New AICPA Publication to Guide Reporting on an Entity’s Cybersecurity Risk Management Program

The AICPA has developed a new guide, “Reporting on an Entity’s Cybersecurity Risk Management Program and Controls,” to assist CPAs who are examining and reporting on an entity’s cybersecurity risk management program.

Reporting on a client’s description of its cybersecurity risk management program will help clients demonstrate to stakeholders, customers, vendors and others that they have sound cybersecurity procedures and practices.

The publication’s release follows last month’s introduction of two resources under a voluntary cybersecurity risk management reporting framework:

  • Description criteria – For use by management in explaining its cybersecurity risk management program in a consistent manner and for use by CPAs to report on management’s description.
  • Control criteria – Used by CPAs providing advisory or attestation services to evaluate and report on the effectiveness of the controls within a client’s program.

The 263-page publication includes chapters on Accepting and Planning a Cybersecurity Risk Management Examination, Performing the Cybersecurity Risk Management Examination; and Forming the Opinion and Preparing the Practitioner’s Report. It is available online and in print.

Meanwhile, in a new blog post, Susan S. Coffey, AICPA executive vice president, public practice, writes, “At the AICPA, we saw the emerging market need several years ago. We recognized that there hasn’t been a consistent, common language for describing and reporting on the cybersecurity risk management programs organizations put in place. This lack of transparency makes it difficult for stakeholders to determine whether an organization’s cybersecurity risk management plan effectively addresses potential threats.”

Visit aicpa.org/cybersecurity to learn more about the CPA profession’s cybersecurity activities.

New Version of CPA Exam Tests Critical Thinking, Analytical Ability

The AICPA, National Association of State Boards of Accountancy (NASBA) and Prometric have announced the successful launch of an updated version of the Uniform CPA Examination.

The next-generation exam, which began testing April 1, has added additional assessment of “higher-order cognitive skills that test a candidate’s critical thinking, problem solving and analytical ability,” the AICPA says. The exam also makes greater use of task-based simulations to assess these higher-order skills. Research shows that CPAs are now performing tasks that rely upon these skills earlier in their careers.

“The roles and responsibilities of newly licensed CPAs are constantly evolving, so it’s crucial for the CPA Exam to stay ahead of the curve. The CPA Exam now better reflects the knowledge and skills essential to today’s profession,” says Michael Decker, AICPA vice president of examinations.

Among the most important changes to the CPA exam:

  • Exam blueprints that contain about 600 representative tasks across all four exam sections are available on the AICPA website. The blueprints have replaced the Content Specification Outline (CSO) and Skill Specification Outline (SSO) as CPA candidates’ primary source of the content and skills that they will be tested on.
  • The exam remains composed of the four existing sections – auditing and attestation, business environment and concepts, financial accounting and reporting and regulation.
  • Any combination of passing exam sections prior to April 1 and passing exam sections on or after April 1 (within the 18-month window following passing one section) will count toward licensure.
  • Total CPA exam testing time increased from 14 to 16 hours – four sections of four hours each.
  • A new, 15-minute standardized break during each section that will not count against a candidate’s testing time had been added.

For candidate convenience, the 10-day extension of the testing window introduced in April 2016 will continue in the third and fourth quarters of 2017. The 10-day extension will not be available during the current April/May testing window to allow the AICPA to follow the standard-setting process and analyze exam results to set new passing scores. To provide sufficient time for the process, scores will be released only once following the close of each testing window.

In addition to the changes to the CPA exam that have already occurred, the AICPA is working on an improved user experience, which is expected to launch in 2018. More information on that project will be announced later this year.

Detailed information on the exam is available online at www.aicpa.org/cpaexam and https://nasba.org/exams/the-next-version-of-the-cpa-exam/.

AICPA Launches New Branding

The AICPA is rolling out new branding in conjunction with the Chartered Institute of Management Accountants and their joint venture, the Association of International Certified Professional Accountants.

The move will create unified branding for all three organizations, sharing the sphere logo and the same color palette. Currently only the logo for the association has been released; the rest of the rebranding will be announced in the coming weeks, and is expected to be completed by the end of 2017.

The rebranding was announced in a letter to members from institute chair Kimberly Ellison-Taylor and CIMA president and association chair Andrew Miskin.

“This new brand signals that we are part of one global family with a shared commitment to public and management accounting as we come together through the Association,” says Ellison-Taylor and Miskin. “The same logo, colors and other attributes will appear across our brands to represent a consistent beacon of quality and integrity around the world.” The new look was extensively tested with members and students, who described it as “professional, visionary, dynamic and influential,” they say.

Most Business Executives Prefer Repeal of Affordable Care Act, AICPA Survey Finds

Most business executives want to see the Affordable Care Act repealed, an AICPA survey of CEOs, CFOs and other senior-level CPAs found.

But they also expect their company’s health care expenses to rise this year and next, no matter what happens in Capitol Hill deliberations on the fate of the sweeping health care insurance law, the AICPA says.

Asked their preference for action on the Affordable Care Act, 61% of respondents to the first-quarter AICPA Economic Outlook Survey said they preferred “repeal and replace,” while another 10% said they wanted to see the health care coverage program repealed and not replaced. Almost one-in-five respondents (18%) said they preferred to leave the law as is. Ten percent said they weren’t sure which option they preferred. The survey questions were fielded before the Trump administration and congressional Republicans unveiled their own version of a health care coverage plan, the American Health Care Act, earlier this month.

Despite the uncertainty over health care reform, an overwhelming majority (80%) of business executives said they expected at least some additional expense for their employer-provided health care plans this year, with 43% saying they expected an increase in the range of 6% to 10%, and 26% estimating a rise in the 1% to 5% range.

“Business executives now cite ‘employee and benefit costs’ as the top challenge facing their companies,” said Arleen R. Thomas, managing director of Americas Market, Global Offerings & CGMA Exam, Management Accounting for the Association of International Certified Professional Accountants. “A year ago, that category was No. 6 on the list, and it’s clear health care costs are a major concern driving this upward shift.”

AICPA Survey: Business Executives’ Optimism About U.S. Economy Is Highest Since 2004

Business executives are reporting their highest level of optimism about prospects for the U.S. economy in more than a dozen years, according to the first-quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.

Optimism about the 12-month outlook for the U.S. economy rose from 62% last quarter to 69%, the highest it’s been since it stood at 71% at the end of 2004, the first year the survey was conducted. Sentiment about the economy has been volatile in recent years: Optimism was as low as 28% a year ago, and reached 68% in the same quarter in 2015.

Business executives are similarly upbeat about the outlook for their own companies in the coming year, with almost two-thirds (66%) expressing optimism. That’s up from 61% last quarter and 44% a year ago. One reason: rising expectations for profits and revenue, a trend that has gathered steam over the past year.

“We saw a big jump in economic optimism following the election, and that has been reinforced and extended in our latest results,” says Arleen Thomas, managing director of Americas Market, Global Offerings & CGMA Exam, Management Accounting for the Association of International Certified Professional Accountants. “Much of this positive sentiment is due to expectations of lower corporate taxes and reduced regulation under the new administration. I expect business executives will be monitoring progress on these goals closely.”

Other key findings of the survey:

  • Some 67% of business executives said their companies plan to expand at least a bit in the coming year, up from 62% last quarter.
  • There is a growing perception of tightness in the labor market. “Availability of skilled personnel” is once again a top three concern for business executives, and “staff turnover” is now No. 9 on the list. A majority of respondents (51%) now say their companies plan to increase spending for skills training and staff development.
  • Twenty-two percent of respondents said their organizations are ready to hire immediately, up two percentage points from last quarter. Most said their companies had the right amount of employees.
  • While the overwhelming majority of respondents (81%) expect a substantial reduction in the federal corporate income tax to materialize, half expect it won’t be enacted until at least 2018. Some 18% said a cut to a range of 15-20% would have a significant impact on their bottom line, while 33% said it would have a moderate or slight impact and 43% said it would have no impact.
  • Tax savings from a federal corporate income tax cut would most likely be deployed to capital expenses, not new hiring.
  • 12-month profit and revenue growth expectations (3.5% and 4.3%, respectively) now stand at their highest level since the end of 2014.
  • One in three executives now list inflation as a concern, up from 28% last quarter and 14% a year ago.

Maryland Governor Honors AICPA Chairman

Kimberly Ellison-Taylor

Kimberly Ellison-Taylor

Maryland Association of CPAs (MACPA) member Kimberly Ellison-Taylor, a Baltimore native, is the first state resident to serve as chair of the AICPA and the first minority to lead the AICPA board of directors.

To recognize her accomplishments and service to the country’s CPAs, Maryland Gov. Larry Hogan has issued a proclamation, which was presented to Ellison-Taylor by state Sen. Brian Feldman, himself a CPA, during the MACPA’s annual “CPA Day in Annapolis” advocacy event Jan. 26. Ellison-Taylor also was recognized later that day by Maryland’s full House and Senate.

The proclamation is a “well-deserved tribute” in honor of the “leadership, success and outstanding service” Ellison-Taylor has demonstrated throughout her professional career and as a CPA volunteer.

“I am honored and humbled to have received Gov. Hogan’s citation,” says Ellison-Taylor, who serves as Oracle’s global accounting strategy director. “My name is on the citation, but I believe it is a recognition for all Maryland CPAs and an indication of the MACPA’s commitment to leadership development.”

Ellison-Taylor was an early member of the MACPA’s New / Young Professionals Network (now the Young Professional Council) and served as chairman of the MACPA’s 2010-11 board of directors.

“The governor’s citation is not only a high honor for Kimberly; it’s a recognition of the quality of our membership and the significant role that CPAs play in our state and national economies,” said MACPA Executive Director Tom Hood. “The MACPA team couldn’t be prouder of the work Kimberly continues to do on behalf of CPAs everywhere.”

AICPA CEO Predicts Major Tax Reform

Barry Melancon, AICPA president and CEO, expects to see passage of major tax reform legislation during the Trump administration, Accounting Today reported.

Democrats may help Republican lawmakers enact the reform if Republicans can build bipartisan support, Melancon said Jan. 24 at a meeting of the Accountants Club of America in New York.

“The reason for that is you have eight Democratic senators up for re-election in 2018 who now reside in states that voted for Donald Trump, so they will need politically to look for some things to be able to convey back home,” he said. “I think the potential for tax reform will fall into that. No matter who you are or where you are on the political spectrum, it’s pretty easy to beat up on the tax code and the IRS and certainly for those senators that would be the case.”

He continued, “The political winds are there for it to pass. In all likelihood, it will be the most significant piece of tax reform legislation since 1986, and all the CPAs in the room know very clearly what I’m talking about when I say that. It will be a very significant change if it goes through the process.”

Potential reforms include allowing the IRS to automate tax processing by using information returns, repealing the alternative minimum tax and the estate tax, and changing the rules for pass-through entities, reasonable compensation and foreign revenue.

“There is a lot of traction for 100 percent write-off of all depreciable assets, except land,” he added. “They’re even talking about 100 percent write-off of inventory from a business incentive or business-processing standpoint. You can also imagine some of the passive loss rules that exist in the current tax law and how they might play out in a transition situation.”

Read more. http://www.accountingtoday.com/news/aicpa-ceo-melancon-anticipates-major-tax-reforms

AICPA: Client Accounting Services Emerging as Significant Revenue Source

Client accounting services has become an important line of business for CPA firms of all sizes, even as overall client fees are growing, according to a survey sponsored by the AICPA Private Companies Practice Section and CPA.com.

One trend is growing penetration of the client accounting services/virtual CFO services category for larger firms. The slice of net client fees represented by that service area, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled to 9% for the largest firms with annual revenue of $10 million or more who are active in this area, according to the 2016 National Management of an Accounting Practice (MAP) Survey. It also increased by double digits for the next two largest segments: firms with revenue of $5 million to less than $10 million and revenue of $1.5 million to less than $5 million.

“It’s safe to say that nearly 10% of revenues in the profession are focused on client accounting,” said Mark Koziel, the AICPA’s executive vice president of firm services, who discussed the survey results at the 2016 Digital CPA Conference. “And depending on the size of the firm, it may be more or slightly less, but overall it’s a strong category on its own. Tax and audit continue to be the No. 1 and No. 2 revenue categories, but client accounting demonstrates growing significance to the profession.”

On another front, CPA firms use of cloud services has grown since 2014. Some 56% of all firms surveyed said they use cloud-based software, up 17% from two years ago. Six of seven CPA firm revenue segments reported increases, with only the largest category ($10 million in revenue and up) reporting a slight decline (-1 %). Use of cloud-based remote backup increased 14% to 57% for all firms, and an identical number reported that they capture source documents digitally.

“We’re seeing broad pickup in cloud services and other emerging technologies,” said Erik Asgeirsson, president and CEO of CPA.com. “The next wave that leads to greater productivity and capabilities for advanced firms is fuller integration of these technologies and the elimination of bottlenecks in work processes.”

Among other findings of the survey:

  • Some 38% of firms provide staffers with tablets or mobile monitors to work remotely, with 91% of the largest firms ($10 million in revenue and up) doing so
  • Some 49% of firms are using social media for business development, while 29% are using it for recruitment, although the latter is far more common for larger firms

AICPA ‘Standing Ovation’ Honors Postlethwaite & Netterville CPA

Benjamin Vance

Benjamin Vance

The AICPA Standing Ovation program has recognized Benjamin Vance as one of 25 CPAs age 40 and under to be honored for their contributions to the areas of forensic accounting and business valuation. He was honored at the AICPA’s 2016 Forensic & Valuation Services (FVS) Conference in Nashville in November.

Vance is an associate director in the consulting practice at Baton Rouge, La.-based Postlethwaite & Netterville (FY15 net revenue of $53.2 million).

The Standing Ovation program recognizes young CPAs who exhibit outstanding professional achievement in specialization areas, such as forensic accounting and business valuation.

“Benjamin Vance was honored this year for having demonstrated significant accomplishments in the areas of forensic accounting and business valuation,” says Jeannette Koger, AICPA’s vice president of member specialization and credentialing. “The AICPA’s Standing Ovation program was developed to identify those CPAs who are rising stars in the accounting profession, particularly in their area of specialization.”

AICPA Outlines Tax Reform Priorities

The AICPA has identified several priorities that it would like to see incorporated in any tax reform proposal that advances through the legislative process. These include repeal of the Alternative Minimum Tax, harmonization of education-related tax provisions and consolidation and reform of the multiple retirement savings provisions in the tax code.

“We commend lawmakers for signaling that tax reform will be a top priority in the next Congress,” says Annette Nellen, chair of the AICPA tax executive committee. “The CPA profession prides itself on providing objective analysis of potential changes to our tax code and we again welcome the opportunity to lend expert input as the House and Senate consider tax reform.”

The committee, the most senior committee of the AICPA’s tax division, recently outlined key issues it believes should be considered as part of any major overhaul of the tax code:

  • Follow principles of good tax policy including equity, simplicity, minimum tax gap, transparency and economic growth and efficiency
  • Repeal the Alternative Minimum Tax for simplicity and transparency
  • Harmonize and simplify education-related tax provisions
  • Make adjustments via the tax rate schedule (and avoid phase-ins and phase-outs wherever possible) to promote transparency
  • Eliminate temporary provisions that cause tremendous uncertainty for taxpayers
  • Simplify retirement savings for both individual plans, employer-provided plans and those plans for self-employed individuals
  • Simplify or repeal the “kiddie tax” provisions for calculating the tax on unearned income of a child
  • Reduce tax rates for businesses operating in the corporate form as well as a rate reduction for other forms of business
  • Preserve the current availability of the cash method of accounting for tax purposes
  • Focus on IRS improvement of the taxpayer and tax preparer experience by utilizing modern and secure technology, hiring and training knowledgeable employees, and seeking and utilizing stakeholder engagement

“The AICPA has long advocated for simplification to the tax system because we are convinced such actions will reduce taxpayers’ compliance costs, encourage voluntary compliance through an understanding of the rules and greater respect for the system, and improve enforcement actions,” says Edward Karl, AICPA vice president of taxation. “All of these recommendations are in the public interest and are worthy of serious consideration by the House and Senate.”