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Professional Issues
Update
By: Tom Hood, CPA, CITP, CGMA
June 1, 2012 Rockville, Maryland
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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
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What is the #1 reason organizations fail?
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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
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Sarbanes-Oxley Act of 2003
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Dodd-Frank - the bill that keeps on giving
CPAs required to register as debt settlement advisors
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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
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• Collaborative effort with AICPA – CPA/SEA – NASBA & State CPA Societies
• 48 + DC states passed legislation in four (4) years • Maryland enacted it in 2008
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Tsunami of 1099K and info returns
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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
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More than 100 MACPA members call our senators and we defeat the amendment!
Transparency & Accountability
The DATA Act
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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
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“...where the most important skill is the ability to acquire new skills.”
Picture: John Drake - Flickr
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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...
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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
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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?
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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
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
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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
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A leader’s job is to set context and provide hope and inspiration...#
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A leader’s job is to provide hope and inspiration...#
