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MACPA Professional Issues Update / Town Hall Fall 2016

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Maryland Association of CPAs semi-annual update for finance and accounting professionals that includes the latest developments and trends facing the Profession.

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MACPA Professional Issues Update / Town Hall Fall 2016

  1. Many Thanks to Our Sponsors Exclusive Preferred Providers Preferred Providers Premier Silver Sponsor Premier Bronze Sponsors
  2. Select your session and join the conversation: Fall Town Hall PIU Vote for a question Respond to Polls MACPAPIU.CNF.IO
  3. Your Learning Journey
  4. Meet the Chair of MACPA Lisa Cines
  5. “I skate to where the puck is going, not to where the puck is.” – Wayne Gretzky
  6. RFTF – Report From the Future
  7. #FutureReady! Is the capacity to be anticipatory (aware, predictive and adaptive) of emerging technology and trends in business, demographics, and the social environment impacting your organization and industry. Source: CPA.COM Insight into the CPA of the Future Study 2014 92% of CPAs Not #futureready
  8. 1.  Connect to the Innovators in our profession. 2.  Be the lookout post for future trends. 3.  Develop training on how to anticipate and adapt. 4.  Engage members in envisioning their future. How can we make you #futureready?
  9. Connect • Protect • Achieve
  10. Three hard Trends: 1.  Regulations & Standards 2.  Technology 3.  Demographics
  11. &Laws, Regulations, Standards
  12. “From then on, they are no longer isolated men, but a power one sees from afar, whose actions serve as an example; a power that speaks, and to which one listens.” – Alexis de Tocqueville
  13. Peer Review and Audit Quality
  14. 2,832 Bills – 26% increase from prior yr. Business-related Bills - 373 116% increase CPA Bills 37 - 50% increase Tort Liability Bills 14 – 20% increase
  15. DOL  OT  Rule  Video  
  16. Legislative / Regulatory / Standards •  State Board –  Positioning for Firm Mobility –  CPE tracking and audits –  Peer Review •  State –  Offense •  Firm Mobility •  Supersedeas (Appeal Bond) Caps •  Peer Review – Subpoena Power •  State Filing Dates (match Federal) –  Defense •  Oppose Mandatory Paid Leave •  Stop Comparative Fault – Liability •  Stop Sales Taxes on Services •  Stop Anti- Non-disclosure/Non-Compete Bills
  17. CPA Day in Annapolis – January 26, 2017
  18. “Maryland is the best state in the nation to have your CPA license” – Maryland Senator Brian Feldman, CPA •  Lowest CPA License Fees •  Most flexible CPE Environment •  Best environment for CPA firms to practice in (liability, and practice flexibility)
  19. Observations  on  the  profession  in   Maryland Arthur  E.  Flach,  CPA,  Chairman  of  the  State  of   Maryland  Board  of  Public  Accountancy   Maryland Board of Public Accountancy
  20. •  Audit  deficiencies  as  reported  to  us  by  the  DOL •  Continuing  education  problems •  Other  Regulatory  Agencies •  Pass  rate  on  CPA  exam  in  Maryland •  Peer  Review  issues Matters coming to the State Board
  21. •  There  is  a  clear  link  between  the  number  of  employee  benefit  plan  audits   performed  by  a  CPA  and  the  quality  of  the  audit  work  performed.   Analysis  of  the  data  indicates  a  wide  disparity  between  those  CPAs  who   perform  the  fewest  plan  audits  and  those  firms  that  perform  the  largest   number  of  plan  audits.  CPAs  who  performed  the  fewest  number  of   employee  benefit  plan  audits  annually  had  a  76%  deficiency  rate.  In   contrast,  the  firms  performing  the  most  plan  audits  had  a  deficiency  rate   of  only  12%. •  Enforcement •  1.  Revise  case  targeting  to  focus  on: •  a.  CPA  firms  with  smaller  employee  benefit  plan  audit  practices  that  audit  plans  with   large  amounts  of  plan  assets,  and •  b.  CPA  firms  in  the  25-­‐‑99  plan  audit  strata  given  their  high  deficiency  rates  and  the   amount  of  plan  assets  ($317.1  billion)  and  plan  participants  (9.3  million)  at  risk  from   deficient  audits. Department of Labor Audit Failures
  22. •  Ethics  requirement  not  being  met  in  a  timely  manner •  Credits  are  taken  without  substantiation  that  supports  the  credits •  Continuing  education  credit  is  taken  for  courses  not  yet  taken •  You  cannot  claim  credit  for  a  course  that  you  intend  to  take  before  your   license  expires.    If  your  license  expires  on  August  22nd    and  you  renew  on   August  15th  but  intend  to  take  a  course  on  August  20th,    you  may  not  claim   credit  for  the  August  20th  course  when  you  renew  on  August  15th.   •  Do  not  renew  until  all  of  your  CE  credits  have  been  met  at  the  date  of  renewal •  40  hours  of  CE  credit  claimed  in  a  24  hour  period •  Continuing  education  is  taken  after  notification  of  audit  selection Continuing Education Audit Findings
  23. •  Each  license  renewal  application  is  subject  to  audit  by  the  Board.  It  is  the   primary  responsibility  of  each  licensee  to  fulfill  the  requirements  of  the   law  and  to  be  able  to  document,  to  the  Board'ʹs  satisfaction,  such   fulfillment.  All  active  licensees  must  maintain,  for  4  years,  records   substantiating  (proof  of  a^endance,  course  outline  &  expertise  of   instructor)  the  continuing  education  credits  claimed  by  them  as  a   prerequisite  for  renewal  of  their  license. Continuing Education Audit Findings- continued
  24. •  PCAOB  sanctions •  Auditor  had  no  prior  audit  experience  before  becoming  the  auditor  for  an   SEC  registrant •  Auditor  “enhanced”  work  papers  prior  to  PCAOB  inspection. •  SEC  sanctions •  Failure  to  report  misdemeanors,  felonies  arrests,  etc. Other Regulatory Agency Interaction
  25. •  Firms  who  do  not  understand  that  they  are  required  to  have  a  Peer   Review •  Use  the  Peer  Review  selection  tool  at  the  DLLR  website  to  determine   whether  or  not  you  need  to  have  a  peer  review   h^p://www.dllr.state.md.us/license/cpa/cpapeer/cpapquality.shtml •  Must  select  audits  not  identified •  ERISA  engagements  are  must  select  audits  for  Peer  Review  purposes Peer Review Issues
  26. •  Use  the  DLLR  website  for  information  about  the  profession •  Use  the  MACPA  website  for  information  about  the  profession Recommendation
  27. •  Maryland  ranks  44th  out  of  53  jurisdictions  in  the  CPA  exam  pass  rate •  Maryland  ranks  42nd  out  of  53  jurisdiction  in  average  score  on  the  exam •  These  statistics  reflect  a  drop  from  prior  years. CPA Exam Pass rates
  28. VUCABorrowed from the US Army War College, VUCA was coined by The Institute for the Future to describe the rapidly changing and complex business environment since the Great Recession of 2008. Volatility Uncertainty Complexity Ambiguity
  29. “One interesting finding of the survey is that CPA firms, early majority or not, don’t really see a competitive threat from specific challengers.” – Erik Asgeirsson – CEO of CPA.COM
  30. @tomhood #futureready #FriendWatson
  32. References: US Department of Labor, Manpower Group Talent Shortage 2015 38%  of  employers   interna:onally  report   talent  shortages  in  2015   2009: 30% Employment of accountants and auditors is projected to grow 11 percent from 2014 to 2024, faster than the average for all occupations – US Dept of Labor 2015 Accounting and finance staff: #1 in demand #8 in talent shortage Demand for Accounting is Strong
  33. •  2 of Top 10 Best Jobs (US News & World Report) •  Top 20 Happiest Professions (Huff Post) •  Top 10 in Demand Jobs/Hardest Jobs to Fill – (Manpower Group)
  34. #1 Most Profitable industry according to Sageworks #1 In small/mid-size business growth rates averaging 12% in 2016 Demand for Accounting is Strong
  35. Building the Pipeline of Next Gen CPAs and Leaders
  36. Student Leadership Academy
  37. Student Leadership Academy What we want in a career: 1) Professional Development; 2) Purpose and meaningful work; 3) Flexibility; 4) Inclusion and respect.
  38. Guide for Becoming a CPA