Tom Hood, CPA.CITPCEO

Maryland Association of CPAs

Welcome to the Extreme Future!

1. Speed – the rate of change will be blinding, comprehensive in scope and touch every aspect of your life

2. Complexity – A quantum leap in seemingly unrelated forces converging on everything

3. Risk – New risks, higher risks, and more risks4. Change – Drastic adjustments in your work,

community & relationships forcing you to adapt quickly to radical changes

5. Surprise – sometimes good, sometimes difficult to imagine, surprise will become a daily feature of your life

• Competition• Compliance• Convergence• Change• Complexity

We feel overwhelmed by the waves of change

The 5 C’s

There is a way out…

The tornado of changes from CPA Vision Project circa 2000

We can to learn how to harness the winds of change, together!

The Power of We!

“ There isn’ t the luxury of time.We used to say, ‘ Wait untilthis crisis is over and we get backto normal,’ but that never happens.We have to be ‘ change animals.’ ”- Michele McKenzie, President and CEO,

Canadian Tourism Commission

We can become navigators of change

Let’s break it down• Economic• Political / Legislative / Standards• Social / Workforce Demographics• Technology• The Future of our Profession• MACPA resources

Economic

Maryland by the numbers –Unemployment stats

6.0

6.5

7.0

7.5

8.0

8.5

More bright spots

Climbing out faster than most states2009 versus 2007

Most CPAs feel like this with legislative, standards & regulatory changes

Political / Legislative / Standards

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

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

State CPA Statutes (Law)State Boards of Accountancy issue licenses and regulate CPAs

The (infra) Structure of the CPA Profession

Update on PTIN

• Need “new” PTIN before 01/01/2011• Required for Signing Preparer or preparer of all or substantially all of tax return (major victory)

• Fee is $64.25• Actively Licensed CPAs and staff exempt from exam

• CPAs in industry are exempt from filing for employers

Health Care & 1099 issue

Where do major changes come from?Most changes come from regulators and standard setters

Us – AssociationsMACPA & AICPA

OR

Them – Federal & Statelegislators Infrastructure

New laws, regulations& regulators

Recent example – The Dodd – Frank Wall Street Reform and Consumer Financial Protection Act of 2010

Crisis hits news

Bureau of Consumer Financial Protection

848 pages!

533 regulations60 studies94 reports

More than 100 MACPA members call our senators and we defeat the amendment!

“But a time of turbulence is also one of great opportunity for those who can understand, accept and exploit the new realities. It is above all a time of opportunity for leadership.”

‐ Peter Drucker, Managing in Turbulent Times

TX

WA

OR

CA

NV

ID

MTND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WVNJDE

DC

MD

*PA

CPA Mobility Enacted 46

CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA

*

In Process

Awaiting Governor Signature - 1

NH

CPA Mobility Legislation Pending - 2

VT

PR

GU

U.S. VIRGIN ISLANDS

26

• Collaborative effort with AICPA –CPA/SEA – NASBA & State CPA Societies

• 47 states passed legislation in three (3) years

• Maryland enacted it in 2008

What did we do when you were forced to have a license in every state you file

taxes in?

The Federal Issues – more waves of change

• FTC Red Flags rule – privacy & identity theft

• Tax Preparer Registration & PTIN issue

• Patient Protection Act & 1099’s

• Tax Strategy Patents• Dodd‐Frank Act• 3% Withholding on GovtPmts

The State Issues – cascading from the federal level and revenue shortfalls

• Maryland Privacy Act• Maryland Tax Preparer Regulations

• Maryland Consumer Protection & Debt Counselors

• Sales Tax on Accounting & Tax Services

• Combined Reporting

MACPA 2011 Agenda5 for 5!

Pass 120/150 legislationStop Sales Tax on Accounting

ServicesExempt CPAs from Debt

Counseling BillStop Trial Lawyers attempts at

Tort Liberalization –Comparative Fault

Pass Safe Harbor legislation

CPA Day in AnnapolisJanuary 18, 2012

How we did it

Looking ahead to 2012

• Special Session to deal with redistricting (and budget) – will see tax proposals

• Sales Tax on Services• Combined Reporting• Comparative Fault =

increase liability• Quid Pro Quo for DC

mobility

It all adds up$ per partner / year

1. CFPA $2502. Tax Prep $1503. Debt $1504. Mobility $500

Total $950

Sales Tax est $22,000 per partner

SECFASB

FASBPCFRC

IASBIFRS & SME

PCAOB AICPAASB, ARSC, PRB

IAASB

AICPAPEEC

AICPAPEEC

IFAC

Public Company Private Company Int’l Company

FinancialReporting

Audit /Attest PerformanceStandards

Code of Conduct

Another way to look at standards & oversight

State Oversight & Enforcement of CPA LicenseCPALicensure

FAF

FASB

PCFRC

GASB

The PlayersThe PlayersSEC

& State Boards & State CPA Societies

BRP

Additional Background InfoAdditional Background Info

15,000 issuers and 28.5 million private companies but GAAP driven by public company issues

Small businesses employ more than half of all private sector workers

Private companies and their financial statement users have information needs that are different than public companies

Similar Issue Outside the US TooSimilar Issue Outside the US Too

Concerns About Private Company Financial Reporting Include:

Concerns About Private Company Financial Reporting Include:

Too many GAAP-specific requirements not useful or relevant for private companies Greater FASB emphasis on public

companiesIncreased cost, complexity, time-

consuming using full GAAPUse of OCBOA raises the issue of what’s

“generally accepted”

Too many GAAP-specific requirements not useful or relevant for private companies Greater FASB emphasis on public

companiesIncreased cost, complexity, time-

consuming using full GAAPUse of OCBOA raises the issue of what’s

“generally accepted”

U.S. Answer: Blue Ribbon Panel on Private Company Financial ReportingU.S. Answer: Blue Ribbon Panel on

Private Company Financial Reporting

Address how accounting standards can best meet private company financial statement users’ needs

Determine future of GAAP standard-setting process for private companies

Sponsored by AICPA, FAF and NASBA

18 panel members: cross-section of financial reporting constituencies, including lenders, investors, owners, preparers and auditors

Blue Ribbon Panel’s ConclusionsBlue Ribbon Panel’s Conclusions

A problem exists that needs resolutionRecommendation #1 - Enhance GAAP

for private companies by making significant modifications, where warrantedRecommendation #2 - FAF should

create a separate private entities accounting standards board

A problem exists that needs resolutionRecommendation #1 - Enhance GAAP

for private companies by making significant modifications, where warrantedRecommendation #2 - FAF should

create a separate private entities accounting standards board

Other Key BRP RecommendationsOther Key BRP Recommendations

Framework for differential decision criteria

3-5 year sunset review to determine effectiveness of new board

5-7 board members

$4-5 million annual budget

FAF “Working Group”FAF “Working Group”

FAF created a “Working Group” on March 4, 2011Comprised of FAF Trustees and

FAF StaffAdded non-profits to the mix

FAF created a “Working Group” on March 4, 2011Comprised of FAF Trustees and

FAF StaffAdded non-profits to the mix

90.87% of MACPA members believe we need Private Company Standards

90.87% of MACPA members believe we need Private Company Standards

Insights form the Spring & Fall, 2010 PIU / town hall meetings covering 2,000+ members

Judy O’Dell chair of FASB PCFRC shared her perspective

Judy O’Dell chair of FASB PCFRC shared her perspective

MACPA’s responseMACPA’s response

MACPA sent comment letter to FAF on December, 2010 for initial surveyMACPA Chair Kimberly Ellison-Taylor

appoints special Accounting Standards Task ForceAccounting Standards Task Force held

meetings from Jan – Mar, 2011

MACPA sent comment letter to FAF on December, 2010 for initial surveyMACPA Chair Kimberly Ellison-Taylor

appoints special Accounting Standards Task ForceAccounting Standards Task Force held

meetings from Jan – Mar, 2011

MACPA Accounting Standards Task Force – The power of “We”

MACPA Accounting Standards Task Force – The power of “We”

Chair:

Art Flach Grant Thornton Public accounting firm

MACPA Facilitators:

Tom Hood MACPA CEO & Executive Director Non-Profit

Jackie Brown MACPA COO Non-Profit

Skip Falatko MACPA CFO Non-Profit

Task Force Members:

Ernie Paszkiewicz Gross Mendelsohn & Assoc. Public accounting firm

Rob Tuggle BB&T Banking

Bill Ziegler BB&T Banking

Carl Kampel Ellin & Tucker Public accounting firm

Joselin Martin Hayles & Howe Private company

Liz Gantnier Stegman & Co. Public accounting firm

Bob Tarola Right Advisory Public company consultant

Mike Manspeaker Smith Elliott Kearns & Company, LLC Public accounting firm

Ken Kelly McCormick Public company

Don McConnell KCI Private company

Jim Canalichio Dixon Valve Company Private company

Jim Jenkins Stout Causey & Horning Public accounting firm

Al DeLeon DeLeon & Stang Public accounting firm

Debra Busk DeLeon & Stang Public accounting firm

Charles Postal Santos, Postal & Co. Public accounting firm

Jim McKinney University of Maryland Educator

OJ Phillips Small Business Administration Government

Our guiding principlesOur guiding principles

Draft conclusions – Not approved by MACPA Board

Draft conclusions – Not approved by MACPA Board

Private Company Standards need to be addressed (costs, complexity, OCBOA)Current structure is not working –

PCFRC recommendations were not addressed, prior studies indicate issueOther jurisdictions around the world

recognizes needs of private company users are different

Private Company Standards need to be addressed (costs, complexity, OCBOA)Current structure is not working –

PCFRC recommendations were not addressed, prior studies indicate issueOther jurisdictions around the world

recognizes needs of private company users are different

Next StepsNext Steps

Finalizing whitepaperApproval and position by MACPA BoardDistribution and communication

Finalizing whitepaperApproval and position by MACPA BoardDistribution and communication

Maryland ranks in top five states with highest audit deficiencies with DOL

EBP Audits (401k) & 403(b) Audit Quality must be raised in

Maryland

MACPA worked with the DOL to put on our first Employee Benefit Plan Conference in May, 2010

Look for the second annual conference in May, 2011

70% of consumers are looking for businesses adopting sustainable business practices

Can green give you a competitive advantage?

http://www.theiirc.org/

Workforce & Demographics

5 Generations in the workforce

Live First, Work Second

Digital Natives

Workforce & Demographics

Email Generation

Facebook Generation

These guys are retiring

These are making the purchasing decisions

These are the new workers

Are you ready for Gen Y?

The Gen-Y guy

Gen Y’s Top Five Ways We Think and Act at Work

1. No expectation of lifetime employment2. A feeling of entitlement with big

expectations3. A hunger for instant gratification and

tangible outcomes4. A new relationship with technology &

communication5. A need for ongoing feedback

“The only way we can go wrong is to discourage these kids. They are set to go. They’re smart. They’re motivated. They understand the problems. They are engaged.”

- David Gergen – Political Analyst

In defense of Gen Y

New CPAs in Maryland

74

166194

236

291

383

457

New CPAs

04 05 06 07 08 09 10

Technology• Cloud• Mobile• Location‐based / Augmented Reality

• Security / Privacy• Social Media• XBRL

Social MediaAccording to CFO magazine

The learning continues by using social media tools to connect the learners

Surfing Lessons!

www.bizlearningblog.com www.cpasuccess.com www.cpalegislativeinsidercom

Comments on BizLearningBlog include a participant and author of book

Jane Bozarth ‐ author

XBRL – Time to pay attention

XBRL & SBR

“You can’t stop the waves, but you can learn to surf”- Jon Kabat-Zinn

Photo: Pratt’s surfing page

Turbulent times require new skills and new ways of thinking

RFTF – Reports from the Future

MACPA’s Board focuses on 2025

Top 10 Trends (and the time to address is now)

1. Pressures on Gov’t & rising deficit2. Changes in learning – informal & on‐demand3. The cloud = flex, global, work anywhere4. Increasing complexity, ambiguity & change5. Globalization and economic shifts6. Information overload7. Shift to consumer power (push to pull)8. Workforce, demographics, the “she” economy9. Going mobile10. Social media = business

Steve King – Emergent Research & author of Intuit 2020 report

1. Developing soft skills 2. Understanding and applying international accounting 3. Understanding complex accounting and auditing 

standards4. Adapting to an evolving regulatory framework5. Addressing new external reporting needs6. Understanding ERP or IT systems and technological7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge and 

understanding company's non‐financial business drivers

GT: The Evolving Accounting Talent Profile

What’s over the horizon for CPAs?

www.macpa.org/forumhttp://www.aicpa.org/Research/CPAHorizons2025/

In 1997, the CPA profession crowd‐sourced its future with over 3,500 CPAs in the CPA Vision Project

CPAs...Making sense of a changing and complex world.

CPAs...Making sense of a changing and complex world.

Our core purpose, our reason for being is

Here is what they said…

Our Vision Statement for the future is:( mandates to ourselves for a successful future)

• Communicating the total picture with clarity and objectivity,

• Translating complex information into critical knowledge,

• Anticipating and creating opportunities, and

• Designing pathways that transform vision into reality.

CPAs are the trusted professionals who enablepeople and organizations to shape their future.Combining insight with integrity, CPAs deliver value by: 

The DNA of the CPA• Communication & 

Leadership• Strategic & Critical Thinking• Focus on the Customer, 

Client, and Market• Interpretation of 

Converging Information• Technologically adept

IBM Global CFO Study shows movement to “Value Integrators”

The Decade of the CFO?

The best CEOs in the world are a combination of CEO, COO and CFO. They are inspirational, financially literate and know the ins and outs of their business at a sophisticated level.

www.macpa.org/forum

Why we are here and what we are doing about it

Why we are here and what we are doing about it

CPA

Tools: MACPA Fed & State Tax listservs

Our colleagues are phenomenal.  I see it time and time again, both on this website and elsewhere.  Not only "resources" but the human creativity, insight and wisdom so freely given. It reminds me of a karate dojo where members at various levels tutor and mentor those "below" them while being tutored and mentored "from above." Makes me proud to be part of the profession. I'm glad so many recognize how unique and very valuable we as a group are, it's truly remarkable and oh so greatly appreciated. Since I appear to be the sole member practicing at the beach, I would like to suggest maybe a little social mixer for listserv participants before, during, or after the MACPA Beach Retreat? Nothing too formal or structured, but so we all can put faces with names, etc. I see these "flash mobs" on the news, lol, something like that. I will be some sort of forward team arranging a place and maybe a drink or food deal with an OC establishment. I feel that I have come to know many of you but couldn't pick you out of a police line up! It's not just the sole practitioner. There are many of us out here with small practices that don't have the manpower resources to maintain in‐house specialized departments.  I find it amazing that even at the height of deadlines there are those who "belly up to the bar," to offer words of wisdom and advice for the practitioner in need. Awesome folks here! .  I am, too, a sole practitioner, and this year I used listserv for the first time.  Every time I have some problems I couldn't figure out and always had to spend more time than "necessary" to look for publications, look for research materials, etc.  But this year, any problem or issue I post there, to my surprising happiness, the answer came in within a couple of hours, without spending my own time. I just waited for any answer to come out from you.  And especially this year, which I found out I was having more complicated cases than before, how much I was able to deal with, thanks to all of your suggestions, advices, ideas, all of which truly helped me survive this tough season. And yes, finally, I really think our membership dues become worth when we utilize this group's brainstorming. Thank you all for your invaluable advice and comments, suggestions you have given to me, who has been suffering lack of great resources. I could give you unlimited thank‐yous to you all! I agree the listserv is an invaluable resource and it has helped me a great deal during this tax season. Of all the wonderful benefits of being a MACPA member, the value of this one service covers the cost of my membership dues times ten. .  With the wealth of experience available here, I can get information that would be difficult to come by anywhere else.  I echo the sentiments of some of those before me, I wish I could give as much to the website as I get from it.  Thanks to all for your invaluable advice and comments during the past tax season!! Thanks you for the superb quality of this site. I do so few returns, but get (and don’t contribute) so much from it! What a great resource for the sole practitioner!!  Thank You for the invaluable support to those in the collective we call the ListServe :) Two things I so much enjoy from this group is 1) always being able to learn something new, and 2) the reminders that the wackiness I encounter in my clients isn't unique to me, and 3) if I wasn't so sleepy I'd remember number 3 …. Lol You all are the best!!  I too would like to add my thanks to all the wonderful participants in this list serve. While I am semi‐retired, the information provided is invaluable to assist in the preparation of the remaining clients whom I still service. Best wishes to all for a restful post tax season. Enjoy, before you tackle the extensions.  My thanks to everyone that assisted in any and all ways this season. My last return before the clock strikes midnight was just transmitted, so I am off. In the immortal of words of the beloved Truman character, “Good morning, good evening, and good night.” I agree with all. The listserve is a tremendous resource to all. I have learned so much. Almost makes you want to form a new acctg firm ‐‐MACPA & CO! As one of the many lurkers who receives e‐mails and posts questions very infrequently, I speak only for myself when I say thank you to all who share their knowledge here. For those who run small shops, this is a valuable resource for information. My heartfelt thanks for your generosity. Amen to that…I add my thanks!!! Now…off to a week of NOT coming to the office, answering phones, answering emails, etc….  Many thanks to all those who asked and those who answered. I would like to thank everyone who offered words of wisdom on the list serve. Its amazing how much insight you gain from the collective wisdom of the group. I really appreciate the time and effort that everyone put forth, especially the 10 or 15 ‘heavy lifters’ who seem to respond to any question quickly. Thanks everybody for the additional support and welcomed contributions!  Amen. I only wish I could add as much as I get. At the risk of being redundant…I add my thanks for the many timely and helpful replies. It is precisely because I value the input from so many folks brighter and more knowledgeable than I, that I try to take time out and answer on the odd occasion I have something to add. I would argue that, for those of us without a large firm “ivory tower” to turn to, this has become one of the greatest tools/benefits offered by MACPA. THANK YOU ALL AGAIN!! I must get on the band wagon also and thank everyonewho utilized the listserve. It has been invaluable. Questions asked reminded me that I may have the same problem and the answers given have been helpful and informative. You all are such a wonderful help! THANK YOU!  Another thank you for the listserv especially to: Those of you who are so very generous with your time and expertise. Those of you whose questions make my clients seem not so bad. Those of you who have taught me that the IRS instructions are really very useful and to just try looking it up. Those of you who made me laugh. Certainly this is the best CPE there is, even if we do not get credit for it.  Ditto.  I couldn't have said it better myself.  I hope everyone gets some time to rest and relax! Thanks to all, enjoy the off season.  I couldn’t agree more. Thanks particularly to the “heavy lifters” who seem to respond to almost every question with insights, cites and great advice.  I must also add my thanks to all who participated on the listserve. Many times answers to questions were provided even before I had time to ask them.  

The Power of We!

MACPA Leadership AcademySeptember  18‐20, 2011 Annapolis

Key events & dates

Gov’t / NFP Conf ‐ Apr 29, 2011      ‐ U of MDEmployee Benefit Conf ‐May 10, 2011     ‐ ColumbiaMACPA Business & Industry Conference  ‐May 20, 2011    – Turf ValleyMACPA Summit  ‐ Jun 2 & 3, 2011  ‐ BWIBeach Retreat ‐ Jul 5 – 7, 2011     ‐ OCCPA Day in Annapolis ‐ Jan 18, 2012        ‐ Annapolis

Executive Level LearningExecutive Level Learning

Strategic Management Business Management Performance Measurement Management Leadership Development Communications Skills

Strategic Management Business Management Performance Measurement Management Leadership Development Communications Skills

MACPA’s affiliate, the Business Learning Institute (BLI) delivers competency-based curriculum for managers and executives:

• RJP Insurance• AON• Purchasing Power of the profession– Savings of up to 70% off!

ResourcesProducts  / Services

Business Solutions

New CPAs Swearing‐in Ceremony and MACPA Member Reception

June 2, 2011BWI Hilton

How Leadership is changing?From

• Information Stocks• Hierarchy• Centralized• Teacher• Push

To

• Information Flows• Network• Distributed• Facilitator• Pull

How to survive the Extreme Future?

• A future vision – a clear vision of where you are going

• A sound strategy to get you there• Tools to help persuade key people• Effective execution

Source: Dr. James Canton, Ph.d – author of the Extreme Future

“It is hard to plan for the long term future when you don’t know what is going to happen five minutes from now.

Today, a competitive edge is thin and temporary; the edge quickly becomes the margin. The ability to define the edge, and the ultimate competitive advantage, is found in the smarts, heart and ingenuity of your people - that's your powerhouse. Tap that, train it, focus it and mobilize it; now you've engaged a network and inspired a sustainable shift.

Insight to action, one without the other is either useless or destructive.”

-Tom Hood & Gretchen Pisanoco-authors of the i2a: Insights to Action

Strategic Thinking Systemhttp://www.bizlearning.net/live/i2astrategicplanning

The leaders job is to…

Provide hope and inspiration!

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632‐2301E‐mail tom@macpa.org

Web http://www.macpa.orgBlog http://www.cpasuccess.com