• What CPAs Need to Know about ESG Reporting

    by Muhammad Azeem Shaikh | Jan 26, 2024

    The regulatory environment for environmental, social and governance (ESG) reporting has undergone significant changes in recent years, which has put increased pressure on organizations to meet the ESG information needs of their stakeholders by disclosing information on their sustainability performance. As companies increasingly report ESG or sustainability-linked information, there is growing demand for CPAs to provide assurance on ESG reports and disclosures. This renders it crucial for CPAs to familiarize themselves with frameworks, standards and regulatory requirements governing ESG reporting.  

    Commonly used Frameworks and Standards

    The standard-setters that have established frameworks governing ESG reporting include the following:

    • The Global Sustainability Standards Board (GSSB) is the global standards-setting body that pioneered sustainability reporting and set the world’s first globally accepted sustainability reporting standards called the global reporting initiative (GRI) standards.
    • The Sustainability Accounting Standards Board (SASB) was founded to standardize the reporting language of sustainability efforts. SASB developed industry-specific standards for 77 industries to identify and disclose sustainability risks, opportunities and financially material sustainability information.
    • The International Financial Reporting Standards (IFRS) Foundation consolidated the Value Reporting Foundation and Carbon Disclosure Standards Board (CDSB) at the COP 26 UN Climate Change Conference in November 2021 to establish the International Sustainability Standards Board (ISSB), which was charged with developing a globally consistent baseline of sustainability-related disclosures. The creation of the ISSB signaled the first step towards a standardized and consistent framework for sustainability-linked financial disclosures.
    • The Financial Stability Board (FSB) established the Task Force on Climate-Related Financial Disclosures (TCFD) to develop recommendations on climate-related financial disclosures to help stakeholders understand material financial risks relating to climate change. TCFD’s 11 disclosure recommendations focus on governance, strategy, risk management, metrics and targets.

    There are a number of standards currently in place, including the following:

    • GRI Standards: The GRI Standards are bifurcated into a universal series (101-Foundation, 102- Disclosures, and 103-Management Approach) applicable to every organization preparing sustainability reports and a topic-specific series (200-Economic, 300-Environmental, 400-Social). Companies select from topic-specific standards based on relevance and materiality.
    • SASB Standards: SASB provides sector- and industry-specific sustainability accounting standards for more than 70 industries, identifying the sustainability-related risks and opportunities most likely to affect a company’s financial and operating performance.
    • ISSB Standards: In June 2023, ISSB issued its first global sustainability disclosure standards. IFRS S1 covers general requirements for the disclosure of sustainability-related financial disclosures and IFRS S2, based on TCFD recommendations, requires companies to disclose information on climate-related risks and opportunities.

    Existing and proposed disclosure requirements include the following:

    • SEC proposed climate disclosure rules: On March 21, 2022, the SEC put forth rule changes that mandated companies to incorporate certain climate-related disclosures in their published reports. The proposed rule would require SEC registrants to provide the climate-related financial statement metrics in their climate-related disclosure in a separate section of their registration statement or annual report (10K).
    • California climate change reporting laws: On October 7, 2023, California’s governor signed two climate disclosure bills:
      • The Climate Corporate Data Accountability Act (SB 253) requires companies to disclose and obtain assurance on Scope 1, 2 and 3 greenhouse gas (GHG) emissions in conformance with the Greenhouse Gas Protocol.
      • The Climate-Related Financial Risk Act (SB 261) mandates companies to disclose climate-related financial risks in accordance with TCFD recommendations.

    Additional Resources

    Accounting bodies all over the world are ramping up their efforts to provide resources to their members, students and affiliates on ESG and sustainability reporting. CPAs can use the following links to acquaint themselves with ESG reporting: 

  • ESG’s Impact on Valuations and the Benefits of ESG Mandated Reporting

    by Joe Holman, Withum | Jan 24, 2024

    When one thinks of environmental, social and governance (ESG) investing, one should think of transparency. In other words, they should think of additional sources of information that help identify unseen risks and justify shareholder value. This investing style is known as ESG integration. Private equity investors use ESG integration as a value-creation tool by analyzing material and non-financial factors during due diligence and ongoing monitoring. These material factors are centered around the Sustainability Accounting Standards Board (SASB) materiality map, which identifies material ESG information using more than 1,000 qualitative and quantitative factors across 77 industries. To understand how it works, let’s analyze energy management and worker injury rates.

    Energy is a source of both emissions and expense. Using due diligence questionnaires, private equity investors gain valuable insight into how efficiently a target company manages its energy costs and emissions and compare this information to internal benchmarks. Companies with material energy costs, such as data centers, real estate and manufacturers that have a successful energy strategy, will be assigned higher valuations. Furthermore, as emissions are increasingly regulated, the capital costs of implementing an emissions reduction program will also impact a target’s valuation.

    Worker injury rates can also provide insight into how well a manufacturer manages its workforce. High injury rates indicate ineffective safety standards but can also allude to much deeper problems. Poor safety is often accompanied by sloppy management and poor product quality. The consequences of poor safety often result in production downtime, higher insurance premiums, lost customers and, in the worst cases, fines and lawsuits.

    Increasing ESG Transparency

    Unfortunately, public company investors don’t have access to the same meaningful ESG information as private equity investors. This lack of access puts public company investors at a disadvantage and means they are generally blind to most ESG risks and opportunities. The scary part is that unforeseen ESG risks can significantly impact shareholder value. Examples include the expensive SolarWinds hack, the BP disaster and the PG&E bankruptcy – along with countless others.

    The IFRS Foundation is seeking to level the playing field by requiring companies to provide meaningful ESG transparency. In 2021, the IFRS created the International Sustainability Standards Board (ISSB) with the following key objectives: 1) develop standards for a global baseline of sustainability, 2) meet the information needs of investors and 3) provide comprehensive sustainability information to global capital markets.

    In 2023, the ISSB released IFRS S1 and S2 that will require companies to disclose industry-specific sustainability information alongside financial statements. IFRS S1, General Requirements for Disclosure of Sustainability, outlines sustainability-related disclosures that are financially material to specific industries. IFRS S2, Climate-related Disclosures, outlines required disclosures that are in line with the Task Force on Climate-related Financial Disclosures (TCFD). Both S1 and S2 only consider ESG information that is financially meaningful and that allows investors to make informed, rational investment decisions.

    The ISSB sustainability disclosure requirements are based on the SASB materiality map and the TCFD. These are the same standards used by private equity investors to identify ESG risks and opportunities. Required ISSB disclosures are reported in the annual Sustainability Disclosure Statements and may be subject to audit. Like other IFRS standards, each jurisdiction determines the specific reporting requirements. The ISSB’s work is currently supported by the G7, the G20, the International Organization of Securities Commission (IOSCO), the Financial Stability Board plus Finance Ministers and Central Bank Governors from more than 40 jurisdictions. The American Institute of CPAs (AICPA) is also evaluating ways to adapt ISSB’s work in the USA.

    By using due diligence questionnaires and internal benchmarks, private equity investors are able to evaluate material, non-financial ESG information that can identify potential ESG risks and opportunities. After ISSB sustainability standards are broadly adopted, investors in public companies will have access to the same material financial ESG information as private equity investors. By evaluating companies' sustainability disclosure statements, public investors will be in a position to reward better companies with higher share values while punishing the laggers. More importantly, investors may be able to avoid ESG surprises that can degrade share prices in an instant.

  • CEO Compass - Winter 2024

    by Aiysha (AJ) Johnson, MA, IOM | NJCPA CEO and Executive Director | Jan 22, 2024

    New Year, New Beginnings

    When I reflect on this new beginning, thoughts of humbleness and gratitude come to mind. Thank you to all who have offered words of encouragement and constructive feedback. I appreciate the efforts to get involved or continue engagement. We are a community, and, through our collective efforts, we convey the great relevance the NJCPA and the profession continue to offer. I want to extend my wishes for a happy new year and a successful busy season! 

    As we begin 2024, the profession’s pipeline challenges remain front and center. Declining high school graduation sizes, increasing retirements and a drop in the number of candidates sitting for the CPA Exam are converging to severely restrict the number of CPAs who provide critical financial services and advice to communities, businesses and individuals. 

    The NJCPA, along with the AICPA, NASBA and other state CPA societies, have studied ways to increase the number of students becoming CPAs, including the 150-hour education requirement. The additional 30 hours are not specific to accounting or related disciplines, and some believe that the additional year of education and costs associated with it are a significant barrier to potential accounting students and those who may sit for the CPA Exam. 

    We recently asked members to weigh in on the 150-hour requirement:

    • More than 40% of the 1,060 surveyed say, historically, new hires working in accounting-related roles and without 150 hours of education “rarely” or “never” pursue the CPA certification.
    • Sixty-two percent see no noticeable difference in preparedness of staff who have accounting degrees with 120 credit hours versus those who have 150 credit hours.
    • Nearly 80% believe it would be beneficial to the profession to provide alternative pathways to certification where 150 hours is one option but not the only option. 

    It’s clear that CPAs want to explore other options to certification. What’s also clear is that CPAs don’t want to jeopardize their ability to serve clients and provide services across state lines without getting licensed in each jurisdiction (i.e., mobility). In considering changes to the 150-hour requirement, 88% of respondents say that it is “very important” or “somewhat important” to protect CPA mobility. 

    In late December, NASBA said it was discussing a “structured experiential learning program that would provide for education, documented experience, and other elements that would provide an equivalent path to licensure without the need of having a fifth year to complete a 150-hours education program that would appear on an accredited transcript.” This additional path would include an education and experience component to measure a participant’s competency to be licensed as a CPA and would be considered equivalent to the current 150-hour pathway defined in the Uniform Accountancy Act. NASBA acknowledges that this would require legislative and other changes in some states and may impact interstate mobility until all have adopted the new equivalent path.

    The NJCPA Board of Trustees and Pipeline Task Force are exploring all options to attract more students to the profession while maintaining the highest standards expected of a CPA. 

    The profession is facing a challenge and, potentially, a crisis if we don’t make changes. We invite you to share your thoughts on broadening the pathways.

  • Sedentary Lifestyles Can Amplify the Need for Wellness Rethink Among CPAs

    by Diane Thompson, freelance writer | Jan 11, 2024

    Like many other industries, financial services faces a significant talent gap, with more than 300,000 accountants and auditors leaving their jobs in the past two years. This exodus can be attributed not just to retirement but work environments that hinder employee engagement and satisfaction. For instance, CPAs can often work 70 to 80 grueling hours per week, especially before tax and audit deadlines. Entry-level associates also shared that repetitive tasks such as balancing cash sheets can often leave them dissatisfied with accounting work. This technical, desk-based office work in accounting can signify a rise in sedentary behaviors among CPAs.

    Sedentary behavior can significantly decrease energy expenditure and lead to weight gain. Being overweight or obese increases the risk of developing chronic conditions like cancer, stroke and heart disease. Prolonged periods of sitting can also contribute to musculoskeletal disorders like muscle tightness, lower back pain, stiffness and swelling. This can affect health and wellness among CPAs, necessitating the need to encourage the following practices for staff: 

    • Have regular eye exams. There’s no going back to manual, labor-intensive accounting, as the digital transformation is here to stay. This means that most accountants will spend the majority of their time looking at a computer screen, which, over time, can lead to the development of issues like eye strain. To counter this, CPAs can prioritize eye care by getting an eye exam and consulting with an optometrist for regular monitoring and the early detection of possible eye conditions.
    • Use ergonomic furniture. Musculoskeletal disorders like joint pain can be remedied by introducing ergonomics into the work environment. A prime example of this is using an ergonomic chair designed with adjustable back support, armrests and seat height to reduce fatigue and discomfort while sitting. This means CPAs remain comfortable and focused throughout their shifts, whether they’re reviewing financial statements or preparing tax returns. Ergonomic chairs come in various materials, styles and price points, with leading brands like Topstar and Herman Miller offered by major retail stores like Walmart.
    • Offer flexible work arrangements. Employers in the financial services industry can also make an effort and contribute to employee health and wellness by introducing flexible work arrangements. Demands for flexibility are no longer seen as a workplace benefit but are now a crucial part of recruitment and retention strategies. As flexible work models allow CPAs to manage their time better, not only do they become more efficient and productive, but they can also prioritize sleep, exercise and healthy eating for improved well-being.

    Ultimately, the changing nature of accounting work should compel employers and employees alike to reflect on their lifestyles and find ways to adopt healthier habits. 

  • The Continued Fight Over Public Law 86-272

    by Jennifer W. Karpchuk, Esq., Chamberlain Hrdlicka | Jan 08, 2024

    It’s been more than 60 years since Public Law 86-272 was enacted. The text of the federal law has remained constant, protecting companies from income tax liability in states where the taxpayers’ in-state activities are limited to soliciting sales of tangible personal property, with the orders being approved and shipped from out of state. Despite the fact that the text of Public Law 86-272 has remained unchanged since 1959, attacks on the federal law by states have increased in recent years.

    Multistate Tax Commission

    The Multistate Tax Commission (MTC) is an organization formed by state tax administrators in 1967, partially in response to P.L. 86-272. It has been issuing guidance regarding the law’s meaning since 1986. Most recently, in August 2021, the MTC revised its Statement of Information regarding P.L. 86-272, which, to many practitioners, seemed an attempt to eviscerate the federal law’s protections by vastly narrowing its scope in light of the internet age. However, the MTC’s guidance is not authoritative and is arguably self-serving.  Because Public Law 86-272 shields a company from income tax liability in a state, states (and state organizations) have a desire to interpret the federal law as narrowly as possible.   

    The August 2021 Revised Statement proclaims that certain website features constitute unprotected “in-state activities” by a taxpayer. Many of these activities involve a company “interacting” with its customers through its website, a task which was often accomplished by telephone before the internet age. When these activities occurred over the telephone, no one argued that such activities created “in-state” activities. Why should similar activities conducted over the internet be treated differently?

    State Actions

    Although the MTC’s guidance is fraught with issues, states have begun to adopt it. The first state to do so was California by way of administrative guidance. The guidance was immediately challenged on two grounds: 1) California’s administrative guidance violates P.L. 86-272; and 2) the Franchise Tax Board (FTB) failed to properly follow the California Administrative Procedure Act (APA) in enacting it. On Dec. 13, 2023, the trial court granted summary judgment on the grounds that the FTB did not follow the state’s APA. However, it is doubtful we have seen the end of this case; it is likely the decision will be appealed to the Court of Appeals. 

    Meanwhile, in May 2023, Minnesota circulated a draft revenue notice indicating that it was also considering following the MTC’s revised guidance, but a final notice has not yet been issued. Additionally, on Sept. 5, 2023, New Jersey issued guidance related to its interpretation of P.L. 86-272. Although it has some nuances, the New Jersey guidance largely follows the MTC’s guidance. Finally, effective Dec. 27, 2023, New York formally adopted regulations that would largely adopt the MTC’s guidance.

    In addition to states that have officially adopted revised interpretations of Public Law 86-272, some states are adopting similar positions for the first time on audit. Taxpayers should be aware of the increasing aggressiveness of states towards the federal law, as well as the overreach of states in this area. This coming year should bring additional challenges from states and corresponding Public Law 86-272 litigation from taxpayers challenging the overly broad interpretations of the federal law. 

  • 4 Marketing Strategies for the Modern Accountant

    by John E. Graziano, CPA, PFS, CFP®, FFP Wealth Management | Dec 20, 2023

    Today’s accountants are in a completely different landscape than just a handful of years ago. You used to be able to open a brick-and-mortar store, buy an ad in the phonebook and wait for clients to flood your firm.

    Now, to achieve success, you need to:

    • Niche down and become a specialist.
    • Set yourself apart from the competition.
    • Join podcasts and webinars.
    • Be on social media.
    • Create content.

    And that’s just the start of marketing your firm. Modern accountants have a lot of steps to take if they want to build a long-lasting business that attracts the right clients.

    So, where to begin? Let’s dive in.

    1. Know Your Audience

    Who is your niche audience? Who do you want to serve? You'll struggle to market yourself if you can’t answer these questions. 83% of accountants believe today’s clients are more demanding than in the past. Why? Accountants can help clients with every facet of their personal lives and businesses. You can’t serve clients best if you don’t know who they are.

    Once you know who you’re serving, you can begin transforming your firm. For example, tax returns are tax returns. Clients must file their returns and pay the IRS, but when you know your clients are businesspeople, you can view taxes as a way to help them:

    • Save on taxes
    • Get access to specialty tax credits
    • Reach their short- and long-term goals through strategic planning

    Knowing your audience empowers you to set your firm apart from the competition. Many professionals reading this right now don’t know what sets them apart from the competition. If this sounds like you, it’s time to begin thinking about:

    • What are your clients’ main pain points?
    • What can you assist your clients with better than the competition?
    • What can you offer beyond the basics for your clients?

    For example, perhaps you do taxes for high-net-worth clients. Your clients manage businesses, and they want to save for the future. How can you fit into the equation? You can offer financial planning to help your clients reach their goals faster, invest for the future and save for retirement.

    2. Establish Yourself as an Authority

    If you’re still following the “build it and they will come” mindset, you’re on a fast pace to a struggling business. You need to think outside the box and become the go-to expert in your niche. How? You can do the following:

    • Hold webinars.
    • Appear on podcasts.
    • Write for industry publications.
    • Network at local and industry events.
    • Create content (more on that below).
    • Collaborate with other experts that share similar audiences but not services.

    You can also volunteer for local charities and apply for local rewards. If you plan on offering services primarily to clients in your area, these awards and participating in the local community can be extremely helpful.

    3. Create Content

    Creating content is your blueprint to online authority and marketing, but it’s a lot of work. An estimated 90% of accountants believe there’s been a cultural shift in the industry. Accountants are now:

    • Being active on social media and posting daily
    • Writing blog posts
    • Creating newsletters
    • Guest posting on industry blogs
    • Creating free eBooks and resources

    4. Show Up Where Your Audience is Hanging Out

    You can and should create your own content, but you can also show up where your audience is located and “make an appearance.” For example, you can:

    • Join an industry podcast as a guest speaker.
    • Host your own live event on platforms your niche audience is hanging out.
    • Create your own podcast and stream it across popular distribution channels.
    • Speak at or attend conferences.

    If you don’t have your own following online, try reaching out to others who do and try to be a part of their events. Perhaps there’s a business coach who would love you to come on their podcast to talk about how small businesses can save money on their taxes. If you have a social following, you can run live events to discuss pertinent topics with your followers.

    If you make a conscious effort to follow the four steps above, you’ll position yourself as an industry leader and begin attracting your dream clients in the process.

    Securities Offered Through: TFS Securities Inc., Member FINRA/SIPC a full-service broker dealer located at 437 Newman Springs Road Lincroft, NJ 07738 732-758-9300

    Investment Advisory Services Offered through: TFS Advisory Services, a service of TFS Securities, Inc.

  • Small Actions, Big Fallout: Lessons from Large Claims

    by Sarah Beckett Ference, CNA | Dec 18, 2023

    Unfortunately, seemingly benign actions do not always turn out to be so. Even small decisions or quick conversations may have significant — and expensive — consequences. Consider these real-life claims asserted against CPAs in the AICPA Professional Liability Insurance Program, and take note of lessons that were learned the hard way regarding a lack of engagement letters.

    Failure to Search

    • The case: A CPA prepared tax returns and provided bill-paying services for a client. When the client inherited a substantial amount of money, it asked the CPA to assist in managing this newfound wealth. The CPA agreed and invested approximately $2.5 million with an investment adviser who was recommended by another client of the CPA. Eventually, the invested funds were lost due to the adviser's alleged fraudulent activity. The client filed suit against the CPA for failure to exercise due diligence in selecting the adviser. While the CPA's actions were taken in good faith and in the belief that they were in the client's best interests, the CPA did not perform any due diligence procedures related to the adviser, relying solely on the recommendation of the other client. A simple internet search, however, would have revealed that the investor was previously convicted of financial crimes.
    • The outcome: The case settled with defense costs and an indemnity payment of more than $500,000.
    • The lesson: While the depth and type of due diligence procedures vary based upon the situation and service to be provided, performing a basic internet search before accepting a new client, or making a recommendation to an existing one, is a quick and easy — but crucial — step for a CPA to take, even if the referral source is a trusted one.
    • The other lesson: Clients often seek a CPA's advice related to investments. However, providing incidental advice is fraught with risk, and the CPA may be blamed for poor investment performance. Avoid providing investment advice unless you have the requisite experience in the area or have been engaged via a separate engagement letter for the service. 

    Off-the-Cuff Advice

    • The case: A CPA prepared tax returns for a married couple for a number of years until the couple informed the CPA of their impending divorce. During the couple's divorce proceedings, the CPA provided advice to the husband for a short time without first obtaining a waiver from or officially terminating the relationship with the wife. The wife claimed that, within that period, the CPA wrongfully advised the husband that he could withdraw money held in joint bank accounts even though such withdrawals violated the couple's prenuptial agreement. The CPA recalled telling the husband that he believed he would be entitled to half of the joint account but did not have the prenuptial agreement in hand. As such, he verbally advised the husband to consult with his divorce attorney on the issue. There was no documentation related to this discussion with the husband.
    • The outcome: The case settled with defense costs and an indemnity payment of approximately $1.5 million.
    • The lesson: Answering seemingly benign questions based on incomplete or partial information can have significant consequences. Avoiding answering these questions, while preferable, is not always possible or practical. Whenever advice is provided, follow up the discussion with a written communication, such as an email.
    • The other lesson: A conflict of interest, or even the appearance of an ethical violation, can greatly complicate the defense of a claim. Here, the defense expert opined that, despite the short period during which the conflict existed, the case would be very difficult to defend, and the CPA should not have discussed the issues with the husband.

    In both of these cases, the engagement letter was nonexistent. Had engagement letters been in place, the outcomes may have been different.

    This information is produced and presented by CNA, which is solely responsible for its content. Continental Casualty Company, a member of the CNA group of insurance companies, is the underwriter of the AICPA Professional Liability Insurance Program.

    The purpose of this article is to provide information, rather than advice or opinion. It is accurate to the best of the authors’ knowledge as of the date of the article. Accordingly, this article should not be viewed as a substitute for the guidance and recommendations of a retained professional. In addition, CNA does not endorse any coverages, systems, processes or protocols addressed herein unless they are produced or created by CNA.

    Any references to non-CNA Web sites are provided solely for convenience, and CNA disclaims any responsibility with respect to such websites.

    Examples are for illustrative purposes only and not intended to establish any standards of care, serve as legal advice, or acknowledge any given factual situation is covered under any CNA insurance policy. The relevant insurance policy provides actual terms, coverages, amounts, conditions, and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice.

    “CNA” is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the “CNA” trademark in connection with insurance underwriting and claims activities.

    Copyright © 2023 CNA. All rights reserved.

  • Beyond the Balance Sheet: The Latest Trends in Income Tax Accounting

    by Michael Noreman, CPA, MST, MAcc, Alvarez & Marsal Tax, LLC | Dec 12, 2023

    With a rapidly changing tax landscape, an area of focus for internal tax departments, preparers and auditors continues to be financial reporting of income taxes under Accounting Standards Codification Topic 740, Income Taxes (ASC 740). Here are the crucial trends impacting income tax reporting in today’s dynamic environment.

    Changing Tax Legislation

    Tax legislation that will affect companies’ income tax disclosures in the near future, adding additional complexities to the financial reporting process, include the following:

    • OECD Pillar II: The Organization for Economic Cooperation and Development (OECD) has developed a framework to address tax challenges arising from the digitalization of the economy. The European Union Member States formally adopted Pillar II of this framework in late 2022, which enacts a global minimum tax (GMT) of 15% on large multinational enterprises, setting the stage for expansive changes in the global tax landscape. While the United States has not adopted Pillar II, this development still impacts financial statement disclosures for companies that operate in the jurisdictions that adopt it. With Pillar II expected to be effective in 2024, companies will need to begin setting up processes to calculate the GMT and prepare for financials statement audits and potential governmental review.
    • Corporate minimum tax (CMT): Beginning in 2023, large U.S. multinationals will also be subject to a minimum tax of 15% of adjusted financial statement income. While this seemingly aligns U.S. tax policy with the Pillar II, upon closer examination the new CMT contains more differences than similarities. The broad applicability of tax credits, along with accelerated depreciation and other carve-outs, causes the CMT to diverge from the Pillar II provisions, which significantly limits these benefits. Large multinationals may nonetheless ultimately find themselves subject to both Pillar II and CMT provisions.
    • TCJA provisions: The implementation of the Tax Cuts and Jobs Act (TJCA) of 2017 substantially altered the U.S tax system, and its provisions continue to impact companies years later. For example, the TCJA allowed companies to fully deduct the cost of certain capital expenditures through bonus depreciation. However, starting in 2023, the 100% allowance generally decreases by 20% per year before fully sunsetting in 2027. Outside of financial reporting implications, this presents planning opportunities to accelerate capital purchases. Congress is currently considering legislation that would modify certain unfavorable TCJA provisions. Potential changes include extending bonus depreciation, repealing rules requiring capitalization and amortization of R&D costs rather than immediate deduction, and restoring more favorable provisions, such as interest expense limitations. Additionally, state and local jurisdictions are continuously enacting and effecting legislation related to conformity of these TCJA conformity provisions and others such as inclusion of foreign subsidiary earnings into U.S. taxable income under Global Intangible Low-Taxed Income (GILTI) rules.

    FASB Finalizes Income Tax Disclosure Update

    The Financial Accounting Standards Board (FASB) has finalized an update that expands tax disclosure requirements for both public and non-public business entities. These changes include broadening of the effective tax rate disclosure and requiring specific categories of line items, with disaggregation based on the taxing jurisdiction being mandated. In addition, the income taxes paid disclosure in the statement of cash flows will now need to be disaggregated between federal, state and foreign taxes on an annual basis. The update is effective for annual reporting periods after Dec. 15, 2024, and interim periods within fiscal years beginning after Dec. 15, 2025, for public companies. The updates will take effect for all other entities after Dec. 15, 2025, with interim periods after Dec. 15, 2026.

    Looking Forward

    The dynamic nature of the ever-changing tax landscape demands constant vigilance and adaptability. As ASC 740 evolves to address the latest business trends and challenges, staying informed and proactive on income tax reporting remains paramount for companies striving to effectively navigate the rapidly shifting terrain.

  • Finding the Most Efficient Tax Research Can Provide Solutions to Tax Challenges

    by Brock Scott, NovaTax | Dec 06, 2023

    The importance of effective tax research cannot be understated. In today’s ever-changing regulatory environment, staying abreast of tax news and analysis is vital for making informed decisions, planning strategic solutions to tax challenges and ensuring compliance in a complex tax landscape.

    Specifically, CPAs use tax research to identify the tax implications of particular positions, aid their companies and clients in making informed decisions about tax strategies, planning and compliance, and to prepare for potential IRS audits.

    Research Choices

    Whether one uses a variety of sources for research or relies on staff to collect their own data, busy CPAs should understand that tax research sources are categorized as primary (statutes, regulations and case laws) and secondary (law review articles and others providing additional analysis). Other considerations include the following:

    • Finding relevant binding and persuasive authorities. This includes legislative, administrative and judicial sources. Binding authorities are mandatory for courts to follow, while persuasive authorities are optional.
    • Relying on comprehensive resources. These platforms consolidate essential information in one place to make it easy to search for documents.
    • Embracing AI-driven tax research software. This can enhance efficiency and accuracy. In a competitive environment with rising client demands, firms that do not leverage technology risk losing talent to competitors.

    The Tax Research Process

    An organized approach to tax research is crucial to ensure the necessary due diligence is performed in the quest for accurate tax positions. The process can be broken down into both simple and comprehensive steps:

    1. Define the situation: To initiate tax research, the first step is to clearly identify and define the pertinent facts and issues relevant to the tax situation, including a thorough understanding of the client’s unique circumstances within their financial, legal and operational context.
    2. Gather applicable authorities: Tax experts need to identify and collect the applicable tax laws for the client’s situation, starting with the Internal Revenue Code (IRC) as the primary statutory source. This process extends to encompass administrative regulations and rulings, as well as judicial decisions from various courts.
    3. Evaluate the research: Following the collection of relevant authorities, a comprehensive analysis is essential. This entails a detailed examination of legal provisions and an understanding of their implications in the specific context of the client.
    4. Formulate conclusions and recommendations: Based on the analysis, tax professionals must draw well-founded conclusions and make recommendations regarding the client’s tax position.
    5. Share research findings: Effectively communicating the results of the tax research is crucial. This may involve creating detailed reports or delivering presentations to stakeholders, clients or other pertinent parties.

    Effective tax research is not only advantageous but crucial in the intricate world of taxation. With the ever-expanding Internal Revenue Code and associated complexities, reliance on memorization is impractical. The primary purpose of tax research is to define the tax effect of specific tax positions, enabling informed decisions, strategic tax planning and compliance. A structured approach ensures that necessary due diligence is conducted in the research process.

    Both seasoned professionals and novices benefit from expert guidance and reliable sources to bridge the knowledge gap for taxation issues. In the complex landscape of taxation, the ability to conduct effective tax research is not just advantageous; it is crucial for success.

  • Volunteering at the Community FoodBank of New Jersey: A Win-Win

    by Patrick Cleaver, CPA, Meisel, Tuteur & Lewis P.C. | Dec 04, 2023

    Helping out at the NJCPA’s annual volunteer day at the Community FoodBank of New Jersey ahead of Thanksgiving was a success on many levels. The NJCPA has been associated with the FoodBank for 14 years.

    At the FoodBank, we were told that we would work as a group, packing pasta. The group was led to a room in the warehouse that had many large boxes of different pastas. We put on hairnets and gloves to avoid contaminating the food. After receiving instructions, we were split into three larger groups, each group assigned to a different type of pasta and their own workstation. Those three groups were then split into smaller groups, organized by the job they performed. A group of people put labels on bags. Another group of people scooped pasta in those bags. Then one person put the bags into a box (16 bags per box) and taped it with a label, indicating that it was finished. I had the pleasure of boxing up the bags of pasta. About an hour and 45 minutes later, we cleaned the tables and swept the floor, leaving the warehouse ready for the next group of volunteers.

    Packing this food before Thanksgiving was amazing. Through our combined efforts, we packed 2,304 one-pound bags of pasta, which will contribute to 1,920 meals for individuals in New Jersey.

    Giving Back

    As a CPA and a member of the NJCPA, it is my privilege and duty to help others. CPAs are leaders and the NJCPA strives to equip and empower New Jersey’s accounting and finance professionals to thrive in their careers. Assisting others and extending help to those who need it is a big part of thriving in one’s career, as well as one’s personal growth. As CPAs, we are always there to assist our clients during business hours. Similarly, we should assist those in need when we are not billing for our services. Opportunities like this demonstrate the NJCPA’s commitment to that mission.

    The experience, my first group volunteering event with the NJCPA, was gratifying and fulfilling.  I look forward to the next opportunity and urge my fellow accountants to take part in giving back.

  • Essential Year-End Planning Tasks for CPA Firms

    by Vagif Isakhanli, CPA, MBA, MST, RRBB Advisors, LLC | Dec 01, 2023

    The period of time after busy season is a perfect time to be introspective and plan ahead for accounting firms. It’s a good time to reflect on what went well and what needs to be improved.


    The goal for each CPA should be around 40 hours of CPE per year. Smaller firms have the benefit of being able to arrange CPE for the entire firm where everyone can get their needed accounting, audit, tax or other CPE credits. Yearly updates should be one of the most important sessions of the year, so everyone learns the latest guidance and regulations. Without such training, technical knowledge can become outdated which can increase risks.


    Firms should evaluate what generates sales for them and concentrate on these specific marketing initiatives. Management can eliminate expensive marketing tactics that do not generate positive return on investment. Marketing budgets should be reviewed and business plans should be updated accordingly.

    Human Resources

    Companies might face turnover, especially at year end. Searches for qualified individuals should be initiated at this time as well as for interns who can help with busy season. Sign-on bonuses should also be considered in some cases. Adopting new office policies around work-from-home arrangements are also popular and should be implemented to attract new skillsets.


    Accountants must stay informed about new technologies like artificial intelligence, cryptocurrency and various software used in accounting, tax, marketing and other needs. Every office will need at least a couple of technology consultants, who will help with various problems the office is facing. Once the organization grows, a ticketing system can be implemented for IT personnel to fix specific problems. Cybersecurity specialists can also be hired internally. Various software can be compared at year end to be implemented with training related to this, so staff is ready by the beginning of the following year, but it’s best not to overburden staff with numerous changes every year. Data analytics tools can be used to analyze financial data and identify anomalies. Cloud computing and blockchain technology can reduce costs and provide security. Technological tools can create client efficiencies and will help staff to concentrate on actual accounting, auditing or tax issues instead of key punching or other repetitive tasks.

    The management of the firm should update strategic plans in relation to market expansions, mergers and acquisitions, and medical, retirement and other benefits. Also, this is a good chance to recognize people who contributed to the success of the firm.

    By starting early on year-end plans, firms will have more-efficient busy seasons and will increase chances of hitting their goals.

  • Three Year-End Planning Opportunities for Individuals

    by Jordan Reback, MBA, Nisivoccia LLP | Nov 29, 2023

    As taxpayers and their families approach the end of 2023, many may be asking, “What should I be doing?” or “What can I do?” Year-end planning, specifically as it relates to charitable giving, estate planning and financial planning, are tremendous areas to take advantage of planning opportunities.

    1. Charitable Giving

    There is a reason why seasonality impacts not just the financial markets, but also the charitable markets as well. Spending time with family and friends allows people to talk about everything from where they will be spending their holiday season to which charities they may be donating to by the end of the calendar year.

    The IRS requires charitable organizations to send out disclosure statements/charitable donation letters when contributions exceed $75. If donations are below $75, taxpayers may not receive a copy of a letter from the organization, so it’s important for accountants to inform their clients to keep copies of their bank statements or receipts to substantiate the donations made.

    Additionally, donating clothes, books, household items and even your personal time means the world to those in need, but also provides clients a way to benefit personally.   

    2. Estate Planning

    As time passes, we continue to realize the importance of family and spending as much time with them as possible. Conversations pertaining to wills and inheritances may be uncomfortable, but they are important. It may or may not be surprising that 67-70% of individuals in this country do not have a will. This is a staggering number. Setting up a will to make sure one’s assets, possessions and children are cared for in the way they desire is pivotal. Signed, handwritten wills may work, but there is always the possibility that legitimacy may come into question, so it is best that an attorney be used.  

    Married couples who have tied the knot recently may be surprised to know that preparing joint wills after marriage may be best as avoiding ambiguity and confusion help couples steer clear of tension or friction amongst themselves.

    In addition to wills, making gifts to individuals is a great planning tool to preserve wealth in a family. The various ways families can distribute assets (transferring cash, equities and an ownership percentage in a business) to younger generations should be considered during estate planning meetings with clients. 

    3. Financial Planning

    As clients discuss financial planning and wealth preservation with friends and family, everything from U.S. Treasuries, stock market equities and muni-bonds may be recommended. Over 40 years, we have seen interest rates trend to zero, but now the Federal Reserve has increased interest rates to 5.5% to stem inflation.

    As a result, for the first time in a very long time, individuals and businesses have an alternative. Equities have been sold and money is now earning at least 5% in U.S. Treasuries, CDs and money market accounts. There is a big concern regarding inflation having an impact on a portfolio’s annual return for the next 10 to 15 years as the U.S. continues to transition manufacturing out of China and back to the U.S. (onshoring). As history has shown us, during inflationary periods, there is margin compression in stock market equities. Individual Retirement Accounts (IRAs), 401(k)s and 529 plans may not perform as well, as passive investing historically struggles during inflationary periods. CPAs should speak to their clients about being more active regarding their portfolio, and recommend the use of a wealth management expert, if applicable. 

  • Debt Relief Guidance for CPAs

    by Loretta Kilday, Esq., Debt Consolidation Care | Nov 28, 2023

    Bankruptcy represents one of the most daunting financial challenges an individual or business can confront. Characterized by significant debt burdens that become impossible to manage, the process of filing for bankruptcy is both complex and emotionally draining. At this critical juncture, the guidance of a CPA can be invaluable, from offering expertise in dissecting financial situations and ensuring adherence to bankruptcy codes to developing forward-looking strategies. 

    Here are the multifaceted ways in which CPAs provide essential support to clients during bankruptcy:

    Strategic Bankruptcy Planning

    In the realm of strategic bankruptcy planning, CPAs must exercise a holistic approach. It’s critical for CPAs to recognize that clients often come with preconceived notions or misinformation about bankruptcy, which can result in unrealistic expectations or risky strategies. 

    CPAs should actively dispel myths and set clear, achievable goals when collaborating on a bankruptcy plan. They should explore and critique various debt management and relief options, highlighting both the merits and limitations of each. 

    In protecting assets, it’s the CPA’s duty to pinpoint potential legal challenges clients might overlook and to navigate the complexities of bankruptcy laws with a dual focus on compliance and client advantage. This strategic foresight is pivotal in crafting a bankruptcy approach that is both robust and flexible.

    Budgeting and Financial Management Post-Filing

    Post-filing budgeting and financial management are critical junctures where CPAs must combine empathy with fiscal discipline. A common pitfall for clients is to either overcommit to aggressive repayment plans or to fail to adjust to a more restrained lifestyle. 

    CPAs should intervene with a balanced perspective, advising on realistic yet forward-thinking budgets. The goal is not merely to survive the bankruptcy period but to emerge from it with a sustainable financial plan. For Chapter 13 filings, CPAs must ensure that repayment plans align with the client’s current income and are flexible enough to accommodate potential future financial shifts. The advice should empower clients to make informed decisions supporting long-term financial health rather than temporary solvency.

    Navigating Tax Implications in Bankruptcy

    Tax implications in bankruptcy are a labyrinthine aspect where clients often feel lost. CPAs should navigate these complexities and proactively illuminate the tax ramifications of each financial move within the bankruptcy process. 

    Clients may not grasp how discharged debts or the treatment of bankruptcy estate assets affect their tax responsibilities, which is why CPAs must dissect these elements, advising clients on the subtleties of tax laws and the strategic use of tax benefits. Vigilance here can prevent further financial distress due to tax liabilities, offering clarity and a sense of control to clients already facing fiscal adversity.

    Strategic Debt Management

    Strategic debt management is a domain where CPAs can significantly alter a client’s financial trajectory. Clients often struggle to prioritize debts or identify which assets could be liquidated for maximum benefit. 

    CPAs should be prepared to craft tailored strategies that address high-interest debts first and foremost, potentially saving clients from exacerbating their financial strain. Moreover, they should guide clients through the complex decisions regarding asset liquidation, offering nuanced advice on which assets to sell and which to retain to maintain a semblance of financial stability. 

    This strategic guidance is crucial in navigating the precarious balance between debt repayment and asset preservation.

    Ensuring Financial Integrity During Bankruptcy

    Maintaining financial integrity during bankruptcy proceedings is a fundamental yet challenging aspect of a CPA’s guidance. Clients may inadvertently engage in transactions that could jeopardize their bankruptcy plan due to a lack of understanding. 

    CPAs must be the guardians of financial conduct, meticulously reviewing each transaction for adherence to the structured terms. This oversight is not merely about compliance; it’s about fostering a financial environment where integrity is upheld and the path to recovery is clear.

    Strategies for Post-Bankruptcy Recovery

    The post-bankruptcy landscape is fraught with challenges and opportunities for clients to either rebuild or falter. CPAs should be the architects of recovery, providing strategies to restore financial standing, rebuild credit and foster financial literacy. Educating clients on the intricacies of credit, debt and personal finance management is critical to avoiding repeat scenarios. 

    The CPA’s role is transformative, instilling practices and principles that ensure clients’ long-term financial resilience. The journey through bankruptcy, while tortuous, can lead to a renewed financial foundation, with CPAs serving as the pivotal navigators. Their role transcends mere number crunching; it embodies the role of a strategic partner, a fiscal educator and a steadfast advocate. 

  • How to Transform a Cold Call Into a Life-Long Business Relationship

    by Michael Smith, CPA, Nisivoccia LLP | Nov 27, 2023

    Top Ten, a fictional IT hardware maintenance company headquartered in Germany, needed an accounting firm that could keep pace with its growing U.S. business. Their former accounting firm no longer had the depth of expertise or level of responsiveness they required. Top Ten’s Germany-based CFO handled finances for Top Ten’s U.S. and European subsidiaries so, with an eye toward growing the U.S. business, he decided to visit the New Jersey office to consult with management and identify an accounting partner that could meet all its needs. After researching a number of firms, he narrowed the field to three and eventually selected one. Being the chosen CPA advisory comes with a lot of responsibility. How can the firm satisfy the immediate needs of the client but also build a long-term relationship?

    The Challenge

    • Provide a more robust foundation of expertise that Top Ten can depend on as the business grows and diversifies.
    • Ensure that cash flow, U.S. tax returns and foreign tax filings are 100% accurate.
    • Help evaluate business opportunities and offer a sounding board for management to reach out to on financial issues.  

    The Solution

    While CPAs can often be only numbers-oriented, clients like Top Ten focus on sales and operations as well as the bigger picture. Early in the relationship, the CPA should meet regularly with Top Ten’s offices and commit to gaining a solid understanding of the company’s business model, operations and financials so they could offer business perspective and helpful financial advice.

    Initially, the CPA should provide typical accounting services such as monthly compilations, business tax returns and foreign tax filings. As Top Ten goes through growing pains, the CPA should be right there to work through everything with them. As time goes on, the CPA will likely be sought out more often and in different ways. In fact, if Top Ten, for example, decides that it needs to find a new enterprise resource planning (ERP) system, the CPA should work with management and staff to evaluate and implement the new system.

    Top Ten may also want to diversify into other business segments, and they are likely to look to their CPA for advice in those areas as well. Over time, for example, they could buy commercial buildings and would need the CPA to help identify opportunities and evaluate each property for profitability and investment value.

    The Result

    Like all companies, Top Ten has faced challenges during its two-plus decades in business.  With the right CPA relationship, Top Ten can overcome its obstacles and continue to grow.  Often times CPAs can end up handling the personal taxes and finances of the company’s leaders and even end up at family parties.

    What often starts as a cold call can evolve into a strong professional partnership as well as a friendship.



  • Year-End Planning: Setting Up Your Clients for a Smooth Tax Prep Process

    by Cheryl Mucha, CPA, CFO Your Way LLC | Nov 21, 2023

    Tips for Helping Them See, Know and Understand Their Numbers 

    CPAs, it’s that time again … when your business clients bring you their manila envelopes stuffed with statements and shoe boxes crammed with wrinkled receipts so you can piece together their financial statements. You sigh and accept the task of taking their messy data (or mess of data), at your busiest and most stressful time of year, and start making sense of the paperwork to prepare to file their tax returns.

    Obviously, getting business owners to provide accurate, up-to-date information is key to efficient tax planning and a streamlined tax return process. However, many small businesses don’t have a bookkeeper on staff who can input numbers into accounting software, pull relevant reports or analyze the data in front of them. Nor do busy business owners have time to clean up their general ledger, reconcile bank and credit card statements, keep track of all accounts receivable or payable, or compare budget versus actual figures periodically throughout the year. (Don’t we all wish they did?)

    If you’ve been working with these clients for a few years, you already have a good sense of their business operations — the income streams, typical controllable expenses and perhaps capital improvements they’ve budgeted for. But this doesn’t really help when you are forced to recreate an entire year’s worth of income and expenses in order to do their tax returns — and help them plan not only for the tax season but for ongoing profitability.

    Swap the Shoe Box for a Fractional Bookkeeping Service

    For clients that are not ready to take on a staff accountant or full-time controller, partnering with a fractional financial services professional can be a good solution — for both business owners and their CPAs. For many small-business owners, contracting with a bookkeeper for a certain number of hours a week will help empty out that shoe box and clean up the books for you, the CPA, to use for tax planning and profitability consulting.

    For example, with a team of bookkeepers available to work on a variety of clients from different industries, fractional practices can embellish your accounting practice (without adding staff), make your life easier during tax season and help with year-end tax planning or figurative belt-tightening while there’s still time during the fourth quarter.

    There’s no question that you need visibility into the business’s numbers and financial status throughout the year. Once a bookkeeper or controller digs into the books, updates the general ledger and squares away all the numbers, the benefits are invaluable for business owners and you bring greater value to your client/CPA relationship with:

    • Accurate, up-to-date financial information that is always on hand for tax planning purposes.
    • Monthly and quarterly financial statements that enable you to immediately identify changes — both positive and negative — in your client’s business. This, in turn, enables you to advise the business owner, who can make timely decisions about where and how to trim or expand operations.
    • More efficient tax return preparation (for both parties) with no nasty surprises on tax day.

    Build a Stronger Value-Add Client Relationship

    Your clients rely on you for sound financial guidance, tax planning and tax filing. Bringing in a fractional controller or bookkeeper will help you show them their accurate numbers on a regular basis — and help them understand the story those numbers are telling about the company’s financial health. Having that support provides tremendous value to business owners and to you as the CPA providing expert tax and business advice. Your client will quickly see the benefits of timely advice based on actual, up-to-date data, enabling them to develop a tighter operation with knowledge — not guesswork — about their areas of profitability and opportunity.

    By putting these protocols in place before the end of the year, you’ll be able to guide them with real data in the coming year and beyond.

  • Using CPA Skills to Enhance Local Community Civics

    by Brigid D’Souza, CPA, MBA, Saint Peter’s University | Oct 31, 2023

    One of the most rewarding things about being a certified public accountant (CPA) is the ability to give back. One of the many ways to do so is by getting involved in your local community.

    CPAs can play a vital role in empowering their local communities to better understand their budgets. Every CPA possesses a valuable skill set — often hiding in plain sight — that can lend insight into a local budget; this often includes an interest in, and proficiency for, working with numbers and an expertise in helping communicate the story behind those numbers.

    The New Jersey Office of the Comptroller notes on its website that “If you want to understand and shape how your tax dollars are being spent, reading your local government’s budget is essential.”  But digging into a local budget is no small task when familiarity and proficiency varies in the community. Consider that in recent years, New Jersey has made efforts to increase fiscal literacy around issues of personal finance, including the launching of a new financial wellness platform. CPAs can step into this gap, to help simplify basic financial concepts around local budgets.

    The International Federation of Accountants notes that professional accounting organizations (PAOs) can also help by “supporting financial inclusion.” There is a good example of this from 2016 when the New Jersey Society of CPAs partnered with the NJ Realtors and the Association of Municipal Assessors of New Jersey to create the New Jersey Homeowner’s Guide to Property Taxes. This guide, rich with detail and summarized with an emphasis on accessibility and readability, is an excellent example of how CPAs can contribute to civics and raise the profession’s profile in our communities.

    A CPA volunteering in the community can also help break the details down. My own story serves as an example. For the past 10 years, I have written a local blog called “Civic Parent” that is focused on property taxes and school funding in Jersey City — where I live and where my children have attended the public schools. My interest in writing Civic Parent started with a desire to better understand local finance in Jersey City. I have found that public budgets can often be a hard nut to crack for the average taxpayer and resident, especially if the information is shared with the public in Excel or PDF. Two good examples are New Jersey's “Property Tax Tables and its “Municipal User Friendly Budget,” each of which provides a wealth of data about the state and local financial landscape but may be hard to access for users who are not proficient with spreadsheets. However, a CPA can use their skillset to aggregate the data, group and filter, and also visualize in software like Tableau (which is the data visualization tool that I use).

    The profession stands to gain if CPAs volunteer their skill sets in the community. In its 2023 Pipeline Acceleration Plan, the AICPA noted that “improving perceptions” of accounting is needed to attract new talent into the industry. By getting more involved in civic life, we can actively work to help show what CPAs do and how we can be positive contributors to the community. 

  • 8 Things to Love About the Accounting Profession

    by Sarah L. O’Rourke, CPA, Rutgers Business School | Oct 27, 2023

    While there are many great majors and career paths to choose from, most anyone in our profession will tell you that accounting is one solid choice. What makes it so?

    1. Endless career options. Public accounting, private or corporate accounting, internal audit, governmental accounting, forensic accounting and more are all fields that are open to you! There is no shortage of work, and if you find yourself headed down one career path and then decide you want to change things up, it’s relatively easy to do so.  Even within each area of accounting, there are many options. For example, public accounting offers audit, tax, advisory and consulting, among other options, at both larger and midsize firms.
    2. Endless industry options. What do a restaurant, a bank, a pharmaceutical company and a software company all have in common? The need for accountants and accounting services! Your accounting training allows you to work in an endless number of industries. Companies need services such as audit, tax and financial planning and they all also need their own books and records kept.
    3. The opportunity to help people. Accounting is an area where many people need help.  Finances and taxes can be intimidating and confusing for many clients. You can do this work for someone and relieve the stress over it, all while providing a better understanding. But accounting is more than just the opportunity to help someone with work that must be done. Accountants help to improve the lives of individuals and businesses alike. Accountants help their clients better manage their businesses and become more profitable, and they help them to save money and make better decisions. Within accounting, there are many opportunities to truly help people and make a positive impact on their lives, which is extremely rewarding.
    4. Work-life balance. While public accounting has a reputation for long hours, this is true of any profession; almost any field will involve overtime at some point. However, most firms and companies these days recognize the importance of work-life balance. Employers acknowledge that well-rested employees who are satisfied with their personal time will contribute more to the business. In addition, many accounting jobs offer the flexibility to work from home and create your own schedule at times. Specifically, public accounting lends itself quite well to remote work and a flexible schedule. Some firms may even offer part-time options.
    5. Good pay and benefits. Accounting jobs tend to come with better salaries and benefits than what is offered in many other professions (knowledgeable accountants would accept no less, after all), with the potential for upward movement and salary increases.
    6. Skills that transfer to your personal life. Accounting is very useful in business and as a career field, but these skills are valuable and conveniently transferrable to your own personal life and finances. Basic financial literacy and money management skills aid in your own personal financial planning and success, as well.
    7. Learning an actual job skill in the classroom. As accounting students in college, the topics you learn in the classroom are immediately transferrable to the workplace. You are learning real job skills, not merely concepts and theories. Accounting classes are basically job training.
    8. The CPA license itself. The CPA designation is a well-respected credential that is widely recognized. The CPA is one of the most well-recognized designations there is!

    With so many things to love about the profession, who wouldn’t want to become an accountant?

    To learn more about the requirements to become a CPA and the rewards of a CPA career, visit njcpa.org/becomeacpa.

  • 5 Year-End Financial Planning/Retirement Considerations: A Guide for CPAs

    by Al Kushner, author of 10 Medicare Mistakes Financial Planners Make & How to Avoid Them | Oct 26, 2023

    As the year draws to a close, it’s time for CPAs to gear up and guide their clients through the maze of year-end financial planning and retirement issues. As the economic landscape evolves, so do the challenges and opportunities faced by retirees and those nearing retirement. Here are five considerations:

    1. Revisit Retirement Plans

    The end of the year is an opportune time to revisit retirement plans. CPAs should take the lead in ensuring clients maximize their contributions to retirement accounts such as 401(k)s and Individual Retirement Accounts (IRAs).

    For 2023, the contribution limit for 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $20,500. For people aged 50 and above, the catch-up contribution limit is an additional $6,500. For IRAs, the 2023 limit is $6,000, with a catch-up contribution of $1,000 for those aged 50 and over.

    CPAs should also review the asset allocation in these retirement accounts. With market conditions changing, it may be necessary to rebalance portfolios to maintain the desired level of risk and potential return.

    2. Be Strategic with Tax Planning

    Year-end tax planning is a critical aspect of financial planning. CPAs can help clients minimize tax liability by strategically timing income and deductions. For instance, it might make sense to defer income to the next year or accelerate deductions into the current year, depending on clients’ tax situations.

    Additionally, CPAs should advise clients about the potential tax implications of their investment decisions. For example, selling investments with lost value can offset capital gains from other investments, reducing the overall tax burden.

    3. Avoid Mistakes with Medicare Planning

    Medicare planning is a crucial part of retirement planning, and it’s an area where many financial advisors make mistakes. I’ve seen firsthand how these errors can derail a retirement plan. For example, during the annual Medicare open enrollment period (October 15 to December 7), retirees can change their Medicare health plans and prescription drug coverage for the following year. CPAs should remind their clients about this opportunity and help them evaluate their options.

    4. Discuss Social Security Benefits

    CPAs should review Social Security benefits with their clients. The decision of when to start claiming Social Security can significantly impact the benefits received over a lifetime. For those who can afford to wait, delaying Social Security benefits until after full retirement can increase the monthly benefit amount. On the other hand, for those who need income or have health concerns, claiming early might be the better choice.

    5. Initiate Estate Planning

    Finally, year-end is an excellent time to review and update estate plans. Changes in family circumstances, tax laws or the value of assets may necessitate revisions to wills, trusts, powers of attorney and beneficiary designations. Thus, CPAs have a critical role in guiding their clients through the intricacies of year-end financial planning and retirement issues. By focusing on the areas outlined above, CPAs can provide invaluable assistance to their clients, helping them navigate the complexities of retirement planning and positioning them for a financially secure future.

  • CEO Compass - Fall 2023

    by Aiysha (AJ) Johnson, MA, IOM | NJCPA CEO and Executive Director | Oct 19, 2023

    Making Our Voices Heard

    Election Day is Nov. 7. All 120 seats in the New Jersey Legislature are on the ballot and, with them, control of our state’s government. Our political system is founded on the principle of citizens sharing their views and concerns with policymakers. No matter who you vote for next month, it’s important that you make your voice heard. 

    At the NJCPA, we’ve been making our voice heard. Our advocacy work on the state and federal levels encompasses a broad range of activities designed to encourage fair tax policy, improve government efficiency, solve CPA licensing issues and promote business growth.

    With various challenges facing the accounting profession, it is more important than ever to educate policymakers on the real-life impact of legislative proposals.  

    • Legislation drafted by the NJCPA and NJBIA requiring the state auditor to annually issue a reader-friendly summary of the New Jersey Annual Comprehensive Financial Report (ACFR) was signed in September
    • Efforts to grow and diversify the pipeline of accounting talent have been buoyed by legislation supported by the NJCPA that would add accounting to grades K-12 science, technology, engineering and mathematics education programs, better known as STEM. 
    • The NJCPA has joined with the AICPA to advocate for a delay of the beneficial ownership information (BOI) reporting requirement that will affect many small businesses, to allow more time for businesses and CPAs to understand the requirement.

    To read more about our legislative priorities, visit the Legislative Action Center

    While these efforts are led by the NJCPA government relations team, there are opportunities for members to get involved: 

    As always, we encourage your feedback. Thank you. 

  • Top 5 Wage and Hour and Pay Equity Issues That All New Jersey Employers and CPAs Should Know

    by Kathleen McLeod Caminiti, Esq., and Sarah Wieselthier, Esq., Fisher Phillips LLP | Oct 10, 2023

    Compliance with New Jersey’s wage and hour and pay equity laws can be challenging. Over the last few years, the laws have become more robust and noncompliance more costly. Given that employers often rely upon their CPAs for guidance on compensation issues, it’s important to stay up to date on the key areas where employers often experience compliance challenges.

    1. Minimum Wage Continues to Rise

    For the last several years, New Jersey’s minimum wage has increased annually on Jan. 1 to reach a minimum wage of $15 per hour for most non-exempt employees. Looking ahead to 2024, minimum wage for most employees will increase to $15.13 (or higher).

    2. Ensure Exempt Employees Are Properly Classified

    There is a common misconception that so long as an employee is paid on a salary basis, they are exempt from overtime. For an individual to be properly classified as exempt, they must: (1) earn a salary of at least $684 per week; and (2) perform certain job duties and responsibilities that fall within one of the recognized exemption tests (e.g., administrative, executive, professional). The U.S. Department of Labor (DOL) has proposed a rule that would increase the salary threshold to $1,059 per week, among other changes. Unless the employer can prove the exemption criteria are satisfied, the employee should be classified as non-exempt and paid overtime for all hours worked in excess of 40 hours in a workweek.

    3. Proper Calculation of Overtime

    Overtime is calculated as one and a half times the “regular rate” of pay. But calculating the regular rate can be complicated because additional remuneration that an employee receives, such as commissions, shift differentials and non-discretionary bonuses, need to be included in the calculation. These issues are complex and must be examined closely.

    4. Consider Whether Contractors Are Actually Employees

    Many companies routinely engage independent contractors to perform various services. However, these 1099 workers may be misclassified. Typically, misclassification issues arise when an independent contractor files for unemployment. New Jersey follows the ABC test, under which there is a presumption of employee status unless all of the following factors are established:

    1. The worker has been and will continue to be free from control or direction over the performance of the service;
    2. The work is either outside the usual course of business for the company requesting the work, or the work is performed outside of the company’s place of business; and
    3. The worker is customarily engaged in an independently established trade, occupation, profession or business.

    If this test can’t be satisfied, the individual should be classified as an employee and subject to typical withholding taxes, benefits, etc.

    5. Stay Up to Date on Equal Pay Disclosure Laws

    New Jersey requires equal pay for equal work, and pay disparities are fodder for high-stakes, expensive litigation. Many states and municipalities have recently enacted laws requiring that employers include information regarding the salary range for a position on a job posting. New Jersey does not currently have a state-wide salary range disclosure requirement, but it is likely that legislation will be enacted. Already, Jersey City has an ordinance requiring employers to post a minimum and maximum salary or hourly wages on any job postings. There are also certain reporting requirements for public contractors.

    Failure to properly pay wages may result in significant exposure to damages, penalties and fines. A successful plaintiff can recover triple the amount of unpaid wages owed, plus attorney’s fees and costs. The best way to avoid exposure for wage and hour and equal pay claims is to conduct periodic audits of pay practices to determine whether there are any issues that need to be rectified. Employment policies and practices should be reviewed and updated regularly, especially given the frequent updates to these significant laws.