INSIGHT Magazine - November December 2009

SoftwarePlayersyou should know

In this issue

Ponzi scheme victimsfind IRS relief

2009’s hardest hit industries

Five things to be grateful for

Portals boost practice power

US businesses feel IFRS pressure

Time’s almost upfor registered CPAs

R&D tax credits are being watched

Find fame in the media spotlight

New rules for greatertax compliance

The Magazine of the Illinois CPA Society icpas.org/insight.htm | November/December 2009

e-�led returns have a 1% error rate compared to 20% for paper.

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indexNovember/December 2009 Vol.59 No. 4

features

columns

regulars

32 Software Scene StealersBy Carolyn Tang

Check out these lesser-known—but no less worthy—accounting software

companies.

38 ScammerBy Derrick Lilly

Is there relief for defrauded investors? Yes.

42 Spend PhobiaBy Sheryl Nance-Nash

Which industries, products and services have suffered most?

10 Economy Feelgood 2010By Kristine Blenkhorn Rodriguez

Things are beginning to look up...honest.

12 Profession Watch the ClockBy Derrick Lilly

The deadline’s looming for lifetime licensing as a registered CPA.

14 IFRS Are You Worried?By Selena Chavis

Uncertainty and unease continue to blight IFRS adoption.

18 R&D You’re Being WatchedBy Randy Crabtree, CPA

R&D tax credits fall under increasing scrutiny.

20 Technology Portal PowerBy Daniel Dern

Emerging accounting portal technologies streamline financial

processes and boost productivity.

24 Career Media DarlingBy Derrick Lilly

Be the media’s go-to person for all things finance.

28 Tax The OverseersBy Harvey Coustan, CPA

Is increased regulation the route to better taxpayer and preparer

compliance?

4 First WordA message from the Illinois CPA Society President & CEO.

6 Seen + Heard

News bytes, sound advice and practical business tips.

46 Classifieds + Advertiser Index

48 Time + Talent

A shout out for the efforts and expertise of Illinois CPA Society members.

Visit eINSIGHT today!

icpas.org/insight.htm

From the time when you first pass the CPA Exam,

there’s pride in being a CPA and in having a career

filled with endless opportunities to be good at what

you do and to do good with what you know.

As people struggle to navigate the new economic

realities, the ICPAS recognizes the many ways in

which CPAs are uniquely qualified to help others.

The financial knowledge and experience they pos-

sess are qualities that continue to increase in their

value to families, individuals in need, and not-for-

profit organizations.

Society members are a case in point, always making

the best use of their professional assets. When I speak

to members at events like our Town Hall Forums, I’m

always pleased and proud to talk about all the hours

our volunteers have spent helping others.

In the past year, 153 member volunteers have spent 4,658 hours providing tax preparation serv-

ices around the state, working with clients of the Center for Economic Progress to help them get

the tax credits they deserve. About 20 high school students were able to obtain the financial aid

they needed to attend college because of members’ assistance with completing FAFSA forms. And

life was made just a little easier for 80 military families—who already are dealing with so much—

by having our volunteers prepare their tax returns.

With the financial road ahead of us still uncertain, members have been reaching out to the

Society for additional ways to give back to others. Building on the ability CPAs have to make a

personal connection between the profession and the community, we’ve added new volunteer

programs with more choices to suit more interests.

In partnership with Junior Achievement, Dollars and Sense for Kids allows you to be part of

hands-on activities to bring money management and career skills to life for elementary and mid-

dle school students. Or, you can help Habitat for Humanity by working one-on-one with fami-

lies to give them the support they need to handle the responsibilities of a mortgage.

There’s no program in a box that can do what we can do—actually be there for someone in need.

Check out Time + Talent on page 48 to find out more about how you can be a part of our efforts

to connect real CPAs to real communities and real people.

CPA volunteers who share their time and abilities truly improve the lives of others. So be proud

to be a CPA and proud that your dues dollars not only help you do your job, but also allow us

as an organization to offer enormously helpful programs to people who truly need them.

Elaine Weiss, JD, ICPAS President & CEO

ICPAS OFFICERS

Chairperson, Lee A. Gould,CPA/ABV, JD, CFE, CFFGould & Pakter Associates LLC

Vice Chairperson, Sara J. Mikuta, CPAThe Leaders Bank

Secretary, Charles F. G. Kuyk III, CPACrowe Horwath and Company LLP

Treasurer, Robert E. Cameron, CPACameron Smith & Company PC

Immediate Past Chairperson, Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause, LLP

ICPAS BOARD OF DIRECTORS

Brent A. Baccus, CPA Washington Pittman & McKeever

Therese M. Bobek, CPAPricewaterhouseCoopers LLP

William P. Graf, CPADeloitte & Touche LLP

Reva B. Steinberg, CPABDO Seidman

Cara C. Hoffman, CPABlackman Kallick LLP

James P. Jones, CPAEdward Don & Company

Charlotte A. Montgomery, CPAIllinois State Museum

Elizabeth A. Murphy, PhDDePaul University

Annette M. O’Connor, CPARR Donnelley & Sons Company

Michael J. Pierce, CPARSM McGladrey Inc.

Marian Powers, PhDNorthwestern University

Daniel F. Rahill, CPAKPMG LLP

Lawrence H. Shanker, CPAShanker Valleau Accountants Inc.

Edward H. Stassen, CPARecycled Paper Greetings Inc.

FIRSTWORDA MESSAGE FROM THE ILLINOIS CPA SOCIETY PRESIDENT & CEO

4 INSIGHT icpas.org/insight.htm

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Publisher

ICPAS President & CEOElaine Weiss

Editor-in-Chief

Publications DirectorJudy Giannetto

Creative Services Director

Gene Levitan

Creative Services ManagerRosa Garcia

Publications SpecialistDerrick Lilly

National Sales & Advertising Stephanie Bunsick The YGS Group

3650 West Market Street York, PA 17404

Phone: 1.800.501.9571, ext. 137 Fax: 1.717.390.9891

[email protected]

Circulation/Information Systems

Director of Member ServicesRon Jankowski

[email protected]

Editorial Office550 W. Jackson Blvd., Suite 900,

Chicago, IL 60661

INSIGHT is the official magazine of the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL60661, USA. Its purpose is to serve as the primarynews and information vehicle for some 23,000 CPAmembers and professional affiliates. Statements orarticles of opinion appearing in INSIGHT are not nec-essarily the views of the Illinois CPA Society. The mate-rials and information contained within INSIGHT areoffered as information only and not as practice, finan-cial, accounting, legal or other professional advice.Readers are strongly encouraged to consult with anappropriate professional advisor before acting on theinformation contained in this publication. It isINSIGHT’s policy not to knowingly accept advertisingthat discriminates on the basis of race,religion, sex,age or origin. The Illinois CPA Society reserves theright to reject paid advertising that does not meetINSIGHT’s qualifications or that may detract from itsprofessional and ethical standards. The Illinois CPASociety does not necessarily endorse the non-Societyresources, services or products that may appear or bereferenced within INSIGHT, and makes no represen-tation or warranties about the products or services theymay provide or their accuracy or claims. The IllinoisCPA Society does not guarantee delivery dates for INSIGHT. The Society disclaims all warranties, expressor implied, and assumes no responsibility whatsoeverfor damages incurred as a result of delays in deliveringINSIGHT. INSIGHT (ISSN-1053-8542) is published sixtimes a year, in February/March, May/June, July,August, September/October, November/December,by the Illinois CPA Society, 550 W. Jackson, Suite 900,Chicago, IL 60661, USA, 312.993.0393 or800.993.0393, fax: 312.993.0307. Subscriptionrates for non-members: $30 US, $40 Canada and in-ternational addresses, $42 Mexico. Copyright ©2009. No part of the contents may be reproduced byany means without the written consent of INSIGHT.Permission requests may be sent to: Publications Spe-cialist, at the address above. Periodicals postage paidat Chicago, IL and at additional mailing offices.POSTMASTER: Send address changes to: INSIGHT,Illinois CPA Society, 550 W. Jackson, Suite 900,Chicago, IL 60661, USA.

2009 Magnum Opus Award Honoree, Best

CSR/Green Series or Article

2008 Apex Award, Magazine & Journal Writing

2007 Magnum Opus Award, Best All-around

Association Publication

2006 Apex Award, Magazines & Journals


2004 Apex Award, Magazines & Journals



2002 Chicago Women in Publishing Excellence

Award, Writing/Editing

2001 Apex Award, Feature Writing

2001 Apex Award, Best Redesigns


2000 Apex Award, Best Rewrites

AWARD-WINNING INSIGHT

SEEN HEARDNEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS

$3 billionFunding received by the state of Illinois under the AmericanRecovery and Reinvestment Act of 2009 (as of July 1, 2009). Source: Recovery.Illinois.gov

Stimulus ChecklistThe American Recovery and Reinvestment Act of 2009 offerssignificant grants, tax incentives and policy initiatives tostimulate investment and innovation in the cleantech sector(in other words, knowledge-based products/services thatimprove performance). Grant Thornton LLP’s white paper,Navigating the Cleantech Stimulus: An Executive Summary,provides a checklist of key factors to address:n Identify available incentives, including tax credits,

loan guarantees, grants, and Federal, state or localagency funding.

n Assess eligibility criteria & compliance obligationsfor the various incentives available to your business.

n Understand the application process, and make sureyou have access to the skills and experience necessaryto navigate it.

n Take an industry-wide perspective, analyzing howincentives may affect the business directly or indirectly.

n Evaluate the effects of each incentive, and modelscenarios for broader effects on revenues and costs.

n Reassess your strategic focus and business plan toprepare for new opportunities and challenges, such ascapitalizing on grant funding or speeding investmentand development plans due to increased demand.

n Build your stimulus capabilities to adapt to a sectornow heavily influenced by government.

n Keep a global outlook, identifying potential incent-ives and assessing their impact on the cleantech sector.

Visit GrantThornton.com/cleantech-stimulus to download acopy of this white paper.

The Evolving CFO According to a Robert Half Management Resources [rhi.com] survey of 1,400CFOs across the nation, the role of the accountant in business operationscontinues to expand into new territories. CFOs interviewed say they expectissues outside of traditional accounting functions, such as offering strategicbusiness advice or providing input on IT projects, to occupy 40 percent of asenior-level accountant’s time five years from now. What’s more, 26 percentsay these issues will require as much as 50 percent of a senior-levelaccountant’s time in the coming years. Essentially, future CFOs will beincreasingly called upon to step into broader-based leadership roles.

US Business Leaders Live to WorkIf you feel like you've been working a lot lately, you’re not alone. According to anNFI Research [nfiresearch.com] worldwide survey of senior executives andmanagers, businesspeople have settled into the 10-plus hour workday and the41-plus hour workweek. Specifically, survey results show that 77 percent of seniorexecutives and managers work 41-60 hours a week, and 52 percent work 51hours or more a week. What’s more, 20 percent of business leaders work 11hours or more a day, followed by 40 percent who work 10 or more hours. Allsenior executives and managers who work in organizations of 10,000 or moreput in at least nine hours a day, and no-one works eight hours or fewer.


Garelli Wong and Jackson Wabash are Chicagoland’s experts in financial recruiting and staffing.

Our team unites employers with the right accounting and finance talent for direct hire, temporary and consulting assignments. We look and listen beyond the job description to combine the right skills with the desired experience. To learn more about our dedication to finding the right fit, visit us on the web or call your local office.

Finding the perfect fit doesn’t have to be a challenge, it’s what we do.

Chicago Schaumburg Oakbrook Terrace 312.583.9264 847.397.9700 630.792.1660

WWW.GARELLIWONG.COM WWW.JACKSONWABASH.COM

“CPA” Makes the Top 10According to Money/Payscale.com's 2009 list of the 50“Best Jobs in America,” Certified Public Accountant ranks animpressive number 6. The recently released list reveals themedian salary for a CPA to be $74, 200, with the top salarynoted as $138,000. What’s more, the CPA profession isexpected to experience 18-percent growth over the 2006-2016 period. Among the reasons cited for “Why it’s great”are rising demand spurred on by new corporate accountingrules and government compliance requirements, as well asthe fact that taxes—and the need to file them—won’t goaway any time soon.Visit money.cnn.com/magazines/moneymag/ for more.

Garelli Wong and Jackson Wabash are Chicagoland’s experts in financial recruiting and staffing.

Our team unites employers with the right accounting and finance talent for direct hire, temporary and consulting assignments. We look and listen beyond the job description to combine the right skills with the desired experience. To learn more about our dedication to finding the right fit, visit us on the web or call your local office.

Finding the perfect fit doesn’t have to be a challenge, it’s what we do.

Chicago Schaumburg Oakbrook Terrace 312.583.9264 847.397.9700 630.792.1660

WWW.GARELLIWONG.COM WWW.JACKSONWABASH.COM


34 percentPercentage of CEOs planning to increase their workforce inanticipation of the economic rebound. Source: PricewaterhouseCoopers

Capture Biz KnowledgeWith the exodus of Baby Boomers from the profession,capturing knowledge and expertise in a central, easy-to-access resource is a top priority. CCH addresses thischallenge with KnowledgeConnect, the only knowledgemanagement system designed exclusively for accountants. Itprovides a virtual database in which experienced profess-ionals can store and share their accumulated knowledge.That knowledge is readily accessible, allowing firms andprofessionals to effectively brainstorm and collaborate.KnowledgeConnect even links firms in different locations into“knowledge communities,” and supports blogs, wikis, FAQs,and other types of Web 2.0 tools to encourage collaborationand keep content up-to-date.Furthermore, the system identifies top users based on thenumber of documents published and questions answered.Users can rate the accuracy, quality and usefulness of contentso that the best answers are highlighted for firm-wide use.And KnowledgeConnect’s customizable templates ensurethat all published knowledge of the same type is laid out in aconsistent format.Also, firms can customize the solution’s rules, such asescalating urgent questions if they haven’t been answered ina predefined period and controlling who can join acommunity based on their roles in the firm.Visit CCHGroup.com/KnowledgeConnect.for more.

Boost Your IT IQHit hard by the economic downturn, accounting and financial organizations aretempted to trim or postpone technology spending. But falling behind could bea price too high to pay down the road. Instead, make the most of what thecurrent economy offers, seizing the opportunity to catch up with or leap aheadof your peers, especially since technology costs are down.Five strategic technologies to look into are:n Cloud computing and Software-as-a-Service (SaaS)n Mobile devices, including Netbooks and Smartphonesn Smarter scanning and document managementn Virtualization solutions to get the most out of your existing servers n Social media tools, like Twitter, Facebook and LinkedIn.

Source: cpatrendlines.com

SEEN

+HEA

RD

Give back to the profession that’s been good to you

Your support means a great deal to me and will help me achieve my goal of becoming a CPA.

THE CPA ENDOWMENT FUND OF ILLINOIS

Provides Scholarships for Accounting Students | Funds Career Awareness ProgramsPromotes Diversity in the Profession | Develops New Leaders

The CPA Endowment Fund of Illinois, working in cooperationwith the Illinois CPA Society, raises philanthropic support tofund programs that nurture and sustain the CPA profession.

Paving the Way for Tomorrow’s CPAs

For more information or to make a tax-deductible gift:Julie Lenner, Director of Development, 312.993.0407, ext. 290or go to www.icpas.org.


ECONOMY

Feelgood 2010Things are beginning to look up…honest.

By Kristine Blenkhorn Rodriguez

After a year rife with bankruptcies,unemployment and pessimism,industry experts are a bit more

optimistic about the year ahead, believingthat although things won’t be positivelyrosy in 2010, they’ll be far rosier than theywere in 2009. Slow but steady progressseems a lot sexier these days than it did pre-recession. Here, then, are five things to begrateful for:

1. A Stabilizing Economy “The nation now knows we have to earn ourkeep,” says Jeff Kosnett, senior editor forKiplinger’s Personal Finance. “That’s some-thing we forgot for awhile.” Individuals aresaving more and reducing debt with a senseof urgency, he says. And mid-year, the Com-merce Department happily announced thatthe US personal savings rate had hit a 15-plus year high of 6.9 percent.

What’s more, “As a nation, we’ve realizedthat much of the world has the capability tohandle computer work and manufacturing,two of what used to be our core areas. Wesee business and government working to-gether to come up with areas we can excelin like green business and new models forhealthcare,” Kosnett explains.

Moreover, “Banks that have survived thiscrisis appear to be stronger,” he says.

2. Stimulated SpendingIn terms of the much touted Stimulus Pack-age, “It takes time for the government tospend money,” says Adolfo Laurenti, dep-uty chief economist and managing directorfor Mesirow Financial. “Stimulus fundshaven’t really funneled through enough tohave a proper effect on the economy. Butmidway through 2009, you started to seeeffects in things like construction report fig-ures. The public works stimulus funds werebeginning to cycle through. As they con-tinue to do so in many economic sectors,you will see a strong gain in 2010.”

Keith Ashmus, chair of the NationalSmall Business Association (NSBA), sees

the purchasing of goods and services pick-ing up in many areas of business, particu-larly those affected by stimulus funds.“Inventories have been low and you canonly keep them that way for so long. Sup-pliers will see their businesses pick up asclient businesses replenish.”

There’s also the IPO factor to consider.The slowdown of IPOs happened in early2007, explains Austin Fox, senior recruitingmanager with Robert Half Finance &Accounting. “We have two to three years ofpent-up offerings. These are not just bio-tech or tech companies sitting on the side-lines waiting it out; not dotcoms with norevenue. These are companies that aremaking a couple of hundred million dollarsthat are waiting it out for the right moment,even though they’ve already hit breakeven.They want that extra 50 percent they’ll geta year from now.”

3. An Improving CPA Job MarketWhile “Overall, the US accounting industrywill experience a decline of 1.5 percent inthe upcoming year,” says Toon van Beeck, asenior industry analyst with IBISWorld, “in2011 things will pick up, with 5.5 percentoverall growth in the accounting industry.The trend continues in 2012 and 2013, withpredicted growth of 4.6 percent.”

Laurenti believes, “The big, shocking joblosses, the massive collapse in employment,are done, which is good news for anyone inthe financial industry because they were thehardest hit. We’re not in freefall anymore.We have a floor under our feet.” He sees jobcreation being somewhat subdued untilmid-2010, however.

“CPAs are needed whether our economyis experiencing boom or catastrophe,” saysLee Gould, managing member of Gould &Pakter Associates, LLC and ICPAS chair. “Infact, accountants’ advice is sought after ateven higher rates when the economy hitsan extreme, whether high or low.”


Award Recommendations Now Being Accepted

LifetimeAchievement

2010

Deadline for recommendationsis December 15, 2009

The Illinois CPA Society is seeking recom-mendations for the 2010 Lifetime AchievementAward, which is presented each year to aindividual(s) who has provided distinguishedservice to the profession in Illinois and/ornationally.

Candidates are selected based on a lifetimeof service to the profession. Factors to be con-sidered include:

> Contribution to the profession> Professional position attained> Length of service> Illinois professional involvement

Recent Award Honorees:2009 Cameron T. Clark

Duane D. Suits

2008 Belverd E. Needles, Jr.

2007 Edwin Cohen

2006 Richard T. Sullivan

2005 Vincent E. VillinskiRichard E. Ziegler

2004 Lawrence M. GillJerome A. HarrisCheryl S. Wilson

2003 Daniel W. CadiganLester H. McKeever Jr.

Letters of recommendation with informationsupporting the individual’s qualifications(resume, biography, etc.) can be sent to:

Eileen Robbs, Lifetime Achievement Award,Illinois CPA Society, 550 W. Jackson Blvd., Suite 900, Chicago, IL 60661Or by email to: [email protected]

Trends expert and futurist Jim Carroll agrees, stat-ing that CPAs carry critical skills, regardless of jobsituation. “Even those who are not in full-time posi-tions can usually still find good contract work. Stoplooking for a job in 2010. Look for opportunities.”

4. A Prime Time for Specialization“Those CPAs who haven’t picked a niche yetshould,” says Carroll. “Specialization is becomingcritical to accounting. If you can pick a niche...andnot limit yourself geographically, your chances offinding a great position go up exponentially.” Carrollsees huge growth potential in IFRS, green/smartbuilding and agriculture.

Fox feels that auditors in particular are benefittingfrom specialization right now. “The hot topics arehealthcare reform, alternative energy and emissionscap-and-trade. If you’re the person who can tracksolar and wind credits and is up to speed on the reg-ulations governing that area, or tracking emissions,you are almost guaranteed a job because there aren’tmany people out there right now who are qualifiedin these areas,” he explains.

Like Carroll, he also sees IFRS as key to job cre-ation, particularly for those who would like to work ata large corporation. And when the recession dambreaks, he says, “CPAs in the consulting industry,investment banking industry and who specialize inareas like SOX, will reap the benefits.” He sees it com-ing in 2010, even if in the latter part of the year.

For Van Beeck, forensic accounting is the “it” spe-cialization, with continued growth predicted in2010 and 2011. He also sees opportunities for CPAswho can help companies struggling with insolvency,liquidation and corporate restructuring.

5. An Improving Housing Market“The joke has been that we hit the bottom in 2009 andstarted to dig. The amount of construction and saleshas been so low that it doesn’t take much now toincrease activity by even 100 percent,” says Laurenti.

Overall, however, housing is predicted to stabilizein 2010. While markets such as Florida and Califor-nia will continue to decline due to delayed retire-ment and over-building, Kentucky, Tennessee, Geor-gia and Texas are among those states that will expe-rience a stronger comeback, says Laurenti. He pre-dicts that Chicago will fall in the middle of the scale.

Jim Pair, president of the National Association ofMortgage Brokers (NAMB), sees a decent percentageof consumers “getting into housing before we hithigher interest rates and higher home prices. You’llsee caution ease up slightly and more movement. Andthe affordability index will not get out of control.

“Interest rates (right now) are phenomenal givenwhat we’ve just been through,” he adds. “Look atthe double-digit rates that we had in the ‘80s andbe grateful.”


PROFESSION

Watch the ClockThe deadline’s looming for lifetime licensing as a registered CPA.

By Derrick Lilly

Are you a licensed CPA? Or are youa registered CPA? What’s the dif-ference? It can be confusing for

practitioners and the public alike, but in amove that may curb that confusion andstrengthen CPA credibility, Illinois will tran-sition from the current dual CPA licensingoption to a single licensing state in 2010.

“Right now you have two choices: youcan be a licensed CPA or a registered CPA,but after June 30, 2010, unless you’ve beengrandfathered in and are already a regis-tered CPA, you only have one option, andthat’s to be licensed,” explains MartinGreen, VP of government relations at theIllinois CPA Society’s Springfield, Ill. office.

And so, the countdown for becoming aregistered CPA has begun. “The GeneralAssembly passed legislation that essentiallysunsets the issuance of new registered CPAlicenses in order to bring the state in linewith the Uniform Accountancy Act so therearen’t various classifications of CPA licen-sure,” says Green.

On June 30, 2010, the Illinois Depart-ment of Financial and Professional Regula-tion (IDFPR) will cease accepting new reg-istered CPA applications, and new regis-tered CPA licenses will not be issued afterJuly 1, 2010. This move is expected to bepositive for the profession’s future.

“With a single licensing standard every-one knows who you are, what you’ve gonethrough and what the training and require-ments are,” says Carlton R. Marcyan, attor-ney at law, CPA/CFP, with Schiller DuCanto& Fleck LLP in Lake Forest, Ill. “Overall thiseliminates some ambiguity and also ensuresthose persons carrying the CPA designationthat they have maintained their professionalexpertise and education as required. Thepublic should now have greater assurancethat those holding themselves out as CPAsknow what they’re doing.”

“If you’re putting yourself out to the pub-lic as a CPA you have to be either licensedor registered by the IDFPR. Therefore, thepublic has the assurance that CPAs are prop-erly licensed by the Department for the serv-ices they’re providing,” Green confirms.

“There are people not qualified at thispoint to hold themselves out as CPAs, andthat could adversely impact the profession ifthey are giving out advice or performing

Quick FactsRegistered CPA application deadline: June 30, 2010Last day applications will be processed: July 1, 2010Where to apply: idfpr.com/applications/onlinelicensing/Where to get more information: Visit the “Certification,Licensing and Regulation” page on ICPAS.org, or the IllinoisDepartment of Financial & Professional Regulation’s publicaccounting page at idfpr.com/dpr/WHO/pa.aspFine for using the CPA credential without beinglicensed or registered: $5,000 per offense

services that aren’t adequate,” says Marcyan. “This move is a goodthing for the profession.”

You may be asking, “What’s the difference between licensedand registered? And what do I need to do?” Here’s a breakdown.

Licensed CPAs can provide attest services, including audit andreview. Any CPA who is a partner in a firm or a practitioner whoprovides attest services must be licensed by the IDFPR. LicensedCPAs can perform public accounting and practice before the IRS.They must fulfill the continuing professional education (CPE) 120-hour requirement, including four hours of ethics, within the three-year period of their licensing cycle.

Registered CPAs cannot perform attest services, but can holdthemselves out to the public as CPAs, including the use of theCPA designation on resumes, business cards and letterhead, etc.Registered CPAs cannot perform public accounting or practicebefore the IRS, and do not have to ful-fill the 120 hours of CPE during theirlicensing cycle. CPAs who are notlicensed must be registered in order touse the CPA designation; otherwisethey will face a penalty.

Currently, registered CPAs, or thoseregistered prior to July 1, 2010, will be“grandfathered” in and will be able torestore or renew their registered statusevery three years during their lifetimes.All CPAs who wish to be registeredCPAs but have not registered by June30, 2010 will have to be licensed goingforward in order to use the CPA desig-nation. They will be subject to all licen-sure requirements, including themandatory CPE. Foreign national andinternational accountants who wish tobecome registered CPAs will need tohave their paper applications post-marked prior to the June 30, 2010deadline (online application is notavailable to individuals who do nothave US Social Security numbers).Regarding costs, there is an initial $90registration fee and then $90 due everythree years to renew.

Licensed CPAs who are anticipatingretirement or transitioning from publicaccounting work should considerapplying as registered CPAs, thereforecarrying dual licenses going forward(if they wish to continue using the CPAtitle). “If you are planning to retire orswitch jobs and no longer do publicaccounting work, now is the time tocapture the registered CPA licensurebefore it sunsets. You can carry a duallicense, and that’s an important point.You can be both a registered and alicensed CPA,” Green stresses.

“What we’re looking at here is thefuture; for those people anticipating

change, the clock is ticking. If you want the option, you need toexercise it now,” says Green.

Not only that, but it’s the law. Illinois requires all CPAs who arenot licensed but hold themselves out to the public as CPAs tobecome either licensed, registered or both. If a CPA doesn'tbecome licensed or registered and continues to use the CPA des-ignation, then he or she could be fined up to $5,000 for eachoffense.

“Anybody, whether they’re lawyers, investment advisors, insur-ance people, or CPAs on inactive status—all the folks who havepassed the CPA Exam—should immediately get the application infor the registered licensing because otherwise you can’t use thedesignation,” states Marcyan. “Being a CPA is a mark of achieve-ment and shows you’ve obtained a level of expertise, but if youmiss the deadline you’re going to be out of luck.”



IFRS

Are You Worried?Uncertainty and unease continue to blight IFRS adoption.

By Selena Chavis

While a proposed roadmap foradopting International FinancialReporting Standards (IFRS) in the

United States was issued by SEC registrantsfor comment, the directions and timeline forconverting to IFRS are “clear as mud,” saymany CPAs and finance executives. Profes-

sionals across the fieldacknowledge the poten-tial benefits of a conver-sion to IFRS, but are lessenthusiastic about thechallenges that may ac-company the implemen-tation process itself.

“Most professionals a-gree that there is a clearbenefit to having oneglobal set of high-qualityaccounting standards,”says John McGaw, Mid-west IFRS leader forKPMG. “Alongside thatbelief, though, there isclearly a frustration outthere because of a lackof a specific mandateand date certainty fromthe SEC, and many arereticent to make signifi-cant investments with-out clear direction.”

A rule was issued in2007 allowing foreignprivate issuers to useIFRS in their SEC filings,without having to recon-cile the financial resultsto US GAAP. The SECcontinued the IFRS dia-logue with a unanimousvote to issue a proposedroadmap for further USprogress towards accept-ing IFRS for US public

company use beginning in 2014. The com-ment period for the proposal ended inApril 2009 with opinions running acrossthe board.

A March 2009 Deloitte survey of morethan 150 finance professionals, CFOs andfinance managers found that a significantmajority (75 percent) support the movementtoward a single set of global accountingstandards. However, 64 percent indicatedthat they have not allocated any budgetamounts to IFRS transition.

“What we saw was a lot of activity lastyear after the SEC made the announcement,”notes Ben Resch, IFRS technical leader forthe Midwest region at Deloitte. “Now theyare a little more complacent. There’s not alot of news on expectations and timelines. Iwould guess that the next thing we receivefrom the SEC will be much more definitive.”

Resch states that there are three companytypes that particularly feel the pressure tomove forward with IFRS: The largest, mostsophisticated publicly traded enterprises,companies considering infrastructure invest-ments that will need to comply with IFRS inthe future, and smaller companies that mayhave an international parent.

Paul Oetter, senior partner with Black-man Kallick, says that for small to mid-sized private companies, the frustrationssurrounding lack of information and clarityare even greater. “They don’t have the SECtelling them what to do; everything is muchless clear for them,” he explains, addingthat it’s in the best interests of a privatecompany to wait and see what happens.“You can make a strong argument now thatthere is no clear benefit to adopting IFRS forprivate companies. Particularly as manycompanies battle the recession, the lastthing they need to deal with is somethingthat will take their focus off what they mustdo to stay profitable right now.”

The issue is complicated by the SEC’sapparent lack of focus for the moment on

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IFRS, which, according to Oetter, makes the initial target date setout by the roadmap hard to meet. That, he says, means the situa-tion is even more perplexing for smaller entities. “It will happen atsome point,” he says. “Then the question will be, ‘What is the via-bility of the Financial Accounting Standards Board (FASB)?’ At thatpoint, I believe the private world will focus on the issue in muchgreater detail.”

Much of the current debate centers on the timeline in which USregistrants would be required to transition to IFRS, and the processby which they would achieve this goal, McGaw explains. Duringthe roadmap’s comment period, many respondents suggested thatthe SEC consider giving time for further convergence of individualUS GAAP and IFRS accounting standards. “Many see this as amore manageable process than a point-in-time conversion,” saysMcGaw. “On the other side, though, if you try to converge over aseven- to eight-year period, you haven’t achieved commonalityuntil it’s complete. How long will it then take, and equally impor-tant, will we be fully converged once they’ve finished?”

“The desire to converge is due in part to a resistance to a full-ontransition from rules-based US GAAP to principles-based IFRS,” Oet-ter explains. “I think the frustration in the United States has been andwill continue to be that the business community expects there is arule to account for a particular transaction. Two parties may cometo a very different conclusion over an issue with IFRS. That will beone of the biggest issues in implementing the system. People areused to finding a rule; under IFRS, they will find a principle.”

Resch agrees, pointing out that accountants and finance profes-sionals will have to apply considerably more judgment in forming

an accounting decision under IFRS. “It’s hard to move from the USGAAP world to the IFRS world,” he says. “If you are applying judg-ment, and it turns out to be incorrect, it seems that there may bemore liability.”

To compare the extent of US GAAP and IFRS guidance, McGawexplains that a full US GAAP printout is estimated at about 25,000pages, whereas an IFRS printout would be about 2,800 pages.“There’s a large difference in volume,” he says. “Whether that’s apractitioner using IFRS or a university teaching its fundamentals,there is less application guidance and more room for interpretation.”

And while IFRS is being used in many countries, some expertspoint to the litigious climate of the United States as a concern,questioning whether there would be greater liability for account-ing professionals. However, “I don’t know that we’ve had enoughexperience to know whether there is more risk with IFRS com-pared to US GAAP,” says McGaw.

Without a more clearly defined roadmap, many companies andfirms are hesitant to make too much of an investment too fast.What’s clear, say many experts, is that there will be costs associ-ated with implementation, and the amount and types of those costswill vary by industry and company size.

“Certain companies are more likely to recoup that cost throughfuture cost savings. For large global companies, the ability to movemore closely to one accounting language stands to save them a lotof money,” McGaw asserts.

The typical small to mid-sized US company likely will not see theimmediate benefit, says Resch, but over the long haul, many willbreath a sigh of relief in letting go of the complexities of US GAAP.

Oetter agrees, pointing out that the International AccountingStandards Board’s recently released International Financial Report-ing Standards for Small and Medium-Sized Entities (IFRS for SMEs)might jumpstart the effort within the private sector. “It’s apparentlyavailable for use by any privately held company,” he says, reiter-ating the mounting frustrations many smaller companies are feel-ing with how costly it is to comply with US GAAP. “The reality isthat IFRS for SMEs is a greatly simplified set of accounting stan-dards that might percolate some interest on the part of small tomid-sized companies. Accounting complexity might be signifi-cantly reduced with the SME standards.”

A recent Deloitte survey of more than 220 private companyfinance professionals indicates that 51 percent support separateaccounting standards for private and public companies. Fifty-fivepercent of smaller companies (less than $100 million in revenues)were supportive of separate standards.

McGaw acknowledges that finding a starting point for adoptingIFRS is a daunting task for any company, especially in view of therelative lack of IFRS knowledge currently available in US prac-tices. Many larger accounting firms have initiated comprehensivetraining programs in response.

“One advantage we have is that most of the rest of the world hasconverted or is converting so there is experience around the globethat can be leveraged,” says McGaw. “Conversions are a lesson inchange management, and companies that handle change well aremore likely to come out on the top of this endeavor. At its core,professionals should be asking, ‘What does this mean to my organ-ization, and what measured steps can we take today to better pre-pare ourselves for the likely transition to IFRS?’”

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IFRS


R&D

You’re Being WatchedR&D tax credits fall under increasing scrutiny.

By Randy Crabtree, CPA

The US government and the vastmajority of state governments rec-ognize the fact that technological

innovations are critical to the nation’s long-term success and economic growth. As aresult, they’ve implemented tax incentivesto encourage businesses to invest in theresearch and development (R&D) area.

On October 3, the Emergency EconomicStabilization Act of 2008 extended the Fed-eral R&D tax credit through December 31,2009 (with the passage of H.R. 1424). Byreducing taxes, it’s hoped that this creditwill stimulate increased company spendingon R&D over time.

H.R. 1424 also implemented other chan-ges: First, the Alternative Simplified Credit(ASC) was increased from 12 to 14 percentfor taxable years beginning after December31, 2008. Second, the Alternative Incremen-tal Research Credit (AIRC) is no longer elec-table after December 31, 2008. And third, atechnical correction was made to modify the

calculation of the research credit’s baseamount for a tax year in which the credit wasnot in effect for the entire year.

According to H.R. 1424, a qualifyingcompany is in general eligible to deduct anamount equal to 20 percent of qualifiedresearch expenses above a base amountfrom its corporate income taxes. Qualifiedresearch expenses include wages, suppliesand contract research costs, while qualifiedactivities have to pass a four-part test:

Part One: Permitted Purpose The projectmust be intended to be useful in the devel-opment of a new or improved businesscomponent, such as a product, process,technique, formula, invention or software.Part Two: Technological in Nature Theproject must have the purpose of discov-ering information of a technical nature.Therefore, it must rely on the principles ofphysical sciences such as engineering,biology or computer science.Part Three: Elimination of UncertaintyThe project must be intended to eliminateuncertainty related to the development orimprovement of a business component.Uncertainty can include the capability,development method or optimal design ofthe business component.Part Four: Process of ExperimentationThe project must evaluate one or morealternative solutions through the develop-ment, refinement and testing of differentoptions. Furthermore, technical risk mustbe present, which means there’s a chancethe project won’t succeed.To give you a little history, the R&D tax

credit (IRS Code §41) was established bythe Economic Recovery Tax Act of 1981,and since that time has expired and beenextended 13 times. During its 28-year his-tory, the credit has undergone significantchanges and revisions, with importantdevelopments coming from new case law,IRS pronouncements and legislative action.The recent Fifth Circuit Court of Appeals


ruling in the case of US v. McFerrin, for example, established newguidance and precedence for examining R&D tax credit claims,and likely will be heavily relied upon by taxpayers in the future.

In the original district court decision, the court first took issuewith the fact that the evaluation of qualified activities and the cal-culation of the credit were not conducted by engineers or anyonewith meaningful scientific experience. Second, the company wasunable to produce any records of the hours worked on any givenproject or the hours worked or supplies used that involvedresearch. Third, and most significantly, the district court held thatresearch only qualified if it expanded or refined the existing princi-ples in a technical field and had a high threshold of innovation(known as the “discovery test”). Finally, the court also held thatqualified research only applied if a “process of experimentation”occurred that involved the forming and testing of a hypothesis,rather than “trial-and-error” testing.

In the appellate court ruling handed down on June 9, 2009, itwas found that the district court had used incorrect applications ofthe discovery test and process of experimentation by applying thewrong legal standards and failing to consider all the taxpayer’s rel-evant evidence. Most importantly, the appellate court stated thatthe “Cohan Rule” allows a taxpayer to use estimates of qualifiedresearch expenses when qualified research activities can be provenbut exact expense amounts have not been documented. Further-more, the appeals court found that oral testimony (through inter-views) and employees’ institutional knowledge are acceptable indetermining estimates. Based on this the appellate court vacatedthe district court’s original ruling and sent it back for further pro-ceedings consistent with the appellate court’s findings.

Naturally, when working with clients, you’ll need to align clientfacts with those outlined in the McFerrin decisions. Namely, useengineers or technical experts to evaluate and document the qual-ified nature of projects; and make sure there’s sufficient documen-tation to support the existence and facts of each qualified project,and the employees involved in those projects.

It’s important to note that the volume of R&D credit claims filedin recent years has increased significantly. Consequently, on April4, 2007, the credit was designated as an LMSB Tier 1 Audit Issue—an issue that, if present in an audited tax return, must be reviewed.Not surprisingly, tax practitioners should expect to see an increasedlevel of scrutiny relating to R&D tax credit claims.

In May 2008 the IRS published a revised version of the ResearchCredit Claims Audit Techniques Guide (RCCATG): Credit for Increas-ing Research Activities § 41, which is not an official pronouncementof law or of the IRS’ position. However, it does provide indispensa-ble insight into how the IRS views the R&D credit and the main issuesthe IRS focuses on in its examinations.

Plainly, the R&D tax credit can be extremely valuable in reduc-ing the tax liability of a business involved in activities that qualify.Due to the heightened scrutiny the credit is receiving, however, taxpractitioners need to proactively prepare supporting documenta-tion using technical staff with solid science backgrounds to ensurethey meet the IRS’ requirements.

Randy Crabtree, CPA, is a partner with Tri-Merit, LLC. He has over

20 years of public accounting experience and has focused solely on

the R&D Tax Credit for the past three years. He can be contacted at

[email protected].

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TECHNOLOGY

Portal PowerEmerging accounting portal technologies streamline financial processes and boost productivity.

By Daniel Dern

Software has improved accountingefficiencies for companies and CPAsalike by leaps and bounds. How-

ever, despite reducing errors, speeding upcalculations and recalculations, generatingreports, and more, software alone can solveonly part of the security and productivitydilemmas organizations and practitionersface. For starters, they still have to establisha foolproof process for exchanging sensitivedata and accessing each other’s systems.

"One thing we've learned over time isthat accountants used to have trouble get-ting the data from their clients; for example,they would have to drive to the site, bring aCD or memory stick, etc.," explains SamirKhosla, group product manager for Intuit'sAccounting Professionals Division. "If filesare too big for a stick or to email that'sharder, and there are security risks associ-ated with sending financial info via email.Some clients don't know how to encryptfiles or send encrypted files by email."

Thankfully, though, portals have offereda fast-growing solution to these problems.

"Generally speaking, a client portal allowsthe client and his or her accountant toexchange and access documents and infor-mation online," explains Rick Telberg, presi-dent and chief executive of Bay Street GroupLLC, advisors in marketing, managementand strategy. A portal may be provided as anadd-on feature to current accounting soft-ware or as a browser-accessed web appli-cation. Typical features include secure fileand document exchange and work-flowmanagement, such as approving invoicesand checks, and viewing reports and busi-ness analyses.

Thomson Reuters, for one, has beenoffering portals to its customers for eightyears now, with around 250,000 Net-ClientCS portals currently in use, explainsSamantha Mansfield, senior technical salesrepresentative with Thomson Reuters Tax &Accounting. Other leading accounting andbusiness software firms, including Intuit,Intacct and NetSuite, also have added por-tals—or comparable collaborative fea-tures—to their products.

"QuickBooks [intuit.com] has severalfeatures that enable us to work with ourclients' QuickBooks files more easily," saysRichard Kane, CPA, business services man-ager at Schaumburg, Ill.-based Kutchins,Robbins & Diamond Ltd. "We use Intuit forabout 60 to 75 percent of our clients. Theirremote access feature lets us access theclients' books so we can do work on themwithout having to go to the client site. It'svery good for out-of-town clients or forquick work. For a local client, using remoteaccess avoids an hour or more of travel."

What’s more, "Remote access worksacross multiple platforms, including amongXP and Vista, and both people can see it,"says Kane. "It's great for training. It includesteaching tools like annotation, which meansyou can draw lines and arrows like on ablackboard. And I don't need QuickBookson my system to access a client's remote


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access feature; I can do it from a web browser, so I don't have to beat my computer."

Additionally, "There's a feature for the transfer of QuickBooksback-up files, which can be more than 10 to 15 megabytes insize—larger than most email systems can handle," Kane explains.“And you can tell QuickBooks to make an ‘accountant copy’ of aQuickBooks file and transfer it directly to your accountant."

QuickBooks "transfers a copy of the file to a server we maintain,and the intended recipient's system retrieves it from there," explainsShane Hamby, product manager for QuickBooks at Intuit. "Thatmeans it doesn't create a lot of traffic in the accountant's mailbox.The users can set up a password and share it ahead of time. Thissolves the problem of people working together, of clients not beingtechnologically sophisticated enough to secure and attach big files,and of data security. The receiver just needs the password."

According to Pat Bhatt, senior product manager of Intuit’sAccounting Professionals Division, as of July 2009, 315,100 fileshave been exchanged via accountant's copy (since its fall 2007debut within Intuit QuickBooks Premier Accountant Edition). Inthe upcoming 2010 QuickBooks release, Intuit also will be intro-ducing a document management service, giving accountantsaccess to client documents. "Collaboration isn't just about usingthe QuickBooks files, which are representations of your financesand accounting," says Hamby. "Accountants often have questionsabout a transaction and need access to the source document, suchas PDFs of bills or checks."

Intacct Corporation [Intacct.com], which announced a partner-ship with the AICPA earlier this year, provides cloud-based finan-cial applications, defined as applications accessed via the webrather than being installed on user systems. "Portals are one chap-ter of the broader collaborative story on how accounting firms canbetter collaborate with their clients, and are also part of the paper-less story," says Daniel Druker, senior VP of marketing at Intacct."The way Intacct is designed, CPA firms can deliver customizedportals to their clients and brand it so it looks like they're access-ing their CPA's system."

NetSuite [Netsuite.com] provides businesses and CPAs with yetanother option. Its web-based business management software suite

includes financial, accounting, ERP, CRM and eCommerce capa-bilities. And in terms of collaborative activity among NetSuite cus-tomers, "We are a role-based system, so you can grant access forworking on or auditing your books. This means you aren't ship-ping files around and you can assign different permissions for eachuser or role to restrict access," says Darren Linscott, NetSuite’sdirector of product management. And if a company wants its CPAsto work on separate copies of the data at hand, "You can grant per-mission to only view and export data as needed, so they can makechange recommendations," says Linscott. "We also offer ’sandbox’accounts that you can view and make modifications to withoutaffecting the live site."

Portals and collaborative tools are also features of ThomsonReuters’ [cs.thomsonreuters.com] Professional Software and Serv-ice group's GoFileRoom product, as well as in its corporate group,OneSourceWorkFlowManager.

"GoFileRoom's ClientFlow module provides a portal directly tothe client and to documentation stored there," says MichaelKnighton, VP of corporate workflow tools at Thomson Reuters’ Tax& Accounting division. "WorkFlowManager provides the samedocument and information-sharing features—it's data collectionsoftware, allowing users to collect information and migrate it toother applications."

Thomson Reuters' NetClient CS product provides secure col-laborative tools that are housed in Thomson Reuters' data center,allowing accountants and their clients to work together, saysMansfield. "It's a utility that an accountant can establish for his orher client and enable different functions depending on what theaccountant offers to that client."

All in all, portals help to ensure CPAs and their customers aremeeting regulatory compliance in the areas of data security. Thatlevel of security is not easily achieved when using email and filetransfer processes, or non-network data transfers. "Problems likethe Twitter hack of Google Docs is a lesson to accounting firmsthat they need to demonstrate to clients and others that they areensuring security and privacy," notes Telberg.

Portals also help CPAs and companies avoid security breachesthat could have serious financial consequences. "Forty-seven plusstates have stringent privacy laws in place," Telberg explains."Accountants look at these and consider what could go wrong ifan email or document goes astray, and they look to these secureportals and file transfer solutions."

Added to the security benefits are the productivity pluses. Infact, portals provide an “enormous” productivity jump, says SethPomeroy, CPA/MIS, partner-in-charge of CFO Outsource andAccounting Technology with The NDH Group Ltd., a Chicago-based CPA and business consulting services company.

And according to Kane, "Firms report a 50-percent gain in proac-tive consultation billing hours when everything is online. The firmscan see what's going on, like whether the client's information is up-to-date or, say, whether the client is running low on cash and willneed more in order to pay employees in two weeks. Firms with thisinformation can call their customers and say, 'Let's talk about this.'"

"Accounting firms can't move fast enough in going digital, andclient portals are one key feature," Telberg stresses. "We're seeingmore interest in portal and other collaborative features in account-ing tools. When clients are shopping around, they are looking fortechnologically snazzy accounting firms, so if you don't have aportal, you'll probably lose out."

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TECHNOLOGY

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CAREER

If you haven’t heard of ”media expert” asan area of specialization, it’s probablybecause there isn’t a degree or certifica-

tion for it. But media experts—professionalspossessing the composure, expertise andpersonality to address the public throughmedia outlets—are playing an increasinglyimportant role in promoting a positive, up-to-date image of CPAs and increasing publicawareness of the profession’s significance.

“A media expert is someone who hasexpertise in a particular issue or field andalso has the ability to translate that expertiseinto simple words for the public,” explainsLinda Forman, CPA/P.C., a long-time mediaexpert for the Illinois CPA Society (ICPAS).“The only people who really understandwhat a CPA is are other people in similarprofessions. Being a media expert helps peo-ple understand how to use a CPA, and ithelps people understand our expertise.”

Media DarlingBe the media’s go-to person for all things finance.

By Derrick Lilly


How the Pros Do ItBe available: “You have to under-stand that reporters are under dead-lines,” says Forman. “You have to beready for the media on their sched-ule...not yours.”Don’t over-prepare: “If I spend a lotof time studying I want to get into thedetails too much. When I rely moreon my general knowledge I givemore of a big picture answer. That’swhat people really want, and it’s a lit-tle more personable,” says Harlow.Keep it simple: “You have to under-stand the media isn’t looking for the-sis statements,” explains Forman.“Have your thoughts available andoutline the most important parts.” Light up the stage: “Try to be enthu-siastic and extremely energetic,”advises Harlow. “Over deliver, havegood ideas and do what you can tomake the media person come outlooking great.”Don’t try to sell services: “The pur-pose behind being a media expert isto educate the public,” Formanexplains. “If you’re doing it just to getbusiness it will show.” Be respectful: “If you’re in the med-ia you’re going to get calls thataren’t appropriate. If you don’t treatthose people like respectable, nicehuman beings it gets back to themedia. Media reps have to knowthat they’re not going to get badfeedback,” says Forman.

D I V E R S I T Y

Outstanding Leadership in Advancing

Nominations for the2010 Outstanding Leadership

in Advancing Diversity Award are now being accepted.

The Illinois CPA Society is currently seeking nominations to honor the workof exceptional CPAs. The Outstanding Leadership in Advancing DiversityAward is designed to recognize individuals who have made a markedcontribution to diversity within the accounting profession.

The Emerging Leader Award, a recently added category of the OutstandingLeadership in Advancing Diversity Award, will recognize young professionalswho possess the qualities of the Outstanding Leadership in AdvancingDiversity Award but have 5-7 years full-time work experience.

Nominees can be employed in any area of accounting or finance; including public accounting, industry, not-for-profit, education, governmentor consulting.

Criteria considered for the ideal candidate include:

A CPA credential, but do not need to be a current member of the Illinois CPA Society

Diversity efforts with measurable results

Breadth of diversity and related activities

Level of impact on the accounting profession

Unique and creative contributions to the profession in advancing diversity

Channel through which candidate has advanced diversity outside of, or in addition to their day-to-day job functions

For more information or to nominate a candidate, please call Kelly Slay at 800.993.0407, ext. 275 or visit www.icpas.org.

The deadline for nominations is Monday, November 30, 2009.


“It’s important that people understand that we’re here to help andthat we are trusted advisors. We have to put that out there,” addsMary Lou Pier, CPA, of Chicago-based Pier & Associates Ltd. Pier isan ICPAS member and media go-to person.

From complex business tax issues to personal finance Q&As, CPAmedia experts are sought out by reporters and media contacts toaddress a wide range of financial matters, including, of late, per-sonal credit, stock market fluctuations, recession issues, fraud, cor-porate bankruptcies, government regulations and the Stimulus Plan.

Of course, finding the opportunities to put your expertise outthere may take some work, and it can take multiple appearances tobuild a reputation with media outlets. “If you’re going to try doingthis sort of thing, don’t do it only once and quit. When somebodypresents you with an opportunity take advantage of it,” advisesGeoffrey J. Harlow CPA/MST/MBA, principal at Kessler Orlean Sil-ver and Company, P.C. in Deerfield, Ill. Harlow, an ICPAS member,has appeared on Fox Television’s Good Day Chicago and the YourMoney Show with Bill Moller on WGN Radio.

Exposure will be a key factor in finding media opportunities. “Firstof all, the media needs to know you’re there. If you want to be inthe media, look for the opportunities,” says Forman. “Trade publica-tions are always dying for articles. Try coming up with a specificissue and write to a media outlet to tell them you want people to beaware of it. Giving feedback to the media is just one way of gettingyourself into the media.”

Pursuing local presentation or speaking engagements at confer-ences or other professional events also may provide platforms fornetworking with media pros and gaining more media exposure.Check with national and state CPA societies (including ICPAS) tosee if they have connections with the media, whether print, radioor television.

“What we need to do in our industry and our profession is say,‘Look, we have important things that we think the public shouldknow about.’ CPAs need to be proactive,” says Forman.

Before you offer your expertise, though, be objective about yourpotential as a spokesperson for the profession; in other words, askyourself, “Do I have media ‘presence?’” “There are a lot of peoplein our profession that are absolutely brilliant when it comes toaccounting and tax issues. They do incredible work for their clients,

but if you put them in front of a room, or heaven forbid if you putthem on the radio or television, they would either put people tosleep or you would see eyes glassing over in the audience,” saysHarlow. “You have to realize a great conversation for a client or astaff person you’re trying to train may not always be a great conver-sation when you’re on the air.”

Being a media expert doesn’t necessarily require any training, butsome experience of public speaking and dealing with media staffwouldn’t hurt. After all, part of the satisfaction of being a mediaexpert is disproving some of the prevailing stereotypes surroundingCPAs. “As a media expert, one of the things you try to get across isthat CPAs have some kind of personality and that we aren’t all green-eyeshade people,” says Pier.

Harlow agrees, adding, “If you’re just your normal conservativeself you end up coming across like Ben Stein in Ferris Bueller’s DayOff. You really have to ratchet it up and use a lot more enthusiasmin your language, because if you don’t, quite honestly all you’redoing is enforcing the stereotypes.”

“One of the toughest things for me was to learn to talk in less spe-cific language and learn to explain things in such a way that I would-n’t have to spend minutes explaining every permutation of the law,”says Harlow. “(Media training) administered through the Illinois CPASociety was outstanding. It went a long way towards getting mestarted on the right path.

“From a professional standpoint,” he adds, “if it’s somethingyou’re interested in, think you might be good at, or think it soundslike fun, then I think being a media expert can definitely make youstand out and separate you from your peers. And in terms of prac-tice, it really enhances your aura in the eyes of your clients andothers, and obviously that can pay benefits down the road from acareer standpoint.”

To learn more about becoming a media expert for the Illinois CPA

Society, contact Communications and Media Manager Judi Kulm at

[email protected]. To be added to INSIGHT’s Writer Resource Direc-

tory, a list of ICPAS members interested in being interviewed for

INSIGHT articles, email Editor-in-Chief Judy Giannetto at giannet-

[email protected]. Include your name, title, company, email address,

phone number and, most importantly, areas of expertise.

CAREER

Congratulations to the 2009

WomentoWatchAward Recipients

The Illinois CPA Society’s Women’s

Executive Committee and the American

Institute of CPAs Work/Life and Women’s

Initiatives Executive Committee are

pleased to honor these women who have

made significant contributions to the

accounting profession, their organizations,

and to the development of women as leaders.

These deserving women will be presented

with their awards at the Illinois CPA Society

“Women’s Leadership Breakfast” on

November 13, 2009 at the Standard Club in

Chicago. To register to attend this breakfast,

please call the Society at 800.993.0393.

The mission of the Women's Executive Committee is toenhance the recruitment, volunteerism, retention andleadership of women CPAs in the Illinois CPA Society and theprofession through various programs and networking events.This program is one in an ongoing series designed to helpwomen CPAs learn more about important professional issues,expand business networks and foster career advancement.

Genevieve Burns, CPAPartner in Charge of the Not-for-Profit Practice,Blackman Kallick, LLP

Experienced Leader

Kath Carter, CPAMidwest Sub-Area Leader, Transaction AdvisoryServices, Ernst & Young LLP

Experienced Leader

Geralyn Hurd, CPAPartner, Tax Exempt Practice Leader, Crowe Horwath LLP

Experienced Leader

Kathy Ford, CPATax Partner, Ernst & Young LLP

Emerging Leader

Sherrie Krowczyk-Mendoza, CPAManaging Director Risk Management, RSM McGladrey Inc.

Emerging Leader

Heather Paquette, CPAPartner, Advisory, KPMG LLP

Emerging Leader


TAX

The OverseersIs increased regulation the route to better taxpayer and preparer compliance?

By Harvey Coustan, CPA

By the end of 2009, the IRS prom-ises to propose a comprehensiveset of recommendations relating

to how tax return preparers can help toincrease taxpayer compliance and how toensure that tax return preparers meet uni-form and high ethical standards of con-duct. This is the long way of describing IRSefforts to regulate the tax return prepara-tion industry.

Urged on by various other federal gov-ernment agencies such as the TreasuryInspector General for Tax Administration(TIGTA) and the Taxpayer Advocates’ Office(TAO), the IRS will recommend new rules,

including the use of a single return prepareridentification number; return preparer reg-istration, education and competency meas-urement; and enhanced enforcement of taxreturn preparer penalties.

Last July, the IRS scheduled a number ofmeetings in Washington DC and otherlocations to get input from various stake-holders, including tax return preparers,associated industry and consumer groups,and taxpayers. In Notice 2009-60 (July 24,2009), the IRS requested public commentson the two broad issues just described, andspecific comments on:n The types of individuals, entities and

professionals who currently work astax return preparers, how professionalorganizations or the government cur-rently monitor or regulate their taxreturn preparation services, and howthis monitoring and regulation couldbe improved.

n How differences in regulation andoversight affect the way in which var-ious tax return preparer groups inter-act with the IRS and taxpayers.

n The minimum level of education andtraining necessary to provide tax returnpreparation services. If there is a mini-mum level, who should be responsiblefor ensuring that this level is met?

nWhat service and outreach should beprovided to tax return preparers andtaxpayers, and who should provide(and carry the costs for) these services?

n Should tax return preparers be subjectto a code of ethics and, if so, what spe-cific behavior should that code pro-mote or prohibit? How would that codemesh with existing ethical standards?

nWhat, if any, responsibility should thefirms or businesses that employ taxreturn preparers have for the conductof these employees?

nWhat, if any, responsibility should taxreturn preparer professional organiza-

Illinois CPA Society | 2010

OUTSTANDING EDUCATORA W A R D

Nominations for the 2010Outstanding Educator Awardsare now being accepted.The Illinois CPA Society is currently seeking to recognize threeoutstanding educators. Two educator awards may be from 4-yearschools--one from a school that offers a graduate accountingprogram and one from a school that does not. One educatoraward may be from a 2-year school.

Nominations are welcomed from any interested person(colleague, student, administrator, etc.). Nominees must be anIllinois educator at a community college, college, or university witha minimum of five years teaching experience.

Educators who are noted for their teaching abilities, but are nowpredominantly involved in administration or research are eligiblefor the award. Nominees do not need to hold a doctoral degree orbe a member of the Illinois CPA Society, but must be a CPA.

The primary criteria to be considered in making the selection arethe following factors:

Excellence in teaching

Student motivation and mentoring

Educational Innovation

Contributions to the academic community, and/or contributionsto the accounting profession

For more information or to nominate a candidate, please visitwww.icpas.org or call Kelly Slay at 800.993.0407, ext. 275

The deadline for nominations is Monday, November 30, 2009.


tions have for the education, training and conduct of theirmembers?

n If tax return preparation services are regulated, what, if any,special regulatory provisions should be made for individualswho are already tax return preparers, licensed attorneys,CPAs or software providers?

n What, if any, additional legislative, regulatory, or administra-tive rules should the IRS recommend for the tax return pre-parer community?

In a July 14, 2009 report (2009-40-098), Inadequate Data onPaid Preparers Impedes Effective Oversight, TIGTA made a num-ber of recommendations, including a memorandum for the com-missioner of the IRS Small Business/Self Employed Division (SBSE)(the “Memorandum”) that described various deficiencies and sug-gested improvements.

For one, the Memorandum found that management informa-tion on paid preparers is incomplete and inconsistent. Althoughthe IRS maintains significant data, it is not feasible to use that datato track, monitor or control preparers’ activities and compliance.This is largely because preparers use multiple identifying numberswhen dealing with the IRS, and data on preparers consists of morethan 20 different nonintegrated systems.

A test of a statistical sample of 139 preparers revealed that: n 67 percent used multiple identifying numbers.n The names of the 139 preparers in various systems were

inconsistent 45 percent of the time.n There were inconsistencies in 24 percent of the preparers’

street addresses listed in the various systems, while phonenumbers varied 40 percent of the time.

n Nine preparers sampled used invalid identifying numbers onthe tax returns they prepared.

n Five percent of the 139 preparers were not compliant withtheir own tax obligations; three preparers had delinquentreturns and five owed taxes.

This is not a good foundation for carrying out the mission statedin the IRS 2009-13 Strategic Plan, namely to “ensure that prepar-ers adhere to professional standards and follow the law.”

Earlier TIGTA reports (2004 and 2008) recommended that pre-parers use unique identifying numbers to standardize the process

of identifying preparers and enforcing tax laws and regulations.The Memorandum recommended that the SBSE commissionerrevise the target completion date for its study to ensure the IRS“has a means to control and track preparer activities by the 2011Filing Season.”

What’s more, the Memorandum recommended that the com-missioner develop a method to enforce Internal Revenue Code§6695(c), which imposes a penalty on preparers who fail to pro-vide an identifying number on the tax returns they prepare. Inaddition, it is recommended that the commissioner develop acomprehensive data management system that allows the IRS, “ata minimum, to determine the population of preparers by eliminat-ing discrepancies and duplications between systems…[and]allow the IRS to control, track and monitor preparers’ activities.”

The Memorandum also recommended legislation that wouldrequire paid preparers to comply with their own Federal tax filingrequirements in order to be permitted to prepare tax returns for a fee.

As you might expect, various professional organizations,including the American Institute of Certified Public Accountantsand the American Bar Association Tax Section, have checked inwith comments to the IRS. Of course, both believe that any regu-lation should not impose requirements on top of the ones theythemselves already impose on their members.

Any system for identifying, registering and regulating preparersneeds to answer a number of needs. Should there be CPE require-ments and examinations? Should members of regulated organiza-tions (AICPA, ABA Tax Section, Enrolled Agents) be subject toadditional regulation in order to prepare returns for a fee? Shouldthe Office of Professional Responsibility be charged with enforc-ing regulation of this new category of paid preparers?

We are indeed living in a time of increased oversight for manyprofessionals. The route taken to oversee and regulate tax returnpreparers is only logical, and hopefully will lead to better tax-payer and preparer compliance.

Harvey Coustan is an Ernst & Young retired partner. He is presently

consulting on substantive technical and professional standards

issues and has been an expert witness in a number of cases.

making your life easier www.CCFLinfo.org

The Center for Corporate Financial Leadership is a service of the

Illinois CPA Society

upcoming eventsDecember 15, 2009 - Chicago, ILStrategic Cost Analysis: Tools for Lowering Your Company’s CostsJohn W. Hill, PhD, MBA, JD - Arthur M. Werner Chair in Business, KelleySchool of Business, Indiana University

February 5, 2010 - Chicago, ILStrategic Risk Management: Aligning Strategy andPerformance Measures with ERMMark Frigo, PhD, CPA, CMA - Director, The Center for Strategy, Executionand Valuation, Kellstadt Graduate School of Business, DePaul University

March 18, 2010 - Rosemont, ILControllers Conference

TAX

The CPA Life Insurance Plan—Designed with you in mind

The Prudential Insurance Company of America issues this Term Life Insurance and is authorized to conduct business in all states and the District of Columbia, Guam, Puerto Rico and the United States Virgin Islands. Refer to the Booklet-Certificate for more details, including limitations and exclusions. Principal offices are 751 Broad Street, Newark, NJ 07102-3777, (973) 802-6000. The Plan Agent is Aon Insurance Services, 159 E. County Line Rd., Hatboro, PA 19040-1218. Contract Series 31300. Aon Insurance Services is a division of Affinity Insurance Services, Inc.: in CA, MN & OK, (CA Insurance License #0795465) Aon Insurance Services is a Division of AIS Affinity Insurance Agency, Inc.; and in NY is a Division of AIS Affinity Insurance Agency.0155342-00001-00

NEW! Lower rates for many ages

Your State Society membership has brought you the trust of clients and

customers, as well as the respect of your peers. Now it can help bring a sense of security to your loved ones. That’s because your membership provides you with the opportunity to request coverage under the CPA Life Insurance Plan, issued by The Prudential Insurance Company of America.

Affordable rates and the features you wantCoverage under CPA Life offers important benefits your family may need to take care of financial obligations if you were to die. And with our competitive rates, you won’t have to search to find insurance that works with your lifestyle. In fact, rates were recently lowered for most participants ages 50-64.

Eligible members may request up to $500,000 in term life coverage—up to $2 million if you’re also a member of the AICPA. And if you’re approved for coverage and between the ages 45-74, you’ll automatically pay Select Status rates—25%-50% lower than standard rates.

Opportunity for cash refundsEvery year, the money not used for claims or other expenses is paid to eligible Plan participants as a cash refund. These cash refunds are paid by the Insurance Trust from premium refunds received from Prudential and can lower your costs even further. Although not guaranteed, cash refunds have been paid every year since 1958.

Optional CPA Life Benefits: Waiver of Contribution during Disability

$10,000 of Dependent Child Coverage available

Accidential Death & Dismemberment coverage

Protecting your family’s future is a job you take very seriously. With coverage under the CPA Life Plan, it may just get a little easier. Join over 175,000 of your fellow CPAs who have chosen CPA Life for their insurance needs. Visit www.cpai.com/lifeil to learn more about the Plan or to apply online.

•

•

•

CPA Life Plan Features:

Up to $500,000Term Life Insurance for State Society members

$10,000 Dependent Child Coverage Available

Save 25%—50% with Select Status Rates

Opportunity for cash refunds paid by the

Insurance Trust

New lower rates for many ages

Apply online www.cpai.com/lifeil

The

Insurance Plan


SofTwARESCEnESTEALERS

By Carolyn Tang


n an effort to boost the bottom line in a challenging economy,many firms are looking for ways to increase their efficiencywhile working with a reduced headcount. In response, there’sbeen an upsurge in software solutions designed to deliver theright data, to the right people, at the right time. Their ultimate

goal: to free up the accounting department to focus on more strate-gic initiatives, while automating day-to-day administrative report-ing. Numara Software, Drake Software, Avalara, Ultimate Softwareand SilverEdge Systems Software, Inc. are among those softwareplayers leading the trend.

numARA SofTwAREInformation Technology Asset managementFounded in 1991, Numara Software is a global provider of IT serv-ice management and IT asset management solutions that addresscritical information technology and support functions, such as IThelp desk, customer service desk, IT asset management, softwarepatch and deployment management, network monitoring and vul-nerability, compliance and power management.

The company’s Numara Track-It! is touted as one of the mostwidely adopted help desk software and asset management solu-tions on the market. Used at more than 55,000 customer sitesaround the globe, the software increases productivity by automat-ing critical IT functions.

“Numara Track-It! allows companies to do more with fewerresources with a comprehensive, scalable help desk and asset man-agement solution that evolves with their business,” explains DebbieIngram, Numara’s senior manager for market strategy.

For example, one of the solution’s features enables the IT teamto automatically identify all active devices—PCs, network printers,routers, servers and switches. The software then determines IP andMac address information, and uses the data to track inventoryupdates. Users are also able to track inventory in other ways,including tagging and using a traditional barcode system. The soft-ware is smart enough to eliminate duplicate asset records and tagthe asset to the user. “No matter how you add assets, informationwill be automatically merged with existing records when commonattributes are discovered,” Ingram explains.

Asset management is an integral component of the entire organ-ization. No matter what the function, human resources, marketingand finance play a role. So whenever a shift happens in one ofthese key areas, it trickles down to IT.

“Managing business processes throughout the organizationbecomes more challenging as users, equipment and locations areadded and removed,” says Ingram. “Changing economic condi-tions make it more important than ever to closely track hardwareand software resources and manage their related costs.”

She says that the key to managing costs and increasing IT effec-tiveness is ensuring each function has quick and ready access tothe accurate data it needs. For example, company help desks haveexperienced an increase in request volume because of the expand-ing number of communication methods now available, includingphone, fax, email and the web. Complicating this trend is a shrink-ing support team, which is often plagued with increased demands,variable skill levels and high turnover.

“Regardless of business conditions, organizations must ensurethat employees are in the best position to be productive,” Ingram

I


explains. “Instant access to integrated asset data allows agents andtechnicians to get a complete view of an issue along with relatedresources, and resolve it quickly. This results in better use ofagents’ time and creates a higher level of customer satisfaction.”

Visit numarasoftware.com for more on the Numara Track-It!

software solution.

DRAkE SofTwARETax PreparationNorth Carolina-based Drake Software has specialized in tax prep-aration since the 1970s. However, in 1977, the company decidedto discontinue preparing tax returns the old-fashioned way andinstead focus its energies on tax preparation software.

Today, more than 30,000 tax professionals nationwide useDrake Software, and each year Drake processes more than 9 mil-lion Federal- and state-accepted returns. The company has wonmultiple awards, including a 2009 Reader’s Choice Award fromCPA Technology Advisor in three categories: Federal/State IncomeTax Compliance, Website Builder for Accounting Firms, and Doc-ument Management and Storage.

What’s more, in 2008, a National Association of Tax Profession-als survey indicated that Drake Software is the industry leader incustomer support satisfaction, thanks to the quick response turn-around of the company’s support team.

“Year round, our customers wait less than nine seconds to speakwith a customer support representative, which saves them valu-able time, especially during peak season,” says John Sapp, VP ofmarketing and sales for Drake.

The company also ensures their customers have access to exten-sive, on-demand training. “Training is provided via live training,extensive webinars, updates schools and over 50 audiovisual tuto-rials,” Sapp explains.

Continuous improvement is a key goal. “Drake is consistentlyimproving its software by providing the most current technologyavailable. This includes the most up-to-date tax law changes, as wellas time-saving features integrated into the software,” says Sapp.

Drake’s archive feature, for example, enables CPAs to save sev-eral versions of a tax return, allowing them to quickly give recom-mendations, while also maintaining the integrity of client files.What’s more, Drake keeps tax preparers in the know about new IRSregulations. IRS Regulation 7216, for instance, provides guidance onthe use and disclosure of client tax information, and strengthens thetaxpayer’s ability to control his/her tax information and makeinformed decisions regarding the preparer’s use of that information.Tax preparers who fail to comply with this regulation face a $1,000fine and one year in jail for each violation. By accessing the DrakeSoftware site, preparers are able to view a wide range of sample let-ters and consent forms to ensure compliance.

Visit drakesoftware.com for more information.

AvALARASales and use Tax Compliance Avalara is a Software-as-a-Service (SaaS) transaction tax solutionprovider for accounting firms, software resellers, businesses of allsizes and individual end-users. Its web-based solution is used bynearly 10,000 businesses globally.

“Accounting firms partner with Avalara to provide clients withend-to-end sales and use tax compliance solutions. In some cases,


it’s been a matter of good practice management for the account-ing firm, particularly when the firm is seeking to broaden its serv-ice offerings while not having to hire new accounting staff,” saysAlthea Azeff, JD, marketing and investor communications directorfor Avalara.

Avalara tracks changes in various tax rates and jurisdictionboundaries, and incorporates them into its web-based solution,therefore ensuring that all end-users are consistently in compli-ance. These updates are transparent to Avalara service subscriberssince the software integrates seamlessly with financial applica-tions, and returns accurate calculations in sub-second intervals.

“To give you an idea of the sort of numbers we’re talking about,there are more than 14,000 sales tax jurisdictions throughoutNorth America alone. We constantly monitor for rate, boundaryand nexus changes, as well as new taxability rules and other fac-tors that customers need to have managed, especially when theysell into multiple jurisdictions. By the end of June 2009, we hadtracked some 1,404 sales tax rate changes,” Azeff explains.

She adds that, in times of recession, rampant unemploymentand failing enterprises, firms look for solutions that will save themtime, freeing them to focus on the business of staying afloat. “Noone enjoys tax compliance,” Azeff admits. “It’s tedious, burden-some, time-consuming, and can take staff hours away fromaccounts receivables and other functions that directly contributeto the company’s bottom line. By outsourcing the functions asso-ciated with transaction tax compliance, companies save time,money and other valuable resources.”

Calculating sales tax is a challenging necessity; its very naturemakes it transactional rather than geographic. Companies need tocalculate the appropriate rate regardless of whether the transactiontakes place in a brick-and-mortar store, over the phone, or online.

“You simply can’t calculate fast enough unless the process isautomated, and you have to do it in the most accurate way possi-ble. Our web-based solution did an amazing thing for businessesof all sizes, particularly the small and mediums, by providinginstantaneous sales tax calculations that previously had beenavailable only on ERPs,” she says.

Avalara also takes pride in leveraging new technologies to addgreater depth to its offerings. For example, the company reachesout to its customer base using Twitter, blogs, forums, Facebook,and even an iPhone app that allows Avalara users to instantlyretrieve address validations and sales tax rates for any US or Cana-dian location.

“We’re a technology company, right? Of course we use andenjoy new technologies,” says Azeff.

Visit avalara.com for more on these offerings.

uLTImATE SofTwAREIntegrated Human Resources SolutionUltimate Software is the award-winning company behind UltiPro,a product that provides end-to-end strategic human resources,payroll and talent management through Software-as-a-Service.Current clients include Major League Baseball, Nintendo of Amer-ica, Ruth’s Chris Steak House and Sony Music Entertainment.

In the most basic terms, UltiPro helps companies manage theirworkforces, taking care of everything from recruitment to retire-ment. It is unique in the sense that it provides a single, unified solu-

tion for handling every aspect of the employee lifecycle, so com-panies don’t have to search for payroll or HR point solutions.However, it also has a depth of functionality that provides busi-nesses with strategic human resources tools and built-in businessintelligence and workforce analytics.

For example, users of UltiPro can access their payroll and HR dataon demand, and can create workforce reports in seconds. Also, theentire workforce has online access to individual payroll and per-sonal information, and can manage that data without having toinvolve human resources personnel.

“Many companies today are struggling with the inefficiencies,data inaccuracies, errors and time wasted that result when theyhave the same employee data stored in multiple systems thataren’t integrated,” explains Jody Kaminsky, Ultimate Software’sVP of marketing.

Having separate, non-integrated systems may result in unreli-able data, such as different start dates for the same employee anddifferent payroll deductions. “Hours of time can be spent manu-ally comparing and reconciling data between systems,” saysKaminsky. “Having these processes integrated delivers tremendousvalue because there is one central, master source for reliableemployee data. It also delivers time and cost savings by eliminat-ing duplicate data entry or data reconciliation, reducing errors andthe need to reprint paychecks, and consolidated employee data forreporting and trend analysis.”

One of the greatest benefits for the accounting function is thatUltiPro significantly reduces the typical number of costly payrollerrors. The solution eliminates the need for duplicate data entrybetween time entry and payroll, and allows payroll staff to checkdata before the payroll is run. Additionally, UltiPro can feed rele-vant payroll and HR information into accounting systems, such asthe general ledger. This is a significant feature, particularly whenyou consider that HR and payroll costs are more often than not acompany’s largest operating expense.

What’s more, UltiPro’s salary planning and budgeting featureenables accounting and finance departments to forecast operatingexpenses and better project salary increase costs. “Customers canset salary increase guidelines, and managers can determine thebest way to allocate pay increases to their employees within anapproved budget,” Kaminsky explains.

The University of Louisville Hospital is one of UltiPro’s currentusers. Jamie Long, the hospital’s benefits manager, says the solu-tion has significantly helped the organization streamline tacticalwork. “For instance, with UltiPro’s benefits enrollment feature, wehave eliminated two weeks of data entry. This gives us time todevote to more strategic projects, such as recruiting and retainingthe best people,” he explains.

Visit ultimatesoftware.com for more on the UltiPro solution.

SilverEdge Systems SoftwareResource management Solution for Project-focused firms SilverEdge Systems Software, Inc. is an award-winning companythat provides corporate resource management software solutionsto help clients better manage their projects, employees, clients andmarketing functions—and enhance cash flow and profits.

Deltek Vision is SilverEdge’s leading software solution. With thegoal of enabling users to gain a single overview of their project life-


cycle and supporting systems, Deltek Vision con-solidates employee, project, customer, market-ing and financial information into an integrated,real-time tool, which then allows for greater effi-ciency and better, faster decision-making. Thedatabase also brings together all of an organiza-tion’s functions, including project management,IT, accounting and business development,thereby promoting collaboration and knowl-edge-sharing between groups.

“Deltek Vision impacts a company’s bottomline by driving business growth, optimizing proj-ect quality and cash flow, and improving resourceefficiency,” explains SilverEdge Systems SoftwarePresident Maria Vedral.

One way the solution increases efficiency isby automating processes. For example, the acc-ounting and billing function, which was de-signed specifically for project-focused firms,eliminates work-arounds and dependence onmultiple systems. “Deltek Vision automates allyour accounting processes with stringent internalcontrols, providing a complete financial man-agement and project accounting system, multi-currency, multi-company, intercompany billingsand transfer, and other advanced accounting fea-tures, including workflows and dashboards,”Vedral explains.

What’s more, the real-time element of thesolution means that users can access project,financial and business information anywhere,anytime. Specifically, the web-based architec-ture provides access to user-specific or role-based dashboards, targeted and configurablereports with drilldown, and a single database forall critical business processes.

The solution also helps to eliminate leaks inbillable time and expenses, and captures data tosuch a level of detail that it supports project andbudget management, as well as contractualrequirements. “Project invoices are accurate thefirst time, which shortens the billing cycle andtime to payment,” says Vedral. “With targeted ARaging reports and alerts, the team can stay on topof the collections process.”

Like the other software scene players men-tioned here, SilverEdge takes advantage of bur-geoning technologies. “We utilize tools likeGoToWebinar to offer free Internet trainingseminars to our clients. By providing onlineone-on-one training, we eliminate travel costsand improve the training and support experi-ence by being able to see our clients’ screensand take control of them if it makes sense,”Vedral explains.

Visit silveredge.com for more information on

SilverEdge’s software offerings.


ernie Madoff proved that anyone and everyone can becheated out of their money. While his multibillion dollar

Ponzi scheme may be the most publicized, it’s not the only investmentfraud out there. And they’re not all confined to Wall Street and corpo-rate backrooms. “What’s happening now is resurgence; there are alwaysgoing to be predators out there taking advantage of people,” says JosephH. Rieber, CPA. “You are going to see an uptick in people losing moneyas a result of dishonest maneuvers.”

B

SC

AM

ME

R

Is there relief for defrauded investors? Yes.By Derrick Lilly

Pon.zi Scheme: n. an investment swindle in which some

early investors are paid off with money put up by later

ones in order to encourage more and bigger risks.

Etymology: Charles Ponzi, American (Ital.-born) swindler

(early 1920s). Source: Merriam-Webster

governing the treatment of losses in investment schemes and whatqualifies a victim for relief.

“The law before was very confusing and often misinterpreted;it didn’t really help a whole lot of victims, but the governmenthas made a good-faith effort by putting this ruling forward andclarifying what qualifies as a theft loss based on fraudulent deal-ings,” says Rieber.

For taxpayers qualifying under the ruling, the IRS has drawn upgenerous guidelines for addressing losses. “What the IRS said inthis revenue ruling that’s very beneficial and very helpful fordefrauded taxpayers is that the loss is deductible under §165(c)(2),which means it is not limited to personal loss limits or the limitsof itemized deductions detailed under §165(c)(3), §165(h) or §67and §68,” Calahan explains.

“What this essentially means is Revenue Ruling 2009-9 givesyou ordinary loss treatment if you can prove you had a casualtyloss from theft,” adds Rieber.

To maximize tax benefits under this ruling a taxpayer can offsethis or her ordinary income up to the amount of the fraud loss inthe year of discovery, and carryback losses by amending returnsfrom previous years. This helps to recoup previous taxes paid onfictitious income, while minimizing future tax obligations. Andthanks to an amendment of §172(b)(1)(h) resulting from the Amer-ican Recovery and Reinvestment Act of 2009, taxpayers and eli-gible small businesses can elect a three-, four-, or five-year netoperating loss carryback.

Furthermore, Revenue Procedure 2009-20 establishes anoptional safe harbor for qualified taxpayers that suffered losses inqualified criminally fraudulent investment arrangements. UsingAppendix A—a simplified worksheet specifically developed forthe safe harbor treatment—taxpayers will be able to uniformly cal-culate their theft losses and the deductible amount. Less any insur-ance or Securities Investor Protection Corporation (SIPC) monies,victims following Revenue Procedure 2009-20 will be able todeduct 95 percent of their losses if they do not pursue any third-party recovery, or 75 percent for those intending to take legalaction in the year of discovery.


How to spot a scamLook out for these red flags:

n You’re encouraged to borrow money or cash from retirement funds to invest

n You’re pressured to invest immediately

n Quick profits are promised

n You’re told the disclosure documents required by federal law are just a formality

n You’re told to write false information on your account form

n Materials have typos, misspellings or aren’t printed on letterhead

n Your money isn’t sent promptly

n You’re offered inside information

n The sales pitch uses words like "guarantee," "high return," "limited offer," "this invest-

ment is IRA approved" or "as safe as a CD"

n Claims are made that "off-shore investments are tax-free and confidential"

Source: ConsumerAction.gov

Touching closer to home, in July 2009 the Securitiesand Exchange Commission (SEC) froze the assets of LancelotManagement LLC, a Highland Park, Ill.-based hedge fund run byGregory Bell, after the company allegedly fed $2.62 billion intoMinnesota businessman Thomas Petters’ Ponzi scheme. in themost basic terms, a Ponzi scheme is an investment operation thatpays investors from their own money or money paid by subse-quent investors, rather than from profits earned.

“In an economy like this people are looking for alternativesbecause the stock market hasn’t been performing well and inter-est rates are at all-time lows. Unfortunately, that can open the doorfor fraudulent investments that promise returns above marketrates,” explains John Gannon, senior VP of investor education atthe Financial Industry Regulatory Authority (FINRA), which esti-mates that 7,000 investment fraud claims were filed in 2009.

“The typical victim of investment fraud isn’t the little old widowsitting at home alone; it’s actually someone who is a fairly sophis-ticated investor, college educated, financially literate and fairlywealthy,” says Gannon.

Even pension funds, institutional investors, corporations, partner-ships and hedge funds have been duped by fraudulent investments.

“Fortunately, the government seems to be more responsive thesedays to those types of misfortunes,” says Rieber. With two new IRSrevenue guidance items in place—Revenue Ruling 2009-9 andRevenue Procedure 2009-20—some fraud victims may find relief.

“You may not get 100 percent of your money back, but the gov-ernment is giving you a chance to get something,” he says.

Internal Relief ServiceWhen turning to the IRS, “The most important thing is to establishexactly what the facts are,” says Michael O. Calahan, CPA, a taxpartner with Blackman Kallick in Chicago. “Are you a directinvestor? Are you an indirect investor? What did you invest in?What documentation do you have to establish basis?”

Thankfully, establishing a basis for a claim is now easier thanksto Revenue Ruling 2009-9, which clarifies the income tax law


“For a large number of people, this is probably the way to go,but you have to look at each specific tax situation,” says Calahan.“The revenue procedure offers some very nice relief for taxpayerswho were simply investing money, but the IRS didn’t say you mustfollow this revenue procedure, and they didn’t say this is the onlymethod for recovery.”

“There is always capital-loss treatment, but you are limited tooffsetting any capital gains plus $3,000 per year, which you cancarry forward indefinitely as an individual or trust. But once again,there needs to be finality that you aren’t going to recover anythingbefore putting it down on your return and claiming the loss,” saysRieber. “Capital-loss treatment can provide some relief, but it maytake a while, and you may never recover everything you invested.”

Where to TurnA problem for regulatory authorities is the failure of victims toreport fraudulent or suspicious investments. “The FINRA InvestorEducation Foundation surveyed victims of known investmentfraud, and one of the things we discovered was that over three-quarters of those who had been defrauded never reported the factthat they had been defrauded. There is a huge underreporting ofinvestment fraud in the United States,” Gannon states.

That said, reporting incidences of fraud is vital to the ongoingbattle against corruption. Depending on the circumstances, vic-tims need to involve respective regulatory authorities, which mayinclude the IRS, SEC, FINRA, SIPC and your state’s securities reg-ulator, in order to find relief and bring violators to justice. LicensedCPAs, tax preparers and even tax attorneys can help victims deter-mine the best course of action for reclaiming losses.

If it comes down to reclaiming losses through the IRS provi-sions, Calahan strongly suggests, “getting professional guidancebecause there are a number of ways to trip up. Taxpayers with alarge loss are going to require a lot of professional help, but insome instances it all comes down to the cost benefit: How muchmoney was lost and based on that amount how much are weactually talking about recovering.”

Protective MeasuresOf course, even with IRS provisions, regulatory aid and profes-

sional help to turn to, the best relief is to protect yourself from

being victimized in the first place.

“There are two important steps investors should take to avoid

investment fraud, which is to ask questions and then check the

information out,” Gannon explains. “Specifically, ask if the indi-

vidual you are doing business with is licensed to sell investments

with FINRA, the SEC or your state’s securities regulator. The sec-

ond question is, ‘Is the product itself registered?’ If you find out that

both the product and the individual are registered, you’re going to

protect yourself from the worst cases of fraud such as Ponzi

schemes, pyramid schemes and things that are just nonexistent.”

As Rieber advises, “You don’t want to sign up for any investment

willy-nilly.” Checking into a broker’s or advisor’s background is

easy through FINRA’s BrokerCheck® [brokercheck.finra.org] and

the SEC’s “Protect Your Money: Check Out Brokers and Investment

Advisers” web page [sec.gov/investor/brokers.htm].

Extra-cautious investors can turn to FINRA for additional safe-

guards. “We’ve developed a risk meter [finra.org/meters/risk], which

measures what types of risky behavior investors may engage in,

which may open them up to investment fraud. Another tool we have

is a scam meter [finra.org/meters/scam], which helps to analyze

whether the potential investment being considered might be a

scam,” says Gannon.

“There are a lot of basic precautions you can take to protect

yourself, but to best protect yourself from fraudulent investments

you should connect with a regulated, registered financial advisor

you can trust,” Rieber stresses. “You need to take some time, do a

little homework and do the legwork to get as much information as

you can before parting with your hard-earned money.”


sale


Which industries, products andservices have suffered most?

By Sheryl Nance Nash

spendphobia

“It’s ugly out there,”says Paul Strebel, a CPA and Cornell Univer-sity lecturer. And true enough, few companiesare escaping the recession without at least afew bumps and bruises. Their clients and cus-tomers, after all, are keeping a very tight gripon their purse strings.

A recent poll from Associated Press/GFKfound that the share of people using their creditcards has dropped from 25 percent in 2008 to19 percent in 2009. The national savings ratejumped to nearly 7 percent in May, the highestsince December 1993.

“There’s been no real safety net for anyone,big or small. Everybody is fighting this battle,”says Stan Friedman, president of RetroTax,which specializes in tax credit identificationand administration. sale


Sageworks recently released a list of 10 private company types mostlikely to file for bankruptcy in the coming months. The list is basedon the average debt-to-equity ratio in the industry over the last year.Heading the list are automobile dealers and other motor vehicledealers, followed by nursing care facilities, hotels and traveleraccommodations, sporting goods and hobby stores, land develop-ment and subdivision companies, investigation and security serv-ices, residential building companies, motor vehicle parts manufac-turers and printing companies.

According to industry and market research firm IBISWorld, a “suf-fering” or distressed company is defined as one that has seen signif-icant declines in both revenue and industry value added. Valueadded accounts for profitability and wages (which is a direct reflec-tion of employment numbers).

These, says IBISWorld, have been the hardest hit industries dur-ing the 2007-2009 recession period:

Investment Banking and Securities DealingThis industry has observed an average annual decline in revenue of17.5 percent (falling from $151.5 billion in 2007 to an expected$103 billion at the end of 2009), while industry value added hasdeclined by an average annualized 27.6 percent (dropping from$112.9 billion in 2007 to $59.2 billion in 2009), reports Toon vanBeeck, a senior analyst with IBISWorld. The period from 2007 to2008 was particularly bad, with the industry coming close to com-plete collapse. In 2009, however, many companies were able toclaw their way back.

Private Equity, Hedge Funds and Investment VehiclesThis industry has observed an average annual decline in revenue of44.6 percent (falling from $115.7 billion in 2007 to an expected$35.5 billion at the end of 2009). Value added has declined by anaverage annualized 65 percent (dropping from $102 billion in 2007to $12.5 billion in 2009).

Loan Brokers Loan brokers have averaged an annual decline in revenue of 47.4percent (falling from $16.58 billion in 2007 to an expected $4.59billion at the end of 2009), while industry value added has declinedby an average annualized 43.9 percent (dropping from $9.62 billionin 2007 to $3.03 billion in 2009).

Money Market and Other Banking This industry has averaged an annual decline in revenue of 39.6 percent (falling from $2.13 billion in 2007 to an expected $777.6million at the end of the 2009), while industry value added hasdeclined by an average annualized 41.9 percent (dropping from$1.13 billion in 2007 to $381 million in 2009).

Single Family and Multi-Family Home ConstructionOver the last two years, this industry has observed an averageannual decline in revenue of 24.3 percent and 22.5 percent peryear, respectively. Industry value added has declined by an averageannualized 27.9 percent and 26.8 percent per year, respectively.

Sadly, these industries have not suffered alone. IBISWorld reportsthat approximately 70 industries have observed average annual rev-enue declines of greater than 10 percent per year in the past twoyears, and 117 industries have observed industry value addeddeclines of greater than 10 percent per year. Among them are semi-conductor machinery manufacturing, recreational vehicle dealers,

land developers, new car dealers, petroleum refining, fence andswimming pool construction, and boat building.

What’s the outlook for companies? “Finance and constructionhave been utterly decimated,” says Strebel. “Firms that rely prima-rily on trading will recover somewhat, but those with large loanpositions will continue to suffer. We expect loan delinquencies tocontinue rising, and we expect that many banks and finance com-panies will have difficulty rolling over their own debts. This prob-lem isn’t going away. Much the same is true of real estate and con-struction. We see prices continuing to fall and demand for newbuilding to be low.”

Unfortunately, says Bob Stegmann, managing partner of Chicagoexecutive services firm Tatum, “The last 18 months have seen a sig-nificant denial on the part of business owners who refused to believewhat was on the news every night and they waited too long to seekhelp. Companies limit their options when they lock up like a deerin headlights.

“Companies had a vision, a strategy, but they weren’t quite pre-pared for the economic storm,” he continues. “They have leveragedbalance sheets, which is okay when credit is flowing, but now theyare trying to scale back their businesses to be able to come up witha new economic plan that uses a scalpel instead of a hatchet.”

For every loser, however, there’s a winner. “Those who went intothe recession cash strong and well-managed, and who could workthrough the credit freeze, found they could capitalize on things thatothers couldn’t,” says Friedman.

Stores that benefit when consumers cut back, like Wal-Mart andMcDonalds, have done well, says Strebel. Healthcare remains rela-tively strong since, recession or not, people still need health serv-ices. And because companies want to improve efficiencies andautomation capabilities—especially when they’re dealing withfewer employees—software has also held strong, says Stegmann.

While IBISWorld estimates that only 5 percent of all US industrieswill be positively impacted by the recession, the research firm liststhese 10 industries as likely to experience the greatest average annu-alized growth, as of 2009:

1. Voice Over Internet Protocol (VoIP), 31.5 percent growth2. Biotechnology, 10.9 percent growth3. Community Food Services, 10.3 percent growth4. Scheduled Bus Services, 9.5 percent growth5. Community Housing Services, 9.3 percent growth6. Video Games, 9 percent growth. 7. Court Reporting Services, 8.3 percent growth8. Public Transportation, 6 percent growth9. Bridge & Tunnel Construction, 5.6 percent growth10. eCommerce and Online Auctions, 5.4 percent growthThe industries IBISWorld cites as winners are doing well for a

variety of reasons, but paramount is the tendency of today’s cus-tomer to curb the spending habit. Trimming unnecessary expensesmeans that people are making product and service substitutions,such as using public transportation instead of cars and looking tobig box retailers rather than department stores. The days of optingfor luxury items are on hold. What’s more, some industries areflourishing as a result of the public putting off costly repairs andmaintenance services to preserve household cash flow. Car tow-ing is a perfect example.

It’s not all stormy skies, however. Believe it or not, there is stillmoney to be made and entrepreneurial wings to spread in this cli-


mate. IBISWorld identifies nine startup opportunities, inparticular: Landscaping services; tutoring, test prepara-tion, driving schools and other education; fashion designservices; community food services; vocational rehabili-tation services; eCommerce and online auctions; auto-mobile towing; video game retail; and elderly and dis-abled services.

Landscaping is expected to thrive because of the lowbarriers to entry, as well as low initial capital require-ments. “Many people can commence operations withequipment they already own, and there is no need for aformal office or additional space,” says van Beeck. Thentoo, homeowners are time-strapped and the aging popu-lation needs a helping hand.

The aging population also comes into play when welook at elderly and disabled services. Growth and demandare steadily rising as Baby Boomers retire from workinglife. Government grants may be drawn upon to establishnew entities, reducing significant startup costs.

“Rising federal government funding, the rise of age-related issues, and emphasis on caring for people with dis-abilities (such as the New Freedom Initiative), make thisindustry highly prospective. Entry barriers are low and taxconcessions and rebates are available for nonprofit organ-izations. Currently, 73 percent of industry players operatewithout having to pay taxes—a significant incentive,” saysvan Beeck.

But for most companies, the question is not how theycan start a new entity, but rather how they can survive therecession and thrive when the economy recovers.

Change brings more change. When the “new norm”arrives, will your company be around to enjoy the fruitsof its labor?

1. Assess liquidity “Try to squeeze as much cash as possible from the balance sheet. Avoiddefaulting on credit. Operate as efficiently as you can,” says Stegmann. 2. Reinvigorate the f inance funct ion “Some companies are driven by sales or engineering functions, or enteringnew markets which can be risky if you’re placing your bets and waiting fornew markets to materialize. Finance must be at the table when these strate-gies are taking place. Financial discipline has to be a part of the decision-making,” Stegmann explains. 3. Show discipl ine“I typically recommend companies strive to balance their long-term focus withshort-term discipline through a variety of strategic and tactical actions in areaslike staffing, production, product offering, etc. Maintaining that long-termfocus is important to prepare for future growth, but the lack of visibility theeconomy offers today means that companies simply cannot afford to be reck-less with cash flow at the present,” says Chris Montague, office managingpartner at Plante & Moran in Chicago. “In the near term, managing cash flowis essential to remain operationally sound.” 4. Evaluate value to customersCompanies should re-evaluate how they align with customers, and be tacti-cal about customer service. “Identify the challenges facing customers anddetermine what specific value you can provide to help these customers man-age their issues,” says Montague. 5. Identi fy core competenciesIdentify what qualities differentiate your company from others in the indus-try. “If you can’t pinpoint your competencies and differentiation, you needto establish some or align with another company that can,” says Mon-tague. “It’s a great market for companies that are in a position to growtheir scale, reach and capabilities through partnerships or mergers andacquisitions. The downturn has made this a buyer’s market for companiesthat can afford to be buyers.”6. Don’t cut the payroll too deeplyThere can be significant consequences. “It could leave surviving employeesoverworked, making it more likely that they will jump ship at the first sign ofjob market recovery. Companies could be forced to scramble to recruit andtrain a large number of workers when the recovery begins,” says John Chal-lenger of outplacement firm Challenger, Gray & Christmas in Chicago.7. Recruit the best and brightestWhile hiring might seem to be going against the grain, Challenger points outthat the labor pool is currently flush with talent. Grab the opportunity to recruitsome of the highly skilled job seekers that are in the market right now, he says,adding that, “You may be able to bring them in below the premium they mightdemand in a tighter labor market.” 8. Dig deep for ways to make money“We show companies that if they are in a Federal empowerment zone orsend their people to work in a Federal empowerment zone, this can gener-ate a tax credit of as much as $3,000 a year per employee,” says Fried-man. “You don’t have to be physically located in the empowerment zone.Say your business is in the suburbs but the work or job site is in the zone,that qualifies,” he explains.

There are also demographic credits. If a new hire fits into any of 12 par-ticular categories, including two new ones introduced as part of the Ameri-can Reinvestment and Recovery Act of 2009—certain Disconnected Youthemployees and Unemployed Veterans—you could earn a tax credit of $2,400per qualified hire, says Friedman. “The total credit can become significantvery quickly if you have several employees who meet certain criteria.”

How to Survive the Recession

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TIME TALENTA SHOUT OUT FOR THE EFFORTS + EXPERTISE OF ILLINOIS CPA SOCIETY MEMBERS

Whether your passion is helping kids, military personnel, families, or small not-for-profit organizations in your community,the ICPAS has assembled a wide variety of volunteer opportunities to help you to help others.

Junior Achievement – Dollars and Sense for Kids

Work with elementary and middle school-aged children to teach money management and careerskills. As part of the Junior Achievement program, you will join fellow CPAs for hands-on classroominstruction covering “dollars and sense” topics. No experience is needed, but one hour of trainingis required. The program involves a 4-hour in-school session, usually on a weekday morning.

Tax Preparer for Low-Income Families

Help low-income individuals and families receive all the credits available to them by providing freefederal and state tax return preparation services. Through the program, you will work with staff atthe Center for Economic Progress tax preparation sites. CPE credit is available and no previous taxpreparation experience is required; however, training is required for new volunteers. Flexible after-noon, evening and weekend hours are offered from January - April in over 30 cities across the state.

Military Service Tax Preparation Program

Work with active duty combat zone military personnel and/or their families to provide free taxreturn assistance and help to reduce one of the many stresses in their lives. Tax expertise is notrequired and reference materials specific to military service tax issues are provided. Volunteeringinvolves committing a few hours of your time on weekdays or weekends.

CPA Board Connection

Over 200 not-for-profit organizations across the state that work with children, health, the arts, envi-ronmental and animal issues, community development, and people in need, are searching for thefinancial expertise you can bring to their boards of directors. Search the CPA Board Connectiononline directory to find the board service opportunity that matches your skills, time requirementsand interests. Board experience is not required; time commitments will vary.

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Provide money management advice and guidance to Habitat for Humanity homeowner families.Present information to groups or work one-on-one with families to give them the skills to managetheir money as homeowners and build a solid foundation for the future. Training and time com-mitments vary depending on the needs of the area Habitat for Humanity organization.

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Help high school students pay for college by assisting them with their FAFSA (Free Application forFederal Student Aid) forms. In conjunction with Ladder Up, you will help students and their parentscomplete and submit the form at various workshops throughout Chicago. One hour of training isrequired. Volunteering involves committing two or three hours of your time on a weekday evening;some weekend sessions may be available.

For more information contact Jill Wiles, community service manager, at 312.993.0407 ext. 277or [email protected]. Alternatively, visit www.icpas.org/volunteer.


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INSIGHT Magazine - November December 2009

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Transcript of INSIGHT Magazine - November December 2009