June 2011

Good leaders are usually made, not born. Sure, there’s the bred-in-the-bone verve, the judgment that’s often instilled at an early age, the outgoing and fearless personality.

But according to a recent survey of finance professionals, a leader’s most highly-regarded traits are carefully cultivated. He or she is a visionary. Principled. Caring. Motivated. Credible and inspiring.

For many professionals, the ultimate expression of leadership is the office of the chief financial officer, and they plan for that role in their future. What’s the biggest difference? (Other than the paycheck, of course.) Well, whereas the CFO is responsible for the “big picture” and is outward-focused, the Controller is more inward and historically focused, says Russ Palmer, longtime CEO and dean of Wharton School of Business.

The CFO is a strategic business partner who helps raise capital and manages the care and feeding of internal and external stakeholders. A great CFO also has what Palmer calls the “Likeability Factor.”

The two jobs have a lot of overlap, of course. Both incorporate the same general fields of study: managerial and financial accounting, federal, state and local taxes, regulatory compliance.

But also expected from the CFO are deep analytical skills, a dynamic presence and optimistic spirit. So how do you learn to be a motivator? To develop open and effective lines of communication both inside and outside the company? To know instinctively what your company needs?

According to CPE Link instructor, Miles Hutchinson, CPA, the CFO’s role in modern business management is moving away from simply providing information to management and towards acting as a key consultant and decision maker in an organization.

Are you ready to take on this role?


Do your clients feel guilt about benefiting financially from giving to charity? They shouldn’t, of course. “There’s nothing illegal, immoral, unethical, or unpatriotic about making money from charitable activity,” says CPE Link speaker, Stuart P. Sobel, EA who teaches about how to build wealth through wise charitable giving. There is one good way to get over the guilty feeling.

Put hard earned money where it will do the most good.

But with new crises every day and the proliferation of non-profit organizations all competing for donor dollars, that’s easier said than done. There are 1.6 million non-profit organizations in the U.S.—a whopping 68 percent increase over 10 years ago. What’s a taxpayer to do? Two things, says Sobel. First, have a tax plan for giving. Then, check out a charity before giving it a check.

One measure of a good charity is how much revenue goes to programs as opposed to administration and fund raising. Another, perhaps more important one, is how effectively is the money used.

According to 2010 donor survey by Russ Reid, a consultant to non-profits, as reported in Forbes.com, “only one-third of donors actually talked to an organization’s staff before making a gift, and only one-quarter visited the organization in person or reviewed its annual report.”

Here are some resources that help donors check out charities before writing the checks.

  • The Better Business Bureau Wise Giving Alliance reports on charities.
  • Charity Navigator has an unbiased, objective, numbers-based rating system to assess the financial health of over 5,000 of America’s best-known charities.
  • Philanthropedia, acquired by GuideStar, rates verified, financially responsible charities according to how much great work they’re doing.
  • GiveWell focuses on how well programs actually work – i.e., their effects on the people they serve.
  • American Institute of Philanthropy (AIP) publishes a rating guide three times a year.

Do you know of other resources for researching charities?

“Focus on the core problem your business solves and put out lots of content and enthusiasm and ideas about how to solve that problem.” Laura Fitton, Founder of Oneforty.com.

Marcia Miller, EA, lives and breathes this idea. Miller has a thriving tax practice in South Florida, but she may be best known nationally as the “1099 Queen.” Miller lectures and teaches widely on 1099 issues, shining a light on the murky issues of contractor versus employee and the on-again-off-again attempts of the Federal government to close its huge tax gap with changes to 1099 requirements.

“Major changes to 1099 reporting that were passed under the cover of Affordable Care Act were repealed in April, but businesses shouldn’t get too complacent. They’ll be back in some form, sooner rather than later,” Miller predicts. The tax gap is just too huge to let it go. (The IRS is expected to provide updated estimates of the tax gap by the end of 2011, but the most recent estimate puts the gap at about $350 billion annually.)

Will the reprieve from issuing 1099s to corporations be short lived? Possibly. Businesses and the corporations with whom they contract should brace themselves. Will the IRS change how it applies the 20 factors that define the difference between an employee and a contractor? The government publishes the factors, but they are secretive about how they use those factors. How many of them do you have meet to be considered a contractor—that’s a mystery, says Miller, the 1099 Queen. “However, the IRS panel discussion that I just attended stated that in most cases there will be more emphasis or determinations based upon review of the three categories of “control.”

Miller’s advice? Keep a watchful eye on lawmakers in the months to come.

Here are some useful resources provided by Miller.

List of the 20 factors and 3 categories of control used by IRS to determine contractor status.

• A more detailed version used by the IRS.

In a previous post, Garrett Wasny listed ways in which accounting and finance professionals are using Twitter to good advantage. Because his specialty is professional development consulting for accountants, we followed up and asked him how social media has changed the way he conducts his own business. Here is Garrett’s very interesting list—contrasting the old days (before social media) with the new ways (after social media).

Says Garrett:
“I use social media to—

Improve my marketing:
Old: static business cards
New: dynamic LinkedIn profile

Boost my professional development:
Old: magazines subscriptions
New: RSS feeds

Enhance communications with customers and colleagues:
Old: zero access to top decision-makers
New: now, directly connect and eavesdrop using Twitter

Accelerate workflow and productivity:
Old: Travel
New: Virtual meetings and webinars

Help me recruit:
Old: newspaper ads
New: LinkedIn candidate search

Find new gigs and jobs:
Old: public library research
New: follow companies on LinkedIn, Facebook, Twitter, YouTube.

Make me a smarter shopper and cut costs:
Old: hard copy catalogs
New: Red Laser app on mobile phone

Create new business models and revenue streams:
Old: only banks loaned money
New: peer-to-peer lending marketplaces provide lending and borrowing opportunities

Improve Google ranking:
Old: launch website and hope users find me
New: Every mention of my name on social media raises profile and boosts search results”

How are you using social media in your firm?

What is Twitter good for?
a) Helping people organize a grassroots revolution against a dictator?
b) Giving public figures enough rope to hang their reputations?
c) Promoting a teen idol’s latest album?
d) Absolutely nothing if you’re a CPA?

If you’re thinking “all of the above,” you might want to reconsider, at least about (d).
According to WeFollow, a directory of Twitter Users, there are 681 users who list Accounting as their interest. These include industry media, such as AICPA News (with 7,267 followers) and AccountingWEB (with 4,168 followers).

Some state CPA associations are on Twitter—the Alabama Society of CPAs has more than 1,200 followers. You might expect educators and consultants to use Twitter, and they do. Michelle Golden, for example, who teaches CPAs and others about social media, has more than 3,000 followers.

Some individual practitioners are using Twitter, as well. If you’d like to see who they are and how they are doing, you can look up “Accounting” on WeFollow. CPE Link is on Twitter, too.

How are accountants and accounting organizations using Twitter? “They are using Twitter for business research, network building, marketing, recruitment, reputation management, idea sharing, regulation monitoring and much more,” says Garrett Wasny, an award-winning speaker, professional development consultant, author, columnist, and former management consultant for Price Waterhouse in Vancouver, Canada.

Twitter might be worth another look. Tweet tweet.

The Economist says that the consulting industry, in general, is bouncing back after a wretched 2009. (“Consulting bounces back: Advice for Consultants,” June 2, 2011.) But the clients have changed. They drive harder bargains, expect better consultants, and put them to work next to their own staff, says the Economist.

Sheila Shanker, CPA, an experienced consultant, has some practical advice about how to be a better consultant when you’re working closely with staff: “I have seen more than one consultant to forget his role in a business and become part of the rumor mill and lose track of the objective, which is to help a client. My guess is that some people want to “belong” and feel part of a team and in order to do that, they align themselves with the staff, losing objectivity in the process and becoming part of the problem.”

Where have you seen consultants in accounting disciplines go astray?

Sheila Shanker, CPA, MBA is a consultant with 15 years of experience, including internal controls, SOX, teaching, and consulting. Her articles have been published in national magazines including the Journal of Accountancy.

The recent news of the Schwarzenegger-Shriver split is an epic example of the bad things that can happen in people’s lives. The public will never know the resolution of this dreadful situation involving high-profile clients and powerful adversarial attorneys. However, for other people going through bad situations, the accountant could be the unsung hero by strategizing a solution that’s positive for everyone.

Take divorce for example. “No one should look forward to divorce, but when it happens there are tax planning, financial planning, and asset protection ramifications. And there are strategies that accountants can employ to make the best of a bad situation,” says Arthur J. Werner, JD, MS Taxation. “For instance, there may be a strategy that enables one spouse to get more money while the other spouse gets better tax deductions, and the only loser is the IRS.” What about the anger and hurt that happens with divorce? When you explain the strategy, most people accept it, says Werner. “After all, why would anyone want to spite a spouse by paying more money?”

Accountants know about the law and compliance, and they usually report to clients on what happened the year before. But when the bad situations that inevitably happen to people, such as divorce, death, disability, a child who needs help, accountants are in a position to do much more. “The same tax law can be used proactively rather than wait to end of year and compare returns, and say ‘too bad this happened but here’s the result.’ What if we were to say instead, here’s the tax law and let’s strategize accordingly?” says Werner.

Everyone wins, including the accountant. “If we can take a bad situation and make something positive out of it, we are serving the client well,” says Werner. “And the billable hours are very nice too,” he adds.

Arthur Joseph Werner lectures extensively to certified public accountants, enrolled agents, insurance agents, and financial planners in the areas of estate planning, financial planning, and estate and gift taxation–and making the best of bad situations.

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