AZ CPA July August 2019

AZ CPA July/August 2019

Artificial Intelligence in the Workplace The Hidden Cost of the New Revenue Recognition Standard

The Arizona Society of Certified Public Accountants y www.ascpa.com

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AZ 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 JULY/AUGUST 2019

Volume 35 Number 6

AZ CPA

July/August 2019

Features

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Artificial Intelligence in the Workplace is Nothing to Fear A discussion on how the future of AI will influence the world of accounting.

by Jeff Cox

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The Hidden Cost of the New Revenue Recognition Standard The Accounting Standards Update will significantly affect the current revenue recognition practices of most companies.

by Richard P. Higgins

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

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Member News — 2019 Leadership Day

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

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Income Tax Conformity — HB 2757 (Tax Provisions Omnibus) Gov. Ducey signed Arizona’s 2020 state budget into law this May. This year’s budget package included the highly anticipated income tax conformity legislation.

by DeMenna Public Affairs

Quick Quiz

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Classifieds 22

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How to Work With Someone You Dislike Discover nine tips to make the most of tense work relationships.

by Rhymer Rigby

Arizona Society of Certified Public Accountants 4801 E. Washington St., Suite 180 Phoenix, Arizona 85034-2040 www.ascpa.com

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ASCPA Chair’s Message

Advocacy in Action

by Jared Van Arsdale, CPA It is imperative that we as a profession be at the forefront and remain proactive on legislative issues impacting our profession and organizations.

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This past May, members of the ASCPA attended the national AICPA Spring Council meeting in Washington, D.C. For those familiar with AICPA council meetings, you know that the Institute invites representatives for each state to obtain updates on our profession. This Spring Council meeting addressed issues from technological disruptions, changes in the skills we are hiring in our organizations and the ever-changing and challenging political environment.

Additionally, the Washington, D.C. event tasks those members of Council with representing the accounting profession on Capitol Hill by visiting the office of their respective state Congressman or Congresswoman to discuss current or upcoming legislation important to the profession as a whole.

Members of Congress are pressed for time daily between constituent meetings, committee hearings and votes on their respective floors. Being wholly aware of their time limitations, we made our way to Capitol Hill on the last day of our Council meetings. Halfway along our route, we encountered democracy in action as what appeared to be an Americans with Disabilities Act event was marching from the side streets to the Capitol. We were on foot from there. We rushed to our first appointment of the day in the Rayburn building (U.S. House of Representatives). From there, we scurried amongst the tunnels under the congressional buildings to visit each of the members of Congress that we had scheduled for the day. Thankfully, they were all scheduled on the House side that afternoon.

On the agenda for each meeting was the fiscal state of our nation (intending to focus our legislators on long-term fiscal health and not income statement budgetary short-term issues), expanding the IRS’ authority to act quickly following a state’s declaration of an emergency (not a federal declaration), the modernization of IRS practitioner services and the extension of our members’ hands to act as a resource to our legislators on the expanding taxation of digital services globally and locally (OECD actions, state implications on the expansion of nexus relating to sales taxes across multiple taxation jurisdictions).

We answered questions and addressed any issues the members of Congress or their staff had on these or other topics. As you can imagine, it is a heavy lift to hit all these points in a 20-minute meeting, but an engaged and aware member of Congress makes it far easier.

Thanks to the efforts of your team at the ASCPA, we were able to schedule meetings with a majority of Arizona’s members of Congress. Although we are a trusted profession, remaining neutral and non-partisan can be a challenge while discussing certain issues in recent times. However, the AICPA knows it can rely on the professionalism of the members of Council and state societies to ensure we were there to deliver a message as a profession united on the importance of the issues at hand.

Member News As you have likely done already, and as I did walking Capitol Hill, I identified multiple other items of importance to our profession and our organizations that would be impactful in the future. Remember that your thoughts, questions and concerns are valued. To the extent you wish, please communicate any of those thoughts to your team at the ASCPA or any members of its board of directors. It is imperative that we as a profession be at the forefront and remain proactive on legislative issues impacting our profession and organizations. A reactive approach combined with a strong defense can be effective but, we are more valuable to our Congressmen and women when we can steer them around legislative potholes instead of allowing them to hit them and showing up afterward to provide some roadside assistance.

Lastly, on behalf of myself and the ASCPA, I want to thank all the members of Congress who took the time to meet with us this past May. A special thank you to Senator Sinema and Congressman Schweikert’s offices as they and their staff are incredibly gracious with their time, asking questions and subsequently followed up with emailed inquiries. n

2019 Leadership Day ASCPA Board members, chapter presidents, committee chairs and staff learned more about the Society and the profession at the 2019 ASCPA Leadership Day. Arizona Senate Majority Leader Rick Gray spoke about advocacy during lunch.

ASCPA Chair Jared Van Arsdale, President & CEO Cindie Hubiak with Sen. Rick Gray.

Member News Brian Joseph Hemmerle, CPA, CFE, became a partner at Henry+Horne. He will serve as the partner-in-charge of Government Services.

ASCPA leaders discuss nano-learning.

Payroll executive Lawrence Bailliere and BeachFleischman PC recently formed a joint venture to launch Contempo HCM, LLC, an Arizonabased payroll and human capital management company.

Sen. Rick Gray

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AZ CPA JULY/AUGUST 2019

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A Dash of SALT

Arizona Addresses Sales Taxation of Over-the-Top Services In this month’s state and local tax (SALT) column, Busby highlights the provisions of a new Arizona law that confirms that proceeds from over-thetop services are not subject to sales tax and addresses its implications for companies that stream audio or video over the internet.

Although its legislature considered bills this year and last, unlike most states, Arizona still has not enacted broad legislation to specify which digital goods and services, if any, are subject to sales tax. Yet, without statutory direction, Arizona state and local taxing authorities have asserted in confidential audit assessments and in obscure private taxpayer rulings that proceeds from digital goods and a variety of digital services are subject to sales tax as proceeds from renting tangible personal property.

S.B. 1019 Confirms That Over-the-Top Services are Exempt However, Arizona’s Legislature recently enacted, and Gov. Doug Ducey (R) recently signed, S.B. 1019 – a measure that confirms that “over-the-top services” are not subject to Arizona’s sales tax on proceeds from intrastate telecommunications activity and prohibits Arizona cities and towns from levying any type of tax on proceeds from such services.

This legislation was not critical for out-of-state companies that stream video or audio content to customers in Arizona because Arizona courts ruled long ago that proceeds from video content transmitted from out-of-state are not subject to Arizona’s sales tax on proceeds from intrastate telecommunications activity, and representatives of Arizona’s taxing authorities acknowledged the treatment of such proceeds at public hearings in recent years.

The Broad Definition of Over-the-Top Services

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.

Arizona’s Legislature defined “over-the-top services” to mean “audio or video programming services that are received by the purchaser by means of an internet connection, regardless of the technology used, that include linear or live programming and that are generally considered comparable to programming provided by a radio or television broadcast station and includes related on-demand programming that is provided at no additional charge, regardless of whether the services are provided independently or packaged with other audio or video programming.”

The Implications of S.B. 1019 S.B. 1019 is important not only because it defines “over-the-top services” and explicitly confirms that proceeds from such services are not subject to sales tax, but also because of what it implies.

First, the Legislature’s broad declaration that “‘over-the-top services’ means audio or video programming services that are received by the purchaser by means of an internet connection,” followed by inclusive rather than exclusive terms, suggests

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Contact us at (602) 252-4144.

that, at least once S.B. 1019 goes into effect later this year, the Legislature intends that all proceeds from streaming audio or video over the internet are tax-exempt.

Further, the fact that Arizona’s legislature included the language of this exemption in the statute for the state’s sales tax on proceeds from intrastate telecommunications activities rather than in the statute for its tax on proceeds from renting tangible personal property demonstrates that it always intended that proceeds from streaming services would be taxed as proceeds from intrastate telecommunications activities rather than as proceeds from renting tangible personal property, if at all.

Finally, the fact that the Department of Revenue did not oppose this bill despite these implications leads one to wonder whether it is going to back down from the position it has taken in audits — that companies that stream video to their customers over the internet are subject to the state’s sales tax on proceeds from renting tangible personal property. n

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Artificial Intelligence in the Workplace is Nothing to Fear

by Jeff Cox The summer between my high school senior year and my freshman year of college, I was offered a job to make decent money sweeping floors for a machine shop business. This job paid three dollars more than the minimum wage at that time; it was not a night or a weekend job, so I jumped at the chance because it would enable me to save some money for my upcoming college expenses. During my three months of working on this summer job, I got to know quite a few of the machine workers there. All of them were hard-working and very proud of their skillset and the creations they had made.

Every machine worker had access to all the tools that they required to manually make machine parts for orders. For example, an order from a customer required a tailored cog to be made that had multiple holes drilled into it, with the exact hole size located in precise places that could not even be one centimeter off target. One of the best workers there was an experienced man named Earl who was in his early 60s, and nine out of 10 of his cogs were created perfectly. Earl was an expert at manually drilling each hole in the right spot. Everybody respected this man, and he was the floor manager’s favorite employee. But the best worker was a man in his late 20s, whose nickname was “Magic Mike.” Mike operated a computer/machine where he would type in coordinates into a computer, set the metal into the machine and let

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the machine do the precise automatic drilling for him. Mike was able to make four times the amount of cogs as Earl in the same amount of time, and Mike had zero errors.

One thing I noticed about Mike is that nobody would really talk to him during lunch breaks. I asked Earl about Mike, and Earl said, “People don’t like Mike too much because when they purchased the “Magic” machine that Mike uses, they laid off four employees. Earl told me that the machine was seen as a computer robot that is taking their jobs.

The wheel is often described as man’s greatest invention, even though the most important technology that really makes a wheel work is the axle. And without a doubt, at least one person said “technology is taking away jobs” when the wheelbarrow was invented.

Just as we can acknowledge the fears that people have regarding new inventions and new technology, I want to acknowledge the fear in the workplace when it comes to Artificial Intelligence. Yes, you can use AI to replace jobs, but it is a matter of intent.

AI is a tool, just as a drill is a tool, and just as a spreadsheet is a tool. The spreadsheet certainly displaced certain things that CPAs were doing, but it did not replace CPAs. But the spreadsheet possibly replaced the CPAs who refused to learn Excel, just as the “Magic Machine” eventually replaced some machine workers who refused to learn to program robot computers.

We are at a new age of revolutionary technologies, much like the early ’80s when personal computers started replacing mainframes. AI is upon us and it can allow us to increase the productivity of workers by creating great tools for them. Tools that increase worker productivity are the ones that save jobs.

When I was a child, I remember a time at the beach with my family when I built a giant sandcastle with shells and sand dollars, and I was very proud of it ... until I noticed the tide started coming in. So I quickly built a sand wall in front of my sandcastle and dug some trenches. And while my

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quick actions slowed the water for a little while, imminent destruction was inevitable, and eventually the water gushed in and demolished my creation.

And just as trying to stop the tide from coming in, we cannot stop the wave of technology and AI. Whatever temporary measures you put in place at your job or your office to avoid AI, if it doesn’t happen in six months, it will eventually happen. We are always under pressure to improve worker productivity, or eventually a new person or a competitor will do it faster and cheaper. But if you manage to increase the productivity of the workers, then you will save jobs.

By embracing technology, you have a chance to stay ahead in the industry, increase productivity and revenue per worker, or you risk going extinct.

New business technology is focused on creating functionality, but the problem is that humans have to spend time learning how to use that technology effectively, and this could take months or sometimes even years to ramp up. By using AI, you can actually increase the number of people who can adopt technology faster by making it easier to use technology. One extremely basic use of AI is to make things more human friendly so that humans don’t have such a steep learning curve. For example, new software at first did not come with wizards. Therefore, you had to open the software box, put the disk in, scratch your head and then maybe read a manual on how to set it up.

Today, people expect and rely on an installation wizard to get started, where it holds your hand step-by-step asking questions, and gives you subtle hints on what you want to do.

Another example would be an application that tracks your expenses.

AI can be used to accurately read receipts, detect duplicates and warn the user before submitting the expenses.

Similarly, you can use this method in accounting. You will have workflows where you are looking for anomalies, and if the technology can help the person know what to pay attention to, that is a great tool and it will increase the productivity of the person. Ideally

you wouldn’t see AI, you wouldn’t see a computer: you would see a natural workflow that cleverly uses AI to help the person achieve their business goals.

You are not replacing the person, you are just making them more alert, helping them avoid pitfalls, and allowing them to effectively use their time to make their business partners and customers happier.

On the AI horizon for accountants and CPAs will be simple tools to handle fraud prevention, to create more accurate forecasting and definitely help reduce manual tasks to free-up valuable time. Imagine not having to manually go through receipts to apply expense categories and not having to check for duplicates and errors. Imagine not having to scramble the last few days and work weekends when it is time to do the monthly and quarterly close processes. By leveraging AI properly, you will soon be able to accurately process large sets of data in seconds that you would not have been able to produce with a team of data-crunchers assisting the CFO who does not have all of the time in the world. Also, Some accountants that I have worked with have mentioned to me that even with leveraging the latest software and apps, say that about 75 percent of their time is spent doing menial tasks such as data entry, categorizing and error checking, and this leaves only about 25 percent of their time for high-level strategic and executive-level tasks. So imagine if you could switch those percentages ... how much more efficient and valuable would you be to your company and clients?

This is the future of AI, if you choose to embrace it. n Jeff Cox is the co-founder and executive chairman of RadiusAI, Inc, and is the former CEO of Primary Key Consulting.

Learn more bout this topic by attending the Corporate Finance & Constuction Conference on Aug. 27.

The Hidden Cost of the New Revenue Recognition Standard

by Richard P. Higgins The Financial Accounting Standards Board (FASB)’s Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), applies to all contracts with customers unless the contract is within the scope of another standard (e.g., leases, insurance, finan­cial instruments).

The standard became effective for public companies for the first interim period beginning after Dec. 15, 2017, and nonpublic companies in the years beginning after Dec. 15, 2018. Businesses can apply this ASU retrospectively, or they can elect to recognize the cumula­tive effect of applying the new standard to existing contracts in the opening balance of retained earnings on the effective date (with proper disclosures).

This ASU will significantly affect the current revenue recognition practices of most companies. It could also impact the timing and amount of revenue reported, key performance indicators, debt covenant ratios, bond programs, contract ne-

gotiations, performance agreements, business activities and budgets. It is, therefore, important to look at the capitalization of costs associated with deferred revenue and its impact on the balance sheet.

Timing The ASU requires that revenue is recognized when the good or service is transferred or as control over the good or service is transferred. Therefore, revenue can be recognized over time (services) or at a point in time (goods).

Recognizing revenue over time is like the percentage of completion method of accounting with a slight adjustment.

One of the following two conditions must be met to recognize revenue incrementally: The customer must have control of the asset as it is built or improved, or the asset must have no use to you; therefore, you have right to the payment.

Recognizing revenue at a point in time involves recording revenue for each performance obligation as it is completed or when the customer takes control of the asset. Control of the good or service is defined as “when the customer has the ability to direct the use

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of or can benefit from the transferred good or service.”

The timing of contract-related costs will have a significant impact on a company’s balance sheet as well. These include the cost to obtain and fulfill the contract.

Impact CPAs need to analyze how this ASU will affect balance sheets. There could be a major impact on how contract accounts are organized and the presentation of contract-related assets and liabilities on the balance sheet.

Commission and earnout agreements may need to be revised. Under the ASU, commissions that are directly attributed to a specific contract are treated as acquisition costs. These costs will need to be capitalized and amortized over the contract’s life. This may cause a change in the timing of commission payouts.

Earnout agreements that extend beyond

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the ASU’s effective date will typically have to be adjusted due to a change in when contract-related expenses will be recognized.

Businesses are required to maintain the financial metrics outlined in the terms of a loan or bond agreement. This can include everything from minimum working capital ratio to maximum debtto-equity ratio requirements. Lenders and sureties use this information to determine if the company is financially healthy.

Since ratios may be negatively impacted by an increase in liabilities on the balance sheet, it is important for companies to have a conversation with their banker and surety to explain why.

Develop a pro forma of what the balance sheet will look like once revenue is recognized in compliance with this ASU. The costs related to implementing this ASU reach far beyond changes to internal processes and procedures.

Businesses should develop scenarios based on typical situations and thoroughly analyze the possible impacts. It is always better to be safe than sorry. n Richard P. Higgins, CPA (in NJ), is a principal with McCarthy & Company, PC, a leader in construction accounting. He is a member of the NJCPA and can be reached at 732-341-3893 or Richard.Higgins@ MCC-CPAs.com. From the May/June 2019 issue of New Jersey CPA magazine (njcpa. org/newjerseycpa)

Learn more about this topic by attending the Corporate Finance & Construction Conference on Aug. 27.

Income Tax Conformity HB 2757 (tax provisions; omnibus) On the morning of May 31, 2019, Governor Doug Ducey signed Arizona’s 2020 state budget into law. The state’s budget is crafted every session and is comprised of a package of roughly nine or 10 bills. This year’s budget package included the highly anticipated income tax conformity legislation, HB 2757 (tax provisions; omnibus).

by DeMenna Public Affairs

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As Society members are well aware, Arizona requires taxpayers to use their Federally Adjusted Gross Income as the starting point for state income tax assessment. The state has conformed to the Internal Revenue Code (IRC) each year since 1978 to include federal provisions that became effective in the previous year.

But the political challenges associated with conforming to the changes made by the Tax Cuts and Jobs Act of 2017 stalled legislative efforts to address conformity in a timely manner, leaving taxpayers and tax practitioners with more questions than answers as tax returns are prepared.

This year the Society worked tirelessly to educate legislators, many of whom were newly elected, of the importance of full conformity. Legislative budget analysts produced highly speculative estimates ranging from $50 million to $250 million, and the issue quickly became highly politicized.

Some Republican legislators viewed conforming to the IRC as a tax increase, and an unintended consequence of the Tax Cuts and Jobs Act, which was intended to put money back into the pockets of taxpayers, not state government. Meanwhile most Democrats, and a fair number of Republicans, wanted to use the potential revenue from full conformity as a way to fund budget priorities.

Early in the session, Sen. J.D. Mesnard (R – Chandler) introduced SB 1143 (conformity; internal revenue code; rates), which conformed to the IRC as of January 1, 2018, and reduced the state income tax rates by 0.11%, which would have applied retroactively to tax years beginning with 2018. The legislation passed the Senate and House along a party-line vote. Governor Ducey, however, vetoed the measure on February 1, 2019. In his veto message, the Governor stated that he vetoed SB 1143 because it was “the wrong policy, and any bill with a fiscal impact

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should be considered as part of budget discussions agreed to by the Legislature and Executive, just as every budget bill is considered, every session.”

The fiscal impact associated with conformity, coupled with the Governor’s veto message, meant that the conformity negotiations were effectively tied to the state budget negotiations from that point forward. After months of discussions, Ducey and legislative leadership reached a tentative budget deal over the weekend of May 18.

The House began debating the budget package in earnest on Thursday, May 23. After a marathon session of debating, amending, and voting on the proposal, the House adjourned at roughly 4:30 a.m. on Friday, May 24.

The Senate, however, didn’t’ have the votes necessary to pass the deal, as a handful of Senators were refusing to vote on the budget until their individual priorities were addressed.

The Senate met on Friday and Saturday of Memorial Day weekend, a move that was highly unusual as the legislative workweek is typically Monday through Thursday. Senate President Fann, however, was firm in her resolve to negotiate a budget deal that her members could support and send to the Governor.

President Fann was eventually successful in negotiating a budget that her caucus could support, but Sen. Mesnard remained opposed to the conformity-related provisions, and voted against a majority of the budget bills.

HB 2757 (tax provisions; omnibus) ultimately passed the House by a partyline vote of 31-29 and the Senate by a vote of 16-13, with Sen. Mesnard joining the Democrats in opposition.

Governor Ducey signed the legislation on May 31, 2019.

Income Tax Conformity – FY 2020 Budget Package HB 2757 (tax provisions; omnibus) • •

As session law, conforms Arizona to the federal definition of adjusted gross income as of January 1, 2018 for tax year 2018, and January 1, 2019 for tax year 2019.

As permanent law, reduces the number of tax brackets from 5 to 4 and reduces tax rates as follows:

Marginal Income Tax Rate/Bracket Comparison Brackets (Current Law) Rates (Current Law) Proposed Brackets Proposed Rates $0-$10,600 2.59% $0-$26,500 2.59% $10,601-$26,500 2.88% Collapsed 2.59% $26,501-$53,000 3.36% $26,501-$53,000 3.34% $53,001-$159,000 4.24% $53,001-$159,000 4.17% $159,001 and over 4.54% $159,001 and over 4.50% • •

As permanent law, remove the Arizona subtraction from taxable income for lottery winnings.

As permanent law, increases the standard deduction as follows and indexes the standard deduction for inflation.

Standard Deduction Comparison Filing Status Standard Deduction Standard Deduction

(Current Law) (Proposed) Single/Married Filing Separate $5,312 $12,000 Single Head of Household $10,613 $18,000 Married Filing Jointly $10,613 $24,000 •

As permanent law, eliminates the personal and dependent exemptions shown below:

Eliminated Exemptions Personal Exemption, No Dependents $2,200 Personal Exemption, Married with Dependents $6,600 Dependent Exemption $2,300 •

•

As permanent law, allows taxpayers that take the standard deduction to increase their standard deduction by 25% of their charitable contributions that otherwise would have been deductible had they itemized their tax returns.

As permanent law, establishes a dependent tax credit of $100 for each dependent under 17 years old and $25 for each dependent age 17 and above. This credit is to be phased out for singles with over $200,000 of adjusted gross income and $400,000 for married couples filing jointly. n

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AZ CPA JULY/AUGUST 2019

Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services.

By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Paychex is proud to be the preferred provider of payroll, retirement, and HR services for the ASCPA and its members. Learn about unique benefits for ASCPA members, as well as discounts to refer to clients by visiting us online at (http://www.paychex.com/accounting-professionals/) or contact a local Paychex branch (https://locations. paychex.com).

Colleagues are a bit like your family. You don’t get to choose them, but you have to spend a lot of time with them.

How to Work With Someone You Dislike It’s impossible for us to get along with everyone. Here are nine steps to make the best of tense work relationships.

By Rhymer Rigby Colleagues are a bit like your family. You don’t get to choose them, but you have to spend a lot of time with them. So what do you do about a co-worker you really don’t like? Can you change the relationship or find ways of coping? How do you make the best of the situation?

1. You need to deal with the problem. If you don’t, it will only get worse and may build up until it becomes a far bigger issue than it should be. But here’s the good part: Dealing with the problem might involve nothing more than saying to yourself, “Claire annoys me and she’s difficult, but I’ve looked at the options, and the best choice is simply to let it wash over me.” This may seem the same as ignoring it, but it’s not. You have taken control and made a conscious decision.

2 . Tell yourself that it’s not that bad.

We are never going to get on with everyone, nor should we expect to.

Claire, in this example, will never be a good friend, but she needn’t be a mortal enemy. Worrying about her behavior is really rather ridiculous — and there are far worse things. Perhaps you can make a game of it and turn making her tolerable into a personal challenge. The last suggestion may sound childish, but it can be surprisingly effective and satisfying.

3. Sometimes all you need to do is talk to the person. You should go in gently here — because the individual may not realize that their behavior has a negative impact on you. Indeed, in many situations, even if the other person is oblivious, a quiet word is all it takes.

4. Don’t embarrass the person. You can get your message across without letting the entire office know. The bad way to bring up someone’s faults is to say in front of several other people, “Jeff, the tuna sandwiches you eat at your desk make the whole office stink and make me feel sick. You need to stop doing it

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now.” Instead, you might ask Jeff for a chat when nobody else is around. You would then say, “I hate to do this, Jeff, but I really struggle with the smell of tuna sandwiches. Is there any chance you could eat them in the cafeteria or the break-out space? You’d really be doing me a huge favor.” In the first situation, you accuse Jeff of being the problem. In the second, it’s about how you feel. In the first, you embarrass Jeff in front of other people. In the second, you are discreet. In the first, you give Jeff an order. In the second, you appeal to him for help and offer a solution.

5. Learn from others’ coping strategies. Perhaps Michael, who sits next to you, has found a way of dealing with Pam that enables him to accept her behavior and actually get on with her.

Whenever you bring up the subject of a difficult colleague, you should be careful. The person you are talking to may be good friends with the individual you dislike. So again, make it about

vidual or minor objections to behaviors.

If someone is damaging your work or reputation or undermining you, then it is a very different matter and you may need to document the behavior and involve your boss or HR. 9. And if they ruin your every working day? In this case, you will have to move, either to a new department or a new organization. Obviously, this is not ideal. But it is preferable to hating every minute of work. Moreover, if one person can make you that miserable in your job, chances are there are other things wrong, too, so moving on may be a good idea.

you: “I’m struggling to deal with Pam’s requests and was wondering if you had any advice.”

6. Differentiate between the person and the behavior. This will help you not to fixate on hating the person. You may even get to a stage where you think, “Jim is very loud on the phone because he has adopted a big, outgoing persona to hide his insecurities.” Do this well and you could even find yourself feeling empathy for him.

7. If all else fails, minimize your exposure. Make your interactions as transactional as possible. Deal with them in a work sense and not a personal sense.

Do a good job, be polite, and leave it at that. Communicate by email where possible, but keep it professional, not passive-aggressive. Ask your boss not to put you on tasks together if at all possible.

8. Make sure the conflict doesn’t affect work. This advice assumes that you have only a personality conflict with the indi-

Rhymer Rigby is an Financial Management magazine contributor and author of The Careerist: Over 100 Ways to Get Ahead at Work. This article first appeared in Financial Management magazine. For more articles, sign up for the daily email update CGMA Advantage at http://bit. ly/2svn2AY. n

The Keys to Selling an Accounting/Tax Practice 15 years of Unequaled Success vs. Doing it Yourself Visit our website at www.ableta.com Gary W. Hankins, CPA* hankins@ableta.com (817) 738-3287 Serving NV, AZ & TX *Licensed in Texas

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Keys to Success

Able Practice Sales

Buyers in Contacts

Several Hundred

I play golf with three CPAs

Financing

SBA lenders contact us

All credit cards are paid up!

Sales Agreements

We draft and recommend legal alternatives

Glad I got an offer!

Accept or Decline the Deal?

We have 100’s of alternative buyers

What does my spouse think?

Client Announcements

We guide Buyer and Sellers Announcements

Make sure AR is paid-up?

Confidentiality

Our most important objective

I wish I had that problem!

AZ CPA JULY/AUGUST 2019

VS.

Doing it Yourself

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 2020. Please note that users have three attempts to pass the quiz with at least a 70 percent score.

July/August 2019 Issue of AZ CPA* 1. In his Chair’s message, Jared Van Arsdale talks about the AICPA Spring Council meeting in: m Phoenix, AZ m Los Angeles, CA m Washington, D.C.

5. What percent of time does Cox estimate that accountants currently spent on doing menial tasks? m 55% m 65% m 75%

2. Once S.B. 1019 goes into effect later this year, the Legislature intends that all proceeds from streaming audio or video over the internet will be: m Taxable m Tax exempt

6. Accounting Standards Update (ASU) 2014-09 became effective for nonpublic companies after: m Dec. 15, 2018 m Dec. 1, 2017 m Jan. 1, 2019

3. Arizona adopted the Streamlined Sales and Use Tax Agreement m True m False 4. According to Jeff Cox, Artificial Intelligence: m Allows people to avoid pitfalls and use time more effectively m A l l o w s p e o p l e t o m a ke their business partners and customers happier m All of the above

7. Earnout agreements that extend beyond the ASU’s effective date will typically have to be adjusted due to a change in when contract-related expenses will be recognized. m True m False 8. When did Governor Doug Ducey sign Arizona’s 2020 state budget into law? m Oct. 31, 2018 m Jan. 10, 2019 m May 31, 2019 9. HB 2757 conforms Arizona to the federal definition of adjusted gross income as of January 1, 2018 for tax year 2018, and January 1, 2019 for tax year 2019. m True m False

10. When working with someone you don’t get along well with, it is better to: m Avoid any difficult discussions with them m Change jobs if it is bad enough m Embarrass them to get your point across

Quick Quiz Registration 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.

JULY/AUGUST 2019 AZ CPA

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Classifieds Business Opportunities CPA FIRM SEEKING TO ACQUIRE TAX/ACCOUNTING CLIENTS — Phoenix CPA firm seeks to acquire tax and accounting clients from CPAs considering retirement or phase-out of their practice. Contact mra@phxcpa.net

will help transition, can be flexible on deal structure, and is seeking a sale this year. Contact cpapracticearizona@ gmail.com.

Employment

PROFITABLE PHOENIX AREA CPA FIRM FOR SALE OR MERGER —Phoenix based practice grossing approximately $1.6 million dollars a year desires a merger or an acquisition.

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. .

ACCOUNTING MANAGER — Cable ONE —The Accounting Manager assists the Director(s) of Accounting with all facets of general accounting and financial reporting. This position has direct contact with senior leadership, and under the direction of the above, has substantial oversight responsibility for all aspects of accounting operations.

•5-6 years of management experience in a public or large company • Ability to work extra hours as needed to support the financial close. • Strong knowledge of Generally Accepted Accounting Principles and internal controls, including ASC 606 and ASC 842. Salary DOE: $100,000 - $125,000, plus bonus. EEO http://www.cableone.net.

SCOTTSDALE CPA TAX AND ACCOUNTING SERVICE FOR SALE $750k+ in Billings — Scottsdale based 35+ year practice, partner seeks retirement. Consistent growth, 77% business related work, $750k in billings/$370k in discretionary owner in come. Owner

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.

Behind the Scenes at Ballet Arizona Sept. 18 11:30 a.m. – 1:30 p.m.

Join your fellow CPAs as we go Behind the Scenes at Ballet Arizona! Take a look behind the curtain at the ballet and hear an interesting presentation from a few members of their team, including Executive Director Samantha Turner. We will have an opportunity to peek in on a rehearsal as we tour their facility. This is an exciting and rare opportunity to visit and learn more about the inner workings of Ballet Arizona. Lunch will be provided.

www.ascpa.com/ballet

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AZ CPA JULY/AUGUST 2019

HIRLINGER PLC — ACCOUNTING PROFESSIONAL that has public accounting experience processing monthly accounting/write-up clients.

Must know Quickbooks Desktop and Quickbooks Online. Must know how to import transaction into QB. Must be efficient in preparing bank reconciliations along with reconciling the balance sheet accounts to workpapers. Organizational skills a must, along with Excel and Word skills. http://www.hirlinger.com.

TAX MANAGER AND STAFF — CPAFIRM3 — CPA — Eight-person Tucson CPA firm, has Tax Manager and Tax Staff positions open for CPAs with a minimum of five years of recent CPA firm experience with partnership potential. Proven sales and marketing skills are highly desirable.We offer highly competitive salaries and comprehensive benefits, including group health insurance, 401(k) with company 4% contribution, eight paid holidays, paid sick time and vacation, and complete reimbursement of all CPA related expenses.

Please apply for the Tax Manager or Tax Staff opportunity today, by sending your resume and salary requirements to cpafirm3@gmail.com.

Office Space EXECUTIVE OFFICE SPACES FOR LEASE — Beautiful garden-style office complex in a great office environment located in north Phoenix. Easy access to SR 51 and SR 101 just north of NWC of Tatum and Shea Blvd. Executive office $800, interior office $650. Ample parking, beautiful conference rooms, seminar room and copier, telephone and internet ready. Includes Receptionist to greet your clients. Contact Julie at (602) 953-5000.

OFFICE SPACE IN BEAUTIFUL SEDONA! Well established Sedona CPA is leaving the area. Approximately 600 square feet available to share with attorney in Village of Oak Creek, Sedona. Call (928) 284 2190 (office) or (928) 300 6096 (cell).

nents: culture, strategy and operations. This session will explore how culture serves as the glue to achieving the results organizations want from their strategy and operations. We will discuss what culture is made of, how to measure or evaluate the current culture and what to do to improve that culture.

Construction Track – Concurrent Sessions

Corporate Finance & Construction Conference August 27 Desert Willow Conference Center, Phoenix Available In-Person or via Webcast Recommended CPE Credit: 8 hours

Revenue Recognition: Transitioning From Theory to Reality Dave Miller, Jokake Construction Services, Inc. Anthony Hakes, CBIZ MHM, LLC Most construction financial managers have been exposed repeatedly to new revenue recognition standards as they look at applicability to their company or client operations. This session will take the theory and move the discussion into a realworld implementation by a local general contractor.

Benchmarking Panel: How Does Your Company REALLY Look?

The Corporate Finance and Construction Industry Con- Jim Bracy, Willis Towers Watson ferences have joined forces to bring you the new Corpo- Chris Schick, Travelers Bond & Specialty Insurance rate Finance & Construction Conference.

Kirk Welch, Lovitt & Touche, A Marsh & McLennan Insurance Agency, LLC The conference will include general sessions of interest Kevin Herbst, BOK Financial Corporation to all and concurrent session tracks for corporate finance and construction industry. Meet more people and mix- Kyle McMillan, UMB Bank and-match your conference selections to create your The contractor’s banker and surety are critical partners in driving a successful construction ideal day. company. But, despite our best efforts to look financially solid, we often have no idea how these CONFERENCE AGENDA: partners are judging us. This benchmarking session General Sessions will bring bankers and sureties together to help us Good Times or Bad Times? What Will Our Future understand their benchmarking tools and how they analyze the financial elements of their construction Look Like? clients. They will also explore the differences in Scott Smith, Valley Metro We’ll take a look backward and forward, exploring how they look at general contractors, sub-specialty the reasons for our economic growth. Hear about contractors and heavy civil contractors. the challenges and opportunities for continued growth for the future with an emphasis on trans- Construction Financial Managers: Bringing Value to the Company portation investment.

Jared Asay, Conover Asay CPAs, PLLC Marj Weber, Irontree Construction, Inc. The Role of Culture in an Effective Organization Christine Kettelkamp, Jenco, Inc. Aaron Peterson, City of Tempe An effective organization consists of three compo- Cindy Lee, Haydon Building Corporation

Stronger Together

JULY/AUGUST 2019 AZ CPA

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This session will explore the role of the construction financial manager in project procurement, management and close-out; and the communication required among project participants. It will focus on the activities critical to a successful project and identify where they can bring knowledge and expertise to company operations — improving the bottom line.

Panel: Construction and Arizona Sales Tax Tom Johnson, Natalia Garrett, Lisa Querard, Arizona Department of Revenue Brian Eto, BeachFleischman The construction industry was directly impacted by the legislative changes in 2015. These changes included how materials were taxed, how prime contractors should report and changed the way subcontractors work with prime contractors. This panel will discuss how those changes still create challenges today and discuss the best practices for contractors to adopt as a means to stay in compliance with the Department of Revenue.

Corporate Finance Track – Concurrent Sessions

Captive Insurance: Opportunity, Stability, Control Deanna Chew, Lovitt & Touche, A Marsh & McLennan Insurance Agency, LLC Insurance, like taxes, is often viewed as one of those “necessary evils” for conducting business. But a captive insurance program may be an attractive risk management alternative for controlling a business’s destiny. This session will provide an overview of the captive concept, as well as the basic goals and long-term benefits of this alternative risk financing solution.

Will Artificial Intelligence Take My Job? Jeff Cox, RadiusAI, Inc How does AI differ from automation? Where is AI being used today and where can we expect to see AI in the future? Embracing AI will help CPAs be more productive and do their jobs better.

How to Attract & Retain Great Employees Camille French, AmeriSource HR Consulting Group Attracting great talent has become more difficult in our world of technology. Learn what companies are doing to set themselves apart, the methods to find talent and more importantly what they are doing to keep great employees.

Revenue Recognition & Lease Accounting: Takeaways From the Trenches Joel Ryerson, Deloitte The most dramatic changes in revenue recognition and lease accounting in recent memory are still reverberating for senior finance leaders. In this session, Ryerson covers key takeaways from ASC

606 and ASC 842 as informed by the experience of companies that have already made the journey.

Fraud: Following the Money Suzanne Allen, Federal Bureau of Investigation This session will provide an overview of the types of complex financial crimes investigated by the FBI. Allen will take the audience through a brief case study of how a recent fraud was investigated and the resulting outcome.

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AZ CPA JULY/AUGUST 2019

Learn more and register at www.ascpa.com/cfcc19

Stronger Together The Corporate Finance and Construction Industry Conferences have joined forces to bring you the new

Corporate Finance & Construction Conference August 27 The conference will include general sessions of interest to all and concurrent session tracks for corporate finance and construction industry. Meet more people and mix-and-match your conference selections to create your ideal day.

Desert Willow Conference Center & Webcast $299 Members, $399 Nonmembers

Learn more at www.ascpa.com/cfcc19 Special Thanks to Platinum Sponsor:

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Arizona Society of CPAs 4801 E. Washington St., Suite 180 Phoenix, AZ 85034-2040

PRSRT STD U.S. Postage PAID Phoenix, Arizona Permit No. 952 ADDRESS SERVICE REQUESTED

SOLUTIONS CALCULATED FOR YOUR CLIENTS

REFERRAL

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

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AZ CPA JULY/AUGUST 2019