November 2018

Canton IMA


The Newsletter of the IMA Canton Chapter

            November 2018
Jeff Walters, President
Cullen Bahler, Editor

  In this issue:

  This Month's Tech Session

  Strategic Finance Tips

  Webinar Schedule

  Upcoming IMA Technical Sessions


  Connect with Us!

  Do you have info to share with our
  chapter? Email it

Tax Update Information Night
Tuesday, November 27, 2018 | 5:00 - 7:30 pm


   Kozmo's Grille: 37 1st St SW, Massillon OH 44647 (directions)
Deadline registration: Friday, November 23, 5:00 pm


Pre-Dinner Technical Session (5:00 - 6:00 pm):
State & Local Tax Update

After-Dinner Technical Session (6:30 - 7:30 pm):

Federal Tax Update

 Presented by Lane M.
 Knore, CPA, 
 Maloney + Novotny LLC

Lane is a Senior Manager in the tax department of the Canton office of Maloney + Novotny LLC and has been with the firm since 2006. With more than 20 years of experience, Lane is primarily focused on tax consulting, planning and compliance. Lane also specializes in business advisory and strategic planning while representing clients before the IRS, state and local taxing authorities.

Lane serves clients in a variety of industries including commercial and industrial services, wholesale and distribution, medical practices, professional services, real estate, construction and not-for-profits.

Prior to joining Maloney + Novotny, Lane worked for a Big Four firm where he gained extensive expertise in audit and tax matters, including multi-state and local tax compliance and audits. After four years, Lane left to start his own firm specializing in tax services, accounting, investments and insurance.

Lane graduated Summa Cum Laude from Miami University. He is a member of the Tax Section of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants.

In the community, Lane has served as the Treasurer of the Athletic Charitable Committee and Assistant Varsity Football Coach for several area High Schools.


  Presented by Mark P.
  Crawford, CPA,
  Maloney + Novotny LLC

Mark joined Maloney + Novotny LLC in 1994 and was elected Shareholder in the Canton office in 2004.  Prior to joining Maloney + Novotny, Mark spent two years working for Big Four firm KPMG. 

Mark advises clients in a variety of industries including manufacturing, distribution, construction, not-for-profit, and real estate.  Mark has significant experience in providing attest, tax, and business advisory services.

Mark is a member of Maloney + Novotny's Accounting and Auditing Committee that monitors current developments in the accounting profession and implements firm policies on these topics.

A Summa Cum Laude graduate of Bethany College with a Bachelor of Arts degree with a major in Accounting and minors in Economics and Mathematics, Mark is a member of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants. 

He is active in the community as a member of the Canton Regional Chamber of Commerce’s Business Excellence Awards committee and as a volunteer for Arts in Stark.

 Presented by Scott A.
 Dunn, CPA, 
 Maloney + Novotny LLC

Scott is a Manager in the tax department of the Canton office of Maloney + Novotny LLC.  He has been with the firm since 2011.  Scott works with privately-held businesses and not-for-profit entities.

He provides tax planning, compliance, and business advisory services to clients in industries such as manufacturing, distribution, real estate, and not-for-profit.

Scott is a graduate of Walsh University with a Bachelor of Arts degree in Accounting and Finance.  He is a member of the American Institute of Certified Public Accountants and the Ohio Society of Certified Public Accountants.

In the community, Scott serves on the Pro Football Hall of Fame Enshrinement Festival – Security and Logistics Committee.

  Strategic Finance
  The Ethicality of Earnings Management

  By Erin L. Hamilton, CPA; Rina M. Hirsch, CPA; Uday S. Murthy; and Jason T. Rasso, CFE
Just as beauty is in the eye of the beholder, so might be the ethicality of earnings management. Opinions as to the ethicality of earnings management—using the subjectivity within accounting standards or structuring transactions to achieve a particular level of reported earnings—differ quite considerably.
At one end of the spectrum, the deliberate manipulation of company earnings is viewed as self-serving, misleading, and analogous to fraudulent financial reporting. At the other end, U.S. Generally Accepted Accounting Principles (GAAP) allow for managerial discretion in reporting decisions, and many people believe that using that discretion to achieve earnings objectives is an integral part of doing business and protecting the interests of shareholders.
The only difference separating "bad" earnings ­management—which is undertaken to hide true operating performance and mislead financial statement users—from "good" earnings management—which is undertaken to manage the business effectively and create value for shareholders—is the intent of management when making financial reporting decisions. Because managerial intent is often unknown to financial statement users, there's somewhat of a "knowledge gap" that exists between the managers who know the purpose of their accounting decisions and the users of the statements who lack insight into the goals underlying reporting decisions. This includes shareholders, creditors, regulators, and the general public.
In view of these conflicting perspectives on earnings management, we attempted to gain an understanding of how this knowledge gap influences the way in which managers perceive the ethicality of earnings management. Specifically, we surveyed managers of publicly traded companies with financial reporting experience to learn whether they consider public perceptions when making discretionary accounting decisions that appear aggressive (i.e., earnings management decisions). And if they do consider public perceptions, we were curious as to whose perceptions they are concerned with most.
We discovered that managers give considerable thought to how the public (including investors, regulators, and auditors) might perceive their earnings management behaviors. Although managers undoubtedly feel pressure to engage in earnings management to achieve certain earnings benchmarks (like analysts' forecasts), they appear to be predominantly concerned that their earnings management behavior might become public and result in reputational harm, a loss of stakeholder trust, stock price declines, and enhanced regulatory scrutiny.
Many parties with widely varying opinions have weighed in on the debate regarding the ethicality of earnings management. Regulators take a conservative approach by cautioning against inherently “unethical” earnings management, arguing that it distorts a company’s true earnings and misleads the investing public. Others regard the discretion inherent in reported earnings as a valuable tool that can be used to incorporate management’s private information and company-specific circumstances into accounting transactions. 
These proponents argue that financial statements are more useful when such discretion is incorporated. Finally, some take a middle-of-the-road approach by recognizing that earnings management falls along a continuum ranging from justifiable interpretations of accounting standards to outright fraud, with many accounting choices falling within a gray area that’s neither completely ethical nor unethical. 
Managers often rationalize earnings management as being a necessary evil or the “right thing to do” given the circumstances. There could even be situations where managing earnings appears to be the “ethical” choice. For example, imagine you’re the CFO of a company who has toiled tirelessly to meet analysts’ earnings forecasts for the last few periods, but to no avail.
Furthermore, you have had difficulty motivating your hardworking employees because results have consistently failed to reach the level necessary for employees to receive bonuses. Your company’s current period earnings are finally on track to beat expectations and trigger employee bonuses, but an important sale falls through just before the end of the period. As the CFO, you know that yet another failure to meet earnings expectations and pay employees bonuses will further damage shareholder value as well as employee morale. 
Such a situation provides the perfect environment to argue the ethicality of managing company earnings. After all, isn’t it the CFO’s job to protect the interests of both shareholders and employees? Perhaps a more aggressive interpretation of GAAP would allow more revenue to be recognized in the current period, or perhaps a sale of obsolete equipment planned for the current period could be delayed to avoid the loss on sale that would result. 
To learn more about how managers perceive the ethicality of earnings management and the considerations that influence these perceptions, we surveyed 122 public company managers with financial reporting experience. These managers held mid-, upper-, or executive-level positions. Participants had an average of 15.2 years of management experience and 8.2 years of experience making financial reporting decisions. Approximately 39% of participants majored in accounting or finance; 40% possessed a graduate degree; 13% held MBA degrees; and 25% majored in business areas other than accounting or finance.
This is an abstract.  For the full article, please click here.
Webinar Schedule
You will earn CMA and CPE credits when you attend any live webinar. Replay webinars are available in the archive but do not earn credits. Advance registration is recommended—IMA webinars are popular and fill up quickly.
 Step Up Your Tech
 Inside Talk
 November 05, 2018
 01:00 PM - 02:30 PM
 Successful Conflict Negotiation
 Leadership Academy
 November 06, 2018 
 01:00 PM - 02:30 PM
 5 Tips for Leveraging Scenario
 Planning in 2019
 Inside Talk
 November 07, 2018 
 01:00 PM - 02:00 PM
 Balancing the Need for Quick Wins
 Against a Strategic Vision in Digital
 Inside Talk
 November 14, 2018 
 01:00 PM - 02:00 PM
 What Would You Do? Real-Life
 Strategic Decisions
 Strategic Management
 November 19, 2018 
 01:00 PM - 02:00 PM
 Delegation Skills
 Leadership Academy
 December 04, 2018 
 01:00 PM - 02:30 PM
 Best Practices for Building a Risk
 Assessment Framework in Finance
 Inside Talk
 December 05, 2018 
 01:00 PM - 02:00 PM
 Technology Trends Accountants,
 Controllers, and CFOs Need to Know
 Inside Talk
 December 12, 2018 
 01:00 PM - 02:00 PM
   Join Us at IMA Technical Sessions
   2018-2019 tech sessions will be held at Kozmo's Grille with the exceptions noted
   below. There are two hour-long sessions beginning at 5:00 and 6:30 and dinner in
  • November 27, 2018
  • December 18, 2018
  • January 15, 2019
  • February 19, 2019
  • March 19, 2019
  • April 16, 2019
  • May 21, 2019
  Cost for dinner is $30 for members/guests and $15 for students. Please look for
  invite emails with registration information prior to each meeting.
  • Social/Networking at 4:45 pm
  • Pre-Dinner Technical Session at 5:00 pm
  • Dinner at 6:00 pm
  • Post-Dinner Technical Session at 6:30 pm
© 2010-2018 Institute of Management Accountants - Canton Ohio Chapter # 155. All rights reserved.
The mission of the Institute of Management Accountants (IMA) is to provide a forum for research, practice development, education,
knowledge sharing, and the advocacy of the highest ethical and best business practices in management accounting and finance.
Please join us as we promote this mission in the greater Canton, Ohio, area.