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4/11/16 Intrapersonal and Interpersonal Capabilities

At a meeting on Friday for accounting educators, hosted by the (NJCPA) New Jersey CPA’s, we heard of the employer talent shortage and the skills demanded by today’s employers. Employers are affirming a growing importance in three fundamental skills needed today: problem solving, communication skills and collaboration. The big question is where or how do employees gain these needed skills. Are these skills that can be taught and developed at colleges? Or do employers need training programs for all new hires to teach these particular skills? The answer is that everyone with a vested interest in increasing productivity in the US needs to be involved. Another question from the group was how employers assess those needed skills in an interview. It’s easy to assess knowledge and hard skills but difficult to assess intrapersonal and interpersonal capabilities. If this is what is needed, better assessment tools will be necessary. It’s great when educators and the business community come together to talk.

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4/6/16 The SEC and Cybersecurity

At the SEC’s Chief Compliance Officer event last week, we heard the SEC advise us to assess our cybersecurity preparedness.  This included cybersecurity governance, assessment of risks, protection of networks and information, risks associated with vendors and detection of unauthorized activity.   Within 24 hours of that meeting, we heard about the Panama Papers, a data breach and leak of 11 million documents pertaining to offshore tax havens and secret accounts of wealthy individuals throughout the world. While many dealings were not illegal, it is a major embarrassment to the people named. And, new regulations are sure to be enacted by world-wide taxing authorities.   We should take the SEC’s advice and be continuously vigilant.

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3/31/16 The SEC and Data Analytics

At the SEC’s Chief Compliance Officer event today on the compliance function, two words were repeatedly emphasized: Documentation & Disclosure (write down what you plan to do, tell people what you plan to do, then do it). The SEC’s goal is to protect retail investors and investor savings for retirement. In the SEC’s examination of advisors and broker-dealers, the SEC attempts to balance the need to create greater transparency and accountability while being mindful of the benefits of innovation. The SEC also has concerns with assessing market-wide risks, primarily cybersecurity and liquidity controls.  In selecting candidates for SEC examinations, the SEC makes extensive use of data analytics. This is a major element of their risk-based initiatives. Protecting investors requires this type of higher-level analysis. It was reassuring to hear the SEC talk about protecting individual investors.

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3/22/16 Business Intelligence and Analytics

Mike Cangemi, President of Cangemi Company LLC, shared with members of The Presidents Forum his career focus on Business Intelligence. He quickly summarized this complex technology in three phases as follows: Descriptive Analytics – Helps to understand the past, Predictive Analytics — Helps to understand what might happen, Prescriptive Analytics – Helps to find the best course of action.   Small business knows it should be analyzing more but available time is not there. As Cangemi pointed out though, a distinct competitive advantage will be gained by increasing proficiency in analytics. The time to make advancements in our analytic knowledge is now.

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3/21/16 Bitcoin’s Blockchain

Mike Cangemi, President of Cangemi Company LLC, shared with members of The Presidents Forum some insights into Bitcoin’s ‘blockchain’, the main technological innovation of Bitcoin. Blockchain allows Bitcoin owners to make verifiable transfers through a completely anonymous publicly distributed ledger system. Cangemi, told the members that numerous tech companies are trying to capitalize on this new process and large companies like J.P. Morgan and NASDAQ are doing testing of this type of system to settle transactions with continuous verification. The way we conduct business with each other is constantly evolving and Cangemi advised us to stay alert and open to new possibilities.

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1/25/16 Find, Grow & Retain the Best People

At the Oracle CloudWorld New York Conference last week, there was a session on Oracle’s Human Capital Management system, with specific attention to tools that help Find, Grow, and Retain the Best People.   Many now believe that annual performance reviews are obsolete, and a better method is necessary that provides directed and frequent feedback. As an example, in the accounting world CPA’s are required to have 40 hours of Continuing Professional Education per year. Accounting firms are moving from a compliance based system (make sure they get 40 hours) to a competency based system (what is it we want them to learn in these 40 hours).   Using HCM software, managers can now specify what skills each person needs and focus continuing education on those needed skills. Assessments are included to verify the employee actually learned from the course taken. HCM software helps retention as employees are kept appraised of their performance in a positive way as they see their skills increasing.   Employee turnover is expensive. And in a full-employment market, replacing that employee may be very difficult. For many of us, it certainly is worth the time or effort looking at the new tools out there that help find, grow and retain the best people.

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1/22/16 Creating Value

At the Oracle CloudWorld New York Conference this week, there was an active discussion on the shift of asset values from tangible to intangible assets.  Many estimates show intangible assets, now comprising 80 – 85% of total corporate value. Determining this value is difficult and generally poorly done. Still, companies need to create strategies that drive innovation, by leveraging technology, that creates value. These strategies will require metrics that assess where and how value is created.   Companies talk about future-oriented indicators but the process of valuing, reporting and disclosing intangibles is behind the times. Oracle discussed new products they have to help evaluate the four knowledge resource categories; employees, customers, processes, and technologies. While determining the value of intangibles may always be difficult, acknowledging the importance of value creation, then setting strategies to create value using these types of products as an assessment tool, will prove beneficial to the overall goal of increasing value and corporate worth.

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1/21/16 Cloud Based Solutions

Yesterday, I attended the Oracle CloudWorld New York Conference. I went to hear more about Oracle’s integrated cloud-based suite of business software that may be affordable and beneficial to small businesses. Integration is a big concern for companies as they will continue to use multiple products, like payroll, applicant tracking or a CRM product. Another concern for businesses is whether their current IT infrastructure can accommodate their changing business model. Oracle seems to address these concerns in an effective manner. A one day conference though is not sufficient to make a major decision Decisions on investments in enterprise management solutions are complicated and therefore difficult to make. Oracle’s cost structure for their cloud-based SaaS (software as a service) and implementation timeline (now in months not years) should give small businesses a reason to consider Oracle when thinking about software solutions. As always, a well-thought-out plan is essential.

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12/18/15 Arbitration, Mediation or Litigation

At this week’s meeting of The Presidents Forum, Christopher E. Hartmann, Esq. talked about arbitration and mediation. Hartmann encouraged everyone to consider alternative dispute resolution instead of a traditional lawsuit. He advised that this has to be done at contract formation, when a potential dispute may not be foreseeable. Chris explained that mediation is a non-binding settlement discussion with a neutral facilitator. It may resolve issues before litigation is commenced. Arbitration on the other hand, can be binding or not, but it has its own shortcomings, especially if administered by AAA, which can be very costly. Arbitration of commercial disputes can often take as long as a law suit. Also, if multiple parties are involved, the result could be piecemeal and duplicate cases if every party has not agreed to arbitrate. The decision is not always a simple one. These procedures must be by agreement and Hartmann counseled it is a mistake to accept such contract provisions uncritically. The roundtable members agreed there will always be disputes but some are less costly to resolve than others.

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12/16/15 Data Security Matters!

At yesterday’s meeting of The Presidents Forum, Bill Blum, Alpine Business Systems, reminded us of some data security matters; Backups and Disaster Recovery are Job 1.  Cybersecurity is Job 1.01 and no single cybersecurity solution is sufficient. Multiple layers of defense are required to protect any and all assets – databases, web sites, files, emails, etc. And ongoing user education and training are necessary to be ever vigilant against new risks and threats.   For many of us, we operate in an increasingly risky environment.

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12/01/15 Small Business Sustainability part II

At a recent meeting of The Presidents Forum, a discussion on sustainability efforts in small business was led by Angela Liu, Crispy Green Inc. She made clear that as her product is an agriculture product it depends on an abundant source of fresh water. This source is becoming less plentiful and more costly. Looking out five years, the situation will become more troublesome. Angela told us the time for her to act is now and that includes searching for a reliable source of water close to manufacturing facilities, with proximity to a good distribution network.  The members applauded her on her long term strategic planning.

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11/09/15 Small Business Sustainability

At a recent meeting of The Presidents Forum, the discussion of sustainability came up, and whether this concept had importance for small businesses. The Dow Jones Sustainability™ Indices rate large companies based on three sustainability criteria; economic, environmental and social and measures factors such as innovation, risk management, code of conduct, climate strategy and talent attraction and retention.  The members around the table believed it was easier for larger companies to focus on “purpose versus product” while still devoting resources to each.  However, the members agreed in the long term consumers will reward those companies with a high “sustainability index” and penalize those with low scores. Even those in the small business arena. The dynamic discussion that ensued was how small business accomplishes this – creating overall value at an acceptable cost.

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What’s the Worst that can Happen?

10/15/15 Risk Management begins with the question “Is there some event that can shut down our company?” Volkswagen seems to have missed the answer to that question. We wonder if someone at VW asked “what’s the worst that can happen if we manipulate emissions test results?”   Today, VW is finding out the answer to that question, with potentially the largest claims ever on a company. There is a lesson here for all companies to seriously consider “what’s the worst that can happen?”

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Global Summit

10/01/15 Last week, at Withum Smith & Brown’s 2015 Global Summit in NYC, we heard Arnold Chr. Stange, an international tax and legal partner with HLB Stückmann in Germany talk about the driver of the German Export Market (2nd largest in the world). The driving force is not the large international companies but the SME’s. Those Small and Medium Enterprises with sales ranging between EUR 20 and 200M, are generally family owned, which means management and majority shareholder are the same. These same size companies in the US are not actively exporting but sell primarily in North America. Perhaps this is an area for growth that American SME’s should consider. And looking at the SME’s success in Germany is a good place to start.

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Revenue Recognition

10/09/15 Revenue Recognition is a very hot topic in business today. The need for contracts with case-specific enforceability provisions has taken on increased importance. Christopher E. Hartmann, Esq. spoke before The Presidents Forum on contract pitfalls. Identifying performance obligations, collectability provisions, implied warranties, indemnity rights and reciprocal rights to terminate are contract provisions that Hartmann believes should be well crafted in every contract. “One size does not fit all.”  Companies should regularly review their customer and vendor contracts; otherwise they risk being at a competitive disadvantage in the future.

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Global Summit

10/01/15 Last week, at Withum Smith & Brown’s 2015 Global Summit in NYC, we heard Arnold Chr. Stange, an international tax and legal partner with HLB Stückmann in Germany talk about the driver of the German Export Market (2nd largest in the world). The driving force is not the large international companies but the SME’s. Those Small and Medium Enterprises with sales ranging between EUR 20 and 200M, are generally family owned, which means management and majority shareholder are the same. These same size companies in the US are not actively exporting but sell primarily in North America. Perhaps this is an area for growth that American SME’s should consider. And looking at the SME’s success in Germany is a good place to start.

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Global Summit

9/24/15 Today, I was at Withum Smith & Brown’s 2015 Global Summit in NYC. A great opportunity to hear more about doing business globally. A recurring message was the complexity of global business and the necessity of planning, especially for tax issues. Of course, risk management was actively discussed and some creative ways to mitigate risk. Another point is that talent now moves freely between jurisdictions which creates opportunities and challenges. Overall, an impressive Summit.

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