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NEWSACCOUNT COLORADO SOCIETY OF CPAs â€¢ MAY/JUNE 2019

The

Meet Your New Chair PAGE 2

State Board Legislation Moves Through the Process PAGE 4

Blockchain Technology PAGE 8

VISI ON of a Colorado Native

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NewsAccount | May/June 2019

Contents

As a young professional, Ben Hrouda was profiled in the March/April 2007

edition of NewsAccount.

Features 4

State Board Legislation Moves Through the Process Senate Bill 19-155 would continue the Colorado State Board of Accountancy to 2030. Proposed legislation also would make other changes to the Colorado Revised Statutes which govern regulation of the profession.

Prepare for Implementation: New Standards for Not-for-Profits Itâ€™s time to consider implementing several important standards which affect NFPs, unless specifically scoped out of them.

Blockchain Technology: From Disruption to Opportunity The real story behind blockchain lies in its wide-ranging applications that will change not only the way business is done but also the way we live.

Financially Fit Aging: Where to Call Home In this second article of the series, author Amy King focuses on housing and the variety of options available in todayâ€™s environment.

Two CPAs + One Castle: A Historic Renovation Thanks to Steve and April Carver, Redstone Castle is restored and open for making memories. It took their years of experience as CPAs to make the dream reality.

Forensic and Valuation Pros: 4 Ways Tax Reform Affects You The Tax Cuts and Jobs Act created potentially significant effects beyond income tax, such as the impact on valuing closely held businesses and family law.

Using Mobile Apps to Transform Business Processes Businesses are seeing the potential of mobile applications for customer use. They can streamline processes and enhance productivity for businesses, too.

24 Departments 2

Chair Column

Movers & Shakers / In Memoriam

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CHAIR COLUMN

NEWSACCOUNT

A bimonthly publication of the Colorado Society of Certified Public Accountants Vol. 65, No. 1 May/June 2019

Meet Your New Chair: Ben Hrouda, CPA, CGMA

Officers

Benjamin T. Hrouda, Chair Sharon S. Lassar, Vice Chair Christopher J. Telli, Treasurer Victor A. Amaya, Immediate Past Chair Mary E. Medley, Secretary

Directors

Kristine M. Brands, Toby Clary, Audra Dixon, Renny Fagan, Georgia Z. Phillips, Matthew O. Rolland

Editorial Board

Jack Allgood, Alan D. Bennett, Steve Corder, Peggy Jennings, Georgia Z. Phillips, Lori Anne Reinwald, Laura J. Theiss, Barbara J. Tedesko, Steve Van Meter, Michael D. West, Charlie Wright Mary E. Medley, President/CEO Natalie G. Rooney, Contributing Writer Ariana Cassard, Blue Ocean Ideas, Design NewsAccount (ISSN #10899952) is published bimonthly by the Colorado Society of Certified Public Accountants, 7887 E. Belleview Ave., Suite 200, Englewood, CO 80111. NewsAccount is published in January, March, May, July, September, and November and reports information, news, and trends in the accounting profession. The Colorado Society of CPAs assumes no liability for readers’ business decisions in reference to advertisements or other information included in this publication. Membership dues include a $9.00 one-year subscription to NewsAccount. Periodical postage paid in Englewood, CO, and additional mailing offices. POSTMASTER: Send address changes to NewsAccount, Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111 Net press run = 6,743 copies; sales through dealers and carriers, street vendors, and counter sales = 0; paid or requested mail subscription = 6,688; free distribution by mail = 0; free distribution outside the mail = 20; total free distribution = 35; total distribution = 6,708; office use, leftovers, spoiled = 35; returns from news agents = 0; total sum = 6,743; percent paid and/or requested circulation = 99%. 303-773-2877 • 800-523-9082 Fax: 303-773-6344

NewsAccount is available online at www.cocpa.org.

BY NATALIE ROONEY

s a fourth generation Coloradan, Ben Hrouda’s roots in this state, and in Denver, run deep. “My great, great, great grandfather was a minister and came to Denver in 1885 to build and lead Trinity Methodist Church at 18th and Broadway,” Ben says. “This city means a lot to me. My family’s roots go deep in a lot of different ways.” Ben graduated from Cherry Creek High School and attended the University of Denver (DU). He really didn’t have any idea what he wanted to do career-wise. He was financing his college education and wanted to wring everything possible out of his opportunities. “Accounting was known as the most difficult major, so that’s what I chose,” he says. “I think in a lot of ways,

people still consider accounting the hardest major on campus. I was generally good at math, so I took an intro to accounting course. It clicked and was easy for me, so I stuck with it.” After graduation, Ben joined the audit department of EY’s real estate practice. After three years, a client approached him about a full-time position, and he joined its team as corporate controller/head of finance. Ben says it was a great way to transition to the industry side of the profession. He stayed with the client, Alliance Commercial Partners (now Everwest Real Estate Partners), for seven and a half years, gaining more experience in real estate. His next several career moves took him to a startup

real estate fund and to UDR, Inc., a large, public real estate investment trust, before joining Sage Hospitality. By then, Ben had built a successful career focused on real estate. “I grew up around the real estate industry,” he explains. His family had been deeply involved with the Van Schaack Company, a Denver real estate company active since the 1910s. While he was at Sage, Ben says the entrepreneurial bug bit him, and after two years, he “pulled the ripcord” and went out on his own. BOOTSTRAPPING Ben launched the Flywheel Capital platform in June 2016. Flywheel is a privately held commercial real estate investment company with a focus on creating value by sourcing and managing value add and stabilized commercial real estate assets across multiple property types. Without any seed capital investment, Ben describes the process as a “bootstrapping and growing as you go kind of thing. We self-funded the business.” A flywheel is a mechanical device that efficiently stores kinetic energy and smooths the operation of an engine by maintaining a constant speed of rotation over the whole cycle. A flywheel’s rotational energy may be small at first, but momentum gains with each successive revolution, increasing and releasing kinetic energy. Ben and his partner founded Flywheel Capital with this concept at the core of their investment philosophy — “providing investors with opportunities for steady, efficient compounding investment of effort, creating an unstoppable force that builds long-term, generational wealth.”

“For me, the CPA designation is everything.” In addition to the two founding partners, Flywheel has a team of four full time associates and an intern. “We’re in the growth and building mode,” Ben says. “We’re Front Range focused. We look for diamonds in the rough — the properties other people might pass over for whatever reason. Yet, if you spend

a few extra minutes on them, you might find something interesting.” Ben describes his role as providing support for the rest of his team. “Whatever it is we need — guidance, time, resources — I’m supporting the team as we grow and build. I still draw on my CPA designation every day. For me, the CPA designation is everything. People often say it’s the language of business, and it’s true. It’s how business gets done.” THE YEAR AHEAD Ben’s theme for the year is “Stand Up and Be Proud.” It’s a phrase that Ben says can apply to anyone in the profession, whether in tax or audit, public or industry, government or nonprofit. “Stand up and be proud of what you’re doing because what you’re doing matters in a big way,” he says. “Accounting makes the business engine run, and without you, it wouldn’t run. Everybody is doing something different and cool. Don’t be ashamed to tell people what you’re doing. You make a difference.”

2019 WITH BEN HROUDA,

CPA, CGMA

Ben says he also looks forward to promoting the value of the CPA license, what the value means, and encouraging others to pursue the CPA designation. “People can work in the accounting profession without the CPA credential, but they’re missing out on the larger professional opportunity.” Ben’s road to becoming COCPA chair began in college, where COCPA CEO Mary Medley taught his business writing class. He received an Educational Foundation of COCPA scholarship. And, one of his first official COCPA roles was service on the Young Professionals Committee. He’s done a lot more since those early days including service as COCPA Treasurer and Budget Committee Chair. Ben is married and is proud Dad to two daughters. The family’s first names are: Andrea (Ben’s wife), Ben, Clara (age 11) and Delaney (age 8) — yep, ABCD. The Hroudas love to ski in the winter and fill their summer with different sports and activities. Expect the abundant energy Ben exhibits on the ski slope to be just as present during his year as Chair. Or, as he often says, “I’m so excited. The future is bright, and I’m ready to help make it even brighter for the COCPA and all those we serve!” Contact Ben at ben.hrouda@flywheelcap.com.

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SUNSET REVIEW UPDATE

State Board Legislation Moves Through the Process

As we go to print, Colorado Senate Bill 19-155, proposed legislation to continue the Colorado State Board of Accountancy, has passed the Senate and the House. It returns to the Senate for concurrence with the House amendments. Follow progress by going to leg.colorado.gov/bills.

enate Bill 19-155l, sponsored by Sen. Angela Williams (D-Denver), Sen. Kevin Priola (R-Henderson), Rep. Tracy Kraft-Tharp (D-Arvada), and Rep. Marc Snyder (D-Manitou Springs), continues the Colorado State Board of Accountancy to Sept. 1, 2030, and includes all the recommendations the Colorado Department of Regulatory Agencies made in its Sunset Review report for changes to the statute governing regulation of the Colorado CPA profession. In addition, the bill was amended by the Senate Business, Labor, and Technology Committee to provide that a “nonresident Certificate Holder applying to renew, reactivate, or reinstate” a Colorado CPA certificate may meet the Colorado continuing professional education (CPE) requirements by attesting to having met the requirements of the state in which the Certificate Holder’s principal place of business is located. The bill was amended by the House Business Affairs and Labor Committee to specify that “an individual (a non-CPA) may use an accounting designation that includes the word ‘management’ conferred by a bona fide nationally recognized accounting organization, such as the American Institute of CPAs, the Chartered Institute of Management Accountants, or the Institute of Management Accountants, or their successor organizations, if the designation does not purport to confer the right to perform audit or attest services.” The amendment also clarifies that a nonCPA using such a title - e.g. CGMA (Chartered Global Management Accountant) or CMA (Certified Management Accountant) - may not “offer or render tax services to the public while using (such) a title unless doing so within a partnership, professional corporation, or limited liability company of certified public accountants…” As of April 24, the bill had passed the Senate and the House. It awaited Senate concur-

NewsAccount | May/June 2019

rence with the House amendments and Gov. Jared Polis’s signature. The legislature will adjourn, sine die, May 3, 2019. For further details, contact Mary E. Medley, COCPA CEO, at mary@cocpa.org.

IN MEMORIAM

Harold D. Hein, CPA COCPA President, 1983-1984 Harold Hein was a giant in the Colorado CPA profession who continued to make his mark long after he retired from his Big Eight career as a tax partner with Arthur Young & Company. Born in Grainfield, Kan., the University of Kansas Jayhawk joined the Denver office in 1956 and climbed the ladder, making partner in 13 years. After retiring from the firm, he continued to provide his expertise and his wise counsel to clients as a sole practitioner - serving them even this past busy season. And, there was so much more to the man and his legacy. AY retired partner and lifelong friend Ed Meier recalls, “Harold was a mentor and gentleman who was liked and admired by everyone. He definitely was one of the good guys.” Colleague and lifelong friend Michael Weatherwax, CPA, remembers, “In the early 70s, I followed several years after Harold Hein on what we, at Arthur Young, called the Wray Job – about 15 or 20 farmer and rancher clients we visited each year in Wray, Colo.Without exception, the first words from every one of those clients was, ‘How’s the Big Fella?’That is the best description of Harold I ever heard. Yes, he was big in

physical stature, but that’s not what they were describing.Harold was big hearted, kind hearted, intelligent, soft spoken, respected, and admired by everyone he met - a true gentleman and a gentle man.Big Fella, I love you and will miss you a lot.” Harold served the profession as COCPA president, Colorado State Board of Accountancy president (during a Sunset Review year), and National State Boards of Accountancy mountain regional director and subsequently director at large. NASBA recognized him with its Distinguished Service Award. He also was active with his local Lions Club. He loved his sports: “skiing, tennis, golf, and loafing” - his words. Harold loved his family and traveling far and wide, too. A frequent topic would be what adventure he was taking his wife Martha and their family on next - sailing from hither and yon and beyond. All who knew Harold Hein loved him. All who were touched by Harold Hein will miss him. You’re invited to share your remembrances with Martha and their family, 7087 Parfet Street, Arvada, Colo., 80004.

LEADERSHIP S U M M I T

* F O R M E R LY K N O W N A S L E A D E R S H I P C O U N C I L

June 13, 2019 • Courtyard by Marriott, Denver

The Future of the CPA Profession

Finding Balance as We Automate the Human-Machine Relationship Numbers have little significance without a human to interpret them. A single number can signify an amount, indicate a relationship, symbolize a shift, or serve as a lead indicator of troubled times ahead. But without the emotional values a human places on them, they’re just numbers. The CPA profession is full of numbers, and machines soon will be able to manipulate numbers far better than any person. Still, understanding the true significance of any numerical entry is a uniquely human task. Over the coming years, we will have hundreds of thousands of new industries spring to life, and many will attempt to automate far beyond the limits that require human involvement. They will fail. We currently only have a fuzzy understanding of the barrier that separates the capabilities of automation and the necessary involvement of people. However, the future of business will be filled with failed stories of those who have gone too far. The demands of life are changing, and so is the future of virtually every profession. Join Futurist Thomas Frey as he takes you on a journey into the future you are unlikely to forget.

Futurist Thomas Frey

Patricia L. “Patty” Silverstein

Thomas Frey is currently Google’s top-rated futurist speaker and IBM’s most award-winning engineer. As Founder and Executive Director of the DaVinci Institute, Thomas has built an extensive following around the world based on his ability to uncover unique insights into the future, and describe the enormous opportunities that lie ahead. Having started seventeen businesses himself and assisting on the development of hundreds more, the understanding he brings to his audiences is a rare blend of reality-based thinking coupled with a clear-headed visualization of the world to come.

Patty Silverstein is president and chief economist of Development Research Partners, a Jefferson County, Colorado-based real estate analysis and economic development research company founded in 1994. Her expertise is in economic research and economic development, including industry cluster studies and strategic economic development planning. She has extensive experience in preparing economic and f iscal impact analysis for community development purposes.

Architect of the Future

Economic Update

NOT-FOR-PROFIT ACCOUNTING

Prepare for Implementation: New Standards for Not-for-Profits BY PEGGY JENNINGS, CPA

Not-for-Profits (NFPs) have recently been focused on the implementation of FASB ASU 2016-14, Presentation of Financial Statements of Not-for-Profit Entities. Numerous articles have been published, and many webinars have been held on this important new standard.

t’s now time to consider implementation of several other important standards that have been issued. Accounting standards apply to all entities, unless you are specifically scoped out, so NFPs need to be aware of the new standards that might affect their operations or reporting. It’s also important to note whether your NFP holds public conduit debt, as in some instances the standards will need to be implemented a year earlier than is required for NFPs without public debt. The following are excerpts from the published summaries of new standards that might be applicable to your operations: ASU 2014-09 (and amendments), Revenue from Contracts with Customers - effective for calendar year 2019 or 2018 if you hold public conduit debt: The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2016-01, Financial Instruments: Recognition and Measurement of Financial Assets and Liabilities - effective for calendar year 2019: This standard requires equity securities (including other ownership interests such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. An entity’s equity investments that are accounted for under the equity method, or result in consolidation of an investee, are not included within the scope of this standard. ASU 2016-02 (and amendments), Leases - effective for calendar year 2020 or 2019 if you hold public conduit debt: For leases with a term of more than 12 months, a lessee should recognize in the statement of

NewsAccount | May/June 2019

financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. ASU 2016-13, Financial Instruments - Credit Losses - effective for calendar year 2021 or 2020 if you hold public conduit debt: The objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by replacing the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-18, Statements of Cash Flows - Restricted Cash - effective for calendar year 2019: This update requires that amounts described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2017-01, Business Combinations - effective for calendar year 2019 or calendar year 2018 if you hold public conduit debt: This update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill, and consolidation. ASU 2017-02, Consolidation - effective for calendar year 2017: Recent updates to Topic 810 created uncertainty about when an NFP that is a general partner should consolidate a for-profit limited partnership. The amendments herein reinstate the prior consolidation guidance with respect to general partners or limited partners and when they should consolidate the for-profit entity. ASU 2017-10, Service Concession Arrangements - Determining the Customer of the Operation Services - effective for calendar year 2019 or 2018 if you hold public conduit debt: This standard clarifies that when a public-sector entity (government) enters into an arrangement with an NFP under which the NFP will provide operation services to members of the general public, the public-sector entity is both the grantor and the customer of the services.

ASU 2018-08, Clarifying the Scope and Accounting Guidance for Contributions Received and Made - effective for calendar year 2019 or fiscal years beginning after June 15, 2018, if you hold public conduit debt: This standard was issued to clarify and improve the scope and the accounting guidance for contributions received and contributions made. The amendments should assist entities in: (1) evaluating whether transactions should be accounted for as contributions (nonreciprocal transactions) or as an exchange (reciprocal) transaction, and (2) determining whether a contribution is conditional.

Remember the specified implementation timeframes fall after the calendar year-end. ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurements - effective for calendar year 2020: This standard modifies the disclosure requirements on fair value measurements. Disclosure requirements removed include: (1) the amount of and reasons for transfers between level one and level two of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the valuation processes for level three fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses for the period included in earnings for recurring level three fair value measurements. Disclosure requirements modified include: (1) in lieu of a rollforward for level three fair value measurements, a nonpublic entity is required to disclose transfers into and out of level three and purchases and issues of level three assets and liabilities; (2) for investments in certain entities that calculate net asset value, and when the investee has communicated the timing to the entity or announced the timing publicly, an NFP is required to disclose the timing of liquidation of an investee’s assets and the dates when restrictions from redemption might lapse; and (3) the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. ASU 2019-03, Updating the Definition of Collections - effective for calendar year 2020: The amendments modify the definition of the term “collections” and require that a collection-holding entity disclose its policy for the use of proceeds from when collection items are deaccessioned (that is, removed from a collection). NFPs with fiscal year-ends: Remember that the specified implementation timeframes fall after the calendar year-end. For example, ASU 2018-03 that is effective for NFPs for calendar 2020 is effective for NFPs with a fiscal year ending in 2021. The number of new pronouncements over the next two years can appear intimidating. Consider reading the introductory section of each new standard to become familiar with the requirements and how they may (or may not) affect your operations or reporting. Peggy Jennings, CPA, is an audit partner with Eide Bailly, LLP, Denver. Contact her at pjennings@eidebailly.com. This article originally appeared in Eide Bailly’s Insights, April 1, 2019. It is reprinted with permission.

YOU’VE SPENT 30 YEARS BUILDING YOUR NEST EGG. NOW COMES THE HARD PART: MAKING IT LAST ANOTHER 30. The challenges facing today’s retirees are unique. Low interest rates, sky-rocketing healthcare costs, longer life expectancies, and complex Social Security rules all make much of the conventional retirement wisdom of the past obsolete. In this new era, it’s crucial that you take a fresh look at the challenges ahead and create a comprehensive plan to address them.

For 25 years, we’ve been working with people like you to address the challenges of the transition from accumulating their nest egg to using it to support their retirement lifestyle. Get in touch today to schedule a complimentary consultation.

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May/June 2019 | www.cocpa.org

CYBERSECURITY

Blockchain Technology: From Disruption to Opportunity BY NATALIE ROONEY

Ask most people to explain blockchain technology, and they’ll mention cryptocurrencies like Bitcoin, Litecoin, and Ethereum. The real story about blockchain lies in the more wide-ranging applications that are set to change not only the way we do business but also the way we live. THE NUTS AND BOLTS Blockchain sounds kind of vague when you look at its textbook definition: a distributed, decentralized, public ledger. What does that actually mean? Every second of every day, businesses exchange value with suppliers, partners, customers, and others. Value means goods, services, money, data, and more. Each exchange of value is a transaction. Successful transactions need to be fast, precise, and easily agreed on by parties participating in the transaction. How Blockchain Works • As each transaction occurs – and the parties agree to its details – it’s encoded into a block of digital data and digitally signed. • Each block is cryptographically connected to the one before and after it — creating an irreversible, immutable chain. • Because the blocks of data are chained together, existing blocks cannot be altered without breaking the chain. If anyone attempts to change as much as a single comma, the chain is broken, and the change is detected and rejected. Why It’s Better • It’s distributed. Blockchain creates a shared system of record among business network members, eliminating the need to reconcile disparate ledgers. • It’s immutable. Consensus is required from all members, and all validated transactions are permanently recorded. Even a system administrator can’t delete a transaction (because a system administrator doesn’t exist). How It Can Help Businesses • Create new business value. Organizations must continually improve business processes and explore new opportunities. Blockchain enables manual processes to become digital; instant verification of data integrity and authenticity; peer-to-peer communication without the aid of intermediaries; and value transfer with instant settlement. Also, it eliminates usernames, passwords, forms, and other points of friction for customers and users. • Optimize ecosystems. Facilitating transactions with suppliers, partners, and customers helps streamline business processes and transactions. • Reduce risk. With blockchain, your business process network creates transactions using a distributed, immutable ledger. It also helps compliance with privacy and consent laws like the GDPR in Europe; more intimately involves people in the handling of their data; and provides cryptographic proof of events.

NewsAccount | May/June 2019

Beyond Banking Experts say nearly every industry can find a use for blockchain. Audits Blockchain offers what is essentially a permanent record of transactions, which creates an easy-to-follow paper trail for audits, both internal and governmental. It guarantees accuracies and solves the problem of pulling in records from a number of disparate sources. Healthcare In 2017, 477 healthcare data breaches were reported to the U.S. Department of Health and Human Services affecting 5.579 million patient healthcare records. These breaches cost approximately $408 per record — more than 2.75 times the global average across industries. Partially in response to this ongoing issue, healthcare technol-

cation keys, Ruff explains. In this manner, any data anywhere can be instantly authenticated for both source and integrity. Ruff uses the job application process as an example. A university gives a graduate a digital diploma (in addition to a physical diploma). When the graduate applies for a job, the employer can instantly verify that the diploma is valid by pulling down the verification key for the university from the public ledger and using it to unlock the provided diploma. No one has to contact the college or university and wait for a reply. The diploma instantly is verified, and users have assurance that both the source and integrity of the information are valid. Why is this important? “Fifty percent of Ph.D.’s are fake,” Ruff says. “That statistic is even worse for other degrees. Now you can instantly and digitally verify information is authentic. It changes everything.”

“Now you can instantly and digitally verify information is authentic. It changes everything.” ogy innovators are exploring the use of blockchain to establish a more secure, integrated healthcare recordkeeping system. Securities and Commodities Trading Blockchain promises quicker trading and settlement on stock exchanges, whether in securities or commodities. The distributed nature of the technology ensures that a process previously undertaken over the course of several days is affirmed and finalized in minutes, significantly streamlining the entire experience. Smart Contracts Smart contracts enable organizations to handle large numbers of transactions, such as those that run across supply chains, automatically. They can be used to integrate services across different businesses without divulging sensitive or proprietary information. Supply Chain Management Blockchain can track goods and materials within an organization, such as throughout the supply chain of a manufacturing company. As a product leaves the factory, blockchain could be used to record its arrival at a warehouse and its shipment to a retail store, for example. Using blockchain for supply chain management, a business owner has more visibility into the processes of the business. NEW TECHNOLOGY, NEW COMPANIES Evernym – Helping Organizations to Utilize “Self-Sovereign” Identity Timothy Ruff, co-founder of Evernym, Inc. in Salt Lake City, says his company exists to facilitate peer-to-peer trust among people, organizations, and connected things. Ruff says blockchain makes it possible to make identity credentials such as drivers’ licenses and passports digital, uncopiable, and unhackable. “It will change how you prove who you are and how trust is established remotely, over the phone or online” he says. “It will eliminate usernames and passwords – and no more answering questions about your first pet or mother’s maiden name when you call your bank. It will change everything in a really exciting way.” Evernym created a hybrid distributed ledger (technically not a blockchain) called Sovrin – a global public registry of public “verification keys.” No one’s private information goes into it, just the public verifi-

The system can be used by anyone who issues credentials – registrations, certificates, licenses, memberships, diplomas, a stock certificate. “It’s for anyone who certifies something that’s unique about someone,” Ruff says. “Even a Scout’s merit badge. The applications are endless.” Plus, Sovrin’s technology is open source. “Like all open source software, it’s available for anyone anywhere to figure out how to do this. It’s not easy and few want to, so they buy the service from a company like ours,” he says. “The market is too big for any one company to own. We’ve now made this possible and open sourced the concept. Based on what’s already happening around the world, it will be an enormous new market – in the trillions. We can compete favorably, but we won’t try to own it. That would be impossible.” “Without blockchain, self-sovereign identity wouldn’t be possible on a global basis,” Ruff says. “Blockchain enables you to have your own, sovereign wallet with your digital driver’s license, credit card, digital room key, digital receipts, and so much more. And no one else sees it, can change it, or take it away.” Sweetbridge – Improving Supply Chain Management Sweetbridge CEO Scott Nelson used to own a company that audited the logistics of about 25 percent of the Fortune 200 companies. What he found through these audits was, on average, 54 business points of error and fraud. “When you’re talking about tens of billions of dollars, that’s a big number,” he says. “And it was scarily consistent. It didn’t matter what kind of business it was or where in the world it was located. The errors were the same.” Nelson saw an opportunity to turn the situation around using blockchain and its distributed ledger technology. Instead of auditing and finding errors, Sweetbridge could use continuous assurance to make sure the errors weren’t there to begin with. “We wanted to fix the problem at its core rather than solve it after the fact,” he says. The company operated in stealth mode for about two and a half years before it popped onto the Big 4’s radar. The response from firms? “This is going to change our business.” CONTINUED ON PAGE 10 May/June 2019 | www.cocpa.org

CYBERSECURITY CONTINUED FROM PAGE 9 Now Sweetbridge is focused on supply chain management.

business processes. “As that information becomes more real time and more trusted, more new things can be done.”

Supply chain management is the science of managing the creation of something and the construction of it through value chains that involve many parties. Supply chain manages two-thirds of global trade, Nelson says. “That’s $54 trillion of global GDP, and supply chain is one of the most misunderstood pieces of business.”

Nelson says blockchain will turn the accounting “grunt work” into something highly standardized, modularized, and automated. The technology is going to open up new ways to make money – creating modular, standardized components for literally every type of business, transaction, asset class, and liability on earth. “These things will have to be maintained and kept up with GAAP, IRFS, and legal changes,” he says. “It will generate millions of revenue streams: real-time audit and maintenance updates, assurance, tax regulations, state and local legal and regulatory frameworks – things that CPAs have in their heads and give customers advice on in a customized manner. That’s going to be a massive opportunity. Those who move into the space early will do well.”

“People think business works like their personal life. They buy something, pay for it with a credit card, and pay the bill when it arrives,” Nelson explains. “They don’t realize that when a company buys inventory, it goes on account. The invoice may not get paid for months. Tens and tens of trillions of dollars are tied up in working capital.” It’s not just corporations that can benefit from supply chain management. Institutions, advisory firms, law firms, and even nonprofits are starting to look at how applying blockchain technology to their supply chain can improve their processes.

DISRUPTION: SCARY BUT GOOD CPAs haven’t faced a lot of disruption yet, but they’re going to, Nelson says. “That’s both frightening and an incredible opportunity. People who approach blockchain with fear are going to be less successful than those who keep their heads up and look for the opportunity.”

“Blockchain gives you trust in the information you get so you don’t have to check or verify. You know the information is good right from the beginning,” Nelson says. “This revolutionizes what it will mean to be an auditor or a CPA in the future. A lot of what CPAs do today will change dramatically, so you want to be on the front end. There’s a lot of money to be made.”

Nelson says changes are going to be both more and less substantial than people think. “This technology moves you from independence and selling time to selling value. Things are going to get infinitely more interesting. The risk is going to come from staying with the status quo. The opportunity will be in leveraging the opportunities to create value. People don’t mind writing the check when you provide value.”

Nelson says firms see blockchain as a way to increase revenue thanks to a greater need for audit and verification processes that are necessary, not just to certify traditional financial information, but also

Where can an AICPA C redential take your career next? If you have a specialized interest, you can build on the value you offer clients by adding an AICPA advisory service credential: Personal Financial Specialist (PFS ), Accredited in Business Valuation (ABV ), Certified in Financial Forensics (CFF ) or Certified Information Technology Professional (CITP ). These credentials were developed for the profession by the profession. They set you apart, make a statement and get you noticed. And, they can seriously boost your career. ®

™

© 2017 Association of International Certified Professional Accountants. All rights reserved. AICPA and American Institute of CPAs are trademarks of the American Institute of Certified Public Accountants and are registered in the United States, European Union and other countries. The Globe Design is a trademark owned by the Association of International Certified Professional Accountants and licensed to the AICPA. 23438B-326

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PLANNING STRATEGIES

Financially Fit Aging: Where to Call Home BY AMY KING, CPA, CGMA, AND NATALIE ROONEY

In this second article in our series about helping your clients – and perhaps you and your family – prepare for the many aspects of aging beyond financial planning, we focus on Housing. As individuals approach retirement age, or perhaps experience an unexpected health issue, families face emotional decisions about future housing options. This might apply to your clients, or it might currently be an issue for your own family. Regardless, it can be difficult for individuals to come to terms with leaving their family home.

irst and foremost, it’s important to acknowledge that this is a stressful process. Starting early can allow you to plan for multiple scenarios. Too often, a situation can change quickly, and in some cases, preclude a family from the preferred option. As you begin working through the various alternatives for your client or family member, consider these questions: • Financial Impact: What can the family afford? • Accessibility: Is the property suitable for the individual’s health status? • Maintenance: How will the property be cared for? • Location: Proximity to medical services, grocery shopping, and even social networks (the actual in-person kind!) The good news is that today’s retirees have more options than ever for where they’ll live and how they’ll spend their retirement years. AGING IN PLACE Aging in place is designed to keep an individual in her or his own home. An AARP study of adults over age 65 showed 87 percent would prefer this option. People retain their independence, and it’s often cheaper than an assisted living facility. The current home can be modified to address mobility issues, and home health care professionals can be hired to provide assistance when needed. Requirements and considerations: • Good health (usually) • Social networks in place • Location – close proximity to stores as transportation may become more of an issue as aging progresses • Is the home suitable or in need of modifications? Universal design concepts include no step entry, single floor, wide doors and hallways, and reachable controls, handles, and switches. • Arranging for services/personal assistants to handle needs such as cleaning, lawn maintenance, and repairs Many online resources such as aging in place home checklists are available, and certified aging in place specialists offer consultation services.

NewsAccount | May/June 2019

ACTIVE ADULT COMMUNITIES (55+) AND INDEPENDENT LIVING Communities designed specifically for older adults are an option for those who don’t need nursing or medical care. These include single family homes, duplexes, patio style one level units, and even condominiums. Amenities may include clubhouse dining, organized group activities, fitness centers, tennis courts, and golf courses. Services provided may include housework, meal preparation, shopping, laundry, and transportation. Yardwork is usually performed by the owners’ association. Costs vary depending on location and services and range anywhere from $1,000-$5,000/month. The average cost is around $3,000/ month. Fees may be charged for applying, and monthly owners’ association fees to cover groundwork, the clubhouse, etc. COHOUSING Cohousing describes private homes clustered around shared space which is usually for cooking and dining and sometimes laundry facilities. Some locations also may offer a fitness center, pool, or media center. With this option, individuals live on their own in condominiums or private homes, which allows them to maintain independence, but still have a strong community and a support system of neighbors. Another nice benefit is sustainability; residents reduce waste and take advantage of resource sharing. Cohousing is a newer concept and may be harder to find in some locations. Residents buy in by purchasing their own condo or house. They own a portion of the shared house and joint spaces. In addition to social gatherings, cohousing residents also have more formal meetings where they discuss the management of the community. Responsibilities might include establishing a budget for property management, making decisions on community maintenance and upkeep, or planning gatherings and events. SHARED HOUSING Think of shared housing as post-college living, but for older adults. It offers the dual benefits of companionship and affordability through sharing the financial costs. Locator services can help screen, perform background checks, and check references before you commit to a shared housing arrangement.

ELDER COTTAGE (ACCESSOR DWELLING UNITS) Also known as “ECHO housing” or “granny flats,” these pre-fabricated houses can be placed in the yard of the family home. They are self-contained, energy efficient modules. An elder cottage preserves independence while still being in close proximity to the family. They’re smaller than a full-sized house and range in price from $45,000 for a one bedroom, one bath, 568 sq. ft. unit to $60,000 for two bedrooms and one or two bathrooms. Additional costs include site preparation such as electric and water and sewer hookup, and transportation costs from the factory to the site. BOARD & CARE HOMES (ADULT FOSTER HOMES) Board and care homes are licensed, 24-hour care facilities. These are usually single-family residences that have rooms for rent and provide family style living with home cooked meals and licensed caregivers. The number of residents is low – usually five to seven individuals. Average monthly costs range from $2,500-$6,000 depending on location. This type of living situation benefits someone looking for a smaller homelike atmosphere and a closer relationship with care providers. Medical care is not provided but can be arranged with external service providers. Board and care homes are integrated into the community; many neighbors don’t even realize a residential senior care facility is located nearby. ASSISTED LIVING COMMUNITIES Assisted living is designed for those who need assistance with the activities of daily living – eating, toileting, dressing, walking, and other basic activities. Some communities also provide memory care. These facilities can be either apartment style or condos. Costs vary depending on location, size of room, whether a room is private or semi-private, other amenities offered, and the level of care required. Typical costs range from $2,700-$6,000/month. Memory care communities range from $3,000-$7,000/month. CONTINUING CARE RETIREMENT COMMUNITY These facilities provide comprehensive solutions to support individuals as they age – starting with independent living and moving to assisted living and memory care as needed. Housing is typically apartment or townhome style. This option can be a good choice for keeping transitions to a minimum. It also can accommodate different levels of care if one spouse needs more support than the other. They also offer a range of services for personal care, adult day options, skilled nursing, and rehabilitation. Costs associated with continuing care facilities can include substantial entrance fees, known as a buy-in fee. It typically includes the cost of buying the unit and includes a portion of the health services. Pricing is variable dependent on the type of contract, type of residence, level of care needed, and region. The entrance fee/buy in may range from $100,000-$500,000. Monthly service fees range from $1,000$5,400/month. Assisted living fees range from $1,300-$5,400/month. Skilled nursing fees range from $1,500-$10,000/month. NEXT STEPS Research. Knowing your choices can help make the process easier. Talk about expectations for daily life. Someone who wants to be surrounded by a community of people his or her own age should make a different choice than someone who wants to be active in a broader community, age-wise.

Talk to a doctor. Before making a home purchase, modifying an existing home, or investing in a retirement community, identify any concerns about the individual’s mobility or health. Look at finances. Health care can be very expensive. Before making a final decision, talk to someone who has experience dealing with Medicare or Medicaid, pensions, or retirement accounts, whether that’s you as a CPA or another expert. Go for a visit. If your client or family member is moving into a nursing home, age-restricted retirement community, or any other senior living option, encourage visiting several to talk with residents, stay for a meal, and check out the activities schedule. Many communities offer onsite presentation sessions where you can ask questions, and learn more about the financial and contractual obligations. Plan ahead. Make sure everyone involved has thought about their choices and priorities. Talking about what everyone involved wants, and starting the process early, will keep everyone working toward a successful outcome. Having a conversation about changing living arrangements can be emotional and stressful, but all the options available today can make this an exciting time instead of a scary one. Amy King, CPA, CGMA, is a wealth advisor with Rubin Brown Wealth Advisory Services Group, Denver. She is a member of COCPA’s Financial Literacy Committee and counsels her clients about the choices available to them as they age. Contact her at amy.king@rubinbrown.com.

30 years experience in public accounting 25 years of service with Lang & Company, CPAs 8 years experience as a business broker for CPAs

Please call for your free consultation 303-726-7646 www.thomaslangcpabroker.com tom@thomaslangcpabroker.com Colorado Real Estate License and CPA license Member of the Colorado Society of CPAs Member of Colorado Association of Business Intermediaries

May/June 2019 | www.cocpa.org

Photo courtesy of Mountain Home Photography

NewsAccount | May/June 2019

Two CPAs + One Castle =

A Historic Renovation BY NATALIE ROONEY

Steve and April Carver are a rare find – for multiple reasons. First, they’re both CPAs. Second, they own a castle. Now, thanks to their restoration efforts, they have earned a place in history alongside some of the early 20th century’s most famous names. May/June 2019 | www.cocpa.org

PURSUING A PASSION

fter graduating from Montrose High School, Steve Carver attended the University of Denver. Valedictorian April Thomas went off to Colorado State University in Fort Collins. As Steve puts it, “We were classmates but dated others.” They reconnected after their sophomore year in college and married after junior year. After college graduation, they went to work for Dalby, Wendland & Co. P.C. in Glenwood Springs. “We went from the Western Slope to the Eastern Slope apart and came back to the Western Slope together,” says Steve. Steve remained at Dalby Wendland for 38 years. April eventually moved on to become controller at Valley View Hospital. In 1991, the Carvers, along with a few partners, purchased the Hotel Denver in Glenwood Springs. Rooms were renting for $29.95 a night at the time. “We thought the hotel was a bargain,” Steve says. “We paid exactly what it was worth.” Built in 1915, the interior of the hotel wasn’t exactly in keeping with its exterior design – a lot of unattractive Formica needed to be replaced. April knew that to compete with the newer hotel chains coming to Glenwood, the Hotel Denver had to offer something different. She began methodically renovating, replacing all of that laminate with antiques the Carvers bought at auctions. Over 27 years, the Carvers remodeled every room in the hotel, trying to mix the old with the new. “It wasn’t necessarily a historic renovation, but it became a nice boutique hotel,” Steve says. In 1996, they opened the Glenwood Canyon Brew Pub in the Hotel Denver with Jim and Bill Carver (no relation). In 2015, they held a 100-year celebration for the hotel. Eventually they bought out their partners to become sole owners. April and Steve didn’t know it at the time, but as they honed their hotelier skills at the Hotel Denver, they were preparing for a much larger project. THE RUBY OF THE ROCKIES Redstone, Colorado, known as the Ruby of the Rockies, is a small Pitkin County community located on the Crystal River at the base of McClure Pass. With a 2010 population of just 130, the village is listed on the National Register of Historic Places as a historic district. This little hamlet began as a coal camp and became the unlikely choice for 19th century industrialist John Cleveland Osgood, purportedly the sixth wealthiest man in the 16

NewsAccount | May/June 2019

Photo courtesy of JMGant Photography

world at the turn of the 20th century, to build his coal empire. Osgood’s investment in the area eventually led to the construction of the Crystal River Railroad and Redstone’s now-historic dwellings which included cottages for the coal miners and the historic Redstone Inn. The crown jewel of Redstone was the 42-room Tudor-style mansion Osgood built for his second of three wives. He named it Cleveholm Manor – known as Redstone Castle today. Construction began in 1897 and was completed in 1902. No expense was spared. The castle had soaring balloon ceilings, wood paneling designed by Gustav Stickely, and cast brass globe lights created by Louis Tiffany. Dyed leather and silk adorned the walls, and Italian marble and tile surrounded each of the 14 fireplaces. Osgood loved to show off his home to his friends. Frequent visitors included John D. Rockefeller, J. Pierpont Morgan, and Teddy Roosevelt. Despite the who’s who guests who spent their time at Redstone Castle, Osgood eventually lost control of the mines and coke

ovens which gradually shut down. He left the area in 1911 and did not return until 1924. Osgood died at Redstone in 1926. In 1971, Redstone Castle was listed on the National Register of Historic Places. THE KEYS TO THE CASTLE Over the years, Steve, April, and their three daughters passed by Redstone and the castle as they drove to their cabin located on the other side of McClure Pass. As hoteliers and historians, the place intrigued them. “We’d think, ‘That’s a unique place but obviously out of our reach,’” Steve recalls. The Carvers had seen the castle bought and sold multiple times. The castle sold for $6 million. Then it sold for $4 million. Each time, new owners tried to make a go of different business models – a B&B, a wedding facility. Sewer issues and zoning restrictions created ongoing problems for anyone who owned the property. It even was caught up in a skirmish involving a Greeley man running a Ponzi scheme, the IRS, and the SEC. A local attorney and historian stepped in and sued the federal CONTINUED ON PAGE 18

Photos courtesy of Mountain Home Photography

May/June 2019 | www.cocpa.org

PURSUING A PASSION CONTINUED FROM PAGE 16 government to protect the property. The result was a conservation easement on both exterior and interior portions of the castle and grounds. “It’s unique to have a conservation easement on the inside of a property,” Steve explains. In June 2016, Steve told the firm he planned to retire in 2018. The timing was fortuitous, because not too many months later, the Carvers received a postcard announcing that Redstone Castle was to be sold at auction for a minimum bid of $2 million. Suddenly, the castle wasn’t so far out of reach. They researched, discussed, and finally decided on a number. If they could get to that number, they would go for it. On Oct. 7, 2016, Redstone Castle was auctioned. The Carvers beat out two other bidders, purchasing the property for $2.2 million and becoming the 11th owners in Redstone Castle’s 114-year history. Now the work really began. FROM VISION TO REALITY The Carvers called their architect, Nan Anderson. “We told her what we’d done,” Steve laughs. Over dinner, they discussed concepts, drawing their ideas out on a napkin. “We ended up doing ninety-five percent of that,” he says. April had a vision: a boutique hotel offering an elegant experience, without losing the authenticity of the structure. Because of the interior conservation easement, they couldn’t change any of the architectural features. “But why would we want to?” April points out. “The architecture and the structure are unique.” Steve says that structurally, the castle was in phenomenal shape. It had been built by the best craftsmen of the time. To make sure the original features were restored to their former glory, the Carvers brought in restoration experts who discovered, among other things, that what was thought to be a gold leaf ceiling in the library was actually aluminum leaf – more valuable than gold in Osgood’s time. When the renovation began, the castle had three working bathrooms. Seventeen were created by tucking them into repurposed spaces or by renovating existing bathrooms. The intricate frescoes, the glazed ceiling in the library, the velvet walls in the dining

NewsAccount | May/June 2019

room, the leather walls in the library, and the hand-rubbed Honduran wood – the Carvers were committed to giving all of it new life. This was no small feat as some rooms had suffered water damage over the decades. They re-established the original main receiving area. They found an original door in the barn, and local craftsmen worked to match the original trim. The restoration experts recast and reglazed the ceilings. Leather was restretched. Wallpaper was cleaned,

“It took all of our years of experience to get this done.” repaired, and re-stenciled to match the original. Ultimately, they touched every wall, ceiling, and floor in the interior. No walls were moved, successfully preserving the same unique arches and structures Osgood enjoyed. The Carvers used cameras to examine the castle’s plumbing and found it in nearly perfect shape. Clay pipes 10 feet underground were accessible by brick-lined manholes. “It was exceptionally well done,” Steve says. The sanitary sewer system, which had been the undoing of previous owners, was a challenge that spanned two years (and 20 meetings with various officials) from permits to completion. The solution was to run sewer pipe three-quarters of a mile from Redstone, uphill to the castle. This, Steve says, is where being CPAs was invaluable. “We were able to work through all of the issues and to understand things like the conservation easement, what land use codes meant, and dealing with officials. I’ve

said it took all of our years of experience to get this done. Thank God we didn’t do this at age 35!” Steve credits the success of the renovation to April’s knack for details and decorating. “She always pays attention to the way things are, talking to the architects. You see it in everything at the Hotel Denver and the brew pub.” He also admits things go better “when I stay out of decorating decisions.” THE BIG REVEAL In November 2018, Redstone Castle opened for business with 11 luxury suites. Each has a separate bedroom, bathroom, and sitting room and is approximately 500 square feet. As of March, 2019, 120 paying guests have spent the night at the castle. Many more nights are already on the books. The Carvers gave more than 1,000 tours in the first two and a half months. This summer, the castle will host picnics, historical society fundraisers, and musical revues. Wedding inquiries are rolling in, as well. “We’re in the process of raising awareness,” Steve says. The Carvers’ niece and nephew, Jennifer and Pete, live on site, manage the day-to-day operations, and take care of guests. They’re clearly doing something right because they have a perfect 5 out of 5 rating on TripAdvisor. April and Steve still live in No Name, where they have had a home for the past 17 years. “From wildlife biologists to noise studies, from historic restoration to structural engineers, from water guys to sewer construction, we’ve met a ton of different people and learned a lot of different ways of doing things,” Steve reflects. “It’s a complicated business, and we’re fortunate to have our training and experience as CPAs.” He talks about the Colorado and federal historic tax credit issues which he hadn’t dealt with much during his career. “I met with experts to help me understand, and I learned about it all. It was a process.” The wisdom which came from the experience, according to Steve: “You don’t grow old if you’re continuing to learn.” If you’d like to learn more about the history of Redstone Castle, visit theredstonecastle.com.

Distinguish yourself as a strategic leader. Earn the global designation for financial professionals. Explore the CGMA Program: A lifelong professional learning journey that puts you on the path to take your career to a new level. You’ll learn and acquire the skills it takes to become a more strategic, confident, secure and insightful leader who will better influence and guide groups and decisions within your organization. ®

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I believe the CGMA designation enhances and broadens a CPA’s awareness of the internal and external nuances of the complex workings of a business. Holly Rodillo Bernstein, CPA, CGMA Director of Accounting, SoulCycle

© 2017 Association of International Certified Professional Accountants. All rights reserved. CGMA and Chartered Global Management Accountant are trademarks of the Association of International Certified Professional Accountants and are registered in the United States and other countries. The design mark is a trademark of the Association of International Certified Professional Accountants. 22726A-326

May/June 2019 | www.cocpa.org

IN THE WORKPLACE

Strategies For Finding a Good Manager For Whom To Work This article first appeared in Financial Management magazine. For more articles, sign up for the daily email update CGMA Advantage at bit.ly/2svn2AY.

BY HANNAH PITSTICK

Job satisfaction depends largely on the quality of your manager, so doing homework on potential supervisors is vital.

hen looking for a new job or transfer, employees have several variables to consider, including salary, promotion potential, and job responsibilities. But if they hope to thrive in a new workplace, they should make sure the job comes with a good manager. Research has backed up the claim that people leave managers, not companies, including a 2015 Gallup study of 7,272 U.S. adults that found 50% of employees left their job “to get away from their manager to improve their overall life at some point in their career.” Significant research has been conducted to get to the bottom of what makes a good manager, but the traits of a good manager are not so different from the traits of an empathetic person. “What employees are looking for in a manager is the same anyone would be looking for in a good human being,” says Bernard Marr, an author and consultant based in Milton Keynes, England. “People want fairness, respect, and recognition; they want someone who listens and is a good and consistent communicator; someone who supports, sets a clear vision and expectations, challenges and inspires people, and creates a no-blame culture.” Because management is such a crucial variable in job satisfaction, it is wise to research and vet the managers at companies you’re hoping to work for, just as they vet their prospective employees. It may take a

NewsAccount | May/June 2019

few phone calls and some internet sleuthing to find the right sources, but a little due diligence on your part can boost your chances of career fulfillment. Don’t be afraid to tap your network and online resources such as LinkedIn, Indeed, and others to help answer the question: Will this manager help make me a happier, more empowered employee? Once you’ve done that, use the interview process to see if your values align with a potential manager’s values. Here are a few traits to look for and tips on how to spot them when trying to determine if someone will be a good manager for whom to work. FORMS GENUINE RELATIONSHIPS WITH EMPLOYEES The best managers will connect with their employees and demonstrate genuine care and respect. That sort of connection isn’t formed through a one-on-one held once a week where you go through a tick-box exercise, but rather by asking what’s going on in their lives and being aware when an employee might need some extra support. “It’s more the informal, sit down with a cup of coffee, and discuss where you are and where you would like to grow,” says Teresa Kruger, Ph.D., senior manager, People and Business Solutions for BDO South Africa, based in Johannesburg, South Africa. “I think that has a lot more value than any formal structures.”

During the job interview process, you might get a hint of how your potential boss views the employee-manager relationship by taking note of whether they seem curious about you as a person. Do they ask you anything other than directly work-related questions? If you ask about their life or background, do they get uncomfortable or annoyed? Depending on the type of boss you prefer, it may be a red flag if they show little interest in you other than your potential work output. RECOGNIZES STRENGTHS AND EMPOWERS EMPLOYEES TO USE THEM A good manager will keep you engaged, and less likely to leave a company, by providing growth opportunities and encouraging you to learn from projects you have ownership in. If the potential for growth is important to you, ask during the interview about what opportunities employees have for skill building at the company and how often they are allowed to work on a project with minimal oversight. “I think micromanagement went out the window long ago,” Kruger says. “It’s definitely more about a coaching and mentoring type of relationship between employee and manager and allowing the scope and opportunity to grow.” Employees want to be utilized in a manner that highlights all their strengths, she adds, and managers can facilitate that by figuring out what those skills are and thoughtfully placing employees on projects they are best suited for. Talk to current and past employees of the company about their career trajectories. If you find stagnated employees stuck in longterm positions without gaining new responsibilities or skills, it could be a sign management is not empowering them. FOSTERS HONESTY AND VULNERABILITY Managers can create a healthy, trusting environment by letting employees know that everyone can be vulnerable. How a potential manager reacts to your answers about your shortcomings and areas you want to grow in can be a gauge of whether your potential boss practices and encourages vulnerability and honesty. “Being vulnerable doesn’t mean they’re weak, but it does mean they can be open about their shortcomings and they’re not going to be attacked for it — they’re going to be supported in them,” says Drew Dudley, founder of Day One Leadership, a Toronto-based leadership coaching organization. “A manager makes that clear by demonstrating it, by being open about the things they’re not good at or the things they need help with, and gives permission to the employees to do the same thing. Then what happens is people aren’t spending their energy covering up the things they’re afraid of or bad at. They’re spending their energy doing their best work.” If it seems appropriate, ask about ways a potential manager is planning to improve the company or employee morale to see how they discuss weaknesses or areas that could use improvement. It’s a good sign if they look at vulnerabilities as a starting point for potentially exciting growth rather than blemishes that need to be covered up.

“Consistency means the employees know that the manager has a set of clear criteria for decision-making, which means no matter what the decision, they’re going to make it using the same criteria every time,” Dudley said. Consistency is essential when it comes to how managers deal with delivering criticism and discipline. “If I come late, I’m going to be dealt with in a certain way, but if someone else comes late and they don’t get the same treatment, obviously I’m going to start thinking, ‘Hang on, there’s something wrong here,’ and that’s where a lot of managers lose that credibility,” Kruger says. The best way to figure out whether a potential boss is consistent is by speaking with past and current employees, if possible. During the interview process you could ask your potential boss about company policies that are important to you. Then you could verify those answers with past or present employees to see if the responses match up with the reality of how the boss handles various situations. PROMOTES CLEAR COMMUNICATION Saving perhaps the most obvious for last, good managers need to maintain clear and effective communication. “A good manager is someone who is clear, who listens, and they’re not just always telling, but understanding what it is their people need,” says Bob Hewes, Ph.D., senior partner at Camden Consulting Group based in Boston. “When a supervisor becomes a thought partner with you, you can get the job done more effectively, not just efficiently.” A potential manager’s communication skills can at least partially be revealed during the interview process. Do they maintain eye contact? Do they seem genuinely curious about what you’re saying? Are they asking questions about areas that are important to you? And do they comprehend and enthusiastically answer any questions you have for them? Beyond being an effective listener, good managers make an effort to look past behavior to the underlying cause and address problems with empathy. “People leave because of managers, that’s what the data says, but I always point out to managers that at the foundation of any individual or organizational dysfunction, there is a fear,” Dudley says. “People are afraid that they’re going to have something taken away (money, a job, influence, respect) or they’re afraid they’re going to have something given to them they don’t want (more work, a task they’re not equipped for), and when you deal with issues at the level of the fear that generates them, rather than the behavior that emerges, you’re always going to be better off.” Hannah Pitstick is a freelance writer based in the U.S. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com. © 2018 Association of International Certified Professional Accountants. All rights reserved.

MAINTAINS CONSISTENCY AND FAIRNESS Dudley maintains that along with vulnerability, consistency is necessary to create an environment of trust. May/June 2019 | www.cocpa.org

SPECIALIZATION

Forensic and Valuation Pros: 4 Ways Tax Reform Affects You BY BARBARA ANDREWS

Tax reform affects more than just taxes. It has lasting implications for all CPAs and introduces some uncertainty for financial forensics and business valuation. Depending on who your clients are, you may feel this more than other CPAs. If you concentrate in estate and gift tax valuation, now is a good time to start looking outside those business models by leveraging the opportunities that have come up since the new law was signed.

n a recent interview, Don DeGrazia, CPA, ABV, CFF, partner with Gold Gerstein Group LLC, explained the P.L. 115-97, known as the Tax Cuts and Jobs Act, makes the federal estate tax temporarily go away for many taxpayers. While state estate or inheritance taxes are still in effect, they don’t provide nearly the same volume of business. This poses a lot of questions for forensic and valuation professionals – questions that could translate into a very busy, but opportune, year. “It’s big stuff. It’s complicated. And you have to get it right,” says DeGrazia. Much of the attention from tax reform falls on income tax. But, CPAs also should consider the potentially significant effects this legislation has on other services such as valuing closely held businesses and family law. DeGrazia highlights four key components that require this scrutiny. CASH FLOW CHANGES This is the biggie. Provisions in the bill will affect businesses’ cash flow in both directions. For example, §179 and bonus depreciation rules changed to allow businesses to write off 100% of depreciable assets (e.g. a roof) in one year if the asset is bought and placed in service between Sept. 17, 2017, and Dec. 31, 2022 (the percentage then declines through 2025). Businesses will see reduced tax expenditures, which increases cash flow and thus the value of the business – great news if the owner is considering selling. If the company is a pass-through and qualifies for the 20% qualified business income deduction, aka QBID (more on that later), the owners’ tax expenditures dip there, too. But, it’s not that simple. If the same company that installed a new roof, let’s say a C corporation named Stan & Sue Inc., also wants to offset income by carrying over last year’s 22

NewsAccount | May/June 2019

losses, it can’t offset as much as it could under previous law. Net operating loss (NOL) carryforwards are limited to 80% of adjusted taxable income (as defined in the new law) rather than 100%. So now, Stan and Sue’s tax liability goes back up and their cash flow could change accordingly.

Tax reform caps the deduction for net interest at

of adjusted taxable income, with an exemption for smaller businesses.

LIMIT ON INTEREST DEDUCTION Tax reform caps the deduction for net interest at 30% of adjusted taxable income, with an exemption for smaller businesses. Stan and Sue have leaned toward capitalizing through debt and now change to using more equity, increasing their cost of capital but possibly lowering their “specific company risk” for valuation. Also, as we have seen in the news, some businesses will use their enhanced cash flow for capital expenditures and employee bonuses. REASONABLE COMPENSATION This issue has been a thorn in everyone’s side for years as the IRS and businesses debate what should be considered reasonable. S corporations typically want to keep their compensation lower to minimize payroll tax liability, but QBID has “flipped every-

thing on its head,” DeGrazia notes. Now, S corps may want to boost W-2 compensation to be eligible for this 20% deduction, which is subject to numerous rules. For fun, take all these factors and move the scenario to 2023, when the 2025 sunset date of the law is getting closer, and no one knows if it will be renewed. What does that do to the terminal value in a discounted cash flow analysis? The uncertainty adds a higher element of risk to any model and potentially lowers the firm’s value. So, yes, it’s complicated. Stan and Sue are confused, too. ALIMONY DEDUCTION Stepping outside the business world, CPAs also need to prepare individual clients for a significant turn in tax law. For divorce agreements signed after Dec. 31, 2018, taxpayers can no longer deduct alimony payments. “This is a sea change,” says DeGrazia. The eliminated deduction effectively increases the cost of alimony and, therefore, is likely to make it more difficult to reach agreements as the paying spouse will want to pay less. Tax reform also allows the spouse receiving the payment to exclude it from taxable income. If these changes leave you with some questions, you’re not alone. The AICPA received more than 4,000 inquiries from attendees in one of its webcasts on tax reform. The AICPA Tax Reform Resource Center is an excellent resource. It offers comprehensive coverage on all things tax reform. Visit often as the page is updated frequently with guidance, resources, news, and videos. Contact Barbara Andrews, Director – Forensic Services for the Association of International Certified Professional Accountants, at barbara.andrews@aicpa-cima.com.

Interested in attending LeadFit or sponsoring someone from your organization? Request an application from Terry Cervi at terry@cocpa.org, or 800-523-9082, ext. 110. Complete and return it. You’ll be notified of your acceptance. Your sponsor will be invoiced for the $1,465 program fee, which is payable on receipt and no later than July 1, 2019. The program is recommended for 24 hours of CPE credit in the Communications field of study.

APPLICATION DEADLINE: JUNE 27, 2019 LEADFIT FACILITATOR Lorrie Blanchard Tietze is the founder and manager of Interface Consulting, LLC, Castle, Rock, Colo., a consulting firm focused on helping companies enable change and build productivity through process, tools, and skills. She is committed to helping people help themselves and their businesses. Lorrie consults with Fortune 500 companies, governmental agencies, and not-for-profit organizations. The COCPA chose her to help create and facilitate LeadFit because she understands the professional services world and the importance of the human dimension in creating meaningful, sustainable relationships. her high energy approach and commitment to personal growth guarantee that you will not only gain the skills you need for success but that you will truly enjoy the learning experience.

MAJOR SUBJECTS •

Relationship Building – listening and presence; professional and personal

•

Managing a Team v. Leading a Team – goal setting; conflict resolution

•

Performance Evaluation and Feedback – acknowledgement; confrontation; resolution; rewards

•

Negotiation – message tailoring; requesting

•

Rainmaking – thinking styles; generational styles

•

Role Definition – qualitative and quantitative

•

Defining Your “Best Work” – linking to purpose, commitment, and boundaries

Previously, Lorrie worked in the manufacturing and engineering fields. She is adept at maintaining strong customer relationships, developing international, multi-functional teams, and working in fast-paced, challenging environments.

SESSION DATES July 11 - Welcome BBQ

September 13 - Half Day Session

July 12 - Full Day Session

October 17 - Debrief Happy Hour

August 13 - Half Day Session

November 1 - Full Day Session and Graduation Celebration

WOMEN’S SUMMIT

August 23, 2019 | DENVER

By Women, For Women

cocpa.org/Womenssummit

STRATEGIES FOR THE SUCCESSFUL WOMAN PROFESSIONAL

NOMINATE A LEADER IN THE PROFESSION Nomination Deadline: July 19 Women to Watch Awards for Emerging Leaders and Leaders of Note will be presented at lunch during the Women’s Summit. For a nomination form, contact Terry Cervi at terry@cocpa.org. May/June 2019 | www.cocpa.org

STRATEGIES FOR SUCCESS

Using Mobile Apps to Transform Business Processes BY DANIEL BURRUS

As our need for just-in-time information flourishes, our reliance on traditional technological processes has decreased significantly. The shift from personal computers to mobile devices has picked up now more than ever. It is difficult to determine whether stationary computers will vanish into obscurity; however, there is no doubt that mobile devices are here to stay.

ur reliance on mobile devices, these ingenious pieces of technology, is overwhelming. Tremendous time and energy are saved through the use of a mobile device, as we can access information anywhere with ease. The expansion of new types of tasks that are carried out using mobile devices has arrived. Smartphones can solve nearly every need of their users, from providing detailed directions anywhere around the globe to enabling access to the cloud at all times. We take these benefits for granted as the opportunities provided by our devices become more and more integrated into our everyday lives. 24

NewsAccount | May/June 2019

The information we seek is not freely floating on our devices. Mobile applications are the key to the success of these devices, as they provide a gateway to our needs as consumers. Whether it’s the weather forecast, the highest-rated local coffee shop, a traffic report, or a stock market update, it’s an app that provides the answer. At just over one hundred billion, the number of app downloads around the world to date is astonishing. And this number is expected to grow even further in the coming years. Although mobile applications are commonplace today, most consumers think “personal use” when they think of apps. We all understand

These applications are beneficial, however they are far from the only practical mobile business apps. that there is an app for our favorite social media site or a card game app we can kill time with while waiting, but in what other ways can apps be leveraged, and who can benefit from them? The answer is businesses. I have seen businesses of nearly every size begin to see the potential behind creating an app for customers. Retailers can now move even further online to adjust their business model to the changing times. Transportation services have created apps that convenience users by helping them navigate routes and times, all while providing pricing. Some financial institutions allow their customers to scan and digitally deposit checks from their smartphones. Mobile applications for business processes are now more prominent when it comes to how businesses run, day to day. Applications created specifically for the operational side of an organization have gained traction. The benefit of employing an app for use on a mobile device to transform a business process begins with the very reason we use apps in the first place: convenience.

The ways in which mobile applications can be used is seemingly endless, and right now, mobile apps for business processes represent a growing Hard Trend that every organization should address. If productivity and effectiveness are your long-term goals, ask yourself how you can use mobility to improve every business process. Daniel Burrus is considered one of the World’s Leading Technology Futurists on Global Trends and Innovation and is the founder and CEO of Burrus Research, a research and consulting firm that monitors global advancements in technology-driven trends to help clients understand how technological, social, and business forces are converging to create enormous untapped opportunities. He is the author of seven books including the newest, The Anticipatory Organization: Turn Disruption and Change Into Opportunity and Advantage. Burrus also is the creator of The Anticipatory Organization™ Learning System– named a Top 10 Product of 2016. Contact Rebecca Campbell, rebecca@cocpa.org, for information on the program.

For example, instead of handwriting notes on data or inventory while out of the office, an application that allows data to be entered on the spot by typing or talking removes an otherwise lengthy process. That saved time then can be better spent visiting clients and prospective customers, providing convenience in an otherwise tedious operation. Another example of a mobile app for a business’s internal use is one that facilitates mobile sales. For deals that close quickly or unexpectedly, organizations can have contracts signed electronically, no matter where a meeting may have taken place. Presentations and data can be displayed at a moment’s notice if needed, as well. Data on previous deals made with a customer can be easily accessed while heading to a face to face meeting. Mobile apps can streamline processes, including supply chain, purchasing, distribution, or maintenance processes, so that a business can run as productively as possible. With information available on demand via mobile device from one accessible location, organizations tend to increase productivity and identify areas that need further improvement, which can reduce cost inefficiencies while increasing revenue. Communication and collaboration are improved through mobile apps for business processes, as employees begin to more clearly understand roles and discuss the discrepancies highlighted by the application. Employees instantaneously become more productive, as time is saved through the assistance that mobile applications provide. Business applications can be purchased and modified by organizations, or designed from scratch to fit the business’s unique needs. By creating a mobile app tailored to its business, an organization gains a competitive edge from having something unique in its industry. Dozens of businesses specialize in creating such mobile apps.

Careers At ACM, we work hard, play hard, and greet each day with optimism. This commitment is shared by each and every member of our firm – and it’s why we’ve been consistently recognized as one of the best accounting firms to work for in Colorado and across the nation.

“ACM is a family. It’s an amazing group of people who bring their best to the table each and every day.” - melissa k. hooley, partner-in-charge, employee benefit plan services

“ACM encourages each employee to take on new challenges and grow professionally – all while being able to maintain a quality family life. -

dennis tschacher, partner

“I love working at ACM because we’re given opportunity for personal and professional growth. You can pick your own path and your own pace.” -

tim stueven, audit director

303.830.1120 ∙ www.acmllp.com/careers Denver ∙ Boulder ∙ Northern Colorado ∙ Laramie

May/June 2019 | www.cocpa.org

CAMICO – Sponsored Provider of COCPA since 1998 “The COCPA chose CAMICO twenty-one years ago because it offered top-level expertise and support – by CPAs for CPAs. The same is true today. CAMICO consistently delivers outstanding customer service, regardless of market or economic conditions.” Mary E. Medley, CEO COCPA

Why CAMICO? • For more than 32 years, CAMICO has been protecting CPAs with insurance solutions tailored to the professional services and concerns faced by CPA firms every day. • CAMICO’s depth of services for CPA firms is unmatched by other insurance programs.

• CAMICO policyholders have free unlimited access to proactive loss prevention and claims handling. • Policyholders can call CAMICO as often as needed – free of charge – and consult with in-house experts on loss prevention, tax, and accounting and auditing issues.

These are just some of the reasons why COCPA selected CAMICO as the Society’s sponsored provider of Professional Liability Insurance. Alpa (Keily) Evans Account Executive T: 800.652.1772 Ext. 6720 E: aevans@camico.com W: www.camico.com

Accountants Professional Liability Insurance may be underwritten by CAMICO Mutual Insurance Company or through CAMICO Insurance Services by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. © CAMICO Services, Inc., dba CAMICO Insurance Services. All Rights Reserved.

“

The apprenticeship program seemed like a strong investment to help us avoid becoming stagnant.

”

REBECCA KELLEY |

F I N A N CIA L SERVICES

MODERN YOUTH APPRENTICESHIP A TALENT ACQUISITION STRATEGY

THAT MAKES CENTS

CareerWise’s modern youth apprenticeship system builds the innovative financial services workforce your company needs to thrive. Apprentices perform meaningful work, freeing up your teams for higher-value projects. And, at the end of the apprenticeship, students have developed into the unicorn you’re looking for when hiring for a full-time position: they have all of the technical training, essential soft skills and company-specific culture readiness you want in an employee.

TAILORED

Companies train apprentices from the ground up to align to their company standards and culture.

ROI POSITIVE

Companies realize a positive ROI based on the value of apprentices’ productivity.

Find out how Careerwise can INNOVATE YOUR TALENT PIPELINE

MOTIVATED

88% of employers believe that apprenticeship leads to a more motivated and satisfied workplace.

CAPABLE

Youth apprentices bring value and vibrancy to the workplace and have proven to be loyal adaptable employees.

Contact Wogahta Woldezghi

wwoldezghi@careerwisecolorado.org

May/June 2019 | www.cocpa.org

MOVERS & SHAKERS KSENIA POPKE, CPA, JD The AICPA has named Ksenia Popke, CPA, JD, Eide Bailly LLP, Denver, to its Not-for-Profit Advisory Council. 2018 ELIJAH WATT SELLS AWARD Congratulations to the following Colorado individuals who are among the 110 winners of the 2018 Elijah Watt Sells Award: Kelsey M. Alexander, KPMG LLP, Denver; Nathan Herrmann, KPMG LLP, Denver; Ashley McDowell, BKD, LLP, Colorado Springs; and Ryan Thorsen, KPMG LLP, Denver. To qualify, CPA candidates must obtain a cumulative average score above 95.50 across all four sections of the Uniform CPA Examination; pass all four sections on their first attempt; and have completed testing in 2018. Nearly 86,000 individuals sat for the exam in 2018.

IN MEMORIAM We extend our sympathy to the families and friends of the following COCPA members: John Aitken Jr. Member since 1969, Golden, Colorado John Coet Member since 1991, Broomfield, Colorado Sam Kumagai Member since 1955, Denver, Colorado

THANK YOU TAXLINE9 VOLUNTEERS

ANDERSON & WHITNEY PC Alan Holmberg, CPA, has been named President of Anderson & Whitney, Greeley, following Larry Atchison, CPA, who is retiring in 2019. Also, the firm is celebrating its 50th anniversary this year. BKD, LLP BKD, LLP promoted Addie Brown, CPA, Ben Chappell, CPA, Richard Kalisek, CPA, Jenica Shippy, CPA, and Eric Vreeke, CPA, to senior manager. Also, the firm promoted Felicia Geray, CPA, and Mike Meryhew, CPA, to manager. Autumn Miller, CPA, was promoted to manager, as well.

Thank you, Seigneur Gustafson LLP CPAs (left to right) Brenda Clarke, Ron Seigneur, and Anna Overlee for answering Colorado taxpayer questions, March 15, during the annual TaxLine9 call-in on 9NEWS.

STATE BOARD AUDITS CPE COMPLIANCE In fall 2018, the Colorado State Board of Accountancy randomly audited Colorado CPAs for the 2016-2017 CPE reporting period and found the following common deficiencies: • • •

CPE was not completed by the December 31, 2017, deadline. The four-hour ethics requirement was not completed. CPE courses did not meet the NASBA/AICPA standards.

If audited, you must provide all documentation and information requested to the State Board within 30 days. If you have questions about the CPE requirement, email or call Rebecca Campbell, CAE, COCPA CPE Director, rebecca@cocpa.org or 303-741-8618.

NewsAccount | May/June 2019

Congratulations, Sarah Sebastian, CAE, COCPA Member Services Director (in red), on the early May birth of your son. We look forward to welcoming our newest CPA-to-be to the family.

CLASSIFIEDS

TAX STUDY GROUPS

PRACTICE FOR SALE, PURCHASE, OR MERGER Selling your firm is complex! ACCOUNTING BIZ BROKERS can help! We have been selling CPA firms for over 14 years, and we know how to simplify the process. We have a large database of active buyers. We work with industry specific lenders ready to assist buyers with financing. Contact us today to receive a free market analysis or to start the sales process. Current Listings: Loveland Gross $300k (New); Larimer County Gross $395k; Pagosa Springs Gross $230k (SOLD). Kathy Brents, CPA CBI, at 866-2602793 or Kathy@AccountingBizBrokers.com, or visit our website at www.AccountingBizBrokers.com.

Boulder/Longmont Tax Study Group AT THE MEADOWS BRANCH PUBLIC LIBRARY

Tuesday, May 21 and Tuesday, June 18 This informal roundtable discussion group meets at the Meadows Branch Public Library, 4800 Baseline Rd., Boulder, BYO Bag Lunch. Additional 2019 Meeting Dates: July 16, Aug. 22, Sep. 26, Oct. 22, Nov. 19, and Dec. 17. For additional information, contact Lynn M. Mitton, CPA, MT, MPA, 303-499-7445, or email lynn@flewellingcpa.com.

CPA Firms or Partners. We represent a number of quality CPA firms and sole practitioners who are looking to merge, acquire, or sell their practices to other CPA firms. Locations are in the Metro Denver, Boulder, and Evergreen areas. This is an opportunity to ensure your future as well as help your clients by expanding your services to them. Why settle when you can select? Established in 1939. For further information, please contact Phil Rubeck at D&R Associates of Colorado: 720-446-7020, or email dandrassociatesofco@aol.com.

Denver Tax Study Group AT THE COCPA OFFICE

Tuesday, May 21 and Tuesday, June 25 This informal roundtable discussion group meets over lunch, the last Tuesday of most months, at the COCPA office, 7887 E. Belleview Ave., Ste. 200, Englewood. Additional 2019 Meeting Dates: July 30, Aug. 27, Sep. 24, Oct. 22, and Dec. 3. Register at www.cocpa.org.

TO ADVERTISE IN NEWSACCOUNT Go to cocpa.org/advertise to review the details and download the media kit. For more information, contact Carley Cave, carley@cocpa.org.

813 Oak Street 10A #298 Conway, AR 72032

Office - 866.260.2793 Kathy Cell - 501.514.4928 Christy Cell - 501.499.4357

Kathy Brents, CPA, CBI Broker, Managing Member

Christy Hudson, CBI Broker

kathy@accountingbizbrokers.com christy@accountingbizbrokers.com accountingbizbrokers.com

Selling your accounting firm is complex.

Let us make it simple.

March/April 2019 | www.cocpa.org

Colorado Society of Certified Public Accountants 7887 E. Belleview Ave., Suite 200 Englewood, CO 80111-6076

We have the buyers #1 In Mergers & Acquisitions

Periodicals Postage

Delivering Results One Practice At a time Bill Anecelle, CPA, MBA Sr.Practice Transition Consultant

(303) 670-3623 Bill@atp4s.com

Kevin Overberg, CPA/PFS, CFP Practice Transition Consultant

(720) 988-4334 Kevin@atp4s.com

800-859-8250 www.APS.net