The New CPE: Collaborative Learning Experiences

By:    Peter A. Margaritis, CPA, CGMA, MAcc
Robert Dean, CPA, Chief Learning Officer

Lifelong learning means more than simply complying with our State Boards of Accountancy licensing requirements or clicking a box to validate attendance in a webinar. It also extends beyond watching webcasts, studying by one’s self, or going to seminars and conferences in person. The CPA Horizons 2025 report identifies lifelong learning as one of the ten insights and directions of the accounting profession. “Current educational framework must evolve at the same pace with the changing dynamics of business, government, and our profession,” the report states.

The new educational framework must be designed to develop pathways that reinforce and extend the learning experience, particularly in this complex and changeable business environment. Research shows that within thirty minutes of completing a course and not applying the new learning immediately, participants will have retained only 58% of the material.  After 48 hours, the retention level drops to 33% and below 10% after three weeks.

The creation of collaborative learning communities will help extend the learning experience, increasing retention and strengthening knowledge. This movement to collaborative learning communities mirrors a current trend in business outlined in the book The Experience Economy. Consumers are looking for (and willing to pay for) transformational “life changing” experiences. Learning experiences can be a differentiator, in order to receive value beyond the training commodity.

These collaborative learning communities will contain the following elements: revisiting past learning, reflecting on insights, reinforcing the learning, and transferring the learning to the community and beyond–all in real time. “Transitioning to real-time learning will change the way CPAs learn and will help them adopt and adapt quickly and knowledgeably to ever-changing circumstances,” states the CPA Horizons 2025 report. Real-time collaborative learning will provide smaller increments of education that are more easily digested and more rapidly implemented.

Collaborative learning communities can also reduce attention blindness, which is defined as “the basic feature of the human brain that, when we concentrate intensely on one task, causes us to miss just about everything else.”[i] This complex, highly digital, interconnected world creates numerous opportunities and challenges that will be missed by those who do not share knowledge and experience. The collective knowledge existing outside of the organization far exceeds the aggregate knowledge within the organization. “The ability to do our work better based on the input of others, and to make others’ work better based on our contribution, is increasingly seen as the single most important characteristic of successful employees.”[1]

A futuristic example of the benefits of a collaborative learning community is demonstrated in the following scenario. Your firm has hired 25 new staff accountants and they are all starting on Monday, September 8th.  Your firm has offices in five locations throughout your state.  The 25 staff accountants will be assigned an office in one of the five locations after onboarding has been completed.  Over the next week, the new staff will receive training on the firm’s culture, expectations, and software, along with both technical and non-technical training.

Once the new staffers start at their respective offices, the assimilation into the firm begins.  This is a very critical time for the success of your new staffers because moving from “backpack to briefcase” is not a course taught at your local universities.  The challenge for the firm is to remove the “backpack” and replace it with a “briefcase” over the next 90 days in order for them to be highly productive after the first of the year.  This is can be accomplished during this time period by using a collaborative platform such as ThinkTank by GroupSystems.  These new staffers can login and share their experiences and challenges (all anonymous) with a moderator through various attributes of the platform.  So challenges such as professional etiquette or emotional intelligence can be discovered quickly and addressed immediately.  Everybody is benefiting from each others experiences while not being embarrassed because of the anonymous feature in this platform.

As stated in the CPA Horizons 2025 report, integration and collaboration are core competencies for CPAs, and “CPAs will need to build effective strategic alliances while working collaboratively to provide multidisciplinary solutions to complex problems.” These collaborative learning communities will become an essential business tool that lessens attention blindness, reduces implementation costs, and saves time. Participating in a collaborative learning community will be fun, exciting, and inspirational—leading to the increase of the collective knowledge of the entire community.


[i] Davidson, Cathy, N., Collaborative Learning for the Digital Age, The Chronicle Review, August 26, 2011

2 Boyd, Stowe, Network Performance is the Single Most Important Characteristic of Successful Employees, Gigaom Research, December 22, 2013

 Peter A. Margaritis, CPA, CGMA, MAcc

Peter Margaritis is the CEO of IFRS Education and Training, LLC. IFRS Education and Training, LLC delivers high-quality IFRS programs to CPAs, accountants, and business leaders. Peter is a past chair of the Ohio Society of CPAs’ executive board of directors. He is a member of the American Institute of CPAs, the Ohio Society of CPAs, the Georgia Society of CPAs, the National Speakers Association.

Bob Dean, CPA, Chief Learning Officer

Bob Dean is a senior executive in learning and talent management. He has been a catalyst in aligning learning and talent development with business strategy for three major professional services firms. Bob now works as a business innovation consultant to professional services organizations. Bob became one of the first ten people in the world to be certified in the models and frameworks of The Experience Economy. Bob uses this certification to collaboratively design and deliver transformational customer and employee experiences for his professional services firm clients.

How The New Five-Step Revenue Recognition Model Impacts Your Organization

steps-to-making-progress-onlineFor several years the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have worked to develop a single standard revenue recognition model. This new standard will apply to all industries and companies using either the U.S. GAAP and IFRS accounting standards. The intention of the new revenue recognition model is to improve financial statements and eliminate differences between GAAP and IFRS.

In November the FASB and IASB voted to move forward with preparation of the final standard which is expected to be issued in the first quarter of 2014. What does this mean to you and your organization?

This new standard on revenue recognition is a principles-based approach (with some guidance) rather than a “bright line” rules-based approach. It will be a single revenue recognition model applied across all industries and transactions. When the new standard becomes effective, industry-specific revenue recognition accounting will no longer exist. This is a significant change.

At the time of this writing, the proposed effective date for publicly held entities with annual reporting periods beginning on or after December 15, 2016 (with no early adoption) and for privately held entities with annual reporting periods beginning on or after December 15, 2017, with early adoption allowed but no sooner than December 15, 2016.

The core principle is that “an entity must recognize revenue when it transfers promised goods and services to the customer and the amount recognized should be the consideration to which the entity expects to be entitled.”[1] Businesses will determine the correct revenue recognition using this Five Step Model:

1. Identify the contract(s)
2. Identify the separate performance obligations
3. Determine the transaction price
4. Allocate the transaction price to the separate performance obligations
5. Recognize revenue when the entity satisfies a performance obligation

The Five Step Model appears manageable, but let’s look more closely at each step.

Step 1: Identify the contract

A fairly straightforward step whereby specific criteria must be met in order to have a contract. Specifically, the contract must have commercial substance, the promised goods and services must be identified and approved, and the payment terms identified.

Step 2: Identify separate performance obligations

This is applicable when an entity transfers more than one good or service to the customer and the additional good or service is distinct. In order for a good and service to be distinct it could be sold separately or the customer can benefit from the good or service either on its own or together with readily available resources. However a good or service is not distinct if it’s bundled with other goods and services; if the business services are highly interrelated; and if the goods and services are significantly modified or customized.[2] As an example, if you sold a car with a 5-year warranty included in the purchase price and sold a separate three-year extended warranty.  The three-year extended warranty would be a separate performance obligation.

 Step 3:  Determine the transaction price

According to the new revenue recognition model, the transaction price “is the amount of consideration to which the entity expects to receive for the transfer of the promised goods and services.”[3] In determining the transaction price, management will need to take into consideration the variable consideration, time, value of money, non-cash consideration, and consideration payable to the customer.

The determination of variable consideration will require significant amount of judgment. Variable consideration includes items such as discounts, rebates, refunds, and royalties. In estimating the transaction price the entity would use either the expected value method or the most likely amount method.  I will state the obvious here, but both of these methods require management’s best guess. In addition, for an entity to estimate the variable consideration the entity must have relevant experience with the item and the probability of significant reversals would not occur.

Step 4: Allocate the transaction price to the separate performance obligations

A business determines this based upon the relative standalone-selling price of each performance obligations. In determining the standalone-selling price, management needs to identify observable evidence. If none exist management will need to use a method of estimation to determine the standalone-selling price. Once this has been determined they allocate the amount of consideration expected to each of the separate performance obligations.

 Step 5: Recognize revenue when the entity satisfies a performance obligation

This is accomplished when the customer obtains control of the good or service. If the performance obligation is satisfied over time (construction of an asset), and there exists continuous improvement of the asset, the entity would use a progress method (output or input method) to recognize revenue. The percent of completion method would not be used during the step.

The new model requires that management make more estimates and judgments in areas of identifying separate performance obligations, determining the transaction price, variable consideration, the allocation of the transaction price, and when control has been transferred. This increase in estimates and judgments mean that management should assess and update internal controls and processes to avoid fraud.

Additionally, management will need to forecast revenue changes to determine any significant changes in the financial metrics in order to avoid any covenant violations. These changes in forecasted revenue should also be analyzed for any potential tax planning opportunities when the standard becomes effective.

What does this mean for your organization? Entities will be required to show two-year comparative data, either on the face or in the notes to the final statements, when they file their 2017 financial statements. In other words, you will need to be ready by the end of 2015.

It’s time to start planning.



[1] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

[2] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

[3] FASB Exposure Draft Revenue Recognition (Topic 605), Issued November 14, 2011

Georgia Society of CPAs

Communicating with Clients and Customers

How you communicate with your clients and customers can make or break your career! This session will discuss different personality styles and demonstrate the different ways to interpret and communicate information to and from them. See how recognizing their personality style(s) can turn communication breakdowns into breakthroughs.