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Week of September 9, 2016

SEC Steps Up Scrutiny of Adviser Use of Social Media

( Investment News ) September 1, 2016 – The Securities and Exchange Commission (SEC) is taking a closer look at advisers' use of social media by making their activity part of their annual disclosures to the agency. In a recently released final rule, the SEC said it is adding to Form ADV a section that asks advisers to list the addresses of their pages on Twitter, Facebook, LinkedIn and other sites. Previously, the document only asked for the address of an adviser's own website. “Our staff may use this information to help prepare for examinations of investment advisers and compare information that advisers disseminate across different social media platforms, as well as to identify and monitor new platforms,” the rule states. The rule also amends the ADV to require more data from advisers about their separately managed accounts and a longer list of their branch offices.

IRS Warns of a New Wave of Attacks Focused on Tax Professionals

( IRS ) September 2, 2016 – The Internal Revenue Service (IRS) warned tax professionals of a new wave of attacks that allow identity thieves to file fraudulent tax returns by remotely taking over practitioners’ computers. As part of the Security Summit effort, the IRS urged tax professionals to review their tax preparation software settings and immediately enact all security measures, especially those settings that require usernames and passwords to access the products. The IRS is aware of approximately two dozen cases where tax professionals have been victimized in recent days. The IRS, state tax agencies and the tax industry – working as partners in the Security Summit – recently launched the Protect Your Clients; Protect Yourself campaign to increase awareness that criminals increasingly are targeting tax professionals and the taxpayer data they possess.

Tax Refunds Will be Late for Some in 2017

( CNBC ) September 2, 2016 – Some people may wait a little longer for their tax refunds next spring. Households that file early and claim the earned income tax credit or the additional child tax credit won't see their refunds until after Feb. 15. The delay affects only those taxpayers. The Internal Revenue Service said the delays are the result of a new anti-fraud regulation that will take effect in 2017. The rule will give the agency more time to sniff out phony returns and prevent refunds from going to scammers. The IRS said most refunds will be issued within the normal time frame of 21 days.

CFOs Focus on Strategic Tasks, Automation

( CPA Practice Advisor ) August 30, 2016 – CFOs’ plan on being more strategic on strategic financial planning and analysis functions and fulfilling their role as drivers of financial transformation across organizations. That's according to a new study by Adaptive Insights, a provider of cloud corporate performance management. The survey queried over 300 CFOs around the globe about their expectations for FP&A team staffing, composition and capabilities, with a goal to understand the state of the FP&A function today and into the future. The survey also queried CFOs on their confidence with global economies and their ability to accurately forecast sales amid today’s market uncertainty.

Final Regulations Amend Definitions of Marriage

( Journal of Accountancy ) September 1, 2016 – In response to the U.S. Supreme Court’s decisions that the federal government must recognize and states must allow same-sex marriages (Windsor, 133 S. Ct. 2675 (2013); Obergefell v. Hodges, 135 S. Ct. 2584 (2015)), the IRS finalized proposed regulations issued in October 2015 under Sec. 7701 amending the definitions of “spouse” and “husband and wife” to reflect those decisions (T.D. 9785). The final rules make a few changes from the rules proposed in REG-148998-13, in response to comments. Under the final regulations, for federal tax purposes, the terms “spouse,” “husband,” and “wife” are defined as an individual lawfully married to another individual. “Husband and wife” is defined as two individuals lawfully married to each other. These definitions apply regardless of the taxpayers’ sexes. The IRS did not adopt a suggestion that the regulations refer specifically to same-sex marriage so that they would be gender-neutral.

Are Accountants Learning the Wrong Lessons?

( CPA Trendlines ) By Rick Telberg, August 24, 2016 – CPAs are saying one thing and doing another. And the discrepancy bodes ill for the profession's economic health. The survey on professional skills and the goals of accounting firms, being conducted with the Ohio Society of CPAs and consultant Michael Ramos, is turning up a curious mismatch. It seems, at first blush, that CPAs are studying for certain skills while reporting that something else is essential to their success. The survey asks accountants about their CPE plans for the upcoming year – what skills they plan to hone, what skills their practices need. It also asks what the “essential ingredient” is that a firm needs to achieve its goals. You’d expect to see similar answers to the two questions, yet the answers matched up only occasionally.

Companies Plan to Hire – If They Can Find Workers

( CGMA ) September 1, 2016 – U.S. companies appear to be pushing ahead with expansion plans and either hiring new workers or training existing ones, despite uncertainty in the run-up to the November presidential election, a new CPA survey indicates. The quarterly Business & Industry Economic Outlook Survey, released Thursday by the American Institute of CPAs, also indicated a struggle to fill open positions with qualified workers. The CPA Outlook Index, a nine-component measure of economic sentiment, rose to 69 in the third quarter, up one point compared with the previous quarter. Although it is down slightly from the third quarter of 2015, the index has risen two consecutive quarters, buoyed by increased optimism about components such as profits, expansion, employment, and training. An index measure above 50 indicates a positive outlook.

5 Tips to Help New Managers Overcome Top Challenges

( The Business Journals ) September 1, 2016 – New managers can face a number of challenges, whether they are first-time managers or just new to an organization. If you’re a first-time manager who has recently been promoted, you may find that you now struggle to balance your individual responsibilities with time spent overseeing staff. If you are suddenly supervising the team you were once a part of, the challenge might be creating new boundaries with former peers. Even if you are a veteran leader with years of management experience, navigating the cultural nuances of a new organization may still be challenging. More than merely adjusting to a new role, starting a new management position requires adapting to the personalities, work styles, and needs of your team. To that end, whether you are a first-time manager, or starting as a manager for a new company or department, the following tips might help make the transition a bit easier.

Artificial Intelligence – The New Superpower for Compliance

( Corporate Compliance ) By Anant Kale, August 31, 2016 – Today’s automated Enterprise Resource Planning (ERP) systems are designed with the intention of streamlining information delivery and decision-making, as well as providing decision-makers with sufficient information to make informed decisions and then providing electronic decision-making and audit tracking. The best of both worlds: speed and process accuracy, plus compliance. However, reality is far different.

SEC Steps Up Scrutiny of Adviser Use of Social Media

( Investment News ) September 1, 2016 – The Securities and Exchange Commission (SEC) is taking a closer look at advisers' use of social media by making their activity part of their annual disclosures to the agency.

In a recently released final rule, the SEC said it is adding to Form ADV a section that asks advisers to list the addresses of their pages on Twitter, Facebook, LinkedIn and other sites. Previously, the document only asked for the address of an adviser's own website.

“Our staff may use this information to help prepare for examinations of investment advisers and compare information that advisers disseminate across different social media platforms, as well as to identify and monitor new platforms,” the rule states.

The rule also amends the ADV to require more data from advisers about their separately managed accounts and a longer list of their branch offices.

Incorporating social media on the ADV, the foundation of the SEC's regulation of investment advisers, is the latest development in the SEC's effort to get a handle on the rapidly growing area.

In 2012, the SEC issued a risk alert indicating that advisers must retain records of their social media communications and warned that advisers' reference to a “like” feature on a third-party website could be deemed a testimonial.

In 2014, the SEC Division of Investment Management issued further guidance on how the agency would interpret the testimonial rule in the context of social media.

The Financial Industry Regulatory Authority Inc., the broker-dealer self-regulatory organization, put out similar social media guidance in a 2010 regulatory notice and a follow-up notice in 2011.

With the new ADV rule, the SEC is formalizing the attention it's paying to social media.

“It's a logical next step,” said David Tittsworth, counsel at Ropes & Gray. “This is a fairly modest reporting requirement.”

With social media addresses appearing on an ADV, it will be easier for the SEC to locate an adviser's online activity.

The agency “may have some kind of internal system” for assessing information posted on social media and using it to determine which advisers pose the most risk, said Kevin Scanlan, a partner at Kramer Levin Naftalis & Frankel.

“If they see something they don't like on a social media page, they may put you higher on the list for inspection,” Mr. Scanlan said.

The new rule is a reminder to advisers that the story of their firm should not vary based on where it's being told.

“It will be even more critical that whatever information advisers are putting in their contracts, in their Form ADV, in their marketing materials are not inconsistent with what they're saying on social media,” said Karen Barr, president and chief executive of the Investment Adviser Association.

The SEC is “going to follow up, if there are discrepancies,” she said.

The agency itself is trying to be consistent in how it regulates advertising regardless of the medium.

“With the evolution of social media, they want to make sure that the same rules that apply to a pitch book or marketing also apply online,” Mr. Scanlan said.

The agency also is showing that it's keeping up with online developments.

“This is a recognition of how prevalent these social media sites are,” Mr. Tittsworth said of the new SEC rule. “Younger investors are using social media all the time. This reflects the SEC's awareness of those trends.”

IRS Warns of a New Wave of Attacks Focused on Tax Professionals

( IRS ) September 2, 2016 – The Internal Revenue Service warned tax professionals of a new wave of attacks that allow identity thieves to file fraudulent tax returns by remotely taking over practitioners’ computers.

As part of the Security Summit effort, the IRS urged tax professionals to review their tax preparation software settings and immediately enact all security measures, especially those settings that require usernames and passwords to access the products. The IRS is aware of approximately two dozen cases where tax professionals have been victimized in recent days.

The IRS, state tax agencies and the tax industry – working as partners in the Security Summit – recently launched the Protect Your Clients; Protect Yourself campaign to increase awareness that criminals increasingly are targeting tax professionals and the taxpayer data they possess.

"This latest incident reinforces the need for all tax professionals to review their computer settings as soon as possible," said IRS Commissioner John Koskinen‎. "Identity thieves continue to evolve and look for new areas to exploit‎, especially as our fraud filters become more effective. The prompt identification of these attacks is another example of the great benefits that result from the close‎ working relationship the IRS now has with the tax industry and the states through the Security Summit initiative. Information is flowing more rapidly between our groups as we continue‎ our efforts to protect taxpayers."

These attacks come as the Oct. 17 deadline approaches for extension filers. The IRS first warned of a similar remote take-over attack in the spring, just ahead of the April 15 deadline, another peak period for tax professionals.

Thieves are able to access tax professionals’ computers and use remote technology to take control, accessing client data and completing and e-filing tax returns but directing refunds to criminals’ own accounts.

Victims in the tax community learned of these thefts while reconciling e-file acknowledgements.

In addition to activating security measures for tax software products, IRS urges all tax preparers to take the following steps:

• Run a security “deep scan” to search for viruses and malware;

• Strengthen passwords for both computer access and software access; make sure your password is a minimum of eight digits (more is better) with a mix of numbers, letters and special characters and change them often;

• Be alert for phishing scams: do not click on links or open attachments from unknown senders;

• Educate all staff members about the dangers of phishing scams in the form of emails, texts and calls;

• Review any software that your employees use to remotely access your network and/or your IT support vendor uses to remotely troubleshoot technical problems and support your systems. Remote access software is a potential target for bad actors to gain entry and take control of a machine.

In addition, the IRS recently issued instructions to tax professionals on how to monitor their PTIN activity.

Tax professionals should review Publication 4557, Safeguarding Taxpayer Data, a Guide for Your Business, which provides a checklist to help safeguard taxpayer information and enhance office security. Also, practitioners should review Data Breach Information for Tax Professionals for information on what action they should take if they do become victims.

Tax Refunds Will be Late for Some in 2017

( CNBC ) September 2, 2016 – Some people may wait a little longer for their tax refunds next spring.

Households that file early and claim the earned income tax credit or the additional child tax credit won't see their refunds until after Feb. 15. The delay affects only those taxpayers.

The Internal Revenue Service said the delays are the result of a new anti-fraud regulation that will take effect in 2017. The rule will give the agency more time to sniff out phony returns and prevent refunds from going to scammers.

You should still file early, however.

"One thing we've always told people to avoid being subject to tax fraud is to file as early as you can," said Tim Steffen, director of financial planning at Robert W. Baird & Co. "With the refund delayed, that's even more reason to get it in a little sooner."

The IRS said most refunds will be issued within the normal time frame of 21 days.

"We'll be focusing on awareness of this change throughout the fall," said IRS Commissioner John Koskinen in a statement. "But it's important for taxpayers who might be affected by this to be aware of the change for their planning purposes."

Cash is at stake

Over time, the size of refunds has increased, making tax fraud a bonanza for scammers. So far in 2016, the IRS has distributed more than 102 million tax refunds, with the average amount more than $2,700.

Fraudsters are quick to submit fake returns in a bid to get a refund before the actual taxpayer turns in his or her documents. Often there is a large criminal enterprise at work, stealing Social Security numbers, filing the fake returns and collecting the refund, according to the Justice Department.

The two credits at the center of the IRS efforts are especially promising to thieves.

"The earned income tax credit and the additional child tax credit are refundable, so you get back more than you paid in taxes if you qualify," said Debbie J. Freeman, director of tax and financial planning at Peak Financial Advisors in Denver.

Refundable tax credits reduce the amount of federal taxes you owe on a dollar-for-dollar basis. They result in a refund if the amount of taxes owed is less than the credit given.

In the 2013 filing season, scammers filed more than 5 million fake returns in an attempt to make off with $30 billion. The IRS was able to halt or recover $24 billion in ill-gotten refunds, according to the Justice Department.

CFOs Focus on Strategic Tasks, Automation

( CPA Practice Advisor ) August 30, 2016 – CFOs’ plan on being more strategic on strategic financial planning and analysis (FP&A) functions and fulfilling their role as drivers of financial transformation across organizations. That's according to a new study by Adaptive Insights, a provider of cloud corporate performance management (CPM).

The survey queried over 300 CFOs around the globe about their expectations for FP&A team staffing, composition and capabilities, with a goal to understand the state of the FP&A function today and into the future. The survey also queried CFOs on their confidence with global economies and their ability to accurately forecast sales amid today’s market uncertainty.

“CFOs are expected to be visionary leaders, as they are in the ideal position to manage a company’s growth and sustainability,” said Rob Hull, founder and chairman at Adaptive Insights. “But to meet that expectation, they require a truly unobstructed view of the business—a view greatly impacted by the analysis and scenario planning that is the responsibility of the FP&A function. With the right mix of tools and skills, CFOs and their teams can help their organizations glean the insights needed to ensure maximum corporate performance.”

Seventy-five percent of CFOs want their teams to have a strategic and strong impact on their organizations, yet only 46% believe they will have that kind of impact by 2017. The survey revealed CFOs estimate that 11-25% of their teams’ time is spent on strategic tasks today, and they expect that number to grow to 25-50% by 2020.The key question is how will they get there. The report finds:

• Lack of Time Does Not Mean Lack of Staff: The survey revealed that FP&A teams continue to grapple with many familiar challenges. Nearly half of CFOs report that their teams are working up to 50 hours per week, yet continue to lack the time required to perform strategic tasks. While lack of time remains a constant, the majority of CFOs don’t believe that adding staff will solve the problem. Three of four CFOs do not plan to expand their FP&A teams in the next 12 months, with the majority stating that their teams are adequately staffed.

• Increased Effectiveness Via Analytics and Collaboration: FP&A teams get high marks in the areas of management reporting and data gathering for budgets, but rank the lowest when it comes to data analysis and their ability to advise the CFO and C-suite on business decisions. As a result, CFOs would like to see their teams improve analytics skills (46%) and ability to collaborate across the business (45%) in order to become more effective.

• Lack of Effectiveness Translates Into Lack of Accuracy: CFOs likely desire their teams to improve analytics and collaboration skills as quickly as possible. The survey revealed that sales forecasts were missed by the majority of CFOs (73%). The impact of missed forecasts can be felt far and wide, from resource allocations and supply chain management to shareholder confidence. When coupled with an ongoing lack of confidence in the global economy, accurate forecasting and analysis become even more critical.

• Closing the Resource Gap: For CFOs that aren’t adding new members to their finance team but need additional resources, nearly half were going to close the gap by implementing new technology (46%), with over a third hiring part-time resources and consultants (36%).

• Broader Business Knowledge Through Programs Rather Than Experience: When asked what one skill was missing from their FP&A teams, CFOs overwhelmingly cited business understanding. Yet, they don’t believe it is important for prospective candidates to have experience in other functions outside of FP&A. Only about one in 10 CFOs believe it is very or completely important that a prospective candidate has worked in a function outside of accounting and finance; in fact, 24% report that it is not important at all. To infuse their teams with broader business knowledge, they are instead implementing training programs. Ironically, the vast majority state that their training methods include collaboration and integration with other parts of the organization (78%).

• An uncertain global economy is still a certainty. Eight out of 10 CFOs (86%) consider it likely or very likely that market volatility will continue. CFOs also had positive outlooks on only two economies: the United States, with 29% more respondents rating it strong or very strong compared with those who rated it weak or very weak; and the Australia/New Zealand region, which received a net positive rating of +6% strong or very strong compared with ratings of weak or very weak. Brazil, the host of this year’s Summer Olympics, received the lowest score of confidence with -70%. One in four CFOs also met their sales forecasts, with another one in four missing it by 6% or more.

Final Regulations Amend Definitions of Marriage

( Journal of Accountancy ) September 1, 2016 – In response to the U.S. Supreme Court’s decisions that the federal government must recognize and states must allow same-sex marriages (Windsor, 133 S. Ct. 2675 (2013); Obergefell v. Hodges, 135 S. Ct. 2584 (2015)), the IRS finalized proposed regulations issued in October 2015 under Sec. 7701 amending the definitions of “spouse” and “husband and wife” to reflect those decisions (T.D. 9785). The final rules make a few changes from the rules proposed in REG-148998-13, in response to comments.

Under the final regulations, for federal tax purposes, the terms “spouse,” “husband,” and “wife” are defined as an individual lawfully married to another individual. “Husband and wife” is defined as two individuals lawfully married to each other. These definitions apply regardless of the taxpayers’ sexes. The IRS did not adopt a suggestion that the regulations refer specifically to same-sex marriage so that they would be gender-neutral.

Another commenter suggested that IRS forms be updated to refer to “spouse” instead of “husband” and “wife.” Because that was beyond the scope of the regulations, the IRS did not adopt the comment, but will incorporate it when updating forms and publications.

The proposed rules would also provide that a marriage of two individuals is recognized for federal tax purposes if the marriage would be recognized by any state, possession, or territory of the United States. According to the preamble to the proposed regulations, this means that whether a marriage would be recognized depends on whether it is recognized in at least one state, possession, or territory. The final regulations were amended in response to a comment to provide that the marriage is recognized for federal tax purposes if it is recognized in the state where the couple married. This change is intended to address concerns that treating a couple as married in any state would have unintended results, for example, by having common law rules apply to treat a couple as married.

Another clarification from the proposed rules is for foreign marriages. The preamble notes that a provision was added to the regulations stating that two individuals entering into a relationship denominated as a marriage under the laws of a foreign jurisdiction are married for federal tax purposes if the relationship would be recognized as a marriage under the laws of at least one state, possession, or territory of the United States. This allows foreign couples to determine their marital status under the laws of one place in the United States, rather than having to know the laws of all the states.

The rules make it clear that taxpayers who are not married but have entered into registered domestic partnerships, civil unions, or similar relationships will not be treated as married, which the IRS says will permit taxpayers who choose not to be married to have that choice respected for tax and other purposes (such as for Social Security benefits). The IRS has a lengthy discussion of this provision in the final regulations because a few commenters thought it should be changed, but the IRS did not agree.

The regulations obsolete Rev. Rul. 2013-17 on Sept. 2, 2016, the day these final regulations will be published in the Federal Register. Rev. Rul. 2013-17 was the IRS’s original guidance recognizing same-sex marriages in the wake of the Windsor decision.

Are Accountants Learning the Wrong Lessons?

( CPA Trendlines ) By Rick Telberg, August 24, 2016 – CPAs are saying one thing and doing another. And the discrepancy bodes ill for the profession's economic health.

The survey on professional skills and the goals of accounting firms, being conducted with the Ohio Society of CPAs and consultant Michael Ramos, is turning up a curious mismatch. It seems, at first blush, that CPAs are studying for certain skills while reporting that something else is essential to their success.

The survey asks accountants about their CPE plans for the upcoming year – what skills they plan to hone, what skills their practices need. It also asks what the “essential ingredient” is that a firm needs to achieve its goals. We’d expect to see similar answers to the two questions, yet the answers matched up only occasionally.

Diane Merk, a principal with Clark Schaefer Hackett, which has offices in Ohio and northern Kentucky, says she structures her CPE around tax work and this year will probably focus on “Ohio's potential new changes in the taxable of pass-through entities.”

But the ingredient for success? “Accountability – everyone being accountable for their decisions, their clients, their job. Guarantees that the work is done timely and correctly – providing outstanding client service to both external and internal clients.”

To be sure, Merk's responses are more than typical. But that was the general pattern of responses to the two questions: a focus on technical skills – from governmental accounting to estate taxes to business valuation – but recognition that the key to success is more in the area of management – from internal communication to hiring the right staff to partner succession.

An anonymous senior partner tells us, “My office is heavily tax-oriented. Personally, I prepare most of the 990s that come in the door.” But asked about the essentials of success, the response is, “How to replace my position. How to find a qualified employee. It seems impossible to find someone who wants to put in huge hours at a small firm.”

Another says, “Taxes are the mainstay of my practice. I want to obtain more accounting and audit work.” At the same time, this professional sees success in recognizing what’s going on in the industry and the marketplace, noting, “As tax preparation becomes more automated, eventually the IRS will be available to the public to do their taxes directly through them. The market will shrink. The public is becoming very tech-savvy. Auditing and accounting will still be needed.”

A solo practitioner sees two sides of a coin. On the one hand, technology for clients: “I plan to learn more about my tax software and all of its features.” On the other, technology for the practice: “I want to be able to email my clients securely and share information and even files online.”

Dennis Tomorsky, of the Wisconsin Institute of CPAs, plans to focus on tech, taxes, management accounting, accounting and financial reporting, but to be successful, he recommends something more on the management side – “Leveraging technology even more effectively to deliver service faster, with less risk and more customized to customers' needs and desired delivery time.”

All the above is not to say that no one is focusing specifically on the key ingredient of success. Many are, but many, it seems, are torn between quotidian skills and the broader aspects of management.

Companies Plan to Hire – If They Can Find Workers

( CGMA ) September 1, 2016 – U.S. companies appear to be pushing ahead with expansion plans and either hiring new workers or training existing ones, despite uncertainty in the run-up to the November presidential election, a new CPA survey indicates.

The quarterly Business & Industry Economic Outlook Survey, released Thursday by the American Institute of CPAs, also indicated a struggle to fill open positions with qualified workers.

The CPA Outlook Index (CPAOI), a nine-component measure of economic sentiment, rose to 69 in the third quarter, up one point compared with the previous quarter. Although it is down slightly from the third quarter of 2015, the index has risen two consecutive quarters, buoyed by increased optimism about components such as profits, expansion, employment, and training. An index measure above 50 indicates a positive outlook.

The economic sentiment mirrors that of the minutes of the July 26–27 meeting of the U.S. Federal Reserve’s Federal Open Market Committee, which indicated a strengthening labour market and moderate economic expansion. The Fed left open the possibility that with continued economic growth, it would raise interest rates sometime before December. The July minutes are the most recent ones available.

The profits component of the CPAOI has risen nine points to 69 since the first quarter. Revenue, expansion, employment, and other capital spending have also risen in each of the previous two quarters.

More companies, compared with previous quarters, said they have too few employees and are looking to hire. Twenty-one per cent say they have too few employees and expect to hire, up from 15% in the first quarter and 18% in the third quarter of 2015. However, 13% of survey respondents said their companies had too many employees, the same as in the first quarter of this year and the highest percentage in the survey since the first quarter of 2010.

Two-thirds (66%) of CPA decision-makers at companies with annual revenue greater than $1 billion plan to expand business in the next 12 months, up from 56% a year earlier.

But availability of skilled personnel could hamper those plans. That was among the three biggest challenges listed by finance executives in the survey, up two spots from the beginning of 2016.

Dennis Durkin, CPA, the CFO of Trend MLS, a real estate listing service near Philadelphia, has struggled to find specialists such as software developers or engineers, but now the talent drain has extended to jobs in the company’s support center.

“We’ve found it difficult to get people with good customer-service skills who could take a tough phone call,” he said. “You hire one, and two leave.”

Melissa Ruby, CPA, the controller at Melton Truck Lines in Tulsa, Oklahoma, said hiring truck drivers continues to be difficult because job candidates are able to find work in other industries – positions that don’t require regular overnight travel.

The company is focusing on retaining current drivers and attracting new ones. But it faces an uphill climb. Ruby said the trucking industry has more older drivers than younger ones to step in as replacements. In response, Melton has instituted training and mentoring programs for newer drivers.

One benefit it plays up to potential office staff: A 77,000-square-foot facility with a fitness center and restaurant that opened in the spring of 2015. The facility is more than three times the size of Melton’s previous headquarters and gives the company space to expand its 1,200-truck operation.

About the survey and the CPAOI

The survey measured the sentiment of 452 high-ranking finance professionals in business and industry – mainly chief executives, CFOs, and controllers – in nine areas: U.S. economic optimism, organization optimism, expansion plans, revenue, profits, employment, IT spending, training and development, and other capital spending.

Each component of the CPAOI is calculated by taking the percentage of respondents who indicated that their opinion or expectation for the metric is positive or increasing and adding to that half of the percentage of respondents indicating a neutral or no-change response.

For example, if 60% of respondents indicate an optimistic or very optimistic view and 20% express a neutral view, the calculation of the component indicator would be 70 (60% + [0.5 × 20%]).

5 Tips to Help New Managers Overcome Top Challenges

( The Business Journals ) By Kyra Kudick,, September 1, 2016 –New managers can face a number of challenges, whether they are first-time managers or just new to an organization.

If you’re a first-time manager who has recently been promoted, you may find that you now struggle to balance your individual responsibilities with time spent overseeing staff.

If you are suddenly supervising the team you were once a part of, the challenge might be creating new boundaries with former peers.

Even if you are a veteran leader with years of management experience, navigating the cultural nuances of a new organization may still be challenging.

Understanding the informal power structures of a new workplace can be daunting, especially if you encounter people who applied for the job you ended up filling.

More than merely adjusting to a new role, starting a new management position requires adapting to the personalities, work styles, and needs of your team. To that end, whether you are a first-time manager, or starting as a manager for a new company or department, the following tips might help make the transition a bit easier.

Tread carefully

Take the time to get to know your staff, your department, and where you fit in the company as a whole.

It can be all too easy to think you are going to come into a new job and change everything in the name of progress. But if you force too many changes early on or overburden staff, you may create adversaries where you could have had advocates.

Take a collaborative approach, learn about your team, take their opinions into account, and generally show respect for everyone’s contributions.

Be flexible in your management style

Whenever possible, modify your management style to fit the needs of each employee, and be ready to change tactics when something isn’t working.

If you are managing a team of former peers, you may need to establish new boundaries with each individual depending upon your previous working relationship.

Explain what you will expect from them and what they can expect from you. Remember that the new relationship is not easy for them either, so openly addressing expectations can help ease tension and uncertainty.

Manage your expectations

Don’t be too hard on yourself. You want to succeed in the new job, but you need to pace yourself with reasonable goals.

Work with your own manager to develop a 30-, 60- and 90-day plan. Some of these goals may be personal leadership development goals, and those you would likely keep to yourself, but goals for the department may be best served by sharing them with the team.

Identify key resources

Learn what help is available to you and where you can go with questions. This might mean finding a mentor.

When choosing a mentor, think about leaders whom you would like to emulate. Does his or her management style match yours? If you seek a mentor within your own company, he or she often ends up being a strong advocate for your career development, helping you rise further and faster through the organization.

Communicate about time

You want to create an atmosphere where interruptions are welcomed, but distractions are managed.

One of the best ways to manage distractions is to communicate your schedule to your team.

Need to finish a project? Let the people on your team know that you’ll be off-limits until a certain time. Be judicious with the use of these interruption-free blocks of time, however, as you don’t want to give the impression that you are unavailable to your team.

Artificial Intelligence – The New Superpower for Compliance

( Corporate Compliance ) By Anant Kale, August 31, 2016 – In our quest for business productivity and cost savings, compliance teams are all too often being given increasing demands to keep the organization out of trouble, but are not being allocated additional budget to achieve this goal.

It typically takes a high-profile violation or industry-wide regulations like the Foreign Corrupt Practices Act (FCPA), to kick-start the implementation of risk management and compliance programs. And even then, there’s resistance due to concerns about the cost for these new programs and the potential for additional bureaucracy, slower decision-making and operational inefficiencies. When given the choice, today’s business executive tends to err on the side of speed over process.

Today’s automated Enterprise Resource Planning (ERP) systems are designed with the intention of streamlining information delivery and decision-making, as well as providing decision-makers with sufficient information to make informed decisions and then providing electronic decision-making and audit tracking. The best of both worlds: speed and process accuracy, plus compliance.

However, reality is far different. Business decision-makers are pressed for time and have to act quickly. There is simply not enough time to review every piece of information – from paper documents and electronic records to contracts and other collateral – and understand all implications, let alone enough to conduct additional external research and retrieve historical information, including industry-wide comparisons and analytics. The result is that managers routinely approve requests without this background diligence, trusting that their employees are doing the right thing.

This gap in controls is something many companies try to fill by setting up large audit teams (often offshore) to review and manage business processes like accounts payable, expense reports and procurement. However, throwing more people at the process is not eliminating the problem. Companies find their compliance violation detection rates are very low, with most of the team’s time spent on rudimentary checks and “following the process,” while failing to proactively detect real violations. When an issue does crop up, it’s usually in the form of a high-profile escalation, leaving the compliance team to clean up after the fact.

Systemized processes and ERP systems are absolutely essential for basic business workflows. However, new advances in robotic process automation (RPA) and artificial intelligence (AI) can dramatically improve their effectiveness. By automating the activities of human review, research and decision-making, AI can improve compliance effectiveness and reduce costs without sacrificing operational efficiency.

How does AI actually improve business processes?

It begins with “Natural Language Processing” (NLP) – technologies enabling the AI to have an understanding of written text and determining its meaning within the context of human language. As you can imagine, this is fairly difficult. It’s critical that the NLP be accurate. Today, this means RPA AI is most effective when restricted to a specific business process or domain. This enables the AI to go deep in its understanding and allows the AI’s developers to build extensive capabilities for the AI to research and understand external information sources – from proprietary databases to web and social information – just like a human researcher would.

Having artificial intelligence-powered robots is like having a team of hundreds of people, all equally trained and with the time and resources to read through and understand every piece of available information – from paper documents and pictures to contracts and emails. These robots also have the ability to seek out additional information by researching millions of data points on people, places and businesses in data sources external to the company, as well as historical trends, laws and policies – all performed in a matter of seconds. By combing through immense amounts of data, the robots are able to learn and identify patterns and to detect problems.

AI empowers rather than replaces decision-makers

By embedding artificial intelligence-powered robots within their core business processes, organizations don’t have to modify or replace existing gatekeepers and controls. Rather, they empower these individuals to make the right decisions – from both a business and compliance point of view.

For example, imagine a Sales VP who has to approve a planned entertainment expense in Asia, where the company wants to do business. The plan includes inviting business prospects and influencers. The Sales VP wants to quickly give a go-ahead for the expense. Meanwhile, the AI robot embedded within the approval process also analyzes the information provided to the VP and conducts its own research to immediately warn the compliance team about a potential FCPA violation. How did this happen? Because the robot read through the names of the people on the event invitee list, then went and researched each one of them by combing through newspaper articles, government directories and social networking information. It found one of the individuals to be a politically exposed person – with whom business dealings could lead to potential violations of FCPA laws. All of this happened in real time while the decision to approve was being evaluated by the Sales VP, enabling her to avoid a business liability without slowing her decision-making process.

That’s the power of real-time compliance that can be achieved today through artificial intelligence. Artificial intelligence-powered robots have the potential to disrupt how companies conduct back-office business operations, bringing in new levels of productivity improvements, cost efficiency and compliance and risk mitigation.