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#VSCPABIC15: Forging a New FrontierThe historic Williamsburg Lodge was the setting for the VSCPA’s Business & Industry Conference (BIC) from May 12–13 as more than 220 attendees working in business and industry gathered to learn more about the latest trends and updates affecting their work. Here’s what participants learned at BIC and what they had to say about the proceedings. Next year’s conference (vscpa.com/BIC16) is set for May 24–25, 2016!

Navigating the FutureAmericans are lousy at innovation. That was the initial message from keynote speaker Scott Wayne of the Richmond-based Frontier Project when he spoke the morning of May 12 as Leaders’ Summit drew to a close. His reasoning, laid out in his presentation, “The Cartography of Innovation,” is that there’s a disconnect between what American industry is creat-ing and what the public needs.

Or, as Wayne put it, “If ideas really equaled innovation, we’d have kindergartners as innovation consultants.” His keys to real innovation are that an idea must be:

• New• Executable• Aligned with the market

“If you self-define as a logical thinker, you are critical to the latter half of this process,” he said. “If you define yourself as an innovator, you’re critical to the former, but we need both.”

Wayne gave the example of the Segway as a would-be innovation that accomplished his first two criteria, but not the third. The famous personal vehicle is in use around the world, largely for guided tours instead of as a means of transportation.

“We should all be riding these things for short com-mutes around town,” Wayne said. “But they hadn’t

aligned it with the market.”

The point of Wayne’s examples of non-aligned boon-doggles was to illustrate the shortcomings in methods of thinking. True innovation requires both the vision to create something novel and the wisdom to put it into practice, and too often, companies fall into the trap of thinking they’ve finished the process when they’ve only completed the first step.

“There’s that dopamine hit when you check that box that says ‘I’ve done it,’” Wayne said. “But what we’re not good at is walking around the office and thinking about something.”

The way to get past that is to embrace mental blocks. Wayne argued for the utility of the phrase, “I don’t u

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Inside Business & Industry

Scott Wayne of the Frontier Project discusses how companies stifle and encourage creativity during his Leaders’ Summit presentation, “The Cartography of Innovation.”

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at any time doesn’t nurture such growth. The key is in the distinction between data, information (filtered data), intelligence (contextualized information) and insight (actionable intelligence). Somewhere in that three-step process, people are falling off-track and not completing the transition from data to insight.

“The more access we’re getting to data, the less insight and informa-tion we’re getting,” Wayne said. “We’re in this predictive world of guessing what people are going to be interested in.”

The mind-unlocking solution could be in the power of silence and solitude. Wayne referred to the One Square Inch project, which created a “sanctuary for silence” by locating the quietest place in the United States in the Hoh Rainforest in Olympic National Park in Wash-ington. That kind of silence and reflection can be a boon to gener-ating ideas.

“Many of you will have had ideas in the shower,” Wayne said. “Fewer of you will have had ideas in the path, and there’s a reason for that. The pitter-patter of the shower is creating white noise, a blank slate. You’re essentially meditating and just being.”

have the answer yet,” saying that Google has replaced it with “Let me look that up.” He says that sitting on a problem allows us to make connections and solve prob-lems in innovative ways.

In other words, we need to make use of the capacity for innovative thought that we already have. And in some cases, rewire our brains to free that capacity. Wayne, an Englishman, gave the example of a study of taxi drivers in his native London, who had to pass a test called the Knowledge to earn their taxi medallion that essentially re-quired them to memorize the city’s streets.

Researchers studied drivers’ brains and found that they had more gray matter in the hippocampus — the part of the brain that handles long-term memory and spatial naviga-tion — than their non-taxi-driving peers. That means it’s possible for us to revamp our brains through extensive use in the same way lift-ing weights builds muscle.

“It’s a myth that people who have been doing the same thing for a long time can’t do new things,” Wayne said.

And yet the modern trend of infor-mation overload and accessibility

Companies can adapt that theory by following the example of com-munications giant Siemens, which shuts off its employees’ remote access to work email from 8 p.m. Friday night to 6 a.m. Monday morning — in every country but the United States. They found that removing access to the day-to-day responsibilities of work freed their employees to come up with new ideas.

“They were becoming less innova-tive while they were becoming fast-er and more productive,” Wayne said. n

Telecommuting: The New Normal?I’m writing this article from my couch, next to my dog, as part of the VSCPA’s telecommuting agreement, and as companies turn to similar arrangements in increasing numbers, the chances continue to rise that you’re read-ing it from home, too.

According to 2013 numbers from the American Community Survey, 3.3 million Americans (2.6 percent of the U.S. workforce) listed their home as their primary place of work. That’s an 80 percent in-crease from 2005, and those u

There’s No Place Like Home The Telecommuting Explosion: By the NumbersAccording to GlobalWorkplaceAnalytics.com, more than 124 million U.S. workers telecom-muted in 2012. Those figures represent an 80 percent increase from 2005. Here’s how that sharp increase breaks down by sector.

For-profit companies

70%Nonprofits

88%Local government

62%State government

122%Federal government

434%

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numbers don’t account for the self-employed or un-paid volunteers.

A well-planned telecommuting arrangement benefits both employers and employees. Businesses can reduce their real-estate footprint and related costs and provide a benefit to attract and retain employees. Employees save money and time on commuting and can achieve a greater work-life balance through telecommuting.

That last point should be especially salient for CPAs just weeks removed from tax season. Instead of being stuck in an office finishing tax returns, a tax profes-sional might be able to step away from the computer to eat dinner with his or her spouse or tuck children into bed before returning to work.

“I definitely think people feel more confident that they can make life and public accounting work,” said Susan Moser, managing partner at the Tysons Corner office of Cherry Bekaert and one of the panelists for the VSCPA’s Business & Industry Conference (BIC) session “Telecommuting — Is it Right for Your Orga-nization?” “Everybody always used to talk work-life balance, but I think the better term is work-life inte-gration. People need to make phone calls during the day and work at night.”

Cherry Bekaert has had a formal telecommuting policy in place for three years, known as the My Life program, but some of its employees had their own arrangements in place long before it was formalized. In fact, part of the reason the firm put the formal policy in place was to aid in measuring its return on the policy.

“As long as people communicated, we were willing to make things work for people,” Moser said. “But in some offices, that wasn’t working, so people asked us to formalize something so that they had an oppor-tunity to do that. We came up with a process where people could request a tailored work arrangement or a non-traditional work schedule. It was about how the firm could accommodate them and what accommoda-tions they needed to make.”

The Arlington-based Council of Better Business Bu-reaus had a similar informal arrangement when man-agement decided to jump in on telecommuting with both feet. Daniel Marin, the organization’s manager of operations and administration, also spoke on the issue at BIC and touched on the issue of making the policy work for everyone who wanted to take advantage.

“It was handled on a case-by-case basis,” Marin said. “We had a few remote workers who lived out of state who had started locally in Arlington and wanted to relocate elsewhere. So they made arrangements with management to be able to do their jobs completely remotely. Other individuals would make arrange-ments with their supervisors to do flex work or re-mote work here locally.

“Not everybody in management shared the same ideas or agreed with the concept, so it created this inequity, this two-class system, between those who had the priv-ilege and those whose supervisors denied it to them. So we decided it was time to formalize everything and make it as fair across the board as we could.”

As the American Community Survey numbers indi-cate, organizations are implementing telecommuting programs in record numbers, and one of the biggest reasons for that is simply because they can. The rise of virtual private networking (VPN) technology allows employees to link to their company’s server from any-where with an Internet connection.

That’s how the VSCPA is able to make telecommuting work. In fact, aside from rare exceptions, most VSCPA employees connect to the Society’s VPN at the office the same way they do when telecommuting from home. Other organizations have seen similar results.

Another reason for accounting firms to consider a formal telecommuting arrangement is that companies likely already have some of the infrastructure in place. Audit professionals often do a great deal of work at their cli-ents’ office, necessitating the ability to work remotely.

“We’re in the client service business,” Moser said. “A lot of things that people do, we needed to be u

Daniel Marin (left) and VSCPA member Susan Moser, CPA, led the “Telecommuting — Is it Right for Your Organization?” session at BIC.

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working at the client’s office. The client’s needs needed to be front and center. If there were things you needed to do at the client’s office, you needed to do those things at the client’s office.”

The rise in telecommuting hasn’t come without hiccups and contro-versy, including the legal variety. Last year, the U.S. Court of Appeals for the 6th Circuit cited technolog-ical advancements when reversing a Michigan court’s decision, hold-ing that with current technology, “attendance” cannot always be assumed to refer to physical atten-dance at an employer’s work site and that previous cases that reject-ed telecommuting as a reasonable accommodation were based on outdated technology.

With that in mind, any company that wants to initiate or expand a telecommuting program must make significant investments in information technology (IT) infrastructure, including updated phone systems, often of the Voice Over IP (VOIP) variety.

Marin cited technology as one of the three “pillars” of a successful telecommuting program, alongside an equitable, organization-wide policy and clear communication. The last one was especially import-ant as he worked to convince skep-tics that the program would work.

“People have the mindset of ‘They’re out of sight, they’re out of mind, they’re out of control,’” he said. “But I’d be willing to bet that in an office without people work-ing remotely, they’re still commu-nicating by phone and by email. They might be 300 feet away, but they’re still emailing their staff or picking up the phone.”

The panelists have seen the mo-

rale boost their companies’ pro-grams provide firsthand. Moser mentioned one Cherry Bekaert se-nior manager who had been dead set on leaving public accounting after having a child. Two years after giving birth to her first child, she’s still with the firm.

Marin, whose entire staff works in the traffic-choked Washington area, views the lack of commuting time as the main psychological benefit for his employees.

“We had a few people whom the difference that it made, you could see practically overnight,” he said. “They went from almost a level of despondency to being completely re-engaged.”

Of course, telecommuting doesn’t work for everyone, particularly less experienced workers who need more direct supervision. Not every-one has the temperament to work as effectively from home, but those who pull it off often say they’re more productive at home due to the relative lack of interruptions.

Moser said some Cherry Bekaert employees had previously left the firm because they felt they couldn’t make public accounting work with family obligations. That’s one rea-son she and her fellow partners put the My Life program in place.

“I don’t care if it’s tax season or not,” she said. “If your kids have a soccer game, they’re only going to be eight years old and playing soccer once.” n

WWTJD? ‘Jefferson’ Weighs in on Present-Day IssuesDon’t let anyone tell you the VSCPA can’t attract big-name

speakers. That’s right — we got tax expert and VSCPA member Art Auerbach, CPA, to present on economic issues affecting the Unit-ed States in 2015. And you might have heard of his sidekick, a man by the name of Thomas Jefferson.

Before you go talking about issues like “death,” it’s actually Bill Barker, a Colonial Williams-burg employee who happens to bear a striking resemblance to our third president. He and Auerbach squared off in an economic debate at the BIC session “Historical Map-ping — Thomas Jefferson and Art Auerbach Debate the Economy — Then and Now.” So there were two people in the room at the Williamsburg Lodge who know as much about Jefferson as anyone.

“The very first time I did this, I can’t tell you how much money I spent,” said Auerbach, who has now debated “Jefferson” five times. “I bought every book I could find on Jefferson. I probably know about as much about Jeffer-son as he does.”

The aim of the session was to demonstrate that today’s econom-ic issues are nothing the country hasn’t seen before. Wealth inequal-ity between the rich and poor, gridlock and inactivity in Congress — it’s old hat to Jefferson.

Corporate tax loopholes are another issue from Jefferson’s day that has cropped up in recent years. Auerbach and Barker used a the example of the Boston Tea Party to illustrate that loopholes aren’t a new phenomenon.

“It had nothing to do with the British government versus the colonists,” Auerbach said. “It was really a corporate loophole for the East India Trade Company. u

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So I’m going to ask him about loopholes. That’s a big issue today — Congress closing loopholes. That was one of the first loopholes America encountered. We’re talking today about loopholes favoring corpo-rations, and here’s one that came about before the Constitution.”

The session also touched on the contradictions inher-ent in Jefferson’s character. He cautioned against pub-lic debt, but created a major source of debt by spear-heading the Louisiana Purchase. And he had a great deal of personal debt, which he resolved by selling his personal library to the federal government, resulting in a major expansion to the Library of Congress.

Auerbach and Barker also touched on issues specific to Jefferson’s day, particularly as they related to the initial formation of the country.

“In his time, it was pretty much the industrial North against the agricultural South,” Auerbach said. “To get the 13 colonies on the same page took a lot of effort. In the Southern colonies, Virginia and south, there was not a lot of industry, and everything that came about started with seaports. Charleston, New York, Norfolk, Boston, those were the economic hubs of the country. You went 15 miles inland, you were in the woods.”

And, of course, technology is a major change from the era of the Founding Fathers. Auerbach and Barker got some laughs out of that issue by allowing attendees to take selfies with “Jefferson,” but they backed it up with a salient point about the rapid spread of information.

“Put this into perspective. I’m representing modern times,” Auerbach said. “If you record this with your phone, you can put it up on YouTube or Facebook or another vehicle, and instantly, a bunch of people will have it. Jefferson would say something, and then, depending on if someone wrote it down correctly, it would be two or three days before someone in Geor-gia heard about it.”

Of course, a major reason for the session’s populari-ty — this marked the third time Auerbach and Barker have squared off at BIC — is the care and attention to detail Barker puts into his character. He majored in history and drama at the College of William & Mary and then signed on with Colonial Williamsburg after he graduated. His contract stipulates that he can only appear in character at Colonial Williamsburg or Mon-ticello, Jefferson’s estate outside Charlottesville.

“He looks exactly like Jefferson,” Auerbach said. “Same height, same facial shape, same skin tone and color. It’s like you’re looking at a double.”

That resemblance makes it hit home that much hard-er when Barker discusses issues relevant to today’s economy, whether through similar issues from his day or by contrasting the economic and political climate of the two eras.

One major difference between today and the early days of the country is the issue of federalism. When Jefferson was elected president, each state had its own bank, and he worked with Alexander Hamilton to establish the national bank of the United States, a precursor to the U.S. Federal Reserve. Even the nationwide currency system, taken as a foregone con-clusion by generation upon generation, was a major accomplishment from Jefferson’s era.

“Can you imagine if each of the states had their own banking system and you had to equate a dollar in Virginia to a dollar in Pennsylvania?” Auerbach asked.

Today, the federal vs. state issue crops up in the form of tax nexus, the way taxes apply to people and compa-nies doing business across state lines. While the issue of powers allocated to the federal government and the states is a debate that continues to this day, Auerbach likes to point out the simplicity of a top-down approach.

“The question you want to ask the people who are there or anybody who is a CPA is, ‘Would you like 51 state rules or one federal rule? Which would you rather be doing?’” he said.

The main takeaway Auerbach and Barker stress in u

VSCPA member Art Auerbach, CPA, prepares to engage “Thomas Jefferson” in a spirited economic debate at BIC.

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their debates is the importance of citizens taking responsibility for the state of government.

“The last one we did, I said, ‘Con-gress is locked in a bunch of inac-tivity and they can’t get anything done. What is the problem here? How can we fix this?’” Auerbach said. “And in his dramatic pose, he looked to me with a rather wry smile on his face and turned to the audience sitting there and asked, ‘How did you let this happen? Con-gress is elected by you? If there’s inactivity in Congress, how did you let this happen?’ And in actuality, he’s absolutely right.” n

Skepticism and the Auditor’s RoleThe concept of skepticism dates back to ancient Greece, and while that’s a little longer of a time pe-riod than the CPA profession has existed, it’s been a major part of the accountant’s role since people started keeping track of money.

The importance of skepticism to audit was the main theme of the BIC session “Trust Me…I’m a Skeptic,” presented by Jonathan Kraftchick, CPA, of Cherry Bekaert. The three main tenets of skepti-cism, set forth by the Greek philos-opher Pyrrho, are:

• Against every statement, its contradiction may be ad-vanced with equal justifica-tion

• Preserve an attitude of intel-lectual suspense

• The impossibility of knowledge

How does that relate to auditing and financial reporting? It’s right there in the standards. Section 200 of the American Institute of CPAs’ (AICPA) Clarified Statements on

Auditing Standards states, “The auditor should plan and perform an audit with professional skepticism, recognizing that circumstances may exist that cause the financial state-ments to be materially misstated.”

The word “reporting” is also key, and brings up the comparison to another type of reporting — jour-nalism. One famous tenet taught in journalism schools states, “If your mother says she loves you, find a second source,” and it’s easy to see how that outlook can be useful for auditors as well.

“The problem is when we don’t know,” Kraftchick said. “We tend to assume that everybody is al-ways telling the truth, which is kind of the antithesis of professional skepticism.”

The numbers bear that out. Accord-ing to the Association of Certified Fraud Examiners’ “Report to the Nations on Occupational Fraud and Abuse,” external audit caught only 3 percent of occupational fraud in 2014. That figure is somewhat softened by the finding that internal audit caught 14 percent of occupa-tional fraud, but an overwhelming plurality (42 percent) was uncovered after investigators were tipped off.

“This is not anything to rest your laurels on. You can’t say, ‘I can relax, the auditors will do it,’” Kraftchick said.

Kraftchick referred to Harvard Business School professor Max Ba-zerman, who cites three structural aspects of accounting that can allow bias to influence professional judgment:

• Ambiguity: Auditors, like all people, tend to come to self-serving conclusions when confronted by an ambiguous

piece of evidence.• Attachment: Because of the

firm-client relationship, au-ditors have “strong business reasons” to present results favorable to the client.

• Approval: Self-serving biases are even more prevalent when people are endorsing others’ judgments that may also be biased.

And the problem even extends beyond the human element. The constant quest for efficiency can lead to cutting corners, and even an advance as useful as linked workpapers can amplify the effects of a mistake. A skeptical outlook can serve to mitigate that issue by ensuring that numbers are checked at the source.

Skepticism can ensure that you’re right, but it won’t always make you popular. Asking tough ques-tions and going against the grain is a key tenet to succeeding as an auditor in the most important way — ensuring that business figures are reported accurately.

That extends beyond question-ing clients’ numbers to your own organization and being sure to question any decision, no matter how popular.

“Groupthink is a really fascinating idea,” Kraftchick said. “It’s this false sense of security that whatever the group decides is a better decision. Research after research after re-search indicates it’s just not true.

“Fostering that debate and hav-ing those healthy fights is a key to remaining skeptical.” n

SEE MORE: https://hbr.org/2002/11/why-good-accountants-do-bad- audits

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From the VSCPA’s Facebook page, members gathered for a group dinner at The Trellis restaurant in Williamsburg.

Socially Speaking

The Big Issue: Top Issues for FirmsSole practitionersKeeping up with changes and complexity of tax laws

Firms with 2–5 professionals Keeping up with changes and complexity of tax laws

Firms with 6–10 professionalsSuccession planning

Firms with 11–20 professionalsBringing in new clients

Firms with 21+ professionalsPartner accountability and unity

Source: AICPA PCPS CPA Firm Top Issues Survey

I’m pretty sure @scottxwayne’s daughter just stole the show. She’s adorable #VSCPABIC15 — @KatieOCon (Katie O’Connor)

#VSCPABIC15 now maybe I can answer my nine year old’s ques-tion, “what does ethics mean?” — @HappyinVarina (Theresa Welenteychik, CPA)

Very insightful “Evolving Role of the CFO” by Anne Hagen. Helpful for aspiring CFO’s. #VSCPABIC15 — @JLDernar (Jaime Lynn Dernar, CPA)

Are you running your firm or is your firm running you? Visit the @Wolters_Kluwer booth for ideas for a better work-life balance! #VSCPABIC15 — @EileenMarra3 (Eileen Marra)

Mobile is an expectation in today’s business world. Get mobile, or get left behind. @ReggieHenry #VSCPASummit15 #VSCPABIC15 #CPE #techtrends — @TinaLambert (Tina Lambert, CAE)

BIC Bytes: By the Numbers

Percentage of U.S. net population growth from

2000–2009 accounted for by ethnic minorities

Nielsen estimates that if U.S. Latinos formed their own

country, they would constitute the ninth-largest economy in

the world

Number of Baby Boomers who will exit the U.S. workforce

over the next 20 years

Percentage of U.S. accounting firms that expect succession to be a significant issue over

the next decade

Foreign students studying in the United States each year

85%

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79M

79%

819,644

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Mike Venaglia, CPA, takes in the “Turning Differences Into Assets — A Diversity and Inclusion Discussion” session.

Lizabeth Davis, CPA, mingles at the networking reception. Julie Deaver, CPA, gets information from sponsor Dominion Payroll.

Aaron Rawlings waits to contribute during the “Turning Dif-ferences Into Assets — A Diversity and Inclusion Discussion” session.

The conference kicked off to a full house in the main confer-ence hall at the Williamsburg Lodge.

Human resources expert Anne Waidmann leads the “Smooth Sailing or Rough Seas Ahead? Anticipating the Future of Health Care Reform” session.

We look forward to seeing you at next year’s Business & Industry conference, set for May 24–25, 2016, at the Williamsburg Lodge. Visit vscpa.com/BIC16 for more information!

Spotted at #VSCPABIC15