• Diverse Faculty Attracts Diverse Students

    by Anita Dennis, freelance writer | Jul 22, 2021

    Professors can shape a student’s experiences, influencing whether students take a course or pursue a career because the person at the front of the classroom looks like them. The first Black CPA Ph.D.s have played an important role in attracting generations of future Black CPAs.

    Having diversity in the front of the classroom benefits all students, especially the students of color who may not be used to seeing people like themselves in that position, said Mark Dawkins, CPA, Ph.D., professor of accounting at the University of North Florida and the first Black CPA Ph.D. president-elect of the American Accounting Association.

    Among other things, the person teaching the class can have a significant impact on whether students decide to try a course in that subject — and ultimately make it a career — because they see it is being taught by someone who likely embodies similar life experiences. For that reason, the first Black CPA Ph.D.s, and the professors they mentored or inspired, have played an important role in attracting generations of ambitious Black students to the profession.

    Overcoming Barriers

    The earliest Black people to earn Ph.D.s in accounting faced numerous barriers. In fact, the first five “had no chance at full-time positions in majority-white institutions” when they got their start in the 1950s and 1960s, according to Theresa A. Hammond, Ph.D., accounting professor at San Francisco State University’s Lam Family College of Business and author of A White-Collar Profession: African American Certified Public Accountants Since 1921.

    That was the case for William Louis Campfield (1912-1993), who in 1951 became the first Black CPA Ph.D. He was also the first Black CPA in North Carolina and the first Black person inducted into the Beta Alpha Psi organization. His parents, graduates of the Tuskegee Institute and students of Booker T. Washington, were teachers, according to research by Dereck Barr-Pulliam, CPA, Ph.D., assistant professor of accountancy at the University of Louisville. Campfield and his eight siblings attended a school on the Institute’s campus and then he was sent to live with relatives in Pittsburgh so he could attend a college preparatory high school. He enrolled in New York University, supporting himself by working at a bowling alley, then returned to teach at Tuskegee in 1933.

    When it hired Campfield in 1951, the University of San Francisco had the distinction of being the first majority-white institution in the country to hire a Black Ph.D. in accounting, according to Hammond. However, he was hired as a lecturer, not a professor, even though no other faculty member, including the dean, had a Ph.D. A year later, Campfield returned to working in accounting in a government position and created a practitioner-in-residence program that allowed him and numerous other government accountants to take leave and teach accounting. He retired in 1972 as associate director of what was then called the U.S. General Accounting Office, now known as the Government Accountability Office, and in 2019 became the first Black accountant to be inducted (posthumously) into the American Accounting Association’s Hall of Fame.

    Succeeding Through Persistence

    Another pioneer, Larzette Hale (1920-2015), showed similar determination. Sent to an orphanage at age 11 after her father’s death and when her mother could no longer care for her, she learned bookkeeping when the business office’s accountant took an interest in her. She went on to study business in college, where an accounting professor became her mentor. “Thanks to her, I fell in love with balancing the books and knew I wanted to study accounting in college,” Hale told the Journal of Accountancy in 2009.

    She faced a number of forms of discrimination. Although a resident of Oklahoma, Hale was barred from attending its two state universities because of her race, so she attended Langston University, the state’s only historically Black college. The state of Oklahoma would later pay her tuition to attend the University of Wisconsin for her master’s degree, according to Hammond. While teaching at Clark College in Atlanta, she decided to get her CPA at the urging of her mentor, Jesse Blayton, an influential early Black accounting professor. When Hale took the CPA Exam, she was asked to sit in the back of the room and wasn’t allowed to use the lunchroom. In 1955, she became the nation’s first female Black CPA Ph.D. She ran a solo practice for a decade but was drawn to teaching. Hale ultimately became the head of Utah State University’s school of accountancy and also taught at Langston and Brigham Young. She was appointed a regent of the Utah Board of Higher Education, the first Black person in that role.  

    A First for a New Generation

    Dawkins, who met Hale early in his career, set out to follow the lead of these early pioneers. “There are a lot of prominent and impactful faculty of color who may not have had an opportunity to serve in this role, so I stand on the shoulders of giants,” he said. He said he’s grateful for the chance to highlight issues and concerns related to diversity at a time when attention is being focused on racial injustice and economic inequity.

    Dawkins promotes the advancement of future Black accountants through his involvement in the PhD Project, which aims to diversify corporate America by increasing the number of business professors from underrepresented minority communities and attract more minority students to college business courses. He was in graduate school before the PhD Project started, but he began attending the project’s annual conference as soon as it began. Currently, he co-mentors four junior faculty members involved in the project, discussing questions they may have about research or teaching and helping them build the success they need to gain tenure. When the project began, Dawkins recalled that there were so few faculty of color that they would refer to each other by number based on the order in which they had become Ph.D.s. “Today, we have 1,500,” he said.

    Expanding Students’ Knowledge Base

    To keep the momentum going, efforts are underway to nurture a new generation of diverse CPA Ph.D.s and provide them with the learning and tools they need to succeed. For example, Dawkins served on a task force for CPA Evolution, a joint initiative of the National Association of State Boards of Accountancy and the AICPA to transform the CPA licensure model to encompass the rapidly changing skills and competencies that accountants need now and in the future. That will include changing what is being taught. “I believe accounting schools do a good job of giving students the basic toolkit they need,” he said. “But we will need a combination of schools better preparing students and firms enhancing employee training.” Speaking of his work with the learning process and the PhD Project, Dawkins concluded, “for me, it’s a lifelong commitment.”

    This blog post was originally published by the Illinois CPA Society (ICPAS) and was reprinted with permission. The Black CPA Centennial is a yearlong effort to honor, celebrate and build upon the progress Black CPAs have made in shaping the accounting profession. The celebration is a collaborative effort of the AICPA, Diverse Organization of Firms, Illinois CPA Society, National Association of Black Accountants and National Society of Black CPAs.

  • CEO Compass - Summer 2021

    by Ralph Albert Thomas, CPA (DC), CGMA | NJCPA CEO and Executive Director | Jul 07, 2021

    It’s Time to Move Forward

    During the past year, you have provided more guidance and leadership to your clients, firms and employers than ever before. In such unprecedented circumstances, we were able to come out stronger as a profession and a community. But this shouldn’t surprise anyone. Throughout history, our profession has adapted — it’s how we’ve thrived, and your work in the last year is a continuation of that legacy.

    According to a new report from the Association for Accounting Marketing (AAM), almost half (45.3 percent) of firms say the COVID-19 pandemic has had an overall positive effect on them by accelerating key tech and process innovation within their offices. Of the firms who said the pandemic had a positive effect on them, the top three areas of business positively impacted by the pandemic were increases in service offerings (42.4 percent), cost savings from remote work (18.2 percent) and advancements in technology (15.2 percent).

    At the 2021 NJCPA Virtual Convention in June, we discussed the many ways our members have pivoted to deliver value during disruption and how we at the NJCPA are proud to provide support every step of the way by:

    • Transitioning to 100-percent virtual training and offering more than 250 virtual programs. NJCPA members have taken more than 12,000 free CPE credits through Membership+.
    • Polling our members about their willingness to return to in-person programs. There was roughly a 50/50 split between members wanting to come back this fall and those considering coming back sometime in 2022, unsure or who aren’t coming back at all.
    • Remaining a thought leader on tax and fiscal issues and a go-to resource in the state capitol and among the media. 
    • Carrying on extensive communications with the New Jersey Division of Taxation on issues ranging from extending various tax deadlines to implementation of the Business Alternative Income Tax (BAIT). We also advocated for preventing the state from taxing forgiven PPP loans and for allowing business expense deductions related to those loans. 
    • Working with the New Jersey State Board of Accountancy to resolve problems encountered by individual CPAs and CPA candidates and help with firm licensing renewals. 
    • Launching a live online chat tool to answer member questions.

    Even as we help you respond to today’s demands, we are, as always, looking ahead. 

    Society staff and the NJCPA Education Foundation Executive Committee are developing protocols to ensure that the return to in-person programming in January 2022 is smooth and safe. To help avoid confusion, in-person event protocols will be developed based on best practices. The NJCPA Board of Trustees remains open to amending policies should circumstances change between now and the end of the year.

    To you and all our members, thank you for the tremendous support you have shown us and the value you’ve provided clients, employers and your communities during this extraordinary time. You are true leaders on the path to recovery.

  • 7 Questions Where Your Business Client Will Need Answers About their Finances

    by Bryce Sanders, Perceptive Business Solutions, Inc. | Jun 30, 2021

    When cash flow problems emerge, the business owner probably didn’t accurately estimate anticipated revenue versus anticipated expenses. The estimate of startup costs was too conservative. Clients aren’t paying as quickly as they hoped or sales didn’t follow the anticipated trajectory.

    There are several reasons business clients run into cash flow problems or just simply need more money in a hurry. It’s better to get in front of this problem sooner than later and as their accountant, you need to be able to ask the tough questions. Business owners, especially startups, can be excessively optimistic and not properly plan for the aforementioned scenarios. They are simply convinced their idea will take off.

    Here are seven questions to ask clients in order to better understand their finance needs: 

    1. Why is your business going to succeed? Answering this question requires a robust business plan. Ask your client the following questions:
    2. How much money will you (realistically) need? This should be followed by “How did you arrive at that number?” You want them to walk you through their business plan. They often need exponentially more money as the business ramps up operations. Where will this money come from? Is it from product sales? How have they matched projected sales revenue with the more predictable outflow for expenses? Remind them of the timeless advice people are given when going on vacation: “Bring twice as much money as you think you will need.” That was back when people carried cash. Today the advice would be “Be prepared to spend twice as much as you anticipated in out-of-pocket costs.”
    3. Are you prepared for contingencies? How will they be addressed? When you embark on a construction project such as building a new home, the architect typically builds in a cushion of 10 percent (or more) into the project budget. Why? Because they don’t know what problems they will encounter along the way. If construction is halted, rent still must be paid on equipment. The mortgage needs to be paid. When renovating an older home, contractors usually protect themselves by saying: “We don’t know what we'll find when we open up the walls.” Assume everything will not go according to plan. What cushion has the business owner built in?
    4. Are you borrowing or taking on investors who will own equity? The answer might be “yes” to both options. If the client is borrowing, they'll need that robust business plan that will persuade the bank their venture is a good risk. If they are bringing on investors who will pay to own a slice of the equity, they need to be confident the projected return on investment is sufficient to balance the risk they are accepting. Their investment will likely be illiquid for a long time. What can they expect as a return on investment? When should they be starting to see a return? Regardless, if it’s a loan or equity, the client will need that good business plan.
    5. How much equity are you prepared to give away? It’s been said early money is the most expensive money. If investors are willing to put money into a startup, they are buying into a vision and the business owner who promises to deliver. They are taking a major risk. They want to be adequately compensated. The client wants to retain control of their business, but they must be prepared to part with enough equity to make the risk worthwhile to the investor.
    6. How much of your own money are you putting at risk? How much are immediate family members investing in the business? The client needs to understand that if a bank lends them money, they want to be lending alongside the client. They want them to have “skin in the game.” If a business runs into serious financial trouble, lenders have standing ahead of equity investors. They want the client to have a substantial amount of their own money at risk, so that they are motivated to see their business succeed.
    7. How much are you prepared to pay to borrow money? The return on equity must far exceed the cost of borrowing money. Ask your client to imagine the following scenario: You are confident your business can return 20 percent, yet the only lender you can find wants 35 percent interest and your personal guarantee of the loan. In this scenario, the client shouldn’t be starting or expanding their business at this time. They need to bear in mind that there are costs besides the posted interest rate. Origination fees are a good example. The interest rate will likely be variable, which is dangerous in a rising interest rate environment.

    Ideas can look great on paper. Things get complicated once loans are negotiated and your client signs documents. They need to be aware of the risks they are assuming along with costs and consequences.

    This blog was originally published as a column on AccountingWeb and can be read in its entirety here.

  • Managing Cyber Risk in a Remote Work Environment

    by Stanley D. Sterna, Aon Affinity | Jun 03, 2021

    CPAs have been heavily dependent on the use of technology, especially during the COVID-19 pandemic. Unfortunately, cyber criminals are seizing on this as an opportunity to gain access to confidential databases, using phishing and social engineering schemes. Some cyber criminals seek to sell data on the dark web. Others attempt to commit theft through wire transfers purportedly requested by clients at CPA firms or accounting department staff or by demanding ransom payments. While CPAs are well aware of the need for data security and secure client portals/VPNs, they should also recognize the increased risk due to remote employees using technology in their homes.

    Remote Risks

    Home routers can be especially vulnerable. In a December 2020 ThreatPost.com article, vulnerabilities were discovered in home routers manufactured by D-Link, a key supplier of routers for home use. Routers that are improperly configured or use default settings can be easily breached, so it’s best to ensure that employee home routers are patched with the latest firmware to withstand malware infections.

    Use of employee-owned devices for business can also expose an organization’s data which is why all companies should have a written policy on the use of personal devices to conduct company business and have systems in place to enforce security measures.

    Here are some points to consider:

    • Business conversations should be conducted through the use of secure technology recommended by the company.
    • Avoid using SMS text and voice-based multi-factor authentication systems on cell phones, which Microsoft recently identified as a system security vulnerability, potentially exposing other data stored on phones.
    • Staff should be provided with training on how to secure devices prior to logging into a public WiFi network. Using a company VPN provides additional security when using a public WiFi network, but it isn’t foolproof.
    • Operating virtually also requires an increased focus on providing staff and management with the necessary tools and education. Revisit existing organization policies on the use of technology and maintaining privacy/security over confidential information. As the nature of privacy breaches continues to evolve, training on privacy/security should be continuous, rather than an annual exercise.
    • Given the danger of privacy breaches associated with working remotely, there is also an increased risk of claims against management alleging a breach of fiduciary duty for failure to maintain adequate data security. Individual firm managers can be held personally liable for such claims by a variety of parties, including owners, partners, shareholders, staff, clients, competitors and vendors.  

    Accordingly, organizations need to understand the risks associated with their data security decisions. Management should reach out to known and fully vetted third-party consultants to help construct and monitor data security protocols. Contracts with third-party vendors should contain language that the vendor will maintain cyber insurance coverage throughout the engagement and sometime thereafter and, if you can get it, to defend and indemnify the organization for breaches as a result of their advice. 

    Implementing the aforementioned protocols along with ongoing consultation with a cross section of specialized management, technical, legal and insurance experts can help mitigate cyber risk.

  • The Benefits of Accounting in Real Time

    by Marc D. Mintz, CPA, CITP, CGMA, Marc Mintz & Associates, LLC | May 25, 2021

    Emergent technologies have laid the foundation for financial statements and other business reporting to be distributed in real-time by utilizing live feeds. Artificial intelligence (AI) and internet-based computing (the cloud) have combined to provide financial professionals and other interested stakeholders with transaction information that is updated as it is posted by banks and credit card processors.

    How Feeds Work

    Live feeds enable accounting programs to automatically update transactions directly from their source. Three examples include banking, payroll and credit card activity. QuickBooks Online, for one, can be configured so individual transactions are automatically downloaded into the accounting program. Banking transactions are placed into a holding area and can then be matched with transactions that have already been entered into the system or added to the accounting program if they do not already exist. Transactions are classified (posted) based on established rules which can be refined and edited during the acceptance process.

    Feeds are established for credit card accounts that download individual charges into the accounting program. Default general ledger accounts are set for particular vendors which can always be edited on an individual-transaction basis. Gone are the days of tedious manual analysis of lengthy credit card statements. Just like a bank reconciliation, the credit card statement’s opening balance is already known by the system. Individual charges and payments are cleared based on the statement date and reconciled to the closing balance. As an added advantage, charges can be accumulated by the particular vendor even though the credit card company is the payee.

    AI Advantage

    AI is the breakthrough technology that allows rules-based systems to evolve so less time is required for posting analysis. Processing these workflows via the cloud allows automated updates to occur in near real-time while simultaneously providing authenticated users access to the information as it is processed. If you are already using live feeds, you understand the tremendous time savings and convenience that this technology provides. It is critical that posting rules are established, refined and checked so that source transactions post properly. If you are unfamiliar with this technology, you are justifiably skeptical. But it does work, and it is the future of accounting.

  • What CPAs Need to Know About Small Businesses’ Cybersecurity Needs

    by Mary Anne Schafer, SMI Corporation | May 19, 2021

    The COVID-19 pandemic forced thousands of organizations around the world to become entirely remote seemingly overnight. Many businesses had some experience with mobility and remote access to work from home, but few, if any, were equipped to operate 100-percent remote. Cyber criminals and opportunistic attackers wasted no time targeting insecure home networks and household smart devices like doorbells, thermostats and yes, even fish tanks.

    From credential theft, to email phishing scams to social engineering, cybercriminals sought to exploit any and every aspect of the remote transition of our workforce. Cyber criminals don’t discriminate. They feverishly work to find any and all security vulnerabilities that will allow them to access to the networks of large, small, global, regional and local businesses.

    Small and Midsize Businesses

    These mounting cybersecurity threats are particularly troublesome for small and midsize businesses (SMB). Even before the pandemic, SMBs and their chief information security officers (CISOs), if they had one, faced challenges when it came to limited budgets, complex cyber solution and services offerings, and the challenges and costs of hiring skilled staff. As the pandemic continues to take its toll on the broader economy, tighter budgets, higher prices and greater risks have increased the complexity and cost of securing your business. As SMBs find their footing in the post-quarantine world, they must embrace the critical importance of cybersecurity and scale appropriately.

    The "2021 Survey of CISOs with Small Security Teams," from Cynet finds that companies with small security teams are facing a number of unique challenges, placing these organizations at greater risk than their larger enterprise counterparts. Here are some key findings that SMBs and their CPAs should be aware of:

    • 63 percent of these SMBs’ CISOs feel their risk of attack is higher compared to enterprises, despite enterprises having a larger target on their backs.
    • 57 percent of companies indicated they do not have enough skill and experience to protect against cyberattacks.
    • Almost all small security teams are looking to outsource security mitigation to an external provider with over half focused on outsourcing managed detection and response (MDR).

    SMBs can and should increase their cybersecurity resilience to boost their chances of success. A crucial first step is for owners of SMBs to lead by example and pay attention to their employees’ online habits. They can demonstrate good cyber hygiene and educate their employees.

    Here are some considerations:

    • Identify business-critical assets and data to prioritize their protection.
    • Be proactive, rather than reactive, when protecting against cyberattacks.
    • Access online resources to boost cybersecurity awareness and education. For example, the Small Business Administration offers free access to planning tools, business assessments, cyber hygiene vulnerability scanning and best practices on their website.
  • How to Retain Clients After a Merger or Business Sale

    by Bryce Sanders, Perceptive Business Solutions, Inc. | Apr 28, 2021

    Whether you're ready to retire or are simply preparing to move on to something new, selling your accounting firm can be tricky. One of the top priorities you should keep in mind is retaining the clients you already have so the practice continues to be successful.

    Some sales are easier than others. Take selling a car, for instance: The dealer quotes a price, you negotiate a bit, and then you walk away after making a payment and receiving the vehicle. Your responsibilities are over. Selling a business isn’t as simple.

    The major difference concerns tangible and intangible assets. When selling your car, the vehicle is the asset. When selling your business, your client list and the income stream it provides are the major assets. The buyer has enough desks and staplers. They want the clients and the revenue. The sale of a business isn’t a transaction where you walk away and don’t look back. The owner might be expected to stay involved for a couple of years. The payout is likely structured along similar lines.

    Some of your best clients are loyal to you. Clients are more comfortable when you have a succession plan in place. A considerate client looking forward to their own retirement realizes you want to stop working and enjoy life someday. Their fear is you would suddenly be out of the picture. They would no longer have an accountant and would need to find another. They would prefer a smooth transition, organized and sanctioned by you.

    The sale of the business might start as a merger. In this scenario, two firms become one. You want to notify each client, positioning why this is a net benefit for them. Focus on what will remain the same, not what will change. The staff they’ve gotten to know will still be here. You will still be here, at least for the time being.

    Here are some tips for ensuring your clients feel comfortable remaining with the firm even if you're no longer there:

    • Correspondence should reflect the continuity. Letters and general e-mails should be signed by the heads of both firms. Like a seesaw in the children’s playground, the process starts with each firm at opposite sides of the seesaw. Later, both ends are in the air. Eventually, the opposite side is on the ground. Clients will be grounded, just on the opposite side with the new management.
    • Client meetings should initially proceed with you and your team taking the lead. Also include a team member or two from the other firm and introduce them to the client. During the ensuing conversation, you explain, “We are all one firm now.”
    • The transition becomes more apparent at the next round of meetings. Staff members from both sides are present, but the new team members introduced earlier will now take the lead. They should emphasize that they’ve gotten to know each client through records and conversations with the original staff.
    • The handover occurs by the next meeting. The new team members are taking the lead. There should be at least one person from the original team still involved, because clients are more comfortable with a familiar voice, even if it isn’t yours.

    Then, you can formally announce you are starting your retirement. You feel confident the firm and its clients are in good hands with the new administration. Your name disappears from the website, letters and stationery.

    You can see why the entire process takes a couple of years. The major asset is the client base. It needs to transition over smoothly. The payout on the sale of the firm is structured to reflect this reality.

    This blog was originally published as a column on AccountingWeb and can be read in its entirety here.


  • How to Set Up a Blockchain or Crypto-Based Payment System for Cannabis

    by Melissa Dardani, CPA, leader of the NJCPA Cannabis Interest Group, and Dr. Sean Stein Smith, CPA, leader of the NJCPA Emerging Technologies Interest Group | Apr 27, 2021

    This is the third post in a three-part series documenting the weakness and risks of existing payment options for the cannabis industry, and how it can potentially benefit from a blockchain and cryptoasset payment system. 

    In any new and emerging industry, there are bound to be opportunities and challenges alike, and, in that sense, the crypto and cannabis industries have a lot in common. They are both still somewhat controversial and are still developing means of integration with wider economic actors.

    Even though recent legislation has proven beneficial to the cannabis industry, federal and state law disparities still exist (these differences are discussed at length in part one and part two of this blog series). And despite progress being made, there is still ambiguity as to how legalization will impact the integration of cannabis into the banking system. 

    Blockchain and crypto may be uniquely positioned to offer a critical bridge to banking alternatives for what is currently a predominantly cash-based industry. Here are some practical considerations that any organization seeking to implement a blockchain and crypto payment system should take into account:

    • Decide which crypto to accept. Before doing anything else, an organization that is planning on beginning to accept cryptocurrencies as a form of payment needs to decide which crypto it will accept. Similarly, it must decide how it will store the crypto and what service it will use to facilitate the payment. This requires extensive due diligence in the vendor selection process as well as the underlying technology relied on by this vendor. It is important that competent professionals who understand the technology are involved in this process. 
    • Develop a crypto strategy. Like every major implementation, remember the six Ps of planning: prior proper planning prevents poor performance. A company must determine how and where to store their currency just as they would with fiat currency. They may run into issues opening accounts with major exchanges due to mirrored federal banking concerns and limitations. They must develop standard operating procedures which dictate whether these crypto-denominated payments are going to be held by the organization (and if yes, how) or if they will immediately be converted back into fiat currency. Any conversion process requires clearing the traditional banking hurdle. 
    • Don’t reinvent the wheel. Blockchain and crypto might still seem like an amorphous topic that can be confusing, but no organization interested in implementation of a crypto-based solution needs to begin from scratch. Accepting crypto as a payment option is not an impossible idea; multiple vendors have been offering these exact services for years at this point. Again, proper due diligence is key to understand and mitigate third-party risk.

    There are other issues and benefits to bear in mind when determining whether a crypto-based payment infrastructure is right for your business. They include:

    • Cybersecurity and interoperability. Going cashless and being able to access the banking system through stablecoins and other crypto payments might be a solution for certain firms, but that does not reduce the importance of cybersecurity. As prices and interest in crypto continue to increase, practitioners need ensure that the controls in place are up to the task. It is also important to understand how the technology you onboard will cooperate with other parts of your business and with those who you wish to do business.
    • Reduction in cash dependence. Cryptocurrencies, specifically stable coins that maintain value against a certain benchmark such as the U.S. dollar, can act as an alternative to dealing in fiat currency for these organizations. Less cash dependence means lower risk of theft, embezzlement and security around organizational finances.
    • Lower fees. Even if the march toward legalization continues unabated, a crypto and blockchain-based payment structure could result in lower fees per transaction than the traditional third-party payment processing solutions that are available to the cannabis industry. Cash is risky and comes with the added costs of security and astronomical banking fees. Credit cards (which are currently not available to the industry) come with a “baked-in” fee of approximately 3 percent per transaction. Similar fees will be incurred to make use of third-party ACH services or cashless ATMs. Service providers generally understand the limitations imposed on the industry and are taking advantage to meet the demand at high costs. A crypto-based payment system could reduce these fees and add back some of these amounts to the bottom-line.
    • Better traceability. Even with substantial progress toward legalization well underway, a highly regulated industry will bring immense operations requirements such as product tracking. New Jersey law requires a uniform state-mandated tracking requirement and an underlying requirement that businesses maintain their own inventory tracking records. A blockchain and crypto payment system enables specific transactions to be followed, in real time, to their points of origin. Blockchain also may offer the benefits of immutable records due to decentralized authority. Compliance will remain a top priority for cannabis organizations; transparent and traceable records must be maintained with ease. 
    • Other Applications. Another viable application of blockchain-based technology is the smart contract, which exists on the blockchain and is essentially a set of instructions that allows for an array of practical applications. Many bullish on the technology believe that the security offered by the immutable, decentralized nature of the public blockchain, paired with the enterprise-wide applicability introduced by smart contracts, will revolutionize the modern business environment. Processes that can be migrated to the blockchain include record keeping, validating transactions, tracking transactions, assets and company history, payment facilitation and virtually any other task that involves exchanging information.
  • What to Know About TCJA’s Impact on Special Needs Trusts

    by William Rothrock, CSSC, Rothrock Settlement Consulting | Apr 23, 2021

    The Tax Cuts and Jobs Act (TCJA) of 2017 altered the tax regime for those who utilize special needs trusts (SNTs) or any trust after Jan. 1, 2018. CPAs who have clients that have SNTs in place for a dependent should be aware of some options that can mitigate that impact.

    Impact of the TCJA

    At the outset, it’s important to understand the following:

    1. Special needs trusts’ available assets are usually not sufficient to meet 100 percent of a client’s long-term needs.
    2. Special needs assets are for the sole benefit of the disabled client.
    3. The benefits provided by government agencies must be protected and accessed to maintain the client’s life.

    With these in mind, we can explore the impact of the TCJA on SNTs and other trusts. The TCJA eliminated the deductibility of two major expenses — administration and asset management fees no longer receive above-the-line deductibility as they had in prior years. This profound shift in tax regime instantaneously reduced the long-term survivability of the SNTs and demands a re-evaluation of how SNTs should be funded in the future.

    The TCJA essentially placed all fees incurred by an SNT under review. Any action that does not assure the long-term survival of the SNT lacks fiduciary footing. What can be done prudently to guarantee the SNT lasts the full life of the client given the current tax regime?

    Strategies to Mitigate the Impact

    To sustain the portfolio, you must mitigate the taxes and fees absorbed by the special needs trust. There are two potential avenues to address this. First, you could place the assets in a standard investment and reduce the fees incurred to zero. Second, you could fund with a structured settlement and leave fees at customary levels. A structured settlement incurs no taxation or fees, provides guaranteed lifetime income with the added benefit of matching cash flow to needs.

    It satisfies all the requirements necessary to mitigate TCJA’s tax change and permits the disabled party to concurrently receive federal and state assistance. The special needs trust’s assets exist for the sole support of the disabled client and any remaining assets flow to Medicaid for repayment of services they rendered the client. Medicaid’s ownership of residual assets of the SNT mandates that the only fiduciary goal should be guaranteeing the assets are available for the life of the client.

    Thus, only by reducing non-deductible fees which now act as a drag on asset appreciation, can the lifetime availability of the SNT be assured.

  • CEO Compass - Spring 2021

    by Ralph Albert Thomas, CPA (DC), CGMA | NJCPA CEO and Executive Director | Apr 21, 2021

    Pivoting From a Year of COVID-19: The Great Accelerator

    COVID-19 and its aftermath were certainly unprecedented. “The Pandemic’s Impact on NJCPA Members,” a feature article in the spring issue of New Jersey CPA Magazine, begins this way: “In a year like none other, some CPAs fared surprisingly well as they adapted to remote auditing, learning, hiring and everything in between. But for others, the pandemic took a toll that will not easily be forgotten and could take years to recover from.”

    While New Jersey and the country suffered great economic loss, recovery is in sight. Spring always reminds us of new awakenings. In recent weeks, the combination of accelerated vaccine deployment and additional fiscal stimulus boosted expectations that the 2021 economy will produce the strongest growth in decades. Even the Garden State budget is swimming in cash.

    While we continue to ponder when our most optimistic predictions will come to fruition, we must also come to grips with the unprecedented change that has occurred in the past 13 months and the realization that this “great acceleration” sped up the changes already underway.

    As the Washington Post wrote back in December, “Some writers are already imagining the long-term impact of the pandemic on our culture, politics and economy, and they suggest that we may end up in much the same places where we were headed all along — except now we’ll get there faster, with less control over the landing and less time to prepare for life upon arrival.

    To help our members deal with this accelerated change, we’ve transformed our keystone event into a virtual experience where New Jersey CPAs and accounting professionals can gather to exchange knowledge, resources, strategies, solutions and more.

    The NJCPA Virtual Convention, June 15-18, will help you anticipate change, build resiliency and deliver more value. There are 29 sessions, including:

    • How to Spark Transformation in Your Business
    • Using Scenario Planning to Improve Financial Decision Making
    • Lease Accounting After COVID-19
    • Resources for Business Recovery and Growth
    • The Economy and Markets Post COVID
    • Transformational Leadership, Decision Making and Diversity, Equity & Inclusion

    In closing, I want to thank you for being a member. Your support of our nearly 125-year-old organization does make a difference. Since last spring, our staff, leaders, volunteers and partners have been there to educate, inform, answer hard questions and unravel one complex issue after another. Your trust and support helped our organization not just survive but thrive.

    In fact, your membership is a guiding light that reminds us the value of our work, why we do what we do and who we do it for — you, our members.

  • Yogiisms and 8 Value Drivers CPAs Need to Know

    by Richard Austin, J.D., LL.M., CIMA®, CBEC, Integrated Partners | Mar 31, 2021

    Lawrence Peter Berra is famous for two things: his abundance of World Series titles as a member of the New York Yankees and his “Yogiisms.” Montclair, New Jersey’s favorite famously told us nobody goes there anymore. It’s too crowded” and when you come to the fork in the road, take it.” And he really mystified us when he said, “baseball is 90 percent mental and the other half physical.”

    Business owners, and the CPAs who serve them, feel the same much of the time. Owning a business often feels 90 percent mental, and only about half the time is it satisfying.

    Yogi was right. “The future ain’t what it used to be,” especially when “we make too many wrong mistakes” when it comes to selling a business and expecting satisfaction. Did you know only three out 100 business owners getting ready to sell were satisfied with the process?

    To make sure it’s not “déjà vu all over again,” business owners need a great coach to ensure better results. It all begins by having defendable equity value in your business, and that requires a high level of confidence in three areas:

    • Past and future revenues. Demonstrate the last five years of your financials and what’s ahead. You must show how the company will continue to grow and why you are confident in your forecasts.
    • A trading multiple you can demand (if applicable). You must know how an outside buyer will view your company from a risk standpoint. Have you eliminated any causes for concern so you can demand a higher value?
    • Ability to successfully realize equity value. There is no real value in your business if you are not able to monetize that equity through a transaction.

    To build confidence that a business has a defendable equity value, the business owner, along with their CPA, must address the key value drivers of growth and equity value, which include the following:

    1. Company overview/business profile. Can you tell a compelling story of your company’s past and future? And is it documented?
    2. Financial performance/audit. Are you able to show the quality of your earnings to a potential buyer?
    3. Legal considerations. Do you have contractually committed revenue in the years ahead? Are key employees locked in to stay? Have you eliminated any legal issues?
    4. Documented growth. Can you document you are driving growth faster than the competition?
    5. Market share. Are you able to show that you are the big dog in your niche?
    6. Customer diversification. Have you been able to diversify your customer base? Do you have strong customer retention?
    7. Barriers to entry. Do you have a defensible market where competition is blocked using financial, legal and other means?
    8. Good branding. Can you deliver proof that your brand helps drive sales and marketing success?

    Like a great coach once told me, “it ain’t over till it’s over.” It’s all about controlling what you can control so business owners can always get the most from their business — and CPAs can provide the best advice.

    Yogi is right, “you can observe a lot just by watching.”

  • 4 Key Players in Becoming a CPA

    by Kim Condurso, member development specialist, NJCPA | Mar 31, 2021

    When it comes to applying for the CPA Exam, it's easy to get confused with the number of organizations involved in the process. At the NJCPA, we field lots of calls. Remember, we’re not a regulatory board, and therefore, our insight is opinion-based only. But we can help answer general questions about the education or work experience requirements to become a CPA.

    So, who are some key players and what are their roles?

    • The National Association of the State Board of Accountancy (NASBA) governs the state boards of accountancy nationwide and determines whether a candidate meets the requirements to sit for the exam based on the requirements set by individual state boards. CPA Exam Services or CPAES, a division of NASBA, will evaluate a candidate's academic transcripts and issue the Notice to Schedule (NTS) once all requirements have been met. The first step in a candidate's journey to becoming a CPA should be to create an account at CPA Central, NASBA's exam portal. NASBA is also responsible for releasing CPA exam scores. Contact the NJ state coordinator at NASBA at 1-800-272-3926 or cpaes-nj@nasba.org for questions pertaining to:
      • Specific academic courses and whether or not they will count towards the 24-credit education requirement for business and accounting coursesAccreditation of a college or university
      • Notice to Schedule (NTS)
      • Changing your jurisdiction
      • Transferring passing exam scores from one state to another
      • The process for international candidates sitting for the exam
      International candidates should visit NASBA's International Evaluation Services for further instruction before submitting a first-time application.
    • Prometric operates test centers. Once NASBA issues the Notice to Schedule (NTS), a candidate will need to schedule the first section of the CPA Exam. Exams are taken in-person at various Prometric testing centers, but the exams can be scheduled online. Prometric will send exams to the AICPA for scoring.

      Contact Prometric for questions about:

      • Scheduling your exam
      • Locating a nearby testing center
      • Arranging testing accommodations
      • What you can/cannot bring to the testing center
    • The American Institute of Certified Public Accountants (AICPA) sets standards for the accounting profession as well as develops content found on the CPA Exam. While not directly involved in the evaluation of a candidate's first-time application, they will announce any changes affecting the content of the exam and are responsible for scoring the exams received by Prometric before results are released to NASBA. The AICPA publishes several helpful resources, including the CPA Exam Blueprints and mock exams, to help with exam preparation.
    • New Jersey State Board of Accountancy is a regulatory board responsible for granting licensure and ensuring that licensed CPAs are practicing according to the law. Once a candidate passes all four sections of the exam, NASBA's CPA Exam Services will forward a candidate's file with exam scores to the NJ State Board of Accountancy, who will issue a congratulatory letter along with an application and further instructions for becoming a licensed CPA in New Jersey.

      Contact the New Jersey State Board of Accountancy at 973-504-6380 if you have questions about:

      • The status of your application for licensure
      • The one-year work experience requirement

    Let us know if you need help with becoming a CPA. Find out more at NJCPA.

  • Do-It-Yourself Technology Solutions for CPAs

    by Susan Firriolo, CPA, CISA, Pet Rescue 990 Project | Mar 15, 2021

    CPAs are increasingly gathering on social media to solve problems and share experiences. They are using application programming interfaces (APIs) to link processes, robotic process automation (RPA) to automate repetitive tasks, cloud accounting software (CAS) to provide high quality client services and offshore teams to free themselves up for higher level consulting. Even non-technical CPAs have gotten into the mix and no longer have to rely solely on expensive developers to get digital solutions for their practice.

    When automating tasks, it’s best to identify the process, document it and pinpoint what is inefficient or repetitive. Then look for or build an application to perform the task. Here are a few platforms worth mentioning:

    • Clubhouse is a new kind of social media app that lets users host and join conversations. Currently, membership is by invitation and only offered on iPhones. Clubhouse is unique because it has real-time audio — no pictures, videos or text. When the app is opened, members are in something like a school hallway. There is a list of rooms and participants. Members can tap on a room to drop in on a conversation — but nothing is recorded after the conversation ends. CPAs may find Clubhouse useful for talking to other accountants working on the same things. CPAs can also use the app to start a room and share their expertise.
    • NoCode 3.0 is a guide to free and discounted resources to build apps. The website also has how-to articles and lessons on developing tools for performing analytics, designing mobile apps, automating work, manipulating data, creating surveys and much more. Like the name implies, NoCode users do not need to know how to code to use these resources. CPAs can browse non-technical tools to integrate into their practice.
    • UCalc is a platform where users can build calculators and forms. There are free and paid plans depending on the number of projects and advanced features needed. Users can start with a template or build their own calculator. CPAs can put a calculator on their website or social media or in messaging apps where they can provide a useful resource for their clients and prospects while tracking user engagement.
    • ElectroNeek is an RPA platform where users create robots (bots). The website offers free tools and paid subscriptions. CPAs can create a bot to perform repetitive, input-driven tasks that otherwise could not be completed profitably. They no longer have to deal with a whole suite of accounting software that is supposed to be integrated but nobody understands how it works. With RPA, CPAs can customize their own bots to work with legacy software, automate client services and improve internal processes.

    These are just some of the resources available to CPAs. Keep looking — there are hundreds that can be used without writing code. Don’t get left behind.

  • 3 Crypto Trends CPAs Should Know

    by Dr. Sean Stein Smith, CPA, City University of New York-Lehman | Mar 12, 2021

    Cryptocurrency continues to develop and evolve at an accelerating rate, and it can be difficult for even the most motivated practitioner or business professional to keep pace. No single article, no matter how comprehensive or well-written, is going to be able to encapsulate all the changes in this fast-moving sector. That said, there are a few big-picture trends and developments that every CPA should know. Clients, both now and in the future, are increasingly going to expect practitioners and advisors to be well informed on these issues, so let’s look at some of these trends:

    • Crypto has gone mainstream. Cryptocurrency and blockchain might still seem like an abstract or conceptual idea for many practitioners, but that is rapidly changing across the economy. Major institutions, notably Tesla, have invested billions in Bitcoin, but that is only part of the story. The announcements by major payment processors and credit card providers, such as Visa, Mastercard, Square and PayPal, mean that crypto payments and the utilization of crypto as a legitimate alternative to fiat option is a trend that every practitioner will have to stay on top of. Specifically, what will the audit, compliance, tax and reporting implications of this increase in crypto payments be?
    • New applications are here. There are many new applications that have been developed in the blockchain and crypto asset space just during the past year. Ideas and concepts like decentralized finance (DeFi) and non-fungible tokens (NFTs) were definitely not in the mainstream financial conversation before the last several months. With DeFi attempting to replicate banking services without banks, and NFTs seeking to monetize digital and physical assets via a blockchain connection, these concepts are certain to generate numerous accounting questions in 2021 and beyond. These are just two of the highest-profile applications of blockchain technology, and it will be critical for the profession to stay up to date on these fast-changing trends.
    • Regulation is catching up. Perhaps most refreshing is the progress that seems to be being made from a regulatory perspective, especially in the United States, which had been lagging behind some other jurisdictions in developing proactive and innovative approaches to help support this rapidly growing sector. Specifically, the updates from the Office of the Comptroller of the Currency (OCC), which enable federally chartered financial institutions to participate in the buying, selling and confirmation of certain crypto transactions; the potential appointment of an SEC chair well versed in crypto specifics; or the pronouncements by the Federal Reserve pertaining to significant interest in a crypto-dollar project, are emerging trends.

    Blockchain and crypto assets are, without a doubt, quickly becoming part of the mainstream financial conversation and are topics that all companies need to be well versed in as these trends continue. For more information and content on blockchain, crypto and other emerging technology trends, tune into the NJCPA TechTalk Podcast and join the NJCPA Emerging Technologies Interest Group.

  • How Blockchain and Cryptoasset Banking Developments Could Enhance the Cannabis Marketplace

    by Dr. Sean Stein Smith, CPA, leader of the NJCPA Emerging Technologies Interest Group, and Melissa Dardani, CPA, leader of the NJCPA Cannabis Interest Group | Feb 25, 2021

    This is the second in a three-part series on how the cannabis industry can potentially benefit from a blockchain and cryptoasset payment system.  

    In part one of this series, we discussed in detail the challenges associated with processing customer payments for cannabis businesses. In this second post, we delve into the weaknesses and risks of existing payment options and how blockchain and cryptocurrency can assist.

    Banking and Financing Challenges

    Even though Governor Murphy signed the adult-use cannabis reform bill into law on Feb. 22, which is welcome news for New Jersey, the federal illegality of cannabis still poses problems in sourcing banking and financing solutions. Absent the benefit of business banking, cannabis operations take on immense risk handling and safeguarding proceeds in a cash-based payment system. Yet many financial institutions are not willing to accept the risk of servicing these clients, and those that are willing charge fees commensurate with the additional risk and compliance burden. 

    Financing has presented similar challenges for cannabis companies in weighing the pros and cons of their options. Traditional business loans are generally unavailable due to banks’ concern with Federal Deposit Insurance Corporation (FDIC) insurability. Similarly, there are concerns that taking an interest in collateral for loans issued to cannabis businesses could be subject to forfeiture due to the federal illegality. There are providers that have emerged willing to service small business loans for cannabis companies, however these tend to be short-term financing options with higher-than-market interest rates.

    Tracking and Reporting Challenges

    Cannabis businesses must also deal with complexities related to business-to-business (B2B) transactions.

    • Supply chain concerns. A state’s regulations largely dictate what the supply chain will look like. Points in the chain include cultivation, extraction of active compounds from the plants, manufacturing other cannabis products, testing the product for adherence to various regulations, B2B and business-to-customer (B2C) transportation and finally, wholesale and retail sales. Operators’ roles in the space largely depend upon the type of licenses offered by their state and the type of license(s) they obtained. Licensees that own all levels of the supply chain are known as “vertically integrated” businesses.  
    • Tracking and reporting. For vertically integrated businesses, software can help create a “seed-to-sale” experience. Tracking and reporting requirements will vary by state. There are services on the market that are equipped to handle reporting, tracking and transacting through various points in the supply chain. However, businesses that are not vertically integrated may face challenges related to incompatible software. Consequently, they may incur more data input and processing time and risk errors in the process when transacting B2B.  
    • Payment terms and trade credit. Under traditional circumstances, the standard use of payment terms and trade credit aids in administrative functions and allows businesses to better manage their cash flow. These practices are generally not available to cannabis operations. While a few commercial solutions exist, we may see more service providers emerge to service the industry by providing outsourced B2B management.  

    How Blockchain and Cryptocurrency Can Assist

    Bitcoin is still largely at the center of attention and discussion when it comes to cryptocurrencies, but the sector has matured immensely in recent years. In order to understand crypto’s potential as a solution for cannabis companies, we should first discuss the categoric makeup of the industry:

    • Decentralized cryptocurrencies, including Bitcoin, are not issued or governed by any single entity or small group of organizations. They are commonly associated with price volatility and speculation, as well as significant tax, accounting and reporting uncertainty. 
    • Stablecoins were developed in response to the aforementioned price volatility commonly associated with Bitcoin. Stablecoins are cryptocurrencies, but with two major differences: Stablecoins are issued, governed and managed by either a single entity or small group of organizations; and they are connected, tethered or pegged to an underlying asset, with a large percentage of these stablecoins being connected to the U.S. dollar. Lower price volatility, which will enable more products and services to be offered, illustrates the business case for stablecoin-based products. Yet with complexity in implementation and uncertainty surrounding the role of various blockchain-based technologies in the future business landscape, it might be a while before we see crypto-based payment systems in the majority of organizations.

    Accounting for cryptocurrencies continues to be an ongoing issue for even the largest and most sophisticated organizations. Stablecoins, in theory, are to be used as a currency alternative, but under current U.S. regulation are still treated as property. In other words, whenever a stablecoin changes ownership, there is a taxable event. This complicates the accounting, recordkeeping and tax compliance processes, but also creates a bevy of opportunities for forward-thinking practitioners and organizations.

    Looking out at the regulatory landscape, there are distinct updates that might resolve some of these hurdles to wider adoption:

    • The Biden administration’s selection of Gary Gensler to head up the Securities and Exchange Commission (SEC) should be viewed as a positive step forward for blockchain and crypto regulation. This is not to say amenable legislation is guaranteed, but it is always preferable to have regulations proposed and enacted by individuals who are knowledgeable about the subject matter. 
    • The Office of the Comptroller of the Currency (OCC) issued two recent updates that should be of interest to both practitioners and cannabis entrepreneurs. The September 2020 update clarified that federally chartered banking institutions could hold on deposit, reserve dollars for privately issued stablecoins. This enables stablecoin issuers to fully access the services and support of the commercial banking system and clarifies what specific products and services those same banking institutions can offer stablecoin issuers. The January 2021 update is potentially even more significant. It says that, going forward, federally chartered banking institutions under the jurisdiction of the OCC will be able to join permissionless blockchains (referred to as independent node verification networks) and validate transactions.

    These updates are important since it means the banks will have full transparency and accountability with regard to stablecoin transactions on their books. In addition, those same institutions will also be able to buy, sell and process transactions that are taking place in the form of stablecoins backed by the U.S. dollar. Translating these updates into non-technical language means that federally chartered U.S. banking institutions can join blockchains and process transactions that are taking place via dollar-backed stablecoins. 


  • Four Tips on How CPAs Can Digitally Upskill

    by Amber Holmes, freelance writer | Feb 18, 2021

    The global health crisis has truly impacted all industries, with many companies closing down or transitioning to remote work. If there's anything that this pandemic has highlighted, it’s that all professionals, including CPAs, need digital upskilling to keep up with modern technology and the evolving workforce.

    With these skills, CPAs can better service their clients and organizations. Digital transformation has long been a goal of many industries — and the finance and accounting sector can benefit the most from adopting the latest tech trends. As most CPAs realize, traditional and manual processes can be easily automated with the right automation and machine learning software.

    Technology will eventually change the role of CPAs. While most accountants today are focused on adapting their expertise to serve e-commerce and supply chain technologies, CPAs also need to stay competitive and must learn how to leverage advanced technologies — from blockchain to artificial intelligence (AI).

    Amid the pandemic, CPAs also needed to familiarize themselves with remote working tools to boost their productivity and allow them to better connect with clients and colleagues. These apps might seem simple on the surface but being tech-savvy about their functions can give CPAs an edge and streamline their workflow.

    So, how can CPAs improve their technology skills? Here are four tips to get started:

    • Make use of updated training programs. Accounting firms can do their part to ensure their teams are up to date on the latest industry skills and trends by constantly updating their training programs.
    • Get hands-on with technology. It’s important to go beyond the knowledge-transfer model of typical accounting classes. CPAs should have opportunities to practice with the latest technology. Apart from acquiring new skills, CPAs should also have ample coaching.
    • Pursue an online master’s degree in accounting. For solo CPAs or those who'd rather learn on their own time and at their own pace, taking an online master’s degree in accounting is one of the best ways to digitally upskill. Many programs now have a very modern approach to accounting — touching on business strategies, data analytics and even communications. Online schools recognize that today's accounting landscape is continually changing, so you can expect that they'll provide you with industry-relevant accounting education that will prepare you for current and future challenges in the field.
    • Volunteer on technology-based projects. To further hone your tech skills, volunteering on technology-based projects will give you a chance to work with other industry experts.

    Moreover, having a master’s degree in accounting and improving your technology skills can help you land in-demand and high-paying roles as a director, partner, budget analyst, financial advisor or financial manager.


  • New Book Inspires Us All to Work Toward More Diversity

    by Ralph Albert Thomas, CPA (DC), CGMA, CEO and executive director, NJCPA | Feb 11, 2021
    When I Grow Up Book

    “Accountants are fun.” That’s how Dr. Adrian L. Mayse, CPA, chair and associate professor in the Department of Accounting at Howard University and fellow member of the National Association of Black Accountants (NABA), starts out his book, When I Grow Up I Want to Be … An Accountant.

    How true that sentiment is. After all, it’s a creative and colorful children’s book that encourages students — especially minority children — and their families to discover the world of accounting.

    As I leafed through the book’s vibrant illustrations, I imagined myself encircled by a group of first or second grade students, sharing with them the enthusiasm that I felt when I embarked on my CPA journey. When I Grow Up I Want to Be … An Accountant reveals to children that accountants work almost everywhere — sports, movies, the arts, even schools — and anyone can be an accountant, no matter your race or gender. “Accountants look like me. They look like you,” the book encourages. One page even includes space to place a photo so the reader can see themselves as an accountant.

    I applaud Dr. Mayse for addressing the challenges associated with attracting minorities into the CPA profession. Even though accounting has been consistently ranked as one of the leading majors for students, minority students are still not considering it a viable option, tending to opt for other majors or professions where they see more diversity.

    But there is some good news. Mentoring programs — an effort that I’m a big believer in — are tremendously successful in nurturing the next generation of accounting graduates. Seventy-eight percent of black accounting professionals said that their career had benefited from a fruitful mentoring relationship in their current work environment in a recent Howard University survey.

    Mayse ends the book by urging students to “Keep studying and learning.” A simple message that even we seasoned professionals should take to heart. The book also includes a foreword from Frank K. Ross, CPA, MBA, one of the founders and the first president of NABA and the current director for the Center for Accounting Education at Howard University.

  • 3 Ways Automation Can Increase the Efficiency of Tax Preparation

    by John Pennett, CPA, and Laura Macca, CPA, EisnerAmper LLP | Feb 09, 2021

    Beyond tax preparation, clients are seeking insights into the numbers and help with strategic planning, managing risk, controlling costs and driving business decisions. Future-ready CPAs, therefore, are investing in technology that will reduce the time spent on compliance so they can devote more time to analyzing the data and providing client insights such as industry trends, key performance indicators (KPIs) and analysis on strategic decisions.  

    In the past, common tools to help improve the efficiency of tax preparation often meant having a central document storage, moving from paper workpapers to electronic workpapers, importing general ledgers into the tax preparation software and utilizing electronic signature tools such as DocuSign. Today, technology such as robotic process automation (RPA) is being utilized to automate highly manual, repetitive, error-prone tasks.   

    Here are some practical ways RPA can be used to help:

    • Automate the income tax extension process and as well as files for common annual fee forms. Staff can populate control sheets and then a bot can take that information, log into the third-party tax preparation software, populate it to generate the form, qualify the form for e-filing and save it to a document storage depository.
    • Extract information from Schedule K-1s, summarize data points and further analyze and/or import directly to the tax software. This tool will be particularly helpful with the new rules in effect for 2020 for calculating partner capital accounts under the tax-basis method. Staff will be able to pull and summarize K-1 information for prior years in a matter of minutes.
    • Automate and streamline the tax assembly process. A bot can download a return, insert and extract pages, collate returns, send the return for a signature and eventually save it to the document storage tool as someone from the tax processing team previously would. This automation can significantly decrease the tax assembly time as well as increase the turnaround time to clients, especially during peak busy season.

    The investment in dollars and time needed to introduce new technology can be significant, but it will be essential in maintaining a profitable tax return preparation operation and enabling staff time to focus on providing the higher-value services that clients are seeking. So, jump in, the water is not so cold!


  • Strategies for Teaching During a Pandemic

    by Barry R. Palatnik, CPA, Stockton University | Feb 04, 2021

    The COVID-19 pandemic subjugated the world in just a few months. This novel coronavirus altered the lives of people around the world and brought on many challenges for students and professors alike. Faculty who conducted traditional in-person classes were forced to change to asynchronous learning using a learning management system (LMS) such as Canvas or Blackboard (BB) or synchronous learning using a video technology such as Zoom. Regardless of their choice, faculty had to learn to deliver course content in a totally different way.

    As COVID-19 started to spread rapidly across New Jersey, colleges started to close last March. Upon returning from spring break, I used Zoom to welcome back the students saying, we will get through this class together. Most importantly, I also prioritized their health over school by emphasizing patience and understanding of each other. I told the students to call, text or email if they had any questions.

    Here are some strategies that helped me during the early days of the pandemic and could assist CPAs and others who are teaching classes now:

    • Provide detailed chapter outlines.
    • Reintroduce all the support associated with the course material.
    • Use Zoom or other video conferencing software for office hours.
    • Create a discussion board on Blackboard where students can post questions.
    • Require students to read emails at least once a day.

    Lessons Learned

    Using Zoom was different then standing in a classroom. I could not see if students were engaged or if they were even viewing their monitors, so I created poll questions that were built into the Zoom program. To keep it interesting, I created a magic word, where students needed to listen and then upload the magic word. Both activities helped monitor student attendance and engagement.

    With virtual teaching, it’s important to make sure students are engaged and learning the course content. However, I am confident that one day we will return to the classroom.

  • How the Cannabis Industry Can Benefit from a Blockchain and Cryptoasset Payment System

    by Dr. Sean Stein Smith, CPA, chair, NJCPA Emerging Technologies Interest Group, and Melissa Dardani, CPA, leader of the NJCPA Cannabis Interest Group | Jan 19, 2021

    This is the first in a three-part series describing the impact of blockchain and cryptoasset payment systems on the cannabis industry.

    To date, 17 states and territories have legalized adult-use cannabis including New Jersey, whose residents voted in favor of legalization via a ballot initiative in the November 2020 election. Yet, due to the classification of cannabis as a Schedule 1 controlled substance under the Controlled Substances Act (CSA), a disparity exists between federal and state law which precludes cannabis companies from typical operations, including ease of banking and payment processing solutions. That said, any business or industry requires a fully functioning payment infrastructure to grow efficiently and successfully. Despite more political acceptance and a large growth potential for this market in New Jersey, cannabis organizations continue to be hamstrung by the slowly evolving payments landscape. 

    Challenges Exist

    Cash is a leading form of payment in the cannabis sector. Accepting cash is an option for these enterprises, but it presents a security issue, may limit customer sales and provides a logistical headache particularly when considering the banking limitations imposed on the industry. Cash may be convenient on a retail basis, but when it comes to business-to-business (B2B) transactions, the feasibility of a cash-basis environment quickly diminishes. Resorting to paper checks may be a solution, however these businesses must hurdle federal banks’ hesitation to service cannabis businesses. 

    Similarly, opening a credit card may not be possible for a cannabis business or its employees for day-to-day purchases. This simply exacerbates many of the existing issues with B2B payments and deprives cannabis organizations of the benefits associated with digital solutions. 

    The cannabis industry also faces an additional hurdle: the inability to accurately and consistently provide trade credit. Granting credit to suppliers and wholesalers is a common industry practice. An influx of U.S. medicinal market advocates emerged in the 1990s, culminating in the passage of the Compassionate Use Act of 1996 in California. Since then, 41 states and territories have enacted a legal medicinal market, most of which are highly regulated with extreme barriers to entry. Therefore, those with the benefit of early access to the market are at an immense advantage. 

    Payment Options and Risks

    There are several non-cash solutions that have entered the marketplace to serve the payment processing needs of cannabis businesses, but none of them are a perfect solution and each has its own risks. These include the following:

    • Debit card payments should be able to integrate with the company’s point of sale (POS) system to rule out the risk of error in the sale process. The organization will also need to source a bank willing to service their needs, although this challenge exists regardless of payment processing solutions.
    • ACH payments use third-party solutions to facilitate customer payments, which incurs fees on the organizational side. Similar to debit card payments, these solutions should be able to integrate with the POS to rule out risk of error in the sales process, which raises compliance and regulatory ambiguity. 
    • Cashless ATM payments involve the customer’s use of a third-party ATM-like machine to deposit funds directly to businesses’ bank accounts for cashless transactions. This can be integrated with the POS or operate outside the POS, but again risk of error in the sales process should be considered when selecting a service provider. As with any third-party solution, there are fees charged for the use of the services. 
    • Credit cards via third party is another option. While some businesses have assumed the risk of accepting credit as a form of payment, perhaps using a third-party to process the payments as a perceived workaround, this is a risk to the business. If found to be acting out of compliance, merchants may refuse revenues the business has earned but which have not yet been deposited, and they may refuse services in the future. State regulators may also probe into any non-compliance, which could risk the company’s license to operate.  

    Framed in this context, typical operational and accounting challenges are exacerbated for cannabis businesses. But hope is on the horizon. With companies like Microsoft and EY backing blockchain and cryptocurrency solutions for payment processing and B2B payments, we know they are not a mere conceptual idea or fringe item. The potential for blockchain and cryptoassets to form the basis of a payment system is a realistic solution for practitioners and entrepreneurs to consider. 

    Read part two in this series: How Blockchain and Cryptoasset Banking Developments Could Enhance the Cannabis Marketplace