To our colleagues,

Hope you had a great tax season! Our June 21st CPE Conference has a great grouping of programs, and I’ve highlighted what will be covered below. I hope to see you there.

Chris DeMayo will be showing you financial dashboards that can easily be set up and used for your clients. Their purpose is to help clients digest information that can give them get a better grasp on their business. Peter will give his popular IRS update that is always chock full of up-to-the minute tips. Barry Horowitz, our new partner from the EisnerLubin merger, is a recognized expert in SALT issues and he will speak on residency and domicile and how to guide clients through this phase of change in their lives. Baskar Venkatraman specializes in systems and due diligence work and will give us a heads-up on how to handle a due diligence assignment. Frank will provide a current look at financial statement mistakes to avoid, many of which he finds when he does his peer reviews or work with the State of New Jersey and AICPA. Bernie Leone has been advising clients on succession planning for ages and he will share ideas on how to introduce and counsel clients at this critical time in their lives. I will present a quick paced program on 8 ways to value the same business. I will also introduce a 12 step method you can follow when you help clients with their personal financial planning. Don’t miss this program!

Those of you that get the www.cpatrendlines.com emails might have been following the heated exchange on whether or not time sheets should be used. There were 61 comments to my article, most of which came from followers of Ron Baker. My article set forth 13 reasons why time sheets are important and how they should be used. If you are interested you can go to http://cpatrendlines.com/2012/05/08/13-reasons-timesheets-will-never-die/ to read the article and comments. I also recommend reading Ron’s latest book, Implementing Value Pricing (2011 Wiley), that gives a persuasive argument of why time sheets should be chucked.

I am writing a semiweekly blog on the types of issues that clients seem to be concerned with, or ask me about. Go to www.partners-network.com to read the latest blogs, and to sign up for automatic notification of new blogs.

My latest book Getting Your Affairs in Order has been written to assist clients needing estate planning. This is not a technical estate tax savings book, but a practical book with the type of information that affects almost everyone. You can buy the book from Amazon.com and bn.com.

Be sure to sign up today for our valuable CPE program on June 21st. You will also receive a handout that will serve as a valuable reference source you can refer to in the future.

Cordially,

Edward MendlowitzEditor

P.S. We perform many services for CPAs including peer and quality reviews, business valuations and forensic services, and audits that you may not be in a position to perform. Please keep us in mind when you are in need of these services. We can also lend a hand to controllers who need assistance on special projects including tax basis conversions to GAAP and state tax compliance issues.

WithumSmith+Brown, PC

JUNE 2012

WITHUMSMITH+BROWN, PCONE SPRING STREETNEW BRUNSWICK, NJ 08901P. 732.828.1614 F. 732.828.5156

Contact:Ed Mendlowitzemendlowitz@withum.com

Heather Suddothhsuddoth@withum.com

WithumSmith+Brown, PC Certified Public Accountants and Consultants

w i t h u m . c o m New Jersey. New York. Pennsylvania. Maryland. Florida. Colorado

PARTNERS’ NETWORK ANNUAL CPE PROGRAM

THURSDAY, JUNE 21, 2012 8AM TO 4:30PM (8 CPE)THE PALACE AT SOMERSET PARK 333 DAVIDSON AVENUESOMERSET, NJ 08873

8:00–8:30AM Breakfast and Networking

8:30–9:20AM Financial Dashboards for Your ClientsSpeaker: Christopher DeMayo, CPA (A&A)

9:20–10:10AM 12 Step Personal Financial Planning for ClientsSpeaker: Edward Mendlowitz, CPA (CS)

10:10–10:30AM Networking break

10:30–11:20AM Peter Weitsen’s IRS UpdateSpeaker: Peter Weitsen, CPA (Tax)

11:20AM-12:10PM State Residency and Domicile IssuesSpeaker: Barry Horowitz, CPA (Tax)

12:10–1:00PM Lunch and networking

1:00–1:50PM 8 Ways to Value the Same BusinessSpeaker: Edward Mendlowitz, CPA (CS)

1:50–2:40PM Performing a Due Diligence ReviewSpeaker: Baskar Venkatraman, CPA (A&A)

2:40–2:50PM Short break

2:50–3:40PM Financial Statement Mistakes to AvoidSpeaker: Frank Boutillette, CPA (A&A)

3:40–4:30PM Advising Clients on Succession PlanningSpeaker: Bernie Leone, CPA (MAS)

$215 for Partners’ Network members. $295 for nonmembers. Purchase conference materials (if you cannot attend) $100. RSVP to Heather Suddoth 732.828.1614 or hsuddoth@withum.com

WithumSmith+Brown,PC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org. For information regarding refund, complaint, and program cancellation policies please contact Heather Suddoth at hsuddoth@withum.com.

Program Level: Basic Prerequisites: Must be a CPA in own practice or a Partner/Manager in a firm Advanced Preparation: None Delivery Method: Group-Live

The Partners’ Network blog gives Ed Mendlowitz’s take on conventional wisdom that are really fictions. He shows you how the Emperor’s New Clothes fable is truer today than it might have been when first written with clear plain simple logic that will empower you to protect yourself and your financial and personal security.

Visit www.partners-network.com to subscribed to Ed’s blog.

How to arrange things to simplify your life so that others can easily pick up where you left off.

How to declutter your life, what happens if you did not make proper plans, responsibilities of people managing an estate, protection if you become incapacitated, a dire warning to IRA, 401k and 403b beneficiaries, and a priceless gift you can give your children. Includes checklists and sample letters.

Book available at www.Amazon.com and www.bn.com

Ed Mendlowitz is a partner in WS+B’s New Brunswick office and is the coordinator of the Partners’ Network. This interview should give you some insights about the Partners’ Network.

Why did you and Peter Weitsen organize the Partners’ Network?

When Peter and I became partners we wanted to have an in-house pre-tax season CPE program for our staff. I had just left my NY practice where I ran a CPE program for over 40 accountants and the new practice with Peter had only six staff. We felt that the effort going into the CPE program should be spread around, so we invited a few friends with smaller practices, and their participation actually helped us since they asked practical questions, and had comments that added to what we were teaching. Some of them still attend our Pre Tax Season Program. The next thing we did was organize a

June CPE program in a format that was new at that time – we set it up with 8 separate one hour programs. We might have been the first to use this format. This was the type of CPE we felt comfortable attending and thought our colleagues would also. Further, we engaged a Rutgers professor to conduct a couple of the sessions. The program was very successful and we ended up giving it three more times – twice more in NJ and a third time in Manhattan. This has since become an annual affair.

I had been giving a Managing Your Tax Season MAP program for the NJSCPA annually since 1980 and got to know many local CPAs. Additionally, because of our committee service and CPE programs that Peter and I presented, we started getting calls from many CPAs with questions. One year, Peter and I attended an AICPA Conference in Orlando that ended around noon on the third day and we had an evening flight. After lunch, I dragged Peter to a magic store so I could check out any new tricks. After spending some time there, Peter and I sat in his car in the parking lot and stared to come up with a plan that led to the formation of the Partners’ Network. To be honest, the purpose was to assist fellow practitioners and also make money doing it. We started the CPA Practice Report newsletter, better organized our CPE programs, advertised more, published practice aid books, took booths at CPA shows and actively requested CPAs to ask us their “tough” questions on technical as well as practice management issues. Eventually we started doing peer and quality reviews of CPA firms. I even became a team captain and performed many myself until Frank Boutillette became qualified to do them. He still does them. I stopped about five years ago.

When we merged with WS+B, Bill Hagaman wanted the Partners’ Network to become a service for smaller firms, and we reduced the annual fee and upgraded the conference location. We also have a much wider base of partners and senior managers to go to in order to get technical questions answered. Our office added a marketing coordinator to partially assist with the marketing and Heather Suddoth now handles all the admin and marketing for the Partners’ Network (“PN”).

In February I started writing a blog two times a week, www.partners-network.com, that was originally intended to address practice management questions. What happened is that I started writing about issues that came up that concerned my clients and now write about those issues. Last July I started writing a monthly Top 5 Questions CPAs asked me with my responses, and post these on the NJSCPA Open Forum and Randi Kopp’s Accounting Daily Blog for CPAs that are not members of the NJSCPA. I also email it to PN members that are not NJSCPA members. If you are not familiar with the Q&As, email me and I’ll send you the complete Q&As. I also Tweet when it is available. Follow me! @emendlowitz

Coinciding with each PN program, we publish a Topps Accountants’ trading card. We just added our 10th card to the set of noted accountants. History is an interest of mine, and this is a fun way of introducing many colleagues to little known facts in our profession’s past. We also distributed a PN teddy bear at our Pre Tax Season CPE program in February. An insider tip... Keep an eye out for what this teddy bear might bring to the Partners’ Network! Last year we sent every attendee a “Spelling Error” rubber stamp. Who knows what we might distribute at our next program.

I enjoy helping my fellow practitioners. When I started my practice, many people already there helped me, and I attended many practice management programs that assisted me in developing my practice. I felt the proper way to pay them back was for me to do the same for others in similar circumstances. Bill not only felt the same way, but gave us the ways and means to expand the PN.

ED MENDLOWITZINTERVIEW WITH

FINANCIAL STATEMENT PREPARATION TIPS

As you know, I am on the NJSCPA Peer Review Executive Committee which is responsible for accepting all peer reviews performed on NJ CPA firms. I am also on the AICPA Peer Review Board which is responsible for writing the standards that are used when performing peer reviews. You could say I am “Mr. Peer Review.”

I want to be able to give you some pointers that can help you avoid some of the common mistakes that practitioners are making when preparing financial statements. This is not all inclusive, for that you will have to call me and we can discuss those items.

With the passage of SSARS No. 19, several changes occurred for those preparing compilations and review engagements. All compilation and review engagements require a practitioner to obtain a signed engagement letter. The wording of the compilation and review reports changed, adding an additional paragraph. In addition, the title of these reports should include the word “Independent” unless of course, the CPA is not independent with respect to a client, then only a compilation can be issued.

For review engagements, you must obtain a management representation letter. This letter must cover all periods being presented in the financial statements. Many CPAs, when issuing a review on 2011 and 2010, say that they obtained a management representation letter for 2010, so why is it necessary to mention it in the 2011 representation letter? The reason is that you want management to represent that those financials for 2010 are still materially correct and that nothing has changed since you last reported on them.

Finally, when issuing financial statements with disclosures, make use of a comprehensive checklist that lists references to the accounting pronouncements. This will help to ensure that the proper fair value disclosures are made (breaking investments out between the three levels) as well as disclosing whether or not there are any uncertain tax positions and what tax years are still open for audit by the governmental agencies.

If you have any questions or need assistance with an engagement, please reach out to the Partners’ Network.

Frank Boutillette, CPA/ABV Partner

PETER’S TAXING ISSUESFor awhile now I have been enamored with the concept of perfect numbers. In math terms, a perfect number is

a a positive integer that is equal to the sum of its proper positive divisors, that is, the sum of its positive divisors excluding the number. Try the number 6 [1+2+3 = 6] and then try 28 [1+2+4+7+14 = 28]. The next perfect number after 28 is 496, then 8128, and then a really big number.

But in non-math terms, what could be a perfect number? When the refund/balance due on a tax return nets to zero? When the tax projection equals the taxable income on line 43 of the 1040? When the doctor tells you that

your blood pressure is 120/80? When a prospect calls your number out of the blue and he or she ends up being an “A” client? When the client gives you all fives on the client survey (or is it better to get a 3 or 4 on the reasonableness of the fees)?

We all know about a perfect game pitched in baseball (which of course our beloved Mets have never achieved). How about a 16-0 record during an NFL season? The 4.0 cumulative GPA? A hole-in-one in golf?

Some might say that a zero balance due (“No Change Report”) on an IRS exam is a perfect number. Others might think that a peer review with zero deficiencies is a perfect number. How about an ice cream cone with no calories?

Some may think that 1 is the perfect number. Frank was born on February 1. On the other hand, how about a tax season that actually ends on April 15th? (By the way, both Ed and I have the number 2, 8, and 28 in our birthdays.) Tax Season 2013 will end on Monday, April 15. Perfect!

Peter A. Weitsen, CPA/PFS Partner

If only part of the business is being sold, there might be a discount to its value. The reasoning being that the person with a minority interest has less say or no control over the affairs of the business. This includes decisions of officer salary and compensation levels, declaring dividends, and selling or liquidating the company. Accordingly, there is the belief and recognition that a minority interest is not worth its proportionate share of the whole. These discounts could range up to 40% depending on the type of business, number of stockholders and a myriad of other factors that limit the control of the minority stockholder.

Another discount that might be appropriate is for the lack of marketability of the stock, LLC or partnership interest. Lack of marketability adjustments reflect the reality that stock in a non control portion of a closely held business is not easy to sell. These discounts could be 25% or more depending on circumstances. This discount, where applicable, is in addition to the minority interest discount.

Other discounts could also be applicable but these are not as significant as the minority and marketability discounts just mentioned. If the owner is selling or transferring minority interests to a relative or successor, the interests have to be valued in accordance with IRS regulations, and the IRS looks at such transfers for appropriateness of the value.

If the same shares are transferred after death, no discounting is permitted. The reason for this is that life time transfers are valued based on what the recipient receives. Death transfers are valued based on what the decedent had or owned at the point of their death. This is an important factor for clients that intend for their business to continue after their death. Life-time planning and transfers are treated much more favorably tax wise.

GIFT VALUE ESTATE VALUE

Value of noncontrol or minority interest shares $ 5,000,000 $ 5,000,000

Minority interest discount 20% $ (1,000,000)

Adjusted value $ 4,000,000

Marketability discount 20% $ (800,000)

Value of noncontrol or minority interest shares $ 3,200,000 $ 5,000,000

Percent of prediscounted shares 64% 100%

This table illustrates how discounts are applied and the differences in valuation between gift and estate transfers.

Since 2009 we have been publishing a Topps card depicting a notable person in accounting’s past. Each card was issued coinciding with a Partners’ Network CPE program. The front side of the complete set is pictured below. If you want any particular card, or a set, email Heather and she’ll send to you while supplies last.

WS+B’S PARTNERS’ NETWORK CPE RESERVATION & MEMBERSHIP

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Why should my firm join The Partners’ Network?•To broaden your firm’s services and expertise•To help you build your business for growth and

profitability•To obtain answers to challenging audit and tax

matters with a phone call•To get ideas and tips on how to better manage your

practice

What does The Partners’ Network offer a firm like mine? Again, many answers:

•Free Power Breakfast covering timely topics.•Discounts to the annual CPE Conference in June.• Invitation to the Pre-Tax Season CPE program.•Answers to your questions on tax, accounting,

auditing, or practice management at no charge. Just pick up the phone and call, or send one of us an e-mail.

•Contacts with peer CPA practitioners, and opportunities for exchanging ideas, resources, and information with your colleagues.

How do I join? Membership is $145 per year ($500 for firms of 100+). Phone or e-mail Heather with your credit card information, or put a check and business card in the mail. It’s as easy as that. So give Heather a call today at 732.828.1614, or send an e-mail, hsuddoth@withum.com. We look forward to hearing from you soon.

THE PARTNERS’ NETWORK

Objectively determining the value of business enterprises and assets.

Call us for more information.

Ed Mendlowitz, CPA/ABV/CFF, Partner732.828.1614

Accredited in Business Valuation (ABV) by the American Institute of Certified Public Accountants.

We are registered with the Public Company Accounting Oversight Board (PCAOB) and are available to perform your peer review.

Call us for more information.

Frank Boutillette, CPA/ABV, Partner732.828.1614

WithumSmith+Brown, PCCertified Public Accountants and Consultants

w i t h u m . c o m

One Spring Street

New Brunswick, NJ 08901

The Partners’ Network Newsletter is published by WithumSmith+Brown, PC, Certified Public Accountants and Consultants. The information contained in this publication is for informational purposes and should not be acted upon without professional advice.

Partners’ Network ANNUAL CPE CONFERENCE | JUNE 21DETAILS INSIDE

Succession Planning will help your company continue to succeed -even after you’re gone.

Begin planning for the extended life of your company. Call us today to discuss which options are best for your company’s future.

Ed Mendlowitz, CPA/ABV/CFF, Partner732.828.1614

SUCCESSION PLANNING

• Tax basis conversions to GAAP• Sales tax compliance issues• Corporate State tax preparation• Income taxes for foreigners working in U.S.

and U.S. employees working abroad• Transfer tax studies• Internal auditing • M&A due diligence

Ed Mendlowitz, CPA/ABV/CFF, PartnerFrank R. Boutillette, CPA/ABV, Partner732.828.1614