Leading_Edge_Winter09 by wuyunqing



                                            Advice and information to help
PublishEd bY   KaWg&F                       you manage your business

                                                                Stay for the
                                                                Enable star
                                                                performers to
                                                                reach for success
                                                                and longevity

                 voLUme 9 n iSSUe 2
                      Winter 2009

2009 trends
Winning proposals
voLUme 9
 iSSUe 2
                 The Leading Edge

                                                                                            Construction & real estate Services
                                                                                            •	 Tax	planning	services	to	minimize	income	
                                                                                               taxes	using	various	tax	methods	specific	
                                                                                               to the industry

dear Clients and Friends,                                                                   •	 Assistance	in	obtaining	bonding	and	
                                                                                               maximizing	bonding	capacity
welcome to the winter issue of The Leading Edge	magazine.	As	the	                           •	 Cost	segregation	studies
new	year	offers	a	new	beginning	for	individuals	and	businesses,	we	                         •	 Lease	and	financing	assistance
encourage	you	to	re-examine	financial	goals,	take	the	necessary	                            •	 Job	cost	evaluation	and	design
                                                                                            •	 Selection	and	implementation	of	
steps	to	achieve	those	goals	and	plan	for	the	future.	
                                                                                               construction software solutions
                                                                                            •	 Business	valuations
In	this	issue,	we	talk	with	experts	about	cultivating	top	performers	                       •	 Forecasted	and	projected	statements	
within	your	business.	Experts	provide	insight	into	how	management	                             of income and cash flow
can encourage top performers while not alienating other                                     •	 Business	succession	planning
employees	within	the	firm.	And,	what	about	the	underperformer?	                             •	 Preparation	of	compiled,	
Experts	provide	several	steps	management	can	take	to	encourage	                                reviewed or audited financial statements
underperformers	to	improve	performance	and	take	ownership.	                                 •	 Preparation	of	partnership	and	
                                                                                               corporate	tax	returns
For	all	businesses,	the	request	for	proposal	is	an	important	step	
in	cultivating	new	business	prospects	for	your	organization,	and	                           medical Practices
                                                                                            •	 Mergers	and	acquisitions	of	medical	practices
therefore,	it	is	imperative	that	the	proposals	your	firm	is	writing	are	
                                                                                            •	 Sales	of	medical	practices	and	valuations
making	an	impact.	Experts	offer	tips	on	writing	a	proposal	that	will	
                                                                                            •	 Structuring	and	negotiating	associate	
stand	out	from	the	rest,	explain	when	to	compete	on	price,	how	to	                             agreements
know	what	the	prospect	wants,	and	more.                                                     •	 Admission	of	new	owners	into	practice
                                                                                            •	 Buy-sell	agreements
Also,	experts	give	their	forecast	for	various	predictors,	industries	                       •	 Consultation	for	the	selection	and	
and	regions	for	2009	and	explain	how	business	leaders	can	properly	                            implementation of medical and accounting
plan	for	the	health	and	success	of	their	organization	during	difficult	                        information systems
economic	times.                                                                             •	 Cost	management	and	budgeting
                                                                                            •	 Human	resources	consultation
Finally,	while	KAWG&F	accountants	burn	the	midnight	oil	this	tax	                           •	 Tax	planning	services
                                                                                            •	 Preparation	of	compiled,	
season	compiling	tax	reports	and	preparing	tax	forms	to	meet	the	
                                                                                               reviewed and audited financial statements
April	15	deadline,	we	encourage	our	clients	to	contact	us	with	any	
                                                                                            •	 Management	advisory	services
questions	at	(410)	828.2727.	                                                               •	 Practice	operational	reviews
                                                                                            •	 Internal	control	surveys	and	consultation
                                                                                            •	 Strategic	planning	and	practice	retreats

                                                                                            Health & Life Sciences (biotechnology)
                                                                                            •	 All	federal,	state	and	local	business	tax	returns
Best	regards,                                                                               •	 Tax	planning	and	compliance	services
Alvin	D.	Katz,	CPA,	President	&	CEO                                                         •	 New	business	planning	and	set-up
                                                                                            •	 Projected/forecasted	statements	of	income	or	
                                                                                               cash flow (for financing options)
                                                                                            •	 Research	and	development	(R&D)	credit	planning
                                                                                            •	 Outsourced	accounting	services
                                                                                            •	 Consultation	for	selection	and	implementation	
                                                                                               of accounting information systems
                                                                                            •	 Preparation	of	compiled,	reviewed	and	
                                                                                               audited financial statements

       Technology	•	Construction	&	Real	Estate	Services	•	Personal	Financial	Planning
    Cost	Segregation	Studies	•	Estate	Administration	•	Estate	and	Gift	Planning	•	 Audits
       Reviews	•	Compilations	•	Litigation	Support	•	Medical	Practice	Services	Group
            Personnel	Interviewing	•	Business	Acquisitions	•	Business	Valuation
               Tax	Return	Preparation •	Individual	and	Business	Tax	Planning	
             Outsourcing	•	Business	Consulting	•	Business	Succession	Planning
                             Non-Profit	Entities	•	HR	Solutions

2                                                                                                               VOluME 9   n   issuE 2   n   wintEr 2009

      VOLUME 9     n   ISSUE 2 n WInTER 2 0 09            contents
             The Leading Edge
The Leading Edge alliance is an international
professional association of independently
owned accounting and consulting firms. The
Leading Edge alliance enables member firms
to access the resources of a multibillion-dollar
                                                           4   Stay for the climb
global professional services organization,                     Enable star performers to reach for
providing business development, professional
training and education, and peer-to-peer                       success and longevity
networking opportunities nationally and
globally, around the corner and around the
world.                                                    13   new business often hinges
Members are top quality firms who are very                     on an exceptional proposal
successful, have deep client relationships, and
strong ties to the community. The alliance                     Experts offer insight and tips to
provides members with an unbeatable combi-
nation: the comprehensive size and scope of                    winning that next project
a large multinational company while offering
their clients the continuity, consistency and
quality service of a local firm.                          14   2009: What’s ahead and
Member firms have access to the best and                       what’s behind for businesses,
brightest teams of business advisors – a peer-
to-peer connection that provides the right                     consumers and more
business solutions for clients.
To find out more about the alliance contact
Karen Kehl-Rose, president, at (630) 513-9814
or kkr@The-LEa.com.

   Leading Edge advisory Committee
                   Linda Watson
                    Brady Ware                             9   news and information
               Marshall Lehman                                 from our firm
       Lurie Besikof Lapidus & Co., LLP
                Jen Lemanski
       Pannell Kerr forster of Texas, P.C.                16   top 10 misconceptions of
                  gary Voth
       Pannell Kerr forster of Texas, P.C.
                                                               doing business in Canada
               Karen Kehl-Rose
          The Leading Edge alliance
                                                          18   in a nutshell: Q&a
          in affiliation with Wise group
                                                               Chris DeSantis responds to your
                    ann M. gynn
                       Editor                                  workplace dilemmas
        natasha fletcher, amanda horvath,
         Crystal Madrilejos, Stacy Vickroy
                    art directors                         19   the Leading edge alliance
                    andrea Jager
                 graphic designer

The Leading Edge is published four times per year by
Wise group, 812 huron Road, Suite 201, Cleveland, Ohio,
44115, (216) 523-1212, faX (216) 241-5458. Periodicals
postage paid at Cleveland, Ohio.

IRS Treasury Regulations require us to inform you that
any tax advice contained in the body of this com-
munication was not intended or written to be used,
and cannot be used, by the recipient for the purpose
of avoiding penalties that may be imposed under the                       Winner 2006 AGD award for publication design
Internal Revenue Code or applicable state or local tax
law provisions.
         ThE LEadIng EdgE                                                                                                3
Stay for the

    Enable star                            f the Pareto Theory applies to the
                                           workplace, then 80 percent of the
                                                                                         office but was the top producer. Management
                                                                                         wanted help because it was concerned he was

     performers                            organization’s results come from 20
                                           percent of the employees.
                                                                                         always in the office.
                                                                                            Yet, Stevens says, if management had

    to reach for
                                              Since many experts note that star          focused on the best practice approach, it would
                                           contributors are more likely to depart than   not have been concerned, especially given
                                           average or poor-performing employees,         that other sales representatives were out of the

         success                           the impact on companies can be big.
                                              “High-impact workers are often
                                                                                         office 88 percent of the time but only achieved
                                                                                         60 percent of their quota.

  and longevity                            more susceptible to being poached by
                                           a competitor in a downturn,” warns Ed
                                           Boswell, CEO of The Forum Corp., whose
                                                                                         give reaSonS
                                           clients include Fortune 1000 businesses.      Price offers three reasons why top performers
                   By ann M. gynn             Ron Price, an expert in workplace          stay with a company:
                                           behavior, says most top performers leave      •	 Competitive,	performance-based	compensa-
                                    because they see their company as being an               tion (and that’s not just money)
                                    obstacle to their continued growth instead of a      •	 Meaningful	work	that	stretches	them	profes-
                                    catalyst.                                                sionally (they love to achieve)
                                       Just given the bottom line impact of              •	 Supportive	relationships	(they	need	to	feel	
                                    departing employees—$3,500 for a minimum                 valued as human beings in addition to
                                    wage hourly worker to 400 percent of a top               being recognized for performance)
                                    executive’s salary—having a star-performer-             “There’s no reason why everyone in a
                                    retention strategy makes sense all around.           company can’t be rewarded this way in
                                       “Companies that want to hold on to their top      proportion to their roles, responsibilities and
                                    performers should start asking questions 12 to       results,” Price says. “When this is systemized
                                    18 months ahead of job tenure thresholds—            in a company, the underperformers decide to
                                    two, five, 10 and 15 years—to make sure              leave on their own and the average performers
                                    they understand why a top performer would            find a level of contribution that, while not
                                    consider making a change,” says Price, founder       making them a superstar, provides good
                                    and CEO of Price Associates.                         employment and stability for the company. And
                                       Drew Stevens, an organizational                   the top performers see the sky as the limit.”
                                    development specialist, says organizations need         Price explains that keeping the stars without
                                    to make sure they focus on the best practices        alienating the rest of the employees is doable.
                                    of top performers. In his doctoral research,         When alienation does happen, it’s because a
                                    92 percent of firms seeking assistance for           company emphasizes one area over another,
                                    employee performance issues failed to do that.       such as excessive compensation, or follows
                                       He tells of one organization that sought          narrow definitions of what a top performer is
                                    assistance for an employee performance               so all contribution areas and corporate values
                                    issue—a sales representative who never left the      are not recognized.

ThE LEadIng EdgE                                                                                                                       5

                                                                                                      ThEy don’T juST
identify the right CULtUre                        month that he would receive a nickel-an-hour
                                                                                                      wanT To Enjoy ThEir
                                                  raise (he was earning about $1.25 an hour).         work, ThEy wanT
                                                                                                      To bE paSSionaTE
Terri Herren of The Herren Dimension says         “Immediately, I was hooked,” he says today,
if companies want to embrace the idea of          30-plus years later and having spent most of
cultivating top performers, they first must
decide if a performance-based culture is in
                                                  his career at McDonald’s, rising to the level of
                                                  regional vice president. Most recently, Facella
                                                                                                      abouT iT.
their best interest strategically.                authored Everything I Know About Business I
   “While knowledge-based industries tend         Learned at McDonald’s.
to place more emphasis on performance and            He points to a Gallup study that showed 65          Osborne explains that in the accounting
continuous improvement, it can be achieved        percent of American workers reported that they      industry, one of the biggest HR challenges is
in any industry and in all sizes of companies,”   did not receive recognition within the previous     finding the person with two to five years of
says Herren, who has worked more than 25          year—and other reports show that frequently         experience. Thus, keeping staff with similar
years in organizational and human resource        the No. 1 reason employees cite for departure       experience is a must.
development. “It starts with company leaders      is that they don’t feel appreciated.                   Ryan D. Istre, audit senior manager at PKF
committing to a performance-based culture as         McDonald’s understands that data—and             of Texas, a Leading Edge Alliance firm, says
a strategic business objective.”                  right from the start, Facella saw the company       everyone always considers other opportunities.
   With such a commitment, companies also         encourage employees early and often after           But doing so just made him realize how lucky
must devote their resources to developing         iterating what was expected of the individual,      he was. “They never gave me reason to look
processes and education, she says. “Retaining     what goals were set for the store, etc.             elsewhere,” he says.
top performers is a critical competitive             When employees set a record for an                  Upon college graduation in 2000, Istre
advantage.”                                       hour or a day at a store, the manager might         began as an associate. Within two years he was
   Sure, she says, a company can treat all        compensate the crew with time-and-a-half for        promoted to senior associate, then manager,
employees the same, but that’s like a teacher     that hour or day. McDonald’s corporate office       and last year became a senior manager.
giving all students the same grade because        also recognizes staff, licensees and vendors—       Opportunities for advancement and a pleasant
they show up for class. Performance is not        presenting almost two dozen distinct awards         atmosphere that feels like a family—where
rewarded.                                         annually. All employee ranks are eligible for the   everyone knows everyone’s name and
   “Top performers want to work for companies     President’s Award, which is given to the top        executives have open-door policies—are
that provide greater recognition and rewards      1 percent in the company. The winners are           attributes that have helped him decide on his
to them versus other employees who just show      given stock options and flown to Chicago            future. “I don’t plan on going anywhere else,”
up for work,” Herren says.                        along with their significant others for a           Istre says.
                                                  special dinner. Facella says it’s important to         SS&G has next generation leadership
aPPreCiate                                        recognize and include the person behind the         classes, which brings together both senior and
and reCognize                                     winner too for his or her support.                  relatively new directors as well as some of the
                                                     “We do it with fanfare,” Facella notes.          up-and-coming managers and senior associates.
Shortly after he started working at a
                                                     But fanfare doesn’t have to mean big, expen-        SS&G encourages its experienced directors
McDonald’s front counter, Paul Facella was
                                                  sive gestures. “It can be as simple as shaking      to take less-experienced staff when visiting
asked by the general manager to come to a
                                                  hands and saying congratulations,” he says.         clients and prospects, so they, too, have the
corner of the store. There, all his co-workers
                                                                                                      opportunity to get exposure and see how
had gathered and the manager announced
Facella had done such a good job in his first     offer earLy exeCUtive                               things operate in the field.
                                                  oPPortUnitieS                                          Osborne says it’s important to realize that
                                                                                                      the same plan won’t work for everyone—some
                                                  Involve younger staff members in leadership         might want more opportunities to work
                                                  and development activities, says Rebecca            directly with clients, others might prefer to
                                                  Osborne, director of human resources at             focus on business operations or training fellow
                                                  SS&G Financial Services, a Leading Edge             employees. “Help get them involved in those
                                                  Alliance firm.                                      things that they like doing,” she says.
                                                    By leading and helping the firm develop, the
                                                  employees know their voices are valued and
                                                  they can learn more about all the opportunities     fULfiLL a PaSSion
                                                  and potential within the organization at an         “Great employees are not mercenaries,”
                                                  early stage in their careers.                       says Richard Chang, who operates his own

6                                                                                                                   VOLUME 9   n   ISSUE 2   n   WInTER 2009
performance-improvement consulting, training
and publishing firm. His clients include
                                                     It’s about the money AND…
Fidelity Investment, Universal Studios and           Sure, money matters. Every employee wants a paycheck. Top performers, however, want
Black & Decker.                                      more than financial compensation—they want their work to connect to something more
   “What great employees crave most is to            meaningful and bigger than themselves.
be part of something exciting, something             “They need to see that their performance isn’t just recognized by a series of weekly
that moves them,” he says. “They want to be          checks, which could be replaced by a competitor,” says john baker, speaker and founder
involved in work that challenges their abilities     of rEady Thinking, a leadership and development firm.
and pushes them to reach their potential.”
   Great employees are passionate about their        he offers these two examples as case studies:
work—they perform at a higher level because
they are committed to their organizations
and derive greater satisfaction from their job,
                                                     Scenario 1
Chang says.                                          ProbLem: a top underwriter, jenny was one of her firm’s most trusted
   “They don’t just want to enjoy their work,        performers. her loyalty to her job, though, was suspect. whispers of her
they want to be passionate about it,” he says.       interviewing with rival firms echoed in the halls. Comments she made in passing
   Chang says passion-driven organizations win       led others to suspect her tenure was tenuous.
the loyalty of their top employees by giving         SoLUtion: jenny’s boss sat down with her to put forth a new vision of what
them freedom. “You can have systems in place         jenny was to accomplish at work. instead of just recommending a certain piece
to control the implementation of ideas, but          of business be accepted or denied, she was given final decision authority over
you must be certain not to compromise the            new business acceptance.
enthusiasm, creativity and hard work that
make them possible in the first place.”              in studying the situation, the manager learned that the management committee
   He explains that this perspective provides        already accepted jenny’s recommendations 99 percent of the time. So he
an edge over the competition. “Encourage             thought why not make her a business owner, not just an underwriter.
employees to explore their passions and build        reSULt: jenny saw herself not as a cog in the machine and someone with
upon them both inside and outside of work,”          transferrable skills, but rather an instrumental part of an executive team trying
Chang says.                                          to grow business. jenny’s attitude turned around. her asides became less
   In his own company, he found individual           caustic and more positive. recruiters would call, only to be disregarded.
passions suffering—and it led Chang to move

                                                     Scenario 2
employees to better align their positions with
their passions. A desktop publisher with a
passion for competition was happier and more
                                                     ProbLem: pete was the no. 1 sales producer in his region, but his effort was
productive in a sales position that allowed him
                                                     pretty much mailed in. he would come into the office at 10 a.m., arrive late to
to exercise that aspect of his nature.
                                                     meetings, cut out early for 18 holes of golf. Still, his territory was almost always
   “Such changes are invaluable in ensuring
                                                     the top of the chart in terms of meeting and exceeding quarterly targets. other
that talented employees remain enthusiastic
                                                     sales people thought he was toxic to the team, and his remarks about easily
and productive—even if this means you have
                                                     finding a job across the street got on everyone’s nerves.
another job to fill,” Chang says.
                                                     SoLUtion: pete’s boss put him on a 90-day performance plan. at the end of that
                                                     time, pete would either turn around his work habits and attitude or be fired. The
embraCe mULti-faCetS                                 conversation hit pete like a thunderbolt and he stormed out of the office. pete’s
Employees are not one-dimensional, says Susan        boss explained that his job was to make his sales staff better and that he owed
Wilson Solovic, CEO and co-founder of SBTV.          pete direct feedback that pete could do more in sales and as a leader.
com, a video news information destination for
small businesses.                                    reSULt: pete stewed. but after awhile, he stayed with the firm and acted
   “We hire people to do a ‘job’ and that job        differently. he surpassed his old sales records and began teaching others his
requires certain skills and abilities. It’s easy     methods. pete moved from the person to be avoided to something of a mentor.
to forget that often employees have multiple         Looking back, pete said that leaders committed to making him better, not just
talents,” she says. “When you can tap into           accommodating his laziness, were the type of leaders who deserved loyalty.
                               continued on page 8

ThE LEadIng EdgE                                                                                                                              7

    Derailed? Get BACk oN trACk
                                                                                           continued from page 7

                                                                                           those talents, not only do you create a more
                                                                                           engaged and energized employee, but you also
    bonnie hagemann, CEo of Executive development associates, has researched the           enhance opportunities for your business.”
    issues involved with top performers. She offers the top five areas of concern.            At SBTV.com, Solovic hired a production
                                                                                           manager for the technical side of the business.
                                                                                           Later, she learned the new manager had started
                                                                                           his career on-air and soon he was contributing
                  derailment                     back-on-track                             as an anchor/reporter in addition to his

                       issues                    solutions                                 primary responsibilities.
                                                                                              “Identifying employees’ hidden talents
             Lack of communication. when         increase feedback and communication       requires creating an environment where
        responses to requests aren’t given,      to surface the problem and take           employees feel comfortable allowing them to
      engagement decreases. Employees no         action. you don’t want to learn about     be discovered,” Solovic says. She offers these
              longer go above and beyond.        the employee’s problem the day she        suggestions:
                                                 or he resigns. Get close to them early    •	 Host	a	company	social	outing	that	offers	
                                                 on. if you are proactive in employees’        employees the opportunity to demonstrate
                                                 development, you won’t be surprised.          or share more about their interests, back-
                                                                                               ground and experience.
      personal issues and outside stressors.     put together a plan of action and         •	 Bring	in	creativity	consultants	who	use	exer-
         nine out of 10 times, derailment is     management controls.                          cises and conversations that unveil employ-
                  related to personal issues.                                                  ees’ hidden abilities.

                     no follow-through on        provide coaching.                         rotate aSSignmentS
                                                                                           Boswell says providing development
                                                                                           experiences and encouraging rotational
             Maturity issues, including poor     Find a suitable spot for individual if
                                                                                           assignments have been shown to increase
        self-control, lack of self-awareness,    she or he has a strong history or track
                                                                                           retention of key players by 15 percent.
         low or under-developed emotional        record. Cut losses for individuals new
                                                                                              “Rotational assignments move leaders from
                                 intelligence.   to the organization.
                                                                                           one area of the company to another to stretch
                                                                                           themselves, develop new talents, develop
               Character issues such as ego,     Cut losses and move on.
                                                                                           cross-functional skills, groom them for higher
            self-serving attitude and lack of
                                                                                           positions, expose them to other functional
                                                                                           areas and help them acquire a holistic sense of
                                                                                           the company,” Boswell explains.
                                                                                              The Forum worked with a global consumer
                                                                                           products company that sought to develop its
                                                                                           leaders, including implementing rotational
                                                                                           assignments. So, Boswell says, a marketing
                                                                                           executive might have worked in finance,
                                                                                           learning about the budgeting process. As a
                                                                                           result the marketing executive developed
                                                                                           cross-functional skills and applied them,
                                                                                           such as building better customer awareness
                                                                                           (marketing) into the budget planning process
                                                                                              “When designed well, these experiences
                                                                                           can also develop awareness of innovation,
                                                                                           storytelling, communicating, scenario planning
                                                                                           and networking. All of those skills benefit
                                                                                           both the company and the individual,”
                                                                                           Boswell says. e

8                                                                                                           VOLUME 9   n   ISSUE 2   n   WInTER 2009
VOluME 9 n issuE 2
   wintEr 2009

  is your firm getting the most
  from its financial software?
  By	Mark	E.	Rapson,	CPA

  t   he proper tracking of any
      businesses finances is critical.
  Without a good system in place,
                                           vendor invoices and payments in
                                           accounts payable. A firm should
                                           be able to keep track of purchases
  a firm can miss billable hours,          and payments by vendor for the
  misdirect fees or unnecessarily          day, week, month or year.
  perpetuate a frustrating and time-          Using the expense ticket/job
  consuming daily experience.              cost function of the software
     Fortunately, quality account-         enables a firm to allocate expenses
  ing software programs exist to           directly to clients for subsequent
  specifically assist small to mid-        billing. A firm should also have
  sized businesses in day-to-day           the ability to track the profitability
  accounting matters. Many of the          of projects by using job-tracking
  programs are sophisticated enough        functions.
  to handle multiple financial func-
  tions, transforming an accounting        Comprehensive financial
  headache into a few quick clicks         reporting
  of the mouse.
                                           A businesses software program
     If you suspect your firm is
                                           should provide the reporting func-
  spending wasted hours on track-
                                           tionality needed to manage the
  ing numbers, perhaps it is time to
                                           organization. If the software has
  reexamine your software program.
                                           a report-writer function, then the
  You can begin by determining
                                           firm can customize reports to fit
  whether your program offers the
                                           any unique needs.
  following functionality:
                                              In addition to the above, a firm
                                           will need the following additional
  time and billing                         features:                                   If you’re beginning to think
  Many firms should require a              •	 Ease	of	use                           your organization’s accounting
  full-feature time and billing solu-      •	 Cost-effective	solution               program is lacking in functional-
  tion. This allows for tracking the       •	 Fully	integrated	accounts	pay-        ity, then you may want to consider
                                                                                                                          IF	yOu	SuSPECT	yOuR	
  amount of time spent on multiple            able, accounts receivable, gener-     investing in new software. Several    FIRM	IS	SPENDING	
  activities and services associated          al ledger and reporting modules       easy-to-use and affordable soft-      WASTED	HOuRS	ON	
  with your clients. The time can          •	 Preparation	of	quotes	and	esti-       ware packages are available to help
  subsequently be billed to your              mates                                 your business. Among the most
                                                                                                                          TRACKING	NuMBERS,	
  clients based on established bill-       •	 Integrated	project	tracking           popular and trusted programs are      PERHAPS	IT	IS	TIME	
  ing rates. The accounts receivable       •	 Customizable	reports                  QuickBooks	and	Peachtree.             TO	REExAMINE	yOuR	
  module should be flexible to allow       •	 Integration	with	other	software	         Choosing	the	right	software	can	
  for billing client retainer fees, flat      solutions (time slips)                be complicated but keep in mind
                                                                                                                          SOFTWARE	PROGRAM.
  project fees, etc.                       •	 Other	advanced	services	(credit	      that many accounting firms deal
                                              card processing and access to         with this technology everyday
  accounts payable and                        financial data over the Internet,     and can often help you make a
  expense tracking                            etc.)                                 qualified decision about which
                                                                                    software package is right for your
  The software package should
                                                                                    business. e
  provide for detailed tracking of

  THE	LEADING	EDGE	                                                                                                                              9

What does international Financial
reporting Standards mean for your business?
By	Clemens	W.	Mueller,	CPA

i  FRS is the latest “hot” acronym
   in the accounting and financial
                                       widely reported, IFRS is much
                                       more principles-based than it is
                                                                                    Under	U.S.	GAAP,	they	are	gen-
                                                                                    erally treated as either current or
world. The purpose of this article
is to briefly explain what IFRS
                                       rules-based. In addition, IFRS has
                                       few industry-specific guidelines
                                                                                    noncurrent depending upon the
                                                                                    balance sheet item to which they
                                                                                                                          THE	MAIN	
is, why it’s the wave of the future    whereas	U.S.	GAAP	has	significant	           relate.                               DIFFERENCE	
for U.S. companies and when
it will be implemented for U.S.
                                       industry-specific guidelines. For
                                       example, IFRS does not have spe-
                                                                                 •	 IFRS	has	much	less	extensive	
                                                                                    guidance regarding revenue
                                                                                                                          BETWEEN	u.S.	
companies.                             cific guidance relating to nonprofit         recognition,	whereas	U.S.	GAAP	       GAAP	AND	
                                          While there are many specific
                                                                                    has detailed, specific industry
                                                                                                                          IFRS	IS	THAT	
IFRS is the acronym for
                                       differences	between	U.S	GAAP	                                                      IFRS	HAS	
International Financial Reporting
                                       and IFRS, many differences are
                                       not ordinarily significant or relate
                                                                                 Why                                      SIGNIFICANTLy	
Standards. It is a set of account-
ing standards developed by
                                       to transactions or situations not
                                                                                 The push for convergence of U.S
                                                                                 GAAP	with	IFRS	relates	primarily	
                                                                                                                          LESS	DETAIL.
                                       frequently encountered. However,
the International Accounting                                                     to the perceived efficiencies to be
                                       there are important differences,
Standards Board. The IASB is an                                                  achieved from such convergence
independent accounting-standard-                                                 in an increasingly global economy.       to	or	are	described	in	U.S.GAAP.	
                                       •	 IFRS	does	not	permit	the	use	
setting organization based in                                                    Such efficiencies include:                  Other	than	the	costs,	some	
                                          of	LIFO	as	an	inventory	costing	
London. It consists of members                                                   •	 The	use	of	common	accounting	         commentators also see other
from nine countries, including the                                                  standards will make it easier to      problems with convergence. For
                                       •	 IFRS	allows	companies	to	
United States. In effect, IFRS rep-                                                 compare performance between           example, there is concern that
                                          revalue property, plant and
resents country-neutral account-                                                    competitors from different coun-      certain countries may reserve the
                                          equipment to fair value, while
ing standards, which are quickly                                                    tries.                                right to not fully adopt IFRS; that
                                          U.S	GAAP	requires	historical	
becoming	“global	GAAP.”	                                                         •	 Capital	markets	will	be	more	         is, they would partially adopt
                                          cost accounting unless there is
    More than 12,000 companies                                                      efficient because international       IFRS but selectively modify IFRS
in approximately 100 countries                                                      investors will be able to more        guidance with which they do not
                                       •	 IFRS	uses	a	single-step	method	
have adopted IFRS. In fact, the                                                     readily understand the finan-         agree. This would result in lack of
                                          for impairment testing rather
European	Union	requires	publicly	                                                   cial statements of a potential        comparability between countries,
                                          than the two-step method
traded companies in its member                                                      acquiree.                             which is the very “disease” that
                                          required	by	U.S.	GAAP.	The	
states to prepare their financial                                                •	 Companies	with	subsidiaries	          convergence to IFRS wishes to
                                          result is that, under IFRS,
statements in accordance with                                                       in multiple countries would           cure. Also, because IFRS is more
                                          impairment write-downs are
IFRS.	Canada	plans	to	require	                                                      have only one set of accounting       principles-based than rules-based,
                                          more likely.
IFRS for public companies in                                                        standards throughout the entire       concern has been expressed that
                                       •	 IFRS	allows	capitalization	of	
2011. It had previously planned                                                     company.                              companies could make significant
                                          development costs if certain cri-
convergence	with	U.S.	GAAP.	                                                                                              changes to accounting policies
                                          teria	are	met.	U.S	GAAP	requires	
Japan and India also plan conver-                                                  Of	course,	there	will	be	costs	to	     (for example, revenue recognition,
                                          all research and development
gence with IFRS by 2011.                                                         convergence with IFRS, especially        which is much less specifically
                                          costs to be expensed.
    While	U.S.	GAAP	and	IFRS	                                                    education and training. The edu-         addressed in IFRS) that could
                                       •	 Even	if	debt	covenant	violations	
have many similarities, there are                                                cation and training will apply not       potentially still be in compli-
                                          are cured after the end of the
many differences. In general, the                                                only to accountants but to other         ance with IFRS, and that users of
                                          year, IFRS still requires clas-
main difference between U.S.                                                     specialists (such as actuaries and       the financial statements may not
                                          sification as a current liability.
GAAP	and	IFRS	is	that	IFRS	has	                                                  valuation analysts) who perform          clearly understand the nature of
                                          Under	U.S.	GAAP,	such	debt	can	
significantly less detail. To illus-                                             services that have financial state-      such changes.
                                          still be classified as long-term
trate this, it has been reported                                                 ment impact. In addition, there             Despite what one may think
                                          debt assuming a written waiver
that	a	U.S	GAAP	analysis	that	                                                   may be additional costs due to the       regarding the cost versus benefit
                                          is obtained.
fills about 20,000 pages would                                                   potential need to rewrite contracts      decision, convergence is in fact on
                                       •	 IFRS	treats	all	deferred	tax	assets	
consume only an estimated 2,500                                                  whose terms and conditions refer         its way, as explained in the follow-
                                          and liabilities as noncurrent.
pages for IFRS. As has been                                                                                               ing section.

10                                                                                                                          VOluME 9   n   issuE 2   n   wintEr 2009

When                                   above, the effects of increasing       of developments related to con-       is already here. It is very common
                                       globalization, and confusion that      vergence. An excellent source         for the foreign parent to require
The	U.S.	Securities	and	Exchange	
                                       could be caused by certain private     of information is the web site,       at least annual reporting by the
Commission	has	taken	an	active	
                                       companies implementing IFRS            www.ifrs.com sponsored by the         U.S. subsidiary in accordance with
role in the convergence effort. In
                                       while others staying with U.S.         American	Institute	of	Certified	      IFRS.
2007, it unanimously voted to
                                       GAAP,	there	is	the	very	real	issue	    Public	Accountants.	In	fact,	for	        The bottom line is that change
allow non-U.S. based companies
                                       in the not too distant future of       many private companies in the         is almost certainly coming, and
to file IFRS financial statements
                                       what accounting standards private      United States that are subsidiaries   planning and preparation is best
without an accompanying recon-
                                       companies should be using. The         of foreign parent companies, IFRS     done sooner, rather than later. e
ciliation	to	U.S.	GAAP.	Even	more	
                                       most likely possibilities include:
significantly, in August 2008 the
                                       •	 IFRS	specifically	geared	for	
SEC	released	its	proposed	con-
                                          private companies. In fact,
vergence roadmap, which can be
                                          the IASB is conducting a proj-
summarized as follows:
                                          ect	entitled	“IFRS	for	Private	
•	 The	SEC	will	decide	in	2011	
                                          Entities.”	This	project	is	sched-
   whether to require U.S domestic
                                          uled to be completed this year.
   public companies to adopt IFRS.
                                       •	 Continued	use	of	U.S.	GAAP,	
•	 If	SEC	decides	in	2011	that	con-
                                          but in a scaled down version for
   version to IFRS will be required,
                                          private companies
   the use of IFRS will be required
                                       •	 Adoption	of	IFRS	in	full
   beginning in 2014 for the large
   public companies, 2015 for
                                          It should be noted, though,
   those considered medium, and
                                       that if the FASB and the IASB
   2016 for those considered small.
                                       complete the convergence projects
•	 In	addition,	a	select	group	of	
                                       mentioned, this will bring U.S
   U.S. multinational public com-
                                       GAAP	and	IFRS	much	closer	to	
   panies will be permitted to elect
                                       each other, making any eventual
   to adopt IFRS for their 2010
                                       transition less problematic.
   financial statements.
                                          So, what should we do now?
                                          For public companies and
   The	SEC	is	currently	seeking	
                                       CPAs	providing	services	to	public	
public comments regarding its
                                       companies, there is a not a
                                       moment to lose. They should, as
   The FASB and the IASB have
                                       soon as possible, start considering
also been working together with
                                       and planning the variety of
the goal of convergence between
                                       changes that could occur, which
U.S.	GAAP	and	IFRS.	They	are	
                                       include not just purely changes
presently working on convergence
                                       in the “debits and credits,” but
projects with estimated comple-
                                       also the impact on, among other
tion dates generally between 2009
                                       things, investor communications,
and 2011.
                                       information technology, employee
   The above information then
                                       compensation issues such as
begs the question—what about
                                       performance targets and stock
private companies and IFRS?
                                       based compensation.
   Of	course,	the	dictates	of	the	
                                          For private companies and
SEC	do	not	affect	private	com-
                                       CPAs	providing	services	to	private	
panies directly. Yet, with the very
                                       companies, there is of course not
likely implementation of IFRS by
                                       the same urgency. Nonetheless,
public companies as described
                                       it would be wise to keep abreast

THE	LEADING	EDGE	                                                                                                                                  11

medical practices can benefit with internal controls
to protect business, revenue
By	Mark	R.	Cissell,	CPA

i  n today’s medical practice,
   physicians are being forced
to accept less for services they
                                      and post payments to the comput-
                                      er. Dividing the two duties helps
                                      prevent an employee from stealing
                                                                             physician. This avoids the situ-
                                                                             ation in which money could be
                                                                             diverted from the practice with-
                                                                                                                     Pre-numbered patients’
                                                                                                                     encounter forms
                                                                                                                     Controlling	the	charge	tickets/
perform. This in turn reduces         money from the practice and then       out any kind of trail. The office
                                                                                                                     patients’ encounter forms can
profit and ultimately physician       manipulating patients’ accounts        manager should review patients’
                                                                                                                     be done by pre-numbering and
income.	One	way	to	help	counter	      in the computer, usually by writ-      accounts weekly and document
                                                                                                                     controlling the flow of the forms.
this “squeeze” is to control costs.   ing off the balances as contractual    activity. The managing physi-
                                                                                                                     A gap in the numerical sequence
Internal controls can protect a       adjustments or bad debts, to cover     cian should review all patients’
                                                                                                                     may indicate an oversight in post-
practice from revenue loss and        the theft.                             accounts monthly. There should
                                                                                                                     ing client services or some other
potential employee embezzlement.         In an ideal situation, one person   be an explanation for all balances
   This article discusses different   opens the mail, another prepares       more than 90 days describing
forms of internal controls and why    the deposit slip and a third posts     what has transpired and future
they should be implemented in         the payment to patients’ individual    plans.                                  monitor contractual
your practice. Although there is      accounts in the computer. For                                                  adjustments
no guarantee employee embezzle-       example, if any given employee                                                 for reasonableness
                                                                             daily reconciliations
ment, fraud or similar defalca-       has the authority to sign for deliv-   and deposits                            Contractual	adjustments	should	be	
tions will be found, a practice can   eries, this situation could lead to                                            segregated by category from other
                                                                             The sign-in sheet (beware of
minimize these activities by imple-   falsified inventory. Make sure that                                            bad debt expense. This makes
                                                                             HIPPA	issues	here)	and	the	
menting and monitoring sound          an authorized staff member signs                                               monitoring the amount of adjust-
                                                                             appointment schedule are good
internal controls.                    for all deliveries.                                                            ments within each contract easier
                                                                             internal control tools. They should
                                                                                                                     thus highlighting large variances.
                                                                             be compared to the report of
                                      Fidelity bond insurance                daily charges. These tools assist
                                                                                                                     accounts payable
LIMIT	SIGNING	                        Every	medical	practice	regard-
                                      less of the size should consider
                                                                             in finding errors as well as poten-
                                                                             tial embezzlement. Also from            Mistakes and improprieties are not
AuTHORITy	                            bonding all personnel who touch        an internal control standpoint,         limited to cash receipts and bill-
                                                                                                                     ing.	Payables	offer	similar	oppor-
ON	CHECKS	TO	                         or may come into contact with
                                      money. Bonding, most commonly
                                                                             the practice needs to make daily
                                                                             deposits so the corresponding           tunities. The best way to control
OnE Or twO                            known as fidelity bond insur-          reconciliations can be performed.       the outflow of cash is to limit
                                                                                                                     signing authority on checks to
PHySICIANS	                           ance, is relatively inexpensive and
                                      will reimburse the practice for
                                                                             Daily deposits also reduce the pos-
                                                                             sibility of lost checks and prob-       one or two physicians and attach
AND	ATTACH	A	                         embezzlement by office person-         lems related to having cash and/or      a vendor invoice to each check
                                                                                                                     when it is signed. For checks over
VENDOR	INVOICE	                       nel. This type of insurance also
                                      covers theft of practice funds by
                                                                             checks in the office.
                                                                                                                     a pre-set amount, two signatures
TO	EACH	CHECK                         someone other than an employee.
                                      For example, a staff member is
                                                                             Lockbox deposits                        should be required.
                                                                             for medical practices
                                      taking the daily deposit to the                                                   Strong internal controls
                                                                             Lockboxes are a service provided
                                      bank. Along the way he or she                                                  strengthen a practice’s record-
Segregate job duties                  stops for personal errands. While
                                                                             by most financial institutions
                                                                                                                     keeping.	Poor	records	aid	embez-
                                                                             today. They set up a mailing loca-
One	primary	internal	control	step	    away from his or her car, the car is                                           zlement, fraud and mistakes.
                                                                             tion for all cash receipts. Since the
is to divide selected job duties.     stolen along with the deposit. The                                             While implementing internal
                                                                             receipts are received directly by
In most small medical practices       practice is covered by the fidelity                                            controls does not guarantee no
                                                                             the institution the money becomes
this is a difficult task. However,    bond insurance.                                                                mistakes or improprieties, it does
                                                                             available more quickly. The finan-
there are certain duties that must                                                                                   strengthen the practice’s ability to
                                                                             cial institution provides a daily
be segregated to create an envi-      Consent of managing physician                                                  protect itself against those types of
                                                                             report to the practice of who paid
ronment with effective internal       for write-offs                                                                 losses. e
                                                                             what and in some cases it will pro-
controls. An individual should not
                                      A patient’s account balance should     vide a copy of the checks received
be allowed to both open the mail
                                      never be written off as a bad debt     for the day to assist with proper
(i.e., initially handle the money)
                                      without the written consent of a       recording against patients’ records.

12                                                                                                                     VOluME 9   n   issuE 2   n   wintEr 2009

new business often hinges on
an exceptional proposal
Experts offer insight and tips to winning that next project
By ann M. gynn

W      hether responding to a request for
       proposal or submitting a pitch for new
business, the challenges are many but they all
                                                     is profit justification, says Frank Rumbauskas,
                                                     author of The New York Times bestseller, Never
                                                     Cold Call Again, and the follow-up Selling Sucks:
relate to the ultimate question: How do we win       How to Stop Selling and Start Getting Prospects to
this new project?                                    Buy.                                                 don’t forget
   “New business is the lifeblood of any
company. Companies just need to be smart
                                                        “You MUST show the prospect how your
                                                     solution will put money into his or her pocket.      the writing
about business development and submitting            It is not enough to sell on features, benefits or    “proofread. proofread. proofread,”
proposals,” says Michele Harris, founder and         price,” he says.                                     advises author and speaker Sue
CEO of SmartiSolutions, a marketing agency              Winning proposals and clients is all about        Thompson. “use spell check.
search firm.                                         telling, says Nancy Trent, founder and CEO
   She advises that an initial meeting with the      of Trent & Company. “Tell them what you’re           “There is hardly anything that turns a
prospect, even a conference call, is a must          going to tell them, tell them, and tell them         client off more than an incorrect street
before a proposal is submitted. “Clients want        what you told them,” she says.                       address, poor syntax, or atrocious
thoughtful ideas about where and how you                Many salespeople fail to tell prospects what      spelling,” she says.
would take their business,” Harris says. “In         they are going to tell them. “The way you
                                                                                                          “poor writing and spelling can lead the
submitting a proposal, impress with strategy         present your proposal will test the waters
                                                                                                          reader to assess you as uneducated,
and ideas over information overload. You don’t       for success. It’s all about first impressions,”
                                                                                                          unprofessional, or just plain stupid,
need a ton of detail but you do need to dazzle.”     Trent says.
                                                                                                          especially if your proposal is being
   Rose Fass of Fass Forward says showing how           She says being prepared for changes with
                                                                                                          compared with others,” she says.
you can add value quickly and succinctly is          the prospect is a must. Perhaps a new business
critical. “This is more important than price—if      pressure has caused the prospect to change           al borowski of proposal writing
your potential client can’t see the bottom line      course, a new requirement has arisen or              Services says knowing the rules of
benefit, they won’t use you no matter how            budgets are lower than expected. Or nothing          writing and knowing how long it takes
cheap you are,” she says.                            really has changed but as the decision draws         to write a truly effective proposal
   Distinguish yourself from your competition.       near, cold feet cause the prospect to rethink a      are critical to success. among his
Identify what the prospect could get from you        position on the campaign.                            advice, which is found in detail at
that others can’t give—what separates you from          Trent says be ready for these challenges          www.proposalwritingservices.com:
the pack of other contenders, Fass notes.            by delivering a compelling story to get your         •	 Avoid	“boilerplate”	usage.
   Demonstrate knowledge of the prospect’s           message across by:                                   •	 Demonstrate	understanding	of	clients’	
industry and the company in particular—              •	 understanding	the	prospect’s	needs	better	           wants, needs and expectations.
mention big accomplishments and big                      than anyone else.                                •	 Be	conversational.	Don’t	write	a	
challenges that they face, she says.                 •	 having	products	and	services	that	fit	like	a	        college term paper.
   Raj Khera, CEO of MailerMailer, offers                glove for those needs.
proposal writing advice through his blog,            •	 exceeding	the	prospect’s	expectations	in	         “Make it easy for your buyers to skim and
http://blog.mailermailer.com. One recent tip he          your specialty field by showing results,         still understand your story through your
shared is to make sure the bottom line bid is            credibility and reputation with past projects.   use of design elements such as graphics,
less than what it would be if you totaled each          Lisa Nirell of EnergizeGrowth LLC advises         slogans and informative headings,”
line item. “Include a line item called ‘discount,’   that you ensure you are working directly with        says dianna booher, author of Rules of
which is the difference between your bottom          the economic buyer. “This is the person who          Business Grammar: 101 Fast and Easy Ways
line bid price and each line item price total,”      can authorize payment or lead the project,”          to Correct the Most Common Errors.
he says. “This way, if the customer tries to         says the author of EnergizeGrowth NOW: The           “a cut-and-paste job won’t do in today’s
reduce price by picking a particular line item,      Marketing Guide to a Wealthy Company. “Do            environment—particularly when cutting
you can accommodate them but then reduce             not waste time writing a proposal for someone        and pasting from poor models that have
your discount.”                                      who can say ‘no,’ but can never say ‘yes.’ Your      been ‘in the files’ for a decade or so.”
   The most important value to demonstrate           proposal will gather dust.” e

ThE LEadIng EdgE                                                                                                                                    13

2009                                  What’s ahead and what’s behind
                                      for businesses, consumers and more
      s 2009 begins, forecasters and trend experts share their insight and predictions about what lies ahead. And this time, unlike in many recent
      years, their comments all reflect the impact of the economic troubles.

new behaviors adopted                                time for turnaround                                  government promotes green
“Change is good—even when it means tem-              Turnaround consultants and financial advisors        E. Bruce Harrison, author of Corporate Greening
porary losses—and ups and downs happen,”             will continue to face an abundance of work           2.0, says despite congressional preoccupa-
says Judith Lederman, president of a strategic       but a paucity of options to save businesses          tion with economic recovery, Congress will
marketing firm and former market analyst with        stifled by a credit crunch, according to the         enable legislation that mandates stronger green/
a leading consumer publication.                      Turnaround Management Association.                   energy initiatives for business. The cooperation
   “A plummeting stock market does not mean             The organization’s annual Trend Watch poll        between Capitol Hill and the White House will
that consumers need less; it just means that         released last fall shows about three-quarters of     energize the initiatives.
the buying patterns are likely to change and         respondents report engagements and revenue              Public companies in the United States must
spending will decrease,” she says. “Businesses       up at least 10 percent in 2008 over the previ-       prepare for election-year political pledges to
that are going to succeed are going to have to       ous year. The same number anticipates further        convert to a long life. Standards, rules, inspec-
target strategically, lower prices, appeal to bar-   revenue growth this year, with most expecting        tions, compliance deadlines and lawsuits will
gain-hunting attitudes and stay aware of what        increases of up to 25 percent.                       follow the corporate-greening pattern set in
people are most likely to buy.”                         Manufacturing (62 percent), construction          1970 when the Environmental Protection
   Lederman offers her consumer behavior pre-        (46 percent) and distribution (45 percent)           Agency opened its doors, Harrison notes.
dictions:                                            were the top industries in which turnaround
•	 Clothing—Consumers are holding off on             professionals were working. More than one in         Social media expands business role
    making expensive fashion purchases and           four respondents said their work also includes
                                                                                                          Being relevant in the social media world will
    that trend is likely to continue. Consumers      retail, real estate, automotive, service busi-
                                                                                                          get to the top of more companies’ to-do lists,
    will look for durable and classic clothing.      nesses and health care.
                                                                                                          according to Romji Mahajan, chief marketing
    Dry-clean-only tags won’t be as popular,            “Not only are more companies in need of
                                                                                                          officer of Ascentium Corp.
    which may pinch dry cleaners too.                turnaround professionals, the new Bankruptcy
                                                                                                             Ascentium is finding more of its customers
•	 Food—Restaurants will suffer in the long          Code and the current credit market have
                                                                                                          want or need to tie into various social plat-
    term as more people analyze their credit card    combined such that a significantly higher
                                                                                                          forms to give their customers better insight into
    bills and come face to face with their restau-   percentage of these troubled companies will
                                                                                                          consumer demographics and trends. “These
    rant expenditures. In grocery stores, cou-       have no option other than liquidation,” says
                                                                                                          types of platforms enable companies to be
    pons will see a resurgence not only among        James B. Shein, chair of the TMA Trend Watch
                                                                                                          more relevant to younger and more technically
    the boomer and older generations who             Committee and professor of strategy and man-
                                                                                                          savvy consumers who have flocked to sites like
    have used them previously, but among the         agement at the Kellogg School of Management
                                                                                                          MySpace, Facebook and Twitter,” Mahajan says.
    younger generations as well. Comfort food,       at Northwestern University.
    not gourmet cuisine, will be popular again.
•	 Technology—Online shopping is likely to                                                                not just social Web expansion
                                                     baby boomers talk exit strategies
    experience renewed growth. Mobile market-                                                             Paula Lovell, president of Lovell
                                                     As the baby boomer generation approaches tra-
    ing, such as Twittering, blogging, texting,                                                           Communications and past chairman of the
                                                     ditional retirement age and rides the economic
    will increase to reach the public and let                                                             Federal Reserve Bank of Atlanta, agrees that the
                                                     roller coaster, more will see uncertainty in their
    them know what’s happening.                                                                           Web is where more businesses will go.
                                                     retirement plans. In 2009, more small- and
•	 Health care—More stress-related illnesses                                                                 “In 2009, we expect more businesses to
                                                     mid-size business owners will recognize the
    may come into play but consumers will be                                                              turn to social networking, search engines and
                                                     need to plan for the future, says Bob O’Hara,
    less likely to pay for expensive co-pays on                                                           the Web for public relations exposure, driv-
                                                     president of O’Hara & Company.
    medical tests. Emergency room visits will                                                             ing demand for Web sites with effective search
                                                        O’Hara, who advises on exit planning, says
    increase as the middle class neglects its                                                             engine optimization, SEO,” she says.
                                                     baby boomer business owners realistically must
    health and follows the indigent community                                                                As traditional media organizations consoli-
                                                     know there will probably be no more peaks in
    that uses the ER as a primary care provider.                                                          date, the remaining journalists will be required
                                                     their business cycle. “Therefore, it is imperative
    Lower-cost HMOs are likely to be busier                                                               to produce more; thus they will turn to expert
                                                     for them to think of the bigger picture now. In
    and get more customers than the more                                                                  sources who are easy to find online.
                                                     five or six years when the markets come back,
    expensive PPOs.
                                                     it will be too late,” he says.

14                                                                                                                       VOLUME 9   n   ISSUE 2   n   WInTER 2009
                                                            a pLuMMETinG                                 Steps to watching expenses include:
                                                                                                       •	 planning	well	in	advance	to	shop	for	dis-
                                                            SToCk MarkET                                  counts and monitor currency fluctuations
                                                                                                          for the most favorable exchange rates,
                                                            doES noT MEan                              •	 using	prepaid	foreign	currency	travel	cards.	
                                                            ThaT ConSuMErS                                More people opt for these electronic forms
                                                                                                          of payment over traveler’s checks and cash,
                                                            nEEd LESS; iT juST                            according to a recent industry study,
                                                                                                       •	 using	planning	tools	such	as	Travelex’s	
                                                            MEanS ThaT ThE                                budget calculator (www.cashpassport.com/
                                                            buyinG paTTErnS                               us/budgetcalculator.html) to estimate costs
                                                                                                          of trip basics such as food and beverage,
                                                            arE LikELy To                                 accommodations, public transportation,
                                                                                                          entrance fees, etc.
                                                            ChanGE and                                   While travel for business is still required,
                                                            SpEndinG wiLL                              cost containment is a priority for companies,
                                                                                                       according to the Association of Corporate
                                                            dECrEaSE.                                  Travel Executives.
                                                                                                         Christopher Russell, Travelex’s executive vice
                                                                                                       president of outsourcing, says business travel
                                                                                                       previously was considered a necessary expense
                                                                                                       and generally no one scrutinized that belief.
   “Businesses that understand and collabo-         funding losses for nonprofits                        “We see that starting to change,” he says.
rate with the Web’s influential social media        Nonprofits around the country will see funding     “Travel management and travel spending man-
outlets—blogs, Facebook, Twitter and a host         cuts for a variety of reasons. The government      agement are being discussed in CEO offices
of others—will fare better than those who fail      may reduce or eliminate their funding, their       and board rooms across the country.”
to grasp the significance of this fundamental       endowments took a hit in the stock market
shift,” Lovell says.                                and their contributors are facing their own eco-   fewer dollars spent on off-site meetings
                                                    nomic challenges.
                                                                                                       Travel managers, directors and others involved
it cost containment for many                           Dave Kerr, founder and president of Integrity
                                                                                                       in planning meetings for their companies say
IT decision-makers across government and            House, a substance abuse rehabilitation center
                                                                                                       they will be spending less in 2009.
corporate sectors enter the year citing cost con-   in New Jersey, says the need continues to be
                                                                                                          A Worktopia survey shows that economic
tainment as their top priority, according to a      great but the dollars are shrinking.
                                                                                                       conditions are tightening companies’ plans
survey by CDW Corp.                                    “The problem of addiction didn’t hear about
                                                                                                       to host off-site meetings, including moving
   Forty-one percent of respondents cited cost      our bad economy,” he says. “Our waiting list
                                                                                                       meetings to lower-priced venues and locations
as their top concern. However, 32 percent said      is in the hundreds. We probably will see a
                                                                                                       where less travel is incurred. More rigorous
investment, new products and technologies           funding cut soon and yet somehow we have to
                                                                                                       planning also is anticipated.
was their priority for 2009, a five percentage      maintain services to 366 addicts in recovery in
                                                                                                          Those companies expecting fewer meetings
point increase over 2008.                           our residential program,” he says.
                                                                                                       in 2009 typically are larger organizations with
   “Many times, organizational objectives              An added economic impact for organizations
                                                                                                       more than 2,500 employees. They also are the
are set well in advance, and after navigating       like Kerr’s is that graduates of the program
                                                                                                       ones who are planning to strategically leverage
through the volatile market conditions that         will be competing for employment with hun-
                                                                                                       technology to reduce meeting costs.
have become the defining characteristic of          dreds of thousands of qualified workers being
                                                                                                          “Not surprisingly, larger companies are
2008, IT decision-makers are planning for           laid off.
                                                                                                       more inclined to utilize a technology-based
2009 by planning for the one element they                                                              solution or service provider to source, track
can control—cost,” says CDW Vice President          Planning before plane departs                      and plan their off-site meetings,” according to
Mark Gambill, who handles market insights           International travel will still happen, but        Worktopia. e
for the company.                                    Americans are opting to control costs better in
                                                    2009, according to Travelex.

ThE LEadIng EdgE                                                                                                                                    15

                        top 10 misconceptions about
                        doing business in…Canada
                        By gordon Jessup | fuller Landau

         Canada iS a
                               Canadian companies require                  implemented the federal corporate tax rate will
                               resident directors.                         be 15 percent.

                                                                              Provincial tax rates have also seen reductions
                                Canadian companies can be
                                                                           over the last few years and they range from
                                incorporated under the jurisdiction of a
                                                                           a low of 10 percent to a high of 16 percent.
       SoCiETy. MorE
                        province, a territory or the federal government.
                                                                           Some provinces have announced future tax rate
                        Each Canadian jurisdiction has enacted its own
                                                                           cuts, and once fully implemented combined
                        Business Corporations Act and, while similar,
     Than 5 MiLLion     each piece of legislation has variations. Most
                        Canadian jurisdictions require at least one
                                                                           federal and provincial corporate tax rates will
                                                                           range between 25 percent and 31 percent.

      rESidEnTS LiST
                                                                           Please note that tax paid to the province is
                        resident director and many require a majority
                                                                           not deductible in arriving at federal corporate
                        of the directors be Canadian. This can be an
                                                                           taxable income.
          ThEir FirST
                        impediment for foreign businesses wishing to

                        establish a subsidiary in Canada.
                           Nova Scotia and New Brunswick, however,                Canada does not have any
        LanGuaGE aS     do not require resident directors. By choosing
                        to incorporate in one of these provinces
                                                                                  incentives for businesses.
                                                                                   Companies undertaking scientific

         oThEr Than     a foreign business can set up a subsidiary
                        without the need to find a resident to act as a
                                                                                   research and experimental development
                                                                           in Canada are eligible to claim federal and

          EnGLiSh or
                        director. These corporations can then register     provincial tax credits. The federal government
                        to do business in other provinces, even though     provides a tax credit equal to 20 percent of
                        they may not have any business activity in their   eligible expenditures that is applied against
             FrEnCh.    province of incorporation.                         federal income taxes. Several provinces also
                                                                           provide tax credits for research performed in

                               Canada is a high tax jurisdiction.          their province.
                                                                              Companies that manufacture in Canada also
                                Traditionally Canada was seen as a high
                                                                           enjoy tax incentives. Many provinces provide
                                tax jurisdiction as corporate tax rates
                                                                           tax credits for manufacturing and processing
                                often were greater than 40 percent.
                                                                           undertaken in their jurisdiction. These credits
                        However, Canadian governments (federal and
                                                                           reduce the effective corporate tax rate.
                        provincial) have been successful in balancing
                                                                              The Canadian entertainment and software
                        their budgets, and the resulting surpluses have
                                                                           industries benefit from lucrative film-related
                        allowed them to reduce tax rates.
                                                                           tax credits. These tax credits significantly
                           In the 2008 budget the federal government
                                                                           reduce the cost of Canadian productions.
                        announced reductions in the general corporate
                        tax rate for the next several years. When fully

16                                                                                        VOLUME 9   n   ISSUE 2   n   WInTER 2009
        foreign corporations do not need            of the population of Canada lives within 93            than English or French. A significant portion of
        to file Canadian tax returns                miles of the Canada-U.S. border.                       the population speaks Chinese, Italian, German
                                                       Average winter and summer temperatures              and Punjabi. More than 50 percent of the
        Canada has an extensive treaty
                                                    across Canada vary by location. Winters can            people living in Toronto, Canada’s largest city,
        network. Following the Organization
                                                    be harsh in many regions of the country,               were born outside of Canada.
of Economic Co-operation and Development
                                                    particularly in the north and Prairie provinces,

model treaty, a foreign corporation that is a
                                                    where daily average temperatures are near                       Canada is mostly focused on
resident in a treaty country is exempt from
                                                    5°F but can drop below 40°F with severe                         trade with the United States.
Canadian income taxes on business profits if
                                                    wind chills. Southern Ontario experiences
it does not have a permanent establishment                                                                         While Canada’s primary trading partner
                                                    a moderate winter with average daily
in Canada. If the corporation has an                                                                               is in the United States, in recent
                                                    temperatures around 14°F Coastal British
establishment in Canada it is subject to tax on                                                            years Canada has increased trade with other
                                                    Columbia enjoys a temperate climate with a
income earned through that establishment.                                                                  countries. China has increasingly become an
                                                    mild and rainy winter.
Foreign corporations resident in a non-                                                                    important trading partner. Aside from the
                                                       While winters can be cold, summers in
treaty country are subject to tax on income                                                                North American Free Trade Agreement that
                                                    many parts of Canada can be quite warm.
earned in Canada even if it has no permanent                                                               Canada has entered into with Mexico and
                                                    Summer high temperatures range from 75 to
establishment.                                                                                             the United States, Canada has entered into
                                                    85°F with occasional extreme heat in some
   In 1999 Canada adopted rules in its Income                                                              similar free trade agreements with Peru, Costa
                                                    interior locations exceeding 104°F .
Tax Act that require non-resident companies                                                                Rica, Israel, Chile, the European Free Trade

that are exempt under a tax treaty to file                                                                 Association (consisting of Iceland, Norway,
a federal corporation income tax return to                 Canada’s economy is primarily                   Liechtenstein and Switzerland) and Columbia.
disclose that they are carrying on business                based on resources.                               By reducing trade barriers Canada has not
in Canada and the basis by which they are                    Canada is one of the world’s most             only opened its doors to the world, it has
claiming exemption from Canadian tax.                        important suppliers of agricultural           opened foreign markets to Canadian-based
Failure to file a required tax return can result    products (wheat, canola and other grains)              companies. Foreign companies looking to
in penalties being assessed against the non-        as well as one of the few developed nations            reach into these markets may wish to establish
resident corporation. Many non-resident             that are net exporters of energy. Canada has           manufacturing operations in Canada to gain
corporations are unaware of this requirement        vast deposits of natural gas and oil and is the        lower cost access to these markets.
and surprised when assessed non-compliance          world’s largest producer of zinc and uranium.

penalties of $2,500 for each year of non-           It is also a world leader in many other natural                        Canadians enjoy
compliance.                                         resources such as gold, nickel, aluminum,                              free health care.
                                                    and lead. Yet, with all of these resources the

                                                                                                                          Canada has a nationalized
       foreign businesses can sell to               Canadian economy is dominated by the service
                                                                                                                          health care system. The federal
       Canadians without concern for                industry, which employs about three quarters
                                                                                                           government ensures access to health care
       Canadian sales taxes.                        of working Canadians.
                                                                                                           through the Canada Health Act. This act provides
                                                       Canada has a highly skilled workforce
        Canada has a national sales tax, the                                                               criteria provinces must meet to be eligible for
                                                    and many universities known for their
Goods and Services Tax. Non-residents who are                                                              federal transfer payments. Federal transfers are
                                                    business, engineering and computer science
carrying on business in Canada are required to                                                             important for the provinces because as they are
                                                    programs. Companies such as Research In
register, collect and remit this tax. As a value-                                                          constitutionally responsible for providing health
                                                    Motion, producer of BlackBerry™ wireless
added tax they may be eligible to claim tax                                                                care services. Without federal transfers many of
                                                    communication, are the product of these
credits for GST that they pay on their inputs.                                                             the provinces would be unable to raise sufficient
   Canada collects tax on all importations of                                                              funds to operate their health care system.

goods. This applies to non-residents that act                                                                 For the federal government to be in a
as the importer of the goods. Without proper                all Canadians speak french.                    position to provide the necessary transfer
planning the non-resident may be incurring                  Canada has two official languages,             payments to the provinces it must raise
non-recoverable tax when selling goods to                   English and French. English is spoken          significant tax revenues. Canadian individuals
Canadians.                                                  by more than 85 percent of Canadians           have not experienced the significant tax
                                                    and French is spoken by just 30 percent of             reductions that corporations have seen in recent

       Canada’s climate is cold.                    Canadians. Eighty-five percent of French-              years. Universal health care is provided to all
                                                    speaking people live in the province of Quebec.        Canadians at the cost of higher personal taxes. e
       Canada is the second largest country in
                                                    Other than Quebec, only New Brunswick has a
       the world (only Russia is larger). Much
                                                    statement of official bilingualism.                    If you would like to discuss any of the above in detail or
       of this land mass is in the north where                                                             would like further advice about setting up business in
                                                       Canada is a multicultural society. More than 5
population is sparse. Approximately 75 percent                                                             Canada, please contact Gordon Jessup at (416) 645-6508
                                                    million residents list their first language as other   or gjessup@fullerlandau.com.

ThE LEadIng EdgE                                                                                                                                                 17

in a nutshell by Chris de Santis
iMpEndinG rETirEMEnTS poSE nEw ChaLLEnGE For CoMpany

Q: our company employs several hundred                The retirement age was set at the age it         people who work with individuals inside the
people—35 percent of whom will reach               was because most people, at the time, didn’t        organization to identify resource needs, then
traditional retirement age in the next five        live much beyond it and therefore the cost          create the project scope and determine its
years. What should we do now to ensure a           of carrying people wasn’t burdensome.               worth and costs. A budget is created and the
smooth transition?                                 Life expectancies have changed. What isn’t          project is posted for bidding by the network
                                                   changing are work habits.                           or passed directly to members of the “alumni.”
                                                      Boomers have worked hard all of their            The trick is to make the project interesting
                                                   lives. I for one do not see them leaving work       enough to attract talent.
                                                   where they are fully engaged for 10 or more            There are any number of ways to retain and
                                                   hours a day and suddenly sitting around and         attract talent. First off, you will need a talent
                                                   gardening, golfing or pursuing any number of        bank that identifies all the skills available
                                                   leisure activities. While that might be fun for a   and who possesses them. Next, you will
                                                   short time, it will not meet the needs of a large   need incentives. This is why it is important
                                                   group of formerly productive individuals. What      to highlight the costs of the scoped project.
                                                   you will see is a slew of second careers, which     Once you know the costs, you can estimate
                                                   brings us back to what to do about those            the worth of the project to the organization
                                                   people retiring.                                    and price it accordingly.
                                                      Here is the challenge for savvy businesses.         Back to your original concern regarding
                                                   If you have a workforce highly dependent on         the transition of knowledge. What I didn’t
                                                   the intellectual capital of people who are going    mention was the value of both mentoring
                                                   to retire. If that workplace is finding it hard     and knowledge management. If you have a
a: Your question is one that will impact a large   or impossible to replace those individuals in       good approach to mentoring, then you are
number of companies in the next few years.         the interim, then the workplace has to create       developing the next generation to take the
The first of the baby boom generation just         incentives and structures that entice these         reigns of the organization. But, I would argue,
reached the age of Social Security eligibility     potential retirees to remain or continue to         since we are all living longer and since we all
and soon will reach the traditional retirement     contribute in a limited capacity. The challenge     want to contribute continuously, expect to see
age of 65. On their heels are another 30 or        for most businesses is structure and reward.        Alumni Talent Management as an HR function
40 million Boomers.                                   Most businesses are structured around            someday soon. Also, because of the difficulty
   According to The Economist, there will be a     advancement. If you do well, you will               in capturing institutional knowledge, expect to
management talent shortage by 2012 that will       move up. If you move up you take on                 see that same talent manager scoping out work
continue for a few subsequent years as more        more responsibility. If you take on more            and negotiating with the retirees for “gigs.”
and more managers leave the workplace. While       responsibility, you will receive greater reward.       The good news is that healthy, talented and
this sounds dire, if you look at it in more        It is a virtuous cycle, supposedly.                 energetic people who still wish to be involved
detail, you might see it more as an opportunity       The new world order is closer to a loose         in making contributions to the organizations
than a threat.                                     network of contracted experts who only do           or fields of work they are passionate about
   I would first like to start with this issue     specific tasks or assignments based on defined      will continue to have an opportunity to do so.
of “retirement.” The concept of the golden         needs. This contractual arrangement is much         The bad news is that retirement dinners will
years in retirement was and remains largely a      like outsourcing on a local scale, with a           never be the same and that watch you were
construct. It was first marketed to the public     core group of full-time employees acting as         expecting at your retirement might end up
by the housing developer Dell Webb as a            what I would term, “scopists.” Scopists are         being a BlackBerry. e
way to sell homes in “Sun City” community
model. The idea stuck and became rooted
in the American psyche. At the time, the
organizational “man” dreamed of the day when                                     do you have a workplace question you want
he or she would be able to say goodbye to                                         answered? What do you want to know to make
work for good. Thus, the concept of retirement                                     work a better place? Send your questions to
became the ultimate brass ring. The reality is a                                   deSantisCP@aol.com to get Chris deSantis’ two
bit different.
                                                                                   cents as to what he thinks you might want to do.

18                                                                                                                    VOLUME 9   n   ISSUE 2   n   WInTER 2009
The members of the Leading Edge alliance
are leaders in many key markets, including:
                                                                              the Leading edge alliance is an international professional
afghanistan              Indiana                   Paris                      association of independently owned accounting and consulting firms. The
argentina                Indonesia                 Peru                       alliance enables member firms to access the resources of a multibillion-dollar
atlanta                  Iowa                      Philadelphia
                                                                              global professional services organization, providing business development,
australia                Ireland                   Phoenix
austria                  Israel                    Philippines                professional training and education, and peer-to-peer networking
Bahrain                  Italy                     Pittsburgh                 opportunities nationally and globally, around the corner and around the world.
Baltimore                Jordan                    Poland
Bangladesh               Knoxville                 Providence
Belgium                  Kenya                     Puerto Rico                Members are top quality firms who are very successful, have deep client
Bolivia                  Korea                     Richmond                   relationships, and strong ties to the community. The alliance provides
Boston                   Kuwait                    Reno
Brazil                   Las Vegas                 Romania                    members with an unbeatable combination: the comprehensive size and scope
British Virgin Islands   Latvia                    Russian federation         of a large multinational company while offering their clients the continuity,
Buffalo                  Lebanon                   San francisco
                                                                              consistency and quality of service of a local firm. Member firms have access to
Bulgaria                 London                    Saudi arabia
Cayman Islands           Los angeles               Scotland                   the	best	and	brightest	team	of	business	advisors—a	peer-to-peer	connection	
Chicago                  Luxembourg                Seattle                    that provides the right business solutions for clients.
Chile                    Macedonia                 Senegal
China                    Madison, WI               Serbia
Cincinnati               Malaysia                  Singapore
Cleveland                Malta                     Slovakia                   the Leading edge offers:
Colombia                 Mauritius                 Slovenia
Croatia                  Mexico                    South Carolina             •	 Access	to	the	best	and	brightest	CPAs	and	business	advisors—a	peer-to-peer	
Cyprus                   Miami                     Spain                         connection that provides the right solutions for clients.
Czech Republic           Michigan                  Sweden
dallas                   Minneapolis               Switzerland                •	 Innovative,	practice-proven	strategies	for	improving	performance	in	
dayton                   Missouri                  Taiwan                        management, business processes, finance, operations, information technology
denver                   Moldova                   Thailand                      and marketing.
dominican Republic       Montenegro                Tokyo
Ecuador                  Montreal                  Toronto                    •	 A	leading	knowledge	resource	for	multi-disciplinary	information	and
Egypt                    Morocco                   Tucson                        industry-specific expertise responsive to clients’ unique needs.
El Salvador              nashville                 Tunisia
finland                  nebraska                  Turkey                     •	 The	strength	and	reputation	to	attract	the	highest	quality	team	members.
fort Lauderdale          netherlands               Ukraine
ghana                    new Orleans               United arab                •	 The	Alliance	offers	accounting	and	consulting	services	through	a	global	network	of	
germany                  new Jersey                Emirates                      firms with more than 15,000 professional staff in more than 430 offices.
greece                   new York                  Uruguay
guatemala                new Zealand               U.S. Virgin Islands        •	 The	Leading	Edge	Alliance	offers	world-class	business	advisory	expertise	and	
harrisburg, Pa           north Carolina            Venezuela                     experience with innovation, progressiveness and quality.
hartford                 norway                    Washington, d.C.
hong Kong                Orange County, Ca         Vietnam
honolulu                 Oregon                    Virginia/West Virginia
houston                  Pakistan                                             To find out more about The Leading Edge alliance, visit
                                                                              www.LeadingEdgealliance.com or contact Karen Kehl-
      Visit LeadingEdgeAlliance.com for a detailed listing of member firms.   Rose, president, at (630) 513-9814 or kkr@The-LEa.com.

ThE LEadIng EdgE                                                                                                                                                   19
                        prsrt std
                       u s postage
                      cleveland oh
                     permit no. 1702

9690 Deereco Road
Suite 500
Timonium, MD 21093
(410)	828-CPAS

To top