INSIGHT Magazine - Summer 2012 - Business Solutions Special Issue

Exploring the issues that shape today’s financial world g icpas.org/insight.htm

Summer2012

THE MAGAZINE OF THE

2012 BUSINESS

SOLUTIONS special issue

The right SOLUTION is worththe wait

Register Today for the Midwest Accounting & Finance Showcase, August 28-29

© 2012 Robert Half. An Equal Opportunity Employer. 0806-0005

Your complete

Robert Half will help you find the optimal balance of temporary, project consulting

and full-time financial resources to improve productivity and profitability within your

organization. As the world’s leader in specialized financial consulting and staffing

services for more than 60 years, only Robert Half offers you this complete solution.

Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources are the leaders in specialized financial and accounting staffing for temporary, full-time

and project placement, respectively.

T E M P O R A R Y / P R O J E C T / F U L L - T I M E

1.800.803.8367 accountemps.com

1.800.474.4253 roberthalf.com

1.888.400.7474 roberthalfmr.com

Chicago • Gurnee • Hoffman Estates • Naperville Northbrook • Oakbrook Terrace • Rosemont • Tinley Park

© 2012 Robert Half. An Equal Opportunity Employer. 0806-0005

Your complete

Robert Half will help you find the optimal balance of temporary, project consulting

and full-time financial resources to improve productivity and profitability within your

organization. As the world’s leader in specialized financial consulting and staffing

services for more than 60 years, only Robert Half offers you this complete solution.

Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources are the leaders in specialized financial and accounting staffing for temporary, full-time

and project placement, respectively.

T E M P O R A R Y / P R O J E C T / F U L L - T I M E

1.800.803.8367 accountemps.com

1.800.474.4253 roberthalf.com

1.888.400.7474 roberthalfmr.com

Chicago • Gurnee • Hoffman Estates • Naperville Northbrook • Oakbrook Terrace • Rosemont • Tinley Park

1. Alliant new and used vehicle rates as of 06/01/2012. Loan approval, APR and downpayment required based on payment method, creditworthiness, collateral and ability to repay. Rates include automatic payment option. Rates are 0.4%higher without automatic payment. Rates, terms and conditions are subject to change. Add 1% for over 72 month term. For pre-existing Alliant vehicles loans, members will have 1% APR added to their qualifying rate for refinancing. APR=AnnualPercentage Rate. You must be or become a member of Alliant Credit Union to apply. Applicant must meet eligibility requirements for Alliant membership.

2. Comparison of Alliant’s new and used auto loan rates as low as 1.99% APR as of 06/01/2012 vs. Illinois bank average 72 month new auto loan rate of 4.94% APR and 60 month used auto loan rate of 4.95% APR as of 06/01/2012. Illinois bank average rates are sourced from National Association of Federal Credit Unions in cooperation with Datatrac Corp. as of 06/01/2012.

Payment Example: Financing $20,000 for a loan period of 72 months and an APR of 1.99% APR (new) would result in 72 monthly payments of $14.75 per $1,000. Financing $20,000 for a loan period of 60 months and an APR of 1.99% APR (used)would result in 60 monthly payments of $17.53 per $1,000.

Looking to lower your car payment?

Look to Alliant.

Whether New or UsedOur rate is as low as

©2012 Alliant Credit Union. All Rights Reserved. SEG598-R06/12

Your Illinois CPA Society membership provides accessto some great benefits including the great rates onsavings and loans for cars, homes, education andmore from Alliant Credit Union. Lower your monthlycar payment today...

• Visit www.alliantcreditunion.org/ilcpa • Call 800-328-1935, press option “5” for loans

1.99APR1%

That’s up to 60% lower than Illinois bank rates!2

index SUMMER 2012 | www.icpas.org/insight.htm

the regulars

34 The Big PictureFive trends impacting the business landscape—and why they matter to you.

38 Rapid RecoveryProtect your data, save your business.

42 The Nimble NonprofitIn addition to the age-old challenges nonprofits face on a daily basis, today’s organizations have to show agility in navigating the twists and turns of a rapidly evolving business landscape.

6 Chair’s MessageIncoming Chair James P. Jones, CPA talks about his goals for the year ahead.

12 Tax Decoded In the ZoneNew legislation will amend and continue the ever popular Illinois Enterprise Zone initiative.

14 Forensics Insider The Public TrustWhat happens when public cash becomes private gain?

16 Retirement Advisor All Together NowA strategic alliance will introduce your clients to a whole new world of personal financial planning.

18 Capitol Report Rendezvous with RealityA recap of the spring legislative session, and an update on what we’ve been doing for Illinois CPAs.

20 Workforce Rise of the Free AgentWhy contingent employees might make business sense.

22 M&A Worst-Case Survival GuideImagine the worst to plan for the best merger or acquisition.

24 Innovation Cogs in the MachineWhat the America Invents Act means to the tax and accounting world.

28 Marketing Like Me!Social media has put a whole new spin on how you market your business.

30 Startups Smart FundingLean times call for creative ways to find your startup money.

32 Bottom Line Healthcare RisingWhat’s a small business to do about escalating healthcare costs?

departments

columns

features

Business Solutions Special Issue

2 INSIGHT icpas.org/insight.htm

4 First Word

8 Seen & Heard

46 Advertiser Index

48 Volunteer News

The turbulent economy continues to hit home for businesses and professionals in the Chicago area. But, as the local experts in financial recruiting and staffing, we can help you get ahead no matter which way the winds are blowing.

Our intimate understanding of the local job market, salary trends and business climate helps us con-nect great talent to great companies better than anyone else in Chicagoland. To find out more, visit us online or call your local office.

Having trouble staying on course in the windy city? We can help.

Chicago Schaumburg Oakbrook Terrace 312.583.9264 847.397.9700 630.792.1660

WWW.GARELLIWONG.COM WWW.JACKSONWABASH.COM


FIRST WORDA MESSAGE FROM THE ILLINOIS CPA SOCIETY PRESIDENT & CEO

Backyard barbecues, golf outings, farmers markets and familygetaways. Yes, summer is finally here. I hope you’re takingsome time to kick back—perhaps you’re even reading thisissue poolside. This being our Business Solutions SpecialIssue, the following pages offer up some great tips and toolsfor just about anything and everything to help you find theright solutions for your business, no matter how large or small.

A new project we’ve been working on that I hope will be ago-to solution for you is our online learning management sys-tem, knowledgehub [www.icpas.org/knowledgehub.aspx].

We’re concerned that professional education and training gets lost in the rush of today’sall-too-common 24/7 workweek. Knowledgehub Learning Management System utilizesnew technology to bring you over 1,500 programs from an array of CPE providers in avariety of formats to best suit your needs, including live programs, webinars, and CPEonDemand. You can even track compliance and create customized learning paths.

This summer, we’re also beginning to take an aggressive look at the needs of our Indus-try & Business members. A newly formed Industry & Business Advisory Task Force willtackle the issues coming straight from you, our members on the front lines. We’re excitedto have our new Board Chair, industry insider Jim Jones, COO & CFO of Edward Don &Company, involved with this initiative. Jim’s message on page 6 offers some insight intowhat’s in store for this group in the coming months. As we emerge from the economicrecession, our goal is to understand the challenges you’re facing and learn how we canhelp you overcome them. Please email us at [email protected] to share your specific ideasor suggestions for this Advisory Task Force to tackle.

Speaking of sharing, I encourage you to become active on our LinkedIn, Twitter,Facebook and YouTube pages. We’re making a concerted effort to share more informa-tion via these channels and are excited by the ideas and discussions exchangedbetween members. It’s clear that social media is no longer just a craze. With that inmind, I hope you’ll read the article on page 28, featuring best practices for social mediaand how to use it effectively to promote your business.

Although it seems like there isn’t really a slow season anymore, I do hope that sum-mer offers you an opportunity to escape the ever-increasing pace of the accounting andfinance world, if only for a few hours. Have a hot dog, stroll an art fair, doze off in thefamily hammock, and have a great summer.

Bring on the Summer

INSIGHT MAGAZINE

Publisher/ICPAS President & CEO Elaine Weiss

Editor-in-Chief/Director of Publications Judy Giannetto

Creative Services Director Gene Levitan

Creative Services Manager Rosa Garcia

Publications Specialist Derrick Lilly

National Sales & Advertising Natalie Matter DeSotoYGS Group, 3650 West Market Street, York, PA 17404 P: 800.501.9571 x127 F: 717.825.2171 E: [email protected]

Circulation/Member Services Director Carl Siska

Editorial Offices: 550 W. Jackson Blvd., Suite 900Chicago, IL 60661

ICPAS OFFICERS

Chairperson, James P. Jones, CPAEdward Don & Company

Vice Chairperson, William P. Graf, CPADeloitte & Touche LLP

Secretary, Edward J. Hannon, CPA, JD Freeborn & Peters LLP

Treasurer, Daniel F. Rahill, CPA, JDKPMG LLP

Immediate Past Chairperson, Robert E. Cameron, CPACameron, Smith & Company, PC

ICPAS BOARD OF DIRECTORS

Linda S. Abernethy, CPA, McGladrey LLP

Rose G. Doherty CPA, Legacy Professionals LLP

John A. Hepp, PhD, CPA, Grant Thornton LLP

Margaret M. Hunn, CPA, CFE, CFF, CITP,Rozovics & Wojcicki

Geralyn R. Hurd, CPA, Crowe Horwath LLP

Paul V. Inserra, CPA, McClure, Inserra & Co., Chtd.

Leif J. Jensen, CPA, Leif Jensen & Associates Ltd.

Kathleen M. Kedrowski, CPA, Retired, Navigant Consulting

Michael J. Maffei, CPA, GATX Corporation

Marcus D. Odom, PhD, CPA (inactive), SouthernIllinois University

Floyd D. Perkins, CPA, Ungaretti & Harris

J. Bradley Sargent, CPA/CFF, CFE, CFS, Cr.FA,Sargent Consulting Group LLC

Marcus F. Schultz, CPA, Dugan & Lopatka CPAs PC

Thomas L. Zeller, PhD, CPA, Loyola University Chicago

INSIGHT is the official magazine of the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA. Its purpose is to serve as the primary news and information vehicle for some 23,000 CPA members and professionalaffiliates. Statements or articles of opinion appearing in INSIGHT are not necessarily the views of the Illinois CPA Society. The materials and information contained within INSIGHT are offered as information only and not as practice,financial, accounting, legal or other professional advice. Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication. It is INSIGHT’s policy notto knowingly accept advertising that discriminates on the basis of race, religion, sex, age or origin. The Illinois CPA Society reserves the right to reject paid advertising that does not meet INSIGHT’s qualifications or that may detractfrom its professional and ethical standards. The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within INSIGHT, and makes no representation orwarranties about the products or services they may provide or their accuracy or claims. The Illinois CPA Society does not guarantee delivery dates for INSIGHT. The Society disclaims all warranties, express or implied, and assumesno responsibility whatsoever for damages incurred as a result of delays in delivering INSIGHT. INSIGHT (ISSN-1053-8542) is published four times a year, in Spring, Summer, Fall, Winter, by the Illinois CPA Society, 550 W. Jackson,Suite 900, Chicago, IL 60661, USA, 312.993.0393 or 800.993.0393, fax: 312.993.0307. Subscription rates for non-members: $20 US, $28 Canada, $30 Mexico and $40 for international addresses. Copyright © 2012. No partof the contents may be reproduced by any means without the written consent of INSIGHT. Permission requests may be sent to: Publications Specialist, at the address above. Periodicals postage paid at Chicago, IL and at additionalmailing offices. POSTMASTER: Send address changes to: INSIGHT, Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA.

P.S. As the reporting year draws to a close, don’t forget to mark your calendar for the

2012 Midwest Accounting & Finance Showcase on August 28 and 29 in Rosemont. Find

more details at www.icpas.org/show.

Go with the biggest in the industry. Our biggest concern is you. Our broker’s wealth of experience culminates to make sure your comfort level is met, your questions are answered and everything is being done to sell your firm.

We are North America’s leader in marketing accounting and tax practices because we understand the value of your firm, know how to market it and have hundreds of buyers in your area who want a practice.

We’ll be at the Midwest Accounting and Finance Showcase on August 28th and 29th in Rosemont, IL. Stop by and visit our booth or call in advance to schedule a confidential appointment. Give us a call today so that we may go to work for you and produce the results you desire.

We Go To Work For You.

The Holmes Group

1-800-397-0249www.AccountingPracticeSales.comtrent@accountingpracticesales.com

the value of your firm, know how to market it and have hundreds of buyers in your area who want We are North America’s leader in marketing accounting and tax practices because we understand

comfort level is met, your questions are answered and everything is being done to sell your firm.Our biggest concern is you. Our broker’s wealth of experience culminates to make sure your Go with the biggest in the industry.






comfort level is met, your questions are answered and everything is being done to sell your firm.Our biggest concern is you. Our broker’s wealth of experience culminates to make sure your


comfort level is met, your questions are answered and everything is being done to sell your firm.Our biggest concern is you. Our broker’s wealth of experience culminates to make sure your

Give us a call today so that we may

IL. Stop by and visit our booth or call in advance to schedule a confidential appointment.the Midwest Accounting and Finance at We’ll be

a practice.the value of your firm, know how to market it and have hundreds of buyers in your area who want

go to work for youGive us a call today so that we may

IL. Stop by and visit our booth or call in advance to schedule a confidential appointment.the Midwest Accounting and Finance

the value of your firm, know how to market it and have hundreds of buyers in your area who want

and produce the results you desire.go to work for you

IL. Stop by and visit our booth or call in advance to schedule a confidential appointment.on August 28th and 29th Showcase the Midwest Accounting and Finance


and produce the results you desire.

IL. Stop by and visit our booth or call in advance to schedule a confidential appointment.on August 28th and 29th


and produce the results you desire.

IL. Stop by and visit our booth or call in advance to schedule a confidential appointment.Rosemont, in on August 28th and 29th


[email protected]

1-800-397-0249The Holmes Group

[email protected]

1-800-397-0249The Holmes Group


CHAIR’S MESSAGE2012-2013 ICPAS CHAIR JAMES P. JONES, CPA

I am grateful for having the privilege to serve as the Chair of the Illinois CPA Society for theupcoming year. While I’ve worked in public accounting for several years, the majority of mytime has been in Industry & Business as a Chief Financial Officer with both public and pri-vate companies, large and small, and I hope to use those experiences to enhance your expe-rience as a CPA and a member of the Society.

The CPA credential is something special. Many of us came into this career as the first inour families to attend college or receive a professional designation. Our immigrant parentscame from humble beginnings, and the CPA credential was the entry to “a better life.”Times were obviously different as we worked our way through school, crammed life inwhen possible, and finally sat for nearly three days at McCormick Place taking “TheExam.” Looking back, I wouldn’t change a thing.

Flash forward to today and it’s a simple fact that technology continually enables moreactivity, more communication, more data and more options for doing almost anythingfrom anywhere. “I’ll be working remotely today” or “I am off the grid for a couple of hours”are daily phrases we all hear. Between our BlackBerry and iPhone, we are always on andalways available. The pace of change is staggering.

What has not changed is the esteem that our credential conveys. We are trusted advi-sors. Whether you work from the audit in or the business out, whether you prepare thereturn or handle the multiple assignments that often come our way, we are the ones thatinterpret the ever-increasing data, strip out the noise and find the relevant facts that drivethe next decision. What our credential implies is that we can make sense of the tornadoof data, apply complex rules and concepts, put results into a logical format and, maybemost importantly, convey the message in a straightforward way. This is what we do.

You may ask, “Why is an Industry & Business person chairing the Illinois CPA Society?” We have 24,000 members in our Society made up of CPAs looking at the profession

from many perspectives. I am one of the 6,800 members who work in Industry & Business.It is our hope that we can channel the Society leadership’s diverse expertise to reach outand engage all of our member groups with relevant actions. Whether it’s the right training,the right introduction or the right answer to a question, we want to be at the top of ourCPA members’ short list for information and help.

Over the next year, in addition to pushing the Society up on our members’ speed dial,we would like to enhance the value of the ICPAS membership to every member segment,with a special emphasis on our young professionals. When harnessed, the energy andenthusiasm of this rising generation could light up a city.

As with many of you, the desire to “give back” to a profession that has been so person-ally rewarding triggered my involvement with the Society and in my community. For me,future CPAs—the students, whether high school or college—hooked me on sharing whatthis great profession and credential have to offer.

As with any profession, it takes experience and training to keep your edge. Commitmentis key. I am all in.

About James P. Jones, CPAExecutive VP, CFO & COOEdward Don & Company, North Riverside, Illinois

ICPAS ServiceMember since 1979

ICPAS Board ServiceVice Chair (2011-2012)Treasurer (2010-2011) Director (2006-2010)

Current ICPAS CommitteesAICPA/ICPAS Collaboration Task Force(2012-13), Executive Committee (2010-13), Illinois CPAs for Political Action (Ex-Officio 2012-13), Industry & BusinessAdvisory Task Force (2012-13), LifetimeAchievement Award Task Force (2011-13),Nomination Committee (Ex-Officio 2012-13), Regulation & Legislation Committee (Ex-Officio 2012-13).

Former Committee ServiceAMS Advisory Task Force (2011-12), Audit (Ex-Officio 2010-11), CCFL Advisory Group (2007-08), ChicagoDowntown Forum Group (1997-98), Finance Committee (2008-11, Chair), Finance & Treasury Management (2010-11, Chair 2011-12), Future of theShow Task Force (2008-09), Industry &Business Advisory (2008-10, Chair), Industry & Business Education Events(1989-90), Strategic Issues Task Force(2006-07), Strategic Planning (2007-12),Student Outreach Task Force (2006-09),Young Professionals Conference Advisor.

Professional & Community ServiceBoard of Directors, Edward Don & Company; Member, AICPA; Member, Financial Executive Institute; Treasurer,Adam Don Foundation; Member, DePaul University Alumni Programs.

Plans for the Year Ahead

Unlimite

d CPE

OnDeman

d

Ethics c

ourse

Live CP

E Webca

sts -

Up to 32

live cr

edits

Self-stud

y/and

group-st

udy

Formats

include

online, v

ideo, au

dio,

CD-ROM and

textbook

s

MAKE YOUR CPE WISH LIST A REALITYOur One-Stop CPEasy Shop Has You Covered!

Choose from Group-Study, Self-Study, Online, Live and More!Stop wasting time and money with multiple CPE sources. Your search for convenience and value is over – CPEasy has an unmatched selection of review materials in all formats, for all states. Get hundreds of credits from one convenient source.

with online format

Try a FREE Course Online and Experience the Difference With CPEasy!

Call 800-404-7439Visit CPEasy.com/InsightOneStop

TRY A FREE COURSE ONLINE!

®2010 Bisk Education, Inc. All rights reserved. SC: 195650ZBT1 | MCID: 10952


SEEN HEARDNEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS

&Key Leadership Roles Are Hard to FillDespite having a vast pool of candidates for the choosing thanks to continued highunemployment, 90 percent of US employers in a recent Right Management[www.right.com] survey of more than 600 firms say they’re still finding it difficult to fillkey positions. Twenty-seven percent of respondents reported often having difficulty fill-ing certain jobs, while 61 percent indicated they occasionally have difficulty. What’smore, with workforces running lean, doubts about management succession pipelinesare surfacing. Of 631 senior executives surveyed, only 4 percent said they have an“ample leadership pipeline that will cover most of our needs.”

FEATURED APP: Bloomberg BNA’s Payroll Reference RulerDo you need a fast and free way to search for federal and state minimum wagewithholding rates? Try Bloomberg BNA’s new Payroll Reference Ruler app forthe iPad, iPhone and iPod Touch.With just a few clicks users gain access to minimum wage rates, unemploymentwage bases, supplemental withholding rates, and annual reconciliation datesfor the federal government, all 50 states, DC and Puerto Rico. What’s more, this easy-to-use app includes Federal Basic Deferral Limits, Com-pensation Limits, Standard Mileage Rates, Individual Tax Rate Schedules, Trans-portation Benefits Limits, Automobile Valuations, and Federal Contacts forIRS/Treasury, SSA, DOL, CSE, and Citizen & Immigration.For more information, visit www.bna.com/payroll-reference-app.

Inspire Your Team to InnovateAccording to 35 percent of US CFOs interviewed for arecent Robert Half Finance [www.roberthalffinance.com]survey, a lack of new ideas is the greatest barrier togaining a competitive edge. To get your team inspired, Robert Half offers these tips:1. Engage the entire team. Empower all employeesto easily share solutions for improving the business.2. Cut the red tape. It’s frustrating to have to wait forideas to be approved and implemented.3. Keep it collaborative. Too much competition caninspire fear of idea stealing or ridicule. 4. Build a better brainstorm. Rein in the naysayerswho always say proposals won’t work.5. Take things easy. Relaxed, positive employees arebetter able to generate innovative concepts.

HOW TO:

39% Percent of US CEOs intending to pursue a cross-border

M&A in the next 12 months. SOURCE: PwC 2012 US CEO Survey.

Three Reasons to Love Your iPadThe iPad is an invaluable business tool once you realize it’s not a replacement for yourlaptop. It’s fast and portable, and has plenty of battery life to keep you running over-time. Here’s a few ways you can use an iPad as a complement to your existing tools.Go Paperless. Need notes? Leave the legal pad at your desk. With free iPad appssuch as Evernote, you can take, organize and synchronize your notes to the cloud,making them accessible on virtually any Internet-accessible device. And, thanks to sev-eral other apps, you also can create, edit, review, save and send PDFs from your iPad.Remote In. Working on the go is increasingly important to today’s accounting pros,making the ability to access files and systems from any location critical. Enter the iPad.With an Internet connection and one of many remote desktop apps, you can accessand run your other home or office systems remotely.See double. Wish you had another screen to spread those documents or programsacross? With a dual-display app and a wireless network, you can extend or clone yourdesktop or laptop display right on your iPad.Source: CPA Practice Advisor [www.cpapracticeadvisor.com].


SEEN & HEARD

$26 billionDollars identity thieves could receive

through fraudulent tax returns

over the next five years.

Source: Treasury Inspector General J. Russell George.

TRENDWATCH:Tax Accountants Lagging on Clean Energy FrontA survey conducted by Bloomberg BNA in consultation with Bloomberg NewEnergy Finance reveals that tax professionals are generally unfamiliar withthe various tax incentives available to private investors in clean energy proj-ects. This comes at a time when the US clean energy sector is seeking to attract new private investment in the form of tax equity. In fact, 65 percentof respondents said they were mostly or completely unfamiliar with the Pro-duction Tax Credit available to US wind project backers.

When asked why they or their clients had not made a clean energy tax equityinvestment, the majority answered that it was either not a strategic fit withthe company’s business or that they believed there were better returns avail-able elsewhere. Twenty-one percent responded that they did not make theinvestment because they were unaware of a tax equity option.Detailed results are available at www.bna.com.

New NFP Audit/Accounting Guide ComingSet for comment release in late summer 2012, the newAudit & Accounting Guide, Not-for-Profit Entities focuseson uniform reporting practices, and is a joint effort of theFinancial Reporting Executive Committee, the Not-for-Profit Entities Expert Panel and the Not-for-Profit GuideTask Force of the AICPA. Key updates include new sectionson reporting and measuring non-cash gifts; a new chapteron program-related investments and microfinance loans;an expanded section on municipal bond debt; new guid-ance for reporting the expiration of donor-imposed restric-tions; and more. Visit www.cpa2biz.com for information.

Cybersecurity Tops CAE ConcernsFifty-six percent of Chief Audit Executives (CAEs) in a recent Grant Thornton LLP survey stated that their organ-izations had up to 10 cybersecurity incidents in the lastyear. A further 31 percent couldn’t actually identify a pre-cise number of incidents. In terms of concerns, 81 percentof CAEs say they are most worried about the privacy ofemployee and customer data, while 63 percent are con-cerned about mobile computing, and 55 percent haveissues with cloud or Internet-based solutions. What’smore, while 42 percent of CAEs see the greatest cyber-security threats coming from hackers, a surprising 38 per-cent view employees as the biggest threat.Visit www.GrantThornton.com/CAESurvey for more.

Your Client’s Business Life Cycle

Established EntrepreneursThe Paychex HR Solutions team provides one-on-one, onsite assistance throughout your client’s employee lifecycle including time and labor management, expense tracking, employee online self-service, COBRA administration, and applicant management.

Call 877.534.4198. Or, visit cpa.com/Paychex

Explore how a partnership with Paychex can enhance your client relationships...

with consultative solutions throughout the client life cycle.

Client Growing Pains As your client grows, a competitive benefits package is essential to attracting and retaining necessary talent. Paychex offers integrated solutions for retirement plans and pre-tax benefits that work in concert with payroll.

New Business FormationPaychex can provide help with federal/state applications and new hire forms. Other than payroll, services include consultations on business and health insurance, workers’ compensation, employee handbooks and more.

Download the New Paychex Online Mobile app for Apple® iPad® and Android™ powered tablets and smartphones. Use the QR code to download the app from your device.

Ex e how a partnership with Paychexplor

e how a partnership with Paychex




Ex e how a partnership with Paychexplorcan enhance your client r

with consul

blished EntrepreneursEstaThe Paychex HR Solutions team pr

e how a partnership with Paychexcan enhance your client r

with consultative solutions thr

blished Entrepreneursovides one-on-one, onsite assistance The Paychex HR Solutions team pr

e how a partnership with Paychexelationships...can enhance your client r

oughout the client life cycle.tative solutions thr

ovides one-on-one, onsite assistance

e how a partnership with Paychexelationships...

oughout the client life cycle.


Client Growing Pains As your client gris essential to attracting and rPaychex of

The Paychex HR Solutions team proughout your client’thr

management, expense tracking, employee online self-service, COBRA administration, and applicant management.

Client Growing Pains ows, a competitive benefits package As your client gr

etaining necessary talent. is essential to attracting and rfers integrated solutions for rPaychex ofPaychex offers integrated solutions for r

ovides one-on-one, onsite assistance The Paychex HR Solutions team prs employee lifecycle including time and labor oughout your client’

management, expense tracking, employee online self-service, COBRA administration, and applicant management.

ows, a competitive benefits package etaining necessary talent.

ement plans etirfers integrated solutions for r

ovides one-on-one, onsite assistance s employee lifecycle including time and labor

management, expense tracking, employee online self-service, COBRA

Paychex ofand pr

New Business Formaovide help with federal/Paychex can pr

state applications and new hiroll, services include consultations than payr

on business and health insurance, workers’ compensation, employee handbooks and mor

fers integrated solutions for re-tax benefits that work in concert with payrand pr

tionNew Business Formaovide help with federal/

e forms. Other state applications and new hiroll, services include consultations

on business and health insurance, workers’ compensation, employee handbooks and mor

ement plans oll. e-tax benefits that work in concert with payr

e. compensation, employee handbooks and mor

compensation, employee handbooks and mor

Download the New Paychex Online Mobile

compensation, employee handbooks and mor

Download the New Paychex Online Mobile app for Appletablets and smartphones. Use the QR code to download the app fr

Call 877.534.4198. Or

, visit cpa.com/Paychex Call 877.534.4198. Or Call 877.534.4198. Or, visit cpa.com/Paychex

, visit cpa.com/Paychex


tax incentives, each of which has detailedrequirements. Businesses claiming exemp-tions are subject to Illinois Department ofRevenue (IDOR) audit.

Illinois income tax incentives include aninvestment tax credit, a jobs tax credit, adividend income deduction and an interestincome deduction for financial institutions.Sales tax exemptions include a limited ma-chinery and equipment exemption, a pollu-tion control facilities exemption and abuilding materials exemption. The PublicUtilities Act contains an Enterprise Zoneutility tax exemption, and the Telecommu-nications Ex-cise Tax contains an exemptionon originating calls.

The exemption for sales and use taxes onpurchased building materials is the exemp-tion retailers most commonly encounter. Inmy experience, it’s also the exemption mostoften at issue during an IDOR audit.

A qualified exempt sale is defined as a saleof building materials to be used for real estatewithin an Enterprise Zone. A key element ofthe exemption is that the sale must involveitems that qualify as “building materials.” Forexample, lumber and nails and built-in dish-washers are building materials, while refrig-erators and tools used by contractors are not.Another key element is that there must be avalid certificate of eligibility issued by thezone administrator. Certificates of eligibilityare valid for a set period of time. IDOR audi-tors will verify that a certificate of eligibilitywas valid at the time of the purchase, and ifnot, then the sale is taxable.

The Act currently provides that the maxi-mum life of an Enterprise Zone is 30 years.As a result, a number of existing EnterpriseZones will reach the end of their statutorylife over the next few years. Senate Bill 3616(“SB 3616”) was passed by the House andSenate on May 31, 2012 to address theupcoming Enterprise Zone expirations, andto modify the Act in other respects. As of the

Keith is a senior manager of GrantThornton’s State & Local Tax practice,based in Chicago. Previously, he heldthe position of general counsel of theIllinois Department of Revenue, wherehe developed tax policy, evaluatedand reviewed tax-related legislation,and oversaw tax-related litigation.

TAX DECODED

In the ZoneNew legislation will amend and continue the ever popular Illinois Enterprise Zone initiative.

By Keith Staats, JD

The Illinois Enterprise Zone program isone of the state’s most well-known eco-nomic development tools. The Illinois Enter-prise Zone Act became law in 1982, andprovides for the establishment of geo-graphic areas, known as “Enterprise Zones,”administered by counties or municipalities.These zones are distinct contiguous geo-graphic areas of the state, and must be clas-sified as “depressed.” The purpose of theAct is to stimulate growth at the local level,primarily through tax credits and incentivesfor businesses that operate within the zones.

There are currently 96 Enterprise Zones—the maximum number allowable under theAct. The allowable size of these zones is setby law, with a minimum of one-half squaremile and a maximum of no more than 12square miles. Generally, Enterprise Zonesmust be entirely within a municipality orwithin the unincorporated areas of a county.

To qualify for Enterprise Zone designation,a proposed zone was required to meet one ofsix tests. Specifically, it had to show, n Unemployment at 120 percent of thestate’s annual average.

n A poverty rate of at least 20 percent.n 70 percent of households meeting thelow-income definition.

n A documented decrease in populationof 20 percent or more from 2000-2010.

n Evidence of job creation, or n Evidence of closed military bases. Applications for Enterprise Zone designa-

tion, as well as application approvals, areadministered by the Illinois Department ofCommerce and Economic Opportunity(DCEO). The Act allows existing EnterpriseZones to be amended (for example toincrease the boundaries of any zone that isbelow the statutory geographic maximumsize), with all amendments administeredand approved by the DCEO.

Businesses located within EnterpriseZones have been eligible for a number of

date of this column, SB 3616 is on its wayto the Governor.

SB 3616 amends the Act to extend the lifeof existing Enterprise Zones that are cur-rently scheduled to expire by operation oflaw before July 1, 2016. All such EnterpriseZones are extended until July 1, 2016. Italso eliminates the Enterprise Zone incometax jobs tax credit, the Enterprise Zone div-idend deduction and the Enterprise Zoneinterest income deduction for financialinstitutions. In addition, SB 3616 changesthe sales tax building materials exemption.

Existing Enterprise Zones must reapply fordesignation in order to keep Enterprise Zonestatus after the scheduled date of zone expi-ration. Representatives of proposed newEnterprise Zones also may apply for desig-nation to replace expiring zones. The pro-posed new zones don’t have to be locatedin the same geographic area as those thatare expiring.

SB 3616 requires the DCEO to developan Enterprise Zone application process byMarch 13, 2013. Applications the DCEOreceives will be submitted to a new Enter-prise Zone Board for review. The five-per-son board consists of the DCEO Director,the Director of Revenue, and three mem-bers appointed by the Governor.

Newly designated Enterprise Zones willbe effective for 15 years, will be reviewedafter 13 years, and can be extended for anadditional 10 years for a total of 25 years.

SB 3616 sets down detailed eligibility cri-teria for Enterprise Zone designation. Specif-ically, applicants must meet three or more ofthese 10 criteria:n All or part of the local labor market hashad an annual average unemploymentrate of at least 120 percent of the state’sannual average.

n The designation will result in creatingor retaining a minimum of 1,000 jobsdue to an investment of $100,000,000or more.

n All or part of the local labor market hasa poverty rate of at least 20 percent, or50 percent or more of the children par-ticipate in the federal free lunch pro-gram, or 20 percent or more of thehouseholds receive food stamps.

n An abandoned coal mine or brown-field is in the proposed zone, or all ora portion of the zone was declared afederal disaster area in the 3 years pre-ceding the application.

n The local labor market area containslarge employers that have downsized

over the years, or there have been plantclosures, or state or federal facility clo-sures in the 5 years prior, affectingmore than 50 workers.

n The local labor market contains a high-floor vacancy rate of industrial or com-mercial properties, or vacant or demol-ished commercial and industrial struc-tures are prevalent, or industrial struc-tures in the local labor market are notused because of age, deterioration,relocation of former occupants or ces-sation of operation.

n The applicant demonstrates a substan-tial plan for using the designation toimprove the state and local govern-ment tax base.

n Significant public infrastructure is pres-ent in the local labor market area inaddition to a plan for infrastructuredevelopment and improvement.

n High schools and community collegeslocated within the proposed zone areengaged in certain specified trainingthat prepares students for careers.

n The change in equalized assessed valu-ation of industrial and/or commercialproperties in the 5 years prior is equal toor less than 50 percent of the state aver-age change in law for the same period.

SB 3616 will require businesses receivingEnterprise Zone tax incentives to compiledetailed reports of the benefits received to besubmitted to the IDOR no later than March30. Employers must report job creation,retention and capital investment numberswithin the zone annually to be submitted tothe zone administrator. The zone administra-tor will compile the information into a reportto the IDOR, and the IDOR then will com-pile the data into a report to the DCEO.

What’s more, SB 3616 modifies the Enter-prise Zone building materials exemption.Effective July 1, 2013, retailers will be requir-ed to document the exemption by obtaininga certification from the purchaser. The certi-fication must contain the Enterprise Zonebuilding materials exemption certificationnumber issued by the IDOR.

SB 3616 passed the House and the Senatelate on May 31, 2012, and next will go to theGovernor. As of our publication date, Ihaven’t heard any indication that the Gover-nor will not sign the legislation as passed.

icpas.org/insight.htm | SUMMER 2012 13

Accounting andFinancial Reporting

Updates from the SEC,FASB, IASB and PCAOB

A unique opportunity tointeract with an all-star

line up of the “who’s who” in financial reporting – all inone information-packed day.

$335 M / $420 non-members8 CPE Credits (7 CLE Credits Pending)

Vist www.CCFLinfo.org formore information.

09.28.12Donald E. Stephens Convention

Center, Rosemont, IL


executive makes an $80,000 annual salary.The same employee has financial controlover and access to $8 million to $9 millionin annual spending. Due to the length ofhis service with the company and apparentcompetencies, this employee operates withlittle or no supervision.

This is a recipe for disaster. Could thistrusted public servant possibly create a seriesof bogus invoices and transfer over $50 mil-lion to personal accounts? It can happen.

Consider another set of numbers—a mun-icipality of 100,000 citizens with a policeretirement fund worth over $100 million inplan assets. This type of pension fund is typ-ically managed by appointed boards thatemploy fiduciaries to manage the assets, con-duct due diligence and generate income. Theprocess may involve the board as an over-sight body, the fiduciary as a trusted advisorand the fund recipients (portfolio companies)themselves. At any point in this chain, a linkcan be broken and corrupted, leading to mil-lions of dollars in bad investments, bogusmanagement fees and the dissipation ofretirement dollars.

As states and municipalities work to shoreup their pension funds because of the possi-bility of fraud, more cases of kickbacks, theftand abuse now reach the media spotlight.What makes high-profile fraud so compell-ing, particularly in difficult economic times,is the outrageous self-dealing. Ill-gotten gainsspent on homes, cars, vacations, jewelry anda host of assorted lifestyle items, have a last-ing impact on the public psyche and damagethe image of all public officials.

Hindsight gives the public 20-20 vision,and leads to some hard questions: How doesa $50,000 a year official drive a $150,000car? Or own a $1,000,000 residence? Or a$250,000 vacation home? How is it that noone noticed these obvious discrepanciesbetween income and lifestyle?

The extreme selfishness of these acts fuelspublic angst even further. Taking taxpayer

Brad is the managing member of TheSargent Consulting Group, LLC, whichspecializes in forensic accounting andfinancial investigation. He is a frequentlecturer, and chair emeritus of theAmerican Board of Forensic Account-ing. A member of the Illinois CPA Soci-ety since 2002, Brad also serves on theSociety’s Board of Directors.

FORENSICS INSIDER

The Public TrustWhat happens when public cash becomes private gain?

By Brad Sargent, CPA/CFF, CFE, CFS, Cr.FA, FABFA

On April 30, 1789, George Washing-ton stepped onto the balcony of FederalHall in New York City and took the oath ofoffice of President of the United States.Washington solemnly swore that he wouldfaithfully execute the office and would, tothe best of his ability, preserve, protect anddefend the Constitution of the United States.

You can easily imagine this great man—stately, dignified and beyond reproach—bearing the mantle of public servant andleader. It’s possible that he was the singlemost respected man on the planet at thatvery moment.

While Washington’s presidency was notwithout ethical dilemma (all of the Found-ing Fathers were flawed individuals), couldWashington himself ever have imagined therecent spate of alleged fraud, self-dealing,theft and blatant misuse of public funds bypublic officials?

Fewer and fewer of us participate in theelection process, but those of us who dosubsequently bestow a great deal of trustupon elected officials. Not only do thesepublic servants have access to and controlover public funds, but they also appointother public servants who have access toand control over public funds. Clearly, ourFounding Fathers’ concept of checks andbalances has run amok.

Consider this business model: Employeesare paid below market salaries (when com-pared to similar jobs in the private sector)and have control over vast amounts of thebusiness’ spending. These employees exer-cise their control by managing cash disburse-ments as well as selecting the vendors thebusiness utilizes. Now factor in the currenteconomic conditions, which force this busi-ness to contain costs and reduce its work-force. The business has fewer employeesdoing more work with less oversight. Thisisn’t an uncommon situation these days.

Let’s add a few dollar amounts to high-light the point: A 20-year senior finance

monies when public services are scaled back or eliminated, orstealing from the retirement funds set aside for police personnel orfirefighters (who typically earn less than $50,000 a year and puttheir lives on the line) shows a total lack of regard for the victims.

The stories of such abuses currently circulating will likely growover the coming months, and unless public officials are willing totake proactive measures, this trend may continue for a long time.Due diligence and internal controls are viewed as luxuries in moststate and local governments, so what can be done to help mitigatethis growing crisis?

Implementing a new system of internal controls designed todeter fraud or unethical acts is ideal, but not pragmatic when dol-lars are tight. However, senior officials can take a few simple stepsthat actually do help to deter fraud. For one, when examining thetheft or diversion of cash, bank statements sent directly to a newaddress or individual can stop a fraud scheme in its tracks. In manycases, the simple act of opening the bank statements, which cre-ates the appearance of actually reviewing them, can dissuade atrusted employee from abusing cash accounts. What’s more,review vendor and employee lists. Although this takes time andmust be done by someone high enough up the ladder to have thenecessary insights to identify red flags, it can easily identify shamvendors and ghost employees. Enforced vacation policies, not easywhen understaffed, also can uncover fraud.

The government sector is no different than the private sector;both rely on trust as the key to a successful business relationship.When that trust is broken, the stakeholders pay the price.


A Good Day for Doing GoodBe part of the Illinois CPA Society’s third annual CPA Dayof Service. It’s as easy as 1-2-3:

Choose a community organization or charity to help.

Register your volunteer activity plans atwww.icpas.org/CPADayofService.htm.

Receive a free CPA Day of Service t-shirt (while supplies last, free to ICPAS members).

Volunteer as an individual, or get a group together andvolunteer as a team.

Questions? Please contact Taylor Banisterat [email protected] or 800.993.0407, ext. 231.

CPAs for the Public Interest (CPAsPI), the community service arm of the Illinois CPASociety, links the expertise of CPAs and finance professionals with Illinois not-for-profitorganizations and community needs.

1

2

3

Day of Service

September 21, 2012

Business and Intellectual Property Damages WorkshopBusiness Valuation Certi� cation and Training CenterBusiness Valuation in Litigation WorkshopCase Analysis in Person (CAP)

Comprehensive Certi� ed Business Appraiser (CBA) WorkshopCurrent Update in Valuations (CUV)Intermediate Business Valuation Training CenterValuing Family Limited Partnerships Workshop

Consulting Opportunities in the Accounting ProfessionComing to Chicago—October 29-November 3!

Refer to this ad and

SAVE 10%

Visit www.theCTI.com—Call (800) 677-2009


don’t need to worry about the legal ramifi-cations of making the referral. If you dochoose to accept compensation, you mayneed to become licensed to sell or provideadvice on securities. Plus, you may need topartner with a broker-dealer or investmentadvisory firm to “hold” your securitieslicense. And the firm that pays you must dis-close this practice in some of its own regu-latory filings.

2. Financial Planning Model This model involves providing advice onlyin exchange for a fee paid by the client. Thisadvice may involve writing a financial planand/or making recommendations about fin-ancial planning areas. If this advice hasnothing to do with investing, then you maybe able to avoid any further regulation. It’sa good idea for professional liability pur-poses, however, to offer PFP advisory serv-ices through an affiliated entity outside ofyour CPA practice.

Most commonly, investment advice isoffered as part of overall PFP advisory serv-ices. In this case, you’ll need to establishyourself as a Registered Investment Advisor(RIA). An RIA is subject to the InvestmentAdvisors Act of 1940, among other federallaws, or may be subject to state regulation(which frequently incorporates the 1940 Actand other federal laws in its administration).

RIAs who advise on more than $100 mil-lion of investment assets are subject to SECregistration and federal regulation, while oth-ers are subject to state registration and regu-lation. In either case, RIAs must take and passthe Financial Industry Regulatory Authority

A principal in the financial planningfirm of Reason Financial Advisors,Inc., Mark’s 25-plus years of financeand accounting experience includes13 years in personal financial plan-ning. An ICPAS member since 1982,Mark currently serves in the IA/PFPMember Forum Group and on theStructure & Volunteerism Committee.

RETIREMENT ADVISOR

All Together NowA strategic alliance will introduce your clients to a whole new world of personal financial planning.

By Mark J. Gilbert, CPA/PFS

A re you an independent CPA providingaudit, review, compilation, tax and/or tradi-tional business consulting services? Then,more likely than not, you are your client’smost trusted advisor.

You can, however, do even more for themby adding personal financial planning (PFP)to your list of services.

For some clients, this may not be possi-ble, simply because they are already work-ing with a trusted advisor on PFP and invest-ing matters. Other clients, though, will bereceptive to your proactive offer to helpthem with their personal finances in addi-tion to their tax and/or business accountingneeds. And, by providing PFP services, youare adding another revenue stream to yourpractice—one that isn’t tied to tax andaccounting fees.

I define personal financial planning as theprocess of identifying and prioritizing aclient’s lifestyle and financial goals, anddeveloping and implementing a plan toaccomplish those goals. It involves areassuch as retirement, cash flow, investments,insurance, tax and estate planning.

If you’re interested in working with exist-ing or new clients in some or all of theseareas, recognize that there are multiple waysin which to do it. Some will involve formingstrategic alliances with business partnersusing one of these three models:

1. Referral-only Model The most basic PFP service model is to refera PFP prospect to another financial planner.You will need to decide, however, whetheryou’ll accept compensation for the referral.If you opt for no compensation, then you

“[Y]ou have the luxury of focusing solely on those areasthat appeal to you most, or play best to your professionalstrengths, or result in the largest revenue source.”

(FINRA) Series 65 (Investment Adviser Repre-sentative) securities license exam in order toaccept fees for financial planning advice. Inalmost all cases, it’s a good idea to establish alegal entity for the RIA that is separate fromyour CPA practice.

3. Financial Planning &Investment Model

The most common PFP service mode involvesdelivering PFP advisory services along withimplementing investment advice through in-vestment securities held. Again, consider howyou’ll be compensated. If you choose toaccept fees for investment implementation,you’ll need to establish an RIA entity. If youchoose to collect commissions for investmentsales, you’ll need to establish or affiliate witha broker-dealer firm.

Like an RIA representative, a broker-dealerrep must take and pass relevant FINRA secu-rities licenses exams—Series 6 (mutual funds,variable annuities and in-surance premiums)and/or Series 7 (all securities products exceptcommodities and futures).

From a business perspective, in order toprofitably accept fees, a client must have anaccount of $100,000 or more. Commissionsare appropriate when working with smallerclient accounts. Many financial planners aredually registered as both an RIA and a broker-dealer rep, which gives them the flexibility tocharge either fees or commissions.

Regardless of the business model, it’s pos-sible to outsource or assign just about any andall PFP functions, which means you have theluxury of focusing solely on those areas thatappeal to you most, or play best to your pro-fessional strengths, or result in the largest rev-enue source.

For instance, you can partner with a broker-age firm and have it supervise client invest-ment assets in brokerage accounts. Or youcan partner with a compliance provider toreview your client communications and regu-latory materials. What’s more, you can havean investment manager make daily invest-ment selection decisions, work with anaccount reconciler to develop accurate clientinvestment performance reports, contract acold caller to generate leads and scheduleappointments, and partner with technologyand data managers to maintain client records.

As with all good things, it takes time andeffort to ensure things work seamlessly. But therewards make it all worthwhile.


Food, Networking& Free CPE!

Illinois CPA Society member town hall forums

TO REGISTER for this complimentary program in your area, call 800.993.0393 or visit www.icpas.org

Join us for acomplimentarylunch or breakfastprogram.

Elaine Weiss, ICPASPresident and CEO, and Jim Jones, Chair of theICPAS Board of Directors are traveling across the stateto talk about the impact of current trends on the CPA profession.

This a great opportunity toget out of the office andlook at the big picture --- allwhile enjoying a free meal,networking with colleagues and earning 1 hour of CPE!

FOR ALL PROGRAMS: CPE: 1 Credit Hour Cost: Free

Champaign-Urbana | Sept. 5 | C19943 11:30AM - Networking and Lunch 12:00PM - 1:00PM - Program and Q&A I Hotel and Conference Center 1900 South First Street, Champaign, IL

Springfield | Sept. 6 | C19944 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A President Abraham Lincoln Hotel 701 E. Adams Street, Springfield, IL

Peoria | Sept. 19 | C19945 11:30AM - Networking and Lunch 12:00PM - 1:00PM - Program and Q&A Embassy Suites East Peoria 100 Conference Center Drive East Peoria, IL 61611

Bloomington-Normal | Sept. 20 | C19946 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A Chateau Hotel and Conference Center 1601 Jumer Drive, Bloomington, IL

Rockford | Oct. 16 | C19947 11:30AM - Networking and Lunch 12:00PM - 1:00PM - Program and Q&A Radisson Hotel and Conference Center Rockford 200 S. Bell School Road, Rockford, IL 61108

Oak Brook | Jan. 22 | C19950 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A The DoubleTree Hotel 1909 Spring Road, Oak Brook, IL

Glenview | Jan. 23 | C19951 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A Wyndham Glenview Suites 1400 N. Milwaukee Ave., Glenview, IL

Chicago | Jan. 28 | C19952 8:00AM - Networking and Breakfast 8:30AM - 9:30AM - Program and Q&A The Crowne Plaza Chicago Metro 733 West Madison, Chicago, IL


Revenue (IDOR) collected motor fuel tax.This legislation was highlighted in the April30, 2012 Chicago Tribune editorial on theState’s loss of sales tax.

As part of the negotiations process, theICPAS joined the Illinois State Chamber ofCommerce and the Illinois Taxpayers’ Fed-eration, as well as the Attorney General’srevenue criminal prosecution attorneys andlegislative staff, in narrowing the definitionof tax evasion. Collectively, we were able toamend this legislation to mirror portions offederal tax guidelines and case law.

Also, House Bill 5192 details the establish-ment of an Independent Tax Tribunal, whichwill greatly benefit taxpayers in resolving taxdisputes with the IDOR. While not everyonegot everything they wanted, we were partic-ularly pleased with the outcome of the cre-ation of this Tax Tribunal and, most impor-tantly for the profession, with enhancementsthe legislation requires in the informal con-ference process within the IDOR. The ICPASwill provide more information on this legis-lation if signed into law by the Governor.

Outside of these significant bills, there’ssome unfinished business that we hope willbe addressed during the November veto ses-sion or in the following spring session whenthe 98th General Assembly is inaugurated.

Specifically, as part of Illinois’ transitionto a one-tiered license-only state, the ICPASworked with Representative Robert Rita,chair of the House Business and Occupa-tional License Committee, to introduceHouse Bill 5773, which would update theIllinois Public Accounting Act.

Our legislation, along with most of theother professional licensure acts that arescheduled to sunset on January 1, 2013(ours sunsets in 2014), was not assigned toa committee for a substantive hearing, andtherefore didn’t meet the House’s hearingdeadline. We will continue to work with ourBill’s sponsor and Speaker Madigan to en-

The ICPAS VP of Government Relations,Marty is a practicing lawyer and mem-ber of the Illinois Bar. Marty previouslyserved as executive assistant attorneygeneral for Illinois Attorneys GeneralLisa Madigan and Jim Ryan, and as director of the Governor’s Office ofCitizens Assistance and assistant to theGovernor for Public Affairs, both underGovernor James Edgar.

CAPITOL REPORT

Rendezvous with RealityA recap of the spring legislative session, and an update on what we’ve been doing for Illinois CPAs.

By Marty Green, Esq.

Medicaid, public pensions and the stateoperating budget were at the heart of discus-sions during the Illinois General Assembly’sspring legislative session. Reining in Medi-caid spending and the state’s public pensiondebt both directly impact the state operatingbudget. With this in mind, the GeneralAssembly passed legislation that reducesprovider reimbursement rates, narrowingcoverage and raising the tax on cigarettes.

Several proposed pension reform meas-ures that would help to control the spiralingcost of public pensions were considered dur-ing the final hours of the spring session.However, Speaker Madigan and MinorityLeader Cross determined that a consensuscould not be reached, and legislation wasnot called for an up or down vote. All havehighlighted the enormity of our state’sbudget problems and the difficult decisionsthat must be made in order to restore Illinois’fiscal integrity.

Also during the spring session, ICPAS gov-ernment relations staff was actively involvedin a number of areas. Here’s a synopsis ofjust a few of them.

Introduced by Senator Linda Holmes andsponsored in the House by Speaker Madi-gan, Senate Bill 3794 creates a board of fiveCPAs to work with the comptroller and thevarious state agencies in improving the time-liness, quality and processing of financialreporting for the state. Government relationsstaff provided Senator Holmes with technicalinformation on auditing and accounting prin-ciples, and background on the internal auditfunction and financial statement preparation.The impetus behind this legislation is anaudit conducted by the Illinois Auditor Gen-eral’s Office that was critical of the State ofIllinois’ outdated and multiple financial re-porting systems.

What’s more, House Bill 5289 introduc-ed by Illinois Attorney General Lisa Madi-gan enhances criminal penalties for entitiesthat fail to pay the Illinois Department of


sure that the Accounting Act update re-mains at the forefront of discussion.

The Attorney General also has indicatedthat her office would like to review thecriminal penalty section of House Bill5289 more comprehensively later thissummer, with a working group in whichthe ICPAS likely will participate.

We’ve also been working with membersof the Illinois Congressional Delegation, theAICPA and other state societies on federalissues of interest to the profession. TheMobile Workforce State Income Tax Simpli-fication Act of 2011 (H.R. 1864), for exam-ple, would create a uniform national stan-dard, and limits state or local taxation ofcompensation earned by employees whoperform duties in more than one state orlocality. Taxation would fall to the state orlocality of the employee’s residence and thestate or locality in which the employee isphysically present when performing dutiesfor more than 30 days. Working with ourIllinois Delegation, this legislation passedout of the House and is currently pendingwith the Senate.

The online one-stop-shop for small & mid-sized practitioners.

Check it out today at...www.icpas.org/public.htm

Connections and resources to help power your practice.

Quick answers on: Licensing and Registration Peer Review Requirements IRS Registered Tax Return Preparer Program Technical Topics, such as Accounting, Auditing, Tax, Not-for-Profit and Government

Practice management solutions: FREE Succession Planning Service FREE Marketing Toolkit

Connect to people who can help: Staff Research Specialist NETWORK Volunteers Staff Subject Matter Experts ICPAS LinkedIn Group Member Forum Groups

Client Connection.Your clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothly. At TCF Commercial Banking, our experienced professionals will work with you and your clients to create tailored banking solutions across a wide range of financial products and services.

Cash Management Commercial Lending Solutions Commercial and Multi-Family Real Estate Financing Capital Funding

To learn more, contact:Juwana Zanayed, Vice President, Cash Management Solutions (630) 986-7155 or [email protected]

©2012 TCF National Bank. Member FDIC. www.tcfbank.com

Cash Management

banking solutions across a wide range of financial products and services.At TCF Commercial Banking, our experienced professionals will work with you and your clients to create tailored our clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothlyYYour clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothly

banking solutions across a wide range of financial products and services.At TCF Commercial Banking, our experienced professionals will work with you and your clients to create tailored our clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothly

banking solutions across a wide range of financial products and services.At TCF Commercial Banking, our experienced professionals will work with you and your clients to create tailored our clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothly

At TCF Commercial Banking, our experienced professionals will work with you and your clients to create tailored . our clients rely on you for trusted advice, guidance and the right referrals to help their business run smoothly

(630) 986-7155 or [email protected] Zanayed, Vice President, Cash Management Solutions o learn more, contact:T

Capital FundingCommercial and Multi-Family Real Estate FinancingCommercial Lending SolutionsCash Management

©2012 TCF National Bank. Member FDIC. www

(630) 986-7155 or [email protected] Zanayed, Vice President, Cash Management Solutions

Commercial and Multi-Family Real Estate FinancingCommercial Lending Solutions

.tcfbank.com ©2012 TCF National Bank. Member FDIC. www

WORKFORCE

Rise of the Free AgentWhy contingent employees might make business sense.

By Selena Chavis

While many companies are beginning tosee that much anticipated light at the end of thetunnel, are they confident enough to return tobusiness as usual? For many the answer is no.And hiring is a case in point.

“Some companies are understandably nerv-ous about hiring permanent employees untilthere is more certainty about a recovery, soCFOs are engaging short-term, third-party re-sources to complete projects that simply mustbe completed despite capacity constraints,”explains Chris Kearney, a Chicago-based part-ner and practice leader with Tatum, LLC.

For shorter-term projects, companies are ableto bring in experts who can hit the ground run-ning and complete the work faster, without theassociated costs and benefits packages.

“For example, temporary controller-level re-sources are in record high demand since CFOsare seeking people who are dependable andwell-credentialed,” says Kearney. “This app-


roach helps CFOs maintain a desirable variablecost structure in their departments, which ismore prevalent now than ever.”

This strategy also may help to address worriesover tighter talent pools once the economy gainsmomentum. “As the economy gets better, itmakes sense to draw on skill sets quickly,” notesTom Moran, CEO of Addison Search in Chicago.“Departments are growing too quickly, andworkloads are growing too quickly. Many com-panies can’t keep up.”

Steve Meyer, who has worked as a contractaccountant for the last 12 years, has seen a def-inite uptick in activity in the last 3 to 5 years.He finds that companies are depending moreand more on contract professionals to meetseasonal workflows. “Companies have one ortwo busy audit testing times each year,” heexplains. “They can bring in an expert for theshort-term, and they don’t have to keep a fullstaff all the time.”


We don’t deliver dressed up wannabes. Our team delivers real Accounting, Finance and IT Superheros.

Accounting & Finance Professional Search

www.clearfocusfs.com312.582.1700

Temporary Accounting & Finance Professionalswww.brilliantfs.com

312.582.1800

Specialized Information Technology Professionalswww.silverpointts.com

312.582.1910

Accounting & Finance Project Resources/Executives

www.numeratepartners.com312.582.1900

Four specialized companies with the goal of finding you the best talent. Let’s start a conversation today. — Jim Wong, CPA - Founder

Are you in need of a real Superhero?

et d’noe dWWe d

ebannap wd uesserr devvelie

se

l Aaes rs rerevveliem daer tuOet dnoe dWWe d

hrcae SlnaiosseforPecnani F &gnitunoccA

not a crats s’’s ste Lnapmod ceziizlaiiacepr suoFFo

nd Ie acnani, Fgnitnuoccl Aebannap wd uesserr devvelie

or PecnaniFcy AraropmeTe

A - FP, Cgnom Wi— J.yy.adon toitasrrsvenhu tog yg yonidnf fil oaoe ghh ttis wein

.sroehrepuT Snd I.se

lsanoissefg & nitnuocc

rednuoA - F

.tnelat tsee bh

00712.852.13ocs.fuscofraelc.wwwhrcae SlnaiosseforP

00912.852.13serntraeptaermnu.wwwevitcuexE/secruoseRore Pcnanig & FnitnuoccA

2.852.13aillir.bwwwor PecnaniF

mo

2.852.13prevlis.www

PygoolhnceT IdeziliacepS

moc.ss

t cejo

00812.mco.sftnalsanoissef

01912.omc.stntoi

lsnaoissefornioatmrofn

Financial statement audits and audit prep-arations for year-end close are among themost active areas for contract accountingprofessionals. “Monthly financial statementsstill need to be prepared in a timely andaccurate manner. Lenders and CEOs stillexpect to see budgets and cash-flow fore-casts, and there is actually a tendency forthese parties to want more information pre-pared by the accounting function moreimmediately,” Kearney explains, adding thatif these functions are not adequately add-ressed through outsourcing or by hiring inter-nally, many key accounting activities mightbe overlooked.

Industry professionals suggest that high-level projects such as mergers and acquisi-tions and company expansions also areprime areas for contract expertise. Moranpoints to instances where a Fortune 500company spins off a division or opens a sub-sidiary. “The accounting work doubles, andmost companies are going to want to avoidbringing in that kind of high-level expertisefor the long-term,” he notes.

What’s more, when a company is acquir-ed or merges, accounting personnel oftenchoose to leave or are terminated as part ofthe agreement. This results in holes in acc-ounting departments at a time when moreresources are needed, making the free agenta very appealing proposition.

“With M&As, companies need expertiseintegrating the accounting functions andstatements of both companies,” Kearneystresses. What’s more, “When the account-ing department gets too lean, the conse-quences of losing a top performer are signif-icant. The loss of continuity and know-howhas a major impact on senior financial lead-ership in this era, magnified more than in thepast when measured in cost and quality.”

IT initiatives also are ripe for project out-sourcing, especially since companies may nothave the luxury of accounting executives withexpertise specific to software implementation.

“If a company’s IT department hasn’t beenthrough the process of implementing anenterprise resource planning solution, forexample, it’s going to benefit them to getsome outside help,” Kearney explains. “Byleveraging the expertise of professionals withthe know-how of large-scale software imple-mentations, companies will almost alwaysrealize a return on investment for the effort.They need help knowing how to accept pro-posals from vendors and negotiate appropri-ate contracts. They need to know how soft-ware companies operate—what they willinclude and what they won’t do.”

Kearney advises companies to be activelyinvolved in these projects in order to buildinternal expertise and ease the transitionafter the interim resource leaves.

Even this, however, may not be enough.“Some companies simply don’t have en-ough capacity to effectively handle the add-ed project workload,” Kearney explains.

As an endnote, our experts do warn thatcontract employees may not always be the

best option. “If it’s a case where the com-pany may need to bring in the knowledgeover and over again, then it may not makesense for the long-term,” says Meyer.

“If a company is going to be doing some-thing repeatedly,” Kearney confirms, “itmay be much more affordable to hire anexpert full-time or near full-time.”

Still, the “free agent” is definitely a trendto watch.


M&A

Worst-Case Survival GuideImagine the worst to plan for the best merger or acquisition.

By Sheryl Nance-Nash

The concept is simple: Combine twogood organizations and you’ll create onegreat one. That’s the theory anyway.

In practice, though, what can seemlike a match made in heaven can proveto be hell on Earth. In fact, recent PwCresearch reveals that few dealmakerssucceed in meeting their most importantfinancial and operating goals.

In terms of global M&As, activity fellsharply in the first quarter of 2012.According to the M&A Trends & Insight

for Lawyers report from Thomson Reut-ers Westlaw Business Advisor, activitydropped 20 percent and deal valuedropped 33 percent compared to thefourth quarter of 2011. There were signif-icant declines in deals in US and UKmarkets, as well as in Hong Kong andSingapore.

Don’t feel too discouraged, however. Thereport states that deal flow could rebound later in2012 if economic indicators continue in a posi-tive direction. With large corporations holdingmegacash—about $1.5 trillion—in addition toan estimated $500 billion in untapped capitalheld with private equity sponsors, acquirersmight well find ways to put their cash to work.

How do you guarantee a smooth merger oracquisition? By preparing for the worst thatcould happen. Here are just five scenarios.

1. Protracted IntegrationsA detailed written merger integration and tran-sition plan is essential, says Carl George, a CPAand senior executive partner with CliftonLar-sonAllen in Peoria, Ill., adding that, “It shouldinclude personnel and orientation, client tran-sition communications, internal systems, poli-cies and procedures, financial and budgeting,long-term strategy and vision for the combinedunit, and much more.”

Most importantly, start developing that planduring the due diligence period, and includefinancial impact and key actions, advises LeanneSardiga, national retail & consumer leader forPwC’s Transaction Services practice. “Accelerate

the integration. Prolonged transactions tend toslow growth and destroy morale. Focus on the20 percent of actions that drive 80 percent ofvalue. Identify specific actions, timing, costs/benefits, and create accountability for results,”she says. “Manage the integration as a businessprocess, quickly and systematically.”

“Windows of opportunity to achieve synergiesclose as time passes. High persistent employeeturnover and missed financial goals are associ-ated with protracted integrations,” adds JoeAberger, president of Pritchett, an M&A integra-tion advisory firm that has consulted on mergerssuch as Pfizer/Wyeth and Mobil/Exxon.

2. Culture Clashes Bringing together two separate cultures creates apotential minefield. “Even when everybody is onboard, there can still be an us-versus-them men-tality,” says Brian Wodar, director of WealthManagement Research with wealth manage-ment firm AllianceBernstein in New York. “It’ssort of like growing a beard. The first day youkind of like it, then it starts to itch like crazy. Youeither shave it off because you can’t stand it, oryou tough it out.”

David Gebler, author of The 3 Power Values:

How Commitment, Integrity and Transparency

Clear the Roadblocks to Performance, offers afew rules to safeguard against costly culturalfaux-pas.n Don’t act like a conqueror. The acquiredcompany’s employees will appreciate thatthe new leadership cares enough to learnabout what made them successful.

n Discover what makes them tick. An acquir-ing firm’s leadership needs to invest the timeand effort to learn the new team’s history, aswell as individual and group motivationsand dynamics.

n Handle one function at a time. Corporateculture is not monolithic, says Gebler. Everycompany has many sub-cultures, each withdifferent styles and motivations. New leader-ship should assess which of the acquiredcompany’s cultures are compatible with thenew direction of the merged organization,

and what to do to bring the cultures in line with a new,well-oiled model.

“If they don’t reach agreement on these key culture indi-cators, the day-to-day activities won’t support the overalldirection the company needs to take,” stresses Linda Hen-man, Ph.D, author of Landing in the Executive Chair.

3. Poor HR Decision-MakingThere are tough choices to be made. And if handled insensi-tively, look out.

“When we worked on the Tyson acquisition of IBP, we ana-lyzed the needs of the new company, assessed each personcurrently holding key positions, set criteria for the position,and made recommendations about who the person shouldbe,” says Henman.

Sounds simple enough. But egos and tensions can flarewhen equally qualified people are vying for, say, the sameCFO spot. However fair you’d like to play it, be aware thatcompromises like co-CFOs are particularly risky, says GeorgeBradt, managing director of PrimeGenesis, an executiveonboarding consulting firm in New York. “Compromises areoften substitutes for difficult choices,” he says.

4. Unpleasant Tax SurprisesBecause tax considerations are a major component of M&Atransactions, tax volatility can be a game changer.

“Large M&A deals structured around tax incentives, such asasset write-ups and unused operating losses, for example,could see these incentives change or evaporate, ultimatelyaltering the nature and value of the deal,” warns CharlesBeauchamp, assistant professor of finance at Middle TennesseeState University. Similarly, post-merger or acquisition regula-tions can change the dynamics of the newly formed company.

5. Careless Customer CareMissteps made with customers or clients during the M&A tran-sition can be fundamentally destructive. The acquirer shouldtalk to customers as part of the due diligence process, saysLeslie Weiss, an M&A attorney with law firm Barnes & Thorn-burg in Chicago. At that point, they should get a sense of howcustomers might react to the transition. Specifically, theyshould surmise what’s important to these customers and whattheir primary concerns are about a change in ownership.

“Assure them that service will continue uninterrupted,”Weiss advises. And assign a special team to deal with the tar-get company’s customers post-signing. “This team shouldinclude representatives from the acquirer and the targetacquisition,” she says.

Customers can become irritated with both the acquired andacquiring company as products or service offerings are deleted,fused or reinvented, cautions Flip Filipowski, CEO of SilkRoadTechnology, and an M&A veteran who’s been involved in morethan 100 acquisitions. “Revenue can tank when everyonebecomes confused, concerned, agitated or discombobulated inthe period leading up to and following an M&A.”

While there’s no shortage of M&A failures, there are plentyof success stories. By planning for the worst, you might justend up with the very best of outcomes.



INNOVATION

Cogs in the MachineWhat the America Invents Act means to the tax and accounting world.

By Carolyn Kmet

The Leahy-Smith America Invents Act (AIA)was signed into law by President Obama onSeptember 16, 2011, and is widely consideredto be the most significant revision to the patentstatute since the 1800s. Given the proclivity ofnew inventions spurred by new technologiesand their applications, as well as the increasedemphasis on accurate patent valuation as itrelates to business transactions, such defininglegislation is certainly warranted.

What’s more, the Act has far-reaching impactlocally for businesses of all sizes. As Crain’s

reported in June, “Although major Chicago-areacorporations were, not surprisingly, granted thelion's share of patents local companies receivedlast year, (our) analysis...found local patentrecipients provide a surprisingly broad cross-section of big and small enterprises.”

From a tax and accounting perspective, theAIA has considerable significance. For one, tax-payers may need to establish the value of intel-lectual property (IP) if it is being attained throughthe acquisition of another entity or sold or trans-

ferred to another entity, or ifroyalty rates need to be deter-mined in relation to its use.

However, it’s unlikely thatthe AIA will have a direct im-pact on IP valuation, since thereis no language that specifiesvaluation methodology or app-roaches. That said, earlier ver-sions of the Act did include a“valuation calculation” thatwould have required the courtto “conduct an analysis to en-sure that a reasonable royalty isapplied only to the portion ofeconomic value of the infring-ing product or process properlyattributable to the claimed in-vention’s specific contributionover the prior art.” This valua-tion calculation ultimately wasexcluded, however.

It’s likely, though, that theAIA will have an indirect im-pact on valuation. “The AIA

should reduce uncertainty for patent applicantsand for patent owners. The AIA should reducethe amount of litigation arising over patentapplications, ownership, patent claims and pat-ent use,“ explains Robert F. Reilly, CPA, manag-ing director of Chicago-based Willamette Man-agement Associates.

Reilly adds that, over time, “This reduced riskand value/royalty rate increase should lead tomore patent sales, licenses, transfers, financingsand other transactions—all of which becomeaccounting and taxation events.”

The legislation also introduces a first-to-filerule, versus the previous first-to-invent rule. Toclarify, historically the United States applied afirst-to-invent system to determine patent own-ership, which meant that the patent would beawarded to whomever could prove the earlierconcept as well as diligence in bringing theinvention into being. In this scenario, “anotherinvestor could come forward and claim thathe/she was the first-to-invent,” Reilly explains.“Such claims resulted in expensive and time-consuming ‘interference proceedings.’ The riskof such litigation claims often constrained pat-ented product exploitation.” Because of thisrisk, a buyer, licensee, creditor or transfereewould be reluctant to pay as much for a patentapplication or for a patent.

With the shift to a first-to-file system, thedetermining factor becomes the date uponwhich the patent application is filed with thepatent office. And this subtle but significantchange increases patent value. “Once an inven-tor proves an uncontested first-to-file status, abuyer, licensee, etc. will feel comfortable pay-ing full value for the patent rights,” says Reilly.

“Prior art” or “prior disclosure” was yet an-other risk associated with patent applicationspre-AIA. Specifically, “If another inventor couldprove that the invention, design, etc. wasknown in the marketplace, then the actualinventor may not have been able to receive apatent,” Reilly explains.

Basically, this encouraged inventors to dis-close nothing about the invention until after theUnited States Patent and Trademark Office(USPTO) had granted the patent. This in turn

meant that inventors were reluctant to pitchtheir pre-patented inventions to investors, ban-kers, commercial corporations, etc., opting in-stead to hold their cards close. “Without thisself-promotional publicity, patent values oftenremained low, at least until the patent wassafely granted,” says Reilly.

“Under the AIA, inventors can brag abouttheir inventions all they want the year beforethe patent filing. Such self-disclosure and self-promotion will not count as patent-disqualify-ing prior art. And this inventor-created buzzabout the new invention should increase val-ues, royalty rates, financing potential etc. re-lated to new patents,”he adds.

The AIA also stipulates that “any strategy forreducing, avoiding, or deferring tax liability,whether known or unknown at the time of theinvention or application for patent, shall bedeemed insufficient to differentiate a claimedinvention from prior art.” Essentially, this meansthat patent applicants will not be granted apatent if they are relying on a tax strategy to dif-ferentiate their invention from prior inventions.

According to Patrick A. Doody, a partnerwith Pillsbury Winthrop Shaw Pittman LLP, for-mer Congressman Rick Boucher (D-Virginia)and Congressman Bob Goodlatte (R-Virginia)added the tax-strategy patents provision duringthe Judiciary Committee markup to preventindividuals and companies from filing patentapplications to protect tax strategies.

“The legislative history suggests that if oneindividual or business is given the exclusive rightto a particular method of complying with the TaxCode, it increases the cost and complexity forevery other citizen or tax preparer to complywith the Tax Code,” he explains.

Eldora Ellison, Ph.D, director at Washington,D.C.-based law firm Sterne Kessler Goldstein &Fox, adds that, “Section 14 of the AIA strives toensure that the ability to interpret the tax lawsand implement one’s interpretation of the taxlaws remains part of the public domain, and thusis available to all taxpayers and their advisors.”She explains that even if an applicant devises anew tax strategy, this new strategy cannot berelied upon to impart patentability to an inven-tion that encompasses the tax strategy.

However, the provision distinguishes betweentax strategy and certain tax-related inventions. Tobreak it down, there are essentially two exclu-sions to Section 14 of the AIA. An inventionthat’s directed to filing taxes may be patentable,but the tax strategies underlying that inventionare not.

Jeffrey Mann, special counsel in the intellec-tual property department at New York-basedStroock & Stroock & Lavan, explains that, “Thisexception is important because it limits theAIA’s provision to only the tax strategies them-


Education when you want it. | Available 24/7

Earn CPE from the convenience of your computer, anytimeday or night. Choose from a catalog of engaging, high-qualityHD video courses you can access instantly, at a price youcan afford.

Check it out @www.icpas.org/ondemand.htm

NEW from the Illinois CPA Society...

A quick and easy way to get CPE in a reporting year.September 30, 2012 is the CPE REPORTING YEAR DEADLINE.

selves, and not to any tax-preparationproduct. So, for example, a new feature ofa tax-preparation computer program maystill be used to distinguish over prior art,although the general tax strategies carriedout by such a program may not. This con-forms with the purpose of the provision inthe AIA, which is to make tax strategiesavailable to everyone.”

So, while the first exclusion says taxstrategies are not patentable, the secondexclusion further protects the patentabilityof financial management programs thatuse tax strategies.

“This second exclusion prevents a finan-cial management program that has distinc-tive features, other than the use of the taxstrategy, from being unpatentable purelybecause it implements a tax strategy. Thisexclusion, therefore, does not prohibit thepatenting of financial management pro-grams and permits inventions to be gener-ally patented in this area,” Mann explains.

According to Doody, another purpose ofthe “no-tax-strategy-patents” provision isto avoid any public reliance on the legalityor government endorsement of the taxstrategy recited in the patent claims. This

could otherwise constitute an unlawfultax-sheltering scheme.

“The provision is not meant to make itmore difficult for companies to differenti-ate a claimed invention, nor does it bar thepatenting of tax software or imply thatother business methods are unpatentableor invalid,” Doody stresses.

The impact of the AIA on the frequencyand number of patent filings is as yetunknown. However, Ellison believes wemay see more patent applications filed ear-lier on in the process.

“Given the first-to-file provision, clientsthat can afford it will be more likely to filetheir patent applications earlier than theypreviously would have. And they’re likelyto file more applications in a series ofrelated applications directed to a particularinvention,” she says. Pursuing many patentclaims may be a strategy used to make itmore expensive, and therefore less desir-able, for others to challenge them later on.

Doody agrees that the AIA will indeedimpact how businesses pursue intellectualproperty protection, but suspects that it maycause more businesses to forego patent pro-tection and instead maintain the inventionas a trade secret.

“Both the public disclosure requirementsof invalidating prior acts and the new prioruser’s rights defense of the AIA may en-courage the retention of certain methods astrade secrets instead of disclosing them tothe public,” he explains. “These provisionsrun counter to the constitutional mandateof promoting the progress of science andthe useful arts by, in some instances, dis-couraging public disclosure of inventionsand discoveries.”

The other factor that may dissuade com-panies from pursuing patents is the poten-tially higher costs associated with filing,particularly when factoring in the defenseof numerous post-grant review challenges.

“The high cost of post-grant review maydiscourage smaller companies from pursu-ing patent protection if their issued patentsare systematically challenged by muchlarger corporations,” Doody warns. “Busi-nesses and individuals likely will still valuetheir intellectual property as they do today,but the AIA may greatly impact their strat-egy for protecting their intellectual prop-erty by placing more value on trade secretprotection than patent protection.”


*Please note that benefits received under this rider may be taxable. You should consult a personal Tax Advisor for further information.1 CDA 2011 Consumer Disability Awareness Survey, Council for Disability Awareness. The research can be viewed at http://www.disabilitycanhappen.org/research/pdfs/ProducerResearchReport.pdf. Viewed 2/20/12.Plan information includes costs, exclusions, limitations and terms of coverage. Plans may not be available in all states. Form SRP-1311 AB (5636).All benefits are subject to the terms and conditions of the policy. Policies underwritten by Hartford Life and Accident Insurance Company detail exclusions, limitations, reduction of benefits and terms under which the policies may be continued in force or discontinued.55948 (7/12) ©Seabury & Smith, Inc. 2012

A majority of people admit to not being financially prepared

if a disability were to occur. According to the 2011 Consumer

Disability Awareness Survey, 65% of working Americans say

they could not cover normal living expenses even for a year

if their employment income was lost.1

In reality, the odds are one in four that an employee

entering the workforce will experience a long-term disability

prior to retirement. What’s more, the average length of a

long-term disability claim is over 2.5 years.1

Think about your financial situation. If you su�ered a disability that prevented you from working for several

months (or several years), how would you pay your bills?

The time to help protect yourself from this risk is now. The Group Disability Income Insurance Plan—exclusively for ICPAS members—can help, with:

Tax-free benefits of up to $10,000/month*

Competitive group rates

The ability to take your coverage with you if you change jobs

IF YOUR INCOME STOPPED TODAY, WHERE WOULD THE MONEY COME FROM TOMORROW?

Underwritten by: Hartford Life & Accident Insurance Company, Simsbury, CT 06089

THINK YOU DON’T NEED DISABILITY INSURANCE? THINK AGAINwww.icpasinsure.com | 1-800-842-4272

*

The Hartford® is The Hartford Financial Services Group, Inc., and its subsidiaries, including issuing company Hartford Life and Accident Insurance Company.


MARKETING

Like Me!Social media has put a whole new spin on how you market your business.

By Caitlin Petersmark

Thanks to Facebook Fan Pages and Yelp cus-tomer reviews, to name just a few venues, socialmedia is now one of the most proactive andcost-effective ways to get your business or prac-tice in front of an ever-expanding audience.

Jody Padar, CPA, a principal with family own-ed New Vision CPA Group, started her firm’sTwitter stream three years ago. When a reporterreached out to her after reading one of hertweets, Padar immediately recognized the valueof marketing via social media. Beyond Twitter,the firm sends out promotional emails to clientsand maintains a YouTube channel.

“It’s not like I got on and right away figured itout,” Padar admits. When she first started onTwitter she depended greatly on the help of herfollowers and devoted time to building heronline reputation. Today, she is well known in

social media circles, and was named one ofAccounting Today’s “Top 100 Most InfluentialPeople in Accounting.”

For some firms, though, client needs and lim-ited resources mean putting social media on theback burner.

“It’s all too much work,” Debra Lessin, CPAsays of the sheer volume of social media toolsand websites available to businesses. Lessin, alife balance coach, an author and also owner ofBalancing Act Productions, Inc., is slowly inch-ing into the social media arena. Her companycurrently uses its website presence and a blogfor marketing and client engagement purposes,while Lessin uses a personal Twitter profile tohumanize her personal brand. She also uses theonline web tool SocialOomph to monitor herTwitter messages and followers, helping to reinin the amount of time she spends on maintain-ing her online presence.

Mark Gilbert, CPA, principal with ReasonFinancial Advisors, Inc. and Retirement Advisorcolumnist for INSIGHT Magazine, is somewhatdubious about social media given its unknownvalue proposition. Currently, the two-advisorfinancial planning firm uses email marketing tosend out a regular eNewsletter to clients andprofessional contacts, focuses on improvingsearch engine optimization (SEO) by developingGoogle keywords, and regularly uploads firmmarketing materials, including press releases, toensure information is on topic.

Gilbert feels you see more immediate resultsfrom traditional marketing than you do fromsocial media. “I will test the waters, though,” hesays, “and see if my peers in the profession arehaving success.”

If you’ve already developed a social mediacampaign, you now may be wondering how toinvolve and monitor your staff. First and fore-most, “Use your best judgment,” says Padar,who chooses to connect with each staff memberonline so they know she’s following posts,tweets and status updates. That in itself detersany negative or inappropriate commentary. Sheencourages her staff members to be active

online, even asking them to “check in” usingFourSquare when they arrive at the office.

Short of blocking social media sites in theworkplace, it’s hard to keep your staff fromvisiting Facebook, Twitter and LinkedIn, so itmay be your best bet to follow Padar’sexample. According to Kaye Publicity, com-panies do have the right to monitor socialmedia usage. However, it’s up to you andyour organization to determine what kind ofenforcement, if any, there will be.

Whatever the extent of your policy-mak-ing, it’s good practice to remind employees tobe mindful of what they broadcast. The men-tality that posts will be seen solely by a close,personal circle of family and friends isn’t real-istic given the public nature of social media.It’s also difficult to retract a statement, so staffmembers should think before they post.

To get you started, here’s a social mediamarketing “what’s what,” courtesy of theFox Business Small Business Center [small-business.foxbusiness.com].

Facebook: This is the place to “growyour brand.” Photo albums and wall posts,etc. allow you to interact with clients whilealso creating a personality and tone for yourcompany or firm.

Twitter: Twitter allows you to hold a con-versation with your audience. As Fox Busi-ness explains, “Twitter offers a global, inter-active, 24-7 sounding platform.” Gone arethe days of limited customer service.

LinkedIn: This is the place to “grow andmonitor your network.” From promotingyour services to hiring new staff, LinkedInoffers a versatile professional platform.

Foursquare: Here, you can use incen-tives such as badges and rewards for check-ins to encourage people to choose yourbusiness and/or services.

Tumblr: This is where it all comes togeth-er. An integration tool of sorts, Tumblr “is agreat way of incorporating and enhancingother social-media campaigns.”

It’s your choice how much time andenergy you invest in each social media site.Involving staff can be a way to share theworkload and increase consumer engage-ment, since each individual has a uniquepersonal network and therefore will reachdifferent segments of the population. Thosewho have already entered into social mediawaters should trust their instincts and dowhat feels best for their organizations. Ulti-mately, don’t over think it.

August 28-29 | Rosemont

Midwest Accounting & Finance Showcase

September 20 | Chicago

Fraud

September 24 | Oakbrook Terrace

Financial Institutions

September 28 | Rosemont

Midwest Financial Reporting Symposium

October 17 | Rosemont

IRS Tax Symposium

October 30 | Oakbrook Terrace

Construction Industries

November 1 | Oakbrook Terrace

Tax

November 14 | Rosemont

Healthcare Compliance and Fraud Half-Day


Not-for-Profit Half-Day


Not-for-Profit

December 4 | Rosemont

Employee Benefits Half-Day

December 7 | Springfield

Not-for-Profit

December 12 | Springfield December 13 | Rosemont

Accounting & Auditing

2012 is a CPE Reporting Year!Licensed CPAs need 120 hours of CPE, including4 hours of Ethics CPE, by September 30, 2012.

www.icpas.org

MARK YOUR CALENDAR!2012 Conferences



STARTUPS

Smart FundingLean times call for creative ways to find your startup money.

By Christine Bockelman

Twitter and Pinterest, capital often comes from“Super Angels,” who typically invest in theregion of $500,000 or more.

“Super Angels get involved from the very, verybeginning,” says David Diamond, a CPA andmanaging director at CBIZ. “They will do thingslike rent out or take over a couple of floors in abuilding and make them an incubator for start-ups. They’ll bring in a few, help fund them, helpthem with their business plans, and if that goeswell, bring in more money for the startup.”

Super Angels carefully evaluate sound busi-ness models and don’t like to take big risks.They want to nurture and mentor a company,not aggressively push it towards growth in orderto get a return on their investment. Typically,Super Angels aren’t “flipping” their investment,to borrow a term from the real estate world.

Another way to raise capital, of course, is tojump into the venture capital pool. It’s a tried-and-true way of injecting big chunks of moneyinto a growing company. However, there aresome indications that venture capital firms arebeing evermore cautious about where they puttheir money.

“It’s a lot harder to get money from venturecapitalists today,” says Diamond. “The publicmarkets have crashed, and venture capital hasbeen putting money into companies that aren’tbeing sold. They’re called the ‘living dead.’ Inother words, some venture capitalists can’t getmoney out of companies they’ve invested in, andtherefore have less money to invest.”

If you’re too small for angel investors or ven-ture capital firms, read up on the Jumpstart OurBusiness Startups (JOBS) Act.

Signed into law by President Obama in April2012, the Act is designed to give new fundingoptions to small businesses, especially those out-side Silicon Valley and other established angelinvestor and venture capital hotspots.

In essence, the Act loosens up some securitiesrequirements and increases the number of share-holders a company is allowed to have beforegoing public. Through the Act, companies canraise capital by selling unregistered securitiesworth up to $1 million in a 12-month period.This is known as “crowdfunding.”

It’s a tough time to be a startup. Although tra-ditional sources of funding do remain, it’s notlike the heady days of 2000 and 2001, whenthere was money for the taking. Banks, forexample, are still coming out of the mortgagecrisis and facing new capital reserve and otherregulations. And family and friends, once a firststop for anyone looking to raise money, arereeling from post-recession economic issues oftheir own.

Of course, there are some high-profile start-ups like Facebook and LinkedIn that raised a lotof money just fine. But don’t be fooled—theseare the exceptions.

Which brings us to the question, how canstartups raise capital these days? The answer isanything but straightforward.

At the top of the list there are angels—wealthyindividuals who invest their personal funds (typ-ically in the $10,000 to $15,000 range) into astartup company, and effectively fill the gapbetween the family/friend investment and the bigmoney that comes from venture capital firms.

If that’s not enough private capital, in the sexyworld of tech companies, home to Foursquare,

Crowdfunding basically allows the gen-eral public to invest money, often a smallamount like $25, in a business. It’s not anentirely new concept. Internet companieslike Kickstarter.com, which helps to fundprojects like a Masala Food Cart based inMissoula, Mont., have been using it for along time. But the JOBS Act marks the firsttime these investors will get actual equityin exchange for their money, as opposed togetting a free curry dinner for two peopleafter giving $25 to a project, for example.

Not every business can take advantageof crowdfunding, though. Only emerginggrowth companies are eligible to partici-pate in the JOBS Act. These are defined ascompanies having an annual revenue ofless than $1 billion during their mostrecently completed fiscal year. They alsomust have an IPO after December 8, 2011.

Evanston, Ill.-based ImpactTrader.com,co-founded by John Jordan, has a socialenterprise bent and a business plan basedentirely on crowdfunding. It plans to sellinvestors small ownership shares in socialand environmental improvement projectsaround the world.

“We will basically be doing IPOs on avery small scale over and over and over,which would rack up millions of dollars inSEC fees in the current system,” Jordanexplains. “The JOBS Act allows us to pro-vide affordable financing for projects thatdon’t offer profits that would appeal to tra-ditional investors.”

It sounds great, but there are some prettybig concerns surrounding crowdfunding.First, it’s never been done, so there are lotsof regulatory, accounting and other issues towork out. Second, there are limits on howmuch can be invested by any one person.

“Do it cautiously,” Diamond advises.“Hire an attorney who knows a lot aboutthis, because chances are it’s going to getcomplicated.”

Taking a more creative approach to thesearch for funding, “I’ve had a lot of clientsget money from the government,” says Dia-mond. Specifically, the Small BusinessInnovation Research (SBIR) program, whichhas been around since 1982, awards fundsto small, domestic research and researchand development businesses.

Another option is to take a companypublic through a reverse merger. This in-volves finding a clean, public shell com-pany and merging into it. “This is happen-ing a lot now,” Diamond explains. “It getsa bad rap because of unethical people, butwe’ve done this three times in San Diegoin the last year.”

Although not a strategy suitable for everycompany, many countries have economicdevelopment agencies that will give youmoney to set up in their local towns andcities. “This is what [bio-tech] Invitrogendid,” says Diamond. “They kept their head-quarters in the United States, but set up asales office in Holland. They hired a bunchof people, used the economic develop-ment money very judiciously and are ahuge company now.”

And there are licensing options as well.“This doesn’t happen a lot,” says Dia-mond, “but sometimes people will behappy with whatever they can sell in theUnited States and just want the licensingmoney to grow and develop the product.”

It’s a reality of today’s marketplace thatfunding is hard to find. Whether the tried-and-true traditional route, or a new, morecreative approach, where there’s a will,there’s definitely a way.


FSA I HSA I HRA I COBRA I FMLA I ERISA I PAYROLL

800-422-4661 x8878

[email protected]

As a TASC Client, you receive expert administration, compliance assurance, and dedicated customer support from experienced professionals who care.

Have you heard?

Our comprehensive menu of services and tools are designed to:

simplify the benefits administration processreduce your HR workload and liabilityincrease employee satisfaction and plan participationprotect your bottom line

Self-Service Tools: mobile app, text, web, IVR

Benefits Card with Cash Account

Fast Reimbursements /Daily Processing

Online Administration and Account Management

www.tasconline.com

More employers are choosing TASCto outsource their benefits administration!

ARHIASHIASF

IASIREIALLAMFIARBOCIA

LLORYAAYPPA

eceive expert ASC Client, you rAs a TAs a TASC Client, you radministration, compliance assurance,and dedicated customer support fr

ofessionals who carexperienced pr

e employers arMorce their benefits administration!to outsour

eceive expert administration, compliance assurance,

om and dedicated customer support fre.ofessionals who car

e choosing Te employers arce their benefits administration!

ASCe choosing Te choosing TASCce their benefits administration!

ehensive menu of services and tools arOur compr

simplify the benefits administration preduce your HR workload and liabilityr

ease employee satisfaction and plan participationincrotect your bottom linepr

Self

ehensive menu of services and tools ar

ocesssimplify the benefits administration preduce your HR workload and liability

ease employee satisfaction and plan participationotect your bottom line

Self ools: -Service T-Service Tools: mobile app, text, web, IVR

d with Cash AccountBenefits Car

e designed to:ehensive menu of services and tools ar

ease employee satisfaction and plan participation

ile app, text, web, IVR

d with Cash Account

800-422-4661 x8878

onica.burver


800-422-4661 x8878

[email protected]

d with Cash AccountBenefits Car

Fast Reimbursements /Daily Pr


www

d with Cash Account

ocessingFast Reimbursements /Daily Pr



BOTTOM LINE

Healthcare RisingWhat’s a small business to do about escalating healthcare costs?

By Derrick Lilly

Marcus Newman, RHU, CBC, VP of small-busi-ness sales at GCG Financial.

What’s more, in a highly competitive industrylike accounting and finance, employee benefitsis one of the few ways employers can differenti-ate themselves. Simply put, “You can’t have cut-rate insurance as an employee benefit and stillexpect to attract and retain the highest-qualityemployees,” says Newman.

Deciding on a health insurance plan comesdown to a three-layer process: “Layer one attacksplan provisions; co-pays, deductibles, maximumout-of-pocket risk,” Newman explains. “Layertwo is cost-sharing; small businesses will thenlook at the way they share the plan costs withemployees. The third layer is going to market tofind a carrier with an attractive cost.”

Approaching each layer strategically is vital.

Layer One: Plan ProvisionsLook carefully at deductibles, co-pays and max-imum out-of-pocket risk. Generally speaking,plans with higher figures in these key areas willbe more affordable to implement. Jensen notesthat, “Employers trying to hold the lines againstincreasing premiums are increasingly selectingplans with higher deductibles.”

Finding a balance between costs and out-of-pocket liabilities is the trick. “Small businesseshave been slow to embrace qualified high-deductible health plans—plans with high upfront deductibles to meet before costs are cov-ered—because they’re afraid employees won’tbe able to afford the initial deductible,” Newmanexplains. “However, these plans are typically 15to 20 percent less expensive for the employer.”

Layer Two: Cost-Sharing “Most employers don’t want to burden theiremployees with high-deductible plans so they’llput in place some type of a self-funded reim-bursement arrangement to help to cover thehigher deductible amounts incurred throughtheir cost-cutting measures,” says Jensen.

Health Savings Accounts (HSA), Health Reim-bursement Arrangements (HRA) and MedicalExpense Reimbursement Programs (MERP) are

Small businesses form the backboneof the US workforce, and a growingemphasis is being placed on how theirexpansion is essential to a sustainablenational economy. The trouble is, manyare still hurting, and confidence remainsunsurprisingly cautioned.

Earlier this year, Gallup’s survey of600 small-business owners found that avast 85 percent are choosing not to hirenew workers. Why so bearish? While,the nation’s overall economic healthtopped the list of reasons (66 percent), awhopping 48 percent of small busi-nesses said their lack of hiring was dueto concerns over rising healthcare costs.

Those concerns are certainly justifi-able; the PwC Health Research Institute’sreport, Behind the Numbers, cautionsemployers to expect an 8.5 percentincrease in costs in 2012 alone.

“Employee benefits plans come in sec-ond only to payroll as an expense for a

lot of employers, and it has only gotten moreexpensive and complicated—especially whenaccounting for all of the regulatory changes,”stresses Adam Jensen, JD, CEBS, GBA, FLMI, VPof compliance and HR consulting at Cottingham& Butler.

“There are many hard decisions that have tobe made as a small-business owner—especiallyin cases where their livelihoods are sunk into abusiness that puts a roof over their heads andfood on their tables,” says Jensen. When health-care premiums jump 10, 20 or 30 percent in ayear, employers may be quick to pull their plans,pass costs on to employees or go to shop the mar-ket. But each of those actions requires due dili-gence. It’s important not to lose sight of why youoffer employee benefits in the first place.

“The reality is that the cost of health insur-ance is a result of the astronomical cost ofhealthcare. Considering most of us will needtreatment in a very major way at some point inour lives, our out-of-pocket premium paymentswill look like just a drop in the bucket,” says

the primary options that allow employers toestablish the cost-splitting structure or theamount employees may be reimbursed forclaims.

Looking purely at reducing costs, MERPsare most advantageous because they grantemployers the flexibility to fund employee lia-bilities on an as-incurred basis.

“Essentially, it says to the employee, ‘Thereis $500 for you if and only if you need it. Youhave to have experienced a claim, paid the billand then we will reimburse you,’” Newmanexplains. “For example, instead of creating afixed expense by giving 10 employees $500each in the case of an HRA or HSA, if only twoemployees have claims in a year, only $1,000has to be paid out instead of $5,000 annually.So while a MERP protects the employee fromthe same out-of-pocket liability, it’s definitelyadvantageous for the employer in terms ofcost-cutting and control.”

Layer Three: CarriersThe third layer looks at one of the more pre-carious cost-cutting measures—going to mar-ket to find a lower-cost carrier.

“Unfortunately,” says Newman, “this isn’talways an opportunity because you have to gothrough medical underwriting and may not beable to achieve lower costs by simply switch-ing companies.”

In any given market, there are generallyonly a handful of carriers that offer fully in-sured plans to small businesses, and each off-ers rates within a competitive range in an effortto grow their market share. This is where abroker comes into play.

“You can’t practically access the small busi-ness health insurance market without a broker.When it comes to comparing new rates ornegotiating renewals, a broker is an importantpart of the process,” says Newman. “There aresome companies that have gone directly to theinsurance provider to buy a policy, but...comerenewal time, that provider isn’t going to showyou quotes from others in your market ornegotiate for your benefit.”

If you already have a health plan that you’rehappy with but costs keep rising, Jensen sug-gests giving wellness programs a shot.

“Meaningful wellness programs are becom-ing a big thing...healthy people use less health-care. Programs can entail anything from learn-ing sessions or fitness challenges to annualbiometric testing and other preventative meas-ures,” he explains. “As a small-business own-er, you’re talking about your dollars on theline. If you’re able to create a wellness pro-

gram that helps employees stay healthythen fewer dollars are spent.”

What’s more, “If you’re getting high re-newals, it’s very important to ask what theincreases are based on,” says Jensen. “Em-ployers need to stay on top of occupa-tional illnesses as best they can. We callthis disease management,” he explains.

“For example, maybe an employee wasundergoing a specific treatment, but now

they’re done and there won’t be futurecosts. On the other hand, maybe an em-ployee will have ongoing catastrophicclaims; it’s important to work with your bro-ker and insurance carrier so they can adjustfor treatments that may or may not needongoing coverage. In some cases, they mayhave additional resources...[T]he point is tomake them justify their increase.”


THE BIG

PICTURE

Five trends impacting the business landscape—and why they matter to you.

Information overload is a blight affecting just about every executive today. Decidingwhat’s important to know is a drain on time and productivity. Missing what’s importantto know is costly, even devastating. Outlined here are five trends—some national, someglobal—that will impact the accounting and financial landscape in the future. By Kristine Blenkhorn Rodriguez

ONE: The ‘Greying’ of AmericaIncreased longevity and declines in fertility rates are creating aglobal shift towards aging societies. According to the Global Coali-tion on Aging, the 65 and older population in the G-20 countries isprojected to increase by 124 percent between 2000 and 2030. By2025 researchers project that more than 20 percent of the US popu-lation will be over 65.

“What most people don’t realize,” says Joshua Wiener, distin-guished fellow at the nonprofit research institute RTI International, “iseven after the Baby Boomers are gone, we’re not looking at a steepdecline in the elderly population.”

Foreboding tales prevail of a Medicare-subsidized populationdeteriorating slowly into nursing homes, while a dearth of youngerworkers brings our economy to a virtual halt. In a 2011 survey forthe American Association of Retired Persons (AARP), Baby Boomersshowed their pessimism in no uncertain terms. For one, they areless confident about financing their retirement through their ownsavings or pensions, and are more likely to rely on Social Security.They also have lower expectations of a comfortable retirement,anticipating working longer, at least on a part-time basis, for theadditional income they need.

Wiener isn’t surprised. “Look at the situation the 65-and-older setis in now,” he says. “Their assets, stocks and bonds have had a slowrate of return or no return for some time now. The housing collapsehas robbed them of substantial home equity. In addition, a signifi-cant portion has been laid off, partly due to age discrimination,which the Supreme Court has made more difficult to contest.”

And then there’s the matter of benefits. “The number of peoplerequiring long-term care will double between 2000 and 2030,”says Wiener. “Many middle-aged workers have aging parents andchildren. Right now, we’re not experiencing a shortage of workers.But if that occurs...companies will have to take more of an interestin providing flexible work schedules and leave for their employeesto accommodate care-giving if they want the good ones to stay.Some large companies offer long-term care insurance to theiremployees, but don’t help to pay for it. Without an employer sub-sidy, most employees aren’t going to buy it.”

TWO: The Rise of the Mobile MavensYour younger clients, customers and employees have never knowna world without cloud computing, mobility and social platforms.

“These kids are the next generation and they don’t want theirfather’s financial advisor or brands unless they’re updated for theDigital Age,” says Amy McIlwein, president, Financial SocialMedia. “They want digital communication now. Twenty-four-hourturnaround for anything is an eternity to them.”

Gen Z is the fledgling generation, born after 1995. According toAnn Mack, director of trendspotting for marketing firm JWT, mem-bers of this generation are the first true mobile mavens.

“They will take for granted a world of smartphones, tablets andhigh-speed wireless Internet, untethered by the constraints of a land-line or a traditional Internet connection,” she says. “They won’t dis-tinguish between online and offline, since their mobile devices willkeep them connected most of the time. This will create a uniquemindset, especially when it comes to accessing information.”

The days of Yellow Pages are over, says McIlwein. “Trust is gonewith this generation. They rely heavily on friends and family foropinions on purchases or professional services. Posts about tiring ofpoor service from mobile phone communication providers and the

like abound on Facebook. And usually they’re asking for an opinionon who everyone else is using and how good they are.”

With phone saturation reaching 83 percent of American youthsby the time they get to middle school (says 2011 research fromBridgewater University), the mobile device is an omnipresent andindispensable tool. As this generation grows up, mobile devices willbecome deeply integrated into daily lives—an “Everything Hub,” ofsorts, that enables socializing, shopping and web searches, withgeolocation services supplying information on nearby friends, dealsand amenities.

In response, companies will need to create tailored mobile strate-gies, with websites optimized for mobile browsing. Brands alsoneed to master SoLoMo (social, local, mobile), ensuring they popup on Gen Z’s mobile-roaming radar by, for example, linking in toservices like Foursquare and Yelp.

Soren Gordhamer, author of Wisdom 2.0, says social media ishelping to forge a new era in business transparency and engagement,creating both new challenges and opportunities. “Gone are the dayswhen companies could rely on carefully crafted press releases orflashy ad campaigns to communicate with their customers, often inan attempt to convince people that their products are the best in thefield,” he says. “In the age of social media, the rules have changedradically, and people today demand a more honest and direct rela-tionship with the companies with which they do business.”

Companies now face a clear choice: Wall themselves in or usesocial media and other means to reveal their human side, welcometransparency, and forge new relationships with their customers.

It’s not just a new generation of clients ushering in the mobilityand social media era; it’s employees as well.

“The reality is that mobile collaboration will increase for all cat-egories of workers, and organizations can either take the lead or beled by their users,” says Monica Basso, research vice president foranalyst firm Gartner. “The most progressive organizations won’t beafraid to explore the innovative communications and collaborationmodels enabled by new devices and social services.”

Whether marketing goods or services, financial or otherwise, theimplications of dealing with this generation are clear: It’s all digital,all the time. And it’s served up on their terms.

THREE: The Exodus to the CloudGartner analysts assert that all Forbes Global 2000 companies willbe using cloud computing by 2016.

“Technology has become a commodity,” says Matt Coates,Accenture’s global lead for cloud-computing strategy. “It’s now apay-by-use service, thanks to the cloud.” The option to ramp it upor down, switch it on or off, is the crux of the cloud’s oft-touted costsavings, he explains. “You’re moving from capex to opex, and that’sgood for many balance sheets. But many executives miss the realpromise of cloud.”

That promise, says Coates, is flexibility. “Rapidly changing con-sumer and client demands are much easier to meet and exceedwith a flexible IT architecture that incorporates the cloud. Yourspeed to market improves immensely because you’re more agile asa company,” he says.

Coates sees middle-market companies gaining a lion’s share ofthe cloud’s benefits. “Technology is a larger percentage of their costbase, and with cloud they’re greatly reducing those costs, in somecases by as much as 40 percent,” he explains. “But they have therigor to use the best-of-breed technology that cloud makes readilyavailable to its full advantage.”



As for Gartner’s assertion, Coates agrees it’s valid but adds acaveat. “Large multinationals will be in the cloud by 2016 but somewill use it just for a piece of the business. We’re not talking an enmasse exodus.”

FOUR: The Energy Demand SurgePrimary energy demand is expected to grow 36 percent worldwideby 2025. In the United States, the American Petroleum Instituteprojects that the energy industry supports more than 9 million jobsdirectly and indirectly, which is more than 5 percent of the nation’stotal employment. In 2009, the energy industry supported a totalvalue added to the national economy of more than $1 trillion,which represents 7.7 percent of US GDP.

While growth in energy demand is good for the economy onmany levels, it also has the potential to strain resources and themarketplace in other ways.

Steady and reliable energy supplies are crucial to growth in devel-oping and emerging economies. According to a recent World Eco-nomic Forum report, Energy Vision Update 2012, South Korea, Chinaand India are fostering entrepreneurship and technological innova-tion in non-traditional energy sectors as another avenue to promotethe development of their rapidly growing economies. Specifically,they are providing incentives for wind and solar production, andencouraging joint ventures and technology transfers. Many devel-oped economies also are seeking to expand their renewable energycapacity to be at the forefront of this growing sector.

According to the 2011 McKinsey Global Institute report, Resource

Revolution, the flip side to the positive growth is an increase inresource price volatility as new supplies become more expensive toextract. Environmental spillover then could impact crop yields andthe availability of water, ultimately leading to fuel protectionism andpolitical unrest.

The Institute’s executives, Richard Dobbs, Jeremy Oppenheim,Fraser Thompson, Marcel Brinkman and Marc Zornes, suggest thatthis new era presents both opportunities and risks for businesses.Specifically, they say that, “Companies in most sectors were able tobenefit from declining resource prices over the past century. Thisallowed management to focus attention primarily on capital andlabor productivity. But resource-related trends will shape the com-petitive dynamics of a range of sectors in the two decades ahead.Many companies need to pay greater attention to resource-relatedissues in their business strategies and adopt a more joined-upapproach toward understanding how resources might shape theirprofits, produce new growth and disruptive innovation opportuni-ties, create new risks to the supply of resources, generate competi-tive asymmetries, and change the regulatory context.”

FIVE: The Social Network RevolutionAs far back as 2010 (and in the digital world, two years is an eter-nity), analyst firm Gartner predicted that greater availability ofsocial-networking services, coupled with changing demographicsand work styles, would lead 20 percent of employees to use socialnetworks as their business communications hub by 2014. Nowsome analysts claim an even higher percentage.

“In the past, organizations supported collaboration throughemail and highly structured applications only,” says Basso. “Today,social paradigms are converging with email, instant messaging andpresence, creating new collaboration styles. However, a truly col-laborative, effective and efficient workplace will not arise until

organizations make these capabilities widely available and usersbecome more comfortable with them. Technology is only anenabler; culture is a must for success.”

Newer employees will enter the workforce with a predispositionto communicate via a social network, but they will use email in par-allel, optimizing the business need with the communication modal-ity. “The rigid distinction between email and social networks willerode,” says Basso. “Email will take on many social attributes, suchas contact brokering, while social networks will develop richeremail capabilities.”

Gordhamer lists four actions companies have taken to better theirchances of success in this new socially networked era:

1. Make a connection rather than a sale. Companies need to usevarious means, including sites such as Facebook and Twitter,to socially interact with people. The most popular brands tendto post less about their products or services and more aboutthings that help their customers get to know the people be-hind, and personality of, a company. Their goal is less aboutselling and more about engaging.

2. Opt for small campaigns rather than large ones. With siteslike Facebook and Twitter, we all essentially have our ownbroadcasting network. And businesses are beginning to seethat rather than spending millions of dollars on traditional adcampaigns, small acts can be more valuable because peoplewill inevitably share such experiences through social media.

3. Recognize your customers’/clients’ broadcast power. In thepast, if we had a very bad or very good experience with a com-pany, it could take days or weeks to tell all our friends and rel-atives about it. Today, in a matter of minutes, we can spread theword among our friends on Facebook or followers on Twitter.When every customer experience can be easily and widelybroadcast, small issues become highly significant. One of themost important jobs for the corporate suite today is to hear whatpeople are saying about the company’s products or servicesacross social media channels, and to respond to them directly.

4. Become available everywhere. It’s no longer enough to havean email address and customer service number on your web-site to engage with customers. Today, people want to interactwith and engage businesses via their chosen means of com-munication, whether it’s Twitter, Facebook, discussion forums,or a feedback site like Get Satisfaction.

“Knowing that I can communicate with a company on the net-works upon which I am already most active makes me feel morecomfortable doing business with them, because I know that if Ihave an issue there is someone at the company I can commu-nicate with through those means,” Gordhamer explains.

Companies like Dell, for example, have fully embraced multiplechannels of support. Dell’s community site lists all the ways cus-tomers can connect with the company through Twitter, Face-book, Flickr, YouTube, forums, blogs, email, and more.

“Businesses that choose not to adapt to the new culture will beat an increasing disadvantage, as their customers slowly build per-sonal relationships with their competitors,” says Gordhamer. “Weare now in the age of open communication, engaged dialogue andtransparency, and business success may now have less to do withthe size of ad budgets, depending more on the quality of interac-tions with customers.”

other Nature, human error, hackers, viruses,mice chewing electrical wires—they’re all potential threats to your business. Even a sim-ple power surge can disrupt many of the tech-nologies upon which we so greatly rely.

A frightening 93 percent of companiesthat lose their data center for 10 or more days following a disasterfile for bankruptcy within one year, according to the NationalArchives and Records Administration. Today, you’re expected tobe accessible 24/7, and the slightest hiccup or period of down-time can quickly lead to distraught customers and clients, dam-aged confidence, missed deadlines and, ultimately, lost revenue.

Unfortunately, the amount of paper and digital data accountingand finance professionals rely on leaves them especially vulnera-ble. That’s why savvy business leaders are recognizing that imple-menting the right solutions to protect, backup and restore systemsrapidly is more critical than ever.

By Derrick Lilly

RAPID RECOVERYProtect your data, save your business.


M

RAPID RECOVERY

Data BackupThe mentality of, “This hasn’t,” “This won’t” or “This can’t happento me” simply won’t cut it.

“Data backup is absolutely essential,” says Tony Miscavige, CPA,IT audit manager at Trout, Ebersole & Groff LLP and a Certified Busi-ness Continuity Professional. “Client trust is key, and it would be agrievous breach of trust not to even be doing basic data backups.”

At the absolute ground level, “Business leaders need to take acritical look at what data, devices and systems would cause themto be unable to function if damaged or lost. Anything that is busi-ness critical you need to ensure is backed up often to a secure off-site location,” advises Shane Arnold, vice president of Marketing &Product Management at VaultLogix [www.VaultLogix], an offsitedata backup and storage services provider.

With many of today’s organizations running lean, migrating to acloud-based backup platform administered by a third party is onemethod gaining momentum. As Arnold points out, “Backing upsensitive data in high volumes requires oversight. Paying someoneto handle it so you don’t have to allows you more time to focus onthe actual business.”

There are a number of things accounting and finance profession-als need to pay particular attention to when selecting a serviceprovider, including data encryption and security, data recoverytimes and guarantees, backup and recovery methods, and data cen-ter location and security. Above all, however, “The biggest issueaccounting and finance professionals need to understand andensure is that they’re compliant with whatever regulations theirbusiness is subject to with regards to the handling and storage ofcustomer data,” Arnold explains.

Does your organization need to follow SSAE 16 standards? Solu-tions such as Mozy’s [www.mozy.com] SSAE 16 audited and ISO27001 certified MozyPro and MozyEnterprise use the strictest secu-rity policies, military-grade encryption and leading data centersbacked by storage leader EMC Corporation [www.emc.com]. Ormaybe you need to meet SOX, SEC/NASD, HIPAA, Gramm-Leach-Bliley (GLB), IRS or Payment Card Industry (PCI) regulatory compli-ance? Third-party service providers like VaultLogix [www.datapro-tection.com] and Evault [www.evault.com] offer scalable databackup and recovery solutions that meet the requirements of manyhighly regulated environments.

But data backups are really only one piece of the overall businessprotection puzzle. As Miscavige points out, “You can have greatdata backups, but if you don’t have equipment it’s not going to doyou much good.”

Hardware Protection“There are many ways data and devices can get corrupted or com-promised and it’s important for every business to ensure they havethe appropriate safeguards in place to keep that from happening,”says Arnold. “Those are critical pieces of the overall data-protec-tion picture.”

It’s no secret that computers lacking sufficient protection are themost vulnerable to malicious invasion and corruption, which caneasily spread throughout your entire network. “A data breach in aCPA firm, for example, would certainly cause a hit to your reputa-tion and possibly your bottom line,” Miscavige stresses.

Instead of setting yourself up to be a victim, take every step nec-essary to ensure your systems are secure right from the start. Syman-tec [www.symantec.com], for example, offers solutions specificallyfor small and mid-sized businesses, enterprises and industry-

specific customers that will ensure you have the most comprehen-sive anti-virus, anti-spyware, firewall, encryption and host-intrusionprevention protection available to defend you against hackers, mal-ware and other digital threats.

Don’t stop there, however. Protecting your data, systems andbusiness from their physical environment is just as critical. Theoffice sprinklers go off unexpectedly, there’s a building fire, a light-ning strike kills the power—there are plenty of situations that cansideline your business. That’s when disaster-defying hardwarechampions the day.

“The consequences of not investing in this kind of protection canbe very costly. I bet that most people would place a higher valueon the information stored on their computer than on the hardwareitself,” says Patrick Donovan, product manager at APC. “All of thatcan be lost literally in the blink of an eye.”

Take a brownout or blackout, for example. An uninterruptablepower supply (UPS) can keep your computer, networking systemsand even your whole office fully juiced so you can continue work-ing on those last-minute financial statements.

“Imagine being in the middle of an online stock trade, a banktransaction, and suddenly the power goes out; what a pain, what ahassle, and in some cases, what an expense,” says Donovan.“Aside from protecting both the hardware and the information,there’s a third benefit to having a battery backup, and that is tomaintain your connection to the Internet regardless of what hap-pens to the power.”

That faulty sprinkler head that drenches your desktop doesn’t haveto be your worst nightmare, either. Lost data means lost business, butspecialized storage hardware from companies such as ioSafe[www.iosafe.com] can dramatically decrease the risks of losing yourbusiness-critical data and software solutions in the event of a disaster.ioSafe says its line of specialized external hard drives for personal,business and enterprise use is comparable to an aircraft black box,offering protection from fire, water, shock and crushing.

“If you’re not using rugged hardware, your data is at serious risk,”says Robb Moore, ioSafe CEO. “For example, if the internal glass disk[in your hard drive] is broken in 20 pieces or the drive has sufferedserious fire damage or liquid corrosion, recovery will be impossible.”

Specialized Data RecoveryNo matter what steps you take to protect your data and devices, thetruth is that wear and tear and unforeseen events are inevitable. Atsome point your devices will simply fail you. Your IT department did-n’t replace that aging server soon enough, the laptop the interndropped won’t boot up, your frazzled hard drive has files stuck on itthat weren’t included in your automated cloud backups, a disgrun-tled employee corrupted client data…. Having a reliable data-recov-ery service to turn to in these situations can be your best backupback-up plan.

ADR Data Recovery [www.adrdatarecovery.com], for example,specializes in advanced data recovery and computer forensics, andhas more than 300 locations across the nation that can recover dataand deleted files from failed, unreadable, corrupted or damaged harddrives on desktops and laptops, flash drives, mobile phones andPDAs, servers and other devices. Considering ADR says 80 percentof all corporate and business data is stored electronically—much ofit in the form of emails, PDFs, Word documents and digital files—the need for its services and those of companies such as MidwestData Recovery Inc. [www.midwestdatarecovery.com] and Datare-covery.com Inc. [www.datarecovery.com] is pretty obvious.



The ultimate safeguard for business continuity, however, comesin the form of a strategic plan.

All-Out Business ContinuityData and disaster recovery precautions often fall short because theyfocus on the steps to protect or restore your data and devices, butoverlook the overarching objective of ensuring your entire organiza-tion can recover from a catastrophic event within a set timeframe.

“If your business can’t afford to be down for four or five days,then you seriously need to be looking at a business continuity plan(BCP) to ensure that, no matter what happens, you’ll be there toservice your clients,” says Miscavige. “Whether you’re a mom-and-pop shop, or a regional, national or large enterprise, a lot of the BCPprinciples are the same.”

What are our main threats and risks? What are our critical assetsand processes? What’s time critical? What’s our strategy for main-taining the business, people, premises, operations, technology andsuppliers? What evidence do we have that our plans will work?These are just a few of the many questions that have to be answeredwhen developing an all-encompassing BCP.

Knowing the task can be overwhelming, the US Small BusinessAssociation and Agility Recovery Solutions teamed up to create Pre-pareMyBusiness.org, a website dedicated to providing BCP planning,education and testing resources and disaster assistance for do-it-

yourselfers. Turning to a third party for guidance, however, oftenoffers the greatest value and insight, since they can look at your gen-eral risks and vulnerabilities and uncover situations you simply mayoverlook or not assign priority to.

Miscavige’s firm, for example, takes a four-phase approach toBCP development. Phase one is the vulnerability analysis, which isa general risk assessment. Phase two is the business-impact analy-sis, which analyzes each operational area to look at what it does,who it interacts with and how sensitive it is to outages. Phase threeconsists of drafting the plan based on all findings. And finally, phasefour dives into testing and implementing the plan.

Agility Recovery Solutions [www.agilityrecovery.com], knownfor its BCP consulting and testing services, also offers clients aunique way to beat the odds. In the wake of any emergency or dis-aster, Agility Recovery immediately mobilizes the power, work-space, connectivity and technology resources needed to get itsclients’ businesses up and running again. And in the most dire ofcircumstances, it can deliver its ReadySuites, which provide all-in-one mobile offices with the critical space, data centers, satelliteconnectivity and power generation for your specific needs.

Regardless of what steps you take to secure your business, theimportant thing is to find out where your plan fails. A faulty plan isas good as no plan at all.

With so many backup solutions out

there, finding the best one for your

business is an overwhelming proposi-

tion—especially if you don’t have any

IT support staff or consultants to

guide you. Shane Arnold, VP of Market-

ing & Product Management at Vault-

Logix, offers these pointers.

CoMPATIBILITy: Narrow your options

to include only what’s compatible with

your existing operating systems.

SuPPorT: Clearly knowing who you

need to contact for service and sup-

port and when they’re available is

critical. A lot of providers only offer

support during limited hours.

ENCryPTIoN: This is particularly impor-

tant to professionals in accounting

and finance. Data shouldn’t be trans-

mitted or taken off-premises in an un-

encrypted format.

CoMPLIANCE: If you’re in a highly reg-

ulated industry, ensure your backup

solutions are compliant with all the

regulations you’re subject to.

BACkuP: replication is critical to en-

suring data safety. Choose a solution

that replicates the data to multiple

locations in different geographical

areas for maximum risk containment.

rECoVEry: Does the provider offer

recovery Time objectives? Are the

restoration methods limited? rest-

oring data over the Internet can be

very slow. If time is critical, you

want a solution that offers restora-

tion within a set period and prefer-

ably via a mobile data vault expedited

to your location.

SErVICE-LEVEL AgrEEMENT: What is the

company’s service-level agreement

and how do they stand behind it? Is

there financial reimbursement if data

cannot be recovered within a set pe-

riod? Choose a solution supported by

strong guarantees.

PrICE: Everyone has budgetary con-

cerns, but the cost of not getting

data back as expected is crippling.

online backup is very cost competi-

tive, and many providers take short-

cuts that may put you at risk. Don’t

sacrifice your data for cheap service.

Browse before you buy

THE NIm

BlE

NoNPRofIT

In addition to the age-old challenges nonprofits face on a daily

basis, today’s organizations have to show agility in navigating

the twists and turns of a rapidly evolving business landscape.

By Clare Fitzgerald

Nonprofits have been hunkering down over the pastfew years, and for good reason. They’ve been forced toweather the perfect storm—decreases in donor contri-butions, slow government funding, tricky conditionsfor endowments and a stricter regulatory environment,all while demand for their services is soaring. According to the 2012 State of the Nonprofit Sector

survey conducted by the Nonprofit Finance Fund, 85percent of nonprofits experienced an increase in thedemand for their services in 2011, and 88 percentexpect an increase in demand this year. However, 57percent have only three months or less of cash on hand.In such a difficult operating environment, nimble

nonprofits are coping with the “how to do more withless” conundrum by studying trends and best practicesacross all areas of their operations, including regula-tory compliance, staffing, technology and onlineengagement. They’re looking for solutions that will notonly help to drive their missions forward, but also keepthem on solid financial footing and in the good gracesof their donors and regulators for years to come.


Regulatory Rank & fileThe nonprofit regulatory environment gain-ed a new layer of complexity in 2007 whenthe Internal Revenue Service (IRS) substan-tially revised reporting rules and redesignedForm 990 for tax-exempt organizations, cre-ating more transparency and visibility intononprofit financial information, tax-exemptpurpose, and corporate governance andpolicymaking.

“The IRS has used the revisions to touchmore organizations,” says Dan Romano,partner-in-charge of Grant Thornton’s nat-ional not-for-profit practice. “While non-profits may not have liked the changes,they’re adapting the best they can.”

“Organizations used to be able to gathertheir tax information at the last minute, butthat’s no longer the case,” says Scott Steffens,partner in Grant Thornton LLP’s not-for-profitpractice in Chicago. “We advise them to getthe ball rolling much earlier now.”

The overall heightened level of trans-parency, especially when it comes to donorand board interest in their operations, is stilltaking some getting used to.

“We’re seeing a lot more donor account-ability. In the past, people might have justgiven to a cause because their parents sup-ported it,” Steffens explains. “Now, peopleare much more interested in understandingthe impact of their gift.”

With the books now open to the public,nonprofits need to provide measurableresults to earn and maintain the public’strust. “If donors don’t like what they see,contributions will go down and the organi-zation will suffer,” says Romano.

Board members are more actively involv-ed as well. Prior to the IRS revisions, Rom-ano estimates that only about 5 percent ofhis clients’ boards reviewed Form 990. Nowhis firm is seeing some sort of board-levelreview in about 90 percent of the nonprofitsthey serve.

“Board members are no longer just sit-ting on boards with the idea of helping acharity. They’re rolling up their sleeves andgetting involved in the strategy and finan-cials,” he says.

Nonprofit regulations aren’t getting anyless complex. Both Romano and Steffensexpect to see stricter community benefitsrequirements for all nonprofits in coming

years. For example, tax-exempt hospitals arenow being required to prove their exemp-tion by completing a community needsassessment every three years, and Romanopredicts the IRS may institute a similarrequirement for all 501(c)(3) organizations.

Organizations such as churches, somesmall nonprofits and government entitiescurrently are not required to file Form 990,but may be required to provide informationin some capacity in the future. Requirementsfor colleges, universities and foundationsalso may be tightened, while executive com-pensation and board oversight also may facemore scrutiny.

Talent Search & findNonprofits are keeping a close eye on theirstaffs—especially their fundraising talent—as the economy recovers and competitionfor fundraising dollars heats up.

“Fundraisers help to keep the doors open,and there’s a huge demand for them,” saysMarian DeBerry, director of executive searchfor Campbell & Company, a national non-profit consulting and executive search firm.

According to DeBerry, over a millionnonprofits are operating across the countrytoday, and the fundraising professionalsthey need to serve them run only into thehundreds of thousands. That translates intosome strong competition.

There’s no question that as the economyimproves, more Baby Boomers retire andturnover creeps back up, nonprofits willneed to find new talent and groom existingstaff to fill those voids. Forty-three percent ofnonprofits expect to create new positionsthis year, according to Nonprofit HR Solu-tions’ 2012 Nonprofit Employment Trends

Survey. And they’ll be recruiting beyond thefundraising department.

DeBerry says her firm is seeing ramped-up demand for senior-level executives andexecutive directors as well. “A few yearsago, people just weren’t hiring. In manycases they had to lay people off, and thosethey retained were doing the work of twopeople. That scenario is starting to ease,”she says. “Organizations have to hire.”

And they’re looking for very specific skillsets when they do. With greater accounta-bility expected across organizations, non-profits are establishing higher standards forperformance and expecting more from staff.

“Before, fundraisers raised money,” saysDeBerry. “Now they raise money, managestaff, focus on metrics and more.”

Dennis Sawyers, senior HR consultant forNonprofit HR Solutions in Washington,D.C., agrees. “Development people need tobe creative in their fundraising approachesand have robust rolodexes and a knack forreally identifying strong prospective donors,”he contends. “Across the board, nonprofitsare looking for more business-savvy peoplewho can advance these critical missions.”

Once nonprofits secure top talent, theyhave to hold on to it. But many still strugglewith staff retention. In fact, three-quarters ofthe nonprofits that participated in the Non-

profit Employment Trends Survey said theydon’t have a formal strategy in place forretaining staff. When asked about chal-lenges, 34 percent cited an inability to offercompetitive pay and 22 percent cited theinability to promote top talent.

Sawyers says there are creative ways toovercome those obstacles, however. “If youcan’t do X, do Y,” he advises. “Staff reten-tion challenges so often come back to fund-ing and what is or isn’t affordable. Some-times the dollars just aren’t there to ensureyour staff has all the professional develop-ment opportunities or the latest and greatesttechnology, or the salaries to support theirpersonal economics. You have to find whatyou can do. If you can’t send your staff tothe next conference, then find ways inter-nally where you can help them stretch andboost their growth. Demonstrate in otherways that their growth and development isimportant and that they’re valued.”

Sawyers also suggests looking at opportu-nities for flexibility, especially when recruit-ing Gen Y workers, who often are service-minded and looking for flexible workarrangements. Being open to flextime initia-tives and work-life balance incentives is keyin the ongoing battle for talent.

Tech Game ChangersNo longer considered just back-end infra-structure, nonprofit executives are lookingfor IT solutions that will directly impacttheir organizations’ processes, operations,donor relationships and ultimate mission.They’re carefully planning their technologyspending and finding powerful, robust toolsfor their investment.



According to Jeff Sobers, product market-ing manager at Charleston, S.C.-basedBlackbaud, a nonprofit software provider,one area where technology has had anenormous impact on nonprofits is in theautomation of accounting processes formore detailed financial reporting.

Sophisticated accounting software sys-tems allow nonprofits to more easily pro-duce financial reports and spending ratios,while reducing the time involved andhuman error associated with manual dataentry. “These tools allow nonprofit profes-sionals to know and produce informationabout the exact location of the money theycollected and whether it’s being used as thedonor intended,” Sobers explains.

Nonprofits can not only produce dataquickly, but also analyze it that much better.For example, user-friendly dashboards allowfinance professionals to create graphs andfinancial snapshots that penetrate the mean-ing behind the numbers.

“These tools are extremely helpful to seeyour outcomes. Nonprofits can show donorsand board members exactly where and howthey’re outperforming their peers, and theycan use that data to obtain more funding,”says Sobers.

Krista Endsley, senior vice president andgeneral manager for nonprofit solutions forSage North America, adds that automationtools allow organizations to build processesaround data for the entire workforce, in-cluding those who may not be as spread-sheet savvy.

“Technology helps turn data into knowl-edge,” she says, noting that automationtools also are critical for securing govern-ment funds. “Federal dollars are comingwith even more restrictions today, creatingan extra layer of burden on small nonprof-its. Automation tools can handle that verydetailed segmentation of information anddata. The technology is very resource-driven and allows nonprofits to stay aheadof demands.”

Another area where technology is improv-ing data flow for nonprofits is in the shift tothe mobile realm, says Sobers. “Data ismuch more accessible now. All of the plat-forms and information that used to be desk-top-based can now be in the hands of yourfundraisers when they’re out on the road and

in donor meetings. And you’re keeping thatdata on encrypted, password-protected appsinstead of on a sheet of paper.”

The Social media linkAs nonprofits seek out more ways to diver-sify and boost fundraising efforts, they’realso establishing a greater online presence.In fact, 59 percent of US nonprofit organi-zations reported an increase in onlinefundraising last year, according to the Non-profit Research Collaborative’s Nonprofit

Fundraising Survey released in April 2011.Nonprofits are ramping up their websites

with overall user experience in mind—mak-ing it easier and more secure for donors andsupporters to give, register for events andsign up to volunteer. And, most significantly,they’re increasing contributions and build-ing relationships by connecting more effec-tively with supporters through social media.

Peer-to-peer fundraising efforts, wherefriends supporting a cause ask friends foradditional support through social networks,are gaining popularity and momentum, saysSobers. “You’re promoting your organiza-tion through those who already believe inyour mission and have their own network ofsupporters. It’s a very low cost-per-dollarfundraising effort that can go viral veryquickly and make a big difference, whetherit’s raising money for an event or boostingresponses to grassroots advocacy alerts.”

Despite such opportunities, only about50 percent of Sage’s mid-market nonprofitclients are actively engaging online, saysEndsley. “Nonprofits still need more under-standing about how to really take advan-tage of many of the tools,” she says.

Effectively using social media requires atime and learning commitment, explainsGeri Stengel, president of Ventureneer, aNew York-based research company that pub-lishes a variety of social media studies tai-lored to nonprofits. In fact, according to arecent Ventureneer report, Ditch Digital Dab-

bling: How Small Businesses and Nonprofits

Can Master Online Marketing, nonprofitsneed to spend at least 25 hours per week onsocial media to see worthwhile results.

But few nonprofits have achieved thatlevel of commitment. “We’ve found thatnonprofits actually start using social mediasooner than many small businesses do, butthey often get frustrated by the learning

curve and give up,” Stengel explains. “Butif they stick with it and put in the effort tolearn how to use social media, they start tosee it doing what it’s supposed to do, and itquickly becomes part of their routine.”

Because many nonprofits are scared offby the thought of devoting 25 hours a weekto social media, Stengel suggests startingsmall, adding one social medium at a time.Facebook, Twitter, YouTube and LinkedInoften are considered the top-tier socialmedia channels, but Stengel notes thatLinkedIn is an especially underused socialmedia resource among nonprofits.

“Nonprofits don’t realize how valuableLinkedIn can be in terms of fundraising,sourcing strategic alliances and gettingintroduced to potential donors,” she says.“They’re not using it as a research database.But LinkedIn can help you find people youwant to know and then find ways to getintroduced to those people. It’s a great start-ing point for building relationships and it’sparticularly important for connecting topeople. You can search by geography, title,function and even passion, so you can con-nect to those people who share a belief inwhatever your mission is.”

“The biggest advantage of social media fornonprofits is in building relationships,” saysStengel. “But it’s also another way to com-municate the messages you need to get outthere, whether it’s announcing events, re-sults or whatever is important.”

For the vast majority of nonprofits, pro-gress is slow but sure. According to Black-baud’s 2012 Nonprofit Social Networking

Benchmark Report, nonprofits feel that tak-ing the time to develop a vision and strategyfor their social media program, having ex-ecutive management that makes it a prior-ity, and hiring dedicated social media staffare the top three factors for implementingsocial media efforts successfully. Most non-profits are starting to make inroads in theseand other areas as they persevere in theirmissions. In fact, nonprofit professionalssurveyed already reported increases inmembers joining their social communitiesin 2012.

As Sobers explains, “It’s all about interac-tive engagement. Organizations can usethese tools to show what good thingsthey’re doing, and the money follows.”


CLA

SSIF

IED

S+

AD

VERT

ISER

IND

EXIs it time

to consider a merger?

We can make thedecision a Win-Win!

We’ve completed 15 separate mergers over the past 20+ years. You’ll work with us, not for us… and become more profitable!

Contact me to learn more:Earl Holtzman,

Managing PartnerPhone: 847.213.2100

Email: [email protected]

Michael Silver & Company CPAsSkokie, IL 60077www.msco.net

Peer ReviewMueller Prost PC, a St. Louis, MO based CPA firm, is offering

firm to firm engagement and system peer reviews as well as readiness assessments.

Our team consists of individuals with over 100 years

of combined auditing and assurance services experience

in the areas of:

Manufacturing & DistributionConstruction & Real Estate

Non-ProfitERISA

Governmental

Effective for all license renewals on or after July 1, 2012, the State of Illinois is now requiring satisfactory

completion of peer reviews.

Don’t get left behind. Prevent costly delays in

renewing your Illinois State license by scheduling your

peer review today!

Please contact: John E. Oeltjen, CPA

314-480-1302 [email protected]

Sublet 650 square footoffice in Skokie.

Single story building.4-way on/off at Edens

Expressway. Furnishedor unfurnished.847-583-0005

BUY OR SELL AN ILLINOIS

ACCOUNTING OR TAX

PRACTICE

PRACTICES FOR SALE:

Chicago CPA Firm gross $2.3M;

Chicagoland EA Practice gross

$1.1M; Rochelle CPA Practice

gross $110K; SE Missouri CPA

Firm gross $780K; Oregon CPA

Practice gross $217K; Springfield

Area CPA Audit Only Practice

gross $200K; Rockford Tax &

Accounting gross $108K.

For practice details, call

1-800-397-0249. Or, visit us at

www.accountingpracticesales.comto inquire about available

opportunities and register for

free email updates.

THINKING OF SELLING YOUR

PRACTICE?

Accounting Practice Sales is the

leading marketer of accounting

and tax practices in North

America. We have a large pool of

buyers, both individuals and firms,

looking for practices now. We also

have the experience to help you

find the right fit for your firm,

negotiate the best price and terms

and get the deal done. To learn

about our risk-free andconfidential

services, call Trent Holmes at

1-800-397-0249 or email

[email protected]

Business Services

CPA careerspace

www.icpas.org/careerspace.htm

For CPA career-climbers andthe people who hire them

ADVERTISER INDEX [www.icpas.org/advertiserindex.htm]

Visit these websites for more information on the services and products provided by advertisers featured in thisissue of INSIGHT.

26 ADP Small Business Services accountant.adp.com/my-number

5 Accounting Practice Sales accountingpracticesales.com

1 Alliant Credit Union alliantcreditunion.org/ilcpa

10 Audimation Services Inc. audimation.com

7 Bisk Education CPEasy.com/InsightOneStop

Inside Back Cover BMO Harris bmoharris.com/redframe

21 Clear Focus Financial Search LLC clearfocusfs.com

11 CPA2Biz cpa.com/Paychex

15 Consultants’ Training Institute theCTI.com

23 CPE Link cpelink.com/cm

9 FGMK, LLC fgmk.net

3 Garelli Wong/Jackson Wabash garelliwong.com

27 Marsh icpasinsure.com

Inside Front Cover Robert Half International roberthalf.com

19 TCF Financial tcfbank.com

31 TASC tasconline.com

33 Warehouse Direct warehousedirect.com

PAGE ADVERTISER ONLINE

VALUATION OF YOUR

CLIENT’S BUSINESS OR

PRACTICE

By: Crandall & Brackett,

Ltd. 630. 653.7922

email:

[email protected]

Web:

www.crandall-brackett.com

Our only service is performed

on your behalf in a mutual

engagement setting. From

basic research to a full valua-

tion, we tailor our services to

your needs. We author, teach

and participate on policy set-

ting committees and boards

within the valuation profession.

Don’t forget...to renew your membership today!

MANAGE the BUSINESS

MAKE CONNECTIONS

STAY INFORMED

Renew online at www.icpas.org.

here to

help you...

Questions: Please contact Member Servicesat 800.993.0407, option 4.


The annual CPA Day of Service on September 21 is rapidly approaching. If you’re

looking for volunteer ideas, consider serving lunch at a soup kitchen, planting flow-

ers at a retirement center, cleaning up your neighborhood park, walking dogs at

an animal shelter, organizing a blood drive, assembling care packages for de-

ployed troops, or repainting a women’s shelter. Any volunteer activity is encour-

aged, and you can plan around your schedule. Plus, members who register their

volunteer plans with the Society will receive a free CPA Day of Service T-shirt to

wear during their chosen activities on September 21.

Register today at www.icpas.org/CPADayofService.htm.

VOLUNTEERNEWSTHE LATEST FROM THE ILLINOIS CPA SOCIETY’S CPAS FOR THE PUBLIC INTEREST

CPA Day of Service September 21

Want to improve your image, boost morale and give back to the community? Follow these steps provided by the HandsOn Network [www.handsonnetwork.org]:n Assess both your employees’ and community’s interests and needs.n Identify business priorities and goals that can be met through an employee

volunteer program.n Secure top management support, with all levels of management and all depart-

ments encouraging employee participation in the program.n Develop a program structure and policies that encourage participation from all

employee levels.n Design volunteering projects around organizations that your company supports

or is considering supporting.n Measure the program and evaluate its results to ensure plans achieve their goals.n Establish a rewards program to acknowledge and boost employee participation.n Publicize your company’s efforts internally and externally to increase visibility

and inspire future efforts.

Kickstart Your Employee Volunteer Program

The NonProfit Times reports the value of an hourof a volunteer’s time increased to $21.79 during2011, up from $21.36 in 2010, and nearly triplingin value since 1980. What’s more, according to themost recent Corporation for National and Commu-nity Service figures, in 2010 approximately 62.8million US adults volunteered 8.1 billion hours,worth $173 billion. Nonprofits often use the valueof a volunteer hour to help volunteer recognitionand communications, and to show an organiza-tion’s community and economic impact.

Volunteer Value Rises

This spring, 25 Illinois CPA Society members volunteered to present money management skillsto elementary school children in schools in Chi-cago and Wheeling. Junior Achievement (JA) vol-unteers were energized with the experience,expressing comments like, “I truly enjoyed work-ing with the students. Thank you for coordinatingsuch a wonderful partnership program,” and “I re-ally enjoyed the experience. The students and theteachers were great.”You too can catch this enthusiasm and headback to school this fall. Dates and locations, aswell as FAQs about the program, are listed onour website at www.icpas.org/volunteer.

Be a JA Volunteer

use your financial expertise to help those in need

FOR MORE INFORMATION Visit us online at www.icpas.org/Volunteer for CPAs for the Public Interest programming information and volunteer news.

CLIENT NAME: Y&R MidwestJOB#: 15673DESC: BMO Harris Bank

OPERATOR: tjcROUND: 2DATE: 06/06/12

FILE NAME: I15673A.indd QC Check __________

__________

__________

Title:

Space/Color:Bleed:Trim:Live:Media:

Art Director: Writer: Production: Account Manager: Keyliner:

Job #: Y12049

“Business Banking”

FP 4/C Bleed8.625”w x 11.0625”h8.375”w x 10.8125”h7.875” x 10.3125”INSIGHT Magazine

J. SmallwoodP. MufsonK. SmilesA. ReinBeat Studios/tjc

Insertion Date: Summer 2012

What do you see?

BMO Harris Bank N.A. Member FDIC

You want to make your client’s vision a reality. So we make that our goal as well. Whether we provide treasury management or financing, or simply act as a sounding board, we’ll help you be part of a success story. Because when your client succeeds, you succeed.

bmoharris.com/redframe

A partner who worksas hard as you do.

VOLUNTEERNEWS

Knowledgehub is an innovative learning management systemproviding a cost-effective training solution for you and your team.

knowledgehub delivers

For more information, call Jennifer Schultz, Vice President, Member Services and Professional Development at 312.601.4604. www.icpas.org/knowledgehub.htm

knowledgehub

convenienceMore than 1,500 educational offerings in one easy to navigate site

Information at your fingertips when you need it

Search for programs by topic, practice areas or job function

coachingMonitor and guide the development of your staff

Development plans tailored to specific practice areas or job function

complianceTrack compliance with requirements for:

• CPA licensing in all states• Other credentials such as CMA, CIA, CFE and CFP, as well as Yellow Book

contentMost programs delivered in HD video format

Only solution with multiple vendors• Illinois CPA Society• Becker Professional Education• SmartPros• Western CPE

Date post:	18-Mar-2016
Category:	Documents
Upload:	illinois-cpa-society-insight-magazine
View:	230 times
Download:	4 times

INSIGHT Magazine - Summer 2012 - Business Solutions Special Issue

Documents