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July 2013 | Maryland Association of Certified Public Accountants, Inc.
STATEMENTMACPA’S
“GIVE AND YOU SHALL RECEIVE”New MACPA Chair Byron Patrick gets more than he gives from his volunteerism. He wants all members to feel that as well. PAGE 6
CPAs’ frustrations boil over after
TAX SEASON FROM HELLPAGE 28
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DON FARMER’S 2013 CORPORATE/BUSINESS INCOME TAX WORKSHOPNovember 1, 2013 | Event ID: 111000macpa.org/DonFarmerCorporate
DON FARMER’S 2013 INDIVIDUAL INCOME TAX WORKSHOPNovember 14 & 15, 2013 | Event ID: 211000macpa.org/DonFarmerIndiv
DON FARMER’S 2013 TAX UPDATEDecember 13, 2013 | Event ID: 111001macpa.org/DonFarmerTax
2013 Advanced Tax InstituteMastering the Complex
Save the DateNovember 18-21, 2013Martin’s West
2013 Advanced Tax InstituteMastering the Complex Port ions of Tax Law
lawyers CPAs
Complex tax laws change all the time.
The tax strategy you give your clients must change with it.
AdvancedTax Institute
Sponsored by:
lawyers CPAs
September 16-17 | Martin’s West | Event ID: 221000 | macpa.org/ChesapeakeTax
Brought to you by CCH Presented by Jody Padar, CPA, MST, New Vision CPA Group, Inc.
December 3 & 4, 2013 Hunt Valley | ID: 211001 macpa.org/1040FTdec
Win the tax season race.January 7 & 8, 2014Baltimore | ID: 211002macpa.org/1040FTjan
B A N K I N G . I N S U R A N C E . I N V E S T M E N T S
Member FDIC. Only deposit products are FDIC insured.© 2013, Branch Banking and Trust Company. All rights reserved.
If values aren’t shared,If values aren’t shared,If values aren’t shared,they aren’t lived.they aren’t lived.they aren’t lived.
For more than 140 years, BB&T has never taken a relationship for granted. We set out to earn your business each and every day. Our strong value system helps us determine what is right and reasonable. And to remain focused on doing what’s in the best interests of the clients and communities we serve. Discover the value a values-driven bank can offer you. Talk to us today. BBT.com
Proud Sponsor of the MACPA
ADMINISTRATION
Amy Stumme [email protected]
Becky Conley [email protected]
TECHNOLOGY
Doug Shaner [email protected]
COMMUNICATIONS
Amy Moran [email protected]
Bill Sheridan [email protected]
FINANCE
Margaret DeRoose [email protected]
Laura Swann, CPA [email protected]
MEMBER SERVICES
Julianne Part [email protected]
Jeannie Richardson [email protected]
Ashlee Stem [email protected]
PRODUCT DEVELOPMENT
Akesha Brown [email protected]
Debbie Zizwarek [email protected]
TECHNICAL SERVICES
MaryBeth Halpern [email protected]
Cora Edwards [email protected]
PROFESSIONAL DEVELOPMENT
Dee Sullivan [email protected]
Pamela C. Devine [email protected]
Chris Dougherty [email protected]
MaryBeth Drusano [email protected]
Jared Feinstein [email protected]
Megan Gratz [email protected]
Emily Trott [email protected]
Rebekah Brown [email protected]
Donna Lewis [email protected]
Ryan Wey [email protected]
Amy Puente [email protected]
Paige [email protected]
Meredith Senio [email protected]
Laura Dorsey-Shaner [email protected]
Andrew Hood [email protected]
2012-2013 BOARD OF DIRECTORSOFFICERS
Anoop N. Mehta, CPA, Chair
Byron K. Patrick, CPA.CITP, MCSE, Incoming Chair
Marianela del Pino-Rivera, CPA, Secretary/Treasurer
Allen P. DeLeon, CPA, PFS, Immediate Past Chair
DIRECTORS
Samantha Bowling, CPA
Lisa Cines, CPA
Shane Grady, CPA
Kara King Bess, CPA
Michael Manspeaker, CPA
Joselin R. Martin, CPA
Amy Myers, CPA
Robert Tarola, CPA
SENIOR STAFFMACPA EXECUTIVE DIRECTOR
J. Thomas Hood III, [email protected]
MACPA DEPUTY EXECUTIVE DIRECTOR
Jacqueline E. G. [email protected]
DIRECTOR OF FINANCE AND ADMINISTRATION
Skip Falatko, [email protected]
CONTENTS
WE WANT TO HEAR FROM YOU! See below to submit content
Bill SheridanMACPA Dulaney Center II 901 Dulaney Valley Road Suite 710 Towson, MD 21204
For content submission: [email protected]@macpa.org
P: 410.296.6250 F: 410.296.8713Toll free: 800.782.2036
The MACPA reserves the right to edit all submissions for grammatical style and / or length.
Statement of fact and opinion are made by the authors alone and do not imply an opinion on the part of the officers or members of MACPA.
The Statement is published four times a year by the Maryland Association of Certified Public Accountants, Inc.
Bill Sheridan, EditorAmy Moran, Advertising Sales
July 2013 | Maryland Association of Certified Public Accountants, Inc.
CHAIR’S COLUMN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FEATURESNew MACPA Chair Byron Patrick: Give and you shall receive . . . . . . . . . . . . . . . . . . . . . 6MACPA’s 2013-14 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9CPAs’ frustrations boil over after Tax Season from hell . . . . . . . . . . . . . . . . . . . . . . . . 28
DEPARTMENTSNews & Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Business & Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20High Tech Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Tax Corner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Financial Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Member Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
MEMBER NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
NYPN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
CLASSIFIEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3JULY 2013
B A N K I N G . I N S U R A N C E . I N V E S T M E N T S
Member FDIC. Only deposit products are FDIC insured.© 2013, Branch Banking and Trust Company. All rights reserved.
If values aren’t shared,If values aren’t shared,If values aren’t shared,they aren’t lived.they aren’t lived.they aren’t lived.
For more than 140 years, BB&T has never taken a relationship for granted. We set out to earn your business each and every day. Our strong value system helps us determine what is right and reasonable. And to remain focused on doing what’s in the best interests of the clients and communities we serve. Discover the value a values-driven bank can offer you. Talk to us today. BBT.com
Proud Sponsor of the MACPA
STATEMENT4
CHAIR’S COLUMN
MEMBERSHIP MEANS MORE THAN PAYING DUES. IT’S ABOUT GETTING ACTIVE.BY BYRON PATRICK, CPA.CITP, CGMA, MCSE CEO AND CO-FOUNDER, SIMPLIFIED INNOVATIONS
When does one become an MACPA member?That’s an interesting question, and one
I’ve been asking myself a lot lately.
Most people would say paying their dues
makes them members. They’d be wrong.
Paying your dues earns you membership
in the association, sure. In my opinion,
though, it doesn’t really make you a
member. That doesn’t happen until you
roll up your sleeves and get your hands
dirty on behalf of the profession.
Only one in five MACPA members plays
an active role in the association through
volunteerism. Twenty percent. That’s
it. And yet we accomplish some pretty
amazing things in spite of that.
Case in point: our recent meetings with
federal lawmakers as part of the AICPA
Council’s spring meetings in Washington
D.C. In just a few days’ time, MACPA
members gave Congress a CPA’s
perspective on some awfully important
issues, including:
• TAX SEASON FRUSTRATIONS:
After one of the most onerous tax
seasons in memory, the MACPA gathered
feedback from members of its federal
and state tax committees, its MACPA
Tax Group and listserv, and nearly 1,000
town hall participants. Our goal was
to compile suggested solutions to the
problems that arose when “fiscal cliff”
negotiations delayed the start of tax
season. We presented those suggestions
to lawmakers during our D.C. visits.
• MOBILE WORKFORCE BILL:
The MACPA and the AICPA are among
the 495 national businesses and groups
that are backing the Mobile Workforce
State Income Tax Simplification Act of
2013, which will be a huge help to not
only CPAs but all businesses that send
employees to work across state lines.
• TAX DUE-DATE REFORM BILL:
The MACPA joined other state CPA
societies in urging lawmakers to
co-sponsor a plan to create a logical set
of due dates focused on allowing a more
timely flow of information from pass-
through entities to their owners. It also
would promote the early filing of more
business and personal returns and relieve
some of the workload compression
surrounding the Sept. 15 business return
deadline.
• OTHER TAX SIMPLIFICATIONS AND
REFORMS:
The complexity of our tax system leads
to unbearable tax compliance costs for
CPAs and taxpayers. Changes need to be
made, and MACPA members have been
instrumental in presenting the profession’s
side of this story to Congress.
• FINANCIAL LITERACY REGARDING
THE U.S. DEBT AND DEFICIT:
MACPA members have joined a
renowned AICPA initiative to explain the
U.S. financial situation in plain English to
anyone who will listen. Our recent visit to
Capitol Hill is just part of that initiative.
That’s what CPAs do, after all, isn’t it? We
make sense of a changing and complex
world.
• SUPPORTING THE DATA ACT:
The Digital Accountability and
Transparency Act would require all
recipients of federal money to standardize
and tag their financial data in machine-
readable formats for easy analysis,
presentation and transparency. Testimony
by MACPA members has helped move this
legislation through Congress, and we will
support it again this year.
And that was less than a week’s worth of
work. Now tie in all the important stuff
that volunteers do during CPA Day in
Annapolis and via the MACPA’s varied
committees and task forces. When you do
that, one inescapable truth becomes clear:
If we can do all of this with just 20 percent
of our members helping out, imagine
what we could do if the other 80 percent
stepped up as well.
That’s my challenge to you: Raise your
hand. Get involved. Be active. The
profession you save might be your own.
You do more than serve the profession
when you volunteer, though. You also
serve yourself.
You learn invaluable leadership and
innovation skills that will help you grow
personally and professionally. Without
getting too schmaltzy on you, let me just
say this: Working with the MACPA has
changed my life. I want it to change yours
as well.
I’ll be chair of the MACPA’s Board of
Directors for the next year, and I know
we’ll do great things during that time, but
we need you to help us get there. Help us
out.
We’ll be a better association -- and you’ll
be a better CPA -- as a result.
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E-9002-0113 MD_Layout 1 11/15/12 3:19 PM Page 1
“Give and you shall receive”BY BILL SHERIDAN
THERE’S MORE TO BEING AN MACPA MEMBER THAN PAYING YOUR DUES. A LOT MORE.Just ask Byron Patrick.
“A large part of what makes the MACPA
such a strong, influential and impactful
organization is due to its volunteers,” said
Patrick, CEO of Simplified Innovations in
Cockeysville. “Despite our great success
as a strong state association, most of
the faces I see are the same, over and
over. I feel very passionately that not only
would increasing member involvement
strengthen the MACPA even more, it
would increase the value to all of our
members. The more people who are
actively involved, the more knowledge,
experience and ideas there are.”
Patrick has lived that creed since he
passed the CPA exam. He brings that
same enthusiasm to his newest position
– chair of the MACPA’s 2013-14 Board of
Directors. He takes the helm on July 1.
His volunteerism dates back to his first
job out of college. Shortly after joining
Heim and Associates (now HeimLantz), he
was accosted by his boss, Carter Heim,
a former MACPA Board chair in his own
right.
“He grabbed me in the hallway and
said, ‘I want you to be involved in the
MACPA,’” Patrick said. “I went to one
meeting and was hooked.”
Since then, he has played a role in some
pretty significant MACPA initiatives.
He was an original member of the
MACPA’s Under 35 Governance and
Structure Task Force, which helped shape
the very future of the association.
He was one of the first members of the
MACPA’s now influential New / Young
Professionals Network.
He helped design the MACPA’s inaugural
Leadership Academy, then started
moving up the ladder as a member of the
association’s Board of Directors.
Each step was a revelation, and he wants
all members to experience what that feels
like.
“We did some really cool stuff that made
you want to keep coming back,” he said.
“The MACPA became my mentor. It
wasn’t one individual – it was the MACPA.
“I do this out of pure selfishness. I get
so much more out of it than I could ever
contribute. I give because I want others to
have those same opportunities.”
And those opportunities are almost
endless, particularly when it comes to
advances in technology.
“It’s the ultimate enabler,” he said. “We
can share knowledge easier then ever.
There are innovative tools available that
we have never seen before to service our
companies and clients. And technology
is shrinking the world. Things that were
difficult to accomplish before are now
available to CPAs on so many levels due
to technology.”
Those things include the cloud, the
continuing push for a robust learning
management system that will help
members track their continuing education,
and the newly launched MACPA Groups,
a collaboration and social networking tool
for MACPA members.
Beyond that, Patrick hopes to cast a light
on other initiatives that, while not as high-
profile as shiny new tech offerings, offer
equal bang for your membership buck.
New MACPA Chair Byron Patrick is proof that doing good is good for you. He wants all members to get greedy for the benefits of volunteerism.
STATEMENT6
They include the MACPA’s legislative
agenda, women’s issues, diversity in the
profession, and the ever-present potential
of XBRL and Big Data.
Mostly, he just wants members to realize
what they’re getting when they write their
dues checks. Things like:
• Relationships with brilliant CPA leaders.
• Experience and knowledge that will help
them professionally and personally.
• Mentorships.
• Leadership training.
• Cutting-edge CPE.
• Exposure and opportunities to
volunteers at the national level.
“I’m pretty passionate about what the
MACPA does and what CPAs do,” Patrick
said. “CPAs are bad-ass. It’s pretty
incredible to be one.”
Bill Sheridan is the MACPA’s chief
communications officer.
7JULY 2013
Byron Patrick, CPA.CITP, CGMA, MCSE
New MACPA Chairman of the Board of Directors
A new series for financial professionals in Business & Industry
Shape your organizat ion for better results .
CHANGE EFFORTS THAT STICK Aug 29, 2013 // Gretchen Pisano // Event ID: 170000
CHALLENGES FOR FINANCIAL PROFESSIONALS Nov 21, 2013 // Francis X. Ryan // Event ID: 170001
MACGYVERING: THE ART OF BEING RESOURCEFUL IN A CRISIS Feb 27, 2014 // Greg Conderacci // Event ID: 170002
SMARTER DECISION-MAKINGMay 22, 2014 // Jennifer Elder // Event ID 170003
4 hours of CPE each quarter to share and learn with other experienced financial leaders.
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QUARTERLY
LEADERS
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FINANCIAL
Because you are trusted.
2013 PRACTITIONERS’ CONFERENCEOctober 22 | Martin’s West, Baltimore | Event ID: 121010
macpa.org/practitionersconf2013
YOU
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STATEMENT8
Because you are trusted.
2013 PRACTITIONERS’ CONFERENCEOctober 22 | Martin’s West, Baltimore | Event ID: 121010
macpa.org/practitionersconf2013
YOU
CLIENT
NEWS & VIEWSMACPA’S 2013-14 BOARD OF DIRECTORSThe MACPA’s 2013-14 slate of officers and directors was voted into place at the association’s
Annual Meeting, held May 17 in Baltimore. Here’s a closer look at this year’s Board of Directors.
CPA, CITP, MCSEChair
CPAVice chair
CPASecretary / treasurer
CPA, CGMAImmediate Past Chair
Employer: Simplified Innovations Inc.
Title: Co-founder / CEO
Notable: An MACPA member since 1999. A member of the MACPA’s Under 35 Structure and Governance Task Force in 2000. A founding member and past chair of the MACPA’s New / Young Professionals Network (NYPN). Remains active as a NYPN advisor. Current member of the MACPA’s Technology Committee. Has participated in a number of additional MACPA task forces, committees and is a frequent presenter on technology topics. Previously a member of the AICPA’s IT Executive Committee and Practice Monitoring of the Future task force. Co-founded Simplified Innovations after five years as IT director at KAWG&F, where he helped the firm become the first to have virtual offices in Second Life.
Employer: Sole practitioner
Notable: An MACPA member since 1984. Also a member of the AICPA. Winner of the MACPA’s 2005 Public Service Award. Founder of Learning Power, Inc., a 501(c)(3) corporation that operated a tutoring center for disadvantaged youth in Bowie. Named Woman of the Year in 2000 by the Bowie-Crofton chapter of the Business and Professional Women’s Association. Served as vice chair on the Governor’s Commission on Hispanic Affairs from January 2004 to January 2008. President of Bowie-Crofton Soroptimists Chapter and serves on the Finance Council of St. Camillus Church.
Employer: Smith Elliott Kearns & Company, LLC
Title: Member, director of accounting, audit and quality control
Notable: An MACPA member since 1979. A former member of the Auditing Standards Board of the AICPA and several ASB task forces. Former chairman of the PKF North America Accounting and Auditing Committee. Former member of the MACPA’s Accounting Reform and Standards Convergence Task Force. Current chairman of the MACPA Peer Review Committee. Current member of the MACPA Board of Directors. Active member of the Hagerstown Kiwanis Club and several other community organizations.
Employer: Science Systems and Applications, Inc.
Title: Vice president and chief financial officer
Notable: An MACPA member since 1992. Serves on the MACPA’s Board of Directors and on the Government Contractors Committee (chair from 2001-03). Serves as President and member of the Board of Directors for the Maryland Space Business Roundtable. Also serves on the National Advisory Board of the Diversified Investment Advisors. Chaired Maryland’s Governor’s Workforce Investment Board (GWIB) Aerospace Industry Implementation Leadership Team (2006-09). Graduate of Leadership Howard County, class of 2010. A member of the AICPA, the National Contract Management Association and many other civic organizations. Has taught classes on various topics affecting government contractors. A seventh-degree black belt and master instructor in Tae Kwon Do.
BYRON PATRICK MICHAEL MANSPEAKER ANOOP MEHTAMARIANELA DEL PINO-RIVERA
OFFICERS
9JULY 2013 CONTINUED ON PAGE 10
CPA CPA CPA, CFP CPA
Employer: Dixon Hughes Goodman
Title: Managing partner, Rockville office
Notable: An MACPA member since 1983. Before joining Dixon Hughes Goodman, served as managing officer, chairman of the board, and partner in charge of business and corporate development for a nationally ranked regional accounting firm. Her work has been recognized by several media and industry outlets, and in 2005, she was named one of the Washington Business Journal’s “25 Women Who Mean Business.” A member of the AICPA Board of Examiners, the Junior Achievement Board of Directors, the Montgomery County Chamber of Commerce Board of Directors, the University of Maryland Accounting Department Advisory Board, Rockville Economic Development Board, the Montgomery County Chamber of Commerce Foundation Board, and the AICPA Board Task Force on FASAB Rule 203 Review. A former member of the AICPA Board of Directors.
Employer: HPG Windows and Doors
Title: Controller
Notable: An MACPA member since 1985. A member of the MACPA’s Business and Industry Committee since 2004. A member of the MACPA’s State Budget Advisory Task Force, which examined Maryland’s budget and financial affairs. An active participant in the MACPA’s annual CPA Day in Annapolis.
Employer: Boal and Associates, CPAs
Title: Principal
Notable: An MACPA member since 1999. Experienced in accounting, financial planning, estate planning, taxation, technology and business consulting. A member of the AICPA, the Garrett County Chamber of Commerce, the Community Trust Foundation Board of Trustees. Chair of the Garrett County Chamber of Commerce Legislative Affairs Committee. Former member of the Maryland Chamber of Commerce Board of Directors and the Greater Oakland Business Association Board of Directors. Has previously serviced the MACPA as a member of the Nominations Committee and the Western Maryland Chapter Executive Committee.
Employer: Ellin & Tucker, Chartered
Title: Director of Professional Standards
Notable: An MACPA member since 1998. Current member of the Emerging Issues Task Force of the Financial Accounting Standards Board. Former vice chair of the AICPA’s Accounting Standards Executive Committee (AcSEC) and former member of the Executive Committee of the AICPA Employee Benefit Plan Audit Quality Center, the Technical Issues Committee, and the Health Care Audit and Accounting Guide Overhaul Task Force. He is a board member and past president of the Baltimore chapter of Financial Executives International (FEI).
LISA CINES SHANE GRADY CARL KAMPELMICHAEL DRANKIEWICZ
DIRECTORS
STATEMENT10 CONTINUED ON PAGE 12
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Robert G. BlueRoyston, Mueller, McLean & Reid, LLP
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Sandra P. GohnDLA Piper
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Charles B. JonesThomas & Libowitz, PA
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Baltimore Community Foundation Announces 2013 Inductees to the
PROFESSIONAL ADVISOR RECOGNITION SOCIETY
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Mr. Brunk and Ms. Sassin join the ranks of professional advisors who demonstrate a commitment to the
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CPA, CGMA CPA Esq. CPA, CMA, CGMA, MBA
Employer: Hayles and Howe, Inc.
Title: Financial Manager
Notable: An MACPA member since 2000. Vice chair of the Institute of Certified Construction Industry Financial Professionals. First became an active MACPA volunteer with the Business and Industry Committee as a result of attending the MACPA’s Business and Industry Conference; now serves on the conference committee. Attended her first CPA Day as an industry member in 2008. Former member of the MACPA’s Accounting Reform and Standards Convergence Task Force. Member of the Accounting and Reporting Committee of Construction Financial Management Association since 2006.
Employer: University of Maryland Medical System
Title: Senior director of finance
Notable: An MACPA member since 2005. Responsible for consolidated financial reporting and treasury operations (including cash, investment, and debt management) for UMMS, a multi-hospital, not-for-profit healthcare system. Formerly an auditor and a state / local tax analyst at KPMG LLP. A graduate of Loyola University of Maryland. A member of the Healthcare Financial Management Association (HFMA) and a participant on the Membership, Sponsorship, and Community Service Committees of the Maryland Chapter of HFMA.
Employer: MedChi, The Maryland State Medical Society
Title: Chief executive officer
Notable: At-large member of the MACPA’s Board of Directors. As MedChi executive, implements MedChi’s mission as an advocate for physicians, patients, and the public health of Maryland. Elected to the Queen Anne’s County Commission in November 2002. The only incumbent county commissioner re-elected in 2006. Has served in numerous leadership positions with the Commission, including president, vice President, and voting member. Also served the public as an elected member of the Democratic Central Committee (1996-2000), a member of the 2008 Electoral College, a former member of the Maryland Nursing Home Administrators Board, and through numerous local and state appointments to Boards and Commissions.
Employer: Watkins Meegan
Title: Chief operating officer
Notable: An MACPA member since 1995. Former member of the MACPA’s Business and Industry Committee and the Capital Area Chapter Executive Committee. During his tenure as COO, Watkins Meegan has become the 60th largest CPA firm in the U.S. Prior to joining the firm, was CFO of a pre-IPO technology company that was the 16th fastest growing company in the U.S. Has served as chair of the Howard Technology Council Board of Directors, and as a member of the Boards of Directors of Junior Achievement of Greater Washington, D.C., and the Greater Bethesda Chevy Chase Chamber of Commerce. Also has served as an Advisory Board member of greeNewIt, LLC in Columbia and Moonrider, Inc., in Ontario, Canada. An adjunct professor of finance with Johns Hopkins University from 2009-12. Also a member of the AICPA and Financial Executives International.
JOSELIN MARTIN GENE RANSOM III SEAN RODDYAMY MYERS
DIRECTORS
STATEMENT12
123
The concept of going paperless has been
around for a long time, but CPA firms of
all sizes are increasingly adopting a more
virtual operating environment and taking
advantages of the benefits allowed by
Internet- (or “cloud-”) based computing
service providers.
While much has been written about the
benefits of cloud computing, CPA firms
should be aware of the hidden risks of
allowing a third-party vendor to manage
and maintain the firm’s and their clients’
data, and the associated professional
liability implications.
This article provides an overview of
cloud computing, highlights the common
benefits of utilizing cloud computing
services, provides sample practice aids,
and raises awareness of the professional
responsibilities and liability implications
CPAs must consider.
OVERVIEW OF CLOUD COMPUTING
Cloud computing is a model for
on-demand network access to a
shared pool of configurable computing
resources.1 Essentially, this technology-
driven model allows a user to store,
access, and edit data in a remote and
virtual environment rather than via a
physical information technology (IT) server
located in the firm’s office.
Cloud computing offers centralized access
to shared software applications and other
computing resources that are managed
by third-party vendors. The vendors own
the programs, applications, and computer
equipment and lease their use to CPAs
for a fee, which is generally based upon
the number of users accessing the
applications.
Accountants utilize various providers of
cloud-based applications to help them
manage their practices and deliver
services to their clients. Cloud computing
services targeted to CPA firms include
those related to practice management /
internal administration such as document
management, workflow, or customer
relationship management; service
delivery such as tax return preparation,
bookkeeping, payroll, billing and invoice
management, and financial statement
preparation; and information sharing via
Internet-based portals, which offer an
alternative to e-mail for communicating
and collaborating with clients and provide
real-time access to client accounting
records.
A comprehensive overview of cloud
computing, including differing service
models and practical considerations in
employing such service models can be
found in Cloud Computing Synopsis and
Recommendations, Special Publication
800-146, issued by the National Institute
of Standards and Technology (NIST), U.S.
Department of Commerce.
BENEFITS OF CLOUD COMPUTING
There are numerous benefits of utilizing
cloud computing services to help CPAs
deliver services to clients and share
information.
1. Reduced cost / reduced capital
expenditures: Using a cloud model
can help reduce or eliminate the need
for in-house technology infrastructure.
Accounting firms that fully utilize a cloud
model no longer need computers with
large memories, external hard drives,
or servers to store all of their data.
In addition, computer software and
hardware maintenance, administration,
and upgrades can be performed by the
cloud vendor rather than an in-house
IT department. To deploy cloud-based
services, firms only need a robust Internet
connection and a browser.
2. Scalability / flexibility: Another benefit
of cloud computing is that CPA firms
pay only for their actual service usage.
Cloud services are generally billed on a
subscription basis based on the number
of users. If needs change based on
fluctuations in personnel, users can be
easily added or deleted. In addition, the
firm has access to additional data storage
when needed during peak periods and
does not pay for unused storage during
non-peak periods.
3. Accessibility of data: One of the
greatest benefits for CPA firms with
a highly mobile work force is the
accessibility of data. Data stored in the
cloud is accessible from any computer,
tablet, or other device with access to the
Internet and eliminates the need to create
multiple versions of the same document
on different devices. If a document is
stored in the cloud, it can be updated
from any device with access to the
Internet. Additionally, data stored in the
NEWS & VIEWS
Professional liability risks related to cloud computing
NEWS & VIEWS
EDITOR’S NOTE: THE FOLLOWING ARTICLE IS AVAILABLE FOR ACCESS AT WWW.CPAI.COM. COPYRIGHT 2012
CONTINENTAL CASUALTY COMPANY. ALL RIGHTS RESERVED. REPRINTED WITH PERMISSION.
13JULY 2013 CONTINUED ON PAGE 16
CPA, CMA, CGMA, MBA
STATEMENT14
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4cloud is readily available in the event of
a natural disaster or other catastrophe at
the CPA’s physical location as the data is
not stored on the CPA’s servers.
4. Sharing / collaboration: The most
compelling feature of utilizing cloud
services is the ability to share and
collaborate remotely. Cloud-based
portals provide a convenient method for
CPAs and clients to share information
in a secure environment and facilitate
the exchange of files that are too large
for e-mail. Cloud computing also helps
CPA firms, especially those with multiple
offices, balance workloads and resources
during busier times by removing the
geographical barriers associated with the
location of resources and clients.
PROFESSIONAL LIABILITY IMPLICATIONS
While cloud computing offers a number of
compelling benefits associated with CPA
firm practice management and service
delivery, one critical risk with both legal
and ethical implications arises – protecting
the privacy and security of confidential
client information.
The risks of unauthorized disclosure of
sensitive client and firm data by cloud
vendors can be significant. Recent,
high-profile data breaches at companies
such as Expedia Inc.’s Trip Advisor,
e-mail marketing provider Epsilon Data
Management LLC, Sony Corporation of
America’s online entertainment services,
Google, and Apple’s iCloud call into
question how secure information is within
a cloud-computing infrastructure. While
there has not yet been a high-profile
data breach within the professional
services industry, client data utilized by
professional services firms presents an
attractive option for hackers. Therefore,
professional services firms that utilize this
technology should not be complacent
about the exposure.
Cloud computing involves the uploading
of client data to the Internet outside of
the control of the CPA firm, an inherently
perilous environment if not safeguarded
appropriately. ET section (§) 301 of the
AICPA Code of Professional Conduct
states that a CPA shall not disclose any
confidential client information without the
specific consent of the client.
In addition, Internal Revenue Code (IRC)
§7216 prohibits anyone involved in the
preparation of U.S. income tax returns
from knowingly or recklessly disclosing or
using the tax-related information provided
other than in connection with the
preparation of such returns. Practitioners
who violate this provision may be subject
to fines or imprisonment.
Consequently, CPAs must fully understand
the professional obligations related to
information privacy and security, as well as
the risks associated with leveraging cloud
computing technology before venturing
into this area.
PROFESSIONAL RESPONSIBILITIES AND RISK CONTROL CONSIDERATIONS
Professional obligations:2 While ET
§301 and IRC §7216 are not intended to
prohibit a CPA from utilizing third-party
cloud computing service providers to
deliver professional services to clients, the
Code of Professional Conduct identifies
relevant obligations of the CPA:
• The CPA should enter into a written
agreement with the third party regarding
the maintenance of confidentiality of
client information (see Ethics Ruling No. 1
of ET §391).
• The CPA should take steps to
reasonably assure him / herself that the
third party has appropriate procedures
in place to maintain confidentiality (see
Ethics Ruling No. 1 of ET §391).
• The CPA should disclose the use of
third-party service providers to its clients,
preferably in writing, before disclosing
confidential information to the third party
(see Ethics Ruling No. 112 of ET §191 and
Ethics Ruling No. 1 of ET §391).
The obligations noted in IRC §7216 differ
slightly from the Code of Professional
Conduct. IRC §7216 provides an
exemption from the law for tax return
preparers who disclose taxpayer
information to a third party for the
purpose of having that third party process
the return.
However, members should make third-
party providers to which they have
supplied protected client information
aware of the requirements of IRC §7216.
While there is no requirement in §7216
or its regulations for a member to inform
the client that a third-party provider is
being used to process the return, best
practice and the sections of the Code
of Professional Conduct noted above
indicate notification should be made.
Laws and regulations: CPAs must
comply with relevant state privacy
laws and related breach notification
requirements. Currently, 46 states, the
District of Columbia, and Puerto Rico have
breach notification statutes applying to
disclosures of sensitive information and
impose data security requirements on
entities operating in the state or who hold
data about state residents. If data stored
by a cloud vendor is compromised, under
state privacy and security laws, the cloud
vendor is responsible only for notification
to the data owner (the CPA firm), not to
the CPA’s individual clients. Once the CPA
becomes aware of a potential privacy
breach, he / she is ultimately responsible
for responding to the breach on behalf of
their clients, as well as compliance with
state breach notification statutes.
In addition, CPA firms that provide
services to health care providers or health
15JULY 2013
STATEMENT16
1care plans are subject to the privacy and
security rules contained in the Health
Insurance Portability and Accountability
Act of 1996 (HIPAA) and the Health
Information Technology for Economic
and Clinical Health (HITECH). Firms with
access to protected health information,
such as patient billing records, are
business associates as defined in HIPAA,
and, based on the passage of HITECH,
are subject to the same privacy and
privacy breach notification requirements
as their health care clients. Consequently,
CPA firms are subject to potential civil
and criminal penalties and prosecution for
violation of the federal health care privacy
laws.
By extension, CPA firms that utilize
third-party service providers to store
protected health information may be held
responsible for the violations of their third-
party service providers. To help mitigate
this risk, CPA firms should confirm the
service provider’s use of encryption and
encryption keys that comply with the
HIPAA Security Rule.3 If private, non-
encrypted protected health information is
breached, CPA firms may be held liable
for the breach.4
Costs of compliance with state statutes
to respond to a data breach can be
significant. Costs can include notification
to clients, the provision of credit
monitoring services for a period of
time, and more. Insurance coverage for
data breaches varies and may involve
a practitioner’s professional liability or
another specialized policy. Such coverage
is typically not provided in a general
liability policy. Practitioners should confer
with their professional liability insurance
agent or broker regarding the application
of insurance coverage to data breaches.
Additional coverage may be necessary to
fill any gaps.
Risk control considerations: So what’s a
CPA to do? There are several practical
actions CPAs can take to help ensure
compliance with professional standards
and laws, and to help safeguard client
information.
1. Conduct due diligence before selecting
a vendor: CPAs should investigate vendors
thoroughly before making a selection.
Information should be obtained related
to the financial stability of the vendor, the
processes and controls the vendor utilizes
to protect data, and how and where data
will be stored and backed up. The CPA
should review these competencies prior to
entering into any contract with the vendor.
The location of data storage is also
important. For example, if the vendor’s
data storage resides outside the U.S.,
the CPA may be subject to liability in
the country in which the data is stored.
In addition, the ability to produce data
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CONTINUED ON PAGE 18
17JANUARY 2013
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3
in a timely manner may be affected, and
the laws of the relevant country may not
provide adequate protection.
The use of strong encryption
technology is essential to protecting the
confidentiality of data stored with a cloud
vendor. CPAs should understand what
encryption technology is used by the
cloud vendor.
Service Organization Control (SOC)
reports issued under the guidance of
Statement on Standards for Attestation
Engagements No. 16 provide information
on internal controls at a service
organization. CPAs should obtain and
review the SOC report for the prospective
cloud vendor as it provides valuable
information that CPAs may utilize to
assess and address the risks associated
with an outsourced services.
Diligence procedures performed, results
obtained and the CPA’s evaluation
of the vendor should be thoroughly
documented. Initial and subsequent
periodic evaluations to confirm the
initial assessment are recommended.
Documenting investigations undertaken
helps demonstrate compliance with the
Code of Professional Conduct and helps
protect the CPA if questions arise.
The AICPA Code of Professional Conduct
states that a CPA should take steps to
reasonably assure him / herself that the
third party has appropriate procedures
in place to maintain confidentiality.
However, there is no clear definition
or determination of what is considered
reasonable. The CPA should utilize
professional judgment and exercise due
diligence. The greater the sensitivity
of client information, degree of data
complexity, volume of data, or reliance on
the cloud vendor, the more thorough the
CPA’s diligence efforts should be.
2. Put it in writing: Key commercial terms
with the vendor should be agreed to in
writing via a service level agreement or
other contract that outlines the terms,
services provided by the vendor, metrics
by which that service is measured,
and remedies or penalties, if any, if
the agreed-upon service terms are not
achieved.
While vendor terms are not always
negotiable, vendors will sometimes
entertain reasonable negotiations.
The CPA should not blindly accept the
vendor’s terms and conditions without
reviewing them in detail to verify the
inclusion of key contract terms in the
service level agreement. A competent
attorney should be retained to assist
with this review. If the agreement does
not provide the CPA and its clients with
the necessary protections for privacy
and security, other available vendors
or technology resources should be
pursued. CPAs should not engage any
vendor whose terms would be viewed
as “unreasonable” or who attempt
to disclaim liability for its own errors,
omissions, or neglect.
3. Tell your client: CPAs should inform
clients of its use of cloud service providers
and obtain written consent from the
client before providing client files and
documents to the provider. A separate
agreement between the CPA and the
client specifically related to the use
of portals or the inclusion of specific
language in the engagement letter are
ideal ways of obtaining client consent.
While professional standards do not
require CPAs to obtain written consent
from the client, this is a recommended
practice.
To help avoid misunderstandings with
clients, the CPA should be responsive
to client inquiries regarding the vendor’s
data security controls and questions about
the use of client data in the cloud.
CONCLUSION
While cloud computing can be attractive
for many reasons, CPAs should not access
this functionality to simply adopt the
latest technology. The benefits of cloud
computing should be weighed against
the needs of the practice and the ability
of the CPA to control the associated
professional liability risk. If the CPA would
benefit from the advantages offered, then
appropriate steps must be taken to ensure
that the CPA fulfills its legal, ethical and
business obligations to its clients.
FOOTNOTES1. See The NIST Definition of Cloud Computing, Special Publication 800-145, issued by the National Institute of Standards and Technology, U.S. Department of Commerce for additional information on cloud computing characteristics.
2. See also Ethics Ruling No. 12 of ET §291 regarding the CPA’s professional responsibilities when utilizing a third-party service providers to assist the CPA in providing professional services to clients.
3. See An Introductory Resource Guide for Implementing the Health Insurance Portability and Accountability Act (HIPAA) Security Rule, NIST Special Publication 800-66 Revision 1, issued by the National Institute of Standards and Technology, U.S. Department of Commerce.
4. or additional information related to the requirements of business associates under HIPPA/HITECH, see The Health Information Technology for Economic and Clinical Health Act and Business Associates, by Laurie Cohen and Christine Hayes at www.cpai.com.
5. Federal Information Processing Standard Publication 140-2, Security Requirements for Cryptographic Modules, published by NIST, establishes a security accreditation program for encryption. Its use is mandatory for U.S. government departments that handle unclassified data and is accepted as a best practice within the technology industry.
19JULY 2013
BY BARRY PAYNE
CGMA at work: Employer voices
BUSINESS & INDUSTRY
STATEMENT20
Since the AICPA launched the Chartered
Global Management Accountant
designation early last year, our goal has
been to elevate management accounting.
To me, that means raising the profile and
value of management accountants in the
eyes of their current and future employers.
By recognizing and highlighting the
strategic contributions that CPAs working
in business and industry make every day,
we can make their value known – and
understood – in the marketplace.
That’s why we are reaching out to
some of the leading global employers
of finance professionals and talking to
them about the CGMA designation.
Over the past three years, I have been
working with a number of Fortune 100
companies in both my former role as
director of global corporate relations for
the Chartered Institute of Management
Accountants (CIMA), and more recently
as director for business development for
the AICPA. I’ve spent much of this time
learning what leaders of finance teams
and departments around the world need
to drive success. Now I speak with those
same leaders and their U.S. counterparts
about the CGMA designation, how it can
help them develop their finance teams,
and how CGMA designation holders are
well-positioned to be strategic advisors to
organizational leadership.
Our message seems to resonate.
Employers understand the key role that
management accountants play, or should
play, in guiding critical decisions and
driving business performance. They also
have shared some insights into their
needs that can help us better serve CPA,
CGMAs. I have found the interaction
rewarding and thought provoking.
Take, for example, the case of American
Express. AMEX has a significant finance
organization, including many CPAs.
Additionally, AMEX employs several
CIMA-qualified CGMAs. In March, we
were invited to participate in two AMEX
career development expos, one in
Phoenix, one in New York. Specifically
for AMEX’s employees in finance roles,
the events were designed to provide
attendees with useful information to
encourage them to pursue learning and
development opportunities. We set up
a booth stacked with CGMA reports and
information packets, and over the course
of the two days, spoke with hundreds of
employees and hiring managers at various
stages of their careers.
I’d like to share some of their feedback:
• The CGMA Innovation Agenda materials
resonated, especially the Fast Track to
Leadership report (http://cpa.tc/2n6),
which appeals to finance professionals as
they develop their careers.
• While several CPA CGMAs stopped
by, CPAs who hadn’t heard of CGMA
were interested in learning more. They
appreciated the fact that the CGMA
designation recognizes their expertise and
were encouraged that we were engaging
their employer.
• Younger employees at the start of their
careers were interested in CGMA and
understood that they’d need to get their
CPA first. One employee pointed out that
the CGMA presented a new incentive to
pursue the CPA over other degrees and
credentials, especially as he pursues his
career in management accounting.
• Senior-level finance professionals who
were not CPAs visited our booth as well
and asked us how the CGMA designation
might apply to them or their teams. We
explained how the CGMA designation
signals expertise and provides resources
to keep designation holders at the top
of their profession. As hiring managers,
they saw the benefit of the designation in
helping them identify capable candidates.
As mentors and leaders, they saw the
CGMA designation as a potential career
enhancement for their existing staff.
We continue to work with organizations
like American Express and as our
relationships deepen, we expect more
opportunities to connect with finance
professionals and leaders. But we’re just
getting started. The CGMA designation is
new to the market and we’re in the early
stages of adoption among companies
and organizations both here in the US
and abroad. Organizations like American
Express, with CPA, CGMAs and FCMA,
CGMAs in key strategic roles, are
leading the way. Our task is to help them
along their journey and drive broader
acceptance of the designation.
Barry Payne is director for business
development for the AICPA.
21APRIL 2013
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Attention CPAs:Whether A Decision Maker Looking To Upgrade Your Talent,
Or A CPA Looking to Upgrade Yourself/Your Skills, Ask Yourself:
Who really chose who in joining your company?
Are you/your professional staff really at the right level where you should be/you need them to be?
Are you/your staff in a position that truly suits your/their personality, values, and professional and personal needs?
Why leave your future to chance?If you’re seriously interested in making the “right” move for your next hire, I can help you.I am an actively licensed CPA in Maryland and Virginia with over 20 years of experience including public accounting (E&Y) and consulting (KPMG), financial accounting (American Cancer Society), internal audit (Moneyline Telerate), and recruiting (Acsys, formerly Don Richards). As a networker who truly enjoys helping others and sharing my career experiences to guide fellow professionals, here is how I can help you:
Decision Makers: Ask you questions, and most likely ask many more questions than other recruiters
about your company, duties involved, skills required, corporate culture and more Work with you on finding the “right” professional that is the “right fit” Provide you with valuable information about the professionals I work with,
the marketplace, what your competitors pay, and more
Career Seekers: Guide you on career paths available in public accounting and industry Enable you to capitalize on your strengths Coach you on how to put your best foot forward to find the “right fit” Advise you when to stay in your current position if that is the right move
If you’re interested in working with a recruiter who understands your background, skills, andis genuinely interested in helping you find the “right fit”, then I welcome meeting you!
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BY KRISTIN MAZANY NEVINS, ESQ.
Protecting innovation and staying competitive in a new patent landscape
BUSINESS & INDUSTRY
In the past year, new patent laws have
drastically changed the U.S. patent
system. Understanding these changes and
how they affect your business is crucial for
staying competitive.
The changes to the patent system provide
an ideal opportunity for re-evaluating
business practices around identifying,
cultivating, and protecting vital intellectual
property (IP) and updating or establishing
new procedures where necessary. Under
the new patent system, proactive, agile
companies will have a competitive
advantage in the evolving IP landscape.
The new patent law, known as the
America Invents Act (AIA), was enacted
in September 2011 and brings sweeping
changes ranging from how a patent is
obtained (pre-grant changes) to how
patents can be evaluated and challenged
after issue (post-grant changes).
The most significant changes took effect
on March 16, 2013, when the long-
standing “first-to-invent” system, the
cornerstone of the U.S. patent system,
was replaced by a “first-inventor-to-
file” system. The new system brings
U.S. patent practice in line with the rest
of the world, an essential update in an
increasingly global marketplace.
The AIA also establishes new procedures
for challenging issued patents via post-
grant review proceedings, affording
opportunities for third parties to
challenge patents and for patent owners
to strengthen their portfolios. In some
instances, the post-grant review process
can be utilized as a cost-effective
alternative to patent litigation.
The alignment of business interests with
procedures promoting innovation will
require the retooling of business practices
that support a business’s IP culture.
Discussed below are some best business
practices to help align a company’s IP
strategy in a post-AIA world.
PRE-GRANT BEST BUSINESS PRACTICES
The first-inventor-to-file patent system
essentially establishes (with rare
exceptions) a race to the patent office.
Companies owe it to themselves – and to
the investors or shareholders supporting
them – to proactively formulate a strategy
for protecting the company’s inventions.
Mechanisms need to be in place to
identify and document inventions, and a
patent attorney should be enlisted early
on to help navigate the patent process.
For example, employees should be well
educated on the concept of invention
and how to record inventions. If your
company is actively engaged in research
and development, allocate resources to
review R&D progress more frequently.
Moreover, internal personnel should be
tasked with monitoring developments so
that any inventions are identified at the
earliest stage of the product development
cycle, and especially before disclosures
are made to third parties.
In a post-AIA world, where the first
person to file gets the rights to patent,
interactions with third parties should
be closely evaluated, and confidential
information should be carefully guarded. If
possible, inventions should be protected
before they are disclosed. Provisional
patent applications can be a cost-effective
way to protect an invention and obtain a
“holding place” with the Patent Office,
without incurring the full expense of a
non-provisional patent application.
Potential risks arise, however, if your
company is involved in joint development
with third parties. It is important to know
when a provisional application will help
secure rights, or when it may be the
precursor of a potential fight over joint
rights. Partnering with IP counsel allows
you to save time and money by guiding
your business toward intelligent choices
designed to protect your valuable IP and
reduce the risk of third-party conflict over
IP rights.
POST-GRANT BEST BUSINESS PRACTICES
The AIA affords companies new
mechanisms for challenging issued
patents. Even if your company is not
actively involved in establishing a patent
portfolio, others in your space are
likely invested as such. To this end, it is
prudent to monitor the patent landscape
for any patents that issue in a closely
related technology to address possible
infringement issues. Should a closely
related patent issue be a key product
or process of your business, post-grant
23JULY 2013 CONTINUED ON PAGE 24
review may help prevent a costly patent
infringement lawsuit.
It is difficult to estimate the cost of post-
grant review proceedings. However, they
will certainly cost less than the several
million dollars of the average infringement
lawsuit. From a business standpoint, this
may entail assigning individuals within
your organization to routinely assess
the actions of competitors, as well as
partnering with IP counsel to monitor the
patent applications and issued patents of
your competitors.
Also, make every effort to know your
entity. The United States Patent and
Trademark Office establishes fees based
on the size of the entity. Large entities
(those having more than 500 employees)
pay the highest fees, but companies with
fewer than 500 employees receive a 50
percent discount on most fees under
small-entity status. Post-AIA, start-up
companies will benefit from a newly
created category, the “micro-entity,”
which qualifies for a 75 percent discount
on patent fees.
The AIA seeks to modernize the U.S.
patent system and ultimately spur
innovation. With this in mind, it is
important to make IP a vital component
of your overall business strategy for 2013,
possibly necessitating adjustments to
budgets, reallocation of resources, and
an overall increase in investment around
IP. Within a company it is important to
identify any obstacles, whether monetary
or structural, to executing a cohesive,
cost-effective IP strategy. Because a single
idea can make all the difference to a
company, IP should be a key part of the
bottom line.
Kristen M. Nevins, Esq., is a registered patent attorney who focuses her practice on patent prosecution, enforcement, agreements, and due diligence surrounding patent business transactions as well as other intellectual property (IP) work, including trademark matters. Contact her at [email protected].
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STATEMENT26
Why network monitoring is a must for every computer networkBY KIEL W. MOORE
HIGH-TECH SOLUTIONS
Everyone knows the phrase, “If it ain’t
broke, don’t fix it.” When it comes
to your computer network, there
couldn’t be worse advice. Proactive
network monitoring is simply a must for
maintaining a healthy computer network.
If you want a reliable IT infrastructure,
it’s wise to be aware of small problems
before they develop into major obstacles.
One of the best ways to accomplish
this is through network alerts that are
automatically sent to you or your IT staff
by a proactive network monitoring system.
Network monitoring systems alert your IT
staff to issues such as hard drive failures,
running out of server space, and too-
high operating temperatures. When left
untouched, these issues can wreak havoc
on your network.
BENEFITS OF PROACTIVE MONITORING
Most businesses don’t have a dedicated
IT person to monitor their network. Even
the ones that do can still benefit from a
network monitoring system.
Network monitoring systems can work
(monitor) more efficiently (and cheaper)
than a person, having the ability to
monitor thousands of event logs and
operations simultaneously across an
entire network. They can also generate
full, detailed, graphical network reports
within minutes, by request or through
scheduling, which can be e-mailed to the
appropriate people as needed and on
time.
Proactive monitoring offers three major
benefits.
1. Reduce risk of network failure
Perhaps one of the greatest mistakes
made by small business owners is ignoring
their IT infrastructure until it fails.
There are usually multiple warnings
or indicators that take place prior to a
system failure. Network monitoring can
detect and relay these warnings to people
who can take the appropriate actions to
prevent a major problem.
Many servers have systems designed
to accommodate a single failure for
hard drives, power, etc. However, if the
problem is never addressed or realized, a
complete system failure can result.
2. Monitor your network 24 hours a day, seven days a week
Proactive monitoring systems are
automated and monitor systems every
minute of every day. If there is an issue
that occurs outside of normal business
hours, proactive monitoring systems can
send you a notification about the issue
before arriving at the office the next day.
Since many businesses have employees
accessing their systems around the clock,
being alerted to an issue as soon as
it happens can save time and money,
and help to accommodate for support
response times.
3. Save costs
It is always more cost effective to prevent
a disaster before it happens, rather than
dealing with the aftermath.
When systems are down, business
operations grind to a halt, your reputation
and reliability are affected, and most
importantly, you are losing money.
Recovering from a system failure can often
take more than a day, and brings with it
the costs of IT personnel, overnight parts
shipping, and leased equipment. The cost
of proactive monitoring is a fraction of the
cost of recovering from a disaster.
Kiel W. Moore, MCSA, is a member of
Gross Mendelsohn’s Technology Solutions
Group. He helps businesses solve
computer network problems. Contact Kiel
at (410) 685-5512 or kmoore@gma-cpa.
com.
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MACPA PREMIER SPONSORS
For information about sponsoring MACPA programs or to learn more about advertising with the MACPA please contact Andrew Hood at 443.632.2323 or [email protected]
HIGH-TECH SOLUTIONS
MACPA joins profession’s cal l for reforms, standardization
BY BILL SHERIDAN
CPAs’ frustrations boil over after TAX SEASON FROM HELL
TAX CORNER
Busy Season earned a new moniker this year.
Call it “the Tax Season from hell.”
“Practitioners have told me that they’re
getting out of the business because
of how bad it was,” MACPA Executive
Director Tom Hood said. “It’s definitely
the worst I’ve seen. In every town hall
meeting we hold, everyone says it’s been
the worst they’ve ever experienced.”
Hood isn’t the only CPA leader who’s
heard that type of feedback. Speaking
at the Oregon Society of CPAs’ Strategic
Leadership Forum in April, AICPA
President and
CEO Barry
Melancon said that
based on what he
has heard, there’s
a “90 percent
chance” CPAs just
completed the
worst tax season
of their lives.
That frustration
started on Jan.
1, when federal
lawmakers
passed “fiscal
cliff” legislation that introduced and
/ or extended provisions surrounding
individual income tax rates, payroll taxes,
dividends and capital gains, estate taxes,
personal and business tax credits, and a
slew of other issues that directly impacted
the work that tax practitioners do.
That work couldn’t start until the IRS
updated its forms to include the new
provisions. The filing season for 1040
returns didn’t start until Jan. 30, returns
claiming education credits weren’t
accepted until mid-February, and it wasn’t
until March 4 that the IRS announced it
was accepting all individual and business
tax returns.
“The late start to filing returns ... was
the most frustrating part,” said Jerry
Beard, a supervisor with Ellin & Tucker,
Chartered, and a member of the MACPA’s
State Taxation and Federal Taxation
committees.
That late start was only the beginning.
• Multiple revisions of Form 1099 created
bottlenecks on the practitioners’ end.
The initial forms went out by Feb. 15, but
the revisions weren’t received until early
April, which meant clients provided CPAs
with their tax information later. “Folks
who used to have all of their information
to us in mid-February now don’t get
it to us until mid-March,” said Jeffrey
Lawson, a shareholder with Stoy, Malone
& Company.
• Publicly traded partnership investments
continued to grow in complexity,
especially for state issues, and brought
delays in the release of some Schedule
K-1 forms.
• New provisions mean that tax forms
in general have become more complex,
which means they take longer to
complete.
• Identity theft is on the rise, leading to
further complexities in dealing with the
IRS.
The end results: Massive headaches and
stress for tax preparers, who were left to
deal with a significantly compressed tax
season; and greater numbers of clients
having to get extensions – “and most of
them don’t like it,” said sole practitioner
Marianela del Pino-Rivera.
The concerns of CPAs went further than
that.
“Every state seems to have different rules
and layouts for calculating tax; calculating
depreciation; allowing all, some or none
of the Domestic Production Deduction;
imposing sales tax; adding use tax; and
other additions and subtractions for their
forms,” Beard
said. “The rules
regarding federal
taxes and state
differences aren’t
becoming any
less complicated.”
“It wasn’t too
long ago that
I could answer
questions on the
radio and spout
off the particular
tax form to be
used. Now I have
to look up almost everything before I
answer even a fairly simple tax question
about depreciation,” added Carol Katz,
deputy tax director at Leonard J. Miller
& Associates. “The rules on almost every
aspect of individual taxation seem to have
changed every year with phase-ins and
phase-outs and extensions. That makes it
extremely difficult, if not
29JULY 2013
“We really do hope we can get Congress and the president to understand that the inability to reach consensus has far-reaching and unintended impacts on CPAs and the taxpayer community at large,” said Hood. “We’ve got to get them to pay attention.”
What you need to know:Maryland CPAs are required to take 4 hours of ethics as part of the minimum 80 hours to qualify for license renewal. This is the only subject requirement for CPE. No carryover is allowed. The ethics CPE requirement does not apply to inactive licenses. The requirement for new licensees begins in the first two-year license term after initial renewal.
The CPA profession is built on ethics. It’s ethics that provide a CPA’s clout and professional purpose.
MACPA.ORG/ETHICS
impossible, for an average person to
prepare their own return. And, of course,
the identity theft issue of having one’s
tax return “stolen” with fake information
filed has impacted many taxpayers and
complicated their “lives.”
CPAs say the solutions to these problems
all point in one direction – to Washington
D.C. The AICPA has testified before
Congress on numerous occasions this
year on the need for tax reform and fraud
prevention, and the MACPA has joined
that effort in a number of unique ways:
• Hood and other MACPA officials have
been in contact with the AICPA’s Tax
Division and advocated for Maryland
CPAs’ concerns issues.
• The association has used Google
Documents to crowdsource a letter
among MACPA members that will be used
to testify before the House Ways and
Means Committee.
• Members of the MACPA’s online tax
community have written letters describing
their frustrations. MACPA officials plan
to schedule a meeting with Maryland’s
lawmakers in Washington to deliver those
letters and discuss CPAs’ frustrations.
The goals, say CPAs, are fairly
straightforward: Standardized forms,
standardized information across state
lines, fewer last-minute revisions, and
a commitment to have any tax-related
legislation finalized by Oct. 31. That will
give the IRS time to revise its forms and
CPAs time to work with clients so that tax
season can start smoothly and on time.
No one is particularly optimistic that any
of that will get done.
“Congress needs to get its act together,”
said Katz. “Am I optimistic? No. I believe
everything is still too partisan and
Congress is too concerned with its own
members’ re-election needs to focus on
the needs of the country.”
Still, said Hood, that doesn’t mean we
shouldn’t try.
“We really do hope we can get Congress
and the president to understand that
the inability to reach consensus has far-
reaching and unintended impacts on CPAs
and the taxpayer community at large,”
said Hood. “We’ve got to get them to
pay attention.”
BY MELISSA K HAMMEL, CFP, LPC/MHSP
Budgets: They’re a lot like diets
FINANCIAL PLANNING
LOSING WEIGHT AND SAVING MORE MONEY OFTEN RANK HIGH ON PEOPLE’S LIST OF NEW YEAR’S RESOLUTIONS – AND LIKE SO MANY RESOLUTIONS, THEY OFTEN ARE SOON BROKEN.
Why is that? Why do so many folks
struggle with changes in their eating /
exercise habits and spending / saving
behaviors?
My hunch is that these issues are surface
issues and many times are masking an
underlying problem.
I speak from my own experience – in both
areas. I will focus on the spending/saving
behaviors as it will probably be more
helpful for readers and their clients.
Many years ago, after going through a
divorce, I had borrowed some money
from my father. I was young and needed
some help to get started on my own. My
father loaned me the money with one
condition – that I create a budget to
show how I would pay him back. So I did.
I did not like owing him money. I did not
like owing anyone money. So I put in a
very aggressive rate of payback so I could
pay him back very quickly. He rejected my
initial stab at my payback plan. He gently
and clearly explained to me that it would
not work. He pointed out that I was so
focused on getting him paid back quickly
that I had left out key components that
would make my plan succeed. I had not
put money into my budget for repairs,
entertainment, eating out, or unexpected
expenses.
He taught me such an important lesson
here: Just like with extreme diets, extreme
budgets will not generally work in the
long term. They are not sustainable.
Folks have to live life while they are
working on their debts and paying them
off. They have to live life while they
are saving toward retirement and enjoy
some of the fruits of their labor. Based
on information I have gathered from the
12-step program “Debtors Anonymous,”
folks must pay off their debts slowly
and have money in their saving plan for
vacations and daily enjoyments. Why? It
helps keep people committed because
it is livable, doable, and long-term. And
with savings and budgeting, we are
seeking to help our clients develop long-
term, sustainable behaviors.
Now, as advisors, just how do you
help clients with this issue? One of our
first tasks is to know our clients. Take
some time to gather information on the
activities and interests of your client.
Then, in working with the client on
establishing a budget, review where those
activities and interests are accounted for
in the budget. If they are missing, talk
about what you notice. Here are some
key phrases that may help you gain better
understanding and more information from
your client:
• Tell what you believe is the most
important part of this budget to you.
• Describe the way this spending plan /
budget helps you achieve this goal.
• I would like to hear about your interests
and hobbies in life, in detail.
• One of the things I notice is that your
interest / hobby in XYZ is missing. **
• Tell me about how you have funded
your interest / hobby in the past.
** A key way to phrase this is just
noticing. Do not judge whether this is
good or bad, just that you notice.
Finding a quick fix usually does not
address the underlying issue. Developing
an overly strict budget will not “fix” a
person’s spending behavior – it is only a
guide. The real issue is an underlying one,
not readily visible to the average person.
In therapy, one of the things we generally
uncover around compulsive spending is
that the person is seeking to cope with
feelings that stem from an unresolved
trauma. For example, if a person
experienced an unstable home life as a
child, he or she may grow up seeking
escape from difficult feelings in shopping
or spending. On the other extreme, we
may see folks who seek to find comfort
in amassing large amounts of money and
rarely spending anything. (It is rare to see
those folks in a financial planning office,
though. They do not want to spend the
money.)
Your role is not necessarily to solve the
underlying issue. Most of us are not
equipped in our training to handle those
types of issues. Your role is to know that
underlying issues tend to fuel spending
patterns and behavior with money. As you
begin to recognize some of these patterns
in clients, you may assist your client in
developing their own awareness as to why
they may spend as they do. Ultimately, it
may be helpful to engage the assistance
of a financial coach, therapist, or
counselor to help facilitate this type of
work with your client.
Melissa K Hammel, CFP, LPC/MHSP, is managing member and principal financial planner with Hammel Financial Advisory Group, LLC.
Lessons at the crossroad of cr i t ical thinking and ethics, v ia the MACPA’s 27th Advanced Personal Financial PlanningBY SETH HAMMER, CPA, PH.D.
Why smart people do dumb things
FINANCIAL PLANNING
The MACPA’s 27th Advance Personal
Financial Planning Conference’s keynote
speaker, Patrick Kuhse, chronicled
his extraordinary true-life story of the
“slippery steps” taken in unethical
behavior that led to his fall from successful
stockbroker to life on the lam and
incarceration as a felon.
Kuhse, who was convicted of
embezzlement against the state of
Oklahoma, explained how someone
who previously considered himself to
be a smart and ethical person could,
nonetheless, do such dumb things
and succumb to ethical lapses that, in
retrospect, would not have seemed
remotely possible to him. Specifically,
Kuhse identified eight critical thinking
errors – gleaned from his own personal
experience and interviews with thousands
of convicted criminals – that he found to
be common to all unethical behavior.
The first and foremost of the critical
thinking errors that he encountered – the
one that he believes most frequently
leads to the initial slide on the so-called
slippery slope of ethical behavior – is the
development of a sense of entitlement,
the feeling that one is deserving of some
type of reward and / or is above the law.
In Kuhse’s case, his sense of entitlement
was combined with a rationalization that
not abiding by the law was, in fact, a
common occurrence (e.g., “everyone
does it”) and, therefore, acceptable
behavior.
Similarly, he presents high school
students’ justification for cheating, a
foundation combining their belief that
they are entitled to get admitted into
good schools with a rationalization that it
is acceptable to cheat because “everyone
does it.” Some students, he noted, even
take the rationalization a step further,
taking the position that not doing so
would be unfair because it would place
them at a competitive disadvantage.
Comparable situations, Kuhse pointed
out, may apply in a variety of business
and organizational settings.
The second critical thinking error – the
one that he determined may most
commonly lead to a person’s downfall
– encompasses most of their unethical
actions. The slippery slope builds as an
individual, finding that his or her modest
ethical transgressions go unchecked, takes
increasingly bolder and more damaging
unethical actions.
An interesting characteristic (identified as
the error of “sentimentality”) that Kuhse
commonly found in his own experience
and that of the thousands of criminals
he interviewed was a desire to cultivate
an image of oneself as being a “nice
person.” In his own situation, Kuhse found
that even after succumbing to temptation
– becoming a willing participant in the
embezzlement of large sums of money
from the state of Oklahoma – he was,
nonetheless, able to foster a “nice
person” image of himself.
Other critical errors that may be of
particular concern for busy professionals
include mental laziness, discontinuity, and
mollification. A characteristic of mental
laziness is taking unwarranted shortcuts
that lead to failure. Discontinuity may be
related to mental laziness in that it refers
to a failure to maintain focus, being too
easily influenced by current events and
situations. Mollification, which refers
to making excuses for or downplaying
unethical behavior, may also be related to
these two aforementioned errors in that at
its core, there is a failure to focus on and
directly address the issue in question.
The remaining two critical thinking errors
– “cutoff” and “power orientation” –
respectively refer to (a) the process of
eliminating, through a phrase (e.g. “forget
it”) or other means, feelings that might
deter unethical behavior; and (b) the
attempt to exert control over others.
In conclusion, Kuhse urged conference
participants to be vigilant and wary of
the subtle lapses in critical thinking that
can lead to serious ethical lapses and
their potentially severe consequences.
Simply recognizing, for example, that
one is developing a wrongful sense of
entitlement or is becoming cavalier about
taking minor, but wrongful, shortcuts
may be the crucial step that halts smart
people from the beginning the trek on
the potentially precipitous “slippery slide”
to unethical behavior and its attendant
consequences.
STATEMENT32
Because even WHIPPERSNAPPERS
need to plan their future.
28TH ANNUAL ADVANCED PERSONAL FINANCIAL PLANNING CONFERENCE October 25, 2013 Martin’s West, Baltimore http://www.macpa.org/PFP Event ID: 121007
NOTES FROM THE PERSONAL FINANCIAL PLANNING CONFERENCE
In addition to addressing relevant
practical ethics issues, the annual
conference also addressed a variety of
current concerns, including elder care,
asset protection planning, tactical asset
allocation, investments, and pre-fiscal cliff
planning.
Highly regarded economist Aniban Basu
of the Sage Policy Group presented
an economic update that afforded
participants not only national and
international insights but statewide
analysis and forecasts as well. Addressing
local issues such as Maryland non-farm
employment and county-by-county
housing inventories, participants were
provided with relevant localized economic
data that may prove valuable in working
with clients in targeted regional markets.
Seth Hammer, CPA, Ph.D., is an accounting professor at Towson University.
Financial
Because even WHIPPERSNAPPERS
need to plan their future.
28TH ANNUAL ADVANCED PERSONAL FINANCIAL PLANNING CONFERENCE October 25, 2013 Martin’s West, Baltimore http://www.macpa.org/PFP Event ID: 121007
BY MICHAEL KITCES, MSFS, MTAX, CFP, CLU, CHFC
Why cancelling an existing whole life or universal life policy may be a bad idea
FINANCIAL PLANNING
The fundamental purpose of insurance is
to protect against and manage risks that
can’t otherwise be borne by an individual,
from homeowner’s insurance to protect
against the risk of a disaster to the home,
to permanent life insurance to protect
against the financial impact of an untimely
death. While term insurance can and
does fulfill the latter function for most,
in many cases clients currently maintain
an existing permanent insurance policy,
in anticipation of an insurance need that
will last for the rest of his / her life. Often
that need really does continue for life, but
sometimes it does not.
In situations where permanent insurance
is no longer needed – whether because
the individual accumulated enough
wealth that the death benefit protection
is simply no longer necessary, or perhaps
because the insurance was intended to
provide liquidity for estate tax exposure
that is simply no longer relevant at
the newly permanent and portable,
inflation-adjusting $5.25 million estate
tax exemption (http://cpa.tc/2n7) – the
default decision is often to cancel the
coverage. After all, what’s the point of
paying for life insurance that’s no longer
needed?
The caveat, however, is that in today’s
low-yield environment, many permanent
life insurance policies indirectly provide
another potential value: a remarkably
favorable internal rate of return if simply
held until death. Given this potentially
appealing “bond alternative,” many
clients should not only keep an existing
permanent policy – despite no need for
the death benefit – but even consider
making ongoing premiums, paying
down loan balances, or even increasing
contributions to maintain the policy in
force for life.
Of course, if the client really needs the
cash value or cannot afford premiums, this
strategy is not viable, but the policy can
still be sold as a life settlement instead to
harvest most of the underlying value.
The bottom line, though, is that given the
internal rate of return on life insurance
held until death, for those who don’t need
the policy but don’t need the cash value
either, the best decision for unnecessary
life insurance might actually be to keep it.
EVALUATING EXISTING LIFE INSURANCE: A REAL-WORLD EXAMPLE
A real-world example may help to
illustrate.
Barbara is a widower client who came
in a few years ago to review an existing
universal life policy that was issued
back in 2000. The policy, which has a
$500,000 death benefit, is owned inside
an irrevocable life insurance trust (ILIT) for
the benefit of her three children, and was
purchased as a strategy to replace the
impact of potential estate taxes on the
family back when Barbara’s net worth was
$1.4 million but the estate tax exemption
was only $675,000. Barbara was able to
get coverage, despite being 59 and in
relatively poor health, although it was
issued with a Table F rating. Given interest
rates at the time, it was estimated that
a premium of $13,500 per year would
allow this universal life policy to sustain for
Barbara’s lifetime.
Unfortunately, though, interest rates have
declined significantly since the policy’s
original issue date. As a result, the
insurance now credits Barbara with only
the policy-stated minimum (4 percent
per year), and because of her significant
cost of insurance charges – due both
to the fact that she’s now age 70 and
the aforementioned Table F rating –
and the fact that she cut back on the
flexible premiums for a few years in the
middle while markets were turbulent,
the insurance charges have already
overwhelmed any potential growth in the
policy. After 11 years, her cash value is
STATEMENT34
only up to $69,627, and even if she makes
the $13,500 premium deposit this year
and it all grows at 4 percent, the cash
value is projected to be only $74,064 next
year.
In other words, the insurance charges are
so high that $69,627 (cash value) plus
$13,500 (premium) equals $83,127 plus
4 percent growth, which brings the cash
value up to $86,452 – and that will still be
depleted by a whopping $12,388 from
the insurance charges.
Of course, the charges continue to grow
higher under the universal life policy
as Barbara ages. Within six years, the
charges will be greater than the total of
premiums plus growth, and the net cash
value will start to decline every year. The
policy is projected to lapse in 19 years,
when Barbara is 89.
Given the fact that the policy is projected
to lapse and that there is no net growth
under the policy as the insurance charges
and other policy costs (about $12,388)
far exceed any growth potential (even
at 4 percent on $83,127 of cash value
with another premium payment, it’s only
$3,325 of growth), Barbara’s inclination
was to simply cancel the policy (or to
suggest to the trustee to allow it to lapse,
as technically it’s the trustee’s decision in
the case of an ILIT), avoid the insurance
charges, and reinvest the cash value.
After all, the insurance death benefit
isn’t needed now that the estate tax
exemption has jumped from $675,000
(when the policy was purchased) to $5.25
million (far in excess of Barbara’s net
worth), and Barbara would rather try to
invest the money elsewhere where it has a
chance to grow – not to mention stopping
annual sales from her investment portfolio
to plow into an insurance policy where
costs exceed any growth potential.
EVALUATING THE INTERNAL RATE OF RETURN ON LIFE INSURANCE
The caveat to Barbara’s strategy, though,
is that she remains in poor health. While
the policy is scheduled to lapse when
she turns 89, the life expectancy of
even a health 70-year-old woman is only
about 16 years, and Barbara’s life
expectancy is even shorter, due to
her health conditions.
If Barbara were to live only 10 more
years – paying in $13,500 times
10, or $135,000 more premiums,
on top of her current $69,627 of
cash value – she’d turn a little
over $200,000 of cash value and
premiums into a $500,000 death
benefit. Over a 10-year timeframe,
that’s a whopping 11.8 percent internal
rate of return. Even if Barbara lives to
an average life expectancy, the internal
rate of return is still 5.1 percent over
the next 16 years. Short of a default
of the insurance company itself, those
are fixed, guaranteed rates of return (at
least, guaranteed if Barbara dies in that
year and the cash value hasn’t been fully
depleted yet). Given that 10- to 20-year
Treasuries barely yield 2 percent and
even high-quality corporate bonds only
yield about 4 percent, these represent
remarkably favorable fixed income returns.
However, there is a notable risk to the
strategy: If Barbara has unexpected
longevity, the policy is projected to
deplete just a few years past her life
expectancy. In other words, if she lives a
bit “too long,” she runs the risk of turning
her 11.8 percent or 5.1 percent return
into a negative 100 percent return as the
policy lapse would result in no cash value
(as it would be fully depleted) and no
death benefit, either.
The solution to this is that Barbara can
choose to contribute more to her policy
– a flexibility allowed to universal life
policies – to ensure that the policy will last
longer.
For instance, if Barbara increases her
premium payments to $17,000 per year,
the policy is projected to last until it
matures at her age 100. Of course, if
Barbara still passes away in 10 years –
which will bring her the same $500,000
death benefit regardless of whether she
pays $13,500 per year or $17,000 per year
– then her rate of return will be reduced
from 11.8 percent to 10.1 percent, and
over 16 years her expected return with the
higher premium contributions would fall
from 5.1 percent to 3.6 percent.
On the other hand, she substantively
reduces the risk of turning the premium
payments into a total loss from a potential
policy lapse, which may still be an
appealing trade-off. Conversely, Barbara
could reduce her premium payments,
which will increase the rate of return,
especially if she passes away sooner
rather than later, but also increases the
risk that the policy will lapse if she survives
“too long” instead.
Nonetheless, the bottom line remains:
If Barbara doesn’t need the cash value
(in this case she doesn’t, as it’s inside an
ILIT anyway) and can afford to continue
paying the premiums, maintaining the
life insurance death benefit as a “fixed
income substitute” actually turns out to
be a remarkably appealing fixed-income
investment to maintain for the rest of her
life, even if the reality is that the return
will only accrue to her beneficiaries and
not herself!
Michael Kitces, MSFS, MTAX, CFP, CLU, ChFC, is director of research for Pinnacle Advisory Group and publisher of the financial planning industry blog Nerd’s Eye View. Follow him on Twitter at @MichaelKitces or connect with him on Google+.
KITCES ON AGENDA FOR ADVANCED PFP CONFERENCEMichael Kitces will be a featured speaker at
the MACPA’s 28th annual Advanced Personal
Financial Planning Conference, scheduled for
Oct. 25 at Martin’s West in Baltimore. Get
details and register at http://cpa.tc/2n8.
R. Frank Abel, CPA/CFF, CFE recently returned
from a training assignment at the Connecticut State
Police Academy. He served as an instructor for
the weeklong Financial Records Examination and
Analysis course administered by the National White
Collar Crime Center.
Kate Drachova, CPA, a senior accountant at Berman
Goldman & Ribakow LLP, has earned her CPA
designation.
Aileen Eskildsen, CPA, director and professional
development coordinator at Ellin & Tucker,
Chartered, was a presenter at the recent Women in
Leadership Conference, held in Towson University’s
Chesapeake Room. The program, which featured
local businesswomen, focused on increasing the leadership
capacity of female students and preparing them for success in
the workplace. Her presentation topic was “Creating Financial
Stability After Graduation.”
Scott E. Murray, CPA, has been hired as a senior accountant in
the Tax Department at Stegman & Company.
Yelena Sandler, CPA, has joined Squire, Lemkin + Company. She
graduated from the University of Maryland and is pursuing her
master’s degree in taxation from American University. She joins
the firm as a tax manager with 13 years of experience in public
accounting.
Philip Smith, a CPA Candidate member, has been hired as a staff
accountant at Stegman & Company.
Mark A. Steinberg, CPA, CVA, director of
assurance at Hertzbach & Company, P.A., has
become a stockholder. Mark is a CPA in Maryland
and a Certified Valuation Analyst with more than
18 years of experience in providing assurance
services, business valuation, litigation support and third party
reimbursement consulting across a wide range of industries,
including health care, non-profits, continuing care retirement
communities, nursing homes , residential treatment centers,
organizations supporting the developmentally disabled,
construction and real estate entities.
Ana Welborn, CPA, a Senior Accountant with Stegman
& Company, has obtained her license as Certified Public
Accountant.
Kimberly J. Wines, SPHR, firm administrator /
human resources director at Smith Elliott Kearns
& Company, has been appointed to the Human
Resources Committee, a PFK North America
national committee. Kim specializes in providing
human resource consulting for the firm and its clients throughout
MD, PA and WV. As a recognized professional in the field of
human resources, Kim has earned the designation of Senior
Professional in Human Resources (SPHR).
NEWS & VIEWSMEMBER NOTES
Save the Date 11/4/13
Innovation Through Technology Conference
Martin’s West Event ID: 121009
FIRM NOTESDeLeon & Stang has been named one of the top accounting
firms by the Washington Business Journal. The list is comprised
of 50 firms from the Washington, D.C. metropolitan area and is
ranked according to the number of professional employees at
each firm. DeLeon & Stang was ranked 46th on the list with 32
professionals.
Accounting Today has recognized Gross, Mendelsohn &
Associates as one of the leading CPA firms in the capital region,
encompassing Maryland, Delaware, Virginia, Washington, D.C.,
and West Virginia.
Hertzbach & Company, P.A. has raised more than $2,600 for
charity through a silent auction, a new event added to the
firm’s tax season morale program. The 21 auction items were
generously donated by the firm and the partners, and included
items such as an iPad, a Kindle Fire, gift cards to various
restaurants and stores, a golf outing, and tickets to Ravens and
Orioles games. The money raised will be going to the charity of
each winner’s choice, which includes John’s Hopkins Children’s
Hospital, Good Shepherd Center, BARCS, Habitat for Humanity,
and the Wounded Warrior Project.
Maryland’s General Assembly has passed and Gov. Martin
O’Malley has signed into law legislation that will convert
IWIF, the Injured Workers’ Insurance Fund, to Chesapeake
Employers’ Insurance Company effective Oct. 1, 2013.
Chesapeake will be a non-profit Maryland corporation and
will continue to provide workers’ compensation insurance
to Maryland employers. IWIF is Maryland’s largest writer of
workers’ compensation insurance.
Santos, Postal & Company, P.C. (“Santos, Postal”), a leading
certified public accounting and business consulting firm,
announced that Thompson & Associates, P.C. (“Thompson”),
Certified Public Accountants, will merge into Santos, Postal
effective August 1, 2013. The merged firm will continue to
guide businesses and individuals with traditional tax, auditing,
and accounting services, as well as wealth management and
advisory services.
Smith Elliott Kearns & Company, LLC, launched its redesigned
website in January 2013. The new site is designed with an
emphasis on regularly updated content, useful information,
and user-friendly navigation. SEK&Co is using the look of the
site as new branding tool for collateral marketing materials.
The graphic used as the website header will be on one-page
informational sheets for all services and industries as well as
profiles for members and managers. These changes are a part
of the firm’s 50th anniversary celebration in 2013.
IN MEMORIAM
Sol R. Shipley, CPA, passed away on February 6, 2013. Mr.
Shipley joined the MACPA in 1963 and was a Life Member with
the association. He was a sole practitioner in Baltimore.
MACPA WEBCASTSOur best training... right to your PC.To see a full listing of MACPA webcasts, visit macpa.org/webcasts
The MACPA NYPN Committee hit the ground running this spring
with a variety of events after Tax Season. NYPNs met to network
and have fun at three happy hours – April 25 in Bethesda at Rock
Bottom Brewery and Restaurant, May 16 in Frederick at Brewer’s
Alley Restaurant and Brewery, and May 30 in Baltimore at Nick’s
Fish House. Thank you to all who came out!
MACPA and NYPN members volunteered on May 11 at the
Baltimore Cash Campaign’s 2013 Money Power Day at Poly High
School in Baltimore. Money Power Day is a free, annual event
providing Baltimore-area families with quality financial services,
including free credit reports, credit counseling, customized
financial planning, housing counseling, screening for public
benefits, and financial programs for youth.
MACPA and NYPN members also volunteered on May 14
at Junior Achievement’s BizTown in Owings Mills. BizTown
specializes in educating fourth- and fifth-grade students on
financial literacy through a series of business, economics, and
life-skills programs. Students learn first-hand what it takes to
create and operate a business, and to earn and manage money.
Thank you to all of our generous and hard-working volunteers at
both events. We appreciate your service and are proud to see
our members making a difference in the community.
On June 25, NYPN hosted a Generational Symposium at Turf
Valley in Ellicott City. During this four-hour CPE event, MACPA
CEO Tom Hood led an all-ages interactive conversation
and panel discussion on topics ranging from differences in
communication and learning styles to flex time, social media,
and earbuds in the office.
NYPN is in the planning stages of a fun networking opportunity
to be held this summer in Baltimore. Stay tuned for an update
and official invite to our NYPN Summer Mixer. We will also post
details soon regarding a summer volunteer opportunity.
We are looking for presenters to join the NYPN Roadshow
team. The NYPN Roadshow presentation details the benefits of
joining a professional association and helps educate young CPA
professionals, CPA candidates, and firm leadership about NYPN
and MACPA. If your company would like to request a Roadshow
presentation, contact [email protected].
VISIT THE NYPN WEBPAGE AT MACPA.ORG/NYPN.
You can also follow NYPN on Facebook, Twitter, and LinkedIn
NYPN NEWS
The MACPA held its 2013 Spring Leadership Academy from
May 6-8. The two-and-a-half day workshop trained participants
on how to be leaders in their profession. Attendees learned
about the importance of teamwork, strategic thinking, strength-
based leadership, and network leadership. Here is what some
attendees said:
• “Most thoughts we have are biased based on personal
experience and preference. When you bring that thought to
a group, the idea can change entirely.”
• “An interesting part of the Leadership Academy was the
history segment of the i2a (Insights to Action) process.
We did an activity where we mapped the history of the
CPA profession. From this, we were able to identify a
clear understanding of where CPAs are coming from and
where improvement is needed. We saw how reactionary
this profession has been throughout history, adjusting and
growing only after major events. Our collective group of
young leaders at the Leadership Academy discussed the
need to change this and become a proactive, innovative
profession.”
• “I learned that recognizing and understanding one’s own
strengths and weaknesses will more successfully guide a
team to keep making sense of rapid environment changes.”
• “I want to take back what I’ve learned to my firm and
change our meetings to become more meaningful and
effective.”
.
GET TO KNOW OUR NYPN ADVISORY BOARD AND FIND OUT FIRST-HAND WHAT WE’RE ALL ABOUT:
Chair: Jeff Klima, SC&H: [email protected]
Vice chair / chair-elect: Nick Hollander, L&H Business Consulting: [email protected]
Secretary / treasurer: Debra Hale, Stoy, Malone & Company: [email protected]
Past chair: Diana Scatliffe, CohnReznick Group: [email protected]
LEADERSHIP BOARD
Activities / Professional development chair: Stephen Hohne, Hertzbach & Company: [email protected]
Public relations / outreach chair: Jennie Hammett, Gorfine, Schiller & Gardyn: [email protected]
At-large member: Barrett Young, The Green Abacus: [email protected]
NYPN is an organization committed to connecting new / young professionals to the MACPA, protecting the integrity of the
profession, and helping new CPAs and CPA candidates achieve their goals. NYPN is a place where new CPA professionals can make
contacts in the profession, get involved in the community and get the support they need to be successful. The requirements to be a
part of NYPN are CPA candidates (working on or having achieved the 150-hour threshold) or current CPAs under the age of 40 and/
or licensed for fewer than five years.
1. Camaraderie 6. Commitment2. Insight 7. Charity3. Professionalism 8. Community4. Development 9. Responsibility5. Growth 10. FUN!
what is NYPN?
get involved
TOP 10 REASONS TO GET INVOLVED:
NYPN NEWS
39JULY 2013
ANNE ARUNDEL COUNTY
SAMANTHA L. DEREMIGIS, CPA
KATSIARYNA DRACHOVA, CPA
JOHN R. GOWER, CPA
MYTRANG NGUYEN, CPA
PAUL J. PARKER, CPA
ERIC D. WARD, CPA
CAPITAL AREA CHAPTER
MARK A. ANCHOR, CPA
LISA ARONOFF, CPA
MUHAMED-BURIHAN A. AYODEJI, CPA, MBA
MICHELLE BARNABY, CPA
DONALD BEARDSLEY, CPA
JOHN S. BENNETT, CPA
JANET M. BORJESON, CPA
SLADE W. BRENNEMAN, CPA
KEVIN S. BURKHOLDER, CPA
JAMES S. CLARK, CPA
BRITTANY E. CRAFT, CPA
JOSEPH A. DESALVIO, CPA
JOHN T. DEVINE, CPA, PFS
ERIC H. FIG, CPA
JACKIE J. FLESHER, CPA
IRA S. GLIKMAN, CPA
RYAN P. HAM, CPA
MARIAH J. HEWITT, CPA
TRICIA HUFF, CPA
JORDY C. KANE, CPA
STEVEN J. KURINSKY, CPA
MELISSA J. LACEY, CPA
ALAN J. LANGELLI, CPA
BRANDON S. LAYO, CPA
NOAH F. LEIDEN, CPA
DAVID J. LEMUS, CPA
PAUL A. LEPEONKA, CPA
FENG LIN, CPA
LOUIS W. LITZ III, CPA
SARAH M. MCGARITY, CPA
CONNIE L. MITCHELL, CPA
DAVID T. PALANK, CPA
UNA LEE PENNINGER, CPA
MATTHEW H. PETERSON, CPA
MARK D. POLVANI, CPA
MATTHEW J. RADFORD, CPA
COREY J. REINKE, CPA
NICOLE A. ROSENTHAL, CPA
ORIN T. SCHEPPS, CPA
STACY A. SEPPY, CPA
ADRIAN G. SIMMONS, CPA, MBA
ROBERT M. STORZ, CPA, MBA
GAIL A. SUIT, CPA
DOUGLAS E. WHITESCARVER, CPA
DENISE WU, CPA, CGFM
HECTOR J. WUOR, CPA, MSC
CENTRAL MARYLAND CHAPTER
ANGELA A. BARONE, CPA
JARED S. BECKER, CPA
RICHARD L. BROHAWN, CPA
LI CAI, CPA
MAURICE CHEESE, CPA
AIRES R. COLEMAN, CPA
BRAD H. COPPEL, CPA
JOSEPH P. DETORIE, CPA,
CGMA
GRIFFIN DETRICK, CPA
ERICA A. DIPAULA, CPA
JENNA S. DURST, CPA
BARBARA L. ENSOR, CPA
CHARLES T. FAGAN, CPA, MBA, CFE, CGMA
AMANDA FOEHRKOLB, CPA
ALEXANDER D. FRANKS, CPA
ALBERT W. GERMANN, CPA
PETER D. GILROY-SCOTT, CPA
KATHLEEN M. GLENN, CPA
DAVID GONANO JR., CPA
RICHARD G. GREENE, CPA
LAKSHMI GURUBHAGAVATULA, CPA
ALLISON HARTLOVE, CPA
MICHAEL L. HICHEW, CPA
PAIGE K. HOFFEN, CPA
RANDY M. HOFFMAN, CPA
VALERIE S. HOFFMAN, CPA
ANGELA M. IANNETTA, CPA
ALISON M. JAMES, CPA
ERIC A. KRAYOWSKI, CPA
RYAN M. LEVY, CPA
ADAM M. LUECK, CPA
NICKI MANN, CPA
MICHAEL E. MARSICO, CPA, CISA
GEORGIA B. MARTIN, CPA
DIANE B. MASON, CPA, MBA
MISTY L. MCGLONE, CPA
KIMBERLY R. MILLER, CPA
KENNETH W. MORRIS, CPA
AMY L. MOWREY, CPA
HALEY J. MYERS, CPA
PUI C. NG-HUI, CPA
REMI OMISORE, CPA
LOUIS R. PARKER, CPA
STEPHANIE A. PARKER, CPA
LINDSEY PATTERSON, CPA
CHRISTOPHER J. RHOADES, CPA
LAUREN A. RICKTOR, CPA
SYLVESTER B. SAVOY JR., CPA
JOSEPH SCLAFANI, CPA
CHRISTOPHER D. SEMESKY, CPA
SHARON STEWART, CPA
MELISSA A. TARKETT, CPA
ROBIN L. TAYLOR, CPA
DAVID WALTON, CPA
ANA C. WELBORN, CPA
ELIZABETH A. WRIGHT, CPA
ROBERT F. WRIGHT, CPA
GUI ZHANG, CPA
EASTERN SHORE
KAREN M. BURD, CPA
MEGAN COLLINS, CPA
MATTHEW P. CRISWELL, CPA
ALEX J. CUGA, CPA
ELIZABETH J. EICHER, CPA
PATRICIA M. HARVEY, CPA
BETH A. HORNER, CPA
JAMES K. HULL, CPA, MBA
MID-MARYLAND CHAPTER
RYAN G. CRABBS, CPA
MYRON L. DRAPER JR., CPA
PATSY R. GUTIERREZ, CPA
BONNIE J. HINES, CPA
STEPHEN J. LYNCH, CPA
VICTORIA L. RAABE, CPA
RENEE C. WHALEN, CPA
ROBERT T. ZISA, CPA
SOUTHERN MARYLAND
LEAH E. MCCONNELL, CPA
DENISE M. SHLEGLE, CPA
OUT OF STATE
RYAN C. BARNOSKI, CPA
DANA L. BOYD, CPA, MBA, MST
MARC D. CARRIE, CPA
DEBRA L. COOPER, CPA
KATHERINE L. CRAWFORD, CPA
TAYLOR S. DEAN, CPA
SAM HABIB, CPA
PAMELA J. HARBOURT, CPA, MST, CGMA
PAUL A. KLIER, CPA, CAPTAIN, ARMY
TAKESHI KOBAYASHI, CPA
COLETTE KOLANKO, CPA, PFS, CFP
VICTOR LEO, CPA
AMELIA S. LESWING, CPA
PAUL W. LOKER, CPA
CLIFF PARDO, CPA
ALENA V. PAULIUCHKOVA, CPA
HUGH M. ROSENBLUM, CPA
LOREN L. TROTTA, CPA, MBA
ANNE ARUNDEL COUNTY
RANDALL J. BRUNK
CHARLES J. COLLINS III, MBA
KIMBERLY GILLIAM
CAPITAL AREA CHAPTER
KOSSI AGIDI
KOKOU J. ASSIGBE
JOSHUA E. BARNABY
CHRISTOPHER D. BARRETT
JAIDEEP CHAKRAVORTY
WILFREDO CORPS
NICHOLE A. DAVIS
MEYROODJY DELVA
MATTHEW O. ENEKWE
FAHAD HASHMI
BIJAY B. KARKI
ASHLEY R. MILLSAPS
KRISTIN M. O’CONNOR
TIMOTHY A. WALKER
SHANSHAN YANG
CENTRAL MARYLAND CHAPTER
MERCEDES BELL
MARTA B. CHAPLINE
MICHELLE CHOPPER
JOYCE DANZIG
JENNIFER DIETRICK
KAREN FORSTER
DAVID P. GECKLE
CHRISTOPHER HESTON
JOHN A. IRVIN III
JARED MAHAR
VICTORIA A. MCNAIR, BS
ELIZABETH G. MILLIGAN
PHILIP NAM
PATRICK NELSON
MELISSA A. SHUTLOCK
PHILIP P. SMITH
PATRICK W. ST. CLAIR
AMBER L. STONE
EASTERN SHORE
SYED N. SHAH
MID-MARYLAND
BENSON A. ADEGBITE
ASHLEY CONLEY
LOUIS D. HAMMOND
JUSTIN L. HEWETT
OPHAIR SILVER
MATTHEW C. SMITH
SOUTHERN MARYLAND
COREY A. BECKETT
OUT OF STATE
RAIZY COOK
WELCOME, NEW & REINSTATED MACPA MEMBERS!
WELCOME, NEW CPA CANDIDATE MEMBERS!
MEMBER SERVICES
MEMBER SERVICES
QUALITY CPA FIRM WISHES TO ACQUIRE PRACTICE OR ACCOUNTS in Baltimore/Washington/
Annapolis area, or possible association with retirement-minded
practitioner. “Top Dollar Paid.” Reply in strictest confidence to
410.539.7100, or File No. 63-87.
THINKING OF SELLING YOUR PRACTICE? Accounting Practice Sales is the leading marketer of tax and
accounting practices in North America. We have a large pool
of buyers, both individuals and firms, looking for practices to
purchase. We also have the experience to help you find the
right fit for your firm, negotiate the best price and terms and
get the deal done. We welcome the opportunity to talk to
you about our risk-free and confidential services. For more
information please call Bradley Holmes with the APS Holmes
Group at 1-800-397-0249 or email [email protected].
STEELEY & ASSOCIATES is a diversified service
provider operating in the Maryland and DC areas. We seek to
offer succession and continuity solutions by partnering with
retirement-minded CPAs. Transitions of 1-5 years are preferred,
though immediate or longer time frames will be considered. If
you are a CPA considering retirement, or simply transitioning to
other lines of work, please call (301) 263-8519, or email [email protected]. All conversations will be kept confidential.
MARYLAND PRACTICES FOR SALE: Salisbury
Bookkeeping Practice - annual gross $330K; Salisbury Franchise
Tax Practice - annual gross $135K. For more information about
these opportunities or others in your area, please call 1-800-397-
0249. Also, view listings, inquire for details and register for free
email updates at www.AccountingPracticeSales.com.
Do you need an Engagement, System, or Pre/Post Issuance
Peer Review? We are experienced and up-to-date on the latest
regulations. Call us today to perform your review professionally
and efficiently. Charles Coker, CPA. 703.931.3290 x 108 or email
mergers & acquisitions
WANT TO SUBMIT A CLASSIFIED AD?To submit a classified ad, please visit http://www.macpa.org/classifieds/public/search.aspx, or contact Amy Moran at 443.632.2319, or by email [email protected].
CONFIDENTIAL ADS: Replies to confidential ads will be addressed to the file number in care of:Amy Moran MACPA901 Dulaney Valley Road, Suite 710Towson, MD 21204
Properly addressed replies will be forwarded to the advertiser unopened. Replies that are not properly addressed will be opened only to determine contents and then forwarded to the advertiser.
office space
EXECUTIVE OFFICE SPACE AVAILABLE with multiple amenities and free parking. Our business
center provides a professional environment, features well-
appointed reception areas, offices and conference facilities.
Enhanced communication and administrative support services
are also available. For terms and availability, please call us
at 301.263.8519 or e-mail [email protected].
Location zip is 20817.
TAX PROFESSIONAL FOR BUSY SEASON Kenneally & Company, a progressive, medium-size, Towson
CPA firm of highly motivated professionals, seeks like-minded
individuals capable of individual and/or business tax return
preparation. Familiarity with ProSystem fx is a plus. Flexible
hours, incentive compensation and a pleasant working
environment are just a few of our benefits. Forward your
resume via e-mail to [email protected] or via fax, (410) 321-9809.
CLASSIFIEDS
peer review
job openings
41JULY 2013
MARYLAND ASSOCIATION OF CERTIFIED PUBLIC ACCOUNTANTSDulaney Center II | 901 Dulaney Valley Road, Suite 710Towson, MD 21204 | www.macpa.org410. 296.6250 | Fax: 410.296.8713
SMOG-FREE CPE2013 MACPA Mountain Retreat
Brought to you by the Western Maryland Chapter of MACPA
Save the Date: September 23-24, 2013 | Wisp Ski Resort
HIKING, BIKING, BOATING, GOLFING, DINING, & LEARNING
