CONNECTIONS | January - February 2021

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Endowed ASCPA Educational Foundation Scholarship in honor of the late Edward Lamar Reeves 13 ASCPA Educational Foundation

CPE

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Bridging the Gap

Key Alabama Income Tax Considerations Related to the CARES Act Provisions for Individuals and Businesses

Five Ways Boards Can Unlock ESG’s Strategic Value

Environmental, social, and governance (ESG) strategies are ever critical to resiliency and long-term business success.

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Jim Martin & the ASCPA

The work and reflections of key members— the ASCPA’s State Taxation & Legislation Committee

It is critical for CPAs in Alabama to understand the existing Alabama individual and entity-level provisions which will apply for the 2020 tax year unless legislation with a retroactive effective date is enacted this spring.

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CPE for ADD! 25

Inside the ASCPA Message from Jeannine................ 4 Message from the Chair................ 5 Member News............................ 10 Remembering............................. 18 Self-Study CPE............................ 26 Classifieds................................... 26

Forgiven?

Your clients received Payroll Protection loans in spring and summer of 2020 and now come the applications for forgiveness.

Five Technology Resolutions for 2021 2021 has opportunities for us to become more efficient, more effective, and more secure with technology.

We’re @ALsocietyofCPAs on Facebook, Instagram, & Twitter— follow us to see the latest from the ASCPA.

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MESSAGE FROM JEANNINE

W

e made it to the New Year; welcome 2021! I sincerely hope that between work, family, the holidays and your socially distanced circle of friends, 2021 is treating you well so far. I will go as far to say that the ASCPA team has collectively exhaled as 2020 ended and we embrace the new year with a bit more clarity.

This issue is our Tax & Governmental Relations issue, and it could never be timelier.

We are grateful more than ever to have guidance from experts on the ASCPA Tax Committee and contributors, like Karen Miller and Tom Zoebelein, who help us navigate the many benefits (and intricacies) of the CARES Act. The year ended with no Alabama special sessions to disentangle

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taxation concerns associated with the goliath act, but Governor Kay Ivey’s special proclamation mid-December encouraged the Alabama Department of Revenue (ADOR) to act on the interests of taxpayers instead. Karen Miller, ASCPA State Taxation Committee member and University of Alabama professor, gives us some insight on the latest dialogue with ADOR on pages 8-9. And, Tom Zoebelein shares a plain-English overview of the latest steps to PPP loan forgiveness in this issue as well. Please be on the alert for another waterfall of information related to PPP2 legislation and the related Treasury and SBA guidance. The new act coupled with PPP1 forgiveness process, will keep CPAs busy for the foreseeable future.

We expect our tax experts will continue to be a valuable resource through the transition of our incoming President and Alabama legislators. Speaking of, I look forward to meeting with our legislators and with other business leaders as the legislative session kicks off. The Alabama session will likely be conducted differently from “normal” operations with limited visits into their meeting venues but that does not mean that we will be quiet as CPA legislation works its way through the process. So, please continue to share your concerns with us as the 2021 legislative session convenes on February 2nd.

In addition to state advocacy issues, we hope that the management and technology strategies in “Five ways boards can unlock ESG’s strategic value” and “Five Technology Resolutions for 2021” equip you and your team with knowledge to usher changes coming in the new year. As we resume chapter and firm visits throughout the state, we want to hear about the issues and initiatives that are your top priorities. You can always contact me directly at jbirmingham@ascpa.org to share your concerns and ask questions.

Finally, please make a difference and help the future of our profession. You can help by contributing to the ASCPA Educational Foundation. Now more than ever, your contributions encourage and supports the best and brightest prospective CPAs to succeed in the accounting profession. We have had an incredibly busy 2020 with our profession being on the forefront of helping businesses succeed through the COVID pandemic, thus, we must continue to grow our CPA pipeline, the most trusted profession.

Jeannine

MESSAGE FROM THE CHAIR

Welcome to 2021!! I do not know that I have ever anticipated the closing of a calendar year more than that of 2020. Do not misinterpret this though, from a professional business standpoint it has been a tremendous year in so many ways. It seems as if new opportunities popped up weekly for us to perform additional services to our clients. Of course, many of these services were the direct result of changes brought about by the pandemic.

Now, most businesses are going through a year end close to one of the most challenging years that they have had to go through with still many uncertainties going into the new year. Even with all the uncertainties facing everyone, opportunities abound.

When you visit the Society’s website, you will find a number of helpful news items to help keep our members abreast of the many issues that could have an effect on them. You will find information regarding state and national tax issues. Additionally, Jeannine works closely with the committees that the ASCPA has to cover these topics. Three of the ASCPA committees come to mind when thinking about these topics. The Federal Taxation, State Taxation & Legislation, and PAC work hard to make sure the Alabama CPA profession continue to have a voice on the political side of things. These committees not only meet on their own, but also meet annually with the governmental entities to discuss the issues and legislation that effects our members. I would encourage anyone to contact Jeannine or these committee members with

any concerns regarding state and national tax issues. Better yet why not become involved in one of these committees to add a voice to the group? I can assure you that you will gain a great deal by becoming an involved member.

Along with the ASCPA committees discussed above, the AICPA Council representatives from Alabama get to meet on a biennial basis with the Alabama legislative delegation in Washington, D. C. While I have not yet made one of these meetings, this is they year that we plan to meet. Whether it is done virtually or in person, the plan will be as always. We want to discuss those matters that are of the utmost importance to CPAs and to maintain the good relationships that have been built over the years with our legislators. Jeannine has and will continue to build on these relationships with the Alabama delegation in D.C. as will the Council members. The meeting is typically held in the Spring and be sure to let Jeannine or myself know of any concerns or issues you think our legislators need to pay close attention to as it relates to our profession.

As we begin a new calendar year and we reflect back on what 2020 brought us, I cannot help but feel so proud of how we as a profession performed. We met all the issues with vigor and made changes on a dime. I have and will continue to heap praise on the staff at the Society office have handle the rapid pace of change we have all dealt with

this past year. They continue to work diligently to offer the best for the membership. They do that through the programs and benefits offered and through the continued dedication to advocate for the membership on the state and federal level when it comes to tax and legislative issues. We can help them by being an active membership and to continue our commitment to serve our profession. I look forward to continuing my service and I thank you all for your commitment to the profession!

Michael

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BRIDGING THE GAP ASCPA’s State Taxation & Legislation Committee

The ASCPA’s State Taxation Committee is responsible for developing and communicating fair and reasonable legislated and administered taxation at the state and local levels. The committee meets annually with the Alabama Department of Revenue (ADOR) to discuss issues and legislation that effects our membership. Members are at times called upon to participate with public hearings of the ADOR. The information obtained during the annual meeting and public hearings is communicated to the membership via the ASCPA website and weekly electronic newsletters. The committee also tries to communicate changes that occur during the year to the membership and work with the ADOR as needed to improve the tax preparation process for CPAs. Over the years, the ASCPA’s State Taxation Committee has benefited from the expertise, insights, and influence of its committee members. The following members have established friendly relationships between the ASCPA and regulatory bodies, brought clarity in trying times, and offered guidance when navigating state taxation issues.

KAREN POIST

ASCPA State Taxation & Legislation Committee Chair

2020! What a year it has been! A year full of uncertainty. Although, one thing did remain certain and that was the dedication of the ASCPAs and its collaboration with the Alabama State Tax Committee to get us through a tough year! The ASCPAs and the State Tax Committee were in continued communications with the Alabama Department of Revenue to gain state perspectives, guidance and responses to the CARES Act, PPP, teleworkers, nexus issues and the impact they were having on business owners and taxpayers. There are still several unanswered questions, but it is of the opinion that these questions will be addressed, and additional guidance will be given during the next legislative session.

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Serving as the chair of the committee has been such a valuable experience both personally and professionally. The ASCPAs and the Alabama State Tax Committee are well-respected organizations, and it has been an honor to be a part of a leadership team that continues to strive to be an advocate for CPAs in Alabama as well as nationally through the AICPA. The practicing CPAs and professionals who contribute their time and expertise to continually stay on top of tax issues has assisted many. It is truly a team effort from work study groups, introducing tax reform and keeping up with the ever-changing tax laws. Looking forward to a new and challenging year!

KAREN MILLER

ASCPA State Taxation & Legislation Committee Member and ASCPA Connections Contributor

In a year filled with both unprecedented challenges and opportunities for ASCPA members, the ASPCA Tax Committee has been at the forefront of the efforts to ensure that ASCPA members received the guidance and support necessary to address the constantly evolving issues faced by their clients during 2020. The ASCPA Tax Committee has actively monitored the developments related to the ongoing consideration of both the Alabama tax issues associated with the Tax Cuts and Jobs Act of 2017 and the Alabama tax issues which have arisen as a result of the enactment of the CARES Act in March.

Members of the Tax Committee have proactively identified individual,

partnership, and corporate tax issues for which the Alabama guidance was uncertain so that these issues could be discussed with the Alabama Department of Revenue. Though these efforts, many of these issues have been resolved quickly, and ASCPA members have received the guidance necessary to address these questions for their clients. The Tax Committee members have also assisted Alabama legislators with the modeling of the potential tax impact of several pending state legislative proposals, an effort which will hopefully facilitate the enactment of critical tax legislation in an upcoming special session.

TOM ZOEBELEIN

ASCPA State Taxation & Legislation Committee Member, ASCPA Connections Contributor, and Past-Chair

Prior to my joining the ASCPA State Tax Committee, the Department of Revenue and the ASCPA State Tax Committee were at odds over the Department changing the state tax credit. I joined the committee so that our firm could have input in the future. Two weeks after joining the committee, I was honored to be asked to be its chair.

chairmanship position. I told her my belief was that the Department and the ASCPA State Tax Committee were members of the same team with the same goal of insuring tax compliance. We only asked that our clients be treated fairly, to ensure that they would only pay the tax they owe, not a penny more nor a penny less.

One week before chairing my first tax committee meeting with the Department, Jeannine arranged for me to meet with the Revenue Commissioner. In that meeting, I told the Commissioner that as a new committee member, I did not bring any baggage into the

Building on mutual respect, the ASCPA State Tax Committee together with the Department of Revenue’s staff began working as a team sharing each other’s strengths and prospective benefiting the Alabama taxpayer.

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Key Alabama Income Tax Considerations Related to the CARES Act Provisions for Individuals and Businesses After the enactment of the CARES Act in March, the ASCPA State Tax Committee closely monitored the status of the ongoing efforts to alert the state’s legislative delegation to the critical need for a special legislative session during which several pandemic-related bills could be considered. Legislation which would have addressed the Alabama individual and entity-level income tax implications of the provisions in the CARES Act had been included in the group of potential bills which could have been considered during a special session, if it had been called before the close of the calendar year. Despite the significant efforts of the ASCPA leadership team and the ASCPA State Tax Committee to continuously highlight the critical need for this legislation, a special legislative session was not called during the summer or the fall.

Acknowledging that both the regular legislative session and the potential scheduling of a special session had been adversely impacted by the pandemic, Governor Kay Ivey issued the “21st Supplemental Emergency Proclamation” (“Proclamation”) on December 11, 2020, to provide the critical guidance related to Alabama tax treatment of certain taxpayer benefits provided in the CARES Act, including the Economic Impact Payments, Recovery Rebate Credits, and the cancellation of indebtedness income associated with Paycheck Protection Program (PPP) loan forgiveness. Governor Ivey authorized the Commissioner of Revenue to revise the 2020 income tax forms and instructions as needed to reflect the provisions outlined in the Proclamation.

On December 18, 2020, the Alabama Department of Revenue issued formal guidance “to effectuate the implementation of the tax relief measures included in the Proclamation.” A summary of the items addressed in the guidance issued by the Alabama Department of Revenue is included below. Please note that this summary does not incorporate any of the Alabama tax considerations related to the federal legislation passed by Congress on December 21, 2020. The analysis of that legislation is ongoing, and the ASCPA will continuously update members as additional information becomes available. The ASCPA also encourages members to actively monitor the status of tax legislation as the regular Alabama legislative session convenes in early February.

Analysis of the Guidance Released by the Alabama Department of Revenue on December 18, 2020 Economic Impact Payments and 2020 Recovery Rebate Credits In the Proclamation issued by Governor Ivey, Alabama individual taxpayers received the long-awaited clarification regarding the Alabama tax treatment of both the Economic Impact Payments provided under the CARES Act and the related Recovery Rebate Credits which will be reflected on the 2020 federal income tax returns of many Alabama taxpayers who did not receive the full amount of the 2020 income tax credit through the advance Economic Impact Payments. Governor Ivey’s Proclamation provided an exclusion from Alabama income taxation for the Economic Impact Payments and the related Recovery Rebate Credits and an exclusion from the calculations related to a taxpayer’s federal income tax deduction

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for purposes of calculating Alabama taxable income.1 The guidance issued by the Department of Revenue provides for these exclusions as well, further clarifying that the worksheets for the calculation of the Federal Income Tax Deduction have been modified to exclude any adjustment for the 2020 Recovery Rebate Credits which may be reported by Alabama taxpayers on the 2020 federal income tax returns.2 Paycheck Protection Program (PPP) Loan Forgiveness The Proclamation also provided an exclusion from the calculation of income taxes for individuals, corporations, and taxpayers subject to the financial institution excise tax for the cancellation of indebtedness income resulting from a PPP loan forgiven pursuant to section 1106 of the CARES Act. Additionally, the Proclamation provided for the exclusion of the cancellation of indebtedness income from the calculations associated with the determination of a taxpayer’s federal income tax deduction.3 At the time of the issuance of the Proclamation on December 11, 2020, significant uncertainty existed regarding the potential deductibility of the expenses paid with proceeds from PPP loans which were forgiven under section 1106 of the CARES Act and excluded from gross income. The Proclamation addressed this issue, noting that “any amount of cancellation-of-indebtedness income resulting from a loan forgiven pursuant to section 1106 of the CARES Act, as it now exists, shall only be considered for Alabama tax purposes in determining the deductibility of otherwise deductible expenses…to the same extent as such expenses are deductible in calculating federal income tax.”4 The guidance issued by the Alabama Department of Revenue on December 18, 2020, also provided additional commentary related to the deductibility of the expenses paid with proceeds from forgiven PPP loans, noting that taxpayers may not deduct the expenses, even if the taxpayer has not submitted an application for forgiveness of the loan by the end of the 2020 tax year. The Department referenced the guidance which existed for federal tax purposes as of December 18, 2020, in support of this conclusion.5 Subsequent to the release of the Department’s guidance, Congress enacted the “COVID-related Tax Relief Act of 2020,” and Section 276 of this act provided that “no deduction shall be denied, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income.” At the time of the publication of this issue, Alabama’s conformity to this provision is still uncertain, and the ASCPA has requested that the Alabama Department of Revenue provide additional guidance which addresses Alabama’s conformity, or lack thereof, to this provision in the “COVID-related Tax Relief Act of 2020.” Practitioners are encouraged to monitor the updates from the ASCPA with respect to this issue in the coming weeks.

1 Section I.B of the “21st Supplemental Emergency Proclamation” 2 Section I.A and I.B of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 3 Section I.C of the “21st Supplemental Emergency Proclamation” 4 Section I.C.2 of the “21st Supplemental Emergency Proclamation” 5 Section I.A.5 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue

The guidance released by the Alabama Department of Revenue provided further clarification and instruction regarding the exclusion from gross income and the exclusion from the calculation of the taxpayer’s federal income tax deduction for corporate taxpayers and taxpayers subject to the financial institutions excise tax. Because the calculation of the Alabama corporate income tax and the calculation of the financial institution excise tax begin with a taxpayer’s federal taxable income, the Department noted that no adjustment would be needed to report the Alabama exclusion from gross income for the cancellation of indebtedness income associated with PPP loans or the disallowance of the deduction for the expenses paid with the proceeds from the PPP loan.6 The treatment of any non-deductible expenses associated with the PPP loan proceeds in calculating a multistate taxpayer’s apportionment factors has been debated by many states since the enactment of the CARES Act. The Department provided guidance with respect to this issue in the release on December 18, 2020, confirming that any non-deductible PPP expenses should be included in the calculation of the apportionment factors for Alabama income tax purposes.7 Other Direct Benefits Received by Taxpayers Under the Federal CARES Act In addition to providing the exclusion from gross income for the Recovery Rebate Credits, the Economic Impact Payments, and the cancellation of indebtedness income resulting from PPP loan forgiveness, the Proclamation also noted that the exclusion would apply to “other direct benefits a taxpayer receives under the federal CARES Act.”8 The Proclamation did not define the phrase “other direct benefits,” and consequently there was uncertainty regarding the extent to which the exclusion from gross income would apply to certain other provisions included in the federal CARES Act. After the ASCPA State Tax Committee issued a request for guidance on this topic to the Alabama Department of Revenue, the Alabama Department of Revenue incorporated further clarification in the guidance released on December 18, 2020.

The Alabama Department of Revenue adopted a broad definition of the phrase “other direct benefits” and extended the exclusion from gross income to the following federal CARES Act provision: 1. Principal or interest payments incurred by an employer on behalf of the taxpayer on any qualified education loan that is excluded from the employee’s federal gross income pursuant to IRC Section 127(c)(1)(B), as amended under Section 2206(a) of the CARES Act;9 10

6 Section III.A.1 and 2 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 7 Section III.A.3 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 8 Section I.B of the “21st Supplemental Emergency Proclamation” 9 Section I.A.2 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 10 Note that the Alabama Department of Revenue highlighted the fact that “other forms of educational assistance as defined in IRC Section 127(c)(1)(A) and (C), provided by the taxpayer’s employer…continue to be includable in the calculation of Alabama income tax.” See Section I.A.2 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue.

2. Amounts received from the state Coronavirus Relief Fund (CRF), including Revive Alabama and Revive Plus grants11; and 3. Qualifying disaster relief payments received by the taxpayer that would be excluded from federal income taxation under IRC Section 139.12 Regarding the CRF grant awards, the Department provided clarification regarding the differences between the federal tax treatment of the grants and the Alabama tax treatment of the grants. For federal purposes, the current IRS guidance indicates that grants of this type by state governments will be considered taxable gross income. Because the grants are taxable for federal purposes, the expenses paid with the grant funds are deductible in calculating federal taxable income, assuming that the normal criteria for deduction under IRC Section 162 are satisfied. Conversely, in calculating Alabama taxable income, the CRF grants will be excluded, and the expenses for which taxpayers were reimbursed through the CRF grant awards will be nondeductible. Given that the income inclusion for federal purposes is offset by the deduction for the expenses paid with the grant funds, the same net result is achieved for both federal and Alabama tax purposes. Accordingly, no adjustment will be needed in calculating Alabama taxable income.13 Additional Considerations for Employers Regarding the exclusion from gross income for the employer-provided qualified education loan payments under IRC Section 127(c)(1)(B) and the employer-provided disaster relief payments under IRC Section 139, the Alabama Department of Revenue provided further clarification regarding the calculation of the Alabama wages reported on Form W-2 for the 2020 tax year. Both of the aforementioned employerprovided payments should not be included in Alabama wages for the 2020 tax year.14 Next Steps for Alabama Practitioners and Taxpayers As highlighted at the beginning of the article, the legislation enacted

by Congress on December 21, 2020, is still under evaluation by the ASCPA State Tax Committee and the Alabama Department of Revenue as of the time of publication for this issue. Any changes to the aforementioned conclusions resulting from the consideration of the legislation will be communicated by the ASCPA to its members as soon as possible. Practitioners are encouraged to monitor the email communications from the ASCPA on a frequent basis in the coming weeks.

11 Section I.A.3 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 12 Section I.A.4 of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 13 Section III.B of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue 14 Section II.A and B of the Guidance Related to Governor Kay Ivey’s 21st Supplemental Emergency Proclamation issued on December 18, 2020 by the Alabama Department of Revenue

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MEMBER NEWS Anglin Reichmann Armstrong, P.C. is pleased to announce the following promotions for the following Huntsville employees.

LeAnne Goode, Manager, Audit and Assurance Services Meg Hampton, Manager, Audit and Assurance Services Andrew Labosier, Manager, Tax Advisory Services Elena Miller, Manager, Solutions Services Emily Zirbel, Manager, Solutions Services Kayla Burgess, Supervisor, Solutions Services Raven Howlet, Senior Accountant, Audit and Assurance Services Ellen Deasy, Senior Accountant, Solutions Services Laken Hooper, Senior Accountant, Solutions Services

professional membership in the American Institute of Certified Public Accountants, the Alabama Society of Certified Public Accountants, and the Society of Depreciation Professionals. Compton is a member of the Kiwanis Club of Montgomery, serves as a board member and Team Captain for the Greater Montgomery YMCA’s Hitchcock Committee, and is current treasurer of the Associate Committee of The Telecommunications Association of the Southeast (TELSE).

Smith Dukes is happy to announce the promotions for the following employees: Evan Cox, CPA promoted to Assurance Supervisor Miya Barnes, CPA promoted to Assurance Supervisor Joy Mothershed, CPA promoted to Assurance Supervisor Brandon Wolf, CPA promoted to Senior Accountant Ashley Jernigan, CPA promoted to Senior Accountant

“These individuals display a commitment to our firm’s promise to our clients,” says Gary Anglin, Managing Partner. “It’s gratifying to recognize the contribution these professionals make toward the successes of our clients and our firm. These promotions are a well-deserved testament of their hard work and dedication.”

Jackson Thornton, a certified public accounting and consulting firm, is pleased to announce that Tuan P. Blank and Richard B. Compton have been selected as the firm’s newest principals.

Tuan P. Blank is a principal in the firm’s Franklin, TN office. Blank, a Certified Public Accountant since 2005, specializes in audit and accounting services for clients in the utilities industry. She is a graduate of the University of West Florida, where she obtained both her undergraduate and Master of Accountancy degrees. Blank holds professional membership in the American Institute of Certified Public Accountants as well as the Tennessee Society of Certified Public Accountants. She serves as treasurer of the East Williamson Athletic Association.

Richard B. Compton is a principal in the firm’s Montgomery, AL office. Compton, a Certified Public Accountant since 1998, specializes in audit, accounting and consulting services for clients in the utilities industry. He also oversees cost consulting and regulatory compliance for the firm’s telecommunications clients. Compton earned his undergraduate degree from Auburn University and his MBA from Auburn University Montgomery. He holds 10

ASCPA Connections

WHAT’S HAPPENING OUT THERE Anglin Reichmann Armstrong hosted a ‘Serve Day’ to connect employees with local non-profits. Employees completed a variety of service projects in COVID-friendly ways to support the community in Huntsville and Pensacola, Florida.

HOUSE OF HARVEST CANNED FOOD DRIVE Employees collected canned food items November 1 – November 13 to benefit Food Bank of North Alabama. On November 13, ‘Serve Day’, a group of employees delivered the boxes of canned food items to this local non-profit.

WATER BOTTLES FOR LOCAL TITLE 1 SCHOOL Because of the COVID-19 pandemic, water fountains are off-limits at schools. Children are asked to bring reusable water bottles and refill them at fill stations throughout the school. Not all of the students at MLK Elementary School had reusable water bottles, so Anglin employees wanted to help them fill this need. On ‘Serve Day’, Anglin employees delivered reusable water bottles to the children at this elementary school.

“Anglin employees who volunteered their time and services during our annual ‘Serve Day’ showed their commitment to our local communities. It’s encouraging to see our Anglin team coming together to support the greater good during this uncertain time,” says Gary Anglin, Managing Partner.

The Anglin team also served the following non-profits by completing a variety of projects on ‘Serve Day’: • Manna House: Hydroponic garden care • Village of Promise: Helped catalog and re-shelve books in their library, assembled One Table bags to support the Village of Promise annual fundraiser, and helped build outdoor art boards • 305 8th Street: Garden bed clean up, helped with small

maintenance projects—replacing screws, light bulbs, and organizing laundry closet—and wrote pen pal letters to 305 8th Street residents • Furget Me Not Animal Rescue: Created bandanas to help dogs get adopted from shelters

Only 278 firms nationwide were selected and only ten in Alabama.

Jackson Thornton was selected as being a top recommendation in both the tax and accounting areas. Forbes and market research company Statista partnered to create the list, which considered thousands of survey responses from CPAs, enrolled agents, tax lawyers, accountants, CFOs, and other clients.

• HEALS, Inc.: Organized the shoe closet at MLK Jr. Elementary

Forbes named Birmingham-based Kassouf one of the top firms of 2021 in their annual America’s Best Tax and Accounting firms list December 3, 2020.

• Friends, Inc.: Completed yardwork at patients’ homes

Forbes and Statista, a database company specializing in market and consumer data, created the list based on surveys of tax and accounting professionals and their clients. Kassouf is one of 178 companies recommended for both tax and accounting services.

• Local Police Precinct: Packaged COVID-friendly snacks and notes to be delivered to officers In addition to ‘Serve Day’ on November 13, The Anglin team located in Pensacola, Florida has supported the local community with Hurricane Sally clean-up through Council on Aging of North West Florida, and has volunteered with the Manna Food Pantry and Humane Society Pet Drive this year.

“Kassouf is honored to be recognized by America’s leading business magazine as a top firm. We continually strive to help our clients succeed, whether it’s through tax accounting, healthcare consulting or wealth management. It’s exciting to be honored as one of our country’s best firms,” said Kassouf Director and Shareholder Gerry Kassouf.

“We look forward to continue growing our services, but one thing remains the same: excellent support for our clients. Thank you to Forbes for honoring us with this prestigious award,” said Kassouf Director and Shareholder David Kassouf.

ChannelE2E, published by After Nines Inc., has named Warren Averett Technology Group to the Top 250 Public Cloud MSPs list for 2020 (http://www.ChannelE2E.com/top250).

The list and research identify and honor the top managed IT service providers (MSPs) that support customers on Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP) and more.

“We’re honored to receive this recognition,” says Emily Jones, Practice Leader and Director of Operations for Warren Averett Technology Group. “We’re very proud of the hosting changes we’ve made in moving from a private datacenter to cloud hosting in Azure.

Our team is dedicated to providing forward-thinking services and solutions so that our clients can thrive in this ever-evolving world of technology.”

Jackson Thornton, a certified public accounting and consulting firm headquartered in Montgomery, AL, is pleased to announce that, for the second year, it was named as one of America’s Best Tax & Accounting Firms by Forbes.

“After Nines Inc. and ChannelE2E congratulate Warren Averett Technology Group on this year’s honor,” said Amy Katz, CEO of After Nines Inc. “Businesses worldwide require MSPs like Warren Averett Technology Group to ensure safe, successful and secure cloud migrations backed by ongoing support.”

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T N E L TA ’s A M A B A AL st e t h g i r BEST & B

CPAS

Endowed ASCPA Educational Foundation Scholarship in honor of the late Edward Lamar Reeves Edward Lamar Reeves, beloved Alabama Society of CPA member and resident of Spanish Fort, passed away on December 1, 2020. Lamar was 56 years old. He was a loving husband, father, son, brother, and friend to many. He is survived by his loving wife, Betsy, and daughter, Racheal.

In memoriam, the ASCPA is encouraging donations to the ASCPA Educational Foundation to help establish an endowed scholarship to honor his legacy.

Many will remember him as a devoted professional and for his extension contributions to the CPA profession. Lamar joined Smith Dukes after he graduated from the University of Montevallo in 1986. He was admitted to the firm partnership in 1998.

His areas of concentration were audits of closely held businesses as well as corporate, partnership, individual and estate taxation and planning. He was also responsible for the firm’s automotive dealer accounting and taxation team.

He served as 2010/2011 Chair of the Board of Directors of the ASCPA, having served previously in all other offices, as a member of the board, and in numerous offices for the Mobile Chapter of the ASCPA. He was also a member of the American Institute of CPAs’ Council from 2010-2017. In 2017, Lamar was awarded the ASCPA Life Member Award.

That same year the award was renamed in his honor to the Edward Lamar Reeves Life Member Award in recognition of his service to the profession.

His other professional affiliations include the Estate Planning Council of Mobile, where he served a term as a member of their board. He was also involved in the community as an elder and treasurer of Faith Family Fellowship, as treasurer of the Lions Club of Mobile and the Mobile Lions Charity Foundation, and as a member of the board of directors of Pilots for Christ, Inc. He served as a member of the Providence Hospital Foundation Board of Directors, as a member of the board of trustees of the University of Montevallo Foundation, and as

a member of the board of the Old Spanish Fort Christian School, including a term as president. Lamar has been recognized by the University of Montevallo’s National Alumni Association with a “Leader of the 21st Century” award.

Lamar’s contribution to the ASCPA was been marked by his thoughtful consideration of board issues, visionary approach, serious weighing of options and wise counsel leavened by his twinkling eyes, and incisive wit. He always showed up.

His wife, Betsy, has supported him in his service to the ASCPA and accompanied him on trips to AICPA Council meetings. Every time Lamar visited the ASCPA office, he carried her homemade mini Bundt cakes for each staff member. If he had not already been a favorite member, this would have done it.

It is our honor to establish and fund an endowed scholarship from the ASCPA Educational Foundation in memorial of this champion of our profession. Thank you in advance for the contributions you submit to make this possible.

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FIVE WAYS BOARDS CAN UNLOCK ESG’S STRATEGIC VALUE

BY STEPHEN KLEMESH, EY CENTER FOR BOARD MATTERS LEADER

To thrive in this new era of accelerating transformation and stakeholder capitalism, companies should embrace ESG as a business imperative.

Environmental, social and governance (ESG) strategies are ever critical to resiliency and long-term business success. COVID-19 and its exponential impacts have transformed societal norms and interactions, exacerbated social and economic inequality and heightened demands for companies to be accountable to their stakeholders.

Financial figures alone no longer tell a company’s whole story. The pandemic has also cast a spotlight on corporate resilience and purpose just as the climate crisis, changing demographics, emerging innovations in technology and other forces may drive further upheaval and radically reshape expectations of business. It has become clear that ESG issues are critical business issues. To sustain and thrive in this new era of accelerating transformation and stakeholder capitalism, companies should embrace ESG as a strategic business imperative.

This article explores five ways boards can enhance their oversight of ESG and better position the company to unlock value.1. Address heightened investor expectations

1. Address heightened investor expectations

This year saw a record number of shareholder proposals on environmental and social topics secure majority support, as well as an uptick in the incorporation of ESG factors into activist hedge fund strategies4. Companies that are signatories to the Business Roundtable’s Statement on the Purpose of a Corporation are under particular scrutiny from investors and other stakeholders regarding how they are implementing that commitment.

It is essential for boards to understand how evolving ESG investing and stewardship trends are impacting access to capital and relationships with investors. They should be sufficiently informed to confirm whether the company is effectively capitalizing on these trends to attract long-term investors and secure shareholder support.

How we see it We believe capital will increasingly shift to organizations that create value in the long term, across a broader group of stakeholders. Long-term-value creation requires a strategy that is inclusive of stakeholders, business capabilities for successful execution and demonstrated impact in the market through measurement, reporting and a cohesive narrative.

Capitalize on ESG investing and stewardship trends.

A sustainable investing surge is underway. Driven by many factors, such as investor demand and increasing recognition that ESG factors can be financially beneficial, ESG investing strategies have gone from niche to mainstream to now transforming the flow of capital. In 2020, ESG investing strategies surpassed $1 trillion for the first time on record after net inflows of $71.1 billion in the wake of the pandemic1.

Significant growth in ESG-branded funds and indexes points to continued momentum2.

Investors are also raising the stakes when it comes to ESG stewardship. The high-profile ESG engagement priorities of BlackRock and State Street, as well as the over 3,000 investor signatories to the Principles for Responsible Investment, underscore the strength and breadth of investor commitment in this area, as do related proxy voting and activism trends3.

1 Sustainable investment funds just surpassed $1 trillion for the first time on record, CNBC, August 11, 2020.

2 Jon Hale, The Number of Funds Considering ESG Explodes in 2019, Morningstar, 30 March 2020; and the Index Industry Association’s Third Annual Global Index Survey, which found 13.85% growth in ESG indexes in 2019 (see www.indexindustry.org).

3 See Larry Fink, Chairman and CEO, BlackRock, letter to CEOs, A Fundamental Reshaping of Finance, January 2020, and BlackRock Investment Stewardship Engagement Priorities for 2020, March 2020.

See also Cyrus Taraporevala, President and CEO, State Street Global Advisors, CEO’s Letter on our 2020 Proxy Voting Agenda, January 2020. See also the Principles for Responsible Investment.

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Adapt to significant changes in business context

Today’s ESG-oriented investing trends are forward-looking and anticipate profound shifts in the business environment over the long term. Key forces and megatrends that are shaping tomorrow’s business environment, such as exponential climate impacts, the rise of Gen Z, and powering human augmentation, will further sharpen the focus on corporate purpose and the interdependence of long-term financial value and social and environmental factors5.

Maximizing value over the long term can only be accomplished by considering certain stakeholders, including employees, customers, suppliers, community stakeholders and investors. By understanding and adapting to this emerging business context, directors are better positioned to challenge the status quo and support future strategies.

4 “The Next Wave in Shareholder Activism: Socially Responsible Investing,” The Wall Street Journal, 8 March 2020. Also, for insights on how EY’s market engagement reflects current ESG investing trends, see How will ESG performance shape your future? Why investors are making ESG an imperative for COVID-19 and beyond, EY Climate Change and Sustainability Services, Fifth global institutional investor survey, July 2020; and 2020 proxy season preview: What investors expect from the 2020 proxy season, EY Center for Board Matters, January 2020.

2. The ESG ecosystem and developments impacting stakeholder expectations Know the key players shaping the ESG ecosystem and how your company is viewed.

Enabling today’s rapidly evolving ESG investing trends is an ever-expanding ESG ecosystem. Key players shaping this ecosystem include corporate reporting standard-setters that provide guidance for ESG disclosures; data aggregators that structure publicly available data or that request data from companies via questionnaires; rating agencies that create assessments of companies based on public and/or private information to sell to investors; and increasingly in many jurisdictions, regulators.

Depending on the identification of the priority stakeholders and ESG issues, some or many of these organizations could be significant in communicating the company’s narrative. Knowing this ecosystem and how the company is viewed should be part of the board’s oversight of strategic decisionmaking and communications.

Keep pace with market-driven and regulatory developments

Recent market-driven and regulatory developments are further

accelerating standardized ESG reporting and impacting the expectations of stakeholders, particularly investors, subjecting the ecosystem above to ongoing disruption. By staying up to date on these and related developments, boards can help their companies keep pace with market trends and stakeholder expectations and potentially get ahead of regulation.

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3. Guide ESG strategy development that drives stakeholder engagement and value Know what matters and oversee a materiality assessment.

A fundamental step in ESG strategy development is a sustainability materiality assessment. A materiality assessment involves engaging with a company’s most important stakeholders to identify and prioritize ESG topics that are most relevant to the business and where the company can make the most meaningful impact. This is a critical early step as it helps filter the excessive number of ESG issues into a more manageable set upon which to focus.

In this context, the term “materiality� does not reference any particular regulatory definition; it applies more broadly to topics that can have different levels of relevance depending on the stakeholder.

Overseeing the materiality assessment helps boards understand and help efficiently drive the social and environmental issues that intersect most directly with the business.

Guide an ESG strategy

Once ESG priorities are defined, then the board should help guide the design of an ESG strategy that strengthens current business initiatives and addresses gaps related to those priorities. With the materiality assessment as the foundation, companies should allocate resources to ESG initiatives that are aligned to the highest priorities and drive long-term business value.

Strategic ESG priorities should be limited in number, focused on the midterm (i.e., bridge long-term aspirations and short-term objectives) and evaluated using scenario planning tools. They should also pull toward the future, address critical opportunities and vulnerabilities and provide concrete guidance that aligns the organization to execute effectively against these priorities.

Oversee ESG goal setting and metrics

It is important for boards to oversee ESG goal setting and the identification of relevant metrics to measure, manage and communicate progress. Suitable criteria for metrics should be defined considering objectivity, reliability and consistency and should leverage external reporting frameworks and science-based goals.

Goals should be quantified and have a set time frame with year-overyear progress communicated externally.

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The role of the board, particularly the compensation committee, is to consider whether executive pay should be aligned to key ESG goals to incentivize management. Given increasing stakeholder scrutiny of such pay alignment, the compensation committee should be able to provide a clear rationale for how ESG goals are incorporated to the executive pay program, or, if they are not incorporated, why. These measures should also be sufficiently specific.

Provide for transparent ESG governance structures

While organizational and board structures vary across companies, strong governance is fundamental to success. At the board level, oversight structures may provide for the full board overseeing ESG

integration into strategy and enterprise risk management (ERM); the audit committee overseeing ESG disclosure processes and controls and obtaining internal and external assurance over ESG reporting; the compensation committee overseeing the alignment of ESG goals to executive pay; and the nominating and governance committee overseeing ESG governance, stakeholder expectations and related board expertise.

An integrated ESG strategy also includes considerations related to capital allocation, supply chain management, marketing, partner choice and investments — many of which create ESG risks and opportunities that can impact the business. Ultimately the board can help management move beyond viewing ESG as a compliance exercise to integrating ESG into a purpose-driven strategy that will drive competitiveness across multiple dimensions6.

Some boards may choose to create a separate sustainability committee or an environmental, health and safety committee to explicitly focus on ESG risks and opportunities. The most effective structure may change based on the company’s circumstances and the advancement of its sustainability journey.

Mitigate accelerating sustainability risks through ESG integration into ERM

Whatever structure the board chooses for oversight, those responsibilities should be incorporated into board and committee charters and policies, and they should be disclosed. Communicating the board’s processes and structures for governing ESG — as well as the experiences, activities and education that enhances the board’s competencies in this area — is vital to building stakeholder confidence in the board’s leadership and oversight.

4. Support the integration of ESG with broader strategy and ERM An integrated ESG strategy includes considerations related to capital allocation, supply chain management, marketing, partner choice and investments.

Integrating ESG into broader business strategy can enhance performance and further differentiate the company from its competitors. It involves rethinking and redefining the strategy and operational processes with an ESG lens to enhance competitiveness and sustain lasting profitability. The potential value of an integrated ESG strategy includes: • • • • •

Highlighting the sustainability of the company’s business model over the long term with consideration given to material ESG opportunities and risks Market differentiation through strategic positioning in terms of sustainability Innovation of products, services and processes with sustainability attributes to capture larger market share and address unmet stakeholder needs Enhanced brand and reputation among consumers, employees and investors who are increasingly environmentally and socially conscious Better relationships with stakeholders, who can obtain a better understanding of the organization’s overall commitments and actions

ESG-related risks are among the most significant risks facing businesses today. According to the World Economic Forum’s Global Risks Report 2020, the top five risks in terms of likelihood are all environmental risks (extreme weather, climate action failure, natural disasters, biodiversity loss and human-made environmental disasters), and three of the top five risks by impact are also environmental (climate action failure, biodiversity loss and extreme weather)7.

Integrating ESG risks consistently through existing ERM governance practices and processes can help risk management and sustainability practitioners navigate these accelerating ESG-related risks.

In collaboration with the Committee of Sponsoring Organizations of the Treadway Commissions (COSO) and the World Business Council for Sustainable Development, the global EY organization supported the development of guidance Enterprise Risk Management: Applying enterprise risk management to environmental, social and governance-related risks. It offers information and leading practices to organizations seeking to integrate ESG risks into ERM structures and processes utilizing the principles in COSO’s ERM framework8.

By challenging how sustainability risks align with enterprise risk management priorities, boards can help increase the consistency and cohesiveness of sustainability-related risk management. ESG integration into ERM also helps to improve decision-making and resource allocation, reduce disruptions to strategy and operations, minimize financial impacts and improve stakeholder confidence.

5. Consider how the company tells its ESG story Key factors for Boards to consider as they oversee ESG disclosures.

ESG communications and reporting provide stakeholders a broader view into how the company is delivering and protecting value.

Further, ESG disclosures provide a forward-looking view and insights into how the company is building resilience and strengthening its competitive positioning. As boards oversee ESG disclosures, they should consider the following key factors.

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Disclosures should align to investor expectations and needs.

By aligning reporting to external frameworks, companies can determine whether they are providing the comparable, decision-useful ESG data investors seek.

Robust disclosure processes and controls must underpin ESG reporting. Companies should have rigorous disclosure processes and controls in place, including those related to data quality.

Involving internal audit and obtaining internal and external assurance provides credible, quality ESG data to the marketplace and builds stakeholder confidence in the reliability of this infor-

6 For more on the concept of dynamic materiality, see Statement of Intent to Work Together Towards Comprehensive Corporate Reporting, Summary of alignment discussions among leading sustainability and integrated reporting organizations CDP, CDSB, GRI, IIRC and SASB, September 2020.

7 The Global Risks Report 2020, World Economic Forum in partnership with Marsh & McLennanand Zurich Insurance Group, 2020.

8 Enterprise Risk Management: Applying enterprise risk management to environmental, social and governance-related risks, Committee of Sponsoring Organizations of the Treadway Commission and World Business Council for Sustainable Development, October 2018.

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mation.

Unified narrative should be used across reporting domains. While different company communications will target different audiences and have different objectives, all communications should articulate a clear, consistent longterm strategy for value creation.

Companies should consider whether to integrate material ESG metrics into regulatory filings. Sustainability factors reasonably likely to materially affect the financial condition or operating performance of a company are of particular interest to investors, and when financially material or present a material risk factor, may be required to be disclosed.

The path forward: creating and communicating long-term value As ESG investing, strategy and communication evolve, material ESG factors will become further integrated into business fundamentals and serve a critical role in how long-term value is created and reported. As the shape of business value continues to change, boards should recognize and prioritize ESG as a business imperative and create transparent governance structures and disclosures to help advance the company’s strategic journey.

By understanding the ESG landscape, overseeing the integration of ESG factors into strategy and ERM, and monitoring how related performance is communicated, boards can enhance their companies’ ability to further create long-term societal, environmental and financial value.

REMEMBERING EDWARD LAMAR REEVES

JOAN JACKSON SANDERS SEWASTYNOWICZ

December 24, 1963-December 1, 2020 Spanish Fort, AL | Certificate #3894

March 2, 1943-October 27, 2020 Anniston, Alabama | Certificate #2638

Edward Lamar Reeves, a resident of Spanish Fort, AL, passed away on December 1, 2020. Lamar was 56 years old. He was a loving husband, father, son, brother, and friend to many. Lamar graduated from the University of Montevallo in 1986 with a degree in Accounting and was a CPA & CGMA. Lamar joined Smith Dukes & Buckalew, LLP in 1986 and became a partner in 1998. Lamar was a devoted professional and tremendous advocate for the ASCPA, serving in various roles and offices including chairman in 2010-2011. He was awarded the Life Member Award by the Society in 2017 which was named in his honor in recognition of his service to the profession.

Lamar was also a member of the American Institute of Certified Public Accountants (AICPA) where he served as a member of the AICPA Council from 2010-2017. Other professional affiliations include the Estate Planning Council of Mobile, where he has served a term as a member of the board. Lamar was involved in the community as an elder and treasurer of Faith Family Fellowship Baptist Church, as treasurer of the Lions Club of Mobile and the Mobile Lions Charity Foundation, and as treasurer and a member of the board of directors of Pilots for Christ, Inc. Additionally, he served as a member of the board of directors and treasurer of the Providence Hospital Foundation and as a member of the board of trustees of the University of Montevallo Foundation. He served as a member of the board of the Old Spanish Fort Christian School, including a term as president. Lamar was recognized by the University of Montevallo National Alumni Association with the prestigious “Leader of the 21st Century Award.” Lamar’s faith in God was a driving force in how he lived his life.

Joan Jackson Sanders Sewastynowicz passed away at her home on October 27, 2020. A loving wife, mother and grandmother, her greatest joys in life were reading, cooking and playing with her grandchildren. Joan will be remembered as a CPA with offices in Oxford and Anniston where for many years she enjoyed assisting her clients and especially in helping small businesses. Joan was a former president and council representative with the Northeast Alabama Chapter of the ASCPA and was a member of the American Institute of Certified Public Accountants. Her active participation in the Anniston Rotary Club included time spent as secretary and member of the board of directors. Joan was treasurer of the Longleaf Botanical Gardens, a member of the Women’s Executive Network, and served on the board of Leadership Calhoun County following her graduation from that program. Joan was a member of Meadowbrook Baptist Church where for many years she sang in the choir and taught Sunday School.

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Growing up in the small town of Fulton, Joan was very active in the Fulton Baptist Church where she played the piano for church services and taught Sunday School and Vacation Bible School. Joan attended Fulton School through the 9th grade and was Valedictorian. Following graduation from A.G. Parrish High School in Selma, Joan attended Judson College and later earned a Bachelor of Science degree in accounting from Indiana State University, Terre Haute, Indiana.

In lieu of flowers, the family suggests a contribution to Meadowbrook Baptist Church, 1125 Meadowbrook Court, Oxford, Alabama 36203.

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E-13931-121 AL

TOM ZOEBELEIN I once read on a t-shirt “old accountants never die they just lose their balance.” Now at age 70 I have decided to take heed and bring more balance into my life. This means effective with this issue I will be reducing the number of articles I write for the ASCPA Connections Magazine. This does not mean “Zoebelein on Tax” is gone forever - just less often. Be assured I will still cover major tax topics and important legislation.

Seeking Forgiveness Your clients received Payroll Protection loans in spring and summer of 2020 and now come the applications for forgiveness. Keep in mind you have ten months from the end of the twenty-four week period to apply. Some brave souls did apply for forgiveness and have actually received notice they were forgiven during the tail end of 2020. As I write, there is proposed legislation to ease the PPP forgiveness process for loans of $150,000.

What Form to File?

There are presently three SBA forms for filing for forgiveness.

The forms range in complexity based on amount of the loan, clients with no employee reductions during the period, and finally those clients that have had staffing reductions and part time employees. Please note there is a $100,000 per employee limit in all three cases.

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SBA Form 3508S - The easiest for loans of $50,000 or less. This form is one page, requiring the least amount of information. If the legislation regarding the $150,000 limit is passed, I suspect this will be the form.

SBA Form 3508EZ - This form is two pages long but not that complicated. To use this form the client must meet

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one of the following three conditions: • Self-employed with no employees and did not use wages in his PPP application.

• The client did not reduce the number of employees from January 1, 2020 through the end of the covered period (8 or 24 weeks), excluding positions that could not be filled or employees refused to return as of 12/31/2020.

• The client did not reduce wages by more than 25% from 1/1/2020 – 3/31/2020 and were unable to return to the same level due to mandated COVID 19 restrictions.

SBA Form 3508 – This is a four-page form that includes the computation of the full time equivalent for both the covered period as well as the pre-Covid base period (2019 or trailing 12-month period). This computation is used to compute the percentage of loan forgiveness.

The computation translates part-time employees to full time equivalent employees. The actual computation is beyond the space for this article. To make the computation easier, you can use a factor of .5 for each parttime employee.

Lenders may have their own equivalent to the above forms which must be used.

Required Attachments and/or Required to be Kept in Support (for the covered period) • • • • • • • • •

IRS Form 941s AL A-1 Quarterly AL UC-CR4 Quarterly Contribution & Wages Employee Quarterly Taxable Wage Summary (payroll services should supply) Quarterly Tax Report (payroll services should supply) Reconciliation Report (payroll services should supply) SUI Taxable Wages by Quarter (payroll services should supply) Taxable Wage Recon (payroll services should supply) Required to be kept but not sent with application: • Expense verification • Cancelled checks • Transcripts of accounts • Payment receipts (including rent and debt payments)

PPP Covered Expenses •

Loan forgiveness for expenses incurred during the 24 weeks (or elected 8 weeks) after loan is made.

• Forgivable payroll (must be at least 60% of the loan) i. Cash wages limited to $100,000, $46,154 per employee (8 weeks $15,384). Self-employed and 5% or more business owners are limited to a cap of 20,833 (>5% are treated as a regular employee). ii. Covered benefits 1. These are not forgiven for self-employed and 5% or more business owners iii. Employer paid state taxes, such as SUI • Forgivable non-payroll costs (limited to 40% of the loan) appear limited to 8/52 weeks. However, this, and whether costs are determined on a cash basis, are unclear at this writing. i. Mortgage interest and equipment debt interest (excludes principle and prepayments) ii. Rent (includes both facility and equipment leases). Related party rent is limited to interest on the property mortgage. iii. Utilities (also include transportation, telephone and internet, per Pub 535)

Review Process • •

The lender has 60 days to approve the application • This should take much less time with favorable results SBA has 90 days after lender approves the application.

• Smaller loans appear to be fast tracked by SBA (3508S & 3508EZ applicants)

Issues •

SBA will be focusing on whether our clients qualified for a PPP loan. This is not an issue for loans under $2 million as they are considered qualified (safe harbor).

• The SBA has provided the lender two forms to be

sent to those borrowers with loans over $2 million - Form 3509 for for-profit companies and Form 3510 for not-for-profit borrowers.

• The form asks very pointed questions targeting proof of need, giving only ten days to respond. I suggest reviewing the form with your clients and attaching a detailed explanation of the conditions at the time the loan was taken out.

• The SBA has a six-year statute to examine the applications in detail • There are insurance providers issuing coverage in case SBA denies forgiveness asserting the borrower did not qualify.

• The SBA will have the advantage of hindsight.

So be prepared to have documentation and a narrative of the situation when the PPP loan was applied for.

• The IRS has issue pronouncement that the items of expense paid with PPP funds are not deductible. This position is contrary to the intent of Congress. The proposed Bipartisan Emergency COVID Relief Act of 2020 specifically addresses that point - “business expenses paid for with proceeds of the PPP loans are tax deductible, consistent with Congressional intent in the CARES Act.” This IRS position has wreaked havoc with yearend planning for 2020.

• One unanswered question regarding forgiveness what happens if 100% of the proceeds were used to pay wages? Will the borrower be denied forgiveness?

In my opinion, I do not see forgiveness being denied as it would be a tragedy and contrary to the spirit of the CARES Act. The employers have performed the objective of the CARES Act - to get money to the people in need quickly.

Ownership Change with PPP Loan still Outstanding SBA issued guidance on this issue on October 2, 2020. SBA said if there is a 20%-49% change in ownership the lender must give permission for the ownership change. 50% or more change in ownership requires SBA permission. Getting SBA is impracticable in most sales and acquisitions and as such, many buyers are demanding the PPP loan be repaid. There is a better solution under the October 2, 2020 guidance in which the seller can escrow with the lender the outstanding amount of the loan. If the loan is forgiven, the escrow is paid to the seller. If not, the loan is repaid out of the escrow.

Putting this provision in the sale document takes away the requirement for SBA approval. I have had this come up twice in the same week.

My hope is that with your help, your clients will have all their PPP loans forgiven. Also, if the Bipartisan Emergency COVID Relief Act of 2020 has an additional $300 Billion to go to the SBA, there could be a second round of PPP loans. As the saying goes “it is déjà vu all over again.”

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Five Technology Resolutions for 2021 THOMAS G. STEPHENS, JR., CPA, CITP, CGMA

For many, the Holiday Season is a time to look back and reflect on the year gone by – and what a year it was! But it is also a time to look forward, to plan, and to consider how we can do better in the coming year. Often, this results in making resolutions for the new year, and in that spirit, let us consider five technology resolutions that you might consider adopting for 2021.

We Will Collaborate More Effectively

In today’s work environment, collaboration is critical. Team members no longer work in isolation. Instead, they work collaboratively with customers, clients, vendors, and others who work for different organizations.

Recognizing this new reality, yesterday’s work methods are no

longer optimal for today’s environment.

To illustrate, the age-old practice of emailing documents to others for review and revision is outdated. Instead, we can take advantage of collaboration tools to enable simultaneous, multi-user collaboration.

For instance, we can use the co-authoring feature available in Excel, Word, and PowerPoint to collaborate on common Microsoft Office documents. Likewise, we can use Adobe’s Creative Cloud to enable collaboration too. Further, tools and platforms such as Google Workspace, Microsoft Teams, and Zoho One provide excellent collaboration options. No matter the technology used, recognize the benefits of collaboration – a recent Forrester report indicated that team members save almost two hours per week when they use collaboration tools. No matter the type of business you are in, seek out opportunities to improve collaboration in 2021.

Information Security Will Be A Part Of Everything We Do

You have, no doubt, read the headlines and know that cybersecurity attacks continue to rise.

Ransomware, spear phishing, and Internet of Things attacks are just a few of the everevolving cybersecurity threats we face from external forces. But we also need to address internal security issues,

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such as team members sending sensitive and confidential information as unsecured email attachments, failing to use encrypted Internet connections, and not taking advantage of multi-factor authentication on a device or application.

Information security must become an integral part of each of our businesses.

A single security incident – such as a ransomware attack – could cost millions in remediation expenses and perhaps more in reputation damage. Further, with everexpanding data privacy laws and regulations, fines for non-compliance could cripple organizations of all sizes. To address these threats, resolve to make information security a fundamental part of every activity in your organization. Among other actions, encrypt all your data, and mandate multi-factor authentication wherever possible. Consider adopting a “zero trust” security model to minimize risk. Above all, train every team member on identifying and responding to the dangers that will inevitably arise. The issue of information security is not going to disappear, so address it now and ensure that all business processes incorporate appropriate security measures and all data remains secure.

Equip Work From Home Team Members Appropriately

In the understatement of the century, 2020 was a year of unprecedented business change. At the outset of the pandemic, business leaders told millions of workers to “pack up your computer, take it home, and figure out how to work from there.” And these team members did an outstanding job of making the best of the situation. Along the way, many realized they prefer to work from home and will continue to do so in the future. In these cases, we must ensure that our remote workers have the equipment and tools necessary to be at least as productive at home as they were in the office.

In addition to addressing hardware issues and fast and secure internet connections, also carefully consider issues such as desks and chairs. Remember, employers typically have a responsibility to ensure that team

members have the equipment they need to get their jobs done efficiently and safely.

In most cases, workers’ compensation laws still apply, even if a team member works from home. Hence, it remains necessary to address workstation setup and safety measures, including those related to ergonomics. Further, do not let relatively inexpensive technology expenditures hamper productivity. For example, purchasing an inexpensive scanner or other hardware devices may pay big dividends in increased productivity for team members working from home or other remote locations.

We Will Leverage Our Investment In Existing Technologies To Improve Efficiency

Most organizations have invested heavily in technology over the past two decades.

But are these same organizations receiving the promised return on investment? The unfortunate answer is a resounding “no!”

One of the biggest reasons for this failure is that most organizations have not committed to training their team members to use the tools provided or discover some of the newer features in core applications. For example, although almost all accounting and financial professionals use Excel daily, they do not know how to work with data models, create formulas based on dynamic arrays, utilize Flash Fill, or perform “whatif analysis” using Solver. Thus, tasks take longer than necessary, and results are often not as precise as needed. For 2021, commit to leverage the investment already made in core technologies such as Excel, Word, Outlook, PowerPoint, Adobe Acrobat DC, and Windows 10. Incredible improvements in accuracy and efficiency await!

Our Team Will Adopt New Technologies To Improve Productivity

Just as we commit to leveraging existing technologies, we also resolve to adopt innovative technologies, where appropriate, to improve productivity. One example lies in Robotic Process Automation (RPA).

RPA allows businesses to automate rote, repetitive tasks such as manual data entry.

With tools such as Automation Anywhere, Microsoft Power Automate, and Blue Prism, you can build custom applications to automate virtually any repetitive task performed in your organization. But do not stop with RPA! Consider how you can use other technologies such as machine learning and artificial intelligence to improve productivity. For example, is there a role for artificial intelligence to help audit employee expense reports for errors, irregularities, and fraud? Tools available from companies such as AppZen can help you do precisely that, identifying out-ofpolicy spending and enhancing internal control at the same time. Once considered to be “bleeding-edge” technologies, these tools are now mainstream and offer new productivity plateaus.

Summary

Another New Year is upon us, and with it, we will gladly say goodbye to what was a most tumultuous 2020. As we do, let us look forward to all that 2021 has to offer, including the opportunities to become more efficient, more effective, and more secure with technology. Resolve to improve your business with the five items outline above – collaboration, information security, equipping remote workers, leveraging existing technologies, and adopting new and transformative technologies. Next year, when you look back at the year that was 2021, you and your bottom line will be delighted you adopted these five technology resolutions for 2021.

All the best to you and yours for a Happy Holiday season and a healthy and prosperous New Year!

Tommy is one of the shareholders of K2 Enterprises. At K2, Tommy focuses on creating and delivering content and is responsible for many of the Firm’s management and marketing functions. You may reach him at tommy@k2e.com, and you may learn more about K2 Enterprises at www.k2e.com.

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ASCPA Connections

CPE for ADD!

CPE for ADD is for practitioners:

1. Who want to be updated on A&A throughout the year, not just the last 3-4 months of it 2. Who have interest in learning about a separate A&A topic each month 3. Who need to satisfy their ethics requirement in 2 convenient installments 4. Who can’t “zoom” or sit through 4-8 hours of training at a time without wanting to retire or change professions

Jim Martin is partnering with the ASCPA to put together a unique and innovative subscription CPE service. Jim will attend virtually the meetings of the FASB, the ARSC (keeper of the SSARS), the ASB (keeper of the SASs and SSAEs), and various other AICPA and

When You Just Can’t Concentrate on A&A All Day!

professional committees each month and bring to you an extremely timely report of what’s coming your way as a practitioner in public practice or industry. In addition, a different timely and relevant topic will be discussed each month.

The 75 minutes each month will be comprised of 25 minutes of “what’s in the pipeline speeding your way on all A&A fronts” and the other 50 minutes will be a discussion of a different and relevant topic. For two months during the year, the additional 50 minutes will qualify as ethics!

The individual topics to be discussed in the first 12 monthly segments are scheduled as follows (subject to change based on “market conditions”):

February 2021:

March 2021:

April 2021:

Impairment Issues in the Time of a Pandemic

May 2021:

New SSAE 19: Agreed-Upon Procedures Engagements: A Very Efficient New Way to Do AUPs!

June 2021:

A Refresher on Going Concern Responsibilities of Management and the Accountant

July 2021:

SSTS: Tax Ethics Standards Part 1

August 2021:

SSTS: Tax Ethics Standards Part 2

Accounting for PPP Loans and the Related Forgiveness (Including Tax Accounting Implications) Disclosures in a Time of Uncertainty (estimates, concentrations, going concern)

September 2021:

Getting Ready to Implement SSARS 25 (Big Changes for Reviews)

October 2021:

Getting Ready to Implement SAS 134 (Brand New Audit Reports)

November 2021:

December 2021:

January 2022:

Getting Ready to Implement SAS 135 – 140 (Other New Auditing Fun) ASU 2020-07: Disclosures of Non-financial Donations to a Not-for-profit Final Preparations for the Leasing Standard

This subscription will provide you with 2 full days (16 hours) of A&A and 100% of your ethics requirement in 12 easy to manage 75 minute segments. To make it an even more convenient experience, you can access your subscription in two ways as the monthly

segments will be offered live (virtually) on the third Thursday of each month from 12:00-1:15PM CT and will be taped so you can access as self-study if you miss the live version! What could be simpler!

January/February

25

SELF-STUDY CPE SCHEDULE BUNDLE40 ASCPA’s Build Your Own 40-Hour Bundle ASCPA | Self Study | Other: 40

AUGN-MG ASCPA’s Annual Update for Governmental and Not-for-Profits ASCPA | Self Study | AA: 4

NFPAA-MG ASCPA’s Not-for-Profit Accounting Update ASCPA | Self Study | AA: 4

AEIS-JM ASCPA’s Ethics for CPAs in Industry or Searching ASCPA | Self Study | Ethics: 2

BUNDLE20 ASCPA’s Build Your Own 20-Hour Bundle ASCPA | Self Study | Other: 20

FVA09 ASCPA’s Fair Value Accounting 2020 ASCPA | Self Study | AA: 4

ECPP-JM Ethics For Public Practice ASCPA | Self Study | Ethics: 2

BBB-LS ASCPA’s Small Business Workout & Bankruptcy Strategies ASCPA | Self Study | TX: 1

IAT-JM Impairment Accounting Toolkit for the Local Practitioner ASCPA | Self Study | Other: 4

GAU-MG ASCPA’s Governmental Auditing Update: Yellow Book & Uniform Guidance What You Need to Know ASCPA | Self Study | AA: 4

AAAE ASCPA’s Ethics ASCPA & NASBA Self Study | Ethics: 2

ANAR-JM ASEA-JM ASCPA’s SSAE 19 - What a Relief ASCPA’s The Corona Virus PEAAE-OL for Agreed-Upon Procedures Accounting ToolKit for the Local ASCPA’s Understanding The Engagements Call or visit APS.net today for aIndependence free, confidential valuation of your practice.

Practitioner Guidelines of the ASCPA | Self Study | AA: 2 ASCPA | Self Study | AA: 4 Accounting Profession ASUT-BE ASCPA | Self Study | AA: 4 AAAU-JM ASCPA’s Sales and Use Tax

Imagine... a chair without a desk

ASCPA’s A&A Update For the Local Firm ASCPA | Self Study | AA: 4

BCNI08 ASCPA’s Business Combinations & Non- Controlling Interests ASCPA | Self Study | AA: 4 AAGE-MG ASCPA’s What’s Changing in A&A for Governmental Entities ASCPA | Self Study | AA: 4

SSARS-JM ASCPA’s SSARS Update (Preparation, Compilation and Review) ASCPA | Self Study | AA: 4

WGASB-MG ASCPA’s What’s Going on at the GASB ASCPA | Self Study | AA: 4

Highlights for AL CPA’s ASCPA | Self Study | TX: 2

CHCOV-SS COVID-19 Economic Stimulus Webinar with Karen Miller & Lisa McKinney ASCPA | Self Study | TX: 2

MCCP-MG ASCPA’S Managing Change in an ASU-OL Ever Changing Profession ASCPA’s Auditing Standards Update ASCPA | Self Study | AA: 2 ASCPA | Self Study | AA: 4

EUPC-KD ASCPA’s Economic Update, Post COVID-19 ASCPA | Self Study | Other: 1 CHAA-MB ASCPA’s COVID-19 Impact on Your Accounting and Auditing Practice ASCPA | Self Study | AA: 1 ICBA-KM ASCPA’s Refund Opportunities for Indi viduals & Businesses CARES Act ASCPA | Self Study | TX: 1 TCJA-KM ASCPA’s State Income Tax Considerations- CARES Act & TCJA ASCPA | Self Study | TX: 1 PDDA Preparing for the Data-Driven Age ASCPA | Self Study | Other: 0.2

GO TO WWW.ASCPA.ORG FOR NEW CLASSES AND MOST CURRENT INFORMATION.

CLASSIFIEDS

Delivering Results - One Practice At a time • Near Huntsville / Decatur / Athens

888-553-1040

Loriaccounting Newcomer, & & CPA tax practice grossing Tim$660,000 Price, CPA PNGroup@aps.net www.APS.net

• SW Mississippi CPA grossing $300,000

YOUR PRACTICE WANTED

Thinking about selling your practice? Accounting Practice Sales delivers results, bringing you the best price, optimal terms and a buyer who represents an ideal fit for your clientele. Contact us today for a confidential discussion.

Our current listings include: • Dothan area CPA grossing $270,000 • Northern Birmingham Tax & Accounting practice grossing $950,000 26

ASCPA Connections

For more information on these listings or to sell your practice, contact Lori Newcomer, CPA and Tim Price, CPA at (888) 553-1040 or PNgroup@APS.net, or visit www.APS.net.

SELLING YOUR FIRM IS COMPLEX. LET US MAKE IT SIMPLE.

Accounting Biz Brokers has been selling CPA firms for over 16 years and we know your market. We have a large database of buyers ready to purchase. Our “Six Steps to Success” process for selling your firm includes a personalized, confidential approach to bring you the win-win deal you are seeking.

Our brokers are Certified Business

Intermediaries (CBI) specializing in the sale of CPA firms. We are here to help you navigate through the entire sales process – from marketing to negotiating, to closing and successfully transitioning the firm. Contact us TODAY to receive a free market analysis.

LISTINGS: NEW: MS Gulf Coast Gross $490k; Huntsville Gross $200k-SOLD; NE MS Tax & Bookkeeping Firm Gross $850k-SOLD.

Kathy Brents, CPA, CBI. Cell 501.514.4928, Office 866.260.2793, Kathy@AccountingBizBrokers.com, visit us at www.AccountingBizBrokers.com

Take a deep breath.

We are here for you.

Our mission is to enhance your profession through advocacy, education, and member engagement.

Let one of us know how we can help you.

Visit www.ascpa.org/staff to reach one of us today.

Presort Std US Postage PAID Permit No 131 Montgomery, AL

The Alabama Society of Certified Public Accountants 1041 Longfield Court P.O. Box 242987 Montgomery, AL 36124

Thoughts of Selling your practice...

putting a smile on your face?

Delivering Results - One Practice At a time 28

ASCPA Connections

Lori Newcomer, CPA & Tim Price, CPA PNgroup@aps.net

888-553-1040 www.APS.net ASCPA Member