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A WORD from our CEO
Change management starts with changing ourselves
As the saying goes, only two things in life are certain: death and taxes. Many accounting professionals are well-acquainted with the taxes portion of this saying. But I would add change to the list of things in life that are guaranteed.
In the business world, change is constant. New technologies, new regulations and new ways of working can be overwhelming, even for those who embrace the latest developments. Yet, the absence of change is more unsettling, as it signifies a lack of momentum, innovation and growth.
Fear is the enemy of change. It’s the nagging voice of doubt that stifles progress, prevents evolution and extinguishes the spark of ingenuity. Fear keeps us entrenched in old ways of operating and blinds us to new opportunities.
To embrace change and the transformative possibilities it offers, we must be brutally honest with ourselves about what drives our thinking. Do we view new ideas, new approaches and new tools with apprehension or enthusiasm? With curiosity or concern?
The phrase, “Be the change you want to see in the world,” is sound advice for accounting professionals who want to remain relevant in a rapidly evolving business environment. Regardless of the role you play in your organization, you have the chance to be a change agent or a servant of circumstance.
The road to transformative change is paved with uncertainty and hesitation. Those who navigate it effectively are the ones who have developed a tolerance for the unknown and a comfort level with ambiguity. They expand their thinking, moving from a mindset that seeks “the” path forward to one that imagines a broad spectrum of alternatives. Successful change agents are also in touch with their fears about the unknown and actively work to push past such limitations to champion new approaches.
One of the most significant drivers of change in the accounting profession is technology. Automation, artificial intelligence (AI), blockchain and cloud computing are revolutionizing how accounting tasks are performed. While some worry that these technologies will eliminate their jobs, accounting professionals who find ways to harness such tools to deliver strategic insights will provide greater value than those who resist learning how to leverage them.
Technology isn’t the only arena that requires an open mind. Developing an openness to the opportunities that exist in changing regulations, standards, trends and concepts enables accounting professionals to capitalize on areas where others only see pitfalls. Those with a change mindset see how to leverage the value of diversity, equity, and inclusion (DEI), environmental, social, and governance (ESG) principles, remote work and other
emerging disciplines for the benefit of their organization. As a result, they become more valuable to their clients and employers.
To truly serve as trusted business advisers, accounting professionals need to develop a change mindset and foster it in others, helping them to envision multiple paths forward. This involves cultivating a culture that embraces continuous learning and adaptability, and viewing change not as a threat, but as an opportunity to grow and innovate.
Embracing change is not just about adapting to the present; it is about preparing for the future and positioning oneself for sustained success in the accounting profession. What change will you lead?
Self-Assessment Exam
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Advocating for tax reform and childcare solutions in Ohio legislature
By State Rep. Bill Roemer, CPA (R-Richfield)
Currently, I am the only CPA serving in the Ohio House of Representatives. As Chairman of the House Ways and Means Committee, I’m proud to bring my years of experience in business to the Statehouse. In the committee, we have reviewed 40 pieces of legislation, passing 13 bills affecting tax policy at the state and local levels. We have held over 35 meetings covering more than 70 hours of testimony. It is an important and interesting committee that considers everything from the future of property taxes to tax credits for employerprovided childcare.
Greg Saul, OSCPA’s Vice President of Government Relations, has come in on behalf of the OSCPA to testify on numerous bills in the committee, providing valuable insight. I encourage fellow members of the Ohio Society of CPAs to appear before the committee and share their expertise. It is important to hear from experts in a
variety of fields to craft good legislation that will help everyday Ohioans.
Building on my experience leading the Ways and Means Committee, I am proud to share my perspective in the Joint Committee on Property Tax Review and Reform, where I serve as co-chairman. This bipartisan committee consists of five members from the House and Senate. My colleagues and I have worked diligently to protect already heavily taxed Ohioans, and we need to work together to find effective and accurate long-term solutions to simplify Ohio’s complex and burdensome property tax system.
We have heard from over 60 witnesses representing state and local governments, business owners, national and statewide research organizations, subject matter experts and community advocacy groups who want to see effective solutions in their communities. The committee will issue a series of recommendations in the next few months.
Lowering property taxes for families, veterans and older Ohioans is not something I take lightly. I appreciate the opportunity I’ve been given to help provide much-needed relief to Ohioans.
It's no secret that, much like homeowners, employers are also facing a crisis attracting and retaining their workforce. To continue to grow Ohio’s economy, we need new publicprivate partnerships to help our businesses, community partners and childcare providers create increased access to childcare. Across Ohio, families cannot afford childcare and are leaving the workforce altogether. Forty-eight percent of small business owners say lack of available or affordable childcare affected their ability to recruit and retain employees.
Representative Andrea White and I introduced House Bill 484 to help our communities partner together to solve our childcare crisis. HB 484 creates a new state grant fund, training, an employer toolkit and a Design Learning Lab to help employers partner with childcare providers, non-profits, government and community organizations to expand childcare options to meet workforce needs. A start-up innovation fund of $10 million would be allocated, with grants capped at up to $750,000. Partnerships can use the funds to assist in retrofitting or equipping on-site
or near-site facilities for childcare, building new facilities and more so they can pay higher wages to attract workers into the field.
As a direct result of childcare issues, the United States loses $122 billion in earnings, productivity and revenue annually. Ohio’s economy alone is suffering an annual loss of $3.9 billion.
If the imbalance of wages to childcare costs remains, our workforce will continue to see shortages. We don’t want to negate the work Ohio has done to become a businessfriendly state with numerous job opportunities for families to thrive. We must continue to work with parents and businesses to establish affordable childcare facilities.
I am truly honored to serve in the Ohio House. I encourage you to visit the Ohio Channel (https://www.ohiochannel. org/) to stay updated with legislation and issues being discussed at the Statehouse. I also urge you to take advantage of OSCPA’s news resources for all the hot issues of concern to our profession.
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Unlocking team potential: Wordle’s unexpected leadership lessons
By Monette Anderson
Leaders should always look for opportunities to cultivate a culture of resilience within their teams.
Charles Duhigg, in "The Power of Habit," highlights how simple actions like making your bed can link to better productivity and overall health.
In a team setting, particularly during high stakes or stressful times, how can simple practices be employed? Maybe a team huddle where everyone shares goals or encourages the team to complete one task before they open their email and report what it was on a Teams or Slack channel? These all seemed favorable options. Then it hit me: my team had already established a daily ritual like this with the game Wordle. During the remote-work era, prompted by COVID-19, we began sharing our Wordle scores in a group chat, celebrating wins and offering support on challenging days (Queue? Better luck next time). While this seems trivial, I realize its impact has been significant:
1. Cultivating a sense of team cohesion: Just as making your bed allows you to start the day with a sense of personal accomplishment and order, a team ritual like a morning Wordle game fosters a sense of belonging and engagement. It’s a morning ritual where everyone comes together outside a work-related meeting or discussion, to have a shared experience that’s both enjoyable and mentally stimulating.
2. Setting the tone: These few minutes of camaraderie encourage a mindset of humor, competition and lightheartedness that becomes essential during stressful periods. Rituals like these can become a cornerstone for the day and team members feel connected, empowered and energized to tackle the day’s challenges.
3. Reinforcing resilience: Routine and discipline are key components of resilience. Grounding rituals like a morning or evening routine provide a sense of stability and normalcy that we can lean into when things become hectic or stressful. Amidst our daily chaos and to-do lists, there’s a constant that the team can rely on.
4. Supporting an optimistic outlook and competence mindset: Tackling Wordle early in the day aligns with the idea of activation behaviors that promote goal achievement, as mentioned in "Resilience: The Science of Mastering Life’s Greatest Challenges," a book by Steven Southwick and Dennis Charney. It builds a sense of early accomplishment and a positive mindset, fueling momentum for larger tasks.
As a leader, I think the benefit to maintaining such a simple practice underscores the importance of mental well-being. It reminds me that, while work and accomplishing tasks is important, so is the team’s emotional and psychological state. It’s a balance that’s crucial to our company culture and values.
As we gear up for the demanding times ahead, I encourage leaders to consider small, daily practices like the Wordle challenge to bolster team resilience.
Monette Anderson, CAE, is Vice President of Membership and Education for the Washington Society of CPAs. You can contact her at manderson@wscpa.org
Reprinted with permission from the Washington Society of CPAs.
DIVERSITY, equity & inclusion
Mentorship and early education critical to increasing Black accounting leaders
By Jessica Salerno-Shumaker, OSCPA senior content manager
Despite not knowing any CPAs or accountants growing up, Ron Reed, CPA, felt passionate about succeeding in the accounting profession.
Reed, now a tax managing director at BDO, chose accounting because he enjoyed math, and said he was surprised when he found the subject was actually focused more on formulas. He became actively involved with the profession at Mount Union College, from tutoring students to serving as the treasurer and eventually president of the accounting club. He also became a Becker CPA representative on campus.
He credits his immersion within accounting to a professor who encouraged him to get involved, and said he found other mentors in the partners and managers who took an active interest in his career in public accounting and gave him an opportunity to interact with clients.
“They listened to what I would say, and in turn that provided a lot of confidence in my career and a lot of confidence within myself,” he said. “I had exposure to some complex matters that my counterparts probably weren't exposed to and it really helped guide my career.
Now, being in a leadership position as a Black CPA is meaningful to him, Reed said, because it gives him the opportunity to be a role model for other diverse colleagues and students.
“It's not always something that's visible within our profession,” Reed said. “But I take great pride in being that example, that somebody can make it to a director level or a partner level, if they choose to do so. Being in leadership also allows me to be a part of things like interviews and recruiting, which is key for diversity.”
Outreach and education are critical to increasing the number of Black CPAs in the profession, Reed said, and, while efforts have improved in recent years, there is always more that could be done. He pointed out the extra hours required to earn the CPA as a barrier he hears regularly from students.
“It’s also important there are mentors and leaders available that look like them and are representative of the profession,” he said. “That's going to help with recruitment and also with retention, because most firms that I'm hearing have had more success with recruiting than retention.”
By Laura Hay, CPA, CAE, OSCPA executive vice president
Generally Accepted Accounting Principles (GAAP)
are coming under increased scrutiny regarding the cost versus decision-usefulness of recent standards, especially for less sophisticated private businesses.
GAAP is important to financial reporting quality, providing information that is consistent and comparable, receiving public exposure and input in its development, and built by an independent standards-setting body. However, despite the introduction of some private company differences within GAAP and alternative accounting frameworks for small- and medium-sized entities, the election of GAAP departures continues to increase in use and acceptance. Is this often the best choice?
Private company differences within GAAP
In May, the Financial Accounting Foundation (FAF) closed its public comment period on a periodic review of the effectiveness of the Private Company Council (PCC). The PCC advises the Financial Accounting Standards Board (FASB) on possible differences within GAAP to meet the needs of users of private company financial statements.
In its comment letter on the draft, OSCPA noted that while early alternatives within GAAP adopted as a result of PCC initiatives were significant and important, including goodwill, intangibles and consolidations, the PCC has more recently focused on more narrow topics such as stock compensation, and the FASB has not been as open to addressing greater private company pain points such as leases, revenue recognition and credit losses.
OSCPA advocated for greater representation on the PCC from smaller and less sophisticated private entities and CPA firms who audit them, greater information collection from smaller private entities and their users earlier in the research process, and consideration of the public interest impact of private companies leaving GAAP.
GAAP departures
Many OSCPA members have commented on an increase in clients requesting GAAP departures for recent standards such as leases and revenue recognition, and increased acceptance from lenders of reports disclosing departures from GAAP. The market is very clearly saying that the information return from these standards does not exceed their implementation cost for certain entities with less-sophisticated operations.
OSCPA’s Accounting and Auditing Committee shared several considerations for CPA firm and their clients electing GAAP departures:
• Does management truly understand the implications of having the GAAP departure in the report, and what it might mean to future users of the financial statements?
• Is GAAP required by any loan covenants, contracts or outside regulators?
• Unless it can be readily determined that the departure is immaterial, remember that management and the external CPA would need to do the work to quantify the materiality of the departure. Or, if management does not sufficiently cooperate or is unable to provide the information to perform that calculation, that limitation would need to be disclosed in the report (AU-C 705.18).
• There can be some situations where the departure would be so significant to the financial statements, or where the election is made with the intention to mislead, that the CPA could not be associated with the financial statements and would be obligated to withdraw.
• Depending on the needs of any third-party users, there may be other alternatives, such as tax-basis financial statements.
Other comprehensive bases of accounting
There are a number of widely-used alternative frameworks to U.S. GAAP collectively referred to as special purpose frameworks, or other comprehensive bases of accounting (OCBOA). Examples include:
• Cash basis
• Tax basis
• Regulatory basis
• Contractual basis
• Other basis that uses a definite set of logical, reasonable criteria applied to all material items appearing in financial statements
Unlike GAAP, little authoritative guidance is available for accounting under these frameworks. To help promote consistency and answer frequent questions about best-
practices, in 2018, the AICPA Accounting and Review Services Committee issued a non-authoritative practice aid, Accounting and Financial Reporting Guidelines for Cash- and Tax-Basis Financial Statements .
Authoritative guidance does exist for reporting on OCBOA financial statements. A resource from the AICPA Center for Plain English Accounting, Navigating Disclosure Requirements for OCBOA Financial Statements , addresses considerations in professional standards for preparing and reporting on OCBOA financial statements. Some considerations are:
• Including a description of the special purpose framework, including a summary of significant accounting policies and how the framework differs from U.S. GAAP
• Financial statements being properly titled
• Disclosures necessary for fair presentation
• Options for substituting qualitative information for the quantitative information required by U.S. GAAP that communicates the substance of those requirements
The report notes that the assumption that OCBOA would reduce disclosure requirements may be a misconception; while there are some disclosures that are not required, there are also needs for some additional disclosures. While disclosures may be omitted in a compilation, the CPA needs to determine if the omissions would be misleading to the users and the report modified appropriately.
Advantages of OCBOA statements include greater understandability to some users and cost savings for many clients. Disadvantages include ensuring the adequacy of disclosures and following professional standards for reporting on these engagements.
Financial Reporting Framework for Smalland Medium-Sized Entities
In 2013, the AICPA issued a new option for non-GAAP financial reporting with the Financial Reporting Framework for Small- and Medium-Sized Entities (FRF for SMEs). FRF for SMEs was designed to offer a more cost-effective framework that includes comprehensive accounting principles developed with public exposure. FRF for SMEs is also a special purpose framework, but with more definitive requirements.
The framework uses accrual accounting, but retains accounting treatments for items such as revenue recognition and leases traditionally used in the U.S. before the adoption of recent standards. It is separate
and distinct from the International Accounting Standards Board’s IFRS for SMEs, which is another alternative for SMEs not needing GAAP financial statements.
This just got confusing.
AICPA has provided a Decision Tool for Adopting an Accounting Framework to assist owners and leaders of SMEs in selecting between U.S. GAAP and various special-purpose frameworks. Considerations include:
• The nature of the entity and the purpose of the financial statements
• Whether the entity has any reporting requirements for GAAP-based financial statements
• The entity’s plans for future expansion and financing
• Whether the entity operates in an industry that requires highly-specialized accounting guidance not available in non-GAAP frameworks
• The ability of the framework to achieve fair presentation
• The users’ ability to understand the framework and its relevance for their needs
Options are good, but increase the demands on an already-strained profession in keeping staff sufficiently trained and informed of the requirements of existing alternatives. While special-purpose frameworks may offer improved cost-effectiveness and decision-usefulness for certain stakeholders, it is crucial to balance these alternatives with financial reporting quality for the desired purpose, and to balance costs with benefit in regulation and standard-setting.
Laura Hay, CPA, CAE, is the executive vice president of The Ohio Society of CPAs and the staff liaison to the Accounting, Auditing, Professional Ethics Committee and Peer Review Committee. She can be reached at Lhay@ohiocpa.com or 614.321.2241
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CHATGPT AND THE ACCOUNTING PROFESSION:
A transformation in the early stages
By Christina M. Olear, CPA, and John Peatross, CPA
While often considered a traditional profession, accounting has always evolved and embraced innovative technologies to remain competitive and enhance efficiency.
One such advancement that has garnered significant attention in the past year is the emergence of generative artificial intelligence (AI), with ChatGPT leading the way. The technology has the potential to transform many industries, including accounting.
ChatGPT vs. Generative AI: Is there a difference?
AI tools have been around for decades, so why has there been a lot of hype around ChatGPT (a form of AI) this year? We will first review AI and consider specific AI examples before we dive into ChatGPT.
As described on Investopedia.com, artificial intelligence refers to machines that are programmed to simulate human intelligence and actions. Often, the term is applied to machines that exhibit learning and problem-solving traits.1 AI examples include the virtual assistants Alexa and Siri, chatbots and self-driving cars.
Essentially, AI uses logic and algorithms to identify patterns and efficiently solve problems. Its integration into mainstream consumer products and services (Alexa, Siri), along with advances in machine learning and algorithms, have led to explosive growth in this technology.
Generative AI is a subset of AI that focuses on generating content based on patterns it picks up from existing data. It involves large datasets and training a model through the process of machine learning to generate content that is both contextually relevant and coherent.
ChatGPT is one of many generative AI tools. What makes it different is its ability to generate human-like text responses in a conversational manner. While many other AI applications have the ability to process text inputs, ChatGPT’s design allows it to do so in a way that is accessible to a wider population while maintaining its efficacy. Currently, there are two versions of ChatGPT available: ChatGPT-3.5 and ChatGPT Plus. Access to ChatGPT-3.5 is free when creating an account with OpenAI, the developer of ChatGPT. You will need to pay a monthly subscription for ChatGPT Plus, which includes ChatGPT-4.
The latter version opens the door to many more uses and produces better results.
These tools facilitate efficiency and automation, and the possible uses are endless. Some general examples include the following:
• ChatGPT can generate letters and emails with only a sentence or two of input.
• ChatGPT can summarize a 20-page report into one page of main points in seconds.
• ChatGPT can dramatically reduce the time needed to produce Power Point slides. The human-like, textbased platform mentioned above offers users an interaction that feels as if you are communicating with another person. When we ask ChatGPT to perform a task, this is known as “prompting.” As society gets better at asking questions (prompt engineering), the technology will produce better results.
There are numerous generative AI tools available to explore. Google’s Bard and Microsoft’s Bing function similarly to ChatGPT, and there are various other generative AIs that focus on image and audio generation, among other specializations.2
Why is everyone talking about ChatGPT?
ChatGPT sure seems to have everyone excited (in both positive and negative ways). This is because of the huge value proposition ChatGPT has going for itself. The program in its latest version significantly increased its accuracy, performance and capabilities while still maintaining accessibility. The table highlights five ChatGPT features and compares the performance of GPT-3.5 versus GPT-4.
Identifying risks
The potential benefits that ChatGPT can bring to the accounting profession boggle the mind, so it is critical to understand the relevant risks of this controversial technology. Here are some of the more current and pragmatic risks accountants will encounter with the current iterations of ChatGPT and similar programs.
Misinformation/Inaccuracy/Quality Control – ChatGPT can create fabulously flawed content because it has a remarkable ability to produce information that is incorrect but sounds accurate. The content product is based on the data it was trained on; and, as a machine, it lacks true understanding and context. It’s also not uncommon for the software to misunderstand prompts created by its users.
Because most users opt for the free version of the software, some of these drawbacks should be expected. However, a lack of quality control around content inaccuracies has gotten many users into trouble.
Bias and Inappropriate Content – ChatGPT is trained on enormous sets of data so that it can perform its conversational functions, but there are limitations to this method. For one, the data used for training only goes through September 2021. In addition to the historical time limitation, data has been pulled from a wide range of internet sources, which could lead to unintended biases in the software’s responses to prompts. If a user asks ChatGPT for information that is based on biased training data, they could end up with a biased, harmful, or inappropriate response.
Privacy – To further develop the software, ChatGPT collects data about the prompts and conversations that users have within the software. As is the case for every social media platform, it is important to consider the content we want to disclose. Since working with ChatGPT feels like you are
texting a friend, you could easily be lulled into a false sense of security or safety. Inadvertent inclusion of private or sensitive information about yourself, others or employers is a real risk as prompts are created and your focus is on the tasks ChatGPT is being used to complete.
Some organizations have been communicating to their employees to not put sensitive or proprietary information into ChatGPT out of fear that they will inadvertently leak information. Many others have remained silent on the issue. Ideally, more organizations would come out with guidelines for their employees on how to use the software in a professional environment to enlist the efficiencies of the tool without adding unnecessary levels of exposure.
Plagiarism – If writing reports that you purport to be your own work product, there is a chance that plagiarism or copyright issues could rear their ugly heads. Because generative AI is trained on massive amounts of accumulated data, there is a chance that the resulting text could be generated exactly the same as the input or too closely paraphrased that a notation would be required. To use another’s thoughts, observations or conclusions without proper acknowledgment is plagiarism. In addition, data used to build the generative AI often comes from sources that are copyrighted and used without permission. If this material surfaces in a recognizable form it could be a potential copyright violation.3
Common use cases for accountants
Accountants are finding numerous practical and innovative use cases for integrating ChatGPT into their daily workflows. AI-driven conversational tools are becoming valuable at streamlining processes, enhancing efficiency, and delivering more comprehensive service packages. For all accountants, ChatGPT can be a useful tool for creating content such as articles, reports, emails, and internal process documents.
Impact on accounting professionals
Much like Excel has been, ChatGPT will be a tool professionals use as they perform their work, but it has the power to revolutionize the way accountants perform certain tasks. Historically, new tools allow skilled accountants to spend less time on simple, yet time-consuming, tasks and more time on higher-level work. Is the current version of ChatGPT going to be as revolutionary for accountants as Excel? That is to be determined. We can certainly say, however, the technology is going to be transformative and has the potential to support accountants in areas where Excel cannot. Below are some of the high-level impacts
that we believe ChatGPT will have on accounting professionals.
Skill Sets Will Adapt to the New Technology – A tool is only as good as the person using it. With the massive potential that ChatGPT brings to the table, CPAs need to update their skills to leverage the technology. In fact, a few surveys indicate a majority of business leaders are looking to hire candidates with some ChatGPT skills.4 One such skill is prompt engineering, which is the practice of carefully designing prompts to guide AI models. Better prompts equate to better results. Skilled users can create prompts that provide better content in less time. One day, entry-level employees may regard prompt-engineering to be just as essential as proficiency in Microsoft Excel. On top of the specific skills to use the software, continuous tech learning will be essential. Additionally, improvement in our emotional intelligence skills will be necessary as we become more involved in cross-department collaboration since we will have more higherlevel responsibilities and AI takes on more of the task work. An increase in technology skills, along with growth in emotional intelligence, will enable effective collaboration with departments such as IT, operations, risk management, legal, etc.
The tools will evolve with AI – One remarkable thing about ChatGPT is its adaptability to new information and situations. In recent years, accountants have been using a variety of tools to help read documents and process information to make their lives easier. ChatGPT can identify key information and summarize documents in a matter of minutes. In addition to improving on existing tools, ChatGPT can act as a virtual collaborator, offering real-time assistance and guidance. Accountants will rely on AI systems to automate repetitive tasks, flag potential errors and provide instant access to relevant information.
Job responsibilities will change – With the increased capabilities of AI-powered tools and the efficiency they bring, the role of accounting professionals will change. Time that was previously spent crunching numbers or reading through extensive contracts will be used to perform higher-level tasks, such as strategic planning and company innovation. This shift in responsibility could have a cascading effect on all levels of accounting, where even entry-level personnel may find themselves doing today’s manager-level tasks. While there may be some roles where AI tools act as more of a replacement, most accountants will adopt ChatGPT as
a supplement to their current role and see their day-to-day responsibilities change as a result.
In closing, this rapidly changing technology has the potential to be transformative for businesses. While some embrace it with excitement, others fear it will have a negative impact on the future of our society. One thing is for sure, we will continue to hear about this technology whether we like it or not.
1 Jake Frankenfield, “Artificial Intelligence: What It Is and How It Is Used,” Investo- pedia.com (April 24, 2023 update).
2 www.cpa.com/Gen-AI
3 Wes Cowley, “Why I Dont Use LLMs in My Work,” Words by Wes (May 5, 2023).
4 Aaron Mok,“ChatGPT Experience May Be Able to Get
You That Job - More than 90% of Potential Employers Are Looking for Workers Who Use the Chatbot,” Insider (April 27, 2023).
Christina M. Olear, CPA, is an accounting professor with Pennsylania State University Brandywine in Media and is a member of the Pennsylvania CPA Journal Editorial Board. She can be reached at cmo16@psu.edu
John Peatross, CPA, is a financial advisory services manager at Siegfried Advisory and an adjunct instructor in the department of economics at the University of Maryland. He can be reached at jpeatross@siegfriedgroup.com
Reprinted with permission from the Pennsylvania CPA Journal, a publication of the Pennsylvania Institute of Certified Public Accountants
THREE THINGS
1. Generative AI is a subset of AI that focuses on generating content based on patterns it picks up from existing data.
2. With the massive potential that ChatGPT brings to the table, CPAs need to update their skills to leverage the technology.
3. With the increased capabilities of AI-powered tools and the efficiency they bring, the role of accounting professionals will change.
TALENT management & human resources
The key to the profession’s talent retention is modernizing the early career experience
OSCPA staff report
To retain talent, the accounting profession must find a way to balance the equation.
“Leaders are looking at how to meet the deadlines and deliver upon their commitment to a meaningful culture and work experience,” said Tiffany Crosby, CPA, chief officer of learning. “There isn’t any disagreement on the importance of doing all of those things. There's just an overwhelming sense of paralysis from the enormity of the challenge.”
Though hard, figuring out how to provide a positive work environment that delivers upon employees’ expectation for work-life integration while meeting regulatory deadlines, satisfying client needs, responding to shifts in the business and technological environment and growing the business is essential to addressing accounting’s talent shortage.
That's why OSCPA formed the Ohio Accounting Talent Coalition (OATC)—an industry-sector partnership designed to manage Ohio’s accounting workforce strategy. Collaboration, messaging and curriculum, the first three pillars of the Ohio Talent Plan created by the OATC, seek to make the profession more attractive to recruit current students and secure future talent. The fourth pillar, experience, speaks to the retention aspect of the plan. Numerous studies of accounting professionals’ career choices have proven that the first five years professionals spend in accounting are vital determinants in career progression and must be improved to stop the drain of talent. Crosby noted that “if we don't get that time right, there will continue to be a significant gap and talent drain at the more experienced level.”
Crosby said that she is regularly asked by employers about where to find people with 5-7 years of experience. Finding the experienced talent desired by companies becomes increasingly difficult the more professionals leave in the early years. As demographics continue to shift and the population of high school and college students decline, companies will have to become more intentional about keeping the people they do have, Crosby said, because they don’t have a choice. Years ago, when there were enough people coming in to replace those that left public for industry or for nonaccounting related careers, attrition assumptions were built into forecasts and considered a cost of doing business. But the talent equation has changed. Not only are firms having a hard time finding staff but industry has also begun recruiting candidates directly from college campuses, thus expanding
the competition for a more limited pool and increasing the time required to find replacements. In the midst of this shrunken and more competitive talent pool, companies have to be more deliberate about the experiences they create.
Improving the experience
As Crosby mentioned, changing the experience of what it’s like to work in accounting is an enormous undertaking, and won’t happen overnight. Instead, there are various actionable initiatives that support the experience pillar and drive meaningful results. One of those initiatives is counteracting work compression, a difficulty many organizations face when there is too much work and not enough people, leading to burnout.
Another is helping employers redefine career progression, encourage succession planning and enhanced career development so more professionals feel invested in their future in accounting. Early career professionals need to see what is possible and they need to understand how technology trends might impact their career trajectory.
Instead of opting out of accounting for fear of obsolescence, they need to hear the positive message about opportunities technology brings, including better work-life integration. Companies must also recognize that “with technology adoption we've now created a need to upskill and reskill, and we must include adequate budget to train staff and grow their skills” Crosby said.
Collaboration among firms and industry
The pillars of the Ohio Accounting Talent Plan are all linked together. When more individuals stay in the profession, the messaging pillar is positively impacted. There are more individuals who are advocates for the profession and can speak to others about the opportunities and the reasons they stayed, creating more attraction and interest. “It becomes a circular system where each pillar adds improvement to the others,” Crosby said.
The OATC’s job is not to “fix” each company’s individual culture to ensure that their retention improves. Instead, what it can do is collaborate with companies on leading practices and bring in shared models that can be leveraged across different businesses to improve retention. “Each company is trying to figure out something all on their own, which takes
up a lot of resources,” Crosby said. “A coalition is a more efficient and sustainable model.”
It's not enough for only a few companies to make these changes. It needs to be embraced and supported across accounting to make an impact. That’s where the collaboration piece of the work of the OATC comes in. The OATC will have subcommittees focusing on public and industry to bring solutions to the table.
“We can have a coordinated approach, which saves time, and also benefits other organizations,” she said. “And this is where this collaborative effort spearheaded by OSCPA saves time, saves resources and accelerates change.”
For more information on the coalition and how to join, visit www.ohiocpa.com/wd.
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ESSENTIAL skills & professional standards
4 steps to having productive accountability conversations
By Rich McLaughlin, M.A., McLaughlin Consulting Services
So many of the leadership teams I work with struggle with holding people accountable.
It’s so hard for some that they would rather avoid having the conversation and instead come up with a workaround. The problem is that those leaders then start to lose credibility with the rest of the organization. One reason these conversations are so difficult is because both people are emotionally primed entering into it. The deliverer of the message is worried about the direction it may go, and the receiver can usually tell bad news is coming and can feel their defensiveness start to rise.
Like many conversations, it’s how you say things more so than what you say. You should avoid going into a “parent/child” type of conversation where you shame the other person into the behavior you’re looking for by using phrases such as “I’m disappointed you…” (judging); “Why did you do it that way when I told you…” (accusing); or “What made you think that was a good idea…” (judging and shaming).
These types of phrases will often generate a “child” response such as, “Sorry boss, I won’t do it again.” (chagrined with eyes and head down). Worse, the other person can shut down and not even hear your full message. They experience an emotional hijacking “freeze” response
and are unable to hear anything further.
Getting these types of conversations started on the right foot often comes down to tone and removing judgement. Having delivered many workshops on hard conversations, I have come up with the following structure that involves four steps and a pause.
1. Make an appeal to “collaborate.” I’ll often say something like, “Help me with something…” or “I need your help with something…” or “Check my thinking on something because I want to make sure I’m not overreacting.”
2. State the where, when and what (behavior) you saw. For example, “Remember the meeting we had two weeks ago about you bringing Sara up to speed before the next requirements meeting? That meeting was yesterday, and she told me you haven’t reached out to her at all.”
3. Explain the impact of that behavior on you, the team and/or the organization. For example, “I thought when we chatted, I made it clear why we need to get Sara up to speed ASAP. This slows the whole project down, especially if you will be rolling off in a month.”
4. Ask if your telling of events is accurate. Ask, “Does that make sense?” or “Is that fair?” or “Can you understand why I wanted to talk about this?”
At this point, you need to pause and see if they are willing to own their part of this mix-up. If you start the conversation tactfully, you’re hoping they step through the door and say, “Yeah, I can see why you wanted to talk.” Or, they may push back and get defensive, and you may need to start over at step one. This is about as far as you want to go in this conversation before you start the “where do we go from here” part. If they are not willing to own their behavior and how it contributed to this moment, they will not be ready for any “action planning.”
After step four, sit back and read their emotional state. Sometimes, you may have to end it there and say, “It looks like you still need to process this. Let’s pick it up tomorrow and we’ll figure out how to resolve this.” Or maybe they are ready to move right into the “where do we go from here” conversation. Rather than give them your action plan, ask them for their thoughts: “So, what do you think you need to do to get this right?” This approach makes it clear who needs to own this going forward.
I find when I use this structure it helps me have productive, tough conversations and people appreciate and respect me more.
MEMBERS in motion
ARCHBOLD
Tony Giovarelli has been promoted to in-charge accountant at Shultz Huber & Associates, Inc.
Chelsea Waidelich, CPA , has been promoted to supervisor at Shultz Huber & Associates, Inc.
Reprinted with permission of the New Jersey Society of Certified Public Accountants.
Richard McLaughlin, M.A., is a principal at McLaughlin Consulting Services and can be reached at rich.mclaughlin@eosworldwide.com
THREE THINGS
1. With having conversations on accountability, it’s how you say things more so than what you say.
2. Have the conversation tactfully and assess the other person’s emotional state.
3. Ask for their thoughts before moving forward with an action plan.
BRYAN
Ashley Grimm has been promoted to in-charge accountant at Shultz Huber & Associates, Inc.
Tony Giovarelli
Ashley Grimm Chelsea Waidelich, CPA
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DISCIPLINARY actions
Leikin, James L. with JL Associates Inc., of Beachwood, OH
Under the automatic disciplinary provisions of the OSCPA bylaws, Mr. Leikin’s membership was terminated effective June 23, 2023, following revocation of his CPA certificate and firm registration by the Accountancy Board of Ohio for violating state board statues 4701.16 (A)(3), (A)(4), (A)(9), (A)(11) - Unlawful practice; failure to respond to Board communications; failure to comply with firm registration requirements; failure to comply with 4704.04.
Smith, Bradd S. of Sylvania, OH
Under the automatic disciplinary provisions of the OSCPA bylaws, Mr. Smith’s membership was terminated effective June 26, 2023, following revocation of his CPA certificate by the Accountancy Board of Ohio for violating state board statues 4701.16(A)(3),(A) (9)&(A)(11) - Unlawful practice; failure to obtain the proper license/credential; failure to comply with RC 4701.04.
Keith, Jeffrey T. of Frazeysburg, OH Under the automatic disciplinary provisions of the OSCPA bylaws, Mr. Keith’s OSCPA membership was terminated effective February 29, 2024. Mr. Keith was found guilty of Telecommunications Fraud, a felony of the second degree, in violation of ORC §2913.05(A); and Aggravated Theft, a felony of the third degree, in violation of ORC §2913.02(A)(1).
Weinel, Lee R. of Cincinnati, OH
As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA, Ohio Society of CPAs, and the Kentucky Society of CPAs, Mr. Weinel, with the firm of Soper, Soper & Weinel LLP entered into a settlement agreement under the Joint Ethics Enforcement Program, effective October 23, 2023.
Information came to the attention of the Ethics Charging Authority (ECA –AICPA Professional Ethics Executive Committee, the Ohio Society of CPAs Professional Ethics Committee, and the Kentucky Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Weinel’s performance of professional services on the audit of the financial statements of an employee benefit plan as of and for the year ended December 31, 2020.
The ECA reviewed the findings of the U.S. Department of Labor’s Employee Benefits Security Administration, Mr. Weinel’s responses to the ECA’s inquiries, and other relevant documents Mr. Weinel submitted to support his response, including certain work papers, financial statements, and relevant correspondence. Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA, Ohio Society of CPAs, and the Kentucky Society of CPAs codes of professional conduct as follows:
Violations
General Standards Rule .01a. Professional Competence (1.300.001)
The auditor undertook an engagement he could not complete in accordance with professional standards.
General Standards Rule .01b. Due Professional Care (1.300.001)
The auditor failed to exercise due professional care in his review of the financial statements as:
a. Amounts disclosed in Note 5 for 2019 do not agree to the statement of net assets available for benefits.
b. Plan expenses per Note 7 for 2019 do not agree to the statement of changes in net assets available for benefits.
c. Note 8 states the IRS letter is dated
06/18/15; however, Note 1(A) states the date is 10/12/10.
Compliance with Standards Rule (1.310.001)
1. The auditor failed to perform preliminary analytics. (AU-C §315)
2. The auditor failed to perform final analytics. (AU-C §520)
3. The auditor failed to adequately assess compliance with independence requirements. (AU-C §220)
4. The auditor failed to obtain an adequate understanding of internal controls. (AU-C §315)
5. The auditor failed to assess the SOC 1 reports for the third-party service provider. (AU-C §402)
6. The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the assessment of control risk below high. (AU-C §230 and §330)
7. The auditor failed to assess risk at the assertion level. (AU-C §315)
8. The auditor initially failed to prepare a written audit program that set forth the procedures necessary to accomplish the objectives of the audit in the area of administrative expenses. (AU-C §300)
9. The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the procedures performed for substantially all audit areas. (AU-C §230)
10. The auditor initially failed to document a complete listing of related parties and parties in interest. (AU-C §230)
11. The auditor failed to identify the date audit procedures were completed. (AU-C §230)
12. The auditor failed to document sampling methodology in all testing areas. (AU-C §230)
13. The auditor failed to document changes made to the audit file (when the changes were made, who made the changes, reason for the changes, and effect of the changes on the auditor’s conclusions) after the documentation completion date. (AU-C §230)
Accounting Principles Rule (1.320.001)
1. The financial statements failed to disclose the accounting policy for investment purchases and sales, interest income, dividend income and realized/unrealized gain/loss. (FASB ASC 235)
2. The financial statements failed to make all fair value disclosures required by FASB ASC 820.
Governmental Bodies, Commissions, or Other Regulatory Agencies (1.400.050)
1. Schedule A – Analysis of Investments is not in the format prescribed by ERISA and did not include interest-bearing cash. (29 CFR 2520.103-10)
2. Schedule B – Assets Held for Investment Purposes Both Acquired and Disposed of Within the Plan Year is not in the format prescribed by ERISA. (29 CFR 2520.103-10)
Agreement
In consideration of the ECA forgoing further investigation of Mr. Weinel’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Weinel agreed as follows:
a. To waive his rights to further investigation of this matter in
accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures.
b. To waive his rights to a hearing under AICPA bylaws section 7.4, the Ohio Society of CPAs bylaws Article V, and the Kentucky Society of CPAs bylaws Article XI.
c. To neither admit nor deny the above-specified charges.
d. To his admonishment by the AICPA, Ohio Society of CPAs and the Kentucky Society of CPAs from the effective date of this agreement.
e. To comply immediately with professional standards applicable to the professional services he performs.
f. To complete the following 19 hours of continuing professional education (CPE) courses within 6 months of the date he signs this letter and provide evidence of such completion (e.g., attendance sheets, course completion certificates).
Risk Assessment Today (3.5); Obtaining and Understanding of Internal Control (1.0); Documenting Internal Control (1.0); Take Control of Your Audit – Avoid Common Internal Control Missteps (2.0); You have a SOC 1 report – now what? (3.5); Accounting and Attest Update Part 1: Hot Topics for Preparing Current Period Financial Statements (2.0); Accounting and Attest Update Part 2: Hot Topics for Current Period Audits and Other Attest Services (2.0); and Course on workpaper documentation and review to be selected by the respondent and preapproved by the division (4.0)
g. To hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on all audits performed by him for one year from the date the reviewer has been approved by the ECA. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the date he signs this letter.
He agreed to permit the outside party to report quarterly to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); a description of the nature of the entity reviewed; the entity’s year end; and the date of the review.
The first report is due 120 days after the reviewer has been approved by the ECA, with subsequent reports due every 90 days thereafter. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agreed to inform the ECA of such. He agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change and undergo the required pre-issuance reviews.
h. To submit six months after completion of the pre-issuance reviews, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the six-month period following the date he completed the pre-issuance reviews.
The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of the auditor’s report, the financial statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available. A peer review undergone by his firm would not exempt him from this requirement.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits, reviews, or compilations with note disclosures until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, reviews, or compilations with note disclosures, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change, and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change, and the ECA will select a suitable work product for review.
After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA joint trial board for a hearing or take such other action as it deems appropriate.
i. To provide an attestation immediately, then every six months for a period of three years that he is no longer performing employee benefit plan audits. If he returns to performing such work, he agreed to the following:
i. To complete the following 18.5 hours of continuing professional education (CPE) courses prior to commencing such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates).
Audits of Employee Benefit Plans
Subject to ERISA (12.5); and Auditing Financial Statements of ERISA Plans (6.0).
ii. To hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on all employee benefit plan audits performed by him for one year from the date the reviewer has been approved by the ECA. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the date he accepts such an engagement.
He agreed to permit the outside party to report quarterly to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); a description of the nature of the entity reviewed; the entity’s year end; and the date of the review.
The first report is due 120 days after the reviewer has been approved by the ECA, with subsequent reports due every 90 days thereafter. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agreed to inform the ECA of such. He agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any employee benefit plan audits during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with employee benefit plan audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change and undergo the required pre-issuance reviews.
iii. To submit six months after completion of the pre-issuance reviews, a list of the employee benefit plan audits that he performed in the six-month period following the date he completed the pre-issuance reviews.
The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of the auditor’s report, the financial statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available. A peer review undergone by his firm would not exempt him from this requirement.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any employee benefit plan audits until a suitable work product is selected for review. If his practice changes and he is no longer involved with employee benefit plan audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change, and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change, and the ECA will select a suitable work product for review.
After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA joint trial board for a hearing or take such other action as it deems appropriate.
iv. To submit, within 30 days after he has accepted an employee benefit plan audit, evidence that his firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that center, he agreed that his firm will comply with the directives of that center.
j. To be prohibited from performing peer reviews in any capacity until he has completed all directives in this letter. This prohibition will be communicated to his firm’s peer review administering entity.
k. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA, the Ohio Society of CPAs, or the Kentucky Society of CPAs until he has completed all directives in this letter. This prohibition will be communicated to those responsible for appointments to such committees. In addition, if he applies to join any other committee of the AICPA, the Ohio Society of CPAs, or the Kentucky Society of CPAs, he must inform those responsible for such appointments of the results of this ethics investigation.
l. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in the areas of accounting, auditing, and employee benefit plans until he has completed all directives in this letter. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA, the Ohio Society of CPAs and the Kentucky Society of CPAs.
m. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.
n. That the ECA shall monitor his compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.
Soper, Steven A. of Cincinnati, OH
As a result of an investigation of alleged violations of the codes of professional conduct of the AICPA and the Ohio Society of CPAs, Mr. Soper, with the firm of Soper, Soper & Weinel LLP entered into a settlement agreement under the Joint Ethics Enforcement Program, effective October 23, 2023.
Information came to the attention of the Ethics Charging Authority (ECA – AICPA Professional Ethics Executive Committee and the Ohio Society of CPAs Professional Ethics Committee) alleging a potential disciplinary matter with respect to Mr. Soper’s performance of professional services on the audit of the financial statements of an employee benefit plan as of and for the year ended December 31, 2020.
The ECA reviewed the findings of the U.S. Department of Labor’s Employee Benefits Security Administration, Mr. Soper’s responses to the ECA’s inquiries, and other relevant documents Mr. Soper submitted to support his response, including certain work papers, financial statements, and relevant correspondence. Based on this information, there appears to be prima facie evidence of violations of the rules of the AICPA and the Ohio Society of CPAs codes of professional conduct as follows: Violations
General Standards Rule .01a. Professional Competence (1.300.001)
The auditor undertook an engagement he could not complete in accordance with professional standards.
General Standards Rule .01b. Due Professional Care (1.300.001)
The auditor failed to exercise due professional care in his review of the financial statements as:
a. Amounts disclosed in Note 5 for 2019 do not agree to the statement of net assets available for benefits.
b. Plan expenses per Note 7 for 2019 do not agree to the statement of changes in net assets available for benefits.
c. Note 8 states the IRS letter is dated 06/18/15; however, Note 1(A) states the date is 10/12/10.
Compliance with Standards Rule (1.310.001)
1. The auditor failed to perform preliminary analytics. (AU-C §315)
2. The auditor failed to perform final analytics. (AU-C §520)
3. The auditor failed to adequately assess compliance with independence requirements. (AU-C §220)
4. The auditor failed to obtain an adequate understanding of internal controls. (AU-C §315)
5. The auditor failed to assess the SOC 1 reports for the third-party service provider. (AU-C §402)
6. The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the assessment of control risk below high. (AU-C §230 and §330)
7. The auditor failed to assess risk at the assertion level. (AU-C §315)
8. The auditor initially failed to prepare a written audit program that set forth the procedures necessary to accomplish the objectives of the audit in the area of administrative expenses. (AU-C §300)
9. The auditor failed to prepare audit documentation that would enable an experienced auditor, having no previous connection to the audit, to understand the procedures performed for substantially all audit areas. (AU-C §230)
10. The auditor initially failed to document a complete listing of related parties and parties in interest. (AU-C §230)
11. The auditor failed to identify the date audit procedures were completed. (AU-C §230)
12. The auditor failed to document sampling methodology in all testing areas. (AU-C §230)
13. The auditor failed to document changes made to the audit file (when the changes were made, who made the changes, reason for the changes, and effect of the changes on the auditor’s conclusions) after the documentation completion date. (AU-C §230)
Accounting Principles Rule (1.320.001)
1. The financial statements failed to disclose the accounting policy for investment purchases and sales, interest income, dividend income, and realized/ unrealized gain/loss. (FASB ASC 235)
2. The financial statements failed to make all fair value disclosures required by FASB ASC 820.
Governmental Bodies, Commissions, or Other Regulatory Agencies (1.400.050)
1. Schedule A – Analysis of Investments is not in the format prescribed by ERISA and did not include interest-bearing cash. (29 CFR 2520.103-10)
2. Schedule B – Assets Held for Investment Purposes Both Acquired and Disposed of Within the Plan Year is not in the format prescribed by ERISA. (29 CFR 2520.103-10)
Agreement
In consideration of the ECA forgoing further investigation of Mr. Soper’s conduct as described above, and in consideration of the ECA forgoing any further proceedings in the matter, Mr. Soper agreed as follows:
a. To waive his rights to further investigation of this matter in accordance with the Joint Ethics Enforcement Program (JEEP) Manual of Procedures
b. To waive his rights to a hearing under AICPA bylaws section 7.4 and the Ohio Society of CPAs bylaws Article V
c. To neither admit nor deny the above specified charges
d. To his admonishment by the AICPA and Ohio Society of CPAs from the effective date of this agreement.
e. To comply immediately with professional standards applicable to the professional services he performs.
f. To complete the following 19 hours of continuing professional education (CPE) courses within 6 months of the date he signs this letter and provide evidence of such completion (e.g., attendance sheets, course completion certificates).
Risk Assessment Today (3.5); Obtaining and Understanding of Internal Control (1.0); Documenting Internal Control (1.0); Take Control of Your Audit–Avoid Common Internal Control Missteps (2.0); You have a SOC 1 report – now what? (3.5); Accounting and Attest Update Part 1: Hot Topics for Preparing Current Period Financial Statements (2.0); Accounting and Attest Update Part 2: Hot Topics for Current Period Audits and Other Attest Services (2.0); and Course on workpaper documentation and review to be selected by the respondent and preapproved by the division (4.0)
g. To hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on all audits performed by him for one year from the date the reviewer has been approved by the ECA. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the date he signs this letter.
He agreed to permit the outside party to report quarterly to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); a description of the nature of the entity reviewed; the entity’s year end; and the date of the review.
The first report is due 120 days after the reviewer has been approved by the ECA, with subsequent reports due every 90 days thereafter. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agreed to inform the ECA of such. He agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change and undergo the required pre-issuance reviews.
h. To submit six months after completion of the pre-issuance reviews, a list of the highest level (audits, reviews, and compilations with note disclosures) of engagements that he performed in the six-month period following the date he completed the pre-issuance reviews.
The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of the auditor’s report, the financial statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available. A peer review undergone by his firm would not exempt him from this requirement. He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any audits, reviews, or compilations with note disclosures until a suitable work product is selected for review. If his practice changes and he is no longer involved with audits, reviews, or compilations with note disclosures, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change, and the ECA may require that he attest every six months for three years as to the nature
of his practice. If, during the threeyear attestation period he returns to performing such engagements, he must inform the ECA of this change, and the ECA will select a suitable work product for review.
After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA joint trial board for a hearing or take such other action as it deems appropriate.
i. To provide an attestation immediately, then every six months for a period of three years that he is no longer performing employee benefit plan audits. If he returns to performing such work, he agreed to the following:
i. To complete the following 18.5 hours of continuing professional education (CPE) courses prior to commencing such work and provide evidence of such completion (e.g., attendance sheets, course completion certificates).
Audits of Employee Benefit Plans Subject to ERISA (12.5); and Auditing Financial Statements of ERISA Plans (6.0)
ii. To hire an outside party, acceptable to the ECA, to perform a pre-issuance review of the reports, financial statements, and working papers on all employee benefit plan audits performed by him for one year from the date the reviewer has been approved by the ECA. He must submit the names of the chosen reviewers to the ECA for approval no later than 30 days after the date he accepts such an engagement.
He agreed to permit the outside party to report quarterly to the ECA on his progress in complying with this agreement as stated herein to comply with professional standards. The report should include the reviewer’s comments in detail for each engagement (a report that omits such detail will be unacceptable); a description of the nature of the entity reviewed; the entity’s year end; and the date of the review.
The first report is due 120 days after the reviewer has been approved by the ECA, with subsequent reports due every 90 days thereafter. If none of the engagements selected for pre-issuance review were performed during a reporting period, he agreed to inform the ECA of such. He agreed to have this pre-issuance review performed at his expense. The ECA has the right to extend the period of time and number of engagements subject to pre-issuance review if there are deficiencies.
He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any employee benefit plan audits during the period he is subject to the pre-issuance reviews. If his practice changes and he is no longer involved with employee benefit plan audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change and the ECA may require that he attest every six months for three years as to the nature of his practice.
If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change and undergo the required pre-issuance reviews.
iii. To submit six months after completion of the pre-issuance reviews, a list of the employee benefit plan audits that he performed in the six-month period following the date he completed the preissuance reviews.
The ECA will select one of these engagements for review. He will be informed of this selection and will be asked to submit information to include a copy of the auditor’s report, the financial
statements, and working papers related to that engagement for review by the ECA. The ECA may extend the period to select an engagement to ensure a suitable selection is available. A peer review undergone by his firm would not exempt him from this requirement. He agreed to inform the ECA of any changes in the composition of his practice, changes in his role, or if he has not performed any employee benefit plan audits until a suitable work product is selected for review. If his practice changes and he is no longer involved with employee benefit plan audits, no longer acts in a supervisory capacity on such engagements, or he has not performed such engagements during the above specified period, he must inform the ECA of this change, and the ECA may require that he attest every six months for three years as to the nature of his practice. If, during the three-year attestation period he returns to performing such engagements, he must inform the ECA of this change, and the ECA will select a suitable work product for review.
After an initial review of such report, financial statements, and working papers, the ECA may decide he has substantially complied with professional standards and close this matter. Or, the ECA may decide that an ethics investigation of the engagement he submitted is warranted. If, at the conclusion of the investigation, the ECA finds that professional standards have in fact been violated, the ECA may refer the matter to the AICPA joint trial board for a hearing or take such other action as it deems appropriate.
iv. To submit, within 30 days after he has accepted an employee benefit plan audit, evidence that his firm has submitted an application to join the Employee Benefit Plan Audit Quality Center. Upon membership in that center, he agreed that his firm will comply with the directives of that center.
j. To be prohibited from performing peer reviews in any capacity until he has completed all directives in this letter. This prohibition will be communicated to his firm’s peer review administering entity.
k. To be prohibited from serving as a member of any ethics or peer review committee of the AICPA or Ohio Society of CPAs until he has completed all directives in this letter. This prohibition will be communicated to those responsible for appointments to such committees. In addition, if he applies to join any other committee of the AICPA or Ohio Society of CPAs, he must inform those responsible for such appointments of the results of this ethics investigation.
l. To be prohibited from teaching continuing professional education courses approved by the AICPA or the state CPA societies in the areas of accounting, auditing, and employee benefit plans until he has completed all directives in this letter. This prohibition will be communicated to those responsible for engaging CPE instructors at the AICPA and the Ohio Society of CPAs.
m. That the ECA shall publish his name, the name of his firm, the charges, and the terms of this settlement agreement.
n. That the ECA shall monitor his compliance with the terms of this settlement agreement and initiate an investigation where the ECA finds there has been noncompliance.
LEARNING events at a glance
Quarterly
Ethics: Ohio Professional Standards & Repsonsibilities
Women, Wealth & Wellness
OSCPA celebrates the 2024 class of Power of Change Honorees. Congratulations!
Read their stories each month in CPA Takeaways and on our social media channels.
Emily Huggins , CPA, MBA, Packer Thomas
Kim Floriani , CPA, Cleveland Cli s
Anne Farrell , CPA, inactive, Miami University
Kendra Philon , CPA, Meaden & Moore
Marie Brilmyer , CPA, MAcc, Cohen & Company
Robyn Pollina , CPA, inactive, Palmer Donavin
Tracey Holecek , CPA, Kaiser Consulting
Dana Mountjoy , CPA, BMF
Angie Lewis , CPA, Crowe LLP
Melanie Prevost , CPA, Plante Moran
Darci Congrove , CPA, GBQ
Alisha Durham , Upward Bound
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From the episode: “Your career doesn't stay static, and it doesn't stay the same. The business environment is constantly changing. Workforce development ensures that you have all the skills you need to be ready for the everchanging business environment.”
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