great resources. I could give you unlimited thank‐yous to you all! I agree the listserv is an invaluable resource and it has helped me a great deal during this tax season. Of all the wonderful benefits of being a MACPA member, the value of this one service covers the cost of my membership dues times ten. . With the wealth of experience available here, I can get information that would be difficult to come by anywhere else. I echo the sentiments of some of those before me, I wish I could give as much to the website as I get from it. Thanks to all for your invaluable advice and comments during the past tax season!! Thanks you for the superb quality of this site. I do so few returns, but get (and don’t contribute) so much from it! What a great resource for the sole practitioner!! Thank You for the invaluable support to those in the collective we call the ListServe :) Two things I so much enjoy from this group is 1) always being able to learn something new, and 2) the reminders that the wackiness I encounter in my clients isn't unique to me, and 3) if I wasn't so sleepy I'd remember number 3 …. Lol You all are the best!! I too would like to add my thanks to all the wonderful participants in this list serve. While I am semi‐retired, the information provided is invaluable to assist in the preparation of the remaining clients whom I still service. Best wishes to all for a restful post tax season. Enjoy, before you tackle the extensions. My thanks to everyone that assisted in any and all ways this season. My last return before the clock strikes midnight was just transmitted, so I am off. In the immortal of words of the beloved Truman character, “Good morning, good evening, and good night.” I agree with all. The listserve is a tremendous resource to all. I have learned so much. Almost makes you want to form a new acctg firm ‐‐MACPA & CO! As one of the many lurkers who receives e‐mails and posts questions very infrequently, I speak only for myself when I say thank you to all who share their knowledge here. For those who run small shops, this is a valuable resource for information. My heartfelt thanks for your generosity. Amen to that…I add my thanks!!! Now…off to a week of NOT coming to the office, answering phones, answering emails, etc…. Many thanks to all those who asked and those who answered. I would like to thank everyone who offered words of wisdom on the list serve. Its amazing how much insight you gain from the collective wisdom of the group. I really appreciate the time and effort that everyone put forth, especially the 10 or 15 ‘heavy lifters’ who seem to respond to any question quickly. Thanks everybody for the additional support and welcomed contributions! Amen. I only wish I could add as much as I get. At the risk of being redundant…I add my thanks for the many timely and helpful replies. It is precisely because I value the input from so many folks brighter and more knowledgeable than I, that I try to take time out and answer on the odd occasion I have something to add. I would argue that, for those of us without a large firm “ivory tower” to turn to, this has become one of the greatest tools/benefits offered by MACPA. THANK YOU ALL AGAIN!! I must get on the band wagon also and thank everyonewho utilized the listserve. It has been invaluable. Questions asked reminded me that I may have the same problem and the answers given have been helpful and informative. You all are such a wonderful help! THANK YOU! Another thank you for the listserv especially to: Those of you who are so very generous with your time and expertise. Those of you whose questions make my clients seem not so bad. Those of you who have taught me that the IRS instructions are really very useful and to just try looking it up. Those of you who made me laugh. Certainly this is the best CPE there is, even if we do not get credit for it. Ditto. I couldn't have said it better myself. I hope everyone gets some time to rest and relax! Thanks to all, enjoy the off season. I couldn’t agree more. Thanks particularly to the “heavy lifters” who seem to respond to almost every question with insights, cites and great advice. I must also add my thanks to all who participated on the listserve. Many times answers to questions were provided even before I had time to ask them.
The Power of We!
MACPA Leadership AcademySeptember 18‐20, 2011 Annapolis
Key events & dates
Gov’t / NFP Conf ‐ Apr 29, 2011 ‐ U of MDEmployee Benefit Conf ‐May 10, 2011 ‐ ColumbiaMACPA Business & Industry Conference ‐May 20, 2011 – Turf ValleyMACPA Summit ‐ Jun 2 & 3, 2011 ‐ BWIBeach Retreat ‐ Jul 5 – 7, 2011 ‐ OCCPA Day in Annapolis ‐ Jan 18, 2012 ‐ Annapolis
Executive Level LearningExecutive Level Learning
Strategic Management Business Management Performance Measurement Management Leadership Development Communications Skills
Strategic Management Business Management Performance Measurement Management Leadership Development Communications Skills
MACPA’s affiliate, the Business Learning Institute (BLI) delivers competency-based curriculum for managers and executives:
• RJP Insurance• AON• Purchasing Power of the profession– Savings of up to 70% off!
ResourcesProducts / Services
Business Solutions
New CPAs Swearing‐in Ceremony and MACPA Member Reception
June 2, 2011BWI Hilton
How Leadership is changing?From
• Information Stocks• Hierarchy• Centralized• Teacher• Push
To
• Information Flows• Network• Distributed• Facilitator• Pull
How to survive the Extreme Future?
• A future vision – a clear vision of where you are going
• A sound strategy to get you there• Tools to help persuade key people• Effective execution
Source: Dr. James Canton, Ph.d – author of the Extreme Future
“It is hard to plan for the long term future when you don’t know what is going to happen five minutes from now.
Today, a competitive edge is thin and temporary; the edge quickly becomes the margin. The ability to define the edge, and the ultimate competitive advantage, is found in the smarts, heart and ingenuity of your people - that's your powerhouse. Tap that, train it, focus it and mobilize it; now you've engaged a network and inspired a sustainable shift.
Insight to action, one without the other is either useless or destructive.”
-Tom Hood & Gretchen Pisanoco-authors of the i2a: Insights to Action
Strategic Thinking Systemhttp://www.bizlearning.net/live/i2astrategicplanning
The leaders job is to…
Provide hope and inspiration!
Tom Hood, CPA.CITPCEO
Maryland Association of CPAsBusiness Learning Institute
(443) 632‐2301E‐mail [email protected]
Web http://www.macpa.orgBlog http://www.cpasuccess.com