KEEPING UP WITH ACCOUNTINGKEEPING UP WITH ACCOUNTING From Globalization to Web 2.0

Tom Hood, CPA.CITPCEO & E ti Di tCEO & Executive Director

Maryland Association of CPAs

“CPAs ARE the DISCIPLINEDISCIPLINE in business!”

Jim Collins

Economic Outlook

National Outlook is not brightg Economists estimate 3Q 2009 – 1st Q 2010 for recoveryrecovery Maryland outlook is much better T 5 t t t th Top 5 states to recover the fastest CPA Career one of the Top p10 recession-proof careers CPA firms below Top 8 are continuing to see growthcontinuing to see growth

the basic physical and organizational structures needed for the operation of a

society or enterprise

The Infrastructure for the CPA Profession is maintained by your Professional Associations

society or enterprise

AICPA & State CPA societies (MACPA)

GlobalizationPipeline – WorkforceT h l W b 2 0Technology – Web 2.0

What is under the CPA Profession?

Federal Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB

CPA Profession Standards – AICPA & FASB GASB FASAB IASB IFAC& FASB, GASB, FASAB, IASB, IFAC

State CPA Statutes

police power of the states to protect their citizens vs commerce clause

Another View

S C S S

Public Company Private Company Int’l Company

Financial SEC FASB IASBFinancialReporting

PCAOB AICPA IAASBAttest PerformanceStandards

AICPA AICPA IFACCode of Conduct AICPA AICPA IFAC

CPAState Oversight & Enforcement of CPA License

CPALicensure

US Treasury

MD ComptrollerMD Comptroller

MD Comptroller

CAQCAQ

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

Scandals & CPA Profession

CPA Profession in the Spotlight

Changes in our Infrastructure

Massive Changes in our Regulatory Structure

The Obama CabinetThe year of the REGULATORThe year of the REGULATOR

Timothy Geithner,Secretary of the

Treasury

Mary Schapiro,SEC Chief

Paul Volcker,Chair, Economic Recovery

Advisory Boardy y

Gar GenslerGary Gensler,Chair, Commodity Futures

Trading Commission

Ben Bernanke,Chair, Federal Reserve Board

Sheila Bair,Chair, FDIC

Standards ChangesAS 5 PCAOB• AS 5 - PCAOB

• IRFS – SEC International gets legs• Fair Value Accounting• Fair Value Accounting• XBRL – SEC mandatory• Codification Project – FASBCod cat o oject S• Clarity Project – ASB

– Convergence with international– Risk-based standards already in int’l format

(SAS 104-111)SAS 112 Comm nication• SAS 112 Communication

• Internal Control – COSO• Fin 48 delayFin 48 delay• Delay of SOX 404 for “small” caps

US Treasury

MD ComptrollerMD Comptroller

MD Comptroller

CAQ

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

IFRS – International Financial Reporting StandardsFinancial Reporting Standards

Not if but when…Goodbye GAAP?

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

SEC Roadmap releasedSEC Roadmap releasedEarly adopters can file using

Large Acceleratedcan file using

IFRS 2010

Accelerated Filers2014

Small-caps2016

2011Official SEC

decision

2015Accelerated

filersdecision point

filers –second wave

Corporate Con ersion TimelineCorporate Conversion Timeline

Convergence ≠ Sameness

US GAAP IFRS– Rules based– Based on a GAAP

hierarchy (level A – D)

– Principles based– No hierarchy, consists

of IASs IFRSs &hierarchy (level A D)– Primary accounting

standard setting body is the FASB

of IASs, IFRSs & interpretations

– Standards and interpretationsis the FASB

– Accounting guidance and interpretation is provided by FASB

interpretations approved by the IASB

– Interpretations of IFRIC and its predecessor theprovided by FASB,

SEC, AICPA and EITFand its predecessor the SIC

25,000 pages vs 2,000 pages

Private Company ReportingPrivate Company Reporting

1. IFRS with Private Entities Option1. IFRS with Private Entities Option2. U.S. Adapted version of Private

EntitiesEntities3. IFRS with differential reporting

S S C G4. Separate U.S. Private Co. GAAP -Revised

5. Separate U.S. GAAP- Maintained and Updated for Private Companies

Q ti ?Questions?

• What happens when FASB moves to IASB?FAF F di t IASB• FAF Funding goes to IASB

• Who funds GASB?• Who funds US private company

standards (GAAP)?

And if that is not enough…CPA Pipeline

– CPA Exam– Young CPAs– Student Recruitment

Quality– Audit Quality – Auditing Standards– Clarity Project

– Minority Initiatives– PhD Creation & Support– 150 hour

Regulatory Forces

y j– Reliability Project– Audit Committee

Effectiveness– Peer Review

Ethig y

– SEC Changes– Fair Value Report– Regulatory Restructuring– Economic Recovery and

R

– Ethics

Advocacy– Federal/State Legislation &

Response– Enhanced Business Reporting– XBRL– Private Company Financial

Reporting

gRegulation

– Tax– Uniformity & Mobility– Public Policy IssuesReporting

International– International Convergence– IASB

Internationali ation of E am

yFinancial Literacy

– Feed the Pig– 360 degrees of Financial

Literacy– Internationalization of Exam Literacy

Pipeline WorkforcePipeline - Workforce

Pipeline - Good Newsp20% avg increase in

Graduates & enrollments!

Pipeline - CPAs are SEXY!

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

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

ill i l ti "millennial generation."

Maryland Pipeline

Primary School Student

College Student

CPA ExamCandidate

CPA MACPACPANYPN

MACPA CPACareer Paths

EngagedRetiree

1,373 1,818 399 8,047

•Drive to  CPA Exam

h•Reach employment  influencers•Career hchangers

Four Generations in the WorkplaceI G ti l Diff

• Matures – 1909-45

Issue: Generational Differences

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

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

Which one are you?

Staff Shortage + Four Generations in workplace = pTrouble!

90,000,000

70,000,00080,000,000

StaffShortage

50,000,00060,000,000

20 000 00030,000,00040,000,000

010,000,00020,000,000

0Matures Boomers X'ers Millenials

Why won’t they sit?

CPA Exam changes

Then: Now:• Paper-based• 2 x year May &

• Computerized• Anytime

Then: Now:

2 x year May & November

• 5 sections

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

months (to keep passed sections)

• 4 sections• 4 sections• 70% new content!

Steps to become a CPA1. Get Accounting Education – 150 hours2. Sit for & Complete CPA Examp3. Take AICPA Ethics self-study & report

grades to State Board4. Complete 2,000 hour experience

requirement (interning counts) RPE form

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

Promote the CPA licenseMaryland DLLR Swearing-in of new CPAs

June 16, 2009At the Maryland Business & Accounting Expo

Biggest Issue Facing NYPNsBiggest Issue Facing NYPNs

• Bridging the Gap between college & real worldg g p g• Under-Developed Skill Sets

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

S– Technical Skills• Work-Life Balance• Limited Networking Opportunities• Limited Networking Opportunities• Intimidation• CPA ExamCPA Exam• Lack of a Voice in Profession

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

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

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

• Work-life flexibilityT h k i t (f l• Tech-savvy work environment (for example, access to online problem-solving and learning tools)

Open social networks that embrace open and• Open social networks that embrace open and honest communication

Source Deloitte Global Manufacturing survey

By 2010 Millenials/Gen Y-ers will outnumberTechnology & Web 2.0

By 2010, Millenials/Gen Y ers will outnumber Baby Boomers.

“If you think about the media environment an average American

teenager lives in, to walk into a classroom (or one of our Associations) that doesn’t

have any of that media must be like have any of that media must be like walking into a desert.”

– Steve Maher, High School teacher PBS Special “Growing Up On line”Special Growing Up On-line

Meet the Gaming GenerationG k it i t d t d diffi lt• Games make it easier to understand difficult

concepts – 51%• I would be more engaged in the subject – 50%ou d be o e e gaged e subjec 50%• I would learn more about the subject – 46% (56% of students in K-2 chose this as their #1 reason)

It would be more interesting to practice problems• It would be more interesting to practice problems –44%

Source: Project Tomorrow – Speak Up 2007 report

Meet our future members?

“over 64% of students in grades K-12 play onlinegrades K-12 play online and/or electronics based games regularly”g g y

“Downloading music is #1 activity by middle and high school students”

“40% of middle school students and 67% of high school students have a personal

school students

students have a personal website (Facebook, MySpace, Xanga)”

Source: Project Tomorrow – Speak Up 2007 report

Five Learning Trends for 2009

1.Mobile Learning2.DIY - Do-it-Yourself

LearningLearning3.Flexible Learning

Environments4.Virtual Worlds4.Virtual Worlds5.Games & Simulation

Chief Learning Officer Magazine – January 2009

So what?

Accounting Educators in Second Life

Dr. Mike KratenSuffolk UniversityDr. Robert BloomfieldDr. Robert BloomfieldCornell UniversityDr. Steve HornikUniversity of Central FloridaUniversity of Central Florida

FASB is there!

Even our members are already there!

IBM Financial AnalystMember of NJSCPA

Accounting Assistant

Benefits of Virtual Worlds for Education• The sense of self• The death of distance• The death of distance• The power of presence,

sense of space &sense of space & capacity to co-create

• The pervasiveness ofThe pervasiveness of practice

• The enrichment of experience

VW Sensibilities - eLearn Magazine Another Life: Virtual Worlds as Tools for Learning, Jay Cross – eLearning Magazine

Accounting for Second LifeJournal of AccountancyJ 2008June, 2008

University of Florida Report - Winter 2008

The study found that 93% of college instructors using Second Life in classes were satisfied enough to do

y p

classes were satisfied enough to do it again and felt it enhanced the learning experience.

"Post-secondary school instructors who conduct classes fully in Second Life are significantly more satisfied than those who use Second Life as only a small supplement to a real-world classes.”

Professors Richard Johnson & Joyce Middleton of Frostburg University,

Maryland

4 tips to cross the digital divide

1. Start Gaming and take a session in Second Life

2. Do our 33 things in 15 minutes a day www cpalearning2 comwww.cpalearning2.com

3. Get an iPod and listen to our cool podcasts – CPA S tli htSpotlight

4. Check out our blogs and post a comment or psubscribe in a blog reader (RSS)

You can…Ignore itFight it orFight it or

Harness it’s power

Maryland Association of CPAs – founded 1901 to promote and protect CPAs and help them thrive in the rapidly changing environment 10 000the rapidly changing environment – 10,000 members

Business Learning Institute – founded in 2000 withBusiness Learning Institute founded in 2000 with a mission to help organizations deliver competency-based curriculum, courses, content and community toenhance learning and grow intellectual capital forenhance learning and grow intellectual capital for organizational and executive leadership

Second Life Association of CPAs founded inSecond Life Association of CPAs – founded in 2006 With 238 members and two islands (CPA Island & CPA Island 2) with a mission of building a community of people interested in exploring the possibilities of CPAs in Second Life

For more information

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning InstituteBusiness Learning Institute

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