MACPA Town Hall / Professional Issues Update

Professional Issues

Update

By: Tom Hood, CPA, CITP, CGMA

June 1, 2012 Rockville, Maryland

2 2

So what? What does this mean to CPAs?

What  lies  beyond  the  fog?  

“…an  indisputable  leadership  challenge  that  ul8mately  requires  new  models,  bold  ideas  and  personal  courage  to  ensure  that  this  century  improves  the  human  condi8on  rather  than  capping  its  poten8al.”      –  World  Economic  Forum  

Welcome to the “New Normal”

The Future

30 Future Forums 1,000 CPAs

Identified these top trends

What CPAs think about the future

http://www.bizlearning.net/live/i2afutureforums

In our hyper-networked, mobile, social, global world, the rules and plans of yesterday are increasingly under pressure; the enterprises and individuals that will thrive will be those willing to adapt in a disciplined, unsentimental way.

Generation Flux is a term that describes all of this - the chaotic business era that we have moved into - as well as the people who are poised to thrive in this environment. - Robert Safian - editor FastCompany

We need a longer sight line

NAVIGATORS OF CHANGE

OUR GYROSCOPE!

In  1997,  the  CPA  profession  crowd-­‐sourced  its  future  with  over  3,500  CPAs  in  the  CPA  Vision  Project  

That  was  re-­‐validated  in  2011  by  8,000+  CPAs  

CPAs... Making sense of a changing and complex world.

Our core purpose, our reason for being is

Here is what they said…

Our Vision Statement for the future is: ���( mandates to ourselves for a successful future)

• Communicating the total picture with clarity and objectivity,

• Translating complex information into critical knowledge,

• Anticipating and creating opportunities, and

• Designing pathways that transform vision into reality.

CPAs are the trusted professionals who enable people and organizations to shape their future.

Combining insight with integrity, CPAs deliver value by:

The  DNA  of  the  CPA  Values  &  Competencies  

•  Leadership  •  Communica8on  •  Strategic  Thinking  •  Collabora8on  &  Synthesis  •  Technologically  Savvy  

"For Gen Y, training and development is the most highly valued employee benefit. The number choosing training and development as their first choice of benefit is THREE

times higher than those who chose cash bonuses."

Generation Y Born btw 1980 – 2000 (12 to 32) Generation X Born btw 1965 – 1979 (33 – 47) Boomers Born btw 1946 – 1964 (48 – 66) Traditionalists Born prior to 1945 (67 & older)

Our new research bears out that the human dimension – relationships with customers, employees, partners and communities – will be key to getting things moving again and sustaining success over the long run.

CGMA & Business & Industry members

How are you doing?

• Change • Complexity • Compliance • Convergence • Competition

MANAGING THE SEA CHANGE

30  

30

What is the #1 reason organizations fail?

31

Complexity “the biggest challenge facing enterprises from here on will be the accelerating complexity and the velocity of a world that is operating as a massively interconnected system.” 79%

51%

Compliance

Federal Laws & Regulations

State Laws & Regulations

Professional Standards

Our infrastructure for regulating the US

financial markets has been created from a series of reactions to

crises and changes and is in need of repair.

Single audits

Audit quality

Financial Regulatory Reform

Sarbanes-Oxley Act Dodd-Frank Wall Street Reform and

Consumer Protection Act

36

Sarbanes-Oxley Act of 2003

37

Dodd-Frank - the bill that keeps on giving

CPAs required to register as debt settlement advisors

38

Cascade from across the pond!

Federal Accounting Standards?

State Legislation

Next CPA Day in Annapolis - January 16, 2013

State  Legisla8on  

Results  –  Legislature  2012  

http://www.cpalegislativeinsider.com

•  Accountancy  bills  (20  states)  -­‐  51  •  Auditor  Rota8on  (3  states)  -­‐  8  •  Mobility  (2  states)  -­‐  6  •  Regula8on  of  Tax  Preparers  (3  states)  -­‐  5  

•  Tax  on  Accoun8ng  Services  (6  states)  -­‐  11  

•  Peer  Review  (4  states)  -­‐  7  •  State  Board  Consolida8on  (6  states)  8  

State Legislation and Regulatory

Maryland & Federal Tax Preparer Law Threats to your CPA License

•  Well intentioned consumer group •  Solving a problem – low income tax frauds •  But…creating problems for CPAS

–  Licensed / Certified Tax Preparers would be confusing to the public

–  Tax Preparer Exam using ACAT / H&R Block designation (ATA, ATP) opens door for second tier license

–  Misinformation / confusion

Example - CPA Mobility and uniformity achieved through collaboration in profession

TX

WA

OR

CA

NV

ID

MT ND

SD WY

UT

CO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WV

NJ DE

DC

MD

*PA

CPA Mobility Enacted 48

CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA

*

In Process

NH

CPA Mobility Legislation Pending - DC

VT

PR

GU

U.S. VIRGIN ISLANDS

47

•  Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies

•  48 + DC states passed legislation in four (4) years •  Maryland enacted it in 2008

48  

Tsunami  of  1099K  and  info  returns  

49

CPAs in Tax The increase in IRS activity is swamping our tax practitioners and costing them hundreds of hours in chasing down IRS notices.

MD Workplace Fraud Act

Maryland  joins  AICPA  &  

States  suppor8ng  government  employee  mee8ng  

acendance  

50  

More  than  100  MACPA  members  call  our  senators  and  we  defeat  the  amendment!  

Transparency  &  Accountability  

The  DATA  Act  

53  

54 54

Convergence

Public Company

Private Company

Int’l Company

Financial Reporting

Auditing

Ethics

State Boards of Accountancy

Private Company Standards

Well, did they listen? Today, the AICPA also announced

plans to develop an “other comprehensive basis of

accounting” (OCBOA) financial reporting framework to meet the

needs of some privately held small- and medium-sized enterprises

(SMEs), as well as the users of the financial statements of these entities. The SME OCBOA framework will be a less

complicated and a less costly alternative system of accounting to U.S. GAAP for SMEs that do not

need U.S. GAAP financial statements. 

MANAGING THE SEA CHANGE���Captain of your own ship!

• Continuous Learning

• Competency • Collaboration =

Career Success

What  do  young  professionals  need  to  be  leaders?  

Drivers of Value

AICPA  125th  -­‐  CFO  Panel  

62

“...where the most important skill is the ability to acquire new skills.”

Picture: John Drake - Flickr

64

Wisdom from the MACPA Leadership Academy

According to these young professionals, the future is one in which CPAs: ● are proactive, flexible, adaptive and collaborative by nature; ● have regained the trust of their clients and the public at large; ● have successfully bridged the profession’s “leadership gap” by focusing on succession planning, personal growth, and generational cooperation; ● have created the profession’s premier global industry standards and best practices; ● have redefined the profession through work / life integration, collaboration, and a team-first approach; and ● have earned a reputation as technological innovators.

Achieve – Find Your Edge

http://youtu.be/e-zeOD79clA

It really is about this...

67

3 Critical Workforce#Priorities Rapidly developing workforce skills and capabilities Fostering collaboration & knowledge sharing Developing future leaders

"In a world that shows no signs of slowing down, no individual can rest on his

or her intellectual laurels… The future belongs to

those organizations, as well as those individuals, that have made an active,

lifelong commitment to continue to learn.”

-  Howard Gardner Five Minds for the Future

68

Practice Areas

Competencies

Staff Levels

• How we work

• Skills we need • Knowledge • Skills • Abilities

• How we grow • Career Paths

The Learning Matrix

www.macpa.org

Staff Principal/Director

Senior Senior Manager

Manager

Decision making by specification,

task specific work

1st level supervision on established guidelines & standards

1st level of strategic thought & focus on boundary spanning

activities

Assess & understand longer-term variables

& accomplishing future goals

Leading and/or developing new practice areas, strategic alliances

& talent Critical Turning Point

Copyright 2012 – Business Learning Institute

Entry-level Staff

Supervisor

Manager

Controller

CFO Critical Turning

Point

Why MACPA?

73

MACPA  Priori8es  1.  Connect & Collaborate 2.  Span Generational Divide 3.  Alignment w/ Committees 4.  Legislative Task Force 5.  Leadership Development 6.  Connect Pipeline

Surfing  lessons!  

http://www.macpa.org/Content/26336.aspx

MACPA Your Trusted Filter

The  Idea  Store  is  open!  

Mail Suggestions to ideastore@macpa.org

MACPA  Special  Task  Force  •  Annual cost of Federal

Compliance $1.75 trillion •  Federal burden exceed

costs of health care per person by 50%

•  Cost per employee = $8,086

•  For SMB < 20 = $10,500 per employee

Offer CPA expertise to the state to help overcome budget issues in bi-

partisan, objective manner in order to bring about efficiency, transparency

and fiscal discipline.

Innovation Summit

June 27, 2012 Martin’s West

Five Qualities of Extraordinary Leaders

1. Sight - Ability to see emerging patterns and shift perspective when necessary

2. Insight – Ability to think strategically and critically to gain insights

3. Create – Seek high leverage opportunities that build on your strengths

4. Communicate - Ability to make your thinking visible to others and the ability to collaborate inside and outside your organization

5. Inspire – Ability to mobilize support and engage others involved in doing the work to join you in ACTION

80

The history of associations – Why do we exist?

Bill of Rights - submitted to the states for ratification on September 25, 1789 and adopted on December 15, 1791

Macrowikinomics  

83

A leader’s job is to set context and provide hope and inspiration...#

84

A leader’s job is to provide hope and inspiration...#