AZ CPA July/August 2021
Trust
Assured reliance on the character, ability, strength, or truth of someone.
The Arizona Society of Certified Public Accountants y www.ascpa.com
AZ CPA The Arizona Society of Certified Public Accountants President & CEO Editor Advertising Board of Directors Chair Chair-Elect Secretary/Treasurer Directors
Oliver Yandle Heidi Frei Heidi Frei Tom Duensing Rachael Crump Andrea Levy Samantha Crum
Jessica Estrada Glen Evans Tabitha Fox David Gephart Barbara Gonzalez James McGettigan Lauren Murro Eugene Park Megan Romo Gidget Slater Christopher Tyhurst
Immediate Past Chair Ginny DeSanto AICPA Council Members Mike Allen
Jared Van Arsdale
Chapter Presidents Southern Chapter Clark Goding Northern Chapter James Shankland Southwest Chapter Helen Greenwell North-Central Chapter Gidget Slater AZ CPA is published by the Arizona Society
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of Certified Public Accountants (ASCPA) to provide information, news and trends to the accounting profession. It is distributed six times a year as a regular service to ASCPA members. The ASCPA, its members, board of directors and administrative staff assume no responsibility for advertisements herein. The ASCPA and the above people also assume no liability for business decisions made by readers in reference to statements and/or claims in articles or advertisements within this publication. Opinions expressed by contributors are not necessarily those of the ASCPA.
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Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040
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Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 www.ascpa.com
AZ CPA JULY/AUGUST 2021
Volume 37 Number 4
AZ CPA
July/August 2021
Features
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12 Client AssessmentByChecklist Suzanne M. Holl, CPA
the character, ability, strength, or truth of someone.
(licensed in CA)
Extended Relief for 15 Temporary Use of e-Signatures
Columns & Departments
By Edward K. Zollars, CPA
Chair’s Message by Thomas F. Duensing, CPA
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Member News
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ASCPA CPE Bundles
11 23
Classifieds 26 Quick Quiz
by Marie Solange Lopes, CPA (licensed in Massachusetts)
Trust: Assured reliance on
Connect with Colleagues via Zoom
CPA Exam Changes on the Way
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How COVID-19 Pushed HR 18 Into the Future By Annie Mueller
How to Get a Handle on Today’s 24 Volatile Supply Chains By Luke O’Neill and Sabine Vollmer
4801 E. Washington St., Suite 180 Phoenix, Arizona 85034-2040 www.ascpa.com
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ASCPA Chair’s Message
Trust: Assured reliance on the character, ability, strength, or truth of someone.
Since becoming chair of the ASCPA, I’ve always thought, “What topic would possibly be of interest for CPAs?” I typically have that mental debate for several weeks, and for this issue, I would like to discuss something that is very important to the CPA profession and that has greatly impacted my career: trust.
Thomas F. Duensing, CPA
Now, more than ever, our role as trusted advisors is critical to those that rely on the expertise of a CPA.
We’ve all heard that CPAs are “trusted advisors,” but what does that mean to each of us? Merriam-Webster defines trust as “assured reliance on the character, ability, strength, or truth of someone.” In our profession, it is so important to strive to maintain trust. How have I personally experienced the value of trust? Eight years (and one employer) ago, I was hired as the finance director of a large municipality. Like anyone starting a new job, I did basic research on my new employer and was curious about the burning issues. However, my research should have been much more in depth – I had no idea what I was getting into. Two weeks into my new job, I received a call from a reporter at the Wall Street Journal who asked me to comment on a story they were about to run stating there was only one city, out of the 250 largest U.S. cities, that was in worse financial condition than my city. The issues continued with a financial forecast that indicated we only had one to two years of operating funds remaining. So, I was the new guy who told decision-makers, “Without changes, staffing costs will need to be reduced by 20 percent; seriously, trust me.” I won’t get into detail about the decisions made, the restructuring, or the budget cuts. I also admit there were mistakes along the way, but roll forward to today, and this municipality is now AAA rated due to the efforts of a very small, but nimble team and difficult decisions made by a committed city council. Although the strategic decisions made were based on data, most importantly, the strategic decisions were based on trust. Trust that the truth was being told, trust that financial data was accurate, and trust that the staff was making the correct recommendations. In various presentations, I have been asked about the biggest lesson I learned from this experience. The answer is simple. Have a clear, simple message, and make sure decision-makers trust that you are telling the truth. Be honest, be accurate, remain flexible and be sincere – be that trusted advisor. Now, more than ever, our role as trusted advisors is critical to those that rely on the expertise of a CPA. Whether forced by the pandemic, or by the natural evolution of technology and the workforce, our responsibility to those that rely on us will only become more important. It is an exciting time, and in my opinion, this is a great time to be a CPA. Looking back, my experiences eight years ago were by far the most difficult, yet most rewarding time of my career. I hope each of you takes pride in the fact that we are in a trusted profession, and I encourage each of you to remain committed to keeping the trust of those you serve. l
Respectfully, Tom Duensing
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Member News The Arizona State Senate and House of Representatives are in ongoing negotiations for the Fiscal Year 2022 budget and a major tax omnibus. Jared W. Van Arsdale, CPA spoke with the Arizona Republic on the flat income tax proposal being discussed at the Arizona Legislature. Van Arsdale noted Arizona’s tax system is already fairly simple and a flat tax does not change much when it comes to the complexity of Arizona’s taxes. Wallace Plese + Dreher, LLP designated Randy G. Brammer, CPA, CCIFP as the firm’s new managing partner. Jeremy Miller has joined the CBIZ & MHM Phoenix team after relocating from the company’s Salt Lake City office.
Virtual Member Initiation August 19, 2021 3-4:30 p.m. Please join us on Zoom to learn more about your membership and your CPA community. You will have the opportunity to connect with other members and learn how to maximize your growth as an ASCPA member. Find inspiration in stories from CPAs who have utilized their membership and established their connection to the CPA profession. RSVP by August 18 to receive the Zoom link. This is a free event.
RSVP: https://www.surveymonkey. com/r/5P359MF
Exclusive Member Savings As an ASCPA member, you have access to products and preferred pricing on services geared to serve you personally or professionally. Log into your ASCPA account to access the discount codes. www.ascpa.com/membersavings
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CPA Exam Changes on the Way by Marie Solange Lopes, CPA (licensed in Massachusetts) Factors such as specialized core competencies, expanded CPA skill sets and advancing technology are bringing significant changes to the CPA Exam. According to the AICPA, the percentage of nonaccounting graduate degree hires in public accounting firms increased from 20 percent in 2016 to 31 percent in 2018. This reflects how the evolving business environment is affecting the profession and the CPA licensure model. The National Association of State Boards of Accountancy (NASBA) and the AICPA recently launched the CPA Evolution initiative, having solicited input from over 3,000 stakeholders, including AICPA council members, state boards of accountancy, state CPA societies, academia, regulators, students and technology experts. Feedback included suggestions for an updated exam format with revised core competencies and a greater emphasis on technology and expanded skill sets.
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A refresh of the CPA Exam is set to be implemented on July 21, 2021. A practice analysis conducted by the AICPA and other stakeholders resulted in the new CPA Exam Blueprints, released on Nov. 20, 2020. It had no changes to the exam format itself, but it did affect the Auditing and Attestation and Business Environment and Concepts sections. The CPA Exam Blueprints have a new requirement for emerging CPAs to understand how automation, risk and internal controls pertain to business processes. Specifically, CPAs will be expected to assess auditor reliance on technology and IT controls. In addition, an expanded focus on data analytics will measure CPAs’ datadriven analytical skills, as well as data management and relationship knowledge. Lastly, upcoming changes will target the differences between System and Organization Controls (SOC) 1 and 2 reports. Many of the changes rely on an increased use and understanding of technology. These are indispensable in the assessment and audit of business processes, as well as the use of data analytics and SOC 1 and 2 reports. Material removed from the exam includes evaluating the differences between international financial reporting standards and generally accepted accounting principles, as well as trusts and estate taxes.
Likely Changes for 2024 The proposed 2024 model would feature revised core competencies in accounting, auditing, tax and technology with an expectation that not all material covered in the current CPA format will be considered “core.”1 There would also be an option for certification in specialized disciplines related to business analysis and reporting, information systems and controls, and tax compliance and planning. Candidates would be required to complete the core section plus one discipline to meet the licensure requirements. The AICPA and NASBA conducted a survey of more than 600 university students and recent graduates and found that 90 percent of the participants already knew their area of focus.
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The main objectives of this “Core + Discipline” model are as follows: • Serve the public by providing a pool of CPA candidates with the knowledge to meet the evolving needs of organizations and individuals.
refining their career specialization and stream-lining their experiences. In terms of IT, CPAs should target areas of focus such as data analytics, artificial intelligence and blockchain.
• Incorporate a strong foundation of accounting, tax, auditing and technology into the core competencies.
• Education and training – Emerging CPAs in public accounting firms should look to technical resources such as webinars, white papers and professional training, including continuing education opportunities and trade publications.
• Enhanced expertise through professional certifications – Emerging CPAs should consider obtaining additional and enhanced expertise through professional certifications.2 One example is AICPA’s Blockchain Fundamentals for Accounting and Finance Professionals, which is geared at providing accounting professionals with increased digital and technical proficiency.
• Build deeper expertise in one of three disciplines: business analysis and reporting, information systems and controls, and tax compliance and planning.
• Create a community that is nimble and adaptive to future changes in the profession.
Current CPA candidates would be able to sit for the CPA Exam in the current format until the expected implementation of the new format in January 2024. NASBA and the AICPA will be working with educators to better incorporate the new licensure model into the academic curriculum. A gap analysis is currently being conducted to assess what is taught today in the classroom compared to what will be tested on the new CPA Exam.
Recommendations for Emerging CPAs Current accounting students can acquire the skills needed to be successful with this new version of the exam in school. Emerging CPAs already in practice should consider upgrading their skills to reflect the new core competencies and strive to adjust to the upcoming specializations. Below are some tips for emerging CPAs: • Career specialization – Emerging CPAs should consider specializing in specific areas mirroring the CPA Exam changes, including business analysis and reporting, information systems and controls, and tax compliance and planning. At the undergraduate and graduate levels, opt for these courses to better prepare. Experi enced CPAs should consider
As the accounting profession continues to evolve, incoming and emerging CPAs must stay ahead of upcoming changes by acquiring, developing and maintaining the necessary abilities and skills. To learn more about CPA Evolution, please visit www.evolutionofcpa.org. l Jerry J. Maginnis, CPA, and David D. Wagaman, CPA, “The CPA Evolution Project: Preparing the Profession for the Future,” PICPA’s Guide to CPA Careers in a Changing Business Landscape (April 2020). https:// mydigitalpublication.com/publication/?i=658167& ver=html5&p=6 2 Ashley L. Stampone, CPA, and Amanda S. Marcy, CPA, “Emerging Technologies Will Impact More than Office Duties,” Pennsylvania CPA Journal (Fall 2019). https://mydigitalpublication. com/publication/?i=615374&ver=html5&p=12 Marie Solange Lopes, CPA (licensed in Massachusetts), is an assistant professor of accounting at Stonehill College in Easton, Mass., and a doctoral student at the University of Scranton in Scranton. She can be contacted at mlopes@stonehill.edu. Daniel J. Gaydon, DBA, is the associate vice president of financial reporting at Geisinger Health in Wilkes-Barre and an adjunct accounting instructor at the University of Scranton. He can be contacted at daniel.gaydon@scranton.edu. Reprinted with permission from the Pennsylvania CPA Journal, a publication of the Pennsylvania Institute of Certified Public Accountants. 1
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Client Assessment Checklist By Suzanne M. Holl, CPA (licensed in CA) Any client, whether new or established, can become problematic for a variety of reasons. For example, a problem client may: • be unhappy with the results of an engagement, though there was nothing wrong with the services performed; • believe that the CPA rendered substandard services (especially if the client is unhappy with the results); • manage financial affairs poorly, creating maelstroms for which the CPA is held responsible; • be financially irresponsible and more inclined to blame the CPA when finances take a downturn; • owe so much money to the CPA that the client believes a malpractice claim will eliminate or reduce the amount owed. 12
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objectivity are impaired in appearance or in fact, especially when considering services for attestation clients.
3) Is the client financially viable? The answer to this question is critical, especially in avoiding fee-collection problems and disputes. Much of the information needed can be obtained by:
• interviewing the client and the client’s key personnel, banker, attorney, predecessor accountants and auditors; • running a credit check;
CPA firms should evaluate all potential new clients and re-evaluate all current clients on a regular basis, at least annually. This enables the firm to better monitor clients, consider any changes that might affect the professional relationship and avoid situations that could escalate into crises. Firms can also stipulate in their engagement letters that the engagement is not binding until client acceptance procedures have been completed. The following questions are designed to help CPAs conduct the due diligence needed to ensure that the client is a good fit for the firm and that the firm is comfortable with the client.
1) Is the engagement a good match for the firm’s expertise? If the firm accepts an engagement for which it is not professionally staffed or qualified, it runs the risk of disappointing the client, or a third party, and exposing itself to litigation and ethics violations. Due care demands that firms a) are capable of performing the services required by the engagements they accept and b) are performing the services often enough to become proficient at them. Firms that “dabble” in services outside their areas of expertise are typically not practicing them often enough to become proficient. Indeed, services that represent less than 15 percent of a firm’s service concentration
produce disproportionately high loss ratios. (See the chart, “Risk Is High for Beginners and Dabblers.”) Proficiency in any type of engagement includes the ability to identify risk stress points in the engagement. CPAs are expected to possess a thorough understanding of the client’s business and industry in order to identify those stress points. Establish a policy for what types of engagements the firm will avoid because of a lack of technical expertise.
2) Is the client the kind of client the firm would like to have? A variety of factors need to be considered in answering this question, ranging from the client’s reputation and integrity, to its commitment to appropriate accounting practices and internal controls. CPAs should communicate with predecessor accountants and third parties to obtain as much information as possible about the client. Are the client’s expectations of CPAs reasonable? Does the client appropriately value CPAs’ services and advice? Once the firm has the information it needs, it can explore ways to cultivate the kinds of business it wants. Other important considerations will depend on the type of client or engagement in question. For some engagements, CPAs will need to consider potential or actual conflicts of interest and whether their independence and
• examining the past three years of financial statements;
• examining the past three years of tax returns; and
• examining the prior CPA’s management letters.
Background checks Background checks should be considered for all significant engagements. Credit checks and public record checks are critical, but background checks are about more than the financial condition of the client. The questions the CPA firm should ask include the following:
• Why was the firm selected for this engagement?
• What was the source of the referral? • What business is the client in? - Is the engagement within the firm’s areas of expertise? Is it risky? - Are the rewards of the engagement worth the risk?
• Will the engagement create any conflicts of interest (actual or potential) for the firm?
• Are the business and accounting records adequate and in order, or disorganized?
• Are the financial statements and tax returns for the past three years consistent?
• What is the client’s financial track record? Have there been bankruptcies or business failures?
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• What is the client’s level of financial sophistication (especially among its accounting staff)? • Is there high staff turnover?
• Is a key partner or employee leaving?
• Is the client of a litigious nature, judging from conversations with prior accountants and/or attorneys?
• Is the financial knowledge of the client acute?
Regardless of the services the CPA is being asked to perform, client screening should be done during the period between the client’s first contact with the CPA and the signing of the engagement letter (the “preengagement” period). Much of the information needed can be obtained at the client interview and verified later through other interviews. The more information obtained, the better the assessment of risk. In a CPA partnership or professional corporation, it is a common practice for another partner or a client committee to review the client-screening information and to pass judgment on the acceptability of a new client. There are high-risk clients and high-risk engagements. Some CPAs rank their clients according to how cooperative, knowledgeable, reasonable, difficult or time-consuming they are. Engagements can be ranked as well by the complexity of the work. Generally, difficult clients with complex work pose the highest risk to the firm, and risk management then becomes even more essential. l Suzanne M. Holl, CPA (licensed in CA), senior vice president of loss prevention services at CAMICO (www.camico.com), has more than 28 years of experience in Big Four public accounting and private industry. She provides CAMICO policyholders with information on a wide variety of loss prevention and accounting issues. CAMICO is the preferred provider of professional liability insurance for the ASCPA.
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Extended Relief for Temporary Use of e-Signatures By Edward K. Zollars, CPA The IRS has once again extended its special relief for the temporary use of e-signatures on specified tax documents in Memorandum NHQ-10-0421-00021 , now providing that digital signatures may be used beyond the June 30, 2021 expiration of the prior memorandum. The memorandum, revising a memorandum issued on December 28, 20202, states: As part of our response to the COVID-19 situation, we have taken steps to protect employees, taxpayers and their representatives by minimizing the need for in-person contact. Taxpayer representatives have expressed concerns with securing handwritten signatures during these times for forms that are required to be filed or maintained on paper. To alleviate these concerns while promoting timely filing, we are implementing a deviation with this memorandum that allows taxpayers and representatives to use electronic or digital signatures when signing certain forms that currently require a handwritten signature. The forms to which this flexibility applies can be found in the attachment to this memo. Such forms must be signed and postmarked on August 28, 2020, or later. The attachment may be updated from time to time to either add or remove applicable forms as appropriate.3 The new version of the form now shows an expiration date of December 31, 2021. As well, unlike the prior versions of this memorandum, the paragraph no longer refers to this as a temporary deviation. Since the memorandum will expire on December 31, 2021, it would appear that, without further action by the IRS, the deviation would be temporary. But removing that word may mean the IRS is considering taking formal action to expand the use of e-signatures, including potentially allowing more means of electronically signing documents.
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Acceptable Electronic and Digital Signature Under This Deviation The footnote discussing allowed methods of obtaining an acceptable electronic and digital signature does still refer to this as a “temporary” deviation, but continues to allow far more e-signatures than the IRS allowed in other cases, such as signing individual electronic filing authorizations: Electronic and digital signatures appear in many forms when printed and may be created by many different technologies. No specific technology is required for this purpose during this temporary deviation.4 As the memorandum lists the various e-File signature authorization form series as being covered by this deviation, it appears that while this memorandum is in force, a preparer would not need to use an electronic signature system that meets the knowledge-based authentication standards the IRS had demanded previously for individual tax returns. As well, the list of forms includes those for the electronic filing of many entities other than individuals. Previously, IRS policy appeared to require pen and ink signature for any electronic filing authorizations other than for an individual return. l
List of Forms That Are Covered by the Revised Deviation The new memorandum also expands the list of forms that can be filed using the digital signature options: Form 11-C, Occupational Tax and Registration Return for Wagering; Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit; Form 637, Application for Registration (For Certain Excise Tax Activities); Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 706-A, U.S. Additional Estate Tax Return; Form 706-GS(D), Generation-Skipping Transfer Tax Return for Distributions; Form 706-GS(D-1), Notification of Distribution from a Generation-Skipping Trust; Form 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations; Form 706-QDT, U.S. Estate Tax Return for Qualified Domestic Trusts; Form 706 Schedule R-1, Generation Skipping Transfer Tax; Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return; Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return; Form 730, Monthly Tax Return for Wagers; Form 1120-C, U.S. Income Tax Return for Cooperative Associations; Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation; Form 1120-H, U.S. Income Tax Return for Homeowners Associations; Form 1120-IC DISC, Interest Charge Domestic International Sales — Corporation Return; Form 1120-L, U.S. Life Insurance Company Income Tax Return; Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons; Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return; Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts; Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies; Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B); Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship; Form 1128, Application to Adopt, Change or Retain a Tax Year; Form 2678, Employer/Payer Appointment of Agent; Form 3115, Application for Change in Accounting Method;
Sunita Lough, Deputy Commissioner for Services and Enforcement, “Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” NHQ-10-0421-0002, April 15, 2021, https://www.irs.gov/pub/foia/ig/ spder/nhq-10-0421-0002.pdf (retrieved April 23, 2021) 1
2
NHQ-10-1220-000, December 28, 2020
Sunita Lough, Deputy Commissioner for Services and Enforcement, “Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” NHQ-10-0421-0002, April 15, 2021 3
Sunita Lough, Deputy Commissioner for Services and Enforcement, “Temporary Deviation from Handwritten Signature Requirement for Limited List of Tax Forms,” NHQ-10-0421-0002, April 15, 2021 4
Edward K. Zollars, CPA, is in public practice in Phoenix, Arizona as a partner with the firm of Thomas, Zollars & Lynch, Ltd. He has been in practice for more than 35 years, specializing in tax issues for closely held businesses and individuals.
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Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts; Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner; Form 4421, Declaration — Executor’s Commissions and Attorney’s Fees; Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes; Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues; Form 8038-G, Information Return for Tax-Exempt Governmental Bonds; Form 8038-GC; Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales; Form 8283, Noncash Charitable Contributions; Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms; Form 8802, Application for U.S. Residency Certification; Form 8832, Entity Classification Election; Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent; Form 8973, Certified Professional Employer Organization/Customer Reporting Agreement; and Elections made pursuant to Internal Revenue Code section 83(b).
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How COVID-19 Pushed HR Into the Future By Annie Mueller In a remote work environment, we must bring the human element of human resources to the forefront. Remote work was always going to become much more common – it was just a question of when. Between 2005 and 2017, remote work in the United States increased by 159 percent, according to U.S. Census and Bureau of Labor Statistics data. In 2019, a Buffer report proclaimed, “Remote work is here to stay.” The growing trend was widely perceived as positive: Remote work productivity was up and remote worker satisfaction correspondingly high. Still, even with steadily increasing numbers, less than four percent of the U.S. workforce worked from home prior to 2020. Then COVID-19 struck, and few organizations were prepared for the urgent, global adoption of remote work. A May 2020 survey conducted by LinkedIn found that more than 75 percent of the financial sector believed remote work could succeed in their industry. However, confidence was much lower in industries like retail and healthcare, where the very nature of the work depends in large part on actual human presence. That human presence factor is the same foundational challenge facing HR in the new normal. It’s easier – though not seamless – to work remotely when dealing with things that can be calculated and conveyed digitally. The accounting and finance industry, in particular, seems to be well-positioned for the shift into a fully digital, fully remote workforce, with more than 75 percent of financial industry activities classified as feasible for remote work. But even in the most digitalized organizations,
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Annie Mueller
humans fill the ranks – humans full of emotional and social needs. It’s one thing to make evidence-based strategic decisions in the midst of change and uncertainty, and it’s quite another to navigate the ongoing emotional and social repercussions of those strategic decisions. And that’s where HR often lands: Their tasks belong to the messy middle, in transitions and changes and gray areas, in the most significantly human, subjective, and stress-filled situations that work creates.
Stressed for Socialization Of course, the challenges HR has faced over the past year aren’t simply the challenges of remote work. Change of any kind is stressful for humans – who do not like uncertainty. In fact, research shows that uncertainty causes more stress than a predictable negative experience. Life has seemed very unpredictable since March 2020, while at the same time humans have been asked to eliminate, or severely limit, the reassuring, anxiety-relieving balm of human connection, creating a perfect storm for stress. “When you’re always by yourself, it can really make you feel isolated; you may feel like no one else is really working on this, or no one’s joining together,” says Carrie Steiner, a clinical psychologist, founder of First Responders Wellness Center, and a former crisis intervention team officer for the Chicago Police Department. “The more you can encourage socialization, do, especially live video chats.” The face-to-face calls are worth the effort despite collective Zoom fatigue because humans depend on non-verbal cues. “Anytime the body senses something that is different, it gets alerted to that difference, which causes some anxiety and stress. When you can’t read those non-verbal signs, you don’t know if somebody is smiling or not smiling,” Steiner explains. Short, matter-of-fact emails or chat messages can end up sounding curt because they’re divorced from these cues – even if it’s the exact same answer you’d have given in person. 2020 research from Buffer found that collaboration, communication,
and loneliness are the three biggest challenges facing remote workers today. HR’s task is to establish practices that keep workers connected and equip leaders to help team members stay engaged. “Overall, as people are working from everywhere, there has to be more communication,” says Carol Semrad, an HR consultant and current board member and past president of Chicago SHRM, an affiliate of the Society for Human Resource Management. “I’ve seen the most successful remote work outcomes in organizations that made investments in training their leaders and managers to give performance feedback and to have ongoing iterative conversations.”
Connecting With Care Conversational cues aren’t the only signs that get lost in remote communication: So are the cues that a team member is struggling to stay focused and productive. Leaders must be proactive in two ways: to identify which employees are struggling, then connect those employees with HR for the necessary help and resources. “Recognize that some people are not going to do quite as well in a remote environment, and some people are going to do as well or better,” Steiner says. “We need to understand that everybody has their own situation.” Leaders must have ongoing and honest conversations with each remote worker to understand the challenges they may be facing. These conversations are important, though they may not be focused on productivity or work at all. The point is connection. “Maybe you have a virtual ‘wine meeting,’ just like you would go out to the bar after work,” Semrad suggests. “If you’re a strong supervisor, you’re checking in with your folks frequently, which puts you in a more informed position.” As leaders become aware of the challenges their team members face, HR should be a trusted partner in offering the necessary resources and policies to help both the individual and the organization succeed. “The result is being able to have these mature conversations with people and
allowing people to have some agency in choosing their own path, without forgetting that the company has to accomplish certain things to succeed,” Semrad says. Remote communication often requires more directness than in-person social courtesies dictate, and when face-to-face interaction is limited, directness can be a welcome relief from the tension of uncertainty. “Have everybody try to connect with their team to discuss what’s working and what isn’t. Try to find out where flexibility is needed, even if it’s a temporary solution,” Steiner advises.
Maximizing Mental Health The silver lining of a forced shift to remote work is the corresponding swing to an emphasis on, and more resources for, mental health and wellness. “If you as a leader are noticing that someone is not getting things done on time like they used to, or they’re making mistakes, or they’re not following up on things, those are all signs that things are not going well for them,” Steiner says. “You can reach out and ask, ‘Is there any way that we can help you? Are there ways that we can support you on this?’” At that point, the partnership between leaders and HR becomes pivotal. With issues related to mental health or any other medical condition, “confidentiality is really important,” says Lori Goldstein, an award-winning employment lawyer. “Leaders need to know when to send the employee to HR. Information pertaining to mental health and medical issues should only be discussed on a need-to-know basis.” HR departments can help support mental health and wellness by making mental health resources available and accessible to everyone in the organization. “HR can send out weekly or monthly messages to build a culture that supports mental health,” Steiner says. “Give those reminders to make sure the information is easily accessible. Give them the answers before they have to ask.” For organizations without an HR department or dedicated HR employee, a consultant can fill the gap. “External
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partners become really valuable because they don’t have to be there all the time,” Semrad says. “You’re dialing into them for what your needs are.”
Onboarding Online In a remote landscape, some of HR’s most foundational tasks have greatly changed, including how they find and train new employees. “People interviewing remotely has become the norm,” says Mike Younie, senior manager of Michael Page’s accounting and finance recruitment team across Chicago and the Midwest region. An initial remote interview used to lead to an on-site hiring process, but pandemic protocol has changed the standard, and the entire process is now remote. “We certainly learned a few key lessons,” Younie says. “It’s much harder to give the candidate an accurate representation of the company and a true feel for the culture and values.” For Younie’s clients, three strategies eased the remote hiring and onboarding process: communicating with clarity, involving more people and partnering with HR. Clarity is essential for communicating to potential recruits what the company is all about. “You have to sell the business and the opportunity to the candidate even more now,” Younie says. “Your message needs to be clean
and clear in terms of what makes the company stand out.” Since in-office visits are limited or not possible, getting more people involved in the hiring process helps establish a sense of company culture and role expectations. Try a team video call or brief introductions to team members, he suggests: “It puts the candidate at ease when multiple people are echoing the same message.” The third component is ongoing partnership and communication between HR and any job candidates or new team members. “HR plays a really key role,” Younie says. “They support the process by explaining what the policy for working from home looks like, what they’ve implemented, and how it works culturally to dive in remotely. When you get a blend from the direct hiring managers and the HR rep, that’s when you get the most engagement.”
Post-Pandemic Protocols Even as organizations implement long-term remote systems and strategies, the question beneath the surface is, “How long-term does this really have to be?” For some organizations, remote work may be the new, full-time norm. For others, the hope is to return to in-office work either fully or partially. The transition requires flexibility, care, and, above all,
clear policies. “The best thing for an employer would be to have a policy that explains how they’re handling vaccines and accommodations and exemptions,” Goldstein says. It’s easier, she says, for employers to suggest and encourage rather than mandate what their employees do in order to balance the different concerns and life situations each employee has. Clear policies from HR help maintain the balance: All employees need to know what is required for a return to the office and what their options are if they feel they can’t safely return. “Maybe you don’t have a specific deadline,” Goldstein suggests. “You could say, we’re going to transition back. If you’re interested and you want to, you can take the first step.” Whether remaining remote or transitioning back to in-office work, HR will remain an important partner for both employers and employees navigating the challenges and unceasing changes of our working world—even after remote work becomes voluntary again. l Annie Mueller is an experienced financial writer and principle of Prolifica Co. She works with clients from individuals to large financial companies and is a frequent contributor to various financial and business publications. Reprinted courtesy of Insight, the magazine of the Illinois CPA Society. For the latest issue, visit www.icpas.org/insight
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How to Get a Handle on Today’s Volatile Supply Chains By Luke O’Neill and Sabine Vollmer Companies worldwide continue to battle bottlenecks and shortages in their global supply chains. A global shortage of semiconductors is causing low production of cars and electric products. The plastics industry has been dealing with a shortage of raw materials while cargo ships are waiting to unload in backlogged ports. And lumber prices have skyrocketed, halting construction in some places. “Risk is a much, much bigger factor now,” said Ken Koenemann, vicepresident of supply chain and technology with TBM Consulting, a firm that specializes in operations and supply chain consulting for manufacturers and distributors.
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Supply chain problems that arose during the pandemic will probably continue for another six to eight months, Koenemann said. Many companies went out of business during the pandemic, and it’s going to take a while to work through the backlog, he added. But supply chain management started becoming more demanding long before the pandemic. “This has been brewing for a while,” Koenemann said. “The pandemic was the icing on the cake.” Tariffs, trade policies, extreme weather and pandemic lockdowns all played a role. So did a rise in e-commerce, which was particularly steep during the pandemic. E-commerce allows customers to buy and order through multiple channels – traditional brickand-mortar stores, websites, or distributors – and requires not only broader supply chains to react more quickly and deal with larger variations in demand but also inventory changes. “If you look at what supply chain management used to be compared to what it is today, it is night and day,” Koenemann said. “In the past, it was, find a source, negotiate a contract, run material requirements planning, fill the requirements as a supplier, off you go,” he said. “Nowadays, we’re having to look at all this complexity of distribution models. We’ve got to start to look at multinational planning and how we are going to stage inventory throughout to get to it.”
5 tactics for wrestling down a volatile supply chain GE Healthcare consolidated centers of excellence supporting various functions and processes in supply chain, such as sourcing, cost accounting, transfer pricing, and logistics, into one hub in Bangalore, said Parag Bhagat, CPA, CGMA, the company’s global supply chain center of excellence finance manager. As a result, operations in Bangalore expanded from a handful of people to about 60.
“The intent of doing this was to consolidate our presence in India and be a strong business partner to our global teams across the world with standardized processes,” Bhagat said. Improving supply chain transparency can help gain consumer trust and even lead to increased sales, according to a study by MIT Sloan professor Yanchong Zheng, North Carolina State University assistant professor Tim Kraft, and University of Pittsburgh assistant professor León Valdés. What else can businesses do to help manage volatility and multichannel demands? Here are five tips: Know what customers cost. Finance has a wealth of information to help organizations think through the multichannel process, Koenemann said. “In many cases, the finance organization also has the analytical capability that is not prevalent in the rest of the operation. There’s a role to play in helping the operation get to and understand cost to serve.” Cost to serve goes beyond the unit purchase price and includes everything you have to do to service that customer in that channel on a specific product. Selling through multiple channels requires expanded sources to react more quickly and deal with larger variations in demand. Optimize where to put the inventory and how to get it there. Think global, hire local. “Providing employees with the responsibility of thinking globally and not locally can go a long way in helping the business grow,” said Bob Castaneda, CPA, CGMA, director for Walden University’s MS in Finance program. Castaneda has held senior finance roles at American Express, McDonald’s and Pepsi. He said mixing up the staff and hiring locally can ensure finance professionals are knowledgeable about local market issues.
said. Make sure key performance measurements are being met. The faster the company can source products locally, including raw material, labor, and capital, the more the company can minimize unexpected surprises, he said. Decode your data. Bhagat suggested finance leaders re-examine how they look at data in a multichannel world. “You can’t combine two different datasets, from the traditional brickand-mortar side of the business and the digital, and then make decisions on that combined dataset,” he said. “You need to have different KPIs to analyze each one differently. The dynamics are radically different, and they have different ramifications on forecasting and modeling.” Quantify risk. Look at the business opportunities you lost over the past year due to the pandemic, Koenemann suggested. Add up the lost business or the incremental gross profit margin you would have captured and any costs to expedite freight. You can then use that dollar figure to determine what kind of inventory investments you may want to deal with. Having an alternative source may add a few pennies or dollars per unit cost. Now you have something to compare it to. l Luke O’Neill is a freelance writer based in Australia. To comment on this article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine. Vollmer@aicpa-cima.com. This article was reprinted from FM magazine with permission from the AICPA.
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6. What is the new expiration date of the extended relief for temporary use of e-signatures?
AZ CPA Quick Quiz You’ve Read It, Now Get Credit Take this quiz on AZ CPA content online or submit this hard copy. Receive a score of 70 percent or more and earn one hour of CPE credit in specialized knowledge. It’s that easy! Fees: Members: $25 Nonmembers: $40 Online Access Go to www.ascpa.com/quickquiz to access links to all active quizzes. Once a quiz is purchased, a link and password will be emailed to you. Your results will be sent immediately after completion, and certificates are emailed within two business days. Hard Copy Please select one answer for each question. Fill out registration/payment information below and mail or fax to the Society office. Quiz results and certificates will be emailed to the address provided on the registration form. *This quiz will be available until August 2022. Please note that users have three attempts to pass the quiz with at least a 70 percent score.
July/August 2021 Issue of AZ CPA* 1. ASCPA Chair Tom Duensing defines _____ as something that is very important to the CPA profession and that has greatly impacted his career. m Leadership m Trust m Emotional Intelligence 2. According to the AICPA, the percentage of nonaccounting graduate degree hires in public accounting firms increased from 20% in 2016 to how much in 2018? m 45% m 31% m 25% 3. Current CPA candidates will be able to sit for the CPA Exam in the current format until the expected implementation of the new format which should take place in: m January 2022 m January 2023 m January 2024 4. Services that represent less than __ percent of a firm’s service concentration produce
disproportionately high loss ratios.
m Jun. 30, 2021 m Sep. 30, 2021 m Dec. 31, 2021 7. No specific technology is required for gathering e-signatures under the IRS Memorandum NHQ-100421-0002 m True m False 8. According to the U.S. Census and Bureau of Labor Statistics, how much did remote work increase between 2005 and 2017? m 200% m 139% m 159% 9. What is one of the biggest challenges facing remote workers today?
m 15% m 40% m 65%
m Communication m Transportation m Training
5. How can a CPA learn more about the financial viability of a potential client?
10. Think global, hire local is one of the five tactics for wrestling down a volatile supply chain.
m Interviewing the client’s attorney m Examining the past three years of tax returns m All of the above
m True m False
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