Fast Forward's Site

To become a CPA and work in the tax industry an individual is certain to encounter a variety of unusual situations. In particular, a CPA must exercise diligence in assessing circumstances where innocent spouse claims might arise. These measures protect spouses from the tax liability on a joint return that was created by a spouse or former spouse.

Innocent spouse claims often land in tax court. Therefore, any CPA involved in these matters must assure that the tax returns involved are accurately prepared. But more action is required than merely deploying the rules from the tax section of CPA exam courses. When a marital conflict exists, an accountant should caution a spouse about the possibility of filing a separate return to avert any difficulty caused by the other spouse.

A recent case in Tax Court reveals the advice that would have benefited a wife. Unfortunately, she did not learn a vital fact found in CPA exam material. That is, filing a separate tax return when married is the only sure path to avoiding tax difficulty created by a spouse. Farzana Zaher is a dentist who was married in 2006. Her husband, Mohamed Zaher, owned a gas station. Mohamed sold his business in 2006 for a gain of $587,760. After paying off business debt, the remaining $315,000 of sales proceeds was deposited into a joint savings account. No estimated tax payments were made but the funds in the bank
were reserved for 2006 taxes.

Following the couple’s separation in November 2007, Mohamed sent Farzana a draft of their joint 2006 tax return requesting her signature. This was how Farzana first learned that the tax return had not been filed by the due date. Mohamed urged Farzana to sign the return for immediate filing with the IRS. He also set an appointment for her with their accountant to discuss the return.

This is where the facts stray from the typical procedure described in CPA classes regarding tax returns. The initial step in tax work is identifying filing status. Given the facts in this matter, the accountant should not have assumed that Farzana file jointly with Mohamed. This was an obvious consideration when noticing the tax due of $63,379 on the joint return. Sound advice to Farzana would include a recommendation to file separately.

Filing a joint tax return is an irrevocable election. Once done, it cannot be undone. Farzana needed this information but did not receive it. As a result of filing the joint tax return, she was hit with the tax liability. She expected Mohamed to pay the tax because she no longer had access to proceeds from the gas station sale. But, Mohamed also no longer had the money. He gave it to various relatives in late 2007, claiming the transfers were loan repayments.

Mohamed did mention in an email to Farzana in January 2008 that he was seeking another accountant to redo the 2006 tax return. But the damage for Farzana was already done. As explained in CPA exam study, a married couple can amend separate tax returns by changing to joint filing, but not the other way around. Sure, a join tax return typically produces a lower tax calculation than the combination of two married filing separate returns. That’s irrelevant to Farzana, who simply needed to avoid joint tax liability with Mohamed relating to his income.

Fortunately, Farzana Zaher prevailed in Tax Court on her claim for innocent spouse relief. Despite this victory, an accountant helping her file a separate 2006 tax return would have saved her substantial attorney fees and years of grief in the court system.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The rising number of fraud at US corporations is creating greater demand for highly skilled auditors to detect it. Unfortunately, many accountants are allegedly failing to find cases of fraud at the companies engaging them for audits. To avoid these claims of professional liability, accountants must develop a bit of skepticism when deploying the technical skills they polish during study for CPA credentials.

The percentage of professional liability claims against auditors that allege failure to identify fraud more than doubled between 2008 and 2010. As the frequency and severity of corporate fraud increases, more accountants must sharpen their fraud detection ability as they take CPA exam steps.

In fact, any type of engagement may require identification of fraud. Audit is not the only accounting service creating liability for noticing fraudulent and illegal acts. Among the 2010 claims of accountant failure to detect fraud, 52 percent entailed tax work or accounting services other than audit.

Therefore, even tax and compilation assignments should deploy fraud-detecting skills perfected during CPA exam study. Much fraud is identifiable during tax return and financial statement compilation projects. Accountants should not overlook potential fraud at companies engaging them for more limited services than audit.

Passing the CPA exam in any state proves only part of the aptitude needed for auditing. Detection of fraud and theft situations requires experience. The general tone of senior management is often indicative of the integrity applied to company operations that may create environments for fraud.

Fraud is sometimes a mismanagement cover-up instead of an overt scheme of personal enrichment. Lax management is just one indicator of potential fraudulent activity. Another contributor to fraud cases is aggressive management that pressures employees to mask financial irregularities out of fear about job elimination.

The majority of corporate fraud arises at companies lacking sufficient internal controls. Auditors look for situations where duties are not adequately segregated among employees. These cases present opportunities for employee theft. Specific details about any particular fraud scheme are then uncovered using audit techniques groomed by CPA exam preparation.

Some examples of the problems discovered by CPA auditors are negligent cash handling procedures, poor inventory control measures, and lack of adequate account reconciliation activity. When an accountant notices any of these circumstances, a professional responsibility exists to notify the client company. In fact, this is a best practice for all types of engagements – not just audits.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

A few weeks ago, the Tax Court ruled on several cases in the same day concerning a common element in CPA exam study. All three of the separate petitioners to the Court conducted nearly identical arguments. And, each of them learned the same lesson upon hearing the Court’s judgment.

The specific facts in any one of the cases could comprise a question for a sample CPA test. Because of the similarity, the pattern is easily revealed without specifically identifying any one of the unfortunate taxpayers.

Each trial centered on incentives provided by the same company in Hawaii for sales of solar water heaters. The Hawaiian business offered a program to buyers of the product to obtain “free” units by purchasing one for personal use and one for investment. The latter was installed at the location of a party that paid a monthly fee to the owner of the investment water heater.

Financing was provided plus a tax incentive commonly discussed in CPA study courses was utilized. That is, the investment cost was written off using a Section 179 expense deduction. In addition, an LLC was created that collected the monthly fees on the investment water heaters. This LLC then made the financing payments and remitted state excise taxes. The investors had no responsibility.

The entire process resulted in an after-tax cost for the personal water heater of essentially zero. In fact, the LLC generated a tax loss. All three taxpayers deducted the losses on their tax returns. However, this arrangement triggers factors described in CPA exam prep about material participation.

Any activity in which a taxpayer does not materially participate is defined as passive. Losses on passive activities are not eligible to offset earned income. The Tax Code identifies seven tests a taxpayer can apply to demonstrate material participation. Two of these tests are typically identified most prominently in study for CPA exam requirements. One is that material participation arises when a person contributes substantially all of the participation by all individuals in an activity. The second case of material participation transpires when someone spends more than 100 hours on the activity
during the year and no other individuals spend more.

The Tax Court held that the taxpayers failed to meet the material participation requirements. They did not install any water heaters or collect any payments. Hence, the taxpayers could not claim substantially all of the participation. Moreover, they did not provide any records showing more than 100 hours of participation during any of the years. A combination of inactivity and inadequate records is certain to doom taxpayer claims of material participation, as the individuals in these Tax Court cases learned.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Accountants working for corporations are starting to feel a little overworked, which is a promising sign for the profession. When economic activity is rising, more individuals are needed who meet CPA requirements in order to account for the details.

Opportunities for accountants are increasing due to several causes. First, large enterprises need to catch up on hiring that halted when the economy slid into recession. Moreover, corporations have created new demands of accountants to apply knowledge from CPA study that aids assessment of cautious optimism about the economy.

Second, a healthy economy spurs more activity for small businesses. More sales by large companies means they increase their purchases of materials and services from smaller operations. Then, as profits grow at small corporations, rising wages lead to more local purchases from shops and restaurants. Substantial accounting work is required for each of these phases.

Therefore, an optimistic outlook at large corporations also creates more demand for accountants to work at CPA practices serving small businesses. A variety of career opportunities await accountants while they are engaged in CPA exam review. Companies hire CPA candidates to work while they study to pass the examinations.

Indication that this process is underway is reinforced by several recent surveys. One of them – conducted by the American Institute of Certified Public Accountants – consisted of an inquiry in the first quarter of 2012 of 1,400 corporate CPAs. A greater number then those surveyed in the preceding quarter expect higher revenue, profit, and headcount. These results support the view that CPA courses are a path to fulfilling vital roles for accountants in a growing economy.

However, not quite as many survey respondents expressed economic optimism as did one year ago. This possibly indicates that some regions of the country are economically better than others. A few of the surveyed CPAs might have expected better improvement in their areas than is actually unfolding.

Uneven economic growth among various geographic areas is sometimes not a consequence of cyclical economic factors. Rather, declines in certain regions are often indicative of permanent demographic shifts.

A survey of corporate CFOs by accounting giant Deloitte also shows that economic optimism is strong but not universal. Over 60 percent of CFOs reported a more positive view of the economy than last year. But 15 percent still responded about feeling less optimistic.

This information gives accountants some important factors to consider. A CPA candidate seeking employment should carefully evaluate the economic stability of a particular region and the financial strength of a specific employer. Fortunately, a course for online CPA review allows studying for the CPA exam from any location.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Complex tax subjects are apt to confuse the general public but make for enlightening sample CPA exam questions for accountants. Most of the difficulty for CPA candidates regarding tax issues concerns deductions. Of particular significance are tax deductions for business expenses.

One of the more complicated tax matters in courses for CPA study is deductible travel expense. This applies to both self-employed independent contractors and individuals with unreimbursed travel expense related to a wage-paying job. A series of logical steps is applied to the details for a particular case when determining whether travel qualifies for a tax deduction.

Accountants find the definition of business travel as defined in a CPA course is any travel away from the general area of a person’s tax home that is substantially longer than an ordinary workday and necessitates sleep or rest to meet work demands while away from home. This comprises a lot of detail to digest. Some factors are more obvious than others.

The first element to recognize for answering CPA questions is that business travel entails more than driving someplace for a few hours and then returning home. Clearly, a business traveler must require staying somewhere – such as a hotel – for sleep or rest. This typically means overnight accommodations, but might include daytime rest while working at night. Either way, the work travel experience must encompass an entire day.

The other aspect of business travel discussed in CPA exam review is the definition of tax home. Tax-deductible travel only arises for trips away from a tax home. The tax home for someone is normally that person’s regular place of business. For an individual who lacks a regular place of business, a residence is the tax home. Sales people without local offices may also qualify to consider their residences as tax homes.

Unfortunately, the treatment of tax home is one of the tax issues that often receives subjective application of the facts and circumstances. The main point is that an individual has a tax home at any regular or main place of business – even one that is fairly distant from the place of residence. Consistent and permanent assignment to a single location causes recognition of that place as the tax home.

When no regular place of business is provided, CPAs apply IRS guidelines to determine if a residence qualifies as the tax home. A residence is eligible to declare as a person’s tax home when it is used for lodging while the individual is working in the vicinity of the residence and living expenses at the residence are duplicated by having to travel away from that home. In addition, the taxpayer should have frequent personal use of the residence or have family living there. When the conditions are met to claim a residence as a tax home, travel for work away from that location qualifies as business travel.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Many Tax Court cases provide excellent CPA exam study because they encompass application of basic concepts to specific situations. In addition, tax subjects are often the most confusing elements of accounting. Tax rules are seldom uncomplicated.

A recent case before the Tax Court provides a scenario similar to one that could appear on a sample CPA test. The taxpayer in the matter was Graciela Helguero-Balcells, an assistant professor at Lynn University. Balcells has doctorate degrees in global and international education as well as Spanish literature.

She traveled extensively and claimed the costs as tax deductions. A CPA course review covers the conditions under which employees may deduct unreimbursed expenses. Travel expense for business is certainly one of the tax deduction categories. However, a taxpayer is not eligible to deduct the cost for travel that is primarily personal in nature.

Any business activity pursued during primarily personal travel does comprise a class of employee expense. For example, attending a conference may qualify. During part of her 71 travel days to Madrid, Balcells attended a symposium. She did not substantiate the duration of this business event and she did not request reimbursement from her employer.

Balcells also attended conferences in Rome, Tampa, Nashville, and Chicago. She did submit reimbursement requests for all these trips except the one to Chicago, However, the university declined them. Balcells claimed a deduction for her 6 days of travel to Montreal because of its connection to research related to one of her dissertations.

Some general rules for deducting employee education are addressed in CPA exam material. The expenses must maintain or improve skills required for current employment. Costs for travel away from home to pursue qualified business education are also tax deductible. However, a tax deduction is only permitted for expenditures that are not allowed for reimbursement by an employer. Therefore, no deduction is taken when an employee fails to seek reimbursement.

Some other facts about the Balcells situation are also enlightening elements for a CPA course. Foreign travel for business education has a specific restriction. That is, no deduction is allowed for any part of the time spent traveling outside the US that is unrelated to business. Consequently, a taxpayer like Balcells is required to allocate travel expenses between personal time and business time. Further illustrating tax law complexity is the added element that this rule doesn’t apply to foreign travel lasting less than one week or that has an amount of personal time comprising less than 25 percent of the trip.

The Tax Court decision denied Balcells a tax deduction for any of the travel to Madrid because her records did not substantiate the portion of time spent for business versus personal purposes. Conversely, the cost for her trip to Montreal was tax deductible because it lasted less than one week, thus requiring no substantiation of the percentage of business time. Her travel deduction to attend conferences in Rome, Tampa, and Nashville was also allowed by the Court. However, the trip to Chicago was not tax deductible because Balcells failed to request reimbursement and thus could not prove the expenditure was a disallowed unreimbursed employee expense.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

After meeting the extensive educational standards for a CPA career, accountants are faced with the struggle of entering the workforce and still needing to pass the CPA examinations. Most employers of young accountants are willing to hire CPA candidates for positions that require the designation. This leads to a period of balancing work and study.

Taking the right steps for CPA preparation demands arranging work and personal schedules to accommodate daily study. People have more free time than they realize, but typically less than when they were college students. Studying for CPA testing will only occur with proper planning and sticking with a schedule.

Devising a study plan begins by examining what part of the day offers the greatest flexibility. Individuals with more control over their mornings, arise a little earlier for studying prior to work. Other people find study time at the office by staying at their desks after the workday ends.

Whichever part of every workday is scheduled for study is typically devoted to churning through sample CPA exam questions following a brief review of study materials. This leaves weekends for more intensive study over longer periods of time than the weekday routine.

The next step is confirming with an employer the designated study times. That is especially important if study is conducted at the place of employment. Obviously, employer approval is required for using a company computer to access CPA online review. In addition, a CPA candidate needs employer support to study before or after normal work hours and avoid being targeted for extra job duties.

Many CPA candidates find studying at their work desks saves valuable time. By arriving at work early or staying late to study, commuting times are shortened. This time saving technique often creates the needed study periods.

Allowing a gap of time between graduating from college and taking the CPA exams is a definite advantage. People in this situation can devote all their time to studying. This shortens the time required to fully prepare for passing the CPA examinations. A study course is easily completed in a few weeks.

However, most individuals don’t have the financial luxury of exam preparation while not drawing a paycheck. Therefore, scheduling discipline is extremely important for anyone working a full-time job while engaged in CPA exam study. The combination of work and study also necessitates allowing several months for the process. Consequently, CPA candidates should schedule exams well in advance of the testing dates. Saturday exam times fill quickly at testing centers. At the least, having a Saturday test date avoids conflict with most work schedules.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

An examination of hiring trends in the US labor market is wisely leading many workers to aim for positions in the accounting field. Although Wall Street firms are lightening their staffs, other American corporations – along with small businesses – are recognizing the importance of accountants.

Choosing to become a CPA opens opportunities for a variety of roles. First, large enterprises want accountants to maintain complex systems for measuring and assessing corporate initiatives and risks. Secondly, the changing employment condition in many industries is creating a new breed of entrepreneur needing to outsource accounting and tax work. These small operations also rely upon accountants as vital sources of advice.

The key to meeting these demands is attaining the CPA designation, which demonstrates possession of the highest level of achievement in accounting. That amount of knowledge is exemplified by the information covered in CPA exam review. Studying all that detail is worth the challenge in order to enter the accounting field as a CPA.

By reaching the CPA pinnacle, an accountant enhances professional positioning for a rewarding career. CPAs have the most respect and admiration among their peers in the financial profession. The steps to undertake CPA exam study begin a process of attaining the high proficiency in accounting that results in promotions and outreach by the public. CPAs are trusted for technical aptitude, ethical responsibility, and commitment to rendering sound advice.

This professional respect has caused CPAs to give their profession one of the highest rankings for job satisfaction. Another benefit of pursuing CPA courses is availability of work with plenty of variety. Accountants can choose positions with a lot of travel or enmesh themselves in key roles within a small community. They can track down international fraud in financial reporting or provide critical services for local businesses to navigate the complexity of tax returns.

Most importantly, study for CPA designation sets an accountant apart in a field with high employment demand. Compounding the attraction is a shortage of CPAs. Corporations are finally absorbing the impact of more stringent public accounting standards implemented in 2002 with the passage of the Sarbanes-Oxley Act. Now large companies face the likelihood of new International Financial Reporting Standards. In addition, they are relying more upon accounting teams to track and evaluate the ever more complex situations in a global economy.

Also driving the demand for accountants is the number of individuals starting businesses or becoming independent contractors for the first time. They face unknown tax circumstances that an accountant with CPA training can best address.

The professional choices for a CPA are numerous and each of them offers apparent job stability for many years into the future.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The value of a trusted accountant was recently discovered again regarding a matter that primarily embodied a legal issue. Tax advice is often applicable to legal contracts. Dave LaPoint, a former major league baseball pitcher should have sought the counsel of a tax professional. His situation reads just like cases for sample CPA exam questions.

LaPoint played during the 1980s for several teams. He married in 1990 as his pitching career was near the end. At the beginning of his final major league season, he and his new wife executed a postnuptial agreement. An attorney was likely involved  in drafting the agreement with terms specified by the parties. Unfortunately, LaPoint seems to have averted obtaining tax advice. Accountants can render valuable details about the tax consequences of contractual clauses by applying the information in CPA books.

One of the provisions in the postnuptial agreement provided that, after any divorce, LaPoint’s wife retained ownership of the settlement agreement with major league baseball relating to collusion among team owners in the 1980s about player contracts. This agreement provided LaPoint with payments of $50,000 per year.

Anytime a contract calls for payments after divorce, assessment of the tax impact is vital. Several possibilities are described in CPA review courses about the tax treatment of payments pursuant to termination of a marriage. First, payments to settle the dissolution of the marital estate do not affect taxable income. Secondly, alimony payments made after a divorce do appear on tax returns of both payer and payee.

Answers to CPA questions concerning alimony dictate that payers of these amounts are entitled to tax deductions and recipients report taxable income. However, whether payments are alimony or something else depends upon several factors.

LaPoint’s marriage ended right after the new century began. He assumed that the payments under the postnuptial agreement were alimony. When he deducted $384,964 as alimony on his 2004 tax return, the IRS disagreed. The Tax Court sided with the IRS.

Even if LaPoint used an accountant to prepare his tax returns, the CPA could rely upon LaPoint describing the payments as alimony. Tax work would not necessarily have entailed examination of the postnuptial agreement. That CPA task arises only if LaPoint had requested evaluation of the agreement to identify the tax consequences. He should have made that request because the postnuptial agreement contained a clause describing it as binding on heirs. This meant that payments by LaPoint under the agreement continue even after his ex-wife’s death.

The Tax Court pointed out to LaPoint that one of the elements defining payments as alimony is that they do not survive death of the payee spouse. Listed criteria about matters like alimony are presented in CPA exam review in order to clarify such complex tax subjects. As the Court stated, a specific definition is given for alimony in order to avoid subjective inquiries about whether payments serve the same purpose as alimony.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

As rising expectations are placed on Chief Financial Officers at large enterprises, their demand is escalating for accounting staff that thinks strategically. After meeting requirements for CPA designation, working in a modern corporate environment means spending plenty of time evaluating business models and opportunities. Meanwhile, automated systems are increasingly conducting much of the rudimentary number crunching.

Accountants still need to understand the basics from their CPA courses, but corporations want them to place more emphasis on analyzing and verifying data. A movement is underway to replace labor-intensive financial compilation work with higher valued strategic tasks.

In addition, automating more routine financial processes decreases the time required to produce output. Making forward-looking decisions demands immediate information that isn’t out of date.

Modern corporations have become more complex in the information they maintain. Measurements are taken that create an enormous database. A typical accounting project entails utilizing available data to create a matrix for assessing a potential problem or opportunity. This requires gathering detailed financial components and understanding their meaning as taught in CPA exam study.

Automating the compilation of data is obviously advantageous in this corporate environment. But limits exist for completely using technology. Human judgment is still relied upon. This is why corporations are seeking accountants for financial positions who pass CPA exam requirements and thus demonstrate a high level of expertise. Accountants must still occasionally apply their knowledge to financial reporting. This assures accuracy in the statistics used for high-level analytical perspectives.

Another complicating factor in the automation process is the number of unusual financial transactions incurred by particularly large organizations. These situations require manual journal entries. For instance, staff accountants must apply the base knowledge from CPA exam review to record extraordinary events related to acquisitions or reorganization initiatives.

Overall, large corporations still have plenty of positions in their finance departments for accountants. Firstly, CPAs are needed who understand how to translate complex transactions into manual journal entries. But targeting many basic accounting functions for automation is vital for enterprises of substantial size. This permits turning over to seasoned accountants the duty to evaluate data and perform complex assessments of financial scenarios.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

A significant example of the important services rendered by outside auditors is the now notorious case of Japanese company Olympus. The report released last December by an investigative committee reveals valuable lessons for accountants to strictly deploy the audit principles covered in CPA exam study.

Olympus engaged in substantial fraud to misrepresent its true financial condition. Uncovering these situations is precisely the function of audit work by accountants after they pass CPA requirements. According to the report, Olympus incurred large losses on financial investments that remained on the books at their original cost. New accounting rules requiring write down to market value awaited implementation in 2000.

To avert a disastrous impact on earnings, Olympus concocted a scheme from 1998 to 2000 that moved off the books approximately ¥96 billion – about $US1.2 billion – of  unrealized investment losses. In 2003 alone, approximately ¥118 billion – $US1.5 billion – of unrealized losses were moved off the books.

By the time the whole fraud blew up in 2011, the losses amounted to ¥137 billion – about $US1.7 billion. This is a figure that CPA exam preparation about audit would surely classify as material. After all, the March 31, 2011 audited financial statements report total assets of $13.3 billion and net income of $92 million. This is after removing the assets with the $1.7 billion loss. Hence, the write off is about 13 percent of total assets and an amazing 18 times net income.

The loss was hidden off the books back to at least 1998. Hiding $1.7 billion of losses for more than a decade demanded some creative accounting. Olympus indirectly loaned money to an off-the-books subsidiary and simultaneously sold the devalued investments to the new entity at the historical cost. Actually, Olympus used CD bank deposits as collateral to induce lending to the apparently unrelated entity created by Olympus. According to the report, the three banks involved agreed to not convey to auditors that the CDs were pledged against loans.

This would certainly avert auditor attention temporarily. But, eventually the unrealized losses required write down. Hence, the second phase in the plan was implemented. Olympus bought some small companies for a huge premium over their market value. Several steps were launched that an auditor should uncover when applying the measures outlined in CPA exam reviews.

First, outside consultants were hired to locate the acquisitions. Secondly, the acquired companies were consolidated on the Olympus financial statements. Thirdly, when the consolidated subsidiary began purchasing the bad investments from the off-book subsidiary, some questions were in order.

Instead, the off-book subsidiary repaid the bank loans by using cash received from selling the investments to the consolidated subsidiary. The CDs were released back to Olympus. The underwater investments were losses for the consolidated subsidiary, which Olympus wrote off as goodwill impairments. Gradually writing down goodwill is much more palatable for investors than a sudden recognition of loss caused by declining market value of investments.

Plenty of audit firms are susceptible to blame for not uncovering the Olympus fraud. Arthur Anderson was the external auditor through the fiscal year ended March 31, 2002. A Japanese arm of KPMG was the auditor through the fiscal year ended March 31, 2009. This was followed by an Ernst & Young unit in Japan for fiscal years 2010 and 2011. Admittedly, Olympus and the three banks adeptly hid the fraud. But the involvement of that many newly engaged audit firms should have inspired someone to raise enough questions for revealing at least the appearance of a sinister plot. Simply applying CPA course factors about audit standards might
have made an eager accountant into a hero.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Accountants planning a career in the tax industry should linger carefully over the description of hobby loss rules in CPA books. The IRS is increasingly disallowing alleged business losses as hobby activities.

Hobby rules are the interesting part of the tax code dictating that any income a hobby produces is taxable, but the IRS will deny the deduction of a hobby loss. Consequently, some tricky questions on practice CPA exams point out the result of expenses exceeding revenue for a hobby. The taxpayer can use just enough of the expenses to escape tax on hobby income. But the excess expenses are not permitted to create a deductible loss against other sources of income.

Individuals commonly use certain activities to claim business losses, which are later denied by the IRS. The tax code doesn’t contain a formal definition of what constitutes a business activity. But a reasonable understanding of the concept is conveyed in the tax section of CPA exam preparation.

An activity may comprise a business for some people and a mere hobby for another person. Hobbyists are generally identified by their part-time engagement in an activity and non-reliance on the pursuit for income. The Tax Court case of Peter and Carolyn Bronson illustrates the situation.

The Bronsons operated Coldstream Farms, which they claimed on their tax returns as a business raising Welsh ponies that incurred losses averaging $30,000 per year from 2001 to 2005. Peter Bronson is an attorney. Carolyn Bronson has a Ph.D. in consumer finance but devoted her time to operation of Coldstream Farms. Alluding to the hobby description in CPA study materials, the Court pointed out that the Bronsons boarded their horses and thus avoided the routine and often unpleasant tasks of caring for horses.

Due to the high boarding costs, the Bronsons determined that they needed their own pony raising facility in order to achieve profitability. A key element in CPA courses to identify legitimate businesses is that the operators pay attention to results and modify their actions in order to generate profits. Even if the efforts are unsuccessful, this business-like process is essential.

The Tax Court’s main criticism of the Bronsons case is two-fold. First, they took a long period of time to establish their own pony location. Meanwhile, they continued to acquire more ponies and still use the unprofitable boarding endeavor. Second, the Bronsons’ record keeping constituted a mixture of personal and business expenditures. The Court noted that more than three-quarters of the records were receipts for both personal and business costs. The Bronsons’ allocation of exactly 80 percent of these expenditures to Coldstream Farms indicates that the recorded business expenses are approximations.

Further compounding matters is that the Bronsons listed their dog among the items on their depreciation schedule. The total deduction in 2002 for the dog was $1,144. Possibly the dog was used to herd horses. But meticulous records are required to demonstrate that exclusive use of a dog. Moreover, because the ponies were in a boarding facility, the necessity of needing the dog for herding is not particularly plausible.

Interestingly, the Bronsons used an accountant to prepare their tax returns. However, the Court rejected their argument that they adequately consulted with him on the hobby loss issue. They were assessed an accuracy related penalty for two of the tax years. Taxpayers must relate all relevant facts to their CPAs in order to prove they relied upon professional advice to attempt preparation of accurate tax returns.

Still, a competent CPA might have at least inquired about the arrangement for Coldstream Farms. The Bronsons sold only one horse during the entire five years examined by the IRS. A real eyebrow raiser is the bargain sale charitable deduction the Bronsons claimed on this only sale.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

A common occurrence arising from a constrained job market is individuals with financial difficulty – including delinquent taxes owed. Many people are struggling to get back on their feet while facing the challenge of accumulated debt. Dealing with much of their debt is accomplished by basic budgeting, but addressing back taxes often necessitates assistance from an expert with an enrolled agent education.

When the problem of a past tax liability has escalated into an IRS tax lien, immediate action is required. Individuals of every income level may encounter tax liens. This IRS collection method usually arises for people who are fearful and uncertain about how to resolve their tax difficulty. They need professional representation and EA solutions that address the IRS issue.

An estimated one out of six Americans has a tax problem. These all begin with collection notices from the IRS. Tax industry professionals with enrolled agent certification are trained to understand tax notices. Often the extra tax owed is a result of extraordinary income a person received during a period of financial trouble. Some examples are early retirement plan distributions, unemployment compensation, and work as an independent contractor. An EA can help a taxpayer avoid problems in the future with accurate tax return preparation and limit tax assessments by capturing
all eligible deductions.

When a tax lien is already in place, urgent attention is needed to stop any subsequent IRS levy or seizure of property. Fortunately, passing the enrolled agent examination renders a tax expert with the authority to negotiate resolutions with the IRS. Because a tax lien is a claim by the government against any property owned by a taxpayer, the impact is a restriction on borrowing against assets or selling assets to raise cash. Taxpayers are unable to convey property when a tax lien prevents providing clear title.

In most cases, the IRS will not release a tax lien until the delinquent tax is paid in full. This impairs the ability to operate a business or conduct routine personal finance matters. Removing this incapacitation entails an enrolled agent job to file a collection appeal. This assigns the case to an IRS appeals officer. These officials have latitude to release tax liens under certain conditions.

The critical action for taxpayers is appealing tax liens within the legally allowed time frame and by following specified procedures. The IRS will file tax liens in any jurisdiction where a taxpayer owns property or operates a business. Tax liens appear on credit reports. In addition, a tax lien establishes the government’s interest in property ahead of lending institutions in priority. This can cause calls from banks demanding immediate loan repayment.

Bankruptcy does not eliminate tax debts. But EA tax specialists provide the avenue for people with tax delinquencies to resume their lives and businesses with credit ratings intact.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

The US Department of Justice has escalated its pursuit of corporations that violate the Foreign Corrupt Practices Act and CFOs at multinational companies are on high alert about the situation. Concerns like this exemplify the assignments a CFO is likely to give accountants who enter corporate finance after they pass CPA examinations.

Last year, Lindsey Manufacturing was the first company tried and found guilty of violating the Foreign Corrupt Practices Act. Since then, the Justice Department has conducted inquiries against such big international operations as Johnson & Johnson, Tyson Foods, Alcoa, and Diageo plc.

Some violations have been assessed and fines levied. Monetary penalties are likely to remain the standard following reversal of the Lindsey conviction along with the judgments against two executives at the company. Still, to avert complications, corporate CFOs are implementing compliance initiatives by deploying staff with expertise covered in CPA study.

In fact, avoiding vulnerability to violations of the Foreign Corrupt Practices Act demands practices that adhere to superior auditing skills. An accountant typically develops audit experience as part of mandated CPA requirements. Subsequently, working in a corporate environment under a CFO will entail critical measures to avoid running afoul of such key legal matters as the Foreign Corrupt Practices Act.

The first step at multinational companies is review of the accounting at all foreign branches. CFOs rely upon a team to pursue audits of this nature by utilizing the details from CPA courses. The objective is assurance that all relationships with vendors or third-party agents are free of bribery and disallowed gifting. Auditing of acquired foreign companies is particularly important for US based corporations.

Next on the agenda for compliance with the Foreign Corrupt Practices Act is implementation of tracking procedures to simplify monitoring of potential violations. Early detection of such acts as insider trading or diversion of deposits held in trust is vital. Accountants are familiar with establishing these audit trails from their CPA study materials.

However, auditing techniques may comprise more than verification of financial figures. Other likely actions include extensive background checks, especially of key executives and board members. The aim is identification of previous lawsuits or regulatory disciplinary actions. Also on the agenda for Foreign Corrupt Practices Act compliance are creation of avenues for employees to give tips of suspicious behavior and procedures for investigating rumors. So, in addition to customary audit methods, corporate accountants can expect to monitor many functions within an organization.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

For everyone planning to study for the certified public accountant examination, here are a few random details about testing. These facts don’t address any of the examination subjects. Rather, they are merely statistics from the 2011 Candidate Performance book, which covers test takers for the CPA exam in 2010. So, this information is for entertainment only and will not aid anyone’s CPA exam result.

Prospective certified public accountants usually schedule the different exam sections at distinctive times and even different years. This permits them to spread CPA exam prep over an extended period. Any particular candidate may have scheduled repeat of one exam while sitting later in the year for the first time with another exam.

CPA exam candidates were tested in every state at Prometric testing centers. A candidate can even take the CPA exam in the Virgin Islands. Two individuals repeated testing there in 2010. Both sat for the FAR exam and only one passed. One of them repeated REG and passed while the other sat for AUD and failed. The data do not reveal if the one passing FAR is the same individual who also passed REG.

Five first-time candidates sat for CPA exams in the Virgin Islands during 2010 – two for BEC, two for FAR, and one for REG. The one candidate who sat for REG passed but all the others failed. The result is a 20 percent first-time pass rate and a 50 percent repeat pass rate for candidates in the Virgin Islands.

The CPA exam pass rate for first timers was highest in Utah at 65.9 percent. Delaware had the worst first-time pass rate of 35.9 percent. The CPA exam in California has the largest number of candidates. A total of 8,213 individuals repeated exams and 12,161 sat for exams as first timers. Some of these people overlap into both categories by repeating one exam and taking another for the first
time. The state’s pass rate ranked 36th for first time testers and 28th for repeat candidates.

Wake Forest University graduates had the highest pass rate. An impressive 96 percent of first timers passed in 2010. Only 9 of the 217 exams taken were failed. Their success is even more remarkable considering that each candidate sat for an average of 3.77 exams, which is considered substantial testing for a one person in a single year. Advanced degree graduates of James Madison University sat for 111 exams. Only 7 failed, for an impressive 94 percent first-time pass rate.

None of these location statistics should lead anyone to believe the CPA exam questions are more difficult in some locations. After all, it is a “uniform” certified public accountant exam.

The school with the highest pass rate for the largest number of first-time candidates was the University of Phoenix. That notable achievement for online education may indicate that online CPA review is most conducive to passing the examinations.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Small private companies may soon learn that new financial reporting standards their accountants study for CPA education apply to corporations of all sizes and ownership arrangements. The initiative causing this impact is the pending adoption of International Financial Reporting Standards in the United States by the Financial Accounting Standards Board. Although this change is primarily aimed at publicly owned companies, any business intending to maintain financial records in accordance with FASB guidelines is affected.

In fact, the FASB is proceeding with its Convergence Project to adopt IFRS in the US by the end of 2012. This has an immediate bearing on CPA study material because it alters acceptable accounting standards for audited financial statements. The universe of audited corporations encompasses more than only public companies. Audits are also performed on businesses with government contracts and private companies expecting to launch public offerings in the future.

For at least another year, the Securities and Exchange Commission is not requiring domestic public registrants to follow IFRS. However, the American Institute of Certified Public Accountants has authorized privately held companies to issue financial statements in accordance with IFRS since May 2008. A small number of corporations have changed to IFRS. However, more companies are likely to receive advice this year from their CPAs to make the adjustment. A primary benefit for doing so is the limited cost for adopting IFRS as a privately owned corporation. Waiting to implement the change after registering to issue public stock is more expensive.

Small private companies are obviously less complex than large global organizations. For example, reconciling US GAAP to IFRS for a single location business probably requires only limited transactions. Knowing how to post such ledger adjustments is one of the CPA requirements for possessing expertise about financial statements.

IFRS varies in a few important ways from US GAAP as studied in CPA exam review. One of the differences is that IFRS requires segregation of fixed assets into components. Clearly, the impact of this is potentially substantial at large complex manufacturing facilities but barely noticeable at smaller operations.

Another distinction about IFRS for CPA courses to address is that development costs are capitalized and depreciated under certain conditions. Companies using US GAAP simply expense R&D costs.

Accountants are prepared to implement IFRS for their clients and are expected to recommend these standards for both large public companies and small private organizations. Small corporations have an advantage by encountering few immediate IFRS adjustments while establishing new operating methods for the future.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Accountants have substantial career opportunities working as internal auditors at large corporations. These companies are expanding the audit function and providing a greater overall relevance for auditors. To bring the highest value to these businesses, accountants are improving their stature by passing the certified public accountant exam.

According to a study titled “Aligning Internal Audit: Are You on the Right Floor?”, business leaders expect their internal audit team to render key components of risk management. The study reveals that just 45 percent of executives who are close to the audit process describe the function as well managed. The majority expressed a need to improve with a greater reliance on new high quality auditors. This is a call for more accountants to complete CPA exam preparation and attain the top designation in their field.

Adding internal audit capabilities to more corporate areas was a key theme in the study. For example, 65 percent stated that internal auditors should become more involved in monitoring risks. Audit assessment of data security and privacy was cited by 46 percent of survey respondents. This creates an enormous opportunity after becoming a certified public accountant. Internal auditors can expect substantial requests for their viewpoints in the future.

Forward-looking perspectives are increasingly valuable to risk assessment. Nearly 75 percent of survey respondents considered economic uncertainty as their largest risk. This avers for greater attention by auditors to pro forma scenarios. The foundation for this begins with firmly understanding the financial statement compilation lessons reviewed in a CPA exam course.

But internal auditors are being asked to evaluate and measure other risks. This includes the potential impact of data security breaches, acquisitions, and government regulation. Surprisingly, the highest organizational risk cited in the survey is availability of needed talent. Including labor metrics in company risk management should become a leading goal of internal audit.

With all of these demands on internal auditors to handle complex issues, accountants in this career path must learn to think strategically. Senior executives express a desire for more frequent reporting in concise and simplified formats that link data to business risks.

This tracks back to the basic concepts in CPA exam study guides about financial controls. In fact, the report reveals that senior management still ranks this skill as the most important expectation of internal auditors. After some special training for the CPA exam and experience as auditors, accountants are ready to tackle the additional duties that make them significant contributors to corporate success.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Accountants who choose tax careers after passing the CPA exam are destined for addressing delicate situations. Among the duties when preparing accurate tax returns is inquiring about all reportable income. This is not always so easy.

Contrary to the public’s common misconception, withdrawing money from a financial account or business entity is not necessarily a taxable event. An easy example from CPA exam study is that money transferred to personal use from an investment account does not trigger tax. However, selling securities in order to provide the funds for transfer does create taxable income (or loss).

Similarly, some businesses are pass-through entities regarding their taxable income (or loss). Particularly common cases in a CPA course are partnerships and S corporations. Partners and S corporation shareholders are taxed individually on income of the businesses. Accountants know that a tax assessment on pass-through business income is mandatory even if none of the income was distributed. This is exactly the situation for a Mr. Jones that landed in Tax Court.

In 2005, Jones owned 45 percent of the shares in an S corporation that conducted aviation management. He also owned 50 percent of an LLC that chartered aircraft. The LLC was taxed as a partnership. Facts in the case make an ideal practice CPA exam question. The 2005 net income for the S corporation was $101,927. The LLC had earnings of $212,298.

Jones received cash distributions during 2005 from the S corporation totaling $10,000. The partnership did not pay him any distributions. However, the shares of income from the entities for Jones were $45,867 and $106,149. Despite his low distributions, a CPA examination book lesson on this situation is that the income apportioned to Jones for his ownership in the businesses is taxable.

Naturally, the Tax Court agreed that tax is due on the income passed through to Jones by the S corporation and the partnership. Interestingly, the petitioner in the case was the ex-spouse of Jones. The former Mrs. Jones sought relief from the Court for the tax on understated 2005 income because it transpired for a joint tax return.

The Court pointed out to Mrs. Jones the rules about pass-through entities. The share of income from both businesses attributable to Mr. Jones was incorrectly omitted from the joint tax return of 2005. In addition, the Court ruled in favor of the IRS that an accuracy related penalty was appropriate for the intentional omission.

However, Mrs. Jones did receive victory on a key point. That is, she was granted an innocent spouse claim. She is relieved of the tax burden because of this ruling. Innocent spouse relief arises when a taxpayer on a joint tax return is not aware of underreported income by a spouse or former spouse.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Corporations face new challenges in the post Great Recession economy that are creating vital job responsibilities for finance departments. This leads to important corporate positions for accountants who have completed the CPA examination.

Financial executives are under pressure to evaluate global competition, address more government regulations, and manage the trends in consumer activity. All of this demands the evaluation of financial reports by a staff with certified public accountant training. Recently, the American Institute of Certified Public Accountants conducted an evaluation of the issues confronting business leaders. One of the outcomes is the Chartered Global Management Accountant designation, which was created in concert with the Chartered Institute of Management Accountants.

Findings of the research were published in a report titled Rebooting Business: Valuing the Human Dimension. The results convey how businesses with global exposure have an urgent need for management accountants. Hiring and grooming individuals for these positions is occurring when they engage in CPA exam preparation.

Uncertainty was the leading problem cited by 300 global CEOs in the survey. In addition, corporate executives are concerned with meeting the demands of short-term investor sentiment. Providing measures of company stability and strength requires people possessing knowledge that begins with CPA examination study.

As businesses face increasing levels of complexity, accountants are needed with multidisciplinary expertise. That broad perspective is a hallmark of CPA study. A critical mission for the corporate executives is decision making by use of financial information. The goal is obtaining a clear picture of an organization’s position and opportunities. This is the role of management accountant.

Moving beyond financial statements is a common theme in the AICPA research report. A paramount mission is adding a human element to unlock the value within a corporation. The key objective for financial executives is creating value with people. In fact, CEOs in the AICPA study consider employees much more valuable than other factors for reaching future accomplishments.

As investing in the right talent appears highly correlated with business success, accounting positions are among the critical corporate components. In recognizing the need for these specific skills, the AICPA and CIMA created the Chartered Global Management Accountant designation as a prestigious standard. A wide majority of the executives in the survey indicated that candidates for this recognition provide greater appeal than those lacking it. Both existing and new CPAs will aim to attain the designation in order to maximize their value to corporate employers.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

A report by the Pew Research Center demonstrates that a young worker may learn to how to become a certified public accountant after starting a career. The research was developed in a 2010 survey that focused on the characteristics and behavior of individuals between the ages of 18 and 29. This generation is described as confident and open to change.

Findings in the report provide a map for recruitment practices by CPA firms as well as professional development considerations for young workers, who the report refers to as “Millennials.” Individuals of that age group have not yet achieved the educations level of the preceding GenXers. Millennials are weighing their options as they face a challenging employment market. As they discover the demand for accountants, many of them will advance their education with CPA examination courses.

Despite a harsh economic environment, Millennials remain confident. Although about two-thirds of them reported earning less than optimal income, 88 percent expect to earn enough for a good life. That exceeds the confidence levels of both GenXers and Baby Boomers. Instability in the job market for earlier generations contrasts with the expectation by Millennials of a strong financial future. Fulfillment of that plan requires pursuit of careers in high demand, such as accounting. That path demands further education and passing the certified public accountant exam.

Millennials keep abreast of trends by staying well connected online. This should permit them to navigate through expected long careers as a result of their significant life expectancies. The fast pace of communication among Millennials provides them with opportunities to locate new challenges. This can translate into starting out in staff accounting positions and later advancing to CPA study. Consequently, accounting firms will endeavor to groom promising Millennials for attaining the CPA designation.

Consistent with economic conditions of recent years, Millenials have maintained flexibility. They are open to such workplace patterns such as telecommuting and flexible hours. Relocation to new areas is seldom a problem for Millenials because only 22 percent of them own a home compared to 71 percent of individuals age 30 and over.

Millennials understand that job security is tenuous. They realize the significance of gravitating toward such high profile positions as accountant. Two-thirds of Millennials expect to change careers in the future. In fact, nearly 60 percent of them have already switched careers at least once. That makes this generation the most open to pursuing CPA exam prep after entering the workforce.

As CPA firms compete for the best employees, Millennials represent a significant wave of new talent. Attracting these individuals to the accounting profession requires offering stable employment and opportunity to study for the CPA examination after starting accounting jobs.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.