The accounting profession has been plagued with staffing shortages caused by a multitude of retiring professionals, a gradual decline of new entries into the profession, the pandemic and other factors. Many firms are scrambling for qualified staff to fill vacancies and are turning to outsourcing and offshoring.

U.S. Outsourcing

Firms should be mindful of their respective state board rules, IRS rules and other standard-sending bodies’ rules regarding confidentiality if they outsource within the United States.

In most cases, a disclosure of the use of third parties providing tax and accounting services will be required. The following clause can be considered in the firm’s engagement letter:

We may, from time to time and depending on the circumstances, use certain third-party service providers and transmit information to them in serving your account. Such transmissions can include, but are not limited to, tax software providers for electronic filing, technical assistance, automated processing of tax forms, online backup services and file sharing services. We may share confidential information about you with these service providers, but we remain committed to maintaining the confidentiality and security of your information.

Offshoring

Off-shore outsourcing requires strict adherence to IRS Code Section 7216. Tax preparers bound by 7216 should become familiar with the civil penalties outlined in code section 6713(a) and the criminal penalties outlined in code section 7216(a). The disclosure must:

• Outline the purpose of the disclosure
• Indicate the duration of the disclosure
• Be signed
• Be a separate written document

Civil penalties from non-compliance are $250 per disclosure and cannot exceed $10,000 in any one year. Criminal penalties are one year of imprisonment and/or $1,000.

Disclosure Guidance

There is often confusion in the profession regarding when the disclosure is required, whether it has to be a standalone document and whether it can be inserted in the engagement letter. IRS  Revenue Procedure 2008-35 provides these answers and guidance with respect to other areas of concern.

Essentially, the 7216 disclosure is required for individual tax filings. The disclosure must be in a standalone document. While the disclosure can be attached to the firm’s engagement letter, it must be a standalone document. See the Section 7216 Information Center on the IRS website for additional guidance to ensure adherence to the rules governing off-shore tax preparation.

Talent is the foundation and lifeblood of an organization. It is the most essential component for current and future sustainable success and growth. Firms that are successful at attracting talent have figured out the “secret sauce” in their recruiting process. But how do you differentiate yourself during the recruiting process?

Candidate Experience

It begins and ends with the candidate experience. This is all-encompassing and offers the candidate visibility into what he/she should expect if they were to join. This should consist of timely communication and engagement throughout the process, along with the opportunity to meet multiple employees at different levels (both tenured and newer employees) who are willing to share their experiences and offer their insights into your culture and organizational structure. Additionally, a streamlined interview process that minimizes gaps between interviews, is accommodating and yields a timely decision-making process is also key. You have one opportunity to get the candidate experience right. A favorable first impression is often the difference between the candidate selecting your firm or your competitor.    

Understanding what candidates desire in a firm is equally important. Most candidates are motivated by several factors; how they prioritize them may differ. Candidates tend to concentrate on the following:

• Inclusive culture
• Compensation/benefits
• Clear path for ongoing career advancement
• Flexibility
• Work-life balance
• Sense of belonging
• Feeling valued
• Challenging work in a preferred discipline
• Working in a growing, yet stable organization

Organizations must understand what the candidate truly values in a job. The interview process presents an opportunity for both the candidate and the firm to perform due diligence on each other. It is a fact-finding mission that should be an open dialogue, not a Q&A.  Transparency by both parties significantly increases the likelihood of a successful hire.

Retention

The candidate decides to join your firm, so the hard work is done, right? No. The real challenge lies in retaining your talent. How do the best firms retain employees? They deliver on what they advertised and promised during the interview process and more. If they fail to deliver on their promises, employees WILL LEAVE as trust is broken and it fractures any loyalty to the organization.

Accounting firms with the lowest turnover demonstrate all or most of the following characteristics:

• They are focused on successful employee integration. Performing check-ins within the first few months of the employee starting will help to ensure the experience has been favorable.
• Leadership is invested in employees’ success and ongoing development (continued education/training and career mentorship).
• Leadership shares a consistent and clear communication strategy around the firm’s vision.
• Rewards and recognition are a key ingredient for retention.
• There is a correlation between compensation, promotion opportunities and value derived. No employee wants to feel that the firm is squeezing the last bead of sweat out of them to improve margins.
• They provide flexibility and a reasonable work-life balance, which lends itself to positive mental health. Employees value their life outside the office.
• They maintain the optimal number of resources to ensure they are not over-burdening employees.
• They hire the RIGHT talent (high integrity and empathetic people) who align with the firm’s culture; diversity, equity and inclusion (DEI) strategy; and overall core values. Employees notice the firm’s commitment to hiring talent.
• They offer a pleasant environment. Employees want to work with people they like, and it helps with retention.

Recruiting and retention are woven together in a tapestry, and the most successful firms excel at both.    

An NJCPA New Year’s Resolution

Happy New Year from the NJCPA!

This is the time of year that throngs of people — maybe even you — choose a list of resolutions for the next year. While adopting a resolution shows a wonderful sense of positive intent, a more practical alternative could be to simply set new goals for the future. Goals give you a direction to aspire to. And, with the baby steps you may be taking toward your goal, you can still feel like you’re on the right track, which will, in turn, keep you focused.

With that in mind, I invite you to include the NJCPA in one of your goals. In the next few months, find one way to get engaged with us:

• Attend a chapter or interest group meeting.
• Attend a free Membership+ webinar.
• Recommend NJCPA membership to colleagues who aren’t yet members through our Member-Get-a-Member program.
• Post or respond to a question on NJCPA Connect.
• Share your professional experiences and insights by writing for New Jersey CPA magazine, teaching your fellow professionals or speaking to students about the CPA profession.

Not sure where to begin? Start your engagement journey by filling out your Volunteer Interest Profile. Whether you choose to get involved to gain personal exposure, build your competencies, gain leadership experience or give back, you’ll find a meaningful way to participate in the NJCPA community.

As with any professional association, we’re only as strong as our membership.

Every voice counts, every recommendation moves the profession forward and every CPA benefits from our combined efforts. More than 12,000 accounting and finance professionals have chosen to join. These professionals understand our value as an association. They know they’re contributing to something greater than themselves and yet also receiving something in return.

This is where I need your help and support. When you’re in a gathering of your peers, just ask, “Are you a member of the NJCPA?” If someone isn’t a member yet, see if they would be willing to have a conversation with me or one of our team members. Share positive stories with them. Tell a young professional why you joined. Explain how membership has impacted you.

As always, thank you for your membership and continued support of the NJCPA. I look forward to seeing many of you at an upcoming meeting or event.

It is said that accounting firms have commoditized their services. Every firm can do “similar” compliance-type reports — tax returns and bank-required audits, reviews and compilations. But the difference, the unique competitive advantage, is YOU. You are selling yourself — and for you to be granted the ability to provide that commodity or service package to this new prospect depends entirely upon your ability to read and connect with them. And communication is the key to doing just that.

Do you know your style? There are many types of communication tools like Myers-Briggs, Strengths Finder, ELI or DISC, which stands for Dominant, Intuitive, Steady and Conscientious. DISC is one of the leading programs to teach us about our styles of communication and how to recognize the styles of others. When you can recognize how others interpret communication, you can monitor your own behaviors, flex your tones, deliver your words more appropriately and come to decision-making with a better understanding.

Here is an abridged version of how to use DISC with your clients:

• Dominant type.“I before why?” This type is all about how something suits the individual. Dominants are driven by ego. They talk and walk fast and look good doing it. They are big-idea and bottom-line driven. They need to hear answers fast and delivered with confidence. They do not appreciate small talk; they prefer to get down to business. They are loud and proud, to the point, and can be abrupt and direct. They are leader oriented and typically in the roles of CEO or operations. You would recognize this type by how their office looks; a dominant prefers an “ego wall” (filled with accolades, accomplishments and “selfies”). Their biggest fear is being taken advantage of. The best way to sell to this type is to let them explain what they want first. Next, ask them to talk about how they envision the solution. Finally, quickly provide them with what they ask for and congratulate them on the win.
• The Intuitive or team leader. “We before me.” This type wants to know how your solution can help the more significant “us.” They might take a while to stop talking before they are interested in what you are pushing. They generally enjoy getting to know you, and they like to talk about their team a lot. Often dubbed the “chatty Cathy” in the office, you will know them right away by their pictures of family and the way they show their love for people. Their biggest fear is not being heard or included.When you are ready to present to this type, be sure to become part of their team. Aim to be seen as collaborative, not unilateral. Provide them with details on how your solution makes the whole group more efficient. And don’t forget to get to know them first. The biggest sales tip when working with this type is to connect personally with them first. They rarely do business with someone they wouldn’t go to dinner with or bring home to their family.
• The Steady Ready Eddies. These quiet and intelligent types are hard to read. They are most afraid of the loss of security. They want to hear words like guarantee, warranty, timeline, assurance and commitment. They do not like change at all but will change with consistent, constant reliability. They are your true supporter on a team and are notably dependable. You can identify them prominently by their clothes — mainly the firm logo — and their repetitive, systematic approach to completing tasks. Accountants are saturated with steadies; it’s a great profession to align with. It’s important to share the details of your proposal step by step, and then give them time to review and think about your proposition. If they haven’t responded to you, don’t take it personally. They aren’t ignoring you; they are thinking.Give the steady time to ask questions and respond, so schedule a follow-up meeting before leaving the initial discussion. Once they agree to your services, you can bet you’ve got a client for life.
• The Conscientious. Just the facts, Jack! Unless you come with charts, references, guides, etc., you don’t stand a chance of winning this type over. They may not even give you a chance unless they’ve been referred to you by an old friend or a family member. This consummate introvert has difficulty balancing the heart and the brain; therefore, decision-making is tricky since they never want to be wrong. Often dubbed the perfectionist, they are slow to complete tasks, especially if it’s new, because they want to be sure it’s accurate. Fear of being wrong has this type gripped. This buyer, if engaged, already knows about you, your product and your company, so prepare for a quiet meeting of the minds. To be most effective with them, be respectful of their attention to detail and facts. Don’t share your emotions; stick to research and proof, and make sure you have back up. Signing a deal with this type may take several rounds, but if you can earn their trust, they will make you feel like the smartest salesperson alive.

In a perfect world, the you you’re selling is your authentic self. But to be great at selling your services, you have to be better than just yourself — you have to change your behavior and adjust to the needs of your prospect. Half the battle is being heard. 

For CPAs, restrictive covenants — in the form of non-competition and non-solicitation agreements — are part of life. Most firms, and most CPAs, understand that these restrictive covenants are enforceable to varying degrees. Currently, under New Jersey law, courts will enforce restrictive covenants as long as they are “reasonable” in duration, territory and scope.  Generally, the court will weigh the employer’s legitimate business interest against the hardship on the employee. In recent years, courts have generally trended toward not enforcing restrictive covenants, and in New Jersey, courts have utilized the “blue pencil rule” to narrow overly broad agreements to make them more reasonable. Thus, all CPAs and accounting firms should be aware of pending legislation that would statutorily limit the enforceability of non-competition and non-solicitation agreements. The pending legislation (A3715) would, among other things, make the following changes:

• Limitations as to the scope of non-competition agreements. The legislation would statutorily limit the temporal scope of a non-competition agreement to one year and would limit the geographic scope to the state of New Jersey. This is significant to employees and businesses that provide services in New Jersey and neighboring states.Under the proposed legislation, if the employee works in Bergen County and provides services to clients in New York, a non-compete could only preclude him or her from competing in New Jersey. Additionally, non-competition agreements would not be enforceable against any employee who has been employed by the firm for less than one year.
• Garden leave requirement. Under the proposed legislation, in order to enforce a non-competition agreement, the firm would be required to pay the employee 100 percent of his or her pay and benefits for the duration of the period of non-competition.
• Creation of statutory cause of action against employers. Agreements that violate the proposed legislation would be declared void and unenforceable. Courts would no longer have the ability to “blue pencil” an overly broad non-compete in order to make it reasonable and enforceable. Additionally, employees would have a newly created statutory right to sue an employer imposing a “prohibited agreement.” The employee would be entitled to up to $10,000 in liquidated damages, lost compensation, damages, reasonable attorney’s fees and costs.
• Non-solicitation. While the bulk of the proposed legislation is aimed at limiting non-competition agreements, it would also impact the enforceability of non-solicitation agreements. Specifically, non-solicitation agreements — agreements that restrict a former employee from soliciting business from the firm’s clients — would be unenforceable “if the employee does not initiate or solicit the customer or client.” This provision is extraordinarily vague and, if enacted, will likely lead to disputes as to whether former employees “initiated” the contact when they began providing service to their former employers’ clients.

If the legislation is enacted it will not apply retroactively to existing agreements, but firms should be cognizant of the impact that it could have on the standard restrictive covenants that are often executed at the outset of a CPA’s employment.

CPA Evolution encompasses a new model for licensure and the CPA Exam that will subsequently necessitate some significant changes to our accounting programs. As accounting educators, we’ve been considering CPA Evolution for some time. The CPA Exam is due for an overhaul, and we are enthusiastic about the changes, but many questions remain about how best to incorporate these new topics into our programs. Curriculum changes aren’t always easy to achieve. And while we recognize the importance of the new material, we also grapple with the challenge of where to include the new material in a curriculum that is already jam-packed. 

Accounting educators have been considering CPA Evolution for some time, but what about accounting students? Are they thinking about the new licensure model at all? Do they welcome the changes? Are they worried? To find the answers, I polled a few accounting majors at Rutgers Business School. Most of the students who responded to my inquiry were juniors and seniors — all of whom are likely to be affected by the new CPA Exam. 

Here’s what I found out:

• Students were aware of the new Exam but not focused on it yet — their familiarity with the new Exam was anywhere from “somewhat familiar” to “not so familiar.” They are likely waiting on more guidance from instructors or their chosen review course provider.
• Students had a positive opinion about CPA Evolution and agreed the changes were necessary. Students appreciated that the new Exam will be more modern and adapted to the ever-changing profession. They liked the inclusion of more data- and technology-related topics. They also liked that they could specialize and become more skilled in an area that interests them.
• At the same time, they also worried about the data and technology topics on the Exam. Despite students overwhelmingly listing technology as well as analytical and problem-solving skills as topics they welcomed, they were concerned their current accounting classes would not adequately prepare them for these new topics. This is a valid concern and perhaps a wakeup call for accounting educators. We also wonder what data and technology topics are most important since firms and companies vary in practice with what they use. In addition, some accounting faculty don’t feel comfortable teaching the data and technology subjects because their background is in accounting.
• The students were concerned about the requirement to choose a specialty in the new licensure model. While they did appreciate the opportunity to become more skilled in a specific area of interest, students worried about picking the wrong section. What if their chosen specialty eventually was not a good fit for them? Deciding upon an area of specialty is difficult when you’ve not yet had the chance to gain much work experience. Students also wondered if firms might favor one section over another — would they favor a job candidate over another due to their selected specialty? They also wondered about choosing between a section that might be considered easier versus choosing a section that has more practical application.
• Students showed concern about the availability of practice material for the new Exam. After all, who wants to be the first group to try out a new exam?

In general, students did seem very optimistic about the new licensure model as well as the accounting profession as a whole. They viewed accounting as a rewarding career with security and opportunities for growth.

The new CPA Exam will test candidates on knowledge required for a profession that has changed and will continue to evolve for years to come. A revised curriculum at the college level, based on the CPA Evolution initiative, will equip students with the skills expected by today’s accounting profession. While we aren’t 100-percent sure yet what that revised curriculum will look like, we know we are ready to meet the challenge — both accounting educators and students alike.

When discussing artificial intelligence (AI), many accountants have asked the fundamental question: Will AI replace me and threaten my practice or the firm I work for?

A variant of this question has existed since the beginning of the personal computer. For example, before AI, questions arose about whether computers would eliminate accountants.

Here’s the simple answer: AI will not eliminate you, but your role will change.

Think about the impact of Intuit and Microsoft Excel on accounting. Even then, some doomsayers predicted the end of accountants. But you’re still here. Moreover, after overcoming any initial skepticism and learning curve, many fearful accountants could be heard muttering, “How did we do this before we had the software?”

There are several changes that AI will bring about, but the most significant is the reduction of repetitive tasks. By automating many drudgery-filled duties like data entry, tax returns and banking, accountants will be able to become more strategic in their analysis. Becoming a strategic partner should increase your value to the CPA-client relationship.

An AI Primer

Think of AI as programs under the umbrella of computer science that can analyze a staggering amount of information at “lightning” speed using predesigned rules, algorithms and patterns. AI is “systems or machines that mimic human intelligence to perform tasks and can iteratively improve themselves based on the information they collect,” according to Oracle. Simply put, AI via computers or robots can replicate the work of humans.

AI and Accounting

The Bureau of Labor Statistics predicts 7-percent growth for accountants and auditors between 2020 to 2030. That suggests more work (and clients) for accountants.

By automating tasks, AI can drastically reduce the time needed to finish everyday tasks that we have mentioned. For example, if you (or an assistant) only spend one hour per day committed to mundane work, instead of the usual three to four hours, you have freed up time for other projects. 

The AI thrust is toward creative and strategic thinking. Less time spent doing or directing these tasks could create a window for an accountant to spend more critical (and billable) time on the tax code. AI could even help analyze summaries provided by the IRS or the American Institute of CPAs (AICPA) and the updates that your software will presumably incorporate.

There are two other significant AI benefits. First, it will probably allow you to accept more clients without automatically adding to human staff. This is a substantial financial incentive. Second, the possibility of billing for your time and robotic time is even more exciting. (Yes, I know an accountant who boasts about this.)

Accountants can also anticipate with a reasonable degree of certainty that AI could result in a positive unintended consequence: You might find yourself a little less stressed out during tax season.

A View to the Future

Some of my accountant clients ask me: “Anthony, what’s your take on AI?” Here’s my answer:

• Remain current. Every profession urges practitioners to remain current. However, when applied to AI, it’s more than a platitude. You must be ready for changes, and accountants must stay current with technologies, including cloud computing, blockchain technology, big data and the Intelligence of Things (IoT). The intelligence of things (not the Internet of things) refers to integrating interconnected machines and devices with the software used.
• Embrace learning. We’ve always paid a certain amount of lip service to being the perpetual student. Now, you might drown if you ignore this axiom. You don’t have to overwhelm yourself with emerging trends, but several reliable sources are necessary.
• Look for the opportunity. Ask yourself this fundamental question: Is there an area of my practice I can now service because of AI that I refrained from in the past?

Maintaining and Protecting Your IT System

Supporting your IT operation will become more critical than ever before. This is not a self-serving analysis. IT is the umbrella under which your entire business operates. You must ensure its smooth operation remains current with changes and constantly protect your business from bad actors who might invade your network. Time has always been money, but now that truism has even more validity as reliance on IT and IA continues to increase.

Let’s say that a New Jersey taxpayer is self-employed, with a net taxable income reported on Schedule C of Form 1040 of $225,000. This person was referred to you because you are a CPA who provides value-added tax planning opportunities, and the current accountant only provides compliance work. Eager to impress and provide tax savings, you suggest that the taxpayer makes a New Jersey Business Alternative Income Tax (BAIT) election.

This seems like a no brainer at first, because the BAIT was put in place by New Jersey to help those taxpayers impacted by the federal $10,000 state and local tax (SALT) deduction limitation. However, before adopting BAIT, an analysis should be provided so the taxpayer can make an informed decision.

By the Numbers

In this example, by reviewing the 2021 tax return, the federal tax rate was 27 percent and the income is expected to be same as last year — or “SALY” for the accounting nerds. Their $225,000 income multiplied by the New Jersey tax rate of 5.68 percent and by the federal tax rate of 27 percent provides a tax savings of $3,450.

The taxpayer is happy, but is that really the savings to the client?

As a CPA, include the following additional costs for year one of this tax strategy:

• Applying for a federal Employer Identification Number (EIN) and forming a taxpayer and spouse LLC in New Jersey: $750
• NJ LLC initial filing fee: $125
• Fee for making the BAIT election: $250
• Preparation fee for the LLC and BAIT tax returns: $1,000

If the taxpayers chose to engage an attorney to draft an operating agreement, this would represent an additional fee. In this case, since the members are married, they decided to pass on an agreement.

This leads to estimated tax savings after additional costs in year one of $1,325.

In year two and going forward, estimated tax savings would be $2,450.

Presenting this sort of breakdown to a client provides a more accurate description of the potential net savings when considering the BAIT election. Based on the facts and circumstances, it could make sense to elect S corporation status and then include the fee for adding the taxpayer to payroll. This includes the filing of federal and state quarterly payroll reports, year-end reports and obtaining workers’ compensation insurance, all of which needs to be factored into the net savings to the taxpayer. If the decision to elect S corporation status is made after the due date (75 days from the beginning of the year), there is relief available at both the federal and New Jersey levels. Then, subtract $100 from the savings analysis for the retroactive, late New Jersey S-election.

Taxpayers who already have an existing partnership or S corporation do not need this analysis since most of these costs either do not apply to them or have been already accounted for.

BAIT Rules Recap

A single-member LLC and a sole proprietorship may not elect to pay the BAIT, as only a pass-through entity, such as an S corporation or a multi-member partnership, are permitted to do so.

As a workaround to the $10,000 SALT deduction cap for individuals that included in the Tax Cuts and Jobs Act (TCJA), many states, including New Jersey, enacted pass-through entity (PTE) taxes as an elective tax. The IRS issued Notice 2020-75, which clarified that partnerships and S corporations may deduct their SALT payments at the federal entity level when computing taxable income or loss.

There are some other considerations to keep in mind: 

• New Jersey requires the BAIT election to be made annually. If the election is made, but later determined that the election should be revoked, file the revocation and claim for refund form, and the entity will receive any estimated tax payments made.
• Quarterly estimated tax payments are needed. Otherwise, underpayment penalties can be assessed.
• BAIT payments reduce the Sec. 199A qualified business income deduction as well as the amount that can be contributed to a SEP-IRA and other retirement plan options. Consider a solo 401(k) over the SEP-IRA since New Jersey permits a deduction for the 401(k) but not the SEP-IRA.

Ultimately, the tax savings are the most important factor when deciding whether electing BAIT makes sense, but they are not the only factor, as there are other costs. The higher the taxable income, the easier this decision becomes. What is the income amount needed? As with determining the reasonable compensation for an S corporation owner, it depends. The CPA plays a vital role in answering those questions.

Finding your voice is essential for professional success. Whether in a meeting or giving a presentation, you will earn the respect of your organization’s leadership and your peers if you can clearly articulate your points. To find your voice, try listening to others with strong voices and see how they communicate. You may notice that they have similar communication styles and techniques. Here are some tips to find your voice:  

• Develop a strong tone. When delivering a presentation, a clear voice is essential to communicate your message. The tone of your voice reflects your attitude, so it's vital to learn how to control it to sound confident. Practicing this skill is key and can help you overcome common communication barriers. When you’re nervous or excited, the vocal cords tend to shorten and tighten, making it challenging to produce an engaging, energetic and interesting speech.
• Use volume to emphasize points. Using volume to emphasize the most important parts of your speech is necessary to ensure your audience can hear you. Avoid a monotone voice and try to vary the volume of your words. Speaking at a constant volume is tedious and can put your audience to sleep.
• Avoid pitching your voice "up" at the end of sentences. Doing so makes your sentences sound as if you are asking a question. This can be distracting and disorienting. It makes you appear uncertain and like you seek approval, which undermines your credibility. Instead, it is best to keep your pitch even and your sentences interesting.
• Avoid shouting. Raising your voice is rude and may backfire. You should instead speak clearly and distinctly. Try to face and look directly at the person you are talking to. Another good tip is to use appropriate gestures to make your point.
• Be aware of body language. Confident people often have a relaxed and expansive physical presence. This is especially important when presenting or giving a speech because it helps people respect you and pay attention to what you are saying. Developing good body language is a great way to boost your self-esteem. Remember, your posture is important when you want to project authority. Letting your shoulders slump or slouch will give the impression of fatigue or low self-esteem.
• Avoid Using Filler Words. People use filler words (“um,” “like” or “you know”) when they are nervous. Try to avoid saying these words. Instead, take a silent pause to collect your thoughts. Filler words are distractive and diminish your credibility.

One of the most impressive people I have worked with mastered communications skills early in her career. She could captivate the room and clearly articulate her point of view. Although she was in her early 20s and had no experience, leadership listened to what she had to say because she was confident. She did her homework, knew what she was talking about and believed what she was saying. Even though she had just graduated from college at the time, the managing partner gave her opportunities that the others in her cohort could only dream about. Many of you know this woman. She is Sarah Krom, CPA, MST, managing partner at SKC & Co. CPAs, L.L.C., and a past NJCPA president. Sarah is a shining example of someone who found her voice which helped her achieve much professional success.

The Federal Reserve has increased the federal funds rate at a rapid pace this year to contain inflation, but banks have not responded with higher interest rates on certificates of deposit (CDs) or money market accounts. Clients may be asking their CPA to explain the disconnect and, more importantly, where they can earn better returns on cash holdings.

As of this writing, CDs maturing in one month pay as little as .01 percent to .05 percent. According to my research, the highest money market account pays .60 percent, but nothing comes close to the current federal funds rate of 3.75 percent. Why aren’t bank deposit rates higher?

The reason is supply and demand. Banks are flush with cash now and are unlikely to increase their deposit rates significantly until they need cash. Banks are holding large cash balances because of the pandemic-induced recession two years ago. Home-bound consumers reduced purchases and many received stimulus checks that they deposited into their bank account. Many small businesses closed, reducing demand for business loans, and the Federal Reserve added money to the banking system to restore growth in the economy. The economy has recovered, but banks are still holding large sums of cash.

Alternatives

Do your clients have alternatives to near-zero interest rates on bank CDs and money market accounts? Fortunately, the answer is YES! Attractive rates from ultra-safe investments are available. But first, there are a few important considerations to make when choosing where to invest short-term funds. These include:

• Safety. When I was a fixed income portfolio manager for a large software services company many years ago, my treasurer was fond of saying, “Return OF investment is far more important than return ON investment!” He meant don’t let high interest rates fool you into making risky investments. If the issuer can’t repay the principal, you lose money regardless of the promised interest rate. The question becomes, how do you determine if an investment is safe? CPAs should remind clients to thoroughly research investment opportunities. Start with the free bond ratings available from Moody’s, Standard & Poor’s and other bond rating agencies. The top long-term ratings are Aaa for Moody’s and AAA for Standard & Poor’s, and the best short-term ratings are P-1 and A-1, respectively. The full range of ratings with explanations is available on each of these websites.
• Liquidity. A study conducted in March 2022 by the Association for Financial Professionals found that treasurers managing corporate cash investments consider liquidity as the second most important factor behind safety when making short-term cash investment decisions. Finance managers need access to cash if revenues unexpectedly fall short. For this reason, short-term CDs, money market funds and Treasury Bills are popular among money managers because they provide access to cash in maturities ranging from one day to 12 months.
• Yield. Where can your clients find all three features — safety, liquidity and yield? Typically, debt securities of the U.S. government pay lower interest rates than commercial banks and corporate debt because they are considered “risk free.” However, in today’s environment, Treasury Bills (U.S. federal short-term debt with maturities up to 52 weeks) pay significantly more than most commercial bank deposits. Recent Treasury Bill rates start at 3.6 percent for four-week maturities and increase to 4.5 percent for 52-week maturities. Purchases are simple. Individuals and companies can buy Treasury issues on TreasuryDirect.gov without a broker. The principal is withdrawn directly from the client’s bank account on settlement date and returned with interest on the maturity date.

CPAs can make their clients aware that today’s economic conditions have created an unusual opportunity to earn attractive yields from ultra-low risk, short-term U.S. Treasury Bills that pay higher rates than many alternative higher risk investments.

Reverse mentoring, where a junior employee mentors a senior employee, is a strategic method that helps employees feel more engaged with their organization and its values. It is a powerful tool for bridging the generational gap and building solid professional bonds within an organization. It can also help break down stereotypes in the workplace and increase diversity, equity and inclusion within the firm. For example, it can help educate senior leaders about racial, gender and discrimination issues, which can improve the upward mobility of women and minorities in the workplace.

Challenges and Opportunities

In theory, reverse mentoring is an excellent way for an executive to gain knowledge and skills from someone less experienced. However, there are challenges that both the mentor and mentee must overcome to make the arrangement successful. The first challenge is that the participants must share a high level of respect for one another. Another challenge is that the more-senior employees must be willing to accept feedback from their junior counterpart.

Reverse mentoring programs can also fail if the senior executive does not prioritize the relationship. Ideally, a junior staff person should lead the program, select new cohorts and train the new mentors. This training will prepare mentors for successful experiences and help them share challenges.

Reverse mentoring is an excellent alternative to conventional mentoring. However, it can be a lengthy process, may require some effort to implement, and might not be suitable for everyone. For instance, a newer team member may not feel confident sharing their opinions with an experienced colleague. Also, more-established colleagues might not want to spend time participating in such a way with newcomers.

In addition to the apparent benefit of guiding a new employee, reverse mentoring provides both the mentor and mentee with an opportunity to share their expertise. For example, experienced professionals can discuss what they have learned from being in the trenches. At the same time, novice team members can share new approaches to addressing situations with artificial intelligence and other innovative technology.    

Another benefit of reverse mentoring is that it builds stronger relationships within the workplace. It is impossible to fully understand employees' perspectives and experiences without listening to them. Reverse mentoring helps more-seasoned employees refine their leadership skills by learning from newer employees.

Empowering Employees

Reverse mentoring is a great way to develop future leaders within a firm. By pairing more senior employees with junior ones, firms can accelerate learning and boost engagement. For example, Turning the Gender Diversity Dial, a 2017 research study by Moving Ahead in collaboration with and sponsored by Deloitte, found that 87 percent of mentors and mentees said their relationship had increased their confidence and empowered them. Furthermore, 82 percent of participants believed mentoring relationships help foster meaningful connections between mentors and mentees across departments and the organization, and 84 percent reported that mentoring relationships provide two-way inspiration for mentors and mentees. The concept also has the added benefit of giving senior leaders new perspectives on emerging trends. 

A reverse mentoring program allows companies to transfer knowledge and technical skills to junior employees and familiarize their senior employees with a different mindset. Those earlier in their career can to more likely to be receptive to a new idea or offer suggestions to make processes more efficient. This type of mentoring is helpful in learning about the latest tools and applications.

Reverse mentoring can foster lifelong learning. In today's fast-paced world, employees of all levels must keep their skills and knowledge up to date.

Disclaimer: This article is for informational purposes only and doesn’t constitute professional advice.

For CPAs who face the ordeal of losing against time, here is something for you — a quick list of effective time management tactics. Remember, if you fail to govern the clock, you’ll get governed by it - Golda Meir, former Prime Minister of Israel

Has it ever happened to you? You’re making your way through a big project for what seems like minutes, only to realize that it’s already been five hours? Or you’ve been running around all day, shuffling through responsibilities, only to realize that you’ve barely made it through your to-do list? Both are a result of poor time management.

CPAs have numerous duties: updating accounts, analyzing financial reports, managing debts and more. With all of these responsibilities, losing against time is only natural. But there are ways to tackle the issue:

• Track your time. If you bill clients by the hour, time tracking will help you keep a verifiable record of the time you work on their accounts. Even if you’re not billing them by the hour, tracking your time will help you identify your problem areas and create a plan to eliminate or reduce any shortcomings.
• Plan your schedule around your peak hours. Another benefit of tracking your time is that it helps you identify your peak performance hours. There likely are certain times when you’re more productive than others. I had a friend, a CPA (he was also my client) who, in the morning, couldn’t make heads or tails of his duties, but as the afternoon came, he was at his analytic and problem-solving best. You probably also have specific productive hours, and whatever they may be, try to plan your schedule around those times.
• Focus on one task at a time. According to a 2015 joint multi-tasking paper with authors from the Utrecht University, University College London and Lingnan University, IQ scores drop when people try to focus on more than one thing during cognitive tasks. Some of the participants who multitasked had a 15-point drop in IQ, leaving them with the average IQ of an 8-year-old. Imagine an 8-year-old filing taxes — horrifying, isn’t it? So, to avoid losing your IQ, do the critical, complex, urgent and highest-value action items first, and save the easier ones for later.
• Group your minor tasks and save them for later. Sending and replying to emails, filing documents and making phone calls are essential to achieve more significant tasks. However, you’ll fail to achieve the end goal if you spend most of your time and brainpower on minor tasks. So, to avoid getting sidetracked, you can group these tasks and save them for the time when you don’t feel particularly productive.
• Get organized. It may have happened to you a couple of times: you think you had a specific engagement letter saved on your computer, but you forgot in which folder, or you thought you had a client’s contact information but don’t know where it is now. Such circumstances can cause you to lose a significant portion of your time at work. You can start small — take some time at the end of each day to ensure everything is in place — and gradually build up your organizing skills.
• Delegate tasks. Don’t try to do everything. If you’re in a senior position, only handle tasks that demand your skills and expertise. Assign the rest. If you’re a one-person accounting office, you can hire a virtual assistant or a temp to help you during the busy tax season.
• Take a few breaks. You might get the urge to power through your responsibilities in a single sitting. But, experts opine that taking breaks between work has several benefits like improved memory, a boost in energy, less stress and increased productivity.

Time management is one of the fundamental skills that every professional needs to master. Those who do enjoy a significant advantage over others.

Over the past few years, many stakeholders have been asking questions to companies on how they are addressing environmental, social and governance (ESG) risks and, more specifically, climate-related risks. This has led to increased demand from investors for disclosure transparency. For example, some stakeholders would say that being able to understand how a beverage company is managing the risk of efficiently having access to the increased amount of water needed to support potential growth should be addressed just as financial metrics are. However, the demand for transparent disclosures should not be viewed as a negative or just a form of compliance but as an opportunity for companies to take credit for their innovative and disruptive efforts. 

SEC’s Proposal on Climate Impact

The word “sustainability” is frequently used interchangeably with ESG. We've seen the terminology evolve over many years — corporate citizenship, corporate responsibility, philanthropy and sustainability, to name a few. At this point, many in the capital markets have organized around the term ESG to understand and evaluate business impacts and dependencies on the environment and society.

Although ESG relates to a broad range of environmental, social and governance risks, the driving interest right now is on the E, more specifically climate-related impacts. Fitting under the umbrella of ESG, climate addresses how companies manage both their physical risk, such as a higher rate of extreme storms and intensified weather conditions, as well as their transition risk, such as policies and regulations related to greenhouse gas emissions.

With the increasing attention by many stakeholders and, most notably, investors, regulators such as the U.S. Securities and Exchange Commission (SEC) have begun focusing on climate-related disclosures. On March 21, 2022, the SEC issued a proposed rule that would standardize climate-related disclosures provided by public companies and serve as a driver for organizations to enhance their sustainability practices. The proposed climate rule would use a phase-in approach that would require public companies to include “inside the financial statements” disclosures related to their material climate-related financial impacts, as well as an “outside the financial statements” disclosure where companies would disclose their greenhouse gas emissions, climate governance, climate risks and the progress toward their goals. Although the current proposal only impacts public companies, private companies may also need to understand the ESG needs of their major customers and investors.

Where Can Accountants Start?

Because of how new and rapidly changing the ESG regulatory environment is, it has left most companies and accountants to ask themselves, “where can I start?” Through my experience researching the ESG landscape, knowing where to start can be overwhelming. Here are five questions I believe can help you figure that out:

1. Does the company have appropriate oversight responsibility for climate-related or other ESG risks and opportunities?
2. Does the company know their stakeholders and the material issues they are interested in?
3. What is the company doing to operationalize their ESG strategy and to achieve any climate-related goals?
4. Does the company have a framework of processes and controls to support complete, accurate and timely measurement of ESG-related data?
5. Does the company have the appropriate transparent disclosures around the material ESG topics?

Considering these factors can provide a starting point to understand how mature a company is on their ESG reporting journey and where you may want to focus. 

How ESG Reporting Can Add Value to a Company

By knowing your company’s stakeholders, understanding material issues and developing processes to track progress, climate-related datapoints can be leveraged to identify cost-effective ways to improve performance. The process of compiling and assessing ESG-related data, specifically related to climate impacts, can help companies discover risks that may not be captured by conventional financial analysis. It can also help companies discover avoidable costs. This process can provide the opportunity for leaders to drive risk mitigation, enhance resilience, foster innovation, increase employee engagement and, perhaps more importantly, become more operationally efficient. 

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

As used in this document, “Deloitte” means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Reflecting on a Life-Changing Role

I’ve had the privilege of being CEO of the New Jersey Society of CPAs for 22-plus rewarding years. Today, I announce with both sadness and anticipation that I intend to retire from my position effective June 30, 2023.   

Reflecting on my more than two decades as your CEO, I realize what a transformative time it has been for the profession. We have faced a myriad of challenges together, but, throughout it all, members and staff adapted, overcame obstacles and reinvented the organization into a vibrant community able to adjust to whatever new normal was thrown at us. 

Of course, there were plenty of moments worth celebrating. I will always be proud of the students we’ve helped through our scholarship programs (now totaling more than 2,000 since the Scholarship Fund was first created), the members who have come to us for valuable training, the tremendous advocacy work we’ve done and the awareness programs to promote this wonderful profession. 

And there’s plenty more to come. Later this month, members will be asked to participate in a bylaws vote affecting NJCPA membership categories. The proposed changes update terminology and simplify and consolidate categories, making it as easy as possible for graduates and new professionals to remain NJCPA members and start taking advantage of the benefits of membership. The bylaws vote will take place Oct. 18 through Nov. 1; watch your email for voting instructions.  

I’m also looking forward to celebrating the Society’s 125th anniversary in 2023. We’ll be commemorating the NJCPA’s history, accomplishments and the members who shaped our past — and we’ll be looking toward a future where we’ll innovate and grow, help the profession flourish and foster the next generation of aspiring CPAs. 

Our community is stronger together. We learn from each other’s experiences, build lasting relationships and open up opportunities.  

Member referrals are an important way to grow the Society, which is why we’ve launched our Member-Get-a-Member program. Recommending NJCPA membership to colleagues who are not yet members is an opportunity that will help them thrive in their careers and businesses. And it may help you, too. Many CPAs and colleagues I’ve met in the profession have come to be lifelong friends.  

I am so grateful for our members’ unwavering pride in the profession and commitment to this great organization. Thank you for 22-plus years of fun, camaraderie and life-changing moments. 

If a client is going from renting to owning a home or vacation property, I’ve got news for them — all those things their landlord used to take care of are their problems now. As their trusted advisor, CPAs need to remind clients that buying a home, after all, is most likely one of the largest financial transactions in their life. For this reason, they need to understand the tax implications as well as the home-related tax deductions that come with owning a home or vacation property. And they also need to understand how everyday decisions can impact their budget and financial situation.   

Here are 10 homeownership dos and don’ts that CPAs should remind clients of (though this list could be much longer, we’re going to limit it to the top 10):

1. Get to know the neighbors. The best thing your client can do both in the short- and long-term is to get to know their neighbors. They will become priceless sources of local information, helping them find the necessary services and products in their new neighborhood. They may even know things about their home from the previous owner that could save them time and money.
2. Don’t spend too much to immediate improvements. It’s incredibly tempting when buying a new home to invest in improvements right away and really make the home one’s own. Clients should resist this temptation. They’ve just spent a large portion of their life savings to buy the home and move in, so money is probably pretty tight right now. On top of that, they’re still getting used to all the monthly expenses that come from owning a home.
3. Get all the necessary insurance.  Lenders require homeowners insurance in order to finance the loan, but that’s not the only type of insurance they should get. If you’re sharing the home with someone who depends on their income to pay for the mortgage, like a spouse or family members, they should get life insurance. That way the mortgage will be covered should something happen. For the same reason, disability-income insurance is a smart investment.
4. Learn about important maintenance. We’ve already said it a couple of times, but they’re in charge of taking care of their property now, not their landlord. And while we’ve already warned them about spending too much to improve their home, there’s one area that should never be skimped on — maintenance. They will need to know about appliances and mechanicals, especially their HVAC system and hot water heater.
5. Find a reliable home improvement specialist. Homeowners need to find contractors and handymen to help them take care of their investment. A reliable handyman is worth their weight in gold. This is where getting to know the neighbors comes in. Ask them for recommendations. And don’t try to repair something that’s above one’s skill level.
6. Organize all warranties and manuals. Go find that folder with information about troubleshooting and repairs for appliances that came with the house, as well as warranty information. If something goes wrong with these big-ticket items, these documents are the first place to look. It’s also a great idea to scan digital versions of these documents.
7. Change the locks.  No one knows who has a copy of a new home key when homeowners first move in — and no one wants to find out the hard way. Call a locksmith and have them change the locks.
8. Replace the air filters. A new HVAC system requires a little bit of yearly maintenance, and when someone moves in is a great time to get started. Find out what kind of filter an HVAC needs and where it should go. Make the trip to the local hardware store or home center and purchase a few years’ worth of filters. Once the filters are inserted, set a reminder to replace them again in six months.
9. Keep your receipts. Once homeowners have settled in and gotten used to the monthly budget, they’ll likely to decide at some point to invest in some upgrades. As improvements are made, hold onto the receipts. Later on when a home is sold, the owners may be subject to taxes on a portion of their profits. But if homeowners save the receipts from the improvements, they may be able to reduce the amount they’ll have to pay in taxes on the sale. They can work with their CPA to find out if they’re eligible for savings.
10. Find a good tax professional. Remind clients that owning a home has many benefits when tax time rolls around, but it’s likely they’ll need an expert (you!) to help take advantage of all of them.

CPAs can provide the necessary guidance related to homeowners’ monthly budgets. Having all the information at hand related to expenses, interest deductions, available tax credits and overall financial outlay will help first-time buyers be better prepared.

It is inevitable that businesses will experience some sort of employee theft or fraud. Employee fraud is very costly, and according to the Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2022 report, businesses lose an estimated 5 percent of revenue due to employee-related fraud. The most common type of fraud is asset misappropriation, which was a staggering 86 percent of fraud cases. The report also found that 42 percent of those who committed fraud were living beyond their means, and 26 percent were having financial difficulties.

The fraud triangle is an important concept to understand. Fraud generally happens when these three things are present: pressure, opportunity and rationalization. Situations where employees are living beyond their means create pressure, inadequate internal control creates opportunity and employees believing they are owed compensation creates rationalization.

Here are five common types of employee schemes and what accountants can initiate or tell their clients to be aware of to uncover the fraud:

• Expense reimbursement. Some of the most common types of fraudulent expenses are reimbursement for fuel purchases, airfares and meals and entertainment.
  • Review the date and time of the expense on the receipt. Was the expense made on a holiday, late at night or on a weekend that does not correlate with the employee’s duties? Look at the location of the purchase and confirm whether the location correlates with a company activity.
• Payroll. There are typically two ways that an employee can perpetuate payroll fraud:
  • Setting up ghost employees. These employees do not exist but are paid like regular employees with their payroll being diverted to the perpetrator’s account.
    • To detect a ghost employee, look for duplicate mailing addresses or bank accounts. Review W4 forms and benefit election forms. The absence of withholding elections or benefit elections is an indication a ghost employee may exist.
  • Falsified wages, increased salary or excessive overtime.
    • Compare employee overtime and look for outliers. Are there any employees who are working many more overtime hours than their peers? Review employees’ pay rates versus their peers: Are there any outliers?
• Billing. There are typically two methods of perpetrating billing fraud:
  • The fraudster creates a purchase order and payment is diverted for personal use.
    • Examine the quality of the invoice, the invoice numbers and pricing. Many times, fraudulent invoices are created using online templates. Invoices may be unnumbered or invoice numbers will be sequential, similar or close together.
  • The fraudster creates a false vendor account and pays fraudulent invoices from this fictitious vendor. This type of fraud is more difficult to detect since to commit this type of fraud, the fraudster has a higher level of authority.
    • Test a few new vendors each year and scrutinize those at a higher level. Review the addresses of the vendors and compare that to the file of employee addresses; look for duplicate mailing addresses or bank accounts. 
• Skimming sales. Skimming of sales typically occurs at point-of-sale businesses where an employee checks out a customer and pockets the cash received.
  • Test the register logs for a high volume of no-sale or voided transactions and compare the time they are occurring to the employee shifts for evidence they are happening more often by one or a few employees. 
• Receivables skimming. Accounts receivables skimming is typically conducted by an employee who has access to the payments received and the recording function. In this scheme, the fraudster will steal the payment received and attempt to conceal this by either lapping or journal entry. Lapping will cover up the theft of customer A’s payment by using customer B’s payment, then customer C covers customer B, and so on.
  • Match the payments received with the customer the payment is credited to and the date the payment is posted. Match the customer check with the customer on the invoice. A discrepancy between the invoiced customer and the paying customer, or significant discrepancies between deposit date and posting date, could indicate a lapping concealment of a receivable fraud.

No auditing procedure can guarantee success in uncovering fraud but having preventative measures in place can provide the right environment for detecting these common forms of employee fraud.

In today’s challenging economic environment, independent auditors — from sole practitioners to the largest international CPA firms — are under a microscope to ensure they are achieving high-quality auditing of financial reporting. CPA firms have recently been in the crossfire of negative results reported by standard-setters and regulatory agencies.

One way to steer your ship clear of these treacherous waters is to increase audit quality across your assurance practice. When independent auditors, regulators and investors refer to the term “audit quality,” most tend to focus on the credibility of the audited financial statements. In other words, did the auditor deliver an appropriate professional opinion that was supported by sufficient evidence and objective judgments? In order to answer that question, we must first identify the key ingredients that drive audit quality:

• Leadership and culture of a firm
• The skills and personal traits of audit partners and professional staff
• The effectiveness of a firm’s audit process, methodologies, policies and tools
• The reliability and usefulness of audit reporting
• The business and regulatory environment in which the CPA firm and their clients operate
• Compliance with applicable independence and ethics requirements from the American Institute of CPAs (AICPA), regulators, standard-setters and state boards of accountancy
• Market placement and specialization
• Engagement performance, professional skepticism and judgement
• Quality control and consultation
• The delivery of consistent results

So how can you ensure your assurance practice does not get sued by an audit client, fail an AICPA peer review or face a regulatory enforcement action? Follow these 10 recommendations for boosting the quality of your audit practice:

1. Strengthen the “tone at the top.” Firm leadership should:
   • Ensure that all staff have sufficient time and resources to solve engagement issues.
   • Demonstrate a track record of consistency on standards-based decisions.
   • Establish and regularly communicate a formal code of conduct.
   • Challenge unethical behavior and address instances of non-compliance with the firm’s code of conduct through swift disciplinary actions.
   • Provide a copy of the firm’s quality control document to all professionals.
   • Hire, compensate, promote and reward professionals who possess and exhibit high levels of integrity and demonstrate a commitment to quality.
2. Enhance your client acceptance and continuance process. Perform sufficient client background checks. It’s important to only associate with highly ethical clients.
3. Hire or align with experts, specialists and consultants. Have sufficient technical personnel on hand at your firm or have access to external experts, specialists and consultants who can provide you with the appropriate advice when facing challenging issues.
4. Offer high-quality continuing professional education and training. Offer a blended training package to increase competency from a technical and soft skills standpoint. Focus on topics such as:
   • Independence and ethics
   • Applying professional judgment, skepticism and objectivity
   • Firm policies and procedures
5. Establish or outsource a quality control department. If possible, consider investing in or outsourcing a quality control department that will:
   • Develop accounting and auditing guidance as well as industry-specific guidance.
   • Perform engagement quality control reviews of high-risk engagements.
   • Monitor and evaluate the firm’s quality control policies and procedures.
   • Provide technical consultation to personnel.
   • Monitor the firm’s accounting and auditing training programs.
   • Develop assurance policies and procedures.
   • Participate in a dialogue with regulators and standards-setters when new accounting and auditing standards are being developed.
6. Streamline your audit process. Ensure all engagement teams consistently apply and streamline your audit approach so they can focus on areas of high risk and audit execution.
7. Increase specialization. Consider specializing in a specific industry or niche so that you can focus your attention and build efficiencies to increase engagement realization.
8. Rotate key professionals on engagements. Consider rotating partners, managers and engagement quality control reviewers on a periodic basis to add fresh and new perspectives to your high-risk attest engagements.
9. Join an accounting network or alliance. Consider joining a reputable accounting network or alliance program to collaborate and share with other CPA firms.
10. Incorporate data analytics. With many attest clients processing their transactions electronically, CPAs are getting more involved in data analytics — the art and science of processing “Big Data” to discover and analyze patterns, identify anomalies and extract other important information embedded in data through analysis, modelling and visualization relative to human behavior and interactions. Data analytics can be utilized to enhance audit and review engagements, forensic investigations and consulting engagements, and to assist clients in business decisions. For CPA firms, data analytics is a powerful tool because it can help auditors and accountants achieve 100-percent coverage in substantive testing, which decreases engagement risk while increasing efficiency and realization.

Retirement planning could be your client’s primary financial planning need. For younger people, retirement seems so far off. Other clients may avoid the topic because they feel so far behind. As an accounting professional, how can you bring up the subject, not embarrass your client and give them hope for the future?

“Retirement planning” sounds like industry jargon. The term is used so often, clients tend to tune you out. Try repositioning the goal as financial independence. When clients think of retirement planning, it’s often in terms of something that happens at age 65 or 70. They go onto Medicare. They collect Social Security. There’s a big party at work. They don’t go into the office anymore, living off their savings for the foreseeable future.

Financial independence is similar, but much more appealing. Set Medicare and Social Security aside for a moment. Imagine your client, through disciplined saving and wise investments, could reach a time in their life when working becomes a choice not an obligation. For a person in their 20s, could they see this happening at age 55 or 60? Since they might feel like they will live to 100, that can be an attractive goal, something they would work towards achieving.

Now, what about the client further along in their working career who hasn’t given much thought to financial planning? They have a 401(k) plan at work. They make the maximum allowed contribution. Maybe they’re starting to get their Social Security projections in the mail. They have some investments in taxable accounts but aren’t actually saving much at this time in their life. How do you create a need for retirement planning?

Let’s talk a little about creating a need. You aren’t “creating” anything. You’re uncovering a problem that might not have been on your client’s radar previously. Your client now has two choices: they can address the problem or ignore the problem. If they choose to ignore the problem, the problem doesn’t go away. Often it gets larger. If you went to your doctor for your annual checkup and they said “I saw something I don’t like. We need to do more tests,” you know there’s a problem. You will want to address it, not ignore it. 

Here's the scenario. You ask your client, “Are you confident you’ll have a comfortable retirement when the time comes?” They give a yes or no answer. If the answer is no, they recognize there is a problem. They might say, “Yes, I suppose I am confident I will have a comfortable retirement.” You ask another question: “How confident? 100 percent? 50 percent? 20 percent?” They will probably not have an answer and would be open to you helping to find one, getting to a probability.

This blog was originally published as a column on AccountingWEB and can be read here. It is republished with permission.

The word most people have been searching for is “whipsawed.” As is both typical and cyclical, the amount of change we are experiencing and feeling continues to be unprecedented. Whether it is the workplace trend of the Great Resignation or larger, global phenomena, the ability to feel like you are “in control,” especially for CPAs, their clients and organizations, is getting harder by the hour. As the rate of change continues to accelerate, the frequency of these feelings will increase, requiring individuals to develop strategies to respond to change when they don’t know what change is coming.

We know that most change management programs don’t stick because they are rejected by employees. It makes sense — we aren’t going to create new habits or processes without wanting to do it, and change is uncomfortable. A solution is to change the focus away from the change and over to the individual who we’re asking to make the change. Successfully responding to macro change requires a focus on the micro individual. This is because the only constant throughout all of the change is the individual going through that change. 

Since individuals are the central point of success, it’s best to start to adapt by explaining the “arc of change,” a four-phase response that includes awareness, preparation, learning and wisdom:

• Awareness. The first phase in responding to any change is understanding the change to which we are responding. This is more than just an exercise in recognizing that things are changing; it goes beyond to understand the speed at which things are changing. We can handle small amounts of change; yet when change is occurring in multiple facets (work, home, life) and at increasingly swift speeds, the combined level of change can be overwhelming. This awareness allows us to properly prepare.
• Preparation. At first thought, it’s tough to prepare for change when we don’t know what change is coming. But it’s important to note that we aren’t preparing for specific change, we are preparing ourselves to respond to change. This shift in thinking allows us to focus on the things we can control (physical, mental, social and financial well-being) in order to appropriately set ourselves up for success. External change will always happen in many different forms; we can only focus on our ability to respond, and that requires us to focus on the micro individual. 
• Learning. Properly preparing ourselves requires us to then shift and evolve into what’s called a learning mindset. Those most effective with adapting to change understand a good balance between curiosity, humility and vulnerability that, when embraced, allows them to adjust with relative ease. Change can be painful, yet there are lessons in pain. Viewing change as an opportunity to develop and adjust, rather than something to react and respond to, is an important step in the change management process.
• Wisdom. All of the above components lead us to the holy grail: making good decisions. Ultimately, as the economy and workplace change around us, we are only as successful as the wise decisions we make in the moment. As we look back on the arc of change management and our ability to adapt in motion, we see that each step leads us to a point where we are setting ourselves up for decision-making moments. 

The world, economy and workplace will continue to change. In fact, they must. And for us to remain relevant as the world changes, we also must invest in our capability to be flexible and ready to respond when appropriate. We don’t know what the next spike of change will bring, but we can guarantee that it’s coming — and soon. Those who embrace change and this arc of thinking will be the ones still standing in the coming years. 

As I am sure most of us have seen over the last couple of years, the ability to source, attract, develop and retain top accounting talent has been notably difficult. Labor demands within the profession, a new emphasis on work-life balance and shifting demographics have all played a part, making this task increasingly difficult without diminishing its importance as an integral part of the growth of our industry.

This sobering reality makes the process of sourcing, developing and retaining top talent all the more important.

Outreach and Recruiting

In order to build a firm foundation of talent, we must start at the beginning — sourcing and recruiting. While the idea of college campus recruiting has been well established, it is possible to expand this concept to the campuses and accounting programs of two-year (junior/community) colleges and high schools. Doing so allows firms and recruiters to get a head start on getting students excited about the potential and opportunity that a career in accounting can provide. Leveraging student accounting organizations in promoting the profession has proven to be effective as well; in the process of choosing a career path to follow, many students will first look for the opinions of their peers.

Establishing mentoring relationships earlier in a student’s career (high school, early college) also can help to reverse stereotypes about the industry that are well set in by the time students need to traditionally choose a career path. Connecting students with practicing accountants early on will go a long way in shaping (and changing) the perspective many students have on the field of accounting.

Uncovering Untapped Talent Pools

As the landscape for both employers and employees has changed over the last couple of years, so has the pool of talent that needs to be utilized in the process of building the “pipelines” we are striving to create.

To take full advantage of this shift, we must expand our focus to less-traditional candidates — those looking for greater flexibility, better benefits, shorter commutes or a larger opportunity for remote work. 

Another avenue of talent pool expansion centers around the re-focusing of skill priorities for those positions in question — “must-have” versus “preferred” skills. “Must-have” skills are those that are necessary for a candidate to perform at the position in question. “Preferred” skills are those that help a candidate’s potential for landing the position but should not exclude them from consideration.

Focus on Onboarding

Once candidates have been sourced and offers have been made, it is important that hiring organizations ensure that assumptions are not being made in the onboarding process about what a new hire needs for success.

Once onboarded, it is vital that new hires, at any level, take part in a mentorship program. Leaning on guidance from experienced CPAs and higher-level professionals at the onset of a new hire’s career will increase the likelihood of their long-term success within your organization.