professional issues update - leadership in the new normal

Professional Issues UpdateLeadership in the New Normal

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Today You Can See TomorrowNortheast CPE Conference - 2011

Tom Hood, CPA.CITPMaryland Association of CPAs

Business Learning Institute

Thought Leader in Leadership - Learning - Technology

“With a social media outreach in the tens of thousands, Hood is well known for his pioneering use of Second Life, multimedia and social networking tools to communicate and educate.” That is what Accounting Today magazine said in their 2010 profile of Tom as one of the Top 100 Most Influential People in the CPA profession (his sixth time).

Tom is best known for his role in helping CPAs “shape their future” through his work at the Maryland Association of CPAs and the Business Learning Institute, a center for the development of leadership and strategic thinking skills for CPAs. He stands out in three areas, leadership, learning, and technology.

He was recently named as one of the Top 25 Thought Leaders in Public Accounting Technology by CPA technology Advisor, one of the Top 25 Online Influencers in Talent Management by HR Examiner and as one of the Top 100 Most Influential People in the CPA Profession by Accounting Today Magazine (sixth time in 2010).

Tom and his team have facilitated and taught the Major Firms Group (Top 100 CPA firms) for the AICPA, the AICPA Leadership Academy and facilitated strategic plans with numerous national AICPA committees and leading CPA firms from all over the US, along with corporations and non-profits. Tom also co-authored BLI’s i2a - Insights to Action a strategic thinking system that is used to cultivate leaders and a strategic planning process to help organizations navigate today’s permanent whitewater environment.

He is a nationally recognized author, speaker, and consultant. Tom and the MACPA have been featured in the Journal of Accountancy, Accounting Today magazine, and AccountingWeb. He also won the AICPA Special Recognition Award for his contributions to the profession leading the CPA Vision Project in 2003. He is also considered as a thought leader in the Association Community speaking at the DigitalNow Conference and the ASAE (American Society of Association Executives)

Tom likes to say much of his success as a CPA is due to membership in associations. He has been an active volunteer since starting his career. He has been past-president of the Maryland Association of CPAs (1993-1994) and currently on the AICPA CPE Advisory Committee. He has served on several key national committees - the AICPA Enhanced Business Reporting Committee and AICPA Special Committee on Mobility. He is also a member of the ASAE, World Future Society in addition to the AICPA & MACPA.

In addition to his history as an association executive and CEO, Hood has experience as a high level executive in industry, specifically as treasurer and CFO of Bryn Awel Corporation, a privately owned $75 million highway construction company.

He is a graduate of Loyola College (B.A. in Accounting) and has a Master’s in Finance (Real Estate) from Johns Hopkins University and a Master’s equivalent in Information Systems from the University of Baltimore. He also obtained the Certified Information Technology Professional (CITP) certification from the AICPA.

Tom HoodCPA.CITP

BIOtom@macpa.org(443) 632-2301

Web

www.macpa.org

www.bizlearning.net

Blogs

www.cpasuccess.com

www.bizlearningblog.com

www.cpalegislativeinsider.com

www.slacpa.org

www.cpaisland.com

Social Mediawww.twitter.com/tomhood

www.linkedin.com/in/tomhood

www.facebook.com/thoodcpa

http://www.slideshare.net/thoodcpa

http://www.youtube.com/user/thoodcpa

Second LifeSL Rocky Maddaloni

http://slurl.com/secondlife/CPA%20Island/146/189/21/

The recession is over? Many of our CPAs are continuing to see rough seas ahead

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CPAs and businesses are

feeling overwhelmed by

the rapid and turbulent pace of

change

You would like to be ahead of the waves instead of being crushed by them

Photo: Pratt’s surfing page

Today we will show you how you can survive and even thrive these waves of change

Our agenda

• What do we see?– Economy –Regulations & Standards–Globalization– Technology–Workforce & demographics

• What does it mean to lead in turbulent times?

A useful framework for dealing with change – strategic thinking using our i2a –

Insights to Action SystemMaking sense of

a changing & complex world

How is the world

changing?

What does it mean to us?

What possibilities do we see?

What direction should we go?

Who do we need to inspire to help us get

there?

Report from the future…

Re‐Set, Re‐Think, Re‐ImagineAnticipation of a very large business model change amidst  rapid change – Steve King

There are two recessions – the obvious one and the not so obvious, the end of the industrial age where perfecting the model was the key. The new model will be completely different. – Seth Godin

#4 Rethinking the Business Model (25) from AICPA MFG

The Economy

Where have the jobs gone – 8,000,000 down

Source: Small Business Labs blog – Fidelity.com

Are we in the “Loch Ness Monster” Economy?

“Characterized by a series of dips superimposed on a slow underlying economy thru 2020” ‐ Business Redefined by Ernst & Young

Regulations & Standards

The Federal Issues• FTC Red Flags rule – privacy & identity theft

• Tax Preparer Registration & PTIN issue

• Patient Protection Act & 1099’s

• Sub S. Employment Tax Issue• H.R.5297 ‐ Small Business Jobs and Credit Act of 2010 –1099s

• Tax Patents

Massive legislation in a very short timePatient Protection Act Dodd-Frank Wall Street

Reform & Consumer Financial Protection Act

Small Business Tax Relief Act

The CPA profession is part of the bigger infrastructurethat supports the US free market system. Like the pipes under

urban streets, it is often invisible until it breaks.

A useful framework to understand the CPA profession

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

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

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

The (infra) Structure of the CPA Profession

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

Crisis hits news

Bureau of Consumer Financial Protection

848 pages!

533 regulations60 studies94 reports

TX

WA

OR

CA

NV

ID

MTND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL *GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

*MA

AK

WVNJDE

DC

MD

*PA

CPA Mobility Enacted 46

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

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In Process

Awaiting Governor Signature - 1

NH

CPA Mobility Legislation Pending - 2

VT

PR

GU

U.S. VIRGIN ISLANDS

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

• 47 states passed legislation in three (3) years

• Maryland enacted it in 2008

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

taxes in?

It’s 7:00 am at a town hall meeting in Aberdeen when the 

AICPA alert comes in…

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

Protecting by advocating for members (CPAs) = real results!

Retained independent structure of financial accounting standards (FASB)Modified provision to audit broker‐dealers (PCAOB)Exempted CPAs from CFPA registration due to existing licensing and oversightStopped excessive liability exposure for auditors (aiding & abetting)Commented on SOX 404(b) exemptions

Working together with the AICPA and many State CPA Societies achieved these:

Professional Standards are also rapidly changing

SECFASB

FASBPCFRC

IASBIFRS & SME

PCAOB AICPAASB, ARSC, PRB

IAASB

AICPAPEEC

AICPAPEEC

IFAC

Public Company Private Company Int’l Company

FinancialReporting

Audit /Attest PerformanceStandards

Code of Conduct

Another way to look at standards & oversight

State Oversight & Enforcement of CPA LicenseCPALicensure

Six Ways Convergence is happening1. FASB – IASB Convergence Project2. SEC IFRS – The Long and winding roadmap3. Private Company Standards4. AICPA Auditing Standards Board ASB Clarity 

project5. AICPA Professional Ethics Executive 

Committee – convergence6. Green / Sustainability reporting

Globalization

As the globe shrinks, 

opportunities grow for CPAs

5 Forces of Globalization

1. Growth of consumers in emerging economies2. Technologies that empower consumers & 

communities3. Increase in labor productivity in developed markets4. Shift of economic activity between and within 

regions5. Increasingly global markets for labor & talent

Growth is projected to come from overseas for the next five years while the

US remains flat

Priority #1 Exports by Small to Medium Enterprises (SME’s)

• 33 % shipments overseas by UPS

• 25% of small practices had international clients

• US targets 100% increase in exports by SMEs

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

• Security / Privacy• Social Media• XBRL

It’s the power of the network

Are you on Facebook?

It’s the power of the network

Social media = social capitalreal world examples

The IRS is on Twitter are you?

The AICPA is on Twitter are you?

CCH is on social media

Workforce & Demographics

5 Generations in the workforce

Live First, Work Second

Digital Natives

Workforce & Demographics – Are you ready for the shift change?

Email Generation

Facebook Generation

These guys are retiring

These are making the purchasing decisions

These are the new workers

Bright spot?

What today’s workers want

Think A M P• Autonomy• Mastery• Purpose

• Engage your top performers• Coach tomorrow’s leaders• Manage your Millennials

The CPA Profession

Flat is the new growth3% average growthSome declinesCompetition is increasing

Accounting Firms Most Trusted Advisors

• Generally speaking, how believable do you normally find statements made by someone who works for one of these organizations or groups

• “Echo Boomers” (18‐34) rated accounting firms highest–74%

67%62%

55%51% 49% 47%

36%

Acctg FirmsBanksInvestment FirmsHealth Ins. Co.Mortgage CompaniesGov't regulatorsCredit Card Co.

Source: Harris Poll, May 18

CPAs most profitable small businesses

Top 10 Issues Facing CPAs1. Economic Outlook 2. Tax 3. Business Operations 4. Implementation and Execution 

of Plans 5. New Business Development 6. Personal/Professional 

Development 7. Management and Leadership 8. Financial Regulatory Reform 9. Access to Financing and Credit 10 New Accounting Standards, 

IFRSSource: CPA Trendlines for AICPA Feb, 2010

Top Ten Issues for MFG1. Regulatory/Legislative (56)2. Private Company Leadership (47)3. Capital Markets Awareness / Recognition (34)4. Rethinking Business Model (25)5. Protect Audit/CPA Franchise (20)6. Risk Management (Audit efficiencies) (20)7. Leadership Development / Succession 

Planning (19)8. Global / International (Clients / IFRS / 

Branding) (17)9. Leveraging Technology & Social Media (17)10. MFG Issues specific forums / focus groups (8)

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Grant Thornton report outlines  8 key areas for CFOs to focus on

1. Developing soft skills2. Understanding and applying international accounting standards3. Understanding complex accounting & auditing standards4. Adapting to an evolving regulatory framework 5. Addressing new external reporting needs6. Understanding ERP or IT systems & XBRL7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge & company's non-financial business drivers

What is leadership and why is it important?

Photo: Pratt’s surfing page

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

Leadership is still about…

• Engagement• Alignment• Accountability• Commitment

“First I get all of my men facing the same direction.”- Napoleon

How is leadership changing?

“What got you here won’t get you there.” – Emmanuel Gobillot - Leadershift

From: Command & Control

To: Connect & Collaborate

How Leadership gets it done is changing!

Turbulent times require new skills and new thinking

Source: Chief Learning Officer magazine

Five Qualities of Extraordinary Leaders1. Sight - Ability to see emerging

patterns and shift perspective when necessary

2. Insight - Ability to learn faster than the rate of change in your industry

3. Create - Ability to think strategically and creatively to gain insights that create new opportunities

4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work

5. Inspire – Ability to mobilize support and engage others to join you in ACTION

Leadership = Multiplication•15 X – ROI strategy as process & alignment

•8 X – Strengths•6 X – Trust & Engagement•3 X ‐ Positivity

Five Keys to Success in the New NormalThe Flywheel Effect

1. Strategic Planning continuously2. Collaborative environment3. Culture that focuses on people4. Seek Opportunities & Builds on 

Strengths5. Harness the new skills & tools

Does it really work?Four Examples

Service Profit Chain

AICPA Major Firms

The Tortoise was right

Sometimes you have to go slow to go fast

Elvis was wrong!What we need is

a little more conversation!

Leadership defined

The four most important words for organizations are, “what do you 

think?”‐ Tom Peters

The only question for leaders

Have I made you feel stronger and more capable?

Source: Emmanuel Gobillot -LeaderShift

Tom Hood, CPA.CITPCEO

Maryland Association of CPAsBusiness Learning Institute

(443) 632‐2301E‐mail tom@macpa.org

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