Tuesday, October 31, 2017

Thomson Reuters offers new audit management tool

Thomson Reuters has added an Audit Management solution to its Connected Risk platform to help firms better assess risks and increase the efficiency of their audit process.
Thomson Reuters launched its Connected Risk platform in the first quarter of 2017 following its acquisition of Empowered Systems, whose proprietary technology underpins the offering. Connected Risk is designed to help customers tailor solutions to meet specific risk-use cases.
The new Audit Management addition is designed to facilitate the role of an audit advisor to their business clients by providing information to support strategic decision-making.
Auditors can use the tool to adjust audit plans in cycle to reflect changes in risk profiles, and where applicable, assessments can be informed by the broader business risk through use of the underlying Connected Risk platform’s data mapping and aggregation capabilities, according to Thomson Reuters. Audit professionals can also execute audits underpinned by electronic work-papers and subsequent audit findings management, which is all tracked and reported through the integrated dashboards and reporting engine and/or integrated into existing business intelligence tools.
“There is no denying that both the financial services and corporate sectors continue to experience unprecedented volumes of regulatory change and complexity,” said Gareth Evans, managing director, enterprise risk management at Thomson Reuters, in a statement. “The amount of data our customers must understand shows no sign of abatement. What they need more than ever are ways to better make sense of what matters.”
He added that the Audit Management tool will allow auditor customers to apply “the deep expertise that Thomson Reuters is known for in managing and interpreting unstructured data.”

Monday, October 30, 2017

Pathways to Growth: Want to land that big fish?

It drives me crazy to hear complaints about lost business opportunities when there was very little understanding about how to land that big fish. If you’ve got something of value to offer and are approaching the right buyer, reeling in the big ones isn’t rocket science. It’s a proven process based on doable steps and learning moments.
I often hear partners blame missed opportunity on issues like price pressures or competition. But I can count on one hand the number of times I’ve heard, “You know, Gale, I blew this one.”
Recently I got a call from a CPA I had coached years ago who eventually left public accounting to serve as CFO of a large, publicly held company. He couldn’t wait to tell me about a request for proposal that he and his company sent to their current provider, as well as some of the other largest CPA firms in the country. Breathlessly he exclaimed, “I just walked out of the orals, and you’d be shocked and horrified at what I saw!”
He described an anemic sales process and pathetic presentations by all of them that demonstrated no understanding of the client. When he asked several pointed questions, none of the presenters could muster a substantive response.

Tired of landing in the ditch?
He and I had a good laugh, but neither of us were shocked. He said, “These firms haven’t innovated their sales process since the 1970s.”
In the mid-market where I reside, this is life as we know it. Partners call me after the fact, constantly in despair, having watched one and then another opportunity roll into the ditch. It’s especially disheartening to see this happen to partners who hear what they need to do, but constantly revert to dated approaches — like poring over records rather than interviewing senior executives, including the CEO, to shine light on what the business seeks to accomplish, and learning everything possible about context and strategy.
Listening for the main mega-themes in the interviews is the clue to a winning strategy, not the fact that you (think you) have better auditors.
Instead of conversations with executives about the company and the context of the decision, contenders often come to the conference table with a well-dressed entourage and lots of technology. They mistakenly assume that chest-thumping and digital bells and whistles will secure the opportunity.
When I was with IBM, we called this approach “spray and pray.” The tactic involves showering your prospect with information about how wonderful you are, and praying they find something relevant to grab onto. What clients really want is something solid and relevant to them — value, innovation and customization. To achieve this, you have to crawl into your buyer’s head to uncover deep, often hidden needs. The name for this is strategic solutions selling, and I describe the process in detail in a document I call the “Big Fish Emergency Toolkit.”

Listen close
Truth is, your prospect knows something about you or you wouldn’t be a contender. Instead of the “me and us show,” you need to become the producer of the “you and your challenges show.” The way to do this throughout the sales process includes key principles such as:
  • Qualify the opportunity. Make sure it’s worthy of pursuit by going one-on-one with decision-makers, influencers and others who have a vested interest in the outcome.
  • Get comfortable talking about your competitors. Ask the prospect about the competition, which helps put you in a consultative, rather than a vendor, position. During your one-on-ones, don’t hesitate to learn about other firms under consideration and what they bring to the table.
  • Find an advocate. Identify and cultivate someone who can help you navigate the minefield of confusing and wrong information that will come your way. Like the real estate agents say, “Buyers are liars.” It’s not that they’re bad people, they just sometimes forget to tell you the truth or may not know it! An advocate can come from anywhere in (or sometimes outside of) the organization.
These techniques will serve you well as you pursue opportunities of all sizes, not just the big ones. Also, note that strategic selling can be especially useful down market, where fewer of your competitors will know and use the approach.
You’re not going to land that grown-up fish using a kid’s rod and reel. You need big ideas, robust tools and fresh solutions that distinguish you from the crowd. There’s a big ocean out there, and there’s no reason the biggest fish in it shouldn’t be yours.

Friday, October 27, 2017

The power of the red chair

One day, we were having a team meeting. I was becoming particularly frustrated with the discussions we were having.
We love a healthy discussion with opposing views, but it seemed like we had crossed a line and were just spinning our wheels instead of making progress. We were discussing potential new services to roll out, new billing methods to offer and a better client portal. We couldn’t seem to come to a consensus and then it hit me: It doesn’t matter what we think. That only thing that matters is what our clients think. What can we implement that will make their lives easier and make them happier with the experience we provide?
To break the stalemate, I blurted out, “Suppose Susan (one our top clients) was in the room right now. What would she say?” When your team knows that a client is sitting right across from you, or within easy earshot in the hallway, that changes everything from the way you converse with each other, to the way you state your case, to the way you outline the pros and cons of each new offering you’re proposing.
The person sitting in the “client chair” can trump every decision that we make—or want to make. Clients trump decisions because that’s who we work for. Whichever member of my team is sitting in the client chair is expected to answer any question that comes up in the meeting. At our firm, we have a special red chair at the head of the conference room table reserved for the “client.” All the other chairs are gray, so there’s no mistaking whoever sits in the client chair on any given day has the responsibility to be the client advocate in our internal meetings.
Even if only two of our staffers are in a meeting, one must sit in the red chair and speak from the client’s perspective. For example, it wasn’t easy for our office manager to let go of her habit of questioning every new idea that involved spending more money. But she was committed to the idea of having a client advocate in every meeting so when it was her turn in the red chair, she learned to let go of her job role and embrace the purpose.
It doesn’t have to be Susan every time. Rotate your top clients into every meeting. Ask yourselves: “How are the Joneses going to answer this? What are the Jacksons going to say about that?” As soon as you establish a framework like that, it’s going to permeate the culture of your company.
Over time the red chair mentality will permeate the culture of your company and be the lens you use to make decisions. Suppose you overhear an employee in the hallway explaining her rationale to a colleague for voting against investing in a customer relationship management system, rolling out a new client service offering or taking a CPE class after work. But, before you can jump in, her colleague says, “Do you think Taylor would be supportive of that?”
Bottom line: Don’t say anything in a meeting that you wouldn’t feel comfortable saying in front of clients—clients who are sitting in the same room. That’s how you know you’re making the right decisions.
Let’s look at some examples:
Billing: Hourly billing is designed for inefficiency. Clients will always tell you they don’t care how long it takes you to get an assignment done as long as it’s done well. Brain surgeons don’t get paid by the hour. Their job is to keep people alive. CPAs’ job is to keep clients financially healthy.
Technology: I can assure you clients are going to recommend any solution that’s helpful for them, that makes their lives easier—things like eSignature, electronic filing, The Vault.
Tax planning services: Which services are they going to tell you they find most valuable? What about when they meet with you? What does the agenda look like? What sort of collateral do we deliver? What does our client service model look like?
Customer relationship management: Many in your office might not want to invest the time and money it takes to get a CRM system up and running. But, don’t you think your clients find it valuable for their CPAs to be able to instantly retrieve everything about their personal and financial life that’s relevant to solving a financial goal or challenge?
People don’t leave their CPA because they charge too much. They leave because they don’t feel valued and appreciated—and because they don’t feel listened to. “We went out and bought this chair to show you how much your opinion matters to us when we make any kind of decision,” they might say. This is how we should already be making our decisions. Use the chair as a catalyst to build the service level your best clients want and may soon demand.

Thursday, October 26, 2017

What separates the best from the rest

As part of the war for talent going on in the profession, firms are competing fiercely to become employers of choice, and that means searching out any advantage they can, however small.
The firms that participate in Accounting Today’s Best Firms to Work For ranking are among the fiercest competitors in the field, and an analysis of the data compiled in the survey process reveals a short list very specific policies, procedures and perks that mark the difference between those who made the list and those who almost made it.
The list below represents those benefits where the difference between the percentage of firms on the list that offered them was greater than the percentage of firms that didn’t make the list by more than 10 percentage points – and they range widely, from straightforward perks like fitness programs and retirement plan contributions, to broader policies like sharing information about how the firm is doing financially.
Firms looking to recruit or retain top talent will want to go over this list carefully to make sure they’re keeping up with the Best Firms:
  • 1. Offering paid time off for community service activities or volunteer work.
  • 2. Offering telecommuting options.
  • 3. Providing fitness or wellness programs.
  • 4. Inviting staff members’ families to firm events.
  • 5. Limiting firm meetings and staff-only events to work hours.
  • 6. Offering tuition reimbursement or assistance for additional degrees or credentials.
  • 7. Having formalized succession planning programs or practices.
  • 8. Offering flexible hours or compressed work weeks.
  • 9. Offering personal development or stress management workshops, seminars or classes.
  • 10. Matching employee contributions to retirement savings plan accounts.
  • 11. Sharing information about how the firm is doing financially.
For more ways to create a top workplace, see 20 Days: Building a Better Firm.

Wednesday, October 25, 2017

Compliance.ai debuts collaborative version of its financial regulatory software

Compliance.ai has debuted the new Team Edition version of its financial regulatory compliance software. The company provides software that distills regulatory content into actionable intelligence using machine learning and artificial intelligence tools.
The Team Edition is the offering one step more advanced than the most basic service Compliance.ai offers, which is the Pro Edition. Pro offers access to all the company’s aggregated content, so regulatory and compliance professionals can peruse the information and compile the information that is pertinent to their organization, and needs action. Team Edition also offers collaboration capabilities between all the members in a compliance and regulatory team, so they can share and exchange their topic- or agency-specific regulatory research and insights with other team members.
“We’re presenting another angle of frustration, which is, now that I’ve done some research, how do I share that?” Explained Compliance.ai CEO Kayvan Alikhani. “The Team Edition lets people share news within the team automatically. Just save the research, and share, and they all get a collaborative view.”
Compliance.ai also just launched the Developer Edition of its software, which provides API access so regulatory and compliance professionals can write their own code and expand on the capabilities of Compliance.ai’s solution.
The top-tier Enterprise offerings also includes the capability for software integration with a firm’s existing CMS or other software.
Separately, Compliance.ai recently recruited Marsha Ershaghi Hames, Ed.D., to its advisory board. Ershaghi Hames is an expert in ethics as it relates to corporate compliance.
For more information and pricing, click here.

Tuesday, October 24, 2017

GetPayroll to give away a year of free service to 10 nonprofits

To celebrate the upcoming holidays, payroll software provider GetPayroll will be awarding a year of free access to their solution to 10 U.S. nonprofit organizations. Usually, the payroll software costs between $30 a month to upwards of $150 a month, depending on the size of the company and the features needed.
To enter the giveaway, nonprofits need to fill out a form including basic information such as company name and address, a description of the nonprofit, and an explanation of why the organization believes it should win a year of free service for 2018. GetPayroll claims that the awards may be valued at up to $5,000 for the year,
At the end of 2018, one of the 10 winning nonprofits will be selected randomly to receive an additional $1,000 donation on behalf of GetPayroll and the software company’s founder, president and CEO, Charles Read.
“It is important to me that the organizations that are giving back to communities across the U.S. are recognized and taken care of,” said Read in a statement, adding that if every payroll service provider in the United States did the same thing, they would collectively help 40,000 nonprofits serve their communities.
To enter the competition, click here.

Monday, October 23, 2017

10 business challenges that brand research can solve for firms

It seems everyone is talking about “brand” these days. Given the many tangibles and intangibles involved in creating and managing a brand, giving it a concrete definition can be a challenge. However, one thing is clear—brand is important.
In many ways, brand is a promise. When buyers—whether they’re retail consumers or business users—consider doing business with a firm, they’re looking not only at the product or service being offered, but the firm’s reputation and perceived value. How potential and current clients perceive your organization is the foundation of your brand.
There are certain times in your firm’s existence that warrant taking a closer look at your brand. Perhaps you are facing a major business decision that you can’t afford to get wrong. Or a new challenge that has high stakes. Situations such as these are the opportunity to take a step back and look at the bigger picture as it relates to your brand.
Here are 10 business challenges that brand research can help you solve:
1. Difficulty describing your firm
Have you heard the old Indian parable about the blind men describing an elephant? Each touched various parts of the animal and, based on their individual experiences, each described a very different entity. Sometimes different business developers describing their accounting firm can create the same confusion.
Brand research can help you determine where you’re creating value and what’s most important to potential clients so you can better align your value with their needs and create a more focused yet comprehensive description of your firm.
2. Changed target audience
If your target audience has changed because you’ve changed the services you provide or the industry or industries you serve have changed, then your brand message needs to change as well. Brand research can help shed light on the new target’s issues and needs, as well as how and where they get information so you can more effectively address your new audience.
3. New firm name or identity
Brand research will uncover how your market thinks about your firm now, what kind of brand equity you might already have, and how your target audience might react to a new brand name or identity. Our research has shown that often names which seem clear, effective and sure winners to the stakeholders appear weak, confusing and even nonsensical to potential clients.
4. Outdated firm appearance
No matter how well thought out your original logo, typeface and tagline, all things eventually look their age and need some revision to stay current. Brand research can tell you what your target audience prefers for the look-and-feel of an accounting firm they would want to do business with.
5. Downward pricing pressure
As markets and competition evolve you may find yourself facing increasing pressure to lower prices. Brand research can help you escape the clutches of commoditization and thinning profit margins by revealing where you have credibility to charge more because of greater expertise and specialization.
6. Stalled growth
Sometimes an accounting firm runs into stiffer competition or an evolving market in which previously successful sales approaches no longer work and growth stalls. Brand research can reveal how the marketplace has changed, where the market is going, and the best ways to reposition your firm and reconnect with current and potential clients.
7. Changed competitive landscape
As your firm grows it will run into competition that may dictate a more sophisticated approach or a change in focus to attract prospects who may not be aware of your firm and its value. Brand research will help you determine your competitive advantage against your rivals as well as your potential value to a new, larger audience.
8. Merger or acquisition issues
Perhaps a merger or acquisition is the source of your growth. M&As often mean entrance into a new geographic market or the addition of new service lines and client types. Brand research can reveal how strong the acquisition’s brand is, how strong your brand is in the new market, and what may be complementary or competitive between your two firms.
9. Introducing new services
Introducing new service lines can be fraught with danger. It may be unclear what would be most appealing about the new service to potential clients. Or what kind of operation within the industries you serve would align best with your offering. For example, let’s say you provide accounting and tax services to the financial industry and you’re thinking about launching a new service. What kind of financial institution would be best to target—regional banks, local banks, credit unions, savings and loans? Brand research can help find answers.
10. Top talent acquisition
One of the biggest challenges facing accounting firms today is attracting and retaining top talent. Our recent employer brand research study revealed that online searches and firm websites are much more important to potential employees than most professional services firms realize. Brand research can help you understand what’s valuable to top talent in terms of workplace environment, advancement opportunities and employee benefits so this kind of information can be utilized to attract the kind of employees you seek.
There’s a lot to learn with brand research. Everything from how the marketplace views your firm to who your true competitors are and how you differ from them. Best of all, you can gain insight into the entire client journey—from how to first attract them to the best ways to keep them.

Friday, October 20, 2017

KPMG introduces Ignite, a portfolio of AI tools

During its Global Data and Analytics summit in Boston this week, Big Four firm KPMG launched a portfolio of artificial intelligence (AI) capabilities called Ignite. The AI tools are designed to enhance the decisions and processes that KPMG clients use to go digital.
“Artificial intelligence, combined with advanced data and analytics and robotic process automation (RPA) are enabling a new generation of intelligent automation that is changing the nature of work and quality of services,” said Cliff Justice, principal and leader of intelligent automation, KPMG in the U.S., in a statement. “KPMG Ignite will offer clients and our KPMG professionals some of the most advanced suite of AI tools, solution capabilities and accelerators, designed to move quickly and capture the most value in this era of exponential technology change.”
Earlier this year, the firm founded KPMG Ignition, a workspace in Midtown Manhattan that brings together its Innovation Lab, Insights Center and Technology Solutions. The space now has a dedicated Intelligent Automation Lab that uses certain tools and approaches to build AI solutions.
KPMG has built accelerators for Ignite in the form of patterns and tools to enable rapid AI solution development and delivery. These accelerators work by integrating with existing IT infrastructure without the need for developing new methodologies and templates.
KPMG Ignite also features a set of frameworks and methods that describe how KPMG professionals approach client-specific AI solutions and make them repeatable. The initiative will also provide ongoing testing, prototype development and innovation on emerging AI tools and approaches.
“The promise of AI requires more than just technology. Its power must be grounded on a foundation of trusted analytics, access to unique and reliable data, and deep-rooted domain knowledge in order to drive new insights and strategies,” added Brad Fisher, KPMG’s U.S. leader of data and analytics. “KPMG Ignite fills a critical void in the marketplace for businesses that aim to meet the competitive challenges of the future, particularly those who wish to expand and serve customers more efficiently.”
To learn more about KPMG Ignite, click here.

Thursday, October 19, 2017

Rio Tinto and ex-CEO and ex-CFO face accounting fraud charges on $3.7 billion coal calamity

Rio Tinto Group’s calamitous $3.7 billion coal deal in Mozambique keeps coming back to haunt the world’s second-biggest miner, three years after it unloaded the mine.
U.S. authorities filed fraud charges against London-based Rio, former Chief Executive Officer Tom Albanese and ex-Chief Financial Officer Guy Elliott, claiming they inflated the value of the coal assets acquired in 2011. The unit was sold for $50 million in 2014 following impairments of about $2.9 billion in 2013 and $470 million a year later.
Rio concealed setbacks at the project and Albanese publicly reinforced a “false positive outlook” for the asset, according to a Securities and Exchange Commission complaint filed in federal court in New York. Executives told Albanese and Elliott by May 2012 that the Mozambique unit was likely worth negative $680 million, the SEC said.
“Rio Tinto intends to vigorously defend itself against these allegations,” the company said in an emailed statement on the SEC charges. Albanese, Rio’s CEO between 2007 and 2013, said in a separate statement that “there is no truth in any of these charges.” Elliott, who retired in 2013, also refuted the allegations in a statement issued on his behalf. He stood down as a non-executive director of Royal Dutch Shell Plc, the company said Wednesday in a statement.
Rio has also agreed to pay a 27.4 million pound ($36 million) fine for a breach of disclosure rules concerning the Mozambique assets, the U.K. Financial Conduct Authority said in a separate statement. The Australian Securities and Investments Commission is also reviewing the issue, the company said.
There’s an onus on Chairman Jan du Plessis and the board to explain the issues around the SEC charges, Peter O’Connor, a Sydney-based analyst with Shaw and Partners Ltd., said in an email Wednesday.
Rio’s shares declined 2.3 percent by 3:30 p.m. in London, while rival BHP Billiton Ltd. fell 1 percent.
The charges come as Rio assists authorities in three countries over a separate case related to the $20 billion Simandou iron ore project in Guinea. Rio said in November it had alerted authorities including the U.S. Department of Justice and the U.K.’s Serious Fraud Office to a $10.5 million payment to an external consultant made in 2011.
Rio’s 2011 acquisition of Riversdale Mining Ltd., holder of the Mozambique assets, came as the producer sought access to coking coal in the Moatize basin at a time the African nation was seeking to become a major supplier of the steelmaking raw material.
The plans unraveled as the government refused to allow Rio to barge coal down the Zambezi and amid prohibitive costs of accessing or building rail lines to a port. Estimates of recoverable coking coal held by the assets were also downgraded, Rio said in 2013.
Rio, Albanese—who stepped down in August as CEO of Vedanta Resources Plc—and Elliott, “allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure,” Stephanie Avakian, co-director of the SEC’s enforcement division said Wednesday in the statement. Shell declined to comment on charges against Elliott.
Rio raised $5.5 billion from U.S. debt investors, including $3 billion after May 2012, the SEC said.
Concerns over the carrying value of the coal assets were raised in January 2013 by an executive in Rio’s Technology and Innovation Group, allegedly triggering an internal review, the SEC said in its statement. Shortly after, Rio announced Albanese’s departure and the major writedown, the SEC said.
The SEC charges that having already booked major writedowns following a takeover of Alcan Inc., Albanese and Elliott knew that disclosing a second failure would “call into question their ability to pursue the core of Rio Tinto’s business model to identify and develop long-term, low-cost, and highly-profitable mining assets,” according to the statement. Rio recorded more than $29 billion of charges after paying $38 billion in 2007 for aluminum producer Alcan, company filings show.
The U.K.’s FCA said Rio agreed to settle a breach of disclosure rules at an early stage and received a 30 percent reduction on its penalty. “The FCA made no findings of fraud, or of any systemic or widespread failure by Rio Tinto,” Rio said in a Wednesday filing.

Wednesday, October 18, 2017

IRS won’t accept returns next year without health coverage

The Internal Revenue Service said that for the upcoming 2018 filing season, it‎ will not accept electronically filed tax returns where the taxpayer does not address the health coverage requirements of the Affordable Care Act, the first tax season it has refused to accept such returns.‎
In an update Friday to the web page of its ACA Information Center for Tax Professionals, the IRS said will not accept the electronic tax return until the taxpayer indicates whether they had coverage, had an exemption or will make a shared responsibility payment. On top of that, the IRS said tax returns filed on paper that don’t address the health coverage requirements may be suspended pending the receipt of additional information and any refunds may be delayed.
In previous tax seasons the IRS has held up processing of tax returns that didn’t have the health care coverage box checked, but it didn’t prevent the returns from being processed. During this year’s tax season, President Trump signed an executive order directing agencies not to impose burdens from the Affordable Care Act pending repeal, so the IRS processed the returns, but still required taxpayers to pay a penalty known as an individual shared responsibility payment if they lacked coverage and didn’t receive an exemption.
“To avoid refund and processing delays when filing 2017 tax returns in 2018, taxpayers should indicate whether they and everyone on their return had coverage, qualified for an exemption from the coverage requirement or are making an individual shared responsibility payment,” the IRS advised. “This process reflects the requirements of the ACA and the IRS’s obligation to administer the health care law.”
The announcement comes after unsuccessful efforts this year by the Trump administration and Republicans in Congress to repeal the Affordable Care Act and replace it with a Republican health care plan as an alternative to Obamacare. Last week, President Trump announced he would end cost-sharing reduction payments, subsidies to health insurance companies to help provide coverage to low-income people. He also signed an executive order allowing consumers to buy coverage from so-called “association health plans,” which could be sold across state lines and wouldn’t need to meet the minimum coverage requirements or consumer protections of the Affordable Care Act.
However, with the Affordable Care Act largely still in place, the IRS said taxpayers remain obligated to follow the law and pay what they may owe when filing‎.
“The 2018 filing season will be the first time the IRS will not accept tax returns that omit this information,” said the IRS. “After a review of our process and discussions with the National Taxpayer Advocate, the IRS has determined identifying omissions and requiring taxpayers to provide health coverage information at the point of filing makes it easier for the taxpayer to successfully file a tax return and minimizes related refund delays.”

Tuesday, October 17, 2017

IRS puts Equifax contract on hold

The Internal Revenue Service has temporarily suspended its $7.25 million contract with Equifax after the company admitted to finding a malware link on its website on the heels of a data breach that exposed the personal information of approximately 146 million people in the U.S.
The IRS came under fire from members of Congress this month after the agency admitted it had signed a no-bid contract with the credit bureau to provide identity verification services for taxpayers despite recently suffering one of the biggest data breaches in history (see Lawmakers question IRS’s $7.25M no-bid contract with Equifax). A security researcher also found last week that a hacker had exploited a flaw on the company’s website to direct unsuspecting visitors to a link where they would download malware. Equifax took down the page, but the series of problems prompted the IRS to suspend its controversial contract with Equifax on Thursday.
“On October 12, the IRS notified us that they have issued a Stop-Work Order under our Transaction Support for Identity Management contract,” said a statement forwarded by an Equifax spokesperson. “We remain confident that we are the best party to perform the services required in this contract. We are engaging IRS officials to review the facts and clarify available options.”
The IRS said it was suspending the contract as “a precautionary step” in light of the new information.
“Following new information available, the IRS temporarily suspended its short-term contract with Equifax for identity proofing services,” said the IRS in a statement. “During this suspension, the IRS will continue its review of Equifax systems and security. The IRS emphasized that there is still no indication of any compromise of the limited IRS data shared under the contract. The contract suspension is being taken as a precautionary step as the IRS continues its review. Suspending the identity-proofing work provided under the contract means that the IRS will be temporarily unable to create new accounts for taxpayers using Secure Access, which supports applications including online accounts and transcripts. Although people can’t create new accounts, current Secure Access users aren't affected by this contract change and will continue to have access to their accounts. Other taxpayers still have options available for things such as obtaining transcripts, which can be ordered by mail. The IRS notes most of its services and tools are unaffected by this change.”
The IRS has awarded a new long-term contract to an Equifax competitor, Experian, for protecting taxpayers from identity theft. Equifax protested the IRS's decision to the Government Accountability Office, but the GAO ruled in favor of the IRS’s decision to award the new contract to Experian while continuing to review the suspended short-term contract with Equifax. The IRS praised the GAO’s decision.
“We’re looking forward to the start of the new contract,” the IRS said in a statement Monday. “We will move as quickly as we can, but it will take some time to begin service under the new contract. We are continuing to assess the time frame for the new service. In addition, we continue to review the status of our short-term contract with Equifax, which was temporarily suspended last week.”

Monday, October 16, 2017

Keeping up with technology in accounting

Both in specific practice areas and for firms as a whole, technology is automating and streamlining accountants’ work, even as the tools themselves grow more integrated and more useful, according to industry experts from the CPA Consultants’ Alliance.
In “CPA Firm Technology Trends,” one of the CPACA’s “Issues and Answers” video series, members of the alliance examine how new developments are impacting every aspect of the modern accounting firm.
Starting in tax, the panelists pointed up the importance of technologies that organize the work, rather than those that prepare or file returns.
“What it really comes down to is having an integrated workflow tool,” said Roman Kepczyk, director of consulting at Xcentric. “When we consult with firms, we find that there are long-time processes for tracking all aspects of the process, but these all seem to be in different applications. We need a way to have everything centralized in one place, so anyone who’s authorized to see it in the firm has easy access to that. Workflow tools are the solution. In smaller firms, that may be practice management projects, which are modules that allow them to track all those steps pretty cohesively. The problem is that, as you get much larger, the sheer volume of returns, makes those somewhat kludgy, so we see firms implement dedicated workflow solutions.”
“Having a workflow solution is a no-brainer in tomorrow’s CPA firm,” added Dustin Hostetler, chief innovation officer at Boomer Consulting. “You can’t properly manage a tax practice without having that integrated workflow solution to automate the movement of the tax work through the office. We’re finally there where we can have that paperless tax process from engagement acceptance all the way through to e-filing of the return, which not only benefits us but gives our clients a much friendlier client experience.”
For the other major components of the traditional accounting practice – accounting and auditing – the impact of technology is often felt more at the level of the grunt work that bookkeepers and auditors slog through.
“Automation is the big word here,” Hostetler said. “More and more, the A&A side of firms is becoming more and more automated. You’re seeing some of the artificial intelligence software coming into the market. Some of the Big Four have their own homegrown solutions to automate more of the workpapers and work you traditionally do during fieldwork.”
Citing the growing availability of such tools for auditors and accountants at firms of all sizes, he added, “That’s going to change the mindset of the audit practice from compliance to consultative. As automation and efficiency get driven into the audit practice, there’s going to be downward pressure on fees” – and firms will need to counter that by moving to more value-added advisory services.
Kepczyk noted two technology trends that are streamlining access to audit and accounting data: “One trend would be the centralization of data so that it’s run on servers, and rather than checking out binders and working out in the field, all the work is done on the servers. Not only can the field auditor access it, but maybe a manager in a different location or the manager in the office can look at those workpapers. The other benefit of having everything centralized on the services is that, from a security perspective, there’s no more data residing on the local workstation, so if a laptop happens to be lost or stolen, the risks of a security breach are significantly reduced.”
“The other thing we want firms to take a look at is that we’re seeing a trend towards going to a single audit suite for not only the engagement binder, but also for the workpaper programs,” he added. “Can we put all of our information in one place? … We’re seeing vendors put everything in one bucket to eliminate the lack of integration between products.”
Sarah Johnson Dobek, president of Inovautus Consulting, took up the theme of integration as one that’s being felt all across tech-savvy firms.
“One of the challenges that many firms have had over the years is that all of the software you use on the tax and audit side tends not to talk to each other,” she said. “That’s gotten much better over the years, but a lot of the information still resides in these disparate programs and there hasn’t always been a way to get that.”
Now, she explained, more and more software vendors are developing special tools that allow information to flow out of their applications more freely. “We’re seeing firms really focus on integration of software so the data is being provided to the marketing and business development professionals that are charged with growing the firm, so it’s getting into CRM systems, and they’re building special integrations to allow all the information to come together.”
All of this is actually being felt beyond firms themselves.
“The other impact we’re seeing of combined technology is that it’s helping enhance the client experience,” Dobek continued. “This is a huge focus for CPA firms right now, to really look at what is their client experience. Because of the move toward building a much more consultative practice, client experience has really risen to the top in this move away from compliance-only services. A lot of firms are starting to focus on how they can do this better, and technology is going to be a huge aid in being able to figure out some of those touchpoints – everything from notifying clients where something is in process, to how they use the portal, to how your staff engages with it.”
The video covers a number of other critical technology trends, including cloud adoption, remote work, and more; it and the other three videos in the CPA CA “Issues and Answers” series are available on the alliance’s YouTube page.

Friday, October 13, 2017

Bill.com attracts investment from JPMorgan Chase

Bill.com has secured $100 million in funding from JPMorgan Chase and Temasek, among other lead investors from previous rounds. With funding from America’s largest bank, and a holding company owned by the government of Singapore, this latest round of financing demonstrates the burgeoning investor interest in financial technology companies.

This latest round of funding brings Bill.com’s total to $200 million, and the company now has an estimated private market valuation of $742.8 million, according to PitchBook, a private market research provider. This makes the paperless billings and payments software company among the top valued startups in Silicon Valley.
Bill.com reports that has more than 2.5 million members processing $50 billion in payments annually. Its self-reported customer tally is at approximately 100,000, and it partners with four major U.S. banks, more than 50 major accounting firms, and integrates with commonly used accounting software including Xero and QuickBooks. Bill.com is also the preferred digital payments provider for CPA.com, the technology arm of the American Institute of CPAs.
“The last chasm to cross in digital payments is business payments. Eighty percent of all payments made by U.S. businesses today involve paper checks, and it’s about time we change that,” said RenĂ© Lacerte, CEO and founder of Bill.com. “Businesses deserve the same digital payment experience we have come to expect as consumers. With this capital, we will double down on our efforts to shift digital payments from early adoption to major, widespread market acceptance.”

Thursday, October 12, 2017

Intuit is hiring tax experts

Intuit is hiring thousands of credentialed tax experts to prepare for the expansion of its TurboTax product for the upcoming tax season.
The software company will be expanding the do-it-yourself functionality for its tax preparation software. Part of this expansion is the availability of live tax experts to answer question from filers at any time of day.
CPAs, enrolled agents and even practicing attorneys are on the wanted list to create a virtual team of tax experts to connect directly with TurboTax users who would like their taxes reviewed or some guidance on completing their tax filings.
Those hired will be able to choose the times and hours they want to work, similar to how contract workers on the cab-hailing app Lyft or the hand-for-hire app TaskRabbit operate.
The Turbotax software routes the tax payer’s question to an expert. Then, using one-way video and screen sharing, the expert will show and explain answers.
To learn more or apply, click here.

Wednesday, October 11, 2017

Anti-Fraud Collaboration issues case study

The Anti-Fraud Collaboration between the Center for Audit Quality, Financial Executives International, the Institute of Internal Auditors and the National Association of Corporate Directors has released the fourth in a series of case studies highlighting ways to deter financial fraud.
The new case study focuses on LDC Cloud Systems, a fictitious global technology company whose board is dealing with bribery accusations and accounting shenanigans. The case study offers a timeline of management and board decisions after potential problems are uncovered. It demonstrates how complex accounting practices typical in a fast-changing business environment can make a company prone to fraud. The hypothetical scenario shows how fraud situations can develop and be addressed, such as through strong board oversight. For classroom use, the Anti-Fraud Collaboration has developed a video series to bring scenes from the case study to life. The videos are available at the Anti-Fraud Collaboration website.
“The Anti-Fraud Collaboration is pleased to present the latest case study in our series designed to raise awareness of financial reporting fraud,” said Center for Audit Quality executive director Cindy Fornelli in a statement. “These case studies have proven to be valuable educational tools for all members of the financial reporting supply chain, as well as students.”
The Anti-Fraud Collaboration’s case studies take participants through a hypothetical scenario about a fictional company dealing with fraud. Guided by an instructor, participants can then discuss what could have been done to address or avoid the situation. Each case study offers a companion discussion guide for instructors, available on request.
LDC Cloud Systems is the Collaboration’s fourth case study. Others include:
Hollate Manufacturing focuses on the conditions that can lead to fraud and misrepresentation in financial reporting.
Carolina Wilderness Outfitters aims to facilitate a discussion about how to perform an internal investigation when fraud is suspected in a company.
Kendallville Bank focuses on the need for professional skepticism in the financial reporting process.
“New technologies can make for a disruptive business environment, and can create new challenges on existing business practices,” said FEI president and CEO Andrej Suskavcevic in a statement. “Resources like this case study provide a practical tool to help financial executives explore and deter financial reporting fraud.” 

Tuesday, October 10, 2017

A prime challenge in M&A: Retaining the clients

Acquiring another practice can seem like a sure and quick (if expensive) way to grow a book of business. Practitioners warn, however, that such a move can come with problems. For one: How many of those new clients will stick around?
“If you pay too much up front and don’t retain the clients, you’ve wasted money,” said Scott Kadrlik, a CPA at Meuwissen, Flygare, Kadrlik and Associates in Eden Prairie, Minn.
Clients and individual tax pros also cement bonds over many filing seasons. “If the acquiring firm doesn’t consider these personal ties and provide a comparable culture for client interaction, there’s a real danger that the clients won’t be happy and will go elsewhere,” said New York-based Enrolled Agent Phyllis Jo Kubey.
“You have to really look at the client base. Also, what are the plans of the owner? Do they want to retire or just not want to run a business any longer?” said Jeffrey Schneider, an EA in Port St. Lucie, Fla. “Having the owner in place, especially if there are no other long-time staff that’s staying on or if it’s close to tax season, is invaluable.”
Slow diminishing?
The demographics of the acquired firm’s clients are of first concern. “If you buy a practice from older, retiring practitioners, their clients are probably similar in age,” Kadrlik said. “There may be some estate tax work, but the client work may slowly diminish as their income declines and their need for your services decline.”
“The biggest danger or risk is the quality of the clients being acquired, which also includes the service that they’re accustomed to receiving,” said Ed Guttenplan, managing partner at Wilkin & Guttenplan in East Brunswick, N.J. His firm asks such questions as:
  • What are the standards of client data and related compliance that were required by the seller?
  • What degree of documentation was necessary in connection with the work provided?
  • What kind of vetting is performed in regards to the integrity of the prospective clients, as part of the client acceptance process?
  • Was the adequacy of internal controls at the client considered?
  • Are there fee disputes, large overdue balances or unusual billing arrangements?
“If all of the above answers are acceptable,” Guttenplan adds, “we examine one final question of great significance: how easily the client relationship will be transitioned to the new firm. This can be dealt with by paying for clients based upon retention, but even under a purchase arrangement with those terms, the purchasing firm doesn’t want to pay for clients that will leave shortly after the retention period.”

Price points
Jeff Gentner, an EA in Amherst, N.Y., has purchased several small tax prep practices – and each time negotiated a share-responsibility purchase agreement.
“The seller agreed to write a letter to their clients, explaining the situation and highly recommending me as their new tax professional,” he says. “This letter included my experience and credentials. I have always felt that getting them to come to me the first time was the responsibility of the seller. Keeping them beyond that first meeting was my responsibility.”
“In all practices, the purchase priced agreed upon was based on the first year’s gross income,” he adds. “This way the seller had an incentive to get the clients to me. This method has proved very successful; each time 5 percent to 85 percent of the clients accepted the change. If you use any other method, you’re simply purchasing a list of potential clients.” All purchase agreements should include a covenant not to compete, he added.
“Did the current owner undercharge based on your rates? If so, you may not keep as many clients as you think when they find out your rates,” added Laurie Ziegler at Sass Accounting, in Saukville, Wis. “And what’s the age of the clients? If there are many seniors, this will play a large role in the retention rate.”
“Do you have the staff to service the new client base? Most firms have enough work [and] are buying other firms for the employees and then culling out the clients from the old firm by raising rates,” Kadrlik said.
Many factors can affect retention and other important aspects of a deal – some of which a preparer can help, and some a preparer can’t. “With all the talk of tax reform and knowing that tax reform is most likely imminent, I’m reluctant to enter into any agreement,” Gentner added.

Monday, October 9, 2017

Treasury lays out plan for loosening dozens of Wall Street rules

The Trump administration on Friday urged the overhaul of key rules underpinning trading in U.S. stock, bond and derivatives markets, calling on regulators to loosen dozens of restrictions imposed on Wall Street after the financial crisis.
The 220-page report written by the Treasury Department lays out a series of recommendations for the Securities and Exchange Commission and the Commodity Futures Trading Commission. Rather than making specific demands, the document is intended to be a road map for the agencies to streamline regulations affecting the largest banks, hedge funds and exchanges.
While some of the changes would require congressional action, most could be accomplished by re-writing regulations. The markets review was spurred by President Donald Trump’s February executive order calling for a broad rethink of financial regulations. Treasury issued a separate report on bank oversight reforms in June, and another on asset managers is set to be released in the coming days.
“The review has identified a wide range of measures that could promote economic growth and vibrant financial markets,” the report said.
Opposition Anticipated
A number of the suggestions in the markets study have long been backed by industry, and groups like the U.S. Chamber of Commerce were quick to praise them. Meanwhile, Democratic lawmakers and investor advocates are expected to oppose many of the recommendations. They’ve been critical of the Republican administration’s attempts to cut Wall Street regulations, especially those enacted in response to the financial crisis.
The administration’s wish list isn’t likely to be granted any time soon. The regulatory process is notoriously slow and neither the SEC nor the CFTC have a full compliment of commissioners.
Treasury’s recommendations included proposed adjustments to rules stemming from two laws that tightened capital markets oversight, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010. Two Trump appointees, SEC Chairman Jay Clayton and CFTC Chairman Chris Giancarlo, will be charged with carrying out many of the proposals.
Both agencies saw their oversight roles expanded by Dodd-Frank, with the CFTC being given responsibility for policing the massive over-the-counter derivatives market. The two chairmen appointed by Trump are aligned with the administration’s goal of dialing back some of those rules.
Clayton told lawmakers in March that he thought Dodd-Frank regulations should be reviewed to determine “whether they are achieving their objectives effectively.” And he has repeatedly said that he wants to stem a two-decade decline in the number of publicly traded U.S. companies -- a subject the Treasury report will address. Giancarlo reached out to the derivatives industry earlier this year for suggestions on how the CFTC could simplify and modernize agency rules that he said can be “unnecessarily complex.”
In particular, the Treasury recommended that the CFTC and SEC work better together, especially in monitoring derivatives markets. The report echoed calls by Giancarlo for a loosening of restrictions around the execution of swaps trades. It also backed an effort by Giancarlo to harmonize swaps data reporting.
“We are pleased to see our perspective incorporated in the final product,” Giancarlo said in a statement.
Craig Phillips, a former BlackRock Inc. executive who was major fundraiser for Hillary Clinton’s presidential campaign, has been leading the Treasury’s regulatory review. He is now a senior adviser to Secretary Steven Mnuchin.