Category: News

Accountancy is a vibrant, dynamic profession that involves more than crunching numbers. And the people we work with are unique and complex. But in any workplace — whether it’s a CPA firm, Hollywood set or football practice field — people have been asked to put aside parts of themselves in order to perform better. “It’s not personal. It’s just business,” the old saying goes.

Increasingly, however, that conventional wisdom is coming under question. Separating ourselves from our work isn’t only difficult; it adds unnecessary stress to an already demanding career.

During busy times, there’s particularly strong pressure to compartmentalize ourselves and our work in order to get everything done. But suppressing emotions during your workday can create pent-up emotions. This affects the energy you generate in the workplace and triggers undue stress and tension in our bodies.

Here’s how you can manage your emotions, moods and personality to create a healthy and productive space within your busy workplace.

Defining our terms

Before we can begin, it’s important to draw distinctions among the concepts we’re discussing.

When I refer to emotions or feelings, I mean the temporary reactions we have in the moment. Anger, sadness, rage, embarrassment, pride, elation and many more fall under this umbrella.

Second, we have our moods, which are longer lasting than emotions and determine how we approach the day. Mood is not simply a matter of good and bad; our moods come in many forms.

Finally come our personalities, which are more static but need to be accounted for as well. Our communication styles, responses to different kinds of motivation and senses of humor are just some of the components of our personality.

Emotion

The most important thing to understand about handling emotions in the workplace is that it’s not an all-or-nothing proposition. Allowing space for emotion in the workplace doesn’t mean creating an environment where all behavior is forgiven. Just the opposite. Recognizing that emotions are part of our professional lives is the first step in managing them appropriately.

“Modern work requires an ability to effectively harness emotion — but most of us have never learned how to do this in our professional lives,” write Liz Fosselien and Mollie West Duffy in No Hard Feelings: The Secret Power of Embracing Emotions at Work. They argue that many of us struggle to harness our emotions due to the fact that we’ve tried to minimize them for too long.

If you want to learn more about your emotional temperament, a great place to start is Fosselien and Duffy’s Emotional Tendencies Assessments.

You can also study strategies for creating an emotionally healthier office, from giving people the chance to leave meetings when they’re overwhelmed to simply making it acceptable to openly talk about emotions.

Busy season is a stressful time for all of us, so being actively aware of the emotions of others is just as important as taking stock of your own. Imagine you just finished a really demanding client workload and finally have a moment to catch up on other work. It’s totally okay for you to feel happy and proud, but you should also be cognizant of those around you who may be feeling depleted and burned out. Take a moment to step away and express your elation, maybe by calling a loved one, journaling or thanking other team members who helped you out. Expressing this emotion will allow you to interact with your teammates with grace and empathy.

When people talk about emotional intelligence, that’s exactly what they’re referring to: Assessing and accommodating everyone’s emotions, including your own, in a way that results in growth and progress for all parties.

Mood

If our emotions result from a response to certain stimuli, our moods are a little more mysterious. Some days, we wake up in a funk we can’t seem to shake. On others, we could drop our phone in a puddle and take it in stride. Moods are notoriously hard to predict and control, but they shouldn’t be ignored.

Our moods have been linked to everything from productivity to “your whole workday,” so it’s vital to take stock of them. Have you ever lashed out at somebody without reason, only to apologize because you realized you were upset about something else? That’s a negative outcome of trying to suppress your mood. It’s much better to acknowledge your mood — if only to yourself — than to let it subconsciously direct your actions.

The relationship between work and our moods can be a two-way street. As the novelist Henry James once wrote, “If you have work to do, don’t wait to feel like it; set to work and you will feel like it.” Often, the best way to lift your mood is to get the little wins that the workday offers. That won’t happen, though, if you continue to labor under the false assumption that your mood has no bearing on your work and no place in your office.

Meditation allows us to gain awareness of our own moods. By taking a moment to observe our thoughts without passing judgment on them, we can better understand what is happening internally. Once we have that insight, we can intentionally make adjustments to create the energy we want.

It’s also worthwhile to recognize moods in others, but you probably want to stop short of commenting on another person’s emotional state. If you notice somebody in a bad mood, make a mental note of it and try to be supportive.

Personality

Unlike emotions or moods, our personalities are not temporal phenomena. Our personalities may evolve over time, but they aren’t there one moment and gone the next. As such, correctly navigating personality in the workplace isn’t a matter of making space or upending outdated ways of thinking. It’s much more about understanding how people operate on their own and how they interact with others.

If you’ve ever taken one of the many personality tests that are en vogue in offices today, you know there are many ways to describe a personality. These tests are the subject of much debate, especially when they create stigmas in the workplace or are used in the hiring process. It’s important to remember that learning about somebody’s personality is not a way to put them in a box; it’s simply a tool to better navigate interpersonal interaction.

The best way to use personal assessments, whether formal or informal, is to learn how to create an environment that works for everyone. When you know somebody is an introvert, you won’t force them to engage in after-work events that make them feel uncomfortable.

Gaining insights into your own personality is also helpful when communicating with coworkers, because it allows you to provide guidance on how to best work with you. The same goes for emotions and moods.

For far too long, we thought these traits stood in the way of getting the job done. Now we know that the opposite is true. The qualities that make us who we are can also make us better professionals, but only if we harness them correctly. If we can be who we really are at work, we can start to create happier, less stressful work environments not just during busy times but throughout the year.

The next blog in Amy’s series focuses on learning and mastering your productivity rhythm, and will be posting February 10. Be sure to check out Amy’s podcast on emotion, mood and personality at work. A short, free registration may be necessary.

Amy Vetter, CPA.CITP, CGMA, MBA, is the CEO of The B³ Method^® Institute and Drishtiq Yoga, a top inspirational keynote speaker, corporate board member, author, and host of the podcast: Breaking Beliefs. As a CPA and Yogi — who specializes in Technology Innovation – Amy is a motivational and inspiring speaker. She provides a refreshingly new perspective that inspires and guides professionals on how to transform their careers and lives.

     

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Classifying workers as either employees or independent contractors is important. The correct worker categorization has a profound impact on businesses because it affects not only how workers are paid, but how the government gets paid. Because of the latter reason, this is an issue that will not be going away any time soon. In fact, it’s been thrust into the forefront more than ever due to changing economies, technological revolutions and recent legislative actions.

What’s the difference between the classifications? Why does it matter?

The IRS has long had a voice in the categorization discussion.

In 1987, based on an examination of cases and rulings, the IRS developed a list of 20 factors to consider when determining whether a worker should be classified as an employee or independent contractor. The IRS’ next steps included the identification of three categories of evidence that may be relevant in the determination — Independent Contractor (Self-Employed) or Employee?:

1. Behavioral control — Is there a written agreement between the parties? Who controls what the worker does and how the worker does his or her job? Is it the company?
2. Financial control — Who provides the tools and supplies? Who controls how the worker is paid? Can the worker perform work for other businesses? Who provides the materials? Where is the work to be performed?
3. Relationship of the parties involved — Is the worker entitled to benefits (i.e., pension plan, insurance, vacation pay, etc.)? Who is to perform the services? Can assistants be engaged? If so, with approval?

But why does this matter? In a nutshell, employees receive a Form W-2, Wage and Tax Statement, and are taxed on this income at the federal and state levels. Employers must withhold these income taxes from employee paychecks and remit them to the IRS on the employee’s behalf. These aren’t the only taxes that are withheld, though. Employers must also withhold Social Security and Medicare taxes (together known as the Federal Insurance Contributions Act [FICA] taxes). The FICA tax is 15.3%, and the employer and employee each pay 7.65%. Then, there is the Federal Unemployment Tax Act (FUTA) tax. Only the employer pays FUTA tax; it is not deducted from the employee’s wages. The FUTA tax rate is 6.0%.

It’s easy to understand why businesses, from a financial perspective, might prefer workers classified as independent contractors: they wouldn’t have to pay income tax withholding and would not be liable for 50% of the FICA taxes and 100% of FUTA taxes for the worker, and the reduction in benefit expenses is an added bonus.

To help with the classification, firms and workers can file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, to request a determination of the status of a worker for purposes of federal employment taxes and income tax withholding. Workers file most Form SS-8s, however, and a formal determination is sent to both the payer and worker and will be binding with the IRS.

Changing economies don’t fit the mold

The traditional factors used to assess worker classification do not translate easily in today’s economy given how businesses are changing their models to offer different services to customers. For example, do you still get into your car, drive to the grocery store, shop, check out and drive home? Or do you download your favorite grocery store’s app, add your items to your virtual shopping cart, press the “submit button,” and wait a few hours for those groceries to arrive on your doorstep? Is the worker who shopped and delivered the items to you an employee of your favorite grocery store? Or is he an independent contractor? Traditional classification criteria might not result in the perfect answer.

A new gig for the gig economy

The gig economy is expanding rapidly as internet platforms are used more to connect service providers to customers. The gig economy generally includes industries in which workers complete tasks on an on-demand or client-by-client basis, such as Uber and Lyft drivers or restaurant home-delivery services. The emerging gig economy has raised questions about how to classify workers for tax purposes.

And an important side note here — make sure you are appropriately inquiring of your clients if they are involved in the gig economy before you prepare their returns, perhaps asking if they “occasionally” drive for Uber or Lyft. If the answer is yes, make sure that receipts and other documentation are available for support.

Legislation at play

Many states use some form of an “ABC test” to aid businesses in the classification of a worker. California has a notable adoption of an ABC test that garnered mainstream attention in the state’s Supreme Court ruling in April 2018 in the case of Dynamex Operations West, Inc., v. Superior Court. The ruling established that companies must use a three-pronged test to determine how to classify workers. This test assumes that workers are employees unless the company that hires them can prove otherwise.

In September 2019, California legislatively followed up on the decision with the passage of Assembly Bill 5 (AB-5), popularly known as the “gig worker bill.” Effective Jan. 1, 2020, the law requires companies that hire independent contractors to reclassify those workers as employees, with a few exceptions.

Many states have started to pattern themselves after California, and we may see in the upcoming year many state legislatures engaged in renewed or new discussions regarding the gig economy.

In related federal news, on Jan. 9, 2020, the IRS released IR-2020-04 and announced the launch of a new Gig Economy Tax Center on IRS.gov to help people involved in the gig economy area meet their tax obligations.

Your responsibilities as the adviser

As if the classification topic wasn’t complex enough, another very big aspect for CPAs to consider involves the ethics of advising clients about classifying workers. Keep in mind that the potential for unauthorized practice of law (UPL) if you are advising clients on worker classification and have not been licensed or admitted to practice law in a given jurisdiction. Check your state rules to find out where all these lie and what you can or cannot do regarding giving any advice.

Where can I learn more?

Check out these additional resources for more guidance:

• AICPA webcast with Art Auerbach “Employee or Independent Contractor? A Guidebook to Proper Classification”. In this webcast, Art details the new Form 1099-NEC, categories of statutory employees and nonemployees, tax consultant issues and more. This webcast is available exclusively to Tax Section members.
• Independent contractor or employee? Varying tests, The Tax Adviser, December 2019

Sarah Shannonhouse, CPA, Manager — Tax, Practice and Ethics, Association of International Certified Professional Accountants

Arthur Auerbach, CPA, CGMA is an independent tax consultant located in Atlanta, GA., specializing in tax consulting and estate and financial planning for individuals and closely held businesses. He is affiliated with the Asbury Law Firm as a consultant. Arthur is a current member of the AICPA’s Tax Executive Committee.

     

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The National Football League was born in the early years of the 20th century. But 100 years later, the Kansas City Chiefs are using 2020 strategies to meet business goals and thrill their fans. The Chiefs head to the Super Bowl with a winning finance team behind them.

As the Chiefs’ CFO, Dan Crumb, CPA, CGMA, oversees finance, IT & strategy and analytics. Although his team is not on the field, the group touches football on all sides. Its goal is ensure that there is no downtime for the team. It’s up to them to be sure the football side of the operation has all the planning and preparation needed to focus on what they do best.

Having a great team is not only a point of pride, but it’s also critical to our business. “One of the really important elements of being a good management accountant is looking at our products and services and asking, ‘What can we do to make it the best?’ ” Crumb says. “We are fighting for our fans’ discretionary dollars, so we have to give them a reason to come to the stadium. That means first that we want to provide a strong product on the field — a good team that performs well. We also want to offer a great fan experience. We want it to be memorable so that they’ll come back.”

His group does that, in part, by identifying and implementing needed infrastructure and technology upgrades. In the last year, for example, the team made attention-grabbing upgrades to the iconic Arrowhead Stadium scoreboard, created a Drum Deck to give a new home to a beloved tradition and added flashy, wider new seats in the upper deck. Less visible are the necessary waterproofing in the upper deck and advanced security measures. “Risk management is a central challenge for us, so we spend a lot of time on it,” Crumb said. “We have 65,000 to 70,000 people in the stadium on game days and 19,000 to 20,000 cars in the parking lots. We want to mitigate any risks to them as much as possible, so we look at procedures and processes to make sure that we do all in our power to eliminate risk.”

To meet the goals for the team and its fans, Crumb’s group wants to be the best finance team in the league. To do that, Crumb works to get the right people and systems and offers his people constant training to keep them up to date. The group also regularly benchmarks its status against other teams, other sports leagues and other companies. “We want to learn about the best practices being used not only in the league but also in a variety of other kinds of organizations,” he says. 

The first Super Bowl that Crumb can remember watching was Super Bowl IV, held in his hometown of New Orleans between the Chiefs and the Minnesota Vikings. Little did he know that many years later he would be the Chiefs’ CFO. Not too surprisingly, one of the biggest lessons he has learned is the value of teamwork.

“To work well as a team, you need to focus on the details and get the big picture, and there is so much preparation necessary to get things right,” he said. “I watch the coaches and see how buttoned-down they are in all they do, and that discipline is something I’ve brought into my work. In the end, leadership is about having the trust of your team. If they trust you, they know that where you lead is going to be the right path.”

Developing a winning finance team

The AICPA, powered by the Association of International Certified Professional Accountants,  has a breadth of resources to help you and your team sharpen your skills for the future. Check out:

• FM Magazine – Access the latest news and information for finance professionals to help you stay ahead.
• CGMA Competency Framework – Use this free framework to guide your team’s professional competency development.
• CGMA Finance Leadership Program – Help your finance team hone important business, communication and digital skills through an on-demand, personalized learning journey.

• Finance Transformation certificates – Learn how the finance function is evolving and the new skills and capabilities your staff will need to develop to meet the new demands of business.

     

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Around this time last year, as we glanced in our rearview mirror, tax season was approaching quickly. As the days and weeks went by, it was clear that “objects are closer than they appear!” Along with the normal tax season preparations, many more challenges were afoot. A government shutdown was underway, we were preparing for the first round of returns filed under the Tax Cuts and Jobs Act, IRS guidance was still being issued on key provisions and we were doing quality control on our tax software.

It’s a new year, a fresh tax season and time for a new outlook. This year, you can proactively use an arsenal of AICPA resources in 2020 to get you and your firm in tip-top shape for the upcoming tax season.

• Form 1120-C C corporation checklist and addendum of recent tax law updates — Download these two resources from the AICPA Tax Section’s Annual Tax Compliance Kit. The checklist helps you identify planning opportunities and potential risks on a return. Review the addendum to get highlights of the latest tax updates from the Further Consolidated Appropriations Act, 2020, H.R. 1865 to see how it will affect 2019 returns and potentially previously filed 2018 returns.
• Filing season quick guide — Keep this handy to refer quickly to tax tables, common thresholds, standard amounts, limitations and other 2019 facts and figures.
• IRS hotlines quick reference chart — Tap into this Rolodex of IRS contacts to resolve various issues.
• Tax return due dates guidance and federal due dates chart — Stay on top of those tax return and payment due dates to maximize your workflow.
• Sample consent forms for disclosing tax return information — Use this template when you need to share your client’s tax return information with outside parties.
• Document retention FAQs — Get guidelines on implementing (or updating) a document retention policy for your firm.
• Tax law snapshot and 2019 tax year in review — Use these two client-facing guides in the Tax Practitioner’s Marketing Toolkit to start the right planning conversations with your clients before tax season.
• Analysis of a tax return for financial planning opportunities — Identify where your clients need proactive planning by running through their individual tax return alongside this checklist.
• Personal Finance Scorecard — Check out this tool to help spur conversations with prospective and existing clients about their financial health and identify areas for improvement.

For additional resources and the latest news and weekly alert bulletins during busy season, check out Tax Season Resources for CPAs to stay focused in 2020.

Minh Graham, CPA, Lead Manager – Tax Practice & Ethics, Association of International Certified Professional Accountants

     

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It’s that time of year when everyone reflects on the past and looks forward to a positive future with personal and professional planning, and new and fresh ideas. You may have some New Year’s resolutions you’d like to accomplish. I have two: From a personal perspective, I’ll look at my financial and personal health. From a professional perspective, I’ll look at planning and execution around securing the future and value of the profession. On the latter, I’m working on a number of initiatives to advance the value of the profession, including the development of technology-based tools to enhance the efficiency, quality and value of audits. Many of you are already starting busy season and are focused on getting through a mountain of work over the next few months.

Whether we’re plotting our 2020 goals or just focusing on getting to March 30 or April 15, we need to think long term. How do we ensure that the future of our profession is bright and that the CPA maintains its strength and relevance for decades to come?

To position ourselves for continued success in a constantly evolving business environment, we must take the necessary steps now.

Evolving CPA licensure

You may have read my blog posts in January, May and July of last year about CPA Evolution, a joint initiative of the National Association of State Boards of Accountancy (NASBA) and the AICPA®. CPA Evolution aims to transform the CPA licensure model to recognize the rapidly changing skills and competencies accountancy requires today and will require in the future.

In summer 2019, NASBA and AICPA leadership developed five guiding principles for a new CPA licensure model, and we asked for your feedback. We heard input from more than 2,000 stakeholders across the profession, including CPAs working in firms of all sizes, CPAs working in business and industry, state CPA societies, academia, state boards of accountancy, accounting students, technology experts and more. Thank you to everyone who shared feedback; your insights helped us determine a viable path forward. 

What we heard from you

There were a few common themes that emerged from your feedback:

• By far the No. 1 comment we heard was support for the need to change CPA licensure. You also told us there should be a greater emphasis on technology skills and knowledge taught in university and tested on the CPA Exam.
• You said that any new licensure model should require all CPAs to demonstrate strong common core competencies in accounting, auditing, tax and technology.
• You asked questions about the specifics of implementing a new CPA licensure model, such as what would be considered “core” common knowledge, how the education requirements might change and how licensure could evolve in the current state legislative environment.

Although CPA Evolution originally started because of the impact of technology on the profession, we heard an overarching theme from you that we also need to consider other disrupting factors.

For example, we heard that newly licensed CPAs need to know more than ever before. The CPA profession’s body of knowledge is growing rapidly as the number of accounting and auditing standards have quadrupled and quintupled, respectively, since 1980. The Internal Revenue Code is also larger and more complex. With firms automating or sending offshore many procedures that newly licensed CPAs used to perform, entry-level CPAs are doing work traditionally assigned to more experienced CPAs.

CPA licensure needs to evolve to address this challenge… so how?

NASBA and the AICPA’s proposed CPA licensure model

After reviewing all the feedback, conducting additional research and considering multiple possibilities for evolving licensure, NASBA and AICPA leadership developed a draft licensure model that we believe best positions our profession for the future.

NASBA and AICPA leadership recommend that we move to a core + discipline CPA licensure model. Here’s how it might work:

• Each CPA candidate would be required to complete the same robust core education and examination in accounting, auditing, tax and technology — the navy “core.”
• Each candidate would also choose a discipline in which to demonstrate deeper knowledge. The three potential disciplines we’ve initially identified reflect three pillars of the profession:
  • Business reporting and analysis
  • Information systems and controls
  • Tax compliance and planning

• Every successful candidate — regardless of their chosen discipline — would receive a CPA license with the same rights and privileges licensed CPAs have today. We knew this was important to you — that all CPAs share a common core of knowledge and the same CPA license.

This model is responsive to the feedback we heard, as it would build accounting, auditing, tax and technology knowledge into one robust common core. We also believe a core + discipline licensure model reflects the realities of practice by requiring deeper knowledge in one of three areas of practice that are key to the profession.

This licensure approach also builds flexibility into our model, allowing us to adapt and grow over time. This will help future-proof the CPA for years as the profession continues to evolve. But the model would still result in one CPA license, keeping the profession strong and not splintering the credential.

Ultimately, this licensure approach would enhance public protection, as it would produce candidates who have the deep knowledge necessary to meet the needs of organizations and perform high-quality work.

What a core + discipline model could look like

One of the most common pieces of feedback we received was that “the devil is in the details” with this project. People asked what would be considered “core” vs. “discipline” knowledge.

Ultimately, the exact content of the core vs. the disciplines would be determined through revisions to state board education and licensure requirements followed by a CPA Exam practice analysis. As a part of its ongoing efforts to maintain the validity and reliability of the Exam, the AICPA (with oversight by the Board of Examiners) conducts periodic practice analyses to gather information about the state of the profession and the work of newly licensed CPAs. These research initiatives inform potential changes and updates to the CPA Exam and maintain its alignment with professional practice. You can learn more about the CPA Exam Practice Analyses here.

However, while the specific content of the core vs. the disciplines has not been determined, the below graphic gives you some insight into NASBA and the AICPA’s current thinking about where topics could fall. The topics below are color-coordinated with either the core or a discipline. This is not an exhaustive list, but it gives some indication into what we’re thinking.

For example, we could envision that advanced accounting topics such as business combinations, derivatives and foreign currency translations would move to the business reporting and analysis discipline. Advanced tax topics, such as AMT and estate and gifts tax, could move to tax compliance and planning. Advanced information systems topics, such as cybersecurity and information security and privacy, could move to the information systems and controls discipline.

Again, this division of content is not final, and a CPA Exam practice analysis would determine the exact content of the core vs. disciplines. Hopefully, it provides some clarity into our thought process.

What’s next

CPA Evolution is still a work in progress. Over the next few months, we’ll gather more feedback on this proposed licensure model from stakeholders across the profession and, particularly, state boards of accountancy. Our goal is to finalize a new approach to CPA licensure acceptable to the state boards by this summer.

Once we have a final approach, we’ll collaborate with NASBA, state CPA societies and state boards of accountancy to establish a multi-year implementation plan.

Visit our website to learn more information about the CPA Evolution initiative and our proposed licensure model. You can also watch Carl Mayes, CPA, the AICPA’s Associate Director — CPA Quality & Evolution, discuss the proposed model in more detail in the below video.

If you’d like to share your thoughts on the proposed model, we welcome your feedback. Please email Feedback@EvolutionOfCPA.org.

As we start the 2020s this year, let’s not forget to think ahead to the next decade and beyond. I’m excited to take this step, and proud of our profession’s commitment to keep the CPA strong for years to come.

Susan S. Coffey, CPA, CGMA, EVP — Public Practice, Association of International Certified Professional Accountants

     

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Americans’ financial well-being roared into the 2020s. For the seventh time in the last two and a half years, the average American’s financial satisfaction hit an all-time high, according to the AICPA’s quarterly Personal Financial Satisfaction index (PFSi). With all these positive records, you may wonder what it means for you.

First, a little background: The PFSi is a quarterly economic indicator that measures the financial standing of the average American. It’s calculated as the difference between two sub-indexes: The Personal Financial Pleasure Index, which measures the growth of assets and opportunities, and the Personal Financial Pain Index, which calculates the loss of assets and opportunities. Most recently, the Pleasure Index (74.9) greatly outweighed the Pain Index (34.7), bringing the Q4 2019 PFSi to a positive reading of 40.2, the highest reading in the index’s 26-year history.

Richard Ward, CPA/PFS, a member of the AICPA’s National CPA Financial Literacy Commission, spoke to AICPA Insights about the index results and what the record-setting quarter means for Americans.

Are the results of the Q4 2019 PFSi consistent with what you are seeing? What are you recommending to your clients?

RW: The PFSi just reached an all-time high, indicating that the average American should be feeling a strong sense of financial well-being. Many of my clients feel quite positive about the growth of their assets over the past decade. We are taking these prosperous times as an opportunity to review all outstanding liabilities and decide whether any debt payments should be accelerated or paid off in full. This is also an excellent time to ensure that there is ample cash on hand for when times are not as good. It’s essential for individuals of all ages to maintain focus on their long-term goals and stay the course.

While times are this good, where should Americans place their focus?

RW: It is encouraging to see such sizable returns throughout the run of this current bull market. Thanks to the stock market’s positive performance, the PFS 750 Market index reached a record high. It accounts for one-third of the Personal Financial Pleasure index, and it has helped boost the Pleasure index to an all-time high itself. However, if you don’t own stocks, you’re not seeing any of this benefit. Most people understand the idea of working to make money. Investing is the concept that you can grow money by making it work for you. Before jumping into the market, take time to learn the investing basics.

In prosperous times like this, it is important to be cautiously optimistic. Remember, a robust market and economy is cyclical. Be appreciative of financially favorable times but cognizant that they won’t continue forever. Keep in mind that certain investments may be suitable for young investors, but they probably won’t be appropriate for those nearing retirement or already drawing down their portfolio for living expenses. With that in mind, make sure that your portfolio and financial plan align with the time horizons of your personal financial goals. By positioning your financial plan accordingly, you will help to safeguard your finances from a potential pullback.

In this current labor environment, what should Americans of all ages keep in mind?

RW: After trending down for the last decade, underemployment is at a new all-time low. Job openings are hovering just shy of their recent record high. A great job market like the one is the perfect time for Americans to shore up their emergency fund, double-check they’re making the most of their work benefits, and even consider shopping around to see if there is a better opportunity in their field.

It is great news that the average Americans’ financial satisfaction is at an all-time high. But for those who are not feeling the benefits of this record, where would you suggest they begin to improve their financial situation?

RW: The current environment is a perfect time to analyze your financial situation. You can do this by taking a personal inventory of all income and expenses, based on actual past spending (past three months should be sufficient). Then, calculate how much money you’re bringing in after taxes and how much you have left after covering your monthly bills. This process will help you become more aware of where your dollars are going and help to reduce frivolous spending. After every two weeks, review your budget to make sure you are not spending more than you make. If you have extra cash, consider increasing your savings rate, retirement contributions or build up that emergency fund. Just like a financial plan, making a budget is not a “one-and-done” process; it requires frequent monitoring and updating as financial situations change (e.g., raise, bonus, laid off, hours cut, etc.).

Check out the free resources available on the AICPA’s 360 degrees of financial literacy website. Once there, you can find budgeting tips, savings calculators, articles full of insight on a wide range of financial topics and a tool to help you build your financial plan.

Jon Lynch, Manager – Public Relations, Association of International Certified Professional Accountants

     

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If you’re an auditor, you should be excited about the many opportunities that the digital era creates for your profession. Sue Coffey, CPA, CGMA, Executive Vice President, Association of International Certified Professional Accountants — Public Practice, and Erik Asgeirsson, President and CEO, CPA.com, share how the profession is reimagining the audit and what this means for you.

1. What’s changing in the audit area? What opportunities is technology bringing?

Erik Asgeirsson:  We’re at an inflection point in the financial statement audit. Emerging technologies allow us to reimagine how we perform the audit — what we look at, when we look at it and how we look at it — to provide greater insights and value to the client. The profession’s largest firms realize this opportunity and are investing heavily in the adoption of new technology-enabled approaches to the audit. However, the level of investment required to custom-develop solutions can be too expensive. Leaders from many of the top 100 U.S. firms said that there’s a need for a solution to help firms of all sizes perform audits of all complexity levels and embrace the chance to leverage technology in the audit space. These firms asked if we could create a solution that would help propel the entire profession forward, and pledged funding and resources to the initiative.

This feedback was the impetus for what we’re calling the Dynamic Audit Solution (DAS). DAS is a partnership among the AICPA, CPA.com, leading CPA firms and our technology partner, CaseWare International, to develop a data-driven, technology-enabled audit solution that will enhance the efficiency, quality and value of audits.

2. What exactly is the Dynamic Audit Solution and what will it do?

Sue Coffey: First, it’s important to recognize that when we look to create a solution to transform the audit, we can’t just focus on technology. Technology is an enabler. Automating what we do today is not the solution. We must also look at the evolution of methodology and the relating auditing standards. The combination of emerging technologies and reimagining the audit, via a new methodology, will distinguish the profession and position it for continued success. I’m also pleased to see the Auditing Standards Board’s (ASB) agenda is highly focused on the use and application of emerging technologies during the audit. Its Audit Evidence project, for example, is just one element of its aggressive agenda to modernize the audit. I’m further pleased to see firms identifying the new skills needed for success and investing in their talent to address a growing gap in digital intelligence, critical thinking and people skills.

With these key drivers in mind, we’ve engaged top talent from across the profession, as well as CaseWare International, to help us reimagine the audit and develop a new solution from the ground up. This fully integrated solution will use data analytics and artificial intelligence to analyze entire populations of data to identify relationships and patterns that may not be intuitive to humans, to transform risk assessment and for use across all phases of the audit. It will also employ sophisticated algorithms, continuously improved by machine learning and other variations of artificial intelligence, to detect anomalies and irregularities in business information.

3. Who will benefit from DAS?

SC:  The profession is developing DAS for the profession. The objective is to enable firms of all sizes to bring greater quality, efficiency and value to their audits. Scalability is a foundational principle in our development process.

4. How does DAS fit with the OnPoint PCR solution introduced in 2018?

EA: OnPoint PCR is a preparation, compilation and review (PCR) tool that integrates AICPA guidance into the CaseWare Cloud Smart Engagement platform and incorporates some of the more foundational DAS components. Right now, 19,000 firms across the United States offer preparation, compilation and review engagements as their highest level of service. Our vision is that, once DAS is commercially available, firms that offer audit and PCR engagements will have access to a single, integrated platform to meet their needs. The platform will include modules that firms can select based on their engagements and specialized industries. 

5. Will firms using DAS know about changes in audit or peer review standards before the public or have an advantage in the peer review process?

SC: No. The standard-setting and peer review administration processes are independent of DAS development. The ASB is looking at how standards might need to evolve in light of technological innovation, but DAS won’t drive these efforts. The DAS team doesn’t have early or exclusive notice of changes in standards. Similarly, firms that will use the DAS will have no more or no less advantage in peer review. 

6. When will DAS be available?

EA: We’re developing DAS following an agile development process, which means we’ll test initial prototypes or offerings with firms and then adapting the solution based on the feedback collected. The first commercial parts are expected to be released to firms working on the DAS project later this year, with the first commercial release expected in 2021. As we continue to gather feedback from firms, we’ll adjust and refine the solution to make sure it brings optimal value.

We’ll be starting with the core commercial audit and then will add in industries and additional functionality over time through a process of continuous improvement and innovation.

7. What opportunities is DAS bringing to the profession?

SC:  Since our announcement about this initiative, there’s been a new excitement and energy in the audit space. Firms are eager to have a tool that will allow them to leverage new technologies and methodology in the delivery of the audit.  Eventually, DAS will also support the delivery of attestation and advisory engagements for firms that are evolving their services beyond the traditional financial statement audit. The world has become more complex. Businesses are looking for assurance in new areas, such as data and information integrity, sustainability and System and Organization Controls (SOC) reporting, which includes reporting on cybersecurity risk management.

Want to learn more about the Dynamic Audit Solution? Listen to this Accounting Today podcast with Erik and Sue.

Colette Sharbaugh, Senior Manager – Communications & Public Relations, Association of International Certified Professional Accountants

     

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It’s no secret that a phone call can change a life’s trajectory. Two decades ago, I received a call that not only had a deep impact on my family, but also sent me down a career path to help my clients navigate critical life transitions — unexpected and otherwise.

Unexpected events and major life transitions offer a critical opportunity to assist clients.

Over 20 years ago, my mom called and asked if I had talked with my dad that day. He had recently suffered some health issues but was doing well, so I assured her that he was probably out for coffee with friends. The day did not end well. I soon discovered that my dad had passed out while driving due to adjustments in medications and died in a one-car accident. He was only 64.

After dealing with the immediate grief and repercussions of my dad’s death, I began contemplating how to balance living for today and planning for tomorrow. My dad had passed away at a time when most people are preparing to retire. Over time, I recognized a difference in the way I was talking to my tax clients. I found myself engaging in broader personal financial planning conversations beyond taxes.

Life’s ups and downs each come with specific financial implications. CPAs serve individual clients on the good days (marriage, births and retirement) and bad (aging parents, divorce and death). But are we stopping to listen or consider how we might help? Do clients have a plan for the loss of a loved one? Have they considered how to address an aging parent’s needs? How are they balancing retirement funding while saving for their children’s education?

Broaden your knowledge and position yourself as the trusted adviser.

As I listened to my clients, I knew I needed to deepen my expertise in all aspects of their financial lives. Tax knowledge serves as a critical foundation when planning for retirement, estate, investments and risk management. But to be able to address the broader financial picture, pursuing the Personal Financial Specialist (CPA/PFS) credential was the most logical path.

In a recent AICPA survey of high-net-worth and high-income prospects, “2 of every 3 participants said that the credentials an individual holds are very important when selecting a financial planning professional.” To me, obtaining financial planning education and a credential that aligned with my CPA ethics and thought process was the perfect way to go. The AICPA^® offers not only the comprehensive PFS^TM exam, but also the Personal Financial Planning (PFP) Certificate Program, a more flexible option to help you grow your  financial planning skill set and work toward the credential.

CPAs have the skills to successfully produce financial planning solutions; we are process-oriented, analytical and we know how to talk with people about money. Keep in mind that you don’t have to be the expert in everything. Clients appreciate having a primary point of contact and as such, CPAs can oversee the overall picture while bringing in specialists or partnering with other professionals where needed.

Slow down, listen and connect to discern clients’ needs.

Stories are a powerful way to connect. Hopefully, you haven’t walked through anything as jarring as the unexpected death of a family member. But, chances are you have an engaging story of your own. It doesn’t have to be complicated or life-altering. It could be as simple as, “My spouse and I were talking about our retirement plans recently; what are you thinking about retirement? How much longer do you want to work?” Those questions can open a conversation about a universal topic that is a great first step into a broader planning discussion. They are not intrusive, but valuable!

The key is to ask open-ended questions, slow the pace of your meeting and listen. Instead of beginning a tax return delivery meeting with, “Anything new?”, ask instead, “How are you doing? Has anything been on your mind about your finances?” Then wait. Be prepared for some awkward silence; I promise you they are worth the 20 seconds of discomfort. Resist the urge to jot down notes and listen as you would with a trusted friend.

Asking the right questions and then listening can help you discern what is most important to your client. Is it a safe retirement? Passing money to heirs? Funding grandchildren’s schooling or leaving a charitable legacy? Perhaps complications of aging are affecting a loved one.

Once you’ve given your client an opportunity to tell their story, ask if they’d like you to follow up. Set up a second meeting, offer to help run some numbers or look at their scattered accounts. These simple steps are incredibly valuable to your client and may be the genesis of a personal financial planning relationship — and perhaps, like me, a new direction for your career.

If you aren’t sure where to start, you’re not alone. The AICPA PFP Section developed a Tax and Financial Planning Services hub with toolkits, checklists and guides designed to help not only initiate these conversations but also transform your practice.

My dad’s death opened my eyes and ears to the needs of my clients as they face the certainties and uncertainties in their own lives. As a tax preparer, it can be difficult to slow down the hustle of your practice to relax into these conversations. But, when you do, clients are anything but hesitant. After all, you may be one of the few people they talk candidly with about their finances.

David Stolz, CPA/PFS, has more than 20 years of experience working with high-net-worth individuals in tax preparation, investment consulting and personal financial planning. He serves the profession as chair of the AICPA Personal Financial Specialist Credential Committee. His wealth management firm, Stolz & Associates, is based out of Tacoma, WA.

     

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CPA Exam (Exam) score release timetables for the first and second testing windows of 2020 are available. The National Association of State Boards of Accountancy (NASBA) will release scores to candidates and boards of accountancy based upon the target score release dates in the table below. It is important to note that some boards of accountancy require at least one day beyond the published target release date to process and release scores.

Q1 testing window Jan. 1–March 10, 2020
If you take your Exam on or before:	The AICPA® receives your Exam data files from Prometric by 11:59pm (ET) on:	Your score will be released by the target release date:
Jan. 20	Jan. 20	Feb. 3
Feb. 14	Feb. 14	Feb. 24
Feb. 28	Feb. 28	March 9
March 10	March 11	March 18
March 10	**After March 11	March 19

 

**The Exam data files the AICPA receives after March 11 will be included in the final target score release date.

 

Q2 testing window Testing dates April 1–June 10, 2020
If you take your Exam on or before:	The AICPA receives your Exam data files from Prometric by 11:59pm (ET) on:	Your score will be released by the target release date:
April 20	April 20	May 4
May 15	May 15	May 26
May 31	May 31	June 8
June 10	June 11	June 18
June 10	**After June 11	June 18

 

**The Exam data files the AICPA receives after June 11 will be included in the final target score release date.

Keep in mind:

• All dates and times are based on the Eastern time zone.
• For most candidates, the AICPA receives the Exam data files from Prometric within 24 hours after a candidate completes the Exam.
• The scores for the exam data files received after the AICPA cutoff dates will be in the subsequent scheduled target score release.
• Some candidates who take the BEC section might receive their scores about one week following the target release date due to additional analysis that might be required for the written communication tasks.

     

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The IRS is getting serious about cryptocurrency. This fall, it released three documents that all tax practitioners need to pay attention to ahead of the 2019 filing season: a retroactive revenue ruling, FAQs for reporting cryptocurrency ownership and a draft of Form 1040 that asks taxpayers about their financial interest in virtual currency.

Revenue ruling

On Oct. 9, the IRS released an authoritative revenue ruling that specifically addresses situations in which a taxpayer receives auto-generated cryptocurrency. According to the IRS, this type of situation – known as a hard fork and airdrop – always triggers a tax obligation. Thus, because forks and airdrops are often unprompted by the individual who owns cryptocurrency, a taxpayer could receive digital currency against their wishes and still must pay taxes on it.

Moreover, this ruling is retroactive and does not provide any safe harbor or transition relief. For taxpayers to fully comply with the rule, they will need to file amended returns. In other words, an individual can be taxed on something that occurred in 2016 and also must pay a penalty and interest.

The AICPA® plans to issue a comment letter to the IRS in early 2020 to address concerns with this ruling, including its retroactive nature and lack of transition relief for taxpayers.

Guidance for tax practitioners and taxpayers

In conjunction with the revenue ruling, an IRS “Frequently Asked Questions” document addresses several issues cryptocurrency owners have long asked about, including those related to calculating income, gifts, and gains and losses.

Additionally, the FAQs provide information on basis when real currency is used to purchase virtual currency. Here, the IRS states that the cost basis is determined by adding up the total money spent to acquire crypto assets, “including fees, commissions and other acquisition costs in U.S. dollars.”

Draft Form 1040

An early release draft of Form 1040 showcases how serious the IRS is about reporting cryptocurrency ownership. The first question on Schedule 1 asks, “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in virtual currency?”

Should the question remain on the form’s final version, CPAs will be required to ask clients about cryptocurrency ownership. As such, the AICPA recommends that tax practitioners add this question to their updated tax organizer.

To make sure you and your clients meet IRS expectations, the AICPA and CPA.com also made three recommendations in our Special Report from the 2019 Blockchain Symposium:

1. Adhere as closely as possible to information the IRS provided.
2. Be conservative with all documentation, including how gains and losses are accounted for.
3. Be consistent in your approach. Do not skip back and forth between accounting methods.

For more information on the IRS’ ruling and FAQ, check out the AICPA’s webcast IRS Guidance on Taxation of Virtual Currency from 1–2pm ET and Jan. 14. Save 20% with promo code IRSG19.

Lindsay Patterson, Director – Corporate and Integrated Communications, Association of International Certified Professional Accountants

     

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