Spring 2021 - Florida CPA Today | Volume 37, Number 2 by Florida Institute of CPAs

SPRING 2021 | VOLUME 37, NUMBER 2

WHAT IS IT REALLY WORTH? Measuring Fair Value for Equity Securities in the Age of COVID-19 PAGE 16 Compliance with Generally Accepted Government Auditing Standards

PAGE 20 Pending A&A Standards: Upcoming effective dates

PAGE 22 FICPA compliance practice aids: Valuable resource tools

CONTENTS SECRETARY, TREASURER, COO Donna M. Son, IOM EDITORIAL COMMITTEE David J. Hochsprung, CPA, chair Joel M. DiCicco, CPA Lynda M. Dennis, CPA Jonathan S. Ingber, CPA Douglas B. Keith, CPA Michael S. Kridel, CPA Troy Y. Manning, CPA Ryan A. Myers, CPA Will Quilliam, CPA FICPA STAFF Leah Pritchett, Director of Marketing and Communications Nick Menta, Creative Marketing Copywriter Alejandra D’Jermanos, Graphic Designer All articles submitted to Florida CPA Today are subject to technical review, Editorial Committee review, space availability, and editing requirements and restrictions. Statements expressed herein are those of the identified authors and not necessarily those of the Florida Institute of Certified Public Accountants, Inc. (FICPA), nor should statements be considered endorsements of products, procedures or otherwise. The FICPA reserves the right to reject any editorial material or paid advertising that does not meet Florida CPA Today criteria or detracts from its ethical and professional standards. Florida CPA Today is published quarterly by the Florida Institute of Certified Public Accountants, Inc., 3800 Esplanade Way, Suite 210, Tallahassee, FL 32311. Telephone: (850) 224-2727 or (800) 342-3197. Visit our website at ficpa.org. This magazine is provided to members of the FICPA. No specific amount of your dues, either expressed or implied, is for this publication. This magazine is not available for purchase by either FICPA members or nonmembers.

COVER STORY WHAT IS IT REALLY WORTH?

Measuring Fair Value for Equity Securities in the Age of COVID-19

FEATURES

DEPARTMENTS

Compliance with Generally Accepted Government Auditing Standards

Web Digest Pending A&A Standards: Upcoming effective dates

FICPA compliance practice aids: Valuable resource tools STRATEGIC PARTNER CONTENT

For display advertising information, contact the FICPA Marketing Department at (850) 224-2727, Ext. 270.

5 steps to streamline your sales and onboarding workflows

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Chair’s message News briefs Staff reports Committee column DOR update CPAs in the spotlight Marketplace

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CHIEF OPERATING OFFICER’S MESSAGE

Through transition and challenge, FICPA emerges stronger

DONNA SON

The adage “learn, unlearn and relearn” has never been more relevant than this past year. We have learned much and have accomplished even more together.

FLORIDA CPA TODAY | SPRING 2021

As I reflect on the past 10 months as your COO and Secretary-Treasurer, emotions are high, and several words flood my mind: stewardship, leadership, team, pandemic, innovation, advocacy. And the one constant: disruption. The FICPA team is resilient, strong, and, above all, committed! We’re committed to identifying new ways to serve our members, who have overcome many obstacles and challenges of their own during a time of great complexity. To better serve you, the FICPA in the past year: • Adapted smoothly and professionally to remote work and safely returned to the office on April 1. • Increased employee engagement through interactive, virtual, social events, building team camaraderie and setting a strong foundation for years to come. • Transitioned our learning programs online, bringing you the same high-quality CPE you trust from the FICPA in a convenient and interactive format. • Launched an all-new, on-demand, 24/7 Learning Library that includes our Florida-specific ethics course. • Launched an all-new FICPA.org website. New technologies bring new challenges, but we are committed to continually improving your experience with the FICPA. We welcome you’re feedback and suggestions for improvements. • Added an all-new FICPA Blog, with a focus on highlighting member stories and sharing the latest updates. • Established the Task Force on Diversity, Equity & Inclusion, focused on developing programs and services to help guide your company in attracting, engaging and retaining the best talent. • Onboarded a new marketing and communications staff, updating our processes and extending our reach. • Opened our new office in Orlando that is now home to 16 team members. As we now look forward, your leadership council and board will be holding virtual strategy sessions on April 19-20. The agenda includes breakout groups focusing on our strong advocacy efforts and legislative representation – the unique benefit that only the FICPA provides to the profession. The FICPA is the premier association serving Florida CPAs, and it’s our mission to provide you with benefits and services aligned with your needs. Accordingly, we will conduct an evaluation of our current programs, sunsetting those that are no longer relevant, as we make way for new and innovative approaches to best serve the profession in the future. I encourage you to contact me at Donna@ ficpa.org with ideas about how we can best support you. In keeping with our look to the future, I also want to direct your attention to latest details on CPA Evolution, which you can find on page 10. Finally, I am proud to have served during this transition and am excited to welcome our new FICPA President and CEO, Shelly Weir. Shelly is a veteran association executive, and I encourage you to read more about her on page 6. I am excited to work alongside her and continue to serve you, our valued members and trusted partners.

Tackling Challenges and Priorities for Nonprofit Organizations

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CHAIR’S MESSAGE

Even at a distance, our FICPA community remains vibrant The amount of change we’ve all experienced in the last 12 months – both inside and outside our workplaces – has been monumental. While crucial to combatting our public-health crisis, social distancing is nonetheless isolating by its very nature. That’s our Catch-22: We need to take proper precautions, and yet we yearn for social interaction.

W. GORDON SPOOR II CPA, PFS, CGMA

The blending of in-person and virtual work should make us all less rigid, more agile and increasingly efficient.

It’s a circle we’ve tried to square for the last year, and I am proud of what we’ve been able to accomplish. Even though we haven’t been able to meet in person, the FICPA’s online resources – from our virtual CPE to our digital and social media channels to our FICPA Connect message board – have kept our sense of community alive and well. And whether it’s been working through the nuances of the Paycheck Protection Program and the Employee Retention Credit or sorting out updated guidance in real time on a host of evolving issues, it’s been wonderful to watch us all pull together. I’ve likewise been impressed, though I am never surprised, by the resolve and dedication of our volunteer FICPA Committee members. FICPA Committees are a terrific way for our members to network, expand their leadership skills, and take a leading role in our community. If you’re not already involved with one of our committees, and we have myriad options to choose from, I highly encourage you to visit ficpa.org/get-involved/committees and sign up by April 23. Whether you’re an accounting veteran looking to share decades of expertise or a Young CPA looking to learn and lead, FICPA Committees are a great way for our members to interact, engage and grow. As vaccines become more widely available and as we begin to approach some degree of normalcy in the months to come, we’ll all be excited to once again meet and work in person. That said, the last year has led me to a realization: We really can have it both ways. Virtual communities and online learning resources are fantastic, flexible options for our members to continue to leverage. Sometimes, we’ll be in person. And other times, for logistical reasons, we’ll still be Zooming in for meetings. I don’t see our adoption of technology as a loss but a net gain. We can take the virtual resources we’ve exclusively relied on during the pandemic and incorporate them into part of our day-to-day practices. COVID-19 has reminded all of us just how much we crave a sense of community and belonging. It’s reinforced how important it is to feel like you’re a part of a team. It’s why I’m proud of our organization and continue to be so inspired by our members.

FLORIDA CPA TODAY | SPRING 2021

May 13-14, 2021 Location: Virtual, Interactive

CPE: Up to 16

We'll cover everything from economic and legislative updates to the CARES Act, fraud studies and forensic accounting, and you'll be attend this year's conference in the comfort and safety of your own home or office. Go 'Noles!

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NEWS BRIEFS

FICPA NEWS

FICPA appoints Shelly Weir president & CEO Weir will oversee the FICPA’s headquarters relocation from Tallahassee to Orlando Association executive Shelly Weir has been named president & CEO of the Florida Institute of Certified Public Accountants (FICPA), the premier association dedicated to enhancing the success of Florida CPAs. Weir brings extensive leadership experience in the association sector to the FICPA, one of the largest CPA organizations in the U.S. Weir was most recently senior vice president of Career Development for the American Hotel & Lodging Association (AHLA) and its Educational Foundation, where she oversaw the strategic vision of workforce development. “We are excited for what the future holds under Shelly’s leadership. She brings a wealth of membership organization success and strategic vision to the FICPA,” W.G. Spoor, chair of the board of directors of the FICPA, said. “I believe her leadership and infectious energy are exactly what we need at this time.” In her role at the American Hotel & Lodging Association, Weir designed and executed programs that delivered career advancement opportunities and competency attainment for professionals in the hotel sector in order to strengthen the lodging industry workforce. Her many accomplishments include orchestrating a groundbreaking initiative to enable a cost-free college degree for hotel associates nationwide – a first of its kind, industry-wide program. She also drove the lodging industry strategy and oversight of AHLA’s apprenticeship programs. She served as co-chair of the Committee on Attracting Businesses to Apprenticeship under former President Trump’s national task force on apprenticeship expansion. In September 2020, AHLA’s programs were awarded the White House’s Pledge to America’s Workers Presidential Award for outstanding career development programming. Prior to joining AHLA, Weir spent seven years with the American Hotel & Lodging Educational Institute. She led the domestic sales team responsible for all certification, training and continuing education product sales to hotel companies, schools, and state hotel association partners. 6

FLORIDA CPA TODAY | SPRING 2021

During her tenure, she created national partnerships with education officials and community-based organizations to better position a pipeline of workers for the lodging industry. Previously, Weir served as state director of membership at the Florida Restaurant & Lodging Association, where she was responsible for the growth of association membership and retention. “The FICPA has a rich history of advancing the accounting profession in Florida,” Weir said. “I’m honored to join the team and look forward to building upon the strong foundation in place to further promote the profession, shape public policy, and elevate the competency of our membership.” Weir is a member of the National Network of Business & Industry Associations, National Workforce Needs Coalition, and has represented the lodging industry on federal task forces with the Departments of Education and Labor to reauthorize career education funding and competency model frameworks. She obtained a Bachelor of Arts from Florida State University. Weir will assume her responsibilities as president & CEO of the Florida Institute of Certified Public Accountants on April 5, 2021. Be on the lookout for an in-depth profile on Weir in the Summer edition of Florida CPA Today.

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NEWS BRIEFS

FICPA Official Notice NOTICE OF REGULAR COUNCIL MEETING

In compliance with Article XI, Section 6 of the FICPA Bylaws, be it known that a regular meeting of the FICPA Council will be held on Thursday, June 17, 2021, at 10:00 a.m. via conference call.

FLORIDA NEWS

DeSantis appoints Brown new secretary of DBPR

On Feb. 18, Gov. Ron DeSantis announced his appointment of Julie Imanuel Brown as secretary of the Florida Department of Business and Professional Regulation (DBPR).

FICPA NEWS

2021-22 membership renewal update

The window for individual FICPA membership renewals will open in mid-May. You can renew online – via a one-time payment or our auto-renew options – or by mail. Should you choose to renew by mail, print a copy of your invoice and send payment to: FICPA c/o Hancock Whitney Bank P.O. Box 746318 Atlanta, GA 30374-6318 This address is also printed on your invoice. If you’ve already set up auto-renew, please confirm that your credit card is current and does not need to be updated. Annual auto-renewals will be charged July 1. Monthly payments will be charged on same date as current. You will receive email reminders ahead of time. Please note: If your company participates in firm billing, no action is required on your part. That said, you can still help us by confirming: • Your home address • That you’re linked to the correct company/firm • That your membership type does not need to be changed • That you can successfully log into your account Please also check your email preferences to make sure you’re signed up to receive the FICPA communications most of interest to you. Included with your invoice will be a $25 savings on the Florida-approved, on-demand ethics course and information on our continually evolving 24/7 Learning Library. Need help or have questions? Please email membership@ ficpa.org, or call Member Services at 850-224-2727x1. Thank you for being part of our community. We appreciate your membership and support.

“Julie brings a unique blend of experience in the private and public sectors, as well as the legal field, including over 10 years of service on the Florida Public Service Commission and various corporate positions. I’m confident she will do a great job in our continued fight to cut red tape and ease regulation on our businesses and hard-working Floridians,” Gov. DeSantis said. Brown has most recently served on the Florida Public Service Commission (PSC) since 2011 and was commission chair from January 2016 to January 2018. Prior to serving on the PSC, Brown was associate legal counsel of First American Corporation; a corporate attorney at Shumaker, Loop and Kendrick, LLP in Tampa; director of franchise sales and development for Checkers Drive-In Restaurants, Inc.; and an assistant city attorney for the City of Tampa. The FICPA congratulates Secretary Brown on her recent appointment and looks forward to working with her in her new role. FICPA NEWS

Stay up to date with all the latest FICPA news by following our accounts on Facebook, Instagram, LinkedIn and Twitter. You’ll get news, event reminders and everything else you need to know. It’s best way to engage with the FICPA every day!

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NEWS BRIEFS

INDUSTRY NEWS

CPA Evolution update

CPA Evolution is a joint initiative of the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA). The initiative is transforming the CPA licensure model to reflect the rapidly changing skills and competencies the accounting profession requires today and will require in the future. It will put in place a flexible and adaptable licensure approach that will serve as the foundation for future-proofing the CPA profession. Over three years, NASBA and the AICPA gathered input from more than 3,000 stakeholders from across the profession on how to transform CPA licensure and meet the needs of the marketplace. During these conversations, several key themes became clear: • The profession supports the need to change the CPA licensure model • Newly licensed CPAs should all demonstrate strong common core competencies • The new CPA licensure model should position the CPA for the future • The new CPA licensure model should continue to protect the public interest Based on this feedback and lessons learned from studying other international and domestic licensure models, NASBA and the AICPA developed a new approach to CPA licensure. In 2020, both the AICPA Governing Council and the NASBA Board of Directors voted to support advancement of the CPA Evolution initiative. The AICPA and NASBA are now moving forward with implementing the new model.

What is the new licensure model?

The new CPA licensure model takes a core + discipline approach, starting with a deep and strong core in account10

FLORIDA CPA TODAY | SPRING 2021

ing, auditing, tax and technology that all candidates will be required to complete. Each candidate will also choose a discipline in which to demonstrate deeper skills and knowledge. Regardless of chosen discipline, this model leads to full CPA licensure, with rights and privileges consistent with any other CPA. A discipline selected for testing will not mean the CPA is limited to that practice area. This model:

• Enhances public protection by producing candidates who have the deep knowledge necessary to perform high-quality work, meeting the needs of organizations, firms and the public. • Is responsive to feedback, as it builds accounting, auditing, tax and technology knowledge requirements into a robust common core. • Reflects the realities of practice, requiring deeper proven knowledge in one of three disciplines that are pillars of the profession. • Is adaptive and flexible, helping to future-proof the CPA as the profession continues to evolve. • Results in one CPA license.

What does this mean for the Uniform CPA Examination?

The specific content of the core and the disciplines will be determined by a CPA Exam practice analysis, which is currently underway.

Practice analyses — gathering information about the current and future state of the profession and the work of newly licensed CPAs — are conducted periodically as part of the

AICPA’s ongoing efforts to make sure the Exam is current and to maintain its the validity and reliability. The current practice analysis will likely wrap up in 2022, and an Exam Blueprint will be exposed for public comment in mid-2022. The AICPA and NASBA expect the new Exam will launch in January 2024. What’s next for students and CPA candidates?

Aspiring CPAs who are college freshmen now will be among the first to take the overhauled version of the CPA Exam when it launches in 2024. Current CPA candidates will be able to sit for the current CPA Exam until the launch of the new Exam, and a transition plan is being developed for candidates who have started but not completed the CPA Exam process as of January 2024. Under the new model, the AICPA and NASBA expect to attract students that today wouldn’t necessarily choose the CPA route, but who are becoming more critical to the success of the CPA profession. How are the AICPA and NASBA supporting accounting academic programs and educators?

Accounting educators will play a vital role in preparing students to pursue the CPA under this new licensure model.

The AICPA and NASBA are committed to helping educators every step of the way. The AICPA and NASBA have engaged with faculty and practitioner volunteers to build a model curriculum that aligns with the core + discipline licensure model. The model curriculum will launch this June, and updates will be posted on EvolutionofCPA.org. Faculty can also access the Academic Resource Hub, a free database of content from the AICPA, accounting firms, academics and AICPA teaching-award winners that will help faculty prepare students for the rapidly evolving demands of the profession. The hub contains over 200 resources for a range of class levels on topics like data analytics and cybersecurity to use in classroom instruction. Throughout 2021, the AICPA will be holding a series of faculty webinars including regular updates on CPA Evolution and deep dives into emerging topics to include in accounting courses. As CPA Evolution continues to progress, please check back for updates at EvolutionofCPA.org. If you have any questions, please reach out to Feedback@EvolutionofCPA.org.

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WHAT IS IT REALLY WORTH? Businesses may find it challenging in the current COVID-19 economic environment to monitor their investments in equity securities without readily determinable fair values. By J. Russell Frawley III, MBA, CPA/ABV

n adverse economic consequence of COVID-19 that’s made headlines is the significant impairment charges business entities have taken related to their non-financial assets, such as intangible assets and goodwill. Less notable has been the pandemic’s similar effect on an entity’s financial assets, including equity securities without readily determinable fair values. Fair value for these types of equity investments is measured in accordance with FASB Accounting Standards Update (ASU) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which is codified within ASC 321, Investments in Equity Securities (“ASC 321”). This article focuses on the measurement-alternative method under ASC 2016-01, also referred to as the “practicability exception,” to recognize and measure fair value for equity investments without readily determin-

FLORIDA CPA TODAY | SPRING 2021

able fair values and the related impairment considerations. Equity investments without readily determinable fair values

FASB ASC 820, Fair Value Measurements (“ASC 820”), states that the fair value of an equity security is readily determinable if sales prices or bidand-ask quotations for the security are currently available on a securities exchange registered with the SEC (New York Stock Exchange) or in the over-the-counter market (NASDAQ). Thus, an example of an equity security without a readily determinable fair value within the scope of ASC 201601 would be an ownership interest in the non-marketable equity securities of a private company, assuming the interest is not required to apply the equity-method accounting or specialized-industry guidance, such as for broker-dealers or investment companies, or interests that result in the consolidation of the investee. Prior to

the issuance of ASC 2016-01, an equity investment without a readily determinable fair value was measured at its original cost, less any impairment. Under ASC 2016-01, an entity can make an accounting election to either measure the fair value in accordance with ASC 820, with changes recognized in earnings, or use a measurement alternative. Measurement alternative

Using the measurement alternative under ASC 2016-01, an entity measures its equity investment without a readily determinable fair value at its original cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar equity instrument of the same issuer. Thus, the measurement alternative represents a hybrid method, combining elements of the legacy GAAP cost method with features of the market approach under ASC 820. An observ-

able price is a price derived from an actual market transaction, and an orderly transaction presumes that the transaction was not forced, such as a distressed sale. An example fact pattern of an orderly transaction with an observable price under the measurement alternative would be if ABC owns a less than 20% interest in the Series A preferred shares of a private company, and the same private company subsequently issues new Series B preferred shares in a private placement offering. When determining whether an equity instrument issued by the same issuer is similar to the equity instrument the entity holds, the entity should consider any significant difference in rights or obligations associated with the instruments, such as dividend rights, liquidation preferences and voting rights. If the instruments are considered to be similar, the entity will adjust the carrying value of its investment to the observable price of the similar security, plus or minus the fair value attributable to any difference in rights or obligations. Presented below are two examples of how an entity may determine whether equity instruments of the same issuer are similar under the measurement alternative and the resulting accounting impact: Example 1: Series A and Series B Preferred Shares

FACT PATTERN ABC owns Series A preferred shares of a private company. It observes an orderly transaction in Series B preferred shares by the same issuer. The Series A and Series B preferred shares have different dividend rates, but all of their other rights and obligations are the same.

ARE THE EQUITY INSTRUMENTS SIMILAR? Yes. ABC may conclude that the Series A and Series B preferred shares are similar. Therefore, it would adjust, upward or downward, the carrying value of its investment in the Series A shares to their fair value based on the observable price of the Series B preferred shares, adjusted for the difference in dividend rates. Any change would be recorded in earnings.

SPRING 2021 | FLORIDA CPA TODAY

Assume further the following additional facts in Example 1: 1. Series A preferred share has a carrying value of $100 per share 2. Observable price of Series B preferred share is $150 per share 3. Series B preferred share has a higher dividend rate 4. Incremental fair value attributable to higher dividend rate is $10 per share As a result, ABC would adjust the $100 carrying value of its Series A preferred shares by $40 per share ($150-$100$10), with a corresponding increase to earnings. Impairment considerations

At each reporting date, an entity that elects the measurement alternative is required to make a qualitative assessment of whether the equity investment is impaired by considering the impairment indicators in ASC 320, Investments in Debt and Equity Securities (“ASC 320”), including the following indicators which have been more prevalent during the COVID-19 economic environment: • A significant deterioration in the earnings performance, credit rating, asset quality or business prospects of the investee • A significant adverse change in the regulatory, economic or technological environment of the investee

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Example 2: Common Shares and Series A Preferred Shares

FACT PATTERN 2 ABC owns common shares of a private company. It observes an orderly transaction in Series A preferred shares of the same issuer. Owners of the common shares have voting rights and rights to any declared dividends. Owners of Series A preferred shares have rights to a cumulative dividend, liquidation rights and a non-voting board seat. • Factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations and working capital deficiencies If a qualitative assessment indicates that the investment is impaired, the entity must estimate the investment’s fair value in accordance with the guidance in ASC 820, not under the measurement alternative. If the fair value is less than the carrying value, the entity recognizes an impairment loss in earnings equal to the difference. An observable price for an instrument of the same issuer that is not similar but below the carrying value of the entity’s investment may also be an indicator of impairment. Referring to Example 2 discussed above, if the observable price of the Series A preferred shares is less

ARE THE EQUITY INSTRUMENTS SIMILAR? No. ABC may not conclude that the common shares and Series A preferred shares of the same issuer are similar due to the differences in rights and obligations. Therefore, it would not adjust the carrying value of its investment in the common shares for this observed transaction.

than the carrying value of the entity’s investment in the common shares, this could be an indicator of impairment that would require a fair-value measurement of the common shares. In conclusion, applying the measurement alternative to equity investments without readily determinable fair values can be challenging, even more so in the current environment, requiring significant judgment and technical expertise. J. Russell Frawley III, MBA, CPA/ABV, is principal at Frawley & Co. PLLC, a boutique CPA firm based in Miami, Florida, offering specialized accounting, advisory, and valuation services to both publicly held and private companies. He has over 30 years of diversified accounting experience, including Big Four public accounting, financial reporting and accounting oversight roles at global organizations, and project-related consulting engagements for a diverse clientele.

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Compliance with Generally Accepted Government Auditing Standards By Troy Manning, CPA

comparison between the 2011 and 2018 revisions of Government Auditing Standards (GAS) indicates expanded requirements and guidance, additional chapters, and other major changes. This article provides an overview of selected aspects of GAS, including certain 2018 revisions that were issued by the U.S. Government Accountability Office (GAO). These professional standards are also referred to as Generally Accepted Government Auditing Standards (GAGAS), or the “Yellow Book.”

The word “Government” in GAGAS may mislead certain auditors and audit organizations to infer that GAGAS may only apply to audits of government entities. However, GAGAS may also apply to an entity that receives government assistance, such as a nonprofit organization. Overall, a law, regulation, contract, grant agreement or policy may require an engagement to be conducted in accordance with GAGAS. An organization may also voluntarily adopt GAGAS.

The objectives of all GAGAS engagements will determine the type of engagement and the appropriate GAGAS requirements and guidance to follow. The types of GAGAS engagements include financial audits, attestation engagement or review of financial statements, or performance audits.

For example, Florida statutes specify that a financial audit “must be conducted in accordance with auditing standards generally accepted in the United States and government auditing standards.” Florida statutes require certain local governmental entities and certain nonprofit organizations to have a “financial audit.” The determination of specific audit provisions is within the authority of the Florida Auditor General, in consultation with the Florida Board of Accountancy. Therefore, the form and conduct of financial audits performed by independent certified public accountants in Florida are through the adoption of rules. The Rules of the Florida Auditor General are found in Chapters 10.550 and 10.700 for local governmental entities and audits of certain nonprofit organizations, respectively.

The enhanced format of GAGAS makes it easy to differentiate requirements from guidance. Text presented within a black border represents requirements. Requirements apply to all GAGAS engagements and impose unconditional or presumptively mandatory requirements on auditors and audit organizations. Explanatory material in the form of guidance immediately follows the requirements. The guidance provides detailed information about applying the requirements or relevant material, such as examples, intent or background. In specific chapters of GAGAS, requirements and guidance for competence, continuing professional education, quality control and peer review are established. Effective with the implementation of GAGAS, the GAO will retire two documents: “Guidance on GAGAS Requirements for Continuing Professional Education” (2005) and “Guidance for Understanding the New Peer Review Ratings” (2014). The consequence of this simplification: Everything pertaining to GAGAS is accessible in one document. APPLICABILITY 16

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VALUE-ADDED ATTRIBUTE OF GAGAS

GAGAS provides a framework for performing high-quality audit work with competence, integrity, objectivity and independence. They do so through the incorporation of other professional standards, using references and additional requirements. The incorporated professional standards depend on the type of GAGAS engagement. For example, GAGAS for financial audits incorporates the American Institute of Certified Public Accountants (AICPA) Statements on Auditing Standards (SAS). Thus, GAGAS does not repeat nor summarize each section of the AICPA SAS, since the auditor is responsible for performing the audit in accordance with the requirements of both stan-

dards (GAGAS and the SAS). Next, GAGAS has additional standards for auditors conducting and reporting on financial audits. There is a relationship exists between GAGAS and other professional standards that may be required depending on the specific engagement. The AICPA has established professional standards for financial audits, attestation engagements, and reviews of financial statements. There are also professional standards issued by the International Auditing and Assurance Standards Board (IAASB) or the Public Company Accounting Oversight Board (PCAOB). There is a distinction in GAGAS between the incorporation by reference of other professional standards, the additional requirements, and the relationship with GAGAS in conjunction with other standards. INDEPENDENCE

A conceptual-framework approach for making independence determinations is established in GAGAS, which includes the period of the professional engagement. This framework contains identifying threats, evaluating each threat’s significance (individually and in aggregate), and applying safeguards to eliminate the hazards or reduce the

threats to an acceptable level or declining to perform the service. Professional judgment should be used to determine if safeguards have been effectively applied based on the facts and circumstances because GAGAS only includes examples of actions or measures that may be considered safeguards. Seven broad categories of threats to independence, practical examples and guidance are provided in GAGAS. There are also specific non-audit services that impair independence. Auditors frequently provide non-audit services, such as financial-statement preparation. The independence standard was expanded (2018 revision) to explicitly state that auditors should conclude that preparing financial statements – in their entirety from a client-provided trial balance or underlying accounting records – creates a significant threat to the auditor’s independence. Management remains responsible for the preparation and fair presentation of the financial statement. Auditors no longer use judgment to determine if this specific non-audit service threatens the independence and if the threat is significant. Different circumstances can occur regarding financial-statement preparation. No definition of “entirety” as it relates to financial-statement preparation is included in GAGAS.

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Therefore, circumstances may exist where the auditor prepares less than 100% of the financial statements from a client-provided trial balance or underlying accounting records. The actual percentage of the financial statement that an auditor may prepare is subjective. Therefore, GAGAS requires the use of professional judgment and consideration of materiality to determine if the preparation of financial statements creates a significant threat to the auditor’s independence. Then the auditor performs the next step of the GAGAS conceptual framework when this non-audit service is performed. The auditor is required to implement safeguards to eliminate and reduce the threat to an acceptable level or decline to perform the service. WASTE

The 2018 revision of GAS added a definition of waste, which is an “act of using or expending resources carelessly, extravagantly, or to no purpose.” The determination of waste is similar to that of abuse, which is subjective. Therefore, auditors are not required to perform specific procedures to detect waste. EFFECTIVE DATES

The 2018 revision to GAS is effective for financial audits, attestation engagements, and financial-statement reviews

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for periods ending on or after June 30, 2020. Performance audits are effective for audits beginning on or after July 1, 2019. Early implementation is not permitted. EFFECT OF THE COVID-19 PANDEMIC

Two alerts were issued during 2020 that relate to COVID19. The CPE Alert provides three exceptions to GAGAS’ continuing professional educational requirements. The Audit Alert provides non-authoritative guidance about areas that may require more attention. These alerts did not change the effective date for applying the audit requirements of GAGAS. CONCLUSION

There are many benefits when an engagement is performed in accordance with GAGAS. An independent and objective assessment of accountability is provided to legislators, oversight bodies, the public, and those charged with governance. Also, the high-quality audit standards result in greater transparency, better decision making, and improved government management of programs and operations. Troy Manning, CPA, is a member of the FICPA’s Editorial Committee. Currently, she provides training to certified public accountants on accounting and auditing topics relating to government and not-for-profit entities.

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What to know about upcoming effective dates By Lynda M. Dennis, CPA, and Will Quilliam, CPA

Over the last few years accounting and auditing standard setters issued numerous new standards with various effective dates leading to what many financial-statement preparers and auditors refer to as “standards overload.” From January 2018 through December 2020, the Financial Accounting Standards Board (FASB) issued 43 Accounting Standards Updates (ASU). During this same period, the Governmental Accounting Standards Board (GASB) and the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) each issued 10 standards. Not to mention, the Government Accountability Office issued a new version of Government Auditing Standards (GAS) in July 2018. In addition to the sheer number of new accounting and auditing standards, several of the new standards either supersede, or significantly modify, existing standards. A total overhaul of accounting and financial reporting of revenue recognition, leases, and credit losses on financial instruments1, for example, significantly impact for-profit and not-for-profit entities and their auditors. Recent GASB pronouncements relating to leases, public-public and public-private partnerships, subscription-based information technology arrangements, and Internal Revenue Code Section 457 plans2 similarly affect state and local governments and their auditors. Due to the magnitude of the changes to some standards and the resulting implementation challenges, the FASB modified the effective date in whole or in part for several ASUs during the past few years. For example, effective dates for ASUs relating to revenue recognition, leases, and financial instruments have been extended primarily based on feedback the FASB received from stakeholders relating to implementation challenges. Dealing with the operational and financial impact of the COVID-related, 20

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government-mandated shutdowns or reductions in operating hours or capacity left financial-statement preparers and their auditors with less time to devote to implementing new accounting and auditing standards, respectively. In response to concerns raised by various stakeholder groups, the FASB, GASB, and ASB issued the following standards in May and June 2020 to defer the effective dates of certain standards. 1 See Accounting Standards Updates (ASU, ASUs) 2014-09, Revenue from Contracts with Customers (Topic 606), as amended, 2016-02, Leases, (Topic 842), and 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, available at www.fasb.org. 2 See Governmental Accounting Standards No. 87, Leases, No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, No. 96, Subscription-Based Information Technology Arrangements, and No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32.

• ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities. • GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. • ASB Statement on Auditing Standards No. 141, Amendment to the Effective Dates of SAS Nos. 134-140. This article provides a summary of the upcoming effective dates, or deferred effective dates, of accounting and auditing standards and should be used in conjunction with the effective date and transition and implementation guidance in the standards. Financial statement preparers and their auditors are encouraged to continue or increase efforts to implement accounting and auditing standards even though effective dates may be deferred. UPCOMING EFFECTIVE DATES –ACCOUNTING STANDARDS UPDATES

ASU 2020-05, issued on June 3, 2020, provides for the following limited delays in the effective dates relating to revenue recognition and leases standards for certain entities. • Certain entities having not yet issued their financial statements (or made them available for issuance) implementing the revenue recognition standard, as amended, may elect to defer the effective date of ASU 2014-09, as amended, for one year only (annual reporting periods beginning after Dec. 15, 2019). • The effective date of ASU 2016-02, as amended, is deferred one year to annual reporting periods beginning after Dec. 15, 2021. However, the deferral is limited to entities in the “all other” category and public notfor-profit entities having not yet issued their financial statements (or made them available for issuance) implementing the leases standard, as amended. Effective dates of standards not affected by ASU 2020-05 are as follows: • ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2022. • ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities and ASU 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a

Benchmark Interest Rate for Hedge Accounting Purposes Effective for fiscal years beginning after Dec. 15, 2018 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee ShareBased Payment Accounting Effective for fiscal years beginning after Dec. 15, 2018 (public business entities), and fiscal years beginning after Dec. 15, 2019 (all other entities). • ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts Effective for fiscal years beginning after Dec. 15, 2021 (certain public business entities), and fiscal years beginning after Dec. 15, 2023 (all other entities). • ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement Effective for fiscal years beginning after Dec. 15, 2019 (all entities). • ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2021 (all other entities). • ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities Effective for fiscal years beginning after Dec. 15, 2019 (entities other than private companies), and fiscal years beginning after Dec. 15, 2020 (private companies). • ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 SPRING 2021 | FLORIDA CPA TODAY

Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2019-01, Leases (Topic 842): Codification Improvements Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2019-02, Entertainment-Films-Other Assets-Film Costs (Subtopic 926-20) and Entertainment Broadcasters-Intangibles-Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2019-03, Not-for-Profit Entities (Topic 958): Updating the Definition of Collections Effective for fiscal years beginning after Dec. 15, 2019 (all entities). • ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments Effective for fiscal years beginning after Dec. 15, 2019 (all entities). • ASU 2019-06, Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), and Not-forProfit Entities (Topic 958): Extending the Private Company Accounting Alternatives on Goodwill and Certain Identifiable Intangible Assets to Not-for-Profit Entities Effective at issuance (all entities). • ASU 2019-08, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements—ShareBased Consideration Payable to a Customer Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2020 (all other entities). • ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date Effective for fiscal years beginning after Dec. 15, 2021 (public business entities), and fiscal years beginning after Dec. 15, 2023 (all other entities). 22

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• ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842: Effective Dates Credit losses: Effective for fiscal years beginning after Dec. 15, 2019 (public business entities), and fiscal years beginning after Dec. 15, 2022 (all other entities). Hedging: Effective date for fiscal years beginning after Dec. 2018 (public business entities). Amendments for all other entities were suspended by ASU 2020-05. • ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses Effective for fiscal years beginning after Dec. 15, 2019 (all entities). • ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2022 (all other entities) • ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)— Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2021 (all other entities). • ASU 2020-03, Codification Improvements to Financial Instruments Effective for fiscal years beginning after Dec. 15, 2019 (all entities). • ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Effective from March 12, 2020 through Dec. 31, 2022 (all entities). • ASU 2020-006, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Effective for fiscal years beginning after Dec. 15, 2021 (public business entities), and fiscal years beginning after Dec. 15, 2023 (all other entities).

ASU 2020-07, Not-for-Profit Entities (Topic 958): Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets Effective for fiscal years beginning after June 15, 2021 (all entities). • ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2021 (all other entities). • ASU 2020-09, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2021 (all other entities). • ASU 2020-10, Codification Improvements Effective for fiscal years beginning after Dec. 15, 2020 (public business entities), and fiscal years beginning after Dec. 15, 2021 (all other entities). • ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application Effective for fiscal years beginning after Dec. 15, 2022 (public business entities), and fiscal years beginning after Dec. 15, 2024 (all other entities). UPCOMING EFFECTIVE DATES – GASB PRONOUNCEMENTS

GASB Statement No. 95, effective immediately upon issuance (May 2020), postpones the initial effective dates by one-year of the following (effective dates noted reflect the one-year postponement): • Statement No. 83, Certain Asset Retirement Obligations Effective for fiscal years beginning after June 15, 2019. • Statement No. 84, Fiduciary Activities Effective for fiscal years beginning after Dec. 15, 2019. • Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements Effective for fiscal years beginning after June 15, 2019. • Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period Effective for fiscal years beginning after Dec. 15, 2020.

• Statement No. 90, Majority Equity Interests- an amendment of GASB Statements No. 14 and No 61 Effective for fiscal years beginning after Dec. 15, 2019. • Statement No. 91, Conduit Debt Obligations Effective for fiscal years beginning after Dec. 15, 2021. • Statement No. 92, Omnibus 2020 Generally effective for fiscal years beginning after June 15, 2021. Changes relating to the effective date of Statement No. 87 and the related Implementation Guide (20193), reinsurance recoveries, and terminology referring to derivative instruments are effective upon issuance (January 2020). • Statement No. 93, Replacement of Interbank Offered Rates Generally effective for fiscal years beginning after June 15, 2020. Changes relating to LIBOR as a benchmark interest are effective for fiscal years ending after Dec. 31, 2021. Changes relating to lease modifications are effective for fiscal years beginning after June 15, 2021. • Implementation Guide No. 2017-3, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting) Generally effective for fiscal years beginning after June 15, 2017. Requirements relating to actuarial valuations are effective for actuarial valuations as of Dec. 15, 2018 or later. Requirements relating to certain other post employment benefit plans (OPEB) are effective for employer or nonemployer contributing entities in the first reporting period in which the measurement date of the collective net OPEB liability is on or after June 15, 2019. • Implementation Guide No. 2018-1, Implementation Guidance Update—2018 Effective for fiscal years beginning after June 15, 2019. • Implementation Guide No. 2019-1, Implementation Guidance Update—2019 Effective for fiscal years beginning after June 15, 2020. • Implementation Guide No. 2019-2, Fiduciary Activities SPRING 2021 | FLORIDA CPA TODAY

Effective for fiscal years beginning after Dec. 15, 2019. In addition to the postponement of the standards and Implementation Guides noted above, GASB Statement No. 95 postpones the original effective dates of the lease-related standards and guidance by 18 months (effective dates noted reflect the 18-month postponement) • Statement No. 87, Leases Effective for fiscal years beginning after June 15, 2021. • Implementation Guide No. 2019-3, Leases. Effective for fiscal years beginning after June 15, 2021. Effective dates of standards issued after GASB Statement No. 95 are as follows: • Statement No. 96, Subscription-Based Information Technology Arrangements Effective for fiscal years beginning after June 15, 2022. • Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32 Changes relating to component unit criteria are effective upon issuance (June 2020) for defined contribution pension plans, defined contribution OPEB plans, and other employee benefit plans and effective for fiscal years beginning after June 15, 2021, for all other situations. Requirements relating to Section 457 plans are effective for fiscal years beginning after June 15, 2021. UPCOMING EFFECTIVE DATES – STATEMENTS ON AUDITING STANDARDS

In response to the effect of the COVID-19 pandemic on auditors and their clients, the ASB issued SAS No. 141, Amendment to the Effective Dates of SAS Nos. 134-140, in May 2020 (effective upon issuance). SAS No. 141 defers the effective dates for the following standards from audits of financial statements for periods ending on or after Dec. 15, 2020, to periods ending on or after Dec. 15, 2021. • No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended. • No. 135, Omnibus Statement on Auditing Standards — 2019. • No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended. 24

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• No. 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports. • No. 138, Amendments to the Description of the Concept of Materiality. • No. 139, Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134. • No. 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137. SAS No. 134 relates to changes in the auditor’s report and SAS Nos. 136-140 are interrelated because they are affected by the changes in the auditor’s report. Therefore, the effective dates for these SASs are aligned, and the ASB recommends concurrent implementation of all these SASs. Initially, early implementation of these SASs was not permitted; however, SAS No. 141 deletes this prohibition. CONCLUDING THOUGHTS

The volume of new standards issued from January 2018 through December 2020 illustrates how accounting and auditing is a dynamic profession with a constantly growing body of knowledge. Staying up to date requires significant time, especially with the “standards overload” of the past three calendar years. Some of these standards have future effective dates which may provide relief in terms of one’s time budget for learning. Since this article notes the effective dates and titles of the new standards, it provides structure for updating one’s knowledge. Of course, all three standard-setting bodies included in this article will continue to issue new standards in the future, which will require financial-statement preparers and their auditors to continue investing significant time and energy to maintain professional competence. Lynda M. Dennis, CPA, Ph.D., is a retired Associate Instructor from the Kenneth Dixon School of Accounting at the University of Central Florida. She is a contract CPE discussion leader and course developer in the areas of accounting and reporting for governmental and not-for-profit organizations. She previously served a four-year term on the Pre-Certification Education Executive Committee of the AICPA and currently serves on the Editorial Committee for the FICPA and the State and Local Government Section of the FICPA. Will Quilliam, Ph.D., CPA, CIA, is the Louise Templeton Endowed Chair and Associate Professor of Accounting at Florida Southern College, where he also chairs the accounting program and directs the MAcc program. He is active with the FICPA and serves on the FICPA Scholarship Foundation. He will assume the role of President of the Scholarship Foundation on July 1. He was previously on the FICPA Council. He was an auditor with EY and was on the accounting faculty at the University of South Florida, the University of Central Florida, and the University of Florida.

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FICPA compliance practice aids: Valuable resource tools By Thomas F. Reilly, CPA

Editor’s Note: FICPA Committees are a way for members to engage with their peers and gain valuable insights into a particular practice area. They have the ability guide and shape the future of the profession for years to come. Many times, committees have been at the forefront of legislative and regulatory changes that have occurred in Florida. The State and Local Government Committee’s collaboration with the state’s Auditor General has produced two of the most comprehensive resources for local government and compliance auditors available: the “Compliance Auditing in Florida” and “Charter School” practice aids. This history of their development is a testament to the caliber of volunteer members serving throughout FICPA Committees. To become a member of an FICPA committee, please visit https://ficpa.org/get-involved/committees and sign up by April 23. Auditors of local government entities should be aware of the definition of a “financial audit” per Florida Statute (F.S.) Section 11.45, which refers to “an examination of financial statements in order to express an opinion on the fairness with which they are presented in conformity with generally accepted accounting principles and an examination to determine whether operations are properly conducted in accordance with legal and regularity requirements.” It is the latter part of this definition that has caused problems for some auditors in the past. A little history might help to gain perspective.

ing procedures in the conduct of the audits. Some of these audits were referred to the Board of Accountancy, which ordered follow-up investigations to determine the extent of the deficiencies. The results had one common theme – lack of appropriate compliance-audit work to comply with professional standards. Consequently, many CPA firms were put on probation and/or assessed additional continuing professional education (CPE) in compliance auditing and/or auditing local governments. A number of CPA firms with minimal local governmental audits abandoned this area of practice.

F.S. 11.45(7)(b) states, “The Auditor General, in consultation with the Board of Accountancy, shall review all audit reports submitted pursuant to F. S. 218.39” (“annual financial audit report”). The Auditor General’s review covers only the audit reports and financial statements. In the 1980s, representatives of the Florida Board of Accountancy conducted a concurrent review. The results of their review, as well as that of the Auditor General staff, indicated a large number of audit reports that were indicative of a failure to follow appropriate audit-

Determining all of the appropriate compliance areas to test or review on a local government audit can be exhaustive and time-consuming. Is there any assistance available to CPAs to address this vital area of an audit? Of course – the FICPA to the rescue!

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The FICPA became aware of the problems previously noted and set about to assist in any way possible. The State and Local Government Committee worked for two years to develop a compliance practice aid. This was done in consultation with the Florida Gen-

eral. In 1987, the Compliance Auditing in Florida practice aid was first issued; it was primarily related to municipalities. Due to their unique nature, separate practice aids were issued in 1991 for 1) Constitutional County Officers and 2) Special Districts. Several years later, these three practice aids were combined into one practice aid that we have today: Compliance Auditing in Florida – Counties, Municipalities, Special Districts. This document, currently 124 pages in length, is updated annually by members of the State and Local Government Committee. This practice aid has a wealth of information and is a must-have resource for all auditors of local governments in Florida. The document is available at no charge from the FICPA, and can be downloaded from the FICPA website. The document contains a wide range of information and is organized in relevant sections as follows: • General Audit Considerations • Compliance Requirements • Audit Scope and Reports • Individual Types of Local Governments

Counties • Board of County Commissioners • Clerk of the Circuit Court • County Comptroller • Sheriff • Tax Collector • Property Appraiser • Supervisor of Elections

Municipalities Special Districts • Appendices Reporting Requirements Sample Compliance Attestation Report Sample Management Letter – Schedule Format Sample Management Letter – Letter Format

• Contractual Obligations Charter schools started operating in Florida more than 20 years ago, and are a unique type of entity that, with a few specific exceptions, must follow governmental accounting standards. As such, they present another area of the governmental audit practice with its own specific needs, especially as it relates to compliance. Again – the FICPA to the rescue! The State and Local Government Committee developed the Charter School Practice Aid to assist auditors in this unique practice area. It is much shorter in length – 60 pages. It is also free of charge and available to be downloaded from the FICPA website. The pertinent contents are outlined as follows: • Historical Background • General Audit Considerations

Hierarchy of Laws

• Accounting and Financial Reporting

List of Legal Reference Web Sites

• Auditing

One of the more valuable sections of the practice aid specifically identifies the relevant laws and regulations specific to the type of government. These are also classified in the hierarchy of laws. That said, it is still incumbent on the auditor to identify the specific areas of compliance that need to be tested or reviewed. The hierarchy of laws outlined in the practice aid are: • Florida Constitution • Session Laws/Laws of Florida • Index to Special and Local Laws • Florida Statutes • Florida Statutes Annotated • Florida Administrative Code • Rules of the Auditor General • Attorney General Opinions • Codification of County Ordinances • Municipal Ordinances

• Compliance Auditing • Audit Report • Appendix I Exhibit I - Yellow Book Exhibit II - Research of Compliance Criteria Exhibit III - Compliance Checklist Exhibit IV - Sample Management Letter - Schedule Format Exhibit V - Sample Management Letter - Letter Format Exhibit VI - Sample Communication of Internal Control Related Matters Identified in an Audit (AU-C 265) Letter Exhibit VII - Sample Communication With Those Charged With Governance (AU-C 260) Letter Exhibit VIII - Financial Statement Presentation Under the Govern-

mental Model - Example 1 (Combined Format for Single Program School) Exhibit IX - Financial Statement Presentation Under the Governmental Model – Example 2 (Traditional Format) Exhibit X- Financial Statement Presentation Under the Not-ForProfit Model (FASB ASC 958-20555) Exhibit XI - Audit Report Submittal Checklist • Appendix II - Web addresses It is important the auditor gain a good understanding of the laws and regulations applicable to the type of local government being audited, as well as complying with professional standards pertaining to auditing for compliance. The FICPA practice aids 1) Compliance Auditing in Florida – Counties, Municipalities, Special Districts and 2) Charter School Practice Aid, are designed to assist CPAs in meeting their professional obligations in these areas. These valuable documents should be a vital part of the auditor’s reference materials. These practice aids are updated annually in consultation with the Auditor General’s office and digital versions can be downloaded on the FICPA website at www.ficpa.org/legislative-resources. Tom F. Reilly, CPA, is the partner in charge of accounting and auditing and quality control for Holland and Reilly in Orlando. He was a founding member of the FICPA committees that created “Compliance Auditing in Florida – Counties, Municipalities, Special Districts” and “Charter School Practice Aid” and has been involved in the annual updating of these documents. He is a past president of the Central Florida Chapter of the FICPA and a past member of the FICPA Board of Governors. He is currently the author and instructor of the FICPA course “Ethics for Governmental CPAs in Florida.”

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5 steps to streamline your sales and onboarding workflows By Josh Lance, CPA, CGMA

t many tax and accounting firms, the processes and workflows around client service are usually top notch. Accountants are experts in providing these services and do well with executing them on a regular basis. However, when it comes to sales and onboarding, accountants often struggle to create a workflow that guides their clients through the process and still provides a great experience. At Lance CPA Group, we have developed, streamlined, and automated our sales and onboarding services with the following five steps.  Step 1: Understand your customer’s journey

First, you need to get inside the mind of your customer. A customer-journey map traces four distinct phases:  I. Awareness. The prospect knows they are in need of an accountant and is doing the work to become aware of their choices. They may talk to peers or make use of search engines and social media. At this point, they are trying to gather information to make an informed decision.  II. Consideration and purchase. Your prospects have narrowed their search and started to meet with accountants to obtain proposals, assess prices, and determine a right fit. Prospects then make the purchase decision based on the factors they deem most important. This customer phase lines up with your sales phase; the more you understand a prospect’s process, the more you can improve your business sales. III. Onboarding. This is when the client is trusting you to take care of them and the phase of the journey exposed to buyer’s remorse if they quickly lose trust in you. You’ll need to handle this phase with care; a poor onboarding experience may doom your relationship.  IV. Service and advocacy. Your client is expecting you to deliver what you sold. You should be serving them well

and delighting them. In turn, they will be an advocate for you and start referring business to your firm. In understanding your customer’s journey, you are able to craft a better experience by designing your processes and workflows to meet and exceed their needs. Too often, I see firms focus on how the process works internally, overlooking the customer’s experience. A workflow that only works for your firm will cause your clients to make a quick exit.  Step 2: Map your existing workflows

Document your workflows as they exist today, even if you know you are going to change them. You can do this visually, using whiteboard software such as Miro, or by listing each step. Don’t start tweaking your workflows until you have documented them in full; you want a bird’s-eye view of your workflows as they exist. This way, you’ll see the inefficiencies and issues that exist, and then make systematic changes, rather than piecemeal changes. Step 3: Standardize your workflows

A standardized workflow allows you to do two things:  Create consistency. A good sales and onboarding workflow will have several people involved in the process, and they will need to be on the same page to deliver a great client experience. If your workflow is not standardized, you might miss steps in the process or have multiple people asking your client for the same thing. Discover automation opportunities. If your standard onboarding workflow involves sending out an intake form to a client once they sign their engagement letter, you can use automation to ensure this step happens each time, instead of requiring the manual, tedious work of an employee. At our firm, we use Practice Ignition to get our proposal and engagement letter signed off and approved by the client. Once they sign the letter, an automated email is sent to the client, outlining their next steps and providing a link to our intake form. By standardizing our workflows, we can create a more SPRING 2021 | FLORIDA CPA TODAY

efficient and effective process that will provide a better experience.  Step 4: Identify the necessary technology

In a good workflow, you will have three Ps: people, process, and programs (or technology). Identifying the right technology is critical to the automation process. For example, if you are using Intuit® Practice Management powered by Karbon alongside ProConnect Tax, each time you create a tax return, the steps and workflow that need to be completed will automatically be set up in Intuit Practice Management. This will ensure your workflow operates correctly each and every time, without the need for someone in your organization to set up the workflows for each client. Again, the goal is to provide a consistent experience.  Step 5: Reassess your client experience

The final step is to get feedback on the sales and onboarding experience. If your processes don’t serve the outcome, then you will need to reassess your workflow and make changes that will provide a great experience.

Seize the day

Your sales and onboarding workflow is your first opportunity to show your client how you care for them. If the experience leaves something to be desired, you may have started your relationship on the wrong foot. Standardized workflows help you to automate manual work, and ensure consistency. Creating a great sales and onboarding process will allow you to wow your clients and set your relationship on the right path.  Editor’s note: This article was originally published on the Intuit® Tax Pro Center.  ****  https://proconnect.intuit.com/taxprocenter/practice-management/steps-to-streamline-your-sales-and-onboardingworkflows/  Josh Lance, CPA, CGMA, is the head of accounting for Practice Ignition and an adjunct professor at Northwestern University. He was selected to the 2017 Class of the AICPA Leadership Academy and was named one of the 40 under 40 in 2017 by CPA Practice Advisor.

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2/12/2021 11:13:44 AM

STRATEGIC PARTNER CONTENT

Essential technology for a mobile workforce Christophe Réglat, president and CEO, Coaxis

ith the nationwide rollout of the COVID-19 vaccines and Dr. Anthony Fauci predicting a return to “a considerable degree of normality” by Fall 2021, businesses are beginning to reimagine what it will take to return their employees to a workplace that is fundamentally changed. The U.S. may have reached a tipping point in favor of working from home, according to CNBC, which reports the coronavirus pandemic is having a lasting impact on how work is conducted. It’s a view supported by a June 2020 survey by PricewaterhouseCoopers that found remote work gaining traction as a viable alternative to the workplace. Global Workplace Analytics has been studying workplace trends for more than a decade. Statistics from the company’s Telecommuting Trend Data published in March 2020 include: • 56% of workers (75 million U.S. employees) have a job where at least some of what they do could be done remotely. • 80% of employees want to work from home at least some of the time. • 40% more U.S. employers offer flexible workplace options than five years ago. Additionally, Global Workplace Analytics conservatively estimates a typical employer can save an average of $11,000 per half-time telecommuter per year, with the savings coming primarily from increased productivity, lower real estate costs, and reduced absenteeism and turnover. The company’s research also indicates that working remotely for two to three days during a five-day workweek is the most productive; it’s an option that gives employees several days for meetings, collaboration and interaction, and the opportunity to focus on their work for the rest of the week. According to CIO magazine, technology is one of the four major “pillars” of a successful remote-work strategy (along with structure, culture and legal/compliance).  Without it, remote work would be nearly impossible. But the shift away from the office requires more than a computer and internet access.

Here are six essential components for an efficient and productive mobile workforce: 1. Remote cloud platform

COVID-19 made cloud computing a game changer in a world where remote work has become the new normal. Cloud-based data hosting platform solutions provide an in-office desktop experience – including software, apps, files and permissions – that allow CPAs to securely perform remote accounting and tax services from any device that connects to the internet. 2. Hosted phone system

A hard-wired PBX office phone system is now as antiquated as the rotary phone.  Designed to connect all office desk phones on the same network, a PBX (Private Branch Exchange) system allows a company to have more phones than phone lines, using extensions to redirect calls to the business number. Technology, however, has enabled today’s business phone solutions to evolve dramatically, including IP PBX and VoIP systems. IP PBX uses internet protocol (IP) software for internal calls in place of antiquated hardware. There’s also a cloud-based IP PBX option that hosts all the software and data in the cloud instead of on a premises-based server. VoIP (Voice over Internet Protocol) is technology that allows users to make calls using the internet instead of an old-school phone line. Combined, these two phone systems offer a reliable solution for remote workforces. Two services that are considered good choices for mobile and remote teams are Grasshopper and Nextiva. 3. Project management software

The right technology and project management tools can help remote employees stay on the same page, even when they aren’t in the same building. They are also essential to ensure that client work remains on schedule and on budget by giving team members access to the data they need in a timely manner. Examples include Asana, Monday.com and SmartSheet.

SPRING 2021 | FLORIDA CPA TODAY

STRATEGIC PARTNER CONTENT

4. Communication platforms

For many businesses, communication and camaraderie are the two areas most impacted by remote work. Communication platforms like Slack and Microsoft Teams, with their dynamic and interactive chat room-like channels, are valuable tools for users to collaborate in real time. But written communications are still no substitute for meeting face to face, where it is easier to gauge facial expressions, body language and tone of voice. That’s where video conferencing services like Zoom and GoToMeeting can bridge the divide. 5. Learning management system

Employee onboarding and development is another challenging area for businesses with a remote workforce. A learning management systems (LMS) is a software-based platform that trains employees on the skills they need to stay relevant and compliant in their industry. It facilitates the management, delivery and measurement of e-learning programs such as compliance training and certification management, using online courses and real-time instruction sessions. Most systems can even be accessed via a smartphone. 6. Remote printing

Another way the cloud is reinventing the workplace is with services that allow companies to meet their mobile and remote employees’ print-on-demand needs. Cloud printing services enable printing from any web-connected device

FLORIDA CPA TODAY | SPRING 2021

– including smartphones, laptops and tablets – by routing print jobs to an internet-connected printer. The benefits of cloud printing also include eliminating the need to buy, deploy and manage remote printing hardware and software, and not having to worry about drivers, cables and compatibility issues with legacy printers. We live in a mobile world that has transformed the way people do business, enhancing productivity and workforce flexibility. Secure and reliable access to your firm’s IT infrastructure is the essential component that brings all of this technology together. Kimberly Ellison-Taylor, CPA, CGMA, CISA, is a transformational leader with a compelling background of strategy, finance, leadership, digital engagement, business development, and technology. Her career achievements include leadership roles at Oracle, Motorola, KPMG, Prince George’s County Government, and NASA Goddard Space Flight Center. In her most recent role at Oracle, Kimberly serves as an executive director in finance thought leadership, promoting finance transformation and digital strategies in organizations of all sizes. She is a former chairman of the board for AICPA, the Association of International CPAs, and the Maryland Association of CPAs. Christophe Réglat is president and CEO of Coaxis, an endorsed program for the FICPA. Coaxis provides CPA firms with a fully-hosted and managed network solution designed to remove the complexities of federal and industry compliances, curb the demands of maintaining an IT infrastructure, and greatly minimize the threat of cybercrime. For more information, call (850) 391-1022 or email lisa.bryant@coaxissolutions.com.

SPRING 2021 | FLORIDA CPA TODAY

STAFF REPORT

FICPA’s top 3 legislative session issues … so far By Justin Thames, director of governmental affairs

The FICPA has been closely monitoring the 2021 legislative session and has identified three key pieces of legislation pertinent to our members. The details of each bill are outlined below. 1. Public Accountancy Bill Senate Bill 616 by Sen. Joe Gruters, CPA House Bill 717 by Rep. Mike Caruso, CPA • Clarifies “licensure by endorsement” requirements. • Allows for CPE reciprocity for nonresident Florida CPAs. • Creates a “retired” status for CPAs 55 years or older. • FICPA action: The FICPA supports the legislation. 2. Legislative Review of Occupational Regulations Senate Bill 334 by Sen. Manny Diaz, Jr. • This bill creates an “Occupational Regulation Sunset Act” and outlines a process in which the legislature will review the “costs and benefits” of each occupational regulatory program. Prior to the sunset date, the legislature will review each occupation to determine “whether to allow

the program to expire, renew the program without modifications, renew the program with modifications, or provide for other appropriate actions”. • Specific to CPAs, the sunset date proposed in the bill is set for July 1, 2024. • FICPA action: The FICPA is learning more about the review process and meeting with the bill’s sponsor. 3. Civil Liability for Damage Relating to COVID-19 House Bill 7 by Rep. Lawrence McClure • The bill protects reasonably acting covered entities and institutions so that they can predict their COVID-19-related litigation risks, remain viable, and continue to contribute to the state’s well-being. • The bill provides civil immunity from COVID-19 liability to business entities, educational institutions, religious institutions, governmental entities, and other covered entities that acted in good faith during the COVID-19 pandemic For regular updates on the 2021 legislative session, be sure to follow our bi-weekly IMPACT Reports at FICPA.org/blog.

Make your voice heard — SUPPORT THE CPA/PAC.

Stand with our profession and make a voluntary contribution to the Florida CPA/PAC. Donating to the Florida CPA/PAC is the most effective way to ensure you have a voice in the political process. Your donations go directly towards vetting, educating, and electing pro-CPA, pro-business candidates who understand the issues affecting our profession. We carefully research and interview every candidate we support so that your dollars go towards supporting positive legislative change. And with multiple membership tiers and ways to give, we make it easy for you to make a difference this November.

VISIT FICPA.ORG/PAC TO DONATE TODAY Please note: Contributions are strictly voluntary and are not deductible for federal tax purposes. The Florida CPA/PAC is an entity completely separate from the FICPA. The Florida CPA/PAC is supported solely by the voluntary contributions of members of the FICPA and others.

FLORIDA CPA TODAY | SPRING 2021

STAFF REPORT

By Laura Cutchens, director, FICPA Scholarship Foundation

Thank you all for your continued support of the foundation! We are so very grateful to you for giving back and promoting the future of the profession! Here’s a look ahead to our upcoming events and information on how you can join us!

WHAT’S HAPPENING

July 23-24, 2021 Ocean Reef Club, Key Largo www.ficpascholarshipfoundation.org/retreat Join us at this exclusive resort for a casual dinner on Friday and the Chair Gala on Saturday, as we recognize the contributions of our outgoing chair, Bill Moore.

HOW TO GIVE BACK April 17, 2021 – 7:30 a.m. ET Las Olas Centre, Ft. Lauderdale (and Virtual) www.ficpascholarshipfoundation.org/1040k Support our scholarships with sponsorship or by getting out in the fresh air and running the 5K! You can run with us in Fort Lauderdale or virtually participate from your neighborhood!

Donate: Consider giving a monthly gift to the foundation to support future scholarships! Volunteer: We are once again staging events and looking for help is needed to run them. Choose your event and sign up. Corporate giving: Become a corporate partner and support our mission assisting the education of students. Planned giving: Do you have the foundation in your will? Please become a member of our Ring Society. Employer matching: Many companies will match your donations to a 501(c)3. Contact your HR department to see if your company will match your contributions. AmazonSmile: Shopping online with Amazon? If so, add the FICPA Scholarship Foundation as your charity of choice! A portion of your purchases will benefit our foundation at no additional cost to you.

May 7, 2021 – 8:00 a.m. ET Eagle Creek Golf Club, Orlando www.ficpascholarshipfoundation.org/golfing-fore-education Hit the links and support the Mia A. Thomas Endowment Fund, which provides a scholarship to a fourth- or fifth-year accounting student at the University of Central Florida. SPRING 2021 | FLORIDA CPA TODAY

COMMITTEE COLUMN

BUSINESS TECHNOLOGY

Future of accounting By David Bergstein, CPA, CITP, CGMA, chief innovation officer, A David Bergstein CPA

Accounting is a process of recording, sorting and summarizing economic data to permit informed judgments by the end users. This statement will never change, but how you get there has and will. Accounting professionals have gone from paper to digital. Most of our profession is made up of small practitioners who will always need to make sure the compliance work gets done. This work can and should be automated so that solo practitioners can raise the level of value they provide via value-added advisory services. Payroll, which used to be tedious to perform, can now be automated via service providers such as AccountantsWorld, ADP, Paychex, Intuit, and many others. Accountants need to recognize that their clients want help and advice on what they can do to be more profitable, liquid and solvent. They want their firm to focus on moving forward, not with historical financial statements, but with real-time answers about how to increase margins and reduce costs. The process of accounting has now entered the world of machine learning and artificial intelligence. We can now employ bots to do the mechanical processes.

A bot is a software program that operates on the Internet and performs repetitive tasks. Bots often imitate or replace a human user’s behavior. Typically, they can perform tasks faster and more accurately than a human. For example, a firm might set up a bot to receive invoices, extract the data, and enter it into a bookkeeping system. This robotic process automation frees up the practitioner to do higher-value work. The important point to recognize is that you should be charging for this, rather than giving it away. Many of the larger firms are now charging for advisory services for PPP loans, for instance. Once your firm adopts bots, you can work your way up the scale to utilizing machine-learning tools to help with deci36

FLORIDA CPA TODAY | SPRING 2021

sion making. One of these tools is PowerBI, a business-intelligence service from Microsoft that allows users to create their own reports and dashboard. Separately, CashFlowTool easily allows you to forecast your clients’ cash flow. This tool can be particularly valuable, as having monthly meetings with your clients and advising them how to improve cash flow is a billable advisory service. In both cases, the tool does the work in an automated fashion, and you deliver the information as the trusted advisor. In the artificial intelligence space, Vic.ai bills itself as “the next generation of efficiency and accuracy for accounting firms, leveraging AI trained on hundreds of millions of documents and transactions for unparalleled performance,” with “no more manual data entry, approvals, or ledger postings.” Vic.ai integrates with the main accounting systems and supports custom API integration with nearly any type of system. Members of several large firms that utilize this service have told me how it saved them time with accounts-payable processing. Bill.com is another tool with a direct, automatic sync with major accounting platforms that can simplify your business payments. Automation and artificial intelligence are both the future and the present, leaving it up to us as accountants to reinvent ourselves. We should make sure compliance is automated, then sell ourselves as advisors to our clients. I have gone from promoting myself as an accountant to being more of an advisor and helping other accountants learn about available tools via www.appsmaven.com. Are you ready to take your practice to the next level? David Bergstein has been a practicing accountant since 1966. He has held high-level positions at the Top 3 accounting software providers and is an adjunct college professor. He has been an IRS chief and member of their speaker’s bureau. Accounting Today listed David as one of their Top 100 Most Influential People in the accounting profession in 2015 and 2017. Val Steed, CEO at K2 Enterprises, LLC, added him to his Top 15 Accounting Technology Executives of all time.

Member Savings Programs

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COMMITTEE COLUMN

PEER REVIEW

Navigating peer review By David S. Holland, CPA

The sound of air rushing past the aircraft’s cabin was deafening as we flew over the Pacific. A combat evaluation checkride navigator sat in the jump seat, watching my every move. I had sat where he was. After four years in the U.S. Air Force flying the KC-135Q Stratotanker, I was an instructor and evaluation navigator. This time it was my turn to be checked. In flight for a couple of hours, we lost cabin pressure. The pilots plunged the aircraft to 10,000 feet, where we could breathe without oxygen masks. As the pilots safely directed the aircraft, someone had to take over the radios. I “stepped in” to maintain contact with air traffic control during the emergency, using sunlines, pressure patterns, and dead reckoning to monitor our position. Of course, that wasn’t my job, and I found out the check navigator wrote me up for not following standard procedures. I think of that episode almost 50 years later, amused to be playing a similar role in my accounting career as a peer reviewer. Every three years, peer reviewers give accounting firms “check rides,” evaluating how firms comply with accounting and auditing standards made understandable by volumes of practice aids. It’s a lot of work and study to maintain currency in one’s specialty. There are traps in every level of service, from preparation engagements to single audits. Those of us not engaged in pursuing a solid understanding of the standards can find ourselves lost, with little time to resolve our issues. The pressure to find quick answers for complex problems can lead to less-than-quality work. The AICPA Peer Review Program arose in the early 1990s from its predecessor, Quality Review, and continues to evolve. Now all states and jurisdictions require some form of peer review. Significant changes occurred in 2014, when the Department of Labor (DOL) called out the accounting profession for “substandard” work in the conduct of employee benefits plan audits. Employee benefit plans and government audits, including single audits, became “high risk,” which 38

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heightened attention, producing checklists with bold questions representing engagements not materially being performed in accordance with professional standards. This leads us to the AICPA’s Enhancing Audit Quality (EAQ) initiative created in 2014. The four-pronged approach means to 1) collect data, 2) analyze data, 3) detect trends, and 4) take action. The focus areas for 2021 are: • Covid-19 response, auditing revenue recognition • Risk assessment and response • Engagement acceptance and continuance • Emerging attestation engagements The risk assessment standards, with us for 15 years, still aren’t quite mastered, but without the peer review program we might not know about performance trends in our profession. For the time being, the peer reviewer is on the ground floor, uncovering data needed for the EAQ Initiative to help practitioners do a better job. The peer reviewer visits the firm, reviews its system of quality control and issues a report to grade the firm’s performance and reporting, according to professional standards. When something is amiss, the reviewer must evaluate its significance, determine how it occurred and its impact on the report. The more challenging task is identifying the systemic cause for the matter. The reviewer can’t dismiss a matter of noncompliance without finding out if there is an underlying reason for its occurrence and if it occurred in other engagements. The reviewer needs the firm’s input in that determination. The conversation can help pinpoint some process within the firm’s system that isn’t working well. Today, the program is stratified with layers of checkpoints. Peer reviewers check firms; the technical reviewer checks peer reviewers; and the technical review is checked by the Review Acceptance Body (RAB), which also evaluates the

peer reviewer’s performance. The process is monitored by the AICPA, whose representatives travel to state administering entities to check the RABs’ effectiveness, technical reviewer and the administering entity itself. The AICPA Enhanced Oversight Program provides additional assurance, where selected peer reviews are subjected to more scrutiny by “subject-matter experts” (SMEs). To a great extent, this activity is memorialized in the relatively new online Peer Review Information System Manager Application (PRIMA). Few of us have a handle on this system yet, but there are signs that it is improving its interface with humans. This automation coincides with the evolution in the accounting profession. Technological breakthroughs (blockchain and data analytics) foretell a time when manual input, spreadsheets and tax returns may disappear. A new audit evidence standard will address how we document the support for our audit work. The trend is industry-altering. Fifty years ago, when I used a sextant to find my way over the ocean or across the North Pole, I didn’t imagine the navigator’s job would become obsolete.

Of course, the purpose of all this is to improve the quality of work performed in the accounting. A profession’s respectability is its ticket to success. No profession can survive without the general approval of the public who uses its services. It makes sense the AICPA is concerned about quality enhancement, promoting it so avidly for decades. But one must ask: “How do I know the profession is doing quality work?” The answer is sought in peer review. My participation in the review program is one of my more rewarding ventures. Peer review has helped me engage in my profession and enjoy it. I’ve met talented accountants in the profession by participating in RABs, working on the FICPA Peer Review Committee and attending annual conferences. Best of all, I’ve made many friends over the years while involved in the peer review. David S. Holland, CPA is a partner with Holland & Reilly.  He is the past chair and a current member of the Peer Review committee member who has performed peer reviews since 1992.

Put our intellectual capital to work for you Burns Nevins Wealth Management Group Robert Burns, CFP®, ChFC®, CPWA® Executive Director 3825 PGA Blvd., Floor 9 | Palm Beach Gardens, FL 33410 | 561.694.5666 robert.m.burns@jpmorgan.com

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. Chartered Financial Consultant® (“ChFC®”) are registered trademarks owned by The American College of Financial Services. Investments & Wealth Institute® (the Institute) is the owner of the certification marks CIMA, (“Certified Investment Management Analyst®) and CPWA, (Certified Private Wealth Advisor®). “J.P. Morgan Securities” is a brand name for a wealth management business conducted by JPMorgan Chase & Co (“JPMC”) and its subsidiaries worldwide. J.P. Morgan Securities offers investment products and services through J.P. Morgan Securities, LLC, member FINRA and SIPC. Bank products and services are offered by JPMorgan Chase Bank, N.A. and its bank affiliates. INVESTMENT PRODUCTS: • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE © 2020 JPMorgan Chase & Co. All rights reserved.

SPRING 2021 | FLORIDA CPA TODAY

DOR UPDATE

Next steps following a Florida tax audit By Barry Ray, government analyst II, General Tax Administration, Florida Department of Revenue

Throughout the year, the Florida Department of Revenue audits businesses to ensure that state taxes are collected, reported, and paid accurately and in a timely manner. Although a tax audit is an enforcement tool to monitor and evaluate tax compliance, it can also help businesses identify and correct bookkeeping problems that could cause additional tax liabilities. After audit fieldwork, the taxpayer will receive a Notice of Proposed Assessment (NOPA) that shows the amount due. Along with the NOPA, the taxpayer is provided with information describing his or her rights to protest the assessment. Three protest options are available. The taxpayer can: • File a written informal protest with the Florida Department of Revenue (or request an extension to file an informal protest within 60 days of the date of the NOPA).

as well as a brochure, “How to Pay Your Audit Assessment and Notice of Taxpayer Rights,” which is also online at floridarevenue.com/Forms_library/ current/gt800004.pdf. The Department is aware that many Florida taxpayers continue to struggle under economic uncertainties caused by COVID-19 and is prepared to assist them in ensuring compliance. Taxpayers who have difficulty paying an assessment following a tax audit are urged to contact the Florida Department of Revenue, Case Processing, at (850) 617-8565 to arrange a payment schedule.

More information about the tax audit process is available at floridarevenue. com/taxes/compliance/Pages/audit. aspx. These are challenging times for all Floridians. Rest assured that the Florida Department of Revenue looks forward to working with state taxpayers to resolve their audit assessments in a fair, understandable, and expeditious manner.

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• File a written formal protest petitioning for a review by the Florida Division of Administrative Hearings within 120 days from the date the Department issued the NOPA. • File a written formal protest by filing an action in circuit court within 120 days from the date the Department issued the NOPA. In January, the Department began a pilot initiative to assist taxpayers in meeting their requirements. Under this initiative, an Audit Assessment Reminder Notice will be sent to taxpayers who failed to respond to the NOPA by either paying the balance due or protesting the assessment. Included with the Audit Assessment Reminder Notice is a copy of the original NOPA, 40

FLORIDA CPA TODAY | SPRING 2021

Endorsed By

GET YOUR FREE ASSESSMENT: Michael Dringus 609-709-6985 mdringus@merchantadvocate.com www.merchantadvocate.com

ON-SITE

Learning Sessions

THE LEARNING YOU NEED. THE FLEXIBILITY YOU WANT.

On-site learning. Choose the time, date and instructors for your customized CPE. The FICPA wants to be your strategic learning partner. We offer customized on-site training for groups of 15 or more. Options range from four-hour sessions to multi-day training events. The FICPA partners with national learning providers, allowing us to bring current topics to firms and businesses at your convenience.

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FULL PROGRAM WITH INSTRUCTOR

Our expert and qualified instructors will guide the curriculum and the conversation for you, in accordance with the customized goals for your team. On-site training is simply the easiest way to bring the best customized learning to your accounting and finance staff. And, because the instruction is being offered to a group, group discounts apply.

Call or text 407-538-6048 or email on-site@ficpa.org to learn more about how FICPA on-site learning can be tailored to the needs of your organization. SPRING 2021 | FLORIDA CPA TODAY Learn more and explore course offerings at ficpa.org/onsite

CPAS IN THE SPOTLIGHT

BOCA RATON GRAU & ASSOCIATES

Grau & Associates has promoted David Caplivski, CPA, to partner. Caplivski has been with Grau & Associates since 2010. He is an active member of the AICPA, FICPA, GFOA, and FASD. “I’m proud of what I’ve been able to accomplish with my team at Grau & Associates over my 10-year tenure, and I’m excited to take on new professional challenges in this role,” Caplivski said. “I look forward to expanding my skill set and offering our clients the best service in the industry.”

CENTRAL FLORIDA BERMAN HOPKINS

Berman Hopkins & Associates is proud to announce that Chris McDirmit has been made managing partner. He is the fourth managing partner in the firm’s 63-year history. In this role, he will lead the largest locally owned CPA firm in Central Florida, with offices in Melbourne, Orlando and Titusville. An Orlando native, Chris brings 20 years of public accounting experience to this leadership position.

MIAMI WATERS|ORTIZ

Waters|Ortiz Accounting, dedicated leaders in non-profit accounting, announces a merger between their companies, ALW Accounting & Consulting and Ortiz Financial Solutions. The new firm will specialize in providing accounting expertise for small busi-

nesses and nonprofit organizations. This strategic partnership and addition of resources will make it possible to better serve their clients and increase efficiency and productivity. Amanda Waters, CPA, and Roxanne Ortiz, CPA, have worked together for many years both as auditors at Goldstein Schechter Amanda Koch Accounting & Waters Consulting firm (now BDO USA) and in collaboration with their individually owned accounting firms. Waters|Ortiz Accounting was formed out of Roxanne a passion for serving Ortiz non-profit organizations and helping them achieve financial excellence. This merger is exciting news for Amanda, Roxanne and certainly their clients.

ORLANDO

Ellrich, Neal, Smith & Stohlman, P.A. (ENSS), a full-service certified public accounting firm, is expanding into Central Florida with the opening of its new office in Orlando. The Orlando location is led by FICPA member Keith E. Gardere, CPA/ABV, who joined the firm in January 2007 and is now a shareholder, currently working in the business valuation and litigation service department. With the firm’s growth and the additional office in Orlando, more clients will now benefit from Gardere’s expertise and experience.

SOUTH FLORIDA TOASTMASTERS

Congratulations to Barbara B. Strasdas, who is currently serving as the District 47 Director of Toastmasters International.  Barbara She directly adminStrasdas isters and oversees the day-to-day operations, finances and human resources of the district, which includes Southeast Florida and the Bahamas. Barbara is now in her 21st year as a toastmaster, having served in a variety of volunteer roles. Barbara served on the FICPA’s Women’s Leadership Committee for seven years, chairing the committee twice.

TALLAHASSEE THOMAS HOWELL FERGUSON

Thomas Howell Ferguson Thomas Howell Ferguson P.A. CPAs congratulates Ying Wang, a senior manager in the firm’s tax services department, on being selected as one of the 2021 “25 Women You Need to Know,” by the Tallahassee Democrat. Wang currently serves as a board member for Girls on the Run Panhandle and is a member of Leadership Tallahassee Class 36.

Congratulations to the Spring 2021 CPAs in the Spotlight! Email your submission to communications@ficpa.org. 42

FLORIDA CPA TODAY | SPRING 2021

24/7

LEARNING

LIBRARY

ALL-NEW FICPA ON-DEMAND CPE SUBSCRIPTION

The Best Florida-Specific Content Available. 24/7 Access. Includes Florida Ethics. Best Value.

To learn more, visit: FICPA.ORG/LEARNING-LIBRARY SPRING 2021 | FLORIDA CPA TODAY

MARKETPLACE

Classified Ads For information on rates and classified ad policies, visit ficpa.org/marketplace. PRACTICES WANTED FOR PURCHASE OR MERGER

PRACTICES FOR SALE

READY TO MERGE OR SELL YOUR FIRM? Are you a retirement-minded CPA but don’t have a clear plan of what to do? Give us a call. KSDT CPA is one of South Florida’s fastest-growing firms. Contact Jeff Taraboulos at info@ksdt-cpa.com or (305) 670-3370 to learn about favorable purchase terms.

PROFITABLE, ONE-OWNER CPA FIRM FOR SALE in high-growth area of Palm Coast/Flagler County. Annual revenues of $900K with cash flow of $360K. Experienced staff of six full-time and two to three seasonal preparers. Firm could be grown exponentially with ambitious owner through organic growth, marketing, and/or adding new services. Seller willing to stay on for lengthy transition with decreasing workload. Revenues are 82% tax, 12% accounting, and 6% other. Software is Thomson Reuters CS Professional Products delivered via Virtual Office. flaglercpafirmforsale@gmail.com

BUYERS LOOKING FOR FIRMS TO PURCHASE IN JACKSONVILLE, ORLANDO, TAMPA, AND MIAMI. Successful transitions require experienced, confidential, professional services you can trust. We specialize exclusively in the brokerage of accounting firms. List your firm with a professional. Call David Akins, CPA, at 877-277-0272 or visit our website at www.akinsprofessionalbrokerage.com.

FLORIDA CPA TODAY | SPRING 2021

FICPA Conferences Are Once Again Live and In Person SAVE THE DATE FOR THESE UPCOMING EVENTS NEW LOCATION!

August 5-7, 2021

October 22, 2021

Disney Yacht & Beach Cub, Orlando

September 23-24, 2021 Rosen Plaza Hotel, Orlando

Renaissance Orlando Airport Hotel

FICPA .ORG/SVC

FICPA .ORG/HCC

FICPA .ORG/CIC

NEW LOCATION!

April 29-30, 2021

Rosen Plaza Hotel, Orlando 9700 International Dr, Orlando, FL 32819 IN PERSON AND LIVESTREAM

The FICPA Health Care Industry Conference is specifically designed for CPAs, CFOs, and other financial officers working in Florida’s health care industry. With health care finance constantly evolving, this event keeps you up to speed on new rules and regulations. Be sure to visit with our solution experts in the exhibit hall and catch up with your peers at the welcome reception.

FICPA.ORG/HCC ENDORSED BY:

October 28-29, 2021 The Barrymore Hotel, Tampa

October 28-29, 2021 Embassy Suites, Estero

Signature Grand, Ft. Lauderdale

FICPA .ORG/USF

FICPA .ORG/FGCU

FICPA .ORG/SFS

November 8-10, 2021

November 11-12, 2021

November 18-19, 2021

Hilton University of Florida, Gainesville

Rosen Shingle Creek, Orlando

FICPA .ORG/UFAC

FICPA .ORG/CIRA

TO SEE ALL FICPA CONFERENCES & TO REGISTER VISIT, FICPA.ORG/CONFERENCES

PRESORTED STANDARD U.S. POSTAGE

PAID

Florida Institute of Certified Public Accountants 3800 Esplanade Way, Suite 210 Tallahassee, FL 32311

Tallahassee, FL Permit No. 144

AUGUST 26-27, 2021 Location: Fully virtual CPE: Up to 16 Hours CPAs working in state and local governments face a unique and rapidly changing set of challenges. The playing field is in constant motion. The FICPA's State & Local Government Accounting Conference brings together experts in the field to provide attendees the information they need to navigate the ethical and practical demands of public services. We'll address everything from GASB, legislative and auditor general updates to fraud and emerging issues in government. We'll also offer an update from the Department of Financial Services and discussions on technology, the CARES Act and more. This conference is a must for CPAs and accountants doing business in government.