AZ CPA January 2020

AZ CPA January 2020

What Should We Do When Our Organization Discovers Fraud?

Working with Family Offices Recruiting & Retention for Generation Z ASCPA 100% Club List The Arizona Society of Certified Public Accountants y www.ascpa.com

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AZ CPA JANUARY 2020

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2020

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ax Guid Arizona T

Tax Guide ona Income Guide 2020 Ariz & Use Tax de ona Sales ty Tax Gui 2020 Ariz al Proper Guide ona Person Property ed 2020 Ariz laim Set ona Unc 4-Volume 2020 Ariz ger, Esq. Pat Derden is, CPA Rod Stephen J. lars, CPA Zol Edward K.

na Society by the Arizo Published Workshop Phoenix Tax

of CPAs

2020 Arizona Tax Guide

Order the only comprehensive guide on Arizona taxes.

Authors: Pat Derdenger, Steve Rodis and Ed Zollars New in the 2020 Arizona Tax Guide: • Details of Arizona law changes to reflect conformity with changes made in the 2017 Tax Cuts and Jobs Act • MRRA changes to the alteration limitations and exclusion of contractors not required to be licensed by the Registrar of Contractors from the prime contracting classification • Option to bypass OAH and appeal directly to the state board of tax appeals or the tax court • Required registration with the DOR for online lodging marketplaces The Arizona Tax Guide includes the following guides: • The Arizona Income Tax Guide is a comprehensive reference that highlights the differences between Arizona and Federal income tax law and provides references to the Arizona Revised Statutes for a more in-depth analysis. It highlights the differences between individual, corporate, partnership and trust taxes, includes tax tables, and is arranged in a way that facilitates research on any topic.

• The Arizona Sales and Use Tax Guide is a resource for anyone preparing or filing city sales and use tax returns. The guide details the various sales tax classifications, exemptions, deductions and rates as well as compliance, audits, refund claims and administrative appeals.

• The Arizona Personal Property Tax Guide provides an overview of Arizona’s personal property tax system, including exemptions, the classification structure and assessment rates, reporting, valuation and appeals.

• The Arizona Unclaimed Property Guide explains what unclaimed property is, reporting requirements for holders of unclaimed property, how owners of unclaimed property can claim their property and audits.

Pricing Spiral-Bound Book:

r Members of ASCPA,

Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $95

r Nonmembers: $115 Electronic PDF:

r Members of ASCPA,

Phoenix Tax Workshop, State Bar of Arizona or Enrolled Agents: $79

r Nonmembers: $99 Guides will be available for delivery mid-January 2020.

Order online and learn more about the guides at www.ascpa.com/taxguide2020

Name ______________________________________________ Company ___________________________________________ Address ___________________________________________ City _____________________State ______ Zip ____________ Phone _____________________ Fax ____________________ Email ______________________________________________

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*The ASCPA will be processing checks submitted in payment as an Electronic Funds Transfer (EFT) transaction. Funds may be withdrawn from your account as soon as the same day we receive your payment.

JANUARY 2020 AZ CPA

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CPA The Arizona Society of Certified Public Accountants President & CEO Editor Advertising

Cindie Hubiak Patricia Gannon Heidi Frei

Board of Directors Chair Jared Van Arsdale Chair-Elect Ginny DeSanto Secretary/Treasurer Tom Duensing Directors

Rachael Bertrandt

Keith Cowan

Kelly Damron

Paul Evans

Ross Grainger

Tim Hansen

Jessica Iennarella

Andrea Levy

Anthony Lorenzo

Vanessa Makridis

Karen McCloskey

Sami Raynes-Houseknecht

Immediate Past Chair Mike Allen AICPA Council Members Rob Dubberly

Greg Nelson Chapter Presidents Southern Chapter Cathy Kinzer Northern Chapter James Shankland Southwest Chapter Helen Greenwell North-Central Chapter Gidget Schutte AZ CPA is published by the Arizona Society of Certified Public Accountants (ASCPA) to provide information, news and trends to the accounting profession. It is distributed 10 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.

Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040 Telephone (602) 252-4144 AZ Toll-Free (888) 237-0700 www.ascpa.com

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AZ CPA JANUARY 2020

Volume 36 Number 1

AZ CPA

January 2020

Features

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5 Best Practices for CPAs Working With Family Offices Family businesses often have a different set of parameters. Here are some tips for CPAs working with, or for, these entities.

by Cheryl Much, CPA (in NJ)

13 Columns & Departments Chair’s Message by Jared Van Arsdale, CPA

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Member News

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A Dash of SALT by James G. Busby, Jr., CPA

9

Quick Quiz

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What Should We Do When Our Organization Discovers Fraud?

Even with the best internal controls, we can still be victims of fraud. Here is what to do if it happens to your company.

by Michael David Schulstad, CPA, CFF, CGMA, FBI (ret.)

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Classifieds 22

Recruiting and Retention for Generation Z Take a look at what you can do to attract younger generations of employees. Their reasons for joining your firm or business may come as a surprise to you.

by Jay Varcoe, CPA, MBA, ELI-MP

19 4801 E. Washington St., Suite 180 Phoenix, Arizona 85034-2040 www.ascpa.com

AICPA Credentials: Increase Opportunities, Credibility and Earning Power Find out if an AICPA credential in one of four advisory service areas is right for you.

JANUARY 2020 AZ CPA

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ASCPA Chair’s Message

Impact or Influence?

Those of us in public practice with a focus in tax compliance are fully aware of the IRS’ release of a revenue ruling in October 2019 relating to the proper income tax treatment of cryptocurrencies such as Bitcoin. My conversations with other practitioners regarding this issue have not been primarily focused on the tax implications but what appears to be the Service’s adoption of the industry use of the terms “hard fork” and “soft fork.” Not as a reference to the actual consumption of currency with polished flatware or sporks from a local retail chain, but rather in reference to changes in the programming of the cryptocurrency that give rise to a taxable event or an event that will impact a future taxable event.

by Jared Van Arsdale, CPA

Let’s not discount our value and embrace the trust that is laid upon us as professionals in our communities. Let’s not discount how our actions and communication may fork the trajectory of someone else’s behavior, character, life or career, today or in the future.

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AZ CPA JANUARY 2020

Where I find these terms quite useful is in reflection on our own history to identify hard or soft forks in our childhood, adolescence, in college and early careers. Although we often do not give it much thought in our day-to-day lives, we all can recall an individual or event that altered our mindsets and the paths we inevitably found ourselves upon later. These forks may be as strong and forceful that you refer to them as a great impact on your life, or they may be mere nudges and instances of guidance which are deemed influences after the fact.

They are nevertheless external events redirecting us down a road to which there is no going back. Although we sometimes seek out U-turn signs in hopes we can reverse course, we find that we only had a slight left turn internally designed by our reactions to the original event.

For me, the influences were a high school teacher passionate about her accounting program, a college professor dedicated to explaining the importance of a CPA credential, and a management training program infused within a highly competitive work environment. Were these hard forks? Undoubtedly. These “boulders” were lobbed into my stream of life that sent me in a completely different direction.

Perhaps reading an article, having an in-depth conversation with a colleague or listening to an ASCPA podcast, have finely tuned our past ideas or thoughts and led us to pursue alternatives to the now — softly forking our path knowingly or unknowingly.

As CPAs, we are trusted with advising our organizations, our practices, our colleagues and the public at large. This trust has tremendous value and as a result, we have an opportunity to impact and influence those we interact with directly or indirectly often on a daily basis. Let’s not discount our value and embrace the trust that is laid upon us as professionals in our communities. Let’s not discount how our actions and communication may fork the trajectory of someone else’s behavior, character, life or career, today or in the future.

Remember, each interaction can impact, each interaction can influence. l

Member News Kevin Wayne McHolland, CPA, received a Volunteer of the Year Award from Arizona Business Angels. Kevin is a partner at EY and was recognized for his work with the Boys & Girls Clubs of Metro Phoenix.

Ellen Marie Ingersoll, CPA, CFO of Viad Corp., was recently honored by the Phoenix Business Journal as a C-level executive who has contributed to her organization and to the Phoenix community.

Hilla Sferruzza, CPA, executive vice president and chief financial officer of Meritage Homes, received the CFO of the Year Sponsors’ Choice Award from the FEI Arizona Chapter.

Thanks to Catherine M. Laganosky, CPA, who responded to our request from Pima County Joint Technical Education District for a CPA to give a financial literacy talk to a class of high school students. Laganosky agreed to teach three one-hour classes.

Kent O. Utter, CPA, volunteered at the W. P. Carey Professional Mentorship Program Speed Mixer.

ASCPA Director of Government Relations John Baumer (center) was recently recognized as one of the top young leaders in the government relations area by the Arizona Capitol Times in their Breakout Awards.

(Pictured left to right) Nick Willis, Joe DeMenna, John Baumer, Kevin DeMenna and Cindie Hubiak.

Congratulations to Michael T. Daggett, CPA, who was honored with the National Association of State Boards of Accountancy (NASBA) William H. Van Rensselaer Public Service Award for his contributions to the public accounting profession. Daggett was chair of NASBA from 2011-12. He is also a past chair of the ASCPA.

Save the Date ASCPA Annual Meeting May 12, 2020 Arizona Biltmore Resort

Past ASCPA Chair George M. Cohen, CPA,is living up to his name as he turned in an excellent performance in The Theatre Artists Studio’s “The Trip to Bountiful.” Cohen played the character Roy. He has acted in three productions at The Studio, which is located in Scottsdale.

JANUARY 2020 AZ CPA

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Panel Discussion: Arizona’s Burgeoning Cannabis and Hemp Industry Feb. 11, 2020 4:30 – 8 p.m.

The Yard 149 S. Farmer Ave, Tempe, AZ 85281 Members $40; Nonmembers $50 • 1.5 hours of CPE Credit As an Arizona CPA or other professional, are you currently servicing or considering engaging clients in the cannabis/hemp industry? Join your peers and hear a panel of industry experts discuss the tax/accounting, legal, ownership/management and regulation of the industry. Bring your questions and participate in a Q&A. Panelists include a CPA and attorney with years of experience serving cannabis clients, as well as a cannabis business owner and a former state regulator. Leave with a better understanding of the opportunities available to you in this growing industry.

Appetizers and one drink ticket are included with your registration. A cash bar will be available.

4:30 p.m. Registration and Networking • 5:30 – 8 p.m. Panel Discussion

Find out more at www.ascpa.com/chpn

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Thank You to Our Sponsors: Guidant Law Firm Kotzin Valuation Partners Price Kong Co. CPAs P.A. R.O.I. Properties & R.O.I. Asset Management Solutions AZ CPA JANUARY 2020

A Dash of SALT

Ways Arizona May Be Able to Improve its Response to the Wayfair Decision (Part Five) In this month’s state and local tax (SALT) column, Busby identifies ways that Arizona may be able to improve its response to the Wayfair decision.

This is the fifth in a series of five articles addressing Arizona’s response to the Wayfair decision.

As was the case in many other states, rather than take time to study what they should do to best position the state to implement — and overcome any challenges to — economic nexus provisions following Wayfair, Arizona lawmakers acted quickly in hopes of collecting additional revenues from remote vendors as soon as possible.

Because none of the economic nexus statutes enacted in other states have been adjudicated by a court, nobody knows whether a state that has not adopted the Streamlined Sales and Use Tax Agreement (SSUTA) or otherwise simplified its tax system in all six of the ways Wayfair emphasized will be able to successfully defend its economic nexus statute. However, states that replicate, or virtually replicate, South Dakota’s sales tax structure in all material respects will be best positioned should a challenge arise. Accordingly, Arizona lawmakers should consider either revising the state’s sourcing rules so sales by remote sellers are sourced to the same jurisdiction as sales by in-state vendors, or requiring all counties, cities and towns to impose taxes at the same rate. In addition, lawmakers should consider the best way to eliminate, or at least minimize, the other burdens described in prior articles that the state imposes on remote sellers.

To that end, if Arizona is not going to adapt the SSUTA in order to eliminate, or at least minimize, the burdens it imposes on remote sellers, it should consider offering free software to retailers to help them navigate the state’s unique sales tax system and providing immunity from audit liabilities to retailers that rely on such software to make taxability and tax rate decisions.

Finally, as I pointed out in a previous column, lawmakers created a trap for the unwary by including all of the options for municipalities to tax items not taxed by the state in a separate statute that makes no references to these option in the state’s retail tax statute, A.R.S. section 42-5061. They easily could resolve this trap for the unwary during their next legislative session by simply adding a provision in the state’s retail tax statute that cross-references the statute they added this session that includes all of the options for municipalities to tax items not taxed by the state, or by simply moving those provisions into the state’s retail tax statute, A.R.S. section 42-5061. l

by James G. Busby, Jr., CPA James G. Busby, Jr., CPA, is a state and local tax attorney at The Cavanagh Law Firm. Busby previously worked in the SALT departments at Arthur Andersen and Deloitte & Touche. Before entering private practice, Busby was in charge of all transaction privilege (sales) tax audits at the Arizona Department of Revenue.

If you have any questions, please contact the author. He can be reached at (602) 322-4146 or JBusby@CavanaghLaw.com.

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Free Webinar for Members Only Arizona School Tuition Organization Corporate Tax Credit January 8, 2020

Webcast: Noon – 1 p.m.

Arizona law provides two individual and two corporate tax credits that fund scholarships for underprivileged students to attend private schools. As your clients’ trusted advisor, are you up to date on how these credits work and benefits of participation? Attend this free webinar and gain valuable insights you can use to guide your clients this tax season.

Learn more at www.ascpa.com/freewebinar Sponsored by Catholic Education Arizona

Make a Difference Today Give Back to the Profession

The Arizona CPA Foundation for Education and Innovation supports efforts to attract and retain the highest quality individuals to the accounting profession by enriching their educational and professional experience. You can make a difference in the profession and in the lives of these individuals as they start on the path to their accounting careers.

Contributions to the Arizona CPA Foundation for Education and Innovation are tax deductible.

www.ascpa.com/foundation

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AZ CPA JANUARY 2020

5 Best Practices for CPAs Working With Family Offices

by Cheryl Mucha, CPA (in NJ) Family offices have a different set of operational parameters and considerations than publicly traded companies. These closely held entities can range from startups to enterprises, in any industry. While financial management and tax planning are core responsibilities for anyone working with family offices, there are issues beyond the balance sheet that any financial or business advisor should be aware of before starting an engagement.

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1. Understand Family Relationships The advisor must be a people person and be able to navigate family dynamics. Family members may not always get along or agree on everything; they require a neutral advi­sor who can guide them on what is in the company’s best interests — not what best serves individual members.

2. Facilitate Conflict Resolution Decision-making and planning can be stalled by familial discord or disagreements over who should be doing what. The CPA is often the linchpin in the creation of the standard operating procedures (SOP), the office textbook for how every facet of the business operates.

Since the SOP also defines the roles and responsibilities for each position within the company, it can help streamline decision-making or reduce friction over members’ roles by outlining the hierarchy. The CPA can also help reduce interperson­al conflict by providing insights into the company balance sheet, showing members what is in the organization’s best interests from a more global business perspective.

3. Assist With Succession Planning Determine if there is a transition plan for the next generation to take over the operation and who those successors will be. The CPA can ensure a smooth

transition by laying the groundwork with solid forecasting. Do the younger members fully understand how the prior generation has operated and why? The SOP is crucial here because it outlines every aspect of the operation.

Make sure the successors know it.

The CPA should remind leadership of the importance of younger family members working their way up through the ranks. Through this experience they will learn the business from the bottom up, gaining first­hand understanding of the organization as they prepare to take the reins one day.

Understanding the operation and planning for its future are different matters. Are the presumed successors up to the task of introducing new technology and implementing new ideas/services/ products that will help the company grow and prosper? The CPA must provide accurate, reliable financial forecasts to help the new generation understand the business’s current operation, see the opportunities for profitability in the near future, and make the case for new tech­nology or new methods to drive sustainabil­ity and maintain a path to profitability.

With a 360-degree view of the operation and its financials, the CPA also plays a crucial role in helping leadership plan for the financial commitment needed for succession. For example, will there be a payout to the

current generation that will affect cash flow? Will there be new employees or independent contractors working with the succeeding generation whose com­ pensation must be incorporated into the operating budget?

4. Position the Business for Non-Succession If the current family members will be the last ones to run the company, the CPA can advise leadership and help prepare for the next steps. This might be positioning the company financially for sale or for going public. Is there debt to retire or restructure? Is there anything on the books that may be a barrier to a merger or acquisition? The CPA’s guidance and expertise will be instrumental in these situations from an advisory or remediation perspective.

5. Maintain Financial Controls Keeping close tabs on the company bank account keeps everyone honest.

The CPA must have full access to all banking and credit card statements, invoices and other financial transaction documents in order to monitor all accounting operations. This enables the CPA to monitor cash flow and provide valuable checks against any suspi­cious activity through periodic audits and monthly reconciliations.

With full access to accounting records, the CPA is able to generate the reports that provide the financial road map to future growth. After all, the family office members won’t know where they’re going down the road if they don’t know where they are today. This access also enables the CPA to provide visibility for all members into the family office’s financial affairs, with timely, accurate financial reports to project cash flow and monitor performance. l Cheryl Mucha, CPA,(in NJ) is the owner of CFO Your Way LLC. She can be reached at cheryl@cfoyourway.com or 973-8970650. This article first appeared in the Nov/Dec 2019 issue of New Jersey CPA magazine (njcpa.org/newjerseycpa).

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AZ CPA JANUARY 2020

What Should We Do When Our Organization Discovers Fraud?

by Michael David Schulstad, CPA, CFF, CGMA, FBI (ret.)

Leaders can hire the best individuals, conduct background checks, implement internal controls and still be victims of fraud. Here’s how to react if it happens to you.

I have spent the last 35 years investigating fraud in almost every kind of scenario you can imagine. I served 25 years as an FBI Special Agent and 10 as a fraud investigator with national CPA firms. Whether it is a bank, a business, a religious organization, a government entity or a private firm, trust is an important component of any organization. No organization can function efficiently without some level of trust. Leaders hire the best and most trustworthy individuals, conduct background checks, implement internal controls and still things go wrong.

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Agencies will prosecute the perpetrator, and it may take a long time for the process to run through the courts, but you can’t rely on them to help fix your processes, tighten your internal controls or recover your funds.

What are the first steps to take when you discover a suspected fraudster?

What do you do with the person who committed the fraud? For employees, no matter how much you admired, respected or trusted them, it is imperative that you quickly remove all access to company bank accounts, credit cards, financial records, payroll systems, accounts payable, accounts receivable, company computers, email and facilities while the matter is being assessed. Immediately recover all company-issued keys, access cards, equipment and computers. For all computers used by the fraudster, secure the computer first: Do not turn it on or off; simply unplug it. You should consider having an image made of all hard drives to preserve potential evidence.

Do not allow suspects to remove anything from the office, including personal items. Their desks and work spaces should be thoroughly searched and inventoried. Personal items will be returned after careful review for evidence of the crime.

This is probably the most difficult part of the entire situation, but you must remember that no matter how much you liked the person, and no matter how difficult the situation may be for fraudsters, they took advantage of your trust and used it against you.

And do not forget, you must also take appropriate steps to ensure that others in the organization are not participants in the scheme.

Is our insurance coverage adequate and appropriate?

Most companies will have some type of insurance to address fraud, but in most instances the coverage is minimal.

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AZ CPA JANUARY 2020

Reviewing your coverage today will make it easier to address fraud losses in the future. Your coverage should also cover the cost to hire an outside forensic accountant, investigator and attorney to help quantify the loss, maximize your response and protect the company throughout the investigation from any claims brought against you.

Should you contact law enforcement?

Yes, file a report. Generally, law enforcement is focused on the investigation and prosecution of the individuals who committed the fraud. In most cases, law enforcement agencies will not provide you with the results of the ongoing investigation or offer information about what happened to cause the losses. Agencies will prosecute the perpetrator, and it may take a long time for the process to run through the courts, but you can’t rely on them to help fix your processes, tighten your internal controls or recover your funds.

Engaging a forensic accountant to conduct a thorough investigation, work closely with law enforcement and turn over the results to the law enforcement agency can help facilitate your legal response. Law enforcement agencies will welcome the assistance and can also issue subpoenas or obtain search warrants based on the information your forensic accountant provides. A forensic accountant is a valuable asset and can help ensure the proper collection of evidence, help law enforcement pursue a successful resolution and testify in court.

What is the role of your attorney?

You absolutely need an attorney. Your company is now confronted with several

legal matters requiring the assistance of a good attorney. The attorney will help guide you through the legal issues, protect your company’s assets and make sure you accurately complete the requirements of the insurance claim. In addition, your attorney will ensure you and your company stay out of harm’s way as the perpetrator faces the legal consequences and potentially looks to blame someone else for the crime. Your attorney will work closely with your forensic accountant and investigator and may seek to maintain the attorney-client privilege and help ensure efficiency and minimization of costs.

Don’t let it happen … again It is safe to say that almost every organization has been or will be confronted with a fraud incident at some point. So what do you do when it is your turn to face the inevitable fraud scenario? How do you respond? Most of the time you are not prepared, and the first few days are spent wondering how this could happen. The next phase is usually anger, and then back to “How could this happen?”

Even when you have put in place all recommended internal controls, fraud still happens. Most of the time organizations survive and recover, but it is still a painful and sobering experience for everyone involved. Many changes should be implemented so it does not happen again. But what if you had those changes in place before you were a victim? Could that have prevented this from happening in the first place? Most likely the answer is “yes.”

It is always better to plan ahead and prepare yourself and the organization to confront these situations when they happen or prevent them from happening in the first place. However, no matter what you do, it is still possible to be a fraud victim. l Michael David Schulstad, CPA, CFF, CGMA, FBI (ret.), is with the New York office of CliftonLarsonAllen. He is an ASCPA member and will be presenting at the Accounting and Assurance Conference on Jan. 16.

Accounting and Assurance Conference Jan.16, 2020 8 a.m. – 4:30 p.m.; 4:30 – 5:30 p.m. Networking Available In-Person or via Webcast Recommended CPE Credit: 8 hours Topics: Current Economic Conditions and Advancing the State’s Economy Jim Rounds, Rounds Consulting Group Fraud Detection and Prevention Michael David Schulstad, CPA, CFF, CGMA, FBI (ret.), CliftonLarsonAllen, and Jenny Dominguez, CPA, CFF, CFE, CliftonLarsonAllen The Arizona Legislature, Legislation Impacting the Profession & the 2020 Election Cycle Ryan DeMenna, DeMenna Public Affairs Roundtables with Ryan DeMenna and Arizona Society of CPAs

Engage with Blockchain: An Interactive Learning Experience Vincent Michael LoRusso, CPA, TrueUp Co. Arizona State Board of Accountancy Update Monica Petersen, Arizona State Board of Accountancy **Bonus Session and Networking Opportunity** Succession Planning – Now What?

Richard L. Joliet, CPA, Richard L. Joliet CPA PLLC

Learn more at www.ascpa.com/aac20

Keeping Up to Date With Key Accounting Standards Adam C. Bowman, CPA, Moss Adams

Business Valuation and Forensic & Litigation JANUARY 2020 AZ CPA

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AZ CPA JANUARY 2020

Recruiting and Retention

for Generation Z

It Might Be Time for a Change

by Jay Varcoe, CPA, MBA, ELI-MP Have you ever thought, “There is just no qualified help out there now-adays!” This phrase may be the new equivalent to, “You kids get off my lawn!”

The truth is that there are plenty of qualified candidates available to fill job positions. With current technology, it has never been easier to connect employers with job seekers. (I recently ran a free ad for a client of mine on a job recruiting website, Indeed, for a bookkeeping position and received 80 applicants for the job with perhaps 75% of those applicants being more than qualified for the job.)

The harder truth may be that qualified candidates are not attracted to your firm or company and your current staff may soon be looking for a way out, too.

Thoughts like the one in my first sentence may be an indication of an antiquated 20th Century business culture with high levels of negative energy.

Sorry for the tough love.

When I joined my first accounting firm in 1994, I expected to have to pay my dues, work exhausting hours and compete with my co-workers to scratch and claw up the partnership ladder in a pursuit of what I was sure to be a successful life. At that time, firm cultures rewarded high billable hours as the holy grail of success and adept navigation of firm politics could also be a successful strategy to advance a career. Higher salaries were the primary carrot and it was a burn and churn environment where only the strongest survived. To my understanding, this type of culture was prevalent in all of the Big Six accounting firms at that time and perhaps it was an industry standard for other firms as well. This was just the way it was. It was a dog-eat-dog world, and you needed to fight for what you got out of life. That was the prevalent thinking at the time, and perhaps it still is for a lot of people in my generation (Generation X).

Times have changed. A 2019 article published in the Journal of Accountancy entitled, “What it Takes for Accounting Firms to Recruit Gen Z 1” discusses a study conducted with 132 current

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accounting students on the factors they consider when making an internship decision. By far, the most influential factor toward the student’s decision was business culture, with 80% of respondents ranking culture as one of the top four factors they look for when selecting an internship position. Additionally, career growth opportunities, relationships with professionals, brand and work-life balance round out the top five factors.

Where did compensation fall? Compensation ranked eighth out of 17 factors, with just over 20% of respondents ranking it in their top four reasons for choosing an internship. About 15% of respondents ranked compensation as one of the bottom four factors of the 17 reasons for choosing an internship. This study is an indication of an enlightened generation looking for a firm culture that aligns with their new perspective for what they believe to be a successful life and career.

Some of my generation were the first to become enlightened to the truth that success may be defined in other ways rather than the amount of money that you make, and grinding out a career may not be the only way to feel successful in life. For various reasons, millennials began to reject some of the old values held by firms and the newest generation is even more entrepreneurial looking for win-win scenarios in their place of work. Generation Z professionals will envision work-life integration as opposed to the elusive work-life balance that many struggle for now.

They believe that life is a journey of experiences and not just a scorecard keeping track of only successes. Despite their youth, the newest generation is very self-aware of what is important to them. In a world where people are increasingly disconnected by technology, the new generation is looking for the workplace to connect with other professionals and want to work for a company with a clearly defined purpose that aligns with their values.

It takes a shift in firm culture to realize the opportunities of the new reality.

So how do you change?

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AZ CPA JANUARY 2020

Having the best pay will not put you on the best places to work list.

You might not be able to compete with bigger firms and businesses when it comes to compensation anyway.

Bigger firms and companies also have their brand on their side. Some job candidates will gravitate toward big firms simply due to the prestige. That leaves smaller firms with the ability to compete based upon firm culture, the strength of professional relationships and work-life balance. Focusing upon any one of these traits can put your company in the right direction.

Having a clearly identified “why” for your firm is the first step for developing a new firm culture. “Why” does your business exist? Your “why” is like the North Star. It is the true north that calibrates the compass guiding your firm toward a common goal. People want to strive for a higher purpose.

(View the Simon Sinek TED Talk for an excellent discussion of this topic.2) The next step is to bring more positive energy into your firm.

According to theories developed by Bruce D. Schneider in his book, Energy Leadership, if you can encourage more positive, anabolic energy into your business culture, you will create a culture with a higher probability of sustained success and satisfaction. I believe that a highly anabolic company would easily attract top Generation Z candidates who overwhelmingly value business culture above all other factors in their decision of where to work.

So, what would a highly anabolic company culture look like?

Local employee recruiting and retention expert, Jen M. Scopo3, owner of Tap Into Talent Consulting says, “There is one ‘trick’ to attracting and retaining top talent and that is trust.”

In highly anabolic firm cultures, trust is a guiding principle. Trust fosters transparency and inclusion over office politics. Trust allows staff to be viewed as an asset with future value rather than an expense necessary for current profits. Every person in the firm takes responsibility as a strategic partner empowered to do

what it takes to achieve the common goal. With an overarching value of trust, company leadership will lead rather than manage subordinates.

Trust allows effective delegation and encourages proper leverage leaving no room for micro-managing of any tasks. A growth mindset manifests in a firm which does not penalize mistakes, but instead encourages feedback to be both received and given freely in an effort toward continual improvement.

Any discovered deficiencies are met with additional training rather than additional supervision.

If you are wondering why you are having trouble with staff turnover or recruiting staff, it might be time to take a hard look at your firm culture. Realize the need to change, identify your firm’s “why” and create a firm culture that facilitates uplifting, inclusive and collective energy to attract and retain the top talent of this new generation. l Jay Varcoe, CPA, MBA, ELI-MP is a member of the ASCPA and a business coach. Before Jay graduated from the coaching school iPEC and obtained his Energy Leadership credential, he ran his own certified public accounting firm, Varcoe CPA, PC, for 20 years. Varcoe is also currently an adjunct accounting professor at Grand Canyon University. More information about him can be found at www.jayvarcoe.com. Contact him at (602) 524-5275 or jay@varcoecpa.com.

Endnotes: 1 Journal of Accountancy, December 1, 2019, Owen Brown, CPA, Ph.D., Daniel Shallcross, CPA and Martin Stuebs, CPA, Ph.D. 2. Ted Talk: https://www.ted.com/talks/ simon_sinek_how_great_leaders_ inspire_action?language=en 3. Jen M. Scopo, from Tap Into Talent Consulting can be reached at (516)424-6535 or jscopo@ tapintotalentconsulting.com.

AICPA Credentials: Increase Opportunities, Credibility and Earning Power Add an AICPA credential in one of four advisory service areas.

In order to succeed in an increasingly crowded marketplace, many financial professionals are leveraging the rapid growth of advisory services by choosing to offer specialized knowledge to their clients or employers. The AICPA offers exclusive credentials for qualified financial professionals — Certified in Financial Forensics (CFF®), Personal Financial Specialist (PFS™), Accredited in Business Valuation (ABV®), Certified Information Technology Professional (CITP®), and the Certified in Entity and Intangible Valuations (CEIVTM) — that can differentiate you as having knowledge and expertise in a specialty practice area, giving you, your firm or your organization a competitive advantage. The AICPA offers exclusive credentials for qualified financial professionals that can differentiate you as having knowledge and expertise in a specialty practice area, giving you, your firm or your organization a competitive advantage. Adding one of these credentials can broaden your career options, expand your practice, increase client retention, strengthen your credibility and help you stand out within the profession. Many firms seek out employees with AICPA credentials because they are able to do more for their clients, serving them in new ways. Likewise, organizations reward their employees who can provide in-house expertise that helps meet business and operational goals. Learn more at aicpa.org/credentials l

Behind the Scenes Arizona Humane Society

South Mountain Facility Jan. 22 • Noon – 1:30 p.m. • 1.5 Credits

The Arizona Humane Society has been improving animal welfare in Maricopa County for more than 60 years. Learn from the AHS team about their latest and greatest transformations, the operational challenges they face and the bright future they envision for animal welfare.This event will include lunch, a tour of the South Mountain facility and an opportunity to help some of the most vulnerable animals at the shelter by making blankets for the kitten nursery. www.ascpa.com/bts-jan

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ASCPA

100 Percent Club

Thank you to the following organizations who have demonstrated their commitment to the CPA profession, community and to maximizing their CPAs’ growth by ensuring that all eligible CPAs are members of the ASCPA. 100% Club Members (as of December 9) A F and P CPAs PLLC Abbott Company, Ltd. Adams Kvittem-Barr & Assoc CPAs, LLP Addington & Associates, PLLC Andersen & Sarnowski, P.C. AXIOM Financial Advisory Group, LLC Baldwin & Baldwin PLLC Bashas’ BeachFleischman PC Benjamin H Field CPA, PC Black & Soli PC, CPA Boudreau Consulting LLC Busby Sanford Brady, CPAs, PLC Butler Hansen, PLC CBIZ MHM, LLC CD Arevon USA, Inc. Chaffee Traasdahl Crockett, CPAs CliftonLarsonAllen LLP Colby & Powell, PLC Conover Asay CPAs, PLLC Cordova & Jones, PC CPA Financial Advantage, PC Darin Guthrie, CPA, PLLC DeBenedetti & Co., PLLC Dickman & Company CPAs PC Dobridge & Company, P.C. Eaton-Cambridge CPA P.C. Eaton & Kasprzyk CPAs, PC Edward M. Osinski, Jr., CPA, PC Edwards, Largay, Mihaylo & Co., PLC eeCPA PLC Eide Bailly LLP Epstein Schneider, PLC EY Fenix Financial Forensics LLC Fester & Chapman, PLLC Flowers Rieger & Associates, PLLC Forever Living Products International, LLC Frost, PLLC Ginsburg & Dwaileebe CPAs, LLP

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AZ CPA JANUARY 2020

Gorman Consulting Group, LLC Gosney & Company, P.C. Greg Patel, CPA PLLC Guest, Schutte & Cosper, CPAs, LLP Hanagan CPA, PLLC HBL CPAs PC Heinfeld, Meech & Co., P.C. Henry+Horne Holdsworth Chadd Fuller CPAs PC Hopkins Tameron Hostal PLLC HSNO Accountants, P.C. Hunter Hagan & Co Ltd Jaffa Simmons, PLLC Jansen & Company CPAs, PLLC Karpinski, Bernstein & Adler, PLC KeatsConnelly Keegan, Linscott & Kenon, P.C. Koeller Thompson CPAs PLLC Koivisto and Koivisto, P.C. Lohman Company, PLLC Ludwig Klewer & Rudner, PLLC Mansperger, Patterson & McMullin, PLC Marley Management Company Martinez & Shanken, PLLC McGrath Nothman, PC Metzger Klawon & Fox, PLC Michael S. Patinella, PLLC Moffitt & Company PC Monheit Zongolowicz Frisch, CPAs PLC Monica J. Stern, CPA, PLLC Morrison, Clark & Company CPAs Moss Adams LLP Mukai Greenlee & Company P.C. Ng Accounting, PLLC Nordstrom & Associates O’Malley & Berberich CPAs PC Pace & Company, PC Pescatore-Cooper, PLC Pioneer Title Agency, Inc. Preston CPA, P.C. Price Kong Co. CPAs P.A. R & A CPAs

R.C. Thornton & Associates, LLC Randy C. Kiesel, CPA, PC REDW LLC Regier Carr & Monroe LLP RSM US LLP Schmidt Westergard & Company, PLLC Schutte & Hilgendorf, PLLC Sechler Morgan CPAs PLLC Secore & Niedzialek, P.C. Semple, Marchal, & Cooper, LLP Shaffer & Danker, CPA PC Shippen, Pope & Associates PLLC Skinner + Company, CPAs Springsteel Investment Advisors Sprowls and Company, PC Stocking and Heard, CPAs, LLC The Ruboyianes Tax Company, PLLC Tull, Forsberg & Olson, PLC Ullmann & Company, P.C. Upworth, PLLC Urke & Stoller, LLP Walker & Armstrong, LLP Wallace, Plese + Dreher, LLP Weech Financial, PLLC West, Christensen, DeGomez & Ignace, PLLC Wold Consulting, P.C. Wyndelts & Co., PLC Your organization may qualify for the ASCPA 100% Club. Contact membership@ascpa.com to opt-in and gain immediate access to exclusive 100% Club benefits.

We make every effort to ensure the accuracy of this list. If your organization’s name does not appear in this list, please contact our membership department at membership@ ascpa.com

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 January 2021. Please note that users have three attempts to pass the quiz with at least a 70 percent score.

January 2020 Issue of AZ CPA* 1. In this month’s Chair’s message, what concept does Van Arsdale review? m Trust and Influence m The Twistor Theory m The Golden Rule

5. It is recommended that a CPA working with a family business do what? m Create a SOP m Hire a Psychologist m Hire an Attorney/Mediator

2. In James Busby’s SALT column, he recommends that Arizona does what to help retailers navigate the state’s unique sales tax system. m Set Up a Hotline m Create a Map m Provide Free Software

6. When an employee is suspected of fraud, one of the first things you should do is: m Perform an exit interview m Remove access to all accounts,

3. SSUTA stands for: m Self-regulated Sales and Use Tax Agreement m Suggested Sales and Use Tax Agreement m Streamlined Sales and Use Tax Agreement

Quick Quiz Registration

4. Which one of these items is not one of the recommended best practices mentioned for working with family businesses? m Facilitate Conflict Resolution m Assist with Succession Planning m Hire Outside Counsel

emails, personal items and facilities m Call the FBI 7. When faced with employee fraud, it is recommended that you:

m Hire a forensic CPA m Hire an attorney m Both of the above 8. What top factor did 80% of accounting students say influenced their decision to pick an internship? m Firm culture m Ability to receive a higher starting salary if hired m Great food in the cafeteria 9. What is the one “trick” to retaining top talent, according to Jen Scopo? m Giving bigger bonuses m Having a good insurance plan m Trust 10. According to Jay Varcoe, the first step to developing a new firm culture is: m Having a clearly identified "why" m Surveying all staff members m Implementing a better maternity leave policy

Name: ____________________________________________________ Email:_____________________________________________________ Telephone: _________________________________________________

Payment

m Member: $25 m Nonmember: $40 Checks: Please make payable to: The Arizona Society of CPAs Credit Card:

m Visa m MasterCard m American Express

Credit Card #: _______________________________________________ Expiration Date: _____________________________________________ Name on Card. _____________________________________________ Mail to: ASCPA, 4801 E. Washington St. Suite 180, Phoenix, AZ 85034-2040; fax to (602) 252-1511 scan and send to ASCPACPE@ascpa.com.

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Classifieds Business Opportunities COTTONWOOD, AZ BUSINESS OPPORTUNITY — Cottonwood, AZ — Small town lifestyle close to Sedona.

Thought of ditching the big city? Slower lifestyle? Call me to discuss possibilities. I’m 60 and have thoughts of either changing occupations or downsizing my current CPA practice. I’m still in that “checking it out” mode so I’m also open to other options. The demand for quality tax and accounting services in this area is large compared to the available CPAs. My current full-time senior accountant needs more work — but I’m maxed out creating an imbalance. Call me (928) 202-4222 or send an email scott@KinzeyCPA.com.

PROFITABLE PHOENIX AREA CPA FIRM FOR SALE OR MERGER — Phoenix-based practice grossing approximately 1.7 million dollars a year desires either a merger or acquisition with a larger firm or a merger with a local tax practice. The source of income is approximately 45% from certified audits; 20% from reviews and compilations and 35% from taxation and consulting services. The firm has unique industry expertise as well as clients that are typical of the Phoenix metropolitan area. Clientele is loyal and management will help in the transition.

The firm consistently receives the highest peer review rating. Please respond to kbzcpa@gmail.com.

CPEvening: Eat, Drink and Be Educated The Art of Successfully Working With Different Personality Traits Speaker: Jessica Iennarella

Jan. 30, 2020 Blanco’s Tacos — 5:30 – 8 p.m.

2502 E Camelback Rd., Ste 122, Phoenix, AZ 85016

Sponsored by Enterprise Bank & Trust CPEvening combines fun and CPE in a relaxed atmosphere.

Make quality connections and grow sustainable and meaningful relationships.

Learn how to more effectively utilize the personality traits inherent in the people with whom you most closely interact. Gain awareness of the benefits and pitfalls of these traits and learn how to identify and best work with them.

Meet some of your colleagues from organizations in the Phoenix area and engage in great conversation. We will be providing appetizers and one drink ticket with your registration.

A cash bar will be available.

5:30 p.m. Registration and Networking 6:30 - 7:30 p.m. Presentation 7:30 - 8 p.m. Networking

www.ascpa.com/cpevening

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AZ CPA JANUARY 2020

Employment BUSBY SANFORD BRADY — 1-3 years recent Public Accounting experience for a well-established, mediumsized CPA firm in East Tucson. Tax and financial statement preparation and experience with UltraTax, BNA, Accounting CS, and QuickBooks a plus.

We offer full benefits and a professional, friendly working environment. Please fax your resume to (520) 733.2529 or email to Kimberly@bsbcpas.com.

JBROOKS WEALTH ADVISORS PC — Annual tax seasons. Looking for long term working relationship. Must have excellent verbal and input skills. Great small office to work at. Flexible hours.

Interview and prepare returns 1040 & business returns. 32nd Street Camelback Rd. jeff@jbrookswa.com.

PARTRIDGE & ASSOCIATES, CPAS PLC — North Scottsdale CPA firm is seeking a part-time (retired) Senior Tax reviewer during peak season. Must have seasoned tax review experience with updated knowledge of tax law and paperless systems.Larry@partridgecpas.com.

VICTOR R. PEREBOOM, CPA, PC— PERMANENT POSITION available at established Prescott, Arizona CPA firm.

We are seeking a seasoned, mature tax professional for a challenging tax preparation, review and planning position.

Responsibilities include individual, corporate, partnership and fiduciary tax returns, tax research and planning tax projections with clients. Ultra Tax experience a strong positive, along with Quick Books and strong accounting skills. We offer significant growth opportunity for the right professional candidate, in a wonderful community in north-central Arizona known as Everybody’s Home Town! Email resume to: vrpcpa@cableone.net.

For more information on classified advertising, go to www.ascpa.com.

Governmental Accounting Conference Wednesday, Feb. 5, 2020

Desert Willow Conference Center — 8 a.m.– 4:30 p.m.

Available In-Person or via Webcast Recommended CPE Credit: 8 hours Your favorite speakers are back, along with other local and national experts to assist you in discovering insights and understanding on new developments in governmental accounting and auditing.

Cybersecurity: Contemplating Life Beyond the Leading Organizational Transformation Tamara Deuser, MBA, PMP, Arizona State University, ITGCs Daniel M. Briley, CISSP, CIPP, Summit Security Group, Knowledge Enterprise LLC Emotional Intelligence Brittney Williams, CPA, CGFM, HeinfeldMeech GASB Update David R. Bean, Governmental Accounting Using Computer Assisted Audit Techniques to Standards Board Detect Fraud

Mistakes Were Made, Heads Rolled; The Responsi- David L. Cotton, CPA bilities of the Governing Board David L. Cotton, CPA (in VA), CFE, CGFM, Cotton & Company LLP Thanks to Our Sponsors: SEC 15c2-12 Continuing Disclosure Requirements, Debt Refundings, Amortization of Premium/Original Issue Discount and Related Audit Impacts Mark Reader, Stifel, Nicolaus & Company, Incorporated Paul Gales and Mike Cafiso, Greenberg Traurig, LLP Security Awareness Training Jerry Keely, Pinal County Government Lunch: The Lessons from Government Ethical Lapses and Crises 2017-2019 Marianne Jennings, W.P. Carey School of Business, Arizona State University GASB In-depth — Leases David R. Bean

Platinum

Gold REDW LLC Heinfeld Meech & Co., P.C. The Pun Group LLP Fester & Chapman, LLC CLA (CliftonLarsonAllen)

Learn more at www.ascpa.com/gac20

JANUARY 2020 AZ CPA

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PRSRT STD U.S. Postage PAID Phoenix, Arizona Permit No. 952 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040

SOLUTIONS CALCULATED FOR YOUR CLIENTS

ADDRESS SERVICE REQUESTED

REFERRAL

2800 N. CENTRAL AVE. SUITE 1200 • PHOENIX, AZ 85004 • EBLAWYERS.COM • 602.271.9090

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AZ CPA JANUARY 2020