FETCH! delivers fun with learning for 5th & 6th graders

November 29, 2010

Walter J. Eckert, CPA, CVA
Russell, Eckert, Mealer & Kalb, CPA’s Inc.

Fetch_logo_120x60 The morning of November 10 started a little noisier than usual for me. I’m a CPA, but instead of heading into my office, I headed to London Elementary School in Madison County to lead 5th graders in a new game called FETCH! This wasn’t for gym class and the students weren’t running after sticks, this was for math class and the students were learning about financial literacy.

FETCH! stands for Financial Education Teaches Healthy Habits. The game is sponsored by The Ohio CPA Foundation to teach kids important concepts like saving and budgeting. Plus, I was able to tell the kids what it’s like to be CPA and work in the accounting profession.

FETCH! in itself is a simple game. Using a dog park concept, the students are divided into teams and each team takes ownership of an imaginary dog, which they must name and then assume responsibility for the financial ups and downs of owning a pet. The goal of the game is to purchase four items: collar, leash, food and water, and a dog bone. At the end, the team that has those four items and the most money in their imaginary savings account wins.

In the first couple rounds of the game all the teams were eager to roll the dice and see if they could earn more money. The room was loud as the teams had fun hoping to build their savings balance. This was all fine and good until…one of the teams got caught by the dog catcher for not having a leash or collar.

You could almost hear the click in their heads. Each of the teams began to realize that while the money in the savings account was good to have, there were responsibilities and expenses for their dog that needed to be taken care of. More importantly, they realized that there were risks for NOT taking care of their financial responsibilities.

From that point, strategizing became part of the game plan for each team. Whether they decided to spend some of their savings to buy one of the required items or roll the dice to see what might happen in the dog park, they planned each move. They were saving and spending and budgeting to make sure their dog and their team had what it needed.

A couple teams saw their saving account balances hit $0 and one team went into the negative. There is no credit allowed in FETCH! so these teams had to build up their savings accounts again to continue purchasing the four required items. Along the way, the teams learned money management terms such as earnings, expenses, auditing, donations and many others.

FETCH! was an absolute success in this classroom. I was impressed (as was their teacher, Mr. Reeser) at how quickly the kids picked up on the concept of budgeting for their expenses. The collar and the leash were the two most expensive items they had to buy, but nearly every team made sure they saved enough to buy them first to avoid the penalty of the dog catcher. The cheaper dog bone (the dog’s luxury item) was typically the last item purchased. They learned to budget the “needs” before the “wants” – a concept that many adults have problems with.

As a father to two young boys I know that teaching the concepts of budgeting, earning and saving takes time and practice. If money grew on trees it would be easy to give our children everything they ask for. But, it doesn’t. So parents and teachers need to give children the right tools and information to become smart money managers. FETCH! is a great tool to use to start the conversation with children, have them practice the concepts and get them on the path towards financial literacy. Plus, they will have a good time too!


IFRS still a reality

March 2, 2010

By Pete Margaritis, CPA

The news from the SEC last week wasn’t earth shattering, it was still a commitment by the Shapiro administration to the converging of U.S. GAAP and IFRS that was originally the SEC plan in November 2008, with a slight modification. In the original SEC roadmap, there was a timeline of 2011 to make the IFRS transitioning determination. This date, although not concrete, has not changed. The milestones set out in the original plan are for the most part not changed. What did change is that the mandatory implementation date for large accelerated filers has been pushed back one year from 2014 to 2015. This should not be a surprise because of a couple of reasons. The change in administration, the economic crisis, and the overwhelming comment letters stating that companies will need more time all support the SEC’s decision.

I have always believed that this process is more about converging standards than adopting IFRS. The original goal set out between the FASB and the IASB in the Norwalk Agreement was toward convergence of IFRS and U.S. GAAP, not the adoption of IFRS. The convergence of standards has been put on a fast track because of calls from the G20 and this can be seen on the IASB project page. Many of the joint projects are set for converged standards by 2011.

The SEC established a work plan team that will issue its first report by October 2010. This will be the group to keep an eye on this coming year because they will be the pulse of when a “date certain” is set.

I do believe that we will ultimately have one set of high quality, country-neutral standards that will be used globally, including the U.S., in the next 3 – 5 years. It will just take a little longer than many wish.

However, that doesn’t mean that we should put off the process of IFRS education until the “date certain” has been set. During this time, we as CPAs need to become bilingual because we will be dealing with IFRS sooner than we think. For example, a German company gains “control” of a U.S. company and the U.S. company has to consolidate its financials into the German parent company. The U.S. company will have to adopt the same accounting policies (IFRS) as its parent. This adoption is usually done in a very short time frame and this situation is happening more and more today.

What if this happens to your client and you don’t have the knowledge to assist them in their transition to IFRS? That client will find a firm who has the knowledge and expertise. Or think about the other side of this situation. You could begin to develop a new line of business in IFRS consulting so you can be the firm that new client seeks.

In conclusion, being bilingual today might just be the right business move for you to make while the SEC goes through their due process.

The silver lining in the Stimulus Act

March 11, 2009

Over the last few weeks, there’s been a great deal of media focus on the $787 billion American Recovery and Reinvestment Act (ARRA) – a.k.a., the most recent Stimulus Act. The Act will soon be followed by the “Making Home Affordable” Program. While government spending isn’t always the answer, the Stimulus Act presents a number of opportunities for individuals to save some serious money and get help when they need it the most – a silver lining if you will.

One of the “winners” in the legislation is those who have lost their job.  David M. Reape, CPA, a senior manager with Ciuni & Panichi in Cleveland and chair of the OSCPA Tax Committee, told OSCPA’s editors: “Individuals, particularly those who have recently lost their jobs, stand to gain the most from this package. For the individual who has been laid off, the government is subsidizing much of their COBRA payment. There is also a provision that allows individuals to exclude from income up to $2,400 of unemployment benefits received in 2009. Those are huge benefits for the recently unemployed.”

Former employees must have been enrolled in their employer’s health plan at the time they lost their jobs. The former employees will now only have to pay 35% of the cost of the COBRA coverage – not the full 100%.

More silver lining: the legislation extended the qualifying period for the homebuyer credit to 12/1/2009. For purchases made after 12/31/2008, the credit is $8000 and repayment is not required.

According to Michael Mares – one of OSCPA’s most popular tax instructors and a federal tax expert, “Homebuyers can treat a purchase made in 2009, as if it was made in 2008. Homebuyers can even file a modified return for 2008 and get the credit in 2009, rather than having to wait until filing your 2009 return.”

OSCPA Hot Topic WebinarsMares joined Lynn Nichols in an OSCPA hot topic webinar on March 6 and reviewed the many credits, extensions and incentives contained in the Stimulus Act with over 150 participants. “This is a very complex set of rules,” Mares told the virtual audience. “But one that is filled with significant benefits for those that really need them right now.”

An even larger silver lining: The Stimulus Act provided AMT relief – extending the individual and MFJ exemption.

“The problem with this is they haven’t increased the phaseout number since 1986, which means there are people that shouldn’t be burdened with the AMT but they still are,” Nichols said.

Mares added, “The basic problem is that since Congress has waited so long to reform the AMT, it will be cheaper to repeal the Internal Revenue Code than it would be to repeal the AMT.”

The Economic Stimulus and Your Tax ClientsNow here’s a silver lining for you: this webinar is now in the OSCPA Online Library. That means that any OSCPA member can listen to this webinar – and any of the other 100+ titles – any time at no charge. Get up to speed on the most significant business and individual credits, extensions and incentives without reading through 3,000 pages – unless you have a lot of time on your hands!

What does the future hold for IFRS?

March 3, 2009

Reading the subtle – and not so subtle – communications from the SEC make it nearly impossible to anticipate the direction the “new” SEC is going to travel with IFRS.

Under former SEC Chair Christopher Cox, the SEC moved toward a new frontier. The commission implemented IDEA – the replacement to the EDGAR database, passed XBRL for financial statements and mutual funds and proposed a landmark roadmap to transition the U.S. to the International Financial Reporting Standards (more commonly referred to as IFRS).

While most decision-makers believed the move to IFRS was inevitable, a loud majority still voiced their opposition saying the roadmap timeline was too aggressive. As Cox finished his term as SEC chairman, the SEC rushed to get the roadmap out for comment.

Then the recession took center stage. The Stimulus Act was passed in October 2008 to help the unstable economy. Job losses were mounting. Fingers began pointing to fair value and financial institutions were demanding the SEC suspend fair value. Congress mandated that the SEC undertake a study of fair value accounting. Understandably, the roadmap was delayed.

Things then went from bad to worse. The alleged Bernie Madoff $50 billion Ponzi scheme broke. And fingers again pointed to the SEC. Investigators failed to investigate many repeated allegations against Madoff over 15+ years. 

Nonetheless, even though mired in the recession and the Madoff scandal, the SEC released its proposed roadmap for IFRS. While the roadmap was significantly delayed, there was only one major change made in the timeline.

Then newly elected President Barack Obama nominated Mary Schapiro as the new chair of the SEC. A former SEC commissioner, Schapiro said from the very beginning, “I will not be bound by the existing roadmap that’s out for public comment.” And she has not. Schapiro has come in and is reinvigorating the SEC as the securities watchdog for the nation – and promises not to take it easy on corporate fraudsters.

Already Schapiro has:

Her actions and her words have made many wonder about the roadmap and the outlook for IFRS. Will the nation actually transition to IFRS or is it just being delayed? How long will the delay be? Six months? Six years? Given the current economy and the many calls from lawmakers to reform the nation’s financial regulatory system, including the SEC, this may not be the ideal time to be completing a transition such as this – one that will dramatically change financial reporting, the accounting profession and possibly litigation.

Right when many were ready to put on the brakes completely, Schapiro met with Sir David Tweedie, chair of the International Accounting Standards Board, in mid-February. Tweedie made his case for keeping the transition on its current – or close to – the current timeline. It’s also been reported that Schapiro has advised staff to review the current proposal to identify elements that can be used.

Actions do speak louder than words and the only real action to date is extending the deadline to comment on the proposed roadmap to April 20.

Next steps from the SEC . . . your guess is as good as mine. What are your expectations? Do you think the U.S. will transition to IFRS in the near future or has been this delayed extensively?

Take a look at some of these IFRS resources and recent news stories:

OSCPA IFRS Issue Monitoring home page

  • Investment executives favor IFRS
  • Big four firms push IFRS education efforts PwC unveils $700K grant, Deloitte readies materials

In May, The Ohio Society is also starting an International Special Interest Section. Watch for more details to come soon.

Investing in Irrational Markets

February 16, 2009

“The world is greedy – it still believes in magic,” summarized Tom Davidson, CFP, Summit Financial Strategies, in explaining market behaviors in last week’s personal financial planning Hot Topic Webinar on post-modern portfolio theory.

While I am most certainly not a financial planner, I enjoy quick updates that make me a more well-rounded professional in managing a variety of functions within business operations. I feel it’s an important part of our core value of professional competence, and Davidson was entertaining and timely in hitting the issues that I’m worrying about today.

Over the years, we’ve been comforted by the diversification of our portfolios, secure in our knowledge that by regularly investing small dollar amounts over a long period of time, dollar cost averaging will earn us a return commensurate with our stomach for risk, as reflected in our asset allocations…you’ve heard all of this before, and probably teach it regularly to your customers or clients.

Per Davidson, what changes in an irrational market is the meaning of “diversification” in this scenario. In yesterday’s portfolio theory, we believed that asset allocation among a variety of stock and bond funds, including some cash and some exposure to international markets and smaller companies, provided us with diversification. In irrational markets, this type of asset allocation may be insufficient.

Davidson studies correlations between types of investment classes, and has found that in an irrational market (defined as no longer tied to underlying fundamentals,) the correlation in terms of direction of movement of various asset classes grows closer and closer to 1.0. In other words, they all move in the same direction, more or less the same amount – i.e., no diversification benefit.

We are definitely in a period where there will be greater volatility, and modern portfolio theory takes advantage of volatility by combining individual volatile assets into portfolios to reduce risk. But as we’ve learned from the mortgage market, that theory doesn’t work either when all of the individual assets move in the same direction.

Post-modern portfolio theory looks for investment alternatives that have a negative correlation to your other investments. In an increasingly global marketplace, the size of business or nation of origin are less likely to provide negative correlations to your standard asset classes. So the trick is to identify new asset classes that provide less correlation. But one fault of this approach is that it relies on historical correlations, rather than forward-looking projections.

So how do we look forward in expanding the asset classes we are willing to consider in our investment strategies? Not being a registered investment advisor, I won’t attempt to suggest the right assets to select in today’s market. But bottom line, we may need to open our minds to what may be better “diversifiers” that are acceptable for our businesses’ or our own personal risk tolerance.

Davidson recommends “Asset Allocation” by Roger Gibson (2008,) “The Only Guide to Alternative Investments You’ll Ever Need” by Swedroe and Kizer (2008,) and “Pioneering Portfolio Management” by Swenson (2009 – particularly for institutional investing.)

As I have no specialization in financial planning, this simply opens my eyes for discussions with our professional investment advisor. But what I’ve learned most significantly is that you can gain critical knowledge in small chunks that makes you more effective as a CPA professional.

Check out the OSCPA online library for past hot topic Webinars on your topics of interest.

Mentors needed

February 9, 2009

Do you remember your first mentor? They may have had a significant impact on your career. Maybe it was your first supervisor. Where would you be today without the guidance and advice you received from your mentor?

As I look back, I realize that one of the most valuable gifts my mentor gave to me was his time. Time to listen, time to coach, time to make me feel like I was worth the investment. In today’s business world where everything moves at the speed of light, time is a rare luxury. Everything moves so fast, from our schedule to new technology. Have you taken the time to make yourself available as a mentor?

Just as generations and the workplace have changed, so has mentoring. According to Les McKeown, president and CEO of Deliver The Promise, a Tiburon, CA consulting firm that specializes in mentoring, “Today, mentoring is less power–related. It’s less about seniority and teaching, and more about sharing and development.”

Mentoring is about the connection and relationship created. And while there is a clear mentor and mentee, both stand to gain from the mentoring relationship. The “protégé” is able to identify a role model and learn from their advice and guidance. They develop a confidant to turn to for help with the tougher workplace and career changing decisions. Remember, we are most likely talking about Gen Yers – a generation that puts a clear priority on having give and take, and an office culture that is rewarding, nurturing and empowering to them.

What do you stand to gain from being a mentor?  If nothing else, you’re going to have the opportunity to give back.

Do you have time to be a mentor? As your career developed, you know how important it was to have a mentor. Is there any reason to believe it is any less important to have a mentor today?

I know I was fortunate to have a mentor – someone who truly took an interest in me, my experiences, my career. To this day, when I need to talk to someone, he is still one of the first people I call. Mentoring is so important to the individual – for their career and confidence – and to the business – for recruiting and retaining employees.

Now, it’s my turn to be a mentor. And it’s yours. It’s all too easy to say “when I have time  . . .” or “I’ll sit down and talk with him tomorrow.” Make tomorrow today. Tag, you’re it.

Word from NASBA – “We will not be disrespected”

January 16, 2009

Audience members at the December meeting of the Accountancy Board of Ohio got to hear first-hand the priorities of guests Tom Sadler, Chairman of the National Association of State Boards of Accountancy (NASBA,) and David Costello, NASBA’s Executive Director.

Topping Sadler’s list is peer review – obtaining peer review as a statutory requirement in states that don’t have it, and achieving state board oversight in states that do (Ohio already has statutory peer review and state board oversight). NASBA also aims to look “under the curtain” for reviews administered at the national level, which have no state board oversight, including achieving an oversight process for desk reviews conducted at AICPA to “ensure independence and that peer review is truly a public interest process.” Sadler noted that he was pleased with AICPA and state society cooperation toward this objective.

This priority was followed by the “Four E’s”:

  • Exam – Renegotiating the contract for the computerized CPA exam, and addressing international candidacy for the CPA exam
  • Education – Protecting the 150-hour requirement to sit for the exam
  • Ethics – Is there opportunity for convergence in state ethics requirements and the AICPA code of professional conduct?
  • Enforcement – As governmental agencies increasingly refer cases to the AICPA, how can these be transitioned to state board enforcement?

Sadler commended Ohio’s reputation for enforcement, but noted that nationwide, “we will not be disrespected.”

Costello spoke to state boards’ response to the prospect of international standard-setting, noting that NASBA had concerns at this time about committing state boards to everything promulgated by international standard-setters. A committee had been formed to address implications of global strategies, including international standard-setting, international candidacy for the CPA exam, and convergence of ethics requirements.

A controversial issue within the profession has been movement by some states to allow candidates to sit for the exam with 120 hours of education, but still requiring 150 hours for state licensure. NASBA research finds no detriment in passing rates for sitting at 120 hours, but the topic will be discussed in 2009 regional meetings.

Contrary to NASBA’s views, proponents of retaining the 150-hour requirement to sit for the exam criticize the 120/150 model for chipping away at the intent of the original 150-hour legislation, and communicating the wrong message to the public about the level of education and preparation required to become a CPA. Some critics also question the validity of the NASBA research.

Costello again commended Ohio as a leader in adopting model accountancy law, particularly in the area of mobility for CPAs practicing in multiple states.

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