CONNECTIONS | November - December 2019

CONNECTIONS n ove m b e r

P R A CT I C E M A N A G E M E N T I S S U E

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E-13414-1119 AL

TA B L E O F C O N T E N T S

FEATURES

COLUMNS ASCPA NEWS 19 A Fiscal Reality

ASCPA & AICPA Support the Fiscal State of the Nation Resolution

TELLING THE FIRM STORY BMSS

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SALT CORNER 22 LLCs Taxed as S Corporations

by Brian T. Robbins & Bruce P. Ely

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Identifying—and Tackling—Top Challenges for Firms Like Yours

Become a Peer Reviewer Grow your practice and lead the profession.

Meet Cliff Jackson

From Young CPA to Chapter Advisory Council to Partner in a Centennial Firm.

Demand for Accounting Advisory Services is on the Rise

Message from Jeannine................ 4 Message from the Chair................ 5 Member News............................ 12

Are you ready?

Mark Your Calendar.................... 15

Prevent Disruption to Your Firm

Remembering............................. 29

…by being proactive on Artificial Intelligence, Machine Learning and Robotic Process Automation

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Inside the ASCPA

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Classifieds................................... 30 ASCPA Across Alabama.............. 25

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MESSAGE FROM JEANNINE

B

y far, 2019 has been my favorite year with the ASCPA —and not just because of the Society’s 100th birthday party, but also because of the numerous statewide events where we were able to celebrate 100 years of Alabama’s accounting profession with you at your office, campus or chapter event location. Certainly, the Roaring 20’s gala was a ton of fun, but I must say, meeting you where you are was the most fun of all. It has been so great to have many one-on-one conversations with Alabama CPAs and students throughout the year. Conversations where staff was able to learn about your challenges and opportunities as well as simply helping staff develop and grow our relationships with members.

Outside of Centennial themed events, this year we also launched many new, successful chapter and CPE events and we thank you for your ideas and support of these programs. The Centennial may be over, but it is most important that ASCPA staff and leaders continue to hear and see what is most important to you! More than ever, we can focus on how to deliver solutions to you.

This issue of Connections is our Practice Management issue and holds the key to some of your organization’s biggest questions and next steps. More than 2,400 (40% of ASCPA membership) of you are in public practice and 940 of you are key decision makers in your firm. So, ASCPA partners and regular magazine contributors shift their focus on ways to enhance your firm through a variety of opportunities—technology, credentials, potential services and professional development. We even have a special contribution from Carl Peterson, Vice President of Small Firms at the AICPA, on “Identifying and Tackling Top Challenges for Firms Like Yours.”

Although the 2019-20 CPE reporting deadline just passed, our team has already established dates for all 2020 conferences and workshops. We are so excited to bring some of the events you love the most to new venues—including the 101st Annual Meeting. This member event is returning

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to the Magic City to the venue with the best view of Birmingham, The Club, on Tuesday, June 16, 2020. It’s not too early to register at www.ascpa.org/AM2020. The same goes for the Summer Education Conference, www. ascpa.org/SEC2020, July 20-24, 2020, at The Lodge in Gulf Shores. While both beautiful venues are new to us, we promise to deliver excellent program content and speakers as well as activities and networking for you to enjoy alongside fellow CPAs. On a very positive note, the ASCPA Peer Review program continues to have success as a leader among Societies in the southeast.

In January, we partnered with the Arkansas Society of CPAs to administer their Peer Review Program and as of July, we began the administration for Mississippi, too. Thanks to the dedication of peer reviewers across the south and especially to our volunteer members, Peer Review Committee and Report Acceptance Bodies, we will continue the profession’s efforts towards Enhancing Audit Quality (EAQ). If providing high-quality firm services is something that you want to play an active role in, please read Become a Peer Reviewer on page 9 and consider contacting Ashley Sellers, ASCPA Director of Peer Review Operations, to learn more about how to become a peer reviewer.

Before you dive into the rest of this issue, I must tell you about our new look coming January 1, 2020. The ASCPA team, with input from the board and YCPA cabinet, refreshed our logo which will be on every inanimate object that our Communications and Membership team manage. I earnestly hope that you will love it as much as our leadership and staff do!

If there is anything that I can do for you, never hesitate to reach out to me at jbirmingham@ascpa.org. I am always open to your ideas and suggestions. Lastly and most importantly, thank you for your membership and support of the Alabama Society of CPAs. It’s great to be a CPA!

Jeannine

MESSAGE FROM THE CHAIR

We are close to the official start of Winter. That means two things are coming: the busiest time of year (for most) and the three weeks of cool temperatures before hot weather returns! This issue of Connections focuses on a critical part of CPA firms - practice management. The way we have done business has changed, significantly, over the 35 years of my career. The future ahead is filled with so much opportunity for practitioners.

This future will be much different than what we currently experience. The current pace of change (particularly with technology) in businesses and organizations gets faster every day and will not slowdown in our lifetimes.

These changes are transforming the “how” we perform our daily routines like never before. Industry influencers and leaders such as Barry Melancon, Bill Reeb, Kimberly Ellison-Taylor, Gary Boomer, Tom Hood and others are continually highlighting the significance of the disruption in organizations occurring as a result of technology. When I hear these individuals repeatedly focusing on the significant future changes that will affect how we practice, I know we need to listen and take action to evolve.

Technology is at the forefront of our profession’s disruption. Artificial Intelligence, Machine Learning, Accounting Bots, the Internet of Things, Virtual Reality and Blockchain are technologies we need to get very familiar with to understand the opportunities they provide our practices to serve customers even better. Leveraging the capabilities of these applications allows firms the opportunity to complete routine and redundant tasks (in all sections of our practice) accurately with little human interaction. We are freed up to utilize the collective intellect of our teams to re-engineer how we serve our customers who are seeking faster, better and easier solutions.

Our customers are happy to pay for the knowledge we provide to help their organizations achieve the success they seek. Disruptive technologies do not eliminate the value we provide customers, rather, they allow us to spend more time focused on what most customers want…knowledge (in the form of advice and guidance). In addition, many of our customers are at risk of disruption from technology innovation and we can help them implement applications to benefit their organizations.

When the value you provide to your customers is knowledge and not a product, the people working in your firm are the most important asset you have. They serve the customers and, often, have more interaction with them than we owners. As leaders, we must make certain to develop talent, now, to meet the increasing needs for consulting and advisory services. That talent exists in our education system and the bright staff we have. The firm of the future will look less like a pyramid and more like a diamond as talent delivering consulting becomes the largest part of our organizations. New faster approaches to talent development will be a critical component to our future.

Technology has been at the core of much change in our past and will be the same moving forward. We must keep adapting to the changes to be even better. We do this by continually planning for the future and developing processes to effectively respond to new opportunities. Effective strategic planning, including adaptive thinking, will allow your entire team to contribute to actions that allow our firms to continue to thrive and serve our customers. These teams will lead the development of new processes to effectively utilize emerging technology to serve customers. Those processes will, most likely, not look like the way we used to do things.

It’s important to focus on our business operation regardless of size. It’s equally important to step out of the day to day to evaluate how your firm is doing and where it is heading.

I encourage your team to, frequently, take time to review your business operations to allow you to remain prepared for today, tomorrow and the future.

Whether we are nearing the last decade or beginning our careers, we have the responsibility to continue to make our profession the best it can be for those who follow and all the incredible customers. As I mentioned above, there has been much change to our practices in the past. The changes are continuing at a rapid pace. To some, change feels uncomfortable. As Gary Boomer has said, “we have to be comfortable being uncomfortable”.

Being uncomfortable makes us strive to be even better. I know we can handle the uncomfortable challenges with ease! Just make certain we do it faster.

Dennis

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Identifying—and Tackling— Top Challenges for Firms Like Yours It’s 2 AM, and you’re lying awake thinking about some of the biggest challenges for your practice and how to address them. You’re wondering, “Am I the only one facing these issues? And what’s out there on the horizon that I’m not even aware of?”

You should be able to sleep better after reviewing the latest results of the PCPS CPA Firm Top Issues Survey (https://bit.ly/2BZ4EYF).

Conducted every two years, this unique study asks practitioners to rate their most pressing challenges and then presents the results by firm size: firms with one professional; with two to five professionals; six to ten professionals; eleven to twenty professionals; and twenty-one or more professionals. The findings can reassure you that other practitioners in firms like yours share your concerns and can also reveal issues that perhaps should be on your radar.

What considerations are top of mind for CPAs in 2019? We found a mixture of emerging and familiar challenges. Here are just a few key takeaways from the results for smaller firms.

Privacy and technology have moved front and center. All firms picked managing privacy/security risks (e.g., cybersecurity, data breach, etc.) as one of their top five issues. That’s a topic that was virtually absent from the top concerns in the last survey, taken in 2017. Sole practitioners also chose keeping up with changes in technology and associated costs (e.g., upgrading hardware, updating software, outsourcing IT, moving to the cloud, etc.) as a top-five concern, and this issue was on the top ten list for other firms with fewer than 10 professionals. I think practitioners are focusing on this area because we continually hear cautionary tales about the latest data breach or service disruption. Add to that the outage that occurred at a major software vendor just after busy season and you can understand practitioners’ concerns.

There’s a wealth of resources for CPAs seeking to address privacy and security risks, including:

• The AICPA Cybersecurity Resource Center at https://bit.

ly/2pAxyLQ, the main source of cybersecurity resources from numerous AICPA sections.

• The PCPS Exploring Cybersecurity Toolkit at https://bit.ly/2PB-

6dE4, featuring learning resources, staff training tools and tools to help clients assess their cyber risks.

• Hacked! Building defenses against and responses to intrusion, a checklist under the PCPS section on AICPA.org for PCPS members can use when they believe data has been compromised.

Complexity and compression are critical issues. Keeping up with new tax laws, maintaining technical excellence and dealing with seasonal workload are always primary concerns among smaller firms, and that was also the case this year. In 2019, there was the added challenge

of applying the new rules of the Tax Cuts and Jobs Act and communicating them to clients. This season may have been more difficult than others, but it’s fair to say that complexity and seasonality will remain important issues that practitioners should include in their strategic planning.

In your planning sessions, remember that there are great tools available to AICPA members to address complexity. Find them at the AICPA Tax Reform Resource Center and the Tax Compliance Resource page on AICPA.org. You can also make tax season easier using some of the online tax season resources created by PCPS and the AICPA Tax and Personal Financial Planning sections. For workload compression, consider streamlining your practice to serve only the clients who provide the highest value and are the most pleasant to work with. Use the PCPS Client Evaluation Tool to assess which ones meet those criteria.

Staffing remains a high priority. Finding qualified staff has long been a significant concern for firms, and this year it was once again the #1 issue for all firms except sole practitioners. Retaining qualified staff came in among the top ten for firms with two to five and six to ten professionals, as well, and was in the top five for firms with eleven or more professionals. Tools to tackle these concerns include:

• The Staff Development and Culture section of the PCPS Firm inMotion e-Toolkit.

• The PCPS Human Capital Center, with numerous resources firms can use to recruit, develop and retain talent.

• The PCPS Diversity & Inclusion Toolkit, whose sections are aimed

at helping you attract, recruit, retain and advance diverse talent.

GET A HEAD START As always, this year’s survey made for fascinating reading. When you review the findings, in addition to today’s top issues, don’t miss CPAs’ insights into the concerns that will be affecting their practices over the next five years, as well. They can help you gain a sense of what’s next for your firm.

No matter what size your firm, you can use the survey results as an outline for your next strategic planning session. Are you experiencing these challenges? Are any of them a future threat? If so, what steps should you be taking to address them? These types of discussions can help you get a head start on identifying and avoiding common challenges.

Carl Peterson, CPA, CGMA is the Association’s Vice President of Small Firm Interests. Have questions for Carl? Contact him directly at carl.peterson@aicpa-cima.com or 651-252-4618.

AMPLIFYING OUR SUPPORT FOR SMALL FIRMS The AICPA has developed the resources mentioned above and more with small firm needs in mind. These include tools to increase your cybersecurity IQ, learn more about service opportunities in the financial planning space, master audit risk assessment and more. Find them all at aicpa.org/membership.small-firms.html.

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Over the past eighteen years, the Alabama Young CPA Charity Golf Tournament has netted more than $500,000 thanks to generous and loyal sponsors who believe in the mission of our two organizations-The Exceptional Foundation and the Alabama Society of CPAs Educational Foundation.

Be a part of our 2020 tournament: • with one of our unique sponsor packages • by donating to the tournament • by registering your team to play • at the 19th Hole after-party • all of the above!

Learn more about this year’s event and opportunites at www.ascpa.org/YCPAgolf.

Become a Peer Reviewer: Grow your practice and lead the profession WHAT ARE THE BENEFITS OF BECOMING A PEER REVIEWER? The peer review landscape continues to evolve and having a quality peer review is more important than ever. Becoming a peer reviewer has many unique advantages to help grow your business and build your reputation as a firm that stands behind its commitment to providing high-quality services. As a peer reviewer, you can leverage your expertise and open the door to a whole new source of revenue for your accounting and auditing practice.

If you are a provider of audit and accounting services, you already understand that clients demand high-quality services. Firms that undergo peer reviews are no different in this regard and want the same from their peer reviewers.

Firms expect a quality peer review to help them: • Improve processes and obtain education or recommendations to correct findings or deficiencies.

• Establish and maintain a system of quality control to comply with Statements on Quality Control Standards (SQCS) No. 8.

• Convey to their clients the honesty, professionalism and trustworthiness of their firm.

GAIN A UNIQUE VANTAGE POINT As a peer reviewer, you will gain insight that contributes to the quality and effectiveness of your own practice.

In other words, you can help firms achieve the results they want, while bolstering your own practice. You can gain greater confidence in your own practices and procedures, learn new best practices and common areas of noncompliance with professional standards, and perform more effective audit procedures.

BECOME AN EXPERT IN PRACTICE MANAGEMENT Serving as a peer reviewer also creates additional opportunities to network with other peer reviewers and firms, which provides additional insight to tackling challenging practice management issues, such as staffing and employee retention, partner or shareholder challenges, firm mergers and acquisitions, and succession planning.

You can also look forward to the annual AICPA Peer Review Conference where you can network with hundreds of other peer reviewers and learn about the latest peer review updates and news. Visit the Annual Peer Review Conference section of the AICPA’s reviewer training webpage to learn more.

Peer reviewers from Alabama, Arkansas, and Mississippi can also serve on the Alabama Society of CPAs (ASCPA) Peer Review Committee. The Peer Review Committee serves as the report acceptance body for all reviews administered by the ASCPA. Committee members meet to collectively examine and approve solutions in each peer review case to refine areas in a firm that need improvement.

HOW CAN I GET STARTED? • Visit bit.ly/BeAReviewer to learn more about the requirements and training options to become a peer reviewer.

• Contact Ashley Sellers, the ASCPAs’ Director of Peer Review Operations, at asellers@ascpa.org for additional guidance.

HERE’S WHAT OTHER CPAS THINK ABOUT PERFORMING PEER REVIEWS: “I enjoy being a peer reviewer because I love working with my peers to help them improve the quality of their services, including insight from my own experience and other peer reviews, whether it’s audit and accounting processes, or sharing of workpapers that we’ve developed.”

“Being a peer reviewer is a great way to keep up with the standards — continuously going through checklists certainly has helped improve our own firm’s quality.

Several issues I encounter often require research, which continues to provide that challenge.”

“I enjoy performing peer reviews because it gives me an opportunity to see how other CPA firms run their practice and have met a lot of nice people along the way.”

“Peer reviews provide another source of revenue for our firm, in addition to the audit and accounting or tax-related services.”

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Meet Cliff Jackson From Young CPA to Montgomery Chapter Advisory Council to Partner in Mobile, AL, meet Cliff Jackson—one of Smith Dukes’ dynamic partners.

What did your undergraduate life and early career look like? I was very busy during my years at Auburn University Montgomery. I worked and went to school at the same time.

My sophomore year of college I decide to major in accounting. During my last two years of college, I interned full-time at Brantley, Stephens and Boucher—now a part of Jackson Thornton—in Opelika while finishing out all my accounting courses and preparing to take the CPA Exam.

After graduation, I continued as a full-time staff accountant. I learned a lot from my time there and worked with some very smart people. I discovered that I liked building the relationships that are required with numerous clients, which influenced me to stay in the public accounting field. I still keep service to clients, and my relationship with them, as a primary focus till this day.

What advice would you give to a smart, driven college student about to enter the “real world”? Let your work ethic and how you treat others speak for itself. In the real world, respect and trust must be earned. What advice should they ignore? They should question anyone who has told them that how they “feel” is more important

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than the truth. Our feelings matter and are important, but they do not change the truth of any situation, nor do they change the job that must be done to be successful.

What prompted you to join Smith Dukes?

I was approached by Smith Dukes back in 2012, when the firm that I was with at the time was going through some very big merger transitions. One of my current partners with Smith Dukes, Lamar Reeves, was the President of the ASCPA at the same time that I was President of the Montgomery Chapter of the ASCPA. So, I had some connections with Smith Dukes already. Once I met with all the partners with Smith Dukes and saw what a great and stable environment that they had, I decided to make the huge move with my family from Montgomery to Mobile. It was not an easy decision because the people that I worked with at Wilson Price (now a part of Warren Averett) in Montgomery were absolutely wonderful people. At the time, my wife was pregnant with our third child, and we were leaving her hometown to move to a city that neither of us knew much about. However, joining a firm as rich in history as Smith Dukes is, made establishing new connections in the Mobile area a seamless transition.

What sets your firm a part? Our firm has been in operation since 1933, so we are very proven in our field. We are dynamic in the wide array of

services that we offer our clients. However, what I believe sets us apart is the fact that we take a genuine interest in our clients’ businesses and lives. The quality of our service and how we treat each other is always paramount in our decisions and plans as a firm.

What are you looking forward to for your firm going into its next century as an organization? We obviously want to grow, but we want that growth to coincide with improving our service to our clients and the quality of life and careers for our people as well.

When you feel overwhelmed or unfocused, or have lost your focus temporarily, what do you do? A partner in a CPA firm can easily become overwhelmed with the sheer number of projects or responsibilities that he or she has. I have found also that it is at those times when I realize the full capability and quality of my staff, because I become more dependent on them. Those hectic times can actually be a great opportunity, because they require increased reliance on my staff and help all of us grow together.

In the last five years, what have you become better at saying no to (distractions, invitations, etc.)? What new realizations and/or approaches helped? Any other tips? This is not an easy question for me to answer. I have always strived to please people, whether it be family, friends or clients. Therefore, saying no to requests from people has always been difficult for me. I do feel that I have gotten better at prioritizing my time over my career in public accounting.

would have otherwise not had if I had not stayed involved. Jeannine and all of the wonderful people at the ASCPA are truly there to help CPA’s across the State of Alabama.

What is one of the best or most worthwhile investments you’ve ever made? Making a concerted effort to be sure that proper time away from the office is taken and focused on activities with my family.

Please tell us about your family & life outside of public accounting.

I have been married to my wonderful wife, Karra, since 2002. We live in Spanish Fort with our three kids. Our daughters are Riley (13) and Sarah (11), and our son is Luke (7). Karra does an amazing job of home schooling the kids while also keeping them involved in multiple extra-curricular activities. Our family is very involved with our church, Faith Family Fellowship in Spanish Fort. My wife teaches Sunday school to the 5-6 year olds (I am just there to assist, play with the kids, keep them rounded up, and just basically do what Karra tells me to do). I have played the drums since college and play regularly at our church as well. I am on the Board and heavily involved with the South Alabama Chapter of the American Red Cross. Karra and I are both Auburn alumni and avid supporters of the University. We have Auburn football and basketball season tickets and make as many games as we can with the kids. We love all the family outdoor opportunities like hiking and biking that abound here in the Mobile Bay and Delta area. I also enjoy playing tennis regularly and kayaking the many rivers around the Delta.

What prompted you to become a member of the ASCPA? How does membership benefit you as a CPA? I joined as soon as I became a CPA, it was never really a question for me. My involvement with the ASCPA has brought me many connections and lifelong friends that I

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MEMBER NEWS Marlene M. McCain, who is currently completing a second four-year term, has been elected chairwoman of the Alabama Securities Commission (ASC).

She recently retired from public accounting and as a member/partner of Warren Averett LLC. “Commissioner McCain’s professional expertise and her extensive experience as a commissioner have ensured the continued success of the ASC, which is recognized throughout the state and nationwide,” said ASC director Joe Borg. “Her leadership will help the commissioners and ASC staff maintain a high standard of industry compliance and to actively fight investment fraud.”

McCain, recommended by her peers at the ASCPA, was appointed to the ASC in 2012 by former Gov. Bob Riley and was appointed to serve another term in 2016. The ASC regulates the securities industry in Alabama, protecting investors against securities fraud.

“Serving on the Commission for the past seven years has not only been an honor, but has also afforded me the opportunity to gain insight that I believe can contribute to the Commission’s continued mission success,” McCain said.

McCain is past chair and board member of the ASCPA and the ASCPA Educational Foundation. She served a one-year term on the American Institute of Certified Public Accountants (AICPA) board of directors and received the prestigious AICPA Woman to Watch – Experienced Leader Award in 2011.

Aldridge Borden is pleased to announce three recent promotions in their firm.

Shana M. MacDonald has recently been promoted from Staff Accountant to Senior Accountant. She is a CPA specializing in individual, partnership, and corporate taxation. Shana joined Aldridge Borden & Company in 2016. She graduated from Auburn University at Montgomery with a Bachelor of Science in Business Administration with specialization in Accounting. Shana is also a member of the American Institute of Certified Public Accountants and the Beta Alpha Psi Accounting Honor Society.

Jessica L. Hudson has been promoted from Manager of Attestation to Principal. She is a CPA & joined Aldridge Borden & Co. in 12

ASCPA Connections

2006. Her specialties include nonprofit organizations accounting, auditing and taxation. Additionally, Jessica is a primary consultant for the OneSource outsourced CFO services.

She is also a member of the American Institute of Certified Public Accountants, and she is a member of the Board of Directors of The Wellness Coalition and currently serves as the treasurer.

Caterina A. Mozingo has been promoted from a Principal within the Aldridge Borden family to Shareholder. Cathy began her accounting career in 1991 and works in the taxation services group. She assists clients with strategic tax planning as well as tax compliance. She serves a broad range of clients including high net worth individuals, businesses and fiduciaries. A CPA and Personal Financial Specialist (PFS), Cathy is also a member of the American Institute of Certified Public Accountants. Cathy is a member of the Montgomery Estate Planning Council and serves on the Board of Directors of the Federal Tax Clinic as well as the ASCPA Committee on State Taxation.

Cathy graduated summa cum laude from the University of Alabama in Commerce and Business Administration before earning her Master of Tax Accounting degree.

Anglin Reichmann Armstrong, P.C. is pleased to announce the following promotions for employees in their Huntsville office.

Christopher Cook has been promoted to Manager, Tax Advisory Services; Rebecca Givens became Supervisor, Tax Advisory Services; Blanton Calvert is now a Senior Accountant, Tax Advisory Services; Rachel Bray has been made Supervisor, Audit & Assurance; and Kayla Burgess has been promoted to Senior Accountant, Solutions Services.

“These individuals have displayed a commitment to our firm’s prom-

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

A longtime accounting industry expert has joined Birmingham-based BMSS LLC as a member. Michael Brand, who has practiced public accounting since 1989, will work from his home office in Athens as well as all BMSS offices, which include Birmingham, Huntsville and Gadsden.

Brand, who earned his bachelor’s degree in accounting from the University of North Alabama, has been involved in all aspects of public accounting, with an emphasis in providing accounting, audit and review services to clients in for-profit, nonprofits and governmental sectors. He has been involved in various committees at both the state and national levels and has spoken at conferences across the U.S. and in several other countries. He also conducts peer reviews across the nation and was formerly on the peer review board, joint trial board and quality control standards task force of the American Institute of CPAs. He is the current co-chair of the Engage Conference – the AICPA’s largest conference.

Brand is a former member of the AICPA professional ethics executive committee and is the past chair of the AICPA’s accounting and review services committee and the ASCPA’s peer review committee. He is the chair-elect for the ASCPA. In addition, he teaches continuing education classes across the country for state societies and individual firms and has been awarded the AICPA’s Outstanding Discussion Leader multiple times, along with the ASCPA’s Thomas A. Ratcliffe Outstanding Discussion Leader Award.

Jason Sharp was recently appointed to BIO Alabama’s board of directors.

BIO Alabama is the leading advocate for the state’s bioscience and healthcare industries, such as pharmaceuticals, medical devices, hospitals, research testing, and medical labs. Jason is a member of Warren Averett and serves as the Huntsville office Service Area Leader of their Tax Division.

DCF Group, PC is proud to welcome Bagby Hall to their team. Bagby joined the CPA firm in July 2019 as a Manager after eleven years in public accounting serving a variety of clients in audit, tax, and business consulting services. Bagby received his Bachelor’s in Accountancy from Auburn University and became certified as a CPA in 2010.

In a momentous year for the accounting industry’s two major state-wide organizations, two members of the same firm are also holding key leadership positions within those bodies.

Earl Blackmon, CPA, CGMA is currently serving as the 20182019 Chairperson of the Alabama State Board of Accountancy while Dennis Sherrin, CPA, CVA, CGMA is the 2019-2020 Chairperson for the Alabama Society of Certified Public Accountants. Both men are shareholders at hb&k located in Fairhope. In these positions, Blackmon and Sherrin support and advocate for the accounting profession throughout the state.

Serving as a Chairperson isn’t the only thing they have in common.

Both Earl and Dennis are alumni of the University of South Alabama. Go Jags!

Chancellor Jimmy H. Baker announced the appointment of Bryan Helms as Acting President of Lurleen B. Wallace Community College. Helms will serve in the role until a president is named at the completion of the presidential search currently being conducted at the college.

Helms has more than 18 years of higher education administration experience and currently serves as the Vice Chancellor for Administrative and Financial Services for the Alabama Community College System.

Prior to his role at the ACCS, Helms served as the Vice President of Financial and Administrative Services at Calhoun Community College.

Helms began his career in the private sector where he served for more than 20 years in various accounting and financial leadership roles. He began his higher education career at Troy University. Helms earned a Bachelor of Science in Accounting from Troy University and a Master of Business Administration with an Emphasis in Information Systems from Auburn University, Montgomery.

The Directors of Kassouf & Co., P.C. are pleased to announce the promotion of Zachary Bennett to shareholder.

Bennett joined the firm in 2002 and has over 17 years of experience in public accounting. He specializes in business advisory, tax, financial planning, healthcare management, and retirement planning for closely-held businesses

and individuals. He is also a member of the AICPA and an active member of Church of the Highlands.

“I am honored and excited to become a shareholder in this firm that has become like family to me. I am blessed to have the opportunity to continue to serve our outstanding clients, and I look forward to our future,” said Bennett.

Bennett earned a Bachelor of Accountancy degree and a Master of Accounting degree from the University of Mississippi. He is a CPA and a Personal Financial Specialist (PFS). He is married to Jenny Bennett, and they have three children, Conner, Corrie, and Logan. He enjoys sports, hunting, boating, and spending time with family.

The Partners of Russell Thompson Butler & Houston are pleased to announce their continued growth with the addition of Javier Marroguin to their team as a Staff Accountant. Javier earned

LO C A L F I R M • N AT I O N A L K N O W L E D G E • G LO B A L R E AC H

BMSS, LLC is Proud to Welcome New Member

Michael L. Brand, CPA, CGMA

BIRMINGHAM | GADSDEN | HUNTSVILLE

www.BMSS.com | 1(833)CPA-BMSS November/December

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Tony explained, “For over four decades I have watched business owners who are very good at their respective craft, struggle to be successful.”

his Bachelor of Science in Accounting from Spring Hill College in 2019. While at Spring Hill, Javier interned with a variety of organizations mastering the skills of data and tax form management, project planning, and analysis.

Wilkins Miller LLC, an accounting and advisory firm with offices in Mobile and Fairhope, is pleased to announce the following promotions: Judy Chen to Manager; Simon Fox to Supervisor; and Courtney McGehee to Senior Accountant.

Each of these team members have demonstrated expertise in their roles, professionalism, leadership and stellar attitudes.

WHAT’S HAPPENING OUT THERE Billy Daniels has formed his own public practice based in Wetumpka. Billy Daniels, CPA, LLC., is a solutions-based CPA with extensive practice experience and a proven track record in public sector government, higher education and nonprofit.

Billy has over 30 years of experience as a CPA and operated as an audit partner with a regional firm, providing professional services to public sector entities. He also has experience as a University Controller, managing accounting operations, financial reporting and external audits.

Billy proudly serves as an outsourced consultant for a local government, a role that includes year-end closing of financial records and preparation of annual financial statements and supporting work papers for external audit.

His education and certifications include: B.A. Accounting with a History Minor (Huntingdon College, Montgomery, Alabama), CPA – Alabama, Certified Government Financial Manager (CGFM) professional certification, Grants Management Certification Program (Management Concepts), and the AICPA’s Not-For-Profit Certificate-Core Concept Certificate Program.

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ASCPA Connections

Gruenloh & Associates P.C., established in the Central Baldwin area almost 30 years ago, is proud to announce their forthcoming merger with local firm Hardy Brock Consulting. The newly named full-service accounting firm, Gruenloh, Hardy & Associates (GHA), will be in the Gruenloh building on Alabama 59 South.

The firm has six certified public accountants on staff including the five partners: Wayne A. Gruenloh, CPA, LUTCF; James H. Hardy Jr., CPA; Melissa Brock, CPA; Angela Doege, CPA, and Collena Matz, CPA, MBA. Each partner has different areas of expertise totaling over 100 years of combined experience.

GHA will provide services in business planning, outsourced accounting, QuickBooks, auditing, tax and compliance, management consulting and financial planning.

“While we are extremely proud of the tax, consulting, and technology firm we have built, we view this merger as a significant benefit for our firm’s clients and staff,” said Jamie Hardy, partner.

“Gruenloh & Associates shares our philosophy that ‘our success originates from our client’s success.’ Our discussions have made us realize that it is a natural fit for us to combine our resources and knowledge base.

This will allow us to more effectively serve as our client’s trusted advisor in financial, tax, consulting, and retirement planning, and we view that as a win for everyone.”

For more information call 251-9471040 or visit GruenlohHardy.com.

Tony Cochran is excited to announce the creation of Team Delta3, LLC—a new initiative to help grow small businesses.

Team Delta3 will offer a premier three-day business boot camp, taking on the task of educating business owners on best practices for success with a focus on the three key ways to grow their businesses. Concepts related to market growth, key performance indicators and applied metrics will be developed for each business. These indicators will be the drivers that provide owners measurable results.

Tony is the president of CK Business Solutions, PC, a consulting and accounting firm headquartered in Albertville. Beyond his own successful advisory businesses, he has been recognized by several organizations for his leadership and civic contributions. He is a board member of the Business Council of Alabama (BCA) and previously served on its executive committee. Currently, Cochran is a member of the 30th class of Leadership Alabama, chairman of the board of the Albertville Chamber of Commerce, chairman of the board of his church, founding chairman of the Albertville City Schools Foundation, board member of the North Central Alabama Girl Scouts and in 2002 received the Citizen of the Year Award the highest award given for community service in his hometown. He also holds the CMGA designation.

William E. Parsons, Jr., CPA, P.C. was recently named Bessemer’s 2019 Business of the Year and has maintained a practice in his hometown, the City of Bessemer, for over 40 years. Currently, his office is located at 419 19th Street North. Billy, as he is called by everyone, has a steadfast work ethic.

Even when tax seasons are over, he works every day for his business and personal clients across the state of Alabama, Georgia and West Virginia. The City of Bessemer recognized 20 companies alone based in Albertville, Bessemer, Birmingham, Chelsea, Columbiana, Fairfield, Hueytown, Pell City, Tuscaloosa, Trussville, Cummings and Woodstock, GA, and West Virginia that bring their business to the city by the way of Billy Parsons. The City also commended him of his “kind, compassion and intellect” noting that he is happy to take walk-ins and often serves as a counselor for his clients.

Wilkins Miller, an accounting and advisory firm with offices in Mobile and Fairhope, has been named a “Top 400 Firm” by INSIDE Public Accounting (IPA). Wilkins Miller came in the 351st spot and was one of two Mobile-based firms named to the list.

“We are proud to be recognized again as a Top 400 firm in the country,” Wilkins Miller Managing Partner Allen Carroll said. “Our team is committed to helping our clients and community achieve more and it’s great to be recognized nationally.”

This definitive list was developed by gathering information from more than 550 firms that completed IPA’s Survey and Analysis of Firms. Many professional associations also aided in the search for firms to add to the list. For the most recent fiscal year, IPA 400 firms range in size from $5.5 million to $11.3 million.

The firm was also recently named one of the 2019 “Best Accounting Firms to Work For” by Accounting Today for the fifth year in a row. Out of only 52 midsized firms selected, Wilkins Miller was the only firm from the Mobile or Baldwin County region

to make the list and one of four accounting firms in the state of Alabama.

“We are honored to be recognized for the fifth time as one of the best accounting firms to work for in the country,” Wilkins Miller Managing Partner Allen Carroll said. “Our team is committed to protecting our culture and this designation is a testament to that commitment.”

Wilkins Miller was selected among hundreds of companies across the country by Accounting Today for a place on the 2019 list. The annual survey and awards program,

which is conducted in partnership with Best Companies Group, is designed to identify, recognize and honor the best employers in the accounting profession, benefiting its economy, workforce and businesses.

“Our people are what truly make our firm one of the best places to work in the country, not only in accounting firms,” Wilkins Miller Partner Scott Browning said. “We are fortunate to work with an extraordinary group of people that are invested in helping each other achieve.”

MARK YOUR CALENDAR NOVEMBER

November 14

December 10

8:00AM – 12:00PM

Mobile Professionals Night Cedar Street Social Club

Montgomery Chapter Photos with Santa Benefiting Mercy House

November 1

Birmingham Chapter State and Local Tax Update with Bruce Ely Harbert Center, Birmingham

November 1

11:00AM – 1:00PM

Montgomery Chapter Tailgate

5:30PM – 7:30PM

November 18

4:30PM – 7:00PM

Downtown Rescue Mission Evening of Service Downtown Rescue Mission, Huntsville

November 21

The Mission House, Montgomery

4:30PM – 7:30PM

November 5

The Woolworth, Birmingham

11:30AM – 1:00PM

East Alabama Chapter Luncheon with David Green Saugahatchee Country Club, Opelika

November 7

YCPA Night at the Woolworth

DECEMBER December 2

1:00PM – 7:30PM

5:30PM – 7:30PM

North Alabama Chapter Tax CPE & Christmas Social

Fairhope Brewing Company Taproom, Fairhope

Marriott Shoals Hotel & Spa, Florence

Eastern Shore Professionals Night November 12

December 5

Tuscaloosa Chapter Luncheon with Mayor Walt Maddox

Meals for Manna House

11:30AM – 1:00PM

The Levee Bar and Grill, Northport

4:00PM – 7:00PM

Manna House, Huntsville

5:00PM – 7:30PM

The Shoppes at EastChase, Montgomery

JANUARY January 10

8:00AM – 5:00PM

Income Tax Update with Jim Hasselback Harbert Center, Birmingham

January 14

11:30AM – 1:00PM

Tuscaloosa Chapter Banker’s Luncheon with Joseph Borg The Levee Bar and Grill, Tuscaloosa

January 23

11:30AM – 1:00PM

Montgomery Chapter Bankers & Attorneys Luncheon Montgomery Country Club, Montgomery

more information about these and other upcoming chapter and student events will be sent out via email and on www.ascpa.org.

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Demand for Accounting Advisory Services Is on the Rise.

ARE YOU READY? It may not be surprising that the accounting services industry is projected to grow at 1.8% overall between 2012 and 2017. But it may come as a surprise that specialized advisory services are projected to grow the most aggressively — at a 5.7% clip during that same time period There also is an increasing international demand for expertise in emerging A&A areas. Accounting organizations around the globe are addressing this with specialized resources and advisory service credentials.

Here are a few highlights for specific advisory service areas:

Forensic & Valuation Service Professionals — Trusted Experts Around The Globe In response to increased market demand for specialized services and a recognition of the rapidly growing forensic accounting and business valuation disciplines, the Accredited in Business Valuation (ABV®) credential was created in 1997, and the Certified in Financial Forensics (CFF®) credential in 2008.

The global demand for qualified forensic and valuation specialists continues to grow as courts and other triers of facts not only seek out, but recognize CFF and ABV credential holders as experts in their respective fields.

In the 2013 “Top 100 Firms” issue of Accounting Today magazine, it was noted that more than 77% of firms offering business valuation services reported significant growth. In addition, 74% reported growth in litigation support (fifth-largest population), and 65% reported growth in forensic accounting (seventhlargest population).

Information Management and Technology Assurance in an Increasingly Complex World Today, many corporate executives and operational managers expect immediate, on-demand financial information, advice and services. As a result, accounting operations and information management systems are becoming increasingly interdependent.

As technology evolves and advances, ensuring the integrity and transparency of financial data and business reporting information becomes a more complex process. And more critical than ever.

Qualified financial professionals who hold the Certified Information Technology Professional (CITP®) credential are equipped to provide assurance for, or business insight into, financial-related data, processing or reporting in an ever-changing business environment.

The Aging Population & Personal Financial Planning As baby boomers age and retire in record numbers, they are increasingly looking for objective financial guidance and advice to help prepare them for the next stage of their lives. This is triggering a great demand for personal financial planning services and resources.

Other factors driving this growth are tax law complexities and an uncertain regulatory, political and economic environment.

The Personal Financial Specialist (PFS™) credential was created in response to the increased market demand from this growing population segment and rapid growth in the number of financial professionals providing personal financial planning.

Building on your expertise with an AICPA advisory service credential makes a strong statement. It sets you apart and gets you noticed. Credentials boost your career potential and credibility. Most of all, an AICPA credential establishes you as an expert. And that can be an invaluable addition to your résumé and practice.

Learn more at aicpa.org/credentials.

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ASCPA Connections

Distinguish yourself as a strategic leader.

Earn the global designation for financial professionals.

Explore the CGMA Program: A lifelong professional learning journey that puts you on the path to take your career to a new level. You’ll learn and acquire the skills it takes to become a more strategic, confident, secure and insightful leader.

Get started at CGMA.org/Program ®

Holly Rodillo Bernstein, CPA, CGMA Director of Accounting, SoulCycle

Early on in her career, Sheri Schultz, CPA/ABV/CFF, Director of Litigation Support & Valuation Services at Fiske & Company in Plantation, FL, decided that working 70+ hours a week at a Big 8 firm and raising a family weren’t compatible. She became interested in the valuation field, left the firm and went to work for her father, building a successful boutique litigation and valuation firm. As soon as the AICPA offered the ABV credential, she and her dad both took the exam and passed. As Sheri says, “It was important to me that the AICPA backs my credential certification. It has a major impact on my credibility and the way I’m viewed in this profession.” The credential has also had a positive impact on her business. “Financial professionals call on me to do their business valuation work since they know I hold the credential. To get constant referrals from others is a significant driver for our financial success.”

For Jolene Fraser, CPA/CFF, CFE, Managing Director at EisnerAmper LLP, pursuing an AICPA specialized credential was second nature. She’s always been good with numbers and worked as an auditor in a Big 8 firm. After 10 years in public accounting, a colleague

© 2017 Association of International Certified Professional Accountants.

All rights reserved. 22726C-326

introduced her to forensic accounting. Right away, she knew this specialty was something she wanted to pursue as a career. “Testifying as an expert requires a huge amount of credibility. The CFF credential, and the fact that it’s backed by the AICPA, gives me that credibility,” she says. It has also led to many referrals from attorneys, who are much more likely to call on CFF credential holders than non-credential holders.

For Kevin Martin, CPA/CITP, MCSE, MCP+I, at Martin & Associates in Cincinnati, OH, melding his expertise in accounting with a passion for information systems was a perfect fit for the AICPA CITP (Certified Information Technology Professional) credential. Early in his career, he was microcomputer coordinator for a Big 8 firm, spending half his time in the “audit world” and the other half in the “technology world.”

The CITP credential has been a great business driver for his firm. His clients, says Kevin, “know they are working with a professional who understands at the highest level the financial aspect and the technological aspect — to make complete sense of their data. It’s a wonderful, powerful 1–2 punch.”

November/December

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Where can an AICPA C redential take your career next?

If you have a specialized interest, you can build on the value you offer clients by adding an AICPA advisory service credential: Personal Financial Specialist (PFS ), Accredited in Business Valuation (ABV ), Certified in Financial Forensics (CFF ) or Certified Information Technology Professional (CITP ).

These credentials were developed for the profession by the profession. They set you apart, make a statement and get you noticed. And, they can seriously boost your career. ™

®

®

®

© 2017 Association of International Certified Professional Accountants. All rights reserved. AICPA and American Institute of CPAs are trademarks of the American Institute of Certified Public Accountants and are registered in the United States, European Union and other countries. The Globe Design is a trademark owned by the Association of International Certified Professional Accountants and licensed to the AICPA. 23438A-326

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ASCPA Connections

Explore your opportunities at aicpa.org/aicpacredentials.

A FISCAL REALITY:

ASCPA and AICPA Support the Fiscal State of the Nation Resolution The U.S. government’s balance sheet indicates that, over time, the nation has an accumulated deficit (from annual shortfalls) of $21.5 trillion1. To put that in perspective, if you made a stack of 21.5 trillion $1 bills, you would be able to go to the moon and back more than three times.

Recently, Representatives Kathleen Rice (D-N.Y.) and Andy Barr (R-K.Y.) introduced the Fiscal State of the Nation resolution, H. Con. Res. 68, with 103 additional co-sponsors. It provides “for a joint hearing of the Committees on the Budget of the House of Representatives and the Senate to receive a presentation from the Comptroller General of the United States regarding the audited financial statement of the executive branch.” The resolution ensures that members of Congress are made aware of the information in the federal financial statements and helps them to better understand how current and/or future policy may affect the nation’s long-term fiscal health.

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“We thank Representatives Rice, Barr and the more than 100 other members who signed on to this important resolution,” said Jeannine Birmingham, President and CEO of the ASCPA. “Their leadership will help ensure that key policymakers are focused on some of the most important aspects of the consolidated financial statements, including financial and stability measures. The ASCPA is encouraging each Alabama Member of the U.S. House to also support this resolution by becoming a co-signer.”

AICPA also supports the Fiscal State of the Nation resolution. The profession believes that the consolidated federal financial statements and the Government Accountability Office (GAO)’s audit report provide valuable information on the financial condition of the federal government, and that policymakers should consider this information while making key decisions.

As of September 30, 2018.

November/December

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The Birmingham crew taking a break from their construction work

TELLING THE FIRM STORY

BMSS, LLC Continues Legacy of Giving Back

by Laura K. Watkins, Marketing Manager In 1991, Keith Barfield, Don Murphy and John Shank decided to leave a large, Birmingham-headquartered CPA firm to establish a new type of public accounting firm. The goal was to build a workplace that values character, family and life/work balance while creating a professional environment where every individual is treated with respect. The founders also wanted to make sure that a hallmark of the new firm was giving back to the local communities in which they work.

Nearly 30 years later, BMSS has grown into a top three accounting firm in Alabama with 27 partners, 82 certified public accountants and approximately 200 people across all businesses and offices. Broadly based, BMSS serves clients in the revenue range of $1 million to $50 million. The majority of the firm’s clients are family-owned/operated businesses; however, BMSS works with startups, private equity firms, smaller main street businesses, nonprofits and municipalities, and currently serves one of the largest family-owned businesses in the state of Alabama, which operates worldwide with over $3 billion in revenue.

Every year since the firm was founded, each location dedicates at least one day to giving back to its local community. Additionally, multiple service opportunities are offered to employees and everyone is encouraged to use at least 24 hours of paid volunteer time throughout the year. Each of the geographic offices primarily volunteers with nonprofits within a 50-mile radius.

A SERVANT’S HEART, OFFICE BY OFFICE Most recently, employees from BMSS’ Birmingham locations participated in serve-day opportunities throughout the month of October. The nonprofit organizations served included Christian Service Mission, Bundles of Hope, Grace’s Kitchen, Firehouse Shelter and March of Dimes. Employees assisted with a variety of tasks ranging from construction work to baking to folding T-shirts.

Every employee, at every level, is encouraged to participate.

“As a member of the business community, we are committed to giving back to the neighborhoods in which we live and work,” 20

ASCPA Connections

said Chief Practice Officer John Shank. We value our commitment to service and are honored to host service days where all employees are given the chance, and are highly encouraged, to provide community service in their local areas. In addition, we are proud to support mission-related nonprofits and organizations throughout the year in a variety of ways that are most meaningful and helpful to them.”

BMSS’ Gadsden office typically holds its day of service each summer.

Gadsden employees participate in the United Way Day of Action serving nonprofits and schools throughout Etowah County. This past summer, this meant spending the day giving the YMCA of Coosa Valley a deep cleaning.

“We are also deeply involved with supporting the James M. Barrie Center,” said Gadsden-based Member Scott Hindsman. “Being able to give back to organizations such as this is essential to our mission at BMSS and brings both firm-wide and individual meaning to our dayto-day lives outside of the office.”

The Barrie Center, whose mission is to provide a child-friendly center amidst investigation and intervention of child abuse, has community events throughout the year. BMSS sponsors its annual golf tournament and assists wherever needed.

“In addition, this year, we are volunteering with the Salvation Army and providing 20 service hours ringing the bell for their kettle drive, said Hindsman.” We will also adopt two families through the Etowah Baptist Mission Center providing gifts and food.”

BMSS’ Huntsville office also has a long history of giving back. “Each of us has been given so much,” said Huntsville-based Member, Jamey Carroll. “It is our duty, as well as our honor, to give of our time, talents and money.”

In October, several employees participated in the 15th annual Liz Hurley Ribbon Run. The event, featuring a 5K run and Survivors’ Walk, was established in honor of local news anchor and breast cancer survivor, Liz Hurley. Many of the participants have had loved

ones who are breast cancer survivors or who are currently battling the disease. Similarly, the Huntsville office has been a long-timer supporter and sponsor of the annual Heart Walk, an annual fundraiser event for the American Heart Association.

A few more examples of the many ways the Huntsville team gives back is by collecting and donating items for the Downtown Rescue Mission, giving to The Care Center’s Bags of Blessings initiative, and purchasing, then donating, a Christmas tree each year for Huntsville’s Tinsel Trail.

EXTENDING BEYOND LOCAL COMMUNITIES TO A GLOBAL REACH This past July, BMSS extended community outreach to an international level. CEO Don Murphy, along with four CPAs from the management group, traveled to Kigali, Rwanda for 10 days to help launch a business analyst and manager training program with Bridge2Rwanda.

Bridge2Rwanda (B2R) is a nonprofit organization founded in 2007 to create opportunities for Rwandan students to obtain a global education and to attract foreign direct investors to help accelerate Rwanda’s economic growth. BMSS originally connected with B2R through Dale Dawson, the founder.

BMSS Bridge2Rwanda team with B2B Country Director Tom Allen

Employees spent their time leading accounting and business training for the B2R Analyst Program and meeting with B2R students. The training was broken down into lessons on QuickBooks, Leadership, Steps to Starting a Business, Personal Finance and Financial Statement Analysis.

Although most of the BMSS family was unable to be in Rwanda in person, many contributed funds to purchase educational resources for the library program in a neighboring village.

Kate Fluker was responsible for scheduling and leading the trip to Rwanda. “Spending time with the analysts and other members of the B2R team was such a privilege,” she said. “I learned so much about the Rwandan culture and their personal stories. I am forever thankful to BMSS for providing this opportunity.”

Emily Riles, CPA and Wendy Adams, CPA volunteering at Grace’s Kitchen.

BMSS was established in Birmingham in 1991 and has grown to be one of Alabama’s Top 3 accounting firms. With an entrepreneurial and innovative mindset at our core, the firm’s ultimate mission is to provide peace of mind to our clients. BMSS specializes in several industries, including manufacturing, wholesale distribution, construction, technology, nonprofit and professional services. In addition to tax and audit, the firm offers robust practice areas in state and local tax, estate planning, employee benefit plan audits, and business advisory services. BMSS is an independent member of the BDO Alliance USA, a nationwide association of independently owned local and regional accounting, consulting and service firms with similar client service goals.

For more information, visit: www.BMSS.com.

Gadsden office employees participating in United Way Day of Action

Group picture of Huntsville office from 2019 Liz Hurley Ribbon Run

Birmingham team members volunteering with Bundles of Hope

November/December

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SALT CORNER

LLCs Taxed as S Corporations: Traps for the Unwary BY: BRIAN T. ROBBINS AND BRUCE P. ELY Bradley Arant Boult Cummings LLP Birmingham, Alabama

Two recent rulings by the Internal Revenue Service should cause Alabama CPAs to seriously consider whether to contact their LLC clients that have elected S status, and to urge clients or friends who are pondering the conversion to think twice or to consider simply forming an S corp. to begin with.

As you know, LLCs provide business owners with a great deal of flexibility in choosing the manner in which the entity will be treated for federal (and oftentimes state) income tax purposes. While this flexibility can be alluring, it can also lead to problems when an LLC’s tax election and its governing documents don’t align. Two IRS private letter rulings warn us that, unless the LLC’s governing documents are amended in several respects to reflect that it will be taxed as an S corporation, the purported election may inadvertently cause the LLC to instead be taxed as a C corporation.

Entities taxed as S corporations are subject to a number of restrictions, including a requirement that the company must not have “more than one class of stock.”1 For these purposes, a corporation is deemed to have one class of stock if the entity’s governing documents provide that all outstanding classes of stock contain identical distribution and liquidation proceeds.2 For many entities taxed as corporations, this rule is straightforward. However, for LLCs that have elected to be taxed as S corporations, the inquiry becomes difficult.

These two PLRs remind us that LLCs with boilerplate partnership-type operating agreement provisions can run afoul of the “one class of stock” rule or other restrictions applicable to S corporations but not to Subchapter K entities: 1 2

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ASCPA Connections

I.R.C. § 1361(b)(1)(D).

Treas. Reg. § 1.1361-1(l)(2)(i).

SALT CORNER

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Private Letter Ruling 2019-18004, which can be found at https://bit.ly/2qMkgwf, involved an LLC that elected early on to be taxed as an S corporation. Throughout its existence, the LLC made all distributions to shareholders pro rata based on the shareholders’ “Percentage Interests” in the company. However, the LLC’s operating agreement provided that liquidating distributions would be made in accordance with the owners’ capital accounts -- a standard provision for LLCs taxed as partnerships.

The IRS ruled that the company’s S election terminated on the day it was made, since the liquidation provisions in the operating agreement could potentially result in distributions to shareholders/members based on their capital accounts rather than based on their respective number of shares. Fortunately, the IRS granted relief to the company (and perhaps to its tax advisers as well) for the failed election, treating the company as an S corporation retroactively effective as of the date of its S election.

Similarly, Private Letter Ruling 2019-3002, which can be found at https://bit.ly/2MKTY66, considered the effectiveness of an S election by an LLC whose operating agreement provided that all distributions would be made according to percentage interests, but the agreement was later amended to provide that liquidating distributions would be made in accordance with capital accounts. The IRS ruled that the company’s S election terminated on the effective date of the amendment, but again gave grace and granted retroactive relief.

These private letter rulings remind us that LLCs cannot simply elect to be taxed as S corporations without substantial revisions to their governing documents to reflect their status as an S corporation rather than a Subchapter K-governed entity. Another example of a foot-fault is the standard statement in an LLC agreement that the entity “shall be taxed [or treated] as a partnership for federal and state income tax purposes…” A retroactive inadvertent termination may be especially detrimental for LLCs that hold depreciable assets such as real estate with built-in gains.

While clients may not appreciate the hassle (and legal fees) involved in amending these documents, they’ll certainly be unhappy if the IRS, or another tax practitioner, informs them that their entity is actually now a C corporation, and not only is there double tax at the entity level but all distributions to member-shareholders were actually dividends (to the extent of earnings and profits). One cannot depend on IRS grace, and it will be much easier, and less expensive, to correct the documents at the time of the election. Or as the senior author of this article often suggests, just form an S corporation to begin with.

The authors can be reached at brobbins@bradley.com or bely@bradley.com. © Sept. 12, 2019. Brian T. Robbins/Bruce P. Ely. All rights reserved.

November/December

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ASCPA ACROSS ALABAMA

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1 East Alabama Chapter Members at the

Chapter CPE on AI; 2 Fun in the Shoals with

the North Alabama Chapter; 3 Ladies from the ASBPA at the Montgomery Chapter Tailgate; 4 Warren Averett Representing at the Tailgate; 5 Bringing their Best Bowling Game in North

Alabama; 6 East Alabama Bankers & Attorneys Social; 7 Aldridge Borden Representing

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their Firm; 8 Jonathan Avant from BBVA & Montgomery’s Downtown Business Association; 9 Representation at the East Alabama Chapter Event from Auburn’s School of Accountantancy; 10 Post Deadline Pinata Fun; 11 The Young CPA Cabinet at the Exceptional Foundation’s Dinnertainment; 12 Montgomery Chapter

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Members at their Annual Tailgate; 13 Mobile Chapter Members at their Post Deadline Party;

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14 North Alabama Student Members even got in on the game!

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BY BEING PROACTIVE ON ARTIFICIAL INTELLIGENCE, MACHINE LEARNING AND ROBOTIC PROCESS AUTOMATION RANDY JOHNSTON, CEO, NETWORK MANAGEMENT GROUP, INC. EXEC VP, K2 ENTERPRISES

We will need to take our firms through a technology transition in the next five years that is unlike anything that has come before. While you may believe that the transition from DOS to Windows, the arrival of the Internet, or the use of cloud technology were big things, the use of Artificial Intelligence (AI), Machine Learning (ML), and other emerging technologies, such as robotic process automation (RPA), will deeply change the practice of accounting. How can you help keep your firm on the right track? It certainly won’t be done by doing the same old thing; but, the risk won’t be mitigated by jumping to new technology too early either.

Your state society has been proactively scheduling CPE courses to help you investigate emerging technology options. However, we each have different technologies we discover, we have different client needs and we have different strategies for our firms.

Remember that you are still well served having a strategic plan and tactical objectives for the firm which are then incorporated into a technology strategic and tactical plan. We still must get day-to-day work done in Accounting, Payables, Tax, Audit and other core services. Each business area and application has development in progress that will apply AI, ML and RPA. The key question you should ask is when does my area of responsibility need to apply the emerging technology?

WHAT ARE THE TOP AI AND AUTOMATION OPPORTUNITIES? Wherever there are a lot of transactions or data, there is an opportunity to automate. You have already seen the opportunity to reduce the amount of effort needed to use bank or credit card feeds to capture all transactional data if you use online accounting software. Some of you are using expense management software to capture transactions and

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ASCPA Connections

reduce the effort to manage expense reporting.

These simple examples leverage the benefits of centralized cloud computing.

Over time, computing power has gone from centralized to distributed back to centralized and is preparing to shift back to more distributed capabilities. The new wave of distributed computing is a result of widespread use of mobile compute power and from the reduced cost of graphics processors which can accelerate machine learning and artificial intelligence. Recognition capabilities, commonly referred to as Optical Character Recognition (OCR) has continued to improve, but adding AI, ML, and other techniques, improve accuracy. Having a local graphics processor can speed up AI and ML. If a document is presented in paper form, the accuracy of translating the image’s numbers and words continues to improve approaching 100%. Of course, it is better to capture the data in the original format; which means we will download the transactions from a bank or from an accounting software system. Another rule to apply is that if an accountant is keying data, there is a broken process somewhere, and your team should not be keying data at any level.

We have seen and experienced the first wave of computer automation with document management, expense management, and accounts payable management, with tools like eFileCabinet, Concur and Altec Doc-Link. While some of these products are approaching ten years old, their capabilities were largely built with manual forms and compute power, not with AI and other advanced techniques. New generation tools like Receipt Bank Extract, Zoho Expense and Bill.com are leveraging emerging technology to improve their capabilities and recognition rates.

Consider what happens if we can ingest a large amount of data for a tax return or an audit, perhaps even all transactions, to look for irregularities? What happens if all, or at least most, business transactions can be accurately captured and classified? Both functions are happening now with first generation products, such as Inflo and MindBridge AI. The algorithms in use are improving in accuracy as more data is processed, and the rules in the algorithms are improved.

Mainstream and start-up vendors are beginning to sell these capabilities. Imagine what can happen if we can apply blockchain techniques to ensure that all transactions that are recorded can’t be changed (= immutable). We are seeing this type of product with tools like AuditChain which is also leveraging XBRL reporting.

SO, WHAT ARE SOME POTENTIAL TOOLS TO USE TODAY? Today, multiple publishers are marketing products claiming that they have these problems solved. While their techniques are beginning to work, don’t expect 100% solutions. Examples of products that are working for audit include: Wolters Kluwer Audit Accelerator and TeamMate Analytics. MindBridge is making progress on ingesting and classifying a large amount of data, while new audit tools are being promoted by the competitors of AuditFile, MyWorkPapers and the AICPA’s OnPoint PCR. We can bring back feeds and expense documentation together with a wide variety of expense reporting tools from Zoho Expense to Tallie to Expensify to Nexonia.

We can automate payables with over a dozen different products from CloudX to Anybill to Avid Xchange.

Note that, if a process can be handled by a human, there are tools that can automate these processes as well. Reports from large organizations demonstrate that Robotic Process Automation (RPA) is paying off very well financially.

Robotic process automation (or RPA) is an emerging form of business process automation technology based on the notion of software robots or artificial intelligence (AI) workers. RPA can be attended vs unattended (similar to Machine Learning). When RPA 2.0 arrives, we will have more integration to AI. Today, the tools are more like programming and scripting. The benefits of RPA include: Productivity, Cost savings, Risk Management, Innovation, and Employee engagement.

The use cases (and more) include: QA, patch deployment, load testing and data entry.

Possible tools to consider include (pay particular attention to the platform across the tool chosen): UiPath, Automation Anywhere, Auto IT (scripts, local workstations), and Blue Prism. What has done well with RPA? Any manual processes that can be automated, repetitive tasks, rule-based activities, changeable tasks that are parameter driven, electronically readable format content, mature/stable processes, processes with low exception rates, areas that have high volume and any places where you can achieve FTE savings from automation.

There are three levels of complexity with RPA: low (recorder, power users), medium (some simple scripting), and high (Developers). To get started on a project, you’ll need to engage the stakeholders (tax/finance), have solid process mapping/prioritization, look at the ROI/KPI, find and develop a Tech/Proof of Concept (use case before, vendor build), and repeat to improve. We suggest that you target work with least realization or areas that you believe will gain benefit from optimization, standardization, quality, or innovation.

AND WE ARE NOT DONE YET… What can you do now? Recognize that if you keep your technology current, vendors will make new offerings available to plug into your technology infrastructure.

Consider services offered by your firm today or ones you’d like to offer in the future. Create an innovation lab, or sandbox, that can be used for testing of new applications and techniques. Listen to your clients or customers’ needs carefully while you are trying to assemble an offering. Test the offering with a few trusted clients and expand the offering into more of your base. Remember that you don’t want to give away the efficiencies gained by reducing fees or prices. Over time, poor competitors are likely to compete on price, but initially you should compete on value. Use the extra time made available by the efficiencies of the application(s) to provide a higher level of service, perform more business development, reduce the workload of your team or allocate the time to other worthwhile projects in your firm.

Expect some of the applications to not work out as you expect, and act quickly to set these options aside.

You may want to hold your work for deployment at a later time once the quality of the products improves and/or become more affordable. Remember to package service offerings as a product and have a marketing documentation and procedures to support the offering. Revise the procedures and offering frequently until you have it finely honed to fit your client base.

There is broad FOMO (fear of missing out) and vendors are selling many partially baked offerings that aren’t really what is advertised. The keys to the offerings are: do they work sufficiently well today to be useful, are they affordable, and do clients and/or your firm have a better experience while using them? If so, you can innovate with the innovative products today and be ready for the emerging technologies of tomorrow.

About the author: Randy Johnston is a shareholder in K2 Enterprises, LLC, a leading provider of CPE to state CPA societies. He also owns Network Management Group, Inc., a managed services provider that provides around-the-clock support from Boston to Honolulu.

Concepts for this article were extracted from the Emerging Technology session produced as part of the 2018 K2 Technology Conferences and from Johnston’s own experience working with technology at various firms in the U.S. Ask for help at NMGI by emailing helpdesk@nmgi.com or calling 620664-6000.

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Governmental Accounting & Auditing Forum PRESENTED BY THE ALABAMA SOCIETY OF CPAS, ASSOCIATION OF GOVERNMENT ACCOUNTANTS & GOVERNMENT FINANCE OFFICERS ASSOCIATION OF ALABAMA

December 5-6, 2019 | Embassy Suites - Hoover WWW.ASCPA.ORG/GAAF2019 For the first-time ever, attend via LIVE-STREAM*!

DAY ONE | DECEMBER 5, 2019

DAY TWO | DECEMBER 6, 2019

8:15 am ASCPA Update & Opening Comments

8:30 am - 10:00 am The Recession after the Great Recession an Economic Update with Keivan Deravi

8:30 am - 10:30 am GASB Update with Lisa Parker 10:30 am AM Break & AGA Update 10:50 am - 11:50 am Update on Financial Reporting Model with Lisa Parker 11:50 am Lunch 12:50 pm - 1:40 pm GASB 87/Leases with Brian Barksdale & Jason Harpe 1:40 pm - 2:30 pm CFO Roundtable with Kathleen Baxter, Lori Law, Penny Smith & Lauren Butts 2:30 pm PM Break & GFOAA Update 2:50 pm - 4:05 pm Blockchain, Cyber & Emerging Tech with Paul Perry 28

ASCPA Connections

10:00 am AM Break 10:15 am - 11:45 am Internal Controls & Green Book with Tommie Singleton 11:45 am Lunch 12:45pm - 2:25 pm Ethical Leadership: The True Sustainable Leadership with Sedrik Newbern* 2:25 pm PM Break 2:40 pm - 3:55 pm Fraud with Kevin Andrews

Visit www.ascpa.org/GAAF19 to access our room block at the Embassy Suites - Hoover, to find out more about this year’s leaders & to register 1-of-3 ways!

REMEMBERING RODNEY SCOTT BUTLER

due to the loss of his and Cheri’s first son Blake to a congenital heart defect.

February 18, 1962 – August 15, 2019 Huntsville, Alabama | Certificate # 3529

The past two years were marked by strong fellowship with other warriors of the faith within his Unity Group and Journey Group, which brought him much joy and support.

After a very courageous two year battle with cancer, Rodney Scott Butler, 57, of Huntsville passed from this life into eternity on August 15, 2019. His family and his loving wife, Cheri, were by his side. He never let cancer define him, but instead made the most of every day while exemplifying the love of Christ. He was always thinking of others above himself.

He loved spending his time golfing with the Player’s Group each week, fishing at the lake, staying active, and spending time with his precious grandson.

Scott was loved by all. His positivity and joy in the most difficult of circumstances inspired all who had the opportunity to meet him. His sense of humor and love for life was contagious. The love he had for his family was immense, and always strived to put them first. He would do anything for “his girls.”

Born February 18, 1962 in the town of Mableton, Georgia to Shirley Hammett Brideau and Y.C. Butler, Scott graduated from Pebblebrook High School and Jacksonville State University (1984). There, he received his degree in accounting and began his love story with Cheri. Throughout his entire life, he was an incredibly hard worker.

From campus police at Jacksonville State to rising the ranks in service jobs at Six Flags over Georgia, he was esteemed by all who worked alongside of him. Eventually earning his CPA, he worked for many years in consulting and ultimately started his own company, Redstone Government Consulting. Scott was a visionary. He was among the first CPAs in Huntsville to identify and pursue the government contracting industry as a niche focus. His humble servant leadership and emphasis on personal relationships were evident to all who knew him.

WILLIAM D. “BILL” HELTON September 5, 1929 – March 29, 2019 Birmingham, AL | Certificate # 372

He had a heart for causes that reflected his life purpose, which was to bring praise, honor and glory to God. Lincoln Village, Kids to Love, Fellowship of Christian Athletes, and Second Mile were among the organizations he partnered with. The Tears Foundation and Children’s of Alabama (Pediatric and Congenital Heart Center) were important to him

William D. “Bill” Helton, age 89, of Birmingham, AL passed away on Friday, March 29, 2019. Bill was born September 5, 1929 in Birmingham, AL. Bill was a graduate of Birmingham Southern and Auburn University.

He was a well-respected CPA (Alabama license #372) for over 50 years and was a Lifetime Member of the ASCPA. He had a passion for golf, was an avid sports fan, an Auburn enthusiast, and loved the beach. He will be deeply missed by his extensive family, close friends, and all those who knew and loved him.

SUPPORT THE EDUCATIONAL FOUNDATION OF THE ASCPA

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When you #startwithasmile, Amazon donates 0.5% of the purchase price to the ASCPA Educational Foundation.

Bookmark https://smile.amazon.com/ch/63-6063630 in your favorite web browser to start today.* *Currently, Amazon Smile is not supported in the Amazon app.

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8/26/2019 4:26:32 PM

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11/6/2019 11:53:18 AM

10/28/2019 11:27:41 AM

SAVE THE DATES FOR THESE

BUSINESS & INDUSTRY APPRECIATION • March 12, 2020 EMPLOYEE BENEFITS WORKSHOP • May 15, 2020 EMERGING LEADERS SUMMIT • May 7, 2020 101ST ANNUAL MEETING • June 16, 2020 GULF SHORES CPE CLUSTERS • June 22-24, 2020 SUMMER EDUCATION CONFERENCE • July 20-24, 2020 TECHNOLOGY CONFERENCE • August 13-14, 2020 FINANCIAL A&A CONFERENCE • September 25, 2020 GOVERNMENTAL A&A FORUM • December 2020

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