Author Archive

Data Governance

At a past meeting of The Presidents Forum, Angela Liu, President of Crispy Green, Inc., talked with members on Data Governance. Angela said this topic’s importance is driven in part by privacy, legal and ethical concerns, presenting unique risks that need to be better managed. This discussion has now come up again due to its importance.

At our meeting, we began talking about Data Governance goals, which are different depending on the industry, organization structure, type of data captured, and overall risk management practices.

However, some common goals and initiatives include improving, data quality, compliance and security, and data sharing.

Data security has become more critical for many companies after the California Privacy Rights Act (CPRA) passage with its new requirements for data retention and the individuals’ request to access, delete, correct, or opt-out.

The key takeaways from this meeting are first to acknowledge that an organization’s data has significant value that needs to be protected. And second, there is a disciplined, formal, centralized enterprise-wide process to manage data, it is not intended for one department only.

Good governance benefits include enhanced security, improved data quality, and operational efficiency by reducing data management and storage costs.

These are good reasons to start working on a data governance plan today.

Steve McCarthy

The Presidents Forum

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12 Basic Concepts Accounting Graduates Need to Know

by Stephen F. McCarthy, CPA, MBA, CGMA, The Presidents Forum |

August 31, 2020

As business becomes more global and regulated, the amount and complexity of knowledge required of accountants continues to increase. A growing emphasis is being placed on advisory and assurance services, which represents yet another level of complexity involving critical thinking, analytics and problem solving. It’s helpful for accounting students to become aware of the essentials in our profession so they can see that there is a method to this madness of detail. In academia, the notion of “threshold concepts” has gained popularity. These are the key ideas central to mastery of any subject, the understanding essential to all further growth.

Here are the threshold concepts for accounting:

  1. Balance Sheet. Liabilities + equity = assets.The balance sheet must always be “in balance” — if assets increase, then either liabilities or equity must also increase. This is an amazingly simple idea. Yet, insight into any business often starts here.
  2. We Are a Rules-Driven Profession. Accountants are governed by laws, rules, policies and procedures established by both government and industry organizations. There are three main organizations in the U.S. that establish and coordinate these rules and standards: the Financial Accounting Standards Board (FASB), the Internal Revenue Service (IRS) and the Securities and Exchange Commission (SEC).
  3. Financial Statements. A complete set of financial statements includes an income statement, a statement of changes in equity, a balance sheet, a statement of cash flows and the notes to financial statements. The graduate accountant need not be an expert but should be conversant with each of these.
  4. The Accounting Cycle. Financial information is prepared in a process called the accounting cycle.Various best practices, information systems and rules are employed in managing this process to identify key data, report and analyze documents, record accounting transactions and prepare financial statements.
  5. Proper Measurement of Assets and Liabilities. Accounting for the true value of assets and liabilities involves judgment. Assets and liabilities are originally listed at the price paid (i.e., historical cost) and this value is often adjusted over time. These modifications are especially important for intangible assets like goodwill, exchange rate fluctuations if priced in foreign currency, or depreciation, the periodic write-off of fixed assets.
  6. Other Essential Financial and Non-Financial Information. A sustainable business creates stakeholder value through the prudent management of interrelated forms of capital(financial, manufacturing, intellectual, human, social and natural). Some of this value is quantifiable, while for others it is intangible.
  7. Legal Entities. Businesses must choose a legal structure to define the rights and responsibilities of business ownership, degree of control, legal liability and tax treatment. The four basic organizational legal structures are sole proprietorship, partnership, corporation and limited liability company. 
  8. Governance, Risk and Compliance (GRC). Accounting graduates need at least basic knowledge of governance, risk management, compliance and internal controls. These interrelated areas of focus involve conformance to ethical and other established standards with a special focus on effective management of risks. The Committee of Sponsoring Organizations (COSO) developed a framework for risk management that is widely used in business.
  9. Raising Money. Growing a business requires investment. There are three ways to finance a business (debt, equity and retained earnings) and each have pros and cons.
  10. Information Systems. For accounting graduates, there is a need for a digital and data-driven mindset along with the use of analytics and data visualization to effectively convey information. This requires a solid knowledge of technology, data analytics and automation.
  11. Setting Strategy. The purpose of a strategy is to help organizations set goals and plan for contingencies that could affect goal achievement. A sound strategy should be a living document that accounts for current market conditions, competitive environment, regulatory environment, and financial constraints and resources.
  12. Ethics, Integrity and Professionalism. We cannot legislate ethics. In a healthy accounting culture, accounting professionals foster trust. In business, trust is the cornerstone of all relationships with customers, suppliers, employees, shareholders and the community.

If accounting graduates develop a firm foundation in the above concepts, they have a great chance to succeed in that first job. And once that critical threshold is crossed, mastery is just a matter of time. 

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The CPA Exam is changing – again

The CPA Exam is changing – again.

Article on Page 15 July 2020 issue

The Examination Team of the AICPA is responsible for maintaining the validity and relevance of the Uniform CPA Examination® (CPA Exam). The team conducts periodic research to assess the current state of the profession and the evolving requirements for newly licensed CPAs (nlCPAs). In this endeavor, the team’s primary research vehicle is called a “Practice Analysis” (PA), a comprehensive project to document the state of the profession and the current role and requirements for a nlCPA.

Similar comprehensive exercises lead to the computerization of the CPA Exam in 2004 and major CPA Exam updates in 2011 and 2017. The team began a new PA in early 2019 with a goal of introducing an updated exam later in 2020.

An observant student will notice from the above dates that the pace of change to the exams seems to be accelerating, something long time practitioners have observed about the requirements of the accounting profession. 

A major takeaway from this article – as the rate of change accelerates, that acceleration itself is a new challenge.  Adaptability and the ability to constantly learn throughout our careers are becoming increasingly important in our profession. Please keep this in mind as I describe the more technical aspects of the current PA, some helpful terms, and the resulting new exam.

The Examination Blueprints.

The AICPA developed what it calls the Uniform CPA Examination Blueprints to organize the content of the CPA Exam, and assess the minimum knowledge and skills required of nlCPAs. Changes in the workplace, especially the impact of technology, require changes in the exam and this Blueprint.

Bloom’s Taxonomy: Remember & Understand. Apply & Analyze. Evaluate & Create.

Another tool employed by the Examination Team is Bloom’s Taxonomy, a classification of different objectives and skills used by educators across many different disciplines, not just accounting. The objectives and skills are organized into a hierarchy comprising six levels of learning to structure any given course of study.

In this hierarchy, learning at the higher levels (e.g. in the final year of an accounting program) is dependent on attaining prerequisite knowledge and skills at lower level (e.g. entry level courses.)

The AICPA has adopted a skill framework for the CPA Exam based on Bloom’s Taxonomy. The use of a framework like this ensures that core knowledge and essential skills are properly evaluated.

What is changing?

The challenge for this PA is to decide which topics to retain or remove on the exam. For example, exam questions that are no longer within the scope of nlCPA practice should be dropped. Alternatively, it is often observed that the cognitive skill level of a task has become more demanding (i.e. it has moved higher in Blooms Taxonomy). In that case the exam questions must change.

In this PA there is a more comprehensive look at technology, data analytics and automation. In the PA’s first phase, several findings were identified that more broadly demonstrate technology’s impact on nlCPA practices. These findings, leading to new exam questions include:

  • Understanding the business. It is not the business knowledge for the sake of business, but rather applying business knowledge in financial reporting, tax preparation, audit, attest, and review services.
  •   The need for a digital and data-driven mindset and the use of data analytics, and
  •  Increased reliance on Internal Control over Financial Reporting (SOC 1®) reports.

In general, the new exam questions involve moving higher in Blooms Taxonomy, from remembering to applying, from applying to analyzing, and beyond analyzing to evaluating

What to expect.

Catherine Miskiv, CPA, who is an Exam Content Manager from the AICPA  has provided some insight into the type of questions candidates should expect. “Candidates can expect to see more and more content related to technology going forward – from your more basic IT-related terminology, to understanding and analyzing automated processes and controls”

Miskiv says further: “We also encourage all candidates to take the sample test. It will provide you with a good idea of how the exam works and includes Excel for you to use when answering questions:

How to Prepare for Change.

Educators must enhance the curriculum by incorporating higher-order skills into the coursework. Group projects and presentations may be particularly helpful in applying business knowledge.

The biggest burden of these changes will of course fall on the candidates. The exam was already rigorous and for many it will be even more demanding. The exam already required hundreds of hours of study and many candidates may require more.   Yet, there are more resources available to the candidates to help them understand the material. Those candidates who have practical experience will undoubtedly have an advantage.


Without a doubt, these changes will create distress for some candidates. However, as I said at the outset, adaptability and the ability to constantly learn throughout one’s career have never been more important. In keeping with the desired goal to see that the exam remains current, relevant, and reliable, these changes are necessary. Moreover, everyone will benefit if standards remain high and a steady pool of candidates successfully completes the exam.

Stephen McCarthy CPA MBA

Member of the NJCPA

Owner, The Presidents Forum

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Now it’s Data Governance

At a recent meeting of The Presidents Forum, Angela Liu, President of Crispy Green, Inc. talked with the members about a relatively new topic in information technology: Data Governance.

Twenty years ago, the hot topic and big challenge was “big data” the challenges in capturing and storing massive amounts of data.

Over the years, as technology matured, the discussion changed to cloud computing as the main vehicle in storing massive amounts of data and accessing shared data from wherever we are. 

It was initially a challenge to search through all the stored data, to convert data points into useful information. So, over the years, diagnostic, predictive and prescriptive tools have developed to quickly analyze and draw helpful conclusions to aid decision making. 

Today the conversation has moved to Data Governance. Driven in part by privacy, legal and ethical concerns, it had become apparent that our use of data presents unique risks that must be properly managed.  So, Data Governance has evolved to address the development of programs and policies to monitor how our data is being created, collected, circulated and controlled.

In describing each of these progressions (storing, accessing, understanding and governing) Ms Liu facilitated our discussion of the unique and evolving challenges at each step of the way. Technologies emerged to meet changing needs. And evolving technologies in turn made us aware of new opportunities and possibilities. We are just beginning to use analytics and data visualization. Now we must also concentrate on proper governance of the data.

The larger lesson for us all is that changes is inevitable. The above progression is typical in a business climate that prizes innovation and creativity. And change is always challenging. Angela’s presentation and the excellent discussion helped us consider how to take care of the present with one eye on the future. 

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Medical Marijuana Update

June 5, 2019

At a meeting of The Presidents Forum this week, Christopher E. Hartmann, Esq. talked about a recent NJ appellate case decision as part of a “Trends in Employment Law” conversation. The specific case Wild v. Carriage Funeral Holdings may require employers to reasonably accommodate employees who use medical cannabis permitted under the state’s Compassionate Use Medical Marijuana Act.

Hartmann told us that the Appellate decision while holding that an employer is not required to accommodate the medical use of marijuana in any workplace, this employer may have engaged in disability discrimination under the NJ Law Against Discrimination (LAD). These types of cases must be analyzed on a case-by-case basis. Especially, cases involving off-duty, off-site medical marijuana use. 

Hartmann suggested that employers show more flexibility in eliminating or relaxing certain hiring and employment policies, especially zero-tolerance policies, to accommodate lawful medical marijuana users.

As with other cases in the “Trends in Employment Law” conversation, it is wise for employers to frequently review their employment policies and seek legal advice when creating new ones.

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Password Management Tools

At a recent meeting of The Presidents Forum, the members began talking about password management tools. The subject came up because of the increasing number of stolen logins and passwords. These tools help up manage and update our passwords and even generate unique passwords for each site. These password management tools also allow us to log into multiple online accounts with a single click. They can also analyze existing passwords for security and help us change them. Most have unlimited storage over unlimited devices and both auto-change and auto-save features.

There are both free versions and low-cost versions ($2.50/month) of these tools, most can be used on all devices. While the members had their own individual preferences, it’s easy to Google “top password managers” and find reviews.

All our passwords in one place is efficient but comes with its own security concerns. That is, one master password unlocks all other protected accounts – so that master password needs to be kept secure. The Presidents Forum members agreed: do your research, find the features and conveniences you need, then secure your passwords.

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Major Technology Initiatives

At a recent meeting of The Presidents Forum, Bill Blum, Alpine Business Systems, talked about the IT convention he attended in CA. The catch-phrase there of the major technology initiatives was BASIC for: Blockchain, A.I., Security, Internet of Things, and Cloud. Initiatives we should all know more about.

Blum also discussed Microsoft’s new collaboration platform – Microsoft Teams. This allows users to collaborate with group chat, online meetings, calling, web conferencing or files with built-in Office 365. Blum’s team has been working with clients on this platform with a great deal of success. The members all agreed on the need for better collaboration and asked Blum to give more detail at a future meeting.

Technology is both complicated and complex and frequent roundtable discussions are held as The Presidents Forum members search for solutions for their businesses. We thank Bill Blum for his informative technology review.

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A Plan for Blockchain Implementation

by Dr. Sean Stein Smith, CPA, and Stephen McCarthy, CPA – November 30, 2018 At this point, you have heard quite a bit about blockchain technology and have seen or participated in one of the dozens of webinars, presentations, or conferences focusing on this topic. Blockchain is a potential game changer for virtually every aspect of the profession, driven by the concepts of decentralization, consensus-based verification of data, the immutability of data once it is added to the blockchain, and the (up to now at least) unhackable encryption used to secure the information. Blockchain is an underlying digital foundation that supports these and other advanced applications. Despite of all the excitement about this new technology, there continues to be a wide gap between inspiration and installation. That said, what action steps or plans exist to understand and implement blockchain applications? Start by using a project management approach, like the agile methodology: brainstorm, design, develop, use quality assurance and deploy. Framed within the agile methodology, we will break down what can seem like an intimidating and overwhelming topic — blockchain implementation.   Brainstorm Begin with the end in mind. Like strategic planning, define a process that needs improvement and then work backward to determine the steps to accomplish it. This is the time where the firm should be dedicated to establishing what exactly is the desired result of this project, i.e. what does the firm want? Some of the first points to identify in any brainstorming session are why this solution is being considered, and what processes are the focus of this initiative. Specific items that need to be considered: is blockchain a viable solution, does your organization have the technical expertise to make blockchain implementation feasible, and what problem does blockchain address?   Design This is the stage where many organizations hit stumbling blocks and suffer setbacks, and that may be due to a common misunderstanding as to what blockchain can do. Put simply, this part of the decision-making process should focus around how to build out the blockchain. Private, or permissioned blockchains are where virtually all the corporate investment is occurring in this space, and that is because the organizing firm can specify not only who can join the blockchain network, but at what levels of access and what rights those members have. Moreover, current technology solutions may –- at this point— outperform the functionality blockchain can bring to the table.   Develop Equally important, is establishing relationships with advisory firms who are uniquely qualified in blockchain technologies and implementation. This is necessary because technical and process standards are only now being developed. These firms can help choose the technology stack to help implement the blockchain solution together with other technical advancements in cryptography, analytics, and governance. These all represent important points to consider as the blockchain chain itself moves from concept, to design, to implementation. The blockchain application will probably integrate with existing legacy systems, so define them, and in thinking with the end in mind, devise the criteria for roll-out strategy, staff training and timeline for deployment.   Quality Assurance This step focuses on avoiding problems while delivering solutions. Blockchain technology by its nature reduces the need for certain processes and controls, so the way of thinking about audit and the concept of assurance must change. Blockchain is certainly a buzzword, a potential paradigm shift, but even with the buzz assurance and standards must be maintained. We must stress the necessity to test, test, test, before rolling out. This is also the time to review reports, KPI’s and other metrics designed to meet stakeholder expectations and concerns. And remember, staff needs to be trained on specific aspects of blockchain. These areas: 1) the education and development of staff to use blockchain and 2) the need for controls and process to ensure the integrity of blockchain information represent opportunities for proactive practitioners and firms.   Deploy We look to the implementation by following the rollout strategy and criteria for deployment. Blockchain may be a new technology but nevertheless, like any other technology project — or project in general — metrics and timelines must absolutely be a part of how effectiveness is evaluated and reported. Only when blockchain is in production status will it deliver ROI, productivity and the improvements sought. Furthermore, companies need to derive measurable value from their blockchain initiatives. The failure rate of new blockchain implementations will be high. Organizations need to focus on the problem blockchain addresses, the business case, and match the technology to solving that problem, communicating with users along the way.     Following this agile methodology will help achieve success with blockchain. That is, identify the business case, work together with the end users, optimize a process with the right combination of technologies, authenticate and adopt. Only after these steps have been completed can management confirm value on this deployment and identify the next challenge for a blockchain application. We have confidence this model will lead to a successful completion. Dr. Sean Stein Smith, CPA, DBA, M.S., M.B.A., CMA, CGMA, is an assistant professor at Lehman College. He can be reached at Stephen F. McCarthy, CPA, CGMA, M.B.A., is the owner of The Presidents Forum. He can be reached at

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IT Controls

At a meeting of The Presidents Forum this week on IT controls, the members talked about Costco’s recent annual report announcement of a material weakness in internal controls. Costco stated, “the weakness relates to general information technology controls in the areas of user access and program change-management over certain information technology systems that support the company’s financial reporting processes.” Even though this weakness only indirectly impacted the financial statements at Costco, the repercussions were great. This type of weakness is one that many can easily have in today’s world. The question around the table — “Is this a risk area in our businesses?” Who is in control of the changes to our IT systems, especially financial reporting systems? Is it an outsourced vendor? And, is it likely that we would detect or prevent any material errors in a timely basis? As systems become more complex, it is not only harder to stay on top of technology but, after changes are made, ensure the controls still meet the control objectives originally set.   The meeting didn’t produce a simple answer to prevent a Costco-like event but made the members more alert to the challenges of complex systems.

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New Jersey’s Equal Pay Act

At a meeting of The Presidents Forum this week, Christopher E. Hartmann, Esq. of Hartmann & Anglim, LLC talked about The Equal Pay Act which became effective on July 1, 2018. It should be viewed seriously because it was added to New Jersey’s Law against Discrimination (“LAD”), one of the nation’s most sweeping civil rights statutes. The LAD’s protections have been construed expansively by New Jersey’s courts.
  • Hartmann advised the members that, depending on the number of employees, businesses should review job descriptions and responsibilities carefully to preserve honest differences in pay scales. As always, objective, performance-based distinctions are most likely to survive scrutiny. These include specialized training or skills, higher responsibilities or experience in situations requiring the exercise of judgment. Consider expanding job levels within departments (i.e. “senior sales associate”) with measurable or merit-based criteria, and not necessarily seniority alone.
  • Hartmann cautioned that the burden is on the employer to justify pay differentials that disfavor employees who are within the LAD’s protected class. The Equal Pay Act’s protections extend beyond gender discrimination, and include all illegal trait-based discrimination in compensation, such as age, race and religious affiliation.
  • Hartmann’s overview of the new Equal Pay Act was well-received by all.

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Blockchain and Sports Betting

At a recent meeting of The Presidents Forum, the members again had a discussion on Blockchain. With all new technology, we use different words to describe features. In Blockchain, we frequently hear immutable and irrefutable. Immutable means the transaction cannot be altered or changed. If the parties want to void the original transaction, they create a new transaction to reverse the first, but both transactions are visible. Irrefutable means operational transparency that allows trust to be instantly established. Both of these features create efficiencies. We also hear about “Smart contracts”. These are regular contracts that have many contractual clauses, coded into the computer, that allow contracts to be made partially or fully self-executing and self-enforcing. Again, creating efficiencies.   A frequent question is “what types of processes could be considered for Blockchain applications?” A recent Supreme Court decision opened the door to legalized sports betting (particularly in NJ). Blockchain with its immutable, irrefutable and smart contract features will play a significant role to sports bettors by providing security under Blockchain’s secure and trusted platform.   How do we think about other processes to consider. Just like any other decision, the process should have viability, feasibility and desirability. Another active discussion among The Presidents Forum members on a technology that may not be as far in the future as some think.

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Blockchain and Smart Contracts

At the recent AICPA Item Development Meeting in Fort Lauderdale, I gave a presentation on Blockchain to the AICPA members there. Blockchain is an exciting technology that will dramatically change the way business is conducted. Blockchain is a DLT (distributed ledger technology), a shared platform, for recording transactions and tracking assets. It is a transactional platform enabling other technologies such as AI (artificial intelligence) virtual reality, 3D printing and robotics to be part of the economy. As Don Tapscott, coauthor of Blockchain Revolution wrote “The internet of everything needs a ledger of everything for it to work.”     An exciting feature of Blockchain is “smart contracts”. These are self-executing contracts. The terms of the agreement are written directly into lines of code and subsequently executed in accordance with the terms. Logistics and supply chain are a perfect application for smart contracts. Blockchain and the applications that run on it will simplify complex multi-party systems while reducing fraud and theft, making logistics much more efficient. It can be argued that widespread usage of Blockchain and its applications are still some distance away, but that horizon is getting closer and the CPA’s at the meeting agreed that now is the time to start planning.

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4/19/18 At yesterday’s meeting of The Presidents Forum, we had a presentation on Blockchain. We heard:
  • Blockchain is a transactional platform that facilitates the process of recording transactions and tracking assets, both tangible or intangible, in a network.
  • Blockchain essentially serves as a database for recording transactions, but its benefits extend far beyond those of a traditional database.
  • Blockchain will enable other technologies such as Artificial Intelligence, 3D printing, Virtual Reality and the Internet of Things to be part of the economy.
  • For example, Bitcoin, a virtual currency is an application developed to run on Blockchain.
  • Other applications are slow in development, but dramatic change will occur when we couple blockchain with smart contracts, automated processes (robotics) and AI.
We heard about benefits and advantages and also hurdles in adopting blockchain. While widespread usage is still several years away for most companies, it’s good to start thinking about processes that can benefit from blockchain’s efficiencies. A great presentation on the future of business.  

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Time for Big Infrastructure Spending

At today’s meeting of The Presidents Forum, there was a discussion on the need for more infrastructure spending in the U.S. At the beginning of this year there was talk of a combined private public trillion-dollar infrastructure spending spree.  This initiative did not get off the ground. By way of contrast, Angela Liu, CEO of Crispy Green, mentioned the trillion-dollar Chinese infrastructure initiative OBOR (One Belt, One Road). Already, more than $900 billion in projects are planned or underway, according to Fitch Ratings. This is the type of spending we need here. Members of The Presidents Forum, sitting around the table discussed the great need for projects such as roads and ports that primarily aim to boost productivity and growth. There’s also demand for more social infrastructure spending such as hospitals, schools and drinking and wastewater facilities. Spending with a primary goal of improving citizens’ quality of life. However, infrastructure spending faces new risks. Do our infrastructure decision-makers have the skills to prepare for emerging opportunities and challenges, as we move away from engineering-driven, labor intensive projects toward more smart technologies? Furthermore, our infrastructure investment needs to be sustainable, projects that most likely will bring long-term economic, environmental and social benefits. Much of our recent infrastructure spending is a response to natural disasters. And, that takes money away from other projects. The members at The Presidents Forum agreed that while the investment in well-structured infrastructure projects is considerable, failure to invest will lead to a serious competitive disadvantage for the U.S. We heard good ideas today, hopefully, someone else is listening.

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11/06/17 Last week, at Withum Smith & Brown’s 2017 Global Summit in NYC, we heard about political and policy influences on the ever-changing global environment. Also discussed was the new US House tax reform bill. While the final bill will be different from this first draft, the bill signals some major changes.   Changes means winners and losers. The uncertainty faced by taxpayers today, poses a tremendous challenge – how to adapt.  After the final tax bill is passed, taxpayers must quickly act to refine, reinvent or even reshape their own financial position. This is not easy when the changes happen close to the end of a year.   However, Withum had some first steps, accelerate deductions and delay income. In addition to changing for this tax year, taxpayers need to look long-term at these new provisions. Home ownership seems to be under attack with limitations on both mortgage interest and real estate taxes.   What is a taxpayer to do? Speak with a professional, and learn to be more adaptable.  

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11/03/17 Today, at Withum Smith & Brown’s 2017 Global Summit in NYC, we heard about political and policy influences on the ever-changing global environment. Of course, because the US House passed a tax reform bill yesterday, we heard some perspectives on overall tax changes. Corporations will realize about 2/3 of the benefits if the law gets passed as released. As usual with any tax reform, there will be winners and losers. The proposed law will incentify equity investments in corporations with dis-incentives for debt financing (interest expense limitations).   The trend most talked about was ever increasing compliance. All governments are demanding more information, then sharing it with other governments while putting restrictions on corporations for the same information. For example, Germany and other European countries are requiring in 2018 that businesses maintain information on customers in the country where the customer lives. There is also substantial sharing of tax-data among countries, all to increase tax collections.   How about, repatriation included in the new House bill. There will be a one-time deemed repatriation of the Earnings and Profits (E&P) of a foreign subsidiary. Deemed means they will charge the tax regardless of whether the money comes back to the US. So, the effect on economic growth will not be as beneficial as originally proposed but the repatriation will increase tax collections in the short term.   The final message– all taxpayers, individual and corporate, should consider measures to accelerate deductions and push income into later years. Of course, all could change when the Senate releases their plan next week. Stay tuned.

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Can Amazon Change the Way We Do Business?

9/14/17 At a recent meeting of The Presidents Forum, we talked about  the industry power that Amazon wields. Amazon can change the strategy of many players in the retail sector even those who are not direct competitors. They have also changed the buying habits and the way consumers research and purchase products. This wide-ranging power was demonstrated recently after their purchase of Whole Foods. Last week, Target announced major changes in strategy, with a news article stating “Target slashes prices on thousands of items, shares falter. The retailer, which said it would continue to offer discounts on some products in addition to the price-cuts, added that it had also eliminated more than two-thirds of its price and offer call-outs.”  All in response to Amazon. This made for interesting discussions at the table on who holds the bargaining power for our companies; customers, suppliers or a big player like Amazon. What lessons are there for all businesses? Most important is the need to maintain competitiveness and that means innovate, constantly changing the way we do business, the products and services we offer and improvements in customer service.

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Is Tax Reform Coming in 2017?

6/21/17 At yesterday’s meeting of The Presidents Forum, Anthony L’Altrelli, Partner at Withum talked about tax reform. The last tax reform was 31 years ago in 1986. The one before that was in 1954, 32 years before the 1986 Act. So it seems the time is right for tax reform. The President issued a one page “Goals For Tax Reform” based on his campaign promises of tax relief for American Families and Businesses that includes a territorial tax system. Three members of congress also submitted their own separate tax reform proposals:  Ryan, Hatch and Camp. Three significant items for individuals under Trump’s plan are:
  • A reduction from 7 to 3 tax brackets of 10%, 25% and 35%
  • An elimination of the state and local taxes and property tax deduction
  • A doubling of the standard deduction but elimination of the personal exemptions
The big question for L’Altrelli was his opinion on the possibility of Tax Reform happening this year and will it be retro-active to the beginning of the year. L’Altrelli told us the 1986 Tax Reform Bill was two years in the making. If reform is to be as significant as the proposals recommend, it is likely to happen late this year or into next year. Especially, if the territorial tax system is included. Effective dates could be staggered with individual changes now and corporate changes later. The problem becomes tax planning. L’Altrelli mentioned that last year’s planning had individuals moving income and expense between years anticipating tax reductions this year. We may be doing the same thing again in December this year.

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Cyber Security Matters

  5/31/17 At a recent meeting of The Presidents Forum, Bill Blum, Alpine Business Systems, reminded us to maintain a cyber security awareness.  Some points Blum stressed: 1) The best way to protect yourself is to NOT click on any link in an email, text, or tweet unless you are Sure it is safe. 2) DO NOT click to open any attachment unless you are Sure it is safe. 3) There is no single cybersecurity solution that is sufficient; we need multiple layers of defense – anti-virus, firewall, Operating System updates, virus protection, to protect all assets. 4) Backup your personal data to a reputable service (Mozy, Crashplan, Carbonite). REMEMBER syncing your data to iCloud, Google Drive, or One Drive is NOT a backup. You need to back up to a place that has a different username and password. 5) Use a Secured Wi-Fi Network. On an unsecured public Wi-Fi network, information is not encrypted, putting your personal information at risk. 6) Of course, ongoing education and training are necessary to be vigilant against new risks and threats. 7) Finally, we must take better control of our own digital security to keep safe from cyber threats   Good points from Blum that were well received by the members attending.

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Retail’s Sinking Ship

sinking ship At a meeting this week of The Presidents Forum, as part of a broader discussion about long-range planning, risk management, and market opportunities, the members talked about the ominous tones coming from the retail sector. There are lessons to be learned from this troubled sector, but mainly a reluctance to change. As an example, on Tuesday, Sears announced in their annual 10K filing “Our historical operating results indicate substantial doubt exists related to the Company’s ability to continue as a going concern…While our historical operating results indicate substantial doubt exists, we want to be very clear that we’re taking decisive actions to mitigate that doubt.” While Sears may mitigate losses, and raise cash by selling assets such as Kenmore appliances, Diehard batteries and the recent sale of Craftsman tools, Sears will struggle as they attempt to transform itself from a catalog mentality to an on-line mindset. Change may be hard but as former UCLA basketball coach John Wooden said “Failure is not fatal, but failure to change might be.” An active discussion among the members revolved around the need to keep focused on our principle business activity. The lesson for us, as the members stressed, is to continually assess our own business model to assure it continues to focus on the needs of our future customers not the past ones. And, of course, change when necessary.

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