December 2012 Newsletter
President's Message
Bethe Davis, CPA
This is the time of year many people are reflecting on their blessings, the people, and circumstances they are thankful for in their personal life. I recently visited family in an economically depressed area “outside” and listened to some of their struggles. I find that this year I have many reasons to be thankful that I had not previously truly considered and I would like to name just a few.
Reason number one – My professional environment. As CPA’s and accountants we belong to a fluid, dynamic professional environment. It is ever changing, always challenging, and incredibly diverse. I am not stuck in a rote, routine job doing the same sorts of things every single day to provide for my family, knowing there is little to no opportunity to make a change. Every day has something new, every year brings updates and changes (and some years have too many). I know that I have a job that offers continuous learning and is well respected. I belong to a profession whose national association’s work to keep the field’s value in high profile, and to promote both our relevance and importance to the world at large. I have a profession that can take me virtually anywhere on the globe I set my mind to going, to almost any industry, non- profit area, or government department. I am thankful for my career.
Reason number two – Alaska’s economic environment. We all have good reason to appreciate that Alaska has not been as hard hit or deeply impacted as some areas of the country. Our housing prices have remained fairly stable in relation to many areas of our country and our unemployment is not as severe. As accountants and CPA’s there is still a strong demand for our services. Our universities are supplying more accounting graduates, and these graduates continue to find jobs. In addition, our university is in process to develop funding to advance curriculum that targets accounting in the private sector because there is still strong unfilled demand. In the last year Alaskans have moved forward to develop advanced placement high school classes to capture the best and brightest at a young age because our state continues to need accountants. I am thankful for this environment and hopeful it will remain strong.
Reason number three – The AKCPA team. Sometimes, I think we live in a very far flung small town called Alaska. As a CPA in that town who is a participating member of the AKCPA I see that sense of community and solidarity regularly. While attending national level events it sometimes becomes apparent that there may be some competition or disharmony between the regional representatives of other states. In our society, our focus is on the profession as it exists in our state and we try to reach out to be inclusive to the entire state’s population of CPA’s. Our society is not split into regions, practice specialties, or other factions that may divide us. When called upon to do so, our membership answers loudly and strongly as seen in the recent response to biometric data collection legislation. We stand together. We work to foster a sense of the greater community within the existing membership and with our young staff and students and I am thankful to be a part of that and a part of the leadership team of outstanding, creative, hardworking individuals.
And speaking of thanks, a big thank you to all the members who supported our UAF students in the AICPA national competition, I am proud of the students for getting so far. I would also like to thank the firms for their time during our firm visits (and in advance for those we have not yet had the opportunity to visit- we’ll be calling soon). A huge thank you for the AKCPA leadership team (especially our Executive Director, Linda Plimpton) who continues to look for ways to innovate and change our operations, stretch our resources, to work toward balancing our budget while continuing to provide services to the state.
I wish you all a wonderful holiday season with many reasons to be thankful personally as well as professionally.
Fall Meeting of Council Amelia Island, FL
Don Rulien, Elected member of Council
The fall meeting of council was held in Amelia Island, FL with the following members attending Bethe Davis, Amy Cooper, Marja Beltrami, John Rodgers, Linda Plimpton and myself.
Greg Anton stepped down as chairman of the board and Rich Caturano from Massachusetts is now our new Chairman.
In what may be one of the most important initiatives that we have seen in our careers the AICPA has proposed the “Financial Reporting Framework (FRF) for Medium- and Small-Sized Entities” (SMEs). This far reaching initiative will change how we prepare financial statements in the future for over 99 percent of our clients.
The AICPA estimates that there are over 20 million SMEs in the United States. The FRF for SMEs will be a less complicated and less costly system of accounting for SMEs that don’t need U.S. GAAP financial statements. The FRF for SMEs is for non-publically traded for-profit entities and are intended to be the most appropriate for the preparation of SME financial statements based on the needs of the users.
The AICPA doesn’t has the authority to require the use of the FRF for SMEs, therefore the FRF for SMEs will have no effective date and the owner in conjunction with the ultimate user will need to make that decision.
The special purpose framework (SPF) is a combination of many different accounting bases, cash method of accounting, modified cash method of accounting, etc. These are normally referred to as “Other Comprehensive Bases of Accounting” (OCBOA). The difference with FRF for SMEs and SPF is that they will undergo public exposure and professional scrutiny and contain explicit and comprehensive accounting principles. These features will result in a reliable and consistently applied financial framework.
As part of this comprehensive change the AICPA, owner-managers and their CPA practitioners will need to consult with lenders, underwriters and other key external users about the use of the FRF for SMEs, the AICPA believes that the end users will accept the financial statements prepared under FRF for SMEs. The FRF for SMEs is intended to be utilized by entities whose end users base their decisions principally on reliable operations and cash flows.
For decades the AICPA and most of the accounting community has wanted private companies and their financial statement users to have the information that suits their specific needs, therefore, FRF for SMEs needs can be better addressed by a less complicated and more relevant financial framework like the FRF for SMEs.
The AICPA will implement guidance for training in the form of application examples, illustrative financial statements, disclosure checklists, and other similar tools to compliment FRF for SMEs preparers.
Another appropriate issue we had on the agenda was “: The Campaign to Fix the Debt”, this is a non-partisan campaign to put America on a better fiscal and economic path. The founders Erskine Bowles and Senator Allan Simpson whom I had the pleasure to meet in Washington DC last May.
The campaign is meant to mobilize key communities, including leaders from business, government, and policy, as well as voters across the country who expect our elected officials to implement a comprehensive plan to fix our long-term debt and deficits.
The campaign is built around the following core principles:
Policymakers need to acknowledge that the growing debt is a serious threat to the economic well-being and security of the U.S.
- It’s urgent and essential that we put in place a plan to fix our debt.
- The plan should be enacted now, but implemented over time to protect the fragile economic recovery.
- The plan must be bipartisan and reform all areas of the budget, including reforming Medicare, strengthen social security, and include a comprehensive pro-growth tax reform.
I’d also like to say thank you to Marja Beltrami for her years of service to the organization.
And finally this was my last council meeting and I’d like everyone to know that it was an honor and a pleasure serving the State of Alaska as your elected member of council.
John Rodgers is now your elected member of council.
If you have any questions regarding the council meetings please feel free to contact me at anytime.
National Tax Conference
by John Rodgers, CPA
So who but the AICPA would schedule a tax conference in Washington, D.C., the day after the most recent presidential election? With over 45 different sessions, some dynamic speakers and excellent information, this three-day conference was busy. The event opened with the priorities of the National Taxpayer Advocate Services office and then followed by a final public presentation from IRS Commissioner Douglas Schulman days before his retirement.
Nina Olson with Taxpayer Advocate Services, TAS, highlighted some key notes to a report that she will give to Congress on December 31st. This report will hit on some key tax issues including, of course, tax reform, AMT, identity theft and offshore foreign reporting. She highlighted the need to change BOTH the current tax code and AMT together. Without changing both, AMT will devastate the middle class pulling more tax payers into AMT situations.
TAS is asking the public for input about changes to the current tax code. They now have a website allowing tax payers to suggest to the IRS ideas for a better tax code, http://www.taxpayeradvocate.irs.gov/.
Identity theft is becoming a large issue as it relates to tax fraud. Currently 27% of the cases being addressed by TAS are related to identity theft. The IRS has over 1000 employees working on this issue with the average case running 180 days.
An interesting new development that TAS mentioned relates to tax preparer fraud. In situations where tax preparers are fraudulently directing client tax refunds back to themselves instead of the taxpayer, the IRS has taken the position that they will not pay the refund to the taxpayer and further stated that it will be between the taxpayer and preparer to resolve this. TAS feels this is unconscionable.
A few other key areas discussed include compliance with sole proprietors, domestic partnerships, collection process with IRS, correspondence exams and IRS portal. The office of TAS recently surveyed sole proprietors (schedule C) to address what does and doesn’t drive compliance. The biggest correlation her office concluded was due to distrust of government, the IRS and tax courts.
Domestic partnerships are causing a lot of litigation between the state and federal returns with more states recognizing same sex marriages. The IRS is having issues when the state return is filed jointly and the federal is not.
IRS collection functions are now very aggressive rejecting OIC, CDP and installment agreements. OPR is stating that RO’s should refer PPR’s to the office. If taxpayers are being referred to OPR the TAS office wants to know as they feel it impairs the taxpayer’s rights to representation.
Finally, the IRS is close to having a portal for taxpayers and the pilot is coming soon for texting and emails. The issue right now is in authenticating the taxpayers.
IRS Commissioner Doug Schulman gave an enlightening report. Highlights included international offshore tax evasion, relationships with corporate tax payers, 2013 filing season, and incoming priorities to include economic crisis, tax credits, affordable care act and paid tax preparers just to name a few.
Commissioner Schulman noted that one of the priorities was on international offshore tax evasion. Along with a successful exchange of information with Swiss banks and the Offshore Voluntary Disclosure Initiative, enforcement efforts have had 38,000 voluntary disclosures of foreign assets generating $5.5 billion in income from back taxes and penalties. The 38,000 far exceeded their original goal of 1000 initial volunteers.
There is a strong desire to change what has been called an adversarial relationship between the IRS and the corporate taxpayer. A suite of programs have been developed by the IRS to assist in voluntary disclosure, fast tract appeals, industry resolution for controversial issues and scheduled UTP. The goal is to have a more productive relationship with the corporate taxpayer focusing on the issues that cause the greatest compliance risks.
Due to the needed changes to the tax law including AMT there could be a possible delay in the 2013 filing season unless Congress can agree to some sort of last minute tax law changes soon. The current system is coded to there being an AMT patch extension and if this doesn’t happen there will be significant delays in the filing season while the system is changed.
Finally the commissioner noted the priorities by the IRS to focus on the operations and infrastructure to include the modernization of their technology and linking returns to preparers. The IRS has moved from weekly processing to daily processing this year. This will result in quicker refunds for tax payers, up-to-date information for customers and more real-time analytics and compliance. With the new system advanced analytics are now used to link tax returns with compliance issues to the paid preparer. In a pilot of the new system and early intervention there was almost a $200 million savings on refund fraud due to improperly claimed EITC and Child Tax/Advanced Child Tax Credit claims.
Any of the conference sessions/speakers can be seen online through the AICPA website at: http://www.aicpaconferencematerials.com/tax/?select=sessionlist&conferenceID=7
Although it is a fair amount of travel I enjoyed Washington DC and the conference. If you would like any further information on the conference please let me know.
Best regards,
John Rodgers
Bring Balance to Your Life
By Jason Bontrager, CPA
I hope all of you had a wonderful gluttonous Thanksgiving….I think I’m still full! It sure was nice to spend some quality time with family and forget about work for a few days. When I returned back to work, I noticed how revitalized I felt and how excited I was to be back in the office, but why? I believe it was because I was able to take some time for myself and unwind. This article will discuss the importance of balancing work with other aspects of our lives and give some helpful tips on how to accomplish this.
Stress affects everyone and can have both positive and negative effects. If controlled properly, stress can help us focus and do better work. Conversely, if not controlled, stress can become unhealthy and have negative impacts in all aspects of our lives (Helpguide.org, 2012, “Understanding Stress”, para. 5,). This is why it is important to develop skills that effectively manage and mitigate it.
But how do you accomplish this? The following steps will help you to develop a method for effectively dealing with your stress and bring balance to your life:
Develop a list of things in life that are important to you.
- Identify which items on the list are being neglected.
- Allocate time to the neglected items to bring balance to your life.
When taking the time to do this, please keep the following points in mind, which I feel everyone can benefit from:
- Exercise-- It has been shown that exercise will improve the quality of your sleep (JCC, 2012, “Exercise improves insomnia”, para. 1). So, in theory, you could excise for an hour a day and be able to sleep a couple hours less and still feel rested. It also reduces stress and has other positive health benefits. Be sure to include this in the list.
- Keep a Calendar—Randy Goruk, the founder of LeadersEdge360.com, recommends including your personal life in your daily work calendar to serve as a reminder. With all of us living such busy lives, it is important to keep things organized.
- Communicate—In order to effectively develop a list, be sure to communicate with your spouse, children, other family, and friends to see if there is any area in their lives that require your time and attention.
Please take the time to try and balance your life and see whether or not you notice an improvement in the overall quality of living.
Works Cited
Goruk, R. (n.d.). How to Improve Personal Productivity by Finding the Right Work – Life Balance.
Retrieved from http://www.leadersedge360.com/articles/work_life_balance.pdf
Jewish Community Center of Greater Pittsburgh. (2012). Exercise Improves Insomnia.
Retrieved from http://www.jccpgh.org/news/single/news/504
Smith, M., Segal .R, & Segal, J. (2012). Understanding Stress. Retrieved from http://www.helpguide.org/mental/stress_signs.htm
Me, my wife, sister, and dad
Thanksgiving day at the beach with the fam!
The goods!
Quote:
"It is much better to train people and risk losing them than to not train your team members and risk keeping them" ~ Leading an Accounting Firm
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