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Navigating Complexity, Driving Excellence
Navigate complexity and drive excellence at the ASCPA’s Governmental Accounting Virtual Conference, where top experts deliver essential insights on public finance, cybersecurity and economic trends to elevate your organization’s performance.
Feb. 7, 2025
AZ CPA
The Arizona Society of Certified Public Accountants
President & CEO Oliver Yandle
Editor Heidi Frei
Advertising Heidi Frei
Board of Directors
Chair Lauren Murro
Chair-Elect Eugene Park
Secretary/Treasurer Joe Heidleburg
Directors Tahir Alhassan
Austin Billingslea
Daliah Bui
Jay Ganesan
Marissa Graves
Ignatius Jackson
Sarah Jones
Mark Kohler
Donnie Neves
Dennis Osuch
Lisa Parke
Stella Shanovich
Heinfeld Meech & Co., P.C.
(CliftonLarsonAllen)
Immediate Past Chair Andrea Levy
AICPA Council Members Kelly Damron
Tom Duensing
AZ CPA Editorial Committee
Alli Byrne, Trevor Johnson
Mike Nyman, Adrian Ochoa
Amy O’Loughlin, Becky Pusch
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 six times a year as a benefit 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
410 N. 44th St. Ste 205 Phoenix, AZ 85008
Telephone (602) 252-4144
AZ Toll-Free (888) 237-0700 www.ascpa.com
ASCPA Chair’s Message
Lauren E. Murro, CPA Chair, Arizona Society of CPAs Partner, Eide Bailly
Expressing Gratitude
“Feeling gratitude and not expressing it is like wrapping a present and not giving it.” – William Arthur Ward
With November being member appreciation month, I have been thinking about the right way to extend my gratitude and appreciation to the members of the ASCPA. Drawing upon various experiences throughout my career, I’ve experienced gratitude in the form of a note left by a former colleague, an “Auditor” mug (which refers to us as superheroes) sent from a partner I assisted while she was on leave, or even the simple sincere words “thank you.” I enjoy how the message can come in different forms but still have the same meaning.
For the ASCPA, the members are more than just a part of the community. They are the driving force behind everything the staff and Board of Directors do. Whether through a commitment to continuing education, participation in advocacy efforts or the dedication of time to mentoring the next generation, your contributions are invaluable. We recognize the time and effort you all have invested in professional growth and advancing the accounting profession in Arizona. As members, you continue to connect, share knowledge and support one another. Attending various events throughout the state during the year, I am fortunate to experience this firsthand. You can also see it on the ASCPA Connect website, where members ask and respond to technical or other questions.
As I reflect on these experiences, I recognize the importance of gratitude both personally and professionally. Expressing gratitude strengthens relationships, encourages a positive culture and inspires generosity, and I’m not sure who would argue we need less of that. It can be easy to get caught up in my day and forget to express my appreciation of those around me, both at work and home. Remembering to practice gratitude in simple acts can have huge impacts on oneself. Focusing on what you’re grateful for helps shift attention away from worries and negative thoughts and promotes a positive mindset. It enhances self-esteem by focusing on your own blessings rather than comparing yourself to others and can lead to feeling more content and satisfied. Lastly, it encourages a cycle, creating a ripple effect of generosity and kindness as we are often more inspired to extend our gratitude when we receive it from others.
With these things in mind, I extend my deepest gratitude to the ASCPA members on behalf of the Board of Directors for your passion, professionalism and dedication to enhancing the CPA community in Arizona. As we look to the future, the ASCPA remains committed to providing members with the resources, support and opportunities needed to navigate the complexities of this everevolving profession and appreciates your contributions to those efforts. Although I didn’t handwrite each of you a thank you note or send you a witty mug, I’ll leave you with one more quote I stumbled upon, which might be useful for us to share with some of our clients. l
“I’m thankful for the taxes I pay because it means that I’m employed.” – Nancie J. Carmody
Warm Regards, Lauren Murro
Member News
Brandon Keim, CPA, JD, was named a 40 Under 40 by the Phoenix Business Journal.
Jessica Rae Estrada, CPA, was named Grant Thornton’s new market managing principal for Phoenix.
Travis T. Jones, CPA, has been promoted to innovation principal at BeachFleischman PLLC.
REDW Advisors & CPAs has announced that Phoenix-based Hatcher Financial has joined REDW.
Do you have any member news to share? Please send any promotions, board appointments or awards to hfrei@ascpa.com for inclusion in a future issue.
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Tactical 90-Day Guide for Emerging Finance Leaders
By Andrea Beth Levy, CPA, CFE, CGMA, MBA
Congratulations! You made it to the final interviewing round and negotiated a favorable offer. What a whirlwind! Now it’s your first day as a finance leader with a new agency. Enclosed is a solid methodology for leaving an independent contributor role and successfully moving you forward into a financial management role.
Many CPAs have heard the storyline of driving our way to success, with one goal in mind, climbing the ladder. In some ways, we have access to all aspects of the business. Yet rarely do we talk about the transition that happens when we leave closer-knit teams and move into our solo financial management space or leading a department. This shift creates an adjustment period.
In the book “Transitions,” William Bridges explores the “process people go through to come to terms with the new situation. Change is external, transition is internal.” There are endings of the prior job, the neutral zone, then the beginnings. The experience of a senior accountant or senior auditor with an entire team and resources is different than serving as a manager, finance director, or CFO of a small company. It can be exciting, challenging and invigorating. In some ways, your schedule will be determined by the financial priorities of the agency. Being prepared for those changes can be the most helpful solution.
As a CPA, we’re also held to adhere to exemplary ethical compliance with relevant standards of our business. Ensuring we can meet the needs of the business while adhering to our required standards is key.
10 days before the first day
– Know your values and your contributions
Before you start your first day, spend time reflecting on your values and what you’ll bring to your new role. It’s likely fresh in your mind from your most recent interview. As a new manager, what are you giving back to the company? Can you contribute to a specialized experience or education that could be especially useful to this new role?
Next, write a few notes about what inspires you most about this role, beyond compensation. What makes you most excited to join the new role? The company and work culture? The opportunities to learn and grow? Are you learning new software, automating processes, implementing
Traditional AI or Generative AI? Are you able to achieve a greater worklife balance with experienced team members? Keep this list available on the more difficult days, to remind yourself of your purpose.
First month – Research like an auditor
As CPAs, we’re familiar with the concept of “professional skepticism,” and we’re required to pass an ethics examination, along with continuing ethics training requirements. We are tested to ensure that if needed, we can deploy our knowledge and continue to act as fiscal stewards for our agency and our community. According to the Association of Certified Fraud Examiners Occupational Fraud 2024: A Report to the Nations, “More than half of occupational frauds occur due to the lack of internal controls or an override of existing controls.” Our goal is to learn our new role while maintaining the agency’s financial integrity and control environment. As fiscal stewards of the agency, internal controls are our top priority every day.
In your first month, gather and review data to develop a preliminary risk assessment. Review the latest Internal Control Audit Memo, the most recent set of deliverables and final reports with external auditors, internal auditors and/or compliance
auditors. Review the last three-five years of financial reports, last threefive years of tax returns, strategic plans, financial policies, treasury documents, loan records and more. Consider expanding this list to include industry specific compliance, data privacy and legal requirements. Pore over the data and notice trends. Are there recent mergers and acquisitions? Or significant product line or program phase-out? Take note of which revenue trends appear interesting and stay curious. Are there items in the notes to the financial statements that bring you pause? Are there current debt covenants to be aware of? During the interview process, did management disclose challenges they would like for you to solve? How are those challenges impacting the financial statements?
During this process of financial review, act like an auditor. Flag potential discrepancies against control standards or compliance requirements for further review with management. According to a recent EY article about third-party risk management, “With the injection of technology-enabled capabilities and GenAI, and the usage of all available data, comes the need for robust and scalable operations that keep up with higher expectations in ongoing monitoring …”
First two months – Plan business partnership meetings Plan to listen. Serve as an ambassador for the department. Meet with key stakeholders and lend a listening ear. Learn how your department interacts with their department and if there are key deliverables from either side. Determine structured timelines to ensure the needs of the business are being served. Are there current pain points or bottlenecks? Ask managers about their biggest concerns and whether there are areas of improvement on your team that could benefit the agency. Consider if there are areas where automation could be helpful. Retain great notes and add those to your preliminary risk assessment.
In addition, continue to create a list of key internal and external contacts. Lists may include auditors, bankers, insurance companies, legal counsel and other professional services. Inquire as to whether an executive assistant can assist with compiling key contact information.
Team development is a process to develop unity. Per Abby Wambach’s book “Wolfpack,” team culture is more than excellence, it’s about unifying a team structure and creating an effective collaborative heartbeat. Set aside time to learn about the existing structure. Ask your team about the current performance management system. How are performance goals determined and at which cadence? How do team members receive feedback? How often are check-in meetings and what format do they encompass? Create a team culture of success and resilience.
Andrea Beth Levy, CPA, CFE, CGMA, MBA, is the head of finance & operations with the Greater Phoenix Chamber. As a financial executive, Andrea’s role is to build a strong, growth-oriented finance infrastructure. This applies to systems, automation, reporting, controls and people. Andrea enjoys creating sustainable business models and achieving strong financial health through detailed financial analysis and sound business decisions. Andrea currently serves as the Arizona CPA Foundation for Education & Innovation Chair and is an audit committee member of the Institute of Internal Auditors Phoenix Chapter. You can connect with Andrea at linkedin.com/in/ andrealevyfinance.
Resources:
“Transitions: Making Sense of Life’s Changes,” William Bridges
“2024 ACFE Report to the Nations,” Association of Certified Fraud Examiners
“Organizations are Reshaping Their Third-Party Risk Management (TPRM) by Integrating Generative AI (GenAI) to Stay,” Scott McCowan, Chris Watson, Ken Lehanka
As CPAs, we are familiar with many aspects of business. We have a head start with our continuous learning and education requirements for our field. Our ability to analyze large data sets, financial trends and patterns provides a competitive advantage. It’s leveraging that knowledge which will move your team, your company and your community forward. Adventure awaits! l
“Five Components of the COSO Framework You Need to Know,” Protiviti Knowledge Leader
“Wolfpack,” Abby Wambach
Preparing for a CPE Audit
By Fred Bedoya, CPA
The primary duty of the Arizona State Board of Accountancy (Board) is to protect the public from unlawful, incompetent, unqualified or unprofessional certified public accountants through certification, regulation and rehabilitation. As part of this mission, the Board randomly selects registrants to participate in Continuing Professional Education (CPE) audits each month. The Continuing Professional Education Advisory Committee (Committee), a body that reports to the Board, then reviews supporting Certificates of Completion and communicates to the Board as to whether a registrant is compliant with all CPE requirements.
R4-1-453(F) requires that CPAs maintain detailed records of the CPE courses taken for a three-year period from the date of the renewal submittal. Once chosen for audit, the selected CPA has 30 days to respond to the Board’s request to supply the required Certificates of Completion. If needed, the Committee may also request course outlines to help support the registrant’s classification of CPE.
It is the Committee’s responsibility to verify the following, between what is reported on required Board CPE forms, in comparison with CPE Certificates of Completion that include the following elements:
Registrant’s Name
Course Provider or Sponsor
Course Title
Credit Hours
Date of Completion
Primary Reasons for CPE Non-Compliance:
The Committee has aggregated the primary reasons for CPE noncompliance:
1. Missing certificates of completion.
2. Certificates of completion that, while provided, do not offer sufficient evidence of the reported CPE in terms of subject, method, hours or the appropriate CPE reporting period.
3. Instructional delivery method is reported incorrectly. Required CPE hours in the method of Classroom or Live/Interactive Webinar (CW) are not met as the CPE is considered selfstudy and is therefore reclassified as Self-Study (SS).
4. Required CPE hours in the area of ethics (E) does not equal at least 4 total hours and/or does not include a minimum of one hour each in the following two areas:
– Ethics related to the practice of accounting including the American Institute of Certified Public Accountants Professional Code of Conduct, and
– Arizona State Board of Accountancy statutes and administrative rules.
5. Required CPE hours in the subject areas of accounting, auditing, taxation, business law or consulting services (A/T/B/C) do not meet the minimum 50% of the total required CPE. (If 80 total CPE hours are required, then a minimum of 40 CPE hours in A/T/B/C is also required.)
6. Required CPE hours in the subject areas of accounting, auditing, and taxation (A/T) do not meet the minimum 20% of the total required CPE. (If 80 total CPE hours are required, then a minimum of 16 CPE hours in A/T is also required.)
7. CPE hours in Lecture or Discussion Leader (LL), Publishing (P), or Introductory Computer (IC) exceed the maximum allowable hours. (If 80 total CPE hours are required, then a maximum of CPE hours are credited as follows: LL ≤ 40; P ≤ 20; combination of LL and P ≤ 40; and IC ≤ 20.) Example: 100 hours of CPE are reported, but LL is reported as 65 hours, which exceeds the maximum allowable by 25
hours. The total reported CPE will be reduced by the number of hours that exceed the maximum allowed. In this example, total CPE hours are now reduced to 75, making the registrant 5 hours short in meeting requirements.
8. Repeated CPE courses are reported as having been taken, or offered as LL credit hours, during the same CPE reporting period.
9. LL preparation time exceeds the total course credit hours (e.g., the course takes 4 hours to teach, but reported preparation hours exceeds the 4 hours).
10. LL preparation time exceeds actual preparation hours (e.g., the preparation takes 2 hours, but 10 hours of preparation are reported).
CAUTIONS
CPE taken in one CPE reporting period cannot be credited towards part of another CPE reporting period.
CPE taken to satisfy a suspension of a CPA certificate may not be credited towards requirements of the subsequent registration period.
Receipts for the purchase of CPE and other such ancillary documents are not accepted as evidence of CPE attendance.
CPAs who work for employers that provide CPE are urged to maintain their own copies of Certificates of Completion on a regular basis. While larger employers typically maintain CPE records and then issue an annual CPE report, it is possible that an employee who has separated employment may not be able to obtain the CPE evidence after having left their employ. Such circumstances may put the CPA at risk for noncompliance with CPE requirements.
College coursework that is reported as CPE requires a college transcript to be submitted in lieu of Certificates of Completion.
Evidence of Lecture (LL) hours requires a letter from the college or course sponsor that can independently verify the hours spent in lecture, to include:
Lecturer’s Name
College Name or Course Sponsor
Course Title
Actual teaching hours by lecturer
Range of dates that the course was taught (e.g., 8/17/2023 through 12/12/2023)
If this range crosses CPE reporting periods, then two letters are required to specify how many hours were taught in each period
If any CPE requirements are unclear or may possibly lead to a CPA’s subjective interpretation, please contact Board staff members for clarification. The Board’s website also offers additional guidance at www. azaccountancy.gov/Renewals/CPE. aspx, and a link to the Board’s CPE Substantive Policy Statement can be found at https://www.azaccountancy. gov/AboutUs/SubstantivePolicy.aspx The Substantive Policy Statement includes:
#2017-002 - CPE Method
Classification of Rebroadcasted Live Webinars l
Fred Bedoya is an active member of the CPE Committee with the Arizona State Board of Accountancy. He has served on the Committee for 13 years and is a past chairperson.
A F and P CPAs
Abbott Company, Ltd.
Abdo, LLP
Alyx Cohan CPA, PC
Andersen & Sarnowski, P.C.
Anne Cornelius, CPA, PC
Anthony Choi, CPA
Arevon Energy
ATLAS CPAs & Advisors PLLC
Baker Tilly US, LLP
BeachFleischman PLLC
Benjamin H Field CPA, PC
Black & Soli, P.C., CPA
Boudreau Consulting LLC
Busby Sanford Brady CPAs, PLC
Butler Hansen, PLC
C. Wesley Addison, P.C.
Cary Millar, PC
CBIZ MHM, LLC
Charles L. Hummel, CPA PC
CHS Tax & Business Services, PLLC
CliftonLarsonAllen LLP
Colby & Powell, PLC
Concierge Consulting and Accounting, PLLC
Conover Asay CPAs, PLLC
Cordova & Jones, PC
CPA Financial Advantage, P.C.
Curosh Law Group, PLLC
CW Clarke Ltd
ASCPA 100% Club
The Arizona Society of CPAs honors our 100% Club members. We are incredibly grateful for your unwavering support. Your commitment to nurturing the growth of your CPAs is truly commendable, and it plays a vital role in fortifying the Arizona CPA community. Thank you for ensuring that all eligible CPAs are members of the ASCPA.
Daniel A. Calabro, CPA, PLLC
Darin Guthrie, CPA, PLLC
David Lipinski, CPA, PC
DeBenedetti & Co., PLLC
Delores I. Nance CPA, P.C.
Dickman & Company CPAs PC
Douglas J Kingston CPA / International & Accounting
Eaton & Kasprzyk CPAs, PC
Eaton-Cambridge Inc.
Edward M. Osinski, Jr., CPA, PC
Eide Bailly LLP
Elliott CPA LLC
Emelia Mensa, CPA
Epstein Schneider, PLC
Evers Robinson Ltd.
EY
Forvis Mazars
Four Leaf Financial & Accounting, PLLC
Frost, PLLC
Gary L Williams, CPA, CGMA
Ginsburg & Dwaileebe CPAs, LLP
Hammond, Travers & Tuttle PC
Hanagan CPA, PLLC
Haynie & Company
HBL CPAs, P.C.
Heinfeld, Meech & Co., P.C.
Herb Anderson CPA, LLC
HH CPA LLC
Horne & Company, LLC
Howard S. Simon, CPA, P.C.
Hunter Hagan & Company, Ltd.
Ignite Accounting LLC
Insight Enterprises, Inc.
Jaffa Simmons, PLLC
Jansen & Company CPAs, PLLC
Joanne M. Elsen CPA, PC
John Heard, CPA, LLC
Johnson Goff, PLLC
Karpinski, Bernstein & Adler, PLC
KeatsConnelly
Keegan Linscott & Associates, PC
Kent O. Utter, CPA
KML CPA LLC
Koeller Thompson CPAs, PLLC
Landmark PLC, CPAs
Laura S. Leopardi, CPA, PLLC
Leonard F. Baker, CPA PC
Lisa M. Smith, CPA
Lohman Company, PLLC
LT Gagnon PLC
Ludwig Klewer & Rudner, PLLC
Lumbard Consulting, LLC
Mansperger Patterson & McMullin, PLC
Mariner Wealth Advisors
Marley Management Corporation
Martinez & Shanken, PLLC
Mary Beth Wifler, CPA
MBE CPAs
McGrath Nothman PC
Mesquite Tax LLC
Michael S. Patinella, PLLC
Minniti CPA LLC
Monica J. Stern, CPA, PLLC Morrison, Clark & Company
CPAs, PLLC
Moss Adams LLP
Ng Accounting, P.L.L.C.
Nordstrom & Associates, P.C.
O’Malley & Berberich CPAs, PC
On-Call Controller
Osiris CPA PLLC
Pescatore Cooper, PLC
Pioneer Title Agency, Inc.
Preston CPA, P.C.
Price Kong & Co., CPAs, P.A.
R & A CPAs
R. Michael Beltran, CPA
R.C. Thornton Accounting Group, LLC
Randy C. Kiesel, CPA, PC
RC Acosta & Associates, CPAs
REDW LLC
Regier Carr & Monroe LLP, CPAs
Robert Martin, CPA, Ltd
Roediger Hoff, PLC
RSM US LLP
Sandra A. Turner, CPA, PC
Sandra L. Reed, CPA
Saunders Company, Ltd
Seby & Associates, Ltd., CPAs
Sechler Morgan CPAs PLLC
Seely, Mullins & Associates, PC
Semple, Marchal & Cooper, LLP
Shaffer & Danker, CPAs, PC
Shippen, Pope & Associates PLLC
Simmons Tax & Accounting Services LLP
Singer Tax & Accounting, P.C.
Skinner Clouse Group PLLC
Slater & Rutherford, PLLC
Splaver & Splaver, CPA, PLC
Sportiqe Apparel Co.
Springsteel Investment Advisors, LLC
Sprowls and Company, PC
Tess L. Ridgway, CPA
The Ruboyianes Company, PLLC
Thomas L Dunbar CPA
Tull, Forsberg & Olson, P.L.C.
Ullmann & Company, P.C.
Urke & Stoller, LLP
Valerie A. Lubken PLLC
Vearle M. Jones, CPA
Walker & Armstrong, LLP
Wallace, Plese + Dreher, LLP
Weech Financial, PLLC
William M. Perius, CPA
WS Weiss CPA PC
YB Company LLC
Organizations with 100% CPA membership convey to their clients, staff and colleagues that they have made a significant commitment to the CPA profession. These organizations enjoy additional perks and no extra cost to participate. By becoming a member, you can show your commitment to excellence. Visit www.ascpa.com/100club to find out more!
We make every effort to ensure the accuracy of this list. If your organization’s name does not appear in this list or is incorrect, or for questions regarding the 100% Club, please email membership@ascpa.com.
Member Appreciation Month
Get ready for an exciting month ahead! November is all about showing our appreciation for our incredible members. We want to celebrate your support and the valuable contributions you make to the CPA profession. To thank you, we’re thrilled to announce our first-ever Free CPE Days on Nov. 13 & 14. This is your chance to earn up to 12 hours of free CPE! Register at www.ascpa.com/freecpedays.
In addition, we will have prize raffles on Connect. Stay tuned for your chance to win! Connect: www.ascpa.com/connect
WE WALK THE TALK.
CAMICO knows CPAs, because we are CPAs.
Created by CPAs, for CPAs, CAMICO’s guiding principle since 1986 has been to protect our policyholders through thick and thin. We are the program of choice for more than 8,000 accounting firms nationwide. Why?
CAMICO’s Professional Liability Insurance policy addresses the scope of services that CPAs provide.
Includes unlimited, no-cost access to specialists and risk management resources to help address the concerns and issues that you face as a CPA.
Provides potential claim counseling and expert claim assistance from internal specialists who will help you navigate the situation with tact, knowledge and expertise.
Does your insurance program go the extra mile? Visit www.camico.com to learn more.
CAMICO is ASCPA preferred provider of CPA Professional Liability Insurance.
Harris Hauptman Senior Account Executive
Generative Artificial Intelligence Solutions … Understand Your Risks
By Suzanne M. Holl, CPA (licensed in California)
The artificial intelligence (“AI”) solutions such as OpenAI’s ChatGPT continue to gain popularity. Many CPA firms seek to leverage the use of generative AI to accelerate innovation and increase productivity. As the use of any AI technology is very organization specific, CPA firms need to obtain a solid understanding of their needs and objectives and gain an understanding of how AI works before they can begin to identify what, if any, AI opportunities are the right fit for their firm.
Although generative AI solutions can provide benefits for CPA firms, from CAMICO’s perspective, there are critical risks associated with generative AI that should be vetted by firms and mitigation strategies implemented to minimize potential exposures. These risks include but are not limited to concerns with accuracy and quality control, confidentiality, privacy, security and ethical issues.
For example, consider the following areas of potential risk exposure:
ACCURACY AND QUALITY CONTROL
AI-generated content cannot be relied upon as-is, as the information may be outdated, misleading or –in some cases – fabricated. All AI-generated content must be reviewed for accuracy before placing any reliance on it and should be given the same consideration as you would to the work of an intern or first-year staff person. Firms need to have proper oversight procedures in place to ensure that personnel with the appropriate competencies will review and interpret the data and content provided, make informed decisions and provide expert guidance in applying the AI-generated information to specific client and/or firm fact patterns.
CONFIDENTIALITY
In accordance with applicable professional and legal standards of care, sensitive client information, as well as firm- and personnel-related information, must be treated with the utmost confidentiality and should not be disclosed without express written permission. Since it is critical that the operations, activities and business affairs of a firm and their clients are kept confidential when using generative AI, it is imperative firms ensure employees understand the terms of the firm’s Confidentiality Policy and are informed that any use of AI technology in violation of the firm’s Confidentiality Policy is strictly prohibited.
DATA PRIVACY AND SECURITY
With data privacy protection initiatives spreading across the U.S., it is important for CPA firms to ensure the privacy and security of the sensitive personal information they collect, use or store. To help mitigate data privacy and security risks, it is vital that firms prioritize data encryption, implement access controls and adhere to data protection regulations. In addition, transparency is a key element in overcoming generative AI privacy challenges, so it may be necessary to consult with qualified legal counsel and update, if needed, the firm’s Privacy Policy to ensure transparency about the categories of sensitive information collected, the sources of that information, the purpose for the collection, and how the firm stores and shares such information.
ETHICAL CONSIDERATIONS
As generative AI has raised concerns about its potential for misinformation, deception and manipulation of public opinion, firms need to consider the implications related to its actual
or perceived unethical use. For example, firms should establish written guidelines to clarify that these technologies must not be used to create content that is inappropriate, discriminatory, or otherwise harmful to others or the firm.
Risk management tips:
• Get educated, as AI is here to stay. Learn more about the generative AI tools that are available and take appropriate due diligence steps to assess which, if any, of these tools may be appropriate to deliver the most benefit to your firm.
• Develop an implementation strategy. Successful integration of generative AI, or any new technology, requires a well-crafted implementation plan which should include, among other things, appropriate education and training to ensure responsible use.
• Document! Document your firm’s authorized usage (e.g open use, limited use or prohibited use) of generative AI and communicate these terms and conditions to your
staff. CAMICO offers a sample Generative Artificial Intelligence Chatbot Usage Policy template for this purpose on CAMICO’s Members-Only Site.
CAMICO policyholders with questions regarding this communication or other risk management questions should contact the Loss Prevention Department at lp@camico.com or call our advice hotline at (800) 652-1772 and ask to speak with a loss prevention specialist. l
Suzanne M. Holl, CPA (licensed in California), is Executive Vice President of Loss Prevention Services at CAMICO. With more than 30 years of experience in accounting, she draws on her Big Four public accounting and private industry background to provide CAMICO’s policyholders with information on a wide variety of loss prevention and accounting issues.
CAMICO is the ASCPA’s preferred provider of professional liability insurance. Interested in a no-obligation insurance quote, or review of your current professional liability insurance? Contact Harris Hauptman, CAMICO Senior Account Executive, at (800) 652-1772 Ext. 6727 or hhauptman@camico.com.
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Tax Planning Opportunities in 2024
By Dave McGuire
For many businesses and individuals, 2024 has been a challenging year. Regardless of their financial situation, higher interest rates, inflation and uncertainties about changes in tax laws can create stress for business owners and their CPAs. Exploring the tax code for opportunities to save costs is one way to alleviate some of these economic pressures
Taxpayers can take advantage of timing opportunities on their tax returns to alleviate economic pressures caused by increased interest rates and inflation. Timing opportunities involve adjusting when deductions are used to plan for changes. One of the main strategies for this is maximizing depreciation. Depreciation allows businesses to write off the cost of capital assets over time, such as buildings or equipment. Generally, the IRS allows buildings to be depreciated over 39 years and equipment over five or seven years. However, when purchasing a building, there are often assets within the building that function more like equipment than part of the building itself. For instance, the carpet in a building can be depreciated over the equipment lifespan, while the building continues to be depreciated over 39 years.
Businesses often conduct a cost segregation study to maximize depreciation deductions. This
type of study identifies assets that can be reclassified from 39-year assets to shorter lives, creating a timing difference that accelerates deductions for the business in the current year. This helps offset taxable income and reduces the business’s tax liability. The resulting increased cash flow can be used to reinvest in the business, pay down debts or invest for future growth. This strategy is particularly valuable during periods of rising inflation and interest rates, as timing differences can be used to hedge against these threats.
In 2024, businesses have the opportunity to improve their cash flow and reinvest in their operations by exploring avenues beyond just depreciation. It’s crucial for businesses to stay updated on new legislative opportunities created by Congress and the President. In 2022, the President approved the Inflation Reduction Act of 2022 (IRA), which offers various tax credits and deductions for businesses of
all kinds to enhance their facilities with energy-efficient systems. These credits and deductions encompass a wide range of benefits, focusing specifically on Section 48 credits and 179D deductions.
Section 48 is a longstanding area of tax law that saw significant expansion under the IRA. While most people associate Section 48 with tax credits for solar panels on businesses or specific wind turbines, it also covers geothermal systems, COGEN plants and other areas. These credits were increased to 30% for most systems under the IRA, with additional credits available for being in an “Energy Community” or utilizing domestic content.
Meeting certain requirements allows businesses to receive full credit, which can result in 30%, 40% or even 50% credits for the installation of solar panels on their facilities. Coupled with the fact that the remaining basis is eligible for bonus depreciation, this means that businesses can potentially have up to
70% of the cost of solar installations covered by federal government tax incentives. For businesses seeking ways to alleviate economic pressures, this presents a significant benefit that is hard to ignore.
The Inflation Reduction Act not only made changes to solar credits but also increased the amount of deductions eligible for businesses to make energy efficiency upgrades. Nearly 20 years ago, the Energy Policy Act of 2005 established a section of tax law known as 179D, or the Energy Efficient Building Deduction. This deduction allowed businesses to deduct up to $1.80 per square foot for the installation of energy efficient systems. Under the IRA, this $1.80 per square foot was increased to $5 per square foot, indexed for inflation. To qualify for the full $5 per square foot, prevailing wage requirements must be met for the installation of the systems. This increased deduction can significantly reduce the cost of installing energy systems in a property. For example, a 100,000-square-foot facility undergoing a renovation including new roofing, HVAC and other systems can deduct up to $500,000 in the first year if they meet the prevailing wage requirements, offsetting the cost of the upgrade.
It’s important to remember that tax planning is crucial in the current environment. Even for successful businesses in 2024, maximizing cash flow can help offset the uncertainty caused by increased interest rates, inflation and other external factors. l
Partnering with leading CPA firms, McGuire Sponsel is a national specialty tax consulting firm that offers Fixed Assets, R&D Tax Credits, Global Business, and Location Advisory services. McGuire Sponsel strengthens CPA/client relationships by offering a trusted partnership for technical expertise across services that often fall outside traditional firm tax practices. Learn more at www. mcguiresponsel.com and attend their session at the ASCPA’s Member Appreciation Free CPE Days on Nov. 13 at 11 a.m. Register at www.ascpa.com/ freecpedays.
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