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Similaire à Professional Issues Affecting the CPA Profession Nationally and in Pennsylvania
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Professional Issues Affecting the CPA Profession Nationally and in Pennsylvania
- 1. 2013 Professional Issues Update Bob Firely, CPA President Mike Colgan, CAE CEO & Executive Director
- 2. Professional Issues & Initiatives PICPA Strategic Priorities Engagement • Professional Development • Voice of the Profession Competition & Risk • Market Forces • Technology & Communication Integration • Evolving Education Model Legislative & Regulatory • Federal/State Legislation • State Board of Accountancy • Regulatory Agencies • CPA Statute • Ethics Demographics & Pipeline • Accounting Enrollments • Diversity • Succession Professional Excellence & CPA Brand • Comfort Letters • Specialty Credentials • FRF for SMEs • SOC Reporting • Private Company Financial Reporting • PCAOB Changes to Audit Environment • CGMA PICPA Initiatives • Student Leadership Academy • Scholarship Fundraising Campaign • Next Generation Leadership • Financial Literacy
- 3. Competition & Risk • CPA Brand • Professional Excellence • Trends and Opportunities
- 4. CPA: Stable & Steady •7.3% • Current U.S. unemployment rate •3.5% • Unemployment rate among accountants •16% • Projected growth in accounting jobs by 2020
- 5. CPA: Satisfying & Rewarding CPA firm: Among most profitable small businesses Yahoo! Business: Top 10 happiest careers U.S. News: Top 3 business career
- 6. More CFOs are CPAs Source: Wall Street Journal, 8/13/13
- 7. Management Accounting Growth 40,500+ U.S. CGMAs 150,000+ September 2013 88% of Fortune CGMAs worldwide 500 represented September 2013 in CGMA rolls Global International perspective trusted + adviser
- 8. Chartered Global Management Accountant (CGMA) • AICPA and Chartered Institute of Management Accountants (CIMA) • Complements CPA designation for CPAs working in business, industry, and government • More than 1,600 CGMAs in PA • Competency exam begins Jan. 2015
- 9. Trends Facing Profession • International • Technology • Regulatory • Human capital • Unstable global economy • Interconnectivity (ripple effect)
- 10. Trends Facing Profession • International • Technology • Security • Regulatory • Privacy • Human capital • Cyber attacks • Opportunities for CPAs
- 11. Gartner: Cloud to grow 20% this year to $109B market NetworkWorld Sept 18, 2012 Gartner predicts a 20% increase in the cloud computing market this year, with the market hitting $109 billion in 2012 and $206.6 billion by 2016. Top drivers of the market will be businessprocess-as-a-service and software-as-a-service with infrastructure-as-a-service not far behind.
- 12. Trends Facing Profession • International • Technology • Regulatory • New players • Human capital • Uncertainty • Gridlock • Government spending
- 13. Trends Facing Profession • International • Technology • Regulatory • Human capital • Demographics change • Use of talent • Business shift towards measurement
- 14. Accounting Firms Most Trusted 74% 62% 55% 51% 49% 47% 36% Acctg Firms Banks Investment Firms Health Ins. Co. Mortgage Companies Gov't regulators Credit Card Co.
- 15. CPA Reputation Stands Strong Overall evaluations of professionals among Business Decision Makers (BDMs)
- 16. CPA Reputation Stands Strong Overall evaluations of professionals among Investors
- 17. CPA Most Valued Credential Among BDMs
- 18. Legislative & Regulatory Pennsylvania Updates • Regulatory Bodies • Accounting & Auditing Climate • Professional Ethics & Codification • Tax Update
- 19. Technical Topics • New FASB Chair • Private Company Financial Reporting – AICPA and FASB’s PCC • PCAOB and IAASB Audit Reports • Compilations – Attest versus Non-attest • New GASB Pension Standards
- 20. FASB @ 40 – Future Russell Golden takes the Helm 1. Process improvement in standard setting process – Improved Codification and shortened life cycle for standards creation. 2. Reduce complexities and cost of implementation and improve information provided. 3. Improve communications and transparency; build broad based awareness to improve input. 4. Increase collaboration with FAF and GASB and create a better organization.
- 21. FRF for SMEs Framework #MainStFinancials Non-GAAP reporting option Free download of framework Free toolkits - CPAs - Clients/small biz - Users of F/S Targeted education campaign CPA/Firm involvement key
- 22. FRF for SMEs Framework Traditional and proven accounting methods Targeted disclosure requirements Historical cost measurement basis Optionality so financial statements can be targeted to users’ needs Uncomplicated and principle-based Simplified consolidation model and no concept of variable interest entities Released June 10
- 23. FAF - Private Company Council Established May 23, 2012 1. FASB and PCC - establish criteria for determining if and when there should be an exception or modification. 2. PCC proposes changes. 3. FASB considers endorsing. 4. Proposed changes endorsed by FASB exposed for public comment. 5. PCC redeliberates based on input. 6. FASB to re-consider endorsement. 23
- 24. PCC Activities To Date Proposed alternatives for private companies to date: 1. Plain Vanilla Interest Rate Swaps 1.Recognizing and measuring various intangible assets (other than goodwill) acquired in business combinations 2.Subsequently measuring goodwill 3.Proposed Alternative for VIEs for entities under common control leasing arrangements
- 25. Other PCC Activities Under Consideration • Stock-based compensation (especially when company value decreases) • Development stage entities (especially for disclosures of cumulative amounts since inception) • Interest rate swaps with more than one counterparty or lending arrangement • FIN 48, Accounting for Uncertainty in Income Taxes
- 26. PCAOB Proposed New Audit Opinion Auditor required to communicate critical audit issues, defined as those that– • “Involved the most difficult, subjective, or complex auditor judgments, • Posed the most difficulty to the auditor in obtaining sufficient appropriate evidence, • Posed the most difficulty to the auditor in forming an opinion on the financial statements.”
- 27. PCAOB’s Proposed New Audit Opinion • Also required to communicate specific items related to independence, tenure, and responsibilities for, and results of, the auditor’s evaluation of other information outside the financial statements. • The proposed report enhances the language related to the auditor’s responsibilities for fraud and the financial statement footnotes. • Proposal requiring audit firms to include the name of the engagement partner in audit reports expected by end of 2013.
- 28. Compilations – Attest versus Nonattest • PEEC – Amends ET 101-3, Nonattest services to specifically classify financial statement preparation is a non-attest function – Effective for engagements for periods beginning on or after December 15, 2014. • SSARS includes financial statement preparation as an attest service. • Currently SSARS applies when the CPA is engaged to perform a compilation, or submits financial statements to a client. • Submission means prepare and present.
- 29. New GASB Pension Standards • Effective for plans for FYs beginning after June 15, 2013, and for employers for FYs beginning after June 15, 2014. • Funded status of the plan now will be recorded on the balance sheet of the participating employer using the fair value of investments and a prescribed actuarial method
- 30. Regulatory Issues • • • • • • • Changing Definition of Attest Comfort Letters DCED & DPW Ethics Codification 2013 COSO Framework DOL Audit Quality Study CPA Mobility
- 31. Changing Definition of “Attest” Definition of “attest” Public’s reliance on CPA audit/attest services Issuance of reports reserved for licensed CPAs in a CPA firm who demonstrate competence and qualifications AICPA, NASBA pursuing revised language for UAA Exposure draft released July 17
- 32. Expand UAA Definition of “Attest” CURRENT DEFINITION PROPOSED DEFINITION Audits/engagements under SAS No Change Reviews under SSARS No Change Audits/engagements under PCAOB No Change Examinations of prospective financial information under SSAE Examinations, reviews and agreed-upon procedures under SSAE 32
- 33. Expanded UAA Definition of “Attest” • Continues to exclude compilations • Applies to performance by licensed CPAs practicing in licensed CPA firms – Unlawful for a non-CPA to perform the service under AICPA standards
- 34. Comfort Letters New Consumer Financial Protection Bureau Regulations – Potentially encourage lenders to rely on 3rd party assurances. See PICPA website - Trending Topic page for resources on the following action steps: • Strategy for Responding to Lenders • Know Your Boundaries and the Applicable Standards • Obtain Consent and Maintain Confidentiality • Understand the Risks of Responding
- 35. DCED and DPW
- 36. PICPA Regulatory Outreach • PICPA/DCED Working Group - Collaborative effort to address practitioner concerns and issues, to improve the quality of the audit guidance and ensure that the guidance is not conflicting with professional standards. • DPW – Currently working with DPW to streamline and modernize their HealthChoices Audit Guides • Contact PICPA’s Professional & Technical Standards Team with any Regulator-Prescribed Reports that do not comply with professional standards.
- 37. Professional Ethics – Codification • New structure applies standard drafting conventions, removes footnote, consistent wording, topically organized, searchable, and intuitive, and adds non-authoritative practice aids. • Divided into 3 sections - members in public, members in business and industry, and other members. • The intent is to retain the original meaning. • Rules have not changed. Ethics rulings are included in the interpretations as examples. • Final expected January 2014.
- 38. New COSO Framework Issued May 2013 • Modernizes the language from the 1992 document and recognize changes in governance, technology and complexity related to globalization and evolving business models. • Retains the original 5 components (control environment, risk assessment, control activities, information and communications, and monitoring) • Codification of the IC concepts into 17 principles • Includes key areas of focus. 38
- 39. DOL’s Audit Quality Study • Review of 2011 plan year audits; will begin late 2013 • Statistical approach • Sample size approx. 400 plan audits – request to go to the Plan Administrators • Results will be stratified by # of audits performed • AQC membership viewed positively • DOL will continue ongoing firm inspections and WP reviews • ERISA audits continue to have high deficiency rates
- 40. CPA Mobility WA OR NH MN ID NV WI SD WY AK VT ME ND MT IL CO KS IN WV MO KY NM VA NC AR DC SC MS HI TX NJ DE MD TN OK RI OH UT AZ *MA CT *PA IA NE #CA NY MI AL *GA LA FL PR CPA Mobility Enacted # CA Mobility Law Effective as of July 1, 2013 * CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA In Progress VI GU CNMI Updated 10.01.2012
- 42. State Tax & Legislative Update • Commonwealth Budget • PICPA Legislative Agenda -State Legislation • CPA Statute • Professional Ethics
- 43. State Legislation 2013-14 Budget Overview • $28.4B, $679M or 2.4% over FY 2012-13 Budget • No tax increase; Eliminates Cap Stock & Franchise Tax 1/1/14 • Broad-based business tax reforms • Provides $14.5M for DOR’s Technology Modernization funding
- 44. State Legislation “Big 3” Initiatives State Pension Reform Transportation Funding •$41B unfunded liability •Senate Bill 1—Sen. John Rafferty •Rep. Chris Ross & Sen. Mike Brubaker 1 Privatization •House Bill 790— Passed House on March 21 •Currently pending in Senate Law and Justice Committee 2 3
- 46. State Legislation Tax Legislation—House Bill 465 (Act 52) • Phase-out of Cap Stock & Franchise Tax delayed until 2016 (.67 mills in TY 2014/.45 mills in TY 2015) • Net Operating Loss Deduction Increase—$3M to $5M starting in 2014 • Effective 1/1/14, aligns Pennsylvania with federal rules to allow for a $5,000 start-up business deduction in the year a new business is established. • Effective 1/14, eliminates the resident credit for PIT paid to foreign countries
- 47. State Legislation Tax Legislation—House Bill 465 (Act 52) • Close “89-11” Loophole • Market Sourcing of Services • Add-back Provision for CNI Apportionment • Modernization of Banks Shares Tax • Eliminates Tax Credit Programs
- 48. State Legislation Tax Administration—Senate Bill 591 (Act 71) • Mandates electronic payments of $1,000 or more for corporation taxes, employer withholding and sales tax (not PIT). Effective 1/1/14 • Requires electronic filing by third-party preparers who annually submit 11 or more state tax reports or returns. Effective immediately • Prohibits the Department from contracting with third parties to conduct field audits based on a contingent fee. Effective immediately. • Repeals the corporate loans tax effective for tax years beginning after 12/31/13
- 49. State Legislation Board of Finance & Revenue Reform—House Bill 465 (Act 52) • Reorganizes from 6- to 3-members (Treasurer and 2 appointed by Gov. & confirmed by Senate) • Expedited process • Greater transparency • Compromise authority
- 50. Act 15 of 2013
- 51. CPA Candidate Experience CPA Law Experience Changes—Act 15 of 2013 • House Bill 40—Rep. Gordon Denlinger, CPA • General Experience Requirement vs. 25% Attest • Opportunities for Candidates Based on Diversity of Profession • Verification of Experience v. Supervision • Timing of Change • Which Candidate’s Need CPE Credit? • www.picpa.org/attest
- 52. State Legislation Business Privilege Tax Clarification • House Bill 1513 – Rep. George Dunbar – Reported from House Finance Committee 10/1/13 • Senate Bill 631 – Sen. Pat Browne • Reverse the Rendina decision • Clarifies application of business privilege tax
- 53. State Legislation Purely Public Charities • Senate Bill 4 – House Bill 724 • Joined coalition proposing amendment to PA Constitution clarifying General Assembly’s exclusive role to determine qualifications for tax-exempt status for purely public charities • Supreme Court decision in Mestivah v. Pike County Board of Assessment Appeals • Approved by both House and Senate • Must be approved again in 2015-16
- 54. Professional Issues • Firm Survey • CPA Poll • Succession Planning
- 55. 2013 PCPS Firm Survey
- 56. CPA Poll • Joint effort with NY and NJ • Will use data to position CPAs as thought leaders in the industry • Firm trends will be shared in Pennsylvania CPA Journal and News Views
- 57. Succession Planning 46% 44% 50% of firms have a formal succession plan – up from 35% in 2008 of firms say M&A talks are on table of practitioners expect 1x revenues for their practice, but in reality often less Source: 2012 PCPS Succession Survey
- 58. Demographics & Pipeline • Accounting enrollment • CPA Exam • Diversity • Scholarship Fund • Pathways Report
- 59. 40,350 Record number of accounting graduates hired in 2012 TRENDS survey 82,177 Record number of accounting degrees awarded 240,380 Record-high accounting enrollments for 2011-2012 2013 AICPA TRENDS Report
- 60. CPA exam 98% Candidate satisfaction 255,277 Delivered sections in 2012 2 Million 17,619 International exam sections since 2011 Total U.S. exam sections delivered since computer-based test
- 61. Diversity - Retention Collaboration - Recruitment
- 62. PICPA Diversity Efforts • Accounting for Success: Diversity in the Profession, Diversity in Opportunities • National attention for Increasing Talent, Clients, and Revenue: The Business Case and Toolkit for Diversity
- 65. Pathways report Seven recommendations CPA involvement is critical To volunteer, visit Pathways Commission website or contact AICPA, AAA or PICPA Careers in Accounting Team
- 66. PICPA Initiatives • CPA Image Enhancement • On-Demand CPE • Learning Management System • Governance & Structure • Support Your Chapter
- 67. Consumer Finances How financial stress is affecting our lives 37% of those who expect a tax refund will loans have made 75% of those with student use it for day-to-day expenses sacrifices because of monthly payments 33% will put it towarddelayed contributions to retirement accounts 41% have debt
- 68. Save Wisely, Spend Happily First consumer educ. book Available on Amazon or CPA2Biz National insight • • 125 CPAs 1,000 years collective experience Personal finance field guide • • • • • • Personal stories Tips Planning guide College saving Retirement saving Education Ted Landis (SC) Susan Howe (GP) Jacquie Basso (GP) Bruce Rhoads (RD) Greg Petyak, (CL)
- 69. Enhancing the CPA Image • • • • • More than 50 Speakers Bureau presentations A record-breaking 145 reporter calls last year Brochures downloaded: 110,000 Brochures ordered: 95,000 Award winning financial literacy calendar distributed to 25,000 consumers
- 70. Invest in Reading • Insert banner ad from homepage
- 71. Google Ad Words • Position CPAs as thought leaders • Key words campaigns before, during, after tax season • 1.3 million impressions • 30,000 visitors to www.picpa.org
- 72. Ask a CPA • More than 140 questions fielded – many people in the room • Nearly 5,000 views of the questions & answers
- 73. Expert speakers, hot topics, and ethics! www.picpa.org/ondemand
- 74. PICPA offers hundreds of programs in a variety of formats: • In person • Webinar • On-demand
- 75. PICPA also tracks all of your CPE in one convenient locations: MY ACCOUNT
- 77. Exploring an LMS More robust system that would include: •One place that administrators can check individual’s CPE compliance •Ability to develop learning ladders – development plans tailored for each staff •A continued comprehensive library of courses in all delivery formats •Flexible pricing suited for your organization
- 78. Pennsylvania CPA Journal • PA is the first state to offer an app for our magazine. • Visit My Account/Communications preferences to tell us if you prefer print or electronic.
- 79. Governance Model
- 80. By-laws Amendment • E-mail notification • Pennsylvania CPA Journal • Online • Visit www.picpa.org/2013bylawsamendment • Deadline: 90 days or January 10, 2014
- 81. 20 Trends to Watch Originally published in Accounting Today for the Web CPA
- 82. 1. Look, Ma—No Walls: virtual & smaller firms 2. The Imperial MP: authority & power 3. Spying on Your Clients: social media/listening 4. The Outsourced CFO: virtual CFO 5. Opportunity in Obama Care: small business client opportunity
- 83. 6. Beyond Expert: niche thought leadership 7. Sending Securely: information security 8. Beyond Borders: global environment 9. The Cooperative Internship: small firm collaboration 10. Tablet Madness: mobile business
- 84. 11. The New Flavors of M&A: boomer retirement 12. The New Career Path(s): expanding market 13. Cloud Closets: virtual support 14. Rise of Emeriti: retirement transitions 15. You Owe Your Clients a Succession Plan: fiduciary responsibility
- 85. 16. The Automated IRS: increased scrutiny 17. Mandates Roll Downhill: regulatory oversight 18. Bring Your Own Device: controlling access 19. Outside Collaboration: joint ventures/network 20. Eye on Auditors: tougher enforcement and inspections
- 86. • Thank you
Notes de l'éditeur
- The CPA profession provides opportunities for one to fulfill career, financial and familial goals. I don’t need to tell you why the CPA profession is great, but here are some statistics that may help: While the U.S. unemployment rate hovers between 7% and 8%, the rate in the accounting field held steady at roughly 3.5% through the recession and after, according to the Bureau of Labor Statistics. The Bureau of Labor Statistics also expects a 16% growth rate from 2010 to 2020.
- The world of business is constantly changing. Regulation can change an industry at any given time. But CPAs are always in demand to make sense of the change. We speak the language of business. I believe it’s always a good time to be a CPA. CPA Firms were ranked one of the most profitable small businesses according to a CNN study. Yahoo! Finance ranked the CPA Profession among the Top 10 “Happiest” careers. The profession is always looking for the best and brightest CPA profession is generally considered to be “recession-proof” CPA always ranked among Top 10 careers and U.S. News ranked “Accountant” as the #3 business career We were also recently ranked in the Top 10 “Happiest” careers CPA firm is most profitable small business Accounting is the language of business CPA enables you to take any number of paths within the business world
- CPAs speak the language of business, and now, more of the financial business decision-makers are CPAs. A Wall Street Journal article on a Spencer Stuart survey shows CFOs who are CPAs increased dramatically, from 25% in 2006 to 38% in 2013. At the same time, the number of CFOs who have MBAs declined.
- Recently released multiple thought leadership reports, including: - Talent Pipeline - Managing Responsible business - Risk & Innovation As of September, there were more than 150,000 CGMAs worldwide. Of them, more than 40,500 were U.S. CGMAs. Besides the number of CGMAs, the quality and position of CGMAs is impressive: 1/3 (30%) are C-level executives 88% of Fortune 500 represented in the CGMA rolls 91% of the Fortune 100 Success driven by resources Interrelated themes important in business environment. We educate the marketplace on what management accountants do through the 6 themes: Doing the Right Thing (ethics - done), Skills and Talent (done), Making it Happen (performance management), Risk vs. Innovation (current), Resilient Business Models, and Big Data For public accounting, the CGMA designation offers the global perspective. It shows clients the linkage of the international trusted business adviser.
- I’m hearing a lot of patterns emerge in comments from members regarding their clients and I’d like to point out just a few of them to highlight what’s on their minds. International There’s a lot of focus on international and firms/companies are exploring what it will take to do business overseas. We’re currently in a period of a very unstable global economy. The global economy benefits and suffers from a great deal of interconnectivity. When things are good, we all benefit, but at the moment, we’re seeing a lot of uncertainty and volatility shaking the global marketplace.
- Technology On the technology front, security continues to be a top issue. Developments in technology lead to security and privacy concerns, as the number of cyber attacks continues to grow to a practically ubiquitous occurrence. I’ll talk more about these issues later, but this is an area where CPAs can take a leadership role, reviewing the security protocols of their clients.
- Regulatory There are a lot of new faces in Washington, and any time there’s change, that leads to uncertainty. We continue to see an environment of gridlock, making it difficult to achieve even small progress. Government spending continues to be a major area of concern and we’ll touch on this a little later on.
- Human Capital The United States continues to undergo a dramatic demographic change and the Institute is taking steps to keep up with this change, including the National Commission on Diversity and Inclusion. We’ll talk more about these topics later.
- 300,000 Fortune Magazine Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups “Echo Boomers” (18-34) rated accounting firms highest– 74%
- After 40 years in existence FASB is in a state of transition. They have spent the last 11 years working towards convergence with the IASB with only modest success. They have issued converged standards on Fair Value and a couple other smaller projects and are about to issue a converged revenue recognition standard but have not been successful on other key standards, (e.g., financial instruments and leases). With Russ Golden recently taking over as the FASB Board Chair, the direction of FASB standard setting has changed. Now they are going to work on improving the U.S. standards focusing on the needs of investors. Key areas of improvement include Reducing complexities and cost of implementation Undertaking a new project to improve the Codification
- We are proud to unveil our new Financial Reporting Framework for Small- and Medium-Sized Entities. The guidance is available free online as a PDF from our website. A print version was bundled with implementation guidance in June and that package has been integrated into the AICPA’s Online Professional Library and available in e-book format. To help firms learn the benefits of the new framework, and to aid the education of their clients and users of financial statements, we have developed a free robust toolkit. Among the many items included are a PowerPoint presentation, a short video, a backgrounder, an FAQ, comparisons with GAAP and tax basis OCBOA and IFRS for SMEs, sample financial statements and an introductory guide. PCPS member firms will also have access to a PowerPoint for staff training, a talking points document and a client interest survey. Educational toolkits are also being prepared for private companies that may be interested in using the framework as well as for bankers and other users of small business financial statements. We’ll be conducting a digital advertising campaign and an email campaign to the user audiences to boost awareness, among other numerous planned activities. #MainStFinancials
- Here are some of the key characteristics of the FRF for SMEs that are in response to CPAs serving small business, the owner-managers of those businesses and users of financial statements. The framework is robust yet relevant. It will provide financial statements that show what a company owns, what it owes and what its cash flow is. There are reduced book-to-tax differences when using the framework. I want to emphasize that the FRF for SMEs is an additional financial reporting option in the OCBOA space; the other special purpose frameworks, such as tax or cash bases, remain and may still be appropriate for entities.
- In a recent exposure document the FASB decided that EBP and NFPs – Not considered to be business entities. This means that they would in many cases, be able to take advantage of the alternatives devised by the PCC.
- IAASB also considering similar changes
- Working on resolving conflict between ethics code and SSARS
- Key conceptual shift in reporting pension liabilities and expense from a “funding” approach to an “earnings” approach: Currently, no liability is reported if government pays its contractually required contribution Under new approach: Pension liability is reported as employees earn their pension benefits by providing services Changes in pension liability recognized immediately as pension expense or reported as deferred outflows/inflows of resources depending on nature of change Substantive changes to methods and assumptions used to determine actuarial information for GAAP reporting purposes are required by GASB 68 The actuarial methods and assumptions allowable under current standards may continue to be used to determine funding amounts
- Definition of “attest”: The AICPA governing council voted at its Spring Council meeting to pursue a change in the definition of “attest.” On July 17, 2013, the AICPA and NASBA released an exposure draft on a proposed revised definition of attest for the UAA. There will be a 90-day public comment period. The proposal would amend the definition of attest so that engagements performed under the AICPA’s Statement on Standards on Attestation Engagements (SSAE) could only be performed by licensed CPAs operating within a CPA firm licensed in the United States. Currently, the only SSAE included in the UAA definition of attest is examinations of prospective financial information. Following the comment period, the UAA Committee hopes to have final revised attest language to bring back before the AICPA and NASBA Boards in November 2013. State CPA societies, working with their boards of accountancy, would then be asked to bring attest legislation to their state legislatures starting in early 2014. The need for changes to the definition of “attest” became apparent when the AICPA’s Auditing Standards Board moved certain services (primarily "Reporting on Controls at a Service Organization") from SAS 70 into SSAE 16. Although the change was a result of the Clarity Project’s efforts to clarify and reorganize the GAAS, it had the unintended effect of removing Reports on Controls at a Service Organization from having to be performed by a CPA in a CPA firm licensed in the state in which the service is being performed. In light of this issue, both the AICPA and NASBA leadership felt it was appropriate to revisit the definition, last approved in 1997, especially since SSAEs are also being used for many new kinds of engagements such as sustainability reports and cloud computing which may currently be performed by non-CPAs lacking the same qualifications as a CPA. Under consideration by UAA Committee Task Force over the past year and a half. When attest and compilation services are not competently and properly performed, the breadth and severity of the possible adverse consequences are far greater than those attendant upon other services performed by CPAs. For these reasons, the keystone of the Uniform Act reserves the issuance of reports in standard form on audited, reviewed and compiled financial statements to licensees who have demonstrated qualifications to perform attest and compilation services.
- Started last year with our input on the Act 32 audit guide. From that effort the DCED invited us to join a working group to address practitioners concerns on a wide array of issues.
- Committee of Sponsoring Organizations of the Treadway Commission Joint initiative by 5 private sector organizations AICPA, American Accounting Association, FEI, IIA, The Association of Accountants and Financial Professionals in Business. The 1992 Framework “is recognized as the leading guidance for designing, implementing and conducting internal control and assessing its effectiveness.” coso.org COSO is not a regulatory or standard-setting body. However, the COSO framework is relied on by companies for their internal control system. Many companies will not want to base their control system on a superseded framework. The audit guidance will change as well. Dec. 15, 2014 - COSO will supersede the 1992 framework.
- California and District of Columbia implemented mobility during 2013. We’re now up to 49 states and DC, and the focus is now on Hawaii to move mobility forward. AICPA and NASBA just released an exposure draft to update the UAA to allow for firm mobility, comment period is January 2014. This will be a multi-year project. One of the ways we’re helping to improve awareness is CPAmobility.org a site where visitors can input their particular circumstance (place of business, secondary state, services offered) and find out if mobility applies to them.
- Pension Reform--Senate Bill 922 & House Bill 1350—Sen. Mike Brubaker and Rep. Chris Ross No changes to current retiree benefits or benefits already earned by current employees Moves new employees to defined contribution (DC) plan Changes formula for future benefits for current employees Transportation Funding--Uncapping Oil Company Franchise Tax Reduction of flat Liquid Fuels Tax Transition vehicle registration renewals to biennial cycle Transition driver license renewals to 6-year cycle Privatization v. Modernization 1,200 retail wine & spirits licenses auctioned Wholesale licenses offered for exclusive sale of particular brands Modernization--Senate Bill 800—Sen. Jim Ferlo
- Expands circumstances in which the sale of a real estate company is subject to tax. The following changes are effective Jan. 1, 2014: o An option or commitment to transfer interests in a real estate company in the future is now treated as a transfer of those interests. o A closely held company, 90 percent of whose assets are interests in one or more real estate companies, is now considered a real estate company itself. o Whether or not a company is a real estate company is determined by consideration of real estate everywhere, not just in Pennsylvania. Clarifies the rules for the sales apportionment factor with regard to sale of services. Effective Jan. 1, 2014, the following sourcing rules apply: o The sale, lease, rental or other use of real property occurs at the location of the real property. o The rental, lease or licensing of tangible personal property occurs at the location of first possession of the property. o Sales of services occur at the point of delivery of the services. Requires the add-back of intangible expenses to income for interest, royalties, patents, trademarks, etc., between affiliated companies in certain instances. Effective for taxable years beginning in 2015. Bank and Trust Company Shares Tax Reduces the bank shares tax rate from 1.25 percent to 0.89 percent as of Jan. 1, 2014, and thereafter. In addition: Eliminates the use of a six-year average to calculate the value of total equity capital, and instead bases the tax on the most recent year-end value of total bank equity capital. Requires apportionment solely based on receipts, similar to the manner in which the corporate net income tax is apportioned based on sales. Expands the extent to which out-of-state banks doing business in Pennsylvania are subject to the tax. A new definition of “doing business in this Commonwealth” is added, extending the tax to banking institutions that generate at least $100,000 of gross receipts apportioned to Pennsylvania and solicit business in Pennsylvania, or hold a security interest, mortgage or lien in real or personal property located in the commonwealth. The prohibition on petitions for reassessment of bank shares tax is repealed. Requires the Department of Revenue and the Department of Banking and Securities to analyze whether the statutory tax rate sufficiently addresses the significant changes in the structure and regulatory environment within the banking industry. Requires a report within 18 months of enactment.
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- Survey sent to a select group of members – many in the room who are partners, shareholders, CEO and other business leaders. Ask questions about business trends and the economy.
- Source: 2012 PCPS Succession survey Significant increase in succession plans but still less than half of firms have them 44% say M&A talks possible to address issue Half of practitioners expect only 1x revenue for their practice, and could be even less
- The 2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report offered good news for those studying, considering studying, or graduating with a degree in accounting. Three records were broken with the latest survey: A record 40,350 accounting graduates were hired in 2012, and 89% of firms say they’re forecasting the same or increased hiring of graduates this year. A record 82,177 account degrees were awarded in the 2011-2012 academic year. There was also a record 240,380 accounting enrollments for the 2011-2012 school year in both Bachelor’s and Master’s degree programs. This all-time high demonstrates continued strong interest in the accounting profession. Employers are increasingly looking to hire CPAs with advanced degrees, as they have the education and skills necessary to work in an increasingly complex, global business environment. The best way to ensure that the profession has the necessary talent to fill open positions, is to recruit the best and brightest young minds from the entire talent base available and make certain we work to retain them.
- Candidate satisfaction with the CPA Exam remains at 98%, with 255,277 delivered sections in 2012 (2.8% growth from 2011). The Exam launched successfully internationally in August of 2011 in Bahrain, Japan, Kuwait, Lebanon, and the UAE, as well as in Brazil in February 2012. International exam volumes remain strong at overseas locations since the CPA Exam was first offered. More than 17,600 sections since launch in 2011. International administration is helping to increase the number of US CPAs abroad. Overall, the CPA Exam program remains strong following the successful implementation of CBT-e, a compilation of the most significant changes to the CPA Exam since its transition to a computerized format. The AICPA is continuing to invest in the ongoing enhancement of the Exam. To date, more than 2 million CPA Examination sections have been administered in the U.S. since the introduction of the Computer-based test.
- A key focus is keeping people in the profession. Issues such as diversity, retention, collaboration and recruitment are important issues we all must address. National Commission on Diversity and Inclusion The well-known attributes of a career as a CPA, combined with the profession’s efforts to recruit accounting majors (Start Here, Go Places program) and support them through their pursuit of the CPA credential (TWTCPA site), has helped fill the pipeline of future CPAs. Our most recent Trends survey, for academic year 2011-2012, reported an all-time high enrollment of 240,380 students in bachelor’s and master’s accounting programs.
- Scholarship fundraising campaign $200K by 4/30/14 75th anniversary of the scholarship fund—last time we had a fundraising campaign was 25 years ago In the last decade, we’ve given $2.3 million to more than 400 PA accounting students Personal giving and Friends of the Scholarship Fund—donate at varying levels, including a scholarship in your firm name at the school of your choice See the cards on your table, visit our web site
- The U.S. Department of the Treasury Advisory Committee on the Auditing Profession (ACAP), created to study the sustainability of the auditing profession, recommended that the American Accounting Association (AAA) and the AICPA form a commission (the Pathways Commission) to study the future structure of accounting education—not just auditing education. The Commission met during 2010 and 2011 to study the future structure of higher education for the accounting profession (broadly defined) and develop recommendations for educational pathways to engage and retain the strongest possible community of students, academics, practitioners and other knowledgeable leaders in the practice and study of accounting. The Commission sought to address how the accounting profession should approach the many challenges it faces that amplify the importance of accounting and access to reliable financial and operational information produced and audited by accountants: Globalization of business and markets Escalating complexity of business Lack of financial literacy High profile frauds eluding regulatory scrutiny Increasingly sophisticated technology systems integral to reliable data Increasing need for fair value estimates, predictive information and use of non-financial information In addition, the Commission acknowledged several developments within the accounting profession that challenge the ability to educate, attract and retain the best talent to meet the information demands of our times, as well as advance the accounting profession: A shortage of doctorally-qualified accounting educators, which limits research productivity, increases costs of research resources and increases teaching and administrative demands on accounting academics; The need to revise the accounting curricula regularly in light of fast-paced business changes; University budget constraints that threaten to make the cost of education prohibitive; and The need for training in specialized areas to meet the profession’s demands. The Report provides 7 recommendations and several objectives for fulfilling each recommendation. Beyond the recommendations and objectives, the report includes approximately 60 action items to help various stakeholders implement the recommendations. Recommendation 1: Build a learned profession for the future by purposeful integration of accounting research, education and practice for students, accounting practitioners and educators. Recommendation 2: Develop mechanisms to meet future demand for faculty by unlocking doctoral education via flexible pedagogies in existing programs and by exploring alternative pathways to terminal degrees that align with institutional missions and accounting education and research goals. Recommendation 3: Reform accounting education so that teaching is respected and rewarded as a critical component in achieving each institution’s mission. Recommendation 4: Develop curriculum models, engaging learning resources and mechanisms for easily sharing them as well as enhancing faculty development opportunities in support of sustaining a robust curriculum. Recommendation 5: Improve the ability to attract high-potential, diverse entrants into the profession. Recommendation 6: Create mechanisms for collecting, analyzing and disseminating information about the current and future markets for accounting professionals and accounting faculty. Recommendation 7: Convert thought to action by establishing an implementation process to address these and future recommendations by creating structures and mechanisms to transition accounting change efforts from episodic events to a more continuous, sustainable process. Continued joint efforts will be necessary for successful implementation of the recommendations in this report. Commission members are finalizing the structure that will continue to represent as broad a stakeholder group as possible to efficiently conduct the implementation phase of the report. Commission members who will continue to oversee implementation include: Bruce Behn, Pathways Commission Chair and Ergen Professor at the University of Tennessee; Bill Ezzell, a former partner with Deloitte, LLP and past Chairman of the AICPA Board of Directors; and Mark Higgins, the Dean and Alfred J. Verrecchia and Hasbro Inc. Leadership Chair in Business at the University of Rhode Island and a past President of the American Taxation Association. The AAA and AICPA remain committed to the initial goals of the Commission and support the recommendations included in the Pathways report. Both organizations are committed to supporting innovation in accounting education, more robust collaboration with practice and encourage adoption of the report recommendations. In addition, both organizations support the ongoing implementation structure and activities necessary to encourage study, testing and adoption of the report recommendations in a variety of settings. Interested and affected stakeholders are encouraged to review the report and identify areas where they can champion innovation in accounting education. How can you help? - Read the report - Identify areas where you can champion innovation in accounting education - Join your local university or alma mater’s accounting or business school advisory committees and/or share the report with them - Volunteer with the AAA or the AICPA, become a CPA Ambassador and help encourage future CPAs
- We recently conducted our Harris poll and I’d like to share some interesting takeaways with respect to Americans’ finances. It’s clear that financial stress is taking a toll on Americans.
- Fortunately all of those Americans who are stressed out by their finances have somewhere to turn. On January 3, the American Institute of CPAs published the profession’s first national consumer education book. Save Wisely, Spend Happily combines the insight of CPAs from across the country — 125 of them with more than 1,000 years of collective experience — into a book of tips, tales and teachings about money. Save Wisely, Spend Happily is the first consumer book from the AICPA and complements the award-winning 360 Degrees of Financial Literacy, a volunteer effort of the CPA profession that helps Americans at all life stages understand their finances. The book was published in honor of the AICPA’s 125th anniversary. Save Wisely, Spend Happily is available to the general public in both paperback and Kindle format through Amazon.com. AICPA members can purchase the book through CPA2Biz. Discounts are available for bulk orders. PICPA Members Ted Landis (SC), Susan Howe (GP), Jacquie Basso (GP), Bruce Rhoads (RD), Greg Petyak, (CL) contributed as authors
- More than 50 Speakers Bureau presentations at libraries, businesses, and to Girl Scout troops Award winning financial literacy calendar distributed to 25,000 consumers through libraries and members New! Thank you luncheon to the members of the Speakers Bureau. Also an opportunity to tell us what we can do to make this experience better. What can be done to increase speaking opportunities?
- Invest in reading program being scheduled in schools throughout the state. Designed for 2nd and 3rd graders. Members go to libraries to read to the students and leave the book behind. Books are: Second grade - Bunny Money by Rosemary Wells; third grade Alexander, Who Used to be Rich Last Sunday by Judith Viorst
- Some key words not during tax season include financial planning, home ownership, saving for college, comfort letters and estate planning. Tax season we run a separate campaign, and direct people to our CPA Locator and Ask a CPA.
- Continuing to support members professional development, we’ve expanded our delivery methods of CPE. In addition to in person and webinars, we’ve added a library of on demand courses. You can watch them from your computer, tablet or phone. All of our courses are approved and accepted by the PA state board of accountancy Expert speakers—National and local accounting leaders from our highest rated conferences Hot topics—Ethics, Act 32, Affordable Care Act, FRF for SMEs, pension accounting Affordable—On Demand Value Pass offers 40 hours of CPE for only $299, less than $8 a credit for members Take the test and receive your score immediately.
- Members liked it and several had asked if they could stop their print edition. The answer is yes!
- 100 year old governance model 2012 task force with McKinley Advisors to conduct qualitative, quantitative, and comparative research Bi-cameral structure Goal to increase member engagement Electronic ballot on changes will be send in late fall