Insight Magazine - Fall 2021

The New Post-Pandemic Value Drivers

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The Business Case for ESG Reporting

Three Ways to Combat the Big Quit

Has Destination CPA Lost Its Appeal?

Taxing Cryptocurrency

Is Your Cybersecurity Strategy Still Relevant?

Surveying SPACs

30 Director’s Cut To SPAC or Not to SPAC?

By Kristie P. Paskvan, CPA, MBA

32 Practice Perspectives

Four Ways to Make Remote Business Development Work

By Art Kuesel

34 Ethics Engaged

The Ethics of ESG Investing

By Elizabeth Pittelkow Kittner, CPA, CGMA, CITP, DTM

36 Financially Speaking Surveying SPACs: A Skeptic’s Stance

By Mark J. Gilbert, CPA/PFS, MBA

38 Inside Finance Analyzing Two Accounting Approaches for Cryptocurrencies

By Nancy Miller, CPA

40 Tax Decoded

Reviewing the Revised Uniform Unclaimed Property Act By Keith Staats, JD

2021 ILLINOIS CPA SOCIETY TOWN HALL FORUMS

State of the CPA Profession

ILLINOIS CPA SOCIETY

550 W. Jackson Boulevard, Suite 900, Chicago, IL 60661

www.icpas.org

Publisher/President & CEO

Todd Shapiro

Editor

Derrick Lilly

Assistant Editor

Hilary Collins

Creative Director

Gene Levitan

Copy Editors

Mari Watts | Jennifer Schultz, CPA

Photography Derrick Lilly | iStock

Circulation

John McQuillan

ICPAS OFFICERS

Chairperson

Thomas B. Murtagh, CPA, JD | BKD CPAs & Advisors

Vice Chairperson

Mary K. Fuller, CPA | Shepard Schwartz & Harris LLP

Secretary

Deborah K. Rood, CPA, MST | CNA Insurance

Treasurer

Jonathan W. Hauser, CPA | KPMG LLP

Immediate Past Chairperson

Dorri C. McWhorter, CPA, CGMA, CITP | YMCA Metropolitan Chicago

ICPAS BOARD OF DIRECTORS

John C. Bird, CPA | RSM US LLP

Brian J. Blaha, CPA | Wipfli LLP

Jennifer L. Cavanaugh, CPA | Grant Thornton LLP

Pedro A. Diaz De Leon, CPA, CFE | Kemper Corporation

Kimi L. Ellen, CPA | Benford Brown & Associates LLC

Stephen R. Ferrara, CPA | BDO USA LLP

Jennifer L. Goettler, CPA, CFE | Sikich LLP

Scott E. Hurwitz, CPA | Deloitte LLP

Joshua D. Lance, CPA, CGMA | Lance CPA Group

Enrique Lopez, CPA | Lopez & Company CPAs Ltd.

Stella Marie Santos, CPA | Adelfia LLC

Brian B. Stanko, PhD, CPA | Loyola University

Richard C. Tarapchak, CPA | II-VI Inc.

Mark W. Wolfgram, CPA, MST | Bel Brands USA Inc.

BACK ISSUES + REPRINTS

Back issues may be available. Articles may be reproduced with permission. Please send requests to lillyd@icpas.org.

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Want to reach 22,600+ accounting and finance professionals? Advertising in Insight and with the Illinois CPA Society gives you access to Illinois’ largest financial community. Contact Mike Walker at mike@rwwcompany.com.

Insight is the magazine of the Illinois CPA Society. Statements or articles of opinion appearing in Insight are not necessarily the views of the Illinois CPA Society. The materials and information contained within Insight are offered as information only and not as practice, financial, accounting, legal or other professional advice. Readers are strongly encouraged to consult with an appropriate professional advisor before acting on the information contained in this publication. It is Insight’s policy not to knowingly accept advertising that discriminates on the basis of race, religion, sex, age or origin. The Illinois CPA Society reserves the right to reject paid advertising that does not meet Insight’s qualifications or that may detract from its professional and ethical standards. The Illinois CPA Society does not necessarily endorse the non-Society resources, services or products that may appear or be referenced within Insight, and makes no representation or warranties about the products or services they may provide or their accuracy or claims. The Illinois CPA Society does not guarantee delivery dates for Insight. The Society disclaims all warranties, express or implied, and assumes no responsibility whatsoever for damages incurred as a result of delays in delivering Insight. Insight (ISSN1053-8542) is published four times a year, in spring, summer, fall, and winter, by the Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA, 312.993.0407. Copyright © 2021. No part of the contents may be reproduced by any means without the written consent of Insight. Send requests to the address above. Periodicals postage paid at Chicago, IL and at additional mailing offices. POSTMASTER: Send address changes to: Insight, Illinois CPA Society, 550 W. Jackson, Suite 900, Chicago, IL 60661, USA.

Has Destination CPA Lost Its Appeal?

ne of the things we’re constantly monitoring at the Illinois CPA Society is the new CPA pipeline, which has become more important than ever given the aging of our profession. To put it in perspective, 44 percent of ICPAS members are over age 55—with 30 percent over age 60—and, as such, we expect to see significantly more retirements in the upcoming years. In fact, during his ICPAS SUMMIT21 keynote, BMO Global Asset Management Senior Investment Strategist Derek Sasveld, CFA, pointed out that the ongoing pandemic and strong equity market returns during the last 18 months have led many workers in their 50s and older to choose to leave the workforce even earlier than expected.

So, it should go without saying that attracting new CPAs will be critical to replenishing the pipeline—but therein lies a disturbing trend. The AICPA issues a Trends report every two years, the last in 2019, in which they track first-time CPA exam takers. After steadily increasing during the early 2000s and then flattening out from 2012-2015, there was a steep decline of first-time exam takers in 2017 and again in 2018, reaching levels not seen in a decade or more. Coupled with this data point are increasing concerns as to the CPA credential’s relevance. According to the 2019 Trends report, U.S. CPA firm hiring of accounting graduates fell almost 30 percent from 2014 to 2018, while hiring of non-CPAs increased to 31 percent of total hires (up from 20 percent in 2016). Expanded use of technology, which is replacing tasks previously performed by people, is driving this decline. As a result of the declining demand, accountants’ starting salaries have been flat and lagging other careers for years.

To better understand the other factors driving the above trends, we launched a research project and issued our findings in the Insight Special Feature, “A CPA Pipeline Report: Decoding the Decline.” We felt it was important to get hard data by surveying students and young professionals and dispensing with supposition. After all, everyone has their own theories about the pipeline’s decline, the most often given reason being the 150-credit hour requirement to become a CPA.

What did we learn? The top reason for not pursuing the CPA credential was the time commitment. Other leading reasons for not sitting for the CPA exam included a lack of relevance for the work respondents were doing or intended to do, employers aren’t requiring or supporting it and, overall, credentials weren’t viewed

as desirable. The 150-credit hour requirement didn’t even make the top four reasons, which shouldn’t be a surprise since it’s been in place for more than 20 years (and we saw increasing or steady firsttime exam takers during most of that period).

We also asked who most influenced one’s decision to pursue the credential or not. Historically, we always thought that one’s employer was the most influential. What we heard in the survey was “self” was the top influencer, and “self” incorporated many factors, including a lack of desire to work in public accounting for most of one’s career. Survey respondents also told us that audit, accounting, and tax are the words most associated with the CPA credential.

So, how do we reverse this trend? I think we need to become more employee-centric and focus on work that appeals to a socially conscious generation that values society and work-life balance like no generation before. I also think we need to make the work more engaging and personally fulfilling. The adoption of artificial intelligence and automation solutions—which has only accelerated during the pandemic—is already changing the way work is done in most large firms, eliminating task-based compliance activities. By empowering employees to become the “most trusted and strategic business advisors,” we can give them purpose and allow them to help make the world a better place by helping our clients and Main Street businesses be successful, which ultimately leads to more job opportunities and a positive economic impact on the communities we serve and live in.

I have hope that we can turn the trend of declining new CPAs, but it won’t happen by itself or through osmosis. It will take us looking at the world, not through our lens but through the lens of those who work for us. We must embrace the oncoming technological revolution, but instead of using the newfound efficiency to add another audit or tax return, we must start to think proactively about how we can help our clients and companies be successful and ensure our employees can have both balance and career advancement. We can make becoming a CPA a desired destination again.

It used to be that if you earned an accounting degree, earning your CPA credential was your next destination. Here’s how we get the CPA credential back on candidates’ maps.

INSIGHTS FROM TODD SHAPIRO, ICPAS PRESIDENT & CEO @Todd_ICPAS

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capitolreport

The Two Elephants in the Statehouse

Even after an extraordinarily productive spring legislative session, two big problems face Illinois: funding public pensions and the unemployment insurance trust.

WhileIllinois’ spring legislative session typically sees 300-400 bills passed and sent to the governor, an unprecedented 652 bills made their way to Gov. J.B. Pritzker this year. Still, two massive elephants are roaming under the statehouse dome that no one wants to address: the state’s public pension problem and the estimated $5 billion deficit in the unemployment insurance trust fund.

THE PUBLIC PENSION PROBLEM

Illinois has long struggled with funding its public pensions and aligning the pension system with contemporary economic and workplace realities. In fact, public pensions weren’t even discussed during the spring legislative session, nor do they appear to be a priority. The last substantive attempt at pension reform was in 2014 with Public Act 98-599, which among other things reduced retirement annuity benefits for individuals who first became members of one of Illinois’ five state-funded pension systems prior to Jan. 1, 2011. However, the Illinois Supreme Court invalidated the act in its entirety for violating the pension protection clause embedded in the Illinois Constitution.

Unsurprisingly, the situation has only grown more dire. Earlier this summer, the Illinois General Assembly’s nonpartisan fiscal unit, the Commission on Government Forecasting and Accountability (COGFA), released a report highlighting the financial instability of our public pension systems. According to the report, the unfunded pension liability for the state’s five retirement systems increased by $7 billion in fiscal year 2020 to reach a total liability of $144.2 billion. To put that in perspective, taxpayer contributions to the pension systems are scheduled to increase by $500 million to a total of just $9.76 billion in 2021.

The COGFA report provides two reasons for the deepening pension debt: First, even with the $9.76 billion taxpayer contribution, the state still isn’t paying what actuaries say is needed to hit the goal of 90 percent funding by 2045. Second is the faulty assumption that investments would yield returns of 6.5-7 percent, which has not happened. The Teachers’ Retirement System, for instance, only achieved a 0.6 percent return on investments.

While Gov. Pritzker suggests that we’re approaching a pivot point as more Tier 1 workers with higher retirement benefits are replaced by Tier 2 workers hired after 2011, the COGFA report illustrates that Tier 2 worker contributions will slowly rise over the next 10 years, moving from 47 percent to 54 percent—leaving a substantial funding gap to close.

Admittedly, the pension systems don’t have to come up with cash to satisfy their liabilities all at once. However, the numbers show that the gap is widening, not narrowing, necessitating action for long-term fiscal sustainability. It’s clear that something needs to be done. If not, pension obligations will continue to absorb ever-larger portions of the state budget and discretionary spending, edging out other important programs and services for Illinois’ citizens.

THE UNEMPLOYMENT INSURANCE TRUST FUND FALLOUT

Each state has an unemployment insurance trust fund maintained by the U.S. Department of the Treasury that’s funded by the state’s employers through insurance premiums collected via payroll taxes. The rates that employers pay into Illinois’ fund are determined by a

LEGISLATIVE INSIGHTS FROM MARTY GREEN, ESQ., ICPAS VP OF GOVERNMENT RELATIONS @GreenMarty

complex formula using unemployment rates, the balance of the trust fund, employer experience, number of employees, and other factors.

During normal economic times, incoming funds outpace the amount of outgoing unemployment benefits, keeping the trust fund solvent. The devastating economic impacts of COVID-19 and the sustained high unemployment rate have taken a toll on the fund that cannot be fixed by the reimbursable benefits of the federal pandemic relief measures.

Business and labor groups have sounded the alarm to legislators about the mounting deficit, which now stands at an estimated $5 billion, and the potential for payroll tax increases and cuts to unemployment benefits if the growing deficit isn’t addressed. The current fiscal year state operating budget allocates $100 million to the fund, but it’s earmarked to cover expanding unemployment insurance benefits, non-instructional education employee claims, and the excess unemployment money sent to some Illinoisans through no fault of their own.

Worse, Illinois is set to pay hefty interest payments on the $5 billion deficit as the state “borrowed” from the Title XII advance to pay unemployment insurance claims. As a part of the COVID-19 relief packages, Congress imposed a moratorium on Title XII interest payments, but that expired on Sept. 6, 2021. Illinois has allocated $10 million for interest payments in the current fiscal year, with the first payment due on September 30. There are estimates that interest payments could be as high as $14 million for the fourth quarter of 2021 and up to $60 million annually while the deficit remains.

So far, the governor and legislative leaders have been reluctant to use the remaining unallocated $5 billion of the $8.1 billion the state

received from the American Rescue Plan for this purpose. This money can be used through 2024 as long as expenditures fall within the four categories allowed under the Treasury’s rules—using federal relief funds for pension fund deposits and directly or indirectly offsetting tax revenue is specifically prohibited. However, one of the broad categories of authorized expenditures is responding to negative economic impacts. It would seem that the payment of unemployment benefits would fall within the category of a necessary measure due to the economic hardships caused by COVID-19.

Gov. Pritzker hasn’t publicly addressed the enormity of the situation and its potential impact on employers other than saying he’s seeking further federal aid. Unless there’s yet another federal stimulus package, or a significant portion of the remaining $5 billion from the American Rescue Plan is allocated to the unemployment insurance trust fund, ultimately employers are looking at higher payroll tax rates coupled with a reduction in benefits—and kicking the can down the road will only exacerbate the problem.

Oddly enough, the three major credit rating agencies surprisingly upgraded Illinois’ bond ratings over the summer due to an improved fiscal situation, which could lower the cost of Illinois’ debt. But while Illinois’ leaders have focused on paying down the state’s remaining debt with the Federal Reserve, these two looming issues continue to threaten our economic recovery and degrade the state’s long-term fiscal viability. As former Illinois Senate Majority Leader W. Russell Arrington once said in response to an impasse on critical legislation: “We’re here to solve problems, and we didn’t solve the problem.” Perhaps we should take note of Arrington’s wisdom now and turn our focus toward the two elephants stuck in the statehouse.

Taxing Cryptocurrency: What CPAs Need to Know

In a loosely regulated and rapidly changing cryptocurrency world, CPAs must build valuable expertise in helping clients decrypt the use and taxation of digital currencies.

BY JEFF STIMPSON

n the 12 years since Bitcoin’s release, it and other cryptocurrencies, like Ethereum, Litecoin, and Dogecoin, have evolved from theoretical flashes in the pan to monetary vehicles with staying power and growing influence. And as cryptocurrencies, which are also referred to as digital or virtual currencies, become mainstream, understanding the evolving tax requirements and helping clients navigate their uses may soon be imperative for every CPA.

“Though the digital assets space is still very much in the early stages, it has enough momentum and real-world usage that the industry is here to stay,” says Illinois CPA Society member Curt Mastio, CPA, managing member of Founder’s CPA in Chicago. “It will evolve over time—similar to the internet.”

“Cryptocurrency is here to stay for multiple reasons,” adds Shehan Chandrasekera, CPA, head of tax strategy at CoinTracker.

“Blockchain technology has a lot of applications in a lot of industries—cryptocurrency is just one of them. Institutions and publicly traded companies are also getting into cryptocurrency by offering crypto-related services and holding Bitcoin on their balance sheets.”

“Cryptocurrency is now front and center,” says Andrew Gordon, CPA, attorney with the Gordon Law Group Ltd. in Northfield, Ill. and a director of the Blockchain Institute. “You now have to ask all

clients if they have received, sold, sent, exchanged, or otherwise acquired any financial interest in any cryptocurrency.”

MILLIONS OF OWNERS—AND COUNTING

So, what exactly is cryptocurrency? Put simply, it’s digital currency that’s created, tracked, and traded via decentralized virtual ledgers powered by blockchain technology. Owners manage their cryptocurrencies inside digital wallets that store the keys to decrypt currency and allow it to be used, transferred, or converted into cash. A recent Finder survey indicates about 59 million Americans own some form of cryptocurrency, a number that has risen steadily over the past decade.

“As more individuals and businesses become involved with cryptocurrencies and as avenues for using cryptocurrencies expand, CPAs are beginning to field more questions on this topic,” says Jim Brandenburg, CPA, tax partner at Sikich in Milwaukee. “It’s a rapidly developing area that CPAs should become familiar with.”

“Many in the accounting industry hold a misconception that while cryptocurrency might be growing in popularity, their clients are not involved with it,” says Stephen Eckert, a Chicago-based senior manager in Plante Moran’s national tax office. “Many CPAs are surprised by the number of their clients that are maintaining cryptocurrencies.”

In other words, you’d better make sure if any of those 59 million cryptocurrency holders are your clients—especially as the IRS is targeting cryptocurrency tax evasion more intensely. Although, critics are quick to say the agency is moving too slowly to enforce compliance.

THE TAX OUTLOOK

“Digital asset technologies are evolving at lightning speed, while tax and accounting guidance is moving at a methodical pace,” Eckert says. “The current amount of tax guidance related to cryptocurrencies is fairly limited. The IRS is convinced that cryptocurrency transactions are a source of significant underreported income and are aggressively looking for taxpayers who fail to report such transactions.”

The IRS addressed “how existing general tax principles apply to transactions using virtual currency” in Notice 2014-21 and has since created a virtual currency FAQ page. “The IRS is trying to get its arms around the expansion of cryptocurrencies and is focusing on the potential for fraud and abuse,” Brandenburg says. “It’s important to understand what transactions need to be reported. Not all cryptocurrency transactions are illegal, as some assume, but even legitimate transactions could trigger IRS scrutiny if not properly reported.”

“Some people think that cryptocurrencies are mainly used for illegal activities and tax evasion, but cash is used for more illicit activity than cryptocurrency,” Chandrasekera says. “Plus, cryptocurrency is the worst asset to evade taxes on because there’s a permanent record of your transactions on the blockchain.”

Another misconception to debunk: Taxation actually kicks in on a variety of transactions, not just when cryptocurrency owners cash out.

“A lot of folks believe that taxes are only triggered when digital assets are exchanged for fiat currencies, such as selling Bitcoin for the U.S. dollar,” Mastio adds. “Not true. Trading one digital asset for another— Bitcoin for Ether, for example—is a taxable event. In addition, receiving digital assets either as payment for services or through an airdrop or fork is also taxable.” (An airdrop is a promotional distribution of a new cryptocurrency. A fork is when there are software updates or other changes to the protocol of a cryptocurrency.)

The IRS isn’t the only institution looking to clarify and regulate the cryptocurrency markets. A recent proposal by the Biden administration to expand brokerage tax information reporting related to cryptocurrencies is “a clear sign of things to come,” Eckert says. All the more reason for CPAs to prioritize understanding when and how cryptocurrency is taxed.

“In some respects, cryptocurrency reporting is similar to the reporting of foreign bank and financial accounts,” Brandenburg says. “Both foreign accounts and cryptocurrencies are top priorities for the IRS. It’s not illegal to have these accounts, but one must be diligent when reporting.”

For instance, cryptocurrency is treated as “property” for tax purposes under current guidance, similar in many respects to a share of stock. “Imagine what would happen if you exchanged a share of Apple for a share of Amazon, or if you used that share of stock to buy a pizza. You’ll often get the same answer if you used cryptocurrency to do the same thing,” Eckert says. “Complexities begin when you realize the variety of transactions that cryptocurrencies are now a part of.”

Cryptocurrency activities can incur capital gains, and holders of cryptocurrency—who may keep crypto on multiple platforms—might also receive reward payments for holding their crypto on a certain platform (aka “staking”). Such payments, according to Gordon, are “akin to receiving interest on a bank account” and are taxable.

Tactics to minimize cryptocurrency taxes resemble general tax strategies: holding long enough to incur a better capital gains rate; offsetting gains with losses; and gifting, donating, or bequeathing. Despite these comparison points, the tax challenges of cryptocurrencies are unique.

“The hardest part about preparing returns for cryptocurrency clients is calculating the gains and losses from the cryptocurrency activity,” Mastio says. “This is a problem unique to cryptocurrencies because, unlike with stocks, the taxpayer won’t receive a 1099.”

CAPITALIZING ON CRYPTOCURRENCIES

Cryptocurrency tax troubles seem to be on the rise, but the challenges also present an excellent opportunity for CPAs who are willing to dive into the cryptocurrency world and become subject matter experts.

“We’re seeing it becoming more of an issue for taxpayers, especially with CP2000 mismatch notices,” Gordon says. “CPAs need to ask about cryptocurrency, especially considering that most professional tax preparation software will default to ‘no’ concerning whether an individual client acquired cryptocurrency. There’s now an argument for ‘willfulness’ if the box is checked no.”

He recommends asking clients these questions:

• Do they hold cryptocurrency now?

• Did they own any in the past and, if so, when did they first acquire the cryptocurrency?

• Have they ever exchanged one cryptocurrency for another or used it for a purchase or payment?

• Did they ever sell cryptocurrency for cash?

• Did they ever give or receive cryptocurrency as a gift?

Gordon’s firm starts billing for cryptocurrency-related services at $250 hourly. “If you have a business come to you with a box full of statements, it’s tough to tell how long it’s going to take,” he says. “The level of expertise needed is also much higher than typical accounting: We train our staff for two months. We do a lot of work for CPA firms that can’t do it themselves.”

For CPAs eager to learn more about this area, there are plenty of resources. “Read up on cryptocurrencies and look for continuing professional education opportunities,” Brandenburg advises. “Learn how cryptocurrencies operate and try to compare them with other products you may be more familiar with.”

But perhaps the best way to learn is hands-on: Buy some cryptocurrency yourself and learn the tax mechanics of it firsthand. Seek out consultants and specialized software—and recognize how the entire tax industry faces a global and fast-moving issue that can easily ensnare clients.

“Existing guidance for cryptocurrency taxation has struggled to keep pace with the evolution of the industry,” Mastio says. “There are a lot of uncertainties with the current regulations, but the worst thing a taxpayer can do is not report cryptocurrency activity at all.”

That’s where CPAs come in: We can—and should—strategically guide clients through the process of cryptocurrency use and reporting to get ahead of the challenges and changes of taxing a new currency.

Jeff Stimpson is a writer based in New York. He has covered tax concerns for more than 20 years for various industry publications, including Accounting Today and Financial Advisor.

Is Your Cybersecurity Strategy Still Relevant?

Organizations must continually update their risk management strategy to protect against the constantly evolving world of cybercrime. Here are some of the latest cyberthreats—and ways you can fight back.

BY NATALIE ROONEY

he cybersecurity landscape is always changing: Between 2019 and 2020, ransomware attacks rose by 180 percent in North America alone, according to a 2021 report by cybersecurity firm SonicWall. The total global cost of damages from ransomware attacks is projected to exceed $20 billion in 2021, and total global cybercrime damages are predicted to soon cost the world $6 trillion annually.

For organizations and individuals, creating protections against everevolving, ever-multiplying, faceless criminals that can steal your identity or shut down your business remains a challenge. The meteoric rise of ransomware attacks is just one part of the rapid proliferation of cybercrime in the pandemic era, creating an environment where even recently developed cybersecurity risk management strategies may already be outdated.

Charles Seets Jr., partner and principal with EY, says the cyberthreat landscape will never stop evolving. “If we’re connected to the internet, we’re vulnerable, and threat actors know that,” he notes. “They’re operating relatively anonymously and often outside the reach of the law. It’s a complicated environment in which to defend ourselves.”

For CPAs and finance professionals, the threat is especially ominous: You hold the key to troves of very important, very private financial data. It’s therefore essential to do all you can to stay ahead of the cybercriminals for as long as possible.

YOUR CYBERCRIME GUIDE

The first step toward protecting yourself and your organization is understanding what you’re up against. Here’s a glossary of some of the most common cyberattacks:

Malware: This terms stands for malicious software, which includes spyware, ransomware, and viruses. Malware breaches a network through a vulnerability, typically when a user clicks a dangerous link or opens an email attachment that opens the door. Once inside the system, malware can block access to key components of the network (ransomware), install malware or additional harmful software, covertly obtain information by transmitting data from the hard drive (spyware), disrupt certain components, and even render the entire system inoperable.

Phishing: Sending fraudulent communications that appear to come from a reputable source, usually through email. The goal is to steal sensitive data like credit card and login information or to install malware on the victim’s machine.

Man-in-the-middle (MitM) attack: Also known as eavesdropping attacks, MitMs occur when attackers insert themselves into a twoparty transaction. Once the attackers interrupt the traffic, they can steal data. Unsecured public Wi-Fi is a common point of entry.

Denial-of-service attack: This kind of attack floods systems, servers, or networks with traffic to exhaust resources and bandwidth. As a result, the system is unable to function normally. Attackers can also use multiple compromised devices to launch this attack; this is known as a distributed-denial-of-service attack.

Zero-day exploit: This attack hits after a network vulnerability is announced but before a patch or solution is implemented, targeting the disclosed vulnerability during this window of time.

“If you’re not following breaches in the news and then conducting case studies and tabletop exercises about those cybercrime

strategies, you’re not getting crisis-ready,” says Jonathan Marks, CPA, CFF, CITP, CGMA, CFE, partner and firm practice leader of global forensic, compliance, and integrity services for Baker Tilly US LLP. “If the smoke is ultimately a fire, what do you do? What’s the plan and protocol? If you need remediation, who do you call? These are all keys to avoiding a business interruption.”

IT COULD HAPPEN TO YOU

One of the biggest risks in cybercrime is the common belief that it won’t happen to your organization—a mindset called “perfect place syndrome.” But from the smallest nonprofit organizations to the largest corporations, criminals aren’t discriminating.

“Our increasing dependence on networks and the growing pools of personal financial information being stored online exposes individuals to privacy violations and institutions to huge liabilities when a data breach occurs—that’s when a breach occurs, not if,” Marks emphasizes.

Smaller organizations in particular shouldn’t fall victim to perfect place syndrome and slack off on cybersecurity. “Small businesses might not be able to afford the best technology or an in-house IT team, but everyone can take certain steps and measures,” Marks says. “Outsource some of your infrastructure. Get someone to help you.”

“Experts have been saying for years that cyberattacks will increase in number and sophistication despite what we do to protect ourselves,” says Donny Shimamoto, CPA, CITP, CGMA, founder and managing director of IntrapriseTechKnowlogies LLC. “Advances in technology make it even easier for criminals. It’s going to continue to evolve.”

The only choice organizations have is to evolve faster.

THE LAYERS OF DEFENSE

There’s no single best cybersecurity strategy, but all organizations should shore up both their technological and human defenses. Shimamoto compares good cybersecurity strategy to an onion: multiple layers of protection that deter criminals as they encounter obstacle after obstacle. A firewall, the outermost layer, will check emails and attachments for phishing links and viruses. These days, antivirus software can actually detect if a virus is starting to encrypt files and if so, roll the virus back.

Too often, however, organizations rely solely or primarily on technological protections, incorrectly thinking a firewall and antivirus software are enough, while leaving the humans within the organization uneducated and unprepared.

One of the most critical layers to cybersecurity is training people to spot red flags. It sounds simple, and yet a survey of more than 1,000 IT professionals by automation company Ivanti revealed that 74 percent of companies have fallen prey to a phishing attack in the past year. More than one in three respondents said that a lack of technology and understanding among employees was the main cause for the increase in successful phishing attacks.

“Whether we want to admit it or not, our own employees are constantly and inadvertently opening the door to cyberthreats,” Seets says.

Even organizations that train employees on cybersecurity likely aren’t doing it frequently enough. Shimamoto notes that the rapid and constant evolution of cybercrime makes quarterly or even monthly mini-training sessions necessary to keep awareness high. After all, one of the most effective protective measures against cybercrime is not the latest technological gadget but training all employees to have good cyber hygiene.

Cyber hygiene is a term for our daily technological habits, from browsing Instagram on our phones to opening work emails in our

offices. Having good cyber hygiene means following best practices for cybersecurity, paving the way for not only more secure information streams, but also a more effective response and recovery after a breach.

Good cyber hygiene practices for all organizations include:

• Knowing where critical data is stored and housed.

• Building and maintaining a secure network, including a firewall and strong password requirements.

• Encrypting data.

• Maintaining a vulnerability management program that includes regularly updating antivirus software and other types of preventive software.

• Utilizing controls to restrict data access based on roles and identification.

• Having an information and security policy that covers employees, contractors, and third parties.

• Implementing software patches and updates as soon as they’re released.

Organizations must use technological protections effectively while also keeping their employees educated on what cybercriminals’ latest schemes are. Balancing technology with the human element is the best way for organizations to keep their cybersecurity strategies relevant and effective.

BEYOND IT

If Shimamoto could offer one piece of advice, it would be to think about cybersecurity as a business issue rather than just an IT responsibility. “This is really about your business, your customers, and your employees,” he says. “The impact of a cyberbreach reaches far beyond the scope of IT.”

While there may be fines and regulatory matters to address after a breach, the biggest loss at stake is trust, Seets says: “Trust is fundamental to any organization regardless of size. We need to inspire trust in our customers, regulators, insurers, and employees. If we can’t trust each other, it’s going to be more difficult to do business going forward.”

Starting now, any new services or products should have a cybersecurity risk management approach built in from the outset. “Anything a company intends to do proactively, whether that’s a new product or service, entering a new market, executing a transaction, or upgrading technology, has to incorporate cybersecurity in development and buildout,” Seets explains. “It’s difficult to bolt cybersecurity on after the fact, and threat actors will take advantage of that. Those who can infuse security at the beginning stand a better chance of executing a successful rollout.”

As cybercrime continues to mature, and criminals become bolder, everyone must chip in to protect themselves and their organizations against cybercrime, and CPAs can play a special role in the cybersecurity world.

“This isn’t just about IT risk—it’s about enterprise risk, and all of us connected to the enterprise play a part,” Seets says. “CPAs understand systems, processes, and roles. We can lean into the conversation and contribute to corporate America raising its cybersecurity game in a collective effort to defend what we’ve created.”

Natalie Rooney is a freelance writer based in Eagle, Colo. A former vice president of communications for the Ohio Society of CPAs, she has been writing for state CPA societies for more than 20 years.

The fallout of COVID-19 proved that the old ways of building and measuring business value are outdated. Four experts share their insights into what’s driving organizational value for CPA firms today.

BY KASIA WHITE

After a crisis, we often look back at the way things were before and find them … well, quaint. Looking back at the ways we measured performance and value before March 2020, they seem a little outdated. Historic drivers like scope, scale, and efficiency are rapidly being replaced by new and transformative value drivers like human capital, innovation, and strategic technological upgrades.

Holding onto the old value drivers for too long could be catastrophic for CPA firms and the businesses they advise. After all, measuring yourself against an outdated metric for success means you could be failing without realizing it. Updating and upgrading the way you view value is a valuable exercise for any leader or organization.

“Times of disruption, like the COVID-19 pandemic, present critical opportunities for organizations to innovate and become more resilient,” says Carlos Leal, senior manager of business transformation and innovation at EY Canada. “Navigating unprecedented challenges requires leaders to adopt a transformative mindset and a structured approach to embracing change, refocusing efforts, and empowering people to lead boldly.”

The new way to drive value for firms and their clients includes empowering people, intelligently investing in technology, and focusing on invisible factors like innovation and intellectual capital— and it starts with a fresh look at strategy.

Building a New Strategy

While strategy isn’t exactly a new value driver, determining your organization’s post-pandemic strategy necessarily precedes developing key performance indicators (KPIs) that will help you measure your organization’s—or your clients’—success.

“Developing new KPIs should always begin with understanding the organization’s business strategy,” says Mark Frigo, Ph.D., CPA, CMA, CGMA, founder of the Center for Strategy, Execution, and Valuation in the Kellstadt Graduate School of Business at DePaul University and lead instructor in the Illinois CPA Society’s new Strategy Academy. “Without a clear, articulated strategy, KPIs can become disconnected, irrelevant, and in some cases even work against value creation. During the pandemic I recommended CPA firms conduct KPI reviews with the express purpose of achieving better alignment with long-term value drivers.”

Leal notes that EY has developed a strategic framework to help leaders navigate their post-pandemic recovery and re-strategize for their imminent business revival. “This framework was informed by the efforts of business leaders across a variety of organizations with a focus on their abilities to pivot and adapt their business models in response to the disruptions created by the pandemic,” Leal says. Here are the four steps they identified:

1. Scenario plan your post-pandemic recovery: Define a few focal questions and construct relevant scenarios, data-driven analytic goalposts, and concrete resource allocation choices. “Prepare to move with or ahead of change,” Leal says.

2. Prioritize adaptability: In line with your scenario plan, prioritize the operational and market-facing tactics available to your organization as clients and businesses slowly return to prepandemic habits and activity levels.

3. Execute your reinvention: Despite the importance of agility and experimentation, the ability to create and successfully execute bold transformation initiatives are still essential to value creation, particularly in a changing environment.

4. Make reinvention a core competency: Change is constant and accelerating, but organizations can and should be resilient in the face of it. “We need to embed a culture of lifelong learning to ensure our teams and organizations continue to thrive and unlock long-term growth,” Leal notes.

Once the strategic framework is built, it’s time to look at the new value drivers.

Empowering People

People’s habits and expectations have changed since the pandemic. Months upon months of remote work and modified business practices have changed both employee and client behaviors. With such new and different expectations hitting businesses from both sides, fostering long-term human connection has become perhaps the most important of the new value drivers.

“The pandemic created major disruptions in supply chains, employee engagement, and—maybe most importantly—client needs, a primary value driver for every business,” Frigo explains.

“When client needs change, organizations must move quickly to fulfill those needs before competitors do. This requires understanding how what you offer actually creates value for your clients, since developing value for the client or customer is how you drive the value of your business.”

Traditional financial value drivers such as cash flow, revenue growth, profitability, and return on investment (ROI) are still valid but Frigo stresses the need to remember that these are driven by client value creation. “Let’s not forget that employees are the primary value creators in any company—companies who treat their employees as valued clients create greater long-term value,” Frigo says.

With workers quitting in record numbers as the economy rebounds, organizations that prioritize their employees and their needs will enjoy greater value, while those who fail to take worker demands seriously will likely end up seeing their long-term value plummet.

“Talent is at the forefront of our strategic plan,” says Brian Blaha, CPA, growth partner with Wipfli LLP and a member of the Illinois CPA Society’s board of directors. “When we focus on the individual and really care about them, we are able to work to accommodate both their needs and the needs of the firm. Because of this, we see turnover rates below industry averages.”

Post-pandemic, Wipfli is embracing the hybrid work schedule, allowing employees to choose between working at home or at the office without mandating how many days they should spend in either place. Blaha notes that even so, they have seen an uptick in

the number of employees returning to the office. “The future of work will be a hybrid of in-person and remote, where in-office work will be encouraged when collaboration and face-to-face relationship building is required,” he says.

CPA firms and the businesses they advise must prioritize changing client needs and shifting employee demands if they hope to build long-term value. “At Wipfli, we emphasize seeing each associate, client, and referral source as the individual they are, focusing on our collective results versus strictly our own,” Blaha explains. “We really seek to focus on each person.”

Intelligently Investing in Technology

Resource allocation is the name of the game when it comes to the second new value driver: the intelligent deployment of technology. Technology is unavoidable, expensive, and can be a game changing value driver or value destroyer for any organization.

“By upgrading existing technology, CPA firms can not only increase efficiency and improve productivity, but also begin serving new groups that were either not geographically available to them before or that required additional resources,” says Matt DiLiberto, BDO USA’s modern workplace practice leader. “The pandemic showed us that by investing in technology that allows auditors to do their jobs remotely—like video conferencing services and online file sharing programs—you can serve clients from afar without spending money on travel. Technological tools are only going to keep growing in scope, so CPA firms that invest now will be ahead of the curve.”

Technology can also help firms retain employees by eliminating the annoying minutiae that often leads to burnout.

“Firms should continue to evaluate existing business processes to reduce inefficiencies, eliminate scenarios where employees are doing manual tasks, identify systems that are not accessible from all devices, and enhance tools and training that support the employee experience,” DiLiberto advises.

Blaha says he has seen huge improvements in the technologies available to supplement the employee experience, from leveraging social media for recruiting to utilizing digital channels and microlearning for employee development. “We are implementing many new technologies, participating in the AICPA’s dynamic audit system, utilizing robotic process automation, and investing in our data structure and enterprise systems for marketing, sales, finance, human capital, and customer service,” he says. “Many of the enterprise systems have AI components, and we are also researching other advanced technologies, such as blockchain and augmented and virtual reality.”

“We are seeing clients in the manufacturing space express interest in augmented reality tools, which can be useful for on-site inspections to capture information that may otherwise be missed,” DiLiberto notes. “Ultimately, adopting the right technologies and tools for your firm will allow your employees to focus on more complex, strategic problems. This can help the firm save time and money by increasing efficiencies and quality control and reducing administrative overhead and turnover.”

Only by keeping a finger on the pulse of technology and making strategic choices that support both employees and clients can firms innovate and build value moving forward.

Innovating for the Future

Innovation was a buzzword long before COVID-19 hit, but the pandemic made it clear: Organizations that cannot move quickly and imaginatively to new ways of doing business will not survive in a post-pandemic world.

“My fellow CPAs should recognize that the business environment today is changing at an accelerating rate of speed, and the pace of change will continue to accelerate,” Frigo says. “Strategic risktaking and strategic thinking are core competencies every firm needs to get better at. Look back and ask: What have I learned during the pandemic? How can those lessons drive my firm and my clients to greater value in the future—and greater resiliency when the next shock hits our economy?”

As we have seen, the firms that used the pandemic as an opportunity to learn how to move quickly and be open to experimentation saw the payoff in added business value.

“Try new things and learn to fail fast and adjust course,” Blaha exhorts.

Driving Value Now

COVID-19 spurred a great test run for innovation in a globalized world where climate change, shifting cultures and demographics, and constantly accelerating technological advances will make future disruptions increasingly common. For many firms and their clients, the pandemic shined a spotlight on the fault lines in the old ways of doing things—and the old value drivers. These three new value drivers—empowering people, using technology intelligently, and foregrounding innovation—are all interwoven and offer big lessons for both CPA firms and the business clients they advise. Starting to effectively focus on just one of these value drivers will likely soon begin to bear fruit in the other two areas.

“CPAs are equipped with the knowledge base and tools necessary to help spearhead the transformation of their own firms and their clients’ businesses,” Leal says. “As leaders with a pulse on organizations’ financial outcomes, CPAs must be part of this value transformation and provide leadership and support in projecting the different future scenarios and their implications; collaborating with functional area leaders to identify the relevant value drivers; and monitoring and regularly reporting on business performance as strategies are implemented.”

In other words, the CPAs who embrace the new value drivers will bring huge growth to the businesses they serve and also see exponential value growth at their own firms—long after March 2020 and COVID-19 are distant memories.

Kasia White is a freelance writer who specializes in profiling small businesses and leaders of global companies.

The Business Case for ESG Repor ting

BY CAROLYN TANG KMET

With social and regulatory momentum building behind environmental, social, and governance reporting, business leaders and their advisors should make meaningful ESG practices an immediate priority.

Environmental, social, and governance—more commonly known as ESG—reporting is having a moment. As investors, employees, supply chain partners, and stakeholders of all stripes turn to ESG reporting to inform key business decisions, business leaders and their advisors are struggling to establish and prioritize ESG efforts. The challenge is that while ESG reporting becomes increasingly popular and valuable, the lack of formal regulations and standards stymies leaders looking to make meaningful changes to how they do business.

Part of the problem is that ESG reporting examines a wide variety of factors, both tangible and intangible. Put simply, ESG reporting is an examination of an entity’s involvement in environmental, social, and governance issues. Environmental factors could include an organization’s impact on climate change, natural resource scarcity, pollution, and waste. Social factors commonly explore an organization’s values and practices around issues such as labor and supply chain standards; diversity, equity, and inclusion efforts; and customer privacy. Governance factors often delve into issues like oversight and management structures, diversity within the board of directors, executive compensation, and crisis response. While some issues like diversity within the board may be easier to quantify, other factors like sustainable supply chain measures or the effectiveness of oversight aren’t immediately apparent in financial statements—yet the appeal and influence of these standards are undeniable.

“Investors, executives, and consumers increasingly understand that a company’s value is largely intangible and consists of more than just assets and products,” explains Marcy Twete, CEO and founder of ESG consultancy firm Marcy Twete Consulting. “How a company interacts with its stakeholders, community, and the planet is a value driver that directly impacts its bottom line.”

The Bottom Line for ESG

The COVID-19 pandemic is an active example of how ESG factors impact the bottom line. Organizations with solid lines of support for employees, nimble business operations that were able to pivot to serve rapidly changing needs, and adaptable strategies for successfully navigating uncertain times were more likely to survive—or even thrive—during the pandemic.

Mary Adams, founder of Boston-based Smarter Companies, believes that the pandemic’s impact on ESG investment activities proves that ESG is more than just a passing fad. “If it was a fad, then everyone would drop it in a crisis,” Adams explains. “What happened during the pandemic is that companies that had the trust and confidence of their employees and customers performed better through the disruption. We know there’s a link between ESG and a company’s performance. It may not be easy to pin down, but there’s definitely a connection.”

Even if we can’t see the impact of ESG on the bottom line, we can definitely see it in the flow of investment dollars. According to Moody’s Investors Service, investments in ESG products increased 140 percent in 2020. Similarly, Morningstar reported that ESG-rated funds took in $51.1 billion in new investments in the same year.

Chirag Shah is chairman of Simfoni, a company focused on leveraging spend analytics to help companies achieve supply chain sustainability. In July 2021, he successfully raised $15 million in Series B funding. “ESG goals are a moral and ethical necessity. As responsible corporate citizens, it’s our duty to take care of the future of our society,” he emphasizes.

Shah believes that product and technology innovations have progressed to the point where companies are able to achieve both ESG goals and business benefits. He says that raising the bar on ESG efforts not only mitigates risks but improves corporate performance.

“Focusing on ESG can reduce unnecessary costs,” Shah says. “Additionally, with social media enabling customers to have more of a collective voice, it’s evident that making responsible choices can result in higher brand value. Corporations that make a positive impact can increase their appeal to existing and potential customers and attract new market opportunities.”

Corinne Dougherty, audit partner with IMPACT, KPMG’s sustainability program, and a member of the AICPA Sustainability Assurance and Advisory Task Force, agrees that there are measurable business benefits: “Implementing an ESG strategy and reporting on progress will help companies unlock new value, build resilience, and drive profitable and measurable growth today and in the future,” she says.

Dougherty adds that ESG reporting further benefits the bottom line by helping business leaders understand and address emerging risks that threaten profitability; attracting a new investor base while meeting the ever-changing and increasingly stringent requirements of institutional investors; gaining access to capital; competing for top talent; and building a loyal customer base.

The Momentum Behind ESG

The motivation to implement ESG practices is driven by both external and internal factors. Externally, investors, customers, and regulators are calling for increasingly rigorous and sophisticated ESG reporting to help inform investment decisions and to hedge systemic risks in their portfolios.

“There’s no way you can hedge against climate change, right? You have to start advocating for a systemic solution,” Adams explains. “Additionally, during a time of great disruption, we often see exciting and innovative solutions, so that could be driving external interest in ESG efforts as well.”

According to a November 2020 report issued by the Forum for Sustainable and Responsible Investment, 33 percent of total U.S. assets under professional management are using sustainable investment strategies. By their count, those assets grew from $12 trillion at the start of 2018 to $17.1 trillion at the start of 2020—an increase of 42 percent.

But there are also internal pressures driving companies to implement ESG best practices. “In both public and private companies, employees are demanding better supply chains, carbon footprints, and labor practices, leading companies to prioritize their ESG efforts,” Adams explains.

Bryan English is the CFO of Elkay, a global manufacturer headquartered in Downers Grove, Ill. He says the momentum toward ESG practices goes further than the financial or branding concerns, with much of it driven by societal expectations and the innate need to “do the right thing.”

“Today’s consumers and workforce, who are really one and the same, expect companies to do right by their employees and their customers, to do good within their communities, to be good stewards of the planet, to be good corporate citizens, and to be a company with a purpose,” English says. “Because these expectations drive buying behaviors and affect whether you’re an employer who can attract top talent, they’re at the heart of why ESG is becoming such a critical focus area for companies today.”

The Regulatory Vacuum

Currently, ESG disclosure is a voluntary best practice, though the U.S. Securities and Exchange Commission (SEC) is signaling that more formal guidance may be coming soon. In March 2021, the SEC announced the creation of a climate and ESG task force in the Division of Enforcement that will develop initiatives to proactively identify ESG-related misconduct. Their initial focus will be identifying any material gaps or misstatements in climate risk disclosures. And in April 2021, the SEC’s Division of Examinations issued a risk alert, noting deficiencies and internal control weaknesses within investment funds that purported to be engaged in ESG investing. The seven-page alert included examples such as portfolio management practices that were “inconsistent with disclosures about ESG approaches,” controls that were “inadequate to maintain, monitor, and update clients’ ESG-related investing guidelines, mandates, and restrictions,” and proxy voting that “may have been inconsistent with advisors’ stated approaches.”

“Regulators have certainly increased their ESG scrutiny,” acknowledges Kristie Paskvan, CPA, MBA, board director of Smith Bucklin, NCCI, First Women’s Bank, and the United Way Metropolitan Chicago and an Illinois CPA Society member and Insight columnist. “In the United States, we expect rules will be implemented that require banks to account for the sustainability impact of their lending and investment policies. Therefore, all banks have this on their radar and are moving at various speeds to implement policies and procedures.”

Twete says there’s a natural tension between wanting to emphasize materiality and wanting to achieve standardization. “As readers of sustainability reports or ratings, we want to be able to easily compare Apple to Exxon, Macy’s to McDonalds, even though their business models and material issues are different,” she explains. “That kind of standardization is not only difficult, but it can also be a slippery slope. But while no system will be perfectly ‘one-size-fitsall,’ there’s hope for a more streamlined measurement framework for companies.”

English believes that we’re starting to see some standardization among ESG models that work best for businesses, though he’s still hesitant about the possibility of the level of standardization associated with traditional financial reports. “There are too many variances between businesses and their impact on consumers,

society at large, the planet, their own people, and the communities where they do business. When you standardize a reporting model, you leave out room for all the nuance—the good, the bad, and the ugly—that’s at the heart of why consumers care about ESG reporting in the first place,” English says.

Starting Your ESG Journey

Even without across-the-board standardization, English believes ESG reporting should be undertaken because it’s a powerful way to express corporate social responsibility. “ESG reporting backs up storytelling with data and facts, which adds credibility and helps distinguish those who are doing the work and making a real difference,” he says.

While each company’s ESG journey is unique, the process of implementation is similar across all industries. Here are Dougherty’s four steps to start your own journey:

1. Develop an ESG strategy. Understand and anticipate stakeholder expectations by identifying issues and assessing gaps, risks, and opportunities to integrate ESG into your business strategy.

2. Operationalize the strategy. Embed strategy into operations by understanding the implications for the workforce, supply chain, operations, controls, technology, infrastructure, and governance and managing the controls around collecting and processing data to track progress.

3. Measure, report, and assure. Understand the different standards, frameworks, and metrics for reporting ESG data, develop capabilities to measure the ROI of ESG initiatives, and provide accurate and fit-for-purpose disclosures and reporting.

4. Transform with ESG. Growing with ESG in mind requires a new approach to transactions, strategies, and partnerships. All these events create risks and opportunities for ESG strategy. Understanding those implications and developing processes to evaluate them during the transaction life cycle can future-proof your ESG approach.

Twete suggests that an initial step toward ESG reporting might be to conduct a materiality study to understand the risks and impact of ESG issues within your own company. “Consider which issues have the potential to negatively or positively impact your business. What do your stakeholders expect of you? From there, you can assess these key material ESG issues with your existing risk management process,” she says.

She emphasizes that companies need to address ESG issues with the same rigor they apply to operational or financial risk—and remember that ESG cannot succeed in a silo. These efforts will reach across and transform every aspect of an organization.

With increased regulatory and social attention on ESG issues, now is the time to identify, prioritize, and act on ESG measures that can improve your organization’s reputation and resilience—while also making the world a noticeably better place.

Carolyn Tang Kmet, MBA is a senior lecturer at the Quinlan School of Business at Loyola University Chicago.

Now that COVID-19 has receded just enough for the economy to rebound, an interesting trend is emerging: record resignations.

BY ANNIE MUELLER

The COVID-19 economy has been a wild ride, a roller coaster of recession and rebound in a compressed time period. But although reports suggest the economy is almost back to normal, there could be a big roadblock to full recovery: mass resignations.

A record number of people quit their jobs in April 2021, according to the U.S. Bureau of Labor Statistics. Almost 4 million employees turned in resignations—the highest level since the Bureau started tracking quits in December 2000, and research suggests that the wave of resignations will continue to build.

Data from Microsoft’s Work Trend Index and Prudential’s Pulse of the American Worker survey show that up to 40 percent of U.S. workers plan to quit their jobs, with some industries already feeling the effects. Hospitality and retail, two of the industries most affected by the pandemic, are struggling to return to pre-pandemic employment rates. In hospitality, the 5.4 percent quit rate is more than double the average across all other industries, and 42 percent of retail workers say they’re considering or planning to leave retail altogether.

The hospitality and retail industries illustrate a key demographic in the big quit: workers who are not shopping for higher pay in a similar position, but who are planning to opt-out of their industry entirely. And they’re not coming back: According to a survey from JobList, more than 50 percent of former hospitality workers say that no pay increase or incentive could lure them back to their old restaurant, bar, or hotel job.

But labor shortages are not limited to the lower end of the wage spectrum or hourly workers: According to data from Visier, managerial resignation rates also rose during the pandemic, especially in health care and high-tech industries. Mid-career workers, ages 30 to 45, are the most likely to walk away from current positions.

Businesses are desperate for employees, says Sheldon Schur, CEO at Brilliant, an award-winning consulting firm. “Hiring has been on the rise since the beginning of the year, with a bigger acceleration in the last three months,” he notes. “As an employer, you cannot hide your head in the sand and think that none of your workers are part of those 40 percent who plan to quit—because they are. You have to adapt to that and understand what it means.”

The Foremost Factors

According to Prudential’s research, two crucial issues are driving workers to quit: a lack of potential for career growth within their current company or industry and the dramatic mindset changes created by the pandemic. When workers were sent home, remote work took away the distractions, good and bad, of office environments, casting the actual daily work of positions in harsh relief. For many, the stark distillation of an entire career down to a few distinct tasks and skills brought a wave of clarity that instigated change. For those with jobs that don’t translate to remote positions—such as retail, hospitality, and other service-based

positions—the perspective of time away from demanding, unstable, and often risky work made returning to those jobs unthinkable.

“There’s been a huge change in the cultural dynamic of what people are willing to do,” says Devin Wells, senior talent acquisition lead at the Georgia Nut Company. “More people are examining their work-life balance; more people want to work from home. The working atmosphere has changed, and companies and firms are going to have to change as well.”

A few additional factors come into play, such as the impact of higher unemployment benefits, the huge number of women leaving the workforce, and the ongoing health and safety concerns of returning to the workplace. There’s also an increasingly vocal contingent of workers demanding to work from home: A May 2021 survey for Bloomberg News found that 39 percent of respondents would consider quitting if their employers weren’t flexible about remote work—and that figure jumped to 49 percent among millennials and Gen Z.

“Basically, you have three categories of people: those who want to stay fully remote, those who want to return fully to the office, and those who want a hybrid work situation,” says Andrea Herran, founder and CEO of Focus HR Consulting. “How employers negotiate with all three of these groups will require a lot of flexibility and adaptability.”

And, of course, for many workers it’s likely that their decision was made from a unique combination of reasons. That’s exactly what makes it so difficult for employers to respond: While the big quit might be a mass event, each individual resignation is a risky personal decision.

What Workers Want

Given the wide variety of personal reasons driving these resignations, as well as the number of workers who flatly say they won’t return to their industry for any amount of money, employers will need to approach this challenge with creativity and open ears. Herran believes the future of the workplace is what she calls “personalized employment,” providing targeted incentives and greater flexibility to woo workers.

“Organizations that don’t adapt to more individualized employment situations will bear the brunt of this mass exodus,” Herran says. Schur agrees: “You have to stay close to the individuals. Do your frontline managers understand how each of their staff members lives and how they feel about the company and their personal goals in coming back to work?”

In the thick of pandemic shutdowns, companies and firms who quickly pivoted to remote work arrangements were the ones to thrive. In the post-pandemic world, an effective transition to personalized employment will play the same role.

To claim and keep the talent they need, leaders must focus on the issues most often cited by workers:

• Adequate compensation, including benefits.

• The need for flexibility in work hours and location, including options for remote work and/or a hybrid work schedule.

• Sensitivity to mental and physical health concerns, including burnout, exhaustion, and increased risk of exposure to COVID19 and its variants.

• Career growth opportunities and options for continuing education and training.

• An increased focus on quality of life, including adequate holiday time, and real help with childcare logistics.

• Good work conditions and company culture.

Of course, employers cannot meet every need or anticipate each unique situation. What they can do is focus on results. “When you’re paying people a salary, you’re not paying them for their time,” Herran says. “You’re paying for their expertise, their knowledge, and their ability to achieve a result.” If companies and firms focus on the results while offering more flexibility and creativity in how people achieve them, there’s room for unique solutions that meet individual needs while also attaining organizational goals.

Small businesses and businesses that rely on hourly and/or inperson employees face unique challenges in fending off the big quit as they often lack either the resources or the flexibility to meet worker demands. However, small businesses have the advantage of being able to provide flexibility and personalization faster than their larger counterparts—an advantage they need.

“Small businesses are now reporting that their biggest business problem is not finding new customers or making new sales, it’s finding employees,” says Derek Sasveld, senior investment strategist at BMO Global Asset Management.

For hourly workers and positions in which remote work is not an option, employers can focus on creating short-term incentives and improving the overall satisfaction of a given position. “We try to be as flexible as possible with scheduling, but there’s not much we can do in terms of flexibility from an hourly worker standpoint,” Wells says. “So, we’ve developed internal incentives for short-term goals and rolled out a plan to revamp our whole employee experience.”

The Brand of a Business

Employers expect job candidates to come in with a pitch for themselves as workers, but today’s employees expect the same from potential workplaces. “What’s your message? Why should people come in and join your company? Present your pitch on social media, on your website, on LinkedIn, and with your team,” Schur says.

Consistent branding will help get candidates in the door, while a good hiring strategy will get them on the payroll. “A hiring strategy should tell you what kind of people you’re looking to bring in while also ensuring that it’s a good place for them to work,” Herran says.

After all, bringing in the wrong people or promising a culture or benefits you can’t deliver will only lead to more resignations. “What the candidate sees during the interview process and what they see on day 30 or day 90 should all connect,” Schur says.

A strong hiring strategy also means moving quickly when you find the right candidate: When it’s a good fit, there’s no time to waste. “You can’t take 10 days to interview candidates,” Schur explains. “Our strategy internally is 48 hours from the first interview to making an offer. We know that if we wait, the best people are going to get another offer.”

CPAs can help their business clients understand and respond to the big quit by being a source of helpful and relevant information and identifying a financial path toward making necessary changes. After all, the financial risks of inadequate staffing and ongoing turnover can quickly outweigh the price tag of new incentives or workplace changes.

“There’s always something that can be done to improve on whatever perceived shortcomings exist,” Herran says. “You can always take a step in the right direction.”

Clients will need accurate numbers and excellent forecasting to build effective strategies, and they will need industry-specific advice and sound financial insights to identify and execute the right moves. “You cannot wait to make this a priority,” Schur says. “The most important thing I do every day is help bring the right talent on board.”

All in all, workers finally feeling able to ask for what they really want is a boon for companies and firms willing to make creative changes quickly. Employers who take worker demands seriously can develop a huge strategic advantage over those who dismiss the big quit as a trend and refuse to adapt. “It’s an unusual wrinkle that we’ve had this short, severe shock to the economy,” Sasveld says. “There’s much more uncertainty, but overall it’s still a pretty positive picture.”

Annie Mueller is an experienced Puerto Rico-based financial writer. She is a frequent contributor to various industry publications.

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See

Two thirds (67 percent) of Americans say the pandemic has been a wake-up call for them to reevaluate their finances.1

Returning to the Of昀 ce: A Guide for Accountants

As stay-at-home and similar restrictions are being lightened or lifted across the country, you are likely wondering what going back to the of昀ce will look like for your 昀rm, your staff, and your clients as you adapt to this “new normal.” In this post, we’re digging into some things that accounting professionals will want to keep top of mind as they consider re-opening and start getting back to business as usual, with the strong caveat that “usual” is going to be a relative term in the coming months.

Safety First!

When thinking about returning to the of昀ce, safety is the thing that most people are concerned about, and so it needs to be your primary focus. What does that look like practically in your office, though? Here are a few tangible examples of what you can do to alleviate fears and make your workspace safer for everyone.

Allow for social distancing

Most people have been conditioned recently to maintain at least 6 feet of separation between themselves and someone else, to help limit the spread of germs. Many of your staff will feel most comfortable maintaining this same separation in your office. If you can, move workspaces or stagger your staff, so that people can remain 6 feet apart while working.

Clean, clean, clean

Make sure that you are well-stocked with cleaning supplies throughout your of昀ce. In addition to providing antibacterial hand soap in the restrooms and hand sanitizer throughout the of昀ce, you’ll want to disinfect surfaces with products that meet the EPA criteria for use against SARS-COV-2. You might also want to consider a professional cleaning crew who can come and give your of昀ce a thorough cleaning at intervals of your choosing. Also have a plan ready for how you are going to restock your cleaning supplies.

Overplan

Don’t wait for chaos to come to you—be proactive in how you will deal with a potential breach in your safety protocols. The moments and days after something bad happens probably isn’t the best time to start thinking about what the right course of action is. What happens if someone who is working in the of昀ce tests positive for COVID-19? What if someone’s immediate family member tests positive? Your team is likely to have all of these questions and more, so prepare in advance and make sure you have plans and backup plans for a variety of healthcrisis scenarios. How you respond to these variables will likely depend on the size of your of昀ce and your staff’s 昀exibility to work from home and the of昀ce. Much grace will need to be given over the coming months as we all adapt to the 昀uctuations that accompany COVID-19.

Who Comes Back and When?

Once you’ve made the decision to re-open your of昀ce and you have all necessary cleaning supplies and plans/procedures in place, you’re ready to start thinking about opening the doors and letting people come back to the of昀ce. However, you’re not simply 昀ipping a switch, throwing open the doors, and returning to the way things were in early 2020. Here are a few things to keep in mind when sending out the signal for folks to come back to the of昀ce.

Stagger re-entry

In order to maintain proper social distancing, consider staggering your staff’s return to the of昀ce so that people have plenty of room to do their job while still staying a safe distance apart. There are a few ways you can do this; one option is to kick off a voluntary return to the of昀ce. This way, people who are more productive and successful in the of昀ce can put their names down 昀rst, while those who are successfully working from home or who have mitigating circumstances can continue to work remotely. A voluntary return also gives your staff more personal autonomy to make a choice with which they are comfortable.

If you have more people who volunteer to return than you can accommodate whilst maintaining social distancing, consider a rotating schedule so that a set max number of people can enjoy working in the of昀ce each day. Keep in mind, you will likely have a “hybrid setup,” where some, but not all, of your team is present in the of昀ce. Expect to have this hybrid system for a few weeks to months while situations progress and slowly normalize.

Be accommodating where you can

Some members of your team are going to have a harder time returning to the of昀ce than others. This could be parents whose child care is no longer available, those caring for elderly or immunocompromised relatives, or those with health concerns themselves. It’s important to be as accommodating as you can for these individuals. While the rest of your staff might be eager to be back in the of昀ce, be understanding of the very real dangers and hardships these individuals are dealing with and how that could in昀uence their decision to come back to the of昀ce or continue working remotely. In addition, liability for employers in relation to COVID-19 is still up in the air, and great care should be taken if you are considering a blanket “everyone returns to the of昀ce” mandate.

Don’t Drop the Ball on Serving Your Clients

At this time, it’s not just the needs of your colleagues you need to consider, but also the needs of your clients. While much, if not almost all, of your work has likely been done face to face in recent years, the last few months have shown that providing exceptional client support and superior services are possible, even in remote working scenarios. With this in mind, know that one of the most impactful things you can do to impress your existing clients and bring in new clients is to be accommodating.

All the circumstances we mentioned above regarding your colleagues will likely apply to your clients, and prospective clients, as well. Some will have limited to no child care. Some will be caring for sick family members, or dealing with illness themselves. The more you can be 昀exible and accommodate their preferred communication, meeting, and payment preferences, the better.

Let your clients set the tone for how you interact, and give them multiple options. Let them call in for a meeting in lieu of an in-person conference, or set up a Zoom call if you want to be able to video chat. Allow clients to pay for your services online through an accounting-specific payment solution like CPACharge so that paying is fast, simple, and convenient. You’d be hard-pressed to find someone who wants to pay with cash at this point in the pandemic.

The more accommodating you can be with your clients now, and in the months and years to come, the more likely they will be to come back to you and recommend your services to others. Doing everything you can to delight your clients now and exceed their expectations will set you up for future success in the post-COVID-19 world to come. The challenges aren’t going away any time soon, but it is still possible for your 昀rm to rise to the occasion and thrive, even in uncertain times.

If you’re interested in learning how CPACharge can bene昀t your 昀rm, visit cpacharge.com/icpas or call 866-526-7320. ICPAS members get their monthly program fee waived for three months.

ACCOUNTANT TRENDS IN ACCOUNTING, AUDITING, AND CONSULTING

The ESG Opportunity for CPAs? Assurance

ESG

Andrea Wright, CPA Partner, Johnson Lambert LLP

As hot as the latest TikTok trend, ESG (which stands for environmental, social, and governance) is the acronym on everyone’s lips. Whether it’s investors and investment managers talking about ESG investing, legislators and regulators pushing ESG initiatives, or stakeholders demanding more transparency via corporate ESG disclosures, you’re unlikely to read a business publication or watch a news program and not find those three letters.

While the term ESG has been floating around for many years now, it picked up speed and traction in a pandemic-era social and political climate. According to the Institute of Internal Auditors’ (IIA) white paper, “Internal Audit’s Role in ESG Reporting,” ESG is defined as “criteria that characterize an organization’s operations as sustainable, responsible, or ethical.” But while ESG is sweeping the world and appearing in headlines, there’s still a lot of work to be done before we have consistent ESG reporting requirements here in the United States and internationally.

While at least 25 countries—including Argentina, Australia, China, France, the Netherlands, the Philippines, Turkey, South Africa, and the United Kingdom—have ESG disclosure requirements, ESG reporting is still voluntary in the United States. According to a 2021 survey of 1,400 companies from 22 countries conducted by the AICPA and CIMA with the International Federation of Accountants, 91 percent said they reported some level of ESG information, and 51 percent said they had some level of assurance on that information. Among these companies, 63 percent of those with assurance engagements on the ESG information had that work conducted by audit or audit-affiliated firms. However, looking at the 100 companies within the United States that were included in this study, only 11 percent of those with ESG assurance had work conducted by an audit or audit-affiliated firm.

With ever-increasing stakeholder pressure, more organizations in the United States are reporting on ESG data, and the requisite assurance over ESG disclosures presents a major opportunity for CPAs. But there are also challenges ahead for CPAs looking to increase their market share in this rapidly growing sector, including the lack of consistency in the type of assurance needed for ESG issues. At the moment, there are multiple standards and frameworks being used to report ESG information. We CPAs have an important and exciting opportunity to leverage our skill sets and expertise to ensure the same level of reliability in ESG reporting as we bring to financial reporting. CPAs are experienced in evaluating

assurance offers CPAs a new way to serve clients as well as an important role in making the world a better place.

processes and internal controls, and those skills can easily translate to measurement and reporting of ESG information.

ESG data is no different than the financial data auditors continually evaluate: The systems and processes used to accumulate the data must be reviewed to evaluate the end reporting. An ESG audit could look something like this:

An organization makes a commitment to reduce their environmental impact from business air travel through the purchase of carbon offset credits. To ensure they’re meeting this commitment, as well as accurately reporting on it (whether it be via a website, newsletter, or financial report), an audit should be performed. The audit should include validation that the right processes have been set up to record all employee air travel, collect the necessary data (miles flown, aircraft type, etc.) to calculate the carbon emissions, and purchase valid offsets.

This is just a simple example of how CPAs can audit ESG initiatives in the absence of a comprehensive reporting framework.

But CPAs soon may get comprehensive guidance. In February 2021, the AICPA released their roadmap for ESG reporting and attestation. The intent is to help tax practitioners start the conversation with their clients on how to report ESG information and what independent validation could be required in the future as regulators look to adopt reporting requirements. Additionally, the International Financial Reporting Standards Foundation is scheduled to decide whether or not to create an international sustainability reporting standards board by early fall 2021. If they create a new standards board, hopefully international reporting consistency soon follows.

While we wait to see what standards and frameworks will be created for us to leverage, we can begin having conversations with our clients about their interest in ESG reporting and assurance. In the meantime, we can utilize the resources already available through the AICPA and CIMA, as well as COSO and the IIA, to provide the ESG assurance our current and prospective clients are looking for. Perhaps most importantly, we can continue to evolve alongside the organizations we serve that care about using their influence to make the world a better place—which is even cooler than the latest TikTok trend.

Jon Lokhorst, CPA, PCC Executive Leadership Coach, Lokhorst Consulting jon@lokhorstconsulting.com

Three Ways to Combat the Big Quit

Earlier this year, Texas A&M University management professor Anthony Klotz warned that “the great resignation” was coming as the pandemic subsided. Klotz told Bloomberg Businessweek, “When there’s uncertainty, people tend to stay put, so there are pent-up resignations that didn’t happen over the past year.” Concerns about returning to the office, work-life tensions, and new perspectives on work elevate the risk of turnover.

Klotz’s words proved prescient as 4 million people quit their jobs in April alone. Another 3.6 million people resigned in May, according to the U.S. Bureau of Labor Statistics. Turnover remained high heading into the summer as employers posted record-high numbers of job openings. Despite offering more incentives to new employees, organizations are finding it challenging to backfill the positions of their departing team members, let alone expand teams with new ones.

What are you doing to combat the elevated risk of turnover in a job market that’s almost begging for workers to jump ship? Here are three leadership behaviors that enhance employee engagement and retain top talent. Consider this an opportunity to spritz your team with turnover repellent.

PRACTICE ACTIVE LISTENING

Active listening may be the most overlooked and underrated leadership skill. The United States Institute of Peace defines active listening as “a way of listening and responding to another person that improves mutual understanding.”

While it’s always been a crucial aspect of communication, active listening is even more vital during this season of dramatic change, shifts in the workplace, and lingering concerns about COVID-19 and its emerging variants. You may not be able to resolve all of your team members’ concerns—nor will they expect you to—but you can listen and let them know they’ve been heard.

Here are seven tips to improve your active listening skills:

• Intend to listen. Like nearly all leadership skills, active listening is hard work. Effective listening starts with the intent to listen before the conversation even starts.

• Minimize distractions. Give your full attention to the people you’re meeting with. Clear away your cell phone and anything else that tempts you to multitask.

• Watch and listen for nonverbal cues. Body language, eye contact, and the tone, volume, and pace of a person’s voice offer clues to the emotions behind their words.

• Observe themes and patterns. Notice the type of questions and concerns that are shared—they may indicate that a team member is struggling.

As employees resign in record numbers, these leadership skills can help you stem the tide of turnover.

LEADERSHIP MATTERS ENHANCING YOUR ABILITY TO LEAD

• Listen for what isn’t being said. What someone doesn’t say can be even more informative than what they do say.

• Clarify the message. Repeating and paraphrasing what others say ensures that all parties to the conversation gain the same meaning and understanding from it.

• Ask, “What else?” Avoid the tendency to hurry through the conversation. Pause long enough to invite team members to express concerns, ask questions, and seek clarity.

EXPRESS APPRECIATION AND GRATITUDE

There’s a significant appreciation deficit in the workplace. In one survey, about three-fourths of workers said they feel undervalued at work. Another study indicated that only one of every three workers had received praise or recognition for their work in the preceding week. Ultimately, these deficiencies increase employee turnover: Almost two-thirds of workers said they would likely leave their current jobs if they didn’t feel appreciated.

Don’t let a lack of appreciation spur your team members to look for other jobs. Instead, make it a regular practice to express gratitude for their efforts and recognize their accomplishments. You may have good intentions to do so, but don’t allow those intentions to fall by the wayside as your day-to-day work buries you in other projects.

If expressing appreciation doesn’t come naturally to you, find ways to build a habit of recognition into your routines. One health care CFO walks through his department near the end of each business day, thanking his team members for their work. A manager in the car rental business puts 10 coins in one of his pockets each morning. Every time he shares a word of appreciation with a team member, he moves a coin to the other pocket. His goal is to move all 10 coins to the other pocket by the end of each day.

ADAPT YOUR LEADERSHIP STYLE TO EACH TEAM MEMBER

Leadership isn’t a one-size-fits-all proposition. The best leaders adapt their leadership style to the situation at hand. They recognize that leadership is a role to play and, like Tom Hanks in his best film roles, they match their approach to what’s needed from their leadership at the moment. They consider the unique needs of each team member and respond accordingly. Otherwise, team members may get frustrated by feeling micromanaged on one extreme or abandoned on the other extreme.

In the 1990s, Paul Hersey and Ken Blanchard created what’s now called the situational leadership model. Using this model, you can adapt your leadership approach to meet the developmental needs of your team members. These needs vary from the enthusiastic beginner who’s eager to get the job done but lacks the knowledge and skills to do so to the experienced team member ready to take the ball and run with it.

Assess the competence, commitment, and confidence levels of each of your team members. As they improve in these areas, you can shift your leadership style from a directing style to a coaching style, then to a supporting style, and finally to a delegating style. By meeting each team member where they are, you equip them to be more effective in their current roles and develop them as future leaders.

Although these strategies aren’t expensive, they do take time. Thankfully, the time you spend on these practices will pay off in the time you’ll gain when you don’t need to replace valuable employees. Now’s the time to step up your leadership game and stem the tide of turnover.

NOW ACCEPTING NOMINATIONS FOR:

Lifetime Achievement Award

Women To Watch Awards

Lester H. McKeever Jr.

Advancing Diversity Awards

Outstanding Educator Awards

Young Professionals Leadership Award

For more information about these awards, visit:

www.icpas.org/awards

NOMINATIONS | 2022

Kristie P. Paskvan, CPA, MBA Board Director, First Women’s Bank and SmithBucklin

Leadership Fellow, National Association of Corporate Directors kppaskvan10@gmail.com

To SPAC or Not to SPAC?

A headline in the New York Times caught my attention: “SPACs on Trial.” The article alleged that the founder of the zero-emissions truck company Nikola committed fraud by misleading investors with a video depicting a “Nikola One truck moving forward, while omitting the fact that the truck was rolling down an incline due to gravity rather than under its own power.” Nikola went public in June of 2020 via a SPAC named VectorIQ.

While the Manhattan U.S. attorney’s office wasn’t objecting to the SPAC structure itself, the article highlights the level of scrutiny that every SPAC will experience following their proliferation and domination of the initial public offering (IPO) space during the last 18 months. Private companies and their boards looking to go public will need to weigh the benefits of a SPAC offering versus the risk of bypassing the more rigorous traditional IPO process.

AN OVERVIEW OF SPACS

SPACs, otherwise known as “blank check companies,” have been around since the early 1990s and hold no operating assets. In the beginning, SPACs mostly benefited industry insiders, didn’t have many protections, and thus had a somewhat suspect reputation. But their reputation was partially rehabilitated when the New York Stock Exchange (NYSE) and Nasdaq started listing SPACs and the SEC added new oversight.

The general process for a SPAC today is as follows: The SPAC files an IPO with the SEC to raise capital, usually at $10 per share, with the specific purpose of acquiring or merging with a private operating company within a specified timeframe and taking that company public. The various parties that manage the SPAC are identified as the “sponsors” in documents, and are generally industry insiders—private equity or hedge fund firms with fundraising expertise. The SPAC files the required documents, but since it’s a shell entity, there are no audited financials for investors to review. Investors instead base their interest in investing in the SPAC on the sponsors’ experience and the industries or companies the SPAC may target with the capital it raises—although the SPAC is not strictly held to that criteria. Want to invest in space travel, electric flying vehicles, or online gaming? There’s a SPAC for that. Examples of high-profile companies that have gone the SPAC route are Virgin Galactic, Lucid Motors, and DraftKings.

As part of the SPAC’s IPO, warrants may be issued to its investors. A warrant is a contract that gives the holder the right to purchase a certain number of shares of common stock in the future at a certain price, often at a premium to the issuance price. Proceeds from the fundraising (generally at least 90 percent) go into a trust to be held until the SPAC’s targeted

The meteoric rise of special purpose acquisition companies (SPACs) has made them an attractive option for companies looking to go public, but directors must first weigh the risks and rewards.

acquisition or merger occurs. According to Ohlrogge and Klausner’s study of recent SPACs, a typical SPAC holds just $6.67 per share in cash of its original $10 IPO price by the time it enters into a merger agreement with its target company.

The usual time frame for a SPAC to identify and close an acquisition or merger is two years, although some prospectuses indicate 18 months. The sponsor team also typically receives a 20 percent ownership stake in the acquired company, known as the “promote,” for no or minimal fees.

In 2020, SPACs accounted for 53 percent of all IPOs. In the first half of 2021, that percentage rose to 59 percent according to SPAC Alpha. And according to SPAC Analytics, the number of SPAC IPOs skyrocketed from 46 in 2018 and 59 in 2019 to a staggering 248 in 2020 and 388 as of June 2021, with the proceeds growing apace–SPACs have raised $116 billion in funds so far in 2021 to deploy within two years. This is an enormous amount of money available to take private companies public via the SPAC process. While SPAC activity has decreased as of the writing of this article, it’ll be interesting to see what happens to the private company marketplace over the next few years, given the number of SPACs created in the last year and the funds available to take private companies public.

THE BENEFITS OF SPACS

What accounts for the increase in SPAC IPOs, especially when the typical risk and financial analysis isn’t available during the IPO period?

• SPACs often take public a startup or technology company that doesn’t have a long history of profits, if any, and may not have the same ability as more established entities to withstand an IPO roadshow.

• The number of public companies listed on the NYSE and Nasdaq has decreased over time from over 8,000 in the 1990s to around 6,000 now, sending investors and exchanges alike looking for additional investment opportunities.

• As retail investment increases through platforms like Robinhood, SPACs provide the ability to access IPO activity not previously available to the typical retail investor until after a company has gone public.

• Private equity funds not only have funds available for investing, but also have companies in prior investment portfolios that they’re ready to sell to SPACs.

• Shares in a SPAC are liquid, and an investor can cash out if they don’t like the proposed target.

• Going public via a SPAC is faster and cheaper than the traditional IPO process, making it attractive to both sponsors and investors.

SPAC SCRUTINY

The SEC has become more involved in regulating SPACs, setting a fixed IPO price for the offering, regulating voting and redemption, and warning investors not to invest in SPACs solely because of a celebrity endorsement, noting the potential lack of business acumen.

Proskauer Rose’s analysis of SPAC activity from 2016 through 2020 notes the total number of days to complete a deal in 2020 averaged 265—159 days to sign a letter of intent and 106 days to close. They also noted that the recent SEC guidance on SPAC warrants may increase the average number of days to identify and close a transaction.

In April, the SEC indicated that the warrants issued to investors at all levels should be considered a liability on the balance sheet instead

of equity. Accounting firms are also evaluating and discussing the attributes required to characterize the warrants issued in future transactions as equity, while closed SPAC entities are reviewing recent treatment at closing.

While due diligence is completed by the sponsor group on the acquisition or merger company target, it falls far short of what’s required in a traditional IPO. And while the SPAC process is faster, it raises substantial concerns about the quality of the information. It’s unclear what fiduciary responsibility the sponsors assume for that information if difficulties arise. A few years ago, WeWork was unable to complete its traditional IPO process because of questions about its operating model and proposed valuation—the company subsequently went the SPAC route.

Litigation has also increased dramatically. According to information from Cornerstone Research and Stanford Law School’s Securities Class Action Clearinghouse, 14 federal suits were brought against SPACs in the first half of 2021. SPACs have also not performed well post-IPO in the marketplace. Two-thirds of the 36 U.S. companies to have gone public after Jan. 1, 2019 via U.S. SPACs that Bloomberg Law analyzed have reported a loss in value. More broadly, the Wall Street Journal reported in early September that a widespread selloff has wiped 25 percent, or approximately $75 billion, off the combined market value of a group of 137 SPACs that closed mergers by mid-February—the pullback topped $100 billion at one point.

So, while private companies may find it irresistible to go public via SPACs to avoid submitting themselves to the costs, delays, and scrutiny of a traditional IPO through the major exchanges, I caution that boards of directors and management teams have fiduciary obligations to uphold, and they should carefully weigh the risks versus the rewards of undertaking this accelerated process.

Art Kuesel President, Kuesel Consulting art@kueselconsulting.com

Four Ways to Make Remote Business Development Work

Digital business development has its challenges, but these four tips will help you effectively attract new clients while working from home.

Remote work has a lot of benefits: greater flexibility, no commute, and more time with family and pets. But if you’re planning to stay remote, you have to think about how business development will change when it’s purely digital.

As a CPA, you have some responsibility for business development, no matter your position or firm. At the very least, you’re responsible for client service and satisfaction—core components of business development. You remain responsible for business development even if you’re working from home, and business development can be done effectively in a remote environment. Like many aspects of work-from-home versus in-office, business development has pros and cons in either setting. Let’s explore how to make remote business development work for you.

Here are four of the biggest challenges of remote business development, as well as tricks to overcome them:

1. Developing rapport: Rapport is often defined as “mutual understanding” and it requires connectivity to uncover commonalities. To set yourself up for success, do your research in advance—digging into the available information about the person you’re meeting with can reveal topics or interests you have in common. On video calls, scan the virtual environment of your client (subtly!) for clues, like sports teams’ logos or family pictures, that can open the ground for rapport-building. In a virtual world, you’re going to have to work a little harder to uncover the commonalities with your clients and other stakeholders that are the building blocks of a relationship.

2. Earning trust: Trust is earned through repeated positive interactions. Without the touchstones of in-person meetings, plan extra virtual interactions to demonstrate that you’re working on the relationship, being proactive, and doing what you say you will. These can range from check-in videoconferences to update emails. The other factor in earning trust doesn’t change from the office to remote work: You have to do great work. With strong communication skills and high standards for yourself, you can build trust with clients in a virtual environment.

3. Determining needs, wants, pains, and fears: In a virtual environment, it can be hard to get clients to open up about the problems they’re facing, making it extremely difficult to

get at the heart of what you can offer them. Try sending questions in advance of a one-on-one video meeting to understand what’s driving their decisionmaking, where their pain points are, and how you can craft a package of services to best meet their needs. Giving them time to think about their answers and a private virtual room in which to discuss them often helps get to the root of what your clients truly need. This is critical, because without knowing what they really need, you won’t be able to do your most effective work as a trusted strategic advisor.

4. Dealing with distractions: One of the biggest challenges of the digital world is gaining and keeping the attention of your potential clients. If a client is only passively participating in your conversation, it’s likely they’re missing important information and you’ll have an even trickier time building rapport, earning trust, and finding out their needs. Try different ways of contacting clients to see where they’re the most tuned in: Are they more responsive via email, or do you have your best conversations on the phone? Do they seem turned off or engaged by videoconferences? Comfort levels with different channels can differ based on age or personality. Find the best formats and use them to engage your potential clients in conversations with real back-and-forth—not a onesided pitch.

So, stop making excuses. Many things have changed during the pandemic that will never return to the way they were—and change isn’t going anywhere. Cultivate a different skill set now and learn to roll with change. This will only help you as our business world continues to evolve and transform. Embrace (or at least learn to tolerate) the new reality of conducting business development activities via digital channels. Relationship building will remain part of your business development strategy—just often without the traditional relationship-building activities.

It’s time to embrace these changes and dive into virtual business development. Firms are reporting strong gains, clients are spending money, and it’s time to get back in the game—as long as you recognize our new environment and make the commitment to change accordingly.

Are you controlling your future, or is the future controlling you?

Dealing with issues like AI, RPA, the future of client services, employee expectations, and firm succession planning, you may be asking yourself:

What do we do? Where do we go next? To

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The Ethics of ESG Investing

Interestingly, one of the most popular trends in investing is being driven less by financial factors and more by behavioral factors. The rising appeal of organizations who prioritize their environmental, social, and governance (ESG) behaviors—and the anticipated positive impacts of these behaviors on these companies’ market values—is driving more investors to consider how ESG investing fits in with both their ethics and their financial plans.

A company’s ESG disclosures offer more insight into its culture and mission than what an investor might gather from simply reviewing the company’s technical valuations and financial metrics. In essence, ESG disclosures empower investors to invest in organizations that respect or support the issues they care about themselves. For example, Investopedia notes the environmental considerations may address issues like energy consumption, pollution, climate change, waste production, natural resource preservation, and animal welfare; social considerations could include human rights, child and forced labor, community engagement, health and safety, stakeholder relations, and employee relations; and governance considerations might include quality of management, board independence, conflicts of interest, executive compensation, transparency and disclosure, and shareholder rights.

One of the first ethical considerations surrounding ESG investing is the difficulty both companies and investors face in applying common reporting standards. Various ESG reporting standards and frameworks have been developed by the Sustainability Accounting Standards Board, the Task Force on Climate-Related Financial Disclosures, the Global Reporting Initiative, the Global Real Estate Sustainability Benchmark, United Nations’ Principles for Responsible Investment, and the Dow Jones Sustainability Indices, just to name a few. Additionally, the International Financial Reporting Standards Foundation has declared its intent to create its own standards. ESG investments may be difficult to compare if the companies being analyzed are reporting ESG components under different frameworks. Similarly, the ESG ratings assigned to stocks from organizations like Bloomberg, the Carbon Disclosure Project, Institutional Shareholder Services, MSCI, Sustainalytics, Thomson Reuters, and Trucost may vary widely across vendors for the same stocks because their rating systems use different sets of criteria to judge the stocks.

A second ethical consideration when considering ESG-driven investments is the threat of greenwashing, meaning that investment managers may be marketing investments toward ESG-conscious investors without substantive ESG initiatives associated with the investments. The former chief investment officer of BlackRock, the largest asset manager

As ESG investing grows in popularity, those looking to invest in purpose-driven organizations should think through the ethical considerations.

CPA, CGMA, CITP, DTM

in the world, has been outspoken about how ESG is being used largely for marketing hype. Fortunately, investors can fight against greenwashing by reading the investment prospectuses and talking to the fund managers about how the management fees are being used. Fees for ESG-focused funds tend to be higher than those that track the broader stock market. Additionally, ESG-related funds tend to have varied success in outperforming funds that track indices like the S&P 500. Still, investors are increasingly shifting money toward ESG-focused funds because they believe in the long-term sustainability of them. According to Morningstar Inc., cash flows into sustainable investment funds in the United States reached $51.1 billion in 2020—more than double 2019 levels and a nearly 10-fold increase from 2018.

A third ethical consideration is determining your own individual ethics for investments. On one end of the spectrum, investors prioritize maximizing financial returns, and on the opposite end of the spectrum, investors prioritize maximizing social outcomes. The chart above from Vert Asset Management illustrates this spectrum.

In their interpretation, ESG falls into the financial-first side of the spectrum. In other words, ESG initiatives focus on how the organization’s behaviors impact its financial performance. Since an ESG focus prioritizes the organization’s values to promote financial returns, investors may prefer to invest in organizations that emphasize social outcomes.

SRI (socially responsible investing) is the strategy of investing in organizations that support the investor’s individual values. For example, some investors intentionally avoid sin/vice stocks, such as organizations involved in alcohol, gambling, or tobacco. Realistically, these organizations could still score high on ESG frameworks based on lower energy consumption, higher community engagement, strong quality of management, or other factors. Since a socially responsible investor may make different investment decisions than

an ESG-focused investor, it is important to know your preference and discuss it with your investment manager.

Impact investing goes further than SRI, prioritizing social outcomes over financial outcomes. Vert Asset Management CEO Samuel Adams says to think about this category as a “for-profit version of philanthropy. It’s realizing that some social problems are only alleviated, but not solved by continually donating money, medicine, and food to these problem areas. Sometimes it’s better to invest in a business that will provide those services on an ongoing basis.” Impact investing usually involves private funds versus the publicly traded funds available for ESG and SRI.

The Forum for Sustainable and Responsible Investment reported that ESG, Impact, and SRI investing grew from $3 trillion in 2010 to $12 trillion in 2018. While all three categories offer investors unique opportunities, ESG has grown the most, partly because ESG factors supplement existing measurements of organizational performance.

While focusing on ESG is bringing more purpose to investors, it also has been improving the way business is conducted. High ESG ratings create positive effects for an organization, such as bringing more purpose to the organization, improving employee morale, facilitating conversations about values between the organization and its investors, raising cash flow for the organization, and lowering the cost of capital. Also, organizations who have sustainable business models and ongoing ESG initiatives are expected to outperform competitors. CPAs can think about their own sustainability strategies internally and consider offering ESG services to clients to help them identify their sustainability strategies.

As investment options grow to meet investor preferences, we will continue to see more organizations looking to implement sustainability initiatives. If you are looking for purpose-driven investments, focusing on ESG may be a good place to start your due diligence.

Mark J. Gilbert, CPA/PFS, MBA President, Reason Financial Advisors mgilbert@reasonfinancial.com

Surveying SPACs: A Skeptic’s Stance

Special purpose acquisition companies are raising record amounts of capital, but are they worthwhile investments?

As accountants and advisors, many of us know of successful private companies run by exceptionally intelligent leaders. Perhaps some of us would love to invest in them, or in other equally successful private companies. After all, the market for investable public companies is small compared to the private company market: According to the World Bank, there were 4,266 publicly traded companies in the United States at the end of 2019. At the same time, there were, at least by one estimate, about 7.5 million privately held companies. That’s a ratio of at least 1,700-to-1. Not all private companies are worth investing in, of course, but doesn’t it seem that the private company market is an untapped investment opportunity? After all, angel investors, venture capitalists, and hedge funds invest in private companies—why can’t the rest of us? Special purpose acquisition companies (SPACs) are a way to do just that.

SPACs are publicly traded corporations which have been set up for the purpose of taking privately held companies public without going through the traditional initial public offering (IPO) process, thus simplifying the process. These corporations raise funds from investors based merely on the sponsor’s intent to find a great company to invest in. SPACs will often identify a target industry or some other area of focus—technology, electric vehicles, and renewable energy companies have recently been attractive targets for SPACs. SPACs are typically short-lived, as they’re generally required to invest the funds they’ve raised within a period of 18-24 months after launch or return them to their investors.

While SPACs have been around since 1993, they used to be regarded as a less desirable method for a privately held business to go public than the traditional IPO process. However, the rising costs of traditional IPOs, coupled with the interest of wealthy entrepreneurs to personally diversify their own investments, has led to increasing enthusiasm for SPACs over the past two years. According to the Wall Street Journal, SPACs raised $83 billion in 2020, which exceeded the combined amount raised in all prior years. In the first quarter of 2021 alone, SPACs raised about $100 billion. By the end of the first quarter of 2021, there were approximately 400 funded SPACs looking for privately held businesses to acquire.

But SPACs may start experiencing some growing pains as their tremendous growth rate has attracted greater levels of scrutiny. In April, the SEC released a statement requiring that the warrants which SPACs create and distribute to their initial investors be treated as a liability rather than equity, thus increasing their expenses and weakening their

financial positions. Only time will tell whether this accounting issue will negatively impact the continued viability of SPACs as a vehicle for taking businesses public.

So, are SPACs worth investing in? As SPACs hold a host of companies in a variety of industries, it can be difficult to draw an unqualified conclusion. Lumping all SPACs together is like judging the collective performance of every company in the S&P 500. With that said, the IPOX SPAC Index of 30 of the largest SPACs was down 2.08 percent year to date through June 30, 2021 after putting up strong numbers in previous years. Worse off is Morgan Creek’s Exos SPAC Originated ETF, which launched on Jan. 26, 2021 and was down 16.1 percent through June 30, 2021.

Overall, I think it’s wise to approach SPACs with skepticism. Because these entities are merely promising to invest in companies that meet their profile and criteria, investors don’t know what they’re ultimately

getting in exchange for their investment dollars. Really, SPAC investors are buying into the reputations and past achievements of the SPAC’s sponsors with the expectation that they can repeat their past successes. Because SPACs have recently raised so much capital that must be deployed within a two-year timeframe, there’s also an increased risk of them investing in private companies that aren’t the best targets. And even if all SPACs find great companies for acquisition, the tremendous capital available could result in SPACs competing over acquisition targets and paying prices that are too high under reasonable valuation assumptions. Furthermore, it’s likely that regulators will continue to crack down on SPACs to protect ordinary investors’ interests, which could ultimately make SPACs even less attractive investments than they’ve been in the recent past. For all these reasons, I advise investors and financial advisors to be very cautious when considering SPACs as part of an investment portfolio and long-term financial plan.

Nancy Miller, CPA Controller - UOP, Honeywell International Inc. nmiller.icpasarticles@gmail.com

Analyzing Two Accounting Approaches for Cryptocurrencies

Cryptocurrencies have so far managed to dodge comprehensive regulation and straightforward accounting approaches despite their expanding uses and growing popularity among investors and companies alike, which has created unique challenges for corporate finance professionals—especially those trying to account for their presence on an organization’s balance sheet. Let’s take a look at what accounting approaches work— and which don’t—for cryptocurrencies.

A quick refresher on cryptocurrencies: They’re a purely digital medium of exchange powered by blockchain technology. This technology means that cryptocurrencies aren’t housed in any particular system but are spread across a decentralized network of computers that record and verify transactions and continually update the respective blockchain. There are thousands of cryptocurrencies today, of which Bitcoin is believed to be the first and remains the most popular.

Explanations for why cryptocurrencies have become so popular vary. Some proponents believe they’re the currency of the future, while others think the decentralized blockchain technology behind cryptocurrencies makes them more secure. Others like cryptocurrencies as investment vehicles and hope they continue to rise in value. Yet others gravitate toward them because they eliminate the need for central banks and other financial institutions and allow parties to transact without intermediaries.

So, what’s the accounting issue? Well, there’s no authoritative or universal guidance currently on accounting for cryptocurrency. Here are two of the most intuitive methods for accounting for cryptocurrencies so far, along with my analysis of whether or not these methods hold up.

FAIR VALUE ACCOUNTING

The first thought for many of us would be to use fair value accounting. However, there are many ways in which cryptocurrencies don’t meet the definition of a class of asset that can be accounted for at fair value.

Cryptocurrencies won’t meet the definition of cash or cash equivalents since they aren’t considered legal tender and aren’t backed by sovereign governments. In addition, cryptocurrencies don’t have maturity dates and have consistently experienced significant price volatility. Cryptocurrencies can’t be considered financial instruments or assets as they’re not cash nor an ownership interest in an entity and they don’t represent a contractual right to receive cash or another financial instrument.

Finally, while cryptocurrencies may be held for sale in the ordinary course of business, they aren’t a tangible asset and therefore may not meet the definition of inventory. For all these reasons, using fair value accounting for cryptocurrencies can be challenging.

In the absence of comprehensive guidance for cryptocurrencies, companies that hold them on their balance sheets are looking for the best method to account for them.

INTANGIBLE ASSETS

Currently, the consensus seems to be that cryptocurrencies can be accounted for as intangible assets since they’re assets that lack physical substance. An indefinite-lived intangible asset is initially carried at the value determined in accordance with ASC 350 and isn’t subject to amortization but should be tested for impairment annually, or more frequently if events or changes in circumstances indicate it’s more likely than not that the asset is impaired. Ultimately, this means that the value can be reduced on the balance sheet due to the decline in price, but there’s no way to recover that value as U.S. GAAP doesn’t allow for reversal of impairments.

While treating cryptocurrencies as intangible assets may make sense on the surface, the concern around this approach is that it might not accurately reflect the economic value. Cryptocurrencies can be used to purchase goods or services or be held as an investment. Absent the ability to mark up the value of its cryptocurrency holdings, if a company believes fair value to be more reflective of the economics of its investment, it has the flexibility to provide disclosures that it believes are meaningful to its stakeholders (being mindful of non-GAAP measures when preparing these types of disclosures). Companies should provide stakeholders with detailed information about their cryptocurrency holdings, such as the underlying purpose, given exchange, purchase price, and quantity. With this information, stakeholders can arrive at an approximate determination of the valuation of the company’s holdings or return on their investments.

But what happens when companies use cryptocurrencies for business transactions, such as paying vendors? A more complex accounting treatment is required for these transactions as the intangible asset is now being used as a tangible asset. This muddies the usefulness of financial reporting using the intangible asset method. The issues currently arising are complex, but there are paths forward. Ultimately, I believe the simplest approach in the short term is to consider accounting for cryptocurrencies as financial assets at fair value rather than as intangible assets. Under fair value accounting, companies can recognize losses and gains in value immediately, and while it may create more volatility in the financial statements, it will provide the most useful information to stakeholders.

This column was co-authored with John Hepp, Ph.D., clinical assistant professor of accountancy in the University of Illinois Gies College of Business.

Keith Staats, JD Executive Director, Illinois Chamber of Commerce Tax Institute

Reviewing the Revised Uniform Unclaimed Property Act

The newly amended RUUPA has major implications for businesses and the CPAs that advise them.

Public Act 102-0288, signed into law by Gov. J.B. Pritzker in August, amends the Revised Uniform Unclaimed Property Act (RUUPA), and while RUUPA isn’t a tax act, unclaimed property compliance is handled by the tax departments within many companies. RUUPA has tax-like features: periodic reports are required to be filed with the Illinois treasurer, the treasurer has authority to audit businesses to ensure compliance, and there’s the possibility of penalties in cases of improper reporting or failure to report.

Unclaimed property consists of intangible or tangible property of someone else held by businesses or governmental bodies without any contact from the owner for the statutory time period. Examples of unclaimed property are customer overpayments, utility security deposits, uncashed payroll or dividend checks, unpaid refunds, bank accounts, contents of safe deposit boxes at financial institutions, stocks and bonds, and insurance payments.

The statutory period after which property is deemed abandoned under RUUPA varies by the type of property, but the most common abandonment period is three years. RUUPA outlines the manner in which holders of unclaimed property are required to attempt to contact the owners. If attempts to contact owners of unclaimed property are unsuccessful, the business or governmental entity is required to report and turn over the property to the treasurer. The treasurer holds the property on behalf of its rightful owners and attempts to reunite the property with them and maintains a searchable online database for unclaimed property. (I recently checked the database and claimed $12 from AT&T that was some type of overpayment from an old telephone account at a previous residence.)

A company can’t keep unclaimed property that’s subject to RUUPA. For example, a company can’t keep an unclaimed refund owed to a customer by converting it on its books to additional income after a certain period of time.

For many years, unclaimed property reporting wasn’t a significant issue for most Illinois businesses, other than financial institutions and utilities, because the Illinois unclaimed property law prior to RUUPA contained an exemption for business-to-business transactions. The rationale for the business-to-business exemption was that there was no need for government to intervene because businesses know to whom they owe money and they know from whom they’re owed money. However, the business-to-business exemption was eliminated upon the adoption of RUUPA effective Jan. 1, 2018.

Two other provisions of RUUPA make unclaimed property reporting a greater issue for businesses than under the prior law. First, RUUPA was given retroactive effect, meaning the first report filed with the treasurer after the Jan. 1, 2018 effective date was required to include

all items of property that would’ve been required to have been reported if RUUPA had been in effect for five years prior to Jan. 1, 2018. This includes the business-to-business transactions that had been exempt from reporting prior to the enactment of RUUPA.

Second, RUUPA effectively has no statute of limitations period for audits by the treasurer. The law has what it calls a 10-year statute of limitations, but the statute of limitations is only for items that have already been reported to the treasurer. There’s no statute of limitations for anything that hasn’t been reported. The detrimental impact of this essentially unlimited statute of limitations on unclaimed property holders is evident when it’s combined with the treasurer’s ability to use estimates in determining liability in cases where the treasurer concludes that the business’s records are insufficient.

Consider the following example: RUUPA became effective Jan. 1, 2018 with a five-year retroactive period and a repeal of the businessto-business exemption. Business A is audited in 2022. The auditor requests documentation back to 2013. Business A only has detailed records for the latter part of the audit period. In reviewing those records, the auditor determines that Business A has failed to report some business-to-business transactions. Because there are no detailed records for earlier periods, the auditor develops an estimated reporting shortfall for the earlier periods. If the reporting mistakes in the later years are significant, the assessment for the earlier periods could be substantial. Actually, the assessment could be substantial even if the mistakes aren’t significant because of the number of years at issue. Note that the further we get from the effective date of RUUPA, the more substantial audit assessments will become because the less likely it will be that businesses will have maintained sufficient records to refute an auditor’s estimates.

As I noted above, RUUPA was amended this year by SB 338. The legislation makes several changes to RUUPA, including provisions dealing with reporting requirements for financial institutions. The legislation also includes new reporting requirements for cryptocurrency, requiring holders to report “virtual currency” to the treasurer five years after the last indication of interest by the owner.

In my opinion, the most unnecessary provision of SB 338 is the new “negative reporting” requirement. This provision requires businesses to file annual reports with the treasurer to report that they have nothing to report. This requirement applies to any business with annual sales of more than $1 million, or that is publicly traded, or that has a net worth of more than $10 million, or that has more than 100 employees.

To me, the negative reporting requirement is of no value to affected businesses and is nothing more than an unnecessary bureaucratic annoyance that’ll assist the treasurer in building a database of potential audit candidates. Remember that RUUPA doesn’t have a real statute of limitations. Therefore, this negative report isn’t like filing a zero-tax return with the Illinois Department of Revenue which would begin the running of the statute of limitations.

Unclaimed property compliance, reporting, and audit defense are issues that’ll continue to grow in importance to businesses and their advisors. If you want to learn more about unclaimed property reporting, be sure to sign up for the Illinois CPA Society’s annual State and Local Tax Conference on Jan. 20, 2022. I’ll be moderating a panel discussion with the treasurer’s chief of staff and legal and accounting professionals experienced in assisting businesses with unclaimed property compliance and audit defense.

Three Skills I Gained by Stepping Out of My Comfort Zone

BY GREYSON BORDEN,

When I was promoted to senior tax associate after only two busy seasons with my firm, I thought my professional life was right on track: I had a master’s degree, my CPA license, and glowing reviews from clients and coworkers. I was doing everything by the book. But after some thought, I realized I was becoming complacent and not looking for opportunities to grow.

Then an interesting opportunity crossed my path: Would I like to serve as a firm ambassador to the Illinois CPA Society? At first, I was reluctant. Why volunteer to do even more work when I already work crazy hours during busy season? And as an introvert, this new role would require me to step out of my comfort zone. I could’ve taken the easy road and politely declined—but I said yes, and here’s what I learned.

#1 Communication skills

As a firm ambassador, I serve as a liaison between young professionals within my firm and the Illinois CPA Society, reaching out to share important information with my colleagues. Sometimes it’s just an email with interesting news or trends, but other times I’ve sent more urgent information, like updates on license renewal, the CPA exam, or crucial COVID-19 communications. I also get to chat with my coworkers about what I gain from my Illinois CPA Society membership and keep them informed about wonderful upcoming events. (The Young Professionals Leadership Conference will be held at the Willis Tower on November 5! Be there!)

#2 Remote connection skills

When I signed on as a firm ambassador, the global pandemic was already in full force and remote work had been the norm for quite some time, which made my ambassador role more challenging. I had to find new ways to connect and share information in a remote environment when I couldn’t chat with other young professionals face-to-face. I found that LinkedIn and Facebook were great channels to connect with colleagues and share posts from the Illinois CPA Society and other important sources. Most young professionals don’t spend as much time on LinkedIn as they do on other social media sites, so I met them where they were already congregating.

I found that even in a remote environment, I could make meaningful connections with my coworkers as a firm ambassador. I even helped a colleague study for the FAR section of the CPA exam and finally pass!

#3 Leadership skills

Overall, serving in this role has helped me to grow as a leader. I took the initiative to stay up to date with information about the profession, connect with colleagues (even in a remote world), expand my network, and help others. This role has helped me shine within my firm and I was proud to add it to my resume.

When we’re doing well in our jobs, it’s easy to get too comfortable. We need to remember that stepping outside of our comfort zones can pay off in essential skills and experiences. Next time an extracurricular or volunteer offer crosses your path, view it as an opportunity rather than a chore—you never know what you’ll learn.

When I signed on to serve as a firm ambassador for the Illinois CPA Society, I learned essential skills and made amazing new connections.

CPA

Greyson Borden, CPA, is a senior tax associate with CohnReznick LLP and an Illinois CPA Society firm ambassador.

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Michael J. Santay, CPA

National Audit Partner, Grant Thornton LLP

INSIGHTS FROM THE PROFESSION’S INFLUENCERS

Michael Santay has enjoyed a long and rewarding career in the accounting profession, and he’s working hard to make sure that disabled people can do the same. A member of the Illinois CPA Society since 2002, this year he was honored with the Lester H. McKeever Jr. Advancing Diversity Award in the Outstanding Leader category in recognition of his tireless efforts to make the accounting profession more inclusive. And as Santay moves into retirement, stepping back from his role as a national partner in the auditing standards group at Grant Thornton LLP where he’s worked since 2003, he looks forward to committing more time toward championing the rights of disabled professionals.

“The disability group is a unique group because it’s a class any of us can join at any time,” Santay says. “I have two nephews who were born with disabilities who are both accountants: One is in a wheelchair. They chose accounting because they viewed the profession as an avenue for them to find a meaningful career where they wouldn’t be held back by their disabilities.”

Determined to make sure his nephews and others have the opportunities to realize those career goals, Santay is a passionate ally for disabled people, particularly at Grant Thornton, in the accounting profession, and in Chicago’s business world. He has served on the finance committee for Access Living of Chicago and as an advisory board member for Disability:IN Chicagoland, both non-profit organizations focused on advancing disability accessibility, inclusion, and employment. Santay is also the founding member and executive sponsor of Grant Thornton’s Diversabilities Business Resource Group.

Through these channels, Santay has seen major changes within Grant Thornton and in his community. But he says the most important change isn’t a wheelchair ramp or specialist software, but a stigma-free environment allowing each employee to do their job.

On a Mission for the Disabled

“One of the rewarding experiences we had at Grant Thornton was when an employee with an invisible disability was brave enough to speak to our disabilities resource group,” Santay recounts. “We went to their manager and ended up getting them the accommodations they needed. Creating an environment where people don’t feel they have to hide their disabilities is an important yet challenging goal.”

In fact, it’s estimated that invisible disabilities account for most disabilities but are often under-reported because of feared backlash or stigmatization. Santay suspects that if people were comfortable self-reporting invisible disabilities, employers would be surprised to see that the numbers of disabled employees are probably much higher than the typical 1.5 percent average.

BY HILARY COLLINS

“I think having people share their stories is so important,” Santay says. “We have an internal program where some people in our group who have invisible disabilities share their stories and affirm that our culture is going to actually support disabled people and not just talk about supporting them. That’s a tough one because people have to be vulnerable to talk about their disabilities.”

Ultimately, Santay believes we can achieve a world where disabled people aren’t seen as outliers and their needs are simply taken care of: “My goal is that disability access becomes something we don’t even need to think about and we don’t even need advocacy groups anymore because the necessary infrastructure and attitudes have become so integrated into the world.”

The 2021 Lester H. McKeever Jr. Advancing Diversity Award recipient shares the driving force behind his passion for disability access in the accounting profession.