Four days, 34 meetings.  That was my week so far as I write this Blog on Thursday night.  To put is delicately, I’m beat.  This kind of schedule is extremely unusual for most people in Business and Industry although I am sure there are more than enough controllers, officers and C-suite CPAs that would say that kind of schedule happens more than once during a year.

My marathon week was brought on by a convergence of several factors.  First, at the beginning of the week, month-end close for April was still finishing up and that created a few regular and issue induced meetings.  The second cause was a rare occurrence.  My employer, AT&T closed on the sale of a Billion Dollar piece of the business, our yellow page and related local search internet operations.  That event alone caused more than a third of the meetings to deal with various aspects of the deal.  The third major factor was the ongoing schedule recovery from missing a day and half the week before while I was out sick.

Going through so many meetings, the hardest thing to do is to stay focused on the topic of each meeting.  It’s easy to let your mind drift to the next meeting topic or to the dozens of emails buzzing on your BlackBerry, but that defeats the whole purpose of the meeting in the first place.  The meeting is scheduled because someone either needs to pass information on to you, they need you to pass information on to them or they need your council, advice or approval for something they want to do.

Passing information on to someone else is the easiest meeting to stay focused in because generally you are the active leader of the meeting. There is also a danger though of moving too fast through the information because you are looking to save a few minutes at the end of the meeting to clear out some of the emails building up, make a phone call or simply take a nature break.   It’s important to not only talk but listen with your ears and your eyes to make sure that your message is being received and more importantly understood.

The other two types of meetings can be made even more difficult to stay focused if they involve conference calls.  It is all too easy to become distracted by the email chime or the papers sitting on your desk.  No one will notice if you take a peek for just a second, but anyone who has worked for a while can tell you that is when they invariably say something really important or ask you a question and you are caught asking them to repeat themselves.  One trick I use is to have a wireless headset and get up and pace around the office.  This gives my body something to do while my mind is focused on the topic at hand.  Walking to the other side of the desk is a great way to avoid clicking the mouse to look at an email.  You can even do a few low impact exercises, although you might want to make sure the mute button is on so people don’t suddenly wonder why you are breathing heavy.

I survived my marathon and can say I only lost focus in two or three meetings.  I just hope I didn’t agree to anything I will come to regret in those few meetings.

As a CPA, you can always tell the end of tax season even if you don’t complete one tax return and your calendar is missing.  You can tell because your mailbox – both the postal version and the electronic version – starts getting filled up with CPE catalogs.  Of course you do probably need to look outside to see if the leaves are green or red to be sure exactly what time of year it is because one tax season end is April and the other is October and the CPE catalogs come in droves after both deadlines.

The question for you is which time of year do you actually look at the CPE catalogs?  Is it in the spring when you can plan your CPE approach for the year or is it late in the year when you are just looking for hours to comply with your state licensure requirements? My recommendation is to take advantage of all of the catalogs you are receiving now to put together a proactive CPE plan that will actually increase your skills during the coming year.

The first step to putting together a CPE plan is to look at your needs.  Are there areas you need to improve on in the coming year?  You might look back at those annual reviews you quickly filed away in the rush to get all of that year-end work done for some ideas.  Ideas can also come from looking at your work goals and plans for the coming year.  Did you get new duties in the last few months that will require new knowledge or skills?  Is there a new standard that directly impacts your company or job? Is there a promotion or new set of duties you will be striving to obtain in the coming year?  All of these provide fertile ground for growing ideas of CPE that will enhance your career rather than simply meeting the state mandated minimum.

The second step is then to search for those CPE opportunities that meet the needs you laid out above.  I know too many of you have limited or no help from your employer in paying for quality CPE.  That creates is own set of dilemmas, but even those can be overcome with a well thought-out plan.  First off, by planning ahead you can maximize the use of low or no cost CPE opportunities that come along.  My home Chapter here in Texas has an annual free CPE day. (OK, you have to pay for lunch, but who is going to quibble over a few bucks when you get 8 hours of CPE.)  With a CPE plan in place, I can choose the sessions that best fit my needs for the coming year while at the same time keeping my cost to a minimum.

Of course sometimes you still have to pay to get the CPE you really need to improve your skills.  By planning ahead you can find the right sessions in or close to your city minimizing the travel costs which all too often can be as much or more than the course or conference itself.  In addition you can look for a course with the right expert on the subject or a presenter that you know will make it worth your time and money rather than taking a leap of faith.

Really, CPE should be no different then everything else we CPAs do.  We plan and organize the monthly, quarterly and annual reporting process for our companies, we put together plans for new system or process implements and we even we put together personal financial plans for our clients and ourselves.  Isn’t your career worthy of some of that planning effort as well?  Planning your CPE approach for the year is one simple step you can take toward being more proactive in planning your career.  I hope you will take advantage of all of the CPE catalogs you are receiving now that tax season is over to spend a little time doing that planning.

We call it our ‘Little Slice of Heaven’ because that’s what it is.  It’s bordered on one side by a swift flowing bubbling brook feed by cold mountain streams and on the other by the mountain that towers over our valley.  I believe the sky has never been bluer.  The BBQ is as tasty as ever and the vanilla ice cream melts quickly from the warmth of the sun.

Today we walked the ‘Blue Trail’ which starts just over the bridge and at the Mountain’s base.  The climb to the top of the peak takes roughly an hour.  The initial hundred grassy feet are steep but, the rest of the climb is a gradual assent.  The light spring green foliage on the trees is thick enough to hide the sky except for the portion above our heads.  Patches of violets offering vibrant shades of purple against the ground cover climb the mountain side along the trail.  Dogwood pedals litter the path and our greyhound runs ahead looking for the blades of green that taste sweet to his chew – the kind that in our manicured and well-kept yards are called weeds.  Everything is of course relative.

We continue to climb enjoying the cool breeze of the morning until, near the top we stop at the first discarded tire.  We are fifteen feet from the top of our mountain and at the brim of its bonnet.  From the highway at the top of the mountain people throw all manner of unwanted items – tires, wheels, utility boxes, washing machines and even two boxes of flyers someone decided was best distributed in bulk to this one location.  The bonnet our mountain wears is not colorful and gay like an Easter hat.  No, it’s colors are mostly black, grey and rusty brown.  Neither are its textures soft and flowing.  Each year the bonnet grows thicker and heaver and sadder to my eyes.   But, the mountain continues to accept the castoffs from the road above with pride.  I think it does not yet know that these are not riches gifted by man.

We turn at the first tire and retrace our steps down the path to the place which is bordered on one side by a brook and on the other by a mountain – our ‘Little Slice of Heaven’.   From there we cannot see the bonnet our mountain wears.  It is hidden by the foliage – at least for now.

It hit me as I was preparing for this Board meeting that this was my next to last meeting in New York with the Board.  My three year term is nearly up.  It has been a great three years, and I am looking forward to the last meeting in August and my final act of making the audit committee presentation at the October AICPA Council meeting.  Of course this just marks the end on one stage of my involvement with the profession.  I will continue to serve on the AICPA council for two more years as I was nominated to complete the remaining two years of an unexpired term as a member at large.  I will also continue to serve through the end of 2014 as the AICPA representative on the IFAC Professional Accountants in Business committee as well as the TSCPA Business and Industry Issues committee.  Even though my term on the Board is nearing an end, there are plenty of issues that the Board will have to deal with this year and beyond.  Some of them are highlighted in the remainder of this blog.

Mandatory Auditor Rotation – a big topic of discussion was the PCAOB and EU proposals around mandatory auditor rotation for public companies.  We had a specific agenda item covering the results of the recent PCAOB roundtables on the subject, but it was also discussed within several other agenda items including the report from the CEO, the report from the Center for Audit Quality (CAQ), and the report on what is happening in Washington.  The PCAOB proposals were seriously questioned by members of Congress (both Democrats and Republicans) at recent congressional hearings.  The focus of the questions was on what issue is mandatory rotation trying to solve and are there better, less invasive ways to solve those issues.  The PCAOB has made it clear they will be discussing this for a while before they even consider proposing any actual rule changes, so we all need to keep up with this issue as it continues to develop.

Cyber Security – If you weren’t aware, the AICPA was the subject of a spoofing attack recently.  Over 90 Millions emails were sent out under a spoofed AICPA address stating that the AICPA was canceling your license.  Putting aside the fact that the ACIPA has no authority to cancel your CPA license, the incident had many impacts.  Clicking on the link in the email resulted in an attempt to install malware on your computer that would potentially send key financial information to the people who launched the spoof.  In addition, millions of the emails had bad addresses, so the AICPA email system was temporarily brought down by getting hit with millions non-delivery email responses in less than 15 minutes.  Keep in mind, this email didn’t come from AICPA systems – they simply sent out emails from other systems that made it look like they came from the AICPA.  The costs of dealing with this attack were significant, but not nearly as much as they would have been had the AICPA systems been actually breached.  And this goes beyond just the immediate costs as shown by these statistics.

• 25% of businesses have had a merger, acquisition or new product roll-out stopped or delayed by a Cyber breach per a McAfee/SIAC study
• 20% of victims who have had data compromised cut ties with the institutions that compromised their privacy.

Like all businesses, the AICPA takes security and privacy very seriously and we have extensive controls and procedures to protect your personal information, but as always the controls start with you.  If you get an email that looks or sounds strange, don’t be afraid to question it.  Did it really come from the purported sender?  Is this legitimate?   Always ask those questions, no matter who the email is from and don’t be afraid to call the sender to make sure it is real.

Total Tax Insights – the last thing I want to do is mention a tool that will soon be introduced by the AICPA in conjunction with its 125^th anniversary in May.  This tool will enable people to determine their total tax burden from all taxes (income, property, sales, gasoline, telephone, electricity, alcohol, cigarette, etc.) they pay down to the county level – all 3,035 of them.  It will be a great way for people to understand the full tax burden incurred by different people at different income and wealth levels across the country.  Be on the look-out for the launch of this fantastic tool.

The AICPA Spring Council meeting and 125^th anniversary will take place in mid-May and I will update you on what happened at that meeting and other items impacting our great profession in the coming weeks.

As an accounting instructor I’ve had the opportunity to work with a number of textbooks, some better than others.  As a consultant I get to work with software manuals, some better than others.  It seems that written communication has become, for many of us, a forgotten art.  This is especially true of such exciting topics as advanced accounting and production costing.

This is no trivial matter.  Every year companies and students invest untold millions in training.  Their goal is to convey sufficient understanding so that students can perform their professional duties.  There’s a pretty obvious correlation, for example, between the quality of financial statements and how well the accountants and auditors involved understand their respective roles.

All of this seems intuitive, yet you wouldn’t know from reading most accounting textbooks.  Discussions of such topics as consolidations and non-controlling interests confuse more often than they explain.  The instructor then has to go through the material and rewrite it in simpler terms, broken out into steps with explanations as to why these steps are necessary.

Accounting texts typically use manual worksheets to explain the processes involved in consolidation.  They still use pencil and paper journals and ledgers to illustrate transaction recording.  Students often complain about the disconnect between these illustrations and the things they do in the real world of computers.

The accounting software training manuals I’ve worked with aren’t much better.  Rather than explaining how to carry out daily procedures and then showing all the setup decisions needed to support those procedures they jump straight into the setups.  Inconsistencies between the terminology used in software manuals and those used in accounting classes only make matters worse.

Maybe someday a textbook publisher will actually hire professional writers as editors.  Perhaps software publishers will hire accountants to review their manuals for inconsistencies between design and practice.  Until then there is a world of opportunities for those who can translate text speak and manual speak into language that mere mortals can understand.

It seemed like the whole country was following the arguments before the Supreme Court on the Constitutionality of the Individual Mandate in the PPACA – better know as the Health Care Act (or as some like to call it Obamacare).  I do not recall this much interest in judicial proceedings since the OJ Simpson Trial.  We are now waiting to see the Court’s decision, but we will have to wait until the end of June to find out.   Essentially, there are four possible outcomes.

1. The mandate is constitutional and everything stays just the way it is
2. The mandate is not constitutional, but it is the only part struck from the law
3. The mandate is not constitutional and other integral parts are struck along with it
4. The mandate is not constitutional and so integrated with the rest of the law that the whole law must be struck down

As an accountant I have been told more than once I have no business trying to play the part of lawyer, so I won’t venture any opinions on which outcome is likely, but as accountants we are responsible for helping our businesses make plans.  In this case, those plans include thinking about the “what ifs” if the law is struck down. With 2,700 pages of law and thousands of pages of passed and proposed regulations, the “what if” list is quite long.

One of the first decisions businesses and insurers will have to make is how to deal with the benefit changes they already made to comply with the law.  Does the business still want to insure dependents of employees up to the age of 26 as was required by the law?  What about reinstituting lifetime coverage maximums?  What changes should be made to preventive care and checkup benefits now that they aren’t required to be without a co-payment?

Another significant impact close to the heart of many CPAs is the elimination of the requirement to include the dollar amount of medical benefits on an employee’s W-2.  Most businesses are well underway with their plans to determine the amount and develop ways to include it on the W-2 since it is currently required to be included on the 2012 W-2s to be issued in early 2013. Another change would be around Flexible Spending Accounts or FSAs.  Under the law the maximum contribution to an FSA would drop to $2,500 in 2013.  Businesses will need to be prepared to modify their annual enrollment process quickly to keep up with the changes.

As I said, the list is long and I could spend the next ten blogs going over the possible impacts, but I think you get the idea that the Supreme Court decision is of more than a passing interest to CPAs in Business.  The decision will impact budgets, planning and a number of processes, so like the rest of the country we will be waiting, but unlike the rest of the country, we are already starting to think “what if…”

The local paper here in Dallas recently had an article in the opinion section on the history of the 40 hour work week and how it cam to be enshrined in the Fair Labor Standards Act (FLSA).  There were interesting slants in the article on how the 40 hour work week was already the standard by time it became law in 1937.  That’s not what really intrigued me about the article.  What I found interesting were the studies on productivity gains from working people more than 40 hours per week that have taken place more recently.

One of the key findings from the studies is there is not a one-for-one relation ship between productivity increases and increasing the number of hours worked.  For example, one study found that increasing hours worked by 50% only resulted in a 30% productivity increase.  If you’re paying workers by the hour, this does not seem to be a rational way to increase production, especially considering you have to pay time and a half for those increased hours.

But what if you aren’t paying workers by the hour like most CPAs (who are generally considered exempt employees under the FSLA).  In that case you are getting extra production for free – who cares if the increase in production is not equivalent to the increase in hours.  That’s where another study came in with a very interesting finding.  The study found that the production gain from extra hours deteriorates over time.  That is, you may start out with a 30% production gain for 50% extra hours, but over time that 30% shrinks as workers don’t have enough time to handle personal matters, family and sleep. In fact, eventually productivity goes negative according to this study.  The point of the study was that the productivity surge does work a little while and is a good way to handle a temporary serge in work (can we say busy season or year-end close), but you can’t expect it to go on forever.

As with anything, there are always exceptions to the rule.  I would consider most CEOs and CFOs (and managing partners) to be exceptions, but therein lays the problem.  They don’t personally experience the productivity fall-offs from working the extra hours and therefore don’t understand why it happens in others (or worse assume it happens because the workers are lazy and not trying hard enough).

On the other hand I think the studies might be a little dated and don’t take into account the location flexibility of the modern knowledge worker.  In today’s world it is possible to leave the office on time (even early?) to get to the kid’s ballgame and eat dinner with the family, take the dog for a walk and help with the homework and then get a little more work done with a refreshed state of mind and a remote connection that is just as efficient as being in the office prior to heading off to sleep for the night.

As usual, I think the answer may be somewhere in the middle.  Today, I think it might be possible to get a one-for-one increase in productivity to increase in hours with the right mix of flexible work arrangements.  The magic is, if that is true, then it doesn’t take as many hours to get the same increase in productivity as it used to which leave more hours for everyone to enjoy themselves with family and friends.

I would love to see more studies on this subject.

That famous phrase came to my mind a lot the week I spent in India.  It hit me as soon as I got off the plane and was walking through the airport.  It’s hard not to notice the soldiers walking around with AK 47s on their shoulders.  I reminded myself that this was India that was subject to several terrorist bombings in the last year and they were taking security seriously, but this was a high profile airport and things would change once I was on my way to the Hotel.  Yeah right.

The first thing you notice on the roads in India is that the white lines are merely suggestions, and not serious ones at that.  There might be three lanes at an intersection, but there are often six or even eight vehicles across and when the light changes, watch out!  They also take their horns very seriously.  They use them so often the cars often have special buttons on the steering wheel so they don’t have to lift their hand to honk the horn (yes I am serious).  I thought a New York taxi ride was wild, until I road around India for a week.

Once I survived my ride to the hotel I thought it would finally be time to relax, but once again I was wrong.  As my car got into queue to go through the gated entrance to the hotel, I realized that all of the cars were popping their hoods and trunks and the guards were using a mirror device to look under the cars for bombs.  I guess after the bombing of the hotel in Mumbai last year, they decided to get very serious about making sure it didn’t happen again.  Tip for those traveling without their spouse – do like I did and don’t tell them about the bomb inspections until you get home.  There is nothing they can do about it anyway, except worry, so why put them through that.

After being sequestered in the Hotel for the conference, we finally got to get back out on the roads for some more eye opening experiences.  The 150 kilometer (less than 120 miles) trip to the Taj Mahal took five hours one way – and that was on one of the better highways.  The concept of slow vehicles staying to the right (or I guess the left in the case of India since they drive on the opposite side of the road like the British), does not enter the Indian psyche.   We were weaving (as best you could do in a bus) around tractors pulling trailers, Camels and Cows (yes cows) pulling carts and the ever popular Tuk-Tuks (a three wheeled motorized vehicle that often functions as a taxi).

Please don’t get me wrong.  India is a very modern country with all of the latest gadgets available to its citizens.  There is a large and growing middle class, and you can see the potential with every turn.  But being in India for a week also made me realize how wondrous our country is and why so many people want to come here.  Even our poor live in sizable apartments with multiple rooms and at least one nice T.V. – not the mud huts that we saw some of the farmers living along the highway.  As crumbling as you hear the politicians describe our highways and infrastructure, it is still light years ahead of what they have in India.

As interesting as India was, I was happy to return to the U.S. and drive 30 miles in 30 minutes to get to my house from the airport.  In fact, sitting in traffic this week didn’t seem nearly as bad as it did the week before I left.  Maybe that is the most important lesson I learned from my trip to India – to appreciate the many blessings I have by living here in the U.S. and being part of the greatest profession in the country.

The AICPA held its four regional meetings of Council over the last couple of weeks.  Regional meetings of Council are smaller assemblies that only members of Council attend (no guests or members of the press attend). This, along with the smaller meeting size, allows for greater and more frank discussion among members of Council.  The AICPA took advantage of this opportunity to have in-depth discussions on its strategic plan down to actual implementation initiatives.

If you are like many of us buried in work these days, you might have missed the impact the JOBS Act will have on our profession.  Dodd-Frank exempted public companies with a market cap below $75M from the section 404(b)  (obviously logic evaded congress as it is precisely these small companies that are most susceptible to fraud and the most in need of controls). Congress continued to defy logic by exempting new public companies for their first 5 years of being public from 404b if their market cap is under $750M  and their revenues are under $1B.  If that wasn’t bad enough, congress also decided to get into the accounting standard setting process. Under the act, new public companies that qualify for exemption from section 404(b) will be exempt from implementing any new accounting standards if the standard includes a delay in implementation for private companies.  Most new standards today include a delay for private companies, so this in effect delays all new substantive accounting standard changes for new public companies for the same period of time.  This is congress’s first successful attempt to set accounting standards since the exchange acts of 1933 and 1934 which gave the SEC standard setting authority (which the SEC then passed to the private sector for the most part). This is a dangerous precedent and we need to be on alert for additional attempts by congress to legislate accounting standards.  As vocal as I have been about the FASB, I still see the FASB as a far superior alternative to congress setting accounting standards.

And a word for those opposed to differential standards for private companies. Where are your voices against this set of differential standards? Congress just set up a scheme for two different sets of standards for two different classes of public companies.  This makes even less sense given the users of new public company financial statements have the exact same needs as the users of existing public company financial standards.

The exemption also applies to auditing standards.  There is a 5 year exemption from new auditing standards for companies meeting the 404(b) exemption threshold.  This may prove to be the most contentious exemption between a new public company and it’s auditor.  Auditing standards are essentially minimum requirements for an auditor to meet when performing an audit.  An auditor can (and should) go beyond the minimum requirements depending on the audit.  My guess is the auditor will often follow all current standards regardless of the exemption, but that sets up the contention.  I can see the discussions now between the business and the auditor with the business asking why certain procedures that are costing time and money are being performed when they are not required by the older auditing standards.  Even better, can you imagine the auditing standard on the auditor’s report being changed, but the business requesting the old report format be used because they don’t want disclosures required by the new report to be included.

There were a lot more topics covered in the meeting, but in keeping with the theme that the regional meetings are more private, I won’t go into them in detail in this blog.  I will, however, continue to keep you informed of the issues through this blog as they become public over the coming months during the April AICPA Board meeting and the May AICPA Council meeting open to the public.

With the growth of international trade more and more businesses find themselves faced with the need to deal in foreign currencies.  This can have a tremendous impact on their accounting functions and on their choice of ERP software systems.

FAS 52 and IAS 21 require that consolidated entities translate results of foreign operations into their reporting currencies.  In addition to this, individual entities may have internal translation requirements if they transact in various currencies.

These are two distinct situations.  A client may have one or both.  The first type of translation occurs during consolidation and is typically a function of the financial reporting solution used.  The latter is usually a part of each company’s internal accounting.

The ERP systems I’ve worked with accomplish these tasks in different ways, and financial managers often interpret their situational requirements differently.  Internal translation tracks foreign-denominated assets and liabilities and accrues pro forma gains and losses resulting from exchange rate fluctuations.  This usually involves a reversing month-end accrual.  When a final settlement occurs the only net P&L impact should come from the rate changes that occurred in that period.

Foreign assets can include cash (in foreign-denominated bank accounts) and receivables (resulting from sales in other currencies).  For these the accountant uses the current “buy” rate of exchange, since an exchange broker will buy that asset from the company at some point in the future.  Liabilities include payables to and loans from foreign entities.  For these you’d use the current “sell” rate, since someone will sell the company the currency needed to settle the debt.  Such rates are available from exchange brokers and from news sources, such as the Wall Street Journal.

An ERP system should be capable of tracking individual receivables and payables in their originating currencies and recognizing realized and unrealized translation gains or losses.  If a bank automatically converts receipts and payments into the company’s functional currency then the ERP system should be able to track such settlements, record them in the functional currency, and recognize any attendant costs.  In some cases businesses with large capital assets in foreign countries may need a fixed assets system capable of translating their historical cost and depreciation individually.

Before selecting an ERP system the client will need to consult an outside CPA with sufficient expertise to judge the translation requirements for that system.