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Donna Witherwax

Donna Witherwax, CPA – 50 Most Influential Women in Arizona Business

Donna Witherwax, CPA – Partner, Grant Thornton

With more than two decades of experience, most recently as a partner at KPMG in Phoenix, Witherwax, CPA, joined Grant Thornton in 2012 as a tax partner and the overall tax practice leader for the firm. She is responsible for implementing the strategic direction of the practice, strengthening existing client relationships, identifying new opportunities and managing day-to-day oversight of the growing Phoenix office.

Surprising fact: “I was on the Villa Montessori board for over 15 years. I acquired land for them until we could put a bond financing in place for them.”

Biggest challenge: “Balancing work and children. I got up early, came home for dinner and then went back to the office after I put them to bed.”

Fifty Most Influential Women in Arizona Business – Every year in its July/August issue Arizona Business Magazine features 50 women who make an impact on Arizona business. To see the full list, read the digital issue >>

Arizona Business Financing

CFOs Show Growing Confidence in U.S. Economy

During the past year, chief financial officers (CFOs) have grown significantly more confident in the U.S. economy, according to the 2013 Spring CFO Survey from Grant Thornton LLP. The survey findings reveal that 45 percent of respondents believe the state of the U.S. economy will improve during the next six months, compared to just 31 percent in the fall and 25 percent last summer.

That confidence extends throughout the survey findings, with 44 percent of those surveyed predicting that industry financial prospects will improve during the next six months, compared to 34 percent in the fall. Since last summer, the number of CFOs who believe the pricing or fees charged by their industry will increase in the next six months has jumped seven percentage points to 37 percent. In addition, when CFOs were asked about employment opportunities during the next six months, more than a third (40 percent) said their company’s head count would increase, rising 6 percent from the fall.

“The results of our spring survey are encouraging — particularly with respect to the uptick in expectations for improved financial prospects,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Seemingly, steady improvements in key economic indicators, including labor and housing, have helped stimulate greater optimism among CFOs, at least in the near-term.”

According to the survey findings, almost two-thirds of CFOs (65 percent) expect the average cost of an employee’s salary to increase during the next 12 months, up from 59 percent in the fall. The total cost of employee benefits, including bonuses (56 percent), stock options (72 percent), 401(k) match (86 percent), and other company-matched retirement contributions (81 percent), are expected to remain unchanged from the year prior.

These findings come on the heels of similar data from the Grant Thornton International Business Report, which found that optimism in the performance of the nation’s economy among U.S. business leaders rose from -4 percent in fourth quarter 2012 to 31 percent in first quarter 2013.

While increased optimism among CFOs was prevalent throughout the survey results, they still cite legislative bottlenecks as an area of concern. Almost half of all CFOs surveyed (47 percent) say they are unable to make a major decision that would allow their company to grow because of uncertainty surrounding the funding of the U.S. government. Thirty-one percent of respondents ranked tax reform as the second greatest bottleneck.

taxes

Tax reform aims to help small businesses

During the State of the Union address, President Obama said that tax reform is a key issue for small businesses today. Specifically, the president stressed that many small businesses are overwhelmed with administrative tasks associated with tax filing and deserve the opportunity to focus on strategic areas of their business that could help them grow and hire more workers.

“For many businesses, the complexity of the tax code is challenging,” said Ron Butler, partner at Ernst & Young in Phoenix. “Small businesses and entrepreneurs incur significant costs to interpret and apply federal tax rules and regulations and to produce the required information necessary to prepare accurate returns. They would benefit from a system that modernizes and simplifies their tax compliance and reporting obligations.”

According to the National Federation of Independent Business, tax compliance costs are 65 percent higher for small businesses than for big businesses, costing small business owners $18 billion to $19 billion per year.  In addition, nearly nine out of ten small businesses rely on outside tax preparers. With about half of the private sector workforce employed by a small business — a total of nearly 60 million Americans — these costs, along with tax rates as high as 44.6 percent, carry a heavy burden for small businesses.

“Record keeping and record retention are probably the most overwhelming administrative tasks (for small businesses),” said Donna Witherwax, tax partner at Grant Thornton in Phoenix. “Not only do they contribute to unproductive costs, they also divert attention from the more important tasks a small business owner should focus on. Small businesses often lack the resources to fully understand how the tax law affects their business.”

To put the need for reform succinctly: “Tax reform presents an opportunity to achieve tax code simplification and improve our nation’s present fiscal path,” Butler said.

To help put us on a better path, the House Ways and Means Committee released a set of proposals in March that are aimed at reforming tax laws for small businesses. As part of a broader, comprehensive tax reform package that would significantly lower rates for small businesses, the proposal would reform and try to simplify tax compliance for small businesses and provide certainty with respect to the ability of small businesses to recover certain costs immediately. These include widely supported reforms such as permanent Section 179 expensing and expansion of the “cash accounting” method, amongst other provisions.

“The most important thing for lawmakers to focus on in this tax reform is re-establishing rate equality,” Witherwax said. “That is, making sure that the current tax rate applied to income earned by an active small business that is organized as a partnership, S corporation or sole proprietorship is no higher than the rate applied to income earned by a normal C corporation. Normally, I would say they should focus on making it easier for small businesses to comply by providing simple and direct rules and additional safe harbors, as well as focusing on minimizing the record keeping burden. But this is not a normal tax reform process.”

Witherwax said the tax reform that is currently being discussed in Washington began as a quest to reduce the statutory corporate tax rate in order to address the disadvantage U.S multinationals face in competing with the multinationals of other nations as a result of the U.S. rate.

“There are good reasons to do that,” she said. “But reducing corporate rates alone would disadvantage those active small businesses that operate as partnerships, S corporations or sole proprietorships. Leaving their rate where it is while reducing the rate of their larger C corporation competitors would put these small businesses at a competitive disadvantage. A disadvantage that would be exacerbated  if the revenue lost by reducing the corporate rate is offset by changes that eliminate some of the business tax benefits that small businesses rely on. For these reasons, in this tax reform, rate equality is the most important thing.”

The good new is that the discussion draft released by the House Ways and Means Committee is designed to provide more uniform tax treatment for pass-through businesses such as sole proprietorships, partnerships and S corporations. The draft also includes proposals that would spur investment in equipment needed to grow business operations by providing permanent expensing of investments and property; would simplify tax and accounting practices by expanding the use of the simpler “cash accounting” method to businesses with gross receipts of $10 million or less; would provide relief for start-up and organizational costs by establishing a unified deduction for these expenses; and make tax compliance easier for partners and S corporation shareholders by reordering and simplifying the due dates of tax returns for partners and S corporations.

To create reform that’s going to work, experts say, it’s vital that they solicit first-hand feedback.

“Lawmakers should ask small business owners and their tax advisors what changes they want,” said John Hanson, a tax attorney with Sacks Tierney in Phoenix. “ They are best suited to propose worthwhile changes because they are dealing with these issues daily.”

Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee that released the set of proposals aimed at reforming the tax laws for small businesses, said he encourages small business owners and stakeholders to review the discussion draft and to share feedback with their lawmakers and the Ways and Means Committee.

“More Americans get their paycheck from small businesses than any other type of business or government,” Camp said in a statement. “If we really want to strengthen our economy and put more money in the pockets of American workers, we must fix the Tax Code and how it treats small businesses. In addition to all the complexity these Main Street businesses face, Washington currently taxes them at top rates nearly 10 percentage points higher than their corporate counterparts. That’s simply unfair to small businesses … These are the businesses we see every day, where so many of our friends, family and neighbors work … They need and deserve a Tax Code that works for them.”

THE IMPACT OF REFORM

Ron Butler, partner, Ernst & Young: “A broader, comprehensive tax reform package that lowers rates and simplifies tax rules for individuals, small businesses and corporations could be a driving force for economic growth and job creation in the American economy.”
John Hanson, tax attorney, Sacks Tierney: “Tax reform that reduces the compliance burden on small business owners will allow them to invest more resources in their businesses, become more profitable and create more jobs.”
Donna Witherwax, tax partner, Grant Thornton: “It depends on the tax reform we get.  If business rate equivalency can be restored, and a more efficient tax code adopted, small business could be a winner.”

Curtis A. Hildt, tax managing partner, Deloitte Tax LLP: “Small businesses will be able to focus their efforts toward business operations instead of weaving their way through a complex tax system.”

economy

U.S. Business Leaders Showing Signs of Optimism

On the heels of a pessimistic outlook during the fourth quarter of 2012, US business leaders show signs of increased optimism in the performance of the nation’s economy according to the latest data from the Grant Thornton International Business Report, a survey of 3,200 business leaders in 44 countries. In first quarter 2013, optimism among U.S. business leaders rose from -4 percent to 31 percent.

This finding accompanies IBR data that reveals an improvement in sentiment about most areas of business performance and stability. The net percent balance of US business leaders expecting revenues to increase in 2013 rose by eight percentage points from the fourth quarter. In addition, profitability expectations rose sharply in first quarter 2013, up 14 percentage points from the previous quarter. Encouragingly, hiring expectations in the United States remain above the global average. A net balance of 29 percent of business leaders in the United States foresee an increase in hiring during the coming year, a four-percentage point increase from the previous quarter and five percentage points above the global average.

“With the fiscal cliff and presidential election behind us, the anxiety has seemingly lessened among business executives,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “While uncertainty is still present, it’s encouraging to see such a large increase in optimism among the nation’s business leaders—particularly when it comes to employment, which is key to US economic health.”

The increase in optimism in the US economy is on par with what is occurring in other markets, with global business optimism up to its highest level since early 2011. Globally, a net balance of 27 percent of businesses are optimistic about the economic outlook, up from just 4 percent from the previous quarter. Following the United States, the next two largest economies in the world also saw sentiment improve. China business optimism rose from a net balance of 19 percent to 29 percent while Japan saw a major increase in optimism, from a net balance of -70 percent to -2 percent.

Still, there are some areas for improvement. Despite a modest uptick from the previous quarter, few U.S. businesses plan to invest in research and development in 2013, with a net balance of only 12 percent expecting an increase during the next 12 months. In addition, 36 percent of U.S. business leaders cite regulations and red tape as the number one factor stopping them from growing their operations in the next 12 months.

Sharon Lechter - headshot

NB|AZ names Lechter 2013 Woman of the Year

National Bank of Arizona (NB|AZ) announced Sharon Lechter as the winner of its fourth annual Women’s Financial Group (WFG) Woman of the Year Award. The award, designed to honor outstanding professional women throughout metropolitan Phoenix, was presented to Lechter during a ceremony last week.

Lechter is a local businesswoman, investor and financial literary activist whose philanthropic work has helped establish, educate and train professional women in the Valley. Lechter is the founder and CEO of “Pay Your Family First,” a money management program aimed to increase financial literacy among youth. She also is the co-author of “Rich Dad Poor Dad,” a financial self-help book that has sold more than 26 million copies worldwide.

“As host to the Women’s Financial Group, National Bank of Arizona continues to demonstrate its dedication to building a stronger community for us all,” Lechter said. “I am deeply honored and humbled to be chosen as the 2013 Woman of the Year and pledge my continued support of the bank’s efforts to encourage and ignite results driven collaboration among the fabulous women of Arizona.”

Woman of the Year Award finalists included Dena Patton and Stella Shanovich. Patton is the co-founder and president of “The Girls Rule Foundation,” has sat on the board of NAWBO and regularly coaches women on entrepreneurship, confidence and building business. Shanovich is a partner at Grant Thornton where she spearheaded “Women at Grant Thornton,” an in-house networking and leadership organization for professional women.

“At NB|AZ we take great pride in supporting local professional women who are making a positive impact in their communities,” said Deborah Bateman, executive vice president, director of wealth strategies of National Bank of Arizona. “We received many nominations for women qualified for this prestigious award and are honored to recognize Sharon Lechter as our 2013 Woman of the Year.”

All nominations for the Woman of the Year Award were reviewed by a selection committee comprised of industry leaders and the National Bank of Arizona Women’s Financial Group Advisory Council.

For more information about NB|AZ and the Woman of the Year award, please visit www.nbarizona.com.

Sharon Lechter - headshot

NB|AZ names Lechter 2013 Woman of the Year

National Bank of Arizona (NB|AZ) announced Sharon Lechter as the winner of its fourth annual Women’s Financial Group (WFG) Woman of the Year Award. The award, designed to honor outstanding professional women throughout metropolitan Phoenix, was presented to Lechter during a ceremony last week.

Lechter is a local businesswoman, investor and financial literary activist whose philanthropic work has helped establish, educate and train professional women in the Valley. Lechter is the founder and CEO of “Pay Your Family First,” a money management program aimed to increase financial literacy among youth. She also is the co-author of “Rich Dad Poor Dad,” a financial self-help book that has sold more than 26 million copies worldwide.

“As host to the Women’s Financial Group, National Bank of Arizona continues to demonstrate its dedication to building a stronger community for us all,” Lechter said. “I am deeply honored and humbled to be chosen as the 2013 Woman of the Year and pledge my continued support of the bank’s efforts to encourage and ignite results driven collaboration among the fabulous women of Arizona.”

Woman of the Year Award finalists included Dena Patton and Stella Shanovich. Patton is the co-founder and president of “The Girls Rule Foundation,” has sat on the board of NAWBO and regularly coaches women on entrepreneurship, confidence and building business. Shanovich is a partner at Grant Thornton where she spearheaded “Women at Grant Thornton,” an in-house networking and leadership organization for professional women.

“At NB|AZ we take great pride in supporting local professional women who are making a positive impact in their communities,” said Deborah Bateman, executive vice president, director of wealth strategies of National Bank of Arizona. “We received many nominations for women qualified for this prestigious award and are honored to recognize Sharon Lechter as our 2013 Woman of the Year.”

All nominations for the Woman of the Year Award were reviewed by a selection committee comprised of industry leaders and the National Bank of Arizona Women’s Financial Group Advisory Council.

For more information about NB|AZ and the Woman of the Year award, please visit www.nbarizona.com.

Small Businesses getting help in down economy

U.S. Business Leaders Show Declining Optimism about Economy

U.S. business leaders continue to show a lack of optimism about the performance of the nation’s economy, according to the latest data from the Grant Thornton International Business Report, a survey of 3,200 business leaders in 44 countries. In fourth quarter 2012, optimism among US business leaders fell to -4 percent, the lowest since the depths of the financial crisis.

This finding accompanies a general lack of optimism about most areas of business performance and stability. For example, the net percent balance of US business leaders expecting revenues to increase in 2013 decreased by 10 percentage points from the third quarter. In addition, profitability expectations dropped by nine percentage point from the third quarter. As far as employment, arguably the country’s biggest concern, only a net balance of 25 percent of business leaders in the United States foresee an increase in hiring during the coming year, a three percentage point decrease from the previous quarter.

“The lack of confidence in, and optimism about, our economy among the nation’s business leaders shouldn’t be a surprise to anyone, given the ongoing fragile recovery and recent drama surrounding the fiscal cliff,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “During the next few months, our country’s political leaders should focus on resolving uncertainty so that business leaders, in this country and beyond, can gain the confidence in our economy that is crucial to US business competitiveness and the dynamic growth that comes with it.”

The notion that the recent debate about the fiscal cliff is affecting optimism about the economy correlates with other recent research from Grant Thornton US, which suggests 40 percent of CFOs have delayed decision making because of similar concerns.1

And though 39 percent of respondents believe there will be increased access to financing in the next 12 months, which often helps grow a business, 48 percent don’t expect to see any change. Slightly encouraging is that 74 percent of business owners plan to give employees raises in the next 12 months, though only 12 percent plan to give raises above the rate of inflation.

Interestingly, the lack of optimism in the US economy is actually quite different than what is occurring in other global markets. For example, business optimism in the emerging markets of Latin America remained relatively stable in the past year, and actually increased to 69 percent in the fourth quarter, up from 61 percent during the same period last year. The BRIC economies (34 percent to 39 percent) also remained consistently optimistic, and there has also been an increase in Asia Pacific (excl. Japan) (23 percent to 28 percent) during the same period.

By comparison, optimism in North America has been on a bit of a rollercoaster during the past year—going from 6 percent in the fourth quarter 2011 to 52 percent in the second quarter 2012, before falling to just 1 percent in the fourth quarter 2012. The G7 economies have seen similar fluctuations, while European businesses have reported a slow decline in business optimism.

“With such lack of optimism in our economy, many business owners may decide to postpone any major investments related to the future of their business, but this could be a mistake,” said Chipman. “In a market such as this, there are opportunities for certain businesses that have the foresight to concentrate on long-term growth opportunities by investing in the right people and infrastructure. Those businesses will be best positioned for success once sustained economic recovery is finally a reality.”

Financial Statements

Momentum builds to soften accounting standards for private companies

Private companies say they need to stop being treated like public companies. And now the accounting world has begun to listen to their complaints.

The debate about whether to soften accounting standards for private companies has gone on for years, but this time it seems to be moving toward action, although slowly. But this past summer, the parent organization of the Financial Accounting Standards Board (FASB) created a new Private Company Council to discuss possible changes in the U.S. Generally Accepted Accounting Principles, better known as GAAP.

The theory behind the move is that the GAAP standards may not always be necessary for private companies, particularly small and medium-size businesses. The council will develop a framework for deciding whether the users of private company financial statements have unique needs and will look at ways to reduce the complexity and cost of preparing private company financial statements as is now the case under GAAP.

Private companies contend that since they don’t raise capital from the public, they shouldn’t have to meet the same expensive accounting standards that publicly traded companies do. In many cases, they are also much smaller than public companies.

Right now, the FASB is seeking feedback on possible changes that could be proposed by this new council.

“They’re only at the talking stage in these standards,” said Ralph Nefdt, managing partner in the Phoenix office of the accounting firm of Grant Thornton. “But it’s a very important debate for standard setters.”

At the same time, the American Institute of Certified Public Accountants has issued its own proposed Financial Reporting Framework that small and medium-size privately held businesses could use to prepare their financial statements when U.S. GAAP is not required. The AICPA is seeking comments on this proposal and expects to finish this framework by 2013.

In the case of the AICPA, a company’s management would have to decide whether or not to use the framework, and the institute would not have authority to require its use, said Ron Butler, Arizona managing partner for Ernst & Young.

“Auditors’ reports for financial statements prepared under the proposed framework would indicate that they were prepared on a non-GAAP basis,” Butler said.

Among major concerns about softening standards for statements is that many companies might report a very different financial performance under the new framework. And whether lenders, creditors and other users of financial statements would accept statements prepared under the AICPA’s proposed framework remains to be seen. “Many contracts, regulations and laws require the use of U.S. GAAP,” Butler said.

In other words there might be risks for businesses in using the AICPA framework because banks and investors might not accept anything other than GAAP standards. Some accountants might also resist the change.

But the AICPA’s plans could bring changes sooner. “This new framework could speed up the processes where an accounting change could occur,” said Richard Goldenson, managing partner of CliftonLarsonAllen’s southwest region based in Phoenix.

He also said that the framework could simplify standards for small and medium-size businesses but not reduce them: “The accounting principles comprising the framework for small and medium-size entities are intended to be the most appropriate for the preparation of the financial statements based on the needs of the financial statement users. Financial institutions in many cases do not require GAAP-based statements.”

Many small and medium-size businesses could realize cost savings because often they do not have the resources and expert staff to implement complex accounting requirements.

Some of the other key features of the AICPA proposal:
    It would be a principles-based framework, available for incorporated businesses and unincorporated.
    It is based on accounting principles commonly used or previously used for financial reporting.
    Historical cost would be the primary measurement basis.
    Fewer disclosures would be required than under U.S. GAAP.
    Fewer adjustments may be needed to reconcile tax return income with book income.
    It is intended to be used regarding issues that face small and medium-size businesses.

If the framework moves ahead as proposed, accountants, companies and regulators would have to go through an education process so that financial reports would be carefully executed. A company that wants to use the framework would need substantial lead time to switch over.

economy

CFOs see stability in US economy despite ‘fiscal cliff’ threat

Nearly 70 percent of chief financial officers of US companies believe the US economy will either improve or remain stable during the next six months, according to the 2012 Fall CFO Survey from Grant Thornton LLP. The survey findings reveal that 39 percent of respondents believe the state of the US economy will remain the same in the first half of 2013, while 30 percent believe it will improve. Of those surveyed, 31 percent said it will worsen, which is an increase of ten percentage points from the firm’s 2012 Summer CFO Survey findings.

That expectation of stability extends throughout the survey findings, with CFOs predicting that industry financial prospects (42 percent), pricing or fees charged (51 percent), and head count (49 percent) will all remain the same in the next six months.

And though the threat of a “fiscal cliff” looms large, 53 percent of respondents say it would not affect the first six months of 2013 for their companies. Further, 60 percent of respondents do not consider the uncertainty of the “fiscal cliff” resolution an obstacle to making business decisions.

“The turbulent years of the recent past have made businesses more adept at managing through economic uncertainty,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “It is reassuring to see that CFOs are confident that we will not take any steps backward in our progress.”

Also encouraging, 34 percent of respondents believe industry financial prospects will improve, 35 percent believe pricing or fees charged will increase, and 34 percent say head count will increase.

In addition, according to the survey findings CFOs are committed to keeping several employee benefits the same as last year, including bonuses (55 percent), stock options (69 percent), 401K match (85 percent), and other company-matched retirement contributions (82 percent). On a positive note, 59 percent plan to increase salaries.

“While many companies don’t foresee the economy taking a turn for the worse in the next six months, there is still an absence of improving economic conditions that are needed to propel our country into growth mode,” Chipman added. “Only 34 percent of companies expect their financial prospects to improve in the next six months, which means that reluctance to increase hiring and make capital investments will continue to bog down our economy.”

Grant Thornton LLP conducts its CFO Survey twice a year with CFOs and other senior financial executives across the United States. The fall 2012 survey took place between November 7 and November 30, with 1,582 CFOs and comptrollers participating. The survey has a confidence interval of +/- 2.5% at a 95% confidence level. Questions ranged from the state of the economy to developments in accounting and financial reporting. For more information on the survey, visit www.GrantThornton.com/CFOSurvey.

IMG_0026

Grant Thornton Give Back Day

On Thursday, Nov. 15, nearly 800 current and retired partners and managing directors from Grant Thornton LLP offices across the globe gathered in the Valley during their annual meeting, which was held at the Fairmont Scottsdale Princess, to help give back to the local area community. During the day, the firm made a check presentation of $12,000 to Kitchen on the Street, a non-profit organization that provides food for children who are not guaranteed a meal during weekends. In addition, the partners supplied and assembled emergency food kits for 500 local families in need this holiday season, also through Kitchen on the Street.

“Hunger is a growing crisis for 17 million children in the United States,” said Ralph Nefdt, Grant Thornton’s local office managing partner. “One in four American children struggles with food insecurity, which results in academic developmental issues that present both immediate and long-term challenges. These issues not only affect the child experiencing food insecurity, but the entire community.”

A leader in this community, events like this are just some of the many outreach programs supported through Grant Thornton C.A.R.E.S. (Community Awareness and Responsibility Expressed through Service), a program designed to demonstrate leadership not only in its industry, but also in its community. Through the program, nicknamed GT CARES, employees contribute time, money and expertise to local civic organizations, charities, universities and professional associations.

104351920

CFOs Believe Economy Will Not Improve During the Next Six Months

Fifty-four percent of CFOs in the U.S. do not foresee any changes in the health of the economy during the next six months, according to a survey by Grant Thornton LLP. Still, most CFOs surveyed are optimistic about maintaining (45 percent) or increasing (37 percent) their headcount over the next six months.

According to the survey, the biggest barrier to employee and company financial growth is the cost of employee benefits, with 56 percent identifying healthcare and pensions as the prime culprits. Furthermore, as the cost of healthcare grows, 77 percent of those surveyed anticipate company and employee contributions to increase over the next year. Yet benefits such as life insurance and disability are expected to remain mostly unchanged.

“With the economy in a fragile recovery, CFOs are most concerned about rising healthcare costs when it comes to compensation and benefits,” said Ralph Nefdt, office managing partner of Grant Thornton LLP’s Phoenix office. “Most companies will continue to see a significant increase in healthcare costs unless they have taken proactive steps to promote wellness and better utilization of healthcare benefits, which can help ease the increase of these costs.”

The survey also shows that 45 percent of those surveyed believe that deficit reduction is the number one initiative to improve overall economic optimism, while 27 percent believe job creation is the solution. In addition, 46 percent said that a tax incentive is not the solution. Even so, 30 percent of those surveyed believe a direct tax incentive for hiring new workers would increase the likelihood of expanding their workforce.

“CFOs are in a prime position to judge the health of the economy, as they have an inside look at their companies’ hiring practices as it relates to financial health of the organization,” added Nefdt. “It remains to be seen how upcoming events, such as the Presidential Election, will impact that outlook.”

About the Survey
Grant Thornton conducted the CFO Survey between June 21 and July 24, with 400 CFOs and comptrollers participating. The survey has a confidence interval of +/- 4.9 percent at a 95 percent confidence level.

"MACH" A Match for Whistleblowers

“MACH” A Match For Whistleblowers

In 2002, the Sarbanes-Oxley Act (SOX) breathed new life into whistleblower programs for U.S.-listed public companies. This legislation had a particular impact on audit committees, handing them the responsibility of, “establishing procedures for

  • The receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
  • The confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”

SOX, however, did not provide any guidance to audit committees on what procedures should be considered or how to evaluate their effectiveness once established. As a result, for many companies, complaint handling is still a haphazard process that tends to operate in crisis mode. It can be both costly and time consuming, yielding few, if any, measurable results. We have found that — even now, 10 years after the enactment of SOX — companies are still struggling to find an effective approach to handling whistleblower complaints.

It is important to understand the role whistleblower complaint handling plays in deterring corporate fraud. Controls on the front end that prevent or deter fraud are critical — after all, the cheapest fraud is one that never happens. An effective whistleblower program, however, is the last line of defense.

According to the Association of Certified Fraud Examiners’ (ACFE’s) 2012 Report to the Nations, a study of 1.388 cases of occupational fraud, the most fraud is not detected as a result of internal controls. This is in part because perpetrators of fraud work in areas that are not tightly controlled or in areas that they themselves control. By far, the most effective form of fraud detection is a tip, often received via a fraud hotline.

The ACFE study also reports that the presence of a whistleblower hotline results in a much higher likelihood that occupational fraud will be discovered by a tip. For the most part, what has been lacking both from the literature and from practice is a methodical approach that organizations can use to register complaints and channel them to the appropriate groups for action. Only by establishing a comprehensive process will organizations be able to ensure that, when the whistle does blow, someone has the wherewithal to stop the train, get out and investigate.

One process, which Grant Thornton developed, is called the Model Accounting Complaint-Handling Process, or MACH Process. The MACH Process is designed to provide both meaningful structure and enough flexibility so that it can be adapted to any organization. It should not be viewed as a soup-to-nuts formula for setting up a whistleblower program. Instead, the MACH Process focuses on the component of any whistleblower program that requires the most attention from management and the board, handling complaints once they are received. Setting up the overall program is important, including making decisions regarding whether to insource or outsource the program administration, who to engage, how to handle different countries’ related legal requirements, and so on. The focus here is on what happens once the whistle blows and that train starts rolling down the track.

The MACH Process consists of six basic steps:

1.   Receive the complaint.
2.   Analyze the complaint.
3.   Investigate the complaint.
4.   Resolve the complaint.
5.   Report the resolution of the complaint.
6.   Retain the necessary documentation.

This complaint-handling process can be tailored to meet the needs of virtually any organization. The MACH Process is designed to ensure not only that venues exist for the gathering of whistleblower complaints, but also that all complaints are documented, investigated and addressed in the appropriate manner and that the process involves all necessary stakeholders.

Ultimately, by establishing an effective whistleblower complaint-handling process, organizations will be able to identify and deal with cases of fraud that have the greatest potential to harm reputation and bottom line.

For more information about the MACH Process, please visit gt.com.

Grant Thornton

Women At Grant Thornton Initiative Create An Environment Where Females Can Thrive

Stella(r) Leadership

For Stella Shanovich, an audit partner at Grant Thornton in Phoenix, her team is anything but a Good Ol’ Boys’ network or a Women-Only Club. It’s a group of men and women focused on building a dynamic, talented team.

“However, while inclusivity is key, it is also important to understand women and men are different in the ways we lead, communicate and build relationships,” says Shanovich, who became Grant Thornton’s first female partner in the Phoenix office in 2008. “These differences are neither wrong nor right — just different.”

It is the celebration of these differences that has helped Grant Thornton thrive in the valley over these past eight years.

A chief collaboration is “Women at Grant Thornton.”

The initiative, which Shanovich has headed on both a local and national level, focuses on:

  • Ensuring a culture that enhances retention and recruitment of women;
  • Enhancing personal development in client serving areas;
  • Increasing awareness of women’s successes;
  • Increasing the number of women in leadership roles within the organization.

Shanovich and her team connect this mission statement to one or more of the firm’s strategic drivers, including revenue growth, talent development, operational excellence, client service and branding, when considering an event or program for the initiative. Her team identifies the specific audience for each individual effort — be it females, males, seniors, staff, partners and managers or even newcomers.

The result? Five signature education programs:

  • Centered Leadership, which focuses on developing leaders through the way they think, act and communicate to achieve impact;
  • Executive Presence, which focuses on image in the business world;
  • Networking, which focuses on techniques for building productive and mutually-beneficial relationships;
  • Rainmaking, which focuses on cultivating relationships into business opportunities;
  • Conflict Cure, which focuses on awareness through recognizing one’s conflict style as well as how to constructively defuse conflict.

Shanovich and her team have also participated in, or sponsored, women-in-business panel discussions, negotiation skills training, work-life integration seminars and dress-for-success events.

According to Ralph Nefdt, Grant Thornton’s Phoenix office managing partner, the Women at Grant Thornton program helped senior management truly understand that to develop great leaders, it must develop a culture of flexibility. this realization has led to flexible work policies, back-up dependent care, adoption assistance, paid parental leave and more for all members of the team nationwide.

“Today, half of our leadership roles here in Phoenix are filled by females,” Nefdt says. “But the real power of the Women at Grant Thornton program lies in its ‘people focus,’ not simply its female focus.”

As such, the men at Grant Thornton are regularly invited and encouraged to participate in the various activities/events to enhance their skills as well.

“Arizona businesses deserve the benefit of a team dedicated to leveraging their talents to bring innovation and perspective,” Shanovich says. “We bring our clients collaborative individuals who believe in having a voice and being part of something different.”

For more information on Grant Thornton, visit www.grantthornton.com.

Arizona Business Magazine July/August 2012

Brad Preber - Managing Partner - Grant Thornton

First Job: Brad Preber, Managing Partner Grant Thornton

Brad Preber, Managing Partner of Grant Thornton, discusses his first job selling seeds door-to-door, his mentors and what he learned along the way.


Brad Preber

Title: Managing Partner
Company: Grant Thornton

Describe your very first job.
When I was a teenager, I found an ad in the back of a magazine promoting the door-to-door sale of seeds. You earned points that you could convert into prizes or
cash. I used the money I earned selling seeds to my neighbors to buy a lawn mower that I then used to start lawn care business.

What did you learn from that first job?
I learned what it takes to sell and promote yourself. I experienced the courage it took to knock on someone’s door and the feeling of optimism that came when they actually did what I wanted them to do.

Describe your first job in your industry.
It was a summer job I took doing some bookkeeping for construction companies. I collected the transaction records, recorded them into the accounting books, and prepared financial statements.

What were your salaries in your first job and first industry job?
Selling the seeds was a point system and the points were converted into prizes or cash. I was paid $300 a month for doing bookkeeping for the construction company. I also had an opportunity to apply for scholarship money from the company. I was a broke college student so any extra money helped.

Who is your biggest mentor?
I don’t really have a single individual that I see as a mentor. Instead, I looked to teachers, coaches, and friends’ parents for guidance. I took small pieces of each of them into consideration for what I wanted to be when I grew up. They combined to become big portion of what I am today.

What lessons did you take from your high school coaches?
It’s very clear that the principle of the seven Ps — Proper Planning and Preparation Prevents Pretty Poor Performance — is as applicable to life as it is to football. Like football, it takes a team to be successful in business. You have to know your role, set goals for the team, and execute strategies to achieve them.

What advice would you give someone entering your industry today?
The good news is that there are still plenty of jobs to be had in accounting and finance. One thing most people don’t recognize is that there are rarely any home runs in this business. It’s a series of small steps and steady improvement over a long career that allows you to advance and move into ownership.

If you weren’t doing this, what would you be doing instead?
If I had the time and the capital to pull it off, I would have become an artist. If I didn’t have the capital to pull it off, I would have become a fly-fishing guide.

Arizona Business Magazine March/April 2012

Grant Thornton Business Optimism Index

Grant Thornton Business Optimism Index Reports Growing Confidence In Economy

Each year, Grant Thornton works with business leaders nationwide to gauge their optimism in the U.S. economy. This project, titled the Grant Thornton Business Optimism Index, was started in 2002 with three key measures over time:

  • U.S. economy: Business leaders’ perceptions of whether the U.S. economy will improve, remain the same or deteriorate in the next six months.
  • Business growth: Business leaders’ perceptions about the growth of their own business over the next six months.
  • Hiring expectations: Whether business leaders expect the number of people their company employs to increase, remain the same or decrease in the next six months.

The most recent survey, available now, was conducted in late 2011 by an outside polling organization, with nearly 400 senior executives from various industries across the country responding.

And there is good news!

While in recent years the responses have been understandably tempered and/or negative, current data shows we may have finally gotten through the worst.

According to the Index, business leaders in the United States have a growing confidence in the economy. Specifically, one-third of all surveyed believe the domestic economy will improve in the next six months, compared with just 18 percent in the third quarter of 2011.

The Index itself rose 11.8 points to 57.9, reflecting increased optimism around key economic measures: the U.S. economy, business growth and hiring expectations.

Some specific data over time:

5/2010 8/2010 11/2010 2/2011  5/2011  8/2011  11/2011 
OVERALL Business Optimism Index* 67.6 58.4 63.0 69.7 62.6 46.1 57.9
Believe U.S. economy will improve 63% 34% 47% 64% 45% 18% 33%
Believe U.S. economy will get worse 6% 16% 10% 4% 12% 46% 20%

Growth, we found, is also top-of-mind among our nation’s leaders.

In fact, 75 percent are optimistic about their companies’ growth in the next six months, up from 60 percent in the third quarter of 2011. Hiring appears to be on the rise as well, with 37 percent of U.S. business leaders noting that they expect to increase staff levels in the next six months, up from 28 percent in the previous quarter.

However, the U.S. optimism is still very reliant on how struggles occurring in the global marketplace, including Europe and China, are being dealt with.

Additional data collected over the past two years:

5/2010 8/2010 11/2010 2/2011 5/2011 8/2011 11/2011
Very or somewhat optimistic about own business 87% 76% 79% 87% 79% 60% 75%
Very or somewhat pessimistic about own business 13% 24% 21% 13% 21% 40% 25%
Plan to increase staff 44% 38% 43% 49% 40% 28% 37%
Plan to decrease staff 12% 15% 15% 10% 12% 25% 14%

When asked what public policy initiative would make business leaders most optimistic about in the country’s future, a job creation program was rated highest, as in the prior quarter.

Please rank in order the public policy initiatives listed below that if adopted would make you most optimistic about our country’s future. Rank from 1 to 5, with 1 being most optimistic and 5 being least optimistic:

Public policy initiative Most Optimistic
Job creation 43%
Deficit reduction 31%
European plan to promote international economic security 17%
Reduction in effective corporate tax rate 7%
Regulatory adjustments to improve IPO market access 2%

While we still have a long way to go, this data represents improved optimism in our nation’s future success, growth over time and economic stability.

For more information or for the detailed white paper on the Grant Thornton Business Optimism Index, please visit gt.com.

2012 ACC Awards Reception

Arizona Corporate Counsel Awards Reception (PHOTOS)

Nearly 300 in-house counsel attorneys and professionals congregated at The Ritz-Carlton in Phoenix on January 12, 2012 for the first annual 2012 Arizona Corporate Counsel.

Attendees from ON-Semiconductor, Grant Thornton, Ogletree Deakins, LifeLock, Barrett-Jackson and many more notable law firms and businesses shared a wonderful evening with AZ Business Magazine and AZ Big Media, where we recognized and celebrated the winners in each category for extraordinary legal skill and achievement across a full range of in-house responsibility, exemplary leadership and their contributions to the Arizona community at large.

We hope everyone enjoyed your evening, and we look forward to next year’s event.

Thank you to our sponsors and presenters,
and congratulations ACC Award winners!


Photos from the 2012 Arizona Corporate Counsel Awards reception:

[slickr-flickr tag="acc-awards-party" items="29" type="slideshow" id="54004193@N04"]

View this album on Flickr.

Arizona Corporate Counsel Awards 2012 Winners

In-House Counsel of the Year in the Government/Public Sector:
Jane Alfano, Senior Executive for SRP Agricultural Improvement and Power District

In-House Counsel of the Year – Nonprofit:
Cindy Sehr, Chandler Regional and Mercy Gilbert

In-House Counsel at a Small Private Company:
Virginia Llewellyn, Barrett- Jackson

In-House Counsel for a Large Private Company:
Christopher Kevane, Rural/Metro Corporation

In-House Counsel of the Year for a Small Public Company:
David Glynn, OneNeck IT

In-House Counsel of the Year for a Large Public Company:
Mark Rogers, American Corporate Counsel – Arizona Chapter Arizona

Intellectual Property Attorney of the Year:
Clarissa Cerda, LifeLock

Litigator of the Year:
Mark Larson, Honeywell

Up-and-Comer of the Year:
Lukas Grabiec, Intel

In-House Law Department of the Year:
ON-Semiconductor

Most Admired Companies - AZ Business Magazine Sept/Oct 2010

2010 Most Admired Companies Winners – Customer Opinion

The Customer Opinion category recognizes companies that deliver exceptional customer service.

Winner: American Express
Category:
Customer Opinion
Headquarters: New York
Year Est.:
1850
No. of Employees in AZ:
7,073
Recent Award:
Fortune Magazine’s Most Admired Companies – 2010
www.americanexpress.com | Facebook | Twitter

video by Sonoran Studios

American Express prides itself on understanding and fulfilling the customers’ needs, and then using the knowledge gained by each interaction to improve the company. One way American Express does this is by calling employees at their service centers “Customer Care Professionals.” They aren’t just service representatives; they are professionals who are the face and voice of American Express. The employees understand that when they take a call, they aren’t just providing cards for payments — they are helping customers achieve their goals, live out their passions and get through tough situations. American Express has delivered customer care from medical evacuations to replacing stolen cards anywhere at anytime to creating unique experiences for customers.

American Express welcomes customer feedback to help create a better, more customer-friendly company. At American Express, a call is not a transaction; it’s an opportunity to create a better relationship with the customer. Customer relationships also have been strengthened by American Express’ hiring technique. The company attracts employees from the retail, sales and hospitality industries who know how to create an environment that fosters strong customer service.

In its 160 years, the company’s core values have instilled a sense of pride in its employees. The employees’ pride in what they do transfers to the customer during their conversations. For three consecutive years, from 2007-2009, J.D. Power and Associates has named American Express highest in customer satisfaction among credit card issuers. American Express also was one of Fortune Magazine’s Most Admired Companies.


Grant Thorton

Finalist: Grant Thornton
Category:
Customer Opinion
Headquarters:
Chicago
Year Est.:
2004 (in AZ)
No. of Employees in AZ:
73
Recent Award:
Arizona Women’s Top 25 Workplaces for Women – 2009
www.grantthornton.com
| Facebook | Twitter

The “Grant Thornton Client Experience” demonstrates the company’s commitment to professional excellence. Employees strive to understand and exceed clients’ expectations, deliver high-quality service, provide valuable ideas and recommendations, show a personalized focus, and provide value. All branches of Grant Thornton strive to exceed their clients’ expectations, but the Phoenix office exceeded the company’s expectations in 2009. Grant Thornton uses a third-party vendor to ask its key clients to evaluate the company’s performance and the client’s service experience. In the audit and tax sections, the Phoenix office scored more than the 8.5 out of the 10 mark the company set as its target goal.

In addition to the Phoenix office exceeding the company’s goal, Grant Thornton has won national honors, including being on the Companies that Care Honor Roll from 2005-2009.  In 2009, Grant Thornton was on Working Mother Magazine’s Top Ten Companies list.


Sonora Quest

Finalist: Sonora Quest Laboratories
Category:
Customer Opinion
Headquarters:
Tempe
Year Est.:
1997
No. of Employees in AZ:
1,750
Recent Award:
Arizona Corporate Excellence Award – 2009
www.bannerhealth.com

Sonora Quest Laboratories’ vision is to be “the trusted leader in diagnostic testing and information services.” This vision shows the company’s focus on the customer, whether it be patients, health care professionals or payer groups. The Patient Care Gold Standard, a poster with 17 standards of care, hangs at each service center to reinforce excellent patient care.

Patients are surveyed by a third-party vendor at patient service centers, and this information is shared with employees to improve the patient experience. In the first quarter of 2010, Sonora Quest Laboratories achieved a 97 percent customer satisfaction rating from patients served at the patient service centers. Employees must commit to putting patient care first by signing the Phlebotomy Code of Conduct and the “Our Promise to Our Patients” packet. Sonora Quest Laboratories also shows its commitment to providing superior service and timely, accurate information to its health care clients by using quality tools and principles that improve productivity.


To buy a print version of the 2010 Arizona’s Most Admired Companies
go to MagCloud.com

Arizona's Most Admired Companies November-December 2010

Most Admired Companies - AZ Business Magazine Sept/Oct 2010

2010 Most Admired Companies Award Winners

Arizona Business Magazine and BestCompaniesAZ are honored to unveil the winners of our inaugural Arizona’s Most Admired Companies Awards.

With 43 winners, we think you’ll agree the awards selection committee has done an outstanding job in determining some of the most admired companies in our state.  Our primary goal in developing this program was to find those organizations that excel in four key areas: workplace culture, leadership excellence, social responsibility and customer opinion.  This list features the most prestigious companies in our state, providing us the opportunity to learn from the best.

Adolfson & Peterson Construction
Headquarters: Minneapolis
Year Est.: 1991
No. of Employees in AZ: 69
Recent Award: AIA Kemper Goodwin Award – 2009
WEB: www.a-p.com

AlliedBarton Security Services
Headquarters: Conshohocken, Penn.
Year Est.: 1957
No. of Employees in AZ: 1,047
Recent Award: Brandon Hall Research Award for Best Integration of Learning and Talent Management – 2009
WEB: www.alliedbarton.com
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Twitter

American Express
Headquarters: New York
Year Est.: 1850
No. of Employees in AZ: 7,219
Recent Award: Fortune Magazine’s Most Admired Companies – 2010
WEB: www.americanexpress.com
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Twitter

Arizona Charter Academy
Headquarters: Surprise
Year Est.: 2001
No. of Employees in AZ: 61
Recent Award: Elks Lodge Community Partner of the Year – 2010
WEB: www.azcharteracademy.com
Twitter

Banner Health
Headquarters: Phoenix
Year Est.: 1999
No. of Employees in AZ: 27,528
Recent Award: Gallup Great Workplace Award – 2009
WEB: www.bannerhealth.com
Facebook
Twitter

BeachFleischman PC
Headquarters: Tucson
Year Est.: 1991
No. of Employees in AZ: 104
Recent Award: Accounting Today’s Best Accounting Firms to Work For – 2009
WEB: www.beachfleischman.com

To buy a print version of the 2010 Arizona’s Most Admired Companies
go to MagCloud.com

Arizona's Most Admired Companies November-December 2010