INSIGHT Magazine - September/October 2009

In this issue

Why water shortages matter to you

The case for anti-green

Alternative energy & the US economy

Illinois CPAs voice their green opinions

Is going green right for your firm?

Track your carbon footprint

Green investing sees its golden age

Adaptive reuse—anincentive to go green

Young, gifted, greenaccounting gurus

Green technologies, prune your costs

Oil & gas tax creditsboost eco practices

The Magazine of the Illinois CPA Society www.icpas.org/insight.htm | September/October 2009

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indexSeptember/October 2009 Vol.59 No. 3

cover stories

columns

regulars

34 Water Water EverywhereBy Sheryl Nance-Nash

But maybe not for long…What could easily be dismissed as anenvironmental issue has a heavy impact on business and industry aswell. Here’s the business case for why water shortages matter.

38 Is Green Worth the Money?By Kristine Blenkhorn Rodriguez

Criticizing the green movement is not politically correct. But is itwrong to want a sound business case for going green?

42 Green PowerBy Carolyn Tang

What will alternative energies mean to the US economy?

8 Research How Green Are You Now?By Judy Giannetto

Is Illinois’ finance community answering the call for businessgreening?

12 Investing Wind Fall By Derrick Lilly

Are we poised for a heyday in green investing?

14 Corporate Watch Your StepBy Christine Bockelman

Dollars, cents and your carbon footprint.

18 Small Business Feeling Green?By Selena Chavis

Find room in your practice to go the eco route.

22 Real Estate Urban RenewalBy Bridget McCrea

There’s a green—and a financial—incentive for breathing new lifeinto old buildings.

24 Young Professionals Green GuruBy Robert J. Derocher

“Think Green” is the motto of the 21st century finance pro.

28 Technology Flowering TechnologiesBy Selena Chavis & Derrick Lilly

Watch business green and cost savings grow.

32 Tax Well OiledBy Harvey Coustan, CPA

Repealing oil and gas exploration tax credits may push producerstowards greener practices.

4 First Word

6 Seen+Heard

46 Classifieds

48 Time+Talent

Visit eINSIGHT today!www.icpas.org/insight.htm

With everything and everybody from Walmart to

the Willis Tower (or, for the traditionalists among

us, the Sears Tower), becoming more conscious of

the environment, the phrase “going green” might

be wearing a bit thin. Late last year a reporter from

the San Francisco Chronicle included “going

green” in his list of 11 overused phrases, suspecting

it was becoming more of a PR buzzword than a

plan of action. Hear a phrase one too many times,

and you begin to tune it out.

But it’s no time to ignore what’s happening on the

environmental front. Climate legislation may

change not only our natural consumption patterns

but our profession. Just as International Financial

Reporting Standards transition from an emerging

issue to a real one, environmental accounting waits

in the wings, equal in its global good intentions.

Contemplate the possibilities for a CPA’s expertise. Accountants will be needed to help industries

calculate their emissions, and track and report their carbon footprints to the Environmental Pro-

tection Agency. Climate change related risks and opportunities may creep into quarterly financial

reports. As companies develop environmentally friendly business practices, they’ll need someone

to guide them though the financial pros and cons.

We wouldn’t be doing another green issue if the Society didn’t think it was important to take a

closer look at the increasing interest in the environment from the CPA’s unique perspective. And

from the results of our second How Green Are You? survey (which INSIGHT’s editor-in-chief, Judy

Giannetto, explores in this edition of INSIGHT), it seems that more of our members are recogniz-

ing the importance of this issue.

To really grasp the implications of this movement—a movement so popular that it has been labeled

a fad by some—many of us will need to take a step back. We’ll need to be objective about what

“going green” means to our clients, our staffs and our bottom lines, rather than what it means—

or doesn’t mean, as the case may be—to us.

Bear that in mind the next time you hear the phrase “going green”—yet again. Maybe it’s a pos-

itive sign that “being green” has become a part of our everyday lives—and that we’ve moved

beyond words to action.

Elaine Weiss, JD, ICPAS President & CEO

ICPAS OFFICERS

Chairperson, Lee A. Gould,CPA/ABV, JD, CFE, CFFGould & Pakter Associates LLC

Vice Chairperson, Sara J. Mikuta, CPAThe Leaders Bank

Secretary, Charles F. G. Kuyk III, CPACrowe Horwath and Company LLP

Treasurer, Robert E. Cameron, CPACameron Smith & Company PC

Immediate Past Chairperson, Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause, LLP

ICPAS BOARD OF DIRECTORS

Brent A. Baccus, CPA Washington Pittman & McKeever

Therese M. Bobek, CPAPricewaterhouseCoopers LLP

William P. Graf, CPADeloitte & Touche LLP

Kelly J. Grier, CPAErnst & Young LLP

Cara C. Hoffman, CPABlackman Kallick LLP

James P. Jones, CPAEdward Don & Company

Charlotte A. Montgomery, CPAIllinois State Museum

Elizabeth A. Murphy, PhDDePaul University

Annette M. O’Connor, CPARR Donnelley & Sons Company

Michael J. Pierce, CPARSM McGladrey Inc.

Marian Powers, PhDNorthwestern University

Daniel F. Rahill, CPAKPMG LLP

Lawrence H. Shanker, CPAShanker Valleau Accountants Inc.

Edward H. Stassen, CPARecycled Paper Greetings Inc.

FIRSTWORDA MESSAGE FROM THE ILLINOIS CPA SOCIETY’S PRESIDENT & CEO

4 THE GREEN ISSUE - PLEASE RECYCLE

www.icpas.org/insight.htm SEPTEMBER/OCTOBER 2009 5

We value your membership.

The Illinois CPA Society...

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oversight?Renew Your Illinois CPASociety Membership Today

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Don’t risk losing these and othervaluable member benefits. RENEWONLINE at www.icpas.org or call 800-993-0393.

Publisher

ICPAS President & CEOElaine Weiss

Editor-in-Chief

Publications DirectorJudy Giannetto

Creative Services Director

Gene Levitan

Creative Services ManagerRosa Garcia

Publications SpecialistDerrick Lilly

National Sales & Advertising Stephanie Bunsick The YGS Group

3650 West Market Street York, PA 17404

Phone: 1.800.501.9571, ext. 137 Fax: 1.717.390.9891

[email protected]

Information Systems ManagerJim Jarocki

[email protected]

Editorial Office550 W. Jackson Blvd., Suite 900,

Chicago, IL 60661INSIGHT is the official magazine of the Illinois CPA Society, 550 W.Jackson, Suite 900, Chicago, IL 60661, USA. Its purpose is to serveas the primary news and information vehicle for some 23,000 CPAmembers and professional affiliates. Statements or articles of opin-ion appearing in INSIGHT are not necessarily the views of the IllinoisCPA Society. The materials and information contained within IN-SIGHT are offered as information only and not as practice, financial,accounting, legal or other professional advice. Readers are stronglyencouraged to consult with an appropriate professional advisor be-fore acting on the information contained in this publication. It is IN-SIGHT’s policy not to knowingly accept advertising that discriminateson the basis of race,religion, sex, age or origin. The Illinois CPA So-ciety reserves the right to reject paid advertising that does not meetINSIGHT’s qualifications or that may detract from its professionaland ethical standards. The Illinois CPA Society does not necessarilyendorse the non-Society resources, services or products that may ap-pear or be referenced within INSIGHT, and makes no representationor warranties about the products or services they may provide or theiraccuracy or claims. The Illinois CPA Society does not guarantee de-livery dates for INSIGHT. The Society disclaims all warranties, expressor implied, and assumes no responsibility whatsoever for damagesincurred asa result of delays in delivering INSIGHT. INSIGHT (ISSN-1053-8542) is published bimonthly except monthly in July andAugust by the Illinois CPA Society, 550 W. Jackson, Suite 900, Chica-go, IL 60661, USA, 312.993.0393 or 800.993.0393, fax312.993.0307. Subscription price for non-members: $30 U.S., $40Canada and International addresses, $42 Mexico. Copyright ©2009. No part of the contents may be reproduced by any meanswithout the written consent of INSIGHT. Permission requests may besent to: Editorial Director, at the address above. Periodicals postagepaid at Chicago, IL and at additional mailing offices. POSTMASTER:Send address changes to: INSIGHT, Illinois CPA Society, 550 W.Jackson, Suite 900, Chicago, IL 60661, USA.

INSIGHT AWARDS2009 Magnum Opus Award Honoree

2008 Apex Award, Magazine & Journal Writing

2007 Magnum Opus Award, Best All-aroundAssociation Publication

2006 Apex Award, Magazines & Journals


2004 Apex Award, Magazines & Journals



2002 Chicago Women in Publishing ExcellenceAward, Writing/Editing

2001 Apex Award, Feature Writing

2001 Apex Award, Best Redesigns


2000 Apex Award, Best Rewrites


SEEN HEARDNEWS BYTES, SOUND ADVICE AND PRACTICAL BUSINESS TIPS

156.5%ROI realized after installing a programmable thermostat toautomatically control indoor air temperatures (cost $115). Source: The DailyGreen.com

eCycling Now in VogueWhere do computers go to die? Actually, they don’t. Rather,more and more of them are being refurbished andremarketed. In other words, they’re being “eCycled.”Many computer and television manufacturers, as well aselectronics retailers, are now offering take-back programsor sponsoring recycling events. What’s more, several stateshave passed legislation to manage end-of-life electronics,and more are expected to follow suit.The Environmental Protection Agency (or EPA, as it’s betterknown) has provided a list of initiatives currently involved inthe eCycling movement. They include:Earth911 [earth911.com]Earth911 has consolidated environmental hotlines, websitesand other nationwide information into a single network. Thesite offers visitors community specific information on eCyclingand more. My Green Electronics [www.mygreenelectronics.org]Provided by the Consumer Electronics Association, this site isa resource for consumers who wish to purchase greenproducts, search for local opportunities to recycle, or donateused electronics. EIA Consumer Education Initiative [www.eiae.org]The Electronic Industries Alliance's (EIA) eCycling Centralwebsite helps visitors locate state-by-state reuse, recyclingand donation programs for electronics products. TechSoup [www.techsoup.org]This comprehensive body of information promotes computerrecycling/reuse, and provides a resource for refurbishers,hardware donations and recycled hardware acquisitions.RBRC [www.rbrc.org]The Rechargeable Battery Recycling Corporation (RBRC)helps you recycle portable rechargeable batteries commonlyfound in cordless power tools, cellular and cordless phones,laptop computers, camcorders, digital cameras and remote-control toys. Search for collection sites by zip code.

Manufacturing Execs CautiousA Baker Tilly Virchow Krause [BakerTilly.com] survey of 300 US manufacturingindustry senior executives reveals that future outlooks are stabilizing, with 57percent having a positive outlook for the economy over the next 6 months. Still,they remain cautious about their own industry, with 49 percent expecting theirfirm’s performance to decline. Over the next year, customer demand andaccess to credit and loans are expected to challenge growth. Executives areresponding by holding present staffing levels (70 percent) and investing ininternal quality improvement systems (51 percent).

Running for the ExitsAdecco Group North America's [Adecco.com] latestAmerican Workplace Insights Survey reveals that employersmay see a mass exodus of talent at the recession’s end. Fifty-four percent of employed adults report that they are at leastsomewhat likely to look for new jobs once the economy turnsaround. What’s more, 71 percent of Generation Y employ-ees (aged 18-29 years) say they’re at least somewhat likely tolook for new jobs once the upturn begins.

2008 Green Issue HonoredINSIGHT’s 2008 “Green Issue,” published in September of last year, has beennamed an honoree by the prestigious Magnum Opus Awards program, in thecategory of “Best CSR/Green Series or Article.” The program “gives industry-wide recognition to writers, editors, designers and all communicators who doexceptional work in print and online.” In being named an honoree, INSIGHTjoins the ranks of big name enterprises such as the Walt Disney Company,American Airlines Publishing and the Meredith Corporation.


$1.2 BillionApproximate Q2 venture capital dollars investedin green/clean technology companies (up from$856 million in Q1). Source: GTMResearch.com

Right Steps Out of RecessionA recent Robert Half International [RobertHalfFinance.com] survey of457 office-based workers suggests that the majority of professionals(69 percent) believe their employers are taking the right steps tosuccessfully weather the recession. What’s more, over half (55percent) feel that their employers will emerge from the recessionstronger than before. Though the consensus is mostly positive, thereis a touch of gloom, with 30 percent of respondents believing thattheir companies are doing only some things right or nothing right.

TXT From the C-SuiteSenior finance executives and managers are increasingly using theirmobile phones to email and text both in and out of the office, saysa global NFI Research [NFIReseach.com] survey. While working, 59percent of senior executives and managers use their phones toreceive email, 57 percent to send email and 54 percent for texting.This highlights the fact that cell phones and smart phones arebecoming preferred network communication tools for work andpersonal use in the C-suite.

Green Technologies to KnowRecognizing what may lie ahead for green technology—andunderstanding the potential impact of developments on bothconsumers and investors—is vital for finance professionalsconsidering a niche in this area. According to George Elvin,director of the Green Technology Forum, a research and advi-sory firm, technological advancements to look out for include:

n Solar nanotechnology. “While not yet as efficient as sili-con-based solar cells, nanotech-based cells like thosemade by Nanosolar can be printed on plastic or metal sub-strates, making them much less expensive than silicon.”

n Lignosic cellulose-based biofuels. “Using feedstocklike corn to produce fuel isn’t economically viable in thelong run. The energy embodied in many non-food plantsis in what’s called lignosic cellulose, but it’s harder toextract. Companies like Range Fuels, however, are per-fecting techniques that will enable us to make fuel fromtrees and agricultural waste.”

n Algae-based biofuels. “A number of companies world-wide are working to make fuel from algae, which is cheapto grow, requires little energy input and doesn’t competefor cropland the way corn does.”

n Carbon sequestration. “We can’t cut our carbon out-put fast enough to counter the effects of global climatechange. New technologies will enable us to store car-bon underground or in oceans rather than release it intothe atmosphere.”

Award Recommendations Now Being Accepted

LifetimeAchievement

2010

Deadline for recommendationsis December 15, 2009

The Illinois CPA Society is seeking recommenda-tions for the 2010 Lifetime Achievement Award,which is presented each year to an individual(s)who has provided distinguished service to the pro-fession in Illinois and/or nationally.

Candidates are selected based on a lifetime ofservice to the profession. Factors to be consideredinclude:

> Contribution to the profession> Professional position attained> Length of service> Illinois professional involvement

Recent Award Honorees:2009 Cameron T. Clark

Duane D. Suits

2008 Belverd E. Needles, Jr.

2007 Edwin Cohen

2006 Richard T. Sullivan

2005 Vincent E. VillinskiRichard E. Ziegler

2004 Lawrence M. GillJerome A. HarrisCheryl S. Wilson

2003 Daniel W. CadiganLester H. McKeever Jr.

Letters of recommendation with informationsupporting the individual’s qualifications(resume, biography, etc.) can be sent to:

Eileen Robbs, Lifetime Achievement Award,Illinois CPA Society, 550 W. Jackson Blvd., Suite 900, Chicago, IL 60661Or by email to: [email protected]

RESEARCH

How Green Are You Now?Is Illinois’ finance community answering the call for business greening?

By Judy Giannetto

When we published our first “green”special issue in September 2008,the response was rather mixed, as

you might expect. Some chastised us forexploring a topic so far removed from theaccounting profession. Others praised us forour foresight in exploring a topic that wouldundoubtedly impact the accounting profes-sion in the not-too-distant future.

When you consider the diver-sity of the 24,000 people whoread INSIGHT, from accountinginterns to high-profile captains ofindustry (and all who fall be-tween), it’s really no great sur-prise that some praise while oth-ers balk.

All things, however, have acontext. And for the purposes ofINSIGHT that context is howthe increasing push for corpo-rate social responsibility andsensitivity to our limited naturalresources will impact busi-ness—including the business offinance—in 2010 and beyond.With talk of government man-dating of green initiatives andcap-and-trade legislation to re-duce CO2 emissions, “goinggreen” might well be a matter ofnecessity rather than choice. Inthat sense, whether you believegreening to be mass brainwash-ing or a legitimate response toimpending crisis, is neither herenor there.

And with that caution inmind, we conducted our sec-ond How Green Are You? sur-vey, gathering the responses of337 Illinois CPA Society mem-bers to gauge where opinionstands. Respondents heraldedpredominately from small com-panies/firms (61 percent), with


large companies/firms filling out the nextlargest segment (27 percent). The majority(46 percent) were designated as publicpractice, followed by business and industry(42 percent) and nonprofit/government/education (12 percent).

When asked about the significance ofgreen initiatives within their organizations,65 percent of 2008’s respondents had report-ed greening to be of moderate to high impor-tance. This year’s numbers show a slightupswing to 69 percent. What’s more, where-as in 2008 only 11 percent stated that theirorganizations had a green policy in place, in2009 that percentage increased to 22. “Wehave a written document with stated meas-urable goals,” explains one respondent. “Wetake a ‘green oath,’” states another.

While this is a significant increase, majorbarriers to developing and implementing agreen policy remain. A commitment to otherpriorities (44 percent) tops the list, as it did ayear ago. Cost and indifference share secondplace (30 percent each), with not enoughtime and lack of management support shar-ing third place (24 percent each).

As one respondent comments, “We havecreated a green initiatives committee tostudy effects on our clients and possibleopportunities. Partners have, to date, shownlittle interest in our own efforts because theydon’t see the cost/benefit yet.” Another adds,“Since the top doesn’t much care about it,there is little anyone else can do. Besides,the top is changing soon.”

It’s long been touted that taking a stand onenvironmentalism will boost employeemorale, and these comments do seem toexpress a degree of frustration from withinthe rank and file. When asked to explain,“What has been the impact of your greenpolicy on employee morale,” the vast major-ity responded favorably. Specifically, respon-dents stated that, “The employees considerthis as a matter of great pride,” “They feelgood about themselves and the organiza-

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tion,” “It lifts spirits to know our company is green,” and “Everyoneis motivated.”

However, when asked to rate the accuracy of the statement,“Going green will help my organization hire and retain top recruits,”only 22 percent of respondents felt this to be true. Comments fromyounger respondents are notable, including, “The staff and youngaccountants would like to go green but the partners are too ‘oldschool’ and do not want to go green,” and “I’m a student mem-ber….Going green definitely gets more students involved.”

Are “old school” finance pros taking too much of a blinkeredview of the green movement? Are they too hung up on their sub-jective opinion of greening to gain an objective sense of the busi-ness opportunities the green movement offers? Perhaps.

While cost, lack of company-wide support, inconvenience andthe effort involved remain drawbacks to moving forward withgreen initiatives, three defined areas of benefit were outlined inthis year’s survey, namely environmental sustainability, cost sav-ings and good public relations. It “wins us work,” states onerespondent. “Customers are demanding it,” states another. And, infact, when asked to rate the validity of the statement, “Going greenwill positively impact the organization’s public image,” 65 percentfelt this to be true.

At the same time, only 28 percent agreed with the statement,“Going green will boost customer/client loyalty to our product/ser-vice,” and only 33 percent consider “Green initiatives are a highpriority within my organization” to be true. Most telling is the factthat only 24 percent feel that “Green initiatives would be more ofa priority if funding were available.”

If your head isn’t spinning yet, it probably should be. Thereseems to be a “split personality” element to the responses wereceived, and this may well be because green policy-making,while old hat in most of the developed world today, is still rela-tively new to the United States, and especially to the accountingprofession. What’s clear, however, is that business greening isgaining attention within organizations large and small, perhaps notspecifically out of concern for the environment, but definitely outof concern for public opinion and cost savings.

In fact, for many, green policies are in place “due to increased effi-ciencies” rather than a push for environmental sustainability. Sup-porting this is the finding that 64 percent feel, “The long-term impactof going green makes the short-term expense worthwhile.”

“Saving money has been the only motivation to date,” explainsone respondent. “We’ve always been interested in recycling,”another states, explaining that, ”We’re frugal, and thus we try tobe cost-effective when it makes business sense to do so, whichmay make us appear green.” Yet another explains that, “Goingpaperless was driven by space and efficiency.”

And while 60 percent of respondents report that the recession hashad a moderate to high impact on green initiatives (40 percentreport little or no impact), those who have a green policy in placeseem reluctant to let things slide just yet. “We were green at leastfive years ago,” one respondent states. “We made a commitment tobe green and used certified organic products exclusively in our serv-ices from day one, which was over three years ago,” says another.

Recycling, in particular, is in place at 69 percent of the organi-zations represented in the current survey—the same number

reported in 2008. “We are a paper-intensive business,” explainsone respondent. “We should have programs in effect that addressdisposal of all the paper we use.”

For a few, however, “The economy has created less interest, as themore expensive alternatives are less desirable.” As one survey takerputs it, “The economy hurts all over, especially green initiatives.”

Looking more closely at the cost-cutting, eco-friendly products,practices and policies surveyed organizations are currently imple-menting, recycled paper (59 percent) and paperless technologies(58 percent) are firmly anchored at the top of the list, followed bytelemeeting technologies (49 percent), energy-saving lighting (46percent), telecommuting and work-from-home arrangements (42percent), Energy Star-rated equipment (39 percent) and biodegrad-able/recycled office supplies (34 percent). Other practices respon-dents pinpointed include operating in LEED-certified buildings,raw material reuse or switching to more environmentally friendlyraw materials, and greening company auto fleets.

We also asked about the media play green initiatives are getting.While increased media attention has meant increased awarenessof the debate, some respondents react to the daily headlines withmore than a touch of skepticism.

“It has shown us that the socialists that control the media are try-ing to brainwash us,” states one respondent, while another explainsthat, “I personally think the green initiative craze is just another fad,perpetrated by those who will profit from the gullibility of the aver-age American. I am very cynical about the whole thing….Globalwarming is a myth, and the environment is much cleaner todaythan it was 30 years ago. Sorry, but I’m not buying into it.”

Yet another respondent states that, “This is nothing but propa-ganda. There is no global warming and the environment is doingjust fine….This is such nonsense! Please, get a grip. All myemployees know this is nonsense and an attempt by the govern-ment to gain even greater control over our lives. All this green stuffmakes all of us sick.”

While opinions swing between both extremes, this year’s sur-vey reveals majority support (54 percent) for government mandat-ing of green compliance among US businesses. In 2008, the pen-dulum swung the other way, with 52 percent being unsupportiveof such a mandate.

It does seem that ICPAS member opinions are favoring green busi-ness practices a little more a year on, but the shift certainly isn’t alandslide. Admittedly, finance professionals carry an enormousresponsibility within the business marketplace, which means theyrequire the facts behind the claims before jumping on any bandwag-ons. As we said a year ago, though, cautiousness is not a bad thing;lagging behind is.

The most enlightening aspect of our latest survey was the par-ticipant feedback we received, which has been quoted extensivelyin this article. We’d like to hear from more of our readers on thetopic of business greening. If you’re interested in commenting,whether for or against, or if you’d like to share your thoughts onthe results of the 2009 How Green Are You? survey, please emailthe Illinois CPA Society’s Publications & Creative Services Groupat [email protected]. Your comments may be published in anupcoming issue of INSIGHT.


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INVESTING

Wind FallAre we poised for a heyday in green investing?

By Derrick Lilly

Green investing—investing in com-panies that specialize in environ-mental technologies, alternative/

clean/renewable energy and eco-friendlypractices—has had its ups and downs.When oil prices were setting record highsgreen technology and alternative energystocks were soaring. But as crude pricescollapsed and the broader economy wors-ened, the green technology sector was hitespecially hard.

Even so, a nationwide survey of investorsconducted by Allianz Global Investors re-veals that green investing has legitimatestaying power. In fact, 78 percent of in-vestors believe “environmental technologyhas the potential to be the next great Amer-ican industry.”

What’s more, “72 percent of surveyrespondents say the recent decline in stockprices has had no impact on their inclinationto invest in environmental stocks.” Instead,their long-term outlook on the sector is bull-ish. Ninety-one percent “believe that findingsolutions to environmental problems will bea major issue for years to come,” and 64 per-cent say “it’s important to look at invest-ments in companies that are capitalizing onaddressing environmental problems.”

Those results make it hard to say thatgreen is just a fad. The best part? Greeninvesting is really just beginning. With manycompanies’ technologies still in the R&Dstage, the growth potential is unfathomable.

“Now is absolutely a good time to startinvesting in green technology companies,”says Judy L. Seid, CFP, founder and presidentof Blue Summit Financial Group Inc., afinancial advisory firm specializing insocially responsible investing. “We’ve seenprices in the sector come down with thebroader market, but the best time to invest iswhen the market is down.”

What’s going to prop prices back up?“Truthfully, the stimulus bill in the UnitedStates has been a game changer,” saysKristina Hooper, head of Allianz GlobalInvestors equity product group. “We’ve seena lot of investment in green technology. In2008 we saw $155 billion in investment inthe United States primarily in clean energy,but the stimulus package in 2009 is injecting$70 billion directly into green initiatives.That is a huge increase just from the newAdministration alone.”

“The potential for alternative energy in theUnited States is really significant, and withthe legislation put in place by the latest stim-ulus plan, the foundation is now well-laid forthe United States to develop a significantindustry there across wind, solar, potentiallygeothermal, and particularly on the effi-ciency and smart grid sectors,” says Matt-



hew Page, fund co-manager of London-based Guinness AtkinsonFunds’ Alternative Energy Fund. “If we had the current legislation inplace in the United States 12 to 18 months back, the alternativeenergy industry would be on fire. It would just be ripping. The ques-tion really is, how long does it take for this industry to stand on itsown two feet without government support and backing?”

Outside of government initiatives, says Hooper, “[A]s we sawthe markets tighten, we continued to see private equity and ven-ture capital investments really helping to accelerate what I thinkis not a fad, but a very long-term trend.”

The spectrum of technologies and companies to invest in growsdaily. As governments and environmental agencies step up regula-tions and subsidies, the green sector will develop even further as alegitimate investment opportunity.

“We believe these technologies will continue to reduce in priceand become more economically viable. Looking 20 years ahead, Idon’t think we’ll be calling it alternative energy; we’ll just be call-ing it energy,” says Page.

Green initiatives encompass much more than combating highoil prices and melting ice caps. As sustainability becomes increas-ingly embedded in our daily practices, Seid believes that, “Thegreen technologies that emerge will help every aspect of our econ-omy.” And if that’s the case, it’s time to invest.

“Individual investors are recognizing green investments as animportant part of their portfolios and a good opportunity. I thinkthat’s an early indicator that we will see more investors moving intothe green sector. This may be one situation where retail investorsgain access to a sector or asset class more or less at the ground floor,along with venture capital and institutional money,” says Hooper.

There is considerable risk, however. “The environmental technol-ogy sector is still in its early stages and a lot of these are very smallcompanies, so the biggest risk is individual company risk, whichwill be reduced when you get into an actively managed, diversifiedfund,” says Hooper. “It would be a mistake to be a passive investorin this space, because this is an area where there are so many pric-ing inefficiencies because there’s not a lot of research coverage.”

Luckily, as the sector gains traction, more diversified fund offer-ings are popping up. Some eco-friendly and green technologyfocused mutual fund offerings include Allianz RCM GlobalEcoTrends (symbol AECOX), and Allianz RCM Global Water Fund(AWTAX); Winslow Green Solutions (WGSLX) and Winslow GreenGrowth (WGGFX); Guinness Atkinson Alternative Energy Fund(GAAEX); and DWS Climate Change (WRMSX).

Of course, before buying into any sector, conduct your ownmarket research or consult with an advisor, Seid stresses. “It’s veryimportant to realize that this sector is volatile largely because a lotof the technologies haven’t been proven yet, and a lot of theemerging companies aren’t profitable yet. It’s going to be a highlyvolatile sector to be in and it probably shouldn’t make up morethan 5 percent of your portfolio,” she explains.

Still, Hooper says green investing “is a wonderful opportunityfrom a diversification standpoint and a growth standpoint. I hopeinvestors get on the bandwagon a little sooner than they’ve donein past cycles for other growing sectors.”

For more on the Allianz survey, visit www.allianzinvestors.com. To

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CORPORATE

Watch Your StepDollars, cents and your carbon footprint.

By Christine Bockelman

The Federal government, hoping toreduce carbon emissions from man-ufacturing and utility companies and

other big energy users, is working to pass leg-islation that would require transparent docu-mentation and auditing of the amount of car-bon these corporations emit into the envi-ronment. If all goes as planned, the new cap-and-trade bill passed by the US House ofRepresentatives will become Federal lawbefore the end of 2009.

The legislation itself is hugely complexand, at press time, largely undecided. Basi-cally, though, the government is consider-ing a program that requires the steadyreduction of CO2 emissions starting in2012, with the goal of returning green-house gas emissions to 2005 levels.

This cap-and-trade would not only limitthe tons of CO2 companies can emit, butalso issue a permit for each ton of CO2

emitted. These permits could be traded,bought and sold on the open market. With

the combination of stricter CO2 emissionsstandards and the limited number of permitsavailable, energy prices most likely will riseif the cap-and-trade legislation passes.

Although this specific legislation is gear-ed towards companies with the largest car-bon footprints, the law will impact smallercompanies as well, says Mike Wallace,president of Wallace Partners, which spe-cializes in sustainability and its applicationto corporate governance.

Large corporations are realizing that theiremissions footprints are influenced by thegoods and services they purchase (i.e. thesupply chain footprint). It then becomes nec-essary to ask suppliers to report their foot-prints as well. It seems that every company,regardless of size, will need to measure andreport its carbon footprint to some degree.

“Customers are already beginning to askabout companies’ environmental practices,and that number is only going to increase,”says Margie Gardner, CEO of BonnevilleEnvironmental Foundation, a nonprofit thatsupports clean energy and water restora-tion by selling carbon offsets to consumersand businesses.

In fact, a recent survey by consultingfirm A.T. Kearney [atkearny.com] foundthat companies which focused on sustain-ability outperformed industry peers in 16of the 18 industries examined. They did soby an average of 15 percent in a six-monthperiod, ending in November 2008.

Walmart has stepped into a leading role inthe issue. The retail giant has asked morethan 60,000 of its suppliers for their carbonfootprint information, and is working withthe Carbon Disclosure Project (CDP) [cdpro-ject.net], a nonprofit group with the largestdatabase of corporate climate change infor-mation in the world. Many big players in thefinance arena, including Bank of Americaand State Street Corporation, also are partic-ipating in CDP studies by voluntarily report-ing information on their energy use andother environmental issues. 8


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Shareholders, too, are beginning to ask questions, particularly asrising utility costs, weather pattern changes and other environmen-tal factors affect profits.

Recently, Sisters of St. Dominic of Caldwell, NJ, a faith-basedinstitutional investor and member of the Interfaith Center on Cor-porate Responsibility, made headlines when it demanded thatChevron Corp. track and report the carbon content of its products.Shareholders in Home Depot, Avis Budget and other companiesare also asking for reports on carbon emissions.

Although this type of reporting hasn’t yet been mandated, itmay well be in the future. Finance professionals likely will play abig role in company sustainability initiatives, stepping in to tabu-late and audit information. Smart professionals therefore will takethe lead now, ensuring that they’re ready when the CEO asks fora measure of the company’s environmental impact.

However, some are in danger of getting ahead of themselves.“Companies are, quite frankly, rushing into this,” says Wallace.“They’re jumping into things like promoting carbon-neutral prod-ucts when there’s really no such thing as a carbon-neutral product.It’s basically a PR gimmick. Rather than marketing and promotion,companies should be focusing on accurate measurements andstrategic disclosure. Carbon emissions are quantifiable, are linked tofinancials (energy used = carbon emissions = dollars spent) and arebeing increasingly tied to overall good corporate governance. Com-panies that demonstrate leadership and performance in this area aretackling these issues at the board level. Given these are ‘accountingissues,’ this should be driven by the audit committee.”

How is a carbon footprint measured? Using three main cate-gories or “scopes.”

“Scope One is the actual fuel you burn. It’s the oil burner in thebasement of the building, the gas in the car’s tank,” explainsByron Stigge, associate principal at sustainable engineering firmBuro Happold, and a founding member of the sustainability groupInTERRAction.

Scope Two is primarily your electricity use. “As purchasers ofelectricity we don’t have any control over the fuel used to createelectricity,” Wallace explains. “Utility companies that produceelectricity using hydro, solar or natural gas have lower ‘carbon con-taining kilowatts’ than utilities burning coal to produce kilowatts.”

Scope Three is tied to the goods and services the companyuses, and includes emissions from air travel and company cars.

There are thousands of online calculators designed to help com-panies get a handle on their carbon footprints. Wallace and Gard-ner both suggest starting with calculators on the EnvironmentalProtection Agency website [epa.gov] to get a rough estimate.Gardner also provides a calculator on her nonprofit’s website,shrinkyourfoot.org.

“Any carbon footprint calculator will ask for the same type ofinformation—airline miles traveled by employees, electricity used,etc.,” says Gardner. “This is all measurable data. If nothing else, it’sa great and very useful exercise in examining how much energyyour company uses”—and how much money it spends in this area.

Measuring a carbon footprint online is far from an exact sci-ence, however, and there are often differences in the numberscalculators output. “It’s a wild market out there right now,” saysGardner. “There are no easy benchmarks.”

That’s why some experts recommend staying away from onlinecarbon footprint calculators altogether. “I don’t like them,” Stiggestates. “There’s huge variability. Time of day is a factor, for instance.Night-time electricity is ‘dirty’ and the afternoon is ‘clean’ electric-ity. It’s so hard to accurately measure a carbon footprint.”

Instead, Stigge recommends hiring consultants who specialize incarbon emissions measurement, and who have experience conduct-ing energy audits. What’s more, Wallace suggests contacting yourlocal utility company or the largest one in your area. Many are nowoffering free support such as energy audits and efficiency programs.

No matter how you crunch the numbers, the mission is thesame—reducing the overall energy your company uses. Eventhough this is not an exact science, finance professionals should“use the estimated size of your carbon footprint as a new lens to lookat energy use,” says Stigge. “The point isn’t to come up with an exactnumber. The point is to better understand your business.”

With predictions that energy costs will rise as a result of theimpending carbon footprint legislation, keeping track of corporateenergy use is a bit of a no-brainer. Even if your company’s energycosts are just a few percentage points of total expenditure, reducingthe size of your footprint will help to reduce spending.

“Most companies just pay their utility bills without consider-ing the full implications,” says Wallace. “Smart companies arerealizing waste is waste.”

Analyzing your carbon footprint, reporting on sustainabilityand identifying ways to improve operations means an invest-ment in corporate social responsibility (CSR) reporting andmonitoring tools.

CSR reporting is a growing trend, and it’s expected to touchbusinesses of all sizes in the not-so-distant future. Essentially,organizations will be required to weigh the interests of society byreporting the impact of their operations on communities, cus-tomers, employees, shareholders, suppliers and, last but notleast, the environment.

Countless businesses across multiple sectors, municipalities andgovernments are implementing CSR services from companies likeFive Winds [FiveWinds.com] and Hara Software Inc. [Hara.com].GreenBiz Intelligence [www.greenbizintelligence.com] VP JohnDavies points to other vendors, including Environmental SupportSolutions [ESS-Home.com] and Enablon [Enablon.com], which

currently provide tools to enable the effective measurement ofcarbon footprints and bottom-line improvements. By implement-ing ESS’ unified environmental reporting software platform,which tracks inventory, waste, air, material and water modules,Dow Chemical Company forecasts a savings of more than $2million a year.

Expectations are that the area of carbon footprint measure-ment software will expand once legislation creates a broadermarket for these tools. In the meantime, the Global ReportingInitiative (GRI) [GlobalReporting.org] provides some widely ref-erenced standards that can be used to benchmark organiza-tional performance in terms of enacted laws, norms, codes, per-formance standards and voluntary initiatives. Also, states theGRI website, these standards can “demonstrate organizationalcommitment to sustainable development; and compare organi-zational performance over time.”

CSR Reporting by Selena Chavis


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SMALL BUSINESS

Feeling Green?Find room in your practice to go the eco route.

By Selena Chavis

I t may not have made its way into main-stream accounting yet, but it’s coming.That’s what industry experts say about

how the green movement will impactaccounting measures and reporting in thecoming years.

Joel Makower, executive editor of Green-biz.com and author of Strategies for the

Green Economy, notes that green account-ing has been a focal point for industriessuch as oil and gas and manufacturing for anumber of years, and that honed account-ing skills for these types of industries arealready needed and expected. “If you areworking in highly regulated industries, thelevels of accounting and accountability willbe different than if you are working forretail or finance,” he says.


And while the current impact of thegreen movement has infiltrated large busi-nesses and heavily regulated industriesmore than others, the expectation is that itwill trickle down to small and mid-sizedbusinesses as well.

“If it isn’t a demand now, it soon will be,”says Makower. “As sustainability gets drivenup the supply chain, it’s growing from tier-1companies to tier-2 and tier-3 suppliers.”

Consider companies like Coca-Cola andUPS—industry giants with far-reachingglobal impacts, huge supply chains andmany stakeholders. Alongside their publicfinancial reporting initiatives, these compa-nies have also opted to voluntarily divulgehow their operations and strategies affectthe social and environmental landscape. To

truly address the need for green practices, companies like theseare expecting the same commitment from their suppliers,Makower notes.

The Big Four accounting firms and many other large firms arealready gearing up to provide expertise to clients on this level.Should small firms be doing the same?

Makower says “yes.” “It requires some new knowledge and thewillingness to be adaptable in a quickly changing environment,”he explains, adding that it’s really pretty easy to establish a nicheaddressing green accounting issues. “It’s a reasonably smalltoolkit. It wouldn’t take much for an accounting firm to puttogether a reasonable toolkit or advisory service for clients.”

Acknowledging that a lack of standards is one of the challengesfacing accounting firms and companies in their efforts to institutea green practice, many industry professionals point to recommen-dations outlined by the Global Reporting Initiative (GRI), whosemission it is to make sustainability reporting as routine and ascomparable as financial reporting.

Aside from client services, today’s small and mid-sized firmsneed to ask themselves, “Can we practice what we preach?”

Faced with pressures to implement green practices, Leisha John,the America’s director of environmental sustainability with Ernst &Young (EY), recommends that small and mid-sized firms getinvolved with the green movement to add credibility to their efforts.Getting the ball rolling, she says, doesn’t require a huge investment.

Started on the grassroots level more than six years ago, EY’s vol-unteer EcoCare network now includes 1,000 employees, whostrive to increase awareness of environmentally friendly practices.The initiative’s successes have included programs for recycling,waste reduction, environmentally friendly procurement practicesand community activities.

“What I’ve determined is that a lot of small firms could domany of the things that EY is doing, and many have no costsattached to them,” John explains. “A lot of grassroots programsare easy to get started.”

However, Makower adds, it can be tough to leap into greenpractices that require a financial investment because small busi-nesses don’t have the deep pockets and economies of scale oftheir larger counterparts, especially in a tough economic market.

“This isn’t easy. It requires things companies don’t have—time,resources and patience. Saving the planet may take a backseat tosaving the day,” he says. “The biggest challenge is finding theopportunities that make financial sense.”

Whether right or wrong, companies may feel pressure to step intothe movement because there are savings that can be achieved; theyneed to keep up with the competition; employees and constituentsare demanding it; or they need “a story” to prove they are environ-mentally conscious.

“The first step is to understand what your impacts are. Until youknow that, it doesn’t make sense to try anything,” says Makower,adding that the two most important tools small companies have aretheir checkbooks and their dumpsters. Analyzing where a companyis spending its money and what’s winding up as waste often can pro-vide a lot of insight into inefficiencies and poor business practices.

Start small, John suggests. Because accounting firms tend to bevery paper-intensive, look for ways to reduce paper consumption.Buy paper made from recycled content as a first step, eliminate

banner sheets, invest in printers that print on both sides of a sheetof paper, reuse paper for scratch pads or shred used paper for useas recycled material.

“There are a lot of efforts that can be implemented around paperin accounting firms,” John notes. “Our paper consumption wentdown by 60,000 reams last year—that’s 30 million sheets of paper.”

Also educate your staff about using energy- and materials-saving resources already at their disposal, such as “print preview”functions that help to avoid unnecessary printing. And, since it’smuch easier to rationalize an effort if it is going to impact an orga-nization’s financial picture positively, Makower recommends takingadvantage of the free audits most energy companies offer as a wayto minimize energy consumption.

“First and foremost, it’s about saving money; it creates a ‘greenstory’ for clients,” he says. “It’s hard to do things that don’t have aspecific business rationale.”

John suggests using LED lighting and remanufactured toner car-tridges. EY, she says, saves $500,000 a year by using remanufac-tured toner cartridges alone.

Lindy Antonelli, president and CEO of Illinois-based Access-Tek, says that some technological investments—such as Voiceover Internet Protocol—are sure wins, since they provide virtuallyimmediate returns.

“Unifying communication tools such as phone and email letspeople utilize their time better. Utilizing virtual meetings withconference calls and online meeting tools built into the phone sys-tems provide for decreased use of gas,” she explains. “It’s so easyto do that; it should be a simple decision, and it saves on long dis-tance as well.”

Efforts such as cloud computing and virtualization are alsosmart investments that are “really not out of reach” for most smallbusinesses, says Antonelli. Cloud computing involves an on-demand self-service Internet infrastructure through which userspay as they go and use only what they need. Also think aboutusing electronic interchange of data. “You can request from yourbank that you get all your files online,” Antonelli explains. “Howmany bank statements do companies get? It adds up.”

Often, the first steps come down to simply changing a few basicbusiness practices, she adds. “Smaller companies think it’s going tocost too much, but really, it doesn’t because the effort can producepayback. Are most of us doing this in our personal lives? Yes, but,in a corporate environment, the attitude is more along the lines of‘it’s not my money buying that paper.’”

For small businesses interested in implementing greener busi-

ness practices but struggling to find the capital for the invest-

ment, EarthShare [www.EarthShare.org] suggests contacting

the US Department of Energy’s Energy Efficiency & Renew-

able Energy division [EERE.Energy.gov], which awards hun-

dreds of millions of dollars each year in financial assistance to

businesses, universities and industry wishing to upgrade to

renewable and energy-efficient technologies.


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REAL ESTATE

Urban RenewalThere’s a green—and a financial—incentive for breathing new life into old buildings.

By Bridget McCrea

There was a time when developersand investors contemplating a newstructure would scout around for

vacant land to build on. With empty lotsbecoming harder and harder to find, though,they’re now looking at a different strategy—recycling what’s already there, or “adaptivereuse.” Another plus in the age of environ-mentalism is that the strategy is green.

Adapting warehouses, factories, store-fronts and the like for new uses such asoffices, commercial spaces and residentialdevelopments reduces urban sprawl andoften results in urban renewal in formerlyundesirable areas. Drive through Chicago’sWest Loop and East Village neighborhoodsand you’ll see adaptive reuse in action.

On the financial front, adaptive reuseoffers various tax incentives and cost sav-ings. In fact, the Federal Historic Preserva-tion Tax Incentives program, which fostersprivate-sector rehabilitation of historic build-ings, is one of the nation's most successfuland cost-effective public/private revitaliza-tion programs.

Federal Historic Preservation Tax Incen-tives are available for buildings that areNational Historic Landmarks, are listed inthe National Register, and that contribute toNational Register Historic Districts and cer-tain state or local historic districts. Proper-ties also must be income-producing andrehabilitated. The program is jointly man-aged by the National Park Service (NPS)and the Internal Revenue Service (IRS) inpartnership with State Historic PreservationOffices (SHPOs).

Current tax incentives for preservation,established by the Tax Reform Act of 1986,include a 20-percent tax credit for the cer-tified rehabilitation of certified historicstructures and a 10-percent tax credit forthe rehabilitation of non-historic, non-resi-dential buildings built before 1936.

For both credits, the rehabilitation mustbe substantial (meaning that the cost ofrehabilitation must exceed the greater of$5,000 or the adjusted basis of the prop-erty), and must involve a depreciable struc-ture (one that, after rehabilitation, must beused for an income-producing purpose forat least five years). Owner-occupied resi-dential properties do not qualify for the 20-percent federal rehabilitation tax credit.

It’s important to note that the two taxcredits are mutually exclusive in that onlyone can be applied to a given project.Exactly which credit applies in each casedepends on the building itself. Buildingslisted in the National Register of HistoricPlaces are not eligible for the 10-percentcredit, for example.

Several states offer additional tax incen-tives for historic preservation, includingcredits for rehabilitation of owner-occupiedresidential properties, tax deductions foreasement donations, and property tax abate-ments or moratoriums. Requirements forstate incentives may differ from the require-ments of the Federal Tax Incentive program.

The Illinois Historic Preservation Agency,for example, administers several incentiveprograms, most of which are linked to reno-vation projects. Eligibility is based on thetype of property ownership. Public and non-profit organizations are eligible for matchingfunds from the Illinois Heritage Grants pro-gram, and homeowners can receive prop-erty tax benefits by qualifying for the Prop-erty Tax Assessment Freeze Program.

Joel Cohn, principal with real estateconsulting firm Resnick Group PC, saysinterest in adaptive reuse is on the rise,spurred in part by the Federal Tax Incentiveprogram and the public’s increased aware-ness of the need to go green. He explainsthat the trend is growing across the resi-



dential, commercial and industrial sectors, with some activity inthe hospitality space as well.

“On larger projects where the rehab costs are $5 million orhigher, the tax credits are often sold to third parties and used tofund the development,” he says. Cohn works with clients who areeligible for the 10- or 20-percent federal tax credit, and explainsthat those credits are often paired with the Federal New MarketsTax Credit (NMTC) program.

Launched in 2000, the NTMC provides tax incentives to induceprivate-sector, market-driven investment inbusinesses and real estate development proj-ects located in low-income urban and ruralcommunities nationwide. Individual and cor-porate taxpayers can receive a credit againstfederal income taxes for making qualifiedequity investments in Community Develop-ment Entities (CDEs). The credit providedtotals 39 percent of the cost of the investment,and is claimed over a seven-year period.

According to Cohn, investors and/or prop-erty owners involved with adaptive reuse doface several challenges. With respect to the“historic” credit, he says obtaining the nec-essary architectural approvals can take timeand involve an application process. “Theproperty owners submit an application to astate preservation officer who then forwardsit onto the National Park Service for finalapproval,” he explains. “The process canhold up the start of a project and add time tothe adaptive reuse initiative.”

The process can take even longer whenthe developer’s proposed plans don’t meetthe reviewer’s strict standards. “Many timesthe developer will need to find ways to com-promise in order to meet those architecturalstandards,” says Cohn, “while still maximiz-ing the efficiency of their buildings.”

Ken Ortiz, regional manager for The ReUsePeople of America, says that when his com-pany came into the Chicago market four yearsago, the deconstruction and donation ofreusable building materials was “pretty muchunheard of.” The trend has grown quicklysince then, and today finds the group gettinginvolved with the adaptive reuse of homes,warehouses and other commercial structures.

“It’s a green movement that’s just gottenbigger and bigger over time,” says Ortiz,who points out that the tax incentives areparticularly attractive for investors, ownersand developers. “The big question now is,why aren’t more people doing this?”

If you’d like to learn more, the National Park

Service offers Incentives! A Guide to the Fed-eral Historic Preservation Tax Incentives Pro-

gram for Income-Producing Properties. For more information or to

request a copy, call 202.513.7270, email: [email protected], or

visit the NPS website at www.cr.nps.gov.

Also, the Illinois State Historic Preservation Office (SHPO), at the

Preservation Services Division of the Illinois Historic Preservation

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laws, including rehabilitation tax incentives for qualified historic

buildings. For more information, call 217.782.4836 or visit the

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16th Annual Midwest

F INANC IA LREPORTING

Symposium

Accounting and Financial Reporting Updates from the SEC, FASB, IASB, AcSEC and PCAOB

Friday, September 25, 2009

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YOUNG PROFESSIONALS

Green Guru“Think green” is the motto of the 21st century finance pro.

By Robert J. Derocher

The message for CPAs and financeprofessionals is that green eyeshadesare fashionable again—but it has

nothing to do with outdated stereotypes andeverything to do with a continuing focus onhow environmental policies and technolo-gies are shaping today’s business and finan-cial environment.

“As the green movement continues togrow, those CPAs who are practicing beinggreen and aware of the most current greenincentives will be ahead of the curve,” saysHilary Kusel, executive director of the Green

Business Alliance, which helps companiesincorporate environmental stewardship intotheir daily business practices.

The emergence of green accounting,along with growing public scrutiny of cor-porate environmental policies and actions,are beginning to translate into new oppor-tunities for young finance professionals. Buttaking advantage of those opportunities willrequire new skill sets and new thinking tokeep pace with rapidly changing technol-ogy and public opinion.

The good news, experts say, is that greenaccounting is still in its infancy. And if fluc-tuating gas prices, global warming and thegrowing number of “environmentally friend-ly” products on supermarket shelves are anyindication, the green movement looks lesslike a fad and more and more like a main-stay of business life.

Whether through public sentiment orlegislative mandate, changes have beencoming in the way companies of all sizesand in every industry sector do business. Asurvey of more than 11,000 people in theUnited States, the United Kingdom andseven other countries released in 2008 byHavas Media found that more than 80 per-cent of respondents would buy more greengoods and services if they were readilyavailable. Additionally, 79 percent of res-pondents would prefer to buy from compa-nies that are actively trying to reduce theircarbon footprints. And when asked if theywould be likely to buy more environmen-tally friendly goods in the next 12 months,89 percent said they would.

What’s more, a white paper issued inMay 2008 by the executive search andconsulting firm Heidrick & Struggles esti-mates that companies worldwide will berequired to cut about 25 percent of carbonemissions by 2020, and 50 to 80 percentby 2050. In the United States, 11 stateshave already adopted those carbon limits,with another 20 states expected to followsuit. Federally mandated caps on all green-


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However, Schuele, Key and others in the field say that CPAs arewell positioned to fill the financial gaps in green accounting—andthat’s just what they expect in the months and years ahead.

“External auditors—that is, Certified Public Accountants in thecourse of their audits—help to ensure that any material environ-mental liabilities are properly reported on the company financialstatements,” says L. Murphy Smith, CPA, an accounting professorat Texas A&M University who has written on environmentalaccounting and auditing. “Thus, accountants who work for indus-try firms or public accounting firms can specialize in environmen-tal reporting issues, and thereby contribute to corporate efforts tobe responsible environmental citizens.”

Key agrees, but adds that auditors in the United States have beenslow to embrace the emerging opportunities as CSR becomes moreingrained in corporate culture. “I believe it is an opportunity for CPAand audit professionals to add value to the companies they serve,”says Key, a former director of internal audit at IBM. “They can iden-tify processes that present opportunities for the enterprise, and pro-vide consulting and assurance services to provide managementwith recommendations to more effectively meet CSR objectives.”

While governments and financial regulators in the United Statescontinue to grapple with environmental reporting standards and dis-closure requirements, it is vital, says Schuele, for young accountantsand finance professionals interested in green accounting as theirarea of focus to continually monitor environmental technology, aswell as the local, state and national regulatory landscape.

“More and more companies are recognizing the need to begin tomeasure environmental impact, and accountants are a natural tolead this effort,” she says. “In addition, as the requirement for exter-nal reporting on environmental issues grows, accountants must beproficient in this area.”

Although the unrelenting focus on the corporate bottom linewill continue to make environmental impact measurement andreporting a tough sell at many corporations, “As CSR becomes therule and not the exception,” says Key, “audit professionals will becalled on to assure the processes that support these efforts. Boardsand executive management will increasingly turn to audit profes-sionals to assist.”

house gas emissions are also on the horizon. Basically, this trans-lates to a rise in the demand for green accountants.

“Green accounting,” says Karen Schuele, CPA, dean of the BolerSchool of Business at John Carroll University, “is the process ofincorporating environmental costs of operation into an entity’sfinancial results and financial reporting. The definition of greenaccounting has not changed over the last few years; however, thefamiliarity of the term has grown and continues to grow.”

Gernot Wagner, an economist with the Environmental DefenseFund in New York, sees it in much the same way.

“Green accounting at its simplest is nothing new: instead ofadding up dollars and cents, the focus now is on tons andpounds,” he says. “But it requires a shift in mindset.”

For most companies, green accounting falls under the umbrellaof Corporate Social Responsibility (CSR), a concept that meshesbusiness operations with a company’s responsibility to society. Onthe environmental front, the key is sustainability: “Meeting theneeds of the present without compromising the ability of futuregenerations to meet their own needs,” according to the US Envi-ronmental Protection Agency [epa.gov].

And the best way to get companies to buy into sustainability andto embrace green accounting is to make a financial case for it, saysJim Key, CIA, managing partner of the Shenandoah Group, a riskmanagement consulting firm.

“There has to be a financial interest for most businesses toembrace sustainability. The basic assumption of CSR is that sustain-ability performance is a concept in which investment can be made,”says Key. “This is crucial in driving interest and investments in sus-tainability to the mutual benefit of companies and investors.”

But implementation of a green accounting standard can be chal-lenging, according to Schuele, because there are no existing stan-dards for measurement and reporting of environmental costs.

“The requirements for reporting within financial reports aregrowing worldwide but most are rather vague,” says Schuele.“Comparisons across companies are nearly impossible, and it ishard to refute the argument that some companies use these reportsas glossy PR instruments without the ability of the reader to discerntheir legitimacy.”


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TECHNOLOGY

Flowering TechnologiesWatch business green and cost savings grow.

By Selena Chavis

Continental Airlines’ newly installedteleconferencing infrastructure hassaved $1 million in three years.

Retail giant Dillard’s’ digital documentworkflow system has reduced signage print-ing costs by 80 percent. A manufacturer’spaperless workflow process has producedsavings of $15-$20 million annually.

The statistics speak for themselves; themovement towards green technologies andbusiness practices is a win-win for the envi-ronment and enterprise alike. From globalfinancial powerhouse Goldman Sachs tolocal sole practitioners, implementing greentechnologies and practices reduces expen-ses and strengthens profits—no matter howsmall the business.

“Eliminating waste results in savingmoney,” says John Davies, vice president of

GreenBiz Intelligence. “Almost all compa-nies face the same ROI scrutiny,” especiallywhen it comes to productivity.

Naturally, being environmentally andsocially responsible improves more thancompany results. According to Mark Sar-ros, principal in Crowe Horwath’s OakBrook, Ill. office, investors and consumersare increasingly vigilant of products andservices committed to corporate socialresponsibility and environmental sustain-ability. They see this as a direct reflectionof the trustworthiness of the company.

Kim Carlson, business owner, speaker andauthor of Green Your Work: Boost Your Bot-

tom Line While Reducing Your Carbon Foot-

print, emphasizes that more and more smallto mid-sized businesses need to realize thebenefits of greener business practices. “It’s


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the last thing we as small-business owners want to spend our timedoing,” she says, “but the devil is in the details.”

For time-starved business professionals, the green storm may beoverwhelming (or, at the very least, irritating), but it’s worth puttingin the research.

Paperless technologies and multifunction devices, for example,aren’t new concepts, but as the years go by, product lines continueto become easier to use, more efficient and, of course, more pock-etbook- and earth-friendly.

The ability to copy, fax, print and scan documents is essential toevery business. By combining all of these functions into a single,centrally located, user-friendly piece of equipment, time and mate-rial savings quickly add up. In fact, the power savings by runningone multifunction device as opposed to three or four standaloneunits can justify the investment on its own.

Canon [USA.Canon.com] and Xerox [Office.Xerox.com], leadersin document-imaging and office products, offer a wide range of eco-friendly multifunction devices. Each company has different productlines developed specifically for the personal office on up to corpo-rate solutions with environmental awareness features.

Solutions in Canon’s imageCLASS, imageFORMULA and image-RUNNER lines tout a number of eco-advancements, including USB-powered, ENERGY STAR® rated devices for 25-percent betterpower efficiency; double-sided printing and duplexing that canreduce paper consumption by 50 percent; toner-saving modes thatallow 20-percent more cost-effective toner usage; individual ink

tanks allowing replacement of only the colors needed; ink-savingfeatures that can reduce ink consumption by 33 percent; andresized, recycled packaging and cartridges that reduce landfillwaste. What’s more, Canon’s multifunction personal office all-in-one devices start at a mere $99.99.

Xerox’s business line of ColorQube 9200 multifunction devicesalso offer a variety of environmentally savvy features, but their newsolid-ink technology stands out. The cartridge-free design prom-ises to produce 90-percent less waste over four years of use com-pared to similar devices. ColorQube 9200 devices start at a heftycost of $21,299, but Xerox offers a number of other efficiencymotivated office products and corporate solutions that span abroad price range. Incidentally, Xerox also offers a range of paperproducts composed of 100-percent post-consumer waste.

“It’s not just about how companies can use less paper, it’s alsoabout creating workflow efficiencies and saving space. Paperlesstechnologies, document management solutions and multifunctiondevices are creating obvious and tangible benefits to companieslarge and small,” says Carlson. “We’ve talked about reducing ouruse of paper for years. What I am seeing is that the technology hascaught up with the idea and become more cost efficient.”

Along with workflow advantages and the tangible benefits ofpaper consumption reduction, there are also advantages associatedwith space and security. Storing and sending documents electroni-cally allows for encryption and virtual storage, rather than physicallyfiling sensitive materials and finding ways to safely dispose of them.Carlson states that paperless technologies allowed her organizationto turn space previously designated for storage into more functionalwork areas that directly impact the company bottom line.

Another hot area to look at is tele-tools. While doing businessin person is nice, it isn’t always cost-effective or convenient. Andwith travel costs constantly rising, businesses that need to crackdown on expenses can find a solution in teleconferencing andtelecommuting solutions.

“No-one wants to pay for travel,” says Carlson. “You can saveanywhere between $500 and $1,000 in hard costs alone by notsending an employee to a meeting or training session, not to men-tion costs associated with time lost.”

Cisco Systems Inc. [Cisco.com] offers a number of products foruse in video conferencing and teleconferencing, ranging fromsmall-business specific telecommunications solutions to globalenterprise live-video meeting tools. In response to demand, Ciscorecently debuted a lower-cost personal teleconferencing systemfor mid-sized businesses, specifically.

Citrix Online LLC’s GoToMeeting [GoToMeeting.com] is anotherpopular tool. Whether you want to demo a product, present filesand applications from your desktop, or simply use VoIP technologyfor a conference call, this product—which CNET described as “Thebest interface in Web Conferencing”—offers a simple all-in-onesolution at a flat rate of $49.00 a month or $468.00 a year.

Offerings in what are essentially the most fundamental aspects ofbusiness today continue to grow as technology and software devel-opers respond to the increasing demand for not only technology effi-ciency and cost savings, but also a greener approach to business.What these new products offer businesses is a double win—cuttingcosts and looking good in the public eye as they do it.

“No-one wants to pay for travel. You can save anywhere between $500 and $1,000 in hard costs alone bynot sending an employee to a meeting or training session, not to mention costs associated with time lost.”

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Please be our guest.Come for complimentary breakfast or lunch and hear thelatest on current and emerging issues and what they meanto you, including:

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> TECHNICAL ISSUESProposed tax preparer registration, mandatory peerreview, IFRS and more.

Don’t miss this opportunity to share your thoughts andideas with Elaine Weiss, ICPAS President & CEO, andLee Gould, Chair of the ICPAS Board of Directors.

TO REGISTER for this complimentary program in yourarea, call 800.993.0393.

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TAX

Well OiledRepealing oil and gas exploration tax credits may push producers towards greener practices.

By Harvey Coustan, CPA

Last September, I described some ofthe many tax incentives available tobusinesses and other taxpayers for

supporting the environment. There are manyways to reward taxpayers who “think green.”However, the Internal Revenue Code alsocan be used to discourage taxpayers whopollute or participate in other activities thatare detrimental to the environment.

The Treasury Department’s General Expla-

nations of the Administration’s Fiscal Year

2010 Revenue Proposals contains a numberof items that actually remove tax incentivespresently available to oil and gas producers.Discussing the proposed repeal of the creditfor production from marginal wells, the doc-ument states, “To the extent the creditencourages overproduction of oil, it is detri-mental to long-term energy security and isalso inconsistent with the Administration’spolicy of reducing carbon emissions andencouraging the use of renewable energysources through a cap-and-trade program.”

The other proposals in this area wouldseverely reduce many of the tax benefitscurrently associated with oil and gas pro-duction in years beginning after 2010.Many of the benefits originally enacted toencourage further production of oil and gasare now on the list for repeal or amend-ment, including,n Levy Tax on Certain Offshore Oil and Gas Production

n Repeal Credit for Enhanced Oil Recov-ery Projects

n Repeal Intangible Drilling Cost Expensingn Repeal Tertiary Injectant Deductionsn Repeal Passive Loss Exception for Working Interests in Oil and Gas Properties

n Repeal Percentage Depletion (for oil and gas production)

n Repeal Domestic Manufacturing Ded-uction for Oil and Gas Production

n Increase the Amortization Period for Geological and Geophysical Costs to Seven Years (presently two years for in-dependent producers)

The repeal of percentage depletionwould be a dramatic change for invest-ors in oil and gas interests. Percentagedepletion for mineral properties hasbeen in the Internal Revenue Codesince 1926. Depletion, of course, is aconcept that applies to investments in“wasting” assets. Similar to deprecia-tion, which applies to assets whosevalue theoretically decreases econom-ically and functionally over a period oftime, the amount is calculated to allowa taxpayer to recover the basis in his orher investment.

Tax depreciation is generally calcu-lated by allocating the basis of an assetinvestment over a useful life, which isexpressed in years and determined bya statutory schedule that often is differ-ent than the asset’s actual economic orfunctional life. Cost depletion is calcu-lated by applying the ratio of actualannual production to total estimatedproduction at the beginning of the year.Total depreciation and cost depletionare limited to the basis in the property.However, percentage depletion, calcu-lated by applying a statutory percent-age to the “gross income from theproperty,” can exceed the basis in thedepleteable asset.

Many taxpayers claim depletion fora number of years after the total basishas been recovered by depletion.Available only to independent produc-ers, royalty owners and non-integratedoil companies, several limitations app-ly: The amount of percentage depletioncannot exceed 100 percent of the tax-able income from the property, nor canit exceed 65 percent of the taxpayer’soverall taxable income. Percentagedepletion for oil and gas investmentscan only be claimed on average dailyproduction up to 1,000 barrels. Costdepletion would still be allowed underthe proposal.


The Center for Corporate Financial Leadership is a service of the

Illinois CPA Society

upcoming events

September 14, 2009 - Northbrook, ILSeptember 16, 2009 - Chicago, ILSeptember 21, 2009 - Oak Brook, IL

BREAKFAST SERIES: All Customers are NOT Created EqualThomas L. Zeller, PhD, MBA, CPA - Professor of Accountancy and UniversityScholar in the School of BusinessAdministration at Loyola University Chicago

September 25, 2009 - Rosemont, IL

Midwest Financial ReportingSymposium

October 16, 2009 - Chicago, IL

Implementing FIN 48 forPrivately-Held CompaniesMark A. Sellner, CPA, JD, LLM (taxation) -Graduate Tax Professor in the Master ofBusiness Taxation Degree Program at theUniversity of Minnesota’s Carlson School ofManagement

December 15, 2009 - Chicago, IL

Strategic Cost Analysis: Tools for Lowering YourCompany’s CostsJohn W. Hill, PhD, MBA, JD - Arthur M.Werner Chair in Business, Kelley School ofBusiness, Indiana University

February 5, 2010 - Chicago, IL

Strategic Risk Management:Aligning Strategy andPerformance Measures with ERMMark Frigo, PhD, CPA, CMA - Director, The Center for Strategy, Execution andValuation, Kellstadt Graduate School ofBusiness, DePaul University

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Many taxpayers have invested in working interests in oil and gasproperties and have benefited from the ability to avoid passive losslimitations on deductions and credits on the ROI in these workinginterests. The Administration’s proposal would repeal the excep-tion for working interests in oil and gas properties effective for taxyears beginning after 2010.

An additional change—described as “Eliminate Oil and GasCompany Preference”—was not contained in the section of theAdministration proposal aimed at the oil and gas industry, but willhave a significant negative impact on major integrated oil produc-ers. This proposal would eliminate the use of Last-in, First-out (LIFO)methods of calculating inventory value for all taxpayers. However,it’s well-known that the LIFO reserves (the difference between First-in, First-out [FIFO] and LIFO values) of the major US oil companiestotal billions of dollars. In its 2007 report to the SEC, Form 10-K,ExxonMobil indicated that the average replacement cost of its end-ing inventory exceeded its LIFO cost by more than $25 billion.

Taxpayers would need to restore LIFO reserves to gross incomeratably in the first taxable year that begins after 2012, and in thefollowing seven years. Of course, present International FinancialReporting Standards (IFRS) do not allow the use of LIFO, and theUS Congress will have to act to eliminate the present requirementfor US taxpayers to use LIFO for GAAP financial statements whenthe United States adopts IFRS as GAAP. If this financial statementconformity requirement is not repealed, the US LIFO user willneed to restore the LIFO reserve to income.

The repeal of LIFO is not the only proposal that would have amajor impact on the oil and gas industry. For periods after 2010,recognizing the need for funds to remedy the damages caused byreleases of hazardous substances, the Administration proposes toreinstate the Superfund Excise Taxes. These taxes were imposedbefore 1996 and were dedicated to the Hazardous SubstanceSuperfund Trust Fund (the Superfund Trust Fund) available forexpenditures incurred in connection with “releases…of hazardoussubstances into the environment.”

One tax that is being proposed for reinstatement is the 9.7 centsper barrel tax on domestic crude oil and imported petroleum prod-ucts. In addition, the Superfund Environmental Income Tax, alsoapplicable to years prior to 1996, would be reinstated for yearsbeginning after 2010. This tax was dedicated to the SuperfundTrust Fund and would apply to all corporations whose alternativeminimum taxable income (slightly modified) exceeded $2 million.It would be applied at a rate of 12 percent on the excess of mod-ified alternative minimum taxable income over $2 million.

As you can see, the adoption of the Administration’s proposalswould have a profound effect on the oil and gas industry. Ofcourse, there’s a long road from proposal to adoption, and Con-gress might not approve all of the proposals. Lobbying against anumber of them will no doubt be intense. Nevertheless, it’s clearthat the industry is in the “tax reform” sights of the current Admin-istration, and the move to remove tax incentives enacted when thegovernment was trying to encourage the exploitation of certainnatural resources has begun.

Harvey Coustan is an Ernst & Young retired partner. He is presently

consulting on substantive technical and professional standards

issues and has been an expert witness in a number of cases.



The use of natural resources is inextricably linked to business culture.And what happens to one directly impacts the other. According to Cli-

mate Change and the Global Water Crisis: What Businesses Need to

Know and Do, published in May by the Pacific Institute and the UnitedNations Global Compact, burning fossil fuels has overwhelminglyaltered our atmospheric chemistry. Rising CO2 concentrations alongwith other greenhouse gases (GHG) are changing the planet’s climate.Global mean temperatures have increased three-quarters of a degreecelsius since 1990, and 11 of the 12 warmest years since 1850 haveoccurred since 1996. These climate changes are expected to acceler-ate over the coming decades. Another report, Water Scarcity & Climate

Change: Growing Risks for Businesses & Investors, released earlier this yearby the Pacific Institute and Ceres, revealed that problems associated withwater shortages are already occurring.

But maybe not for long…What could easily be dismissed as an

environmental issue has a heavy impact on business and industry

as well. Here’s the business case for why water shortages matter.

By Sheryl Nance-Nash

everywhere

W A T E RW A T E R

billion gallons to make silicon chips in 2007, and a water-related shutdown at a fabrication facility operated by those firmscould result in $100-$200 million in missed revenue during asingle quarter.

Reduced water availability has also impacted food commodityprices. Triggered by a drought-induced collapse of rice productionin Australia, global rice prices skyrocketed. Some 70 percent ofthe water used worldwide is for agriculture, and that figure climbsas high as 90 percent in developing countries where populationsare growing at the fastest rates.

What does this mean to your business? “Climate change bringsenormous uncertainty to business. If we thought thatfor the past 50 years weather forecasts were unreli-able and mostly useless, imagine what the futureholds,” says Jack Oswald, CEO of SynGest, whichrecently announced construction of the world’s firstbiomass-to-ammonia plant. “This is the biggest riskto all businesses. We have no idea how localweather changes will affect our businesses in termsof production, demographics, population move-ments or periodic catastrophes. Uncertainty is akiller in all businesses, and that is what climatechange brings.”

Decreasing water availability and quality, andincreasing water demand, are creating challenges toenterprises across all industries, states the Water

Scarcity & Climate Change report. The trends pointto decreases in water allotments for manufacturing,shifts toward full-cost water pricing, more stringentwater quality regulations and increased publicscrutiny of corporate water practices.

Virtually every sector faces some risks: Regulatoryrisks, meaning new government rules to address cli-mate change; market risks; increased energy prices;potential supply chain disruptions; consumer demandfor greener products; and physical risk in terms ofincreased weather severity and rising sea levels.

For example, says Elise Dieterich, a partner withSullivan & Worcester, LLP, “Utilities face increasedregulation and costs under the greenhouse gas emis-sions cap-and-trade system....Energy-intensive busi-nesses such as manufacturing, transportation andcommercial buildings face energy price volatility andpossible government mandates for increased energyefficiency. Weather-sensitive businesses such as agri-culture face risk from climate changes that are pre-dicted to affect temperature and precipitation pat-terns. Supply chain dependent businesses face disrup-tion due to energy or weather impacts on their suppli-ers and transporters. Other risks can include litigationrisk (lawsuits against large GHG emitters) and com-petitive/reputational risks to companies perceived as‘environmentally unfriendly,’” she explains.

“The biggest risk for companies is not thinkingabout climate change in their planning processes,”says Jessica Haller, CEO of Svante Scientific, Inc.,which provides businesses and governments withintelligence for adapting to climate change. Haller is

Drought-induced water shortages, for example,caused power plant shutdowns in Europe, Braziland the southeast United States. These shut-downs led to price spikes and reduced eco-nomic growth. The power industry depends

heavily on water and accounts for 39 percent offreshwater withdrawals in the United States.

What’s more, 11 of the world’s 14 largest semiconductor factoriesare in the Asia-Pacific region, where water scarcity risks are severe.Since IT firms require vast amounts of clean water to operate, theimplications are huge. Intel and Texas Instruments alone used 11

D



also a founding member of InTERRAction, a multidisciplinary con-sortium that advises businesses on climate change risks and sus-tainable solutions. She says there are two important questions toask: “Will any supply or manufacturer be impacted by changes intemperature, rainfall (or lack thereof) or wind speeds?” and “Willany regulation or policy change the requirements regarding use ofland, water or air?”

“If businesses hope to effectively adapt to the changing climate,they need to know how the climate currently impacts their opera-tions and how it will affect them in the future. Specifically, theyneed to assess the impact that temperature, rainfall, wind speedsand other climate conditions have on their business or organiza-tion, and they need to understand how these conditions mightchange 5, 10, or 15 years down the road,” Haller explains.

“Without this intelligence, organizations are flying blind into theclimate change storm—suspecting that they face dire threats, butnot knowing where those threats will come from or what they willlook like. If they can see the threats, they can both minimize thedamage caused by climate change and seize the opportunities itoffers,” she says.

For businesses looking for ways to get going, the Climate

Change and the Global Water Crisis report outlines some options:Measure Water & Carbon Footprints Throughout the Value ChainSome of the most significant water and climate-related risks can beembedded in a company’s value chain, well outside of its directoperations or control. Companies can manage only what they meas-ure, so to accurately assess risks and opportunities, a first step is toconduct comprehensive, integrated water and carbon accounting.By aligning water, carbon and energy measurements, businesses can

identify how the three are interlinked, which in turn provides keyinformation for developing a holistic management strategy.Assess Physical, Regulatory & Reputational Water RisksSpecifically, understand the energy-related risks posed by water, andthe water-related risks posed by energy, as well as any potentialcompeting demands the company may have for water and energy.Companies should align, if not integrate, their water and climaterisks assessments. Having a detailed understanding of local waterconditions, including hydrological, social, economic and politicalfactors, can give a company insights into the risks it faces from waterchallenges, and will allow it to be transparent about the energytrade-offs it may need to make to address those challenges.Integrate Water & Climate Issues into Strategic PlanningWhen developing water management plans, companies shouldconsider the potential impacts of climate change on water suppliesand water quality. Climate-related impacts on water also shouldbe considered when making other business decisions, from factorydesign and siting to new product development. Engage Key StakeholdersWhen developing a corporate water and climate managementplan, managers might benefit from sharing information with andgetting feedback from employees, investors, customers, local com-munities and other key stakeholders. Communication will helpcompanies better understand, anticipate and respond to emergingissues and expectations. Open dialogue with water providers andlocal communities also may help to prevent or reduce the risk offuture water and climate change related disputes or disruptions.Disclose & Communicate Water & Carbon PerformancePublicly report management activities and key metrics. This infor-mation may help stakeholders and shareholders assess how com-panies are addressing their water and climate change risks. Seek Opportunities for Collective ActionBecause water and energy are connected to social, cultural andenvironmental issues, companies rarely achieve the best manage-ment outcomes on their own. Pool resources and bring together awide range of expertise and knowledge through partnerships withorganizations such as the United Nations Global Compact.

Dieterich adds a few more suggestions: “Companies shouldconsider commissioning a climate risk audit to identify theirpotential climate-related exposures. The results of the audit canthen form the basis for immediate, mid-term and long-range actionplans,” she explains. For example, an audit might reveal that abusiness is perceived as environmentally unfriendly, and then sug-gest relatively easy ways to improve the company’s public image.Or the audit might reveal potential weather-related risks for whichinsurance products are available.

“Regulatory, market, competitive and litigation risks mayrequire disclosure in a company’s annual 10-K or other financialstatements. It also is prudent for companies to consider their ‘car-bon footprint’; that is, the amount of GHG emissions associatedwith their business operations, and to look for ways to reduce theircarbon impact, whether through energy efficiency or purchasingcarbon offset or renewable energy credits,” says Dieterich.

“Remember that this isn’t a one-sided issue,” Haller adds. “Busi-nesses must address both mitigation—through reducing the impactof the business on the environment—and adaptation—throughreducing the impact of the environment on the business.”

H2O MeasuresFrom recycling and purification practices to flat-out conserva-

tion, companies are finding ways to measure and reduce their

environmental waste. And while the savings currently are “soft,”

many companies see these initiatives as having greater impacts

down the road.

“All resources have costs in some way, shape or form,” says

Kim Carlson, business owner, speaker and author of Green Your

Work: Boost Your Bottom Line While Reducing Your Carbon

Footprint. “As there is less and less available clean water, it will

become more and more expensive. The goal is to make sure

it isn’t scarce.”

According to the EPA, letting a faucet run for five minutes

uses as much energy as running a 60-watt light bulb for 14

hours. When equated to commercial buildings, a substantial

amount of energy, water and expenses could be saved through

simple efficiency practices. In fact, according to the Natural

Resources Defense Council, the New York and New Jersey Port

Authority’s initial $90,000 investment in water-efficient restroom

facilities has yielded an annual savings of $190,000.

To get your business on track, the American Water Works

Association [AWWA.org] offers free water audit software, which

is an easy way to get an overview of your water supply and

billing operations, and to identify ways to control water loss.

—Selena Chavis

Green worth

money?

Is

the

Criticizing the green movement isn’t

politically correct. But is it wrong to want

a sound business case for going green?

The cautionary tales are few and far between. There aresnippets in this journal or that, rumblings of an executiveousted because of a failed project, but very little that truly,concretely points to the business case against going green.

That’s no coincidence, says Pete Davis, president of DavisCapital Investment Ideas. “I’d be surprised if you’d find anyCEO, no matter how ‘dirty’ the industry, who’s willing to bequoted as not being green. Especially in a time when greenbusinesses will likely get money from Capitol Hill.”

Rather, it’s the columnists who are paid to be opinionated.

By Kristine Blenkhorn Rodriguez

THE VOICE OF SKEPTICISMThe Washington Post’s Robert J. Samuelson closes his April 27 col-umn with: “The selling of the green economy involves muchmake-believe. Environmentalists not only maximize the dangers ofglobal warming—from rising sea levels to advancing tropical dis-eases—they also minimize the costs of dealing with it. Actually, noone involved in this debate really knows what the consequencesor costs might be. All are inferred from models of uncertain relia-bility. Great schemes of economic and social engineering are pro-posed on shaky foundations of knowledge. Candor and commonsense are in scarce supply.”

Samuelson goes beyond pure rhetoric and backs up his state-ments with numbers. His beef is with a “typical” claim from theEnvironmental Defense Fund (EDF), stating that for about a dimeper person, per day, we can resolve climate change, invest in cleanenergy and save billions in imported oil. Samuelson argues that theEDF uses “general equilibrium” models when factoring costs andusage. “The trouble is that these models embody wildly unrealis-tic assumptions,” he says. “There are no business cycles; the econ-omy is always at ‘full employment’; strong growth is assumed,based on past growth rates; the economy automatically accommo-dates major changes—if fossil fuel prices rise (as they would underanti-global warming laws), consumers quickly use less and newsupplies of ‘clean energy’ magically materialize.”

He may have a point. The Energy Information Administration(EIA) estimated America’s energy needs in the year 2030. Com-pared with 2007, it projects that the United States will have almost25 percent more people (375 million), an economy about 70 per-cent larger ($20 trillion), and 27 percent more light-duty vehicles(294 million). It also estimates that oil will be at $130 per barrel(in today’s dollars). On the flip side, solar power will grow 18 timesand wind power six times its current size. Cars and trucks will get50-percent better gas mileage. Appliances and light bulbs willbecome more efficient. And, in the end, US CO2 emissions in2030 will be 4-percent higher than in 2007. A more recent EIApress release claims that world energy usage will increase 44 per-cent from 2006 to 2030.

Samuelson’s conclusions do not win him many popularity con-tests. And he doesn’t seem to be anti-green for any nefarious rea-sons. Instead, he’s just one of a very few high-profile voices thatwants the numbers to make sense.

Arnold Kling might be called Samuelson’s compatriot, and he’s noslouch. Kling earned his doctorate in economics from MIT, and hasserved both as an economist on the staff of the Federal Reserve’sBoard of Governors and as a senior economist at Freddie Mac. Hisbias is, of course, towards initiatives that make economic sense.

“Here’s a scenario they might paint for you in freshman eco-nomics,” Kling explains. “You’re a business. Gasoline costs $5 pergallon and a worker costs $10 per hour. If you’re only focusing onefficiency, and you know you can use one gallon of gas to savehalf an hour of time or more, you do it. That’s what the econom-ics of the situation dictates. If you are in a competitive market, youhave no choice but to make that choice. In that market, if you tryto be green and not use the gas, you’ll go out of business.”

Kling realizes the argument against his rationale. “The greenargument would be that the price of gas doesn’t include the socialcost—global warming, feeding money into economies in totalitar-ian regimes, etc. This reasoning is fine if you’re a monopoly. Then

you can probably afford to be green. Otherwise, forget it. You’ll goout of business.”

Davis takes the argument a step further. “Traditional gasolinemay seem like the less green option here, but I’d say ethanol gasis actually the least green option. First, the United States just does-n’t have the electricity grid to handle ethanol on a large scale, andsecond, South American rainforests are now being clearedbecause the United States has stopped exporting its corn to themon a large scale. Does any of this sound green to you? Or cost-effi-cient? Or profitable?”

And therein lies the question: Is it ethical to require a businesscase for going green?

BUSINESS CASE REQUIREDIt’s not only ethical, but necessary, says Dave Douglas, chief sus-tainability officer (CSO) for Sun Microsystems. “We have alwaysbaked financial analysis into our projects. Positive ROI is a must.”

Douglas says a sustainability officer’s first job is to do what’sgood for the business, but that route doesn’t negate the responsi-bility to do what’s good in general. “Usually, if a practice meanswe get to stay in business over the long haul, it also means that it’sgood for the environment over the long haul. If we’re stripping theEarth of aluminum at an alarming rate to build technology prod-ucts, it’s not likely we’ll be able to profit over the long haulbecause we’ll run out of resources—and so will the Earth. Businesspractices like that died awhile ago, didn’t they?”

Lisa Walker, senior client partner for executive search and tal-ent management firm Korn/Ferry International (and one of thefirm’s sustainability sector leaders), certainly thinks so. “At best-in-class companies, the CSOs are paying for themselves,” sheexplains. “If the role doesn’t pay for itself, if the CSO doesn’t havetechnical and financial credibility, it goes away. Sustainable prac-tices generally make good business sense as well as good overallsense. A green supply chain will secure the availability of scarceresources because you’re not depleting limited resources.”

Douglas cites Sun’s success with projects as high level as reduc-ing greenhouse gas emissions by 23 percent over the past five yearsand eliminating water bottles in customer briefing centers. “Howcan you be against a project that pays for itself in three months?”he asks. “We had tried to get rid of water bottles in our customerbriefing centers because we thought we could save money and doa good deed at the same time. But the first three proposals couldshow no positive ROI so it wasn’t done. Then someone came upwith the proposal to use attractive bubblers and forget the individ-ual plastic water bottles. Three months later, we’d saved what wespent on the project. From here on, it’s all found money.”

Kling’s reaction to large companies touting green projects isskeptical. “They adopt the most efficient technology and theyshout, ‘I’m green! I’m green!’ when they really would have doneit anyway because it’s a competitive advantage—either it saves ormakes them money.”

Douglas sees it as a win-win. “If we can give people ideas abouthow to do things better—better business, better for the environ-ment—and it financially helps the company that employs us, howis that a bad thing?” he asks.

It’s hard to argue with Sun’s savings: More than $1 million inpower costs after improving energy efficiency at data centers, notto mention the savings associated with the use of less fresh waterfor cooling those same data centers. In fact, Sun found a way torecycle its water, saving not just energy, but water costs too.



THE BEEF IS GREENWe said at the beginning of this article that cautionary tales are fewand far between. But they’re certainly not unheard of. Rememberwhen Starbucks was accused of wasting 6.2 million gallons ofwater in Europe due to a company policy regarding constantly run-ning taps for public health reasons? It’s not just the environmentalissue—it’s the business case. Paying for that alleged waste of wateras a cost of business doesn’t make sense if it’s not absolutely themost efficient, necessary route.

Starbucks is not alone. Even entire countries are not immune. Ear-lier this year, Canada’s commissioner of the environment and sus-tainable development was far from happy when the governmentcouldn’t definitively report whether the billions it was spending ongreen initiatives was money well spent. “I have been surprised thatthere haven’t been clear reporting systems,” Sun Media quotes himas saying in a report. “You need to know whether the problemyou’ve identified is getting worse, better or remaining the same, andthere are not systems in place to give the government informationback to let them know how they are doing.”

It’s this kind of attitude—failing to adequately report, the lack ofclear-cut goals and the absence of regular measurement—that hasgiven going green a bad name in financial circles. In reality, itseems there are few executives who are truly anti-green, exceptthose on the far fringe. Most who question green initiatives seemto struggle only with those that are strictly altruistic and far tooloose in terms of controls. And since executives are paid to help acompany save and generate money, asking for a business case forgoing green pretty much falls under the heading of doing the jobthey’re paid for.

Douglas shares what could be a hokey internal corporate slogan,if it wasn’t taken so seriously at Sun and executed with precision.“Every job is an eco-job,” he says. “Eco stands for ecology and econ-omy. Both are taken into account when we undertake a project. Andit works. It’s just how the job should be. You use an integrated deci-sion process and you come up with better decisions that save ormake you money. And you do less harm to the external world.Again, explain to me how that is not just good business.”

THE CASE FOR GREENWhen the economy sputters, chokes or just plain comes to ascreeching halt, it changes the way companies do business. Thefirst areas to be cut are generally “soft” areas—areas that don’t helpthe bottom line directly. Environmental initiatives used to be in thisgray area, but not anymore, says Walker.

“What we’re seeing from some very high-level clients is anincrease in wanting to appear green for competitive advantage,” sheexplains. “They’re downshifting slightly, but still forging ahead.”

According to Walker, since Q3 2008, companies that are com-mitted to sustainable practices have shown more hesitancy to hirefrom the outside due to cost, and may in fact fill a CSO positionfrom within, adding it to another executive’s roster or splitting thejob. “But, on the flip side, clients who are hiring for a CSO-typeposition are now asking to incorporate the word ‘environment’ or‘environmental’ into the title. They want the public to recognizethey’re focused on this area.”

However, business and law professor Andrew Morriss of theUniversity of Illinois says companies may be putting too muchstock in green as a competitive advantage. “People will answer

public opinion polls saying they want green, but it’s the buyingbehavior you need to look at,” he says.

And companies are not always on the up and up when trying tomake being green a differentiator, says Kling. “Trying to ask me tobe an environmental scientist when I’m buying products at thestore is not right,” he says. “The average consumer gets fooled andcan’t figure out the labels. Putting a sticker on saying something is‘green’ doesn’t mean it is.”

But putting a sticker on something and saying it’s green isn’twhat savvy companies are doing. Dell, for example, declared itsintent to eliminate 20 million pounds of packaging worldwide,saving $8 million over the next four years. The United Kingdom’sSainsbury’s Supermarkets Ltd. found that energy-saving refrigera-tion and air-conditioning systems provided an average 30-monthpayback on capital invested. In early 2008, the McKinsey GlobalInstitute issued a report stating that if investors provided a targetedannual investment of $170 billion, they could half the rate atwhich global energy is projected to grow over the subsequent 13years. For that large dollar amount, they could expect an annualaverage return of 17 percent. Not too shabby.

In late 2008, GreenBiz Intelligence surveyed more than 100companies to determine how the economy was affecting spendingpriorities and green strategies. Seventy-three percent of responseswere from Fortune 500 firms. Nearly 47 percent had increasedtheir investments in the area in 2008, with plans to continue in2009. A surprising 46 percent of environmental, health and safetybudgets were remaining the same in 2009, with no cuts.

Will the investment pay off? That remains to be seen. In 2008,the study Consumers, Brands and Climate Change revealed that ofthe 1,000 Americans surveyed, 65 percent could not identifymainstream companies taking a significant stance against climatechange. However, Clorox has had to raise sales projections of itsGreen Works line of eco-friendly cleaners six times in 12 monthsbecause of consumer demand.

And it’s not just consumers the Fortune 500 need to worry aboutin this economy, says Walker. “Jobs are not plentiful, but switch-ing costs are also very low for young people. If you’re trying toemploy the heavy hitters in the under 35 set, you need to thinkgreen. They do. And they want to work for an employer whoshares their values.”

greenpower



What will alternative energies mean

to the US economy? By Carolyn Tang

According to the US Department of Energy (DOE),the United States is the largest oil importer in theworld. Oil supplies more than 40 percent of the

country’s total energy demands and more than 99 percent ofthe fuel used for transportation. However, it’s a limitedresource, and the DOE estimates that the global oil supply isrestricted to approximately three trillion barrels. Add increas-ing uncertainty caused by global warming and political insta-bility, as well as a growing concern for the environment, andwe have a society incentivized to develop renewable, prefer-ably “green” energy sources.

“The wide range of stakeholder concerns has led to the fairlyconsistent support for alternative energy policy measures acrossthe political spectrum, from Al Gore to Paul Wolfowitz,” explainsDr. John Norton, the North American Renewable Energy Practicelead for MWH, Inc., a global water and energy consulting firm.

Norton also points out that regulatory requirements, such asrenewable portfolio standards, further motivate businesses toimplement alternative energy solutions. “The state and federalgovernments are incentivizing businesses and residences as com-plimentary policy to existing energy requirements. It is the carrot-and-the-stick approach. They are trying to harness market mecha-nisms to achieve the same types of benefits they had hoped toachieve through their renewable portfolio standards, but at lowersocial resistance, by leveraging the inherent creativity of the earlyadopters,” he explains. Early adopters help to spread the word byincreasing the social familiarity of a new technology.

“The early adopters are also the market segment most likely topersevere when confronted with problems in the implementationand operation of the new technologies. Market-based incentivepolicies promote the technologies by enhancing and leveragingthe efforts of the early adopters,” says Norton.

The transition to renewable energies, however, has not yetgained full momentum, in part because technical and financialrealities preclude a quick switch. “For instance, there are tremen-dous technology lock-in and switching cost constraints that affectboth the demand and supply components of the energy sector.There are huge capital costs of the transition involved with newtechnology implementation,” Norton explains.

What’s more, sometimes a business is simply incapable of plan-ning for the long run. One global household consumer productscompany that engaged Norton’s team was unable to capture the

entire long-term benefits of switching to alternative energybecause it had a maximum planning horizon of 10 years. “Becauseof their market sector, they couldn’t plan on even owning the facil-ity longer than that, let alone producing the same product and hav-ing the same processing and energy demands,” he says.

However, Norton emphasizes that the benefits of large-scale tran-sitioning to alternative energies would mean, at a minimum, a morestable supply of energy, reduced pollution and potentially a reduc-tion in regional unemployment as the infrastructure is upgraded,renovated and replaced to handle the new technologies.

Much of the discussion centers on three potential renewable ener-gies—wind power, biofuels and solar energy—each of which has itssupporters and its opposers.

WIND POWER

David Loomis is a professor of economics at Illinois State Univer-sity and director of the Center for Renewable Energy. He says thatbusinesses that transition to alternative energy sources have thepotential to recognize tremendous economic benefits. For his part,Loomis specializes in wind power, which catalyzes several directand indirect economic benefits.

According to Loomis, the state of Illinois is just reaching the1,000 megawatt mark of installed wind energy. This kind of out-put has yielded construction jobs, ongoing operations and main-tenance jobs, payments to landowners and tax revenues. He goesso far as to say that a wind farm has greater economic benefit thana residential subdivision.

“School districts especially find that wind farms are favorable tothem, because if a residential subdivision comes in, they increasethe tax base, but then they have a lot of kids to educate, so it raisestheir expense profile as well,” he explains. “A wind farm will raisethe tax base without the corresponding increase in expenses.”

In terms of indirect economic benefit, Loomis contends thatconstructing a wind farm means a boost to construction jobs.“Those workers are going to spend money in the local restaurants.Then, if they’re not from the area, they may rent hotel rooms,spend money at the local stores, etc. This multiplier effect ripplesthroughout the economy.”

The United States is among the world leaders in generating elec-tricity using wind power. In fact, in 2008, the American WindEnergy Association estimated that the United States generated 48billion kilowatts per hour, which is enough to power the equiva-lent of 4.5 million average US households.

Wind power also provides several environmental benefits. Forone, “It doesn’t cause a greenhouse effect or carbon emissions,”Loomis explains. “The other advantage is that wind energy does-n’t waste water resources. Most other fossil fuel or nuclear fueltechnologies require large amounts of water for steam generation.”

Biofuels

Biofuels are a very visible alternative energy source in the Midwestparticularly. They are generally derived from natural sources, andare non-toxic, biodegradable alternatives to petroleum-based fuel.They’re also a renewable energy source, and burn cleaner thanpetroleum. Biofuels can power vehicles, heat homes and even beused for cooking.

“Biofuels already play a critical and much needed role today,”says Robert White, director of market development for the Renew-able Fuels Association. “Petroleum is a limited resource, and one



that gets harder to find and capture with each year that passes. Itis typically found in parts of the world that are not necessarilyfriendly towards American policy. This dependency on unstablecountries and on a limited supply is dangerous.”

Ethanol is perhaps the most familiar biofuel. It is domesticallyproduced using a variety of feedstock, including switchgrass, cornand sugarcane. And since it is renewable, it can be produced yearin and year out. What’s more, it’s environmentally friendly, sinceethanol reduces greenhouse gas emissions and particulate matter.In fact, according to the University of Nebraska-Lincoln, ethanolreduces direct greenhouse gas emissions between 48 and 59 per-cent compared to gasoline.

Some experts suggest that ethanol has the potential to replacepetroleum as the fuel of choice for all domestic transportationneeds. And, in fact, says White, in June Brazil announced that 75percent of its transportation fuel needs will be met with ethanol.“That’s a shining example for the United States to follow, andshows that great strides can happen,” he says.

So why hasn’t ethanol been adopted more widely? According toWhite, part of the challenge is that farmers and ethanol biorefiner-ies don’t own fueling stations, which means that in order to getbroader distribution, they have to convince those in the petroleumindustry to use ethanol.

“Until recent years, the business case was hard to push, buttimes are changing. Federal, state and local incentives are becom-ing common to help with adding infrastructure,” he says.

Additionally, domestic auto-makers have pledged that half oftheir fleet in model year 2012 will be flex-fuel. These vehicles willbe able to operate on unleaded fuel, fuel blends that consist of atleast 85 percent ethanol (E85), or any combination of the two fuels.This enables consumers to use E85 when available, and regulargasoline when it’s not. Lower cost is an additional consumer ben-efit associated with ethanol. “According to industry statistics, E85on a national basis costs 19.3 percent less than unleaded gaso-line,” says White.

As for overall economic impact, in 2008 the ethanol industrycontributed 494,177 jobs to the US economy. “It is also reducingthe need for farm subsidies and lowering the tax bill to consumers.Ethanol helped to contribute more than $65 billion to GDP, and$20 billion to household incomes in 2008 alone,” White explains.

There are a few challenges associated with biofuel production,however. One of them is the food-versus-fuel debate. Sinceethanol is generally made from food sources, like corn and soy-beans, the increased demand for these crops could drive priceshigher. And since these crops are used as feedstock, the trickle-down effect potentially could lift the price of meat, poultry, etc.

Additionally, there’s the issue of energy return. An imbalanceoccurs when more energy is needed to produce a single BritishThermal Unit (BTU) of biofuel than the energy that is subsequentlyprovided by that same BTU.

John Aikens, VP of Lybradyn, a biotechnology company basedin Oak Brook, Ill., explains. “Plants have the limitation that youhave to cultivate, fertilize, harvest and process them,” he says. “Inaddition, crops use a lot of land, all of which requires consump-tion of petroleum fuel.” The challenge, therefore, is to determinehow to minimize the amount of energy needed to create a BTU.

That’s where Lybradyn comes in. “We looked at this problemand realized that we needed to come up with a better, more effi-

cient way to manage carbon,” says Aikens. He refers to thisprocess as a “biosolar concept.”

“What plants basically do is harness sunlight to convert thegreenhouse gas carbon dioxide into biomass. This biomass is fur-ther processed and used to make energy,” he explains. “Lybradynrecognized that the key step is creation of biomass, and as suchthe company doesn’t actually make the fuel directly; we makefeedstock for fuel.”

What’s more, by converting carbon into energy, Lybradyn suc-cessfully sidesteps both the food-versus-fuel and energy-returndebates. The concept also resolves another regional issue associ-ated with biofuel production: “In the Midwest, we have lots ofbioenergy feedstock: corn, soybeans, so on and so forth. However,the lion’s share of energy production is not done in the Midwest.The major challenge is to overcome the existing logistical trans-portation issue to enable bioenergy products to reach the marketsthat need it,” Aikens explains. “The idea here is to create a biofuelindustry situated in the Midwest that would be co-located withenergy production and utilization.”

SOLAR ENERGY

Solar Energy is almost ubiquitous in small consumer goods, pow-ering anything from calculators to landscape lighting. Today, how-ever, solar energy is applied in a greater range of ways.

Passive solar design involves designing and locating a structure toenhance its ability to use solar energy to reduce heating and cool-ing needs. Solar thermal design uses mechanical equipment to con-vert solar power to usable heat. (This application can be found inhouses and swimming pools.) Both passive solar and solar thermaldesign would be considered mature technologies, since they’re cur-rently available for use in both residential and business buildings.

A newer application of solar power is the solar photovoltaic sys-tem. This technology concentrates sunlight, therefore providinghigh-temperature heat that can be converted into electricity. Insome cases, a solar photovoltaic system is also connected to thepower grid, and the generated electricity is fed into the grid.

As expected, there are hefty costs involved in retrofitting a struc-ture to use solar power. Even so, there are government incentives inplace that can offset some of the costs. For example, the IllinoisDepartment of Commerce and Economic Opportunity offers a SolarEnergy Rebate Program, which provides rebates of up to 30 percentof the project cost to a maximum of $10,000 for new photovoltaicor solar thermal installations. This rebate is in addition to a 30-per-cent Residential Renewable Energy Tax Credit provided by the fed-eral government for the installation of solar-electric systems, solarwater-heating systems and fuel cells. This tax credit was amended in2008 to provide for an eight-year extension until 2016, and toinclude small wind-energy systems and geothermal heat pumps.

The trend in Illinois is echoed across the United States. In thestate of Washington, for example, the government provides grantsand funding to companies within the renewable energy industry.The state has also waived sales tax on consumer purchases of solarand renewable energy technologies.

“Throughout the country, states are passing legislation making iteasier for both the green energy companies and also the con-sumers,“says David Winterton, a member of EFS, LLC, a greenenergy company based in Walla Walla, Wash. “This inevitably willcause a snowball effect, and we can anticipate these energysources becoming more and more prevalent.”

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CONFERENCES

I l l i n o i s C PA S o c i e t y

Leadership

2008-09 Boardof Directors

CHAIRPERSONLee A. Gould, CPA/ABV, JD, CFE, CFFGould & Pakter Associates LLC

VICE CHAIRPERSONSara J. Mikuta, CPALeaders Bank

SECRETARYCharles F. G. Kuyk lll, CPACrowe Horwath and Company LLP

TREASURERRobert E. Cameron, CPACameron Smith & Company PC

IMMEDIATE PAST CHAIRPERSONSheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause, LLP

DIRECTORSBrent A. Baccus, CPAWashington Pittman & McKeever







Elizabeth A. Murphy, PhD, CPADePaul University





Lawrence H. Shanker, CPAShanker Valleau Accountants, Inc.


Committees

ACCOUNTING PRINCIPLES (Chair)Reva Steinberg, CPABDO Seidman, LLP

(Vice Chair)Jeffrey Watson, CPABlackman Kallick LLP

AGRIBUSINESS(Chair)Brian Brown, CPAIllinois Agricultural Auditing Association

AUDIT & ASSURANCE SERVICES(Chair)Jon Hoffmeister, CPAClifton Gunderson

(Vice Chair)Kevin Wydra, CPACrowe Horwath & Co.

ETHICS (Chair)Keith Martin, CPAPlante & Moran PLLC

(Vice-Chair)Rick Franklin, CPAWarady & Davis LLP

FINANCE & TREASURYMANAGEMENT

Robet E. Cameron, CPACameron Smith & Co., PC

GOVERNMENT EXECUTIVELinda Abernethy, CPAMcGladrey & Pullen LLP

GOVERNMENT REPORT REVIEWRichard Gaul, CPAMathieson, Moyski, Celer & Co., LLP

ILLINOIS CPAS FOR POLITICALACTION

Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP

NOMINATING Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP

NOT-FOR-PROFITORGANIZATIONS

Floyd Perkins, CPAUngaretti & Harris

PEER REVIEW REPORTACCEPTANCE

(Chair)John Belletete, CPAStriegel Knobloch

(Vice Chair)Gregory Pierce, CPAPierce Riesbeck & Associates

REGULATION & LEGISLATIONLawrence A. Wojcik, CPADLA Piper US LLP

TAX ADVISORY GROUPBrian Whitlock, CPABlackman Kallick LLP

TAXATION BUSINESSLinda Martin, CPAClifton Gunderson LLP

TAXATION ESTATE, GIFT & TRUSTSFred Jahns, CPABrookwood Vance LLC

TAXATION EXECUTIVE(Chair)Edward Hannon, CPAFreeborn & Peters LLP

(Vice-Chair)Mary Lou Pier, CPAPier & Associates

TAXATION FLOW-THROUGHENTITIES

Michael Radencich, CPATrimarco, Radencich, Schwartz & Mrazek, LLC

TAXATION INDIVIDUALCara Hoffman, CPABlackman Kallick LLP

TAXATION PRACTICE &PROCEDURES

Michael J. Singer, CPAMichael J. Singer & Co., P.C.

TAXATION STATE & LOCALJohn S. Bird, CPAMcGladrey & Pullen LLP

WOMEN'S EXECUTIVEJennifer Cavanaugh, CPAGrant Thornton LLP

Task Forces

COMMITTEE STRUCTURE &VOLUNTEERISM

Sara J. Mikuta, CPALeaders Bank

CPA EXAM AWARD PROGRAMDeborah Lindberg, CPAIllinois State University

DIVERSITY INITIATIVESAnthony FullerGrant Thornton LLP

LIFETIME ACHIEVEMENT AWARDSheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP

OUTSTANDING EDUCATOR AWARD

Penny Yunker, CPARetired

OUTSTANDING LEADERSHIP INADVANCING DIVERSITY

Anthony FullerGrant Thornton LLP

PUBLIC SERVICE AWARD(Co-Chair)Linda Forman, CPALinda Forman, CPA PC

(Co-Chair)Christopher Beaulieu, CPAClifton Gunderson LLP

SMALL PRACTICE ADVISORYMary Ann Webb, CPASulaski & Webb, CPAs

WOMEN'S INITIATIVESConnie Kravitz, CPAChicago Park District

YOUNG PROFESSIONALS GROUP(Co-Chair)Jonathan Hauser, CPAKPMG LLP

(Co-Chair)Betsy Mattews, CPALake County Neurosurgery, LLC

Member Forums

CHICAGOLAND CONTROLLERSNorman Serlin, CPA

EMPLOYEE BENEFIT PLANS(Co-Chair)Janice Forgue, CPAMcGladrey & Pullen LLP

(Co-Chair)Erik Pienkos, CPAGrant Thornton LLP

FUTURES, SECURITIES &DERIVATIVES

Jonathan Waterman, CPAMcGladrey & Pullen LLP

INVESTMENT ADVISORY SERVICES/PFP

Mark Gilbert, CPAReason Financial Advisors

MERGERS & ACQUISITIONSMary Warmus, CPAKensington Financial Consultants


Rose G. Doherty, CPALegacy Professionals LLP

TAXATION NW SUBURBANSamuel Pass, CPASamuel Pass CPA Ltd.

TAXATION NORTH SHOREJoe Rieber, CPAJoseph H. Rieber CPA

ChapterPresidents

CENTRAL CHAPTER Mickey M. Scheffki, CPAClifton Gunderson LLP

CHICAGO METROBurton W. Goode, CPABurton W. Goode, CPA

CHICAGO SOUTHKathy Orlando, CPAKathleen Orlando & Associates, Inc.

FOX RIVER TRAILKurt Schneider, CPADam, Snell & Taveirne, Ltd

FOX VALLEYGary Steeno, CPAAyotte Samonds Brdar & Decker, Ltd.

NORTH SHOREJodi Brennan Kunzik, CPABaxter Healthcare Corp.

O’HARENorris C. Harstad, CPABenchmark, Aspen & Associates, Ltd.

WESTERNMichelle J. Ingersoll, CPAProject NOW

We Salute You

The Illinois CPA Society applauds its outstanding volunteer leaders. Their tireless dedication and contributions help elevate the Society as the premier organization for CPAs and finance professionals.

I l l i n o i s C PA S o c i e t y

Leadership

2008-09 Boardof Directors

CHAIRPERSONLee A. Gould, CPA/ABV, JD, CFE, CFFGould & Pakter Associates LLC

VICE CHAIRPERSONSara J. Mikuta, CPALeaders Bank

SECRETARYCharles F. G. Kuyk lll, CPACrowe Horwath and Company LLP

TREASURERRobert E. Cameron, CPACameron Smith & Company PC

IMMEDIATE PAST CHAIRPERSONSheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause, LLP

DIRECTORSBrent A. Baccus, CPAWashington Pittman & McKeever







Elizabeth A. Murphy, PhD, CPADePaul University





Lawrence H. Shanker, CPAShanker Valleau Accountants, Inc.


Committees

ACCOUNTING PRINCIPLES (Chair)Reva Steinberg, CPABDO Seidman, LLP

(Vice Chair)Jeffrey Watson, CPABlackman Kallick LLP

AGRIBUSINESS(Chair)Brian Brown, CPAIllinois Agricultural Auditing Association

AUDIT & ASSURANCE SERVICES(Chair)Jon Hoffmeister, CPAClifton Gunderson

(Vice Chair)Kevin Wydra, CPACrowe Horwath & Co.

ETHICS (Chair)Keith Martin, CPAPlante & Moran PLLC

(Vice-Chair)Rick Franklin, CPAWarady & Davis LLP

FINANCE & TREASURYMANAGEMENT

Robet E. Cameron, CPACameron Smith & Co., PC

GOVERNMENT EXECUTIVELinda Abernethy, CPAMcGladrey & Pullen LLP

GOVERNMENT REPORT REVIEWRichard Gaul, CPAMathieson, Moyski, Celer & Co., LLP

ILLINOIS CPAS FOR POLITICALACTION

Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP

NOMINATING Sheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP


Floyd Perkins, CPAUngaretti & Harris

PEER REVIEW REPORTACCEPTANCE

(Chair)John Belletete, CPAStriegel Knobloch

(Vice Chair)Gregory Pierce, CPAPierce Riesbeck & Associates

REGULATION & LEGISLATIONLawrence A. Wojcik, CPADLA Piper US LLP

TAX ADVISORY GROUPBrian Whitlock, CPABlackman Kallick LLP

TAXATION BUSINESSLinda Martin, CPAClifton Gunderson LLP

TAXATION ESTATE, GIFT & TRUSTSFred Jahns, CPABrookwood Vance LLC

TAXATION EXECUTIVE(Chair)Edward Hannon, CPAFreeborn & Peters LLP

(Vice-Chair)Mary Lou Pier, CPAPier & Associates

TAXATION FLOW-THROUGHENTITIES

Michael Radencich, CPATrimarco, Radencich, Schwartz & Mrazek, LLC

TAXATION INDIVIDUALCara Hoffman, CPABlackman Kallick LLP

TAXATION PRACTICE &PROCEDURES

Michael J. Singer, CPAMichael J. Singer & Co., P.C.

TAXATION STATE & LOCALJohn S. Bird, CPAMcGladrey & Pullen LLP

WOMEN'S EXECUTIVEJennifer Cavanaugh, CPAGrant Thornton LLP

Task Forces

COMMITTEE STRUCTURE &VOLUNTEERISM

Sara J. Mikuta, CPALeaders Bank

CPA EXAM AWARD PROGRAMDeborah Lindberg, CPAIllinois State University

DIVERSITY INITIATIVESAnthony FullerGrant Thornton LLP

LIFETIME ACHIEVEMENT AWARDSheldon P. Holzman, CPA, CFE, CFFBaker Tilly Virchow Krause LLP

OUTSTANDING EDUCATOR AWARD

Penny Yunker, CPARetired

OUTSTANDING LEADERSHIP INADVANCING DIVERSITY

Anthony FullerGrant Thornton LLP

PUBLIC SERVICE AWARD(Co-Chair)Linda Forman, CPALinda Forman, CPA PC

(Co-Chair)Christopher Beaulieu, CPAClifton Gunderson LLP

SMALL PRACTICE ADVISORYMary Ann Webb, CPASulaski & Webb, CPAs

WOMEN'S INITIATIVESConnie Kravitz, CPAChicago Park District

YOUNG PROFESSIONALS GROUP(Co-Chair)Jonathan Hauser, CPAKPMG LLP

(Co-Chair)Betsy Mattews, CPALake County Neurosurgery, LLC

Member Forums

CHICAGOLAND CONTROLLERSNorman Serlin, CPA

EMPLOYEE BENEFIT PLANS(Co-Chair)Janice Forgue, CPAMcGladrey & Pullen LLP

(Co-Chair)Erik Pienkos, CPAGrant Thornton LLP

FUTURES, SECURITIES &DERIVATIVES

Jonathan Waterman, CPAMcGladrey & Pullen LLP

INVESTMENT ADVISORY SERVICES/PFP

Mark Gilbert, CPAReason Financial Advisors

MERGERS & ACQUISITIONSMary Warmus, CPAKensington Financial Consultants


Rose G. Doherty, CPALegacy Professionals LLP

TAXATION NW SUBURBANSamuel Pass, CPASamuel Pass CPA Ltd.

TAXATION NORTH SHOREJoe Rieber, CPAJoseph H. Rieber CPA

ChapterPresidents

CENTRAL CHAPTER Mickey M. Scheffki, CPAClifton Gunderson LLP

CHICAGO METROBurton W. Goode, CPABurton W. Goode, CPA

CHICAGO SOUTHKathy Orlando, CPAKathleen Orlando & Associates, Inc.

FOX RIVER TRAILKurt Schneider, CPADam, Snell & Taveirne, Ltd

FOX VALLEYGary Steeno, CPAAyotte Samonds Brdar & Decker, Ltd.

NORTH SHOREJodi Brennan Kunzik, CPABaxter Healthcare Corp.

O’HARENorris C. Harstad, CPABenchmark, Aspen & Associates, Ltd.

WESTERNMichelle J. Ingersoll, CPAProject NOW

We Salute You

The Illinois CPA Society applauds its outstanding volunteer leaders. Their tireless dedication and contributions help elevate the Society as the premier organization for CPAs and finance professionals.

TIME TALENT AICPA business solutions

To learn more, contact your local Paychex representative, call

877.264.2615 or visit

www.cpa2biz.com/PaychexProgram

MORE THAN

20,000 CPA firmsNATIONWIDE PARTICIPATE IN THE

Paychex Partner ProgramIt’s the preferred provider of payroll and retirement plan services

for AICPA business solutions

You may already know Paychex is one of the largest payroll and human resource companies in the U.S., servicing over 550,000 businesses nationwide. But that’s just the beginning. Paychex is also one of the industry’s largest 401(k) recordkeepers, and offers a full complement of HR-related services. Paychex can provide your clients a wide range of integrated payroll and HR offerings, allowing you to broaden the client services you provide, while enhancing your status as a valued and trusted advisor.

The Paychex Partner Program from AICPA Business Solutions is a valuable resource in this challenging economic environment. Paychex will ensure that your firm and clients are staying up to date with ever-changing legislation–including the new tax incentives and COBRA premium subsidy programs. Learn why over 20,000 CPA firms rely on the Paychex Partner Program to continually keep their firms and clients in compliance with all the latest regulations.

www.cpa2biz.com/PaychexProgram877.264.2615

Danielle Aeschbacher

Brian Anderson

Randall Anderson

Matt Barton

Ilana Bromber

Gregory Brown

Kymberly Buchanan

Julie Butler

Robert Cameron

Doug Canfield

Brenda Cheuvront

Julie Cunningham

Gregory Dunham

Robert Engstrom

William Erdmann

William Fates

Marian Flynn

Jennifer Foley

Lawson Giles

Pauline Halgas

Patsy Hasty

David Hensley

James Hogan

Philippe Jean-Louis

Nicholas King

Andrew Klemens

John Lamszus

Sheila Latting

Sue Legris

Jack Levine

Cherry Llave

Ghadir McCauley

Sally Murray

Brent Olson

Larry Owens

Andy Park

Marianne Phelan

Thomas Phillips

Daniel Reily

Benjamin Settler

Crystal Smith

Thomas Smith

Rebecca Sommer

Michael Tatman

Joshua Ticho

Jim Turner

Valerie Varney

Silene Walters

Kara Weber

Joe Wilson

A SHOUT OUT FOR THE EFFORTS + EXPERTISE OF ILLINOIS CPA SOCIETY MEMBERS

Serving Those Who Serve the Nation

As we continue to welcome home our returning service menand women in Illinois, we are thankful for all of our volunteermembers who stand at the ready to be matched with a militaryfamily for this important and much appreciated program.

If you’d like to volunteer for or refer a member of the armedforces to this program, please contact Jill Wiles, community serv-ice manager, at [email protected] 312.993.0407 ext 277.

Young Professionals Group Helps College-Bound Students

Illinois CPA Society member volunteers have devoted theirvaluable time and skills to benefit the Military Service TaxPreparation Program. As a result, since January 2009 membervolunteers have prepared tax returns for 78 active duty person-nel and recently returned members of the US Armed Forces inIllinois. Any active duty or recently returned member of the USArmed Forces who is an Illinois resident can take advantage ofthis free tax return preparation service. Member volunteers arematched with requests based on geographic proximity, andwork directly with service members or their families.

We’d like to thank this year’s volunteers, including:

The FAFSA (Free Application for Federal Student Aid) has grown in length andscope over the past several years, and college-bound students and their parentsoften find that they’re in need of answers in order to accurately complete thisimportant form. This year, five members of the ICPAS Young Professionals Groupreceived training from the Ladder Up organization to volunteer at FAFSA work-shops at Chicago Public Schools. These volunteers worked with students and par-ents at Lane Tech High School’s computer lab to complete and submit the FAFSA,which will determine eligibility for scholarships, grants and loans.

Thanks to Aamer Jahved, Chris Manderfield, Lanesha McDaniel, Martrice Cald-well and Genevieve Waldron for their participation in the program.

Please note: We have done our best to compile the full list of

volunteer names. However, if we missed anyone, we deeply

regret the omission.


AICPA business solutions

To learn more, contact your local Paychex representative, call

877.264.2615 or visit

www.cpa2biz.com/PaychexProgram

MORE THAN

20,000 CPA firmsNATIONWIDE PARTICIPATE IN THE

Paychex Partner ProgramIt’s the preferred provider of payroll and retirement plan services

for AICPA business solutions

You may already know Paychex is one of the largest payroll and human resource companies in the U.S., servicing over 550,000 businesses nationwide. But that’s just the beginning. Paychex is also one of the industry’s largest 401(k) recordkeepers, and offers a full complement of HR-related services. Paychex can provide your clients a wide range of integrated payroll and HR offerings, allowing you to broaden the client services you provide, while enhancing your status as a valued and trusted advisor.

The Paychex Partner Program from AICPA Business Solutions is a valuable resource in this challenging economic environment. Paychex will ensure that your firm and clients are staying up to date with ever-changing legislation–including the new tax incentives and COBRA premium subsidy programs. Learn why over 20,000 CPA firms rely on the Paychex Partner Program to continually keep their firms and clients in compliance with all the latest regulations.

www.cpa2biz.com/PaychexProgram877.264.2615

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INSIGHT Magazine - September/October 2009

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Transcript of INSIGHT Magazine - September/October 2009