August / September 2013 Gary M. Bolinger, CAE President & CEO

August / September 2013

Gary M. Bolinger, CAEPresident & CEO

Agenda

1. Introduction2. Information Technology3. Ethics4. Legislative, Regulatory & Legal Developments

a. Washington, around the country and Indiana

5. Financial and Business Reportinga. Information, financial , international

6. The Most Valuable Asseta. People, productivity , competence and knowledge

Throughout program – Share what we learned last year

And we’ll celebrate

Steve Eichenberger, CPA – Chairman of the BoardBGBC Partners, Indianapolis

Transformation?

• Change:– doing something in an incrementally different

way. • Wax cylinders to acetate discs to LPs to CDs

• Transformation: – Doing something drastically different • CDs to MP3s• Suddenly entire music library on digital music player

– happens to be smart phone, GPS, videos, and much more– no moving parts unless you count electrons.

Daniel Burrus / July 30, 2013

Change

Transformation

Transformations

Auditing• Technology,

automation & Audit Data Standards

Financial reporting• Private Companies Accounting

Education• Pathways

CommissionHuman Resources• Supply & Demand• Diversity

“Insight into how the profession is conducting and will conduct business, serve clients and employers, attract and retain employees and new business and remain competitive in the marketplace throughout the next 15 years.”

Forces shaping the business environment

• Global economy– Continued globalization• persistent economic turbulence and uncertainty• growing pressure to rethink the entire global

economic and financial governance infrastructure

• Business environment – Growing business and regulatory complexity• intensified global competition• shortening business cycles


• Innovation and change – Rapid advances in science and technology are:• driving disruptive innovation• overhauling industry structures• challenging and reinventing business models • spawning new sectors


• Society and work – Changing social values & expectations of work

• increasing global population & an aging society working well past current retirement age

• Creating Challenges– How IT is managed & leveraged to integrate a diverse

multigenerational, multicultural and multinational workforce

• Learning and development – Structure, techniques, distribution channels and costs of

providing education and training are being transformed• growing trend towards online courses & accelerated learning

Five imperatives for business

• Assume and plan for volatility – Uncertainty as the new normal

• factor in turbulence as a very real possibility • develop strategies for a range of different economic and market

scenarios

• Build the radar – Systematic, organization-wide approaches required for

scanning the future external environment. – Prepare for a wide range of possibilities– Tolerance of uncertainty, curiosity and ‘seeing round

corners’ are becoming critical development priorities for managers and leaders alike.


• Pursue technology leadership – The pace and disruptive potential of information

and communications technology (ICT) development • placed technology at the heart of strategy &

operations of businesses of almost every size

– New mindsets and approaches to technology management are required to exploit and extract full value from the next decade of advances.


• Prepare for true globalization – Development of a truly global operating model

becoming a priority– Clear emphasis required on leveraging

technology effectively– Capability of management to work with, adapt

to and get the best out of a multi-location, multi-cultural and age-diverse workforce


• Develop a curious, experimental and adaptable mindset – Critical success factor in an increasingly complex

& fast-changing environment / a ‘curious’ culture

– Nurture an environment:• That is open to external ideas• That encourages participants to forge a network of

strong working relationships across the entire business ecosystem.

Forces driving change in the accountancy profession

• Trust and reporting – Pressures increasing to

• Strengthen public image• Go beyond current financial reporting practices• Provide more transparent, simplified but holistic

picture of a company’s health and prospects

• Regulatory expectations – Increasing regulatory burden could drive up cost

of compliance• Standards and practices – Drive to globalize standards & practices

Forces driving change in the accountancy profession

• Intelligent systems and big data – Potential to use intelligent systems, data mining and

predictive analytics to exploit the repositories of ‘big data’ • transform operational & interpretative elements of

accountancy

• Organizational remit – Increasing expectations that the CFO & accountancy

function should play a far greater role in everything• strategic decision making to the design of new revenue

models

Five imperatives for the profession

• Embrace an enlarged strategic & commercial role – As businesses adapt to a turbulent environment,

opportunities are emerging for accountants to assume a far greater organizational remit.

– Potential exists to leverage capabilities of the accountant across all aspects of corporate decision making:• from strategy formulation through to defining new

business models.


• Establish trust and ethical leadership – Profession needs to be seen to be addressing

clear public concerns. • there is a perception that the profession could do

more to highlight and prevent everything from small-scale financial irregularities through to the major systemic failures that helped cause the global financial crisis and the ensuing economic uncertainty.


• Focus on a holistic view of complexity, risk and performance – Growing consensus on the need for reporting to

provide a wide view of organizational health, performance and prospects

– Must acknowledge complexity of modern business • encompass financial & non-financial indicators


• Develop a global orientation – The pace of global expansion• developed and developing markets

– Spotlight the profession’s ability to master• technical• language • cultural challenges of cross-border operations


• Reinvent the talent pool – The diverse range of demands and impacts on the

profession is forcing a rethink of everything • From training and development to the type of people

being recruited• Characteristics such as:

– entrepreneurial spirit– curiosity– creativity and – strategic thinking skills– far more significance in the selection

An account of a projected course of action, events or situations.

Widely used by organizations to understand different ways that future events might unfold.

Scenarios: Future of the Profession


• Buccaneer (Perceived as ‘part of the problem’, broad organisational remit) – Many in the profession are playing a more central role

in value creation activities. – There is public concern, however, that accountants

have compromised their ethical financial stewardship role in the pursuit of profit.

– This scenario may be considered too unstable by many because a short-term, profit-driven focus is not tempered by ethical financial stewardship, or entrepreneurship for long-term performance.

Scenarios: Future of the Profession • Survivor (Perceived as ‘part of the problem’, narrow

compliance focus)– Survival seems the priority for many in the profession, who

focus on a relatively narrow technical and strict regulatory remit.

– Society perceives the profession to have failed in its duty of care to highlight and help prevent the issues that caused the global financial crisis of 2007–9 & the subsequent decade of financial and economic uncertainty.

– Might be considered an unstable scenario due to perceived lack of integrity.

– A goal for those in this scenario may be to evolve to the positioning of those in the Safehands scenario.


• Safehands (Perceived as ‘guardians of integrity’, narrow compliance focus) – Profession has succeeded in re-establishing public faith in

its role over the last decade– For many this has been achieved by deliberately

maintaining a focus on the largely technical elements of the role while seeking to ensure compliance with both the spirit & full regulatory requirements of the law

– Perceived as a stable scenario, particularly in turbulent times where CPAs want to demonstrate exemplary financial stewardship.


• Changemaker (Perceived as ‘guardians of integrity’, broad organizational remit) – Over the decade since 2012, many in the profession have

succeeded in balancing public expectations for responsible financial management with enlarged & more entrepreneurial stance

– Need to ensure sound & ethical practice has been a key driver in the gradual assumption of a wider remit by the CFO and accountancy function• seeking to encourage performance with accountability

– Key challenge … maintaining balance between encouraging entrepreneurial behavior & ensuring highest standards of financial stewardship

16th Amendment to the United States Constitution.

Established modern federal income tax law.

Ratified & enacted into law 100 years ago.

February 25, 1913

It’s the 100th Anniversary!

Ratification by the requisite 36 states was completed on February 3, 1913Ratification by Delaware. Indiana was 15th to ratify.

THE PENALTYFOR FAILURE TO HAVE THIS RETURN IN THE HANDS OF THE COLLECTOR OF INTERNAL REVENUE ON OR BEFORE MARCH 1 IS $20 TO $1,000.

(SEE INSTRUCTIONS ON PAGE 4.)

My, how you have grown …

• Government does not publish a stand-alone Internal Revenue Code separate from Title 26 of the United States Code.– 1913 tax law (evolved to become tax code):• estimated 27 pages

– 2011 CCH Winter Edition of the United States Internal Revenue Code: • 5,296 pages

1913 Income Tax Service: 400 pages

2013 CCH Standard Federal Tax Reporter: 73,954 pages

What were the rates?

ComplexityEvolution of

profession and business

Opportunities Threats Risks

Documents

August / September 2013 Gary M. Bolinger, CAE President & CEO