August / September 2013
Gary M. Bolinger, CAE
President & CEO
Agenda
And we’ll celebrate
1.
2.
3.
4.
Introduction
Information Technology
Ethics
Legislative, Regulatory & Legal Developments
a. Washington, around the country and Indiana
5. Financial and Business Reporting
a. Information, financial , international
6. The Most Valuable Asset
a. People, productivity , competence and knowledge
Throughout program – Share what we learned last year
Steve Eichenberger, CPA – Chairman of the Board
BGBC Partners, Indianapolis
Transformation?
• Change:
– doing something in an incrementally different
way.
• Wax cylinders to acetate discs to LPs to CDs
• Transformation:
– Doing something drastically different
• CDs to MP3s
• Suddenly entire music library on digital music player
– happens to be smart phone, GPS, videos, and much more
– no moving parts unless you count electrons.
Daniel Burrus / July 30, 2013
Change
Transformation
Transformations
Auditing
• Technology,
automation
& Audit Data
Standards
Financial
reporting
• Private
Companies
Accounting
Education
• Pathways
Commission
Human
Resources
• Supply &
Demand
• Diversity
“Insight into how the profession is conducting and will
conduct business, serve clients and employers,
attract and retain employees and new business and
remain competitive in the marketplace throughout
the next 15 years.”
Forces shaping the business
environment
• Global economy
– Continued globalization
• persistent economic turbulence and uncertainty
• growing pressure to rethink the entire global
economic and financial governance infrastructure
• Business environment
– Growing business and regulatory complexity
• intensified global competition
• shortening business cycles
Forces shaping the business
environment
• Innovation and change
– Rapid advances in science and technology are:
•
•
•
•
driving disruptive innovation
overhauling industry structures
challenging and reinventing business models
spawning new sectors
Forces shaping the business
environment
• Society and work
– Changing social values & expectations of work
• increasing global population & an aging society working well
past current retirement age
• Creating Challenges
– How IT is managed & leveraged to integrate a diverse
multigenerational, multicultural and multinational workforce
• Learning and development
– Structure, techniques, distribution channels and costs
of providing education and training are being
transformed
• growing trend towards online courses & accelerated learning
Five imperatives for business
• Assume and plan for volatility
– Uncertainty as the new normal
• factor in turbulence as a very real possibility
• develop strategies for a range of different economic and
market scenarios
• Build the radar
– Systematic, organization-wide approaches required
for scanning the future external environment.
– Prepare for a wide range of possibilities
– Tolerance of uncertainty, curiosity and ‘seeing round
corners’ are becoming critical development
priorities for managers and leaders alike.
Five imperatives for business
• Pursue technology leadership
– The pace and disruptive potential of information
and communications technology (ICT)
development
• placed technology at the heart of strategy &
operations of businesses of almost every size
– New mindsets and approaches to technology
management are required to exploit and extract
full value from the next decade of advances.
Five imperatives for business
• Prepare for true globalization
– Development of a truly global operating model
becoming a priority
– Clear emphasis required on leveraging
technology effectively
– Capability of management to work with, adapt
to and get the best out of a multi-location,
multi-cultural and age-diverse workforce
Five imperatives for business
• Develop a curious, experimental and
adaptable mindset
– Critical success factor in an increasingly complex
& fast-changing environment / a ‘curious’
culture
– Nurture an environment:
• That is open to external ideas
• That encourages participants to forge a network of
strong working relationships across the entire
business ecosystem.
Forces driving change in the
accountancy profession
• Trust and reporting
– Pressures increasing to
• Strengthen public image
• Go beyond current financial reporting practices
• Provide more transparent, simplified but holistic picture
of a company’s health and prospects
• Regulatory expectations
– Increasing regulatory burden could drive up cost of
compliance
• Standards and practices
– Drive to globalize standards & practices
Forces driving change in the
accountancy profession
• Intelligent systems and big data
– Potential to use intelligent systems, data mining and
predictive analytics to exploit the repositories of
‘big data’
• transform operational & interpretative elements of
accountancy
• Organizational remit
– Increasing expectations that the CFO & accountancy
function should play a far greater role in everything
• strategic decision making to the design of new revenue
models
Five imperatives for the
profession
• Embrace an enlarged strategic & commercial
role
– As businesses adapt to a turbulent environment,
opportunities are emerging for accountants to
assume a far greater organizational remit.
– Potential exists to leverage capabilities of the
accountant across all aspects of corporate decision
making:
• from strategy formulation through to defining new
business models.
Five imperatives for the
profession
• Establish trust and ethical leadership
– Profession needs to be seen to be addressing
clear public concerns.
• there is a perception that the profession could do
more to highlight and prevent everything from smallscale financial irregularities through to the major
systemic failures that helped cause the global
financial crisis and the ensuing economic uncertainty.
Five imperatives for the
profession
• Focus on a holistic view of complexity, risk
and performance
– Growing consensus on the need for reporting to
provide a wide view of organizational health,
performance and prospects
– Must acknowledge complexity of modern
business
• encompass financial & non-financial indicators
Five imperatives for the profession
• Develop a global orientation
– The pace of global expansion
• developed and developing markets
– Spotlight the profession’s ability to master
• technical
• language
• cultural challenges of cross-border operations
Five imperatives for the profession
• Reinvent the talent pool
– The diverse range of demands and impacts on the
profession is forcing a rethink of everything
• From training and development to the type of people
being recruited
• Characteristics such as:
–
–
–
–
–
entrepreneurial spirit
curiosity
creativity and
strategic thinking skills
far more significance in the selection
Scenarios:
Future of the Profession
An account of a projected course of action,
events or situations.
Widely used by organizations to understand
different ways that future events might unfold.
Scenarios: Future of the Profession
• Buccaneer (Perceived as ‘part of the problem’,
broad organisational remit)
– Many in the profession are playing a more central
role in value creation activities.
– There is public concern, however, that accountants
have compromised their ethical financial
stewardship role in the pursuit of profit.
– This scenario may be considered too unstable by
many because a short-term, profit-driven focus is
not tempered by ethical financial stewardship, or
entrepreneurship for long-term performance.
Scenarios: Future of the Profession
• Survivor (Perceived as ‘part of the problem’, narrow
compliance focus)
– Survival seems the priority for many in the profession, who
focus on a relatively narrow technical and strict regulatory
remit.
– Society perceives the profession to have failed in its duty of
care to highlight and help prevent the issues that caused the
global financial crisis of 2007–9 & the subsequent decade of
financial and economic uncertainty.
– Might be considered an unstable scenario due to perceived
lack of integrity.
– A goal for those in this scenario may be to evolve to the
positioning of those in the Safehands scenario.
Scenarios: Future of the Profession
• Safehands (Perceived as ‘guardians of integrity’,
narrow compliance focus)
– Profession has succeeded in re-establishing public faith
in its role over the last decade
– For many this has been achieved by deliberately
maintaining a focus on the largely technical elements of
the role while seeking to ensure compliance with both
the spirit & full regulatory requirements of the law
– Perceived as a stable scenario, particularly in turbulent
times where CPAs want to demonstrate exemplary
financial stewardship.
Scenarios: Future of the Profession
• Changemaker (Perceived as ‘guardians of
integrity’, broad organizational remit)
– Over the decade since 2012, many in the profession
have succeeded in balancing public expectations for
responsible financial management with enlarged &
more entrepreneurial stance
– Need to ensure sound & ethical practice has been a
key driver in the gradual assumption of a wider
remit by the CFO and accountancy function
• seeking to encourage performance with accountability
– Key challenge … maintaining balance between
encouraging entrepreneurial behavior & ensuring
highest standards of financial stewardship
It’s the 100th Anniversary!
16th Amendment to the United States Constitution.
Established modern federal income tax law.
Ratified & enacted into law 100 years ago.
February 25, 1913
Ratification by the requisite 36 states was completed on February 3, 1913
Ratification by Delaware. Indiana was 15th to ratify.
THE PENALTY
FOR FAILURE TO HAVE THIS RETURN
IN THE HANDS OF THE COLLECTOR OF
INTERNAL REVENUE ON OR BEFORE
MARCH 1 IS $20 TO $1,000.
(SEE INSTRUCTIONS ON PAGE 4.)
My, how you have grown …
• Government does not publish a standalone Internal Revenue Code separate
from Title 26 of the United States Code.
– 1913 tax law (evolved to become tax code):
• estimated 27 pages
– 2011 CCH Winter Edition of the United States
Internal Revenue Code:
• 5,296 pages
1913 Income Tax Service:
400 pages
2013 CCH Standard
Federal Tax Reporter:
73,954 pages
What were the rates?