Professional Issues UpdateFall 2008 Edition

Tom Hood, CPA.CITPCEO & Executive Director

Maryland Association of CPAs

CPA Profession is changing & leading the pack to the new world of work

• The surprise in BusinessWeek's second annual ranking: Accounting firms have raced to the head of the pack

• In fact the article included an interview with the CEO of Universum Communications who talked about the "sexiness of accounting,  the popularity of tech, and the workplace stereotypes attached to a misunderstood millennial generation."

Did you know?

The Big Three Four Trends

• Standards & Regulatory Changes

• Globalization

• Workforce Issues

• Technology – Web 2.0

Speed – Rate of Change will be blinding & comprehensive in scope

Complexity – a quantum leap in forces will affect

everything Risk – new risks, higher risks,

more risk

Change – drastic adjustments in your work, community & relationships will force

you to adapt quickly to radical change

Surprise – sometimes good, sometimes difficult to imagine– it will challenge your sensibility

& logic

The Extreme Future by James Canton, Ph.d

Enduring - to have or gain continued or lasting acknowledgment or recognition,

as of worth, merit or greatness

So…How do we endure and prosper in the face of continuous market, economic, and environmental change?

Look – See – Imagine - CreateWhat is above knows

what is below, but what is below does not know what is

above. One climbs, one sees. One

descends, one sees no longer, but one

has seen. There is an art of conducting

oneself in the lower regions by the

memory of what one saw higher up. When

one can no longer see, one can at least

still know. -Rene' Daumal

ProfessionalStandards,

Legislation & Regulation

ProfessionalStandards,

Legislation & Regulation

2008

ISSUE

MD ComptrollerMD Comptroller

CAQ

US Treasury

MD Comptroller

Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA

Who are these guys?

1. Increasing the usefulness of information in SEC reports

2. Enhancing the accounting standards-setting process

3. Improving the substantive design of new accounting standards

4. Delineating authoritative interpretive guidance

5. Clarifying guidance on financial restatements and accounting judgments

Treasury Advisory Committee on the Auditing Profession - ACAP

Lots of changes on the horizon…

• AS 5 - PCAOB

• IRFS – SEC International gets legs

• XBRL – SEC mandatory (comments end Aug 1st)

• Codification Project – FASB

– Convergence with international

• Clarity Project – ASB

– Convergence with international

– Risk-based standards already in int’l format (SAS 104-111)

• SAS 112 Communication

• Internal Control – COSO

• Fin 48 – Private Companies

• Delay of SOX 404 for “small” caps

InternationalFinancial Reporting Standards

InternationalFinancial Reporting Standards

ISSUE

2008

IFRS – International Financial Reporting Standards

Not if but when…Goodbye GAAP?

Think about this – If SEC timeline is 2014 – what year do you have to convert to show three years of comparable f/s?

SEC Roadmap released

Convergence ≠ Sameness

US GAAP

– Rules based

– Based on a GAAP hierarchy (level A – D)

– Primary accounting standard setting body is the FASB

– Accounting guidance and interpretation is provided by FASB, SEC, AICPA and EITF

IFRS

– Principles based

– No hierarchy, consists of IASs, IFRSs & interpretations

– Standards and interpretations approved by the IASB

– Interpretations of IFRIC and its predecessor the SIC

25,000 pages vs 2,000 pages

Private Company Financial Reporting• A new wrinkle in the debate

20

This is a verysignificant discussion

point

Questions?

• What happens when FASB moves to IASB?

• FAF Funding goes to IASB• Who funds GASB?• Who funds US private company

standards (GAAP)?

CPAs in Business,

Industry, Gov’t & NFP

CPAs in Business,

Industry, Gov’t & NFP

2008

ISSUE

Top 6 Issues facing business

1. Financing and credit crunch

2. Keeping up with Technology

3. Workforce and People Shortage

4. Rising Health Care Costs

5. Rising Energy Costs

6. Rising Taxes

Source: 2007 Private Company Index Report by Entrex

Private Company Trends per CEOs

LeanOperations

Workforce

CFO Competencies Needed

• Change Management (C)

• Strategic Ability (S)• Critical Thinking (S)• Business

Perspective (C)• Organizational

Agility (C)• Dealing with

Ambiguity (S)

• Communication & Leadership

• Strategic & Critical Thinking

• Focus on the Customer, Client, and Market

• Interpretation of Converging Information

• Technologically adept

C – CatalystS - Strategist

CPAs inPracticeCPAs inPractice

2008

ISSUE

27

PCPS MAP Survey

28

Top 5 Reasons to Join a Firm

1.Career Growth2.Paid Time Off3.Salary4.Respect for Company Mission5.Challenging Work

Top 5 Reasons they Stay

1.Respect for Company Mission

2.Career Growth3.Salary4.Management Style5.Challenging Work

4 Generations in the Workplace

4 Generations in the Workplace

2008

ISSUE

Talkin’ bout my generation

Pipeline - Good News20% avg increase in

Graduates & enrollments!

Staff Shortage + Four Generations in workplace = Trouble!

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

Matures Boomers X'ers Millenials

StaffShortage

Four Generations in the Workplace

• Matures – 1909-45• Boomers – 1946-64• Gen X – 1965-80• Millennials - 1981

+ up (Y2K, Netgen, Echo-boom, Gen Y)

Which one are you?

Issue: Generation Differences

The Matures (born prior to 1946)

• Duty, honor, country• Dedication, sacrifice• Conformity, blending, unity – “We

First”• Patience• Hard, hard times then prosperity• National pride• Doing a good job was most

important• Age = Seniority

The Baby Boomers (’46 to ’64)

• Work ethic = Worth. “Workaholic”• Competitive• Success is largely visible – trophies,

plaques, certificates, etc.• Optimistic• Consumers• Defined by their work• We are the world, We are the children

Generation X (’65 to ’79)• Question authorities.• Their heroes are people they’ve met; that they know.• Raised as their parent’s friends.• Saw lifelong employment end – don’t believe it will

happen to them.• Can be cynical. Can be pessimistic.• Time horizons are shorter than the Boomers or

Matures.• Time is a currency.• Carpe Diem approach – Seize the day!• “Prove it to me.”

Millennials (Since 1980)• Individuals w/ a group orientation (team?)• Optimistic• Programmed. Coddled. Well looked after.• Hard time focusing on anything.• Busy & stressed at a young age.• Like “X”, raised as their parent’s friends.• Are not adults. Are not adolescents.

“Adultolescent” phase.• “Future” is very short term.• Huge goals. Clueless on the execution.• Smartest generation + 20 IQ

Biggest Issue Facing NYPNs

• Bridging the Gap between college & real world• Under-Developed Skill Sets

– Leadership & Communication– Time Management & Organization– Analytical Skills– Technical Skills

• Work-Life Balance• Limited Networking Opportunities• Intimidation• CPA Exam• Lack of a Voice in Profession

Deloitte’s Global Workforce Advice• Long-term career development and multiple

experiences within a single organization• Sense of purpose and meaning in work• Availability and access to mentors across the

company. (The focus should not only be on making senior staff mentor younger associates, but also ensuring that people connect and share experiences across all levels of the organization, and across relevant departments and areas of expertise.)

• Work-life flexibility• Tech-savvy work environment (for example, access

to online problem-solving and learning tools)• Open social networks that embrace open and

honest communication

Source Deloitte Global Manufacturing survey

The Maryland Perspective

The Maryland Perspective

2008

ISSUE

42

KEY

GOALS/RESULTS

PROJECTS/STRATEGIES

PRODUCTS/SERVICES/

SITES

PEOPLE

KEY EVENTS

LEARNING

MACPA Founded 1901

Dateline

Gov. John Smith signs CPA Bill

April 10, 1900

MACPA first attempt

to rights to audit

MACPA passes 1924 Law

1900 19871974 1976

In the Beginning...

MACPA stops

several

attempts to

amend 1924

law

Maryland becomes the 1st state to restrict

practice for CPAs

1901

Larry Kamanitz chairs Legislative

Committee

MACPA tries

to pass CPE

Bill in 1974

& 1975

AG opinion of 1981Grants rights to non-CPAs for Reviews &

Comps.

MACPA Passes Mandatory CPE Bill

Sarbanes-Oxley

Act of 2002

Max Teichman, Frank Blacklock &

William Rogers

Interstate Practice &

Uniform Accountancy Act

Rise of special interests

& non-CPAs

HB 1296 Mobility Passes

Quality Review Legislation fails

150 Hours Ed Requirement passes

Effective date is January 1, 1999

• CPA Bill signed April 10, 1900• MD is 3rd state (NY & PA)

1922 1924 1981

Non-CPAs begin

attempts at 2nd

Tier license

2005

HB 1261 re-writesCPA Law - 1986

MACPA amendments to ed requirements fail

Dawson Grove chairs Legislative

Committee

Allen Deleon chairs Legislative

Committee

1993 MACPA passes

MD LLC & LLP Acts

Rights & Recognition•Privilege of Self-Regulation•Right to Sole Control over

an Area of Practice

History of CPA Legislation

1993 20062003

UAA MACPA passes 1 yr

Experience Requirement

2007 200820011999

SB 560 DefeatedMaryland Corporate Accountability Act

MACPA requests reversal of AG Opinion – “This is not an audit”

language added

Terry Hancockchairs Legislative

Committee

MACPA Forms Task Force and surveys members

88% Sub Equivalency76% Peer Review & Safe Harbor

68% Non-CPA Ownership

State Board of Accountancy

formed

UAA MACPA passes

non-CPA Ownership

Computerized CPA exam

Separate Fund Bill passed

Maryland Special Session

Oct – Nov 07

MACPA defeats Sales Tax on Services

Amends Corporate Tax Reporting Bill from

special session

State Board

passes qualify

Peer Review for

CPE credit

MACPA wins use of “consultants” in firm

letterhead at State Board

Accounting Reform task

Force addresses

SOXState Board Hearing

May 1, 2003

New simpler CPA exam Education Rules

HB 1223 Mandatory Peer Review

Maryland Association of CPAs

WA2008

OR

CA

NV

ID2008

MT ND

SDWY

UT2008 CO

AZ

NM2008

AK

HI

TX

OK

KS

NE

MN

IA

MO

AR

LA2007

MS2008

AL GA

FL

WI

IL

MI

IN

KY2008

TNSC

NC

VAWV2008

OHPA

NY

VTME

NH

MA

RINJ

DE

MD

CT

States with Mobility Enacted or Legislation Introduced

40 States are moving toward uniform mobility for CPAs!

DC

Expected in 2009Legislation PendingMobility Enacted

Mobility Enacted 28Legislation Pending 2Expected in 2009 10

AICPA –NASBA September, 2008

2007

2007

2007

2007

2007

2007

1961

2002

1999

2006

17 States have passed this in 2008!

PR

Opposition by unlicensed

accountants

Web 2.0 continues to grow

Try this professional networking site

www.CPALEARNING2.comwww.CPALEARNING2.com

www.linkedin.com

Primary School Student

College Student

CPA ExamCandidate

CPA MACPACPANYPN

MACPA CPACareer Paths

EngagedRetiree

•Awareness•Competencies•Financial literacy

•Awareness•Competencies•Career information•Choice of Major•Shift from accounting to CPA awareness

•Drive to CPA Exam•Reach employment influencers•Career changers

•Brand awareness•Professional pride•Professional affiliation•Market recognition and rewards

•Drive to join•Young CPAs•Careerpathing•Professional pride and affiliation•Preferred source of information

•MACPA as career partner•Professional development•Maintain brand affiliation/equity•Follow/plot career paths

•Mentoring•Mining intellectual capital

1,373 1,818 399 8,047

Connect

What you can do to promote the CPA?

• Understand the “new” CPA Exam– New Educational Requirements

• Encourage MACPA candidate membership

• Use CPA Exam tracking tool to track employees progress

• Support the swearing-in ceremony• Create / reinforce firm/company culture

that celebrates CPAs

update

CPA Exam changes

• Paper-based• 2 x year May &

November• 5 sections

• Computerized• Anytime• 2 months per quarter• Pass all sections in 18

months (to keep passed sections)

• 4 sections• 70% new content!

Then: Now:

update

Steps to become a CPA1. Get Accounting Education – 150 hours

2. Sit for & Complete CPA Exam

3. Take AICPA Ethics self-study & report grades to State Board

4. Complete 2,000 hour experience requirement (interning counts) RPE form

5. Take the official oath at the Swearing-in Ceremony

What are the four parts of the “new” CPA Exam?1. Auditing & Attestation

2. Business Environment Concepts

3. Financial Accounting & Reporting

4. Regulation

The “New” CPA exam

update

2. Promote the CPA license

June 16, 2009At the Maryland Business & Accounting Expo

Maryland DLLR Swearing-in of new CPAs

New / Young Professionals

NYPN All member holiday partyMaryland Zoo (in Baltimore)

December 4, 2008“CPE - Certified Penguin Extravaganza”

“CPAs ARE the DISCIPLINE in business!”

Jim Collins

Managing in Turbulent Times

1. Context - Understand the “brutal facts of your reality”

2. Strengths Challenges Opportunities & Threats – Differentiate yourself for high leverage opportunities

3. Envision your future

4. Manage for today & tomorrow– Liquidity (balance sheet

– Productivities – 3 types of IC (human, structural & social)

– Costs of the future

Connect – Protect - Achieve!“Association members

earn, on average, $10,000 more per year than non-

members”And

“are 19% more likely to say they are “very-

satisfied” with their jobs than non-members”

Where the Winners Meet Study by the William E. Smith Institute for

Association Research

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632-2301E-mail tom@macpa.org