Jim Tencza

Article Dean Dorton

See original article in Louisville Business First

Jim Tencza said he didn’t come to Louisville to stay in Louisville. But after arriving here for college in the 1980s, he’s remained here and built an impressive career in the city.

The original plan was to get back to Chicago, Tencza said in a recent interview. That’s where he was raised — on the city’s south side — and where all of his family lived.

He attended Bellarmine University and graduated in 1989. He initially joined the now-defunct Arthur Andersen LLP office in Louisville out of college with hope that he would be able to work his way back to Chicago, where Arthur Andersen was headquartered.

But then the Enron scandal happened.

Arthur Andersen was never able to recover and went out of business. The company —the auditing firm for Houston-based Enron — was caught destroying documents that were relevant to myriad investigations in to Enron’s fraudulent practices.

Luckily, Tencza was able to get a job with EY’s Louisville office. But EY, then known as Ernst & Young, is headquartered in London.

“Once I started working, I quickly realized that Louisville is a better city to start a career and a family life,” Tencza said. “I fell in love with Louisville.”

After four years as audit partner with Ernst & Young, the company wanted to rotate him out to another office. Tencza said he could have been moved to Pittsburgh, Cleveland or Detroit.

It was at that point he decided to move from an international firm to a regional one — Dean Dorton Allen Ford PLLC. He was hired as director of assurance services in 2009 and then was named as Louisville market leader in October 2017.

According to our 2018 list of the area’s largest accounting firms, Dean Dorton ranks No. 10 with 30 local CPAs and a total local workforce of 83 employees.

He said what makes Louisville a great place to start and sustain a career is its size. The city, he said, is small enough of a town that you can get well-connected with business and other local leaders, but big enough to offer many opportunities.

Outside of his career, he has served on the board of directors for Trinity High School, where his children attended school, and as a trustee for Bellarmine. He no longer holds these posts.

“If you want to do those things, it’s pretty easy to do it,” Tencza said of community service and engagement in Louisville. “In a big city like Chicago, it’s not so easy.”

Also, as a public accountant probably should note, Tencza found the cost of living attractive. Professionally, he’s benefited from staying in town for decades and engaging in nonwork-related activities.

“Through all those networks and connections — it’s how business is done,” Tencza said.

In accounting, he said a company’s CFO and CEO will go to the firms where they have a personal connection or some other trusting relationship, despite the competition from other competent firms. When a firm is asked to be involved with sensitive or confidential business — especially with finances or taxes — Tencza said relationships are especially powerful.

While the importance of personal relationships has remained constant, the ascendance of digital and internet-based technology has fundamentally altered the day-to-day function of his work and business.

“I remember in the first year I was with Arthur Andersen, we got our first fax machine, and we thought this was the greatest thing in the world,” Tencza said.

Now, accounting firms have to offer clients the best software and applications to not simply keep up with industry trends, but to keep or deepen services they offer to customers. Firms are increasingly creating technology themselves or paying other organizations handsomely to create it to keep clients from going other firms for financial and accounting-related services.

With the explosion of technology in the last 30 years, accounting firms also have expanded services to include risk-management and offer more consulting and advisory services in increasingly diverse fields.

Tencza said about a third of his firm’s business is in consulting and is increasing its business in risk management.

“We can help them make better decisions and better run their business,” Tencza said. “We’re not just in there making sure the numbers are correct.”

Tencza took some time to answer a few more of our questions:

How would you describe your leadership style?

 My leadership style is similar to that of a coach. We usually work in teams, and I help direct the team so that everyone works together and grows.

What was it that attracted you to public accounting?

I first became interested in accounting when I took a class in high school. I found it interesting, and it came easy to me.

While in college, I realized that public accounting is primarily interacting with people, helping businesses improve and working with numbers. I knew then that I wanted to spend my entire career in public accounting.

What about your work inspires you?

I am inspired by helping clients achieve their goals. It is extremely rewarding to see clients of the firm grow and prosper, knowing that Dean Dorton played a small role in their success.

What is your number 1 business-related book recommendation?

“Wooden: A Lifetime of Observations and Reflections On and Off the Court” by John Wooden and Steve Jamison. This book has many great tips and lessons that translate to the business world.

If you weren’t an accountant, in what other line of business could you have found yourself?

I would be an athletics director for a college or university. I believe this position requires someone who has a passion for sports, likes working with student-athletes and coaches, is a good businessman, is good with numbers and has good communication skills.

By the way, Vince Tyra (interim athletics director at the University of Louisville) is doing a great job, and I am not looking to replace him.

What was your very first job?

My first job was working in a pizzeria in Chicago. I started in the summer before my seventh grade year and worked there for three years.

I cleaned dishes and ran errands initially, but I eventually answered phones, waited on customers and made pizzas.

Who is your professional role model?

Nolan Allen. He was an outstanding accountant, businessman and family man who gave a great deal back to our community. I am proud to be an owner in the accounting firm that bears his name.

How do you balance your work and personal life?

At Dean Dorton, we have a fairly flexible work arrangement that helps me in balancing my work and my personal life. I also have the pleasure of working with many clients that I consider friends, so work doesn’t always feel like work.

What is your go-to food/drink spot in town?

I do not necessarily have one “go-to” spot; however, my family and I can often be found at Rumors, Fiesta Time and Karem’s Grill & Pub.

Any major fandoms?I am originally from Chicago, so I am a long-time die hard Cubs, Bears and Blackhawks fan. At the college level, I bleed red — #L1C4.View Jim’s Bio

Article Dean Dorton

The Institute of Internal Auditors (IIA) recently released a report which examines outsourcing of internal audit activity.

Over 50% of North American companies participating in the survey use third parties to support their internal audit functions. The demands of internal audit have increased the prevalence of using third parties. Key aspects of using third parties include:

  • Supplementing staff to address staff shortage or help meet tight deadlines
  • Adding specialized skills including certified fraud examiners, IT specialists and data extraction experts
  • Handling special projects
  • Covering remote locations

IIA clearly states that best practices promote having at least one internal employee handle the oversight of the internal audit function and serve as the liaison with the third party service provider.

At Dean Dorton, we have seen the benefits of working with both private and public companies in a co-sourcing arrangement. Our expertise in a broad range of industries, coupled with our internal audit tools, allows a company to maximize the benefits of an internal audit function. We concur with the IIA’s recommendations to:

  • Think of the stakeholders and how third parties add value to meet stakeholder interests
  • Formalize the arrangement with the third party to establish expectations
  • Establish protocol for remediation and follow up steps
  • Allow third parties to share best practices including risk assessments

For more information, please contact:
Bill Kohm: bkohm@deandorton.com, 859.425.7625
Jim Tencza: jtencza@deandorton.com, 502.566.1071

View Bill Kohm’s Bio
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Article Dean Dorton

The U.S. and international economies are becoming more competitive every day. Many of us are competing for the same workforce; for others it may be the same customer, but we have to ensure that we continue to respond to the rapidly changing environment in which we operate. Ten years ago, did you ever worry about cybersecurity?

These are a few of the reasons – it is critical to analyze your business risks at least annually. We recommend formally documenting your key risks along with how you are responding to those risks. This can be a very helpful exercise when strategizing how you should be spending your most valuable resources (your people). Below are a few of the key risks that you may want to monitor in 2016.

5 Key Risks Companies Should Monitor in 2016
Plan now to address employment, inflation, currency, cybersecurity and vendor risks

By: Joe Brusuelas and Rob Kastenschmidt of RSM US LLP

The U.S. economy continues its slow but steady improvement. While growth slowed to 0.6 percent in the first quarter of 2015, it rebounded to 3.9 percent in the second quarter, and we expect growth for the year of about 2.2 percent. Unemployment dropped to 5.4 percent by the second quarter and was down to 5 percent by November. Consumer demand, especially for services and autos, is strong; the housing market continues to improve; and energy and commodity costs remain low.

But the international picture is less sunny. While we expect global growth of about 3 percent in 2015, with a slight uptick next year, a variety of issues are affecting international economies. Growth in China continues to slow as it seeks to rebalance its economy from an export-oriented model to a growth model driven by internal consumption. While the long-term outlook for China is positive, its current slowing growth and the related reduction in demand for resources is adversely affecting many emerging economies. The already uncertain economic picture in Europe is being further stressed by the massive influx of refugees from the Middle East. All of this means lower international demand for U.S. goods and services. It also is leading to a divergence in monetary policy between the U.S. and other economies. In the U.S., the Federal Reserve will likely increase the federal funds rate by 25 basis points in December 2015 followed by another 50 to 70 basis points by mid-2016, while central banks in Europe, Japan and possibly even China are pushing rates toward zero.

What does all this mean for U.S. companies? For 2016, this means you should monitor and be prepared to respond to three key economic risks: a tightening domestic labor market, inflation and the challenges presented by a strengthening dollar. In addition, cybersecurity risks continue to increase and diversify, requiring heightened attention, and the increasing reliance of many companies on third parties raises new risk management issues.

1. Plan for a tighter labor market

An unemployment rate of 5 percent doesn’t tell the whole story. The number of unemployed persons per job opening is down to 1.44 from a peak of almost 7 in 2010. Not only is the overall unemployment rate down, we are also finally seeing stronger growth in higher-wage jobs. Since January 2014, the U.S. has added 2.4 million high-wage jobs compared to 2.3 million lower-wage jobs. While this is helping boost consumer confidence and demand, it also means U.S. employers need to plan for a tighter labor market. The risks of a tighter labor market? Increased labor costs, higher attrition and stronger competition for top talent. To offset these risks, employers should consider the following strategies:

  • Explore automation strategies. Now may be the time to investigate whether the expense of improved automation might be offset by savings in labor costs.
  • Consider offshoring, outsourcing and contractor services. With the U.S. economy outperforming its global peers, offshoring certain functions may offer improved returns given continued low labor costs overseas. Outsourcing non-core functions or increasing reliance on contractors is another way to manage labor costs and can have the added benefit of reducing administrative demands and benefit expenses.
  • Re-evaluate compensation programs. Competition for top performers is heating up. Take a look at your compensation practices to ensure that you are effectively rewarding and motivating your best people. This will also make you more attractive to the candidates you wish to hire.
  • Improve your recruiting practices. LinkedIn and other social media platforms are far more important now than they were prior to the economic crisis, but can’t be relied upon as the sole way of identifying potential candidates. Are your talent identification and recruiting practices keeping up?

2. Manage inflation

  • Inflation is still near historic lows and deflation continues for energy and commodities. But energy and commodity costs are likely at or near their floors, and the Fed is almost certain to start raising rates soon. According to RSM’s Middle Market Leadership Council survey, 67 percent of executives expect increases in their costs over the next six months, compared to just 54 percent in the second quarter. What to do?
  • Focus on efficiency and cost-cutting programs. Decreased costs during the crisis and recession diverted attention from these efforts at many companies. Now is the time to increase discipline.
  • Explore hedging strategies.
  • Shift your purchasing patterns and explore supply chain changes. Global economic conditions are uneven. Weaker economic conditions in other markets may present purchasing opportunities.
  • Audit vendors and monitor margin compression at key customers. Now is the time to reevaluate your vendor relationships to ensure they are delivering real value. And keep an eye on how inflation is affecting margins with your key customers so you can make appropriate pricing and relationship management decisions.

3. Minimize the risks and maximize the benefits of a stronger dollar

  • The U.S. economy is outperforming its global peers. Higher U.S. Treasury rates are spurring an influx of foreign capital and strengthening the dollar. For middle-market companies, this is a double-edged sword. It makes U.S. exports more expensive and diminishes the value of foreign earnings denominated in U.S. dollars. But it also drives down the cost of off-shore sourcing options and can create international acquisition opportunities.
  • Look for global supply chain opportunities. Take advantage of the strong dollar by finding offshore sourcing options.
  • Consider global hedging options to control risks and costs.
  • Consider international expansion opportunities. If expanding through acquisition in new global markets is part of your corporate strategy, the strong dollar could mean a better deal.

4. Increase attention to cybersecurity

No organization can afford lax cybersecurity controls. Many companies think they aren’t large enough to attract the attention of cyber criminals, but the NetDiligence® 2015 Cyber Claims Study shows nano organizations and small organizations actually experienced the most incidents, with 29 percent coming from each of those groups. Your best defense? Make sure you have three layers of cybersecurity controls—preventative controls that make you a hard target, detective controls to timely identify any breach and corrective controls that let you respond quickly and appropriately to intrusions.

  • Preventative controls. Your preventative controls should include a vulnerability assessment, patch management, strong access and authentication controls, a solid intrusion prevention system (IPS), configuration management, and up-to-date anti-virus protection.
  • Detective controls. Most companies choose either to outsource detection controls to a Managed Security Service Provider (MSSP) or to purchase a Security Information and Event Management (SIEM) product. Weigh that choice carefully and be sure the solution you choose is appropriate to your threat environment and internal capabilities. A strong intrusion detection system is also vital, along with compliance and operational monitoring, and anti-virus and network alerts.
  • Corrective controls. Effective corrective controls start with a robust incident response plan. You will also want strong forensic capabilities; anti-virus quarantine and isolation protocols; disaster recovery and business continuity plans; and administrative, legal and insurance protections.

5. Control your third-party risks

Corporate boundaries are getting fuzzier as businesses of all kinds explore a wide range of third-party relationships that allow them to focus on their core business while leveraging outside expertise in areas like logistics, technology and a variety of other specialized functions. That creates efficiencies that drive growth, but it also gives rise to a wide range of new risk issues. Your ability to execute your strategy now hinges partly on the performance of third parties. You could face liabilities stemming from non-performance by your vendors. Connections between your systems and those of your vendors create new security risks. And the web of social media and other connections between you and your vendors can expose your organization to reputational risk due to the failings of third parties. Here are six third-party risk questions to consider in 2016:

  • Do you know where all your contracts are located? Are they stored electronically?
  • Do you understand and are you fulfilling all of your contractual responsibilities?
  • Have your contracts been updated to reflect new regulations for privacy and data security?
  • Are you adequately monitoring the IT risks associated with your third parties?
  • Is the insurance coverage maintained by your third parties sufficient to cover losses in the event of a data breach?
  • Are your audits of the contract performance and related invoices sufficient to ensure alignment with acceptable risk levels directed by your senior management and board of directors?

If you have any questions about the key risks above or how to perform your own formal risk assessment, please contact:
Lance Mann: lmann@deandorton.com or 502.566.1005
Jim Tencza: jtencza@deandorton.com or 502.5661071

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Article Dean Dorton

Most companies want to provide their employees with the best medical benefit coverage; however, healthcare costs and the cost of medical insurance continue to increase. One way to help reduce your costs is a dependent eligibility verification audit.

It is estimated that 4% to 8% of dependents nationwide are ineligible to participate in their company’s medical plan. It is also estimated that a company’s annual average cost of medical coverage for a dependent is approximately $3,300. We have seen these national estimates hold true in the clients that we have worked with in the past year.

So how do you identify the ineligible dependents?

The best way is to conduct a dependent eligibility verification audit. Your company can perform this audit, or a third party can be brought in to assist you. Dean Dorton would be happy to guide you through the process and perform the audit for you. Dependent eligibility verification audits can be very sensitive. They are very time consuming if it is not done properly, and dependents could be wrongly removed from the plan, upsetting employees.

The goals of a dependent eligibility verification audit are to achieve a high response rate from your employees and to make sure that only those who are ineligible for coverage are removed – not to remove the maximum number of dependents in the shortest period of time. We highly recommend partnering with Dean Dorton because we are trained and experienced in performing audits. Our services are designed to:

  • Meet the specific needs and objectives of each client
  • Achieve the highest response rate and compliance rate
  • Properly handle a significant volume of confidential data
  • Provide open, strong communication channels with employees and management
  • Provide value and cost savings

If you would like to learn more about the solutions we can provide, please contact Jim Tencza at (502) 566-1071 or jtencza@deandorton.com to set up a consultation today.


View Jim Tencza’s Bio

Article Dean Dorton

In November, the Department of Labor (DOL) began sending emails to plan sponsors alerting them of the importance of obtaining a quality audit from a qualified and experienced CPA firm. The timing of the DOL communication is intended to coincide with the period when many plan audit contracts are renewed or out for proposal.

The Department of Labor letter refers to the recent DOL audit quality study which found deficiencies in nearly 40% of employee benefit plan audits (DOL study found at www.dol.gov/ebsa).  The DOL letter also states that employee benefit plan audits have unique audit and reporting requirements and are different from other financial audits, and that substandard audit work can be costly to plan administrators and sponsors.

According to the DOL study, CPA firms that were members of the AICPA Employee Benefit Plan Audit Quality Center tended to produce audits that have fewer audit deficiencies. Dean Dorton is a member of the AICPA Employee Benefit Plan Audit Quality Center and audits nearly 100 plans annually, including defined benefit, defined contribution and health and welfare plans. Over the past few years, several of the plans we audited were inspected by the DOL with no significant findings.

For more information, contact Jim Tencza, Director of Assurance Services, at jtencza@deandorton.com.


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Article Dean Dorton

The format of the financial statements of not-for-profits is about to undergo significant changes. Implementation will undoubtedly require planning and early communication with your accounting firm. We will keep you updated regarding the latest proposals and implementation recommendations for your organization as new standards are approved. The latest version of the proposed changes is available for review and feedback.

David Richard (859.425.7662 or drichard@deandorton.com) and Jim Tencza (502.566.1071 or jtencza@deandorton.com) would be happy to field questions regarding these proposed changes.

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